HALIFAX, MONDAY, APRIL 26, 2010

SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY

3:20 P.M.

CHAIRMAN

Mr. David Wilson

MR. CHAIRMAN: Order, please. I will now call the Subcommittee on Supply to order. I realize the member for the Liberal caucus has 39 minutes and had asked the minister a question, so with permission from the member I'll ask the Minister of Finance to respond.

The honourable Minister of Finance.

HON. GRAHAM STEELE: Mr. Chairman, I'm just picking up where we left off last day. We were dealing with the Nova Scotia Liquor Corporation and specifically advertising. The member, if I understood her correctly, was asking about why it is the corporation has sales which are published in the paper.

The Liquor Corporation is a big, modern retail organization. Even though it is a monopoly or almost a monopoly, a retail monopoly, it still has to conduct its business according to normal retail principles. There's a saying which I know that people at the Liquor Corporation cringe at, but you hear all too often and that is, alcohol sells itself. The simple answer to that is, it doesn't, it's not nearly as easy as people think. Sure, you could set up some bare shelves and have terrible stores and really unfriendly staff and as long as you're stocking beer, yes, you're going to make some sales. But in terms of offering the full range of products in an attractive working environment, with experienced and knowledgeable staff, there's a lot of work that goes into it, and sales are really part of that. I think it's important to make some distinctions though between what the Liquor Corporation does and what a regular retailer does.

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First of all let's talk about the volume of advertising. A normal retailer, a big retailer like Sobeys, Superstore, The Home Depot, those kinds of large retailers that the Liquor Corporation should be compared to, would spend anywhere from 5 per cent to 10 per cent of their sales on advertising. The Liquor Corporation spends about 0.2 per cent, so it's a really small amount of total sales.

It's also important to differentiate between Liquor Corporation advertising and supplier advertising, say Keith's or Oland's or any of those kinds of things. Liquor Corporation advertising is aimed at informing consumers about choices, events, gift opportunities and special offers. It's not like supplier advertising which is aimed more at building demand, building market share. I think customers actually appreciate having as good information as they can about what's available at the Liquor Corporation and at what price.

My final thought on this is simply this: clearly there is a potential issue with drinking that is not responsible, but we shouldn't confuse a good, modern retail operation with promoting problem drinking. It all has to do, I think, with having responsible drinking as one of the primary mandates of the Liquor Corporation and that mandate is taken into account in every decision that they make, including their choices around advertising.

MR. CHAIRMAN: The honourable member for Halifax Clayton Park.

MS. DIANA WHALEN: I do appreciate that glimpse on the modern operation of the NSLC. When I was speaking with the Health Minister during her estimates, I mentioned I had begun my work when I was about 18 - which was then the legal age in Alberta - working in a liquor store in Alberta, when they were still government-run, and they were bare bones. You described the atmosphere in a current liquor store, it certainly is a more pleasant experience for shoppers and I'm sure for the workers, but we had pretty bare bones to shelves and alcohol and your job was just to dust them and that was all, we didn't try to lay them out in a nice way. So I think there has been quite a change and I realize the drinking culture has changed.

I wanted to bring to the minister's attention some of the statistics that I had talked to you about and I just printed them off again, they're primarily from HPP studies. There was a Culture of Alcohol Use in Nova Scotia study, a 2007 Student Drug Use Survey, an Alcohol Indicators Report in 2005 and so on, but they have some figures that I just think are important that you have in mind as minister. I'd like to ask you about the cost-benefit study and whether we have any such thing; that really is where I'm going, to see whether we have a cost benefit. If we don't have one, will we ever look at doing a really in-depth cost-benefit study?

We have here there are 3,100 alcohol-related hospital admissions a year in Nova Scotia and we have . . .

MR. STEELE: What's the source of that, I'm sorry?

MS. WHALEN: That one is the Nova Scotia Alcohol Indicators Report, 2005, and I will table this so you can have a copy. In fact, I'll give it to you; it's not really tabling it, I'll just give it to the minister. There were 42,000 hospital days attributed to alcohol in that same 2005 report. I don't think we have the admissions to the emergency room, but we know that on the weekends there's always a spike in admissions that are alcohol related. It says here: $419 million spent each year in Nova Scotia on alcohol-related harm - that was the Nova Scotia Alcohol Indicators Report, 2005, $419 million. Perhaps the minister could tell us what the percentage of revenue is from NSLC, as I know it comes under your government business enterprises I think?

Further to that, if I could, Mr. Chairman, was the question about whether or not the Department of Finance has ever seen a cost-benefit analysis or would be interested in working with HPP to do such an analysis.

MR. STEELE: I'm not entirely sure that I'm answering your question, but the total sales of the Liquor Corporation forecast for 2010-11 are $60,000 short of $600 million, but once you take into account all the costs of sales, the income from operations is $223.5 million.

Specifically about cost-benefit analysis, I suppose we could have a debate for awhile about what exactly that is and what exactly you mean. It's certainly not the Liquor Corporation that you can lay everything at the door to do with alcohol. Let's face it, alcohol is a substance that if used irresponsibly leads to all kinds of issues. As I mentioned in my opening remarks, personally I feel it's a much bigger, more serious issue than gambling, which receives 10 times, 100 times more attention than alcohol abuse does.

It's such a multi-faceted issue; in fact, the Liquor Corporation's role in it is probably one of the brighter lights on the question of alcohol abuse in Nova Scotia. For example, a number of the stories that have been in the paper and things about hospital admissions have been, of course, about over-serving in bars. Now, that's not the Liquor Corporation's fault.

The Alcohol and Gaming Division of the Department of Labour and Workforce Development are the ones who are responsible for regulating that sector and it's a constant battle to make sure that our bars and lounges are serving alcohol responsibly and within the rules. So it's not the Liquor Corporation that governs that. I'm not sure where to go beyond that because a cost-benefit analysis - I'm not sure what you mean by that - a cost benefit of what? Of alcohol?

MS. WHALEN: I think a lot of it is to really attribute all of the costs that we have as a society to alcohol, which would be well beyond just the cost of running the Liquor Commission, we'd really be talking about the societal costs. We've had similar studies done on gambling; I believe in 1997 or 1998 there was a study done, it was a consulting project that was undertaken. I'm sure there have been more recent ones.

MR. STEELE: If I remember rightly, GPI tried something and said they couldn't do it and recently, as you know - it has been in the Legislature - the previous government commissioned a socio-economic study of gambling and the thing, frankly, was a failure because it had profound methodological problems.

A steering committee tried to work with the consultant over the course of at least a couple of years and tried to get that report into some kind of sensible shape and they just couldn't do it. There are some pretty substantial methodological issues with the kind of socio-economic study you're talking about. The real experts in this area are GPI and I believe so far that effort has defeated them, they just don't know how they would go about doing it. It sounds like it would provide us with useful information, but it's really, really difficult to do.

[3:30 p.m.]

MS. WHALEN: As I say, it would just help to frame our discussion around how we market alcohol and maybe how strongly, how hard we are on the advertising and marketing of alcohol.

One of the points I wanted to raise - and I know there were a few letters to the editor, so maybe a little bit of controversy at the NSLC as well - was about the suggestion that the NSLC had certain segments of the population they could market to more strongly. This was, I think, in your last year's business plan or annual report and it identified certain groups of the market. You named them things like the "Adventurers" - I can't remember, there were five categories; perhaps the staff will remember, as well ,what that was.

The suggestion was that women were the group that were not consuming or purchasing as much alcohol - so let's assume purchasing and consuming as much alcohol - and therefore they represented a real opportunity in the marketplace. Then there were a number of letters to the editor from groups such as a reproductive health group and several others who were just saying that that was sort of an abusive strategy, essentially, why would we do that? So perhaps the minister could respond to a marketing strategy that might be targeting women.

MR. STEELE: You know, that whole thing, I think, was just a real, deep misunderstanding of what it was the Liquor Corporation had said. It got caricatured kind of as let's get women to drink more when really, what the Liquor Corporation had actually said in its business plan was considerably more sophisticated and nuanced than that. Like most large, modern retail operations, the Liquor Corporation does carefully study its market.

Just for the record, the four groups that it kind of divided its customers into, if you're interested, are first of all what they call "Adventurers" which is 31 per cent. What characterizes them is that they buy different products across categories, shop more frequently and spend more on average than other customers. The second category was "Loyalists" which is 27 per cent. They buy pretty much the same product, shop more frequently and, again, spend more on average than the average customer. Then there was a third group called "Discoverers" which is 21 per cent. They buy different products across categories, shop occasionally and spend less on average. The final group was the "Maintainers" which is 21 per cent. That would include me: buy the same product, shop occasionally and spend less on average.

The reason why the Liquor Corporation does that, of course, is to study opportunities through growing their market. But remember, every single thing that the Liquor Corporation does is within its dual mandate: providing excellent retail service and responsible consumption. So there is nothing that the corporation does where they say, let's sell more and not care about the consequences. In fact, that's what I'm rather afraid of if the Liquor Corporation were privatized and suddenly you would have a division between retail and regulation, where the retailers' main objective would be to sell as much as they could possibly sell and the regulators would have to struggle to keep up with them. This way, the retailers and the regulators are essentially the same person and so they're thinking about it all the time.

Any discussion there was about marketing to women within one of those categories was all in the context of responsible alcohol consumption. For example, it is not in any way inconsistent with that mandate to say okay, let's suppose we have a certain segment of our market that likes wine, but perhaps we can show them that a better wine will provide a more enjoyable experience. So they may end up drinking exactly the same amount - that is, one bottle - but one they enjoy more and pay a little bit more for it. That increases sales, but it doesn't increase consumption. So I think we need to be careful of saying that an increase in sales necessarily includes an increase in consumption, much less an increase in irresponsible consumption.

MS. WHALEN: I think part of my looking at a cost benefit or some of the socio-economic costs would be for us to frame a policy discussion, I guess, around what we could do to make it more responsible. One of the things that is suggested, and I'm looking at New Zealand and Australia that actually identified - particularly Australia, where I did live for a couple of years in the 1980s. It very much had a macho kind of pioneer drinking culture and they recognized how much harm it was causing in lost work and injuries and so on, and actually went about a five-point strategy which I saw on-line. One of the five points that you can follow - they did this in New Zealand as well - is to reduce marketing and advertising, which is why I'm going to that point, or to do more social marketing maybe that counters it, one or the other, but that is on their five points.

One says to raise alcohol prices, which I'm not sure I would recommend here because our prices are a lot higher than many other jurisdictions, but of the five things you can do that might be one of the things that we look at. But until we recognize or even admit that we have a particular drinking-culture problem, I think we're not going to take any action, we're going to be satisfied with the NSLC's efforts to date to balance their social responsibility with the revenue that they bring to the province, which I do understand.

Before I go on to anything else or let the minister reply, I just wanted to mention, going back to the issue of women and girls, that there are products on the shelf there, one of which I had a picture of the shelf that I gave to the minister - I'm afraid I don't have it today for you but I did give it to HPP - and that was a product that's called "Pink" - the bottle is pink and it's clearly directed at girls. It's all about girls buying this drink and I think that's very clear. It's not even for women or mature, sophisticated drinkers, so we can find out what it is, but to me it's a very blatant attempt just to get girls to drink more. I think some of the members here were actually in the House when I tabled that last time. I think, in fact, it's called "Girl" wasn't it? I think it was called "Girl" in a pink bottle, that's what it was.

It's just a question of thinking, again, when you're purchasing and when you talk about the sophisticated, nuanced, modern operation that NSLC is, are we thinking about some social harm that can come from trying, as I say, and I think it is there as a secondary motive to look at a segment of the market that isn't consuming as much. Certainly, even today, I think women go into liquor stores quite comfortably. As I mentioned, when it was a bare-bones kind of place it was a place that women didn't like to go to. I know when I worked in the liquor store my mother didn't like to come in to get me because she just didn't like liquor stores. I think a lot of us could say our mothers were like that, they didn't want to go there, somebody else could go buy the liquor.

It's different today, but I do object to marketing that might be aimed particularly at girls because I think they're vulnerable and I think it has other outcomes that are negative in a health sense, in terms of their vulnerability to violence and other things where alcohol is involved. So it's more just to have raised that issue with you. I'd like to go on because I know time does fly in here and you might want to respond to that around the girls, but maybe you could just look into that marketing.

The issue I wanted to ask you about was the U-Vints and I guess you call it "brew on premise." I know the minister is aware of the case in Clayton Park, one of the stores that sell kits for brewing wine and beer. They are not allowed in our province to allow a customer to mix it up and leave it on a shelf in their store. This is allowed in Ontario, I think B.C., it seems to be allowed in New Brunswick - although perhaps not by law, but because they choose to turn a blind eye. As I say, it's in my constituency where the one store is, where a gentleman has tried very hard to change this rule. He has been charged and he has gone to court to defend what he's doing and to try to see if this can be changed.

The Nova Scotia Liquor Corporation seems to be unreasonable in its stance; I don't know whether they're protecting people's health or protecting their own turf, I'm not quite sure, but they have disallowed it. Every time he has asked subsequent Ministers of Finance that have been in charge of this and I think the minister may have been more sympathetic when he was a member of the Opposition, I'm not sure of his position today. I would like to know if you could report back on U-Vints and tell me, what is your position as Minister of Finance?

MR. STEELE: I never dealt with this issue when I was in Opposition, so I wouldn't want to suggest that my position has changed in any way, I've just never dealt with it. Now that I am the minister I have dealt with it, so I'm happy to talk about it.

There's actually an interesting link between that topic and the previous topic. There are a number of reasons why I am persuaded that we are not ready yet for allowing U-Vints in this province. I have shared this information directly with the people concerned so that they're not under any illusion about what the reason is. I've met with them, I've spoken with them, I've written to them and the message has been consistent, so they know exactly what the reasons are, why we're not ready to go down this road yet. Let me just review what some of them are.

The link between the two topics - and one of the reasons is what I'll call "social reference pricing" which is one of the ways that we try to ensure that we contribute to the responsible consumption of alcohol in this province - is there are prices below which we will not go. Remember when there were dollar-shot issues here in Downtown Halifax and the trouble that led to? That's essentially why they're outlawed. Of course, that's not the Liquor Corporation's responsibility, that's Alcohol and Gaming, but essentially the price got so cheap that people were drinking way too much and causing trouble for themselves and for others. That is why there's a price below which the Liquor Corporation will not go.

Could alcohol be cheaper in Nova Scotia? Absolutely, it could be cheaper in Nova Scotia, but it would cut into the amount of money that is then contributed to the government from which we pay health and education, and you might run into some difficulties now with the social reference pricing where if the price drops too low people will over-consume.

We are afraid, among other things, that if we allow U-Vints - that is the concept of a U-Vint, that people use the merchant's premises to brew their own wine - that if we do that, essentially the price of alcohol becomes so low that it invites over-consumption and that's one of the reasons. Unless and until we deal with that issue, I can't see us allowing U-Vints in this province.

Another reason, frankly, is because of the impact on the revenue to the province. I don't think I'll make any bones about it or pretend that's not one of the reasons; it is. The Liquor Corporation contributes a substantial amount of money to the government's bottom line and like every other piece of revenue, we use that for health, education, community services, and roads. We are very loathe to give up that revenue to another source, and that's one of the reasons why, for example, the private wine stores haven't been expanded, because that all represents a loss of revenue as well.

Another difficulty with the U-Vints, apart from the two that I've already mentioned, is that the regulatory enforcement can be quite difficult. What appears to be happening in other jurisdictions that allow it is, for want of a better term, the wine is sold out the backdoor of the shop; it shouldn't be, but it is. As soon as you start allowing somebody to brew alcohol of any kind in a commercial setting you're going to run into this issue of having to account for all of it. What seems to be happening in other provinces and states that allow it is that you create an underground market in alcohol.

You have to understand that the concept of a U-Vint is that customers come in and brew their own wine and then you go the very next step which the U-Vint operators also want, which is where they brew the wine on behalf of the customer. As soon as you go down that road it's very difficult to say this vat or this wine belongs to this individual and this wine belongs to that individual. If you have the U-Vints that brew it on behalf of somebody else, you or me or anybody else, suddenly you're losing control of who the stuff belongs to. If you tell the U-Vint person that it's okay to brew alcohol and then sell it to the customers, it's very, very difficult to regulate. That's another reason why we don't do it.

The final reason - I've mentioned three, each of which on their own are probably enough to say no to the U-Vints - but the fourth reason is that we are trying very hard to develop our local wine industry here in Nova Scotia. It's probably the most successful agricultural industry in the province right now, and it's growing in leaps and bounds. We have to make sure that the environment for the production and sale of that wine is not harmed by allowing another channel for the sale of inexpensive wine.

Now, having said all that, we are continuing a dialogue with the U-Vint operators; these are the objections that we have to doing it, but we're open to suggestions, changes, anything that will help us overcome these four issues that I've identified. For example, one thing that you might do is say, okay, to deal with the revenue issue, we'll just put a levy on each bit of wine that you produce so that the price you pay is now equivalent to what somebody would pay for a bottle of wine in a store. So then you've dealt with the revenue issue and you've dealt with the social reference pricing issue, but you haven't necessarily dealt with the other issues. So we're continuing to work with them, we understand their concerns, but we also have concerns of our own.

[3:45 p.m.]

MS. WHALEN: I appreciate your going through some of those difficulties that you see with this concept. I guess what I find upsetting as a Nova Scotian is that we always seem to have 10 reasons why we can't do something, rather than doing what the minister finished his answer with, that maybe you're now exploring how you can overcome some of those obstacles in your way. I see other provinces simply saying, let's see how we can do this. It will certainly create more business activity. Those little stores will have more employees, they'll pay more HST, they'll be able to thrive and prosper; it's another avenue of them providing a service.

I'd be remiss if I didn't mention particularly in my area where there are so many people living in apartments, they don't have the space to do it themselves, so therefore you've limited your market. If you just took the people of Clayton Park, two-thirds of them live in multi-unit buildings. If two-thirds of my families are in multi-unit buildings they don't have a big closet or a corner where they can set up these vats and let them sit. Also, on top of that, a lot of them are older and as you have an aging and older population, these are people who would enjoy that as a hobby but they can't lift and handle those great, big vats. Even women, I don't think, can easily handle them filled, depending on who you are; I don't think I can handle them. Anyway, I'm just saying that there are physical reasons why.

In terms of young people perhaps binge-drinking because it's cheaper, I don't know too many young people who will wait six weeks or two months to get their hands on all that wine. They usually want something - especially if they're underage drinkers - a lot lighter than bottles of wine. Again, we're talking about the youth-drinking culture and they usually want something like hard liquor that they can dispose of quickly and not get caught, so I just don't see that as being a big problem.

I think the people who run these stores would be responsible. You said they were difficult to regulate; I don't think you would need a lot more regulations than any other province has put in place. I think as long as they were professionals and understood that they would lose their licence if there was something that was done amiss - which is exactly what the bars and restaurants operate under. They realize that if they allow underage drinking or if they condone over-drinking that they could lose their licence and that's a pretty big incentive right there for them to follow the rules that are given to them.

One other point that supports doing this is that I think it's really wrong that we have Nova Scotians travelling to New Brunswick to use that service in Moncton and other places, just to bring up that inevitable New Brunswick connection which comes up so often. But because they allow it there you can go there and then you actually break another rule because you're transporting alcohol between provinces. I don't know whether - I've been told that's against the rule, too, when you have a case of wine that you're bringing back. That seems to me to be very counterproductive for us here in Nova Scotia and that we could be more problem-solvers, rather than just defending the kingdom. I think the minister had a comment.

MR. STEELE: Right and, of course, that's the best-case scenario, but it almost runs counter to your original point about over-consumption, because what we're doing then is creating a new channel of cheap alcohol. Let's not underestimate the impact of that.

You say on the one hand, on the other hand, which is what the Liquor Corporation does. They're not saying no, they're not saying yes; they're just saying on the one hand, on the other hand. If people brew their own alcohol and then stop shopping at the liquor store, well, that's less money for the provincial Treasury which can go to things like health, health promotion and protection, and it's all a balance and constantly reviewing, revising. But at the moment that's the position of the current government.

MS. WHALEN: I do understand that's the position of the department, but as I say, there's another argument, too, that says if you began - and I think a lot of people do - when your children are young, for example, and you don't have as much money - we would have done that ourselves, trying this hobby. But it's a progression of making your own wine and then buying some wine at the liquor store, testing it and trying it.

Wine is a hobby in itself, really it is. I don't think that, again, because of the volume of it that there's as much over-consumption of wine - I suppose there is with some people. I understand this is about trying to be socially responsible, but I think it's a way that actually people enjoy a hobby and that they actually become more familiar with wines and that they end up buying wines at NSLC, as well, because they're more interested in what wine tastes like and what the different grapes are.

Even for our local industry they can sell concentrate which is used in that business. That is another avenue that some of our local wineries use; they don't always make their own wine, they sell a concentrate. I know a lot of it is Ontario wines that they're using now in the stores, so it's another avenue for our own local industry to profit from, as well, if it was opened up further.

I just think my main concern is with the older people and the people who can't take advantage of this right now because of limitations. So I leave it to the minister to perhaps explore ways that we can do it because it looks very anti-business and the previous government looked very anti-business, as well, to just step in and it seemed so heavy-handed. So I'm going to leave you with that for the moment. I think we may have exhausted it.

Mr. Chairman, I know I only have about 10 minutes left, but each and every department has been looking for savings. When we had the Department of Justice in they gave us a list of $1.8 million that they were looking at in the elimination of positions and operating reductions. Do you have a similar list for the Department of Finance, the areas under your control where you have been able to estimate where savings are this year? I don't know if you go beyond that. I think the $1.8 million was in this current year that the Department of Justice provided from the different divisions and so on. I realize I've shifted gears, so we need different staff.

MR. STEELE: Of course, we have a much smaller budget than the Department of Justice, so our savings are $211,000. What we did was we asked right off the top in the budgeting process, we said to every department, come back with a 1 per cent savings. Most of the Finance savings have been in professional services, which would be the cost of purchasing professional services - accounting and audit, engineering, legal - and also cuts in consulting services - payments relevant to contracts with outside individuals and firms for specific deliverables. That's where most of the savings come from.

I should say, as I've been saying to the member for Inverness, that you can't just snap your fingers and find $437 million, but you can snap your fingers and find some savings. I have to say that I don't believe, with one exception that I can think of, that many units of government had trouble finding 1 per cent savings. Next year we're going to come back and ask for that 1 per cent, plus another 1 per cent. The year after that we're going to add another 1 per cent and another 1 per cent, this is right off the base. The deeper you go the harder it is for them to do that and that's really before any impact of the expenditure management initiative, which is the other bigger stuff.

Some departments may be pitching in significantly more than that, but Finance's contribution of the 1 per cent was in consulting and professional services. Finance is a pretty lean department, without a lot of fat, but nevertheless we found it. Next year it will be just a little bit harder, but we'll find it again.

MS. WHALEN: If I'm not mistaken, and I'm just looking at this year's estimates, you're about $30.4 million in total - that's 2009-10. In 2010-11 it's $33.8 million, that's what I've got here, so actually you've grown quite a bit this year; in fact, you've grown quite a bit above your forecast. You actually were underspent last year. Perhaps you were over this with others, but why were you underspent last year? You're over this year and yet you found $211,000.

MR. STEELE: Let me talk about why we're over . . .

MS. WHALEN: Why were you underspent first, perhaps?

MR. STEELE: Underspent in what sense?

MS. WHALEN: You estimated in 2009-10 that it was $30.4 million that would be spent and, in fact, the forecast is almost $27.9 million.

MR. STEELE: There are various - I see in my book here six separate items that were decreases and three separate items that were increases. Do you want me to go over them?

MS. WHALEN: Yes, please.

MR. STEELE: The decreases - this would be estimate to forecast in terms of we estimated a certain amount at budget time and then we forecast a certain amount. Bear in mind when I say this that the estimate was actually, of course, passed in the Legislature halfway through the fiscal year.

MS. WHALEN: Would it be possible later for you to table that, just to see the exact items? I know you can tell me about it now, but it's helpful to have it.

MR. STEELE: If I read it to you then I don't mind tabling it, just the one page.

MS. WHALEN: Please do.

MR. STEELE: I guess you have your choice, I can either read it to you or I can just give you a copy afterwards. What's your . . .

MS. WHALEN: Why don't you table it.

MR. STEELE: All right.

MS. WHALEN: But we have quite a significant amount less there, it's $2.5 million which is a lot more than the $200,000 you found by looking for efficiencies or looking for savings. So I'm wondering why it would have jumped from that to go up another almost $3.5 million this year.

MR. STEELE: Well, I can tell you that.

MS. WHALEN: Now maybe you're ready for that, because you'll show me where you were underspent last year and now you can tell me, if you wouldn't mind.

MR. STEELE: There is so much in the Budget Book that looks like increases that are actually transfers. Almost all of the increases are switches from other departments, so it looks like Finance is going up - and it is, except there's a corresponding decrease somewhere else in the budget. For example, up until this year the payroll function of government has been done in each individual department and this year it was centralized in the Department of Finance. What we did was we took the payroll people from each department, meaning there was a corresponding decrease in each one of those departments, and they're now centralized in the Department of Finance. So it looks like the budget of Finance went up and it looks like the number of people went up - and it did, it's just that it was a straight transfer from other parts of government.

Of that increase of $3.396 million, $1.951 million was in relation to the creation of the Payroll Client Relations group. The space is too tight in the Provincial Building here where most of the rest of the Department of Finance is, so they are housed presently in the CIBC building here in Downtown Halifax. The bulk of the rest of the increase was funding increases for salary, $650,000 operating cost and $1.26 million to support various tangible capital asset projects.

One of the things about the Department of Finance is it houses the SAP project really for the whole government. If you took that out, the department would be about half the size it is; or to put it another way, half or not quite half of the department is people dedicated to the government-wide accounting system known as SAP. Even some of that is recoverable from other units of government. For example, we do the school board SAP, we do the municipality SAP - the ones that are participating - so the amount appears in our budget but the recovery appears somewhere else. That would be the bulk of the rest of the money.

SAP was unkind enough to charge us more money this year for software maintenance and that's another $248,000. Then another example of things being transferred in, we had two people transferred in from the Fisheries and Aquaculture Loan Board, who were transferred to our Capital Markets Administration division, so again, that was $121,000. That looks like an increase in our budget and it is, but there's a corresponding decrease where the Fisheries and Aquaculture Loan Board used to be. Then there's $600,000 worth of reductions and the net total, as I said, is $3.396 million, but the great majority of that is things transferred in from other places and these tangible capital asset projects.

MR. CHAIRMAN: Honourable member, you have one minute remaining.

MS. WHALEN: I wonder if you could tell me what the tangible capital asset projects are that would have people funded. I see staff funded through there, there are nine people this year because it comes off your total funded staff. Could you explain what that is just before we're done? It will be my last question.

MR. STEELE: All right, here are the projects - I have a minute to answer your question. There is an SAP upgrade; the Province of Nova Scotia SAP business enhancements; SAP controls and audit software; EHS, Environmental Health & Safety module; Nova Scotia school boards SAP Phase II; SAP payroll for relief workers; SAP payroll for housing authorities; and additional SAP licences. As you can see it's essentially 100 per cent SAP enhancements and improvements, some of which is recoverable from others.

[4:00 p.m.]

MR. CHAIRMAN: Order, please. The time has expired for the questioning from the member for Halifax Clayton Park. I would advise that we don't have the capability of tabling, but the minister could provide a copy to the member of some of the references that were mentioned a few minutes ago.

I now recognize the member for Inverness for questioning. You have about 36 minutes because we do have to allow some time for the minister to wrap up. He has 15 resolutions under his portfolio, so before we run out of time, about 36 minutes.

The honourable member for Inverness.

MR. ALLAN MACMASTER: Thank you, Mr. Chairman, and thank you, minister and staff. Each day that I come into this Legislature it makes me realize how important it is to ask questions so that government does not become irreverent of the people and feeling it has all the answers. When I ask questions I am doing so with legitimate concern and I respect the House too much not to. We're all elected, we all represent about 20,000 people in our ridings and I respect them too much not to ask questions with a point to be made. I know the minister and I have disagreed and he has suggested that sometimes my facts are not straight, or I'm speaking rhetoric, or sometimes that it's inexperience of a new member . . .

MR. STEELE: No, I never said that - the other things, yes. (Laughter)

MR. MACMASTER: I guess I want to keep things positive today, but I do want to say that for me to come here and not question what the government is doing would suggest that there's nobody out there that's questioning it and the people I represent by extension, none of the them would question it. I think there are people who would question some of the directions of the government. I think it's okay - and I mentioned this the last day - to have different opinions, and the government that's in power now was not always in power and it was through forums like the House of Assembly that allowed it to become relevant for the people. As an Opposition member, I respect that because you are now the government and that's what the people chose.

During our last session on Friday, when I recommended it was time for government to address the expenditure side of the operating budget, you challenged me with a number you came up with to cut from the budget. I thought it was unfortunate that you would pit government employees against all other working Nova Scotians and you made a particular comment about the people of Inverness. I felt that was threatening and you made a broad statement about how many nurses and teachers would lose their jobs. I think that's negative, I think it's unreasonable. I do believe that government, like any healthy organization, needs to be able to embrace change. Fear-mongering to suppress ideas does not serve the people that we are elected to serve.

Now, there are two ways that we can look at government expenditure. One way is we can say what do Nova Scotians need from government; another way is to look at government as an employment agency. I believe the priority has to be on the needs of the people. If we look after the people and have services that are relevant for them, we can say government is doing the right thing. To avoid looking at the expenditure side of government, all we can bring Nova Scotians is higher taxes, we can bring them deficit budgets and debt, and we'll end up creating a less competitive business environment for our economy to grow.

Today I want to try to be positive. I have five questions and I'll tell you what they are before I get into them, and hopefully we'll have enough time to go into them. The first one involves what I'm hoping is a positive future for our economy; the next one is a question on bond issues; then one on interest rates; one on inflation; and finally, if we have enough time for it, accounting standards.

My first question is, when would we be able to pay for the debt that we're going to create over the next four years? Maybe there is a future when we can pay for it, but we see that our GDP, our productivity is flat; we have a declining population - flat at best; we have a defensive economy, so we can't depend on an oil boom to lift us out of deficits; our taxes are high - there's not a lot of room to move to increase them further; and what comes to my mind is if we don't see a future where we can pay for it, why would we incur the debt today? Like I say, I want to be positive, I want to give you a chance to be positive. Do you see a time when our province will generate budget surpluses, a time when our economy strengthens; if you do, how do you see that happening?

MR. STEELE: You use a phrase that I don't know what you mean, which is "pay for the debt," because that could mean all kinds of different things.

MR. MACMASTER: Would you like me to clarify?

MR. STEELE: Yes, maybe you could elaborate, because it could mean stop adding to the debt, it could mean whatever debt we add over the next four years we will pay down, or it could mean other things. So do you want to elaborate on what you mean by that?

MR. MACMASTER: Sure. I see like over the next four years if we run a deficit budget each year, that's going to be an accumulation of new debt over the course of the four years.

MR. STEELE: Okay, because I think terminology here is important. Probably more critical than the absolute amount of the debt is the debt-to-GDP ratio, the relationship of the size of the debt to the size of the economy, which is often referred to as the ability of the economy to handle that level of debt. Our plan, as laid out in the budget, shows the debt-to-GDP ratio falling the year after next. Now, of course, that will require significant discipline, particularly on the expenditure side.

I did want to say that you've talked about, well, you have to pay attention to the expenditure side. The good thing is we agree with you, because for every dollar in new revenue we are committed to finding more than $3 in efficiencies and savings. Of the $1.4 billion gap identified by the expert advisory panel, $1.1 billion will be closed through savings and efficiencies. So clearly we are focused on the expenditure side and have made some progress thus far.

I suppose if we have a point of disagreement it is in a way that I don't understand - you seem to think that gap can be closed immediately and I have cautioned you that it is difficult or impossible to see how you could close a gap of $437 million immediately, in immediate cuts to the provincial budget. If anybody thinks that they can take $437 million out of the budget and no one will notice and no one will get hurt, they're kidding themselves.

So I think to me, first of all I would say yes, if we execute our plan - and I believe we can, and it's not just me who says so, there are market analysts who say that it's a solid budget with reasonable assumptions. The response of the financial markets has been uniformly positive. We have yet to go through the process of meeting with the bond-rating agencies, although that will be coming up soon, but the market response to the budget has been very positive.

In terms of the absolute amount of the debt, is there a point when that might go down? It's almost beside the point, the more important one is the debt-to-GDP ratio and as I said, our plan shows it already going down the year after next. Then the important thing after that is it will continue to come down, we are committed to seeing it continue to come down to a more reasonable level.

I would also add something I mentioned the other day which is that this is not the highest that the debt-to-GDP ratio has ever been, that was done in the 1990s, but it is still higher than any of us would like.

MR. MACMASTER: My next question is - and this is to quantify so people can understand the effect of borrowing - I think in February there was an Order in Council passed to allow the government to borrow $650 million at a rate of 4.7 per cent, and to borrow that for a term until June 2041. From my calculation that would cost the province about $30 million a year to borrow that money for 31 years. Would that be roughly . . .

MR. STEELE: I guess $650 million, at whatever the percentage is, is just a mathematical thing, although once you're going beyond a year and you're talking about an extended term you have to do it in terms of net present value and you can't just literally do the multiplication each year, as you know. Off the top of my head I can't do a 30-year net present value, but you're in the right ballpark, yes.

MR. MACMASTER: Thank you. Interest rates are low right now and I do know that most of the province's debt, if interest rates were to rise, it's not going to affect the debt that we have, but it might affect issuing new debt because it might become more expensive. Can you quantify it? I know there was something in the budget documents, there's a statement every year that tries to quantify the effect of a rise in rates, I think, by 1 per cent. We don't know where interest rates are going to go, but do you have any thoughts about where interest rates are going and what effect that would have on the provincial debt?

MR. STEELE: While the deputy is looking at that - I don't have the figures that I think you're asking for. On Page 3.46 of the Budget Assumptions and Schedules document is our forecast of what interest rates will be over the next couple of years, but that would be the Canadian prime and the five-year conventional mortgage rate. We do that more because of the impact that it has on the economy rather than on the borrowing costs.

Our Liability and Management Treasury Services people in the Department of Finance have very sophisticated information about what is likely to happen to debt. What's happening in the market is essentially the market is predicting what rates will be over time and that is one of the factors in terms of what spread the investors are looking for.

The important thing for the purposes of the province is to have a conservative - pardon the expression "small 'c' conservative" - and varied portfolio of maturities to reduce as much as possible your risk. Even if you feel you have too much risk, of course, then you can hedge it, essentially buying insurance on future rate increases, and that's what the people in LMTS do. It's absolutely true that as rates go up, if we need to finance more or if we need to renew a bond - because, of course, our bonds are coming due all the time and we have to refinance them - we have to look ahead and say, okay, where are rates going?

I actually think that the particular deal you mentioned, the $650 million at 4-and-some per cent, is actually a great deal. A 30-year borrowing at the bottom of the market, when rates are going nowhere but up - because you see our forecast and we're predicting increases of over 2 per cent over the next couple of years - that represents a substantial savings.

What the LMTS people are doing is precisely trying to manage the debt portfolio, to ensure we pay as little as possible in debt servicing costs. One of the things that the credit rating agencies like about Nova Scotia - they don't like everything about Nova Scotia, but one of the things they do like about Nova Scotia - is that we have a very, very good debt profile. That is something, of course, that's going to continue.

MR. MACMASTER: Thank you. There's a term here that I've come across, I've often heard it said that governments can "inflate their debt away." I think this has to do with if we're in an environment where interest rates are rising, government could go back and say for that issue, where the province purchased or sold bonds with a rate of return of 4.5 per cent or 4.7 per cent, if interest rates were to rise to 10 per cent, the price of those bonds would drop. I suppose government could buy those bonds back, retire that debt and buy new debt.

This is probably way too much to be going into by way of words, it's probably better to provide it in writing. I'm just trying to get a handle on if that is the strategy that the province would look at going forward and if this is best presented by way of a letter. Would you prefer that?

MR. STEELE: Yes, it's not a phrase that I've heard before, "inflating your way out of debt." There is no magic answer to this stuff. It's not like somebody sits down and says, if only we did this our debt would go down. It's just not the way this kind of stuff works.

The financial markets are very sophisticated. There is no magic answer but if there's a strategy that you want to inquire about, I'd be happy to look at it and I'd be happy to have you meet our Liability and Management Treasury Services people so they can go over with you how they do what they do.

[4:15 p.m.]

MR. MACMASTER: That would be much appreciated. Thank you, minister.

My last question involves accounting standards. This is something that perhaps is on the radar; if it's not, I'd like to put it on the radar right now. I'm just going to read an excerpt of something that I've come across. This involves accounting standards. Of course we're familiar with GAAP accounting standards but there's also IFRS. I'll just read this because it may provide a better introduction:

On January 1, 2011, Canada will join more than 100 countries, including Australia, the European Union, Hong Kong and New Zealand, that have adopted the International Financial Reporting Standards, or IFRS. This marks a departure for Canada. Previously it had been moving its Generally Accepted Accounting Principles towards the American Generally Accepted Accounting Principles. Instead, the United States has started the process of moving American standards towards IFRS, the international standards, and is expected to be compliant, inasmuch as it affects treatment of real estate, by 2014. The financial crisis of 2008 and its aftermath has provided ammunition to those in favour of retaining GAAP and the proponents of IFRS. The replacement of Canadian GAAP by the IFRS will be mandatory for all of Canada's 4,500 publicly-accountable enterprises.

The main difference for people - probably the best way to understand this - between GAAP and IFRS is the option to replace historic cost with fair value or mark-to-market value for assets. That could be real estate or any kind of an asset. I know that when the real estate bubble burst in the United States, one of the issues around some of the banks that held these real estate assets was if they were accounted for on a mark-to-market basis, the real estate values had plummeted, so the banks would have been in very bad shape because they had outstanding loans for assets that had very minimal value.

I guess I have two questions. Perhaps this may be best addressed in a letter, as well, but I'll ask them today. One is, will the province move towards IFRS; and two, if it becomes the standard for business here in Nova Scotia, how will it affect businesses?

MR. STEELE: I'm sorry, could you repeat your first question, please? Could you repeat both questions, please?

MR. MACMASTER: Sure. I'm going to give you another little piece here that might help as well.

The objective of financial reporting is to provide information about the financial position of an entity that is useful to a wide range of users in making economic decisions. There's an opinion by the International Accounting Standards Board that states that the IFRS are more closely aligned with the objective of making financial reporting more transparent. They give a number of points here: it becomes more relevant because they focus on the balance sheet part of the financial statements, not just the income statement; it becomes more accurate because assets can be reported at their fair market value rather than historic cost; comparable - there are benefits if everybody is on the same standard, if financial statements are prepared to a common standard, a standard that transcends national borders; and transparency, which I've mentioned already.

The two questions are: will the province move towards IFRS, is it on our radar; and if it does, if we do move towards those standards, how will that affect Nova Scotia businesses?

MR. STEELE: I'll take the second question first. Of course, it's not for me to say, as the Minister of Finance during the estimates process, how the move to IFRS will affect Nova Scotia business.

IFRS is becoming GAAP. Generally Accepted Accounting Principles are whatever is generally accepted at a given time. So it's true, the history you gave is true, where Canadian accounting standards were moving in one direction then they veered off towards IFRS, so Nova Scotia businesses generally either are or will have to follow IFRS. They are already doing that work, believe me, particularly the larger companies have been working on this for quite some time. It's a major change for some of them, depending on what line of business they're in, in particular. Of course, it's not really for me to say how it's going to impact them, just that yes, it does apply.

Is the province moving to IFRS? Well, the answer to that is also yes, to the extent that it applies to us because IFRS, the International Financial Reporting Standards, are becoming the new GAAP. So since we're committed to following GAAP, of course we're also going to have to follow IFRS. However, the following subtlety is that the IFRS doesn't necessarily apply to all aspects of government. It does apply, without question, to our government business enterprises, in particular - for example, the Liquor Corporation - so they are moving and have been moving towards IFRS. They will have to be on that standard, fully on that standard by July 2011, so they're doing the planning and the transition work now. They do that because they are essentially a business enterprise.

It doesn't apply necessarily to other aspects of government because the rules applying to the public sector are a little bit different and will continue to be a little bit different. Let me just mention the way IFRS can affect the province's balance sheet because there is a bit of a controversy, a fairly esoteric controversy that was on the agenda at the last federal-provincial Finance Ministers' meeting, and that is the way that IFRS rules will apply to derivatives. Now, all provinces are large and sophisticated borrowers and all of them in one way or another would have derivatives. The issue is how exactly should the value of those derivatives be reported?

The difficulty for provinces is that if it's done in a mark-to-market kind of way, what it will end up doing is showing a degree of volatility on the province's balance sheet which has nothing to do with the actual reality of the situation. For example, if a government had a balanced budget law, the volatility might take them way over balance and then way under balance and nothing fundamental has changed, they still hold the same derivative. It's just if you have to mark-to-market at each reporting period, your volatility goes up and down.

The Finance Ministers agreed at this last meeting that we would write to the International Accounting Standards Board, expressing serious concern about the application of that particular rule willy-nilly to provincial finances, because the impact would actually be to disguise what was really going on in the province's books, not the reality of the situation. So the move to IFRS standards is something that everybody who is committed to GAAP is following but not without a few bumps along the way. There are still some things to be worked out. Thank you.

MR. MACMASTER: Thank you, and with that I will conclude my questions and allow the minister some extra time for his closing comments.

MR. STEELE: How much time do I have?

MR. CHAIRMAN: We have 21 minutes.

MR. STEELE: I can conclude - I don't know if any of my other colleagues have questions.

MR. CHAIRMAN: I'll recognize the minister to conclude his estimates - about 22 minutes.

The honourable Minister of Finance.

MR. STEELE: I have a question for you, Mr. Chairman, never having been in this situation before. If I just stop, does that count as the end of the 40 hours or am I obliged to go the full 22 minutes?

MR. CHAIRMAN: We're supposed to go the 22 minutes.

MR. STEELE: All right then, I'm happy to do that. I don't know if everybody listening is happy for me to do it but I'm happy to do it.

MR. CHAIRMAN: You do have 15 resolutions that have to be read, which I would think would take a few minutes, so if you want to work that into it, feel free.

MR. STEELE: Okay, sure. Just so I keep an eye on the clock, Mr. Chairman, what time am I finished?

MR. CHAIRMAN: At 4:44 p.m.

MR. STEELE: I'll bring the plane in for a smooth landing, you just watch.

There was an issue that I addressed in my opening statement that was taken up with me by the member for Halifax Chebucto afterwards. I just wanted to share with the committee the issue and the answer because it's something that came up surprisingly often during the back-to-balance sessions, and that was when people saw that we are spending $1 billion a year on interest. The natural question is, well, who does that go to and isn't there some way of keeping that money in the province?

It's a really interesting question because the answer is that when you're borrowing hundreds of millions or billions of dollars at a time, there's only so many people who have that kind of money to invest. So by and large, the people who are buying our bonds are big funds of one kind or another, big pension funds, insurance companies that have to invest their premiums and those kinds - people, banks, credit unions, anybody who has a lot of money to invest, they are the people who are buying Nova Scotia bonds. Those people can be in Canada or around the world.

Now we believe that most of our bonds are held by Canadian companies. We're still small enough that there's not a big international market for our bonds, so by and large the money - we think - is staying in Canada. But there's simply no way to know for sure because the bonds are held by intermediaries and we wouldn't necessarily know exactly who is the beneficiary on the other end.

When we sell our bonds we can ask our syndicate, well, who did you sell them to? They can tell us but they don't have to, so we have some idea of who at least are the initial purchasers of our bonds but what happens to them after that, we don't necessarily know.

Because of the size of the province, you can take it pretty much for granted that very little, if any, of our debt is actually held by Nova Scotians or Nova Scotia companies. For the sake of argument, let's say that$1 billion a year is leaving the province. Then the question becomes, well, isn't there something that we could do, couldn't we find a way of selling the bonds to Nova Scotians? The fact is that some provinces do that already. Alberta does it, Saskatchewan has been doing it. The problem is that it doesn't work very well and they're not thrilled about it. I believe I'm right in saying that Saskatchewan just suspended their program.

There are several reasons why it doesn't work very well. If you remember the premise of back to balance it was, how do we get back to balance, what's the right path back to balance? Ultimately what we want to do is find ways of saving money or spending money smarter. We could sell our bonds to Nova Scotians if we paid a higher interest rate than is available to them from the other savings vehicles, but almost by definition you end up spending more money so you're keeping some of the debt inside the province but it's not doing the government's bottom line any good. It may be a valuable thing to do just for that reason alone, but nobody should be under any illusion that doing this is actually going to save the province money.

There's another reason for that. When you sell a lot of bonds to small investors there's a transaction cost involved, there's a lot of advertising. Saskatchewan and Alberta both spend a lot of money advertising their bond program to their citizens, so there's that additional cost. There's also the transaction cost of keeping track of all the very many people who hold a very small amount of your debt and there are some transaction costs involved there. So when you look at it all together, raising money by selling bonds to your own population is actually a relatively expensive way of raising money.

The international financial markets are designed to raise large sums of money as efficiently as possible and they do that very well. As I was saying the other day, it's quite fascinating to sit in an office and watch as you borrow $650 million. How many people ever get a chance to do that? It's done like that, it's done within literally seconds. You can't sell that amount of debt that quickly or that efficiently to your own people.

One of the reasons that Saskatchewan abandoned it is because, first of all, it was expensive money, but second, they weren't raising very much. Again, these figures are off the top of my head and they may not be exactly accurate but they're in the right ballpark. The last time Saskatchewan tried to sell a bond issue within the province they raised about $20 million. That sounds like a lot of money except Saskatchewan actually needs about $2 billion - or, I should say, we need $2 billion a year to fund our operations; we need to borrow $2 billion a year. Saskatchewan has a different economic structure so they may need to borrow more or less, I don't quite remember, but it has a similar size population to ours so it must be somewhat the same. They needed $2 billion and they raised $20 million. So you can see that the program is symbolic at best.

[4:30 p.m.]

I think Alberta, at best, the most they ever raised was something in the neighbourhood of $100 million and that's a province three or four times our size, so proportionally you could expect to sell $20 million, $25 million, $30 million worth of bonds to Nova Scotians and that would be in a good year. Then you'd have to go back to the markets to borrow the rest of the $2 billion or so that you need.

Now, it's an attractive idea. I actually like the idea of not sending $1 billion a year of our money outside the province, of keeping it in the province, but it's really difficult to think of a practical way to do that when you consider how these things actually work. The only way that I can think of doing it is encouraging our large pension funds to ensure they have Nova Scotia bonds as part of their portfolio. When I say the large funds, I'm thinking of the superannuation plan, the NSAHO plan, the teachers pension plan, all are large enough to buy bonds, but obviously there's a limit as to how much they can buy and still have a portfolio consistent with a reasonable and prudent person.

That's the only way that I can think of keeping that interest money in the province. It's very interesting and I did take it very seriously and looked into it because it came up so often in the back-to-balance discussions.

Speaking of back to balance, when I was doing my introduction I was talking about different places that I had been to and the particular things that had come up, and I only got as far as Amherst. So I'm really hoping to get around the rest of the province in the few minutes that are available to me now. I left off at Amherst, which obviously is a very particular case, but I won't repeat that.

Other places that I went to - I went to Truro and that was one where I had a meeting with the chamber of commerce, followed immediately by the public meeting. Or maybe it was the other way around, I can't remember. I wanted to emphasize, because of some comments that had been made about small business and our approach to small business. As I was saying, around the province, many of the back-to-balance sessions were attended by small-business people. Many of the sessions were preceded or succeeded by meetings with chambers of commerce. Of the thousands of written submissions, many were from small-business people. We've had lots and lots of contact with small-business people, including in Truro where I literally left one meeting and went to another meeting with the public and with business owners.

That reminded me, there's something that the Liberal Leader said in the House one day where he said that the one session he went to, which was in Bridgewater, he said there was no evidence of small-business people there. I don't know why he would say something like that because it's not like people jumped up and said, I'm a small-business owner and my opinion is this. The fact is in Bridgewater the meeting was immediately preceded by a meeting with the executive of the Bridgewater Chamber of Commerce. Everybody on the executive was there throughout the meeting and a number of their other members as well.

The other thing, of course, the Liberal Leader didn't know was that earlier that very same day I had a meeting with the full Lunenburg Board of Trade. The member for Lunenburg was at both of those meetings - and I thank you very much for attending that - so the member for Lunenburg knows how many small-business owners we met with that day, both at the lunchtime meeting in Lunenburg and the evening meeting in Bridgewater.

Then the Liberal Leader who, of course, wants to be able to dismiss back to balance says, well, I saw no evidence of small-business people there at the meeting. I just think, why is it that people want to so rush to dismiss what was really a very, very successful process of public engagement, saying things where they have no idea whether they're true or not but they want to be able to reject the results, so they somehow want to dismiss the process itself? That was another example that struck me where the Liberal Leader said something where he had no idea whether it was true or not. It was all an attempt to dismiss the process.

Of course, there were 19 sessions around the province and he went to one and apparently is prepared to draw conclusions from that, conclusions that were wrong that night and were wrong every other night that we had a back-to-balance session.

We went to the Valley and we had meetings on the same day in Wolfville and Kentville. The member for Inverness very kindly attended the session in Wolfville that was held on the campus of Acadia University. The one in Kentville was held in the fire hall there. Those were good, productive sessions as well.

Moving further down the shore, of course, we had one in Digby - at least we were going to have one in Digby and then Joe Casey passed away, and the member for Digby-Annapolis called and said, you know, these two events are going to conflict, I thought you should know. Of course, there was only one decision to be made and that was to postpone the back-to-balance session because I knew, for example, the member for Digby-Annapolis would want to go to both. I had the good fortune of attending the funeral for Joe Casey which was held in Annapolis Royal.

An interesting fact about Joe Casey is that even though he represented Digby, he lived in Annapolis County because he lived on the far side of the Digby Gut - a fascinating man who lead a very interesting life. That's why his funeral was held in Annapolis Royal and not actually in Digby which he represented for so many years.

Digby was an interesting session as well and, of course, I couldn't resist just handing the microphone over to the member for Digby-Annapolis since he looked like he really wanted to speak. Certainly many MLAs from all Parties attended the sessions. Some participated and some kind of hung round the edges, but the member for Digby-Annapolis was there and he had things he wanted to say, so at one point I just handed the microphone over to him and let him say his piece as well.

The one in Yarmouth was very interesting, it was the best attended of all the back-to-balance sessions. You know, when I hear Liberals and Progressive Conservatives say oh, it's just a hand-picked NDP audience, I laugh because they know it's not true. The member for Argyle who says it, he was at the meeting in Yarmouth and he knows it's not true. I mean it's just laughable to describe the audience in the room in Yarmouth that night as a hand-picked NDP audience.

It was the largest turnout anywhere in the province, for obvious reasons. They are very concerned, for very good reasons. There were 150 people who attended the Yarmouth meeting and you know what? It was a great session, it was very, very good. People were passionate and they were engaged and they had a lot of things they wanted to share. I was glad that they had the opportunity to do that.

It's interesting, one of the issues that came up there that didn't come up anywhere else, except in Amherst of all places - I still can't figure out why this came up in Amherst but it certainly came up in Yarmouth - was the future of Georges Bank. It was interesting and I did like that the question allowed for a show of hands. I did ask the room whether there was support or opposition to the idea of exploration on Georges Bank and the room was about evenly divided. Of course people from each side came up to me afterwards and said, oh, this wasn't representative, the county really feels strongly this way or the other way. You can see that in Yarmouth County that's going to be a significant issue over the next little while. I still don't know why that issue came up in Amherst, as well, but it did. But that night, that was one of the issues that was unique to Yarmouth.

I also stopped in Liverpool. They were so appreciative of my being there because I gathered that Liverpool was often skipped on previous consultation tours. It's just one of those stops that typically the government consultations go to Bridgewater and Yarmouth and nowhere in between, so I was very pleased to go to the fire hall in Queens County. We had an excellent afternoon session there. Some of the sessions were in the afternoon, some were in the evening, some were on weekends.

No matter what time you pick, it can't be convenient for everybody but no matter where we went, the turnout was really good, except for the very last one, in Sheet Harbour, because it was like 20 degrees outside. It was a Saturday afternoon, and if I had lived in Sheet Harbour, I wouldn't have gone to my own session either. We had about 15 people who turned out to that one, but that one was by far the lowest turnout. (Interruption) But I'm only around to Liverpool, I've got so much more that I could talk about.

I'd love to talk about the one that was done entirely in French, by video conference, with all the Acadian communities around the province. I'd love to talk about some of the ones in HRM, including the one in Lower Sackville that the member for Sackville-Cobequid attended, but I have to do my duty now and have my resolutions dealt with.

MR. CHAIRMAN: Shall Resolution E8 stand?

Resolution E8 stands.

Resolution E9 - Resolved, that a sum not exceeding $959,197,000 be granted to the Lieutenant Governor to defray expenses in respect of Debt Servicing Costs, Department of Finance, pursuant to the Estimate.

Resolution E22 - Resolved, that a sum not exceeding $8,868,000 be granted to the Lieutenant Governor to defray expenses in respect of Government Contributions to Pension Plans, pursuant to the Estimate.

Resolution E23 - Resolved, that a sum not exceeding $10,226,000 be granted to the Lieutenant Governor to defray expenses in respect of the Government Offices, pursuant to the Estimate of the Office of Acadian Affairs.

Resolution E28 - Resolved, that a sum not exceeding $429,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Police Complaints Commissioner, pursuant to the Estimate.

Resolution E29 - Resolved, that a sum not exceeding $2,432,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Securities Commission, pursuant to the Estimate.

Resolution E30 - Resolved, that a sum not exceeding $4,004,000 be granted to the Lieutenant Governor to defray expenses in respect of the Nova Scotia Utility and Review Board, pursuant to the Estimate.

Resolution E39 - Resolved, that a sum not exceeding 111,423,000 be granted to the Lieutenant Governor to defray expenses in respect of Restructuring Costs, pursuant to the Estimate.

Resolution E40 - Resolved, that a sum not exceeding $54,800,000 be granted to the Lieutenant Governor to defray expenses in respect of Tax Credits and Rebates, pursuant to the Estimate.

Resolution E41 - Resolved, that a sum not exceeding $8,448,000 be granted to the Lieutenant Governor to defray expenses in respect of the Pension Valuation Adjustment, pursuant to the Estimate.

Resolution E42 - Resolved, that a sum not exceeding $579,894,000 be granted to the Lieutenant Governor to defray expenses in respect of Capital Purchase Requirements, pursuant to the Estimate.

Resolution E43 - Resolved, that a sum not exceeding $112,293,000 be granted to the Lieutenant Governor to defray expenses in respect of Sinking Fund Instalments and Serial Retirements, pursuant to the Estimate.

Resolution E45 - Resolved, that the business plan of the Halifax-Dartmouth Bridge Commission be approved.

Resolution E46 - Resolved, that the business plan of the Nova Scotia Gaming Corporation be approved.

Resolution E48 - Resolved, that the business plan of the Nova Scotia Liquor Corporation be approved.

MR. CHAIRMAN: Shall the resolutions carry?

The resolutions are carried.

I request a motion to refer these resolutions to the Committee of the Whole House on Supply.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

I also request a motion to refer the remainder of the resolutions not called in subcommittee to the Committee of the Whole House on Supply.

Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

I would like to thank the minister and his staff and all those who have participated in the Subcommittee of the Whole House on Supply. We now stand adjourned.

[The subcommittee adjourned at 4:44 p.m.]