HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr. James DeWolfe (Vice-Chairman)

Mr. Mark Parent

Mr. Peter Christie

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Michel Samson

Mr. Wayne Gaudet

[Mr. Mark Parent was replaced by Mr. Cecil O'Donnell.]

In Attendance:

Ms. Mora Stevens

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

Mr. Roy Salmon

Former Auditor General

Mr. Gordon Hebb, Q.C.

Chief Legislative Counsel

Mr. John Traves

Director of Legal Services

Department of Justice

WITNESSES

Office of Economic Development

Mr. Paul Taylor

Chief Executive Officer

Mr. Marvyn Robar

Director of Development Initiatives

Mr. Chris Bryant

Director of Decision Support

Mr. Andy Hare

Director - Lending and Special Projects

Nova Scotia Business Incorporated

Mr. Stephen Lund

President and Chief Executive Officer

Mr. Pat Ryan

Vice President - Financial Services

HALIFAX, MONDAY, MARCH 20, 2006

STANDING COMMITTEE ON PUBLIC ACCOUNTS

1:00 P.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. James DeWolfe

MADAM CHAIR: I will call the meeting to order, please. This afternoon we have before us the Office of Economic Development. We will proceed in the usual manner. We'll take an opportunity for introductions and our witnesses will have an opportunity for a brief opening statement, to be followed by questioning from the various members of the committee.

Before we start, there is one matter I would like to bring to the attention of the committee, and that is that the business plan for Magic Valley Family Fun Park was discussed by the Subcommittee on Public Accounts. What we decided to do was to refer the plan to Mary Penny, who is in the Office of Economic Development as the FOIPOP individual, for a review to sever from that plan any information that should not be released in accordance with the Freedom of Information and Protection of Privacy Act. Ms. Penny has done this. On your desk you will have a copy of the severed documents and a letter from Mr. Taylor to the clerk of the committee.

In this letter, Ms. Penny has, in accordance with the practices under the Freedom of Information and Protection of Privacy Act, basically encouraged our committee to consult with the third party prior to releasing the severed documents, which is the standard practice for Freedom of Information and Protection of Privacy applications. I've consulted with the other members of the subcommittee, and we have basically agreed that we will go the route of providing these severed documents to the third party for comment prior to making them public. What this means is you have these documents, but I'm asking that you not release them until we have an opportunity to speak with the third party, in accordance with the Freedom of Information and Protection of Privacy officer, and remember to take them with you today.

Having said this, I would like to start by asking the members to introduce themselves, beginning with Mr. Steele, please.

[The committee members and witnesses introduced themselves.]

MADAM CHAIR: Thank you, and welcome to the witnesses. I believe, Mr. Taylor, the floor will be yours for an opening statement.

MR. MICHEL SAMSON: Madam Chair, on a point of order. The last time we were here, we had discussions, we had a lawyer from Justice appear on the floor of the Chamber. There were questions about whether that was appropriate or not. I notice today that we have another lawyer from Justice joining us, who hasn't been introduced. I'm not quite sure if he has been asked to be here, or why he's here. I'm not sure if we're going to allow anyone who wants to, to come sit down here with us. I'm not sure if he's here to provide legal advice to the witnesses, or what his purpose is here. Maybe the Chair could enlighten us.

MADAM CHAIR: My oversight, I'm sorry. We have, today, John Traves, Director of Legal Services with the Department of Justice, who is here to provide legal advice to the witnesses. I was advised of this prior to our convening here. I think it's appropriate that he be able to do that.

Mr. Taylor.

MR. PAUL TAYLOR: Madam Chair, thank you once again for the opportunity to appear before you this afternoon and for accommodating our change in schedule, due to my travel plans. I'd like to begin these brief remarks, which I hope will provide some context for our discussions today concerning Magic Valley Family Fun Park.

This park is located in Green Hill, Pictou County, along the Trans-Canada Highway. The Magic Valley Family Fun Park has been in operation for more than 30 years. It is owned by Bill and Celeste MacNeil, and operated by Village Developments Limited. More than 1,100 jobs and $40 million of economic impact in the local economy are attributed to the tourism in Pictou County, and Magic Valley Family Fun Park is considered by many to be a key component of the tourism sector in this area of the province. It has attracted upwards of 30,000 visitors per year in its early years, and has employed 18 to 20 people. More recently, attendance has declined due to numerous factors, including increasing competition and realignment of the highway.

The company has been an active file with NSBI, OED and its predecessor organizations for more than 30 years. The most recent arrangement with the company has been discussed since the Spring of 2004, when the MacNeils approached OED and NSBI seeking assistance. In the Summer of 2004, they were advised that they would need a business plan before any assistance could be considered. Such a plan was subsequently

prepared. It's a multi-year plan that outlines the potential for the future of this park. It focuses on modernization and expansion. This plan was funded by ACOA and is dated June 2005.

With NSBI regional staff, the RDA, OED staff reviewed that business plan. The plan calls for infrastructure investments of roughly $3.7 million to return the company to a position of strength in the competitive tourism sector. The company originally asked for support from the province at this level. We evaluated this request, discussed the situation further with the company, and provided the Executive Council an assessment of this company and its go-forward plans. Executive Council subsequently made the decision to provide a conditional loan of $350,000 towards infrastructure for this park.

I'd like to take this opportunity to clear up a misconception. It has been widely reported that this company received more than it originally requested. This is simply not true. In fact, the company would receive less than 10 per cent of its original request, if the Executive Council decision is implemented. Before any funds are to be disbursed, the company must submit a plan for the expenditure of this $350,000. Conditions precedent to an arrangement like this are not unusual, we have a responsibility to ensure that the money is being spent responsibly, a condition we require on a regular basis.

Several of the factors which had to be considered in this case apply to the business case. Attendance has been in decline and competition has increased. The diversion of Highway No. 104 has also posed difficulties for the company. On the other hand, this company has shown significant resilience in remaining open for as long as they have. Factors which weigh in support of this company are that it enjoys tremendous community support, and is considered a critical piece of the tourism infrastructure of this province.

In February 2004, the Pictou Regional Development Commission released the Alma to Mount Thom Strategic Plan for Community Economic Development. This plan rated Magic Valley Family Fun Park as one of the top priorities for support and development for the area. It is referred to by the commission as one of the anchors on which to build future growth. Letters of support have been received from local municipalities, the community, local industry and area political leaders from all three levels of government.

With that brief background, Madam Chair, I will conclude my remarks. Before turning to Mr. Lund, though, I would like to end with a word of caution, and I reflect on the decision your committee has just made and applaud you for it. Potential investors in this province must have confidence that their discussions with this government will remain confidential. If they believe their commercially sensitive information will be released as a result of such discussions, they could choose, easily, to go elsewhere. In some cases it is a struggle to have Nova Scotia placed on a company short list as a potential location to do business. As much as we would like to be, we are not always a company's first choice. A reputation for the disclosure of commercially sensitive information will not improve this province's chances of becoming so in the future.

I simply request that this committee carefully assess the balance between the information needed for proper public debate on government expenditures versus the ability for this province to remain competitive in a very, very challenging investment environment. With that, Madam Chair, I will conclude my remarks and turn the floor over to Mr. Lund.

MADAM CHAIR: Thank you, Mr. Taylor.

Mr. Lund.

MR. STEPHEN LUND: Good afternoon, Madam Chair, ladies and gentlemen. We are here at the request of the committee to discuss NSBI's activity with respect to Magic Valley Family Fun Park. I would like to re-emphasize the opinions expressed in my covering letter, which accompanied our document submission on March 3^rd. NSBI recognizes the Public Accounts Committee has the authority to oblige the production of documents which the committee feels necessary for your proceedings. We understand the importance of being open and accountable. We also balance that understanding with the recognition of the importance of maintaining client confidential information.

At NSBI we work with many businesses in Nova Scotia, of all sizes, treating them all with the same respect and courtesy. This is important to our job of helping businesses grow and strengthening Nova Scotia's economy. We do this as an accountable agency. We must strike an important balance with commercial confidentiality. At NSBI we are provided access to sensitive and confidential information about our clients. These clients expect that this information will not be released in the public domain. We reinforce this through our code of conduct, which states that we treat confidential information with the utmost of care and concern, and take all reasonable precautions to protect it against unauthorized access, use or disclosure.

When we provided our documentation to you, we outlined, also, our respect for the job this committee has at hand, and that you also bear the task of balancing the public's right to know with protecting their legitimate privacy rights. We are encouraged by the treatment to date you have provided our documentation and the adherence to the concept of commercial confidentiality. We recognize that the subcommittee has reviewed some of the information provided in camera. It demonstrates sensitivity and understanding of the type of information you are going to be reviewing. I urge the committee to continue to guard against revealing information that would affect NSBI's ability to do business and, even more importantly, Nova Scotia's overall business reputation in the country and beyond. Thank you.

MADAM CHAIR: The opening round will begin at 1:14 p.m.

Mr. Wilson. You have the floor for 20 minutes.

MR. DAVID WILSON (Sackville-Cobequid): Madam Chair, I want to welcome all our witnesses and presenters here today. We're here again to look at another loan that the

government and the Cabinet had approved. It has similar ties, I think, to the S&J file. I think government has aided in providing these loans and having a sense of secrecy around them. I must say I'm very frustrated, as a member of this Public Accounts Committee, to try to do what I think this committee is set up to do, to ensure that public money is spent appropriately and wisely by government. It has been very frustrating over the last month or so to deal with these two files and the requests that we make to try to get all the information, so that we can make sound decisions and sound questions to ensure that taxpayers' money is well spent in the province.

I know that you're here, openly, to discuss this and hopefully answer as many questions as you can. We appreciate that as members of the committee, especially after recent events such as Minister Fage coming to the committee and really refusing to answer many of the questions and using a blanket, for most questions, of Cabinet confidentiality. I hope today will be a little different from our last meeting of this committee, and that we can get some answers to some questions that we believe the taxpayers need to know and the committee needs to know.

[1:15 p.m.]

With that, I'd like to start with you, Mr. Taylor. When was the first contact made to government from Village Developments Limited, seeking financial assistance, that eventually led to the decision of awarding them a $350,000 loan, and who was that contact made by or to?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: The decision that was just made by Executive Council, the original approach, I believe, was in the Spring of 2004. It was primarily through the Office of Economic Development, through Andy Hare.

MR. DAVID WILSON (Sackville-Cobequid): And was that made by the owners of Magic Valley Family Fun Park?

MADAM CHAIR: Mr. Hare.

MR. ANDY HARE: You're talking 18, 20 months ago, so I can't say for sure but I know NSBI and myself and the RDA were very much involved with that first meeting. It was a general meeting with the owner and his accountant to basically discuss what would be required to put an application to government for assistance.

MR. DAVID WILSON (Sackville-Cobequid): Would you describe - Mr. Hare stated that it was about 18 months ago - the process that it took to eventually get to awarding them this current loan, is that a normal process? Would you say that's a normal description of how events would lead to a company in Nova Scotia obtaining a loan?

MR. HARE: Yes, I would say so. The requirement, primarily, was that we needed to see a business plan of some form. It took the owners of Village Developments basically until June 2005 to have that prepared.

MR. DAVID WILSON (Sackville-Cobequid): And it's my understanding that the business plan originally wasn't there for this current loan, but the business was sent back to develop a business plan. I think they received funding through ACOA, is that correct?

MR. HARE: Yes.

MR. DAVID WILSON (Sackville-Cobequid): I understand from going through the documents we received that the former Minister of Tourism, Culture and Heritage, Rodney MacDonald, encouraged Village Developments to make a case to government, and that his bureaucrats or his staff's initial analysis in June 2004, I believe - I hope I have some of the dates right - was that there was no business case for a forgivable or non-repayable loan or financial assistance. Could you tell me if that is correct or not?

MR. HARE: There were discussions with Tourism, among a number of other parties. They had their concerns with respect to where Village Developments was going. So did I, obviously, if you've read the newspaper the last week or so. Anyway, it's true, yes, there were some concerns.

MR. DAVID WILSON (Sackville-Cobequid): Did the Department of Tourism, Culture and Heritage or the minister responsible actually send correspondence to your office saying that we don't support a forgivable loan at this time?

MR. HARE: No.

MR. DAVID WILSON (Sackville-Cobequid): How helpful was the Department of Tourism, Culture and Heritage? Did they give you any direction on what your department could do to maybe bring solutions to what Village Developments needed to progress and expand their business?

MR. HARE: We had a number of discussions with Tourism.

MR. DAVID WILSON (Sackville-Cobequid): You can't elaborate on what solutions they may have given you to go back to this company and hopefully implement some of those changes?

MR. HARE: Not really.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I think, in the documentation that we've provided, there is a copy of a briefing note from the Department of Tourism, Culture and Heritage that refers to several options they had looked at with respect to what could be done with Magic Valley Family Fun Park to keep it viable. If memory serves me correctly, I think the option they looked at and were recommending to the minister at the time was to look for some sort of government funding, but I also seem to understand that at that time that's not the type of funding that the Department of Tourism, Culture and Heritage was capable of providing to a business like Magic Valley. So they were essentially referring the file, in some way, to other business entities, like OED or NSBI.

MR. DAVID WILSON (Sackville-Cobequid): Do you feel that the Department of Tourism, Culture and Heritage should have been the most appropriate avenue for this company to go to to seek funding? In your opening statement, and a lot of the material we got from the businesses and the chamber of commerce and other government officials has stated that this is an anchor industry in that community, a tourism community that depends on tourism for an economic spinoff and to maintain the growth of their area. Do you feel that Tourism did enough to support this company in the early stages of their request for funding?

MR. PAUL TAYLOR: I think it's fair to say we relied, in this case, more on Tourism's assessment of the industry and where this particular facility fits in the industry and where it fits in that geographic sector of the tourism industry, they are the tourism policy people in this province. That's really the strongest role we would expect them to play on this file. If the business development agencies of the province were going to become further involved in this company, we would expect Tourism to provide us advice on whether that is something we should be doing.

MR. DAVID WILSON (Sackville-Cobequid): Did you get that advice from the Minister of Tourism, Culture and Heritage at the time?

MR. PAUL TAYLOR: I wouldn't necessarily say the Minister of Tourism, Culture and Heritage. Most of these discussions take place at the staff level, when we make the calls, when we're doing our due diligence on the pluses and minuses of the files, most of those conversations gathering that information are at the staff level.

MR. DAVID WILSON (Sackville-Cobequid): I would assume, though, at a certain point the minister would be involved, where it does end up on the Cabinet Table, needing his support. Does the Office of Economic Development have a plan that works with the Department of Tourism, Culture and Heritage to assist businesses in the tourism sector?

MR. PAUL TAYLOR: I'm just curious about what you're thinking of with respect to a plan, are you looking for a formal arrangement, like an MOU or something, between two departments?

MR. DAVID WILSON (Sackville-Cobequid): Well, yes, you would think that if tourism is an area that Pictou County depends on heavily that the Department of Tourism, Culture and Heritage would maybe have a plan, government would have a plan to hopefully address some of the issues, in rural communities especially, that depend so heavily on tourism numbers. Do they have a plan with you that allows you to seek out and hopefully support those businesses that depend so heavily on tourism revenues?

MADAM CHAIR: Mr. Robar.

MR. MARVYN ROBAR: Just to clarify that point, for many years now it has been recognized, as Mr. Taylor said, that the Tourism, Culture and Heritage Department is the expert source of advice on tourism matters, but it has also been a common practice when it comes to actual financial arrangements that these would be handled through the provincial lending agencies, such as OED and NSBI, formerly NSBDC. There are a number of tourism loans, perhaps 10 to 15, and in every case NSBI or NSBDC would have sought the advice of the Department of Tourism, Culture and Heritage in making those loans.

MR. DAVID WILSON (Sackville-Cobequid): At what point - I know NSBI has a current loan with them - did it end up in your department, and why didn't it remain with NSBI since they had originally given them a loan several years ago?

MR. JAMES DEWOLFE: Madam Chair, on a point of order. Just in sitting here, I've been watching the cameras going, and there's confidential material that we have on the tables. Is there any requirement to ensure that the business plan is covered up, that sort of thing?

MADAM CHAIR: I would ask the members to make sure the business plan is concealed.

Mr. Taylor.

MR. PAUL TAYLOR: As you referred to correctly, NSBI does have a previous business relationship with this company. The transition took place shortly after that Spring 2004 meeting I referred to when I said the file actually became active again in NSBI and OED's hands. It took place fairly quickly at that time, because in discussions between the two organizations, we quickly realized the type of assistance that Magic Valley Family Fun Park was going to seek was not within the power of NSBI to provide. So the file transitioned to us.

MR. DAVID WILSON (Sackville-Cobequid): The one thing that a lot of people have questions on is it seems like each department had, at one point, dealt a little bit with trying to seek financial assistance for Magic Valley Family Fun Park. To our knowledge the current government established Nova Scotia Business Inc. to address these needs and really give an arm's-length agency the ability to address the concerns for economic growth in the province.

Maybe my next question will be to Mr. Lund. Mr. Taylor stated that it's out of your scope of what you could provide a company, could you maybe brief us a little bit on why your department would not look at funding for Village Developments Limited?

MADAM CHAIR: Mr. Lund.

MR. LUND: Nova Scotia Business Inc. was set up as the main business development organization. We're a proactive organization. We work with companies outside the province, in the province. We assist companies in many ways. Financing is just one part of what we do. We would work with the company to assess what their needs are. In many situations, we may be able to provide financial assistance, but there are many situations where we don't provide financial assistance. We have people in the field whose job it is to recognize and refer. They meet with companies every day. Sometimes they refer business opportunities to NSBI directly, and sometimes it's the Office of Economic Development, and sometimes it's ACOA, and it could be local agencies.

In some situations we don't have the ability to provide things that companies may require. For example, if it's things like a grant, we don't do that. There are some types of businesses that our regulations prohibit us from assisting. There may be reasons, from a business perspective, that it doesn't make enough sense from a business case perspective, so other organizations may step in.

We are one of many organizations in the province that provide financing. The key is to work with a company and assess which organization, be it provincial or federal or local, is best suited for this company.

MR. DAVID WILSON (Sackville-Cobequid): One of the things I found interesting while going through some of this information we received was that one of your criteria for looking at potential support of a company is that any transaction must not negatively harm another operator. Is that something that you look at every time you look at a business and the support you give to a business in Nova Scotia?

MR. LUND: Yes.

MR. DAVID WILSON (Sackville-Cobequid): My question for Mr. Taylor is, is that a criterion that your office looks at when it looks at giving funds to businesses in Nova Scotia?

MR. PAUL TAYLOR: Yes, it is.

MR. DAVID WILSON (Sackville-Cobequid): Do you feel that maybe the Department of Tourism, Culture and Heritage should, or do they have - maybe you don't know this - the same kind of criterion or test when they look at maybe helping a tourism operator in the province?

MR. PAUL TAYLOR: I honestly don't know.

MR. DAVID WILSON (Sackville-Cobequid): One of the things that strikes throughout all the correspondence we see is that Mr. MacNeil's request for funding really stems from what he calls this unlevel playing field, unbalanced in Nova Scotia with support from government to businesses like his own. I'm talking about Upper Clements Park. They have received tens of thousands, hundreds of thousands of dollars, if not a couple of million over the last several years in funding.

How did we get into this position where we're pitting one operator in the province against another? I know, through the correspondence, as soon as Upper Clements Park receives funding, you have requests from Atlantic Playland in Lucasville and Magic Valley. Where is the accountability and the will of government to hopefully treat all businesses the same in this province? Do you have any comments on that?

MR. PAUL TAYLOR: I think it's fair to say government does try to treat all businesses fairly. I think there is certainly a long history on the Upper Clements Park file, as to where the facility originally came from and the support it has received over the years and its ownership relationship with the province. It certainly is one of the factors that weighs heavily in this file with Magic Valley. I don't think there's any question in the assessment of the file that the opening of the Upper Clements Park facility did have an impact on this facility, and the financial relationship with the province created a challenge for Magic Valley Family Fun Park as time went by.

[1:30 p.m.]

MR. DAVID WILSON (Sackville-Cobequid): Reading through the correspondence we received, I noticed that Mr. Hare referred to earlier in 2004 for direction from the minister, but he also asked yourself - well, I believe it wasn't yourself, you weren't there at the time, the CEO of OED for direction on this file. When we're looking through it, we can't really find what direction you were given. Mr. Hare, could you maybe give us some information on the direction at that time, what you were seeking, and why you were seeking direction?

MR. HARE: Well, I had a number of concerns, because of the fact that, obviously, Magic Valley Family Fun Park was struggling with respect to attendance and things like that. I wanted some kind of direction. I had a business plan requesting $3.7 million towards basically a dream of Mr. MacNeil's. I felt it was very difficult to support that without some kind of discussion and direction, at least, from the powers that be.

MR. DAVID WILSON (Sackville-Cobequid): Did you receive any from the minister at the time, who would have been Mr. Fage?

MR. HARE: I discussed it with Minister Fage and with the deputy, and I would assume with Mr. Robar as well. Basically what evolved out of it was the project that we were willing to put forward to Cabinet.

MR. DAVID WILSON (Sackville-Cobequid): I'm not sure if you stated it before, Mr. MacNeil was asking for - and you called it a wish list, I think you said - nearly 10 times the amount they received here. How did you arrive at the sum of money - and I don't know who wants to answer the question - of $350,000, when, potentially, they were asking for upwards of $3 million, $3.5 million? How did you come to the number of $350,000? Did you get direction from a minister, from the Executive Council? Where did that sum of money come from?

MR. HARE: That was a number that, just through sitting down and talking it out, we came up with. I think one of the main thoughts was that Upper Clements Park is receiving $310,000 on an annual basis, can we justify providing a theme park in another part of the province that obviously had an awful lot of support from the community, on a one-time basis, with a similar amount that would allow them to upgrade and at least get a start on proving to us that they could do the job.

MR. DAVID WILSON (Sackville-Cobequid): You said that it was to try to level the playing field. Was that decision made amongst yourselves, or did Executive Council come to you, or did the Minister of Economic Development come to you and say we need to look at this, because they are being unfairly targeted because of the funding going to Upper Clements Park?

MR. HARE: I think the number was just something that was decided as a result of discussions. It may have been a number I came up with, thinking back, but to be honest with you I'm not sure.

MR. DAVID WILSON (Sackville-Cobequid): We all know that there are three theme parks in the province. Can we assume that Atlantic Playland will be given the same . . .

MADAM CHAIR: The time has expired, I'm sorry.

Mr. Samson, from the Liberal caucus. You have 20 minutes.

MR. MICHEL SAMSON: Deputy, you made an interesting comment in your opening remarks. You said that businesses in Nova Scotia and outside must have confidence in your department and in the way that government does business. I would submit to you that the reason you're here today is that Nova Scotia taxpayers must have confidence that their hard-earned dollars are being spent wisely, and that's why we're asking you to provide us with more information today.

Now, Mr. Lund, I can tell you I know how confused I am, trying to figure out if I want to start a business or expand my business, whether I would go see NSBI or OED. I can only imagine how confused Nova Scotians are. You've told us your mandate, and I would appreciate your not going through that again, but can you tell me specifically what was it about the request being made by Magic Valley Family Fun Park that did not fit in NSBI?

MADAM CHAIR: Mr. Lund.

MR. LUND: I don't know. I'm assuming it's because what they were looking for was something that didn't fit within our tool box, but I can't say for sure because I wasn't involved in any discussions.

MR. MICHEL SAMSON: Okay, now I'm going to have to stop you there. Why weren't you involved in any discussions? You had the file, and somehow you lost it. Why did you lose it?

MR. LUND: I can't answer that.

MR. MICHEL SAMSON: Who made that decision?

MR. LUND: I'm not sure whose decision - from my understanding, there were discussions going on with the company, the principals and members of the Office of Economic Development. We have a field person who was involved in some of the discussions for I believe about a six-month period, so she would have had discussions with the company and with the Office of Economic Development. Somewhere along the line I guess the view was that due to the nature of the request it's not something that we could fulfill on behalf of the company.

MR. MICHEL SAMSON: Who made that decision?

MR. LUND: I don't know the answer to that.

MR. MICHEL SAMSON: You're the CEO of NSBI, and you don't know why someone made a decision that you couldn't be involved in this particular loan request?

MR. LUND: I don't know the answer to that.

MR. MICHEL SAMSON: Do you not find it concerning that you don't know the answer as to why . . .

MR. LUND: No. When I look at the transaction that occurred - this is a file we inherited, it's a 30-year-old file. We're restricted in terms of some of the things we can provide to companies, types of financing. The financing that was provided by the Office of Economic Development, I don't believe is something we could have done within NSBI. So,

again, it's not unusual. Most of the transactions that come to NSBI, we look at. Our people in the field are well trained in terms of what we might be able to do and what we might not be able to do.

MR. MICHEL SAMSON: So as CEO you rely on them to decide what files are coming to you and what files are not, and you don't involve yourself in . . .

MR. LUND: I don't involve myself. We've met with over 3,000 companies in the last four years. I don't know all those 3,000 companies. When a deal is eventually approved within NSBI, I get involved. I don't do deals, I only approve or recommend deals.

MR. MICHEL SAMSON: Could you tell us who your field person is who made that decision?

MR. LUND: Her name is Lynn Coffin.

MR. MICHEL SAMSON: You said before that NSBI doesn't give grants, is that correct?

MR. LUND: Correct.

MR. MICHEL SAMSON: This is a grant that Magic Valley Family Fun Park is being offered, isn't it?

MR. LUND: I don't know the answer to that.

MR. MICHEL SAMSON: How would you describe it?

MR. LUND: I don't know, actually. I'm not familiar with the entire transaction.

MR. MICHEL SAMSON: You're the CEO of NSBI, looking for economic growth here in this province, mandated, and you have no idea what transpired and what sort of offer has been made between OED and Magic Valley?

MR. LUND: I wasn't involved with the file. I can ask Pat Ryan, who heads up our lending group, if he was?

MADAM CHAIR: Mr. Ryan.

MR. PAT RYAN: It's my understanding that a forgivable loan is the instrument that was provided. We don't have the capacity to offer forgivable loans.

MR. MICHEL SAMSON: And I guess that would be the grant that Mr. Lund was referring to earlier. Mr. Taylor, who made the decision not to send this file to NSBI, and

before you answer that, and I'm not sure what your answer will be today because at the last meeting you corrected what you had previously told this committee on November 3^rd, where, basically summarizing, you said that NSBI is the first point for anyone looking for assistance from government. You were asked, "Is there a policy in the OED that any entity coming to OED for financing in any form has previously had to have talked with NSBI?", and you answered, "That is certainly the policy that OED follows, absolutely."

Last time you were here, you said that wasn't true. I'm curious, today, is that a correct statement that you made on November 3^rd to this committee? If so, who made the decision that NSBI not be involved in this?

MR. PAUL TAYLOR: I must admit I'm a little confused here. NSBI was involved in this, and the file was transitioned to OED. It would have been a very unusual practice for us, having received the file from NSBI, to then send it back to them and ask them if they wanted to do the deal.

MR. MICHEL SAMSON: Who brought the file over from NSBI?

MR. LUND: The file came from the field staff of NSBI.

MR. MICHEL SAMSON: Lynn Coffin took it over to OED. She said this doesn't meet our criteria, what they're looking for, this grant, we can't give a grant, we're going to have to give it to you, and you guys decide if you can give a grant. Is that what happened?

MR. LUND: The discussions between the staff of the two organizations resulted in the conclusion that this was more appropriately an OED file.

MR. MICHEL SAMSON: Who on your staff would have made that decision with Lynn Coffin?

MR. PAUL TAYLOR: It would have been Mr. Hare.

MR. MICHEL SAMSON: Mr. Hare, you're confirming that you're the individual who talked with Lynn Coffin, and the two of you decided that OED should be dealing with this file and not the arm's-length NSBI because they were looking for a grant?

MR. HARE: There was also an individual in the lending group at NSBI by the name of Bob Barton, who was very active in the file, who has since retired.

MR. MICHEL SAMSON: Other than yourself, were there any other representatives of the Office of Economic Development who would have been part of these discussions?

MR. HARE: I would say no.

MR. MICHEL SAMSON: Mr. Hare, your comments on this business plan by Magic Valley Family Fun Park are well known, they've been made public, and Nova Scotians have had a chance to digest them. We're here today to try to figure out how the comments and the advice you've provided to your deputy and to the minister have somehow resulted in taxpayers forking out a $350,000 grant following the quite negative picture that you painted of their request. Could you explain to us, and explain to Nova Scotians, what changed in your initial assessment of this business plan and of what you described in your words of Mr. MacNeil's dream of $3.7 million that has put taxpayers now at risk for over $0.5 million to this company?

MR. HARE: To begin with, my comments were based on a $3.7 million project, which, in the end, we were able to bring down to $350,000. So it was a significant change in the size of the project. Secondly, those were my concerns. There are other things that we should be looking at, like how the community support and all levels of government and the municipalities were all very much in favour of the project, as well. It was deemed that this was a significant file with respect to the tourism sector, without Magic Valley Family Fun Park there would be a detriment to tourism, probably for the whole of northern Nova Scotia. So there were other things that we did take into account with respect to the file. Sure, there were concerns, but there were also some things on the other side that we had to look at.

MR. MICHEL SAMSON: Mr. Hare, you used to work with NSBI.

MR. HARE: Yes.

MR. MICHEL SAMSON: You're familiar with NSBI policies, and you're familiar with the type of business plans they've gone through, and everything else. Had Mr. MacNeil not been asking for a forgivable, interest-free loan but a more standard form of financing that we've seen in this province being given, in your experience, would NSBI, looking at that business plan, have approved taxpayers' money going to Magic Valley Family Fun Park?

MR. HARE: In my opinion?

MR. MICHEL SAMSON: Yes.

MR. HARE: I'm not sure my opinion really matters.

MR. MICHEL SAMSON: Well, it matters to us, considering your experience, considering you're paid by the taxpayers of Nova Scotia to give advice to government based on your knowledge and based on your credentials. You obviously have a great deal of experience. So I do believe that your opinion is very important, because I think it really goes down to why we're here today dealing with this. So I would ask you again, in your experience with NSBI and now with OED, looking at that business plan, had they not been asking for a grant but for more traditional forms of government financing, would NSBI have approved that money?

MR. HARE: I can't speak for NSBI. I think I would prefer to pass the question on to them.

MR. MICHEL SAMSON: Well, unfortunately, I think Mr. Lund has been clear about his knowledge of the file, and I don't think it would be fair to ask him that question. I felt you were more appropriate, considering your experience. I appreciate you giving that answer on that. I think I can draw my own conclusions as to what your response would have been.

How much money is it going to take Magic Valley Family Fun Park to become a profitable, sustainable, long-term operation? If not $3.7 million - you said that was Bill MacNeil's dream - how much is it going to take, in your estimation?

MR. HARE: I have no idea. I think $3.7 million is high.

MR. MICHEL SAMSON: Then what's a more appropriate figure?

MR. HARE: I think $350,000, and let's see what happens, is an appropriate way to go.

MR. MICHEL SAMSON: When someone comes to me and I hear that they need $3.7 million under their business plan - that I'm assuming is a responsible business plan and has some level of competence put into it - and they say $3.7 million, and someone offers $350,000, well, that's like saying I need to buy a car, and you say, well, here, I'm going to give you a tire, so at least you can start, and if you can do well with your tire, then we'll see about you getting the rest of the car.

[1:45 p.m.]

Do you understand how this just doesn't seem to make sense, that the government has a business plan requiring $3.7 million to be able to move forward, and you're offering $350,000 and saying let's see what happens? Is that the way we're doing business here in Nova Scotia?

MADAM CHAIR: Mr. Robar.

MR. MARVYN ROBAR: Just some clarification on this issue, first of all, Magic Valley Family Fun Park has been in operation for close to 35 years, so it does continue to sustain itself year to year. I think what Mr. Hare had said when we were originally approached by Mr. MacNeil was he had a dream as to what this could be. It's a very impressive dream, but it's certainly one that we weren't prepared to put millions of dollars of taxpayers' money at risk for.

MR. MICHEL SAMSON: That's an interesting answer, Mr. Robar, because if that's the case, could you tell us how much money Mr. MacNeil has paid back to the Province of

Nova Scotia for the taxpayers' dollars he received back in the early 1990s, based on the comments you've just made? How much money has he paid back?

MR. ROBAR: All I can tell you is that I looked up the loan, and it was being fully serviced up until the late 1990s. I'm not sure what the original amount of the loan was, so I can't give you a specific answer.

MR. MICHEL SAMSON: Earlier your comment was basically to say you wanted to clarify that this business is doing well, yet it hasn't paid its obligations to the taxpayers of Nova Scotia for the past six years, seven years, eight years, nine years. Is that your statement, that we should have confidence, and pay no attention to the fact they haven't been meeting their obligations to the taxpayers of Nova Scotia for money they have already received?

MR. ROBAR: No, that wasn't my statement. My statement was that up until 1999, they were fully repaying their loans.

MR. MICHEL SAMSON: But for the last six years they haven't?

MR. ROBAR: No, and . . .

MR. MICHEL SAMSON: And we've just given them another $350,000, knowing that they haven't paid in six years, and they needed $3.7 million under their business plan?

MR. DEWOLFE: Madam Chair, on a point of order. The member of the Opposition keeps insinuating that the money has been given to Magic Valley Family Fun Park, and it's my understanding that Magic Valley Family Fun Park has to meet certain requirements and conditions before they get any money. I believe that no monies have been transferred.

MADAM CHAIR: That is not a point of order. Nevertheless, it's a point.

Mr. Samson has the floor.

MR. MICHEL SAMSON: Mr. DeWolfe's contributions never cease to amaze me. They haven't paid in six years, and $350,000 of taxpayers' money is being offered to a company that hasn't paid in six years. What level of confidence are we to have, knowing that they wanted $3.7 million to turn things around? Has Mr. MacNeil described his business plan as a dream to you, or is that the department's assessment? Has he come in saying, look, here's my dream, guys, see what you can do to help me out? Or, was he serious when he asked for $3.7 million?

MR. ROBAR: I'm sure Mr. MacNeil was serious about what he would like. Many entrepreneurs come in with the grand concept; if you don't ask for everything, then you're

not likely to get it. You wouldn't come in and say I need $50,000. In our opinion, it was Mr. MacNeil's plan but we thought it was overly ambitious.

MR. MICHEL SAMSON: Overly ambitious. Deputy, I'm wondering if you could tell us, with this $350,000, can we expect, if this money is actually paid out, that Magic Valley Family Fun Park, next year or the year after, will start meeting its financial obligations to the taxpayers of Nova Scotia?

MR. PAUL TAYLOR: The Executive Council has made a decision that they're going to advance $350,000 to this company on the basis of the terms and conditions specified in the agreement. This is a facility that is recognized by the local RDA, by the local community, as its - when they did their strengths and weakness assessment of that area of the province - number one asset they have on which to build future growth. My interpretation of the decision that has been made by the Executive Council is to advance money to this company on the basis of the business plan they have put in place to see if this company can make a change in the direction it was headed and if it can fulfil the promise that the local RDA says it should be able to do. That's why the money has been advanced.

MR. MICHEL SAMSON: Could you indicate to us, Mr. Deputy, was it the recommendation of the Office of Economic Development and your staff that Magic Valley Family Fun Park be given $350,000 in an interest-free, forgivable loan, in other words a grant? Was that the recommendation coming from your staff?

MR. PAUL TAYLOR: Our role in this operation is to do our assessment of the facts, the strengths, the weaknesses of the business plan, and make a recommendation to the minister on what those facts say. He then . . .

MR. MICHEL SAMSON: And what's your recommendation?

MR. PAUL TAYLOR: . . . makes a recommendation to Cabinet.

MR. MICHEL SAMSON: Was it your recommendation, from your staff . . .

MR. PAUL TAYLOR: My recommendation to the Minister of the Office of Economic Development is not a subject I'm prepared to discuss in front of this committee, the contents of that recommendation.

MR. MICHEL SAMSON: Mr. Hare said that he sat around with you and possibly Mr. Robar, and came up with the figure of $350,000. Was it your staff that discussed $350,000 to be given to Magic Valley Family Fun Park?

MR. PAUL TAYLOR: Our staff would have put the business case, the socio-economic case, in front of the minister, and it would have contained a figure.

MR. MICHEL SAMSON: What about the interest-free, forgivable aspect?

MR. PAUL TAYLOR: It would have also contained what we were recommending the terms and conditions attached to that figure would be.

MR. MICHEL SAMSON: Was that recommended as part of your recommendation?

MR. PAUL TAYLOR: My recommendation, the specifics of my recommendation to the Minister of Economic Development and hence the Executive Council, is not a subject for this committee.

MR. MICHEL SAMSON: That's a matter there will be further discussion on, I'm sure. On that matter, Mr. Taylor, can you tell us of the documents sent from your office, who was it who severed the information from those documents?

MR. PAUL TAYLOR: That would have been severed by the staff of the Office of Economic Development, under the direction of the Department of Justice legal counsel.

MR. MICHEL SAMSON: Who are those staff people?

MR. PAUL TAYLOR: The staff people in this case would have been, I believe, our FOIPOP officer - the two principal people, now just to clarify, it required in excess of 24 hours straight. They worked, I think 6:00 o'clock in the afternoon, one day straight through to 6:00 o'clock - all night - to meet that deadline. So as to which people were actually in that room at 3:00 o'clock in the morning, I'm not sure. The two people who were leading the cause would have been our legal counsel and our FOIPOP officer.

MR. MICHEL SAMSON: Could you tell me if there was any non-departmental staff, either from OED or Justice, present during this?

MR. PAUL TAYLOR: I could not tell you. It was done outside our office, in the NSBI offices where the FOIPOP officer resides.

MR. MICHEL SAMSON: So you don't know if political staff would have been involved in this or not?

MR. PAUL TAYLOR: Political staff? Could you be more specific as to who you are referring to when you say that?

MR. MICHEL SAMSON: Well, people who aren't traditionally considered to be civil servants but are mostly hired - either from the Treasury and Policy Board staff or the Premier's Office staff. Were any of them involved in this?

MR. PAUL TAYLOR: As I said, I wasn't there, but I can . . .

MR. JOHN TRAVES: I can answer that.

MADAM CHAIR: Mr. Taylor will have to answer. You're not here as a witness, you're here to give advice.

MR. PAUL TAYLOR: I'm advised it was just our legal counsel and our FOIPOP officer.

MR. MICHEL SAMSON: Let me put this last question to you, before our next round. I notice that Tom Peck, who I believe is your communications person, in a number of the last e-mails regarding questions from the media, he continues to cc Mr. Peter Spurway. Could you tell us who Peter Spurway is and why Peter Spurway is being cc'd on matters involving your department?

MR. PAUL TAYLOR: Peter Spurway was the communications officer in the Premier's Office.

MADAM CHAIR: The time has expired.

MR. MICHEL SAMSON: And why was he cc'd?

MADAM CHAIR: The time has expired. We'll have to come back to that in the next round.

Mr. DeWolfe, you have 20 minutes.

MR. DEWOLFE: Welcome, gentlemen. Welcome back. Mr. Taylor, during the course of your opening comments, I believe you talked with regard to an assessment that was commissioned by, I'm not sure now, my memory fails me, either Tourism or PRDC. It identified Magic Valley Family Fun Park as a key component to the business community of that area. Was that commissioned by PRDC, that assessment?

MR. HARE: Yes, that's my understanding.

MR. DEWOLFE: That it came from PRDC?

MR. HARE: Yes.

MR. DEWOLFE: And it did in fact identify Magic Valley Family Fun Park as a key component to the industries out in that area.

MR. HARE: Yes. That was the Mount Thom to Alma strategic plan, and yes, you're right.

MR. DEWOLFE: That has some validity in the loan, certainly for that area. I believe PRDC was a supporter of this.

MR. HARE: Very much so.

MR. DEWOLFE: Also, the local MLA, Charles Parker, was he not a supporter of this project as well?

MR. HARE: We received a letter of support from Mr. Parker.

MR. DEWOLFE: And it's my understanding that he was working with PRDC as well, to try to get this plan together. What contribution does Magic Valley Family Fun Park provide to the Pictou County economy?

MR. HARE: What the park does, it's a place for people to stop on the way through, rather than keep going. It has significant potential for people to stop their cars, let their kids do their thing, possibly stay overnight. The local businesses are very supportive of Magic Valley Family Fun Park because of that. There's a good spinoff from the park.

MR. DEWOLFE: A good spinoff in those areas, and of course that was bypassed by the divided highway.

MR. HARE: Yes, it was.

MR. DEWOLFE: Now some of the trees have been cut away, so that there is some visibility to that park now, which would help a great deal with the drive-by traffic but it will never be as good as it was before when every car had to drive right by the front door sort of thing.

MR. HARE: I haven't been by recently, but if they've cut the trees down, I think that's positive. That was one of my recommendations, to see the park from the road.

MR. DEWOLFE: I'm sure that if that park were to close, some of the other businesses would be adversely affected and perhaps not be able to continue operating.

MR. HARE: It would hurt some of the businesses in Pictou County that are primarily tourism related.

MR. DEWOLFE: The very fact of the timing, in my mind, to improve that park is perfect because of the closing of a similar-type operation in P.E.I. I know many people in my area, myself included, used to transport our kids, almost yearly, over to P.E.I. to go to this fun park over on P.E.I. that's now closed. The cost of travelling on the ferry, the cost of gas alone, now, is quite high to make that move over there. We have something right in our own neck of the woods that I think it would be very beneficial to have some improvements in. But

that's certainly just my opinion. How many people are employed at Magic Valley Family Fun Park?

MR. HARE: It's 18 to 20 through the Summer season.

MR. DEWOLFE: You've already indicated this loan was supported by the local RDA, which was under the chair of Jim McConnell.

MR. HARE: That's right.

MR. DEWOLFE: Jim is very much involved in the business community down there as owner of a very large business, Scotsburn Dairy Products. I also am of the understanding that the local council, the municipal council was very supportive. In fact I had a call of support from the warden, Allister MacDonald. The local council was throwing their weight behind this project, as well.

MR. HARE: Yes, we received a letter of support from Warden MacDonald.

MR. DEWOLFE: So it's safe to say that there were no real negative letters coming in. It seemed to be very supported by the business community and the municipal governments in the area.

MR. HARE: That's true.

MR. DEWOLFE: Is that unusual, to get so much support, in your line of work?

MR. HARE: Yes, it is.

MR. DEWOLFE: Interesting, isn't it? Mr. Taylor, forgivable loans are not without conditions. Would that be fair to say?

MR. PAUL TAYLOR: Yes.

MR. DEWOLFE: There are conditions attached to forgivable loans.

MR. PAUL TAYLOR: Yes, there are, I guess, conditions precedent to both the providing of the money and the way the repayment provisions are governed over the term of the loan. Usually companies have to maintain employment, they maintain their operating conditions, sometimes they have to increase employment levels in order to earn forgiveness, over time, of the loan. If at any time they don't meet those conditions, the usual term is for the loan to become repayable for the remainder of its term on the terms and conditions at the discretion of the minister.

[2:00 p.m.]

MR. DEWOLFE: Now the conditions that are attached to this potential loan - and, let's make this clear now, no monies have been passed on to the company at this point, am I correct in saying that?

MR. PAUL TAYLOR: That's correct.

MR. DEWOLFE: Because the conditions have not been met yet?

MR. PAUL TAYLOR: That's correct.

MR. DEWOLFE: And some of the conditions are that they have to supply a plan of how these monies are to be expended, is that correct?

MR. PAUL TAYLOR: The decision that has been made is to provide a conditional loan to the company to invest in the infrastructure of the park, capital upgrades if you will, to basically reinvigorate the business, to increase its attractiveness to its potential customers. One of the conditions that has been specified is we need to see a detailed plan from the owners of the business as to exactly how that money will be spent. The owner of the business has been advised, obviously, under the terms and conditions of the offer that has been provided to him, that the money will be available if he meets those terms and conditions.

He, then, is able to use the understanding that that money will be available to actually go to the marketplace and try to locate the equipment that he would want to put into the business that best suits where he wants to take that business. So he has the lead time to understand what's available in the marketplace, what it's going to cost for this equipment, how much it's going to cost to install it and when he can have it in place.

When the owner is more up to speed on how the availability of money matches what's available in the marketplace in terms of equipment, then I would expect the owner comes back to us with those details. Once the minister is comfortable with how that money is going to be spent, that condition would have been met.

MR. DEWOLFE: So Mr. MacNeil has to submit a letter to indicate how he intends to spend the money. That then has to be approved. So at this point we're still some way off on providing monies to Magic Valley Family Fun Park, conditions have to be met and approvals have to be put in place.

MR. PAUL TAYLOR: That's correct.

MR. DEWOLFE: Just so I'm clear. And that has to be done by March 31^st. Is that a normal practice with your department?

MR. PAUL TAYLOR: It's certainly not unusual for conditions precedent to be put into an arrangement with a company. It's certainly not the norm that all the i's are dotted and the t's are crossed at the time that Executive Council actually makes a decision. There's usually some outstanding work that needs to be done, and it's not unusual for those details, the resolution of the details or confirmation of a plan or the hiring of people, for those things to actually have to wait for a subsequent period before either money flows or forgiveness of the loan actually takes place.

MR. DEWOLFE: Thank you. On that note, I'll come back to you in the second half, but I'd like to pass my remaining time to my colleague, the member for Bedford.

MADAM CHAIR: Mr. Christie, the floor is yours until 2:14 p.m.

MR. PETER CHRISTIE: I welcome everybody again. I just want to hit on two or three subjects. I guess while I've been listening to the discussion, I'm wondering if you can share with this committee and indeed with the public what successes you've had. I'm getting this concern that every time a loan happens in rural Nova Scotia we come to this committee, when I don't hear the ones from Halifax and those coming in here. Can you tell us, perhaps share with this committee, what successes have you had with the loans you've made to the rural areas?

MADAM CHAIR: Mr. Robar.

MR. ROBAR: I could refer to the previous meeting with the committee, there was some concern expressed by Mr. Steele that the public did not know exactly what the Office of Economic Development did and the results of its operation. In response to that, I'd like to point out there has been an annual report prepared for the Industrial Expansion Fund, which is the principal funding device. It's available from the Legislature and also on the Office of Economic Development's Internet site.

But in response to some specific questions, we can go through some of the activities that happened in 2004, 2005. There's also, if you look at all the OICs that are issued by Executive Council, that will bring you up to date on the transactions during 2005-06. In 2004-05, there were quite a few very positive deals. One was Crossley Carpets, where Crossley relocated part of its operation in California to Truro. As a result, now there are over 500 people working in Truro. Michelin decided on quite a significant expansion in its Bridgewater plant to manufacture a new line of tires. C-Vision is another quite good success that we're really very pleased with, a plant in Amherst that makes circuit boards. They've recently moved into lead-free boards. The company has already achieved its five-year target for employment with over 100 people.

Let's see, what else? Composites Atlantic, that's a very significant event for Lunenburg, where we co-invested with EADS, the parent company of Composites Atlantic, to undertake a significant expansion. During my time, 10 years, as an observer on the board

of Composites Atlantic, employment has gone from 50 people to over 250 now. The company is continuing to progress. We had other expansions with Frito Lay to provide new equipment in New Minas. Great Valley Juices put in new production equipment as a result of an innovation incentive provided by the Industrial Expansion Fund, to make it more of a year-round operation. And in conjunction with NSBI, we've provided training incentives for CGI, which is a very large international IT company that's scheduled to create about 500 jobs here in Nova Scotia, this time in Halifax.

MR. CHRISTIE: That's an impressive list of assistance, I would say, to rural Nova Scotia and indeed to the job market. Just kind of following up on one of the questions you had earlier, one of our committee members indicated that somebody was coming in for a car and you gave them a tire - does a company come in and always get everything they ask for? Is it unusual that they would make a proposal and that through negotiations you would end up with some number other than what they had started with?

MR. ROBAR: Normally, in any negotiation, the person coming in, making the request, will start high, just as a matter of policy, saying might as well ask for the world and see what I get. So, no, it's not uncommon at all.

MR. CHRISTIE: Can I shift gears a little bit? I notice in my material there's the S&J Potato Farms file here, and I'm just wondering - to Mr. Taylor - could you tell us, again, for the committee, why the S&J Potato Farms file was handed over to Minister Baker?

MR. PAUL TAYLOR: As I understand it, Minister Fage was not going to be attending Cabinet that day and he needed someone to speak to the file in his absence.

MR. CHRISTIE: Is that a normal practice, if he wasn't going to be there, that somebody else would handle that file for him?

MR. PAUL TAYLOR: Yes, it is.

MR. CHRISTIE: So he knew prior to that time that he wasn't going to be there, so he arranged for somebody else to speak to it at Cabinet. Is that what you're telling us?

MR. PAUL TAYLOR: As I understand it, yes.

MR. CHRISTIE: And as the file went forward and somebody else was speaking for it, then normally after Cabinet would be done you would be advised as to what the decision was, and you would then take that decision and implement it?

MR. PAUL TAYLOR: When Cabinet makes a decision on one of the pieces of paper we have on the agenda, yes, an instruction comes to the minister on the file, and we proceed accordingly.

MR. CHRISTIE: Now on these two files, as you looked at them, and there has been a lot of discussion as to whether NSBI should have these files or you should have these files, I'm trying to find out what is so extraordinary about these files. Is there something extraordinary about these files that this committee is missing? We've spent a couple of meetings now trying to find out what that is. Is there something you can share with us that tells us that these files are extraordinary or that something different has happened with them?

MR. PAUL TAYLOR: Speaking for the staff of the Office of Economic Development, these files don't strike me in any way as being unusual. Every single opportunity that comes to NSBI, comes to OED, comes to any one of the organizations, InNOVAcorp, et cetera, every one of them is different. There is just no standard file. The requests are different, the industries are different, the circumstances under which the company is coming to government are different, and they all involve the art of distilling the specifics from the generalities and ending up with essentially an agreement at the staff level between the proponents of the deal and our staff as to what is being asked for and why.

Then staff does - these two gentlemen to my left, collectively, are closing in on 50 years of doing this. They've been at it a long time, they've seen a lot of things. They are very good at coming up with the facts and providing those facts to a minister, so he can decide what he wants to do with that file.

MR. CHRISTIE: Mr. Taylor, in my 30 seconds left to me, would it be fair to say that every time you get something in at Nova Scotia Business Inc. or the Office of Economic Development, the circumstances are unique, and your role is to try to find the art of the possible to assist these companies? Is that a fair statement?

MR. PAUL TAYLOR: It's certainly a fair statement that every one of these files is unique, and there's a different pathway followed every time to end up with a conclusion.

MADAM CHAIR: The time has expired. We will have a second round of questioning for 13 minutes.

Mr. Steele.

MR. GRAHAM STEELE: Mr. Hare, I'm going to take advantage of your absence again today to turn back to S&J Potato Farms. When you were last here, we didn't have in front of us, not for long at any rate, your e-mail of February 7^th, which was the morning of the Cabinet meeting, the fateful Cabinet meeting, in which you had indicated that Minister Fage had asked that notes be prepared for Minister Baker. The member for Bedford has just addressed this, but I just want to give you an opportunity, since you were the author of this e-mail, to explain the context for this e-mail. Why did you write it, and what is your understanding of what happened as a result?

MR. HARE: I met with our minister on the previous day, and he indicated to me that there was a good chance he wouldn't be at Cabinet the next day, and asked me to prepare briefing notes for Minister Baker, who he understood would possibly be presenting it. What Minister Baker was aware of, I didn't know at the time, so I prepared some speaking notes for him and passed them on through the deputy's office to get to him.

[2:15 p.m.]

MR. STEELE: This part of the S&J Potato Farms file has always seemed to me to be rather simple, but what has made it more complicated is the government's rather obsessive secrecy over what appears to be a fairly straightforward case of a minister who had, according to his calendar, which we now have, sent his regrets. Another minister was going to present, which was not in the least unusual, in another minister's absence. It turns out the minister who thought he was going to be absent was able to make it anyway, at least for the latter part of the meeting, and made the presentation. Now that's my understanding of what went on that day. Is that your understanding, or is there anything you want to change or add to that?

MR. HARE: I prepared the notes and passed them on, and that's the last I saw of them or heard anything until after the meeting was finished.

MR. STEELE: That's all I have. I'll turn it back to my colleague now.

MADAM CHAIR: Mr. Wilson. You have until 2:27 p.m.

MR. DAVID WILSON (Sackville-Cobequid): Madam Chair, I'll continue on with you, Mr. Hare. You're popular today, I guess. You stated earlier, to a question I posed to you, that the money Upper Clements Park receives from the government played a role in this loan that we're talking about, to Magic Valley Family Fun Park. Is that correct?

MR. HARE: We took that into consideration, yes.

MR. DAVID WILSON (Sackville-Cobequid): So you took that into consideration. Did you get any direction from Executive Council, a minister, the former Premier, the Minister of Tourism, Culture and Heritage, that they felt the same way with so much money going towards Upper Clements Park over the last - I think they have a 10-year agreement that was signed in 1997. Did you get any direction from Executive Council or ministers or the ex-Premier, Premier at that time, that they felt similarly about the case for Magic Valley Family Fun Park?

MR. HARE: The only time that anything went to Executive Council would have been when this was put forward, this deal. I never had any discussions with the former Premier with respect to this file.

MR. DAVID WILSON (Sackville-Cobequid): So he has never once called you or e-mailed you or talked to you about this file?

MR. HARE: No.

MR. DAVID WILSON (Sackville-Cobequid): Did anyone from his office e-mail you or talk to you or respond in any way about this file?

MR. HARE: Definitely not.

MR. DAVID WILSON (Sackville-Cobequid): The one question many people have is, did government feel guilty that Upper Clements Park had been receiving, I think since 1997, about $2.6 million of taxpayers' money? The impression we are getting is that government is feeling guilty that Magic Valley Family Fun Park has been put behind the eight ball when it comes to trying to promote their business, expand and generate tourism and funds to that area of the province. Do you feel that the decision of getting this to Cabinet, the recommendation, was rushed at all, was asked to be presented to Cabinet by a certain date? Obviously the February 7^th Cabinet meeting was an important date, because that was the last Cabinet meeting that former Premier John Hamm was going to be overseeing. At any time, was it indicated to you that you needed to have this file on the table for Executive Council to look at for that February 7^th Cabinet meeting?

MR. HARE: My work was finished significantly before then and was put forward. So when it was actually considered at Cabinet, I don't know.

MR. DAVID WILSON (Sackville-Cobequid): Maybe a similar question to the deputy, in your view, were you asked to have this at Cabinet, on the Cabinet Table, before the February 7^th meeting, ultimately the last meeting of the former Premier of the time?

MR. PAUL TAYLOR: No.

MR. DAVID WILSON (Sackville-Cobequid): That's not the impression given off in the public, honestly. Really, I've heard from many people who feel this was a bit of a rushed decision to get it into Cabinet so that the Premier, one of his last things, is to try to promote the area he represents, and the county he comes from.

MR. PAUL TAYLOR: To clarify for the committee's understanding, in my understanding what was driving the timing on this file was the fact that this had been going on for the better part of two years and another tourist season was approaching. The impression I was getting, in seeing this file as it progressed, was that sooner or later somebody had to make a decision or another tourism season was going to be lost to this business. Hence, a decision had to get in fairly early in the Spring of this year. So he knew, that is the owner of the business knew, what kind of support he could count on if he went to

the marketplace. As I understand, he is, right now, looking for equipment for this coming season.

MR. DAVID WILSON (Sackville-Cobequid): I think that's great. I commend your department for doing that, because it seems, in our view, that government has ignored this area of the province especially with funding going towards a similar venue that has put them at a disadvantage. There are many things that have contributed to it. I think money towards Upper Clements Park and the province's promotion of that has deterred and hurt Magic Valley Family Fun Park. I commend you and your staff, not government, you and your staff for trying to promote this and get a decision made, and to make the government act on it. I think they've ignored it for far too long.

My next question is to Mr. Lund on the matter of the outstanding $234,000 loan. Documents show that after a period of non-payment, NSBI converted the loan to interest-free status. Who made this decision, and on what basis was that made?

MADAM CHAIR: Mr. Lund.

MR. LUND: I would have signed off on the recommendation from our staff in 2002. The decision was based on us trying to enable the company to continue an operation and at the same time still protecting the taxpayers' money.

MR. DAVID WILSON (Sackville-Cobequid): Did anyone from government, including members of the Executive Council, request, endorse or propose this course of action to your office or to yourself?

MR. LUND: Certainly not to me, no.

MR. DAVID WILSON (Sackville-Cobequid): So there was no indication that the current government wanted to assist this business in the avenue of maybe converting this loan into an interest-free loan?

MR. LUND: No, not to my knowledge.

MR. DAVID WILSON (Sackville-Cobequid): Hence the aura around was this rushed, did government feel guilty, and maybe the Premier at the time felt guilty that they hadn't done enough for this organization, this business over the years. I've been in contact with many businesses, especially small- and medium-sized businesses, that feel they don't have an avenue to seek funding or even grants or loans from government, because they're not, maybe, friendly with the current government or aren't represented by a member of the current government or a Cabinet Minister. I'll ask Mr. Lund this first, do you feel the small- and medium-sized businesses are taken care of or have an avenue to go to government to seek financial assistance in terms of loans and grants?

MR. LUND: I can only speak to NSBI. We work with companies right across the province on a daily basis. We have met with over 2,400 companies across the province, and most of those, probably 90 per cent, 95 per cent of those, would be outside of Halifax, over the last four years. Something seems to be working. We've probably had the strongest economic growth in the last five years that we've had in our history. There are certainly lots of businesses that are looking for assistance, and, again, as I mentioned, our field staff work with companies on a daily basis. Their job is to assess the company's needs and refer them. It could be with NSBI or somewhere else.

Whether or not there is enough financing to go around, that's always a question. That has been a question for decades. When the CFIB and small business do their surveys, of the top issues facing small business, financing is not usually the first or second or third or fourth or fifth issue. There are lots of organizations out there that provide assistance to companies, from banks right through to local agencies.

MR. DAVID WILSON (Sackville-Cobequid): Deputy Minister, do you feel the current process that we see on issuing grants and loans to those small- and medium-sized businesses is done in the most fair, open and transparent process?

MR. PAUL TAYLOR: Certainly there has been a concern in this province around access to financing by small businesses, particularly ones that maybe aren't in a position to have a fully developed business plan. In response to that concern, we have put a program in place, the Credit Union Loan Program, that allows - now I'm going to start to get out of my depth in details here, but I think the financing is less than $150,000, that's the upper limit. It's a small business program. It is 75 per cent of the principal of those loans that is guaranteed by the province, 25 per cent by the credit union. The credit union actually administers the program on our behalf and makes the decision on who gets the loans.

One of the reasons the Industrial Expansion Fund has such a large number this year is because that program was put out for a three-year test period. It was overwhelmingly successful, so we converted it from a $6 million, three-year program, which was over-subscribed, to a $25 million program. That $25 million is an example of one of the things that the IEF does that doesn't fit within the ballpark . . .

MR. DAVID WILSON (Sackville-Cobequid): And I don't question that program, I know it's a great program. I know people who have taken advantage of it. That's not a program like we see with forgivable loans. It's a loan from the financial institution. So my question is, where do these small companies that maybe need that extra hand, that are financed to the max go? Do you think that in the province we may need another agency that looks at small- and medium-sized businesses that is arm's length, like NSBI, that is solely directed towards small- and medium-sized businesses?

MR. PAUL TAYLOR: I certainly don't think we need another agency. We're constantly, through the business planning process, NSBI, ourselves, all the organizations of

government, submitting to government, based on what we see in the marketplace, what changes we think should be made to make our programs more effective. We request those changes as part of that process. As I said, that's continually ongoing.

MADAM CHAIR: The time has expired.

Mr. Samson, from the Liberal caucus, you have until 2:40 p.m.

MR. MICHEL SAMSON: Deputy, I'm giving you an opportunity to answer the question I asked. You identified who Peter Spurway was, you said he is the communications officer for former Premier John Hamm. Could you indicate why he is being cc'd on correspondence from your communications officer on questions being asked of your department?

MR. PAUL TAYLOR: He's part of the so-called comm plan, Communications Nova Scotia. That is a common practice for us, to communicate. When a department is communicating publicly, it's not unusual for the Premier's Office to want to know what the minister is going to be saying, so they understand that before the words are said.

MR. MICHEL SAMSON: In this case it was information being asked of the department staff, not the minister. So why would the Premier's Office want to know what department staff, in their everyday operations, are giving out as information?

MR. PAUL TAYLOR: I should see the documents you are referring to, because I'm not sure which ones you are, but I suspect you're talking about a response that has been provided to a member of the media.

MR. MICHEL SAMSON: Yes, and it was basically asking for information from staff. So I'm curious, why is the Premier's Office wanting to know what staff are saying in the regular operation of your department when asked a question by the media?

MR. PAUL TAYLOR: It's not unusual at all in my experience, that the Premier's Office would want to know what a department is saying to the media in this province on an issue.

MR. MICHEL SAMSON: When you were here for the S&J Potato Farms, you indicated it was a solid business plan, you would do it all over again. You said there was no outside pressure, that this followed its normal course of action, and that you had no knowledge of what involvement Mr. Fage subsequently had in this file. Can you tell us today that the $350,000 approved by Executive Council for Magic Valley Family Fun Park was based on a sound business plan, had no outside pressure placed on your department to move it forward and is a good investment for taxpayers of Nova Scotia? Is there any part of that that you disagree with?

MR. PAUL TAYLOR: Yes.

MR. MICHEL SAMSON: Which part?

MR. PAUL TAYLOR: Again, I have to refer back to my role in the documentation - and the role of my staff - that goes to the Executive Council. We prepare the homework for the minister, and we advise him on what that homework says and what our opinion of it is. He then makes a decision as to whether he's going to take that to Executive Council, and if he does, it goes by way of a piece of paper prepared by the staff. Then Executive Council makes a decision. We are informed of that decision, and we implement it accordingly.

[2:30 p.m.]

I'm not in a position to sit here and say what I think of the Executive Council decision that resulted, and whether I think they made the right decision or the wrong decision. I can say to you we advised the Executive Council of what we thought of the facts of that case, there were positives and there were negatives. I think we've been very clear here today in saying there were parts of that business plan that were challenging. The company has been directly impacted by a number of major factors: the tourism industry - we've had a continual debate in this province, it seems for the last year around where the tourism industry is going in this province - the dollar, the lack of Americans, the fact that the highway was diverted, the fact that Upper Clements Park is competition.

We also said that there are aspects of this deal that are supported by the community and it's recognized as perhaps the biggest single asset they have in that region of the province. So it's that balance of pluses and minuses that goes into that piece of paper that ends up in the Cabinet agenda.

MR. MICHEL SAMSON: But you realize that our committee is mandated to look into matters of the expenditure of taxpayers' dollars to see if it was done prudently and on sound financial advice. Can you tell us again today - you said it with S&J Potato Farms without hesitancy that you felt it was a good business plan, you'd do it all over again, and it was a good investment, yet you're not saying that for Magic Valley Family Fun Park. That is very telling. That is why Magic Valley Family Fun Park is before us today, because we have the same concerns. When the Deputy Minister of Economic Development cannot tell us that this is a good expenditure of taxpayers' dollars, based on his professional experience and on the experience of his staff, that tells us right there. Why is it you are so confident of S&J Potato Farms, and yet you're not prepared to give us that same confidence for the monies being made available to Magic Valley Family Fun Park?

MR. PAUL TAYLOR: I'm trying to think back to the part of my testimony you are referring to on S&J Potato Farms. I do recall telling this committee that I did think it was a sustainable, profitable company we were dealing with. I don't think you should misinterpret the comments that were made on S&J Potato Farms, again the positives and the negatives,

associated with that business plan and the conditions of where that company finds itself as being an endorsement or a non-recommendation from me on the basis of those facts. I wouldn't go there at all.

There is no different answer today than there was then for S&J Potato Farms. Our responsibility is to advise the minister. Comments on government policy and our personal opinions on government policy, i.e. my personal opinion on a decision of the Executive Council, is not relevant to this debate.

MR. MICHEL SAMSON: Well, the problem is that because of the government refusing to tell us exactly what the positives and the negatives are that you're referring to, Nova Scotians are left to just wonder what took place inside that Cabinet Room and what decision was made. Mr. Robar has said that it's not uncommon for a company to come asking for money and not get what it wants. I would question what company has come forward with a business plan for its long-term viability and has been given 10 per cent funding by government. It's a stretch. This is not normal, what took place here. I question what other loans have been given under OED where only 10 per cent was given with no other funding partners in place under the business plan. We don't have a normal circumstance here. I believe your opinion and the opinion of Mr. Hare, which I had asked for earlier, are quite relevant.

My final question, Mr. Hare, we continue to hear comments about the impact of tourism and everything else, leaving the impression that it's people from outside who are keeping Magic Valley Family Fun Park going. I'm wondering, is that your position, that the majority of people going to see Magic Valley Family Fun Park are from outside of the general area it finds itself in?

MR. HARE: My impression is that most of the people going to Magic Valley Family Fun Park would be from Nova Scotia.

MR. MICHEL SAMSON: When you said that you believe most of the money spent at the park is from locals, when you say locals do you mean Nova Scotians or do you mean people from the Pictou County area?

MR. HARE: Nova Scotians.

MR. MICHEL SAMSON: I just wanted you to be able to clarify that for me. I'll pass the rest of my time to my colleague.

MADAM CHAIR: Mr. Colwell.

MR. KEITH COLWELL: I have a question for Mr. Lund. On April 15, 2003, there was a reserve set up by your department for Magic Valley Family Fun Park for some

$200,000. Now a reserve means that the province is probably going to write it off, is that correct?

MADAM CHAIR: Mr. Ryan.

MR. RYAN: We reserve on an annual basis. There's an annual exercise that we go through. We look at each loan on the book and make a judgment about its collectability based on a range of factors. So a reservation is just that, it's not a write-off, but it's a recognition of the fact that there will be write-offs at some point in the portfolio. We carry reserves on many, if not all, of our files.

MR. COLWELL: But anybody who's in good stead definitely wouldn't have a reserve on their file, anybody who has their payments up to date, there would be no reserve.

MR. RYAN: That's not quite true. We do apply a general reserve, just for the sake of being conservative, on an annual basis. So there is a modest reserve that would be applied against every loan on the book.

MR. COLWELL: Mr. Lund, based on the information in the financial statements that were provided to you from Magic Valley Family Fun Park and the fact that there had been, as already discussed here earlier, many years when they didn't pay even the interest on loans, or any payments at all, would your normal business case ever consider a second loan for a company that just simply hasn't been paying their loans?

MADAM CHAIR: Mr. Ryan.

MR. RYAN: It would depend on the circumstances. Generally I would say no, unless there had been some material change in the circumstances of the company. In my experience I've seen situations where companies have struggled for an extended period of time and have been able to rectify themselves, and I've seen situations where it has gone the other way, too.

MR. COLWELL: Same question to the Deputy Minister of Economic Development?

MR. PAUL TAYLOR: I don't think the answer would be much different. We would assess how the case had changed and why the new financing was being asked for, what the circumstances were for the request, and make a decision on what was being asked for.

MR. COLWELL: Based on the financial information of the company, again, which I won't discuss openly here, is the company solvent, Magic Valley Family Fun Park? I would think very carefully before you answer that question.

MADAM CHAIR: Mr. Hare.

MR. HARE: I think we should go in camera if we want to discuss viability of the business.

MR. COLWELL: I think that gives me my answer anyway. In the process of giving these, in this case a $350,000 grant - and it really is a grant against non-disclosed equipment that's going to be purchased, I believe the company has to come forward by the end of this month, March 31^st if my recollection is right, with a list of things they're going to purchase, I have never seen a loan like this before. Has this ever been done before, where somebody comes and says give me some money, I'll tell you what I'm going to buy later?

MADAM CHAIR: Mr. Robar.

MR. ROBAR: I'll address that question in general terms. Often an approval in principle is given to companies, saying you have a block of funding available to you. It's not the government's role to tell a business how to run its business. I couldn't tell a company if they are buying the right piece of equipment or are not buying the right piece of equipment. All I can do, in general terms, is say, yes, this seems to make sense in the broader context of the business. Yes, it is common to say that we're approving $1 million for this company and you're going to spend it on building additions, machinery and equipment. That's what we look at, not the specific items.

MR. COLWELL: Maybe my question wasn't direct enough. It didn't appear, from what I've seen so far, from the information I've managed to read so far, that there was even any specific thing they were going to spend the money on. Nothing very specific at all. Normally when you have a business plan, someone is going to buy some machines, extend the building, like you say, or whatever they're going to do, and it all seems to go together in a big puzzle to make everything work. In this case, there's no information that I've been provided - and I got to read the whole file, don't forget - that would indicate they had any idea what they're going to buy.

MR. ROBAR: I think the letter of offer would specify capital equipment. I'm not exactly sure what the specific terms were.

MR. COLWELL: No, I'm afraid it doesn't. It says capital equipment, but it doesn't say what capital equipment.

MR. ROBAR: Well, that's what I'm saying. We don't know what capital equipment. For example, if the plan came back with something that we couldn't see was relevant at all to the business, we wouldn't fund that, but if it came back as a ride, well, we would look at that and say, well, that seems logical. We wouldn't be able to tell if that's the best ride or could you get a better price, but it would generally be we would know that would be in line with the intention of the loan, to increase the capital capacity of the business and to try to increase revenue.

MADAM CHAIR: The time has expired for the Liberal caucus.

Mr. O'Donnell, you have the floor. You have until 2:53 p.m.

MR. CECIL O'DONNELL: Madam Chair, what I would like to do first is probably make a comment and then ask a question. What I'm hearing today is that the request for Magic Valley Family Fun Park hasn't been handled any differently or much differently than other requests. I understand that Magic Valley Family Fun Park has until September 31^st to state how they intend to spend the $350,000. To date no funds have been disbursed.

Can you explain, looking back, in hindsight, how you would have handled this request any differently than you have? Mr. Taylor, I would like for you to answer that.

MR. PAUL TAYLOR: I think the one thing that sticks out in my mind, in looking back over this file, is it would have been nice to find a way to do this faster, to at least come up with an answer for the business, whether it's yes or whether it's no. It did seem like an inordinate amount of time from the time that we first advised the company, in the middle of 2004, that if you want to access government funding, you're going to have to put an awful lot more detailed business plan in place than you have. It seemed to take a long time to do that.

I think it's a matter of the public record now that the company has certainly had challenges on the business side, and if there's going to be a new life for Magic Valley Family Fun Park, it would seem the faster we could get to a point where that could either be tried or not increases the chances that the business could be viable. That being said, it took what it took to get to this point. We'll know better next time, that time matters for these businesses.

MR. O'DONNELL: I'll turn my time over to Mr. Christie.

MADAM CHAIR: Mr. Christie.

MR. CHRISTIE: I'd like to just go to Mr. Hare for a minute. You had some discussion with the members regarding some of the concerns you had as this file came in, and some of the challenges you saw. I'm just having the opportunity to read through some of the correspondence in here which was directed to yourself from the office of the Mayor of New Glasgow, where they talk about the possible potential; from Michelin Tire, Doug Cassidy, where he says it appears there's a great potential for this and more; from a Mr. Charlie Parker, who indicates that this is an economic driver and it will probably envisage a strong future for this business expansion and an increased opportunity in the future; from the Municipality of Pictou County, which indicates that they believe this is an economic driver and they believe it has a strong future; and CRDC, which indicated the same thing. I'm just wondering, did that help you in your decision as to how you were going to try to meet the challenges of this company?

MR. HARE: Those were some of the positive aspects of the project, very much so.

MR. CHRISTIE: And did you put any credibility in those comments that they made? Did you believe those to be sound?

MR. HARE: You have a group of people who have been elected by their community, and I'd like to think that they're credible people. I listen to what they have to say.

MR. CHRISTIE: I'd just like to come back, Mr. Taylor, for a second. You mentioned about some of the challenges. Is it unique for companies to have challenges, even solid files that you have, that you've had for the last 10 years? Don't companies go through cycles where challenges come upon them? In your view, is it unique for challenges to come to different companies at different periods in their history?

MR. PAUL TAYLOR: No. In fact, I shouldn't say this but I will anyway, I would find it unusual if a file showed up in our offices, or even in NSBI's offices if there wasn't a challenge to the business case in particular. I'd find that very unusual, if there wasn't something there. I think back to one of the real successes for NSBI in the last number of years was their ability to get Research In Motion to consider Halifax as a place to do business, let alone get them on that list but then actually have the company choose Halifax. That was a real solid feather in the cap. Well, there was a company that was facing - all the way through that process, and it wasn't resolved until just a few weeks ago - a devastating lawsuit that would have taken, could have taken, well, the better part of $1 billion out of the cash flow of the company. They were facing a possible injunction from the federal courts in the United States that would have taken that company out of business in the United States. That could have been a fatal blow to the company. I think the RIM announcement was universally recognized as a success story for this province. There's usually something there.

[2:45 p.m.]

MR. CHRISTIE: My last question, I'd just like to go to Mr. Ryan on the question regarding the reserves. Isn't it Generally Accepted Accounting Principles that you attempt to look at what's outstanding and try to envisage what challenges companies might have in the future and to make reserves for that? I'm not meaning to suggest that the company is going to fall, collapse or do anything, but isn't it your responsibility to try to put the best value you can on the loan portfolio?

MR. RYAN: That's right, the most realistic value we're able to.

MR. CHRISTIE: So it's not unusual that a company you've had on your file for a while, that you might reserve something just because of all of these different challenges and these things that might come up in the future.

MR. RYAN: Over time we all take a general reserve on all of our files. You can see that accumulate on a given file for a number of reasons.

MR. CHRISTIE: I'll pass it back to the member for Pictou East.

MADAM CHAIR: Mr. DeWolfe.

MR. DEWOLFE: Mr. Taylor, in connection with the recent work of this committee, and the last two cases we investigated, we've heard some fears that some of the investigation could create a chill effect on companies entering the province. Could you elaborate on that, briefly, on the effects a chill effect could have, particularly in rural Nova Scotia?

MR. PAUL TAYLOR: I'll preface my comments on the recognition that we, sitting here, certainly recognize the responsibility of the Public Accounts Committee to properly investigate, essentially value for money for government expenditures, and must have the ability to conduct that assessment in a way the committee sees fit to do so. The concern we have, from a business development point of view, and I think this concern is shared by NSBI, is it's a big world but it's also a very small world. The possibility of disclosure of confidential business information - and I'm not trying to infer that I would expect the Public Accounts Committee would act irresponsibly with the information, but the challenge we have is that the people we deal with in the businesses, all they know is it's beyond the control of the organization they gave it to.

As I said, these gentlemen to my left here have been dealing with companies in this province for the better part of 50 years. They have a reputation. There is a level of trust in the way that information has been handled. The fact that we no longer control, directly control, where that information goes if we have to hand it to someone else - and I'm not trying to say, as I said, that the committee would do anything irresponsible with it, all we know is that the companies now know that we don't control where that information goes.

As I said in my opening statement, our challenge is we are not New York, we are not Los Angeles, we're not London. Businesses don't flock to Nova Scotia to try to open up new offices. They often have to be, particularly through the efforts of NSBI, attracted here. Anything that ties the hand or makes Nova Scotia look relatively unattractive to another jurisdiction, we may never know that the opportunities were there. The organizations that sit out there and say, we were thinking of going to Nova Scotia but there's something new here that we don't understand, therefore there's a level of uncertainty that has developed, well, we'll just cross them off the list and move on to the other eight on the list and we'll pick. All we'll hear is an announcement that a company has opened up, and we may never even have known the opportunity is there.

So I go back to the comments I tried to make in our opening statement, recognizing the work that this committee has to do and the information it needs to do its work, we just have to strive to find a balance between being able to find that information for this committee

and not developing a reputation in that community of businesses that we are now a risk that they are not willing to bear.

MR. DEWOLFE: I can see that while Opposition members may see some short-term gain in exposing sensitive business and personal information about these two small rural businesses that we've dealt with recently, the real effect of their actions may well be that a company the size and quality of RIM, that you had mentioned earlier, or DynaGen Technologies may believe that the advantages of coming to Nova Scotia are outweighed by the risk that sensitive information that would be useful, perhaps, to their competitors will be made public. I think that hurts all Nova Scotians, and I think it would be very unfortunate if that happens with regard to the deliberations of this committee in creating the so-called chill effect in the business community of this province.

There are some areas where it must have been difficult to make the decisions on this loan, because there are other factors that were brought to light here. It's the entire business community, the local economy, the tax base that the local businesses contribute to the local economy in that district, this being the sort of key business. Mr. Taylor, I know you'll have trouble answering this question, but I can't help but wonder how Opposition members would treat a loan application from a rural company that has the support of the community at large. Would they refuse that community? Would they refuse that business? I believe so, from what I've heard here today and in previous meetings. I'm proud of the fact that my government supports rural jobs, and I'm proud of the fact that my government supports rural businesses in Nova Scotia.

MADAM CHAIR: The time has expired for the PC caucus. I now invite Mr. Lund and Mr. Taylor to make some closing comments, if you so wish, beginning with Mr. Lund.

MR. LUND: I think I just wanted to make two points. One is to reiterate Paul Taylor's comments around balancing the right to know with keeping commercially-sensitive information confidential. We talk to companies every day. If the concept of commercial confidentiality was not kept, and again I say that, acknowledging the work of the committee and keeping this information confidential, but if it was not kept in confidence, it would have a devastating effect, potentially, on our province. There's no question about that.

The second point is just to reiterate the fact that the economy is doing well in all areas. It's not perfect, but from what we can tell this is the strongest economy we've seen, certainly in probably the last 30 years. We've been extremely successful with a number of companies, looking at this as a great place to do business, including Research In Motion. We've seen some great growth in our local companies. We work with our partners at NSBI, we work with our partners at all levels to help create and maintain roughly 17,000 jobs. The spinoff effect of this is generating about $500 million in payroll and about $72 million each and every year in additional provincial taxes. Certainly a great boost to any province. Our results stack up with any place across Canada and in many other jurisdictions. I wanted to make sure I left you with that point.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I don't have much to add to that. I'd just like to take the opportunity once again to thank the committee for the opportunity to come in here and explain some of the issues associated with this file today. In particular, I'd like to applaud the committee for its decision on the third party consultations on the Magic Valley Family Fun Park business plan. I think that's a proper decision to have made, and I think that goes a long way in starting to address the concern about the disclosure of the third party information. With that, I'll conclude.

MADAM CHAIR: On behalf of the committee, I'd like to thank the witnesses.

MR. MICHEL SAMSON: Madam Chair, on a point of order. During questioning by my colleague, Mr. Colwell, to Andy Hare, a question was put for which Mr. Hare said he would be more comfortable responding to that question in camera. I would hereby move that the committee go in camera to allow Mr. Hare to answer that question. I'm not sure if we need the representative from NSBI to remain for that portion, based on their previous testimony about their knowledge of this matter. I would so move that we now move in camera for a brief period to allow for that answer to be given.

MADAM CHAIR: Is there any further discussion? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

We will now have an in camera session. I would ask for a one-minute recess so that our witnesses who will be leaving can leave, as well as the media.

[2:58 p.m. The committee recessed.]

[3:13 p.m. The committee reconvened.]

MADAM CHAIR: I'd ask the members to take their seats. The first recommendation is that the business plan be kept confidential, but I would ask, maybe, if we amend that recommendation given the quick consultation we had at the beginning of the meeting. If you have a chance to look through the business plan as severed by the freedom of information officer over in OED, they've actually taken pretty well everything out of the business plan. Nevertheless, we could ask them - and I think we should ask Mary Penny - to provide this information to Mr. MacNeil, the third party, and then respond to us. At that point, we'll be able to release it in the normal practice, which is what we've been trying to do.

With that as an amendment to item number one, I would ask for a motion to adopt the recommendation of the subcommittee.

[3:15 p.m.]

MR. COLWELL: So moved.

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

The motion is carried.

The next thing is the subcomittee recommends that all other documentation received be made public. I think in some ways this is moot, because we had an e-mail consultation and it was agreed. I would ask for a motion again, number two.

MR. STEELE: So moved.

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

The motion is carried.

You have a package of correspondence with respect to additional information that the subcommittee was looking for, as well as correspondence with Mr. MacNeil, with Mr. Taylor. The only thing that arises from this correspondence is a response from the Nova Scotia Farm Loan Board concerning our request to get S&J Potato Farms Inc. files. They have essentially told us that they will only respond to a subpoena for this information. I want to ask the members of the committee what your wishes are with respect to . . .

MR. COLWELL: I move that we subpoena the information.

MADAM CHAIR: Is there any discussion?

Mr. Steele.

MR. STEELE: I've only had an opportunity to review the letters while the hearing was in progress. I have to say that on a quick first reading, I was a little concerned that our second request to the Farm Loan Board was worded differently than the first request, or it appears to have been. In fact, what the Farm Loan Board is saying seems on the surface to be quite reasonable, which is they responded in good faith to our first request in what I thought was a reasonable and forthcoming letter. But then we wrote to them again saying, well, we really want something else. They've responded saying, well, okay, now it appears you've asked for something different.

So in the attempt to be fully fair to the Farm Loan Board, I don't get the sense that they're resisting, they just want to understand clearly what it is we want. I'm just concerned,

with the way the back-and-forth correspondence goes, that this may be more the product of a misunderstanding between us and them than it is actual resistance on their part. I don't know where that leaves us in terms of the motion, which is to issue a subpoena. I don't want us to be too hard on the Farm Loan Board, where it appears there has just been a misunderstanding.

MADAM CHAIR: Mr. Christie.

MR. CHRISTIE: I agree with the last speaker. I would make the motion we defer the subpoena issue until such time as that further letter has gone and they've made an indication of how they're going to respond. They seem to have shown some co-operativeness, and I just don't see us needing to jump in with the hammer right at this point in time. I would move a motion to defer that subpoena motion.

MADAM CHAIR: There's a motion on the floor, so you can't move another motion.

Mr. Steele.

MR. STEELE: I agree with that. Based on what I've said and what Mr. Christie has said, it seems that what we perhaps ought to do is defeat the motion and refer the matter to the subcommittee for follow-up - the subcommittee has done a great job so far in following through the detail work on this - and to liaise with the Farm Loan Board to make sure that we get what we want. Clearly this committee has shown that it will issue a subpoena where there's an outright refusal to give the information. I agree with Mr. Christie that that doesn't appear to be where we are just yet.

MADAM CHAIR: Mr. Colwell.

MR. COLWELL: It's our second request to get this information. I, too, don't see any problem with the Farm Loan Board at this point, but with the lack of information we've gotten in the past from other organizations, it would be better if we could subpoena the information. I think maybe where there's inconsistency with the letters, it might be wise, maybe - I'll withdraw my motion with the understanding that if they don't comply the next time that, indeed, we are prepared to issue a subpoena to get the information.

MADAM CHAIR: I will undertake to work with the clerk to see if we can sort this out, if there is any misunderstanding between the committee and the Farm Loan Board. If it appears that there really isn't a misunderstanding, then I can consult with the subcommittee and we can proceed accordingly.

Is it agreed?

It is agreed.

That's everything that I have on my agenda.

Mr. Colwell.

MR. COLWELL: Next week Dr. Hamm is going to come in. These committee meetings always seem too short to get the answers to some of the questions that we want to put forward, and I'm sure some of the other members share that opinion. I know in the past the committee has gone three hours on different items, and I would just like to have the opportunity next week, if we feel we don't have enough time in the two hours allotted, to move to a third hour or part of a third hour to see if we can't get the answers we need and everyone gets a chance to ask the questions they would like to ask. I would just like to put that on the table for consideration, and maybe we could advise Dr. Hamm that we might possibly be longer than two hours, if indeed we don't get our questioning finished in the two-hour period. It would give him an opportunity to prepare his schedule accordingly.

MADAM CHAIR: The clerk is advising me that that might mean meeting at 8:30 a.m. and going until 11:00 a.m., 11:30 a.m., because government caucus meets.

Mr. DeWolfe.

MR. DEWOLFE: First of all, the honourable John Hamm is volunteering to come here. I'm not in favour of a three-hour meeting. I think that we can handle - you know we're going to get direct answers from John Hamm. He doesn't beat around the bush. He's looking forward to coming here. I don't believe it's necessary to go for three hours. Also, our caucus does start at 10:30 a.m., and we have a full schedule coming up next week. I think it's going to be very difficult. I'm planning on leaving prior to 10:30 a.m. so that I can be there on time. That's fine with the Opposition, of course. I don't think it's necessary in this case.

MADAM CHAIR: Mr. Steele.

MR. STEELE: We've had some off-line discussions about this. It seems to me and my colleague that the best thing is just to stick to our regular time. If it appears to committee members in the course of the hearing that the time is insufficient, then we can, by motion during the hearing, extend it. But let's not go into it on the assumption that it's going to go longer. We did this once before with the Bluenose people, by motion during the hearing we extended the hearing. If we need it, we can do it. If we don't need it, we'll just stick to our regular time. My colleague and I are just content to leave things as they are, but Mr. Colwell makes a good point, we always have to leave open the possibility.

In the same vein, I note that Dr. Hamm's appearance is listed as being for Village Developments Limited, but of course in keeping with the regular practice of the committee, it's important that the witness understands that when they come here they can be asked about anything and that it's not appropriate for the witness to say, well, I'm here on Village Developments Limited, not on S&J Potato Farms, so when he's here, he answers whatever

questions committee members put to him. I think it's important that that be clear to the witness.

MADAM CHAIR: I think it's a given that we have a two-hour meeting, and if there is a requirement for additional time, just as there was today, we can, by motion, by mutual agreement, extend this.

Mr. Colwell.

MR. COLWELL: I would agree with that, but perhaps Madam Chair could inform Dr. Hamm that it might be a bit longer than two hours so that he can have a schedule.

MADAM CHAIR: I agree to do that.

Motion to adjourn.

MR. CHRISTIE: I move adjournment.

MADAM CHAIR: We are adjourned.

[The committee adjourned at 3:25 p.m.]