HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr.Chuck Porter (Vice-Chairman)

Mr. Alfred MacLeod

Mr. Keith Bain

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Stephen McNeil

Ms. Diana Whalen

[Mr. Keith Colwell was replaced by Mr. Wayne Gaudet]

In Attendance:

Ms. Rhonda Neatt

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

Mr. Alan Horgan

Assistant Auditor General

Department of Finance

Ms. Vicki Harnish, Deputy Minister

Ms. Nancy McInnis-Leek,

Executive Director, Fiscal and Economic Policy Branch

Mr. Paul Davies, Policy Strategist, Taxation and Fiscal Policy Division

Service Nova Scotia and Municipal Relations

Mr. Greg Keefe, Deputy Minister

Mr. Frank Moore, Provincial Tax Commissioner

Mr. Michael Decoste, Director of Service Delivery

HALIFAX, WEDNESDAY, MARCH 7, 2007

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Good morning. I would like to call the committee to order. Today we have with us witnesses - we have a large contingent. We have witnesses from the Department of Finance and from Service Nova Scotia and Municipal Relations, and the focus of this morning's discussion is with respect to the HST removal and rebate on home heating fuel.

Before we start, I want to draw the attention of committee members to the new clerk to our committee, Rhonda Neatt. I would like to extend Rhonda a warm welcome to this committee, and I am sure all of the members here will make themselves known to you in the fullness of time.

In addition, I would like, on behalf of the committee, to welcome Helle Haven Petersen who is sitting over behind Mr. Steele. Helle is an international student from Denmark who is studying full time at Mount Saint Vincent and participating in the Women In Politics program of the Mount and is accompanying Mr. Steele today as he goes about his work. So welcome.

At this time, what we will do is proceed in the usual way of introductions from the members of the committee, from the Auditor General's staff and the Auditor General and then our witnesses so that Hansard will be able to do their final sound check. If you are substituting for a member of your caucus, would you indicate that as well for Hansard and for the clerk. Thank you and we will begin now with Mr. Steele.

[The committee members and witnesses introduced themselves.]

MADAM CHAIR: I think Hansard may be having a bit of a problem identifying where people are seated. It may just take them a second to get that sorted. They do have the seating arrangements. I would remind people to watch to see if your microphone is on. The red light will indicate that and then you will be picked up on the record. I've just been advised by the clerk that the witnesses in the second row may have to stand when they are speaking, actually, if there are questions that you will be providing information on. So I would ask you if you would do that.

At this time we will start with an opening statement from our witnesses in the usual manner and then we will proceed with the rounds of questions from the members of the committee. Ms. Harnish.

MS. VICKI HARNISH: Good morning, Madam Chair and members. I am pleased to be here today to speak to you about the program we call Your Energy Rebate. First I'd like to introduce the Finance staff: Nancy McInnis-Leek on my left is the Executive Director of Fiscal and Economic Policy and Paul Davies behind me is a Policy Strategist within the Fiscal and Economic Policy Branch. Both Nancy and Paul have been involved in the overall development of the energy rebate program.

Your Energy Rebate was designed to help Nova Scotians with the rising cost of home energy. As you know, it is an 8 per cent rebate equivalent to the provincial portion of the HST on all sources of home energy including home heating oil, natural gas, propane, wood, wood pellets, coal, kerosene and electricity for home use. The program has an estimated cost to the government of $75 million annually. For the 2006-07 fiscal year the program is estimated to cost around $36.5 million.

Under this program, the average Nova Scotian household will save about $200 a year. Initially, government sought the assistance of the Canada Revenue Agency to deliver this program to Nova Scotians by a point-of-sale rebate on the HST. However, CRA chose not to participate in administering the program. Therefore, Finance staff worked closely with Service Nova Scotia and Municipal Relations staff to design the program which is being administered through that department.

As you can appreciate, there are many considerations to developing such a complex program that involves a variety of fuel sources. Our goal was to ensure Nova Scotians could receive their rebates in a timely fashion and in the most direct way possible. To help achieve this, staff developed a set of program principles to guide the program-designed process. These principles ensure that the resulting program would provide all Nova Scotians with immediate relief from the rising cost of home heating fuel to the extent possible; not interrupt delivery of energy to customers or change the energy choices made by customers; minimize the burden on consumers and suppliers and delivery of the program; and make sure that the

amount of relief provided would be equivalent to the provincial portion of the HST, which is 8 per cent, as you know.

Designing a program that adhered to these criteria involved substantial discussion and deliberation over program details; details around not only program particulars but also around system requirements. Both departments worked with the vendors to identify and develop a process that would work best for vendors and their customers, one that would see Nova Scotians receiving a point-of-sale rebate, where possible, and one that reimbursed vendors who offered point-of-sale rebates in a timely fashion.

I am pleased that we were able to offer this program ahead of schedule and, for the most part, at the consumers' point-of-sale. I commend staff in both of the departments for their hard work and their dedication to make this possible.

Now I'll turn the floor over to my colleague, Deputy Minister of Service Nova Scotia and Municipal Relations.

MADAM CHAIR: Thank you. Mr. Keefe.

MR. GREG KEEFE: Good morning, Madam Chair, and committee members. Thank you for the opportunity to talk about delivery of this program, Your Energy Rebate, which I believe has gone quite smoothly. With me today are; behind me, Mike Decoste, Director of Service Delivery, who will provide any necessary detail on the program delivery, and to my right, Frank Moore, Provincial Tax Commissioner, who will assist with questions on program compliance. Together, we should be able to answer all the committee's questions on the delivery of this program.

Deputy Harnish has already explained the policy decisions that led to the development of Your Energy Rebate; now I'll tell you about the implementation and delivery. Rather than an application-based program, Your Energy Rebate is delivered at source for the energy products that constitute the main source of home heat for more than 86 per cent of households: electricity, petroleum products and natural gas. We did this to ensure that the program was as user-friendly as possible and minimize the possibility of eligible residents missing out.

Equally important was the approach we took with bulk vendors. This component of delivery was designed to minimize the impact on the market and keep a level playing field for operations of all sizes. Since it is the first year of the program, we offer a toll-free number, 24/7, in addition to an on-line tool to help identify eligible customers and answer any questions they may have.

Any new program of this magnitude is bound to have some glitches at the onset. Initially, some eligible residents weren't identified. We worked quickly to correct any

inaccuracies in our data base and work with suppliers to identify every eligible customer. We also put in place a toll-free number, so residents who experience any issues can call the government department and get help. Typically these issues were resolved in 24 to 72 hours.

Although we worked with retailers to ensure program delivery would go smoothly, after Your Energy Rebate began, smaller operations identified a cash flow issue. They were rebating 8 per cent on the customer invoices, but they still had to pay the full 8 per cent HST to their suppliers on cost. So we changed the reimbursement process, allowing bulk vendors to file four monthly reimbursement requests for rebates issued rather than one. This successfully addressed the cash flow issue.

We committed to issuing cheques no more than 21 days after the application is received. To date, all reimbursements have been issued within seven days. Most of the bulk vendors have opted to use the on-line reimbursement application, as well as electronic funds transfer which helped expedite their claims.

After work began, the effective date of the program was moved up to December 1^st. The principal reason for the change was a request from the oil heat industry. They asked for the move to mitigate potential impacts of a January 1^st implementation which is historically colder and therefore much busier. January 1^st remained the effective date for electricity and natural gas, since they are billed after the energy is consumed.

Our staff and the suppliers did an amazing job of preparing for such a major program in a short period of time. Given the relatively short timeline to implementation, we decided to contract an outside service provider initially to handle all inquiries and application processing. Service Nova Scotia and Municipal Relations staff focused on developing program processes, training requirements, as well as the software through which all applications are processed. We plan to migrate the program back into the department in the coming fiscal year.

Your Energy Rebate Program benefits approximately 400,000 Nova Scotia households. As of February 27^th, approximately $11 million in rebates have been issued. The majority of these rebates were for the months of December and January. I am very proud of the delivery of Your Energy Rebate. The work on this program is a credit to staff of the department as well as the Department of Finance and, as I said before, the suppliers and industry have worked very hard with us. We appreciate the opportunity to discuss the delivery and would be happy to answer any of your questions.

MADAM CHAIR: Thank you very much and we will proceed with questions. Before we do that, I would request that each of the deputy ministers provide the clerk with a copy of your written comments. Those can be distributed to the members. There is quite a bit of information in those statements that may be useful during our question period.

We will now have 20 minutes of questioning. The first round, the NDP caucus. Mr. Steele, you have 20 minutes.

MR. GRAHAM STEELE: I would like to welcome our witnesses today. I would like to begin by congratulating the witnesses and in particular, Service Nova Scotia and Municipal Relations. I agree that a lot of good work was done in a short period of time to deliver this program, based on the number of complaints that I have had in my constituency office, namely zero. My colleague, Mr. Wilson, says he has received one. I think things have moved remarkably smoothly and I think Service Nova Scotia and Municipal Relations, in particular, should be congratulated for doing that.

It's particularly surprising because right up until the time the program was announced, the Department of Finance was telling us that this was impossible, that it could not be done. That is the first theme that I want to pursue with the witnesses this morning. The NDP first proposed this program back in 2003 and right up until the time when the program was actually announced, a few days before a provincial election, the answer that we were getting, in particular from the Department of Finance, was that it was impossible. It could not be done. The subtext of it was that the NDP didn't understand how these things worked because we were advocating for it and the Department of Finance was saying, no, sorry, it can't be done. I have gathered together a few examples of that, which I could multiply. I have three with me but at any number of times over a period of three years, the Department of Finance said no, sorry, it can't be done.

[9:15 a.m.]

The reason that I find this particularly disturbing is that was essentially a political message. It wasn't a technically correct message, it was a political message, and I fear that sometimes civil servants fail to draw the distinction between delivering a message on behalf of the Government of Nova Scotia and delivering a message on behalf of the governing Party of Nova Scotia.

I have an example here, Bruce Henneberry before the Public Accounts Committee on December 8, 2004, in response to questioning from the member for Glace Bay. The conclusion the member for Glace Bay drew from that was that it was impossible to offer this rebate. February 19, 2005, Department of Finance spokesperson Cathy Shaw said, "We can't make changes on our own to components of the HST."

Deputy Minister Vicki Harnish, before the Public Accounts Committee, October 27, 2005 - it can't be done. Yet, in May 2006 - literally days before a provincial election - the program is announced that it is possible, the technical details have all been worked out. So my first question to you, Ms. Harnish, when did you know that it was possible to deliver the program that is now known as Your Energy Rebate?

MS. HARNISH: Well, I think you are somewhat misstating what you were told previously. What you had been asking us was, is there an ability for the province to eliminate the provincial HST off home heating oil? What we told you is that under the Comprehensive Integrated Tax Coordination Agreement with the federal government, we are unable to alter the tax base. We haven't altered the tax base.

Let me go on, please. The tax base itself is set by the Government of Canada . . .

MADAM CHAIR: Order, order. Mr. Steele.

MR. STEELE: Thank you. Ms. Harnish, what you're doing is splitting hairs, okay. What the Department of Finance people said in response to questions about whether it was possible, is it couldn't be done by removing the HST without the agreement of the other HST provinces and the federal government, and that was a line consistently stated by the Department of Finance.

That is a political statement because - Ms. Harnish, I'm the one asking questions so I'll finish asking the questions - that is a political statement because it splits hairs. The NDP had always said it was possible as a point-of-sale rebate and the Minister of Finance would say well, you know, you can't do that without the agreement of the other provinces and it is not very likely that we'll get the agreement of the other provinces. It was never the NDP's position - never - that that was the only way of doing it.

Now I don't expect anything different from the Minister of Finance, I expect political answers from politicians. What I don't expect is political answers from the Department of Finance because my question to you is - and the reason I wouldn't let you continue is because you weren't answering my question - when were you aware, as Deputy Minister of Finance, that the program now known as Your Energy Rebate was possible?

MS. HARNISH: I'm sorry, let's go back to my previous attempt to answer this question. We have been talking - and we discussed the last time I was here - whether or not we could eliminate the HST, the provincial portion off home heating oil. We cannot do that and we didn't do it, as you know.

When we announced the program at budget time last year, it was our firm hope, in fact, that possibly we could offer a program which would have the same effect, through a refund program. As you know, this is not an elimination of the HST; this is, in fact, a refund program that we had to put in place to proxy the elimination of the HST. In fact, vendors still have to remit the entire amount of HST to CRA.

When we announced the program at budget time last year, it certainly was our hope that CRA would at least administer this type of program on our behalf. In fact, we asked them to do so. The minister did write the federal minister about that.

Our response was, that while they would have the technical capacity to do it, federal Finance would not permit them to do it for us because it was their belief that it was counter to the spirit and intent of the CITCA agreement. So we were then left with the issue of how to deliver this program. It took us several months, as you know, to put in place with Service Nova Scotia and Municipal Relations, an alternative delivery mechanism to, in effect, replicate the 8 per cent refund.

MR. STEELE: Ms. Harnish, you're still avoiding answering my question. When were you aware that the program now known as Your Energy Rebate, was technically possible?

MS. HARNISH: We announced a program and then we set out to determine how best to administer it. The technical details were worked out over a number of months.

MR. STEELE: So when I and other representatives of the NDP, through 2003, 2004, 2005 and the early part of 2006, were calling on a program exactly like Your Energy Rebate, are you saying that at that time you were not aware that it was technically possible to deliver that program?

MS. HARNISH: I think what I said to you at one time when I was here is that I couldn't determine how much it would cost to deliver a program that was - we'd have to set up a whole new tax administration system to do this, which is basically what we've done, and I wasn't able to guess at that point in time how much it would cost to set up something to administer something of this nature.

MR. STEELE: Okay, at what point did you know that it was possible to do it?

MS. HARNISH: At what point did I know? Look . . .

MR. STEELE: Are you saying that it was announced in the budget in May 2006, and at that point the Department of Finance started trying to figure out whether it was technically feasible?

MS. HARNISH: I was saying that we were sure we could administer something, we just were very unsure how we were going to do it.

MR. STEELE: Do you see the difficulty . . .

MS. HARNISH: The Province of New Brunswick, for example, announced a program that was wholly an application-based system. We weren't certain . . .

MR. STEELE: Do you see the difficulty here?

MS. HARNISH: . . . if we would have to replicate that for a time.

MADAM CHAIR: Order.

Mr. Steele.

MR. STEELE: The program was announced literally days before a provincial election call. My concern is not so much that the Department of Finance has done something wrong, it is that the Department of Finance has been drawn into politics, partisan politics, and the position that you took over three years - 2003, 2004, 2005 and 2006 - was a position taken by the governing Party of Nova Scotia, not the Government of Nova Scotia.

What I fear is that the Department of Finance has harmed itself, will harm itself, by allowing itself to take a partisan political position, namely, consistently having not political people saying that the NDP's proposal wasn't possible, but giving it the veneer of respectability by having the Department of Finance professionals say that it wasn't possible. How are you going to avoid being drawn into that kind of partisanship again?

MS. HARNISH: Mr. Steele, I answer your questions truthfully when you ask them. We did not eliminate the HST. We did have to put in place a very complex system to replicate, through a refund-based program, what we had discussed previously.

MR. STEELE: But you're splitting hairs because we never called literally for elimination of the HST as the only way of doing it. I can give you examples where I and the NDP Leader said that what we were looking for was a rebate and we said numerous times that it could be done as a point-of-sale rebate, which is exactly what has happened, but consistently it was the Department of Finance spokespeople who said that it could not be done.

Let me ask you this, do you understand the way it looks when Department of Finance people take the position that favours the governing Party, as opposed to the government? Do you understand the perception problem?

MS. HARNISH: Well, that would be your perception problem.

MR. STEELE: Well, let me say this to you, Ms. Harnish, if you don't see the problem then you've got a problem because when I see a program being announced literally days before an election, that the Department of Finance has been saying for three years was impossible, I say you've got a perception problem, that you've been captured by partisan interests, and if you don't see that, then I think you really do have a problem.

Now let me ask Mr. Keefe a couple of issues about administration. Mr. Keefe, as you referred to in your opening remarks, the main objection that was raised publicly after the program was introduced was from the bulk vendors, who were saying - I think with some justification - that the way the program was being administered created a cash flow problem

for them. Since the adjustment to the program that you described, namely as I understand it, they can now submit weekly instead of monthly. Have you received any or many complaints from the bulk vendors or, from your perspective, has that issue essentially been solved?

MR. KEEFE: From my perspective, that issue has been solved. I am not aware of any complaints since then. I could ask Mike, though, to elaborate because he would be more directly in contact.

MR. STEELE: Thank you, if you don't mind. That would be helpful.

MADAM CHAIR: Mr. Decoste.

MR. MICHAEL DECOSTE: Unfortunately, while we were designing the program, that issue did not arise when we were consulting with the Canadian Oil Heat Association but we learned very quickly and took steps to alleviate. To date, out of the approximately 100 bulk vendors, we have eight to 10 that on a regular basis file weekly. The rest have opted to file less often than that and to date we have received no further issues or complaints.

MR. STEELE: Do you consider that particular problem to have been resolved?

MR. DECOSTE: Yes, I do, sir.

MR. STEELE: Thank you very much. My next question has to do with another objection that was raised to the program before it was instituted and that was from various interests inside and outside the Legislature who said that it was a bad idea to offer an across-the-board rebate to people because it would encourage people to use more energy, essentially. These are the people who believe that high energy prices are good because it forces people to cut back on their consumption, which I think is a little hard-hearted if you think about the implications of it. However, Mr. Keefe, my question for you is, does the department have, has the department tracked, is the department able to track, changes in consumption patterns following on the implementation of the Your Energy Rebate Program?

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: No, we don't track that directly. We track fuels - gasoline, diesel - because there is a tax component in them. We don't have any direct reporting for home heating oil or electricity. Could we? I am sure something could be put in place but right now no, we are not tracking that.

MR. STEELE: So if the question arises about what impact this energy rebate is having on Nova Scotia's energy consumption patterns, I guess the answer is that the department doesn't know because it is not able to track that. Is that right?

MR. KEEFE: That's correct.

MR. STEELE: I would like to change topics completely now. Ms. Harnish, you will have to excuse me but I know the subject for debate on the floor today is the Your Energy Rebate Program and we will get back to that in the second round of questioning but we also have a tradition in this committee that we can ask any question within a witness' mandate, even if it is not the ostensible topic of discussion. In the few minutes I have left in this round of questioning, I would like to raise a question with you about the Commonwealth Games, which is raised in the Auditor General's Report.

Now it is a very small part of the Auditor General's Report so we are not going to have a session dedicated to it but the Auditor General pointed out that there was a letter from the then Premier dated November 28, 2005, directed to the chairman of the Halifax 2014 Commonweath Games Committee. The reason the Auditor General raised it is because he said the proper process wasn't followed, it wasn't duly authorized by Cabinet the way it should have been and the I think the suggestion was made, in fact, that the Minister of Finance hadn't seen the letter until many months after it was written and may have been somewhat surprised and chagrined when he saw the letter. You are aware of the letter that I am talking about? I have a copy here if you need to see it. When were you aware of the letter? When did you first see it?

MS. HARNISH: During the audit, when it became made available to us from another central agency of government and that was after we started looking for it at the request of the Auditor General to determine whether there was any correspondence.

MR. STEELE: What was your reaction upon seeing this letter?

MS. HARNISH: Well, I was unaware that it had existed previously.

MR. STEELE: What is your understanding of the nature of the commitment that is being made in this letter?

MS. HARNISH: I don't have the terminology in front of me.

MR. STEELE: I will ask the Clerk to pass it over to you then. It's the third paragraph and, for the record, I am going to read it while you look at it. "If Halifax is selected in the fall of 2007 as the host of the 2014 Commonwealth Games, the Province commits to funding the Games as equal partners with the Municipality as outlined in the bid budget. The Province's financial commitment represents 24.8% of the total Halifax 2014 Games budget as submitted to Commonwealth Games Canada." To you, as the top Finance official in the Province of Nova Scotia, what commitment is being made there?

[9:30 a.m.]

MS. HARNISH: Well, it would appear there are a couple of commitments here. We are going to match the municipality and be equal partners with the municipality and the outside amount is 24.8 per cent of the bid budget as submitted at the time, which I guess was $700-some million.

MR. STEELE: So is it your understanding that this is a commitment to a certain percentage of the budget, whatever it may be or of the budget that was submitted at that time to Commonwealth Games Canada as part of Halifax's attempt to be the Canadian bid city. What is your understanding of that commitment?

MS. HARNISH: Do you know what? I'm only going by what I could interpret because I wouldn't have been privy to any discussion at the time. As you are aware, we were unaware of this letter so what the intent was . . .

MR. STEELE: What do you think it means?

MS. HARNISH: I couldn't tell you. The way I read it myself would be the budget, as submitted, I'm assuming it was at the time this letter was in play, the $785 million or whatever the number was.

MR. STEELE: So you take this to be a commitment of 24.8 per cent of $785 million?

MS. HARNISH: That would be my interpretation of the letter but, again, I was unaware of the letter at the time and I can't say what the intent was.

MR. STEELE: One thing that surprises me a little bit is no matter how you look at it, whether it's a percentage of the bid budget at the time, which was $785 million, or of the final bid budget, which is yet to be finalized, whichever one you take, this is a commitment of, at a minimum, a couple of hundred million dollars. What surprises me is that you seem to be taken aback at this or you are not sure what it means. I think what the Auditor General was raising, certainly what concerns me, is that a commitment of a couple of hundred million dollars at a minimum seems to have been made in kind of an offhand way and the Department of Finance still doesn't know what it means. Why are you so surprised and why are you having so much trouble intrepreting a letter that commits the province to at least a couple of hundred million dollars?

MS. HARNISH: I was unaware of the letter at the time. We only became aware of it last summer during the audit of the Public Accounts. I wasn't privy to any discussion about it and I can't say much more than that.

MADAM CHAIR. Order. The time has expired.

Ms. Whalen for the Liberal caucus. You have 20 minutes.

MS. DIANA WHALEN: Thank you very much, Madam Chair. Welcome, this morning. We appreciate your being here to talk about this program so that we can get a better idea about the cost and administration and so on that goes with it. I found it interesting in the binder that there was actually the newsletter from the UNSM from March 2006, so just a year ago, in which the government had answered the UNSM resolution that asked for the HST removal and it said clearly, this is the answer from the government, "Removing HST would not provide targeted relief to those who need it most. In addition, removal of the HST does nothing to encourage conservation and wise energy use. " So I am wondering if that would have come as an answer, it came actually from the Department of Finance, so it is a big policy shift, really, in a single year, in fact in just a couple of months as was pointed out by the previous speaker.

I am wondering if you could give us some indication of the level of consultation that might have gone on with the Department of Energy so that we would know that that was balanced, that it was a decision taken with a sense of what the other alternatives might have been to target relief. We had a previous program, Keep the Heat program, which helped. We have the Department of Energy suggesting that is not the right way to go and yet we went ahead with this program anyway which is not targeted but it is a blanket approach. Was there discussion among the senior level bureaucrats about the best way to move forward? It is an expensive program. Was any discussion held, is what I am asking.

MADAM CHAIR: Your question is being directed at who specifically?

MS. WHALEN: The Department of Finance, Ms. Harnish.

MADAM CHAIR: Ms. Harnish.

MS. HARNISH: This was a policy decision of the government and so the Department of Finance was charged with putting in place an analysis of the cost of this particular program, and working with Service Nova Scotia and Municipal Relations to determine the best means of administering it.

MS. WHALEN: So it was a political decision outside of the realm of deputy minister, really. It was your job to adjust to it.

MS. HARNISH: Yes. Cabinet makes decisions of this kind of nature.

MS. WHALEN: Yes. They do take advice, I would hope, from senior management, senior bureaucrats. I just find it interesting that that was articulated as recently as March of last year.

I'd like to go to some of the specifics of the program now that it's in place. We've lost the Keep the Heat program which was targeted at the low income people. I think that that was a much more affordable program, it came in at under $20 million, I believe, last year. I know that Mr. Steele has said that he has not received any complaints but what I've received in my office are questions about where the rebate is - the real rebate to low income Nova Scotians.

I am wondering if, through the department, there has been any complaints. Perhaps it has come through Service Nova Scotia and Municipal Relations, I imagine that would be the - you previously administered Keep the Heat so maybe Mr. Keefe could let us know if you're hearing complaints from low income Nova Scotians or people looking for that direct assistance.

MR. KEEFE: Not a large number. We have gotten some letters along the lines you just laid out, where the rebates that used to exist but there hasn't been a very large number of those complaints, no.

MS. WHALEN: I'm speaking certainly for my office and other MLA offices. I think people were very surprised to have it not available this year. As you pointed out, the $200 is the average savings for an average home. The low income Nova Scotians were getting a rebate of $250 if they heated with oil, so I think that made a greater impact on people with smaller homes and less money to spend in the first case.

What I'd like to know is if there's any discussion about adding a program that might directly help low income Nova Scotians.

MR. KEEFE: None that I'm aware of.

MS. WHALEN: Ms. Harnish, are you aware of any programs that might come or be discussed to replace that?

MS. HARNISH: I wouldn't be at liberty to talk about anything under discussion while we're doing budget.

MS. WHALEN: Okay. Well, I'd like to suggest that it should be on the agenda, so maybe you can bring it up.

In the administration of this program, I'm interested in the non-profits which are not eligible. This came out as a program that is strictly residential and again, we had calls from

groups like food banks, Boys and Girls Clubs - those kinds of facilities within communities, which are again supported very much by communities, by individual donors and people volunteering. These non-profits are not getting the benefit.

Now I understand there is something called an input tax credit for some non-profits. I wonder if you could provide the specifics of who might be eligible for the input tax credit.

MS. HARNISH: Paul will answer that, he can give you specifics.

MR. PAUL DAVIES: In terms of non-profit organizations, for the most part they are not eligible to claim input tax credits on HST unless they are engaged in any commercial enterprises, in which case they are entitled to an input tax credit for the HST paid in the production of taxable goods and services.

However, charitable organizations and some non-profits are eligible for a 50 per cent rebate of both the provincial and the federal portions of the HST.

MS. WHALEN: Which ones would those be? When you say "some", what's an example?

MR. DAVIES: Okay, a registered charitable organization will be eligible for a 50 per cent rebate and non-profit organizations which receive 40 per cent of their funding from government, and that can be from any level of government, are also eligible for this rebate.

MS. WHALEN: And that would cover the - the home heating would be one of those or the heating cost for their building would be one of those?

MR. DAVIES: Any HST expenses would be covered under that.

MS. WHALEN: So who's being missed? Have you done an analysis, Mr. Davies, of who is missed in this non-profit sector?

MR. DAVIES: Well, there are some non-profits that first of all, don't provide residential accommodations. There are non-profits - not to single anybody out, it could be Engineering Wives Society, particular accounting organizations which are non-profit, and they are not receiving government - 40 per cent of their funding from government it is only that. So there are quite a few organizations that are not going to fall within that and get a rebate from the federal and provincial portions of the HST but they are also not the intended targeted audience for receiving the rebate.

MS. WHALEN: Can I ask if there have been requests from these non-profits to be included in the program?

MR. DAVIES: I'm not aware of any requests. We have directed some non-profit organizations who - I don't know if members are aware but under the Public Utilities Act, charities and non-profit organizations are entitled to apply for the domestic service tariff with the municipal utilities and Nova Scotia Power Inc. and if they are receiving the domestic service tariff, they will automatically get the rebate.

Now in some cases, it is not advantageous for them to have that rate because they get a better rate from the utilities for general purposes.

MS. WHALEN: Would it be fair to say that this would be a very, very small part of the cost to administer, if we were to add those other non-profits into the picture? Or to provide the rebate to them?

MR. DAVIES: I think the rationale was more along the lines of ease of implementation and ease of understanding of the program. The finer we tried to cut the program, the more complex it became - both for Service Nova Scotia to administer, as well as the oil distributors and Nova Scotia Power and the municipal utilities. So we had to take that into account as well.

MS. WHALEN: Well thank you. I think it is something that bears consideration as well as we go forward, and programs do change as they stay in place for a number of years.

A question for Service Nova Scotia and Municipal Relations, going back to the cost of providing this service and setting up the new program, I'm wondering if you could tell us what the contract was to the outside service provider and what it entailed?

MR. KEEFE: Again, I would ask Mike to provide the detail on that.

MR. DECOSTE: Yes, well, the contract deals with handling such issues as telephone inquiries and application processing. It is a piecework kind of contract. They are paid per minute for processing time and for their time on the phones, for their calls.

MS. WHALEN: Have you got a budget estimate for that? You must have put a dollar figure on that, to begin with.

MR. DECOSTE: Based on our original estimates for demand, the budget was estimated at somewhere around $2 million for the next fiscal year.

MS. WHALEN: So that would be for the full year, rather than this partial year?

MR. DECOSTE: Yes.

MS. WHALEN: And it would just be pro-rated, a portion of that for the smaller number of months that you've had this in place.

MR. DECOSTE: Yes.

MS. WHALEN: Do you intend to continue to use the outside service provider? I understand it was done because your program had to be implemented in some haste.

MR. KEEFE: Yes, we plan to migrate that back inside the department within the next fiscal year - early in the year if possible but certainly by the next heating season.

MS. WHALEN: So you may have no more than one full year of having used this service?

MR. KEEFE: Yes, exactly.

MS. WHALEN: Okay. Can I ask you, Mr. Keefe, about the internal costs of administering this because you still have staff obviously devoted to it, making sure that the wrinkles are ironed out as we get started on the new program. Can you give me some indication of how many people have been dedicated to that, or the cost? Both people and cost.

MR. KEEFE: Okay. The cost is about $4 million annually and $4 million in the current fiscal year; a lot of that is start-up cost. We are currently estimating, I believe it is somewhere in the nature of about 25 people all together when the program is fully back in-house. About half that are audit and compliance staff, but the other half on the administration calls and so on. We'll have a much better idea as we get more experience from the vendor here, as to the volume of calls and the work involved in handling those applications.

MS. WHALEN: Can I ask you why it requires so many audit and compliance staff? What would be their specific function?

MR. KEEFE: At a high level, two basic functions; one is to audit the claims from the bulk vendors for the credits that they're applying to us. We pay those based on their application and audit after the fact.

MS. WHALEN: Could I ask, is that really just reconciling those claims?

MR. KEEFE: It is.

MS. WHALEN: When I hear the word "audit", it's like you are off on a trail.

MR. KEEFE: Okay, yes, mini-audit might be a better word and also, of course, applying the credit to the right people. So they are giving it to those who they should be and not giving it to those who shouldn't. That would be part of the audit as well.

There are also going to be applications in this program; it is not 100 per cent at source. The larger amount of the applications will be from landlords, and that would start in April.

[9:45 a.m.]

Those claims need to be audited, one for obviously they are going to need to present receipts and the amount of HST on them, but also a lot of those buildings are mixed use, they are not entirely residential, they would have residential-commercial, so we'd need to figure out a way to prorate the rebate for those, and then the smaller applications in terms of audit review would be for folks who would buy kerosene, wood pellets, and wood at places where the rebate is not available at source and of course we need to have some review of those claims as well.

MS. WHALEN: Actually, I am glad you mentioned the issue around the larger buildings and the residential buildings. In my riding in Clayton Park, we have 160 apartment buildings and there has been confusion - particularly in the condo owners - about whether or not they are entitled to this rebate. Could you explain to the committee how that is being handled because those people are directly homeowners - they may be a condo corporation but they are homeowner-owned. How would we look at that?

MR. KEEFE: Frank Moore will address that.

MR. FRANK MOORE: With respect to rebates, and especially tax rebates or equivalent to tax rebates in this particular case, how they work is whoever basically pays the bill and qualifies is the person who gets the rebate. That's how they work. So if, in fact, a landlord pays the electricity bill, then they will get the rebate and the same with a condo corporation.

MS. WHALEN: In some of the large or small apartment buildings, if the landlord is getting the rebate, which would be very significant in a lot of these large buildings that have over 100 units and so on, is there any provision that would see that passed on to the renters, to the people who are tenants?

MR. FRANK MOORE: No, there is not and we expect that market forces will cause those rebates to be passed down. Generally that is how tax rebates work in general.

MS. WHALEN: I wonder if you could be more specific because I'm not certain that would be so. If landlords choose to keep the money, where is the market force for change?

MR. FRANK MOORE: Well, with such competition in terms of what goes on in the rental of residential properties - like you said, you had 160 in your area - we would think that certainly competition would come into play and these rebates would be a part of a reduction of the cost for the landlord. Therefore, as a matter of business practice, the benefit should flow down.

MS. WHALEN: Was it considered that there is any policy way that you could ensure that it would be passed on? Was there any kind of policy discussion around that?

MR. FRANK MOORE: That would be government policy so I'm not at liberty to discuss that, in terms of what government had decided.

MS. WHALEN: There are literally thousands of Nova Scotians who do rent and don't own their home. Therefore, it just seems really important to me that if we introduce a program to help Nova Scotians across the board, that we make sure we help those thousands who are tenants. This is helping others and really, owning a big building is a commercial enterprise but you are providing housing for many people. So it is at odds with the program, as we have talked about the principles of the program. I'm surprised that hasn't been looked at a little more carefully.

How about condominium buildings? Can you be more specific about how we are going to pass it on to condominium owners, because that should be a given that they definitely get that reduction.

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: Again, I will assume the condominium owners, of course, govern their own condominium so they would, through their board, be able to address that issue, I would think.

MS. WHALEN: Through their own governance within the building, so we are leaving it up to market forces, again, or the knowledge of the homeowner. That's fine, then I know how to answer them.

I wanted to ask you about the term, energy rebate. It's a great sounding program, Your Energy Rebate, but it isn't really a rebate and I think there is confusion around that. I wonder if you could discuss why it was called a rebate. Generally, a rebate is something where you get a separate cheque, a cheque comes to you. As you say, this is at point of sale. How was this name come up with? I think it causes confusion.

MR. KEEFE: I am just trying to remember how that name could come up. I don't think we gave any thought to the fact whether this was at point of sale or through a cheque. It was just a discussion with the communication folks and this sounded like a good name.

MS. WHALEN: We only have a couple of minutes left, but I would like to ask you about the lists that are used to determine who is a residential property and who is not. There was initial confusion around whether or not a property was on a list, some master list. Did you give that list directly to the vendors?

MR. KEEFE: No, we didn't. We provided them access to our system.

MS. WHALEN: So they could go on-line and find out whether or not a property was there.

MR. KEEFE: That's correct.

MS. WHALEN: If the property did not appear but they were at the door and they knew that the building was clearly a home, were they entitled then to make the sale and get the rebate? How much confusion arose around a property that might not be on that list?

MR. KEEFE: There would have been some confusion, no question. They certainly weren't authorized to override what was on the list and what wasn't. We did have, as I mentioned in my opening remarks, phone lines for those folks to call so our staff could do some more detailed research into that.

There were some examples where we did have to make some overrides. For example, the list we are talking about here came from our property on-line database, which is a fairly public, accessible database. If you look at, for example, a mobile home park, the property of a mobile home park is a commercial property, but it is quite obvious all the individual mobile homes would be residential. So there is a case where we gave a broader override - that even though the list said it was commercial, these are obviously residential homes.

MS. WHALEN: In introducing this program, it is clear that, particularly, the oil heat association and the vendors who are involved are bearing a lot of the costs of introducing this program on behalf of the government. How much consultation did you have with that group because I understand government also has a stated goal to cut red tape and to work with business to make their lives easier in terms of the demands that government puts upon large or small business. So was there enough or sufficient consultation to make it possible for these groups to do that? They are clearly out of pocket, I would say, for administering it.

MR. KEEFE: Yes, there was quite a bit of consultation. They probably would have liked to talk to us earlier perhaps but because we were pursuing the other option with CRA, we didn't get into the game until a bit later but we did consult with them quite extensively.

As far as covering some of the out-of-pocket costs, the program does allow for that. For example, where they would have had to buy a new meter for their truck or upgrade the meter to allow it to calculate this rebate or some changes to their accounting system. So after

they have incurred those expenses, they are allowed to apply to us to get some of that money refunded to them.

MS. WHALEN: Some or all of the money?

MR. KEEFE: In those categories, all of the money. Obviously, we need to take a look to make sure the claim is reasonable.

MS. WHALEN: So if they had to buy any new equipment, that would have been covered. What about their actual time involved, that they have to do extra bookkeeping, extra administration and accounting.

MR. KEEFE: No, we didn't cover that.

MS. WHALEN: So they have absorbed that. Were there complaints received from the industry saying that this was an unfair burden?

MR. KEEFE: Not to me directly but again Mike was dealing with them, so I would ask if Mike could pass on . . .

MS. WHALEN: If he could.

MADAM CHAIR: Order. We will get to that on the next round. The time has expired.

Mr. Bain for the PC caucus. You have until 10:13 a.m.

MR. KEITH BAIN: Madam Chair, I would like to direct my question to Deputy Minister Keefe if I could, please. This year, as we all know, is the first year of Your Energy Rebate Program. The last two years was Keep the Heat. I am just wondering, what percentage of Nova Scotian households qualified for the Keep the Heat program when it was in effect?

MR. KEEFE: That would be quite small. I think the last round of Keep the Heat was somewhere in the neighbourhood of 35,000 or 36,000 rebates were given. Whether or not a higher number qualified is subject to some debate, actually, because it was an application-based program. You are never sure everyone applies, but compare that to about 400,000 under this program because all Nova Scotia homeowners under this program are eligible.

MR. BAIN: So did everyone who was eligible for Keep the Heat apply for it?

MR. KEEFE: I have no way of knowing because we have no way of identifying everybody who was qualified - only estimates. So we have no way of knowing if there are people out there who qualified and didn't apply.

MR. BAIN: I guess it would be quite possible, unless there was an awareness, that they wouldn't apply for. Would that be fair to say?

MR. KEEFE: No question.

MR. BAIN: So therefore there were a lot of people missed but with this program, everybody is getting the benefit.

MR. KEEFE: Yes.

MR. BAIN: In the Keep the Heat program, did you find it was responsive to increases in oil prices as it went on? I guess it wouldn't be because the fluctuation in oil prices is so great, where this is based on a percentage of what the price is today and what it will be.

MR. KEEFE: Yes, this one is obviously much more responsive to changes in oil prices because it is immediate and based on the actual 8 per cent at the time that the purchase is made. The Keep the Heat program existed in one form or another over a period of five or six years and the amount each year changed, so I guess it was somewhat responsive but it was nowhere near as immediate as the current one.

MR. BAIN: I understand also that the federal government offers an EnerGuide, I believe it is called, for lower income households and money for energy cost benefits, along with the program we have here provincially. Would these programs, put together, ease the burden of high energy costs for lower income Nova Scotians that Ms. Whalen referred to before?

MR. KEEFE: Back in the Keep the Heat program, we were working somewhat with the Department of Energy in trying to align the delivery of some programs, since that program has stopped, we hadn't been working on the energy piece of it at all so I'm not particularly familiar as to what they're doing. There isn't a linkage between the programs that exist today where the previous one there was somewhat of a linkage.

MR. BAIN: I'd like to move on now, if I could, to Nova Scotians who heat their homes with wood or wood pellets, or kerosene. The rebate is only available, I understand, by completing an application form and sending it in, is that correct?

MR. KEEFE: That's correct.

MR. BAIN: How many people have done this, or would you know?

MR. KEEFE; I don't know, but Mike might know.

MR. DECOSTE: Up to this point in time, we've received 633 consumer applications. I have no numbers to be able to delineate how many of them were for wood or wood pellets.

MR. BAIN: And once the application is received, how long would it take the household to obtain their rebate - from the time their application went in until they were able to get the rebate?

MR. DECOSTE: Currently, sir, the average for turnaround on our applications is within 10 working days.

MR. BAIN: I guess the other question I have, and we haven't talked about electricity, the people who heat their home electrically. I just wonder if you could explain how the rebate works for those people? Is it taken off their bill or is that the application process?

MR. KEEFE: No, electricity is taken right off the bill, right at source, and it's on all electricity use for residential purposes, not just for those heating homes.

MR. BAIN: Not just for heating, so it is everything. Okay. You mentioned before that it takes about seven days for the suppliers to get reimbursed and it is up to them to decide how often they apply for their rebate?

MR. KEEFE: That's correct.

MR. BAIN: Okay. So are there additional costs for those suppliers because of this? Do you see where I'm going - accounting, I guess, and bookkeeping and everything else.

MR. KEEFE: Of course.

MR. BAIN: So the supplier would be the person to absorb the costs, those additional costs?

MR. KEEFE: Yes, for any work their staff would need to do to apply for those rebates, yes, they would be absorbing those costs.

MR. BAIN: Is the program on budget right now, to date?

MR. KEEFE: Yes, most certainly from the administrative point of view, it is. Actually we're running a little under budget in this current fiscal year. I think as far as the rebate portion is concerned, I should let Deputy Harnish answer because that's in her world, but I believe it's very close.

MS. HARNISH: We are a little under because the price is less than we anticipated at the time we prepared the budget.

MR. BAIN: Thank you, Madam Chair. I am going to turn it over to my colleague, if I may.

MADAM CHAIR: Thank you. Mr. Porter, you have until 10:13 a.m.

MR. CHUCK PORTER: Thank you, Madam Chair, and thanks again for all of you and your staff coming in today to provide us with some good information. A couple of questions and maybe for Mr. Keefe, with regards to administration. When December 1^st came, obviously there was - I have a local supplier who had an administration issue and it was the number of people who were able to receive this benefit - there were lists or something. Were there many places across the province or many retailers, suppliers, whatever you want to call them, with similar administration issues?

I guess I ask the question because were they ready for December 1^st is maybe where I'm going with that and if not, maybe you could tell me why they weren't ready?

[10:00 a.m.]

MR. KEEFE: No, I don't think they were all 100 per cent ready on December 1^st. We were certainly working with them as hard as we could to validate their customer lists. There were issues, as I mentioned, perhaps some mis-coded properties in our database, but there were also issues from the company side as well, where the property on-line is keyed on civic address, they never necessarily had the civic address for all the deliveries, particularly in the more rural areas, so matching some of those up took some time, but I believe they tried to stay ahead of the curve as they went down their customer lists to get everybody serviced as fast as possible.

MR. PORTER: Yes, and the gentleman in my area was pleased with the amount of work put in by the department. He wasn't complaining, he was just kind of wondering, I wonder how many others there were or is it just us. Of course one of his questions obviously was, were there people missed? Obviously we thought that perhaps there might have been and I guess the best - they would have been found at some point but they were able to go back, I guess, to December 1st and somehow administratively get that rebate taken off.

MR. KEEFE: Oh, no question, they would have got their rebate eventually, once we understood the situation.

MR. PORTER: Were the numbers high there, would you say, or was it a fairly small amount?

MR. KEEFE: It hasn't hit my desk with any major area, I'd say fairly small but I'd ask Mike if he could provide a bit more detail.

MR. PORTER: This is something that was likely expected - sorry, go ahead, Mike.

MR. DECOSTE: Initially we worked quite diligently on customer lists through the month of November so when December 1^st came, we did have some issues, as Deputy Keefe mentioned, with not accurate civic addresses but we were able to resolve those issues quite readily and quite speedily and for the most part the Canadian Oil Heat Association was quite pleased with the rollout, so it was quite minimal.

MR. PORTER: And I hadn't heard from anyone who actually complained, or whatever, either/or about being missed, it was just the retailer who was more concerned about missing his customers.

Advertising strategies. I know when I listened to the radio and TV there was a variety of different advertisements out there and I tend to listen to them but they focus on a variety of different things. How are we doing as far as advertising goes? Are we effective, do we think, with getting this out to the people that this does exist?

The reason I ask the question, I guess, with regards to maybe what Keith had mentioned was the electricity part. A lot of the people I talked to don't really seem to be aware that oh, I'm getting this off my entire electric bill; it's more, how do I apply for that. So I am just wondering, is there a strategy that we are going to focus on, letting people know? Or is that just something we will assume at some point that they do become aware of? Or is it a Nova Scotia Power issue? I don't know, I'm just throwing it out there.

MR. KEEFE: We did do a fair bit of advertising up front. I believe we had another push in early January, once electricity, and natural gas, I believe, was the other one that came on-line January 1^st, because we do need people to be aware, although they don't have to apply, obviously if they are missed for some reason, they need to be aware that they should have gotten this so they raise a complaint.

There are also people who still need to do it by application, for example, kerosene, wood pellets, wood, and, of course, the big application push will come with the landlords in April. I don't know our advertising plans for that but again I would ask Mike for any details about what we would be planning for that.

MR. DECOSTE: Yes, we have planned kind of a multi-pronged communication plan out where, as Deputy Keefe mentioned, we did initial radio-newspaper advertisements at the end of November, early December and then another burst through the month of January.

We are planning, because of the cyclical nature of the rebate and the heating seasons, we know that for the fiscal year coming up we will have to renew some of our communications because people won't be thinking during the summer months of the rebates, so we do have plans in place to communicate out there again. I don't know if I've answered your question.

MR. PORTER: Yes, I guess probably you sort of have. I was just thinking about - there seemed to be a large number of folks who really don't understand the electricity part, that this is a good benefit. That sort of does answer the question.

I wonder in billing with Nova Scotia Power, for example, if they might consider, or someone in government may consider suggesting to them to let people know that this exists somehow. I don't know, I just throw that out there. We take a fair bit of calls on it so I was just curious. Communication is always a key message and at times we maybe sometimes don't do it as good as we can or as we should but . . .

MR. DECOSTE: We haven't got that type of information now but initially Nova Scotia Power and the utilities did, with our approval, communicate to their customers that they would be receiving the rebate but given the information you provided, perhaps we can encourage them to work with us again to make it a little bit more prominent.

MR. PORTER: Maybe most Nova Scotians are just happy paying their electricity bill and aren't that concerned. I don't know. (Laughter) I would tend to doubt that, being one who - at any rate, are there any families, houses, agencies that aren't taking part in the rebate program and say this isn't good, I just don't want it or anything like that? Is there any negative spin to it at all?

MR. KEEFE: No, not that I am aware of.

MR. PORTER: That's good. I was just kind of curious as to whether or not because we don't get a lot, at least in my office, I have heard very little about it. Only one person about the $250 previous, the old program, Keep the Heat. Again, I am very surprised that there was only one. I would have thought there would have been more but in all honesty, I don't know how many people really pay attention to the whole thing. I like to think there are a lot and I know we spend a lot of time locally advertising how good this is and trying to communicate to our residents when we are talking to them.

MR. KEEFE: There are some people who heat with wood. Obviously, you buy your wood well before you burn it so they may feel they are burning wood this Winter, they didn't get a rebate on it, but of course, they eventually will get that rebate or most of them when they buy their next load of wood. You also need to remember that a lot of wood suppliers are very small. They are under the $30,000 where they don't have to charge the HST. So, again, there would be no rebate there because there is nothing to rebate.

MR. PORTER: Exactly, and that was one of the first questions. I have known a few people who have asked the question with regard to wood, how come they didn't back date it. Well, where do you get your wood, et cetera, and exactly those things right there. Is this supplier a big supplier or a small supplier? Generally speaking, the majority, probably 99.9 per cent, are very small suppliers. So it wouldn't fit in anyway. Once explained to them, again, that communication piece - and that was fairly well communicated early on in the release of the program, et cetera. I tended to pass that out a fair bit last Fall as people were asking the question.

Maybe a question for Mr. Davies, if I could. I just want to clarify something you said with regard to the non-profits being eligible. Would we be referring to community halls?

MADAM CHAIR: Mr. Davies.

MR. DAVIES: Yes, community halls would fall into the non-profits. Community halls, for the most part, are not government funded so they would not receive the rebate unless they were receiving the domestic service tariff from Nova Scotia Power Inc. or a municipal utility, in which case they would get it on their electricity.

MR. PORTER: You also mentioned the word automatic. I was a little confused there. Automatic when? I am sorry, I'll clarify the question. So the community halls generally, as far as I know, they are probably all non-profit. Is there an application then, or do they need to advise somebody, hey, we are here, how do we get the rebate?

MR. DAVIES: They are not eligible for the rebate unless they are receiving the domestic service tariff for electricity. Then they would automatically receive the rebate on the electricity.

MR. PORTER: Domestic service tariff on the electricity. I have quite a few of those questions, wondering why they weren't - not so much maybe why they weren't but if they were available because they spend a lot of money as well in energy.

MR. DAVIES: The intention of the program was to be directed to residential accommodations so that is one of the reasons. The other reason, for many community halls and so on like that, is that they are engaged in some commercial enterprises and they do get the input tax credits for HST they have paid on the production of that. So the programs that they run, where they charge a fee and something like that - they are all considered commercial activities and so that was taken into consideration in terms of who was included and who wasn't.

MR. PORTER: Do all of these community halls file a tax return or are they required to do so? It's very small money. It's in, it's out - they are not sitting with thousands of dollars in their accounts, from what I can tell in my area anyway.

MR. DAVIES: I don't have that knowledge, I'm sorry.

MR. PORTER: Okay, I'm curious. Maybe, Mr. Keefe, another question with regard to the toll-free line. Is there a great number of people who are using that? Do we have any idea what the numbers are?

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: Again, I would ask Mr. Decoste to answer that question.

MADAM CHAIR: Mr. Decoste.

MR. DECOSTE: Initially, in the initial weeks of December, we had a little bit of activity on that line but as we got a few weeks into the program and the vendors were more comfortable with the program. Our calls now are only incidental.

MR. PORTER: That's a good thing, I guess. Thank you. That's really about all the questions I have, thank you very much.

MADAM CHAIR: Mr. Bain, you have until 10:13 a.m.

MR. BAIN: Yes, thank you, Madam Chair. I have just one question as a follow-up to the non-profits. I believe you mentioned that a non-profit organization that receives at least 40 per cent of their revenue from some government source would be eligible. Did I understand that correctly?

MR. DAVIES: Just to clarify, the non-profits that receive rebates of HST - that is a rebate directly. It is not associated with the energy rebate, it's an actual direct rebate of the HST, both the federal and the portions, if they receive 40 per cent of their funding from government.

MR. BAIN: Okay, I understand now. So they apply for the 57.2, or whatever that is, of the . . .

MR. DAVIES: They file their HST return and they get a . . .

MR. BAIN: So they still will not be eligible for the energy rate but they would be able, through - okay. It was just for clarification, Madam Chair, thank you very much.

MADAM CHAIR: Ms. Harnish.

MS. HARNISH: If I could clarify for a minute, this rebate itself is directed towards residential energy users. We've caught up a few of the not-for-profits and only for electricity

because they happen to be billed under the domestic service tariff for electricity. That's the only reason any of them qualify at all and that was done for administrative ease purposes only.

MR. BAIN: Okay, thank you.

MADAM CHAIR: Okay, we will have a second round of questioning, 13 minutes per caucus.

Mr. Wilson from the NDP caucus. You have until 10:25 a.m.

MR. DAVID WILSON (Sackville-Cobequid): Thank you, Madam Chair, and thank you for coming today. Ironically, I think it is one of the coldest days of the winter and we're here talking about energy and a rebate that I think Nova Scotians accepted and needed, because of the high energy costs over the last several years.

I would like to talk a little bit and maybe get some clarification on - and I don't know, maybe Deputy Minister Keefe would answer this one - what date did those individuals with wood or wood pellets for their rebate, what was that date and when was the start-up for that one?

MR. KEEFE: December 1st.

MR. DAVID WILSON (Sackville-Cobequid): And how did you come about that date? Was it your department? Did it come from direction from the minister's office or did it come from Cabinet?

MS. HARNISH: If I could - initially when the program was established and announced at the budget, the target date was set for January 1st. That was done for a number of reasons, including the fact that we knew it was going to take a number of months to get in place, an administrative system to handle such a new and comprehensive program.

During the fall, as we started consulting with the oil heat distributors in particular about the mechanics required to put this in place, it became very apparent that they were quite worried about a January start implementation because it's one of their coldest months of the year. They knew people would hold back purchasing their fuel, waiting for the rebate to kick in. They did indicate to us they generally ran a three week cycle in December and a two week cycle in January, meaning that they wouldn't really have capacity in January and in December, they would have some capacity to service the initial swell of consumers who were expected to want to purchase fuel oil at the start of the implementation of the refund system.

So we went back to the elected folks and we provided them with that information and the option of putting in place the refund system for those fuels that were consumed and were paid for before they were consumed the first of December. We were also able at that point to identify that we could, within our budget, accommodate the extra $4.5 million it was going to cost to do that.

[10:15 a.m.]

So with the discussion, Cabinet then did agree to change the start date of the program for most fuels; certainly, the fuels that were paid for in advance of their use, that was how it was separated starting December 1^st.

MR. DAVID WILSON (Sackville-Cobequid): It's ironic that you mentioned that the fear was that people would hold off their purchases and that brings me to the next few questions. I know Mr. Steele mentioned that I had one complaint around it and it was on the oil rebate which was rectified. I have had a lot of discussions with residents who use wood, for example.

As wood-burning individuals in this province, and I am sure you are aware of it - I think Mr. Keefe mentioned it earlier in a question - I will table a news release from the Minister of Energy. The top heading - and this was April 25, 2006, just two weeks prior to the budget coming due and, of course, the minister having knowledge that this program would be in the budget - it states here, "Winter may be over in Nova Scotia, but now is the time to buy firewood for next year." I quote the minister, "We're encouraging Nova Scotians to buy their supply of firewood now so it can dry and season over the summer . . . Proper seasoning and storage allows the wood to burn properly, which makes for cleaner air and more efficient burning. It will also reduce the amount of money you spend on wood each year."

With that, here is the Minister of Energy encouraging Nova Scotians - I believe it was on the Web site, too - to purchase their fuel early so that it seasons and it is more fuel- efficient. It says there will be a reduction in heating costs but really, when you look at it, many of these individuals who took the advice of the minister or have looked at the Web site, won't qualify for this rebate. I don't understand why those individuals would not be looked at or had you looked at these individuals to encompass them in this program to allow them to submit a bill within the last year to get a rebate on their wood supply?

MS. HARNISH: I am assuming that the Energy Minister's announcement and urging was done for safety and efficiency purposes. I am sure at the time he wasn't giving consideration to the tax refund. That being said, I am sure the safety and efficiency purposes are a legitimate reason to urge people to buy it early. Many of our wood-burning consumers purchase wood as the Service Nova Scotia and Municipal Relations folks indicated earlier, from small vendors who actually are in under the $30,000 threshold and don't charge HST.

Tax-related refund programs - any programs do have a start date and in this case, the start date was December 1^st. There are no plans, that I am aware of, to make it reimbursable for a product that was purchased sooner than December 1^st.

MR. DAVID WILSON (Sackville-Cobequid): With that explanation, I know Mr. Keefe said it earlier, that there is a small percentage of individuals who actually will pay the HST on this. So in my view, that's a small percentage of individuals who are paying that amount that I think government should have looked at and should have encompassed in this program. I would have to agree with the Deputy Minister of Finance that the Minister of Energy, at the time, wasn't thinking of all this definitely because they knew we were on the eve of an election. Of course, we all know that was a big portion of their platform.

I would like to talk about the other aspect of those individuals who aren't receiving the point-of-sales rebate - the wood, for one and wood pellets. Myself, I have a wood pellet stove at home and maybe I will be one extra of the 633 down the road. I know I have a stack of invoices in my vehicle. But these individuals - I don't understand, maybe you can clarify it quickly for me - why bulk vendors, which I would assume, if you could give me an example of a bulk vendor, I would assume is it like Irving and Esso? Because with my knowledge, I know that there is a limited number of suppliers for pellets in the province. There might only be two or even three different kinds of pellets. Why you couldn't use that with those vendors if you can use it for - I don't know how many bulk vendors of oil and gas you have - why you didn't choose to encompass them in the bulk vending rebate program that you have.

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: Reasons of practicality mostly. In launching this program, we made the bulk vendors mandatory. They had no choice. They had to deliver this program this way.

To take on vendors who the energy products are not a primary - it is not the biggest product they sell; for example, Canadian Tire that sells kerosene. Well, to make them change their entire systems for that one product was something we were a little bit hesitant to do.

We're certainly willing to talk to these folks, especially when we get out of this heating season and get the big start-up behind us. Particularly maybe some large wood vendors, I don't see any particular reason we couldn't do those at source. If some of the others were interested, we'd be willing to sit down and talk with them and see if we could work it out. That may require very significant changes to our accounting system for a fairly low revenue stream, from their point of view.

MR. DAVID WILSON (Sackville-Cobequid): I think there have been stories recently, I mean I know for myself the increase in the cost of pellets has been substantial, I think 30 or maybe 40 per cent over the last couple of years. So I'm encouraged, I think, by your

comments that you may look at this or, hopefully, re-evaluate it after this year because I don't think it would add that much more to the system that you have now.

One of the reasons I mention this is because we all know with rebates or programs where you have to submit to government to receive a rebate, they don't have a huge uptake. We look at the fuel rebate that we had earlier in the last couple of years - there was a large portion of those Nova Scotians who would be accepted in that program that never applied, maybe because they were working too much. These are the ones who are truly struggling.

Are you or do you keep track of the predictability of how many of those individuals won't access their rebate or won't submit their forms at the end of this heating season?

MR. KEEFE: That's somewhat anecdotal because again, it comes from your estimate as to who's out there. We don't have the definitive list but it's certainly our experience, I mean anything from the assessment cap to - we're implementing a program now on the graduate tax credits so we've talked to some other provinces that are doing that and they tell us the uptake is only around 60 to 70, so I think your general assumption is fairly right - you never get 100 per cent on a rebate.

The other point I wanted to make, too, on the wood pellets and kerosene - with the bulk vendors we know from their point of delivery that the property is eligible. When someone goes in and picks it up in their car, the question of how big a risk that is, is something else we need to assess. You know, is it a risk worth shutting down or can we live with it? That would be another part of that equation.

MR. DAVID WILSON (Sackville-Cobequid): Okay, I know I have only a few minutes left so a few quick questions. I know the Deputy Minister of Finance stated earlier around the CRA that they are not a partner in this. I believe you mentioned that the Minister of Finance sent correspondence to the federal government to see if they could partner in this, is that correct?

MS. HARNISH: Yes, we did.

MR. DAVID WILSON (Sackville-Cobequid): And what kind of response did you get from them? Did you receive a response from them? What did that entail, what did they say to you?

MS. HARNISH: Responses came back through a couple of venues. My own conversation with the federal Deputy Minister of Finance, it was a verbal indication that because the intent, the substance of our program was counter to the spirit of intent of the Comprehensive Integrated Tax Coordination Agreement, which required us to maintain a common tax base, they would not be supportive of having CRA provide any assistance to us in administering the program. We also had similar kinds of messages back from CRA.

MR. DAVID WILSON (Sackville-Cobequid): So this was just a verbal dialogue that they didn't accept this program and that they wouldn't partner with the provincial government with that?

MS. HARNISH: That's what we received back from federal Finance, yes. We received a written briefing note back from CRA, through staff of CRA which, among other things, indicated the same thing.

MR. DAVID WILSON (Sackville-Cobequid): Would it be possible to have a copy of that to table to the committee for our viewing, so we could see what exact language they used?

MS. HARNISH: Yes, that shouldn't be any problem.

MR. DAVID WILSON (Sackville-Cobequid): I know from my initial start in politics, I believe the Minister of Finance at the time, who is not a member now, stated it would take so long to start up changes to the HST or the removal of this. Has that gone forward to the federal government to say, let's start talking, that we want to change the makeup so that it's easier for us to implement this program?

MS. HARNISH: I'm sorry, I'm not sure exactly what you're referring to. Are you asking about a formal request to change the common tax base?

MR. DAVID WILSON (Sackville-Cobequid): Yes.

MADAM CHAIR: Order, order. The time has expired now for the NDP caucus.

Mr. Gaudet for the Liberal caucus. You have 13 minutes, until 10:38 a.m.

MR. WAYNE GAUDET: Thank you, Madam Chair. I'll be splitting my time with my colleague from Annapolis. Deputy Harnish, in your opening comments you indicated that the average Nova Scotia household will save approximately $200 a year under this energy program. I'm curious, deputy, if the average saving is $200 a year, if you would know approximately how much money some households are saving that are on the high end of this program using home energy?

MS. HARNISH: No, I wouldn't have that information.

MR. GAUDET: You wouldn't have that information. I'm just wondering, at the same time, how about the households finding themselves at the lower end of the program, what would be their saving? Do you have a clue?

MS. HARNISH: I don't have information with me that would - we don't receive individual information. The $200 would have been calculated based on average consumption and the number of households out there. So to talk specifics about any household, as you can imagine how much energy a household uses is a function of many things, including the size of the house, the number of degree days, the type of fuel purchased, the relative energy efficiency of the unit itself. We don't collect information on individuals.

MR. GAUDET: I think it's probably safe to say that people finding themselves on the low end of the program, Madam Chair, are probably saving less than $100 a year, because every day, Madam Chair, I get calls complaining about this rebate program.

Now, Madam Chair, last year the provincial government had a program, the Keep the Heat program, which allowed a rebate of $250 per household and I am sure that a lot of people, especially when it was cold, certainly appreciated that rebate. I'm very grateful to the people who delivered that program because they certainly made a big difference in a lot of people's lives throughout this province, especially people living on fixed incomes.

Now, Deputy Keefe, you indicated in your opening comments, or earlier, that you had received a few complaints. I'm just curious about Deputy Harnish, have you received any complaints about the energy rebate program?

MS. HARNISH: They wouldn't have come to me, personally. The complaints would come in through the minister's office and I don't know if we've even had one or two. We've received very little correspondence around that program at all.

MR. GAUDET: Madam Chair, I know I'm not the only MLA receiving calls complaining about this energy rebate program, especially from people living on fixed incomes, but I have easily received over 100 calls complaining about this energy rebate program. I am sure that some of the calls I've been getting have also called the Department of Finance and have also called the Department of Service Nova Scotia and Municipal Relations because some of these callers are telling me that they will be calling Halifax, they'll be calling these departments to complain.

Now I'm just curious if the deputies or if staff have brought these complaints to the attention of their ministers or to the Office of the Premier, people complaining about the energy rebate program? I'm just curious if these complaints have been raised.

MR. KEEFE: It's fairly standard practice that any correspondence that comes into the department or complaints of any nature, the minister is certainly made aware of. Whether or not every complaint, if someone called our call centre and made a complaint, whether or not staff would record those and pass them on, I certainly couldn't give a guarantee that that always happens. Certainly anything in writing, there is no question that it gets to the minister's office.

MR. GAUDET: Thank you, Madam Chair. I'll now - I know my time is limited and I'll pass whatever is left of my time to my colleague from Annapolis.

MADAM CHAIR: Mr. McNeil. You have until 10:38 a.m.

MR. STEPHEN MCNEIL: Thank you Madam Chair. Ms. Harnish, it has been talked about and it has been said in this House - probably today it has been said a half a dozen times - that the Province of Nova Scotia has removed the HST off energy products. Well, that is false. Not by you, I am not suggesting that it was said by you. I wanted to give you an opportunity because your actual material is very accurate, saying it is 8 per cent but politicians in this House have suggested that we removed the HST off home heating and energy products, which is false. So if that is the case, my constituents are looking for another 6 per cent which they haven't received yet.

[10:30 a.m.]

I believe when you were in front of this House before, you had said you were unable to remove the HST because of an agreement with the federal government and other politicians have suggested that it was impossible to remove the HST because of an arrangement with the federal government on tax issues. So I want to give you an opportunity to answer the question that Mr. Steele asked you around removing the HST which, in fact, we haven't done. What we've done is rebate the PST at source.

MS. HARNISH: That's right. Under the CITCA agreement, we are unable to change the common tax base that has been set out under that agreement without unanimous approval of all of the provinces. So we have not changed that common tax base. What we have put in place, because of this limitation, is a program which attempts to replicate the result and is, in fact, a rebate program - is the terminology we've used - of the equivalent to the provincial portion of the HST on heating fuels provided to residential consumers. So, yes, it is not an elimination of HST or a change in the HST program. In fact, HST is still fully paid on the product and the bulk distributors collect and remit the entire amount of HST. However, on our behalf, they refund the 8 per cent to the individual consumer and then bill through the Department of Service Nova Scotia and Municipal Relations for reimbursement.

MR. MCNEIL: Thank you for the clarification. Oftentimes in this House facts don't matter so it's nice that you've put on the table some facts around this issue.

It's called Your Energy Rebate Program. I am wondering what role, if any - perhaps this should go to Service Nova Scotia and Municipal Relations - the Department of Energy or, quite frankly, Conserve Nova Scotia, has played in the drafting of this program and the support of the implementation of it?

MR. KEEFE: I am not aware they've had any role.

MR. MCNEIL: It's an energy rebate program and they have no role in it. Would that be correct?

MR. KEEFE: Yes. I will ask my staff to confirm but I don't think they have been involved. No.

MR. MCNEIL: Maybe at some point along the way Nova Scotians will get to know what Conserve Nova Scotia is actually doing for them. In your opening remarks, Mr. Keefe, you had mentioned that you had taken an outside service provider for the implementation and you said that Service Nova Scotia and Municipal Relations staff focused on developing program processes and training requirements as well as the rebate system software and yet you also said you were hiring an outside service provider for application processing. So if you are just developing the processes, what are they doing?

MR. KEEFE: They are actually doing the processes. So they would be answering the phones, opening the mail, processing applications, doing the work.

MR. MCNEIL: I guess where the confusion lies for me then, and maybe you could just help, if they are implementing a program that you already have set up, all the criteria are there, the process is there and you then said your staff is developing those processes, so what is your staff doing?

MR. KEEFE: My staff, up until now, except on the enforcement side, has been very few. That is why we went to the service provider to get the people to handle the basic processes. We had to line them up. Of course what do you do when you get an application? What do you check? What do you verify? What are the answers to all the questions you are going to get on the phone? What directions do you give? We had to give all that to the service provider. That's the stuff we will be bringing back in-house. It is basically call centre and back office processing functions.

MR. MCNEIL: So in order to handle this, will your department be hiring people to handle this?

MR. KEEFE: Oh yes.

MR. MCNEIL: You will be hiring more staff to handle the implementation of this program.

MR. KEEFE: Exactly.

MR. MCNEIL: Any idea how many more?

MR. KEEFE: I believe it's an extra 10 next year. The budget for next year isn't final yet. Like every other deputy, I say I need this and I'll see where I end up at the end of the picture. I think that is around where we are forecasting right now for next year.

MR. MCNEIL: I assume that is part of the - I think it was said - $75 million cost to implement this program over a full 12-month period.

MR. KEEFE: Yes, it would be part of that cost.

MR. MCNEIL: The issue around non-profits, it was mentioned that many of them earned money and use their venue to earn revenue. In my constituency, I guess I can speak and I am sure in many constituencies across Nova Scotia, if they are lucky, they do cost recovery. There is no money-making venues in many of these community halls and non-profit organizations. I am wondering if you have a list of how many non-profits there are in the province.

MR. KEEFE: We probably have a fairly good list. As you know we register societies in the department. We register corporations that are not-for-profit but societies are not required to register for us. There might be a lot of these out there . . .

MR. MCNEIL: Would you provide to the committee then the list of the non-profit organizations that you have and the ones that are qualifying for this? You don't have to say them by name, just number-wise. You can say 25 of them or 30 of them are qualifying or not qualifying.

MR. KEEFE: The qualifying, I am not sure we could come up with that because I don't know if I have that data in the database.

MR. MCNEIL: Okay, you will provide us with the list.

MR. KEEFE: Yes. We would have a list of societies, which we know have to be non-profit or they couldn't be societies.

MR. MCNEIL: It was also mentioned earlier around the issue of the list that the bulk vendors were using of who qualified and who didn't qualify. Where did the list come from that they had? Was it their customer list?

MR. KEEFE: No, it's basically a combination of our property on-line system which we use for the registry of deeds and new land titles and that has integrated with the property assessment system. That is where we get the determination that a property is residential versus commercial versus resource versus some other use.

MR. MCNEIL: Just for clarification, you were saying earlier when there was a residency that was judged as non-residential but a commercial, it was wrong on the list. Was that a fault of the assessment list or was that a fault with the customer list of the company?

MR. KEEFE: A combination of both. I don't have the detail about how they all broke down but it could have been situations where there had been a change of use in property and the people didn't notify assessment and so we picked it up during this process. The other case, with the customer list, it would be more a question of whether or not they had a civic address or were they still working on rural routes and so on from past history because we couldn't look those up in our system. We needed a civic address to look something up in our system or the name and then had to resolve that we had the right name.

MR. MCNEIL: In some parts of rural Nova Scotia, there are residents who are having a small business operation; for example, a hairdressing shop in their home but by and large the bulk of their house is residential. Do they qualify for this program?

MR. KEEFE: I will make a guess, yes, but I will ask Mike to confirm.

MADAM CHAIR: Mr. Decoste.

MR. DECOSTE: Yes, actually they do qualify but they must apply. They qualify on a proportional rate so whatever square footage of the residence is used for business would not be eligible but the residential portion would be.

MADAM CHAIR: Order, the time has now expired.

Mr. Porter, you have until 10:51 a.m.

MR. PORTER: Madam Chair, just a question or two and one for Mr. Keefe with regard to the people you mentioned, you maybe are going to hire around 10 people or so. What kind of qualifications do these folks need? Are they accountants? I am just kind of curious.

MR. KEEFE: For the most part, they would be clerical people - Clerk IIIs. There are hundreds of them in the department. There is basic processing.

MR. PORTER: Basic processing staff.

MR. KEEFE: They wouldn't need to be a certified accountant or anything along those lines.

MR. PORTER: I may have missed it. What was the approximate time frame for that?

MR. KEEFE: Hopefully earlier rather than later. We need to see how we get through the processing of all the landlords and so on to bring this season to a close, and also when I can get space, when I can arrange for furniture. We are hoping sometime during the Summer, certainly before September.

MR. PORTER: The two departments working together are Department of Finance and Department of Service Nova Scotia and Municipal Relations. It appears as though the relationship with this program and being rolled out is seeming to go very well, though. Would that be fair to say?

MR. KEEFE: Yes, it would be very fair to say. If you are familiar with the department, we do quite a bit of this. A lot of the work we deliver is programs owned by another department - whether it be the Department of Environment and Labour or the Department of Tourism, Culture and Heritage - because we are trying to do the one-stop service for Nova Scotians. So that is the way we do business, if you will, is partner with other departments to deliver their programs.

MR. PORTER: Yes, and I am certainly learning more of that, how the interdepartmental workings go. Thank you very much. Those are really all the questions I had. We will pass our time.

MADAM CHAIR: Mr. Bain.

MR. BAIN: Madam Chair, just one question. It's going back to the toll-free line. I am just wondering about how it is done. Is it done within the department or is it an existing call centre? It might have been said before. I may have missed it, I don't know.

MR. KEEFE: For now it is a private call centre. The private sector is handling that work for us. We will bring that back within the department. We have a call centre within the department already that deals with quite a few calls so obviously we would be leveraging that but staffing it up to handle any extra calls with this.

MR. BAIN: That is referencing that the staffing hasn't been done as yet on that, but there will be employment.

MR. KEEFE: That is totally transparent to anyone calling. They really wouldn't know whether it was our staff or the private sector answering the phone.

MR. BAIN: That's great. I apologize that when I was out of the room, that might have been discussed. Thank you.

MADAM CHAIR: That concludes the questions that you have?

MR. BAIN: Yes.

MADAM CHAIR: The time, then, has expired for questions and I offer the witnesses an opportunity to make some concluding remarks, if you wish, beginning with Ms. Harnish and then Mr. Keefe.

MS. HARNISH: Thanks to the members today for inviting us in. I would like to indicate that yes, in fact, the two departments have worked very hard and collaborated on delivering this in what is a very short period of time. It was quite a complex initiative to put together and the staff in both departments are to be very much commended for that.

MADAM CHAIR: Mr. Keefe.

MR. KEEFE: I have very little to add except thank you and I hope we answered your questions.

MADAM CHAIR: At this time I would like to, on behalf of the committee, extend thanks to the witnesses.

I would also like to have the record reflect a thank you to Mora Stevens, who is a long-serving public servant and the clerk to this committee for many years. I believe Ms. Stevens worked for the Public Service for 18 years. She will be missed by this committee. She has gone to take up new duties with the Utility and Review Board. I am sure everybody here wishes her the very best in her new endeavours and we would like to thank her.

Additionally, I think it's important that we thank Mr. Claude Carter, the Deputy Auditor General, who is retiring fairly soon, before this committee meets again, in fact. As well, we would like to thank him for his many years of professional service to this committee and to the people of Nova Scotia. I know I certainly appreciated his candor in front of this committee many times and we wish him all the best in his retirement.

So with those remarks, we will stand adjourned until March 21^st when we will have in front of us the Nova Scotia Community College and the Department of Education.

MADAM CHAIR: Order, Mr. Porter has the floor.

MR. PORTER: I was just going to suggest perhaps it would be in order for the committee to write a letter to both of those folks who have assisted this committee in many ways and pass on our appreciation.

MADAM CHAIR: Absolutely. I will undertake to make sure that occurs. Thank you.

[The committee adjourned at 10:44 a.m.]