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April 19, 2001
Supply Subcommittee
House Committees
Meeting topics: 
Subsupply -- Thur., Apr. 19, 2001

[Page 583]

HALIFAX, THURSDAY, APRIL 19, 2001

SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY

1:42 P.M.

CHAIRMAN

Mr. David Hendsbee

MR. CHAIRMAN: Good afternoon, everyone. I would like to call the Subcommittee on Supply to order. This is Thursday, April 19, 2001, and the time is now 1:43 p.m. The debate on estimates will continue with Resolutions E12 and E14.

Resolution E12 - Resolved, that a sum not exceeding $3,200,000 be granted to the Lieutenant Governor to defray expenses in respect of Communications Nova Scotia, pursuant to the Estimate.

Resolution E14 - Resolved, that a sum not exceeding $13,055,000 be granted to the Lieutenant Governor to defray expenses in respect of the Executive Council, pursuant to the Estimate.

MR. CHAIRMAN: This minister is responsible for the Public Service Commission, the Treasury and Policy Board, and Voluntary Planning. Mr. Minister, you have an opportunity to make some opening remarks. When your staff arrives, you can introduce them to the committee. Then we will start with your questioning.

The honourable Minister of Human Resources.

HON. RONALD RUSSELL: Mr. Chairman, what I would like to do, with the concurrence of the membership of your committee, is deal, first of all, with the Department of Human Resources, soon to be known as the Public Service Commission. We would do that first, and then I would have a different crew come in and we would do the former P & P, Priorities and Planning, the future Treasury Board and Policy Board, and Communications Nova Scotia following the presentation on Human Resources.

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MR. CHAIRMAN: We will certainly try, sir, but with the questioning of the Opposition, they may, from time to time go back and forth among various departments.

MR. RUSSELL: Understood. Mr. Chairman, I do have an opening statement, which I think describes what the Department of Human Resources has done over the past 12 months, and how we are changing over to the Department of Public Service, and that we have certain changes in our responsibilities and mandate when we make that change. I will have some staff here shortly, and I will introduce them when they come. What I would like to do is take a few minutes at the outset to talk about our priorities for the current fiscal year, as well as highlight the department's accomplishments over the past year.

Mr. Chairman, on April 5th I had the pleasure of introducing the Government Restructuring Act which creates the Public Service Commission. Today more public services are being delivered by boards, authorities and agencies, and not directly by government departments. We recognize the need to do a better job of managing the human resources costs across government and across the public sector. There is also a need for increased accountability and consistency in governance.

The Public Service Commission will help government address these needs. As a government, we have seen these needs and are ready to act to improve things. The Auditor General, in his recent report, pointed to the same issues. We believed the most effective way to address these needs was to create a structure with a mandate to try to better manage human resources in the public sector. This new structure will incorporate many of the responsibilities of the current Department of Human Resources with expanded responsibility in labour relations, human resources policy and evaluation. The new structure offers Nova Scotians a more responsive, accountable and efficient way to manage human resources.

The first year of operation will be a transitional year as we implement the expanded role for this new structure. Much consultation across the public sector will be required. It is part of the government's overall strategy to increase accountability in governance, to ensure better planning for human resource needs across government, and to ensure appropriate consistency in policy development and collective bargaining across the broader public sector.

Mr. Chairman, we also believe a commission structure is a better mechanism to manage the human resources. In general, a commission structure tends to be a bit more independent as it is not part of the government department structure. It stands apart through its structure and mandate. The Public Service Commission will be mandated to uphold the merit principle in hiring for the Civil Service, an important role that commissions in other provinces also hold.

Mr. Chairman, just as an aside to that, I should mention that, as all members I am sure are aware, we did have, before the Department of Human Resources, in this province a Civil Service Commission. The structure of this present department is modelled somewhat along

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the same lines as the Civil Service Commission except that it has a broader mandate across the Public Service.

Specifically, this Public Service Commission will focus on labour relations, human resources management policy, human resources audit and evaluation, human resources programs and services. The Public Service Commission will have a special role in labour relations, where it will either act as government's agent for the purpose of negotiations or provide appropriate direction to ensure a consistent approach to collective bargaining. This will be across not only what we call the Civil Service but across the broader Public Service.

The human resources management policy function will focus on policy development and best practices which are aimed at innovative methods for developing the Public Service. The audit and evaluation function will ensure accountability through review and monitoring of program and policy effectiveness. The human resources programs and services function will provide guidance and operational direction to line departments of government in the areas of recruitment, training, performance and succession management, human resource systems, employee wellness and diversity.

Mr. Chairman, to understand the importance of having good, clear human resources management you need only look at the challenges of restructuring in government. Over the last year we have merged departments and reduced the numbers of permanent positions in government to create a smaller, more effective government. Throughout the year the human resources community, under the direction of the Department of Human Resources, provided support to departments and employees impacted by change. The transition support program we introduced last May provided enhanced severance packages for employees consisting of four weeks of salary per year of service to a maximum of 52 weeks, extended benefits during the transition support severance period, as well as providing support for career counselling and out-placement services.

Mr. Chairman, I am perhaps too close to it to be a completely unbiased observer, but that package did meet with the concurrence of the union. In fact, when that package was produced to the union executive, it was endorsed as being a suitable package, and no changes were made to the original support program that was offered.

Consultation with the union, through the technological change committee process has had our staff working closely with employees and managers to try to find placements for laid-off workers and to assist with all aspects of career transition. We have provided support to all departments of government and have coordinated access to financial planning and career counselling programs. All of these things have helped to make what could have been a difficult transition run fairly smoothly. We have also had some success on the labour relations front. With 80 per cent of our workforce in the public sector unionized, it is fair to say that at any given time there is always at least one group getting ready to start negotiations, in negotiations, or just wrapping up negotiations.

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Just over a year ago the government reached an agreement with the NSTU for a 3.9 per cent wage increase over 26 months for Nova Scotia's 10,000 teachers. Most recently the correctional workers local of the Nova Scotia Government Employees Union agreed to a three year contract with wage increases of 2 per cent, 2 per cent and 1 per cent. At the start of this fiscal year we announced salary adjustments for our non-unionized employees, mainly support staff and managers. The increases were 1.9 per cent effective April 1, 2000, and 1.9 per cent effective 2001, within the range of negotiated settlements. There have been agreements in the broader public sector for settlements in the same wage range. For example, the Nova Scotia Liquor Commission employees accepted a two year contract with wage increases of 2 per cent in each year, as did employees at the Workers Compensation Board.

As a government we are pleased with these settlements. They are affordable for government and ultimately the taxpayer, and reflect the fiscal reality in which we operate. I also believe that these agreements are fair to employees. Even in times of fiscal restraint, we have been able to continue collective bargaining and provide wage increases to thousands of public sector employees. We still have many contracts in negotiations or about to enter negotiations. While we are encouraged by the settlements reached so far, we realize that considerable work lies ahead as we try to balance the fiscal realities with our commitment to treat our employees fairly.

That highlights the work of the last year, and now I would like to turn our attention to the commission's priorities for the future, especially those focusing on renewing the Public Service. Last year I reported to this committee that we would be rolling out a government-wide initiative to review the job classification system for bargaining unit positions. The project has the input of a joint union-management committee to develop a new classification system to replace our current system, which is outdated and doesn't reflect the kind of work being done in today's workplace.

I am pleased to inform that the process is well underway. After a successful pilot in the Department of Finance, the project has now moved to all departments. Over 40 information sessions have been held across the province, and more than half of the bargaining unit employees have participated in these optional sessions. This renewed classification system will provide a needed update for job definition and flexibility for the workforce. In addition, government has undertaken a review of the management classification system, which will eventually provide the underpinnings for future recruitment and retention of management. This is the most thorough review undertaken in 20 years.

Mr. Chairman, the work being done in updating the human resources system is just one step in renewing the Public Service. Although our immediate human resource requirements are small, we know that at some point, when the budget is under control, young people can look to the public sector for a career. We have been able to meet our commitment to double the number of career start placements in government providing 16 recent post-secondary graduates with that important first-work experience.

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Government has recognized the need to recruit young people in the next 5 to 10 years to replace those baby boomers who will be beginning to retire. Although no permanent positions can be guaranteed for the interns, it is hoped that the interns will be able to gain experience and skills that will assist them in attaining other positions in government after the internment placement is finished.

Mr. Chairman, I would like to add to that that one of the problems we faced in the Civil Service over the past many years is that every time we have had a golden bowler to hand out to people, it has always gone, of course, to those with the most seniority, our most experienced people. In consequence we have very few people at the bottom who have a long work experience. What we have to do - and I know this sounds foolish when we are talking about downsizing government - in point of fact, is start to actively recruit people to come into government. The number of people we have in the Civil Service under the age of 30, in what I will call the permanent Civil Service, is something like about 20, can you believe that? Out of 5,000 people, we only have 20, I think, no, it is a little bit more than that, I will get the number when my people come, it is probably 40-something. There is only approximately 40, I believe, less than 30 years of age. That is completely untenable.

You can't build the expertise that we need in government today, working for the government is no longer what it used to be, where you came in, if I may use the word, by virtue of the fact that you knew somebody. People now come into the Civil Service by what I think and hope and trust is a fair system of taking the best candidates. We are not recruiting the best candidates, because they are going off into other things in the private sector or into other professions. It is very important that we do go after the young people.

Now that we have made great strides in bringing in effective structure, an improved system and more stability to government, we hope that once again the public sector will become a career and employer of choice. Over the next few years we face the challenge of revitalizing the Public Service at a time when we are still working to balance the operating budget and keep it balanced.

Mr. Speaker, I am optimistic that we can achieve that renewal, particularly with the new human resources management structure that we are introducing. Thank you, and I would be pleased to answer any questions on any subject, as I said I will answer questions on anything, but I would like to do the human resources part first and then deal with the Management Board because they are two really separate departments.

MR. CHAIRMAN: It is now time for questioning.

The honourable member for Halifax Needham.

MS. MAUREEN MACDONALD: Mr. Chairman, I would like to thank the minister. That last bit of information, about the age of people in the Public Service in Nova Scotia, is

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really staggering, I have to say. I would agree it is untenable. I understand that this is a problem that the federal government is experiencing, as well.

[2:00 p.m.]

MR. RUSSELL: Pardon me for interrupting, but you are absolutely correct. In fact, the federal government is in worse shape than the provincial governments because they have a harder task to recruit, particularly in the Ottawa area where there is such a boom in the high-tech industries.

MS. MAUREEN MACDONALD: I would think that this probably reflects years of hiring freezes in the Province of Nova Scotia, and the fact that young people will go into areas that they see as being more attractive in terms of the potential for higher earnings or career advancement, those kinds of things. You have identified this as a problem. Did I hear you correctly that there is a group that is doing some work to develop a plan to address this? What will the strategy be to address this?

MR. RUSSELL: We hope that the program where we bring in interns, the internship program, Career Start Placements is the program, as I said we brought in 16 post-secondary graduates to get work experience with the government. That is only a minor way of getting people. I can't answer what we are going to do, but we are going to have to do something and it is going to have to be directed towards getting into the universities and speaking to students at job fairs, and overall to create the impression that if you come into government you do have a future, you do have an interesting job, and you have the opportunity to move up through the ranks to the top position, providing you have the aptitude and you have the drive to do that.

Mr. Chairman, I will get off my soapbox, but one of the things that really annoys me in this province is the fact that so often we go out of this province and bring people into places of responsibility. There is absolutely no reason - and I have said this in front of the deputy ministers and other ministers - why we should go out of this province to recruit deputy ministers. My God, we have people in this province who are being courted by other provinces to go out there and become deputy ministers, why are we going out and bringing in talent from other provinces, normally at great expense? In point of fact, our deputy minister salary range is quite low. When you bring in these people from away, when they come in here they want Heaven and Earth and money in the bank before they even start work. I think we have to demonstrate that people within our Public Service, if they work at their jobs, they show their interest and they have the talent that they can get to the top.

MS. MAUREEN MACDONALD: I think this is true. With all due respect, your own government's record on this with respect to Health and Education, two of the largest departments, has in fact reflected that tendency to look elsewhere for leadership at the deputy

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minister level and with salaries that far exceed what people had been making in those jobs prior to recruiting people from out of province.

MR. RUSSELL: I should quit interrupting you, but going back to that business about recruiting from out of province. One of the reasons is that we have been hiring head hunters to recruit for us and there is no reason why this department, the Public Service Commission, can't do their own recruiting, but we have gone out and we have gotten outside consultants to do the recruiting for us, at great expense too, I might add. They have gone out and done that and they are the people who have looked outside of our own Civil Service, believing, I suppose incorrectly, that we don't have anybody within our own Civil Service that has the potential to take those positions.

MS. MAUREEN MACDONALD: I want to ask the minister a question with respect to the direction that the Hamm Government initially took with respect to the public sector in this province, there was a program review. There was a great deal of speculation that the Public Service, in fact, would be downsized, that positions would be lost and I think that maybe that creates an impression for certainly young people and people that there isn't going to be work available in the public sector. But, more to the point, I want to talk about whether or not you found the bloated Civil Service, that some allege was the problem in Nova Scotia, with expenditure or not in that process.

Now that we are talking about the need to rethink how to get people of younger age into the public sector in Nova Scotia, can you give us some indication of what in fact you found when you looked at various departments and the labour needs of the public sector?

MR. RUSSELL: That is a very good question because there never has been, I don't think, a bloated Civil Service in this province, and I am speaking from a few years of experience. But I do think that the government was doing things that they didn't have to do and that created numbers of civil servants beyond, perhaps, what we should have, being a province of something less than 1 million population. What we have done since we came into government is look at what we are delivering to the public, what services, what programs, et cetera, we are delivering to the public and whether or not some of those services can be delivered better by technology rather than people and, also, whether some programs were programs that we should not have because they were either duplications perhaps of other programs or perhaps they had lost their original intent or perhaps they were programs that could be better delivered by the private sector.

In consequence, what we did was we eliminated programs and then when we eliminated those programs, well, the people delivering those programs were in positions that were removed from the Civil Service. But we knew early that we were going to do this so that back in 1999, when we came in in the fall, we looked, first of all, at the programs and then we started advising departments that such and such a program was going to be either downsized or removed. In consequence, what the departments did was they created a

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tremendous number of vacancies, simply because they did not fill any of those positions coming up in those programs, so that later on, when we came to actually downsizing or cutting back on the number of FTEs in government, we only had a fairly small number of actual live bodies that would be without a job within the Civil Service.

MS. MAUREEN MACDONALD: So my impression, talking to people inside the Civil Service and in the Government Employees Union that represents many of these folks, is that, in fact, for quite some time now, because of hiring freezes and budgetary constraints, there were a significant number of vacancies throughout the Public Service and that these are jobs that have put an enormous amount of stress and pressure on the people who are left still having to do the work. These jobs may appear on the books but, in fact, there were no bodies doing the actual work and, therefore there weren't people to eliminate at all when the programs were examined.

MR. RUSSELL: That is absolutely correct. The reductions - and I have got the numbers here so I will read them off to you - in 2000-01 were 608 full-time equivalents, that is positions. Now these positions have disappeared and by that I mean that the number associated with that position has gone so that there is no basis to pay anybody for that position.

Before I go any further, I should introduce you. On my right is the Deputy Minister of the Department of Human Resources and shortly to become, I believe, probably the Commissioner of the Public Service Commission and on my left I have Joyce McDonald, who I should know very well because she not only looks after the financial affairs in the Department of Human Resources, but also in what is going to be the Treasury and Policy Board. On the far side, I have Heather de Berdt Romilly, who is the policy person in the Department of Human Resources and, also, a lawyer. Behind me is Norma MacIsaac, who is responsible for communications.

Having said that, we will get back to the positions. What has happened in the past with downsizing in government is that they release people, but the position numbers remained. In other words, over time people started filling those position numbers again and things just kept rolling along. What we have done in this exercise is we have taken away the program. The program is gone and we have taken away the numbers for the positions that are associated with that program. So as I said, there were 608 FTEs less and the number of people that were actually released were 180 persons who moved off into other occupations or took retirements or what have you.

MS. MAUREEN MACDONALD: Could the minister tell the committee how many people are being paid at a deputy minister level now versus one, two or three years ago?

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MR. RUSSELL: When you say at the deputy minister level, we have people who are deputy ministers and we have people who are deputy in status and I presume that you want to know the total of the whole works. We will have to get back to you on that number.

MS. MAUREEN MACDONALD: Can the minister provide an up-to-date breakdown of the Public Service by wage levels and classifications with comparisons to prior years to show what kinds of jobs are being cut?

MR. RUSSELL: We can. In fact, I think I saw a piece of paper yesterday - didn't I? - with the decrease in the total salary picture for the Civil Service, but we will get you the whole package.

MS. MAUREEN MACDONALD: It is sort of difficult looking at the estimates and looking at this new entity and trying to figure out how to compare that because the categories have somewhat changed and it is really hard to tell.

MR. RUSSELL: This is going to occur, unfortunately, with every department that is being examined in that you are going to have to look at last year and then decide where various functions of that department went to and did the people go and did the money go, et cetera, with the people.

MS. MAUREEN MACDONALD: One of the things that I have a particular sort of personal interest in is the whole question of affirmative action in the Public Service. I know that affirmative action policy is a relatively recent policy in the Public Service in Nova Scotia and, quite often, when there is downsizing or reorganization, the last people in the door can be the first people out the door. Our Public Service, I know, hasn't reflected the population in Nova Scotia all that well and that's what the affirmative action policies are designed to address. Hopefully, they have had some effect, but I want to know if the hiring targets under the affirmative action policy are still in effect and what steps has the government taken to monitor the effect of job cuts on the representativeness of the Public Service in Nova Scotia?

MR. RUSSELL: My deputy has passed me a sheet which indicates that we're holding steady with the number of aboriginals in the Civil Service. The Black population has increased. The other racially visible minorities have increased. Persons with disabilities have remained steady, but the number of women has decreased. It was at 55.63 per cent and it is down to - I don't know what it is down to, but it is down somewhat.

MS. MAUREEN MACDONALD: Is it possible to table information that gives that kind of . . .

MR. RUSSELL: Sure.

MS. MAUREEN MACDONALD: That would be very helpful.

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MR. RUSSELL: Yes, no problem.

MS. MAUREEN MACDONALD: I would like to ask what changes have been made in the program review database to improve the quality of analysis that Cabinet gets, the political objectives or the policy objectives of Cabinet, with respect to the public sector?

MR. RUSSELL: The policies of the Department of Human Resources, as will happen with the Public Service Commission, are in accordance with the policies that are developed within the Treasury and Policy Board. In other words, the Public Service direction, I suppose, is in harmony with the direction of the government. Now, I am not sure if that's what you meant or did you mean how we feel about the Public Service and the administration side of it?

MS. MAUREEN MACDONALD: Yes, I think that we hear members of Cabinet talk about evidence-based outcomes and this kind of rhetoric, at least that there be some sound basis on which policy decisions are made and then that requires information to be gathered, collected in a particular way, so that you have a quantifiable information base on which to make decisions around allocation of resources and what have you. So I guess that's what I am asking about. I am asking about whether or not you have the program review database of a particular quality that will allow you to provide that kind of analysis that gives Cabinet adequate information on which to be making decisions that will have long-term impacts, not only on people who deliver programs, but also on the quality of the programs that are available to people.

MR. RUSSELL: I have no difficulty saying that one of the primary objectives of the former Human Resources Department and the new commission is certainly to have a workforce that has high morale and is aware that they are very valuable employees to the government. I think I made that remark earlier about how we hope to encourage young people to come into the Civil Service and to choose from within when we are selecting middle and higher management.

The training curriculum that we have now - if I can use that word, I suppose I can - at the present time, is very good. In fact, as I understand it, we are one of the better provinces insofar as providing ongoing training for our employees. We have also attempted to adopt one of the best practices across the country for our Civil Service. We have recently updated our management manual so that employees know exactly what their benefits are and they know that there is a commonality among all departments.

At one time, as the honourable member is aware, there was a difference there and some people in one department either in truth or perhaps just by rumour, seemed to - other people seemed to think that they were getting a better deal than say the people in another department and that shouldn't happen. People who are in the Civil Service should know that

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if they go from department A to department B, they will receive exactly the same benefits and the same benefits of service as they were receiving in another department.

I don't know what else I can say really. One of the things that we are going to encourage - perhaps this is a good time to mention it - is the fact that we are going to try to get more secondments within the Civil Service between departments and, in particular, into the Corporate Services survey units where they have the opportunity to learn how the rest of the Civil Service operates. We are trying to get people out of the departments so that they have a better comprehension of what the aim of government is and I suppose to pick up, as well, other talents along the way because every department has its own specialities. I think that's a good way to get training for everybody.

MS. MAUREEN MACDONALD: I don't know if I am getting to the meat of the issue, but I think when the program review initially was done in the various departments, there were three categories of criteria that were applied. So sort of like an essential service, essential services, the bottom one wouldn't be created, if it was required today or something like that.

MR. RUSSELL: That's right, yes, I forget exactly what the term was myself.

MS. MAUREEN MACDONALD: That's right. So basically I think what I am trying to find out is has that changed in any way? Does that continue to be the criteria that is being used in assessing program review or has program review evolved to include maybe a more detailed set of measurements that are being used to improve the quality of information that Cabinet has? That's the question.

MR. RUSSELL: The first run-through program review was done very rapidly because we wanted it done before the budget in 2000. So we had a very short time, Mr. Chairman, as the honourable member I am sure is aware. We had about four months to go through, I think we estimated it was, about 900 programs first of all, but in truth it ended up at over 1,000 programs to go through. So it was perhaps too fast a read to be able to determine in-depth the value of some programs that fell into that category of perhaps necessary, but not essential. So those programs were virtually untouched.

What we have done during this budget exercise is to go through the programs again and they will be gone through again every year, because the needs of the public of the province are changing. Our ability to pay for programs is changing. The ability to look at programs to see if there is overlapping through a program in one department compared to another department could be taken care of by getting rid of one of the programs and, of course, we have the business plans for each department which outlines the future intent of the various departments.

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MS. MAUREEN MACDONALD: So are you still using the same criteria in that process or has that changed? Could you provide the templates that are being used to give us an idea of what information is now available in terms of . . .

MR. RUSSELL: I would have preferred to answer that question actually when I had my people here from P & P because this is a P & P exercise. When you say the templates, I think the templates have changed from the original one because, as I said, we had a huge number of programs to examine. They were examined by committee. Now they're being examined and evaluated by Priorities and Planning or the Treasury and Policy Board. So it is a slightly different process.

MS. MAUREEN MACDONALD: In your opening remarks, Mr. Minister, you talked about the review that's underway of the classification system. I am wondering if you could elaborate on that review a bit more. You say that it is a joint process between people from your department and the unions representing public sector workers. I am wondering if that review process will be a process that will be looking at designating any of the workforce as essential service workers or will it be . . .

MR. RUSSELL: We don't have that category within our Civil Service, as you know. I would say no. This classification review was started about two years ago. It was ongoing before (Interruption) Okay, it was negotiated during the last contract with the union and it was a joint union and employee type of mission. We hired KPMG - okay, that's who Watson Wyatt is today - and they were selected by the tendering process to provide a job evaluation system and professional advice and the union made a financial contribution, as did the province, to the cost of the consultants and I think, as I mentioned in my opening remarks, at the present time we have just completed the pilot in Finance.

MS. MAUREEN MACDONALD: So are there any plans then in your department to develop criteria to look at the whole issue of essential services? This certainly is something that is out there as a concern that will be part of the restructuring of Human Resources into a Public Service Commission.

MR. RUSSELL: Yes. I should touch wood when I say this, but we have been fairly fortunate in Nova Scotia with regard to not only the Civil Service, but the greater Public Service, as well, has normally been able to settle the differences between the union and management at the bargaining table and I would hope that that would continue.

I do sometimes think though that there are services that are essential to the public safety and well-being. Policing is one. I remember we had a police strike in this city a few years ago. The fire departments, nursing services, those kinds of things, I think are for the benefit of the public as a whole and certainly essential from the point of view of their well-being and, as I say, to date we haven't required that kind of legislation and we are one of the few provinces, I guess, that don't have essential services legislation. Quite frankly, we are

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not considering it right at this moment, let me say that, but I presume that if the need became apparent, we would probably think of joining other provinces in providing some form of either negotiated essential services or else do it by legislation or whatever other process is available to us.

MS. MAUREEN MACDONALD: I think that largely today much of this kind of issue is dealt with in collective agreements. So I think it would be very good to have some clarity from a new government with respect to what the thinking is on this. I know that there is a concern about this and what some of the restructuring will result in may go far beyond just establishing a Public Service Commission.

You also at the beginning talked about the merit principle with respect to hiring. I want to ask a question about merit-based pay. Merit-based pay has become certainly a very popular practice in the public sector for senior managers and I am wondering how prevalent merit-based pay, if it is prevalent at all in the Public Service here in Nova Scotia, and if it is, at what level is it applied; across the spectrum, or is it applied only at the deputy minister or other levels? Could you elaborate on what the practice is?

[2:30 p.m.]

MR. RUSSELL: I think I could probably refer to the blue book. I think we did make a commitment within the blue book that we would look at some kind of merit pay, and we haven't as yet done that; however, that is one of the things that is on the books to do. We are looking at a reward system for performance.

MS. MAUREEN MACDONALD: This would be for senior managers?

MR. RUSSELL: I would think it would be right across - we are looking at senior managers first, but perhaps down the line we would extend that across the board for the entire Public Service.

MS. MAUREEN MACDONALD: What would the criteria be for awarding someone additional pay? Would it be the improvement in public services, or would it be reducing the costs of public services? Those are sort of the two things that come to mind.

MR. RUSSELL: I think you would be aware of the Hay system.

MS. MAUREEN MACDONALD: No, I don't think so.

MR. RUSSELL: I am told that the Hay system is part of the revamping. The Hay system has been around for a long time. What it does really is when you come into a position, there is a salary base for that position; however, you may be paid what is called a compa-ratio below that. In other words, you might come in at 80 per cent, which means that you get 80

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per cent of what the 100 per cent salary is for that job. If you have been there for quite a period of time, perhaps, and you are at the top of your level at 100 per cent of the salary for that position, it is one of those events where you can actually earn more than 100 per cent, because you could get up to, I believe it's 4 per cent? (Interruptions) The government sets an envelope and it is possible to get above that.

That is based on experience, and it is also based on personnel assessments by the head of their department. We are endeavouring to link performance to government objectives. I think that is probably the only way we should be doing it.

MS. MAUREEN MACDONALD: I ask the question because I think that there is a growing feeling, certainly in the public, in the electorate, in people I talk to quite often, that there is a lack of fairness in the way we reward or award or pay people, especially now that people who are senior managers have been able to see increments in their salaries, that people, as you go down the organizational ladder, don't approximate in any way. I think this is fairly prevalent, if you read the letters to the editor and if you talk to people. I think there is certainly some justification, a lot of justification I would submit, for these feelings, when they see six figure salaries in the district health authorities, for example, and the kinds of golden handshakes we have seen, and the information that slips out from time to time.

I think that it is really important that there be a fair system in place and one that is very open and transparent so that we start to address this growing discontent in the public with the way the public sector is managed, and the concern that there isn't fairness and equity between people who are on the bottom, who are struggling really hard these days just to keep pace with the cost of living and inflation - the folks who are outside the Legislature today would be a good example of that - compared to administrators in the system.

I really don't have an awful lot . . .

MR. RUSSELL: Perhaps I could answer that question.

MS. MAUREEN MACDONALD: Yes, go ahead.

MR. RUSSELL: The system I was talking about a little while ago, the Hay system has been around for about 20 years, and it is hopelessly outdated, if we continue to use exactly the same system. The Hay system itself has been updated and we are moving into the new Hay system.

You raised the point about certain agencies and boards, et cetera, where the salaries are not in concert with those being paid in the Civil Service. You are absolutely right, and that is one of the reasons why we hope, in moving to the Public Service Commission rather than the Civil Service Commission, we will be able to have a voice at the table in those various boards and agencies, et cetera, that are funded by the provincial government but,

[Page 597]

however, have their own structured methods of negotiations. We are not asking to take over from them, we are saying we should have somebody at the table, somebody from the commission at the table who is speaking on behalf of the government, however, making sure that everything is kept in line.

In other words, if you are working for the Department of Health across the road here or you are working for the Department of Health obliquely, when you are working for a board, there should be no difference in your salary and, for that matter, in the perks that you get within your position. There should be commonality, and that is what we are aiming for.

The other thing that we are doing, and this is just very recent, is that rather than having departments deciding to hire somebody on contract and writing the contract for that person, we say now that contracts can be written but they cannot be signed, sealed and delivered until such time as that contract has been put through the Public Service Commission to ensure that that contract is in concert with all other contracts for all the positions that are equivalent. I think it is fair. I think it promotes fairness for the government, it promotes fairness for the other civil servants who are not, perhaps, in that fortunate position.

MS. MAUREEN MACDONALD: Okay. I am going to turn it over to my colleague, the member for Hants East.

MR. CHAIRMAN: The honourable member for Hants East. Mr. MacDonell, your time is 2:41 p.m., you have 17 minutes remaining.

MR. JOHN MACDONELL: Mr. Chairman, I will say thank you to the minister and his staff. I appreciate the opportunity. Most of my questions will be around P & P. I have a couple of questions related to comments you have made already. I find what you said to be interesting and educational, not that lots of things you say I don't find educational.

Your comments around the number of civil servants who are so young and the need to try to recruit new people, if you are going to develop any expertise over time in the system, I really find that is almost so sensible I am surprised you said it. I guess, considering what I have seen of the government in the past couple of years, it seems to go almost totally opposite of the actions that government has taken. The thing that comes to mind right off the bat certainly would be the Department of Agriculture. I am wondering, in your own mind, when you talk about the Civil Service, I am thinking of the Department of Health, do you consider people who are on the front-line under that whole envelope or do you just think of higher-level bureaucracy, administration but not nurses, or do you think of them all as the same?

[Page 598]

MR. RUSSELL: That is an excellent question, John. The Civil Service of the province consists of a relatively small number, it is about 6,000 people. The Public Service, that is the people who are paid by the government, however, we are up around about, it depends how you count them but it is a very large number, let me put it that way. That is why I think it is important for the government to have a Public Service Commission. They have them in most other provinces, incidentally. While they do not direct, for instance, the school boards as to their negotiations, at least they have somebody from the government, from the commission, now the Public Service Commission at the bargaining table.

MR. MACDONELL: I think I like what you said. I guess what I am getting to is, do you see a need in having new people coming into the Public Service as well? Do you see the fact that by letting people go and causing situations where you have a more difficult work environment, not enticing people to come in, and by that you are increasing the age of your workforce and reducing your expertise, do you see this as significant with the Public Service as well?

MR. RUSSELL: I was talking earlier about the need for recruiting young people into the Civil Service, and I was saying the number of people in the age group below 30 is very small, less than 20. I was right the first time, I thought I might be hanging out to dry. That is completely unacceptable. If you are going to have succession in any business, whether it is government or the private sector or anything at all, you have to have people at the bottom moving up through the system, otherwise the top goes and there is nothing down here. It is like in the Legislature, we have to have young people and we have to have old people. When I retire the job will be up for grabs by somebody else.

We do have to go out now and actively recruit young people to come into the Civil Service. We have to be at job fairs. We have to be in those areas where there are young people who are considering a career in some kind of an administrative-type position, and say, look, the Civil Service has a lot to offer, I should say the Public Service has a lot to offer. We are prepared to take people and train them, and we are prepared to stay with them. If they exhibit those traits that indicate to their superiors in the Civil Service that they have the ability and the desire for higher management, they should have the opportunity to go through and become deputy ministers.

MR. MACDONELL: I am glad to hear you use the term Public Service. I am really curious as to your overall vision of when you expect to bring about this change of trying to bring more people into the Public Service, because up until now I have only seen people going. You are obviously going to have to plan to spend some money, I would think, if you are going to do that. When is that going to happen?

MR. RUSSELL: As I said, the Career Starts Program is very small, but it is something that is held out as an enticement for people to come in and at least sample the Public Service and to see if it is to their liking. We do not want to increase the numbers that

[Page 599]

we have in the present Public Service, because we believe that we have a lesser number of programs to deliver today than we did in the past, and therefore we should need less people. Having said that, I recognize the fact that to bring young people in you are going to have to get rid of some of the people at the top. Hopefully, in our business plan we have that ability that as people retire, when we come in for replacement we move people up the ladder and there is a slot in consequence of that ladder at the bottom for somebody else to come in. That person should be a person who, as I say, is a younger person.

MR. MACDONELL: I guess I have to agree that certainly the approach of how you go about bringing in new people would tend to make sense, although as long as you do that when you still have some expertise to counsel them would be a good idea. I do want to say that I am not sure you have enough people to deliver the services, even though you have a reduction in service and say therefore we can get along with a reduction in people. I am not sure that you have the right number of people to deliver the services you are presently trying to deliver. I would say that you are probably understaffed, especially if we are going to talk about health care as a Public Service.

MR. RUSSELL: I can't answer that question, quite truthfully. I can assure you, though, that it is not our intention to reduce the Civil Service by doubling up the workload on somebody else, that isn't the intent. The intent is in reducing the numbers of the civil servants by having less for the civil servants to do. That should be our mantra, and I hope that we continue in that fashion.

Also, we have different ways of doing things today that can indeed get the same amount of work done with fewer people. I am not going to go into this business about everyone has a computer, but that does help. That is one of the things. Another big assist to people management today is the fact that you can get a hold of people no matter where they are if you buy them a cell phone and that actually saves a tremendous amount of time and a tremendous amount of personal effort.

Also, departments do things, let me give you an example. There is no media in here, so I will give it to you. For instance, if somebody in the Department of Agriculture and Fisheries, or any other department, for that matter, has a problem with a computer up in Cape Breton, they would send somebody from their closest office, the Department of Agriculture and Fisheries or whatever department, person to that job. The Department of Transportation and Public Works used to do the same thing. But within the Department of Transportation and Public Works, we have all that expertise in one department. We have people all around the countryside. Why, for instance, should the Department of Agriculture and Fisheries, to take another example again, which has a broken computer up in Cheticamp or somewhere and have to send somebody from Antigonish when we have people, maybe, just down the road in one of our garages that has that capability? There are genuine savings there. You aren't making people work any harder. You are just doing the jobs differently.

[Page 600]

MR. MACDONELL: Would the Pages who work in the Chamber here come under Human Resources?

MR. RUSSELL: No, they come under the Office of the Speaker and they are, of course, casual employees.

MR. MACDONELL: Okay, so have they always been casual employees?

MR. RUSSELL: Well, just a second now. Are we talking about the people that are working on the floor of the House or are we talking about people like Peter?

MR. MACDONELL: No, people who work on the floor of the House.

MR. RUSSELL: On the floor of the House, they have always been casual and, as I understand it, at least it used to be that they could only work for two sittings of the House or two years.

MR. MACDONELL: I would like to ask you some questions about P & P, if I could.

I don't know if you have to make a change. I guess one of the things that I do want to say, as people are changing, is I don't think I really understand what P & P is or what P & P does. I know from my limited experience in trying to chase down or get schools for my constituency, I always had heard, well, this has gone to P & P and they are going to make a decision and take it to Cabinet. So I would like you to kind of frame, if you could, exactly what P & P is, what the make-up of it is in relation to staffing and Cabinet, if there is a link there and exactly what its role is.

MR. RUSSELL: Sure. P & P came about as a successor organization to what used to be the Management Board and the Policy Board. They were created back in the late 1970's and the objective was that we would have a core agency that would examine the financial dealings of government and the personnel dealings at government and, at the same time, looking at the policy of government and integrating that with those other two functions. I should also mention that the Management Board and the Policy Board both reported to Cabinet and the boards were composed of Cabinet Ministers, not necessarily the entire Cabinet, but I think there were seven on each of those two boards.

At the present time, we have P & P, which is Priorities and Planning, and that in essence is supposed to be doing the same job as Management Board did, but it isn't doing that. The fact that you don't understand how it works, don't feel badly about it because most people in government don't understand how it works either. It is an agency of government. It is an agency that oversees financial dealings and personnel dealings and provides to Cabinet advice as to whether a particular proposition coming to Cabinet is acceptable in its present form or whether it should be amended or changed, et cetera.

[Page 601]

Now the new Treasury Board, which will be established when we are able to get the bill through, is something like the Management Board and something like the P & P Board, except that it will have a much larger mandate. A lot of departments' budget numbers are required to expend funds only within that budget but, however, sometimes departments get out of line somewhere during the year and they end up with an overdraft, if you will, and they have to come back for an extra appropriation.

One of the reasons why we have had so many extra appropriations of late is because we haven't had a function in government like what Treasury Board will be and like what Management Board will be and that is retaining a how-goes-it, if you like, every month on a department. How goes it with your budget? How goes it with a number of people you have got on staff? Those kinds of answers are provided to the Treasury Board and the Treasury Board says, look, if you carry on the way you are carrying on, you are going to overspend at the end of the year by $1.5 million or $200,000 or something. You are going to have to make some adjustments within your department. You get it early because it is no use getting it at Christmas time and saying that in the next three months, you have to save yourself $2 million in a department. You can't do it. What you have to do is catch it month by month and make sure that departments are staying on line financially. You have to keep checking that they are not hiring additional people and you have to make sure that they are adhering to their business plan and that they are also adhering to the policies of government. That is actually what the Treasury Board does.

MR. MACDONELL: A check and balance?

MR. RUSSELL: I am going to read the description here from the Estimates Book. "Treasury and Policy Board (TPB) is a new Central Agency . . ." - and that is exactly what it is - ". . . created to support the Treasury and Policy Board Cabinet Committee . . ." The Cabinet Committee, at the present time, for Treasury Board and Policy Board, because we have a fairly small Cabinet, is composed of all members of Cabinet. We have a broad mandate . . .

MR. CHAIRMAN: Just to advise that his time is up, but I will allow the minister to answer the question.

MR. RUSSELL: "TPB has a broad mandate to effect better co-ordinated policy, financial, and communications planning. Policy and financial planning will be enhanced, with the goal of improving accountability in government- funded departments and agencies." To put that down in common terms, as I said before, it is to oversee all financial matters within government, all personnel matters within government and also to ensure that the policies of government are kept in mind whenever a department carries out some particular plan of their own.

MR. MACDONELL: Thank you and I will be back after the Liberal caucus.

[Page 602]

MR. CHAIRMAN: Time has expired for the NDP caucus for asking questions for their first hour. I just wish to advise members of the committee, on two occasions, we have lost quorum for two minutes apart, so I will be adding four minutes to our closing time today to make sure that we have our full four hours of debate in. So I encourage all members to make sure we have quorum while we have these proceedings. I let the question go on for fluidity and I was tracking the time that we did miss quorum. So I want to make sure that we are not short judging anyone. I want to make sure the time is on the record. It is now time for the Liberal caucus to ask questions of the minister.

The honourable member for Cape Breton the Lakes. Your time is 2:59 p.m.

MR. BRIAN BOUDREAU: Good afternoon, Mr. Minister.

MR. RUSSELL: Good afternoon.

MR. BOUDREAU: First of all, I would just like to congratulate you. Your staff is out in full force here today and they are certainly a bright and cheery looking crowd.

MR. CHAIRMAN: Can I interrupt the honourable member for second? Mr. Minister, you also have a new senior staff person at the table. Will you introduce the person for the record?

MR. RUSSELL: Oh yes, indeed. This is Vicki Harnish and she is, not an executive director but, an executive officer in the Treasury Board.

MR. CHAIRMAN: Sorry for the interruption, honourable member.

MR. BOUDREAU: Thank you, Mr. Chairman. Anyway, I do want to congratulate you because your staff certainly looks very bright and cheery and rumour has it, although I don't know them personally, they are certainly intelligent. So I want to congratulate you for their abilities and their efforts since I have been involved, at least.

[3:00 p.m.]

I want to move right into last year's budget. I want to ask you some questions on last year's budget. The budget itself saw a substantial cut in jobs across the provincial government. I am sure you will recall the protests, minister, as both your department and the government softened its stance somewhat, particularly in regard to teachers. That has led to some considerable confusion as to how many people have gone and when. So that leads me to a couple of questions actually. The first question is how many positions were, in fact, eliminated in last year's budget?

[Page 603]

MR. RUSSELL: I believe it was 680, but I will get you the exact number. Right, in the year 2000-01, that's the last fiscal year, Mr. Chairman, we have a reduction of 608 full-time equivalents. What is a full-time equivalent you ask? A full-time equivalent is a position that translates into a five day week, 52 weeks of the year. In other words, a full-time equivalent position may be filled by three or four people as casuals, et cetera, but a full-time equivalent position has a number and it is a funded position. As I say, we have a reduction of 608 in the last fiscal year.

MR. BOUDREAU: So full-time positions, is that classified as a position that requires 40 hours per week?

MR. RUSSELL: Thirty-five hours in the Civil Service.

MR. BOUDREAU: What was the net savings to the government from those job losses?

MR. RUSSELL: I don't think I have those numbers here, but they are available. In fact, we are getting them for the member for Halifax Needham. So we can get those numbers to you.

MR. CHAIRMAN: Just to advise the minister that any time requests for information, it is to be provided to both caucuses as well as the chairman for the record.

MR. RUSSELL: Yes, indeed.

MR. BOUDREAU: Mr. Minister, this year, how many positions will be lost?

MR. RUSSELL: This year it will be 83 and those are full-time equivalent positions. They do not necessarily translate into 83 persons losing their position.

MR. BOUDREAU: Would you have the savings from these cuts this year?

MR. RUSSELL: Mr. Chairman, for this fiscal year 2001-02, the number of full-time equivalents that will be deleted is 83. A number of those full-time equivalent positions are vacant at the present time. A number are filled by casual people, term people, contract people. I cannot give you an exact answer is what I am saying and we don't know until we get our first report back from the departments.

Remember that the budget just comes into effect on the first day of this month, starting April 1st of this year through until March 31st of next year. What we know is that during this year those 83 positions, full-time equivalent positions, will disappear. They will no longer be there. They will no longer be funded and they will no longer have incumbents.

[Page 604]

MR. BOUDREAU: So through you to the minister, Mr. Chairman, is it correct you don't have a projection?

MR. RUSSELL: Mr. Chairman, no, we do not have that information at the present time, the reason being that, as I said a moment ago, our fiscal year just started 18 days ago and these positions that will disappear will be done starting this month. There will be some, some the next month, some the following month, but what I am telling you is that the departments knew that these positions were going to be lost in this coming year. So, therefore, in many cases as positions became vacant last year, they did not fill those positions. They were still being funded, but they were not being filled, which is gravy, if you will, for the departments. This year, however, they are going to lose the funding for those positions so, therefore, the position has to disappear, but in many cases as I say they are going to be vacant positions.

I suppose I can say to the member that when we get the reports - and we get a report every month from the departments as to what their numbers are in personnel - and we know what these positions are, we can probably generate some numbers for you at the end of this first month but, however, having said that, the numbers at the end of this month do not filter through to the Department of Human Resources or the new Public Service Commission for probably two or three weeks after the month end.

MR. BOUDREAU: Mr. Chairman, I don't want to confuse the minister because your government continually boasts about the aspect of having a plan in place. So it appears from your comments today at least that you don't have a plan, you know, you are just limping from day to day. Is that correct?

MR. RUSSELL: No, that is absolutely not correct. The departments are aware of these 83 positions. They know that those positions are not going to be funded in this fiscal year. They know that the people, if there are incumbents in those positions, sometime during this year are going to be let go. What I am trying to say is we do not at the moment have any knowledge as to whether or not one of these positions, five of these positions, or even all 83 are vacant at the present time. We don't know that. The departments know that and they're reporting period starts again for this fiscal year, as I said, just 18 days ago, and we don't go to each department every day and check on what their progress is. We get how-goes-it sheets or progress sheets with details of the previous month. So it is going to be sometime in May before I could say to you, the honourable member wanted to know how many of these positions reflect actual people and the answer is whatever it is, but right now I don't have that and we don't have it within the Department of Human Resources.

MR. BOUDREAU: Through you, Mr. Chairman, could the minister indicate then which departments those job losses are occurring in? Which departments are being affected by these job losses?

[Page 605]

MR. RUSSELL: Probably all. In the Estimates Book, Page 1.18, you will find the numbers for each and every department of the numbers for 2000-01 and the estimate for 2002 and the numbers go down from 9,586 in 2000-01 to 9,503 in 2001-02 fiscal year which is a reduction of 83 positions. You will find all the departments listed there and most of the departments, not all, but most, do have reductions in staff. Some actually have increases as well.

MR. BOUDREAU: I am sure, Mr. Minister, there must be collective agreements or contracts, or that sort of thing, with some of these people. When does the minister have to know when an individual is going?

MR. RUSSELL: When they were going?

MR. BOUDREAU: Yes, how do you know when an individual is leaving?

MR. RUSSELL: That is up to the department. All we know is that the departments will not be receiving any funding for that position. For instance, they may elect to keep people on for two or three months. There is also a process that requires that we also notify the union if they are unionized positions and not all of them are unionized, but for those positions that are unionized, we have to notify the union.

MR. BOUDREAU: So is that notice provided by your department or the department in which the individual works?

MR. RUSSELL: The department will advise the Human Resources Department and the Human Resources Department in turn will speak to the union.

MR. BOUDREAU: Thank you for that answer, Mr. Minister. I guess I want to go in a little different direction right now and I am sure the minister is aware, like everybody else, that there is going to be a substantial increase in the right of retirements across the province in every department in government. As the baby boomers approach retirement age, of course, there will be empty positions with no one left to provide training, or corporate memory I guess is a good way to put it. Can the minister tell us how many people in the provincial Civil Service are 50 years of age or more?

MR. RUSSELL: That's a very good question. In fact, I commented on that just a little while ago. The problem within the Civil Service, Mr. Chairman, is that we are rapidly aging and, unfortunately, we are not bringing in at the bottom end people to replace those who are going out to retirement. We are replacing the people who are going out to retirement, but we're not necessarily replacing them at the bottom. There are people coming in at the middle and at the top.

[Page 606]

What we have to do is to get people in at the bottom. In fact, I mentioned I think, and the deputy confirmed it, we only have about 20-odd people below the age of 30 within the Civil Service. I mean that's just not on. So, anyway, I have some numbers here for you. There may be as many as one-half the current workforce reaching their 50's by 2006 and 2007. So if people are 50 and retiring kind of thing, it means that we're going to have a real problem and it is not too far down the road. In another five years or so we're going to have not only a rapidly aging workforce, we're going to have a rapidly retiring workforce. So we do have to, as I said before, encourage young people to come in to make a career of the Public Service.

MR. BOUDREAU: Can the minister give a number? Can you put a number on how many people will retire each year in the next five years?

MR. RUSSELL: As the member is aware, I am sure, the people within the Public Service have the ability to retire at a variety of ages because there is some magic number that they can reach by virtue of years of service and by age, et cetera, that permit some to retire at a very young age and some, of course, go right through until they reach age 65. So it is very difficult to say in any given year how many are going to retire but, however, what we can do is give you a guesstimate at the number of people who will reach retirement age, age 65, in the present year. It seems I don't have it here, but we will get you that information.

MR. BOUDREAU: The federal Civil Service is aware that they have a problem similar to ours and they have been planning for this problem for several years. They have been dealing with it by actively recruiting young people and new people from universities around the country. The reality is that they had to increase incentives in order to attract people from the private sector. Does the minister have any plan for dealing with these retirements?

MR. RUSSELL: Yes, we do. We have a business plan that I won't bore you with at this time but, however, it is available and you will see that within the business plan we have a strategy for developing the present membership in the Civil Service as well as recruitment of additional personnel. The strategy contains four main elements. One is employee retention. In other words, if we have somebody who is doing their job and doing it satisfactorily, there is no reason why we should get rid of that person.

We should have performance management. In other words, we should be rating the person on an annual basis to make sure that they are performing to meet our minimum requirements and if they are performing at above that, to make sure that we're aware of that and look at that person for future development and future promotion.

That deals with succession management and human resource planning. In other words, when a person comes into the Civil Service, I don't say on day one we're going to plan how he is going to progress up to be a deputy minister, but we should have some plan

[Page 607]

in place for the person after six months or something as to where he is going in the next stage and whether or not he has some shortcomings, or she has some shortcomings that should be brought to their attention because it may be an impediment to their future progress.

Of course, lastly, we have to pay the people a salary that is competitive at least with the private sector and we must also be prepared to recognize additional skills that they pick up along the way through training either within the Civil Service or perhaps at some institution such as university or community college, or perhaps on the Internet.

MR. BOUDREAU: Is there any money in your budget allotted for recruiting new people? How much money do you have indicated in your budget for your plan?

MR. RUSSELL: We are not intending to hire more people. Don't let me mislead you. It is not our intention to swell the numbers of the Civil Service. What I am saying though is that as people retire, we have to look at bringing people in at the bottom and then moving people up the ladder. It is a succession type of management whereby the person who retires does not have to be replaced by another person who is exactly the same age with the same skills. We move somebody up in the Civil Service so that we can move somebody in at the bottom at a younger age with less experience.

MR. BOUDREAU: I just want to be clear on this. Just a few moments ago - and I may have misunderstood - I thought you indicated that the problem was at the bottom.

MR. RUSSELL: It is.

MR. BOUDREAU: What are you doing about it?

MR. RUSSELL: We are attempting to recruit young people to enter the Civil Service. At the present time if you go to a school and you say what do you want to be, there is not too many people who will stand up and say I want to be a civil servant. They want to be all kinds of things, but you will find very few who are going to stand up and say I want to be a civil servant. Do you know why? Because they don't see any future in the Civil Service, and that is partially because of the fact that successive governments - I am not saying it is this government or the past government or the government 20 years ago - have not made the Civil Service appear to be a career choice unless the person comes in and gets in the Civil Service and then just decides to remain there until age 65. It has never appeared to be a very attractive kind of an occupation for people who want to advance themselves.

What we are saying is, come on in to the Civil Service; we do have attractive salaries; we do have attractive benefits; we do have longevity and job security. You do have the ability, if you wish to work at it, to take training, to develop your full abilities and to receive promotions within the Civil Service.

[Page 608]

MR. BOUDREAU: Mr. Minister, as indicated a moment ago the federal government has certainly taken a different approach than your department has. In fact, I indicated that the federal government is recruiting new people from universities. The key, Mr. Minister, is that they are prepared to increase incentives in order to attract new people. Really, what you are telling the committee here today is you are tinkering with the pool of casual workers you have, and that is it. You don't have a plan to attract new people into the Civil Service in the Province of Nova Scotia. Is that correct?

MR. RUSSELL: No, it is not correct. We are endeavouring to do things to make the Civil Service more attractive. Part of that is through salary arrangements, through classification and reclassification, by internal training courses that are available, support for training also outside of the Civil Service, at universities, et cetera. We have 19 people every year, I think it is, that we send off to universities to take Masters of Public Administration. We have 75 people at any given time involved in that program.

There are great opportunities for people who want to take advantage of them. We have the co-op program, we have Career Starts and, again, we have exchanges with the federal government. I should point out, also, that you mentioned the federal government doing things to recruit people, it would be my belief that they have a harder time than the provincial government in recruiting people, because most of their employment opportunities are within Ontario, Quebec and particularly in the Ottawa-Hull areas, and that is an area where there are a lot of other avenues for people to find employment, very lucrative avenues. They have a more difficult task than we have.

MR. BOUDREAU: I am getting a little confused here because a moment ago you indicated that we had a problem in the Civil Service at the entry level.

MR. RUSSELL: We do.

MR. BOUDREAU: Now you are indicating that you have 75 individuals on a regular basis.

MR. RUSSELL: No, we have 75 individuals from the Civil Service, and these are not new-entry people, these are people who have moved up the ladder and are engaged in the Masters program at universities, Saint Mary's and Dalhousie, taking a Masters of Administration. Of course, these people are coming into the program at the bottom end, I shouldn't say the bottom end but they are coming into the program and exiting the other end, and another batch comes in. It is 25 a year. To further embellish the point, I guess, we still need people, desperately, in the entry level of the Civil Service, people coming in directly from universities, directly coming in from community colleges, or coming in, to a lesser extent, with a high school graduation certificate.

[Page 609]

MR. BOUDREAU: Mr. Chairman, is the minister prepared to increase incentives to attract more people?

MR. RUSSELL: Increase the standards?

MR. BOUDREAU: Incentives.

MR. RUSSELL: Oh, incentives. If the honourable member is talking about salary incentives, no, we are not. We are presently engaged, as he is probably aware, with the NSGEU in contract negotiations, and no doubt that will translate into an increase in salary for the Civil Service as a whole. We not going to get into a bidding war to try to encourage people to come into the Civil Service. What we hope to do is demonstrate that this is a worthwhile career. It has an appeal to people who want to get ahead, because the opportunity is there.

MR. BOUDREAU: Mr. Minister, thank you for that answer. I am going to use teachers for an example. The estimate is that there are approximately 10,000 people in the province; 4,000 or 5,000 of them will be retiring in the next few years. I can only assume that there are similar statistics for other areas of the government. This seems like it would be a substantial trouble if it is not dealt with now. So I ask again, does the minister have a plan to deal with this situation?

MR. RUSSELL: You should probably ask the Department of Education about that particular question. However, I know that the Department of Education is working with the universities to look at the long-term and the increasing number of seats that are available for teacher training. The teachers and doctors and nurses are three particular fields of endeavour that everybody is having problems with with regard to recruitment. We haven't had any difficulty so far with teachers. However, as you have pointed out, it is going to be a problem, not only in this province but right across the country. To some extent, that is going to be ameliorated by the fact that the number of children is not increasing, as a percentage of the population. Accordingly, you probably don't need as many teachers because there won't be as many students.

MR. BOUDREAU: Mr. Minister, I would suggest 4,000 to 5,000 is a significant number.

MR. RUSSELL: Yes, it is a large number.

MR. BOUDREAU: Does your department consult with other departments such as the Department of Education in regard to issues like this?

[Page 610]

MR. RUSSELL: The Department of Education would be consulting, I would suggest, with their school boards as to the supply of teachers. In turn, they may or may not pass those concerns on to the Department of Human Resources.

MR. BOUDREAU: Really, what you are indicating to the committee is that there is no system in place where you can communicate with other departments in regard to the Civil Service.

MR. RUSSELL: We consult with every department about all manner of things, and I am suggesting to the honourable member we do not come forward to the Department of Education, though, for instance, and initiate the discussion. If the department thinks it is a matter that requires government attention, then it is up to the department to bring that forward as a concern to what will be the Treasury and Policy Board and it will be a policy matter for government as to whether or not they want to take action to increase the availability of people in the Education workforce.

[3:30 p.m.]

MR. BOUDREAU: So when an event occurs in one department, and I will continue with the Department of Education, when the department becomes aware that there are going to be 100 teachers retire this month, they acknowledge that to the Human Resources Department. Is that correct?

MR. RUSSELL: Let me, first of all, point out that I think that there is nobody who isn't aware of the fact that there are a substantial number of teachers going into retirement over the next five to ten years. Least of all, I am sure the Department of Education is aware of that. When the time comes they feel that they have to take action, they will be speaking to Treasury and Policy Board, I would suggest, and coming forward with some plan for further recruitment of teachers. As I say, the Department of Human Resources does not deal with a department and suggest to them they have a problem. The department itself has the problem and comes to the Public Service Commission and brings forward their concerns.

MR. BOUDREAU: I am still not clear, Mr. Minister. Does your department actively have a plan to deal with the Civil Service?

MR. RUSSELL: With the Civil Service, yes, but remember teachers are not members of the Civil Service, they are members of the Public Service. We are creating a department or a division of government which will be known as the Public Service Commission, which does indeed encompass the employees of the school boards and hospital boards and such entities. As such, we will be sitting at the table when there are negotiations between the Nova Scotia Teachers Union and the various school boards.

MR. BOUDREAU: We really don't have a plan.

[Page 611]

MR. RUSSELL: You keep saying that we don't have a plan, but, yes, we do have a plan, but our plan isn't as you foresee it. We are not in the business of taking over completely what the departments do with their people or their finances. We are there to monitor rather than to direct them.

MR. BOUDREAU: Mr. Minister, you indicated to the committee before that you are aware of so many retirements occurring within government, within the Civil Service, within the Public Service and I refer to teachers. Now it is obvious, even I know, that we are going to have a shortage of 4,000 to 5,000 teachers over the next few years and your government, from what I am hearing today, is going to deal with this problem as they retire and you don't have any plan of direction to replace those retiring teachers in this province.

MR. RUSSELL: The template that we use in Human Resources includes an examination of the business plans of the various departments of government, which include the Department of Education. We assist those departments with their planning. We, however, do not step in and take over their planning for them.

MR. BOUDREAU: Okay, we will move on, Mr. Minister. In the Speech from the Throne it was announced that there was a plan to create or perhaps, more appropriately, to reincarnate the Civil Service Commission. Can the minister explain what the role and the parameters of this commission will be?

MR. RUSSELL: Of the Public Service Commission?

MR. BOUDREAU: Yes, the Public Service Commission.

MR. RUSSELL: You can find this on Page 21.1 in the Estimates Book. I am not going to read it chapter and verse, ". . . the Public Service Commission (PSC) is the new agency created to manage human resource functions in the provincial government, as well as to . . ." - and this is where I think we get into the broader Public Service when the member is talking about teachers - ". . . advise and direct certain aspects of human resource management in other areas of the provincial public sector.", and that is the greater Public Service. "The increased mandate of the PSC accommodates government's desire to better manage human resources costs across government and across the public sector, and recognizes that today, more public services are being delivered by boards, authorities, agencies and not just directly by government departments."

MR. BOUDREAU: Mr. Chairman, may I ask that that document be tabled please?

MR. CHAIRMAN: I believe he read from the Estimates Book, which I think has already been supplied to all members.

MR. RUSSELL: I am reading from the Estimates Book, Page 21.1.

[Page 612]

MR. BOUDREAU: So can the minister explain what the difference in the similarities are between the old commission and the new one?

MR. RUSSELL: The Human Resources Department was concerned with the Civil Service and the Civil Service, basically, is the direct employees of departments of government. Now there are some exceptions to that. For instance, in the Corrections and Transportation Departments, there are certain workers that do not fall under the terminology of civil servants.

MR. BOUDREAU: Are there any transition programs for the people who are leaving the Civil Service?

MR. RUSSELL: Do we have them?

MR. BOUDREAU: Yes, do you have a transition?

MR. RUSSELL: A transition?

MR. BOUDREAU: Yes.

MR. RUSSELL: Yes we do. We have a transition package. I read earlier exactly what it was. The Transition Support Program encompasses a number of features. The Transition Support Program provides employees with an enhanced severance package, four weeks salary per year of service, a minimum of 8 weeks, a maximum of 52 weeks, a $2,500 retraining allowance, continuation of benefits during the severance payment period and, basically, career transition services.

MR. BOUDREAU: Could I ask that you table that document, Mr. Minister?

MR. RUSSELL: Sure.

MR. BOUDREAU: How much has this cost thus far?

MR. RUSSELL: I believe that it comes under the subject of restructuring in the Department of Finance and the amount that we actually expended last year was $26 million, was it? I am not sure, to be quite honest, that is not in my budget, that is in the Department of Finance. I believe it was something in the order of $26 million.

MR. BOUDREAU: So this is not a budgetary item for your department? Is that what you are indicating?

MR. RUSSELL: I am sorry, would the honourable member please repeat that?

[Page 613]

MR. BOUDREAU: This is not a budgetary item within your department?

MR. RUSSELL: The restructuring funding comes under the Minister of Finance and it is under the item subject restructuring costs. There is a total amount in there of $53,652,000, but that includes provision for contract negotiations, workforce adjustments and government restructuring, it is all rolled into one. As I said, I think the amount that was spent last year was something in the order of about $26 million, somewhere in that area, under the transition allowance.

MR. BOUDREAU: How much more do you expect it to cost?

MR. RUSSELL: How much more? It depends on how many people take the package and actually are released from the Civil Service. A number of people whose jobs disappear have the opportunity to bump somebody else or to move into other positions within government, quite a few take that option. Others reach retirement and they just take their normal retirement allowance; others who have not reached their retirement age and who leave the service, they are the ones who are qualified to receive the transition allowance. It is very hard to say exactly what that would be, it would certainly be a lot less than it was last year.

MR. BOUDREAU: The Justice Minister indicated that his department has spent x number of dollars on the search for a new director of the Public Prosecution Service. Is your department involved in that search?

MR. RUSSELL: The department does do searches for departments and that search was indeed done by the Department of Human Resources, it started back in 1998. Thompson and Associates was the company, the headhunters, who were contracted to perform the search for a director of Public Prosecutions. It was back in 1998 and the expenditure to date by the Department of Human Resources is in the order of $46,000, since 1998. I emphasize the 1998.

MR. BOUDREAU: How much has the department spent in its search to date?

MR. RUSSELL: It is somewhere around $50,000. I think the number is around about $46,000 and it is money that is expended by the Public Prosecution Service. It is $46,903, if you want it right down to the dollar. It is money that came from the Public Prosecution Service and it is shown as a receivable by the Department of Human Resources.

MR. BOUDREAU: How much more do you anticipate you will spend in that search?

MR. RUSSELL: I believe that the search is completed. The search is still on, I am told, therefore, we do not have the final billing. There will be other ongoing expenditures. If they bring in people from away or even from within the province, there are expenditures

[Page 614]

occurred in bringing them in for interviews and what have you. I can't give you the end number, you will have to wait until next year to get that number because we don't have it.

MR. BOUDREAU: Have you had any progress in the search?

MR. RUSSELL: You would have to talk to the Minister of Justice with regard to that. As I said, there have been, as I understand it, candidates who have been brought to the attention of the Department of Justice. As to their acceptability or not, I can't answer that. That doesn't fall under my bailiwick.

MR. BOUDREAU: Mr. Chairman, at this time I would like to pass the remaining amount of time that I have left in this hour to my colleague, the member for Cape Breton West.

MR. CHAIRMAN: The honourable member for Cape Breton West. Mr. MacKinnon, your time is 3:46 p.m., you have 13 minutes.

MR. RUSSELL MACKINNON: Mr. Minister, with regard to Voluntary Planning, that comes under your purview as well?

MR. RUSSELL: It does.

MR. MACKINNON: I understand that Voluntary Planning was asked to take the task of investigating and preparing a report with regard to the issue of land tenure, foreign land ownership here in Nova Scotia. Is that correct?

MR. RUSSELL: Yes, I believe that is correct. I will have to change staff here. Yes, that is correct.

MR. MACKINNON: I am given to understand, as well, that the government supplied the terms of reference for that particular project?

MR. RUSSELL: Again, you would have to speak to the Minister of Natural Resources. As I understand it, Voluntary Planning was given a fairly broad mandate. The Department of Service Nova Scotia and Municipal Relations provided the direction to Voluntary Planning.

MR. MACKINNON: Your department wouldn't have any input on the terms of reference?

MR. RUSSELL: No. I am responsible for Voluntary Planning on a long leash.

[Page 615]

MR. MACKINNON: Are there any other projects that the government has asked Voluntary Planning to undertake?

MR. RUSSELL: Yes, there have been a number. The energy strategy, for instance, which we were talking about today is one, and they did the Fiscal Management Task Force. There have been a few projects, I shouldn't say a great number, but there have been a few projects that they have accommodated the government by undertaking. They provide a good service, and they provide an independent, we think, view of whatever the subject matter is.

MR. MACKINNON: I would like to switch over to this restructuring. You indicated last year the government spent $26 million. How much was budgeted for last year?

MR. RUSSELL: In that particular item there is a fairly large sum but the restructuring is only one of the elements of that fund. It includes the negotiations with unions and that kind of thing, as well as government restructuring. The amount in the estimate was $88 million, and the forecast actual is $74.6 million.

MR. MACKINNON: So you had a surplus of $14 million?

MR. RUSSELL: There was an under-expenditure, it wasn't like cash in the bank. This year the estimate is $53,652,000, but that, again, isn't all for restructuring. It is my understanding, and I wouldn't want to be stuck on this number, but as I understand from last year, of that $74,600,000 that was expended approximately $26 million went into restructuring. Some of it, I think, was teachers, was it not? I am getting excellent advice here. The Department of Finance . . .

MR. MACKINNON: But the bottom line is you budgeted $88 million and you only spent $74.6 million?

MR. RUSSELL: Yes. If the honourable member is looking for the answer to that, I can give it to him. It was simply occasioned by the fact that the number of FTEs that we removed were not all occupied by people. There were 608 FTEs stricken from the list last year, however, there wasn't 608 people.

MR. MACKINNON: There were vacancies in various departments that weren't filled.

MR. RUSSELL: Yes.

MR. MACKINNON: So you put a line item in there and put a dollar value on that.

MR. RUSSELL: That is exactly it.

MR. MACKINNON: And struck them out.

[Page 616]

MR. RUSSELL: But the thing that we did do, I should point out to the honourable member for Cape Breton West, is that we actually destroyed the position number.

MR. MACKINNON: Destroyed what?

MR. RUSSELL: Destroyed the position number. In other words the full time equivalent position has a number and a set number that goes across to payroll and occasions a paycheque to somebody. By destroying that number, a department can't go and hire somebody without creating a new number.

MR. MACKINNON: I believe the government announced about a year ago that their projection was to eliminate approximately 1,200 maybe 1,400 jobs. How many have been eliminated to date?

MR. RUSSELL: The number that we came forward with last year was a reduction from 10,194 to 9,586 FTEs, which gives us a reduction of 608 FTEs for last year. This year we are going reduce that number again, that 9,586, by a further 83. Those numbers are all shown, I would bring to your attention, in the Estimate Book. You can go to Page 1.18 and you will find, for each department, the numbers of reductions or increases for this current year.

MR. MACKINNON: With the restructuring, obviously you are going to need less office space. What leaseholds would you be bound by that you would have to settle up with out of this restructuring cost? How many leaseholds are you dealing with?

MR. RUSSELL: The number of leaseholds that we are able to vacate are limited at the moment, however, they are increasing as leases come to the end of their term. As the honourable member will be aware, sometimes the space that is being vacated isn't capable of being subleased to another tenant. We had a place up on Strawberry Hill for instance, which we vacated, and we were able to arrange a sublease for. In the main we can't do that, all we can do is when the lease is renewed we can lease for a smaller and, perhaps, cheaper space. I can give you an example. Just across the road over here, we are renovating the old Eatons Building, which is the former home of the Department of Community Services. That renovation will be completed early next year and it will coincide with the end of our lease at Purdy's Wharf where the Department of Transportation and Public Works is, so we are going to move the Department of Transportation and Public Works from Purdy's Wharf to that building. It is, one, cheaper, and secondly, because of the fact that our numbers have decreased at Purdy's Wharf, we don't need as much space as we have down at Purdy's Wharf.

MR. MACKINNON: Do you have a number as to how many leaseholds we are dealing with?

[Page 617]

MR. RUSSELL: How many we have?

MR. MACKINNON: Yes. I can take that on notice.

MR. RUSSELL: Perhaps you could ask me that question tomorrow in the Estimates in Public Works, because I could give you the exact numbers.

MR. MACKINNON: I believe the total figure was in the $470-some odd million for the total costs of restructuring. Realistically, how much do you feel that the government, based on last year's activities and this year's projections, that ultimately you will be spending out of that $470-some million?

MR. RUSSELL: I am sorry where did the $470 million . . .

MR. MACKINNON: The Minister of Finance laid out a four or five year plan on the cost of restructuring government. Last year it was $88 million, I believe you indicated a budget this year of $53 million, and so on until your mission is complete, so to speak. You appear to be spending less than you budget for.

MR. RUSSELL: I don't know where he would have gotten that figure from, to be quite frank.

MR. MACKINNON: It was attached in the small booklet that he handed out during the budget last year. So many dollars . . .

MR. RUSSELL: You are not just talking about personnel . . .

MR. MACKINNON: No, I am talking the entire restructuring.

MR. RUSSELL: The whole shooting match, okay. Maybe that is the figure, I don't know. How are we saving the money? Quite frankly, we are saving it in small lumps here and there. As an example, for instance, by bringing Fisheries and Agriculture together, automatically you only have one minister, you only have one deputy, you only have one minister's secretary, you only have one deputy minister's secretary. You bring the administration together and there are savings. I have not, myself, been involved in trying to compute what that number is. I do know that it is a lesser number than it was last year, and next year it will be less again.

MR. MACKINNON: Last year I believe I asked - I stand to be corrected and I believe you have your deputy with you here today - there was a new Human Resources policy adopted for the Public Service. I thought, and I am only going by memory, that I had been given an undertaking that that would be provided.

[Page 618]

MR. RUSSELL: The Human Resources . . .

MR. MACKINNON: Policy. (Interruptions) I believe I caught you flat-footed on that last year.

MR. RUSSELL: No, no, not at all. You are speaking about the management book?

MR. MACKINNON: The new government policy for the Public Service.

MR. RUSSELL: Last year I did, because I was quite proud of the fact that the management manuals were being reprinted. They had fallen, quite frankly, into disuse over quite a number of years, so that nobody knew what the actual policies were. I think I said to the honourable member . . .

MR. MACKINNON: There was a new policy prepared, I think, wasn't there?

MR. RUSSELL: Yes.

MR. MACKINNON: In April 1999 . . .

MR. RUSSELL: There is a complete rewrite of the book.

MR. MACKINNON: Has that been completed?

MR. RUSSELL: It has been completed and I am sorry, your caucus office should have them, though, because there was a distribution made, I know.

MR. MACKINNON: I must apologize then, if it was sent.

MR. RUSSELL: Maybe you didn't get one, however if you didn't, we will certainly make sure you get one. Manual 500 is available on-line from the Department of Human Resources. However, there is a hard copy which is still a pretty small book. (Interruptions)

MR. MACKINNON: I thank the minister for his answers. My time is a little expired here.

MR. RUSSELL: We will get you a copy of that, for sure.

MR. CHAIRMAN: The time has now expired for the Liberal caucus, and we will now go back to the NDP caucus.

The honourable member for Hants East. Mr. MacDonell, your time is 3:59 p.m.

[Page 619]

MR. JOHN MACDONELL: When we left off you were talking about the bill before the Legislature, I think, to establish the Treasury and Policy Board; is that right?

MR. RUSSELL: Yes.

MR. MACDONELL: I am not quite clear if when that is done does it mean that Priorities and Planning will cease to exist, or will it become a management board?

MR. RUSSELL: Priorities and Planning will be melded into the Treasury and Policy Board.

MR. MACDONELL: Yes.

MR. RUSSELL: The answer is yes, however the Treasury and Policy Board, I should tell you first of all, it is going to expand, we are going to have four more people in the Treasury and Policy Board than we have in Priorities and Planning. The reason for that is because our mandate has expanded from the point of view of running a continuous audit, if you will, on departments. That audit will eventually and probably in the very short term, provide government with the ability to control overruns by departments and will control the hiring practices of departments with the intent not of managing the departments from long distance, but just simply running an audit on how they are doing, knowing how they are doing and providing them with information as to how they are doing. Maybe they don't even know where they are and we can, hopefully, have the expertise within the Treasury and Policy Board to assist the departments.

[4:00 p.m.]

The other thing that I think - you said that people don't know what the Treasury and Policy Board or the management board does. One of the things we talked about earlier was succession in the Public Service, bringing people forward. One of the things that you have to do is to give them an arena of opportunity to get knowledge about themselves and about departments. The staff within the Treasury and Policy Board will not be - at least some of it - will not be permanent staff on the Treasury and Policy Board. They will be secondment positions, people coming in from other departments, working in Treasury and Policy Board for a year or two and then going back, perhaps not to their own department, going back to some other department, or perhaps even going back to their own department.

Rather than just having a knowledge, for instance, in agriculture, you are in the Department of Agriculture, you think that Agriculture runs the whole government, everything in government should be directed towards Agriculture and there are people within departments that honestly believe that. They have an impression that their department should be the absolute number one priority for government, and maybe it should. However, when they get to the Treasury and Policy Board and they look at all the departments, they learn of

[Page 620]

all the concerns and the problems right across the spectrum of what government does. They then get a greater appreciation of their importance, their department's importance and a knowledge that they would never get if they stayed within the one department.

MR. MACDONELL: I mean, that make sense, for sure. I think maybe the wrinkle in all this will be - I find it is difficult to take the politics out of government. When it comes to either running the Treasury and Policy Board or any department, it is going to have to step to a certain tune that the government is going to set. What will make the most sense to the Treasury and Policy Board will not necessarily fit the agenda of government. Something that seems to have occurred in the past with regard to Priorities and Planning is that successive governments have put people who have been helpful to that particular Party in Priorities and Planning, whether that is a place to keep them around for whatever function or they actually help government in some particular way. Certainly, to de-politicize the process so that decisions are made on the value of decisions that would be the best thing for the taxpayer, I would be all in favour of that. If moving to the Treasury and Policy Board - from what you are saying - it sounds that it would make sense.

Depending on what side of the political spectrum you are from, you can use anything to achieve a particular agenda. If a government having a seat on the Treasury and Policy Board - even though they would say they don't necessarily control the Treasury and Policy Board, that it is somewhat independent - it would be a mechanism whereby government may want to try to control costs, which would be sensible enough, considering they are dealing with somebody else's money. It also means that you try to control how well or not well you treat people.

Your earlier discussion about bringing people into the Civil Service so that you can develop this expertise and I think, in particular, of my youngest brother who worked for Natural Resources at one time as a forest technician, I think he was there four years and every spring he was let go, his service was broken, three or four weeks later he was hired back and started a new year or six months. This kept up and he had no benefits, nothing after four years and finally he got a job in the private sector. I thought for sure a job with government would have been a much more secure direction for him and a lot more potential, perhaps. What he is doing now seems to have worked out well. I guess what I want to ask is, what is your plan? If you want to bring in new people and you say you only have so few that are under 30 years of age, is it to bring them in as casual or permanent part-time or whatever? I don't see that as an enhancement to try to get good quality people, especially if there are other areas that are going to compete for their talent and are going to offer them something better that would allow them to aim for whatever hopes and aspirations that they might be working on.

MR. RUSSELL: You made some good points there. First of all, getting back to when you started talking about the political input and it is very easy to say that politics get involved in government. Well, government is all about politics.

[Page 621]

MR. JOHN MACDONELL: I am learning that.

MR. RUSSELL: The two things go in concert. Politics is formulated as a platform or a set of ideas or ideologies or something that a bunch of people decide to try to progress and they normally do that through a political Party. When that government comes into power and it takes over from another government, obviously it is going to have a different platform, a different bunch of ideologies, a different bunch of aspirations than the Party that it is replacing.

So, you have to translate that into action without disturbing the Civil Service that is, to all intents and purposes, non-political. The Civil Service goes on, government's change and you don't want to mess that up, that is a good system. What we are suggesting we do is, we have what is called a Policy Board. Policy Board, if you like, is the political arm of government. It is a part of government, but it is the body that furthers the desires and the aspirations of the political Party to effect change. Those policies then, they dream up a policy or they have a policy, and they then move it across to Treasury and Policy Board and they say, this is the policy of government, Treasury Board, and this is what you do to effect that policy in reality.

So there is a very strong connection between Treasury Board which is, if you like, running the mechanics of government - the people and the money in the departments and the Policy Board which is saying to Treasury Board, you must mechanically do something that will make this thing happen, whatever it is.

Sometimes I get annoyed with people that I meet who are not politicians and they say, government is all about politics anyway. Well, sure it is, that is what it is all about, that is why we have political Parties, to effect change. If the NDP came into power, I am sure that the first thing they would probably do is get into the Policy Board and they would want different policies for government compared to my Party. Having got that far, then we get down the line to what you were talking about - I forget what it was now.

MR. MACDONELL: If you are going to bring new people in, is it going to be permanent part-time, casual?

MR. RUSSELL: I have sympathy for your brother and people like him who come into government and they work six months and then they are laid off until they are picked up again the following year. Unfortunately, we have jobs within government that are seasonal. We don't have jobs for those people in the winter and if we created a permanent position, then we are required to employ that person twelve months a year. We don't really want that person as a permanent employee.

MR. MACDONELL: Yes, if you don't have something for him to do.

[Page 622]

MR. RUSSELL: That is right. Most of our casual positions are of that type. I know, for instance, in the Department of Transportation and Public Works we have people who work in the winter who don't work in the summer and we have people who work in the summer who don't work in the winter; not because the people who work in the summer can't possibly be trained to do the work in the winter, but they don't want to do that job in the winter, and the guy doing the winter job doesn't want the summer job because he can go out and work for a private contractor and make a heck of a lot more money than he makes in the government. In Natural Resources, where their parks, et cetera, are up and running in the summer months, they want a whole host of people; they want people up in fire towers in the summer and they don't need them there in the winter. We need these people, but the only thing we can do is say, yes, we will provide you with employment and you will gain seniority so you are on the recall list but, however, we aren't prepared to offer you a full-time job.

MR. MACDONELL: I hate to keep saying that makes sense . . .

MR. RUSSELL: I am glad you said it makes sense, but you don't agree with it?

MR. MACDONELL: No, actually what you said I would agree with, but the situation that he ran into - and I don't know how often this occurs - his service was only broken for about three weeks, which tends to make me think they obviously needed him, but it didn't allow him to have any status, basically, as an employee after four years.

MR. RUSSELL: Maybe I should just jump in here for a moment. That's true, there were people like that and we are trying to change that system. We have about 90 people that we have taken off that kind of casual, you are off for three weeks and then you are back on the payroll. We have managed to take 90 of those in the 12 months and bring them into permanent positions. It is fair.

A person who is working casual may have some reasonable lifestyle in that they always have something coming in - if it isn't on the payroll, then they are on unemployment insurance, then they are back on the payroll - that's the routine. But they don't get any of the long-term benefits of employment such as pensions and - well, they do get health benefits, don't they? (Interruption) They don't, I am told. In essence, they don't have any substantive benefits at all, but I think that's the way we should be going.

MR. MACDONELL: Mr. Chairman, I am going to hand over to my colleague, the member for Dartmouth-Cole Harbour, then I will resume if we are still within the hour.

MR. CHAIRMAN: The honourable member for Dartmouth-Cole Harbour.

MR. DARRELL DEXTER: I came in at a very interesting time, and I guess I just wanted to follow up for a second on that because I think it is very interesting. My wife worked at the Law Courts and was in exactly that same position where she was taking off the

[Page 623]

three weeks a year and then would be brought back on; it was a position they had no intention of filling with anyone else while she was a away, it just sat there until she came back. One of the things that happened when she was working there, there was another employee within the same position who had to have an operation. That person was the sole breadwinner for the family and they had the operation. They came back to work after two days because there were no benefits, because they were the sole breadwinner for the family and they felt they had no option. They clearly shouldn't have been back to work, but what do you do when you are in those situations?

This isn't really a question, but more just to inform you of some of the consequences to people you assume are valued employees of the Civil Service, yet these things are happening to them and, in my view, shouldn't.

I had questions from something you had said earlier; specifically, you talked about - and this is something that has always kind of baffled me a bit - which is that positions in departments are funded and regardless of whether or not there is an employee in the position, the position continues to be funded. You used the expression, this is gravy to the department if that position is vacant, because they continue to get the funds. My question is, why does this happen; why is it the departments are able to receive the funding for a position that has no employee in it?

MR. RUSSELL: That's an excellent question and it is one that I have often asked myself, as to why these things occur. I said it was gravy - perhaps that isn't the term I should have used - but it is additional funding that the department can use for other things. When you destroy that - it is like a nest egg - from a department, then they start to really feel the pinch; however, while that number is there they can still claim that as being a position. They will go to the department at the present time - the Department of Human Resources, perhaps - and ask for the position to be filled, and the position may or may not attract an applicant immediately. Perhaps it is over a six month period, but they still keep the position and they still get the money.

The money follows the position number, and that is why we are trying to get rid of position numbers. If they need additional funding for something, then their budgets should reflect that need in their budget. As you are well aware, when you are setting the budget for anything, a lot of fiddling goes on, people put a little bit over here and a little bit over there, because they feel they have to have a little bit of a nest egg somewhere. For that reason they have positions - they have had anyway - that are purposely kept vacant but, however, they have still been getting the funding. What we are hoping to do, as I say, is to get rid of that position number and then there is no paycheque; the only way they can get another person then, is to go back to what will be the Public Service Commission and make a case for an additional person.

[Page 624]

MR. DEXTER: It seems to me, and I am not going to argue for the elimination of positions, but it just seems to me that this encourages a sleight of hand kind of - I don't even know how to describe it; it is almost a deceit, really, and I realize that is a tough word - encourages this method of doing business which I think breeds some cynicism about the way department budgets are set and who actually has control over the department. It must be discouraging in some sense for the employees, as well, who look around and realize they are worth more to their boss as a vacancy that they are as an employee.

MR. RUSSELL: Our system, unfortunately, has developed, and not just in the Nova Scotia public sector, but in every province and the federal government as well - I was involved with the federal government for a period of time - and exactly the same thing goes on. They have shadow positions, or vacant positions; they have money cooked away that all of a sudden has to be expended on March 31st of the year, and truckloads of computers and paper and all kinds of stuff arriving at departments. These are things that are done within the Public Service, because of the fact that they are never sure of what their funding is going to be, they are never sure whether somebody is going to arbitrarily come along and say you are going to lose 5 per cent of your workforce or you can lose 5 per cent of your budget, and those things shouldn't happen if, indeed, the government has a plan.

MR. DEXTER: Here's the plan. (Laughter)

MR. RUSSELL: Now, here comes the commercial. I believe that we do have a plan; it may not be the most perfect plan on earth, but it is a plan, and at least I think we know where we are going. The first step along that road of gaining control over money and people, as well as policies and the human resource element looking after people, I think comes with having a strong central agency. When I say a strong central agency, I don't mean to be the czar of that central agency, I mean this should be an ongoing agency that is staffed primarily with people from the departments - as I mentioned to the honourable member - coming into Treasury Board so you have a mix of people going through there. I believe in that way departments will start to be realistic and honest, if you will, and that they will see the sense in that if they need something, they will ask for it and they will make their case; if it is a good case they will get it, and if they don't make a good case they won't.

MR. DEXTER: I used to have a friend, colleague and a boss who used to say, never let the best get in the way of the good. What he meant by that was that the best possible plan that may be out there, if you spend forever developing it, it is much more valuable to put a good plan in action than to wait for the best possible plan, which may never come.

MR. RUSSELL: The man who invented the Spitfire - I forget what his name was - the Supermarine, and they had the plans to build this airplane back in 1992 or 1993, but he kept building a better blueprint and it never got into production.

[Page 625]

MR. DEXTER: Anyway, that really for me was more of a digression, having heard what you said earlier than what I had actually come here to ask you about. There are really two points. I understand this morning there were some conversations, or earlier today, around settlements that had been made with civil servants - is that correct - pay increases?

MR. RUSSELL: Yes.

MR. DEXTER: I wonder if you could just - I am sorry that I missed that this morning - repeat, for my benefit, what they were?

MR. RUSSELL: You mean the settlements that we have already made with civil servants?

MR. DEXTER: Yes.

MR. RUSSELL: That was in my opening remarks and I will just go back to refresh my memory. We have, as you know - well, I can go to the greater Public Service, for the moment, with the Nova Scotia liquor employees: it was 2 per cent, 2 per cent and 1 per cent. We have just very recently provided a wage increase for non-union people of 1.9 per cent, effective last April, and another 1.9 per cent this coming April. We settled with the correctional workers of the Nova Scotia Government Employees Union and we have a three year contract of 2 per cent, 2 per cent and 1 per cent. We had the Teachers Union which we settled - last year too, wasn't it? - and that was 3.9 per cent wage increase over 26 months. We are in the process of dealing with the highway workers; we are into mediation. The QE II is in conciliation and the NSGEU is in conciliation.

As I pointed out earlier, the department has so many contracts, it is just amazing. We are always either just settling a contract or just entering a contract or in the middle of contract negotiations; it is never-ending. In other words, our people are full-time, they aren't casuals; they are required year-round.

MR. DEXTER: It isn't unusual to have a number of tables going throughout.

MR. RUSSELL: Yes, we do.

MR. DEXTER: I guess one of the questions that I had around these wage settlements, was with respect to employees who leave the Civil Service and what happens when they leave the Civil Service, and for example the one you said for non-union employees was 1.9 per cent that was retroactive to last April. Will those civil servants who have left, would they be entitled to receive that increase from the time that it was retroactive up until the time they left?

[Page 626]

MR. RUSSELL: If they were on staff as of April 1st this year, they would be entitled to it; if they weren't on staff as of April 1st, when this settlement came about, then they aren't entitled to the retroactivity.

MR. DEXTER: How is that determined?

MR. RUSSELL: When you say how . . .

MR. DEXTER: Well, is that just a decision you made - I mean these are non-union employees, so you get to decide, and what you did was decide that this is the cut-off date; if you are here on April 1st, then you are entitled to be paid back to the previous April 1st. If you aren't here on April 1st, then you are just out of luck. So, in other words, say I left on March 29th for another job, even though I am a couple of days adrift on the timeline, I basically would have lost a year's increase?

MR. RUSSELL: It is like if you were born a couple of days before the date to go into Primary school, you don't make it. There has to be a cut-off date and the cut-off date is the end of the fiscal year. So, was it an arbitrary decision? Yes, it was.

MR. DEXTER: The impact on those workers, in this case, is that they would have worked for that year; all of the people they worked with would receive it. They earned it in the same fashion as all of those other people. Why couldn't the cut-off date simply have been the previous April 1st and whatever amount you have worked since then, you get paid for it.

MR. RUSSELL: Although management, of course, don't have the advantage that people in the union do where they . . .

MR. DEXTER: These are non-union.

MR. RUSSELL: That's what I am saying. These people don't have the same benefits as people who are in the union where the date to retroactivity is negotiated.

MR. DEXTER: All of that is a preamble to a particular case that I wanted to discuss with you. I have a person in my constituency - and I wrote Human Resources about this individual - who was a salvage yard inspector with the PUB. They were taken over by the Department of Environment and when that happened, he was designated as an Inspector General 1B. He was out on sick leave at the time. All of the other individuals in his classification, once the transfer was made, appealed and asked to have their classification reviewed. It was and they received a new classification and a salary adjustment, which took place as a result of that. He subsequently retired and as a result of his retirement, never received the salary adjustment. Even though he was an employee, he had the misfortune to be out at that time because of illness, but doesn't receive the reclassification. The explanation that was given was that he was on leave and that the colleagues submitted the classification

[Page 627]

appeal; of course, he didn't even know the appeal was going on. Everybody else in his classification is reclassified, receives the salary adjustment and he is left with the explanation that the employer is therefore under no obligation to consider the matter any further or to provide him with any kind of adjustment. It seems to me . . .

MR. RUSSELL: He is still an employee, right?

MR. DEXTER: He retires right at the end, so he never comes back to work.

MR. RUSSELL: I shouldn't say I am confused because that would be admitting confusion, but if you could provide us with the individual's name or . . .

MR. DEXTER: Well, I have and I have had correspondence back and forth . . .

MR. RUSSELL: Anything with his name on it, we will take a look at it and get back to you.

MR. DEXTER: I have written again as of January; I wrote originally in October, I receive a reply . . .

MR. RUSSELL: Who did you write to?

MR. DEXTER: I wrote to Christine Dean. She replied to me in November; I wrote again in January, setting out in more detail all of the situation, and I have not received a reply since January.

MR. RUSSELL: That lady, I understand, works in the Department of Natural Resources.

MR. DEXTER: It says her title is Human Resources Consultant.

MR. RUSSELL: If you could give us a copy of a piece of correspondence with the guy's name on it, we will look at it and we will get back to you.

MR. DEXTER: I would be happy to do that.

I think those are all of my questions; in fact, I will do that now before I leave. So, Mr. Chairman, if I could just pass it back to my colleague.

MR. CHAIRMAN: The honourable member for Hants East.

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MR. JOHN MACDONELL: Mr. Chairman, to the minister, I just want to touch on some points here. No offence, I am kind of eager to get to Natural Resources; we didn't get there last year. I envy you, your comment about not wanting to admit you are confused because that would admit confusion. I usually don't have that option but it is obvious in my case. Coming back to Priorities & Planning, I want to touch on some of the comments that your government has made around tendering and what value contracts will be tendered and so on. Can you tell me what is the total dollar amount for untendered purchases and other exceptions to the procurement policy that have been approved by P & P and do you have a breakdown of those purchases?

[4:30 p.m.]

MR. RUSSELL: Yes, Vicky just pointed out to me and now I recall, we have a FOIPOP on this right now.

MR. MACDONELL: Do you?

MR. RUSSELL: And it is coming to me, but not within the Treasury Board and Policy Board. It is coming to me within the Department of Transportation and Public Works in the procurement division and we're responding to it. I don't know who submitted it, but we will make a note to let Mr. MacDonell have a copy.

MR. CHAIRMAN: Just to remind you to make sure the paperwork is for both caucuses and the chairman, please.

MR. RUSSELL: Yes, indeed.

MR. MACDONELL: Last year we saw some contracts that were split into two payments bringing them under the $5,000 limit for tendering, a contract to Dr. Peter Butler's company, RDI, for pre-budget polling and it was split into a payment for field work and a separate payment for analysis. An earlier contract to Dr. Butler was given in exception to the tendering rule. It sent what we think would be the wrong message to other departments when the people at P & P evaded the tendering requirements, so I want to know what steps have been taken to make it clear that departments are not going to be allowed to evade tendering?

MR. RUSSELL: I can tell you we changed the management. No, your point is well taken and I would hope that those things do not occur again. (Interruption) Vicky just reminded me that there were two separate studies but, nevertheless . . .

MR. MACDONELL: You know my point.

MR. RUSSELL: I have got your point.

[Page 629]

MR. MACDONELL: Has Dr. Butler himself or RDI received any other contracts, tendered or untendered?

MR. RUSSELL: I am advised that Dr. Butler has a professional service contract with the department for $20,000.

MR. MACDONELL: Well, I get from your response earlier that you certainly would like to see tendering tightened up, there's no other way to say that, so you don't expect in terms of dollar amounts or discretion to choose someone, it would be other than the lowest bidder?

MR. RUSSELL: The maximum for local purchases was $1,000 and it has now been increased to $5,000 and the reason for that primarily came about because of two departments - Natural Resources and the Department of Transportation and Public Works. It was our belief that we were wasting a lot of money because local managers were restricted in obtaining some services. To give you a concrete example, up in your territory, as a matter of fact, in Noel, there is a garage up there, as you know.

MR. MACDONELL: Right.

MR. RUSSELL: They have a couple of utility trucks, half-ton trucks. If they wanted to get the brakes fixed on those trucks, they had to take them down to Miller's Lake for repair. They would have one person drive down the sick truck and one person drive down a good truck. They would drop off the sick truck and leave it there and drive back to Noel in the good truck and then a week or 10 days later they would do the same thing. Almost adjacent to the depot in Noel there is a guy who has got a service station. I mean, you know, a country fellow, but he could certainly do a brake job and the problem was that these smaller jobs were not being contracted out because the local management didn't have the authority.

So we have changed that now and upped the limit to $5,000 and, as I say, the primary departments that this affected were Natural Resources and the Department of Transportation and Public Works. It wasn't only just that, it was buying small items like, for instance, perhaps they needed a new alternator, or rebuilt alternator. Instead of going down to Miller's Lake, they could just go next door and buy it. It keeps money in the local community.

MR. MACDONELL: I guess your comments lead into my next question that in the fall of 1999 the government announced that any purchases over $1,000 and all out-of-province travel would require the personal approval of the minister?

MR. RUSSELL: Yes.

MR. MACDONELL: So these purchases over $1,000, did you move that up to $5,000?

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MR. RUSSELL: That moved to $5,000, yes.

MR. MACDONELL: I think the government said that they expected to achieve $27 million in savings. Do you know if you did that?

MR. RUSSELL: I can't answer that question. Do you mean across government?

MR. MACDONELL: Yes.

MR. RUSSELL: Through tendering?

MR. MACDONELL: Right. Well, in regard to that over $1,000, you know, that you would have to go to the minister for approval, so is there even any way to know that?

MR. RUSSELL: It would be very difficult to itemize that, but you can find specific cases where there have been savings and you can say, well, these have probably occurred right across the service. I mean, you know, this piece of paper may be very inconsequential, but you're looking at something that probably costs $10. I mean it is ridiculous. (Interruption) We're just talking, I was just getting advice on the change in the tendering policy. I think the gist of it is that it is very difficult to itemize because various departments don't keep their savings, because of certain policies, they don't write that down and tabulate it and submit it to anybody.

MR. MACDONELL: But they would keep their purchases. It would be something you could look at the previous year and say, you know, there's a difference of x dollars?

MR. RUSSELL: Yes.

MR. MACDONELL: But you haven't done that?

MR. RUSSELL: No, this has only been in place for eight months.

MR. MACDONELL: The Progressive Conservative platform included a promise that all private partner contracts would be made public in some way, either tabled in the House, or however, to let the public know what they were, within 30 days of the signing, but in the two years I can think of, or pretty near two years, I don't remember any being tabled in the House. So is that something that you're going to tend to?

MR. RUSSELL: This is private partnerships?

MR. MACDONELL: Yes, private partner contracts.

MR. RUSSELL: I don't recall (Interruption) Do you have one in mind?

[Page 631]

MR. MACDONELL: I don't have one in mind, but I just have . . .

MR. RUSSELL: I don't think we've had any to be quite honest. We can certainly take a look at that and if there's any, we will let you know.

MR. MACDONELL: Okay. So I am assuming from what you said around the new Treasury and Policy Board, is to control spending and the government has said that health spending is one of the biggest ones that they want to control; of course, the biggest budget item in that department. So I want to know why was most of the Health Department given an exemption from the tighter purchasing requirements your government introduced?

MR. RUSSELL: If you could ask me that question tomorrow, I can probably better answer it when the procurement people are with me at Transportation. I think that what you're referring to though was the Department of Health. If I remember correctly, the Minister of Health requested an exemption because of the tremendous number of purchases. Yes, he was given a letter that routine type purchases that occurred day after day, week after week kind of thing, could be delegated to either the deputy or some department head. (Interruption)

MR. MACDONELL: So you think that your comments around how the Treasury and Policy Board would work as far as acting as a check and balance on a department's budget so that you don't wind up three months before the end of the year saying you have to cut x million dollars. So even with this leeway for the department or for the deputy, you think the Treasury and Policy Board will still be able to be effective?

MR. RUSSELL: Yes, I do. We will be working with the departments closely. The ministers have Cabinet and Treasury and Policy Board where each minister is there himself.

MR. MACDONELL: Right.

MR. RUSSELL: Deputies have the same kind of an arrangement. The deputies meet once a week now and so they have a common meeting place, if you will, to discuss things. I think, in fact, I know everybody has bought into the Treasury and Policy Board as being a valve that they must get by and, quite frankly, from ministers and deputy ministers that I have spoken to, they have all welcomed the fact that we are going to have that function there because it helps them as well.

One thing that I haven't spoken about with Treasury and Policy Board, in particular, is that if a department has some particular program, or some particular change they want to make in the way in which they conduct their business, they come forward with a proposal to the Treasury and Policy Board. The Treasury and Policy Board does an analysis on that, a completely independent analysis of that program that comes forward to see whether or not the costs as the department has presented are valid, the number of people employed, the

[Page 632]

value of the program or whatever it is to the general public, whether it is necessary or not necessary. All those things are evaluated within the Treasury and Policy Board and come forward in a report to the Treasury and Policy Board when it meets, to consider that proposal. You've got the proposal from the department and you've got the analysis by staff within the Treasury and Policy Board as to whether or not this piece of paper should move forward onto Cabinet.

MR. MACDONELL: I guess one other, just out of curiosity, in thinking about what I have seen or understood around the approvals for schools, for the building of new schools, a proposal would go to P & P and then it would go off to Cabinet. So I am assuming that Priorities & Planning would make some statement about this is good, this is bad, you know, some analysis. So are you saying now that that role that would have been done by Priorities & Planning will now be done by the Treasury and Policy Board or is there . . .

MR. RUSSELL: It will be done by the Treasury and Policy Board, but I would point out to you that the Treasury and Policy Board is now 18 days old and so what we're doing at the moment is really converting to what Priorities & Planning did to what the Treasury and Policy Board will be doing. Insofar as schools are concerned, the analysis that was done by Priorities & Planning would be different to the research and the way in which school construction, financing, et cetera, would be dealt with today.

MR. MACDONELL: Right. Mr. Chairman, I think I am going to conclude my questions for the minister. I want to thank the minister and staff for their help. I appreciated the effort and time.

MR. RUSSELL: Thank you for your questions. I appreciated it and just to add to what I said just a moment ago, when I was saying that they're looking at schools, et cetera, under the concept of the Treasury and Policy Board you have a capital budget, a block of money for capital expenditures. There are roads in there, very important, and you've got hospitals and you've got all kinds of stuff within your capital budget. What the Treasury and Policy Board would first of all decide is whether or not the money from the capital budget is enough to cover the program that comes forward from the Department of Education for whatever number of schools they're looking at.

MR. MACDONELL: So I guess I am curious as to whether that has to be done, common sense would say it would have to be done by a certain date, but you have to somehow have some vision of what all departments are going to want to do by a certain date, knowing you have a pot full of money that you're trying to determine how it is going to be allocated?

MR. RUSSELL: Absolutely, very much so.

MR. MACDONELL: Okay, yes. Thank you.

[Page 633]

MR. CHAIRMAN: I understand there are no further questions from the Liberal caucus so there is an opportunity now for the minister to make any closing remarks he wishes to make.

MR. RUSSELL: I will be very short and I will just extend them to as long as I have to go to keep the committee in session until the next group arrives.

I would like to, first of all, Mr. Chairman, compliment your committee on asking some questions that were, I thought, very relevant and although we didn't get into the nitty-gritty of what you might say was the examination of spending within a couple of departments, we talked about more general subjects which not only have greater interest, but I think better explain what the department is all about because, as I said before, when you said that people don't know what P & P is all about, you're absolutely right. Out on the street, if you say P & P, it doesn't mean anything.

Mr. Chairman, thank you very much and I will say adieu until next year.

MR. CHAIRMAN: At the present time I would like to call then for the resolutions.

Resolution E12 - Resolved, that a sum not exceeding $3,200,000 be granted to the Lieutenant Governor to defray expenses in respect of Communications Nova Scotia, pursuant to the Estimate.

MR. CHAIRMAN: Shall the resolution stand?

The resolution stands.

Resolution E14 - Resolved, that a sum not exceeding $13,055,000 be granted to the Lieutenant Governor to defray expenses in respect of the Executive Council, pursuant to the Estimate in relation to the Public Service Commission, the Treasury and Policy Board and Voluntary Planning.

MR. CHAIRMAN: Shall the resolution stand?

The resolution stands.

The honourable Minister of Natural Resources.

HON. ERNEST FAGE: I have to go get a file. I'll be right back.

MR. CHAIRMAN: I will call then for the resolutions. The resolutions that are before us for consideration now are Resolution E11 and E39.

[Page 634]

Resolution E11 - Resolved, that a sum not exceeding $53,945,000 be granted to the Lieutenant Governor to defray expenses with respect to the Department of Natural Resources, pursuant to the Estimate and the business plan of the Tidal Power Corporation be approved.

Resolution E39 - Resolved, that the business plan of the Nova Scotia Harness Racing Corporation be approved.

MR. CHAIRMAN: Those are the two resolutions that are before us for debate now. I invite the honourable minister to make some opening remarks.

HON. ERNEST FAGE: Thank you, Mr. Chairman. I am pleased to be here to present the 2001-02 budget for the Department of Natural Resources. First, I would like to introduce some of my department staff who are here today. On my immediate right is Dan Graham, Deputy Minister, Department of Natural Resources; on my left is Frank Dunn, who is Director of Finance, Department of Natural Resources.

Natural resource industries are recognized as a vital part of this province's rural economy. The province's economic growth strategy, Opportunities for Prosperity outlines the viable contributions that are traditional or foundation industries, as some call them, have made in helping to build this province and how these industries will continue to make a significant contribution in the future.

The forestry industry is an industry with a long tradition in Nova Scotia. Much of the infrastructure of this province was built on the returns from the forest industry. Certainly, in this province, the forestry industry is unique to any other jurisdiction in Canada, other than P.E.I. When you examine that almost 75 per cent of land in Nova Scotia is privately owned rather than publicly owned, it is virtually the mirror image or the reverse of national trends.

Log production, fibre production in this province comes primarily from the private sector rather than the Crown lands and has led to a stronger diversification. Many more individuals traditionally who would receive part of their income from harvesting family woodlots or working on their rural communities' wood holdings through the years.

The mission of the Department of Natural Resources focuses on the road ahead, of course. The department is driven to build a better future for Nova Scotians through responsible natural resources management. The whole issue of sustainability with our forests is paramount with the department and it is certainly paramount with this government, to ensure that sustainable use of the forestry is there so that this renewable resource will continue to provide that base of employment in rural Nova Scotia, as well as social and recreational aspects that our forests provide to all citizens of Nova Scotia.

[Page 635]

How we plan to get there is reflected in the goals the department has set out for itself. These goals are, first of all, achieving sound natural resource stewardship. Again, this is sustainability, renewability and ensuring that the benefits of this natural resource are there, not only for this generation, but for generations to come. Moves made by the department and the previous administration and our administration with regard to legislation dealing with sustainability enacting the Registry of Buyers and other measures that ensure that silviculture and proper forest management occurs and that our most precious water resource and wetlands have the protection that they deserve.

Secondly, conserving the diversity of Nova Scotia's natural environment. This is a charge of the Department of Natural Resources in looking after Crown properties. The Province of Nova Scotia is world famous for its natural beauty of landscapes, forest industry and the Crown lands in this province and we certainly have a strong obligation to uphold the beautiful scenery that is there. Programs such as integrated resource management that we have instituted on all Crown lands as a footprint to identify the significant features of any piece of public property, go a long way in helping identify it so it can be offered special status and its significance and its protection taken into account for future use of that piece of property.

Third, supporting Nova Scotia's economy through the sustainable development of natural resources and, again, the sustainable development with regard to the forests is paramount. There are also obligations dealing with wildlife and with the flora and fauna. I am pleased that we are in front of other provincial governments and the national government with regard to endangered species legislation. We are the only province to have enacted such legislation and we have already proclaimed our first 10 species. Those issues as well as the issues surrounding the forest itself and its many uses are extremely critical to the future of rural Nova Scotia. Not only the direct industries that are involved with property and the outdoors of Nova Scotia, but tourism and other related industries that are very significant generators in the economy of Nova Scotia and have strong growth potential and will continue to grow, as a crowded world looks for more and more opportunities for that scenic beauty and the ability to be part of a landscape that is not dotted by industrial development.

Fourth, improving the quality of life in Nova Scotia. Again, the quality of life here in Nova Scotia compared to other jurisdictions is very much the result of an unhindered natural beauty. Again, that is part of our goal, to protect those significant areas, identify them and have those areas and formations protected for the future.

Fifth, managing the department's finances, physical, human and information resources effectively and efficiently. This is paramount to us not only meeting our budget objectives, but being able to enforce regulations, protect public lands, protect public interests, as well as the protection of the natural species from animal to flora and fauna that is the treasure of this province. As well, managing the resources and finding the physical and financial resources to deal with issues involving mineral exploration and the development

[Page 636]

of industrial opportunities for the mineral industry and the energy industry in this province, which provides long-term, high paying jobs to Nova Scotians. For many communities in Nova Scotia, that industry has been the backbone of those communities for generations. We see new opportunities out there for development in the future and have indeed seen a number of deposits come to industrial production and the manufacturing stage in the last several years.

The various branches of the Department of Natural Resources work to ensure that these goals are supported in all the programs, activities, policies the department develops or is involved in.

I would like to take a minute and speak of the set-up of the department. There are six branches and the first is Planning Secretariat and from this group comes the direction and the outlook on the long range of the department which deals with the big issues of finance and structure as well as sustainability and enforcement of the landscapes and provincial assets that they are charged to look after.

[5:00 p.m.]

Secondly, there is the mineral and energy group. This group deals with the different mineral opportunities in the Province of Nova Scotia. They are highly trained professionals who offer advice to industry and promote the development of significant finds that have commercial potential. As well, the energy division is the key player in the new energy strategy which will be going to public consultation very shortly across the Province of Nova Scotia. It has been over a decade since an energy strategy for this province has been conducted. With the various energy sources, including natural gas and petroleum that are out there, as well as our traditional energy sources of coal and new ones that will come such as green energy, wind power and other ones, how the structure of regulation, of pricing, environment and the uses is a key subject that many Nova Scotians are very much interested in. We obviously want to afford them an opportunity in this very open process to help establish the guidelines of how we will proceed with dealing with energy, not only with production, distribution, but how Nova Scotians will want that dealt with over the coming years.

The third branch is the renewable resources division. This division deals with the manpower and the engine of the department, ensuring regulation protection and that regulated authorities are upheld and that Crown lands and the species there are afforded their proper protection.

The next division is the land services. This division deals primarily with survey, other areas where the province would be involved in interacting with private industry or the protection of the Crown land.

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The next division is regional services. Regional services are a multitude of services and regulations that would be provided to parks, to upkeep of regional offices with their various mandates from the protection and enforcement of the wild game animals to the Crown land itself and the maintenance of those parks, services and roads that would be involved there.

Lastly, there is the resource corporate services unit. Again, this unit deals with the centralized financing part of the department and other related issues that ensure that the objectives and the finances of the department are met and the responsibilities that are delegated to the Department of Natural Resources are carried out.

I would like to describe the important role and functions of each of the branches in a little more detail at a later time. What I will be doing at a later time, as we answer questions, is try to ensure that each one of those branches' issues that they deal with will be highlighted a little stronger.

As each of these departments are responsible to the province's resource based industries, many of the projects and programs that we deal with are rural based initiatives. Our regional services deal with, again, many of those issues dealing with parks, development of staff, and the proper protection and handling of the resources belonging to the people of Nova Scotia.

The balance of our dealings involve many demands on the lands and the natural resources of Nova Scotia. Nova Scotia has a land base of approximately 12 million acres - about 3.5 million acres of that is Crown land, which the Department of Natural Resources is responsible for. Therefore the demands that are placed on our lands often outweigh availability. That creates issues that can sometimes see production efforts pitted against development, recreation against harvesting.

As I mentioned earlier, that is the real reason why the continuation of the Integrated Resource Management or the IRM process, is a departmental priority. IRM outlines the best possible options for management and use of Crown lands for both social and economic benefits. For the department, IRM is a strategic shift from managing resources on an individual or sectorial basis to management of an area or eco-systems. It is a process that balances various users and uses while ensuring sustainability and minimizing conflicts between various user groups.

IRM is an ongoing process and obviously, as new features or significant profiles are identified on any piece of Crown land, they will be added to the list of items to be taken into account when any change of use or any development or alteration of that particular piece of property would be contemplated.

[Page 638]

Currently, revisions are being made to the IRM strategy and inventory of value based on new information gathered at public information sessions throughout the province. Individual citizens will identify a significant feature on a piece of Crown land and would bring that forward to the department. Those could range from the natural viewscapes to an old cemetery, for instance, or a settlement that happened to be there a number of years ago and would be part of the history of that particular piece of property.

The next step would be the development of a long range management plan for the various parcels of Crown land throughout the province. Many groups in Nova Scotia are very keenly interested in that process and will contribute and have input. Many organized groups from various viewpoints have the opportunity to put forward their views on uses of all pieces of Crown land.

Proper management of this province's resources is key to the future of all our resource based industries, the largest of which is forestry. A 1999 estimate places the value of the forest industry sales in the Province of Nova Scotia at $1.4 billion. This is up 27 per cent from 1998. The forest industry employs about 22,000 people, both directly and indirectly, in the province. Many of these jobs are in the rural areas of Nova Scotia. Throughout the province, the forest industry is the lifeblood of many communities. They rely on the forest resource for the future and that is why ensuring the sustainability of existing harvest levels is part of the Department of Natural Resources' mandate.

Again, sustainability is a key thing to this government. Crown land silviculture programs are an integral part of ensuring sustainability of this province's forest resources. Eighty-five per cent of Nova Scotia Crown land is productive forest land. That is more than 1 million hectares. This year's budget sees an increase of $1.3 million for Crown land silviculture programs, bringing the overall total to $3.5 million. This funding will help to ensure that the Department of Natural Resources is working toward its mandate as well as ensuring our resource for future generations.

Our commitment to silviculture work on private lands also continues. Again this year, $3 million in funding will go toward private land silviculture and like last year, that funding will be matched by our forestry companies and woodlot owners.

In keeping with our sustainability focus, we continue to work on developing the wildlife habitat management regulations and expect to introduce them very soon. These regulations will ensure the protection of water courses, watersheds and provide habitat for wildlife on Crown land and private land.

Of particular importance to the forest sector right now is the softwood lumber dispute. Our position on this issue is quite clear. The trade practices that were reflected in the Maritime Accord must continue. Our Premier, John Hamm, along with the three other Atlantic Premiers have communicated this region's desire and need for action on this matter

[Page 639]

to the federal government on numerous occasions. In a recent letter to the Prime Minister the Premiers urged that our four provinces be specifically excluded from the scope of any countervailing duty action. The continuation of our region's free and fair trade in softwood lumber is vital to our province. The Department of Natural Resources and provincial trade representatives continue to work toward ensuring this province's position in the softwood lumber industry.

Forestry, mineral and energy resources have also been a strong factor in Nova Scotia's economy, and new opportunities continue to come up. In particular, the 2001-02 budget will provide funding in the order of $200,000 for the development and implementation of the province's energy and climate change strategies.

Funding for the development of an energy strategy will result in Nova Scotia making full, effective use of its energy resources. It will also allow us to explore opportunities for the development of new energy-use possibilities. The revised strategy will take into account the rapid growth in the province's offshore oil and gas industry, global trends in the structure of the electrical industry and the potential implications of government policies in areas such as climate change and other environmental issues. A new energy strategy will also allow us to take advantage of opportunities in new markets for our electricity and our natural gas, helping to provide the province with expanded economic opportunities and help solve some of our financial difficulties.

Energy is a critical part of Nova Scotia's social, economic and environmental future, and it is absolutely essential to the people and the economy of this province that we have a proper strategy and know how we wish to proceed as a province. A proper mix of new energy supply, energy conservation and the use of alternative, renewable energy will provide Nova Scotia with a secure, reasonably priced and sustainable energy future. A public consultation process will give all Nova Scotians the opportunity to have their say in the strategy and how it should be revised.

Equally important to Nova Scotia is the development of the climate change strategy for the province. Our strategy was developed in response to the national strategy and the first three year business plan. Development of the province's climate change strategy puts Nova Scotia on a level playing field with other provinces. It will also help to ensure the province's participation on the national climate change plan. This strategy is important to this province because of our dependence on coal and oil for electricity generation and the development of natural gas. Nova Scotia must move forward in increasing energy efficiency and encourage more climate-friendly business and personal practices. All Nova Scotians and, indeed, all Canadians share in the responsibility to respond to climate change issues and challenges. Every contribution, however large or small, is important.

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In addition to these existing exciting new initiatives the department maintains many of its important programs that deal with resource management, resource protection, data gathering and analysis, legislation and policy development, and information and technology transfer. One very important program that remains with the Department of Natural Resources is, of course, enforcement. After careful review of the enforcement program last year, it was deemed that it was more effective and efficient to keep the program at DNR. This program is an integral part of managing our natural resources and is recognized nationwide for its policy and standards.

Additional programs that move this department toward fulfillment of its mandate are: youth and woodlot owners education programs, the hunter safety course through the Nova Scotia Federation of Anglers and Hunters, the southwestern Nova Scotia geoscience initiative that will help identify mineral potential and other geological information for use in community economic development and environmental planning, as well as advanced exploration and mine development projects for kaolin, zeolite and barite. The home energy action tips or HEAT program, which we work on in conjunction with Service Nova Scotia and Municipal Relations, focuses on methods for making your home more energy efficient, as well. We maintain responsibility for Nova Scotia's provincial parks which are opening on May 18th, and wildlife-related educational programs, as well.

Further departmental priorities identified for the coming year are to continue to work with the Canadian Food and Inspection Agency on respective responsibilities, and protecting Nova Scotia's forests from the risk of pest introduction. Certainly, the longhorn beetle infestation here in Nova Scotia is a prime example of why we need to work together with our federal partners in the Department of Agriculture, who have named that particular pest and are the lead agency. The support of the department and staff certainly was critical in last year's identifying the radius or size of the outbreak, being able to identify which particular trees needed to be removed immediately, and being able to put in a reasonable containment program with the prospect that at the very least this pest can be contained and, certainly optimistically, eradicated.

With modern transportation, it is certainly easy to see how foreign pests can land on the soils here in Canada. In Canada we have had outbreaks from everything from a zebra mussel to this longhorn beetle. Certainly, the new regulations that are coming into effect, dealing with sea ports and in regard to products packaging, crating, all those types of issues will help, hopefully, prevent an infestation, in the future, of serious pests that can decimate the boreal forest here in Nova Scotia.

As well, to establish a board a directors for the administration of the recently-announced Wildlife Habitat Conservation Fund; also to release the first provincial and national report on the general status of wildlife, which we anticipate will happen very shortly. These reports present important new information on plants and animals that will help in conservation and resource planning. Continued participation in the sustainable communities

[Page 641]

initiative, that is working toward the overall future health and sustainability of Nova Scotia communities.

Our natural resources support an economic and cultural way of life for thousands of Nova Scotians. The Department of Natural Resources realizes the importance of its stewardship responsibility. We must ensure, through responsible use today, that our resources remain viable for tomorrow. With the scope of responsibilities reflected in the Department of Natural Resources, whether it is the development of energy or mineral deposits, whether it is the responsibility for enforcement and protection of our wildlife and our fauna, the upkeep of our provincial park system, the maintenance of the boundaries and cataloguing of all provincial Crown land, working with industry as partners in the forest fibre industry, as well as dealing with many of the players in the energy field, provide a huge range of responsibilities that the department's able staff deals with on an ongoing basis on behalf of the Province of Nova Scotia.

When Nova Scotians think of this province whether they are considering actually exercising their privilege to go hunting, to go fishing, to go hiking, the Department of Natural Resources is there to do their best to protect those resources so that not only does our generation have the opportunity to partake of that privilege, but future generations of Nova Scotians have that right and opportunity.

As we move forward into the future, society and Nova Scotians I think rightfully will, as they do now, continue to look forward to having their opportunity for input on how things are managed and what are the important things and priorities to be protected within the provincial holdings of the property of all Nova Scotians. Certainly the department will openly be part of that consultation process and public process to allow Nova Scotians to have input on what happens to their resources. With those brief remarks, I want to thank you for allowing me to make a few remarks and I would welcome questions.

MR. CHAIRMAN: I thank the honourable minister and now an opportunity for some questions. I wish to advise members of the committee that we will reach our four hour quota at 5:50 p.m.

The honourable member for Hants East.

MR. JOHN MACDONELL: Mr. Chairman, I will request again, I wouldn't mind a copy of the speech, and I don't think I did got one from Agriculture and Fisheries yet.

MR. FAGE: We will make sure . . .

MR. MACDONELL: I would appreciate that. I want to say welcome to your staff. It is nice to have an opportunity to talk. I think the minister would probably be aware from my line of questioning in Question Period, or comments when we have had a chance to just sit

[Page 642]

down and talk, that I do have some concerns. Actually I was quite intrigued by all the branches in the department. I don't know if I missed one. I thought you said there were six.

MR. FAGE: Yes.

MR. MACDONELL: I have Planning, Minerals and Energy, Renewable Resources, Regional Services and Corporate Services; I think that is five by me.

MR. FAGE: The Planning Secretariat, did you have that one?

MR. MACDONELL: I just had Planning.

MR. FAGE: The Planning Secretariat, Minerals and Energy, Renewable Resources, Land Services.

MR. MACDONELL: I didn't have Land Services. I had Regional Services. Is that another one?

MR. FAGE: Yes, as well as Resources Corporate Services Unit. So the one that is missing is Land Services.

MR. MACDONELL: Thank you. Yes, I know we won't have time to get into all of those. The energy strategy is one if time permits. My first questions are around sustainability of the forests. So, you know, I want to ask a very pointed question and that is, at our present harvest level, how long do you think the forests will last?

MR. FAGE: That is an extremely good and important question and one all Nova Scotians ask from time to time I am sure. Last spring a study was conducted by the department in consultation with industry on that very issue. It clearly showed that Crown landholdings were in a sustainable position. It also clearly showed that large company holders of private land - and that could be individuals or a company - were sustainable, but it clearly showed that private small woodlot holdings were not in a sustainable position.

MR. MACDONELL: You did not really answer my question. How long do you think that, at the present harvest, we will keep going before we run out of wood, I guess is what I am getting to?

MR. FAGE: And that is the key to certainly many of the programs and initiatives of the department and the government, is to make sure that we have a sustainable, environmentally acceptable future and plan for the forest industry. When we look at Acts or regulations and policies such as sustainable forest practices, the list of registered buyers which will allow for industry and a check-off for all purchasers of roundwood in this province, it is in force now and, hopefully, will contribute in the range of $9 million a year

[Page 643]

and those funds will be expended on private woodlot holdings. It will go a long way to bringing that cycle back into balance where there is sustainability.

So that is why there has been so much concentration and effort by staff and myself in the last year to get those regulations implemented, to get that fund up and running, and get that silviculture and reforestation work out there on private lands, because clearly those are the ones that are not in a sustainable position and they are the ones that are in danger of not allowing enough wood supply to be there and certainly putting significantly more pressure on Crown landholdings. As well, it jeopardizes not only the employment at processing facilities, but that venue of harvests, because there are thousands of Nova Scotians - and I know the member himself - would have a woodlot. Each one would employ different practices which is their right, but it certainly provides a lot of employment and opportunity for local communities.

MR. MACDONELL: Yes. I can't disagree with what you said, although I think you still didn't answer my question. So I will take your information and I will work with it. You mentioned about the $9 million and I think you mentioned in your speech about $3 million in funding for private land and silviculture. So it is my understanding that this year the mills are to pay 70 per cent in the sustainability fund for the wood allocation that they get and of that 70 per cent, the department pays 30 per cent. They have a 10 per cent deferral for administrative fees and they have a 20 per cent deferral - I am not sure what that is for - and that leaves 10 per cent that the mills can pay into the sustainability fund when we would, first of all, think that they have obviously had a reduction of 30 per cent to start with because it is not being paid at a 100 per cent level. So is it from that that you are going to get your $9 million? Is that where you are thinking?

MR. FAGE: The member is certainly correct in his figures there. The 70 per cent is what we are hoping to achieve this year. The 30 per cent, I probably should give some explanation of why we came to that number. The 30 per cent is the wood fibre that would be involved in sawdust and the chips, those by-products that would end up mainly at the pulp mills, and so with our discussions with that part of the industry, we have agreed with the sawmill, or roundwood portion of the industry, that we would deal with those two issues separately. The 30 per cent is the accepted norm or average of total wood fibre coming in and so to allow the discussion to continue between ourselves and the pulp companies, 30 per cent, and to be able to implement, as we wanted to this year, that is why we agreed on the 70 per cent level.

[5:30 p.m.]

MR. MACDONELL: I am assuming that you redid it, you took the sawdust and the chips aside to try to give some balance to all the mills. I guess what I am coming to is that the 30 per cent that is paid by government, and it looks as though 10 per cent is all that really needs to be paid of the 70 per cent by the mills. If there is 70 per cent going into the fund, 30

[Page 644]

per cent is paid by government, there is a 10 per cent deferral for administration fees, there is another 20 per cent deferral, so out of 70 per cent, the mills are paying 10 per cent and the government is paying 30 per cent.

MR. FAGE: The 70 per cent number is correct. Everything is based on the $3.00 per cubic metre. The province is paying, as it normally would, its one-third share. The full 70 per cent is the fee that the mills are paying. I am not sure about the 20 per cent deferral, what you are talking about there. The mill is paying the 70 per cent. That goes, either they do credits or, into the sustainable fund, and the province contributes its one-third as well. The check-off fee they are paying is based on 70 per cent of the roundwood they bring into their mill site.

MR. MACDONELL: Let me get this straight. They are paying for 70 per cent of the wood into their mill site, and the province is paying 30 per cent, which makes up the 100 per cent. Is that what you are saying? It makes up another 30 per cent on top of the 70 per cent, which makes up 100 per cent.

MR. FAGE: I think the easiest terms to explain it in is, the 30 per cent of the wood volume, they are not paying on accounts for the fibre going to the mills, so they are paying on $3.00 a cubic metre on 70 per cent of roundwood. The $3 million that the province is putting in is not added on top of that. It is a separate fund and is treated separately, and that is why I was hesitating on just adding the two together.

MR. MACDONELL: So the $3 million would be part of the 70 per cent that is going to the sustainability fund, $3 million from the province.

MR. FAGE: Yes. That is correct. To make the total, that is the right way to do it.

MR. MACDONELL: To make the total 70 per cent. The mills actually, if the province is paying 30 per cent of the 70 per cent and they have a 10 per cent that they can claim for administrative fees that they won't be paying and there is another 20 per cent deferral that they won't be paying, that only leaves 10 per cent of the 70 per cent that they are paying.

MR. FAGE: I don't know where some of your numbers are coming from.

MR. MACDONELL: Okay. I might be wrong. That is why I am asking.

MR. FAGE: There is no 20 per cent deferral.

MR. MACDONELL: There is no 20 per cent deferral.

[Page 645]

MR. FAGE: No, I don't know what that is. But there is an allowance for 10 per cent administration to do the logistics, the book work, and that is out of the total amount of money collected. The 70 per cent is based on 70 per cent of the production coming into that mill. That generates a sum of money. It is 10 per cent of that 70 per cent that would be allowable for administration. That is when you convert it to a finite sum of money, rather than subtracting percentages. The remaining block of money that that 70 per cent generates, 10 per cent of it could be used for administration and planning, the remainder goes into silviculture.

MR. MACDONELL: The remainder goes into silviculture.

MR. FAGE: Actually, the work on the ground, purchasing seedlings, thinnings, those types of things.

MR. MACDONELL: If the province is paying 30 per cent of the 70 per cent, then the mills are only paying 30 per cent of the 70 per cent.

MR. FAGE: I think where we have the disconnect is you are adding the percentage and a dollar amount to it. The 70 per cent comes off, that is a block of money, and then the $3 million is added to the block of money. It is not a declining percentage basis that they don't . . .

MR. MACDONELL: You are saying the $3 million is part of the 70 per cent. If you took the 70 per cent as a block of money, the $3 million from the province would be part of that 70 per cent.

MR. FAGE: Let me attempt it again, 70 per cent of the production is subject to a $3.00 fee, check-off, that generates x amount of money. The province's $3 million is then added to it. It is not a deduction out of the 70 per cent, and I think that is where we are going wrong or getting confused, we are trying to make the $3 million part of a percentage. That generates x amount of money, the 70 per cent, and the $3 million is added to it, in agreements.

MR. MACDONELL: Okay. All that really can be deferred from the 70 per cent would be 10 per cent for administrative fees. Right?

MR. FAGE: Yes.

MR. MACDONELL: For any mill it would work out to whatever, and the $3 million in funding for the province would work out in regard to their 70 per cent. Do they all get a percentage or . . .

[Page 646]

MR. FAGE: It would be based on agreements with different mill owners, different wood buyers, and the percentage of land they need to reforest or the amount they need to do. Not to try to complicate it, but if a forest is harvested this year, those credits or dollars would be deducted; the prep work, if it needs to be reforested and there is not enough natural regeneration, may occur two years down the road. It is not an automatic, take it off this year, it goes back on that piece of property, and maybe in10 years it needs thinning. So the money taken off this year . . .

MR. MACDONELL: May not be spent for . . .

MR. FAGE: Well, it would be spent this year, but it would be spent on a piece of property that was done two years ago. That is how it would spin out. It is not tied. There is a development plan for each property, but you wouldn't want to bank the money for 10 years to do the work, so to speak. What comes off this year will do what is ready this year.

MR. MACDONELL: That makes sense, I think. I am curious about, if mills have stewardship agreements or a stewardship program, then they don't pay into the sustainability fund. Is that right?

MR. FAGE: For clarity, the sustainability fund, when a payment would be made there, would be when a mill has not used all the money that was deducted to do silviculture or reforestation work. It would be a direct payment, or that could be a choice by a mill. The normal course of practice, what will happen is a credit is the same as a dollar, so through the normal course of business that mill would be out thinning, reforesting this year. That has given a credit or dollar amount that would be directly deducted against what they collected at the beginning of the year.

MR. MACDONELL: Against that lump of money that you recognize as 70 per cent.

MR. FAGE: Exactly, and at the end of the year, then there would be the accounting. If it was a positive balance, all those funds hadn't been expended, then that would be taken into account in the sustainability fund.

MR. MACDONELL: So what we are saying is, if a mill does have a stewardship program and they harvested 50 woodlots in a year, and only 22 of those woodlots wanted to be part of their stewardship agreement, they entered into an agreement with the mill, then even though they had harvested x number of tons of wood fibre from those other properties, but there was no agreement to do anything as far as management of those properties, then that difference in funding would have to be paid into the sustainability fund.

MR. FAGE: Just for clarity, for the choices for the individual property owner and that woodlot owner, the woodlot owner doesn't have to sign a stewardship agreement or a contract agreement with that mill. They could hire another contractor to do it and withdraw

[Page 647]

the funds, they could do the work themselves on their own property or they could hire that particular wood buyer to do that preparation as well. Those would be the options.

MR. MACDONELL: As long as it got done. I guess one of my concerns is, and this is something that I am assuming that your deputy and staff have had some discussion around, I would be willing to bet on that, but I am looking at this document that was produced by your department - it says, Nova Scotia Wood Supply Forecast for Nova Scotia, 1996-2070. It is my understanding that the whole notion of the sustainability fund or stewardship agreements was to ensure that enough silviculture dollars went into the industry to offset the overcutting on small private woodlots, in particular. If we don't spend that money on those programs, there is no way that our present harvest is sustainable.

I guess the thing that worries me right off the bat is the fact that the department, in the very first year, went to paying on 70 per cent of your wood allocation rather than 100 per cent. So if you are going to hit your targets from this program as it is identified here, then at some point people are going to have to pay on 100 per cent of what they harvest. So I want to know what your plan is. What are you thinking for next year?

MR. FAGE: I probably should give you a little history in the answer. One year ago, when we started the process, the largest mills, 65 per cent of the production in the Province of Nova Scotia, went on at a 50 per cent level. The smaller mills and all other wood buyers went on this year and everybody moved to the 70 per cent level. They came on at 70 per cent and the big mills went to 70 per cent and they had been previously paying 50 per cent. So the entire industry is onstream now. Next year they will go to 100 per cent.

MR. MACDONELL: I want to be sure I understand. You said that in the first year it was a 50 per cent level, but they only paid $1.50 per cubic metre. When you say 50 per cent, was it half the value, or they only paid for half the amount of wood they allocated to you?

MR. FAGE: They paid the full value for half the wood.

MR. MACDONELL: Okay. So the first year it was 50 per cent, this year it is 70 per cent and next year you are thinking it will be 100 per cent.

MR. FAGE: It is 100 per cent. That is the agreement with the industry.

MR. MACDONELL: Well, I am hoping you do that and I will tell you why I am hoping you do that. In looking at these numbers, the operable forest is 2.616 million hectares, which is around 5 million acres. The annual - I guess I will say annual cut, I won't say annual allowable cut - the harvest demand, it says here from 1996-2000 in softwood is 5.4 million cubic metres and for hardwood it is 653,000 cubic metres, which is in the area of 6 million

[Page 648]

cubic metres of wood. So 6 million cubic metres of wood is about 3 million cord. If the deputy will correct me, I think a cubic metre is about half a cord.

Now, when I do my figures, assuming that our 5 million acres of operable forest, and that is with everything taken out that you can't harvest on - that is with federal lands; parks and protected areas; non-participating small landowners; wildlife habitat; and bio-diversity; inaccessible, low productivity, non-forests, like Christmas trees; and so on - with all of that taken away, we are left with 5 million hectares of forest that we can actually cut trees on. Now if we have 3 million cord of wood as what we are cutting annually and if we have the 5 million acres to cut it on, I figure that at 30 cords to the acre, that we have about 15 years of wood supply left and that is assuming that none of that 5 million acres has been cut, what we call the operable forest.

Now I know that some of that has to be cut, but I am assuming that none of it has been cut. So to me, putting money into silviculture is a good thing. But if we woke up tomorrow and there were no trees left in Nova Scotia, it wouldn't matter if you put $1 billion into silviculture, you wouldn't have any trees for 70 years. So I just want to know what you think about my numbers: the honourable member is completely out to lunch, he doesn't have a clue what he is talking about or there is some justification for coming to where you are at. I would like to know because I am taking my numbers, except for the 30 cord per acre, but your deputy is a forester and he can say whether that is accurate. So I would really like to know if that is some kind of sensible analysis of where we are.

MR. FAGE: I think your assumptions are probably reasonable, but I think it goes to enforce and highlight why proper silviculture practice and that expenditure is so critical, so that you don't run out of a finite supply in 35 or 40 years. When you have proper silviculture thinning, you have all that growth in the immediate time, harvested, good genetic material, proper thinning, a forest is ready to harvest in 35 to 40 years. That is why the window is narrow and that is why it is so critical that these extra funds are being expended now. These programs of stewardship and sustainable resource development are so critical that we get them on the road right now.

If we take those assumptions that you have made and we do nothing, then that will be the inevitable. But if we invest dollars in silviculture, reforestation, proper management, improved genetic stock for the growing stock of the trees, then it is preventable. There are going to be price cycles like we have witnessed this year. The price of lumber has decreased significantly. It takes a lot of the pressure off - I shouldn't say a lot - a reasonable amount of pressure off the supply when the price is down. Mills and property owners tend to wait for the upside of the price cycle. No, I think what you have assumed there is absolutely what will happen. If we don't invest that money in silviculture, that will be the inevitable of what happens.

[Page 649]

MR. MACDONELL: That is why I think it is imperative that you do move to paying for 100 per cent of the allocation. There are people who argue with my numbers and say it won't be 15 years, it will be 10 years. I like to use the department's numbers as much as I can because I think it makes for a more credible argument. But I know in a conversation I had with your deputy at the Forest Products Association, he related back to programs that the governments had had in the past that we put money into silviculture programs. He said that we are actually harvesting stands that we had done treatments on in the 1970's and 1980's.

The comment I didn't make to him that day was those weren't clear-cuts in the 1970's and 1980's. If they had been, we wouldn't be harvesting them right now. I will dispute your comment in 40 years or so, harvesting trees, because if that is what we have come to, then we really have gone over the brink.

MR. CHAIRMAN: Time for today has expired for debate. We will reconvene again tomorrow. So, therefore, we have reached 36 hours. Tomorrow will be the final four hours in our Subcommittee on Supply on these resolutions. We will be back here tomorrow with the honourable Minister of Natural Resources and perhaps the possibility of the honourable Minister of Tourism and Culture, Minister responsible for the administration of the Nova Scotia Liquor Control Act and Minister responsible for the Nova Scotia Sport and Recreation Commission.

We stand adjourned.

[5:49 p.m. The subcommittee rose.]