HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr. James DeWolfe (Vice-Chairman)

Mr. Keith Colwell

In Attendance:

Ms. Mora Stevens

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

HALIFAX, WEDNESDAY, APRIL 12, 2006

SUBCOMMITTEE ON PUBLIC ACCOUNTS

8:00 A.M.

CHAIR

Ms. Maureen MacDonald

MADAM CHAIR: Good morning. I'll call the subcommittee to order. We have on our agenda two or three items. We have the response from the Nova Scotia Farm Loan Board regarding S&J Potato Farms and our request for information. We had also, tabled at our last subcommittee meeting, the idea, the recommendation that Mr. Colwell had, to call Bob Barton and Lynn Coffin from NSBI/OED. We also have the correspondence with Mr. Taylor regarding full disclosure around the Industrial Expansion Fund. Perhaps we could deal with the Farm Loan Board first.

You have copies of correspondence. You have a copy of a letter that Mora did on our behalf last week to Mr. Jamieson, asking that all documents be produced no later than Tuesday. Have we received subsequent documents? I'm trying to determine this.

MS. MORA STEVENS (Legislative Committee Clerk): Mr. Jamieson has sent everything that deals with Spring weight restrictions. If the committee wants to go further into S&J Potato Farms and everything they have concerning their files with either Steven or Joan, then they are requesting a warrant.

MADAM CHAIR: I have reviewed Hansard and I had an opportunity to see what Mr. Samson was asking that the committee have. He had actually asked for more documentation than just the weight restrictions.

MR. KEITH COLWELL: I think the weight restriction information, that's just public information, that's pretty simple stuff to get. You can call your local Department of Transportation garage and get all that information. I think the information we want is a lot more detailed than that, and I think we should move to the warrant to get it. The Farm Loan Board hasn't been too co-operative in providing information. So I would make that suggestion.

MADAM CHAIR: I would concur with that, actually. We've been very clear in our correspondence, and I don't know why the Farm Loan Board has taken the position that they won't release all of the information that's been asked for. We've attempted to give them time and be reasonable in the way we dealt with it. We probably should treat this agency similar to NSBI and OED, at this stage.

Mr. DeWolfe, do you have anything?

MR. JAMES DEWOLFE: I feel this is sensitive material, and confidential material. I'm sure they're in fear that some of the information will get out. I would prefer that we don't pursue this.

MADAM CHAIR: We have the option of receiving that material and dealing with it in camera as a whole committee, doing the same process we went through previously, having the subcommittee look through the material and make a decision about what could be properly - there's no doubt in my mind that there will be pieces of it that will be heavily censored, much as the other material. So I think, at this stage, we will recommend that a warrant be served, a subpoena, for the information. I don't see that we have any other option.

MR. COLWELL: I totally agree with the warrants and it seems to me that they've been very reluctant to supply any type of information and possibly we should look at putting these guys on our agenda to have them in here on this issue and probably lots of others. It seems to all tie in to the minister at the time, some of these questionable dealings and goings on. So I think it would be appropriate to bring them in.

MADAM CHAIR: Okay, I think we could add that to the list of further witnesses that we would be looking at. We still have dates set until the end of this month and then starting in May we have no witnesses. So we could certainly look at that.

With respect to calling further witnesses, Bob Barton and Lynn Coffin, I had an opportunity to briefly speak with my colleagues and we're still thinking about the usefulness. We don't want to bring people forward if it's not going to provide us with additional information. So we're hoping that there can be a bit more research done on this and a decision can be made at our next subcommittee meeting with respect to that.

MR. COLWELL: Yes, I would concur with that and I think there is relevant information there, but we would be willing to do more research on that and bring that forward.

MADAM CHAIR: Now, the final item is this request that was made to OED regarding the Industrial Expansion Fund. The clerk, once again, Ms. Stevens had written Mr. Taylor last Thursday asking for all the documents, including e-mails, policy guidelines, reports and recommendations to Cabinet to set aside the amount of $50 million for the Industrial Expansion Fund and explanation as to how the sum of money was arrived at, any and all analyses or other background information in relation to the appropriation of the $50 million without legislative approval. We asked that this documentation be provided by noon on Tuesday. So subsequent to that we have received this small package of material and I think this was distributed by the clerk to the subcommittee yesterday. I don't know if you've had a chance to review this or not.

MR. COLWELL: Yes, again, they keep sending us very, very little information. I think it would be appropriate to issue a warrant again. Unfortunately, you know, we tried the soft approach and it doesn't seem to work at all with these guys. The more I see of this, the more it makes me think that they're hiding something or trying to hide something and it makes me very, very nervous on behalf of the taxpayers of the province. This confidentiality stuff they've got stuck in everything is debatable and especially this, it just doesn't have the information to give us any real value to it. Maybe there were some good decisions made, and I'm sure there were, but it sure makes you think that there wasn't if they're not providing the information.

MADAM CHAIR: Mr. DeWolfe.

MR. JAMES DEWOLFE: As I indicated before, the government has no problem supporting the Industrial Expansion Fund. It has benefited Nova Scotians with a great deal of success and, hopefully, will continue to do so.

MADAM CHAIR: I don't think that any of us would disagree that having a fund to support investment in the province is important. We all agree that's really important. That's not what the focus is - the focus is how has this money been appropriated without any oversight by the Legislature, as identified by our Auditor General, and what are the mechanisms that are in place to ensure that there's transparency and accountability in the allocation of money from that fund. That's what we're trying to determine, and we have been trying to determine that for some period of time now.

I would concur that the documentation we've received is inadequate, number one. I continue to be puzzled by the content of these documents that have been eliminated, and the grounds on which those are eliminated. I would concur that we issue a subpoena to see if we can get additional information. I would also like to ask the subcommittee about asking

Legislative Counsel to give us some further advice with respect to his initial advice to us on executive privilege. Now that we have had a response from the Department of Justice, I would like our counsel to have an opportunity to advise us on the different points of view that are in front of us with respect to executive privilege, Cabinet confidentiality, and this whole question of solicitor/client privilege. I'm not sure I fully understand why this is being claimed as a piece of why documentation can't be provided.

MR. COLWELL: I agree. This solicitor/client privilege is only on the solicitor and not on the client, and the client could at any time decide that they want to release the information. The more this is used, the more it seems like they're trying to hide things. A lot of this information would probably not be harmful to anybody except maybe the people who are trying to withhold it, and that really raises some serious questions. Maybe I could ask the Auditor General, and it's sort of a different situation here, of course I realize, but does the Auditor General come up against this Cabinet confidentiality as well, and do your investigations, or can't they claim that?

MR. JACQUES LAPOINTE: It is an issue that does apply to all requests on information, including Auditor General information, but it hasn't been a contentious issue for us that I'm aware of, in the recent past - mind you I'm new to this, I wouldn't go back too far without checking with my staff - but the concept applies as well. I wouldn't want to state, myself, right now, what the boundary is of what is confidential and what isn't, but it does apply as a concept.

MR. COLWELL: I sort of thought that was what your answer would be, and I appreciate that you haven't been at this for very long, so it's difficult to comment. Thank you.

MR. DEWOLFE: It appears to me that this is not the venue to establish the guidelines for confidentiality with regard to solicitor/client privilege. With regard to privileges of Cabinet, indeed, it is not for this committee to make any determination on the guidelines of that. It's the House of Assembly that would have the authority to formulate guidelines for Cabinet privilege and Executive Council privilege.

MADAM CHAIR: I agree, and I understand that this is the case, but I'm trying, as the chair of this committee, to determine what it is we need to be bringing forward to the House of Assembly when we resume sitting on May 4^th, if in fact the warrants that have been served continue to be ignored by the various parties and what the legal basis and advice from Legislative Counsel to this committee is with respect to the various roadblocks that have been thrown up by the Department of Justice on behalf of the government. That's really all I'm trying to determine here is to use Legislative Counsel in the role that they have in this Legislature, which is to give advice. I understand full well that we always have to come back to the House of Assembly for certain decisions. Mr. Colwell.

[8:15 a.m.]

MR. COLWELL: I agree too. There has to be a level of Cabinet confidentiality. But in this case, again, you don't know what could be confidentiality or hiding something on behalf of some individual or the government. The problem is, I've never seen in all my years - and I've been here quite awhile - the Department of Justice being so involved. Every FOIPOP we've put in now for everything the Department of Justice is involved in it, they have to be consulted.

It makes me think they're really trying to hide some things. There must be some things there we're not getting our hands on that would embarrass the government or embarrass individuals in the government. This is a serious issue. It's a tight balance between things that really have to be kept confidential, as in Cabinet - I'm a former Cabinet minister and I realize the importance of that - and also to the point that we need information to let Nova Scotians know whether the government has made good decisions or not. It's a difficult balance.

The Cabinet confidentiality, I can understand to a point on certain things, but when this solicitor/client information comes in - we don't even know who the client is, we don't know who the solicitor is - it's just a blank page, solicitor-client confidentiality. We don't have a clue what this is. They would have been a whole lot smarter if they just would have left the page out and we would have never known about it.

Someday this will all come out and I'm sure somebody's going to be drastically embarrassed when this all happens. In the meantime, I think we really have to push the government with whatever means we have to get this information, keeping in mind I think it's important that certain aspects of Cabinet confidentiality must be respected, but not to the point that we can't get the information. Some of the stuff in there, there were memos to the media people - this is ridiculous. The media staff in the government department have that much influence in the government, they're sure not elected so there's something wrong with that picture. So some of these things are just absolutely ridiculous. Other things you can see in Cabinet documents - that's a different situation.

What other documents haven't they supplied? That's the other question and we have no way of knowing. When they come here to answer questions, the answers we get are very vague, to say the least. I'm very disappointed with the whole process of not getting information and some of this stuff, I think, would be cleared up.

When you look at the straight financial situation of S&J Potato Farms, the whole issue around that isn't it wasn't a good deal - the company is very solid and very stable - but maybe the terms should have been a little bit different on the loan, maybe they should have had to pay the loan back instead of a grant. That's the only issue on that one.

On Magic Valley, it's a whole different story. Unless we have all the information that's available to make those judgments - I don't want to see us chastise the government for helping a business that needs to be helped, that will help the economy. On the other hand, I don't want to see them helping their buddies and giving money away - let me finish - if, indeed, that's what has happened. And I'm not sure it has, I'm not sure it hasn't.

I'd like to get that information, for the sake of Nova Scotians, that we get all the information, so we clear the air and it's done. At the end of the day, the government might come out and say everything is great, they may not. Until we get all the information, we don't know that.

MADAM CHAIR: Mr. DeWolfe.

MR. DEWOLFE: I have to respond somewhat to the rant of my colleague with regard to Magic Valley. I think it's clear, and if we do get Lynn Coffin in with regard to Magic Valley, I would hope that we have Jim MacConnell added to that list and Lisa MacDonald, the new chairman of PRDC. They were, indeed, very supportive of this project because it had a far-reaching effect on tourism and, indeed, it was the cornerstone of the tourist industry for Pictou County, and was identified as such by a study.

It bothers me terribly when my colleague was in government, there was a 10-year contract made with Upper Clements Park whereby they would receive $350,000 every year for 10 years. The final instalment, I believe, is yet to come for that project in that agreement. I think it's in the final stages. So this theme park at the other end of the province can receive $350,000 every year for 10 years, yet this park in Pictou County, which happens to be in my area, not my riding, but certainly a park where my children went for enjoyment, cannot receive a one-time grant - it's not a grant, it's a loan. I'm starting to call it a grant now because the Opposition has been calling it a grant for so long.

It bothers me terribly that the support was far-reaching from senior people and from all parties in support of it in my area and yet Mr. Colwell has such great problems with it, because the monies weren't just for the park in the sense that it was to prop up the tourist industry, which is a very important industry in my area to keep that afloat.

This whole area of what's confidential, I've already addressed that. Again, I say it's not for us to make that determination.

MADAM CHAIR: It's not for us to make the determination. It is for us to review the Public Accounts of the province and how government has been spending money with a view, are we getting value for our dollar. I think one of the things that's clear to me as we go through these loans, we didn't get the documents in the file of OED. We didn't see what the business case was for the decision, particularly to Village Developments. It disturbs me that it appears that we make decisions because we've been unfair in the past or there's a

perception of unfairness in the past. If that's the way that this fund is set up, then this is very dangerous, because there are going to always be people out there who feel that there is some unfairness from past governments, and, in my mind, that is not the way to be allocating industrial economic development funds.

At any rate, this memorandum to Executive Council that we've just received from Mr. Taylor on the Industrial Development Fund in the manner in which it has been censored, is really disturbing to me as a member of this Legislature, I have to say. The things that have been taken out of this document are things like what the objectives are. How can that possibly be something that this committee, members of this Legislature, and the public have no right to know - how is that possible that that has to be held in confidence in Cabinet? That's ludicrous; that's going way too far. How is it possible that the liabilities and the benefits of this program are a secret? That's unacceptable. This is public money and so it's incumbent on the government to let the public know what the benefits and the liabilities of this fund are, and that that has been removed from this memorandum is a travesty, in my mind.

So I think that we need to go to our Legislative Counsel and ask for his advice with respect to the position that the government, through the Department of Justice, is taking on the releasing of very, very basic and fundamental information that this committee is in full right of having in its possession. I think the time has come to take a harder stand, frankly. My blood boils when I look at this document.

Mr. DeWolfe.

MR. DEWOLFE: I'm sure your blood also boils when you see the success rate of this, being in Opposition, because it states clearly here that as you'll see in 2005 the fund actively generated a rate of return through direct and indirect taxes of $2.50 for every dollar advanced. The report this year will show even better results - approximately $3 for every dollar invested.

MADAM CHAIRMAN: This is interesting in what the government is prepared to have on the public record though, isn't it? It would appear that this document may even have been altered with a political lens rather than just basically looking at what should be available in the public domain, and in a democratic system, that's not acceptable. So I think this is really where I draw the line in the sand. We need to be very clear with OED, with the Department of Justice, and with the government, that this is just not acceptable; this has gone way past what is acceptable.

So we will ask Mr. Hebb for further advice, opinion, with respect to the position that the Department of Justice lawyers have advanced on behalf of the Office of Economic Development with respect to the release. We will ask for a warrant to be served to receive this document and any additional documents in total, and we will reconvene as a

subcommittee to look at what it is that we have received and what it is that we might be bringing into the House of Assembly when we resume if compliance with the warrant is not forthcoming.

[8:30 a.m.]

Mr. Colwell.

MR. COLWELL: I totally agree. I think we should be a little bit more specific too because you did identify the objectives of the fund and some other things in here that should be just basically - unless they say it's to promote some political Party, they should have no reason not to let us know that. I would doubt if that's in a Cabinet document, but those things, we should ask for very specific things, and we should also ask for this one page we have here, the Solicitor/Client Privilege on Page 2, who these people are. We should ask very specific questions as well as the warrant for general information, and that way I think it would give us better grounds, too, to come back to the Legislature and say you refused to give us this specific information, and try to get that information out there.

This really scares me because, you know, it just doesn't really sit well. If you look again at Page 3 on this, it's from Paul Taylor to Marvyn Robar, on this one it has Cabinet Confidence - neither one of those gentlemen are in Cabinet - then below that it says Solicitor/Client Privilege, and it doesn't indicate there was ever a solicitor involved in the first part of it there. So I think we should be very specific for what we're asking for and to make sure we get a description of what these are, and probably go back through all the documents we've received from Economic Development and NSBI, and ask them, for each one of these pages, what is this page for? Who is it to? Who is it from, who was the solicitor, because that is not confidence. That is definitely not confidence. Let's see who these people are, and let us find out who the players are because they may tell us a lot more about the blank pages as well. So I would recommend that we do that as well.

I know it is quite a lot of work to go back through all those books, but I think it is important that we do that because I think if we're going to bring this to the Legislature, it is unfortunate we have to do that. We shouldn't have to do that as a committee, but I think it is important that we have all this background information before that happens.

MADAM CHAIR: I notice that you had sent an e-mail to the clerk outlining some of the items that should be contained in our request, and so I will go back and review that. It came out just after the letter had already gone because we were anxious to get that out. So we will certainly review that and we will incorporate that into our work.

Is there any other business?

We stand adjourned until 9:00 a.m.

[The committee adjourned at 8:33 a.m.]