HALIFAX, WEDNESDAY, APRIL 25, 2007

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Good morning. I'd like to call the committee to order, please. Today we have an extended meeting of the Public Accounts Committee, by one hour, because we have witnesses from two departments, the Department of Transportation and Public Works and the Department of Economic Development.

The way we will proceed this morning is that we will take the first hour and a half for the Department of Transportation and Public Works, a short break of five minutes, and then we will proceed with the Department of Economic Development.

Before we proceed, I want to draw the attention of members to documents we received yesterday afternoon, the Statutory Declaration from the Deputy Minister of Transportation and Public Works with respect to the provision of all documents from the department, as requested by this committee. I would like to thank the deputy for this.

I would also like to say, though, that the lateness with which this material arrived, at 2:00 p.m. yesterday afternoon, makes it very difficult for members of the committee to scrutinize the material and to do our job, so I am a bit concerned about how long it took to have this material arrive for us. The members here this morning are seeing this material for the first time today.

So with that, we will have introductions by the members and from the Auditor General and his staff. We will ask for each of the witnesses to introduce themselves. We have a system where the red light comes on when your microphone is engaged and watch for that. We've been asked not to move the microphones around, please, the Hansard people have them all set up in the way that they find they work best.

[ The committee members and witnesses introduced themselves.]

MADAM CHAIR: Welcome. We will start with a brief opening statement from Mr. Darrow. The floor is yours.

MR. DAVID DARROW: Madam Chair, thank you for the opportunity to address you today. Through our risk management section, the department manages insurance and claims involving all government-owned and -leased vehicles. When any of these vehicles is involved in a collision, be it property damage or bodily injury, risk management or the claims section, as it's widely known, becomes involved. The claims section handles between 300 and 500 claims on government-owned and -leased vehicles every year.

It may be clear to you how our claims division handled the motor vehicle collision involving Mr. Fage last November. What may not be as clear is that the section applies insurance industry standards when it opens and investigates every claim, including the one involving Mr. Fage's Volkswagen Jetta. When a file is opened on a claim, there is a standard procedure that is followed. It does not come to the deputy minister's attention.

In the case of the November 24^th accident involving Mr. Fage, claims section staff opened a claim file on the incident as a result of an e-mail received from then Minister Fage's secretary, Janet White, on the morning of Friday, November 24, 2006. At that point in time claims staff were aware that then Honourable Ernie Fage had been involved in a "fender bender", and I use those words because that was a direct quote from the e-mail, in the early morning hours of Friday, November 24^th, in which his vehicle, the Volkswagen Jetta, was "slightly damaged". Again, that's a quote from the e-mail.

We also were advised that no insurance information had been exchanged and that no police had attended the scene of the accident. Claims section staff did not learn that anything was out of the ordinary with respect to the reported incident until January 5^th of this year following the CBC Television story on the incident. The claim file had been in abeyance since November 27^th awaiting more information on the third party and damage cost estimates. Our claims division staff learned the identity of the third party on January 5^th from a media report in The ChronicleHerald. I personally had no communication whatsoever with the department's claims section staff concerning this matter prior to January 5, 2007.

In addition to the aforementioned e-mail communication between Ms. Janet White and the department's claims section staff, this matter came to the department's attention by another means. On November 29^th the department's fleet services division received an inquiry from the Halifax Regional Police as to whom the Volkswagen Jetta with licence plate EEV 744 was assigned. The police were given Mike MacDonald's name as contact with the Public Service Commission because this is the name on record in our files.

I was made aware of the police inquiry at approximately 6:00 p.m on Thursday, November 30^th, via a telephone call from the department's chief engineer, Doug Stewart. I immediately placed a telephone call to my minister, the Honourable Angus MacIsaac, and apprised him of the situation. The following day, December 1^st, I received a copy of an e-mail confirming the information conveyed to me verbally the day before by the department's chief engineer. This e-mail is contained in the department's original response to the committee's request for information. To the best of my knowledge and belief, no documentation was created or received by staff of the Department of Transportation and Public Works between December 1, 2006, and January 5, 2007. No new information came to light during that period and hence there was no need for written communication during that time.

Before I conclude my opening remarks, I want to say a few words about my department's response to the committee's original request for documentation pertaining to the accident involving Minister Fage. Upon receiving the request for information from the committee by a letter from Mora Stevens dated January 26, 2007, I did two things. I proceeded to search my files for and have copies made of all documents in my possession pertaining to this incident. I also assigned a senior staff person the task of consulting with all those persons in the department who may have had knowledge of this matter and of coordinating the preparation of a response to Ms. Stevens' letter.

The binder containing this information arrived in my office on February 8^th and I was assured that it contained all of the information requested. I reviewed the material contained in the binder and having no reason to believe it was anything but complete, I sent it to Ms. Stevens on February 9^th. To the best of my knowledge at that time, the binder sent to Ms. Stevens on February 9, 2007, contained all of the information requested.

Upon receiving Ms. Stevens' follow-up letter of April 4^th, I arranged, with the assistance of legal staff, for departmental staff to begin to canvass regarding the completeness of the documentation provided in response to the committee's original request. This search turned up seven e-mail documents which predated the January 26^th cut-off date and which should have been included in our response to the committee's original request. These e-mails can be found in Schedule A of the Statutory Declaration that I sent to the committee yesterday.

I want to apologize to members of the committee for this oversight. I wish to assure members of the committee that this omission was indeed an oversight and that it was certainly not my intention to knowingly withhold information from this committee. I would also like to point out that in addition to providing members of the committee with copies of the overlooked documents in the package sent to the committee yesterday, I also included copies of all TPW documents pertaining to this matter which were created after the day the committee's original request for information. You will find that is the bulk of the information that you have in the submission I made yesterday. It is documents that were created after that original request.

Schedule A contains the seven e-mails that existed prior to the January 26^th original request for information. In addition, I asked staff to include general insurance documents in yesterday's submission which had not been included in our response to the committee's original request but which I thought might be of interest. They do not pertain specifically to this incident or to any particular vehicle, they apply to all vehicles covered by our insurance policy.

Again, I want to thank the committee for the opportunity to address you today. I look forward to having the opportunity to respond to any questions members of the committee might have pertaining to this matter.

MADAM CHAIR: Thank you very much.

Mr. Steele, the opening round of questioning, 20 minutes, will begin with you.

MR. GRAHAM STEELE: Thank you very much. It probably goes without saying but I probably should say it anyway, that nothing I say this morning should be taken as having any bearing on what Mr. Fage did or did not do. The issue before us this morning is what did the Department of Transportation and Public Works do. I'm not sure that a lot of people realize that Mr. Fage's insurance company was, in fact, the Province of Nova Scotia, or in other words, all the taxpayers of Nova Scotia. What we want to inquire into this morning is how the department handled the file and what weaknesses, if any, this reveals about the way the self-insurance program is administered and, of course, what improvements follow from any identified weaknesses. That's the framework that I want to put around all of the questions that I ask.

I would like to start by posing a question to Mr. Langille, because it was in fact Mr. Langille who was the first Department of Transportation and Public Works employee who heard about this collision. On the morning of November 24, 2006, Mr. Fage's executive secretary, Janet White, sent an e-mail to the Risk Management Branch saying the minister had "a fender bender". Mr. Langille, you then replied later that day asking for more information because Ms. White had indicated another vehicle had been hit. Ms. White replied that although the minister had hit the other vehicle, no insurance information or names had been exchanged. At that point it appears that you didn't make any further inquiries about the possible circumstances of the collision. Why did you not pursue it any further?

[9:15 a.m.]

MR. BRUCE LANGILLE: Indeed, there is another request on November 27^th, which my assistant, Brenda Zinck, sent to the Public Service Commission asking for third party information. It's in the file, and it's in the documents. It's not unusual for third parties not to come forward. Indeed, about 8 per cent of our claims, we never hear from the third party.

In addition to that, because of extended endorsements or coverages that a third party may have, they wish to deal with their insurance company and take the benefit of those endorsements and allow their insurers to subrogate against the department. So it really wasn't unusual to me that a third party didn't come forward or provide their name, it happens on a very regular basis.

MR. STEELE: But this is not really a case of third parties not coming forward. What it is a case of is that your insured, namely Mr. Fage, was unable to provide the name or insurance information of the people in the vehicle that he hit. How often does that happen, where you know another vehicle has been struck but your insured is not able to provide you information about who they struck?

MR. LANGILLE: It would be infrequent, but it's not unusual for someone to come back, particularly in our larger vehicles, such as our snowplows, that they know an incident has occurred but they haven't obtained the information and indeed we will use the police services or a licence number that we have obtained, or something to that effect, to attempt to find the third party.

MR. STEELE: Okay. The other thing that I would have thought would be a red flag for you and the people in your unit was the fact that the minister repaired the vehicle on his own without showing it to anybody - so nobody would know how bad the damage was, one might surmise. Did that not strike you as an unusual red flag in this case?

MR. LANGILLE: We did not know that occurred. Normally, the normal industry practice is that once we open the file and we make the request and a follow-up request for the third party information, we would advance our file and we would advance it for 30 days and the third party would normally come forward within that period of time. They normally don't have a problem finding us. Certainly they do come forward, or their insurer will receive a letter or phone call from an insurer who says our insured has been hit and we're going to place you on notice for recovery of those funds. Then we would make arrangements to interview their insured as well as we would interview ours.

We advanced that file for 30 days, which would have made it Christmas Eve, so I actually extended that to January 3^rd. It was on January 3^rd or 4^th - I'll have to check my notes - that we received the information that there were other circumstances surrounding this loss.

In my original e-mail to the Public Service Commission, I offered two things. If the vehicle had minor damage, our policy is you obtain two quotes and the vehicle should be repaired and those costs should be sent to us. If the vehicle was not driveable, or had significant damage, then we would engage an independent appraiser and that independent appraiser would calculate or assess the loss and then provide that document to us. We're not always comfortable with having the leased vehicles taken back to the garage where they were

leased because many of these garages do not have auto body shops that would be competitive and many times they actually farm them out to another office.

MR. STEELE: Okay, so, the file goes into abeyance. It's actually the next exchange of e-mails that I find most interesting and most significant for our purposes. On November 29^th, a maintenance planner named Debbie Withrow sends an e-mail to the fleet manager. She says that someone named Aubrey has been in asking about a Volkswagen Jetta with plates EEV 744, and then she talks about some administrative details. Mr. Darrow, do you know who the Aubrey is that Debbie Withrow is referring to, who has been making inquiries about this vehicle?

MR. DARROW: No, I don't.

MR. STEELE: Okay. So it could be a police officer, it could be somebody else. I notice the department has one employee named Aubrey and it may very well be a department employee, although I don't know why a departmental employee would be making inquiries about it.

We also note from other e-mails that it's that same day that the police, a Constable Cheesman from the Halifax police department, contacted the department. From the material that's been provided to us this morning we know that it was Kevin Mitchell who took that call and we know that the name of Ernie Fage was given to the police that day, on November 29^th.

Now this e-mail from Debbie Withrow goes up to Kevin Mitchell who forwards it to Kevin Caines, the director of fleet management. Kevin Caines then forwards the e-mail to Doug Stewart, chief engineer in the highways program. Kevin Caines adds, in his forwarding it to Doug Stewart, the details of the collision the police are investigating as relayed by the police to Dave Hamilton, who's the manager of central fleet services. Then, Doug Stewart forwards the e-mail to you, Mr. Darrow, and it hits your computer on December 1^st.

You've told us this morning that you actually knew about it the previous day, and it seems that when you follow this along everybody in the department who had anything to do with fleet management knew on November 29^th or November 30^th that a vehicle driven by Cabinet Minister Ernie Fage had been involved in a collision and that the police were making inquiries. Why, Mr. Darrow, did nobody think of telling Mr. Langille and the people in the insurance division of the department that this was going on?

MR. DARROW: I can't answer that question, because I don't know.

MR. STEELE: In addition to your other responsibilities you are also the ultimate boss for the insurance program, but Mr. Langille has just told us that after he put the file in

abeyance - he had no more information, no more reason to go back to the file, and yet everybody who is anybody in the fleet management department knew that Ernie Fage was involved in a collision. Does that not strike you as odd, that the left hand of the department didn't know what the right hand was doing?

MR. DARROW: The right hand of the department, if you mean the claims section, knew that Ernie Fage was involved in an accident well before the fleet services people did.

MR. STEELE: What they didn't know was that the police were making inquiries about an alleged hit and run involving Ernie Fage.

MR. DARROW: That's the point, that they didn't know. That's correct, yes.

MR. STEELE: And how can you explain that everybody, including yourself, knew the police were making inquiries and yet nobody told the insurance section?

MR. DARROW: Again, I don't know that that's germane information. Had the insurance section known about that, I don't know that they would have done anything differently because at that point in time that's all we knew, that the police had made an inquiry. In fact, the police were told by our fleet services - all our fleet services division could tell them is that the vehicle was assigned to the Public Service Commission.

MR. STEELE: Now in an e-mail from Kevin Mitchell that we received this morning - I'm going to quote this because I think it's significant - this is Kevin Mitchell relaying his conversation with Constable Cheesman of the Halifax Police Department: "I called the Constable back and told him who the car was assigned to. He asked me if Ernie Fage was using the car the night of the accident. I told him I didn't know who the driver was, only that it was assigned to Ernie. I also explained to him that Ernie Fage was a Cabinet Minister in the Government. Constable Cheesman then made a comment that he would have to talk to his superiors on how to handle this case because of the position Ernie held."

Does that strike you as odd, that the police would be saying they might have to consult with their superiors because Ernie was a Cabinet Minister?

MR. DARROW: I can't really comment on that. As I say, when I found out that the police were involved and conducting an investigation, I immediately contacted my minister and apprised him of the situation.

MR. STEELE: Why did you call your minister rather than calling the insurance section of your department? What was it that you wanted to accomplish by telling your minister?

MR. DARROW: This was, to my way of thinking, something a little out of the ordinary and felt that it would be something that he should know about, that he could get questioned about, and I wanted him to be aware of what I knew.

The contact with the claims section, again didn't appear to me to be germane because the matter was being handled - there was nothing else the claims division could have done, quite frankly, had they known that the police were involved.

MR. STEELE: Oh, come on, Mr. Darrow, there's nothing else they could have done? Their file was in abeyance because the information they had was that no names or insurance information had been exchanged and they didn't have any information about who the third party was. What they didn't know, because no one told them, was that it appeared, allegedly, that Mr. Fage had a collision and left the scene of an accident. Surely that is germane to the work of the insurance section.

MR. DARROW: That's your opinion, I disagree with you.

MR. STEELE: Okay, now so you tell your minister on November 30^th and he's on the record as saying that he then called the Premier's chief of staff to inform him. Now what I find puzzling about the way this unfolded within the department is that Debbie Withrow knew, Kevin Mitchell knew, Kevin Caines knew, Doug Stewart knew, you knew, Dave Hamilton knew. All these people, some very senior in the Department of Transportation and Public Works, knew that the police were making inquiries about Ernie Fage's car, and yet once the e-mail hits your desk on the afternoon of December 1^st not one single word is committed to paper or computer screen by any of those people in the Department of Transportation and Public Works - the issue just seems to evaporate. How can you explain that?

MR. DARROW: Well as I said to you previously, at that point in time - you have to understand what we knew at that point in time. We knew there was a fender- bender - and that was how it was described to us - we knew that no insurance information had been exchanged, we knew that no police had attended the scene of the accident, and we knew that the police were investigating the matter. My view is that the police should do their work and we should await the results of that investigation. We don't have the capacity to go out and investigate accidents - that's the work of the police force. So at that point in time that is what we knew, we had no new information from that point in time until the evening of January 4^th, so there was no reason. What reason would we have for communicating any information during that period of time?

MR. STEELE: It seems to me that the answer is pretty obvious. The police are investigating an alleged hit and run involving a Cabinet Minister - I would think that would be reason enough. You've already said to us this morning the deputy minister is not typically

informed of collisions involving fleet vehicles, but you were informed of this one. Why do you think that you were informed of this one?

MR. DARROW: Again, because of the fact that there was a police investigation involved, but that would have no bearing on how we handled the file beyond that point in time. Again, at that point in time we had the information I just outlined to you, we did not know the identity of the third party. Until the identity of the third party came to our attention, then there was no other action that we could take - even if the claims section had known that the police were involved.

MR. STEELE: Let me suggest to you some of the red flags that were up on this file. Bearing in mind that hindsight is perfect vision, I realize that, but just let me list for you the things that should have told the department that they needed to look harder.

First of all, the department knew that another vehicle had been hit, but no information was provided by your driver - your insured - about the identity of the people in the second vehicle; second, the collision occurs at an unusual time, very early in the morning when one would not typically expect a government fleet vehicle to be driven; third, the driver repairs his own vehicle without actually showing it to anyone; and fourth, the driver never communicates directly with the department, he always does it through someone else.

Now individually you might not pick up on any of those red flags, but all of those together surely should have told the insurance section of the department - and all of those very senior people in the department that I just listed - that something was going on that needed further inquiry. Mr. Langille, why do you think that your section didn't pick up on those red flags that I just listed?

[9:30 a.m.]

MR. LANGILLE: We didn't know that Mr. Fage had repaired his own vehicle until after January 4^th. We had provided instructions through his assistant on November 24^th to obtain two estimates, to submit them to us, or if the vehicle is not driveable to identify it to us and we would assign an appraiser.

MR. STEELE: In insurance there is a doctrine called the duty of utmost good faith - I'm sure you're familiar with it, Mr. Langille . . .

MR. LANGILLE: I am.

MR. STEELE: And in a nutshell, it is that applicants for insurance are obliged to disclose any detail which may be of importance to the insurers, whether or not it is requested. In your opinion, in this case, has your insured dealt with you in the utmost good faith?

MR. LANGILLE: He reported the accident.

MR. STEELE: He didn't. His secretary did, describing it as a fender-bender.

MR. LANGILLE: But I would say that many of the accidents that we receive are reported by other than the actual driver, and then it is our responsibility to meet with that driver to obtain information from him, or request additional information. In meeting the requirements as set out in the statutory conditions of the policy to which you refer, then we would say that the driver, with haste and immediately within 24 hours, reported that accident and would meet the guideline that we place in the back of the certificate for reporting of accidents.

MR. STEELE: And has Mr. Fage ever filed a written accident report with you?

MR. LANGILLE: He has not.

MR. STEELE: Now, in the material provided to us there is a form for just that purpose. Why was Mr. Fage never required to fill out that form and submit it?

MR. LANGILLE: On the renewal of each vehicle - and it's done in March and April - we send out the certificate for the leased vehicles and we send out incident reports and reporting requirements. We send them to the insurance contacts in each department and they do not always find their way to the glovebox of vehicles. In this particular case, I understand that there was not an incident report in the glovebox to be completed and forwarded to us.

MR. STEELE: Have you or has anybody else in the insurance unit of the department met with Mr. Fage?

MR. LANGILLE: I met with his assistant in Amherst. I drove to Amherst to meet with him and he was not there when I arrived. I met with his assistant. I obtained the information that was sought, mainly the invoice where he had repaired his own vehicle, and the police at that time were also looking for that - I had it in my possession and we had to pass it over to the police later that afternoon.

MR. STEELE: Would this be a normal way to deal with an accident of this kind, where no accident report is filled out, nobody from the insurance section ever actually meets with the driver of the vehicle, and all information is provided to you through others - is that normal?

MR. LANGILLE: It would be normal if the driver obtains counsel, and in this particular case Mr. Fage obtained counsel. I spoke to his counsel and he was not at that time prepared to allow me to speak to Mr. Fage.

MADAM CHAIR: The time has now expired for the NDP caucus. I recognize Mr. Colwell. You have until 9:54 a.m.

MR. KEITH COLWELL: I just would like to ask the deputy minister, and anyone in your department whom you might think appropriate, what's the proper process for a minister, or anyone who drives a government-owned and operated vehicle, to report an accident? What is the process, step-by-step, that you have to go through?

MR. LANGILLE: If you refer to the documents and if you look at the certificates and the other documents that we supplied, there is a reporting process. We ask them, and if I could refer to it, I'll read it to you: "ACCIDENT OR CLAIMS REPORTING INFORMATION: Report all accidents (as quickly as possible) to: Insurance and Risk Management Section, Department of Transportation and Public Works, P.O. Box 186, Halifax, N.S. B3J 2N2." We have a toll free number, as well as a claims number, and if you're unable to contact Risk Management, you can contact our access insurer, Lombard Canada, and we provide the toll free number for them. In addition to that, for after-hours calls, my cell phone number and my pager number are provided on this document.

MR. COLWELL: And what do you think is a reasonable time? What would be normally considered a reasonable time?

MR. LANGILLE: A reasonable time on a fender-bender would be 48 hours. We would be very comfortable with that. If you have a life-altering injury, fatal or something of significant environmental release as a result of the accident, we require or seek to have that immediately.

MR. COLWELL: In this particular case, was this procedure followed? I just want this on the record.

MR. LANGILLE: Yes, it was. In less than 24 hours the report of the motor vehicle accident arrived at our shop by e-mail from the assistant of Mr. Fage.

MR. COLWELL: Following the report of the accident, was the process after that properly followed?

MR. LANGILLE: Yes, it was. We did a follow-up on November 27^th to seek additional information for the third party. Directions in respect to the repair to our own vehicle were provided to the operator of that vehicle and then, as I said earlier, it's not unusual for third parties not to come forward, particularly in a fender-bender. They may not have any damage. They don't want to come forward. There are many reasons why they don't come forward. So we advance the file because our experience is that if they wish to find us, they will - and if there is a significant injury in that, they certainly will or their insurer will.

MR. COLWELL: There has been recent discussion about the repairs that were done to the minister's car. Who were they conducted by and under what authorization? The department was aware of them or not aware of them?

MR. LANGILE: We were not aware of them. I would never have authorized that. We like to look at the estimate to ensure that a proper repair facility is being used. I have to look at the invoice, but it went through the garage where it was leased from and then they sublet it to another body shop.

MR. COLWELL: Did the department pay for this?

MR. LANGILLE: No, we did not.

MR. COLWELL: Was it paid for, personally, by Mr. Fage?

MR. LANGILLE: I can't answer that. I just have a copy of the invoice and I have never had anyone come to me and ask me to pay it.

MR. COLWELL: The invoice is still present. Did you enclose that in . . .

MR. LANGILLE: That was there from the beginning.

MR. COLWELL: So who do you feel paid for this? Do you have any idea at all?

MR. LANGILLE: I can't comment on that. I went to his office to meet with him - and I would have to look at the date to give you the exact date - he was not there. In my phone conversation with him, which was very brief, he only gave me his lawyer's name - so his assistant was there, he was not there, and I asked to have that document available for me when I arrived. I understand it was January 12^th when I went there. He provided that document. The police had met with me the day before and we had talked about how they would receive that document - and it could have been a search warrant if we chose to do it that way - on my way back from Amherst, they called me on my cell phone and asked where we could meet so they could obtain that document.

MR. COLWELL: Who was the invoice made out to?

MR. LANGILLE: I would have to look. It's in the documents, but I would have to look and see.

MR. COLWELL: Was it a department, can you recall - or was it personally to Mr. Fage?

MR. LANGILLE: I would have to look and see, I don't recall.

MR. COLWELL: Is this a bit unusual, the process?

MR. LANGILLE: That someone would pay for their own repairs?

MR. COLWELL: Yes.

MR. LANGILLE: Yes, it is.

MR. COLWELL: Were there any photographs of the vehicle provided by Mr. Fage, or anyone else, that you can verify of the damage to Mr. Fage's car?

MR. LANGILLE: No, there are not.

MR. COLWELL: So, in other words, there is no evidence whatsoever of the accident except the receipt for the repairs?

MR. LANGILLE: If we were asked to pay for it, I would attend the body shop, or I would have an independent appraiser attend the body shop, and verify with the repairer that indeed the damage was X and that the cost is associated with the damage and it was not excessive and repaired or met the damage requirement.

MR. COLWELL: So this whole process of getting the car repaired and not documenting that part of it, up to that point, is not normal practice. Correct?

MR. LANGILLE: It is not normal practice.

MR. COLWELL: As you go through the process, you would typically - and I just want to make sure I have all this straight, so I'm asking some duplicate questions here, I just want to make sure I have it all on record and I have it all straight - so the process would be if you operated a government-owned vehicle you would report it to you or the insurance company, or the other places you indicated, within 48 hours if it's minor, or immediately if it's something more serious, which would be normal process, I think, in any operation, and then you would proceed to take your vehicle for an appraisal by somebody who would be assigned would be the normal process, or you would be told to take them to someone who is accredited by the insurance company or by the province, whichever the case may be - is that correct?

MR. LANGILLE: Well, I think we should clarify that the vehicles that we insure for physical damage are the leased vehicles. The vehicles that we own, directly, we do not insure for physical damage. So we self-insure that and that type of repair. I will use the snowplow, again, as an example. If we rolled a snowplow over, that would be taken to our mechanical facilities and repaired. It would not be something - in fact, long before my time, we never, ever, insured owned vehicles for that. When they are in buildings - because that is where

your greatest potential for loss is - we insure the vehicles and the equipment attached to them, or forming part of them, as contents. So our property insurer accepts the exposure so that if we lost eleven snowplows in the Pictou shed, if that burnt down, then they would be covered and we would recover our funds.

On an individual basis, it is cost-prohibitive to insure the physical damage of those types of vehicles for the losses that we have.

MR. COLWELL: So, basically, it's just the leased vehicles. So the normal process, if it wasn't a leased vehicle, it would just be repaired under the direction of the department and that would be the end of it.

MR. LANGILLE: Well, in our claims management system we have codes, and if it's a third party claim it is an 80 - it is just a code that we assign to it - but if it is a first party claim it is a 90. We do that so we can establish our cost of risk, we also do it so we identify duplicate drivers who may be a problem, and we also do it so we identify duplicate vehicles that may be causing a problem.

MR. COLWELL: Getting back to this one particular accident, this one, everything was reported according to the way, the process that you're supposed to report them - although it wasn't reported by Mr. Fage, it was reported by somebody who reported to him - but the repairs were unusual, am I correct here? I'm asking duplicate questions here; I just want to be very clear.

MR. LANGILLE: I will be equally clear that that was unusual and certainly outside the scope of our claims management practice for someone to repair their own vehicle.

MR. COLWELL: To your knowledge, in all the years you've worked at this - and maybe anyone else in the departments here - has this ever happened before?

MR. LANGILLE: There have been incidents in other departments - not the Department of Transportation and Public Works - where someone who is new took the vehicle back to their depot and had it repaired, and actually engaged someone to repair the third party vehicle and it was not reported to us. There are a couple of incidents of that. It doesn't happen anymore, I can assure you. Some of that was just really the lack of succession, where the information on how to do these things had not been passed on.

MR. COLWELL: So you have a definite policy of how this is to be handled . . .

MR. LANGILLE: Very much so.

MR. COLWELL: . . . and Mr. Fage did not follow that policy?

MR. LANGILLE: Mr. Fage would not have known the entire policy. He would have had a certificate, which is in your binder, identifying the Jetta as the leased vehicle, which that certificate is also supplied to the insurers of the leasing company so that they know the vehicle is insured, and on the back of that document is the accident and claims reporting information. So he would have that, or should have been supplied with that - now I can't confirm that his staff supplied him with that.

MR. COLWELL: But isn't it highly unusual - being the minister it is your responsibility to understand what the processes of your department are, and if you don't understand you have staff there to inform you of that. So just a simple phone call or a conversation or an e-mail could have told him within a very short time, because the minister, if I understand, has access to staff 24 hours a day, 7 days a week, to handle all kinds of things that may come up with his responsibilities. Wouldn't it be a normal process for him to ask a question if he didn't understand, before he went and got the vehicle fixed?

[9:45 a.m.]

MR. LANGILLE: Yes, I would say that's correct. Clearly he understood the reporting requirement, because we received that in less than 24 hours.

MR. COLWELL: So then I can make a conclusion you may not be able to - he was fully aware of what needed to be done then, because he would have had a discussion with his assistant who did report this. I know the staff in the departments are very, very competent and would typically advise a minister as soon as possible of anything that they were aware of that he was supposed to do, or not supposed to do, would that be correct?

MR. LANGILLE: My e-mail of November 24^th advised him what to do.

MR. COLWELL: So he was aware at that point, and was the vehicle repaired at that time, do you know?

MR. LANGILLE; No, it was not repaired.

MR. COLWELL: So basically what happened - he was made aware of it, although he may not have been aware of it on the evening of the accident, which the document wasn't there for whatever reason, but upon reporting it, the proper process, he was made aware of what was supposed to happen from there.

MR. LANGILLE: On the morning of November 24^th, or the afternoon of November 24^th, whenever I received the e-mail, I replied promptly and provided the instructions in respect to the repair of that vehicle.

MR. COLWELL: Why do you think the instructions weren't followed, because I would think it would be in the best interests of the province, of the individual, and of the people in the third- party incident, it would have been a whole lot better - why do you think that wasn't followed?

MR. LANGILLE: I can't answer that. Someone took this upon themselves, and you'd really have to refer that question to the Mr. Fage.

MR. COLWELL: Okay. Thank you.

So as we go through this whole process there are some questions I'd like to ask, but I can't ask because I know some of this is before the courts; there are some other questions I can't because I know you can't answer them. Other than not taking the information - he should have taken the information as well at the time from the person who was also in the accident, is that correct?

MR. LANGILLE: If the incident report form was in the car, it has a witness component, and we normally request, and when we provide training to staff we always request that they complete to the best of the ability the incident report form, which identifies who they are, the date of loss, time of loss, police file number, if it was reported to the police - and you have to recognize that many fender- benders are not reported, because police will say anything under $1,000 is not required and they won't take your report - we identify the vehicle, we have a section for the third party and we have a section for any witnesses who may have identified the accident, and that would be the catalyst that we would use to go forward in an investigation.

MR. COLWELL: Wouldn't it be normal, under normal circumstances - I know I've been involved, as everybody in this room has been involved in a fender- bender at one time or another, unfortunately - as standard practice, even though it's a minor bump or bang, because today, a minor bump or bang is usually around $2,000-plus to fix, on both vehicles, isn't it normal practice for somebody to get the information from the other person, and if they don't think it's too serious just get the phone number and a name, and probably the address and name of the insurance company, isn't that a normal process?

MR. LANGILLE: I don't understand your question.

MR. COLWELL: I'll put it another way. If you were in an accident, say you ran into me or I ran into you out in the parking lot here, wouldn't it be prudent, especially if we didn't know each other, for me to get your information, the make and model of your car, the licence number of your car, your name, address and phone number, and the insurance company that you have, just for information purposes, to ensure if there's something later on - because today, with an accident, you can bump somebody, there doesn't appear to injury, or damage

to the vehicle, but later on you can find out, indeed, the person received a back injury, which seems to be quite common, from a minor bump - isn't that normal practice?

MR. LANGILLE: Normally drivers, based on what they're advised on the pink card, the liability card that is in the car, if you exchange information you do not admit liability, but yes, you are correct, it would be normal practice for two parties involved in a minor accident to exchange information.

MR. COLWELL: Yes. That's the answer I was looking for and that's the process that I feel that most people do, and you've indicated in some cases people for some other reasons don't do that and that would be totally based on the particular incidents of that time.

Has the department made any changes since this whole thing has happened, in the process of the policies that you follow, or have the policies not been changed?

MR. LANGILLE: The only change that we have made is I have a student and that student is creating revised accident reporting kits to be placed in the glove compartments of all government vehicles, and we're not going to send them to the insurance contact in each department, we are going to ensure that they arrive in their place - and I'm not sure if I have to do that personally, but we do want those in the vehicles so that everybody is clear on what has to happen and what needs to be completed. I would say that they are and if I went and looked at many vehicles they're there, but some obviously are not.

MR. COLWELL: The new reporting process you have, is there anything that would have made a difference in this case if the old one would have been followed, or the new one?

MR. LANGILLE: No, it's not a change, it's just simply that I want to make sure that they're all there, and they are adhered to a vehicle in some fashion.

MR. COLWELL: So the policy you have in place you feel is adequate, if it was followed in every case, to satisfy all of the insurance requirements and everything that the department may have in a liability problem?

MR. LANGILLE: We comply to the rules and guidelines as set out in the Standard Policy Form No.1 - and it's called an SPF No. 1, and that's the way it's referred to - and that automobile policy is used in all provinces except Quebec, so it really matters not if you're in Alberta or here, you comply to the same rules under the SPF No.1. The SPF No.1 sets out how accidents should be reported and the guidelines, and we have simply replicated those to ensure that our people complied to them.

MR. COLWELL: In this case you indicate that it was reported within the time period that it should be - the accident - but the whole process wasn't followed because, again, the

repairs were done by and paid for by some unknown individual at this point in the process. That's the only problem in that part of the process?

MR. LANGILLE: Well, we did not receive, on our second request, the names of the third party, but as I said earlier that did not trigger a major concern because this happens on a regular basis - third parties, many times we close our file and they never materialize.

MR. COLWELL: But normally in your process that should have happened in this case or in every case - they should have at least exchanged information.

MR. LANGILLE: It is always a concern to us - and you raised it a moment ago - that someone will arrive with an injury regardless of how insignificant the accident. We like to be on top of that, we like to speak to those individuals, the third parties, and confirm whether they are injured or not. If they are injured then it certainly changes the way we would carry out our investigation, the activities and the reserving we would place on the file.

MR. COLWELL: I think my time has expired here . . .

MADAM CHAIR: Your time has expired. Thank you, Mr. Colwell.

I now recognize Mr. Porter with the PC caucus, and you have until 10:14 a.m.

MR. CHUCK PORTER: Thank you, Madam Chair, and I want to thank the witnesses here this morning as well. It's good to have you here - there are lots of questions.

I just want to pick up on what my colleague left off on with regard to the reporting instructions, getting third party information. I'm just kind of curious, given the answer you just provided, is there a percentage, or what percentage is it that people come back later on in life, maybe two months, three months a year and say now I have a sore back and I want to file a claim against the department. Does that happen? Have we ever seen that happen?

MR. LANGILLE: Well, it certainly does and we try to avoid that, and everything we have in place is designed to identify and bring forward a third party, even to the extent - and we review every fatal report that comes forward. If there was an issue that flagged there may be a significant liability to the department, we would commence an investigation even though we hadn't received notice of claim. As you know, there's a three-year prescription period in this policy in this province for automobile. We do everything possible to identify who we have because if we have an injured party you're much better off to deal with that party, deal with rehabilitation, get a strong rehabilitation plan in place, and work with them to try and resolve their injury and move it to a conclusion.

MR. PORTER: How many vehicles in the fleet?

MR. LANGILLE: Approximately 2,400.

MR. PORTER: There are 2,400?

MR. LANGILLE: Approximately. It's a rolling number, it changes every day.

MR. PORTER: How many motor vehicle accidents, altercations - whatever we like to call them - does the department process annually?

MR. LANGILLE: It can be between 300 and 500 per year. It really depends on the type of winter we have. If we have a very bad winter we will have a significant number of incidents, if we have a light winter, as we had here, we'll be in the 300 to 350 range.

MR. PORTER: So the season impacts on what would be more of your snow removal type of equipment that is involved in those, as opposed to other kinds of vehicles.

MR. LANGILLE: That's right, we receive a large number of claims if our plows are on the roads on a regular basis.

MR. PORTER: Of those 300 to 500, I'm just kind of curious, how many of them would be minor versus - and I don't know if you used the term "major", or more significant - but the minor type where you would go for a couple of quotes, what would your . . .

MR. LANGILLE: Certainly we have a claims management system and we open every claim in that system and we reserve every claim to a dollar amount. I guess perhaps in the sense of a simplistic way of handling the claim we could impact a third party vehicle. It could be a $15,000 claim, but it's very straightforward - we hit you, let's have it assessed, let's have it repaired, we sign the release, provide the cheque, and the claim is over - a five- or six-step process. If there's an injury, that's entirely different and, as I referred to earlier, a life-altering injury or a fatal would certainly change the way that we would operate.

MR. PORTER: And you would certainly be dealing with those kinds of incidents, people, families and such, for a much longer period of time?

MR. LANGILLE: A longer period of time and we would most likely deal with their counsel, because someone with a life-altering injury or a fatal would engage counsel.

MR. PORTER: Is the time of day a factor? I guess my question should be my first question - I'll just take a step back - in all of the data that you do collect, is it broken down to time of day?

MR. LANGILLE: On the incident report, time of day certainly is a trigger. If someone who is not assigned a vehicle, but is using a government vehicle to carry out a task such as

you're operating a plow or you have a Department of Natural Resources' vehicle, a half-ton that you're out collecting whatever with, and at 8:00 p.m. you're involved in an accident at Tim Hortons, then you would question why that vehicle was there. The other thing that's always very important to us time-wise is we like to, if it's a very serious accident, attend the site or have an adjuster attend the site to see if the weather conditions or the sun would have impacted our driver, or the other driver - there are many reasons why we would use the time.

MR. PORTER: I would assume, and you can clarify this for me, that any major accident would have not only the police involved but are you saying there would be a member of the department who would be assigned around the clock to go to act as an adjuster or view this incident?

MR. LANGILLE: I would act as an adjuster, our claims officer could act as an adjuster, or we could hire an independent adjuster if we chose.

MR. PORTER: But you don't go to every accident, is that fair to say, or do you?

MR. LANGILLE: I couldn't.

MR. PORTER: Not given the number?

MR. LANGILLE: Not with the eight- hour time frame from each end of the province.

MR. PORTER: And there's only one of you in the province who does that?

MR. LANGILLE: We have a claims officer, Ms. Elliott, and myself, yes.

MR. PORTER: You talked a bit about the reporting structure of altercations, or accidents - I keep calling them altercations - accidents, incidents, and you mentioned that Mr. Fage's assistant actually reported this accident. Did I hear you say correctly that it's not uncommon for the driver not to report the accident?

MR. LANGILLE: Yes, it's actually very common for someone else to report the accident. Again, just because TPW has 50 per cent of the entire fleet we see more accidents from TPW vehicles, but it would not be unusual to have an accident reported by the operations supervisor, by the area manager, or area engineer. That report would come forward, they would supply the driver's name, and then we would meet and take a statement from the driver.

[10:00 a.m.]

There are two reasons for that. Number one, the occupational health and safety requirement must be met, and there is an incident report that is completed and the JOSH

Committee has to deal with that - and that's outside our scope, that's a requirement of the Department of Environment and Labour. We, in turn, would actually ask for our incident report and it will go through a process and get reported to the supervisor and that's why, quite often, the supervisor would report to us.

MR. PORTER: Is JOSH involved in every accident?

MR. LANGILLE: No.

MR. PORTER: No. Just the major?

MR. LANGILLE: Well, if it's an accident in a leased vehicle, such as Mr. Fage's, JOSH would not be involved.

MR. PORTER: Of the percentage of that 2,400 vehicles or so that you have, how many are leased?

MR. LANGILLE: I would have to go and look that up. It's not a very high percentage.

MR. PORTER: Not a very high percentage. In the case of Mr. Fage, what should Mr. Fage have done differently, in your opinion, anything than what was done?

MR. LANGILLE: Well I can't speak for Mr. Fage. What I can speak to is what I would have looked for. He provided the information he had a motor vehicle accident, and fender-benders, in all probability, will not be reported to the police because they're under $1,000, that would be their choice; I would have provided the direction on how to repair his vehicle, which I did; and I would have sought and appreciated to receive the third- party information so we could contact the third party, number one, to look at their property damage and, number two, to assess whether they had any bodily injury.

MR. PORTER: When did the third party come forward in this case?

MR. LANGILLE: The third party came forward - on January 4^th was the first . . .

MR. PORTER: Not before that.

Mr. Darrow, maybe a question for you, because it's departmental, and I will ask you it. Has the department made any policy changes with regard to ministerial vehicles and the reporting structure, the process as a result of the incident with Mr. Fage, or you felt that things were followed?

MR. DARROW: No, we have not made any changes.

MR. PORTER: No intent to make any changes?

MR. DARROW: No, not at this stage of the game.

MR. PORTER: You're comfortable with the current process?

MR. DARROW: We're satisfied that the current process works.

MR. PORTER: Should the department have done anything differently, in your opinion, than what was done?

MR. DARROW: As the member said, hindsight is 20-20 vision. I guess you need to appreciate that we didn't have the benefit of hindsight when we were dealing with this issue. I, frankly, can't see how we could have handled it any differently and had a different outcome. You might argue that my failure to communicate to the gentleman to my right that the police were involved in the investigation - if I had it to do differently, would I have informed him? Yes, I would have. I guess having said that, I fail to see how that information would have made any difference in the outcome, because at that stage of the game the only information that we were missing of any substance was the identity of the third party. The police have much greater capacity to identify that third party than we would, which they did, and we became aware of it and then moved on from there.

MADAM CHAIR: If it's okay, Mr. Langille, I think, would like to comment.

MR. PORTER: Sure, please.

MR. LANGILLE: I would just like to comment, that today, as an adjuster, you cannot go to the office of the Halifax Regional Municipality Police or the RCMP and ask them for a copy of their motor vehicle accident report, the MV 58A. They will not provide it to you; they used to, but they won't do it today. So we have to wait until that document is forwarded to the department through Service Nova Scotia and Municipal Relations and then we would have access to it. So even if I had known and called the constable in charge of the investigation, he is not going to provide me with his investigation documents or the MV 58A, so I would still be hamstrung waiting for that document to be created, and I would have to obtain it at a later date.

MR. PORTER: How many vehicles that are involved in incidents have police involvement? Do all of them have police involvement, or are there some settled without going through that process?

MR. LANGILLE: Many accidents, small fender- benders, the police will not respond. If you call 911, the police will not respond if it is not an injury accident, of if there is not major traffic considerations and the traffic is tied up. They will tell you to come in and report

it, and if it is under $1,000 there is no requirement to report it. Many people will make their trek to the police station, HRM or RCMP, and be told that if it's less than that, or if you have your estimate, it's not required.

MR. PORTER: We've heard some numbers tossed around here this morning, everything I think from $2,000 to $15,000, maybe I have heard. In the types of accidents that the department goes through annually, of the 300 to 500, is there a dollar figure that you, as the adjuster, put on what you would consider a minor accident? Is it $15,000, in you opinion, that is still a minor accident, or is that something that is really too hard to determine, in case by case or is it . . .

MR. LANGILLE: I guess, just from having done this for 31 years, I would say it's really by the ease of how the claim goes. Many of those claims I would not do; I would move those to my Claims Officer. It is very, very straightforward, you contact the third party, you assign an independent appraiser to ensure that the repairs are accurate, or the recommended repairs are accurate, and then it is the responsibility of the vehicle owner to authorize repairs - we do not authorize repairs, we do not own the vehicle - and then upon the completion the garage will forward the invoice to us and we, in turn, actually issue the cheque in the name of the third party and the garage. We do that to protect the third party, so if they're not happy with the job they can deal directly with the garage or not give them the cheque. It keeps us out of the loop. That would be very standard industry practice.

MR. PORTER: How many people in your department who take care of the management of vehicles . . .

MR. LANGILLE: I can only comment on our section. I have the Claims Officer, I have an Insurance Officer, I have a Claims Administrator and I have an assistant.

MR. PORTER: Six, counting yourself?

MR. LANGILLE: Five, counting myself.

MR. PORTER: Five, counting yourself. So 300 to 500 incidents per year - five of you handle that relatively easily?

MR. LANGILLE: Well that's only fleet - we do every slip and fall, flood, falling tree, Department of Community Services claims, foster children claims, and we've had as high as 1843 claims in the year.

MR. PORTER: So you do the insurance coverage basically for all government departments?

MR. LANGILLE: Government departments, boards, agencies and commissions - although some, such as Waterfront Development, maintain their own.

MR. PORTER: And that's all handled under TPW?

MR. LANGILLE: Pardon?

MR. PORTER: You're directly working for TPW.

MR. LANGILLE: I'm attached to that department, yes. Many of the buildings and many of the vehicles, their title rests with TPW, a very logical place to be.

MR. PORTER: Right, okay. Thank you very much, those are all the questions I really have for Transportation and Public Works. I'm not sure if one of my colleagues has any questions or not. Thank you.

MADAM CHAIR: Thank you very much. That gives us an opportunity to have a final round of five minutes per caucus, of quick snappers if you have anything further to ask our witnesses.

Mr. Steele.

MR. STEELE: Thank you very much. I've come away from this session very concerned, and I'm going to tell you why I'm very concerned. It seems to me that the department has not learned any lessons from what went on here. I'm astonished to hear the department representative saying nothing is going to change as a result of this incident.

Let's suppose that hypothetically this was a case of a hit and run - hypothetically. The driver of the vehicle - yes, he did make an accident report through his secretary the following morning, but that report seriously underplayed what happened that night. It was described as a fender-bender. The total damages to the two vehicles add up to $7,000, and that's leaving aside the bodily injuries to the two people in the car that was struck, the amount of which hasn't yet been settled.

This is not a fender-bender - I don't want to hear anybody ever again refer to it as a fender-bender - if you read the witness impact statements of the people who were hit, you will understand the effect that this collision had on their lives. So it concerns me, first of all, that the department seems to think that what Mr. Fage did the following morning - having his secretary report that there had been a fender-bender - is sufficient to meet the insured's duty. Second of all, Mr. Langille, you've referred several times to the fact that no third party came forward. Well, for Heaven's sake, the reason no third party came forward is because they didn't know who had hit them.

Now let's suppose, hypothetically, Mr. Fage struck the other vehicle and then left without giving them his name. They wouldn't have contacted you because those people would have had no idea that they had been struck by a government vehicle. Yet you seem to think - well you have said it is not unusual for a third party not to come forward.

There is no police report because the driver appears to have left the scene before the police arrived - they didn't know who had been involved in the collision. Then, finally, it appears that no adjusting was done at your end, there was an e-mail exchange with the minister's secretary and then the file was put in abeyance.

When you put all these things together, the lesson that I had hoped the department would learn from this is that there is always a possibility that your insured is not telling you the truth. Surely you have to acknowledge the possibility that, occasionally, somebody driving a government vehicle is going to be involved in activity that they have a personal interest in downplaying. I would have thought, at the very least, this would have demonstrated that lesson to you, and yet what we hear this morning is that nothing is going to be done differently. If it happened again, it seems like it would unfold the same way.

The second thing that I'm concerned about is the fact that so many people in the Department of Transportation knew that the police were inquiring about an accident involving Ernie Fage, but not a single one of them thought of telling the insurance people.

Mr. Darrow, I disagree with you 100 per cent that nothing could have been done differently. Your insurance people, your adjusting people, could have gotten right on it within a few days of the collision, found out who the third parties were - you don't have to rely on the police to do that - that's what adjusters are for, that's what they do, they work independently of the police, because this was your insured and your insured vehicle. You don't just sit back and wait for the police to tell you whatever they eventually tell you because they're dealing with the criminal process - you're dealing with the insurance process.

Mr. Langille, every single one of the gentlemen sitting around you right now knew within a few days of the accident that the police were making inquiries about a collision involving Ernie Fage. Do you think that at least one of them should have told you?

MR. LANGILLE: All I can say is, as you said earlier, hindsight is 20/20. On a normal basis, it is very unusual that I would not have received some of that information. I receive hundreds of e-mails every day and copied on things, so I guess it's really whether they saw it material or not. We would not have received any information from the police, they would not have provided documents to us, so I can't really comment why that wasn't forwarded.

MR. STEELE: Thank you.

MADAM CHAIR: Mr. Steele, your time has expired.

Mr. Theriault, you have five minutes, until 10:19 a.m.

MR. HAROLD THERIAULT: Thank you, Madam Chair, and thank you for being here this morning. We know we've all had fender-benders. I heard here a minute ago we shouldn't use it as a fender-bender, but how do we know what a fender-bender is?

[10:15 a.m.]

If you run in back of a vehicle at night and your headlights are still on and you didn't break your headlights, probably you could call that a fender-bender. Who knows? I've done it to my vehicles, run into them and had them fixed with my neighbour and very cheap - who determines, you know, what $1,000 is, or more? You can do a lot of work to a vehicle with $1,000 if you go to the right place.

I always believed, and I still believe, if I drive your car this afternoon, Mr. Langille, my insurance goes with me. My insurance is with me and, if I have an accident, my insurance is liable in your vehicle. If I was to have an accident with that car this afternoon - your car, a fender-bender, whatever I thought it was, be it $1,000 or whatever - would it be wrong for me to go fix that vehicle? If I run into somebody else's vehicle or public property and went and fixed that, is there anything wrong? Does your department see anything wrong with doing that? Because I do that all the time, I don't want to put my fender-benders or even half- smashed vehicles through an insurance company, because your insurance is going to go through the roof and you're going to pay it back fivefold. So, is it wrong if a minister took a vehicle and fixed it by himself? Do you see anything wrong with that?

MR. LANGILLE: They are leased vehicles. We are required to return those leased vehicles in the like-timing and quality they were when they received them. We like to use designated defined repair shops to ensure that those vehicles go back, and at any time we could never be found liable for sending a vehicle back that had not been repaired properly. So certainly for a leased vehicle, we would like to oversee the repair of those vehicles to ensure that they're repaired in a quality and professional manner.

In regards to the third- party component that you asked, we received many requests since the insurance crisis of 2002, if you will, to allow third parties to ask if they can pay for their damages directly without going through their insurer. We will certainly do that - we have a promissory note device that we use and that they sign. Many people, many dads show up and provide a cheque for the damage that their children have done when they run into one of our vehicles - we make sure the appropriate documents are signed and before that's done we ensure that there's absolutely no bodily injury involved in any one in the third party. Clearly, today, people do like to pay for their own accidents and we will accept that.

MR. THERIAULT: If I become a minister tomorrow or next year or whatever and these leased cars are in the departments and I, as a minister, go to your department this

afternoon to pick my car up - is everything disclosed about what I have to do? What the procedure is - whether it's the insurance is explained, accidents are explained, the whole procedure, is anything like that done for the ministers?

MR. LANGILLE: I can't answer that question. We send our insurance documents to the insurance contact of each department, and it is their responsibility to disseminate those documents to those who operate leased vehicles or other government vehicles.

MR. THERIAULT: Personally, if I had your leased vehicle and if I thought my insurance was with me - which I possibly could think, because I think that all the time - and if I had a fender-bender I would go get that vehicle fixed myself if it wasn't too, too expensive. Without me knowing the procedure of the department and how that all works and whether that has been explained to me, that could cause some difficulties there. So you're not saying that is explained to the ministers?

MR. LANGILLE: What I'm saying is that we send all our documents to each department on the renewal prior to April 1^st, 2007 - we'll use this year as an example. We send out all the renewal documents, and in those renewal documents are their certificates for the vehicles and on the back of that is the reporting requirement - there would be a liability card, or a pink card as we refer to them, and an instant reporting kit which they would put in the vehicles. Would we verify that each person assigned a lease vehicle received all that and understood that? We just would simply not have the staff to do it.

MADAM CHAIR: Order, the time has expired. Mr. Porter, you have five minutes.

MR. PORTER: I just want to pick up on where Mr. Theriault left off with regard to that vehicle. I agree, if I were in that position I would routinely look at that vehicle, pick it up, but my question is more when a minister is appointed and receives a vehicle - who gives them the vehicle? The second part of that question is who picks up that vehicle? Does the minister actually pick that vehicle up or does his assistant or someone come pick it up and say here you are minister, the keys to your vehicle, I checked it over and everything appears to be fine, the papers are in order, whatever - I just want to clarify.

MR. LANGILLE: As Risk Management, I couldn't answer that question, but what I could tell you is we will receive an e-mail or document from that department that tells us that a new minister, for example, has purchased a vehicle or has been assigned an existing vehicle. It's in the system, and they would ask us to create the certificate, provide that certificate back to the department, which in turn would be provided back to the garage where the vehicle was leased from, which goes to their insurer - we would not be directly involved with the assigning of vehicles.

MR. PORTER: Thank you for that. Just a question or two with regard to Mr. Fage's vehicle. Obviously, it was fixed, it was repaired. Were you, as the adjuster for the department,

satisfied with the condition of that vehicle when it was returned to your department, and the folks who did the work were a reputable company who were more than qualified to do such work?

MR. LANGILLE: I saw the vehicle. I'm not a mechanical appraiser, I'm an adjuster. From my experience, and when I look at what was done, it was superficial in nature. There was no impact to the drive train, for example. There was no impact to the front end, axles, tie rods, steering mechanisms, et cetera, it was superficial, and painting. It was approximately $3,200, which is not a lot of money today for anything that you do to a vehicle. The vehicle was brought to the government parking lot on Lower Water Street. I saw the vehicle and I was involved in having the vehicle taken from there to Miller Lake because snow was getting pushed around it and it was going to be damaged, and we wanted to get it out of there. So I saw the vehicle on three different occasions and I was in the vehicle on one.

MR. PORTER: Who's driving the vehicle now?

MR. LANGILLE: I have no idea.

MR. PORTER: It is still within the department though? (Interruptions) Oh, it's not, it's been a return lease.

MADAM CHAIR: Mr. Darrow.

MR. DARROW: Yes, the vehicle has been returned to the dealer. We looked for another person who might be interested within the system in taking over that vehicle lease, but there was no interest in that and, at that stage of the game, it was cheaper for us to return the vehicle to the dealer than having it sitting around and us accumulating the end, the monthly lease payments.

MR. PORTER: I'll just ask Mr. Darrow the same question to give him the opportunity to answer that. You're satisfied with the way that the vehicle was returned to the department, given that you're the deputy and manage all entities?

MR. DARROW: Yes, again, I need to remind members that we did not have the benefit of hindsight in December. What we knew in December was that the vehicle driven by Minister Fage was in a fender-bender - and I use that again, because that's how it was described to us - involving slight damage. No insurance information had been exchanged. No police had attended the scene. For all we knew, it was an accident that didn't result in any damage to the other vehicle. So, I mean, there are a lot of things here that you can say about this in hindsight. The thing that we didn't know at that point in time was the identity of the third party, and knowing that the police were on the case doing an investigation, we figured that the identity of the third party would become known to us, which it did on January 5^th.

The member asked me if we would do anything differently. I think I would look to opening up a line of communication between our fleet services division and our insurance division so in the event our fleet services division becomes aware of an accident, then I will look at putting in place a mechanism whereby that information can be conveyed to the insurance people, but, as I say, notwithstanding that, I don't think the outcome would have been any different - the results would not have been any different because we eventually found out the identity of the third party and we're proceeding to handle that file in the normal course of events.

MR. PORTER: Thank you, and I would think that would be a very good recommendation. Communication is always a positive step. That's really all the questions I have. Thank you, Madam Chair, and thank you very much to members of the department for coming in.

MADAM CHAIR: Order, please. The time has, indeed, expired. Thank you very much to the witnesses. I would ask that you would remain. You'll be given an opportunity to make a closing comment after we've heard from the Department of Economic Development. We will take a short five minute break to prepare for the next round of questioning and we'll reconvene at 10:31 a.m.

[10:26 a.m. The committee recessed.]

[10:34 a.m. The committee reconvened.]

MADAM CHAIR: I'd like to call the committee back to order, please. We will now have witnesses from the Department of Economic Development and we will begin with an opening statement from the deputy minister.

Mr. Taylor, the floor is yours for a brief opening statement.

MR. PAUL TAYLOR: Madam Chair, I will be very brief. Good morning to the committee members. We welcome the opportunity to be here this morning to discuss the use of government vehicles by ministers, and I do have a very few brief remarks here.

The formal responsibility for government policy for buying and leasing vehicles for members of Executive Council came to the Department of Economic Development in late 2004. Previous to that, this policy had been the responsibility of the Office of the Speaker of the Legislature. Up to this point our role has been administrative in nature, reviewing the leases and ensuring that the term and price settings have been adhered to as per the policy.

As you probably know, the government has announced a new policy to cover this area. The role of the department, through its Procurement Services Division, will be to administer this policy, it will also be to administer this policy on behalf of government, this however will

be an enhanced role for the department. Under this policy, procurement staff will ensure new executive vehicles are leased or purchased from the federal government's green vehicle list. Staff will ensure the cost of the vehicle does not exceed the maximum allowed under the policy and will ensure the length of each lease is three years. They will also negotiate the lease or purchase of any executive vehicle to ensure best value for government. Staff will also reserve the right to comparison shop for these vehicles to ensure this.

With those few brief remarks, I look forward to the opportunity to responding to the questions this morning. Thank you.

MADAM CHAIR: Thank you very much. I now recognize Mr. Wilson from the NDP caucus, and you have 20 minutes.

MR. DAVID WILSON (Sackville-Cobequid): Thank you, Madam Chair, and thank you for coming this morning and waiting a little bit of time - this is a little longer than our normal Public Accounts Committee meeting.

This issue, I think, is definitely very important even though the previous issue is a concern of many Nova Scotians. I think this one, ultimately, really struck a nerve with Nova Scotians, with taxpayers. When the media reported the cost of the ministers' leases in the paper, I received calls, there was definitely a public outcry on the costs involved.

We have a breakdown, which I'll get into later, of the amount of money that is being paid by taxpayers to lease vehicles for ministers ranges from $467 to $882, I think. Those figures that were given to us - I mean that's without the taxes being paid. I understand that they pay that tax and the province gets that money back. Ultimately, when you look at it, and the way I look at it in a common- sense way, if someone from the public were to come in and take over a minister's vehicle at the high end of $882, that payment would be over $1,000 a month. I think that's what really struck a nerve with Nova Scotians and why I think, as a mandate for this committee, we called your department forward to discuss this.

I was surprised last evening when I heard Minister Hurlburt had seen the light, I guess, and was going to implement a new policy on the ministerial leasing of vehicles. How ironic it was, on the eve of this committee, to discuss the ministers' leasing vehicles with taxpayers' money that we see this announcement. I think it was later in the evening last night, or later in the day yesterday.

It is ironic and I am astonished a bit to hear about this new policy, that I have little information on it so far which potentially leads us down the road of maybe having to call you back in, deputy, to explain this new policy. Ultimately, when I first heard about it and I read about it today in some of the papers, it is probably going to cost taxpayers more money in the end when this new policy takes effect. Not only are we going to see a ceiling of $25,000 go to $35,000, the ministers are going to be able to look at those more "green" vehicles which,

to be quite honest, are usually the more expensive vehicles that we can purchase today. Even though I know most Nova Scotians would love to see many people in this province use greener vehicles, currently those costs are high and most Nova Scotians can't afford to purchase those vehicles.

I'm not sure if the government, Minister Hurlburt, realizes that the cost incurred for these leases was behind the public outcry, and with this new policy I don't think they're really going to address it. I guess, ultimately, we'll see in the end what results we have and what backlash they might have - I mean Nova Scotians are concerned because when they see the price these ministers are paying for their vehicles, they are two times and sometimes even three times what someone in the public would pay for a vehicle.

I know that the government has tried to explain the high cost is because of the kilometres that ministers drive but, still, when you're looking at a vehicle that is almost three times the cost of a vehicle that a person in this province could go get a lease for, that's why they're concerned. Ultimately it's the cost to the taxpayers and that's where I'll lead into some questions here today.

The problem with the system we currently have - and I think it'll be the same problem with this new policy - is that the system leads to special treatment, I think, and I think taxpayers think, for ministers over other civil servants who require a vehicle from government or require a vehicle for their work. It leads to, I think, grossly inflated monthly payments that the taxpayers are paying for, and there's no real accountability because we see interest rates for these leases from 1.25 per cent to the maximum, which I think is 13.5 per cent. That just baffles me that we today - the government - see fit to allow this to continue without addressing the issue of trying to get a deal, the best bang for the buck as some people say, and hopefully reduce the costs of government spending.

Currently the ministers have no incentives at all to find the best deal, and I don't know if the deputy minister will agree or not, but in my view they have no incentives to find the best deal, or they actually don't even have any requirements to get multiple quotes like the government tendering process calls for, to ensure that taxpayers are getting the best deal.

I'd like to start with that, Mr. Deputy - is there a requirement, or is there any requirement for ministers to go out and get several quotes on leased vehicles, to ensure that they're getting the best deal possible?

MR. PAUL TAYLOR: Your question refers to the new policy or previous practice?

MR. DAVID WILSON (Sackville-Cobequid): The previous practice.

MR. PAUL TAYLOR: The previous practice required ministers to essentially retain a vehicle the same way individuals do. The responsibility for doing that was in each

department, through the administrative office of each department and the ministers themselves.

I can speak to the experience of Minister Hurlburt in Economic Development. The process by which he would retain that vehicle is he would, understanding the rules of the policy, the ceiling of the capital requirements and the terms of the lease, he then shopped around for his vehicle. He went out looking for a vehicle that would suit his purposes, his driving conditions, would fit him much the same way we, as individuals, would shop for a vehicle. Having identified a vehicle that would suit his purposes, i.e., the Envoy that he eventually ended up selecting, he then shopped through a series of dealerships looking for a vehicle on their lot that would qualify under the terms of the policy. Having found a vehicle and having signed with the dealer - or signed is the wrong term - having agreed with the dealer that that was the vehicle that he was going to lease, he then turns the responsibility for finalizing that lease over to the Procurement division in acquiring the vehicle. So while there isn't in the policy saying you have to go to X number of dealers, that is the procedure, that is the shopping process by which the minister goes through to acquire that vehicle.

MR. DAVID WILSON (Sackville-Cobequid): At any time did your department go back to the minister or any of the ministers and say well, no, that cost seems quite high or inflated - you know, have you gone back and said are there other quotes, other dealers, or financing companies, that might offer a better deal for that type of vehicle?

MR. PAUL TAYLOR: No, the minister conducts that on his own and, in his case, I do believe the vehicle he selected was significantly lower than the $25,000 ceiling that was set in the policy. So he would have done that himself. He would have essentially reached that conclusion with the dealership and then turned the file over to the Procurement division.

MR. DAVID WILSON (Sackville-Cobequid): And that is what I think is the root of the problem, that the ministers themselves conduct this process. I mean everybody knows how busy a minister is - just ask a minister, they'll tell you how busy they are. I don't understand how, in the book of being a minister, going out and shopping for a vehicle should be at the top of the list. In my mind, I don't think they give due diligence in trying to find the best deal for the best price for taxpayers.

You know, you mentioned Minister Hurlburt - who ironically is the minister overseeing your department - he has the highest price of a vehicle for the lease at $882.85. You had mentioned that it was under the $25,000 ceiling, but really it's only under it by about $750. I think that's one at the maximum. Everybody is within about $800 of that ceiling and to think this new policy, which I have some issues with, because here we are at the Public Accounts Committee trying to discuss a policy of government and, on the eve of it, they come out with a new policy but they don't give us any information on it.

[10:45 a.m.]

I mean that's just astonishing, but I guess that's the record of what this government has done in the past. No reflection on your department - I know that you are guided by the minister and by the government - but I don't understand why individual ministers would go and do their own homework on the leases and not have to follow what I think would be a prudent way of doing it, a tendering process, or even going through the Department of Transportation and Public Works and use a provincial fleet vehicle. I mean I can ask questions around the new policy, even though I don't have any information on it, but the old policy, you know there are still many unanswered questions and that's what is concerning to us, and it's what's concerning to Nova Scotians.

So we'll go on to the new policy, I guess. The minister stated, I think in The Daily News today, that there would be a lower cost for operating vehicles because they're going to be new but he - and actually I'll quote it here - the minister stated: "The cost to taxpayers will be cheaper in the long run because the vehicles won't need an extended warranty, will require fewer repairs, and will save gas." He couldn't say exactly how much the budget for the leased vehicles will change under the new policy. So with the new policy change, was that a directive of your department maybe going to government and going to the minister and saying we should look at a change in policy, or was that an initiative of government?

MR. PAUL TAYLOR: The minister, I do believe, made the commitment - the date escapes me now - after the issue of vehicle leases became a popular topic in our media. He made the commitment at that time as the department responsible for this policy, on behalf of Executive Council, to have lease policy reviewed and the result that was announced yesterday was the result of that review.

MR. DAVID WILSON (Sackville-Cobequid): Yes, definitely, I think that's how it all transpired. There was a public outcry. The minister did state after the media released information on the leases that he'd have a review and ironically, as I said earlier, he released the review the day before this committee meets. But I think he missed the point of the outcry. The public wasn't saying, go greener and increase the ceiling for leasing vehicles for ministers. We all understand that greenhouse gases affect our environment, but the outcry wasn't that. It was the cost of vehicles and under the new policy, in my mind, I think, the prices of these vehicles will increase. Would you agree with that or disagree with that?

MR. PAUL TAYLOR: I think the test of this policy will be, rather than the focus that has been in the media and in this debate around the lease costs and the capital costs of these vehicles - I think if we truly want to know whether this is going to be a better policy or a worse policy, it will be the life cycle costs of providing transportation to members of Executive Council. And that is a combination of not only the capital attachment arrangements that we see in either leases or purchases, it's in the total operating costs of the vehicles to

provide that transportation. That jury is still out. We'll have to wait and see the choices that the ministers make under this policy and the costs that result.

MR. DAVID WILSON (Sackville-Cobequid): Minister Hurlburt stated in the paper yesterday - I believe it was The Chronicle Herald - that he didn't know exactly how much the new policy will cost taxpayers. So my question to you, have you been directed or has your department been directed by the minister, by his Cabinet, to look at what the cost will be, with the new policy in place?

MR. PAUL TAYLOR: No, there would have been an assessment done of - Cabinet went through, as I understand it, a fairly elaborate process here, of arriving at this decision, over the last three-odd months here. So as part of that process there would have been an assessment done of the costs of the various options that would have been part of the mechanism by which the choice was made.

MR. DAVID WILSON (Sackville-Cobequid): So you said an assessment would be done, but you just said that you did not do it or your department did not do it, but you and your department oversee the leasing of vehicles for ministers, so who did this assessment on the new policy?

MR. PAUL TAYLOR: The decision, as you would know, was a decision of the Executive Council of the province and they received input from a number of departments before making that decision - ours being one of them.

MR. DAVID WILSON (Sackville-Cobequid): And what recommendations did you put forward to council?

MR. PAUL TAYLOR: They came to us and asked for specific information on different aspects of the decision, which we then forwarded to them as part of that process and they used that information in combination with information from other sources, to make the decision.

MR. DAVID WILSON (Sackville-Cobequid): Are we able to, as a committee, be provided with that information, that recommendation from your department, to council?

MR. PAUL TAYLOR: Normally, the policy advice of departments to Executive Council are not documents that are provided to this committee.

MR. DAVID WILSON (Sackville-Cobequid): I had to ask because usually that is the question so it would be interesting to see what your recommendations were. I mean, in my mind, I don't know how Cabinet confidentiality revolving around this incident, especially around Mr. Fage and the government - you know, that seems to be the line that is used so often with government, or with the Cabinet, is that they can't talk about it. So is that what

you're saying, that you don't feel that you're at liberty to tell this committee your recommendations to Cabinet, about minister leases on vehicles?

MR. PAUL TAYLOR: I guess what I'm saying is the Executive Council has made a decision, which they have put out in the public and which will follow with a formal written policy in the management manuals. That's the decision that they have made and that is out there for members of the Legislature, the public, and the press to debate whether it's the best policy or not and I'm sure they will. If there are other options that they want to debate in the public forum, that's fair game but the options considered by the Executive Council in reaching these decisions are not mine to disclose.

MR. DAVID WILSON (Sackville-Cobequid): Definitely I know we'll look into that further. Ironically, usually it means filing a freedom of information request to try to get that information. That's why this announcement last night goes to represent, I feel, what this government continues to do. They continue to say they're going to do something, but they don't know what it's going to cost. We've seen it in the last election, and we saw it in the budget that just passed, that many of the initiatives that they were going to implement they couldn't afford to implement them fully - so it's kind of strange that the minister would come forward with a new policy, yet he doesn't know how much it's going to cost the taxpayers. I guess time will tell if that's a benefit or not.

You stated earlier - just for clarification - that your department took over this file back in 2001 from the Speaker's Office?

MR. PAUL TAYLOR: Formal responsibility for the policy was transferred to us from the Speaker's Office in late 2004.

MR. DAVID WILSON (Sackville-Cobequid): Who would have made that transition? Was it the Minister of Economic Development at the time, or was it the Speaker of the House, or was it the Premier?

MR. PAUL TAYLOR: It was the Speaker's Office.

MR. DAVID WILSON (Sackville-Cobequid): It was the Speaker's Office that transferred it over. And you accept that responsibility willingly I'm sure and do your due diligence to try to handle this case. That's why I don't understand - and one reason why we have a longer session today is that here we are, we have vehicles that are being leased by government employees, but yet it's under a different department. Would you not see a benefit to have this case or this file under the Department of Transportation and Public Works under the fleet services that deal with all of the other fleets or all the other vehicles in government? Would you agree or disagree that would be probably the most appropriate place to have this file under?

MR. PAUL TAYLOR: No, I wouldn't agree with that. The acquisition of the vehicles, just like the acquisition of photocopiers, or buildings, or any other of the $700 million of goods and services we procure every year, logically falls under one agency and should fall under the procurement division. Once that decision has been made to procure the asset then the administration end of it, as part of the fleet, belongs in the Department of Transportation and Public Works.

MR. DAVID WILSON (Sackville-Cobequid): But in this case they don't go after obtaining the leases, it's up to the individual minister - is it correct that they obtain the purchase or the lease of these vehicles?

MR. PAUL TAYLOR: Yes.

MR. DAVID WILSON (Sackville-Cobequid): So that in my mind is abnormal. It's not following what generally a government does on procurement of the things that you said - copiers, everything. That's where I have difficulty understanding why your department is handling this case and not the Deputy Minister of Transportation and Public Works.

MR. PAUL TAYLOR: Well, understand individual departments are procuring these vehicles. They are just doing so under a consistent set of rules administered through the procurement policy, which is the responsibility of our department.

MR. DAVID WILSON (Sackville-Cobequid): Yet we see in this case the rules are different for Ministers of the Cabinet. I believe my time is . . .

MADAM CHAIR: It has expired, or it's about to expire.

Mr. Colwell, you have 20 minutes.

MR. KEITH COLWELL: I'm going to, of course, ask some more questions about leased vehicles. You indicated - and I'm not picking on Minister Hurlburt here by any means because I think this applies across all vehicles here - you say that you indicated earlier, and I want to make sure that I have this correct, that there's a procurement policy to get vehicles $25,000 or less. Is that correct?

MR. PAUL TAYLOR: Yes, that was the limit in the old policy.

MR. COLWELL: Indeed Minister Hurlburt did acquire a vehicle for $25,000 or less to meet the requirement of the policy - that's correct?

MR. PAUL TAYLOR: Yes.

MR. COLWELL: The monthly payments, do they include the harmonized sales tax?

MR. PAUL TAYLOR: I believe the way that process works is government does pay the tax but then has it rebated back to it, so in effect government does not pay the tax on the lease.

MR. COLWELL: So the lease payments on the document we have here would indicate where Minister Hurlburt paid $882.85 a month - would that include the harmonized sales tax?

MR. PAUL TAYLOR: No, it does not.

MR. COLWELL: Okay, I just wanted to make sure that was clear. So you get a vehicle close to $900 a month, for a lease. The vehicle was valued at $25,000 or less. Doing some quick math - and maybe you want to check my math to make sure I did it right, and I may not have without a calculator these days - it comes out over a 24-month lease period that is indicated on the paper here, is that correct?

MR. PAUL TAYLOR: I'm sorry, which paper are you referring to?

MR. COLWELL: Oh, it's a document I got somewhere, I don't know where, but it just shows a list of them.

MR. PAUL TAYLOR: The lease term was 24 months.

MR. COLWELL: Yes, so if you do the math on that, the real simple math, 24 months by $900 a month is $21,600, roughly in that range, for a $25,000 vehicle. Correct?

MR. PAUL TAYLOR: I'm assuming your math is correct, yes.

MR. COLWELL: Well, as long as I did my math right. So basically what we've got left here is $4,400 to buy out the vehicle at the end - is that correct?

MADAM CHAIR: Mr. Draper.

MR. RICK DRAPER: That would be the cost of the use of the vehicle during that period, plus the interest rate attached to it, minus the buyout at the end of the term - so the buyout would be in excess of $4,000, yes.

MR. COLWELL: Okay, it would be somewhere above that.

MR. DRAPER: Yes, it would.

MR. COLWELL: At the end of the lease, can the minister buy the vehicle?

MR. DRAPER: Could the minister buy the vehicle? No, it's not normal that the minister would buy the vehicle.

MR. COLWELL: No, that's not the question.

MR. DRAPER: Okay, my response is that there's no record of the minister ever buying a vehicle. I don't think there's any clear policy stating that he could not.

MR. COLWELL: Okay, so in other words he could buy the vehicle at the end. So it could be conceivable, but there's not been any record of any minister ever buying a vehicle?

MR. PAUL TAYLOR: To be clear, it has never happened. In one case a minister's vehicle was purchased by the department and put into the fleet, but a minister, to our knowledge, has never purchased a vehicle at the end of the lease.

[11:00 a.m.]

MR. COLWELL: Okay, I'm glad to hear that because I wouldn't want to see a benefit accrue to a minister because he bought a vehicle at a reduced rate because the lease payments were really high on the front end. I'm pleased to hear, on behalf of all taxpayers of this province, that hasn't happened.

Now when you did your review and made recommendations to Cabinet, there are standard accounting policies and practices that take effect with vehicles. There's a break-even point of how many kilometres you drive in a year, whether it is worth leasing, whether it is worth purchasing, or whether it is better to pay mileage - did you investigate that scenario?

MR. PAUL TAYLOR: You've actually raised one of the key issues in this debate, this very much is a subject where one size does not fit all. The short answer to your question is yes, we have looked at the different ways of acquiring these vehicles and financing them, versus the type of use that ministers use them for, the amount of time they spend in the vehicles, the mileage, et cetera. You are absolutely right, one size does not fit all - as you drive more kilometres, I believe it becomes more cost-advantageous to lease; as you drive less kilometres, it becomes more advantageous to pay mileage.

I think that's one of the reasons you see that Executive Council has chosen a series of options here, to allow ministers to tailor the way they acquire their vehicles to the way that minimizes the cost to the taxpayer.

MR. COLWELL: I know different ministers in different departments would - as you change ministers in a department the mileage would change because it is just basically in the style of the minister and how much they choose to travel or have to travel. Do you ever keep

records of how many average kilometres a year that each department minister would use a vehicle?

MR. PAUL TAYLOR: No, we don't.

MR. COLWELL: It may be something worth tracking in the future, just to see if that formula does average out over time, I would guess.

The thing is, I look at the leases here, and I give Minister Taylor a lot of credit, he's got a 2006 Impala at $468 a month, he's the best deal of all of them, but we go down the list and we look at some - not that the different vehicles are, it is immaterial the different vehicles here - but then we have Minister Streatch at $881, roughly, per month, in an Explorer. Then we go down below that and there are two other Explorers here, or one other Explorer here, to the Minister of Education, that's $100 a month less, and there's another one here of the same year as Minister Streatch's, to Len Goucher, although the mileage is different on the lease, because that would make it a little bit different, for $600 a month as compared to $880. There doesn't seem to be any consistency in negotiating these leases. Can you explain that?

MR. PAUL TAYLOR: It is necessary to delve into the specific circumstances of each of those vehicles, the terms under which they've been leased, the mileage, the value of the vehicle, was it used, was it new. A 2005 Explorer versus another 2005 Explorer, if they're in two different conditions when they're leased, they are going to have two different residual values when they're returned. So there are all those considerations that go into determining what the actual lease is.

In actual fact, as we've looked more and more at the issues around those numbers, we come to the conclusion that this is straight math. You take the value of the vehicle going in, the rate at which it will be depreciated over the term, for example, the mileage it's going to be subjected to, the condition it will be in when it's returned, and the interest rate embedded in the lease, and that's your number. That's how the process works.

I know the member, earlier, mentioned that these leases appear to be two to three times more expensive than what someone else could lease the vehicle for. I assure you, if a member of the general public walked into the same dealer that Minister Hurlburt leased that Envoy from, and went for the same terms and conditions that he retained that vehicle - distance, everything else - they'd pay the same amount of money.

The public cannot look at the issue of an ad in the newspaper that says lease for $300 with dealer incentives and buy-down rates and back-ended leases and a $15,000 Hyundai Accent and come up with a number of $300 and say look, my lease is one-third the cost of a government lease. They would get the exact same price if they leased the same vehicle under the same terms and conditions. They are apples and oranges here.

MR. COLWELL: I'm fully aware of that. It appears in this case that either - you can negotiate these leases because I've leased vehicles for a long time - we have some vehicles, maybe in the Community Services area, that might be a whole lot more expensive vehicle. It sounds that way. The term looks the same, the mileage is the same as the Minister of Education has, although the Minister of Education has a year older vehicle, maybe it was a used one. I know there are all kinds of things here. Wouldn't it be a lot better to just simply say here's a standard vehicle, that vehicles that are needed for a minister - I mean, we go to the police forces and there is a standard vehicle that they use, standard specification, it does the job, it does it well. Ministers have to have a different type of vehicle than perhaps anyone else in government because of what they do and the people they have to work with from outside the province, and there's a certain type of vehicle they really need. I believe that.

I think that some of these maybe are outside that, maybe all of them are outside it - I don't say all of them, but some of them may be outside of that, but wouldn't it be a lot better just to say okay, we're going to lease or purchase 10 of these a year, and each minister gets a standard vehicle, here it is, and go to the different dealers of the different types of cars and say okay, give us a deal on these vehicles, and they have to have these options to suit, with these mileages on them?

MR. PAUL TAYLOR: I think the piece of the policy that is built in to allow the procurement division to essentially do the shopping around for these vehicles is meant to address the issue of, or perhaps the appearance of ministers getting vehicles that don't have the best price or the best characteristics. I think there is always a danger in specifying one type of vehicle for this type of use, and that simply is the same reason why all of us drive different vehicles.

Ministers spend, having been around ministers for a long time, and MLAs for that matter, they spend a lot of time in these vehicles, and these vehicles have to fit, they have to be comfortable for them, they have to meet their uses. If someone's going to be driving in the middle of the night down to Yarmouth, versus commuting to Bedford, there are different requirements for these vehicles. When you specify one brand, one type, there is the risk that you have picked a vehicle that will - I guess, if I can use a boating analogy, I have a boat that is a racer/cruiser, otherwise known as a boat that does neither well, and you run the risk of putting the same thing into a vehicle.

MR. COLWELL: I understand all that. I have had a government vehicle, I'm a former minister. I understand how it works and I inherited an old one, which worked fine for me and did the job wonderfully. The point I'm making here is there is a lot of travelling, the minister does a lot of travelling at all weird hours and the vehicle needs to be safe, it needs to be comfortable enough so they can get to a meeting and they are not totally exhausted when they get there. I understand all those things, but you could specify several different makes of vehicle, a certain type of vehicle that could be used by ministers, and go out to a tender for those types of vehicles. The travelling may be a little bit different with each minister, from

where they live or where they work to where they have to travel within the province, and typically, unless it is somewhere close, they don't go outside the province, I understand, with the vehicles - although they can if they need to where it's more economical.

It just seems to make sense to come up with a standard vehicle like the police force does. There is nobody who spends any more time in vehicles than the RCMP on highway patrol. They use the same car for that, basically, as they use for patrolling HRM. Those are specified, they are special vehicles even, and they work very, very well. There are all kinds of different makes they use, but to their specifications. Couldn't we do that and then standardize a cost for all this and make sure you get a better price because you are going after more than one vehicle at a time?

MR. PAUL TAYLOR: I think, to some degree, the Executive Council's decision has moved toward the point that you are suggesting they should be, in that they have drastically limited the types and the number of vehicles that are now available for ministers to retain under this policy. It's a rather short mixture of small, fuel-efficient vehicles and then some mid-size and larger vehicles that address the safety concerns but have to come with the mixed fuel or the hybrid designation with them. I understand your point. There are examples of other provinces having done that, but I think this decision moves somewhere down that road toward the point of standardizing on that one specific vehicle.

MR. COLWELL: Under the new policy - just to make sure I understand it properly - can a minister still go to a local dealer and say, okay, you have one of the vehicles on the list and I have the list here that they can get and say, okay, I want to get one of these, I see there is a Jeep on here, yes, a Jeep Compass. I want to get one of these. Now, he goes to this local Jeep dealer and says, I want to get one of those and I will get my department to call you and make a deal. Can that still happen under the new policy?

MADAM CHAIR: Mr. Draper.

MR. DRAPER: Under the new policy, the minister can still source that vehicle at a local dealership. The change under the new policy is that Procurement Services will have the final decision on that particular lease or purchase, and we also will have the right to comparative shop and do a number of other things that will ensure best value for government - it could be things such as creating standing offer pricing listing to compare values, to ensure that there is best value for the minister in that particular vehicle. We are moving forward on looking at total cost of ownership as we purchase these vehicles as well, so the final decision lies at our office to make that lease arrangement, not at the minister.

MR. COLWELL: Wouldn't it be a lot better for the minister to come forward and say, okay, here are a couple of different vehicles that would suit my purposes, knowing the vehicle or whatever, and then come to the department and say work me out the best deal, I want to get it?

MR. DRAPER: That, in fact, could happen under the new policy if the minister chose to do that. So there are a number of options available. We will do the negotiations from our point of view. We will comparative shop in all categories or one category, whichever the minister prefers.

MR. COLWELL: It just seems to me it smacks of patronage when the minister can go to a local dealer and say, look, I want to get that vehicle - and I know that the staff of the department aren't involved in that type of activity, but it just possibly could be perceived by somebody that the minister was, maybe someone who donated to their election campaign. And I'm not suggesting that any of the vehicles leased were done like that; I'm not suggesting that at all, but it could be perceived that that happened or could happen.

I think the perception for Nova Scotians and the perception for us in this Legislature would be better if the departments, whom I have a great deal of faith in, would go and negotiate a deal on a vehicle that would suit the particular minister and then know that we get the best price, know that we get the best everything, and at the end of the term the cost per kilometre on the vehicle was the lowest it could possibly be for that particular vehicle. I know you don't make policy and Cabinet makes that policy, but wouldn't it be easier for staff if that was the case? We may not even be in here today if that would have been the case before.

MR. DRAPER: Maybe the deputy minister could answer that question.

MR. PAUL TAYLOR: That's a hard one to answer. I honestly can't say whether it would or would not. As I said in an answer to an earlier question, the jury on the new policy is still out. We need to wait to see how ministers make choices and how the policy is eventually administered to know whether we can say that taxpayers are now getting better and best value for the use of these vehicles.

MR. COLWELL: Yes, and I can make the "political- part" statement, I know you can't. I still think it could be perceived by the public, and I know you won't disagree with me on this, that if you go to a local dealership where the minister has a relationship, in one way or another - it could be that he bought other vehicles there, who knows? - it could be viewed as potentially patronage. I'm not suggesting that has ever happened but it could be viewed that way. I think that is a concern of a lot of people in Nova Scotia and I think if that concern could be taken away, that would help this situation greatly and we can move from there.

This list of vehicles here, it's quite an interesting list. I mean we're looking at a Lexus, a pretty expensive vehicle; a Toyota Highlander, that's a very expensive vehicle; a Jeep Compass, a Jeep Patriot, all these are pretty expensive vehicles; Jeep Compass, Jeep Patriot - there are a lot of jeeps in there - a Saturn VUE hybrid, and a lot of very, very expensive vehicles. Some of them here probably on the list are pretty small subcompacts that may not even suit the description you put forward. So I would think when you go through your list, how many of these on this actual list - and there are 18 on one list - how many of the

18 actually would possibly suit the criteria of safety, travel comfort and everything else, or whatever, as required by a minister on this list?

[11:15 a.m.]

MR. PAUL TAYLOR: I think certainly some of those larger vehicles you quoted early on the list would meet those conditions - the test of acquiring those will be that $35,000 ceiling.

MR. COLWELL: Yes, so it would be very limited - you're either going to be over in cost, or the vehicle is going to be so small that maybe you wouldn't want to head in the middle of the night to Yarmouth, on a regular basis, from Halifax and travel with it. So you're going to be down to one or two vehicles it looks like on this list by the time you look at the overall gas mileage on them. Some of them have very good gas mileage, other ones don't. The larger ones - actually my error, there are three other ones on here too - there's a big Chrysler, which gets terrible gas mileage; a Chevy, which gets terrible gas mileage; and also a Chrysler Sebring.

MADAM CHAIR: Order, please. The time has now expired, right on time I think. I now recognize Mr. Dunn from the PC caucus. You have 20 minutes - until 11:36 a.m.

MR. PATRICK DUNN: Thank you, Madam Chair, and welcome to everyone. I noticed the bounce to everyone coming in here this morning. It must be due to the fine weather that's outside - it's a nice sunny day.

I just want to follow up on a couple issues brought up earlier by one of my honourable colleagues. One of them was referring to the old leases as three times the normal lease, and as an ordinary citizen back six, seven, eight years ago I had the opportunity to lease a couple of vehicles and one of the vehicles that I leased cost slightly over $400, for that lease, per month - and that particular lease didn't have any extra mileage option, no extended warranty. So I guess I just wanted a little clarification there, to that particular phrase that a lot of these leases are three times the amount, where, in my case, as an ordinary Nova Scotian it didn't appear to be that. And I know the perception when you get up $600, $700, $800, the perception is that's extremely high, but anyway, if there's any further . . .

MR. PAUL TAYLOR: I think just in reference to my previous comment on that subject, if a member of the general public wanted to lease a vehicle, particularly a used vehicle that cost in the neighbourhood of $25,000 and drive it for three years at 50,000 kilometres a year and turn it back into the dealer with 200,000 or 220,000 kilometres on it, that rate of depreciation, they'd essentially be turning the vehicle almost fully consumed, and when you add in the fact, especially in the used car market - well, you wouldn't be dealing with dealer incentives, so you wouldn't have interest buybacks or interest buydowns embedded in the lease, you wouldn't have prepayments upfront on the capital cost of the

vehicle, the basic dealer incentives - when you put those kind of terms and conditions into the lease, the cost of the monthly lease is going to go up, but it reflects the fact that you're consuming the vehicle, almost fully consuming that vehicle over the term that you've got it, and you're going to end up paying essentially the capital cost of that vehicle that's left. There's going to be very little salvage value left in the vehicle.

As I mentioned in answer to a previous member's question, when we look at this subject and we do the math, it is exactly that. We can't find an example where there is some sweetheart deal sitting in the system where we appear to be paying higher leases on cars that don't justify those kinds of prices under the terms in which they've been retained by the Executive Council. The lease numbers reflect the specific terms and conditions of that lease. The interest rate that's in there, and that's an interest rate that is generally set by a leasing agency that is a third party to the dealer that's supplying the vehicle, there are the options for people who are leasing these vehicles to compensate for higher interest rates in the deal by something else in that deal - i.e., if I'm going to pay 13 per cent embedded in my lease, I want the price of that vehicle to be reduced by $3,000 to reflect that fact.

Again I caution not only members of this House, but members of the general public, of picking one specific number out of the middle of these deals and saying there, see that proves it's a bad deal. You look at them in their entirety and they reflect the cumulative impact of the math that applies to that vehicle over the term of that lease.

MR. DUNN: Thank you. The public is certainly in tune with environmental issues and concerns today, it's a serious and very sensitive issue and all the governments across the country are certainly doing all they can to improve our environment. Is it an expectation that the Nova Scotia fleet will continue to use more greener vehicles in the future?

MR. PAUL TAYLOR: I think that not only the Nova Scotia Government vehicle fleet, but we as taxpayers and citizens are going to increasingly move into the hybrid and the alternative fuel vehicles. I know, having just purchased a car myself within the last year, there is the usual debate underway, when we're talking about alternative fuels, as to whether the premium required on the capital cost of the vehicle will adequately compensate for the reduced operating costs or the increased fuel efficiency of the vehicles - and that's always a debate, whether it's windmills, whether it's alternate vehicles, whether it's solar power. I think the more that we see people like members of Executive Council using vehicles like this, we are at that point where people are going to more readily adopt these vehicles, not only because they make environmental sense, but they are now making economic sense to do so.

That, then, is going to feed on itself as more and more people buy these vehicles and the manufacturing plants can get tooled more and more to making these vehicles as their base vehicles and the actual marginal cost of production of these vehicles goes down through time, and that premium that we are all saying there that we have to pay to acquire these high mileage vehicles, I think, is going to shrink and these vehicles are going to become the norm.

I know when I talked to one of the dealers, when I was looking for my vehicle, he confidently said that in two model years time every single vehicle model that a dealership sells will come in a hybrid vehicle - so the choice is increasing, the reasons to purchase them are increasing, and so I think it's a wise thing for the government vehicle fleet to go that way, because it is increasingly economical to do that and it's also showing leadership on the environmental front.

MR. DUNN: Will the federal rebate for energy efficient vehicles be applicable to these leased vehicles?

MR. PAUL TAYLOR: Yes.

MR. DUNN: It will be. Okay. The government ministers receive vehicles for their use - do other government members from any of the other Parties receive vehicles for their use in this province?

MR. PAUL TAYLOR: I think the policy also applies to the Leaders of the Official Opposition and the Third Party as well.

MR. DUNN: As we all know, yesterday the new policy for ministers and government vehicles was released. Could you please outline the main differences between the old policy and the reasons why you adopted the new policy?

MADAM CHAIR: Mr. Draper.

MR. DRAPER: Madam Chair, yes, I think from our point of view the much increased level of accountability and the ability to ensure best value for government under the new policy - particularly around the arrangements made on the lease of these vehicles - as I mentioned before we are looking at total cost of ownership, so what's the full life cycle cost of the vehicle; we have to look at the fuel emissions of individual vehicles as well; and Government Services has the right to comparative shop and we'll look at different ways to do that to ensure we're getting best value wherever we purchased or leased the vehicle. Those are some key areas where it has improved tremendously over the old policy.

There is the accountability side as well - ministers are required to report on the use of their vehicles on a yearly basis, including their mileage and a number of other costs attached to the use of that vehicle.

MR. DUNN: When does the new policy go into effect?

MR. DRAPER: The new policy is in effect immediately, but vehicles will not be replaced until such time the lease has expired or an alternate use for that vehicle has been found.

MR. DUNN: So the expectation is that the new policy will be less expensive for the government - the overall expenses for leasing these vehicles, the new policy will be less expensive than the old policy?

MR. DRAPER: I can ensure that the new policy will provide better value for government on an individual leased basis.

MR. DUNN: Can a minister claim mileage for his personal vehicle? A minister who has a leased vehicle but is using his personal vehicle for government business, can they claim mileage?

MR. DRAPER: That's a little bit outside of my area, but I do believe that they can claim personal mileage for personal vehicle use when necessary.

MR. DUNN: This new policy that came into effect, that policy is a blanket policy for all government fleets?

MR. DRAPER: This policy is for executive ministerial vehicles only.

MR. DUNN: With regard to gas cards that ministers have in their possession, what basically can they purchase with their gas cards?

MR. DRAPER: That depends on whether the vehicle is leased or owned by the government. I would think it's normally, a leased or owned vehicle they can charge any types of repairs and maintenance, fuel, windshield washer, wiper blades, tires, those types of costs on their fuel card.

MR. DUNN: How does this new policy compare to those in other Atlantic Provinces?

MR. DRAPER; New Brunswick introduced a green fleet policy for executive vehicles this past fall, I believe it was, so Nova Scotia would be the second to introduce a green tone to their fleet policy. It compares - the dollar value for the vehicles is very comparative in a number of jurisdictions across Canada, so Nova Scotia is not the highest nor is it the lowest.

MR. DUNN: Are there going to be any changes with the way ministers or people using these leased vehicles, as far as reporting back their usage, their mileage, their expenses and so on - are there any changes between the old and the new policy with regard to that?

MR. DRAPER: The new policy does require ministers to make an annual report, which will be a central source, so it can be accessible.

MR. DUNN: With regard to Nova Scotia taxpayers, under the old policy, in your opinion were they getting reasonably good value for the leases that we had in the past under the old policy?

MR. DRAPER: As Mr. Taylor explained earlier, it's really a mathematical equation, so we really have to take a look at the amount of kilometres used on an annual basis. As many of us know, when we lease a vehicle, there is an extra kilometre charge for your use, either at the time you lease the vehicle or after the termination of the lease. In these cases these are extremely high kilometre vehicles and I would say yes, they reflect the true value of that particular lease.

MR. DUNN: Are there any circumstances where a two-year vehicle lease would provide better value than a three-year lease or a four-year lease?

MR. DRAPER: A two-year vehicle lease, particularly for a used vehicle, to minimize the risk of extensive repairs and maintenance to government would be appropriate.

MR. DUNN: When the lease has expired with a vehicle, what transaction occurs then?

MR. DRAPER: That decision is made at the department level. If they feel that there's value in the vehicle that they have - they haven't used all of their kilometres or, in fact, the vehicle has a use within their department - they would make that decision to either add it to the fleet and purchase it out, based on the residual value, or they may just decide to turn it back to the dealership.

MR. DUNN: Under the old policy ministers could choose whatever vehicle they desired - I believe that is correct?

MR. DRAPER: That's correct.

MR. DUNN: So what is the major change now with regard to - I believe they can still select a vehicle that they want, but are there any stipulations to it from that point, before they actually sign the lease?

MR. DRAPER: The major change is that it must be a new vehicle, current model year or one model year old, to cover off for leftover model year vehicles. It must be a three-year term only, nothing other than a three-year term.

[11:30 a.m.]

MR. DUNN: Another question that I have, that I am curious about, is would we be meeting here today if a member did not have an accident in the previous months? Would we be meeting here today on these issues, or would we still be following the old policy?

MR. DRAPER: I think it's important that we look at policy every day and assess the value to changes. It's not something we just pick out of the air. We have ongoing policy reviews to ensure that everything is working well and we accumulate those areas of knowledge and bring them forward and develop new policy as required.

MADAM CHAIR: Mr. Taylor would like to respond as well.

MR. PAUL TAYLOR; In fact this policy was actually under review prior to any of this coming to light, accidents, whatever; it has been under review now for some time but it was under the specific direction to look at how we brought more environmental responsibility into the vehicle fleet process. So there was a greening of the fleet process underway to which this policy review of the basic terms and conditions of ministerial vehicle leases was added in the process when this issue became one of public debate.

MR. DUNN: Those are all the questions I have, Madam Chair.

MADAM CHAIR: Are there any more questions?

Mr. Bain.

MR. KEITH BAIN: Madam Chair, just a couple of questions. Vehicle leases, as they exist today, I would assume expire on different dates, depending on when. So that means that the new policy will come into effect, there is going to be a blending of the old and the new for a good length of time, I guess - would that be fair to say?

MR. PAUL TAYLOR: Yes, the new policy will become effective as the existing vehicle fleet turns over at the termination of the existing leases.

MR. BAIN: So is it possible to even say that it could be another two years before some vehicles fall under this new green policy?

MADAM CHAIR: Mr. Draper.

MR. DRAPER: I think the earliest expiry date on the vehicles would be next Spring, on the existing vehicles. I think it's important, as well, though, that as we monitor requests by departments for particular vehicles that there may be an opportunity from time to time to transfer certain vehicles within fleet, but only if it's best value for the individual department. That final decision will be made by the department, and looking at individual vehicles and their use.

MR. BAIN: Is it the intent that the rest of the government fleet, again over time, will be part of the green policy as well?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I think the issue of more environmental responsibility in the vehicle fleet continues to be assessed and, as far as I know, there is no direction as yet on vehicles beyond ministerial. I think it is absolutely inevitable that the government vehicle fleet is going to become more environmentally responsible as time goes by, not only because of the environmental issues but, again, it's going to become, and continues to be, the financially smart thing to do for government as it acquires new vehicles.

MR. BAIN: I ask that because there are other vehicles leased that ministers don't use. I wasn't talking about total fleet, but more or less the ones that are being leased.

MR. PAUL TAYLOR: As time goes by our department has released our economic development strategy, Opportunities for Sustainable Prosperity. The government came forward and said we have operated in a world where, if you wanted a clean environment you couldn't have an economy, and if you wanted an economy you couldn't have a clean environment. We have now turned that, I think, on its head and said, contrary to that, you need both. They are symbiotic to one another. You cannot have a strong economy without respecting the environment. I think we are going to continually see aspects of that policy being adopted in various areas of the operation of government.

The gentleman to my left is currently undertaking, as one of the priorities of our department this year, a sustainable procurement project to bring the environmental issues to the fore in the way we procure almost $700 million worth of goods and services a year for government use. How can we use more life cycle costing, environmental considerations, emission, et cetera, in the process, while still getting best value for government?

MADAM CHAIR: Order. The time has now expired. We will have a final round, short snappers, three minutes a caucus.

I recognize Mr. Wilson.

MR. DAVID WILSON (Sackville-Cobequid): Three minutes. Okay, I just want to get back to an answer that Mr. Draper gave to a member of the committee, and it was around there will be a better investment on leasing with the new policy. Is that correct, Mr. Draper, you said there will be a better investment with the new policy coming on board?

MR. DRAPER: Better value.

MR. DAVID WILSON (Sackville-Cobequid): Better value. But I don't understand how you can say there will be a better value or make that statement when there hasn't been an analysis or a view of what the new leases are going to cost - the deputy minister mentioned

earlier, in questioning - so how can you say there will be a better value when there hasn't been a review or analysis on what it's going to cost taxpayers?

MR. PAUL TAYLOR: The quick response is that I think the response referred to the comparison on the lease option, I think we're fairly confident on the lease option that under the new terms and conditions there will be better value for the government. Where we can't make the call is overall whether the vehicle, the executive fleet, will be better value because we don't know how many ministers are going to select the other two options which may be appropriate to do so. We just don't know what that mix is going to be.

MR. DAVID WILSON (Sackville-Cobequid): Thank you for clarifying that. I think in the long run we'll end up finding out what the true cost is. The deputy minister, you stated earlier that you were unaware or there were no ministers that bought back a leased vehicle. Do you actually know this or is it that you are not aware of it?

MR. PAUL TAYLOR: I think in response to the committee's written questions we went to each of the departments and asked. The responses we got from those departments reflected the fact that nobody could remember or had any information pertaining to a minister having purchased a vehicle.

MR. DAVID WILSON (Sackville-Cobequid): Quickly I want to go to the travel policy for government employees. Do the ministers have to abide by those policies? I think it's under the travel and relocation policy.

MR. PAUL TAYLOR: Sorry I think you will have to be a little bit more specific as to which policy you are referring to on that.

MR. DAVID WILSON (Sackville-Cobequid): I'm referring to actually 7.1 of the government use of vehicles policy. It's under personal use for government employees when they have a government-issued vehicle. Do the ministers abide by those policies, those regulations?

MR. DRAPER: Under the third option available under the new policy, that would be the policy that does apply.

MR. DAVID WILSON (Sackville-Cobequid): But currently there is no limitation to the use of that vehicle for a minister?

MR. DRAPER: If a minister uses his or her own vehicle then they would certainly be allowed to charge personal mileage.

MR. DAVID WILSON (Sackville-Cobequid): I know I'm trying to rush, that's why. Under the government policy if a government vehicle is issued to an individual there are certain criteria that they must follow . . .

MADAM CHAIR: The time has expired.

Mr. Theriault.

MR. HAROLD THERIAULT: I want to talk a little bit about leasing versus buying. I too want to put on record that I've had a lot of constituents concerned about these big lease prices. I'm a buyer myself, I've been in the business all of my life and my accountants told me many times if you want a write-off you lease, if you want to own, if you want to come ahead you buy. I've always been told that. Nova Scotia with $12.5 billion debt we don't need any write-offs that's for sure.

I have a car at home, a 1992, I won't say what it is but I have another one out here in the parking lot that I bought four years ago, bought it, pretty near paid for, done, just getting broke in good now. The 1992 I had at home, I drove her nine years and my son's had it the last five or six years, 400,000 clicks on it, it doesn't burn a drop of oil, it works perfect. Bought and paid for, I haven't paid a cent on it, seven or eight years, that was a good deal and this one out here is going to be a good deal. We can go a long way. Joseph Howe used to run around this province on a horse, I don't know whether he leased it or bought it but I'll bet he bought it. How many vehicles in this province does the government own and why aren't you looking at leasing them all if leasing is so good?

MR. LANGILLE: I don't know the exact number. They're all registered in our office, I'd have to check but I would venture a guess that it's less than 100.

MR. THERIAULT: It's less than 100 leased you mean?

MR. LANGILLE: That would be correct.

MR. THERIAULT: So why not lease them all, you said earlier you had around 3,000 vehicles in this province that the government owned?

MR. LANGILLE: Approximately 2,400 and that includes the leased vehicles.

MR. THERIAULT: Why aren't they all being leased if the leases are such good deals?

MR. LANGILLE: I couldn't answer that question.

MR. THERIAULT: The leases are being talked about today and not too much about buying these vehicles and making them last for the ministers, like 90 per cent of Nova

Scotians do in this province. I just want to know why all aren't looking at being leased in the government if it's such a good deal.

MR. LANGILLE: I couldn't answer that from a risk management perspective and I would have to refer it to one of the deputies.

MR. PAUL TAYLOR: That's a good question. I remember doing the calculation myself when I looked at the last vehicle I purchased as to whether to lease or buy it, it's a fairly significant calculation. You have to, as you have pointed out, consider the life cycle of the vehicle, how long it's going to last, the estimated maintenance and capital replacement parts for the vehicle, interest rates, it's a rather elaborate present-value calculation that by the time I got all the data, it took me a long time to do it.

It's always a judgment call. I know when we do it individually, in dealerships, as to whether the terms and conditions offered by the lease, which are usually, you'll go into a dealer and there will be a very attractive incentive rate to borrow money to buy the vehicle and there will be a much different rate embedded in the lease - all of those things have to be calculated before I guess you can come up with an objective answer to that and there's a lot of guesswork and judgment that goes into that calculation.

I think one of the other issues that government certainly has to consider on lease versus buy is the issue of access to capital to actually make the purchase and the TCA process. Is there money available in the tangible capital asset process to make the purchases?

MADAM CHAIR: Order. The time has now expired. Mr. Porter, you have three minutes.

MR. PORTER: Just a question or two. One is, was the old policy out of line with policies of other provinces? I was thinking of similar size, but I don't think size really matters in this case - was there a policy similar to other provinces? And, maybe in the question, in relation, where is it now in comparison?

MR. PAUL TAYLOR: I think, as Mr. Draper mentioned earlier, the policy now compares favourably to other provinces in the country. There are some provinces, for example, I think the numbers are that the limits approach $40,000 for the capital purchases. Our mileage rate for charging mileage to vehicles is certainly not the highest in the country. It's one of those policies now that is very comparable to other provinces, yes.

MR. PORTER: And you're stating that is now the new policy?

MR. PAUL TAYLOR: Yes.

MR. PORTER: What about where we were with regard to the old policy? Would we have been similar or far off?

MR. PAUL TAYLOR: Different provinces do it differently, but as I said earlier, our previous policy really, because it focused on leases and the debate comes to the size of the numbers coming out of the lease calculation, that, on its own, tended to leave the impression this leasing policy was not right or not working well. I was just sitting here looking at how it worked, the policy was simply math and it was comparable.

[11:45 a.m.]

MR. PORTER: I know you talked a little bit about review of policy and so on. How often do you foresee reviewing this policy? Is it, now at this point, we've made a change recently - do you foresee a test run, a trial period when you will look at it again - a couple of years?

MR. PAUL TAYLOR: I think the formal review of the policy will be in three years, but I imagine after that first set of ministers' annual reports is filed, there will be a lot of people reviewing the policy.

MR. PORTER: Thank you very much. I think my time might be up.

MADAM CHAIR: Thank you, the time has expired. I now will offer some time for brief closing statements, first to Mr. Taylor and then to Mr. Darrow.

MR. PAUL TAYLOR: Thank you, Madam Chair, I don't really have any formal closing comments to make, other than to reiterate again the issue around the debate around the high lease numbers. I again caution people on selecting one aspect of the existing policy and those lease numbers and using that as an example to say whether the policy is valid or not. I think if one talks about all aspects of the policy and the terms and conditions under which ministers' vehicles were leased, the numbers are what the numbers are. The leases being acquired by ministers for those vehicles were no different than the same terms and conditions that would apply to any taxpayer in this province if they wanted to lease the same vehicle on those terms and conditions.

That being said, I think the new policy does make some improvements to that in that it gives certainly my department more accountability to address the issue of best value for the taxpayer in terms of the initial price. I think we are quite pleased to see in the Department of Economic Development that a little bit more of the green adoption of technology consistent with opportunities for sustainable prosperity is continuing to take place throughout government, and we certainly will be encouraging government to take that concept further, into the bigger vehicle fleet.

So with those few comments, I thank the committee for their questions.

MADAM CHAIR: Thank you.

Mr. Darrow.

MR. DARROW: Thank you, Madam Chair. I'd like to go back to a question that was raised, by the first member opposite, around the issue of wanting to have this discussion in order to identify ways we might be able to do business differently that would offer greater protection to the public and the taxpayers' dollar.

As I stated before, I see no need for changes in how our claims staff handle accident claims. This is a tried-and-tested process, it follows industry standards, and it has stood the test of time. The one thing that I would like to have seen done differently in hindsight is that we had some better communications internally between a couple of divisions in our department, such that our claims people would have become aware of the fact that there was a police investigation underway earlier than they did. I'm not convinced that this would have made any difference in the outcome of the situation - that is to say I don't think we would have learned the identify of the third party any earlier than we did, and that's really what's at issue here.

In any event, had the information been exchanged and had we, as a result of this exchange, learned the identify of the third party earlier than January 5^th, the outcome would not have been any different, it just would have come to a conclusion sooner than it did. While I certainly would rather that that communication had taken place, I certainly would not characterize it as a fatal flaw in the process.

Can the communication process be improved? Certainly, and it will be. Thank you very much.

MADAM CHAIR: Thank you, and thank you to all of our witnesses for being here today. At this time I would ask the witnesses to remain for a few moments and bear with us. We have one other item on our agenda, which is to report back from the Subcommittee on Public Accounts which met yesterday afternoon - and we do not have a written report because we met yesterday afternoon.

What the subcommittee is recommending to the Public Accounts Committee is that our schedule for further witnesses be organized up to and including the 13^th of June, and that the witnesses that were previously scheduled and postponed - which are the Nova Scotia Liquor Corporation, Service Nova Scotia with respect to gas price regulation, and the Department of Community Services, the IT project - that those be re-rescheduled and brought back before the 13^th of June, or by the 13^th of June; that we have two in camera sessions with the Auditor General, one dealing with matters that were left over from the

December report of the Auditor General, and also a briefing on the Auditor General's June report; that we have a public hearing with the Auditor General with respect to his June report; and in addition that there be a special meeting with the Auditor General, scheduled for approximately one hour, to have a presentation on the strategic plan - and this would be open to the public and would, in all probability, happen other than a Wednesday, but that is up for scheduling.

The final thing that we discussed was we did consider a request from the Chair of the Economic Development Committee, who wrote us on behalf of the committee, asking us to consider bringing the Superintendent of Pensions in front of us to discuss the administration of the pension of the Nova Scotia Association of Health Organizations - and it is our recommendation that we do so, but in the Fall.

So that is the report of the committee and I would ask that Mr. Colwell move that report.

MR. COLWELL: So moved.

MADAM CHAIR: Is there any discussion on that report? Hearing none, would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

We now stand adjourned.

[The committee adjourned at 11:52 a.m.]