HALIFAX, TUESDAY, MARCH 27, 2018
SUBCOMMITTEE OF THE WHOLE ON SUPPLY
Mr. Chuck Porter
MR. CHAIRMAN: Order, please. We’ll get started. We’ll move to the NDP caucus, which has 21 minutes left in their hour. I will recognize Ms. Leblanc to start.
MS. SUSAN LEBLANC: Good afternoon. I’m happy to be here. I’m going to focus my questions on the Nova Scotia Film and Television Production Incentive Fund and all things related to film and TV and animation.
The first question I have is, how much of the department funding is allocated to film and television this year? How does that compare with last year?
HON. GEOFF MACLELLAN: The base budget for 2017-18 was $22.8 million. This year, 2018-19, the budget is $20 million exactly.
MS. LEBLANC: Can you tell us how much was spent last year, or is that number the exact? Is that the final number?
MR. MACLELLAN: We don’t have the numbers finalized yet. It’s kind of an aggregate. We know it’s going to be in that range. It’s in and around there, we anticipate.
MS. LEBLANC: You said this year is $20 million, and then last year was $22 million?
MR. MACLELLAN: Right.
MS. LEBLANC: So why have you decreased it?
MR. MACLELLAN: We sort of based it on projections. I know there’s lots of questions. The conversation really is focused around the “cap” - whether or not there is a cap. Basically, we haven’t denied any projects. We take it case by case, and we allocate as the requests come in. There was no reduction necessarily. It’s just sort of where we have landed in terms of the estimates that could potentially come in. That’s where we’re at now, but as it was the last few years, it has been a pretty fluid number.
MS. LEBLANC: We could expect that this time next year, we’ll see that you spent over $20 million. Would you be willing to go over $20 million if need be?
MR. MACLELLAN: Yes, quite frankly, we would. There has always been the perception that there was a cap. With Mike and Screen Nova Scotia, we reiterate that that has never really been the case. So yes, if we eclipse $20 million and we’re into the range that we were at last year - again, since this new fund has come onstream, we haven’t denied any projects that met the eligibility.
MS. LEBLANC: In spite of much lobbying from the film industry, it seems to me from the budget that there is no money for the equity development fund, is that true?
MR. MACLELLAN: Yes, there’s no equity fund at this point. Honestly, in the department, the folks who are focused on film and do some work through NSBI, in consultation with the Department of Business and of course Deputy Bernie Miller, we have a number of conversations around film with Screen Nova Scotia - Mike and his team - just to get a sense as to what would be helpful.
I would love to hear the member’s opinion on this because it seems like there’s a sort of mixed opinion on the value of the equity fund. There are a number of conversations ongoing. One is the equity fund. We have talked about some physical infrastructure that the industry may be looking for to bolster some of their complement for hosting productions and having investors and productions come in that would utilize set facilities for those types of endeavours.
Again, from my personal experience, and I think it’s the same for Deputy Bernie Miller, we really rely on the advice and the direction of Mike Volpe and his team.
MS. LEBLANC: My understanding from my conversations with Screen Nova Scotia and also independent producers is that the film equity fund is essential to the development and the health of the local community. As you know, it’s a way for smaller productions to leverage funding from larger funding agencies, like Telefilm, the Harold Greenberg Fund, and funds like that that are out of Nova Scotia.
Pre-session, in my last conversation with Erika Beatty before she retired from Screen Nova Scotia was that that was their whole focus, the film equity allotment, so I would say . . .
MR. MACLELLAN: This is outside of the normal flow of estimates, but could I ask you a question? I know you’re attuned to this industry.
Do you have any feedback thus far on the Screenwriters Development Fund? I have heard from a few producers about this in recent weeks actually, just around how they would access that. As I’m sure the member knows, that’s a CCH fund, but it’s still part of the same conversation. Does that reach the same type of production that only needs more investment, a larger amount, or is it a different thing entirely?
MS. LEBLANC: My understanding of it is that it is a different thing. It is script development. This is not based on feedback that I have received lately, but my understanding of it when it was announced is that it is for script development, which is a first step. There are so many steps to production green-lighting. It’s once something is going to production that the equity funding becomes essential to leverage the funds from elsewhere. The Script Development Fund is important, too, so we’re happy it’s there.
Going back to your original comment or your comment about the equity funding, one of the other big worries of the producers I have talked to and Screen Nova Scotia is that, within the present Film and Television Production Incentive Fund, there’s an individual production cap of $4 million per production. That didn’t really happen with the Film Tax Credit because it was a tax credit based on labour dollars spent. We’re hearing that it is making our industry non-competitive within the rest of the country. Regardless of what type of incentive fund it is per production, it’s not doing the trick for large productions.
I understand that there was big series that we just lost because of that exact thing. There was a competition between Nova Scotia and Ontario for a series. As you can well imagine, a series is really important to our industry because it’s ongoing work and spending. Between Ontario and Nova Scotia there was about a $1 million gap that needed to be filled. Because of the cap on the incentive fund, Nova Scotia couldn’t go any further, so we didn’t get the series. I can well imagine that that’s happening with lots of productions.
MR. MACLELLAN: I wouldn’t put you on the spot to give the name of that production, but I didn’t even know. I didn’t hear of that before. Inside of the range of $20 million to $22.8 million, where we’ll be in terms of the fund, I’m not aware of - again, the fact that the cap has been applied I know only because The Mist was pretty close to $6 million.
MS. LEBLANC: That was an exception apparently.
MR. MACLELLAN: Yes. Again, these are conversations that I would have. I know from having discussions with you because you’re tied into the industry, of course, and with Mike, that if there are special circumstances, major productions of that nature, or anything unique that doesn’t fit into the box tightly, we can move forward, by all means. For us, it has really been to re-establish a strong relationship with Screen Nova Scotia and recognize the tremendous work that they do. I know I talked about it at length in the previous estimates, but being on scene on Mr. D was an eye-opener for me, it was incredible.
Small and medium-sized productions and operations are critical as well, but to see the big ones take place and to see how many people are impacted by them really is staggering. I don’t know if that $4 million cap would ever be applied. I would certainly be concerned if we lost a major production because of that cap. Again, without breaching confidentiality, if there’s some information you can get me, I would like to pursue that.
MS. LEBLANC: I can’t remember the name of it, but I can ask them. I just met with them yesterday. I’ll just find out the name.
The other thing that is basically making us non-competitive with the rest of Canada right now is the lack of a soundstage. I’m sure you have heard a little bit about this, but we used to have two. Electropolis, down where Nova Scotia Power is, which is now the Discovery Centre, was a massive soundstage, and we had one out in Burnside, I think. Anyway, we don’t really have anywhere to do indoor shooting.
In most larger centres - Toronto for sure, Vancouver for sure, maybe even Montreal, but that’s a little bit out of the industry - they have soundstages. They can shoot year-round. We’re losing a lot of business because of it. I’m wondering if the department is thinking about that.
MR. MACLELLAN: Yes, we’re absolutely thinking about it. We have had discussions with Mike and Marc Almon as well. They’re working on some of the details, but anything that they bring forward is going to be credible. The facts will be checked, and it will be a meticulous application. I know that they have had discussions about a number of different options for locations in metro, and they have also had or are going to initiate discussions with the federal government.
Some funding has materialized, both at the provincial and federal levels, that could tie nicely into a project of that size and of that nature. It’s something that fits within what we’re trying to do. There’s a couple of different options, just thinking off the top of my head. That’s something Invest Nova Scotia would certainly pursue.
I told Mike and Marc to come back to us once they get a little further in their detail and planning, and we would be happy to pursue that.
MS. LEBLANC: Just to be clear, this is not the same thing as Culture Link, which Marc Almon is involved in?
MR. MACLELLAN: No.
MS. LEBLANC: It’s separate. That wouldn’t be enough space.
MR. MACLELLAN: They’re two separate things, for sure.
MS. LEBLANC: NSBI had a performance measure target for last year of increasing the payroll generated by NSBI clients by 15 per cent. I’m just wondering if it reached that target.
MR. MACLELLAN: We don’t have the exact number for the ROI, but the general sense is that we did exceed the targets that were set.
MS. LEBLANC: Do you have any exact numbers for film and television? Do you know if you exceeded the 15 per cent target for film and television in particular?
MR. MACLELLAN: We don’t have any specific targets for these funds. Is there something that you have by way of information to have those targets identified? That was kind of new to us in terms of what the echelon would be. It becomes about the content and the spending but not a specific target.
MS. LEBLANC: I can go further into it in a second. I have lots more questions about money made and hours worked and all that in film and TV.
This is kind of a long line of questioning about the incentive fund. A big question - and we have talked a little bit about it before, but I would love to hear the answer. Why did your government cancel the film and television tax credit and then replace it with an incentive fund? Given what you’ve been saying about how willing you are to invest in the film industry, why was that decision made?
MR. MACLELLAN: Essentially the previous tax credit was simply that. You operate the production and submit the claims. It becomes a percentage of labour. The salaries at various ranges would obviously impact what became the return for the tax credit. You could have higher numbers for lower labour depending on the salary scale and those things. That was part of it.
Really, the conversations that we are privy to - the answer is that it became about planning and budgeting and the fact that we would earmark more Nova Scotia involvement. That was obviously part of it.
One of the things in the thick of the film tax credit equity fund, incentive fund, discussion was around the quickness and turnaround. One of the challenges with the old system was that the turnaround wasn’t great. Then we came to the new incentive fund.
I think it’s fair to say that the transition was a little bit clumsy. I think that we heaped a lot on NSBI, but we didn’t give them the road map for how exactly that would work. I think it sort of worked itself out over time. Again, we take the responsibility for transferring that, and NSBI has done an incredible job getting things stabilized and having an improved relationship with industry. I get that from both sides. Fundamentally, it became about the planning and the budgeting piece and allocating that money based on what we could confirm and identify as Nova Scotia content.
MS. LEBLANC: Could you clarify that part about the Nova Scotia content?
MR. MACLELLAN: The former tax credit was a percentage of labour. The new one has connotations and is sort of tied into what your Nova Scotia content is. What you receive back from the fund is based on Nova Scotia content.
MS. LEBLANC: Can you parse that out then? Is it different numbers if you have Nova Scotia content?
MR. MACLELLAN: It’s Nova Scotia spending, anything that’s spent in Nova Scotia. It’s tied into that. We can probably get some specifics.
MS. LEBLANC: The productions have to demonstrate what they’re going to spend, and then the allocation is based on that?
MR. MACLELLAN: Right and connected to Nova Scotia. I’ll get some clarity on some of those aspects of it.
MS. LEBLANC: I’m wondering - I know in Alberta they have a scoring system. I don’t think we have this here, a scoring system. You get more points if you hire mostly Nova Scotia actors, or you get points for using soundstages or businesses. Is that happening in Nova Scotia right now?
MR. MACLELLAN: There’s a pretty significant breakdown, and I’ll save the committee the time in terms of reading them all. Basically, there are two groupings here.
In the scoring, “content incentives are available separately or cumulatively if the applicable criteria are met.
“A. An additional 1.5 percentage points of all eligible Nova Scotia Costs will be granted for productions in which no less than 60 per cent of all principal performers, actors, stunt performers, and stunt actors are Nova Scotia residents. For greater certainty, background performers are not included in this calculation.
“B. Notwithstanding the foregoing, a further additional 1.5 percentage points of all eligible Nova Scotia Costs will be granted for all productions that meet at least three (3) of the following” criteria. There’s seven, and I’ll just pick a few: productions in which 75 per cent of the post-production work is carried out in Nova Scotia, the principal director is Nova Scotian, or the principal writer is Nova Scotian. If three of those are met, there’s additional points tied in, so I think it could be somewhat similar to the Alberta model you mentioned.
MR. CHAIRMAN: Order, please. Time for the NDP caucus has expired.
I will recognize, for the PC caucus, Ms. Paon.
MS. ALANA PAON: I have some business-related questions, not particularly film- related questions at the moment. I would like to start off with NSBI. I don’t know if you need to change staff around before you get started on that.
There’s $5 million set aside for the Innovation Rebate Program. This specific program did not have any funding attached to it last year. I would really like to know, is this new funding, or has it been reallocated from somewhere else?
MR. MACLELLAN: Yes, this is a new program. It’s one that we have established based on much of the work that NSBI has done in the field, so to speak, talking to private sector participants about what could be transformative or at least helpful in terms of fortifying operations here in the province. The fund breakdown - basically, we will consider covering 25 per cent of capital costs for projects between $2 million and $15 million, again, to the tune of 25 per cent. If a producer is adding production capacity in an innovative way - new equipment, machinery, processing, process operations - that’s the type of things that the eligibility requires. It’s for large-scale manufacturing production between $2 million and $15 million in project costs.
MS. PAON: If I may ask the minister, how does this program differentiate from some of the other programs that NSBI offers?
MR. MACLELLAN: This is the only capital investment program under NSBI. I guess the most popular one, so to speak, the one that’s the most well-known, would be the payroll rebate, which has been around for quite a while now, which obviously covers cost for employees. This is the only one that’s capital specific.
MS. PAON: I’m having quite a bit of a stumbling block in finding a regional breakdown of how NSBI funding has been awarded. Does the department have that? I’m looking specifically for what NSBI has invested in Cape Breton as opposed to the mainland, what NSBI has invested even to each constituency. I would like to have a breakdown of that. Is that available through the department? Surely someone has those numbers.
I’m not specifically looking for a regional quota system or anything like that. I’m generally interested in knowing percentages and successful projects that have gone through and where those projects are located.
MR. MACLELLAN: Last evening - I don’t know if it was with that member, or it may have been the NDP caucus - we got into some of the discussion around NSBI and, more specifically, rural Nova Scotia, the rural economies and how we fund those. Through consultation and work with our department, NSBI has really focused on some of the rural activities around investment, around the rebate programs of course, and around export and small business development.
I’ll give you a breakdown of approved applicants. This is for the export program, those who are sending their goods and services out of Canada, by region: Annapolis County, 2; Antigonish County, 3; Cape Breton County, 18; Cumberland, 3; Colchester, 4; Lunenburg, 23; and Yarmouth, 5. There’s a number by sector as well. We can get you these. It’s just the general synopsis of some of the breakdown.
For the small business program, there has been a number as well in rural areas. Just to take a few: Cape Breton County, 10; Kings County, 5; Lunenburg, 6; Richmond County, 3; and Yarmouth County, 2. Then there’s a breakdown by sectors as well.
Without question, the scope and the focus of NSBI has really changed. I think it has always been the vision and the mandate of NSBI to help everybody, so to speak. With some of these doubled-down efforts around small business in rural Nova Scotia, the export development program - again, thinking about my portfolio of Trade, that has done tremendous work for many of our exporters to get our goods and services out not only under the confines of NAFTA and what we’re sending to the U.S. but also overseas with the emerging markets obviously in Europe, with those trade agreements taking form, and of course the enormous potential that we have getting our materials to China.
With all that being said, I think those numbers are a good start, but you’ll see an exponential growth in the support NSBI gives to rural companies, rural Nova Scotia, just by nature of what our core competencies are. We have to export, or we’re going to stay in neutral for a very long time. Companies are realizing that, and government has realized that. Now we have to do what we can to build those supports around them to make sure they get their goods to their markets on time and with the lowest cost structures possible.
MS. PAON: Will the minister’s department commit to me today that they will make numbers available - not only those just listed? I’m looking for the numbers that would have been invested through NSBI, Innovacorp - basically any kind of Crown Corporation - and where the investment has gone within Nova Scotia. Also, I would like to know a breakdown per constituency as well. I’m looking specifically for Cape Breton and the mainland, but I’m also looking for per constituency as well.
MR. MACLELLAN: The first part of the question is easy. We could certainly do that. It will take a little bit of work. NSBI can do that on their part with respect to the envelopes and the programs we have just listed. Innovacorp would have to do that, obviously, simultaneously. We can get those by region and by breakdown.
When you say constituencies, are you talking provincial constituencies?
MS. PAON: Yes.
MR. MACLELLAN: I don’t know. You would probably have to get the general information and drill down a bit. I don’t think we would have - we would have the breakdown of investments of Glace Bay versus Sydney, but I don’t know if we would have that. I think it would be very much regional and probably by county. We can take a look, and we’ll give you whatever we have. If the particular businesses are listed, then it wouldn’t be hard to find exactly where they’re located.
MS. PAON: Can I ask what kind of timeline I would be looking at before I would receive those kinds of numerics?
MR. MACLELLAN: I don’t know. We could probably get it by the end of this session. It could be much quicker than that. I’m just kind of identifying what would be a reasonable time frame. We’ll have to get Innovacorp to do some of that work and pull these things together and then just try to figure it out.
Is this about tourism investments? Would it be any of the other departmental programs that we have? If we have the business tax threshold and the taxation decisions around that, is that something you would want, as well? Is this just focused entirely on the NSBI and Innovacorp investments? It seems like it’s kind of pan-government.
MS. PAON: This is the minister’s offering. If you wanted to give me further than NSBI or Innovacorp, I’m more than happy for that, as well.
MR. MACLELLAN: I don’t care. It won’t be me doing the work. Don’t worry. Look at the sad faces behind us - they’re the ones who care.
Una and I can talk about what the formally looks like. Again, the NSBI stuff and the Innovacorp stuff gets pretty easy to pull together, but I think we would probably have to draw in Finance and Treasury Board to get some of those other numbers around the taxation implications and across the board. If it’s Graduate to Opportunity, when employers access those programs by county, there would be a little bit of work to be done there. We could figure out what could happen easily and what would need more data mining to get that.
MS. PAON: With regard to Innovacorp, there are program budgets that have been moved from investment functions within Innovacorp to incubation functions. I believe that’s the proper terminology. Can the minister provide some detail on these programs, their funding, and the rationale behind this transfer?
MR. MACLELLAN: I think I will answer generally, and then we can get into specifics on some of the questions.
Basically, the mantra of Innovacorp is find, fund, and foster. Whether it be Volta Labs, the IDEaS Program, or the hubs that we have in Halifax and New Dawn down in Sydney and the related satellite hubs that are coming together pretty quickly across the province, Innovacorp becomes about incubation. That is the right word. It becomes about providing the physical space and also the mentorship, the potential training, the investment advice, the market access, marketing, and that type of advice to get projects from the start-up concept into commercialization, essentially. Innovacorp leads the charge on that.
When you look at Jevon MacDonald, and the people down at Volta who do tremendous work in terms of fostering that growth, it’s an amazing transition. I think that Innovacorp really has led the charge.
For as long as I have been around here, it was kind of hard in the beginning to understand what they did because it was just so specialized. It was certainly over my head in terms of how this whole process works. Then, as you begin to see the success stories and see some of the things that happened at these sites, you see the way that, quite frankly, businesses expand and explode. Whether it’s new age innovative technologies, intellectual property, or artificial intelligence - all these things that are happening here in the province - we are creating a hot bed for innovation and collaboration. It’s frustrating, and we have to be guarded because sometimes these things can get lost in the buzzwords, but it is really happening. It’s happening in a big way here in Nova Scotia.
In opening the centre at New Dawn, there was an eye-opening conversation that I had with one particular proponent of a start-up. Even for my generation, and I’m 39, life became about post-secondary education or community college, some kind of vocational school training, or trades apprenticeship - whatever it is. Our mindset was to get your education foundation, training, whatever it has to be; get a job and stay there for life; build your pension, retire, and have a nest egg. That was kind of what it was all about. Again, that’s not that long ago.
People just don’t think that way anymore. The new age graduate is thinking, what’s my idea? What’s my product or service that allows me the opportunity to hire people, to grow and expand a business, to adapt, and to succeed on the world stage? That’s something that’s new. Believe it or not, Nova Scotia, by way of our innovation programs, is leading that charge. Again, government has a role to play. Innovacorp has been incredible. But this becomes about giving people the tools and harnessing that mindset so that people take risks, go out on their own, and try to operate without a safety net.
Even a decade ago, people would have good ideas - an innovative idea, technology, or what have you. It would fail, and they would go out of business and maybe forget about the dream and go back to work for somebody else. That doesn’t happen anymore.
If you go to Volta or New Dawn and all points in between, innovators and people who are involved in venture capital, the VC players who are out there, take failures and components of those failures and turn them into something else. Idea A may not have worked, but idea B came from that failed idea, and now they’re into a new technology, a new development, a new market. That’s really how this operates.
The member from the NDP was asking a lot about job targets and what the identified and established job numbers are. It’s really not an easy thing to specify because it becomes about making investments, adding some leverage, and getting private sector players on board. Again, that’s not always money. It’s mentorship, guidance, tutelage, to help him get along and just seeing where it goes from there.
We have seen a number of success stories through Innovacorp and through these innovation foundational programs, and I think we’re going to see a lot more. The biggest opportunity that we will see in a lifetime is around the Ocean Supercluster. The province has done a lot to foster oceans development in terms of research, commercialization, how oil and gas and the traditional industries of fisheries and aquaculture are interlinked with the new research, commercialization of equipment, understanding what’s on the ocean floor that we can harness for sale, and what kind of research we can do that ties into the environment.
Obviously, what FORCE is doing in the Bay of Fundy with respect to tidal energy is groundbreaking. There are many conversations taking place about offshore wind technology and how we would harness that by way of offshore floating turbines.
There’s an endless amount of opportunity in the Ocean Supercluster and advancing with oceans. That’s tied into the innovation space. There’s a lot happening.
Again, you could talk about the success stories and the many that have adopted the guidance and the foundation of Innovacorp’s incubation program, but there’s going to be a lot more to come. It’s somewhere we have to be. I don’t want to say it’s intangible because that’s not entirely the case, but sometimes we share in that risk, and we harness that risk. When things work out well, it’s great for the proprietor, it’s great for the entrepreneur, and it’s good for the province.
MS. PAON: I am in agreement with the importance of incubation entrepreneurship and that new grads are being encouraged to come out of whatever program they decide to pursue to be more entrepreneurial. My son has gone through the Dalhousie University business program, and it has a specific leaning towards entrepreneurship. He’s a new business owner - unfortunately not in Nova Scotia but in Toronto at the moment.
Not everyone wants to be an entrepreneur. It’s a risky business. I know, I have been an entrepreneur for most of my life. People who are entrepreneurs, we’re usually serial entrepreneurs, and we don’t give up. There are those people who just want a job. They don’t want to have to go out there and take the risks. They want job security.
I haven’t seen any particular plans for jobs in this budget. What is the government’s plan in this budget for creating jobs for Nova Scotians? It takes a while, obviously, to get a business up and running and through the incubation process. We have thousands of people without jobs in this province. What’s this province doing to actually make certain that they have the best opportunity to get into the workforce? What are we doing today? What’s this government going to be doing today and in the next year for that?
MR. MACLELLAN: Bear with me because this is something that I would never want to turn into the buzzword of government programs. For too long, every Party that has represented government in the province and in this Legislature has really picked winners and losers. That’s something that we have always said, and we watched it happen in every part of this province, by each Party that has been elected government in the last couple decades.
We have cut big cheques to the corporations. Quite frankly, when the money ran out, there was no assurance that the company would stay and survive, and lots of times they didn’t. Not only were we left with the fact that we spent a lot of money to keep jobs going for a relatively short time, but if it was in the industrial base, we were left with legacy liabilities that we’re still stuck with in many cases.
I was happy to be part of the planning that said no more investment in winners and forget about the losers - they’re on their own. It became about the environment. Not to go too long in this soliloquy about fiscal management, but I believe in what we have done, and I think it does make a difference.
Having balanced budgets, I have no doubt that, in a broad sort of intangible way, it impacts consumer confidence. It certainly impacts business confidence. It tells the outside world that your money is safe here to invest. We’re not running large deficits, so we’re not going to do anything that’s going to impose additional costs on businesses, whether that be through monetary tools or through taxation. We’re going to let you make your money, make your profit, take your risk, and apply your business model uninhibited by terrible government spending and necessary government policy to pay the bills.
That’s a big part of it. I won’t stay on this point forever but the fact that major credit agencies across the country - the Parliamentary Budget Office identifies us as only one of two provinces in the federation that is a safe place to put their money. That’s because we’re on a sustainable path.
Quite frankly, that isn’t going to get me 10 votes in Glace Bay, so it’s not going to matter to people. I understand that. I know that when we all do polling, everybody sees the results of that. Nobody really cares about a balanced budget, but they should. One of the messages I have tried to carry the last couple years is that this matters. When we have a surplus, it isn’t about the $30 million that we have in the black; it’s about the fact that we can invest in things that really matter to people.
I look at some of the things we have done, how we are creating the environment to create jobs in Nova Scotia. I think there’s a number of ways. To your previous question, the innovation rebate program and adding a 25 per cent incentive for major producers to reinvest in innovative processes for their plants or facilities is a good thing. We have really taken a keen supporting role in Nova Scotia’s wine industry. We have created a number of different export programs, to support exporting what’s now north of $2 billion in our fisheries. In general, from the Premier and the Cabinet’s perspective, we have been working tremendously hard on advocating for our exports to have a safe place to land as it relates to NAFTA and keep access to those markets in the U.S.
Again, red tape reduction makes a difference. When you save businesses money, when you create an easier program for them in terms of, say, the Registry of Joint Stocks or the Land Registry - those things make a difference for small businesses. Time is money and not having to be tied up doing the bureaucratic red tape of government processes matters.
We’re investing in Graduate to Opportunity and Innovate to Opportunity programs so young people have an ability to stay here. We’re investing in immigration and doubling down on our immigration focus so we can do what we have done, which is actually add people to our population. We’re supporting apprenticeship programs by way of which hours count by way of financial investments in post-secondary student loan debt relief. Government is adding to our ability to make a tax policy that allows small businesses to keep way more money than they could before. Moving that threshold from $350,000 to $500,000 makes a big difference, because when small businesses can keep more of their money, they can hire more people.
One last time, I don’t think we do a good enough job - and this is everybody - explaining the value of tax reductions. The fact that we have half of the population receiving a tax reduction means they have more money in their pockets. It’s just that simple. That matters for people. If we’re doing that for business, if we’re doing that for private citizens, that impacts the bottom line, which means it impacts their position and standing in life. If they’re working, they’re able to keep more money. When businesses realize a tax break, they hire people.
There are all kinds of things that aren’t headline news. The member for Sackville-Cobequid always says that when you’re operating an $11 billion budget, there is always good news for somebody, and I agree with that. At the end of the day, we have done some things, we have made some tough decisions, and we have taken our criticism for it. Where we are in terms of the fiscal health of this province matters to people. It’s the number one driver, in my opinion, for giving us the ability to create that platform and environment to keep people home and create work. We didn’t do direct hiring programs because they simply don’t work, and we have seen 20 years of that in this province and right across the board, but we have done some good things on the fiscal side.
I would close with this. Again, as part of fiscal management, we’re spending a staggering amount of money in our program for Transportation and Infrastructure Renewal facilities and buildings. The amount of people and jobs associated with the Road Builders of Nova Scotia is outstanding.
Our current capital plan, the one that we have been on and tracked for the last couple of years, was impressive in its own right. The fact is, we have added major components of our highway grid to that plan. Safety is paramount, that’s what this is about, but it puts a lot of people to work. The fact that we’re doubling down and making major investments in the infrastructure of our hospitals - the QEII precinct being one - and collaborative centres across the province, and the commitment to schools and the things we’re doing there - those things put people to work.
Again, we talked about payroll rebates and what happens with Nova Scotia Business Inc. They have lots more to come. I think that when you look at all the collective things that happen, we have set a pretty good tone for job creation and job stability. It’s our intent to stay on that path.
MS. PAON: As I’m sitting here and listening to your answer and not wanting to pick winners and losers - and I’m sure that’s not the minister’s intention - it’s difficult to sit here and not say anything about Bill No. 85, but I’m going to mind my Ps and Qs about that one.
Although I will say this.
MR. MACLELLAN: Go ahead, this is the time, by all means.
MS. PAON: I will say that it’s very difficult to represent my constituency. As you know, it includes CBRM, Port Hawkesbury, and Richmond. I’m curious to know how the minister thinks that this bill will not actually be pitting one area against the other.
Before you answer that, I will say that in the Strait area it’s difficult not to feel like there is the picking of winners and losers with this government. We had an opportunity with an offshore base dismantling in Point Tupper which didn’t come to fruition. Looking at a report in front of me, it actually does say that it was a feasible option. However, due to construction costs and schedule risk disadvantages versus the international alternative, it wasn’t recommended. There was an opportunity there for us to actually have something lasting that would have been a positive project for the Strait of Canso. I’m not talking about Richmond, which I represent in Port Hawkesbury. I’m talking about the entire Strait, the other side of the Causeway as well.
It’s also difficult not to feel like we’re on the losing end with this government when it comes to lack of leadership, from my perspective, really fighting to make certain that Energy East didn’t stall at the Quebec border because environmental regulations were changed halfway through the process.
It’s also difficult not to feel like we’re a loser with this government in the Strait area when it really does seem from the optics that one port development project is being pitted against the other and being given an advantage against the other. I have municipalities calling me and saying, perhaps we should all have an opportunity to offer our lands at less than fair market value. Where does that put us as a province if we start selling off portions of our province? Where does that put us as well as far as a business model if an investor can’t afford to purchase land to begin with for a port development project? We have one down in our neck of the woods in the Strait that they have paid fair market value for.
I would like to know how you feel that this is fair. I’m going to ask that question. I may get my fingers rapped later, but gosh, I’m asking that question right now.
MR. MACLELLAN: I think it’s extremely fair. I know that divisive politics have been thrown around, so I’m not going to try to flip the tables on you or your caucus. We’re all better than that, so that’s not my intent here.
Here’s what I see - backing up, and I’ll get to a few of your other points about the Strait. I have had the opportunity to follow the port file for the province for the last number of years. That’s everybody - Milford, Sydney, Halifax, and the smaller ports as well, through various means, but talking about these particular ports.
The conversation around the Port of Sydney and the Port of Milford, but I can certainly speak to the Port of Sydney directly - this has literally been a 20-year conversation. The people who started it two decades ago said, look, we’re not even close to this post-Panamax, 20,000-TEU vessel space that we’re going to be in. When we get there, this will be a tremendous opportunity. All these things were conversations that took place over decades.
Fast-forward to 2014, and we had an issue with the Cape Breton rail line. There was a threat of abandonment, and that really kick-started the government involvement in the rail piece. Connected to that was all three levels of government deciding, a few years earlier, to dredge Sydney Harbour for exactly this reason. There was a history that led up to this point.
The fact of the matter is, I got so tired of everybody having an opinion on which port. When I said I got tired of it, this was more about the Sydney piece - it’s going to happen, it’ll never happen, it’s a pipe dream, it’s ridiculous, it’s going to be the first one out of the gate. I took it upon myself, not listening to any people there, not listening to anybody anywhere, to try to figure out how real this was.
I was invited by the International Longshoremen’s Association, by Peter Gillis, to go down to the ports of New Jersey, Philadelphia, and New York City to talk to those representatives about the port file and how it relates to the Eastern Seaboard. In those three days, I could not fathom that I would have learned that much about the explosion of growth in container port access and containerization globally because of China, India, and other developing nations and the massive trade opportunities that come along with those. They are so congested that they really have no alternatives but to find an open space on the Eastern Seaboard.
In Philadelphia, their depths are in feet what ours are in metres. I’m talking about all Nova Scotia, not just one. Their ability to have land transportation logistics around rail is so congested now that they have nowhere to go - any of them. In those three independent ports, my conversations always led to a port coming to the Eastern Seaboard. They have different opinions on which one is the right one, but make no mistake, it is going to happen. We need an open footprint for this to materialize. I left that trip with a completely different perspective about the opportunities here.
I came back and spoke to Cabinet about the experience. Our decision took place even before that, but it was only cemented after that trip. It was that we are not going to build a port for anybody. As I said, we’re not going to pick winners and losers. We are not going to do that.
However, I had a specific conversation with proponents from each of the three ports. If there is something specific that we can do - if it’s a rail spur or if it’s some kind of infrastructure buildup - then bring it forward, and let’s have these conversations. Halifax has a number of different challenges, as much as they do tremendous work with port movement, and they are a player in the game now. They have issues, and there were some musings about what the government’s role potentially could be in this.
I have offered whatever I can do directly to all three proponents. You want me to go somewhere and meet somebody? You want me to get on a plane and go to a port to have this discussion? I am willing to do it. There will be nobody devastated in Sydney if the Melford Container Port goes - not a person. It’s still good for us (Interruption) Maybe one, the member says. But outside of that . . .
MR. CHAIRMAN: Order, please. I just want to remind all members around the table that there is a bill before the House. That bill was not called. That is not what we are discussing.
I have showed great leniency in this discussion, and I will allow it. In saying that, I would suggest that the language that we are using in the discussion is vitally important where the bill has not been called. Consider that when questioning and answering. That just keeps us within the Rules of the Legislature.
MR. MACLELLAN: Thank you, Mr. Chairman. I will get towards the end, from a business lens. At the end of the day, we have an opportunity as a province. What came before us was about one particular municipal unit asking for something specific.
From a business perspective and from the private sector entity - this is where I will end to keep it tied into business and not dive too much into Bill No. 85. The land portion of a container port program is not going to be the game-changer that gets somebody a port. I have learned it, and I have seen it. There is so much to it, the staggering investment, the build-up, and this is about the business aspect of our province.
Of everything that has to go into a container port, which would be great for the economy of Nova Scotia, securing land is only one piece of that. The fact is that there are three ports, and some are in different places. I get that, but this is about giving opportunities for certain municipalities to have the freedom. It isn’t picking one over the other, so I don’t believe it’s that.
Out of respect for you, Mr. Chairman, I don’t want to dive too much into this. We will have an opportunity to speak about that again. I’m confident in where we are.
Again, the member’s point is about fairness and equity. I think we have tremendous opportunity in the Strait. I have had the absolute privilege of dealing with representatives from Goldboro LNG. I’ve had a fascinating learning curve as it relates to the Goldboro Pieridae project, as well as the Bear Head officials. The opportunities there are endless. Like the example that the member referenced, we have given that same indication to those proponents.
What can we do? We’re not going to build an LNG plant, and no one has asked that, by the way, but what can we do in our capacity as a province to help with infrastructure and to help with policy? What is our role here? There is tremendous opportunity in the Strait. We’ll be part of those discussions. We have always offered to.
The only other thing about picking winners and losers - I’ll end with this. I know the member for Inverness was there for the conversation, and I think that may be it around the table. Port Hawkesbury Paper was a significant investment by the NDP a number of years back. That has been a success. What Marc Dube and his team have done at Port Hawkesbury Paper is all on them, how they managed the market development of their project and how they managed their relationship as it relates to trade with the U.S. They have had some battles, but they have handled it intelligently. They have been very open with respect to communications with government about their positions, and they have been doing great things. I can’t imagine Port Hawkesbury or the Strait region without Port Hawkesbury Paper. In direct jobs and indirect jobs, it has been an incredible thing.
There’s an example for the Strait that was a favourable choice of picking economic development projects. Again, not to digress and get negative, but the Liverpool Resolute Paper wasn’t such a successful decision. DSME in Trenton wasn’t such a successful decision.
Again, governments come in, they identify what their philosophies are going to be to the public, the public votes on that, and they execute the plan that they said they were going to execute. We said that we would get away from the winners and losers concept and, rather, set the tone and set the environment. I think that’s what we have done.
I’ll end it with that and put it back to the member. I think that we did get away from picking winners and losers. I don’t want the member to think that we have identified the Strait as an area that we’re not going to help or that we’re going to harm, because that’s just not the case.
MS. PAON: I also want to mention that I do believe it was a great investment for us to make certain that Port Hawkesbury Paper continues. They have been doing some fantastic work on this tariff situation that they have had to deal with over the years. I will also state that it’s the people who have suffered actually in that whole scenario. It’s also the economy of the Strait that suffered there as well. Who we don’t talk about very much any longer, but who I see and receive phone calls from on a regular basis are the pensioners who lost out when Stora Enso went insolvent.
We have 9 million spending dollars that have disappeared out of the Strait area. That’s not just the Strait. That’s in Richmond County. That’s out in Inverness. That’s the whole area. That’s a lot of money for anybody but for our area specifically. I would like to put that out there and put on the record that it’s a long-standing problem that continues to see closures in businesses because that money is not there to spend any longer. That equates the doors and cars and all kinds of things that would have been purchased.
With that, minister, I really appreciate your candour. I always feel that you try to give a straight and meaningful answer when I ask you questions, both in the House and within this process. I look forward to what we discussed as far as numbers for Innovacorp, NSBI, and further that you can make available to me. I want to thank you for this opportunity to ask you some questions, and I look forward to being able to work with you further.
MR. CHAIRMAN: Ms. Leblanc, do you have further questioning?
MS. SUSAN LEBLANC: I sure do.
MR. CHAIRMAN: I will now recognize, for the NDP, Ms. Leblanc.
MS. LEBLANC: We were talking about the Film Tax Credit. I had asked you why you cancelled it, I think. Then you said it was complicated and difficult to budget around and the quickness of the turnaround. Was there any thought that it was too expensive?
MR. MACLELLAN: Quite frankly, looking at the comparative budget year over year from the new fund to the previous credit, they’re obviously in the same ballpark. I honestly wasn’t at all involved in the discussions about any of it. This is all information that I’m getting a couple of years out. I was at the Department of Transportation and Infrastructure Renewal at that point and really wasn’t part of any of the conversations around the tax credit, the shift to the new fund, any of the rationale. I didn’t know Marc Almon or Mike Volpe at that point whatsoever, so I can’t really attest to what the thought was around the cost or it being too expensive, so to speak.
MS. LEBLANC: The government maintained the tax credit model for animated productions. Can you explain why that was maintained where it was not for film and TV?
MR. MACLELLAN: Just a clarification from the member - is it about the number itself or just the tax credit? Is it the overall budget, or was it the difference?
MS. LEBLANC: I’m just wondering why it was okay to cut the Film Tax Credit, but you retained the tax credit for the animation industry.
MR. MACLELLAN: I think you’re comparing one to the other, but just for information on that clarification - and I’m sure you already know - the digital media tax credit was the previous one that was tied into gaming and that sort of space. The new one, the Digital Animation Tax Credit, is more about screen. I think DHX would probably be the example of the one that would use that.
Same idea, that was altered as well. Again, I wasn’t at the exact conversations that changed that, but as in the previous answer I gave you about why the difference, it just became more about the planning and the budgeting and the Nova Scotia content. Really, that was the difference.
I guess that was the only switch from the original gaming tax credit to the new one. It was just around that component of screen and what the functions were in terms of screen versus the gaming space.
MS. LEBLANC: Let me just clarify. We have an animation tax credit now, like DHX would be using to make their work?
MR. MACLELLAN: Right.
MS. LEBLANC: That’s a tax credit where it’s a credit on labour - is that correct? It’s for Nova Scotia animation jobs, the same way the tax credit used to work for the film industry.
MR. MACLELLAN: Yes, the same criteria.
MS. LEBLANC: I’m just going to put it out there that that system seems to be working, but the old one wasn’t working for some reason. What’s the difference?
MR. MACLELLAN: I’m sure the member is familiar with some of this and probably would have heard it in the past. There was a bit of distinction between the Digital Animation Tax Credit and the former tax credit which is now the fund. In gaming, in the media, or even on the screen, the animation space - a lot of the investment in that particular envelope is from companies that are here and operating year-round.
There was a different sort of lens on those, according to the officials who administer this now, versus the old tax credit where they establish shell companies for a project. This isn’t sort of an insult in any way - it makes perfect sense. There’s nothing wrong with that.
But because these companies operated within the province for a definitive time, the application of those funds is a bit different when it’s a shell company. By way of that, I think with the new fund and the fact that there is more Nova Scotia involvement, and we talked about some of the criteria earlier, it almost encourages incorporation in the province versus what the old tax credit would have done.
I think there is a distinction there, and I get what your question is. You didn’t tinker with one too much, but you completely changed the other. From my perspective, given the quick hit on the explanation, it just became about the sort of consistent Nova Scotia content versus the fact that these companies would form on a project basis.
MS. LEBLANC: I like hearing that you want to support Nova Scotia business. I get that. The fact is that if DHX had picked up and left, we would have been without a lot of jobs and a lot of money spent in this province. They’re a huge corporation now, and they’re a sign of our successful industry.
I’m getting off track of my question here, and I see what you’re saying. As a performer who would get a day on a movie of the week or whatever, as opposed to stars being brought in from Toronto, New York, and L.A., it’s hard to take when these big movies are coming in. Nonetheless, the people who work on those films each day are taxpaying workers in this province who are now out of jobs because of those companies. I wonder if there’s a scenario in which we could reward local production companies for staying around, helping them achieve setting up a shop and take on more of a DHX type thing. There are lots of local producers, and those are companies that are here, made by locals who employ local people. Anyway, that’s just a sidebar.
I want to get into the job part now. I heard you talking to the member for Cape Breton-Richmond about jobs. I have seen Nova Scotia talk a lot about our wine industry. We talk about our beer industry, although I could talk a little bit more about that.
The fact is that hours worked in the film industry have dropped significantly. The year that the tax credit was cut, 2015, there was a massive drop. Then it went up a little bit with The Mist, which is a clear example of why it is good to have a series in. Then it dropped and dropped. We have not yet achieved anywhere near the hours worked or the money made by the film industry in Nova Scotia.
If we’re big on jobs, then is there not a reason to figure out a way to either simplify the tax credit or make the labour aspect of the incentive fund more prominent? When you talked about the labour aspect, part of the new fund is to reward Nova Scotians. I just want to clarify, is one of the points labour, and then another point is that you get goods and services? Or is it labour and goods and services?
MR. MACLELLAN: It is based on the total spend, but I’ll take a look through the criteria of those seven pieces. It’s a combination of all those things you mentioned.
To your general point - and I feel the member for Truro-Bible Hill-Millbrook- Salmon River, who very much lived it back in 2015. Again, I wasn’t making those decisions, but I was part of the Cabinet that did it, so I’m not shirking responsibility. Regardless of what happened, there was an impact.
I’m having the conversations and the interactions with Mike and Marc. I had a buddy who was buying a vehicle, a private sale up here, and went to pick up a licence plate for him. A guy named Forbes MacDonald, who I had never met before, is a huge camera guy. He said, I know who you are, and then we had an hour-long conversation in his garage.
Again, I know you’ve heard this story umpteen times, but the day I spent on the set of Mr. D changed my thought, and that has impacts. Talk about producers and big productions and the big dollars and bringing in A-listers is great. I know there’s going to be a couple in Yarmouth here in the near future.
This is about the individual people, and I get it. I have seen it. To answer the question, there’s a combination.
Some of this is perception. Quite frankly, and I know Mike wouldn’t mind me saying this, part of this is giving him some kind of tool so that he can go and say, look Hollywood, Nova Scotia is in this game - they’re listening, and we’re getting things done. There’s a symbolic part of it too.
That doesn’t overshadow the functional part of an equity fund or investing in a soundstage or investing in some of that physical infrastructure.
I mentioned symbolism and the perception of it all. The whole conversation about the cap, it’s pretty fair to say that when you look at the estimates and then the budget, it’s hard to say that we had a cap. We didn’t turn anybody away, so I don’t know where the cap would be. In other jurisdictions that would be held up as some of the best in the country, they have caps, and there’s a competitive nature within their film tax credit. We didn’t follow that, and quite frankly, it’s in the budget. The spends are similar, from the tax credit to now the equity fund. It’s not as if - you asked that question earlier - this was some kind of tremendous cost saving either.
Overarchingly, for me it becomes about working on the relationship part of it. What strategic tools can we provide that help Screen Nova Scotia go out there and sell us as a viable place again? I think the productions that come forward, what’s happening with Willem Dafoe and - who is that guy from the vampire movies - Robert Pattinson, those guys coming to Yarmouth, incredible. (Interruption) Vampire movies was the best I could do.
Those things matter. It’s a relationship-building thing and the establishment of trust. We have willing participants on both sides, and I think we’ll get there. There is no question that there are some symbolic things we can do, and then there’s actual investment that’s going to help as well.
MS. LEBLANC: My colleague here was inside the House. I was outside the House in the protests because it was my livelihood that was on the line. It’s very hard to hear that the spending is the same, but the job creation has dropped significantly - in some years 60 per cent. Therefore, that tax base is gone, and the economic spinoffs from that are gone. I just can’t see how the government can justify the change.
The spending is the same, and everything else is equal, but all those jobs are lost. We know that we’re not competitive anymore. We lost that year. The industries in Toronto right now are spilling productions. They cannot manage all the productions that they have in Ontario, Alberta, and B.C., and we’re not anywhere near the level of production we were at.
We might be spending the same amount of money, but we’re not at the production level. Again, I know this is the work of Screen Nova Scotia, but it’s unfortunate that all of those resources and that energy of Mike and Erika and now Laura have to be spent on telling people we’re open for business when we were always open for business, and then business shut down. I’m not going to hammer it anymore. I’m going to ask some more specific questions.
The Department of Business invests in all kinds of payroll rebates for different companies. This is an honest-to-God question because I don’t understand the difference. Can you explain the difference in a payroll rebate for one of the latest announcements that you made, how that works differently than a film tax credit the way it used to be?
MR. MACLELLAN: We’re just going to get clarification on the number, but basically the payroll rebates are a negotiated agreement with NSBI in this case. A company that applies for a payroll rebate says, we’re going to grow by X amount. That growth would include X number of FTEs, so full-time employment numbers are the key factor, over a certain time period. We would make the commitment that, should those job numbers materialize, we’ll give you a percentage back. The negotiated parameters are between 5 per cent and 10 per cent for NSBI.
The tax credit, equity funds, are criteria based. If you hit these criteria, you meet it. The base is around 25 per cent, and I think the max is 32 per cent. That’s the difference.
MS. LEBLANC: Just to clarify that. I have company, I come in, and I say I’m hiring 10 people right now. Does the government give rebates on those first 10 jobs or only if they meet targets of growth?
MR. MACLELLAN: That would be in the negotiated settlement, so whatever it is. It could be a start-up, and they’re going to ramp up to 60 jobs. If they hit 50, then they get the payroll rebate on those additional 10. It’s all negotiated. Whatever the number looks like is what has been negotiated. The platform is general, but the agreements are always very specific.
MS. LEBLANC: Going back to budget numbers, how much of this year’s budget for NSBI is allocated to the Eastlink TV Independent Production Fund?
MR. MACLELLAN: None of that is government money. That is the company’s money. They just give it to us to administer.
MS. LEBLANC: But there is money in the budget this year for it?
MR MACLELLAN: We don’t have the specific numbers. We get that in - is it normally in November? It came out last November.
For that fund, we put out a call for applications in the summer and the Fall. Based on that, the company will decide and give us that allocation for that year. They go through the same process. That was done in November for the current fiscal year. Then for next year, the budget that we are working on now, they will go through the same process again.
MS. LEBLANC: There is definitely money from Eastlink for filmmakers for 2018-19?
MR. MACLELLAN: Yes. We are expecting that money to come.
MS. LEBLANC: You don’t know how much?
MR. MACLELLAN: No.
MS. LEBLANC: Do you know how much it was last year?
MR. MACLELLAN: It was $455,400.
MS. LEBLANC: Is it worth asking you some specific questions about the fund?
MR. MACLELLAN: Sure.
MS. LEBLANC: In the criteria for the Eastlink fund, it says you get points for labour, goods, and services. That’s all one sentence, all one category. Does that mean it’s an all-in spend, as well?
MR. MACLELLAN: The Eastlink fund is an equity fund, and it’s structured as competitive. They compete based on criteria. The Nova Scotia labour component is one of those, but there is a set listing of criteria that Eastlink applies.
MS. LEBLANC: Right. I saw that list. On the website, the registration thing or the application and guidelines says, “labour, goods and services.” Is that one category? As long as I spend money on labour, goods, or services in Nova Scotia, or is it, labour and goods and services? I know this is semantics, but it’s a very important difference. Is it a choice between labour and goods and services? That’s the question.
MR. MACLELLAN: Our sense is that it is not distinct. It’s the all-in spend. It’s basically whatever that total amount is.
Just for the record, I’ll give you the numbers. The $455,400 was three projects: Addison, Season II, produced by Edison 2 Productions, was $207,000; Forgive Me, Season 3, produced by Emotion Pictures Inc., was $41,400; and Mr. D, Season 7, produced by Mr. D S7 Productions Limited, was $207,000. That’s the breakdown.
MS. LEBLANC: Back to the regular budget, I’m wondering, how much money is allocated to the Digital Animation Tax Credit this year?
MR. MACLELLAN: We can try to get that number, but that’s the Department of Finance and Treasury Board.
MS. LEBLANC: That’s not run through NSBI at all? Okay. Sorry for that confusion.
We have already talked about this a little bit, but based on statistics from IATSE and the Directors Guild of Canada, it seems like we have significantly fewer film and television industry jobs. Does that concern you?
MR. MACLELLAN: Yes, for sure. Look, any jobs impacted in any slowdown concern me, no question about it. We want as many Nova Scotians as possible working here and staying here and not going anywhere. It always does.
MS. LEBLANC: I’m wondering if your department has any plans to make changes, now that we have looked at several years, to the incentive fund in an effort to support more local jobs?
MR. MACLELLAN: Quite frankly, the department is always open to the conversations that we’re going to have around the incentive fund. I know that Kent Roberts has been the lead in discussions with Screen Nova Scotia prior to my coming on at the Department of Business and worked with my predecessor, Minister Furey. I have touched on this in most of the answers that I’ve given around the film fund - I really take my lead from Mike. Anything that he provides, I take at face value.
I don’t know the industry specifically to the point to say who is the best and who is not the best, but I can’t imagine that somebody would have more depth. I know that there’s Geoff D’Eon and lots of great people out there. Mike just seems to know not only the industry and the history, obviously, but I think he appreciates what works and what’s important. He has always been fair to indicate that he understands where government is, but there’s a few things we could do.
Working with Mike, the department and NSBI are always open to any changes or any input we want to have. This will come about conversations that come from Mike, Deputy Minister Bernie Miller, and myself, and then we go from there. We’re always open to listen, and we take his advice for what it’s worth, which is a lot.
MS. LEBLANC: I agree. He has a great reputation in our community. I wouldn’t stop consulting with him, but I would ask you right here and right now if you will commit to also sitting down with the unions.
Mike is a producer. We need strong producers in Nova Scotia because we won’t have productions without them. We also need to recognize that there are differences in value, in some cases, between producers and the labour, the workers, on these productions.
We can’t have productions if we don’t have the workers. If we continue to have workers not working, they are leaving. You need to sit down with IATSE 849, with the Directors Guild of Canada, and with ACTRA. They have a lot to say on this too.
Screen Nova Scotia largely speaks for the producers, and it’s important that you hear all sides of it, I would suggest, with respect.
MR. MACLELLAN: I don’t have an issue with that. That would be fine. Again, I’m not suggesting that you are saying this isn’t the case, but Mike does a good job of laying it out there across the board. It wouldn’t be just about Screen Nova Scotia’s interests. I think it’s about everybody’s interests. Again, I am not suggesting you are not believing in that. But sure, I’ll talk to anybody.
MS. LEBLANC: Great, I’m happy to hear that.
I’m wondering if you have done any work with Communities, Culture and Heritage to see if the loss of the Film Tax Credit has had any ripple effects in the other arts and culture industries.
MR. MACLELLAN: No, we haven’t. Again, the overlap with Communities, Culture and Heritage has been the writing fund. That has been the biggest part of our discussions.
We didn’t look in the rear-view mirror too much, coming into the new portfolios last summer. We got set up in around June. We were working on the film file and the fund and where we were going with it. It just made sense that there be some money that we would allocate directly to Screen Nova Scotia through Communities, Culture and Heritage. Again, it was Mike who really spearheaded a lot of those conversations to put that particular fund together. Then we have the film incentive fund vis-à-vis NSBI. We didn’t talk about that aspect of Communities, Culture and Heritage and film and screen work in this province, but we’re working together on the solutions and how we can support the industry.
MS. LEBLANC: Looking at the productions that have been funded this year, it seems to me, with some exceptions, that there’s a good amount of documentaries and not reality shows but lifestyle shows that are being funded by the new fund. With documentaries, we have significantly smaller crews, and we have way less actors. Even when there’s production happening, it’s at a smaller scale, and the economic spinoffs are not as great.
I’m wondering if you can speak to that and if there’s any suspected reason why those productions are being funded and other types of productions - I’m not necessarily saying they’re not being funded because you said you haven’t turned anyone away, but why they’re not even coming to the table.
MR. MACLELLAN: It’s certainly a difficult question. To drill down into the industry, the member could probably figure out by talking to people if there is a rationale for that. We really just deal with which producers come forward and which applications are received. Again, in the feedback I have received, I have never heard that. It’s very interesting. I didn’t even think of that being a case in terms of what was being put forth and what was being pursued and which wasn’t - the larger scale, more people, more actors and actresses, and more skilled people as opposed to documentaries, which would be less of that. I really didn’t even appreciate that that was a distinction that has been occurring over the last couple of years. I certainly don’t have any information on that. We operate within the applications that come forward.
MS. LEBLANC: I mentioned earlier that we know that the film industries in Ontario and B.C. are booming right now. There are some productions that are largely shooting there for a variety of reasons and then coming here to do exteriors for a couple of days and then leaving again, but that’s about it. I’m wondering if your department has done any analysis to compare our competitiveness with other provinces and where we can go to regain the edge that we had on production.
MR. MACLELLAN: I guess the short answer is, no, we haven’t done any analysis on that. The deputy and I pay close attention to what is happening in other provinces and what the spend is going to look like now and what the future investment is. Again, this is just me kind of speaking off the cuff here.
It’s one of those systems, one of those environments and industries, where the more you can allocate towards it, clearly the more productions and the larger productions you’re going to bring in. That’s pretty obvious. I think that other provinces are doing it differently, and I know there is a variety of structures for the funds. It becomes about allocating as much as you can, getting that production here, and then hoping that they return and that good word spreads. Every province is doing that. It is extremely competitive.
A part of that is what your global investment is. If it’s $22 million or higher than that in other places, if they have an equity fund, or if the competitive structure is different, that means different things for producers and for the sector.
The other part of it is the perception issue and the fact that there is a bit of a rebuilding of the confidence here, which is an added challenge for our people in the industry across the board.
MS. LEBLANC: Do you know how many films and television series have been funded by the new fund to date?
MR. MACLELLAN: Since the fund started in July 2015, there have been 89 projects approved for a total funding commitment of $39.2 million, and the Nova Scotia expenditure on that was $139.8 million as of March 21st, so this week.
MS. LEBLANC: What was the average funding amount per production? Do you know that? Someone in this room can do that pretty quickly, I’m sure.
MR. MACLELLAN: The average that’s claimed by the applications, the 89, is 30 per cent. I said before that it’s between 25 per cent and 32 per cent. The average is 30 per cent. I was going to race to do the same calculation and just divide the total number spent by the 89, which would give you that number, but it makes sense that the larger projects would obviously skew that. The Mist, for example, which was $5.9 million, $6 million, would be a big part of that. That’s the skewing, but that would still give you the average. You could sort of take out some of those outliers and get the average, but again in terms of percentage, it lands on 30 per cent.
MS. LEBLANC: Does the department track how many Nova Scotians are hired by each production?
MR. MACLELLAN: No.
MS. LEBLANC: Would you be willing to begin doing that?
MR. MACLELLAN: I knew there was a lag. The industry always warned me that if something had an impact, positive or negative, you wouldn’t feel it for a couple years later, and it actually makes sense. Even this indicates that. Of the 89 projects since July 2015, only 12 are finalized and completely settled. In other words, we can tabulate, by looking at those 12, how much of that expense is connected to labour costs and the actual number of employees, workers, who are on those specific jobs.
We’re a very small portion of the 89, and sort of completed that process where we could give those numbers. We don’t necessarily have them yet. We will be able to provide those over time as these come in.
MS. LEBLANC: You would commit to collecting that information from the producers so that we have it on record? It is pretty simple.
MR. MACLELLAN: Yes. It is mandatory, so we will do that for sure.
MS. LEBLANC: Then you do track? You just don’t have the wrapped productions yet.
MR. MACLELLAN: Yes. We just don’t have it yet. We will.
MS. LEBLANC: Awesome. That’s great.
Can you compare the tax credit and the incentive fund, the return that the government gets on each dollar? Have you done that yet, the return on investment? To clarify, I mean in terms of dollars spent by the productions in Nova Scotia.
MR. MACLELLAN: We don’t have that. We haven’t done that sort of calculation, at this point. We would have to dive deep into some of these things and, again, get all that information from the 89 before we could provide any meaningful data on that.
MS. LEBLANC: How much time?
MR. CHAIRMAN: You have about 19 minutes.
MS. LEBLANC: You’re probably not going to be able to do this, but I’m just going to ask it. Comparing the tax credit and the incentive fund, how would you compare the per-dollar return the government gets in terms of dollars spent by the productions, specifically on wages? I gather you probably can’t do that.
MR. MACLELLAN: No, we can’t.
MS. LEBLANC: Yet. Can you provide how much money the government has spent on production funding each year for the past five years through the tax credit or the incentive fund so that we can see the trend through the switch from the tax to the incentive fund?
MR. MACLELLAN: The tax credit data information is warehoused in Finance, so we would have to get that from them. We’re still two and a half years into the new fund. Again, with the 12 of 89 complete, we don’t have all of that tabulated. We don’t have access to that information at this point.
MS. LEBLANC: But you will provide it once you have access to it?
MR. MACLELLAN: Yes.
MS. LEBLANC: This is the same kind of questioning. Can you provide how many work hours were created for Nova Scotians by hiring done by film or television productions receiving government funding so that we can see the trend on hours worked?
MR. MACLELLAN: It’s the same thing. We need all of that from the 89.
MS. LEBLANC: Can you provide the total amount spent in Nova Scotia by film and television productions so that we can see the trend and the impact of the switch of the funds? That would be the total amount spent in Nova Scotia, not necessarily on labour.
MR. MACLELLAN: The total Nova Scotia expenditure that is eligible is $139 million. For the labour piece, we would have to do some heavy extraction and wait until the final numbers are all tabulated.
MS. LEBLANC: That’s from the beginning of the fund?
MR. MACLELLAN: Yes, July 2015.
MS. LEBLANC: Can you provide any estimates of the economic spinoff effects of the incentive fund for the last fiscal year? Are you tracking those numbers, in terms of hotels, car rentals, lumber, et cetera?
MR. MACLELLAN: Sorry, you asked for the last year?
MS. LEBLANC: Yes.
MR. MACLELLAN: Yes, it’s 47. In 2017-18, there were 47 applications and a total funding commitment of $14.8 million, based on a projected Nova Scotia expenditure of $50.09 million.
MS. LEBLANC: Just to clarify, a lot of that allocation might not have actually happened yet. That is money allocated for productions that may not have even gone to camera yet. Is that correct?
MR. MACLELLAN: Yes. It is committed, not allocated.
MS. LEBLANC: Do you believe, minister, that the new incentive fund provides adequate financial support to smaller Nova Scotian productions? Can you provide us with a list of small Nova Scotia equity productions that have been supported by the new fund?
I guess smaller would be defined by $1 million dollars or less - but less than $1 million doesn’t qualify. Is that correct?
MR. MACLELLAN: We can provide a list of companies that are in those small amounts. Can we break them down under a million? Would we have those? (Interruption) Yes, we can check on them.
MS. LEBLANC: Thank you very much.
I just want to reiterate how much I appreciate you listening to all of that and answering the questions you could. Also, I appreciate your commitment to meet with the labour unions in the film industry. I think it would be meaningful for them and important.
MR. MACLELLAN: Sure, you can come along.
MS. LEBLANC: I would love to. I’m done.
MR. CHAIRMAN: Order, please. There are no further questions.
Minister I would invite you to read any closing comments you have.
MR. MACLELLAN: I don’t have any comments, but I would like to thank the honourable members for asking questions last night and tonight. They were all very fair and reasonable, based on important things that matter to all of us. We do appreciate the candour and the respect. The information-sharing was good.
I do appreciate that, and I’m looking forward to more of the same with Energy.
MR. CHAIRMAN: Shall Resolution E2 stand?
Resolution E2 stands.
Resolution E45 - Resolved, that the business plans of Tourism Nova Scotia, the Nova Scotia Innovation Corporation (Innovacorp), and the Nova Scotia Business Incorporated, be approved.
MR. CHAIRMAN: Shall Resolution E45 carry?
Resolution E45 is carried.
We will take a short break, minister, and your staff from the Department of Energy are just outside waiting. We’ll take a few minutes to change things up. We’ll recess for just a few minutes.
[4:52 p.m. The subcommittee recessed.]
[5:02 p.m. The subcommittee reconvened.]
MR. CHAIRMAN: Order, please. Let’s get started with the Budget Estimates of the Department of Energy.
Resolution E6 - Resolved, that a sum not exceeding $31,462,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Energy, pursuant to the Estimate.
MR. CHAIRMAN: I will welcome the minister back and give him the chance to introduce staff and make opening comments. Minister, the floor is yours.
HON. GEOFF MACLELLAN: I thank the honourable members on both sides for being here for this estimates process as we flip to the Department of Energy. I’ll just introduce the good folks that I have here, two staff members. To my left, I have Kim Himmelman, Director of Regulatory and Strategic Policy; and to my right, Remi MacDonell, Manager of Financial Services.
We also have a number of staff from the Department of Energy. Most of them are experts. We also have Simon d’Entremont, who is the Deputy Minister (Interruption) Just kidding, buddy. He’s an expert too. Where did everybody go? I lost all my people. We’re a lean team at Energy. We’re strong. We don’t need a whole lot of support. We have Chris Spencer, and Toby is back there, and big Aaron.
I do want to get into my comments here. I know there’s lots of specific questions, so I appreciate this opportunity, and we’ll roll right along.
The people at the Department of Energy, the staff, are great representatives of Nova Scotia. They do a significant amount of work and make a tremendous contribution to our province’s policy around energy and, more importantly - probably most importantly - as we learned this week, around our province’s finances. This was very evident just two weeks ago when we were able to add $250 million in revenue to this province from our offshore royalties.
As the Premier noted at the very beginning of his announcement, all the benefits that will come from that revenue are entirely due to the hard work of the Department of Energy’s staff. It isn’t the politicians or the government of the day - it’s the people who are there year after year to carry out this important work, and we thank and congratulate them on a job well done.
Let me first focus on the details of our Department of Energy’s budget. The estimated budget is $31.5 million, with the following expenses: administration, $1.8 million; sustainable and renewables, $2.4 million; business development and corporate, $3.2 million; petroleum, $1.9 million; the CNSOBP, $4.3 million; and clean growth and climate, $17.8 million.
The Department of Energy is focused on strategically managing and promoting our province’s energy resources on behalf of Nova Scotians. We’re delivering on that commitment in a way that strengthens our economy by creating opportunities for Nova Scotians in all walks of life and all corners of the province. We’re also creating jobs for young Nova Scotians while protecting our environment.
Over the coming year, we will add to our expertise when the Geoscience and Mines Branch of the Department of Natural Resources joins the Department of Energy. This will merge two teams with expertise in subservice development and enhance development opportunities in our province.
I look forward to welcoming our DNR colleagues to Energy. I think it speaks volumes about our ability to find that delicate balance between development and protection.
Mr. Chairman, we know we need to continue our fight against climate change. The biggest change this year in the Department of Energy’s budget is funding to reduce emissions and create opportunities for Nova Scotians. We’re committing $3 million a year for four years to create new programs and expand existing ones. This investment will leverage a $56 million commitment from the federal government’s Low Carbon Economy Fund.
Working with our federal and private sector partners, we will build on our climate change successes as we move toward a cleaner energy future. We have already set a solid foundation for that future. Nova Scotia is a leader in renewable energy development, and our accomplishments are impressive thus far. We have met our legislated target of generating 25 per cent of our electricity from renewable resources by 2015. We’re on track to exceed our target of having 40 per cent renewable electricity by 2020. No one in Atlantic Canada has installed more wind energy capacity than our province. Our efforts have been focused on reducing emissions from the electricity sector because that’s our largest source of greenhouse gas emissions. Nova Scotia has made a significant investment in renewable energy, and we can all be proud of the results we’ve achieved.
Our leadership in clean energy extends to marine renewable sources. Nova Scotia remains a world leader in tidal energy development, and it’s an important part of our ocean sector and ocean economy. Over the next two and a half decades, this industry could contribute up to $1.7 billion dollars to our economy. Tidal energy has potential as a clean renewable source of energy, as an economic driver in rural Nova Scotia, and as a way to build expertise and export that knowledge around the world.
In January, we brought into force the Marine Renewable-energy Act and regulations. This provides a clear regulatory path for development of the industry and allows for a new type of tidal energy demonstration permit. These regulations will foster innovation by allowing industry to efficiently test new devices that have the potential to drive the cost of energy lower. That’s why we continue to support the important work of the Fundy Ocean Research Centre for Energy, also known as FORCE.
FORCE ensures developers have the onshore infrastructure necessary to test technologies in the Bay of Fundy. Along with the Offshore Energy Research Association, OERA, FORCE is helping the province to collect data and make decisions based on sound scientific evidence. Our work with tidal and other forms of renewable energy has positioned Nova Scotia as a climate change leader. We are a national leader in reducing greenhouse gas emissions. We have already met the national target of reducing emissions by 30 per cent below 2005 levels, and we’re on track to achieve a reduction of more than 40 per cent by 2030.
Our equivalency agreement with the federal government recognizes and credits us for these successes. It gives us the chance to move to cleaner fuel options over time in a way that maintains affordability and avoids costly knee-jerk decisions. At the same time, we’re engaging the federal government and our other partners on the Regional Electricity Cooperation and Strategic Infrastructure Initiative. This project will identify the electricity infrastructure that can help Atlantic Canada’s transition to sustainable energy. We’re also working together with our neighbours on the Atlantic Clean Energy Partnership. We will work to affordably reduce emissions and support innovation with job creation as we transition to a new clean energy economy. Our province will always be ready to lead the fight against climate change while protecting Nova Scotians’ wallets. Nova Scotians should be proud of what we have accomplished. The credit for these achievements rests with all of us.
Our success extends into areas of energy efficiency. After all, the easiest way to lower our energy bills is to not use it in the first place. Nova Scotians have embraced energy efficiency for more than a decade, and the results are remarkable. We have reduced our electricity use faster than any other Canadian province, 1.2 per cent each and every year.
To help low income Nova Scotians continue to be more efficient, government continues to support the HomeWarming program. This investment is paying off for the Nova Scotians who need it most. The program does four very important things. It gives more Nova Scotians the ability to live more comfortably in their homes, it saves families money on energy bills, it creates jobs and supports small rural businesses, and it reduces our GHG emissions.
Homeowners with non-electrically heated homes can expect to save about $1,000 per year on energy bills each and every year. A lot of this success is thanks to the work that Nova Scotians have done to reduce their energy consumption in their homes and at their businesses. Together, we have installed more than 400,000 energy efficient products, reduced emissions by 700,000 tons per year, and saved $150 million annually on energy bills.
Our 25-year electricity plan is now in year three, and it’s clear that the department is successfully following through on that plan. Nova Scotians said they wanted predictable power rates and greater accountability. The electricity plan is delivering on that. Electricity prices are stable and will be until 2020. This period of time has given us the opportunity to take a long-term view of Nova Scotia’s energy future.
Power rates are important, but they are only part of a much bigger puzzle - electricity, transportation, home heating, international commodity prices, incorporating more renewables into our system, and keeping it all affordable. Our goal is to achieve overall energy stability, and our plan is providing that and more.
Today, Nova Scotia Power is more accountable than ever before. Performance standards are in place for customer service, reliability, and storm response. Plus, the new fuel adjustment mechanism ensures ratepayers are charged for only the actual cost of fuel. This past Spring, they received a rebate for the very first time.
Through the electricity plan, government is opening the door to competition and fostering innovation. We have launched a new solar program to help Mi’kmaq, First Nations, non-profits, municipalities, and post-secondary schools be part of our cleaner energy future. We have worked with the Mi’kmaq for many years. Today the Mi’kmaq are producing more electricity from wind than they use in their communities, and our Mi’kmaq communities are making their homes more efficient through collaboration with Efficiency Nova Scotia.
With the completion of the Maritime Link, clean energy is taking a giant leap forward. This is not a small achievement. It’s an historic milestone. This megaproject was delivered on time and on budget, and it will improve the way energy is transmitted in Atlantic Canada. It will also deliver the renewable energy Nova Scotians want and help us make continued progress towards a cleaner energy future.
Our work to implement the electricity plan continues with other innovative projects, including electricity storage, management, and net metering. We have invested in electric vehicle charging stations to lower emissions and make Nova Scotia completely accessible to EV-driving tourists.
From solar to tidal to clean tech to ocean tech to regulatory efficiency and effectiveness, these innovative projects are essential in creating an overall energy strategy and energy stability. Innovation is what leads to the ideas that make our businesses successful and create jobs for Nova Scotians. It also drives the price of renewable energy down. The result is cleaner affordable electricity for Nova Scotia families and Nova Scotia businesses.
As part of this budget, government continues to invest in sustainable transportation. Sustainable transportation is about creating options to get from place to place with minimal emissions impact. Encouraging active living is important for us for so many reasons, but in many communities encouragement is only half the battle. The reality is, people are more likely to tie up their sneakers and get on the move when there are easily accessible and safe walking and bicycle-friendly options available to them. We want to make it just as easy to walk, run, or cycle from place to place as it is to drive - or even easier.
Connect2 aims to create and promote active transportation options for trips of two kilometres or less between community hubs in rural and urban parts of the province. These kinds of projects improve our neighbourhoods and help us build on our achievements as a climate change leader by continuing to reduce emissions. We are providing another $600,000 to Connect2, matching our 2017-18 contribution. Since 2015, we have invested $1.8 million, which has helped community groups leverage around $8.6 million. This investment has supported 78 projects and 61 kilometres of connectors between community hubs.
One of our best opportunities for success continues to be our offshore. Looking back over more than a generation of exploration and development, our offshore has delivered for Nova Scotians time and time again. Our province has received about $4 billion in revenue. That’s money that goes directly towards paying for hospitals, schools, roads, Internet access, law enforcement, and Service Nova Scotia to use every single day. On top of that, oil and gas companies have spent more than $3 billion on goods and services in our province.
We have accomplished this with workplace safety and environmental records that are second to none. Oil and gas developments have safely coexisted with the fishing industry and other sectors for 25 years now. We have one of the strongest offshore safety and environmental protection regimes in the world. We are a model for other jurisdictions. When companies come here, they do so under stringent rules that are strictly enforced by an independent regulator. We have confidence in the abilities of our offshore board. Staff there have almost 300 years of experience in health and safety, environmental protection, engineering, and many other fields. When it comes to the environment and worker safety, we don’t cut any corners at all. We are tough and successful, and our future is bright.
Since 2011, major international firms have committed to spend more than $2.1 billion exploring off our coast. BP is getting ready to drill in the Scotian Basin, and Statoil is preparing its seismic program. I certainly wish both companies the best of success.
Our offshore research is clear. We know that there’s more oil and gas out there. The Play Fairway Analysis told us that more than 120 trillion cubic feet of gas and 8 billion barrels of untapped hydrocarbon potential lie off our coast. We remain committed to working with industry to help find it. So far, we have invested roughly $33 million to better understand our offshore potential, and we’re providing that information to companies.
Nova Scotia will continue to invest in leading-edge geoscience. In this budget, we have committed $14 million over the next four years to support Phase II of the Offshore Growth Strategy. We’ll continue to share the results of this work openly with industry. With a little luck and a lot of hard work, we hope to continue to attract significant work commitments from major international players.
LNG and natural gas are another reason to be optimistic about Nova Scotia’s energy future. East Coast Energy, Bear Head, Goldboro, and Alton all have projects under way that are in the best interests of Nova Scotians. These are projects that will create jobs in rural areas.
Having the capacity to store natural gas could save customers millions every year by smoothing out price spikes, particularly during the winter months, when demand is at its highest. North America has an abundance of natural gas and the potential to help meet global demand. Our opportunity lies in finding a way to transfer gas from the supply basins in North America to markets around the world. We recognize that natural gas is a valuable resource, and it will continue to be an important part of our overall energy strategy.
There’s plenty of good news in Nova Scotia’s energy sector and plenty of reasons to be optimistic about our future. Perhaps the best part of all of this is the opportunity it presents for young people. Our oil and gas industry has created more than 1,100 co-op work terms for students and invested more than $50 million in training and education. That leads to more graduates choosing to start and grow their careers here. There are jobs in manufacturing, research and development, engineering, project management, and of course, tech start-ups. These are just a few examples, but the point is that the opportunity is all around us in energy.
Through the Energy Training Program and Pengrowth Energy Scholarship, the government is doing its part to support industry’s efforts to hire more young people. Our young people and our energy sector share one very big fact in common: they are both filled with potential. If government and industry continue to work together, I know we can and we will create a better future for our young people and for all Nova Scotians.
In closing, Mr. Chairman, I would like to thank you for this opportunity to outline the important work of the Department of Energy. Staff at our department are focused on working towards a more prosperous Nova Scotia. They’re creating jobs for young people so that they can start and grow their careers here. They’re ensuring that there are fair opportunities for all Nova Scotians. They are giving us reason to be optimistic about our province’s future.
With that, I appreciate the time for opening, and I look forward to questions from the committee.
MR. CHAIRMAN: Mr. MacMaster, for the PC caucus.
MR. ALLAN MACMASTER: Minister, I was looking at the line items on Page 8.2 in the budget. The first two that jumped out were significant changes. One was Petroleum Resources. It was estimated to be $3.7 million and came in at $15.5 million. Can you explain the line item there, what caused the increase?
MR. MACLELLAN: When the member first asked the question, I was trying to figure out why he was asking that. I realize he’s only asking it to take credit, because he probably wrote most of it back with Rodney MacDonald in 2008. I think he just wanted to get that on the record.
As the Premier has said many times, in all seriousness, that was started by Rodney MacDonald, and he set the tone for where we are today. The increase in that fund is around the accelerated growth program for the offshore. It’s the accelerator to the next phase of the offshore plan around geoscience, around supplier development, essentially, being ready if there is that next phase of oil and gas - when there’s that next phase of oil and gas activity, we’ll be ready for it. The Play Fairway Analysis has been incredibly successful, and that’s something specifically linked and earmarked to former Premier MacDonald, who the member was close with and worked for during that era.
Again, that information is invaluable to where we are today. It’s interesting that the foundation was started 10 years ago by the government of that day. The NDP continued it, and also, I think it’s fair to say, enhanced some of the components of it. We have really carried on that platform, but because of some of the royalty pieces that we have experienced and some of the additional funds, we were able to accelerate it by way of significant increases in funding.
That’s a long answer to a quick question. Really, that is because we have accelerated the Offshore Growth Strategy to the tune of just under $12 million.
MR. MACMASTER: It’s $12 million more spent on exploration?
MR. MACLELLAN: Geoscience yes, those kinds of things. Supplier development is the key piece. Basically, when these things materialize, is our industry, our sector, ready to take advantage?
MR. MACMASTER: I guess I should clarify. For this year, there is just under $2 million estimated. Is a lot of that work considered done now, or is it possible that figure could inflate over the coming year?
MR. MACLELLAN: Basically, because of the opportunity to have an increased amount allocated to the budget, over the next number of years, the total on the second phase of the Offshore Growth Strategy will include the $12 million in addition to the $1.8 million that’s identified there as the estimate for 2018-19. There is also additional money, $600,000, within the department for the Offshore Growth Strategy.
Putting that all together, it’s an investment of just about $14 million, give or take, on Phase III of the growth strategy. That number of $1.8 million - there will be a number every year that will move around. Again, the reason for the spike is just the opportunity to put a big investment down.
MR. MACMASTER: The extra $12 million that was spent this past year, has that actually been spent, or has that been put into a fund to be spent in the future?
MR. MACLELLAN: It is put in a fund. We’ll have the OERA do some of the work and support the spending of that money over the next four years.
MR. MACMASTER: The next question I have is on Clean Growth and Climate Change. That budget doubled from about $13 million to $26 million. Can you explain what went on with that line item?
MR. MACLELLAN: That increase is attributed to the low-income non-electric heating fund, support for that program. We accelerated that payment into this year so we could do more in a hurry and get it on the ground as soon as possible.
That’s connected to the fortunate news around the offshore royalties that we had a couple weeks ago. That is connected to the Efficiency One, its fifth year of the low income non-electric program.
MR. MACMASTER: Is that money that was spent last year, or is it going to be spent over the next number of years?
MR. MACLELLAN: It will be allocated entirely in this coming year, the additional.
MR. MACMASTER: The additional would be about $12.5 million budgeted last year, but it will be spent this year?
MR. MACLELLAN: This was the multi-year plan. It was originally budgeted to be spent next year. We’re just accelerating it for this year.
MR. MACMASTER: When you say “this year,” you mean the fiscal year that’s just about to end?
MR. MACLELLAN: Yes.
MR. MACMASTER: That will be spent in future years?
MR. MACLELLAN: Next year.
MR. MACMASTER: Next year, so 2018-19?
MR. MACLELLAN: Right.
MR. MACMASTER: Is there any reason why it wasn’t just budgeted for 2018-19?
MR. MACLELLAN: The rationale is that the money was available due to the royalties. It became an opportune time to put it in motion and get it on the ground to Nova Scotians.
MR. MACMASTER: This coming year, it’s going to be about $18 million. Is this all going to Efficiency One for programs there to help low-income people improve the energy efficiency of their homes and that sort of thing? That’s question A. Question B is, $18 million this year is quite a bit from the $13 million originally estimated for the year we’re just completing - maybe clarification could be provided on that.
MR. MACLELLAN: The allotment for the forecast, $26 million, basically finishes off the fifth year of the low income, non-electric program at Efficiency One, as we discussed earlier.
The 2018-19 estimate, the $17.7 million, is comprised of the following. It’s $3 million from the province, and $14 million from the federal government, and this is around the Low Carbon Economy Fund. The balance of that is what I mentioned in the opening around the Connect2 program. The federal money, $14 million, will flow to Efficiency One. We’ll have the remaining balance, the $3 million from the province. Then as I said, it’s the Connect2 program as well.
MR. MACMASTER: The $3 million per year over four years was actually booked last year for the Low Carbon Economy Fund. (Interruption) No, it’s not. Okay.
MR. MACLELLAN: It’s for 2018-19 and the next three years after that.
MR. MACMASTER: Then the next three years, okay. The $13 million booked over the original estimated amount that’s showing up as the forecast amount for Clean Growth and Climate Change is money that had come in from the royalties. The $180 million in royalties - that $13 million came from that and is booked to go into a fund. Maybe the minister can clarify that once more.
MR. MACLELLAN: Yes, I’m sort of getting this as we’re going through. The 2017-18 estimate to the forecast - with the funds that we’re taking in from the royalty, we’re accelerating the fifth and final year of the low-income non-electric program. With the allotment of that money, that program is then finished and complete. Basically, the estimate for 2018-19 is a completely different new component that’s still under Clean Growth and Climate Change, but now we’re into the Low Carbon Economy Fund from the feds, the $3 million that we have allocated, and the Connect2.
MR. MACMASTER: I think I’m clear now. Thank you.
Minister, in your opening comments, you mentioned the charging stations for electric cars. Where does that fall in the department’s budget? Can you indicate the line item where that would fall?
MR. MACLELLAN: The funding for the charging stations is from the 2017-18 estimate for Clean Growth and Climate Change. The previous year, it was about $100,000, and that went specifically towards the Level 2 charging stations, of which there was about a dozen.
MR. MACMASTER: That amount is showing up in the Clean Growth and Climate Change line item for the forecast of 2017-18?
MR. MACLELLAN: No, the estimate for 2017-18.
MR. MACMASTER: The estimate.
MR. MACLELLAN: It was in the estimate and the forecast. It’s just that there was no additional amount needed.
MR. MACMASTER: We heard - I think it was today - that Statoil Canada has delayed plans to enact an offshore seismic program. They’re putting it off until 2019. Does that have any impact on the budget for the department?
MR. MACLELLAN: No, zero impact.
MR. MACMASTER: Does it have any impact for any other government departments?
MR. MACLELLAN: No.
MR. MACMASTER: Was there an estimate of the amount of financial activity related to their exploration if it did start this year?
MR. MACLELLAN: It would show up in the CNSOPB budget, and any of the cost is recovered through the relationship with industry.
MR. MACMASTER: When we hear that Shell and BP are going to spend $1 billion in exploration, we think, wow, that’s going to be a lot of money for our economy. They might be hiring people - income tax, HST, and that sort of thing. Where would that show up in the provincial budget if it doesn’t show up at the Department of Energy?
MR. MACLELLAN: We are just putting our heads together here. It may show up just in terms of general revenue of the province, projected revenue. It would just be a statistic in there. The size of it wouldn’t have a meaningful impact on any of those revenue projections, either. It would be something that the CNSOPB could probably calculate and provide the government as part of that forecasting process. It is not in the Department of Energy. It would be a general line item for the province overall.
MR. MACMASTER: One of the big topics this year, of course, is the federal government saying they want to have a carbon tax. I know that Nova Scotia responded, saying that we are going to have another arrangement that will provide an equivalent to that.
There was an equivalency agreement signed back in 2012. There has been some indication that we will not be impacted. Nova Scotia businesses, especially those that are energy-intensive, are not going to be impacted by these federal government requirements. Yet we have the federal minister saying that they may not accept the government’s response to the carbon tax saying that we have done the work. We have seen our power bills go from 12 cents a kilowatt hour to 15 cents. People are paying more. It is a carbon tax, in that sense. I think that happened in a three-year period. Is the minister concerned about the federal minister’s comments?
MR. MACLELLAN: Obviously, from a technical perspective - and I know the member knows this, but just to say it officially - the Department of Environment is the lead on this. I’m sure that the member will talk directly to the Minister of Environment about this later in estimates. Having said that, I would certainly add a couple of things to try to put some depth around the answer.
The member knows, as he has asked me a number of questions around this, that we are not choosing to consider the idea of a tax around fuel consumption. For us, it becomes a system of credits and trading. That model seems to be a better fit for Nova Scotia.
Quite frankly, to answer your question, I think it is fair to say that we’re concerned about where we will be as it relates to the federal government’s plan. In the less than a year that I have been here at Energy, we have had a number of conversations about climate change and the plans that we’ll have in place for reduction of the GHG emissions. I know the member heard us tout our record around GHG reductions and where we fit in the federation. That’s a good thing, and we have to repeat that quite often to make sure we’re getting that traction federally.
We have done some good things. The reality is that we had a very difficult stretch for the Nova Scotia rate base going back a few years, with the astronomical increases in the price of energy that consumers were paying. It’s amazing to think that, over my seven years, that would have been the number one issue that I heard of in my constituency office in Glace Bay five or six years ago, the looming and increasingly difficult challenge of paying for power bills and stability.
Again, I’m not taking a partisan angle here and trying to make this about us, but the fact that there’s stability in the system and the fact that the NDP Government really pursued the idea of the Maritime Link, those things have led to where we are today. Nova Scotians have paid the price.
I think what the federal government is looking for is a way that we all share in the reductions and address climate change as best we can. Again, and in simple terms, we have led that charge. I am very confident in that. Previous governments have played a role in that, and we have continued to carry that torch, so here we are today.
Until the agreement is final and we have a situation and a mechanism that we’re comfortable with, I’ll always be concerned, to answer the question. With Kim and Chris and the team that we have, we’re always mindful of this. We have a deep roster of people who understand the impacts of these decisions and how policy affects Nova Scotians. We have to guard against that.
Everybody here at this table, everybody in this province, wants to do their share. We’re all worried about climate change and GHG emissions and how we can do better. It’s also important that we get recognized for the tremendous work and sacrifice we have done as ratepayers. It’s a delicate mix. We’ll certainly continue to pay very close attention to any of the language coming out of Ottawa to make sure that we’re still in lockstep and that we’re negotiating a fair and equitable solution that is predominantly made in Nova Scotia.
MR. MACMASTER: Mr. Minister, if the federal government said we don’t agree with what you’ve done, we expect you to place a carbon tax to start to save the planet and to address climate change, which department would be required to implement a carbon tax?
MR. MACLELLAN: Which provincial department?
MR. MACMASTER: Yes.
MR. MACLELLAN: I know we’re in hypotheticals. We can’t be certain of how this is going to go, and this is the worst-case scenario, obviously. If the federal government was going to impose their backstop of a carbon tax and some industry standard, there would be no department that would be specifically responsible for it. It would just exist.
At that point, thinking about the industries and thinking about the impact on Nova Scotians, anything that would be tied into the province would be under the realm of Environment. The backstop as it exists, the federal plan is that it would just drop a price on carbon. Then, really, there would be no administering or implementing. It would just happen, and that would be the result. Again, we’re still working on our own plan to avoid anything of that nature.
MR. MACMASTER: I can appreciate you working on that plan. Does that mean that if there was a carbon tax, it would be one implemented and carried out by the federal government?
MR. MACLELLAN: Yes, that’s correct.
MR. MACMASTER: I realize we are talking hypothetical here, but based on the federal minister’s comments, it’s a concern. If the federal government did implement a carbon tax in Nova Scotia, would it be made transparent? Would people know what it is, or would it be something that would be hidden on whatever they chose to charge it upon?
MR. MACLELLAN: If there are any specifics available around the hypothetical nature of that carbon tax imposed by the feds, it would be my colleague in Environment who would be able to field that the best. That’s one for him.
But rather than not answer at all, on the aspect of transparency, even if this is something that is being imposed, then clearly, they would explain why and how it’s going to happen. The administration would be very open. It wouldn’t be anything that they just kind of try and sneak on the gas pump. I think that would be impossible. But again, any specifics, even with the hypothetical nature, could probably be answered by the Minister of Environment.
MR. MACMASTER: When you say “they,” do you mean the federal government would really have that choice as to how they would implement it?
MR. MACLELLAN: That wouldn’t be something that we would be agreeable to. It would be imposed as the backstop that is labelled, as opposed to something that we would be administering or implementing ourselves.
MR. MACMASTER: One of the things, minister, you mentioned in your opening remarks was affordability. I’m just wondering if the department is keeping track - especially for power bills, there are various input sources of energy that have a great determinant on the cost per kilowatt hour in your power bill. I mentioned before that it went from 12 cents per kilowatt hour to 15 cents. I think it has been acknowledged since then that most of that cost is due to wind energy.
Can the department provide the cost per kilowatt hour for the various sources of energy inputs? I’m thinking of the big ones like coal, natural gas, hydro, and wind. I know Muskrat Falls is not here yet, but there was some indication that we have a price that is locked in for that per kilowatt hour.
MR. MACLELLAN: We can certainly get that to you, honourable member. It’s something that’s sort of spread out that we just have to compile and put into one document. We don’t have it here, but we could certainly follow up on that for sure.
MR. MACMASTER: The next item I have is Muskrat Falls. Do we have a locked in price per kilowatt hour for Muskrat Falls energy? I was hearing, at one point in time, that it was going to be 7.9 cents per kilowatt hour. We have heard about the cost of the project increasing and delays and whatnot. Is that going to impact the price that Nova Scotians pay by way of Nova Scotia Power?
MR. MACLELLAN: Our rates and what we have in terms of the Muskrat Falls project - as said in the opening speech, it is on time and on budget. There was a process by which we had to move this project through the URB, so we are locked into that in the sense that there’s not going to be a rate surprise.
The final number will be determined by the actuals that come out, but that doesn’t mean that there is going to be an increased cost because of what’s happening on the other side. We have this all approved, and it is well within the fixed amount that was passed through the URB.
MR. MACMASTER: Is that to say it’s sticking to what was originally intended in terms of the price per kilowatt hour?
MR. MACLELLAN: Yes.
MR. MACMASTER: Is that public information that can be provided, the cost per kilowatt hour?
MR. MACLELLAN: Yes. There is a calculated amount within the URB, and that will be released. That is part of what has been approved thus far. Any of those cost overruns on the other side are not borne by us. That’s it. We’re locked into the agreement that was approved by the regulator.
MR. MACMASTER: Do we know what the cost per kilowatt hour is?
MR. MACLELLAN: To the member, it is a good question, and we can appreciate where it is coming from. We don’t have the exact number. We are going to look into this because it is something that we try to land on. What we are locked into is 20 per cent of the energy for $1.6 billion. That’s what has been approved through the URB. There are all kinds of moving parts as to what will be finalized, but it is important to note that it isn’t any part of the cost overruns. That’s static at $1.6 billion for 20 per cent. The amount of amortization and all the calculations that go into it will determine the final amount. We don’t have that at this point to give you. It isn’t something that we’re keeping under wraps. We’ll endeavour to get that if we can.
MR. MACMASTER: Is this seen as a risk? If it’s significantly more than what was originally expected, and we’re on the hook to buy the power and use it, could we see our power rates going up?
MR. MACLELLAN: This was approved as the lowest cost, long-term option by the URB. They approved that $1.6 billion as fixed, and that was the mechanism. There won’t be any variation or any spike based on what has happened on the other side and the cost overruns that they’re experiencing there. Again, it will be part of that URB form, and we can get back to you on that. We’re locked in, and that was determined by the public regulator as the lowest possible cost that we could pay.
MR. MACMASTER: There is a chance that we could be paying a lot more for that power.
MR. MACLELLAN: No.
MR. MACMASTER: There’s not. We know that we’re getting 20 per cent of the energy. We don’t know how much energy we’re getting in terms of quantity, but we know we’re paying a set amount. If we get less energy for the same price, we’re paying more per unit.
MR. MACLELLAN: What we have been guaranteed is a fixed block. It’s a quantity of energy. We’ll get you the quantity of energy, and then that will probably help determine some of the information you’re looking for specifically. I certainly get where you’re going with this, and we’re just trying to figure out what the best approach is in terms of that information.
MR. MACMASTER: My next question is about the Marcellus shale, natural gas, down in the U.S. There’s all kinds of pipelines coming off that. Is the department interested in or working on trying to get some of that natural gas here as a means to supplant the coal that’s being burned in the province? Is there any update the minister can provide on that?
MR. MACLELLAN: The long and the short of it is that we are certainly interested in gaining access to natural gas by way of the pipeline network we have, which could bring the product to Nova Scotia.
Obviously, the member would certainly be aware, as he has a keen interest in these things. We have opened up the new regulations to provide Heritage Gas with the ability to use the regulator to access more capacity, access more of the product, and use transportation costs into that mechanism by way of the costing for that. Also, of course, there’s Alton and the natural gas storage project. If we have the ability to bring natural gas in and store it, that would be used to smooth over those spikes of costs at critical times, the winter months.
The direct answer is, absolutely we want to secure as much access and import that product the best that we can.
MR. MACMASTER: How does that fit in with developing our own natural gas? I know it’s very controversial. If we bring that gas in, the price of natural gas will fall, which is great for consumers. Is there consideration of how that will impact development of natural gas in Nova Scotia?
MR. MACLELLAN: Yes, there certainly is. Looking at the offshore, what’s happening with BP and Statoil, we have had tremendous success. This recent royalty arrangement - it’s ironic and significant that the oil and gas royalties that were calculated in arbitration from many years ago as part of an agreement that was more than a decade old are going to pay for broadband Internet access, among many other things - social programs that we certainly need. It’s also going to accelerate some of the offshore strategy we have in place now. That’s all good things.
Again, when we look at BP, Statoil and some of the potential for offshore, that becomes part of the conversation. Natural gas is going to be part of our mix. When you take a drive through our beautiful province, and you go towards the member’s home community, you pass by Goldboro, and Bear Head is in that area. They could be major players in the LNG conversation moving forward.
Kim and Chris could anticipate where we were going with this conversation, and of course, it leads to fracking. I know that the member representing the NDP has asked me questions about that as well.
The reality is that there are decisions we have to make on behalf of Nova Scotians, in their best interests and based on what they support and what they don’t. I think that this conversation will continue to evolve. We know that the moratorium is in place. We also know that we have done the onshore atlas to identify at least where a source could be secured and supplied. That doesn’t mean it will flow, and there’s not even a confirmation that it’s there to the extent that was anticipated by the onshore atlas. It does create a situation where yes, we’re looking to bring in natural gas, and we’re looking to store and access as much as we can, but at the same time, we’re not open to fracking.
That’s not a position that’s lost on me, but the reality is that I think sometimes it’s reasonable and prudent to get out there and engage people and listen to what they have to say. I remember the reaction to the moratorium was favourable and even the reactions in recent times when the onshore atlas was released and the conversation became live again. The emails, the correspondence, and public comments became pretty intense.
I know the municipality wrote in favour of it, and a municipality not far from them wrote that they weren’t so sure about being in favour of it. It’s an interesting conversation. It’s one that we’ll continue to have.
Again, to get back to the original premise and the question that was posed, we want to bring in as much as we can.
MR. MACMASTER: I’m going to turn it over to my colleague, but I have a couple more questions. They’re related to the URB. Do you, as Minister of Energy, have responsibility for decisions they make, or should those questions be asked to the minister responsible for the URB? There is a minister responsible. I’m pretty sure it’s not you. Right?
MR. MACLELLAN: I hope not.
MR. MACMASTER: I don’t think so. Who is it? (Interruption) Finance and Treasury Board.
MR. MACLELLAN: That’s what I thought.
MR. MACMASTER: I think I’ll just save those questions, which you’ll probably appreciate. I’ll save them for the Minister of Finance and Treasury Board.
I’ll turn it over to my colleague, the member for Cape Breton-Richmond who has a question. Thank you very much, Minister, and thanks to the staff of the department.
MR. CHAIRMAN: Ms. Paon.
MS. ALANA PAON: Hello again, minister. I have a couple of questions here on energy. In particular, we were just talking about natural gas, so it’s a good segue. We talk a lot about the offshore natural gas projects. You touched very briefly there on onshore, and we all know the colloquial term is fracking. Are there any test phases or test projects on the horizon for fracking in Nova Scotia?
MR. MACLELLAN: No, there aren’t at this point. Part of the regulations that we haven’t finalized are around what testing and research would look like. Obviously, those regulations aren’t available. We haven’t completed those yet. There’s nothing happening in terms of testing or experimental or exploratory work that’s being done.
MS. PAON: Is there anything on the horizon at all in the next year or so?
MR. MACLELLAN: No.
MS. PAON: I just received word that some municipal counterparts, Richmond and Guysborough, are looking at doing a test phase and wondering if the government is interested in doing a test phase for natural gas onshore. I believe that some letters were sent to the Premier on that subject. Obviously, it’s in my constituency and in the Strait of Canso. That’s why I’m curious to know what the plans are moving forward for this government to do any onshore tests or onshore projects for natural gas.
MR. MACLELLAN: There’s nothing at this point, certainly nothing formal. I think the member pays close attention to these conversations in the Legislature and, of course, publicly as well in her community and in surrounding communities. There was correspondence from the municipality about the potential, and what we have said from the beginning is that the moratorium is in place, and nothing has changed.
The point of the onshore atlas was to identify at least where it is. It’s not applicable to Glace Bay, and it’s not applicable to Yarmouth or Halifax, but there are pockets where it could potentially exist. This coveted resource could exist in certain counties, and the two regions that were identified showed that potential.
What we have always said was that we’re not going to do this unless there’s a social licence. That’s not just empty rhetoric. The fact is that there was a very clear indication from Nova Scotians, when we put the moratorium in place, of their lack of interest and concern about what fracking would mean. We’re sticking to what we implemented back then.
We’re open to a conversation around what that social licence would even mean. When the letter came from the municipality, a municipality not far from them wrote to say, no, we’re not in favour of opening it up. You talk about your own, and no one would know the riding better than you. Would people ultimately be interested in exploring or testing for this resource by way of hydraulic fracturing? I don’t know if they would, but that’s a question that we’re not going to try to answer on our own. If municipalities have solutions or ideas or testing programs they would want to put in place, we wouldn’t be closed off to the conversation. They’re going to have to come up with a strong indication that the people they represent would support that activity.
MS. PAON: In conversations, in questions asked to the Premier in this session, and in what you are indicating as well - I would like to have a clear indication of what is meant by a social licence. I would hope there would be very strong public consultation around this process. We all want to make certain that our waterways remain safe and unharmed, obviously, by any kind of projects we put forward. We are in a province of lakes here in Nova Scotia. We should be very proud that we have such clean water available to us.
With that said, we would love to see some safe development around any resources that are available to us in this province. What exactly are you talking about when you say social licence? What does that mean?
MR. MACLELLAN: We haven’t specifically defined that. We kind of used a broad assumption of what that means. Basically, if your municipality were to entertain fracking activity, how would people react to it? We haven’t formalized this. We have not set anything in stone. For me personally, it would largely be about whether it is going to be acceptable to the community.
Everything that I have learned since the moratorium came in place and what we hear is that it would be met with widespread opposition. Is that the loud minority, as they say? Is it the majority of people? Again, every indication is that more people than not would be against it. That’s what we have to go on. That’s why the moratorium is in place from the beginning when we did that.
Social licence is the ability of a community, a region, or a municipality to have their citizens stand behind any activities related to fracking. How they would do that - is it public consultation? Is it a plebiscite? What are those tools that the municipalities could use, in particular, the one that is so interested in it, to bring forward to us to give us the ability to communicate that with the public and say this particular municipal group wants to pursue this, this is their plan, are the citizens of that area okay with it?
MS. PAON: I am cognizant that I have only two minutes left. I would hope there is a very strong push for public consultation in that process. It sounds as though it would be up to the municipalities to make certain that that public consultation process occurs. Is that correct?
MR. MACLELLAN: We haven’t formalized this. There’s no government position on that, but I think it’s fair to say that that’s certainly my position. By way of the moratorium, we are very clear on where we stand with hydraulic fracturing. If municipalities want to come forward, it’s incumbent on them to give us the indication that something has changed, that technology has made it more acceptable for the people they represent, and that a test well would be given permission in the right conditions - all those things.
Again, it’s such an infancy stage, the conversation around social licence. I don’t want to go too far in terms of trying to define it, but essentially that’s where it’s at. As a province, we are not engaged in trying to change people’s minds or get them to a different place on fracking. If the municipalities want to endeavour to compile that information and get a sense as to what their people think, they are certainly open to do that.
MS. PAON: Thank you, minister.
MR. CHAIRMAN: Order. Time has expired for the PC caucus. Ms. Roberts, of the NDP caucus, you have 48 minutes left in our day.
MS. LISA ROBERTS: Thank you to staff for being here. I’m going to start somewhere different, though I’m sure I’ll circle back to some of the same topics that we have spoken about.
I’m going to start quickly with Bridgewater, which has been in the news recently for the incredible work that they’re doing at a municipal level to become energy efficient and also to become energy generators. They have already reduced their energy use by 23 per cent, and they’re creating jobs and increasing property values, all with focused work on sustainability.
Leon de Vreede, who is a leader in the work that has been done, has said that support from the province could help make that plan a reality. I’m just wondering what your department is doing to support that work and potentially work like it in other municipalities in corners of the province.
MR. MACLELLAN: Looking at the Bridgewater story, first and foremost, I know that the member knows this, and she has heard me say this many times. We are certainly a leader in the federation with respect to reducing GHGs. That’s fantastic, and we’re proud of that. It is a lot of hard work and sacrifice that has got us here and some good policy decisions that were made by our government and good ones by her Party when they were in government. We are in a good place because of that collective effort, and we have to continue to build on that.
With respect to Bridgewater, they’re looking at things that - really, if you took a template of what they’re doing, it is what we aspire to do and want to do more of at the provincial level. Community transit, active transportation, energy efficiency, sustainability through electrification - that’s a lot of the stuff that we want to work on.
When we spend on programs provincially, we want to leverage federal dollars like the Low Carbon Economy Fund. EfficiencyOne, which we continue to fund, has done tremendous work with respect to that area. The Connect2 program is connecting active transportation links and trails in our communities. Of course, there’s the electronic vehicle stations and the investment of the 12 or so spots that we’ll be funding through the province. There is a lot of work that can be done. These things are long-term in the making. I think about EfficiencyOne and that amount of money and time that have gone into those programs, but they have paid dividends time and time again.
I think it’s fair to say that we are very encouraged by the model in Bridgewater. We hope that other communities and units will be inspired to follow a similar path, really taking a multi-pillared approach to how they transition and become more efficient and more sustainable and react to the realities of the renewable energy, low-carbon economy. Bridgewater is doing good things, and now we want a number of other communities to follow that lead.
MS. ROBERTS: The community feed-in tariff system helped to drive investment in wind energy projects before your government cancelled it. Is the department doing any work to re-appraise that decision at all and possibly reintroduce COMFIT for renewable energy projects, perhaps specifically for solar?
MR. MACLELLAN: The COMFIT program was one that related to the addition of wind energy to our grid. It certainly achieved the objective that it set out to do. In fact, it was over-subscribed. As the member would know, there was a fixed rate associated with that program. Like everything else, we struck the balance of the impact on the rate base of adding that renewable energy source to our grid. It was a good program. Because of the subscription of the program at that set price, it really did achieve the mandate what it was set out to do, and that’s where we left it.
The solar program is not a COMFIT necessarily, but it’s a solar program for community building. That’s the next phase.
We have a number of opportunities leveraging money from the federal government with respect to First Nations and Mi’kmaq communities that could certainly put that to good use, not only in energy consumption and efficiency but also by way of employment and training opportunities to lead the province in that charge for solar and how it adds to our grid. There is a solar program looking at community buildings and tying in some funding to continue to build out that option.
MS. ROBERTS: The government invested $12.2 million in windfall spending into the HomeWarming program, which only applies to homeowners. Is that correct?
MR. MACLELLAN: Yes, it applies to low-income homeowners.
MS. ROBERTS: What is your department doing to bring energy efficiency savings to low-income renters in a way that actually benefits their bottom lines?
MR. MACLELLAN: We’re working on a number of options that impact low- income renters or folks who don’t own the properties, the buildings, per se. Part of that is some of the federal programs that we could lever to work on the solar options for low-income homeowners and low-income renters as well.
Also, there is the program that I referenced earlier. It’s tapping federal money to look at First Nations communities. Because of the band administration of the homes, the Mi’kmaq residents wouldn’t necessarily own the home. That would be a way to get access to renewable energy at a reasonable rate, without them actually owning the property. There are a number of things we have to do.
We don’t want to leave anybody behind by way of low-income renters, so it’s important to use all options and, in the early going, establish some pilot projects. Those I mentioned would at least give us a sense as to how we could do it, what would succeed, and how we could do it better, and then go from there. The renewable energy realities are here, and we have to make the most of them, particularly for those low-income Nova Scotians who certainly struggle to make ends meet. Power is a big part of that.
MS. ROBERTS: If you want some suggestions for locations of pilot projects, I can point you to a number of locations, including some that are managed by Metro Regional Housing, where people pay a lot, surprisingly.
MR. MACLELLAN: That would actually be really helpful if you could do that, for sure.
MS. ROBERTS: In the minister’s message, you talk about continuing to decrease greenhouse gas emissions. That seems to contradict what I’m generally hearing, which is that we’re done, and we’re the leader. Are you setting targets for beyond 2030?
MR. MACLELLAN: We see that the trajectory we’ve been on is that we have been decreasing the level of emissions. Backed up by federal information, we will be beyond 40 per cent by 2030, which I certainly think is a good thing.
With respect to the question specifically, we will be identifying those reduction targets for 2030 and 2040. We’ll continue to do that over the long-term. The reality is that we have been on a continuing downturn trend of these reductions, which is a phenomenal thing. Our approach has been to identify GHG reduction and emission targets. We’ll continue to make further deep cuts with respect to our emissions, and that trend will certainly continue. We will continue to be the leader. We don’t have a specific number out past 2030 at this point, but we will in due course.
MS. ROBERTS: We spoke earlier about Muskrat Falls. How confident is the department that Muskrat Falls will be producing power by April 1, 2019? I think that’s the target date.
MR. MACLELLAN: The latest outlook we have to this point is within 2020. I don’t know if the member has April 2019 somewhere official. Anyway, that could have been out there as a targeted date. I’m not sure. I didn’t hear that one. The latest that we have heard has been within 2020.
We’re certainly confident on the budget and the timeline for this side of the project. We’re confident that we’re locked in by way of our agreement, vetted through the URB, of 20 per cent of the energy coming from that project. We are confident in those things. The challenges that they’re experiencing on the other side will have to be determined, figured out, and costs borne by them. But we’re locked in and where we have to be. We certainly look forward to that energy within 2020.
MS. ROBERTS: From your 2016-17 accountability report, I understand that in 2016 more than 28 per cent of Nova Scotia Power energy was supplied by renewable energy. How much of that percentage was supplied by biomass?
MR. MACLELLAN: We don’t have that specific here, but we can certainly get it for you, honourable member, for sure.
MS. ROBERTS: Has the Department of Natural Resources approached you with any concerns about the impact of biomass energy production on our forestry industry and our forests? What can you tell me about that conversation?
MR. MACLELLAN: We haven’t had any specific direction or interaction around the biomass questions with DNR specifically. Obviously, they’ll have a vested interest and a position on some of those things. I know the minister will be in this room in the next little bit, the next couple of days, I think. Maybe some of those questions would be best to ask her.
As the member would know, we did end the must-run requirement component for the biomass facility at Port Hawkesbury Paper in Hawkesbury. That was done in appreciation of the environmental impact and also, of course, the impact for the rate base. From the standpoint of environment and the standpoint of ratepayers, that decision was one that we made and had to make that change to do so. We don’t have a whole lot of interaction or specific position on the biomass plan.
MS. ROBERTS: The question in front of me is, does your department plan to increase or decrease our use of biomass as a source of energy? I’m editing that question as I say it because I don’t know that the department would have that direct an impact on it. That would be a URB-approved (Interruption) Yes, okay. I’m not even going to go there.
Nova Scotia Power’s proposal to spend $131 million on installing smart meters has been criticized for not being properly coordinated with Efficiency Nova Scotia. There’s a suggestion that the money would be mostly to Nova Scotia Power’s benefit rather than helping ratepayers realize the potential savings involved in having more data on their energy consumption.
What role, if any, is your department playing in this? Are you encouraging meaningful collaboration with Efficiency Nova Scotia with targets and outcomes for consumers?
MR. MACLELLAN: We’re very much attuned to the question around the 130-plus million smart meters that Nova Scotia Power has brought before the URB. Like everything else, that is their decision to make, and they will deliberate on that.
It becomes a question of the benefit. I know the member identified how it would benefit the company, but for us, there is a value with respect to the rate base. Again, this will be something that is decided upon by the URB. Just with respect to having smart meters that can connect to wireless devices, people can access that information and have it controlled and not have a requirement to call in for power outages, things like that. NSP would already be aware of it.
It has been built as an enabling technology. There are innovations that are going to be built in around the smart meter technology that wouldn’t be an accessible option for the traditional systems that we have in place now. Finally, with the enabling technology nature, there is opportunity for increased reduction in GHGs. All of those are factors. Our concern is first and foremost the rate base. The efficiencies and the opportunities for using smart devices to access these meters would have some benefit.
Again, we don’t have that final authority. It will certainly be the URB that will comb through all the data and figure out what is in the best interests, collectively. They will make their decision from there.
MS. ROBERTS: I have a similar question related to heat pumps, which I guess the department is promoting through a rebate program.
One of the effects of heat pump technology is that a whole bunch of Nova Scotians are now going to be air-conditioning their homes all summer long, where they never would have before. That is resulting in increased energy consumption, or maybe a steadier base rate of energy consumption throughout the year, such that (a) we might not be reducing greenhouse gas emissions, and (b) people might be paying more for energy.
Is that a conversation you have had within the department? Nova Scotia Power actually might have some really mixed motivations in terms of what they are promoting.
MR. MACLELLAN: I certainly appreciate the question, and it is a fair perspective and position. It’s a known fact that there is value with heat pumps. You’re seeing increased usage, and they have an impact by way of reducing GHG emissions in terms of the overall stability and, of course, reducing costs for the final consumer. That’s important. The fact that we’re moving away from oil is certainly beneficial as well.
This becomes about the long-term goal and challenge of taking carbon out of the system, and that’s going to take time. I think that as the grid shifts over the next number of years, we’ll see that continued decarbonization take place and continue to work towards efficiency.
Even in my area, heat pumps have taken the place of oil tanks and furnaces. They have replaced coal fireplaces and coal stoves. We’re seeing that transition. It’s a weird kind of juxtaposition in that we also have to get our electricity sources cleaner. That’s part of the mix, and that’s not forgotten by anyone, certainly not within the department. It becomes about cleaning those electricity sources and getting access to more renewables. Again, as the member would know, as it was her Party that led the file around Muskrat Falls, that will be a big step for us when we are online.
That’s all part of the mix. Heat pumps are part of the equation, and I can appreciate the position that Nova Scotia Power would want to increase usage. For us, this becomes about the end consumer and the ratepayer. If this is good news for them by way of efficiency, and it also helps to do our part collectively and overall to reduce GHG emissions, then we’re getting to a better place than we were.
MS. ROBERTS: Switching to offshore, which is certainly a significant part of your business plan, what studies has your department done to determine how many jobs will be created for Nova Scotians, and how much revenue for government will be created by pursuing new offshore oil and gas drilling?
MR. MACLELLAN: The oil and gas sector, what’s happening and has happened in our offshore - like everything else, there is a balance. We can’t deny that the numbers are staggering: $4 billion in direct revenue and $3 billion, indirect, over the course of the oil and gas program. It’s something that I feel in Glace Bay. I have a number of close friends who work off Sable as we speak. The impact of the supply chain, the way it reaches into our local economy is significant.
I harken back - it’s amazing when you can make a direct link. Two weeks ago, the result of that arbitration, which pre-dates us by many years, allowed us to realize $250 million in revenue that we didn’t have before. All of a sudden, that is going to make a drastic difference for Nova Scotians by way of their Internet access, not to mention the investments in health and other social programs that were realized because of that money.
That’s not to sell the story of oil and gas, that it doesn’t have its risk and doesn’t have its challenges. The reality is that it’s a vast fairway out there. The work that’s being done by BP and Statoil now, there’s no guarantees. All we can do is set the parameters by way of geoscience and by way of accelerating that offshore plan to make certain that if there is a positive outcome, and there is a flow of the resource, that we have the suppliers and the players in place to move it efficiently to service that industry whether it be an offshore rig or what happens when it comes onshore, all the related activities.
Again, the numbers are staggering. Having said all that, there are certainly no guarantees. There are varying degrees of success with offshore programs of this nature, not just for Nova Scotia but in all jurisdictions that play in that space. Because of the unpredictable nature of oil and gas exploration and what leads to the ultimate find and production of a resource, whether it be oil or gas, we don’t try to predict what those numbers would look like. Clearly, there would be agreements and contracts in place and a defined royalty arrangement, which has predated us. With respect to what’s happening out there now, it’s really just to set the parameters and let these private sector players, who are big international operators, do their thing and see what happens in the coming months and years.
That’s it. We don’t do any official calculation or have any job numbers associated with what’s happening out there now.
MS. ROBERTS: I appreciate that answer. At the same time, when you describe the economic numbers as incredible, fisheries organizations and others involved with the Offshore Alliance point out that the fishery in Nova Scotia generates $2 billion in exports on an annual basis. They’re concerned about the risks involved in offshore drilling. It’s an impossible game of trying to anticipate the risk. In the end, it’s either a zero or a one. If the thing happens, you’re wiping out an annual industry of $2 billion that’s growing at 9 per cent to 10 per cent a year in trade.
Does your department do work to ensure that there’s a cost-benefit analysis that takes those facts into account to provide that to the Canada-Nova Scotia Offshore Petroleum Board at all?
MR. MACLELLAN: There wouldn’t be. I wouldn’t categorize it as - not that you’re doing it blatantly, flippantly, or anything like that, but there’s no cost-benefit analysis because we can’t quantify the benefits or the cost of anything that would happen of that nature. It wouldn’t be a cost-benefit analysis, per se.
There’s a couple things I would say. I don’t feel as though it’s a zero-sum game where, if we allow oil and gas development exploration to happen, it jeopardizes the fishery - which is our number one export. Again, many of our communities wouldn’t exist without it. That’s not historical - that’s present day, for sure. Again, my hometown is one of them.
Fundamentally for me - not that it’s framed up as a zero-sum game - it’s not one or the other. They have co-existed for as long as our offshore program has taken place, and they will continue to do so. Here fundamentally, to the member, for me is the difference- maker. It isn’t about the politicians and the words we use around co-existing and a shared responsibility, and all those things.
As great as the department is, they can be framed as pro-environment, pro- development, or somewhere in the middle. My trust, confidence, and faith rest entirely with the CNSOPB. It really does. I have gotten to know those people as individuals, not just as a professional relationship. They have no interest in allowing something that isn’t entirely in line with environmental protection and stewardship, or understanding what the risks are. They don’t want any part of our offshore harvest in terms of the all-important fishery industry that we have here to be harmed in any way, shape, or form. Never mind a disaster - we don’t want any impact whatsoever.
If we can’t have faith and confidence in that board - and I know there are additional interactions and layers with CEA, the Canadian Environmental Assessment Agency, which works hand in hand with the offshore. We have to know that and trust - I do - that they are the experts. There’s no slant in terms of their wanting development over environment or environmental protection and stewardship. They’re making sure of the safety processes so any work being done by Nova Scotians or any workers who are out there is being done with the most stringent safety procedures being followed, equipment and support pieces that have to be there are in place. Number one is about the protection of people but also, of course, the environment. We can’t take a risk, so to speak, to advance a project that would, in any way, jeopardize a small area, let alone a massive expanse of our ocean.
There is a vested interest in doing the right thing for Nova Scotians. I understand that people can perceive the CNSOPB as something different than that, but they’re regular human beings who care about the province collectively. They just want to do a good job to ensure diligence so that no disasters, no environmental hazards, and certainly no loss of life or impact of human safety take place out there. That’s what they’re established to do. That’s what they’re instructed and mandated to do. They do a good job.
We can’t lean in. We don’t lean in. There is no direct interaction by way of trying to influence their decisions, their deliberations, or their processes. It’s all done at arm’s length, and it’s not our place to get involved.
I have to know that, at the end of the day, we’re doing those things and that safety, environmental protection, and environmental stewardship are in place at all times. That’s certainly the best that we can do.
MS. ROBERTS: All that said, Australia just rejected a proposal very similar to the current proposal by BP. Does that concern you? Do you have any perspective on what the difference was between our project and the one that was just rejected in Australia?
MR. MACLELLAN: Did you say that was BP as well?
MS. ROBERTS: Yes.
MR. MACLELLAN: It’s funny - not ha-ha funny but peculiar - that you mention that. When I was asked similar questions by the media earlier this week, one of the journalists asked, are you concerned about BP’s activities out here because of the connection to Deepwater Horizon and what happened in the Gulf eight years ago? I don’t want to say that I’m not, because I don’t want to dismiss any concern that any person or whatever has - government, politician, bureaucrat, or anyone else. But to reiterate my answer to the previous question, I don’t have to trust BP’s processes or motivations or decisions per se because I know that the CNSOPB, in consultation with CEAA, are going to protect us. I know that’s a pretty lofty responsibility to put on them, but they’ve earned it, and they’re not going to allow anything that breaks procedure, breaks code, violates or hinders safety, threatens or impacts the environment - that’s not who they are.
I don’t have to get those assurances from any company; I just have to get them from the regulator who we give arm’s-length authority and arm’s-length responsibility to get this right for us. Of course, the optics around those things don’t look great. I don’t know the details. I certainly couldn’t compare what BP was pursuing in Australia vis-à-vis what we’re doing off the coast of Nova Scotia, I can’t speak to that. But I know the CNSOPB will look at every detail. They’ll comb through the data. They’ll look at what’s being proposed - how it could impact the environment and people, the fisheries, and all things that go into projects of this magnitude. I trust the CNSOPB and we want to ensure that they protect us, and we know they will.
MS. ROBERTS: I’m going to jump to another question because I’m running out of time. In 2017, the CEO of Nova Scotia Power, Karen Hutt, earned almost $700,000 in compensation, and the combined earnings of the top five earners at Emera - the parent company - was $1.4 million. Rate increases are not supposed to fund executive pay, but it’s still clear that Nova Scotia Power is generating a lot of revenue that is not going back into improving infrastructure or reducing rates.
Your government back in 2013 promised it would push the URB to reduce the rate of return that Nova Scotia Power is allowed to make. What progress have you made on that?
MR. MACLELLAN: I think this is just part of your question. I was just thumbing through there and trying to get something on the first piece. I’ll give you this aspect of it. Anything that the senior leadership group and the senior staff at Nova Scotia Power make, their rates are in respect of the ratepayer, they’re capped at the level of the deputy minister. Anything over and above that in terms of their remuneration, the costs are borne by the shareholders of Emera. That’s the compensation piece. Your second part?
MS. ROBERTS: There was a suggestion, I believe as part of the campaign in 2013, that your government would push the URB to reduce the rate of return that Nova Scotia Power is allowed to make.
MR. MACLELLAN: We’ve obviously done a number of things that impact Nova Scotia Power and Emera. We do what we can from the government side, and then of course there’s the URB. Obviously, the performance standards that we put in motion really keep Nova Scotia Power in check in terms of certain things that they have to deliver on: the electricity plan, rate stability, which has led to an annual increase on average that was less than inflation. So, there have been some measures that I think have played a role.
I don’t remember if it was - maybe the member can clarify that it was a platform piece - and with that, I have run out of time.
MS. ROBERTS: Thank you for your answers.
MR. CHAIRMAN: Minister, we have just two minutes left. I would invite you to have a couple of closing comments.
MR. MACLELLAN: I want to thank the member who has been very patient asking specific questions and giving us the opportunity to pull together that information. There may be a few components that we have to follow up on for her caucus and the Official Opposition as well. We’ll certainly do that.
I do just want to take these last couple minutes to thank the government caucus for sticking in there. These stretches are pretty long for both sides so we appreciate their diligence. Of course, first and foremost, largely I want to thank the staff: Simon; Chris; Kim, who was here before; Keith Collins - I don’t want to list too many - Toby, who has been a champion; and of course Aaron. They make this tick and it’s easy for us to make this happen. They’re the ones that do it year over year. We appreciate their work and I’m happy to be joined by them.
MR. CHAIRMAN: Thank you. That concludes our time for today.
We are adjourned.
[The subcommittee adjourned at 7:09 p.m.]