HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr.Chuck Porter (Vice-Chairman)

Mr. Patrick Dunn

Mr. Keith Bain

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Leo Glavine

Ms. Diana Whalen

[Mr. Leonard Preyra replaced Mr. Graham Steele]

WITNESSES

Department of Economic Development

Mr. Paul Taylor, Deputy Minister

Office of Immigration

Ms. Elizabeth Mills

In Attendance:

Ms. Darlene Henry

Legislative Committee Clerk

Mr. Jacques Lapointe

Auditor General

Ms. Evangeline Colman-Sadd

Assistant Auditor General

Mr. Gordon Hebb

Chief Legislative Counsel

Mr. John Traves

Director of Legal Services

HALIFAX, WEDNESDAY, OCTOBER 15, 2008

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Order. I'd like to welcome you to the October 15^th meeting of the Standing Committee on Public Accounts. Today we have with us witnesses from the Department of Economic Development and the Office of Immigration.

We will begin in the usual manner of introductions from our members and our witnesses. Then the floor will be turned over to Ms. Mills or Mr. Taylor for an opening statement and we'll proceed with questions. So we'll begin.

[The committee members and witnesses introduced themselves.]

MADAM CHAIR: Thank you. Before we proceed, I just want to indicate, Mr. Traves, that you're here to give counsel to the witnesses, as you know, and not as a witness. I notice that you've been added to my witness list so I just want to make that clear, thank you.

Mr. Taylor or Ms. Mills.

MS. ELIZABETH MILLS: Good morning, Madam Chair. Thank you very much, members of the Public Accounts Committee, for allowing us the opportunity to answer any questions and provide further clarification. I'd just like to take a few moments to say some opening remarks, then Deputy Minister Paul Taylor will provide the closing remarks.

As the Minister of Immigration noted on October 1^st, we are pleased to accept the Auditor General's Report on the Nova Scotia Nominee Program, which was submitted that day and tabled with this committee. We are pleased with the Auditor General's findings in two main areas. One is with regard to the trust fund, that all monies are accounted for, and we're also pleased that the Auditor General commented on the residency refund program, that it is being well administered and things are well in hand. Both of these areas auger well for us as we move forward.

We have said to this committee, in the media and in the Legislature, that we have learned a lot about immigration since establishing the Nova Scotia Nominee Program. We attempted to manage the program. When problems arose, we introduced measures to counter them and to try to fix them. In the end, these fixes could not address the deficiencies with the stream's design. That's why we introduced the residency refund and are about to expand it.

When I talk about the stream's design, I'm talking about the economic stream and that's the stream under which the audit was done. Please be assured that the lessons we have learned as a result of this stream are being used to better meet the needs of potential newcomers to our province and the local marketplace.

Thank you, Madam Chair. Now we'd be happy to answer your questions.

MADAM CHAIR: Thank you. The opening round of questions will be 20 minutes per caucus. I recognize Mr. Wilson from the NDP caucus.

MR. DAVID WILSON (Sackville-Cobequid): Thank you, Madam Chair, and thank you for coming before the committee again on, I think, an important issue. With the recent developments of the Auditor General's Report, it definitely highlights some concerns and some deficiencies that were in place, I think, with this program.

I know that the Auditor General did an excellent job looking at this file and did his best to try to bring to light some of the problems that were involved in this program. We know that with his audit, a lot of the findings or some of the findings were out of his scope and were passed on to the RCMP. So I guess we'll have to wait for that and I believe that some of our questions, you may not answer. I'm not too sure what the government and what your take is going to be on some of the questioning so I'll be sharing some of my time with my colleague.

It just leads me to wonder - the stigma attached to this program and to our province with the findings from the Auditor General and some of the problems we've seen - are we in this mess today because government chose to seek an outside agency to provide this program and to deliver this program? So my first question is, would you consider the Cornwallis contract to be a public-private partnership that the province entered into to deliver this program?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I guess that would depend on the definition of that term public-private partnership, it has been used in so many forms in the last 10 years or so. It certainly was an attempt by government to administer what amounted to a government program through a third party.

MR. DAVID WILSON (Sackville-Cobequid): That has been a concern of ours, definitely, for a number of years now because of the appetite, I believe, of the current government with these public-private partnerships. We know they're looking at it in the future for health care delivery and it seems to weigh heavily on some of the problems that we have that I think are a result of them entering into this program. It leaves us to wonder if it's the right path that we went down in this case.

One of the things that we had originally looked at - I'm trying to think of the timeline now, it has been quite some time now - we're trying to get a timeline of when the government recognized or identified that there were some serious problems with this program, the delivery of this program. Can you give me a date, to the best of your knowledge, when you, or the minister and government, recognized that this program had some serious problems with it?

MADAM CHAIR: Ms. Mills.

MS. MILLS: The Office of Immigration first became concerned on June 3, 2005, when interest was removed from the trust fund. That was our first concern. Later, when we became more involved in the actual administration of the program, we began to have concerns about whether or not agents were charging fees over and above the $20,000. We became aware, through the grapevine as it were, of third-party brokers who were involved in doing business-mentor deals.

Many of these areas were suspicions that we had and I think many of them really started to come more to light in January 2006. During the period of January 2006 to June 30, 2006, we tried to investigate these issues further and see if a resolution could be arrived at. It wasn't until October 2007 when we became really aware of the magnitude of the issues. In mid-October 2007 we introduced the residency refund, and at that time a number of nominees came forward with concerns and complaints. Prior to the announcement of the residency refund, we had very few complaints from nominees.

MR. DAVID WILSON (Sackville-Cobequid): You stated that what really caught your attention was the removal of funds from the trust accounts. Why would government allow Cornwallis to have control of those accounts? Was that just part of the agreement that government signed with them to allow them to have full control, especially of the trust accounts where millions of dollars were placed?

MS. MILLS: The original agreement which was signed in December 2002 indicated that a trust fund would be set up. In August there was an Appendix B created and Appendix B allowed for a clause which stated that the fund would not be under total control of Cornwallis.

Once the Office of Immigration was created, we initiated measures to get joint signing authority on the fund. That was not secured until the Fall of 2005.

MR. DAVID WILSON (Sackville-Cobequid): Just for our recollection - I know it's in amongst the thousands of pieces of paper and information that we have - how much money went through that account? Are you aware of the exact amount that went through that account?

MS. MILLS: Yes, $106 million went through the account. Some of that money is net of fees and commissions paid prior to June 30, 2006.

MR. DAVID WILSON (Sackville-Cobequid): Madam Chair, I'll pass my remaining time on to my colleague.

MADAM CHAIR: Certainly. I recognize Mr. Preyra. You have until 9:27 a.m.

MR. LEONARD PREYRA: Thank you, Madam Chair. Welcome, Mr. Taylor and Ms. Mills. It's great to have you back here again, at least from our point of view. I have a number of follow-up questions relating to questions from Mr. Wilson.

[9:15 a.m.]

Both Mr. Taylor's opening remarks and your opening remarks talk about problems with the Nominee Program. But in looking at the government's official response to it, we see the government talking about this as a success. But here we have a number of lawsuits involving Cornwallis and the government, we have the RCMP investigating a number of cases, several hundred nominees have gone missing, the Auditor General says that most of the nominees didn't fit the criteria, most of the businesses didn't fit the criteria.

By what measure can the government call this program a success? How do we reconcile the fact that the government says this is a success and yet both of you here today are saying it was not?

MS. MILLS: As the Minister of Immigration stated in his remarks on October 1^st at the news conference, the government is fully aware that the program did not meet the objectives of the program, the pilot did not meet the objectives of the program. That is why we stopped accepting applications over two and a half years ago.

What I would say, though, is that many applicants - 809 - would otherwise not be in Canada but for the Nominee Program. We know that there are a number of those 809 who have not yet landed. We expect that they will be landing , that's 176. We also know that there are a number of nominees who are in Nova Scotia currently. So that, I think, is what would be referred to as positive findings, but for sure, the program was deficient, the pilot was deficient. That's why we ended it and we don't intend to reinstate it.

MR. PREYRA: Thank you. Now, I notice that you said a number of nominees are in Canada. In the government's most recent statement they come up with clear numbers of nominees who are in Nova Scotia. Now, we see no evidence to support that document. In fact, the Auditor General has said that the government cannot find these nominees. I think several hundred, at least 400 of them, are not accounted for.

Where does this new number come from? Does the government have contact information for these nominees who have disappeared?

MS. MILLS: We do have contact information for over 400 economic nominees. I'll give you the breakdown so that you understand where we have this information: 68 nominees received a residency refund at the end of August 2008, so we have current addresses for those 68. They would have applied to us, they would have had to prove they are a full resident of Nova Scotia for at least 12 consecutive months.

We have 10 additional applications that were processed in the month of September and their funds have been paid. We have 45 applicants for the residency refund and those applications are in process now. We have an additional 140 who have submitted their Form 70, we call it, which is their notice that they will be applying for the residency refund within 12 months of their landing.

We also have a number of economic nominees who participated in the Business Mentor Program who have provided us with their Nova Scotia contact information. We can't be 100 per cent sure that all of their information is accurate. However, because the minister recently announced - or reaffirmed - his announcement of June 11^th that the residency refund will be expanded, we are starting to receive more current information for a number of these economic nominees who will be applying if they qualify for the expanded residency refund after October 27^th.

MR. PREYRA: Thank you. I'd like to go back to the period in which the Cornwallis contract was first signed, in late 2002, and the period between 2002 and 2005 when the Office of Immigration came into being. Now, we've seen several thousand documents from that period. At the outset problems started to emerge with the agents, with the brokers, with the companies that were dealing with Cornwallis. Yet, on the public record, the minister and the succession of ministers continued to insist that there was nothing wrong with the program. It seems to be at odds with what - and when you arrived at the Office of

Immigration, you immediately started sending off these alarm bells about what was going wrong. What was happening there where the bureaucracy was saying there's something wrong here and the ministers are saying don't worry, be happy?

MS. MILLS: I'd like to talk about the time frame a little bit, if I may. The program began in 2003. In July 2003, the first certificates were issued but it takes some time before those nominees would begin to arrive. So in the first year of 2003, only 17 certificates were issued because the program had to ramp up - the capacity had to be built up. Then in the next year there were only 23 certificates issued and so on. So it took a number of years before those nominees began to arrive.

The Office of Immigration was officially established in 2005. We got the responsibility for the Nominee Program on April 1, 2005. So very few landings had actually occurred at that point. Until that point, we were looking at the information and seeing that we were receiving applicants, that applications were being processed, that landings were beginning to happen, and Citizenship and Immigration Canada was approving permanent resident landings. So until that point, very few landings had occurred and even fewer matches had occurred - three, I guess. So it wasn't until the landings began to happen that some of these problems came to light.

As I stated earlier, we had suspicions of these issues. We alerted the ministers of our concerns and suspicions but until we actually had evidence, it was very difficult to act. It was really only in the period of January 2006 to June 30, 2006 that a lot of these issues started to come to light. Again, we didn't have a lot of proof. It was mid-October of 2007 when the residency refund was announced, that nominees came forward with issues and complaints and those have been documented.

MR. PREYRA: But we have a record of these documents going up to the minister and going up to the Cabinet but we see nothing coming back from the minister saying, we want you to do this in response to these concerns that you raise. I'm talking about in April of 2005 and some of the period before that. There's a lot of documents going up but nothing coming back that says this is how we're going to revise the criteria, evaluations, how we're going to measure success and this is how we're going to address these deficiencies that you're bringing forward.

MS. MILLS: As I indicated, at that time, we were not aware of a large number of these issues or problems.

MR. PREYRA: I have another question about the criteria that was set up. The Auditor General has found that the criteria that was given to the Office of Immigration was not clear, it didn't address the needs of the nominees, it didn't address the needs of the business mentors, and it didn't address the needs of the province. In fact, not much was done in the initial stages to look at the criteria itself.

Maybe this is more of a question for Economic Development, since they were present at the creation. What types of discussions took place in the early stages, over the Cornwallis contract? If you look at what arrived in 2000 and 2001 and what was eventually agreed to, there was hardly any change to that initial design that was proposed by Cornwallis and most of the criteria was set out by Cornwallis itself.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: Certainly there were plenty of discussions between the staff, our legal counsel and the people behind the proposal that Cornwallis had put forward. I think it would be fair to say that the staff - one of the issues I think we have to constantly remind ourselves through this period, and I think one of the main reasons this program got off the rails, is that the Government of Nova Scotia didn't really have any dedicated, concentrated staff or expertise in the immigration world when they went down this road.

This was a program that was originally - not the Nominee Program - the responsibility for immigration had been in the Department of Education. It was inherited by the Department of Economic Development and I certainly say when I joined the department, there wasn't a great deal of expertise in the immigration world. I think that you see the contract in its final form is a reflection of, I would say, the staff recognizing or being seen to recognize Cornwallis as a professional, expert organization in the world of immigration. Hence, the contract reflects, in many cases, what that organization had proposed to government as a system that would work.

Here we're talking about a program, or a province at the time that had pretty poor numbers in both arrivals and retention rates and a province that was pretty eager to do something about it. Having retained the services of someone they believed was a professional organization in the area to do it on their behalf, you would obviously be ready to take their advice in many cases.

MR. PREYRA: I think what you're saying is that the province didn't have the expertise at the time to deal with this immigration file and ended up giving it to Cornwallis, to a private contract and, in fact, followed the lead of Cornwallis because of a lack of expertise. Could the same be said of other P3 contracts? Is there anything different about this contract?

MR. PAUL TAYLOR: Just to go back to the premise of your question there, it wasn't just the relative lack of expertise. One of the driving forces was the department was assigned the job of increasing the immigration numbers with the responsibility of not spending any money on doing it. So don't hire people, don't spend government money out of your budget but get those numbers up - something we had been relatively unsuccessful in doing.

So obviously the solution was to find a way to hire somebody to do it without spending money on the contract. Hence, the program that was arrived at was a program that would use money from the immigrants themselves to allow the process to work.

The P3 programs that you refer to in general - my experience with P3 programs in government - is that almost exclusively those P3 programs relate to capital expenditures of some sort, so a school, a rink or a highway - something you can contract out to an organization to build on your behalf and sometimes operate on your behalf. They don't very often use the classic P3 public-private partnerships in relation to a government operating program that doesn't involve significant amounts of capital.

MR. PREYRA: Another question I have relates to the just lack of accountability mechanisms in the Cornwallis contact - a lack of oversight, a lack of follow-up. Given that this was a pilot project, why is there such a deafening silence in this area, in terms of accountability? There was no political mechanism for reviewing this program; there was no administrative mechanism that was required of the bureaucracy that said we want you to report within a certain period of time about the success of this program or the efficacy of certain measures in here.

MR. PAUL TAYLOR: I think that was one of the principal reasons that timelines were established in the contract as they were. I mean, this is a program that advisedly had a sunset attached to it when the program and the contract were signed, specifically for that purpose. We'll run this program in this manner for a while, see what conditions have changed, see what lessons we've learned and see whether this is something we should continue to do. I think that's the principal mechanism of the accountability.

Obviously the staff of the organizations were monitoring the situation, as Elizabeth has mentioned, I guess in early to mid 2005. I can say up to that point in time there was no indication of the lack of trust in Cornwallis. Any time you sign a contract with an outside organization, regardless of what the legal letters say, there has to be some relationship of trust between the two parties in that contact. That trust existed, without question, up until the middle of 2005, when the first signals were that we're not being told everything that's going on inside this program.

MADAM CHAIR: Order. The time has now expired for the NDP caucus. I recognize Ms. Whalen for the Liberal caucus. You have 20 minutes.

MS. DIANA WHALEN: Thank you very much, and welcome again this morning. I know it has been some time since you've been here - I think I saw notes from November last year and perhaps just in the new year as well. One of my concerns in the entire last year has been the amount of effort that has had to go into four court cases, I believe, or four different court issues that are being looked at, as well as the Auditor General's review which has taken months, and the requirements of this committee.

As I say, I think an opening comment would be that your resources must be stretched to the limit in terms of managing the demand for information. I wonder if you could just comment on the last year in the Office of Immigration.

MADAM CHAIR: Ms. Mills.

MS. MILLS: Thank you, Madam Chair. It has been a very taxing year, for sure. We have spent a lot of time responding to all of the requirements for information. I will say, though, that we have an incredible staff and they have worked very hard and very diligently to provide this information in a timely way, so I take this opportunity on the record to thank them for all their work they have done in this regard.

[9:30 a.m.]

MS. WHALEN: I can certainly appreciate that they've been under the gun. What we want to see, of course, as members of the Legislature, and I know your commitment actually, your personal commitment to immigration - our concern is to see more people being welcomed in this province and to find out what went wrong and put behind us a lot of that and move forward. I am fearful that we haven't moved forward at the pace we should have, so maybe we'll go to those questions in a little while.

I'd like to go back to the time when the agreements were - well, when the issues became clear, that there were a lot of problems. There was a memo that we saw the last time you were here that we discussed that had quite an itemization of the things that were going wrong. I believe it was the Spring of 2007 that you had put that together.

I've been concerned from the start about the fact that we didn't just freeze everything when you froze the acceptance of new applications. The problems were clear to you, actually in 2006 in the summer, because you stopped accepting new - and I don't mean you, personally - the government, your office, stopped accepting new applicants so that you could get a handle on the volume and the needs and try to meet their needs. At the same time, mentorships were continuing to be signed while an awful lot of irregularities were being noted.

So could you again, and I think that my colleague Mr. Preyra had begun that, but could you go through the process or the decision points that led you to continue to mentor or to match companies and individuals, while so much was coming to light that was irregular?

MS. MILLS: First I'd like to comment on your other comment and let you know that while we were responding to all the inquiries of information, the Nominee Program continued to exist in that we had our skilled worker category, our family business worker category, community identified and we introduced the international graduate. So our nominee

officers continued to process applications under those categories, so I want to note that for the record.

MS. WHALEN: Well I do, and I know the numbers are increasing but initially certainly the vast number of your nominees have come in under the economic stream, so we're here today just to talk about the economic stream. So if I mention it or any of the others do, I'm sure that it's understood that we're only talking about one stream, which is important.

MS. MILLS: Thank you, that's what I wanted to clarify.

MS. WHALEN: It is important. As I say, right up to the month before the program was changed, there were people still signing up for these programs. One of the things I thought was alarming in the Auditor General's Report was that at least one person who he had interviewed and noted had said that they were notified in advance not to sign, that a change was coming.

As we've said before, $100,000 of their own money was on the line if they put their signature on a contract. There were rumours and some discussion among the immigrants but the office's approach was still to match people and to get contracts going, and to insist that people do so within 12 months. I have a real problem with that because I feel that people were not being protected when there was clearly a major policy shift coming. So could you comment on that, please?

MS. MILLS: Going back to your question about timelines - the contract with Cornwallis ended on June 30, 2006. On July 1^st, we stopped accepting any new applications under that program but we had a number of applicants in the queue and we had an obligation to process those applications. Those individuals had applied under the economic category and they had applied for certain benefits that were to be provided to them under that category; for example, the employment contract, the mentorship experience. So a decision was made that we would attempt to continue to make those matches. There was a lot of alarm and concern on the part of the nominees who had landed. They were anxious that we could confirm that they would be getting their employment contracts and the matches were made.

We continued along that route. As I indicated, more issues came to light in that period of time and we attempted all sorts of measures to try to fix them. In the end, we concluded that no matter what fixes we attempted to introduce, they were gotten around and the deficiency persisted. It was in October 2007 that we finally had approval to offer a second option, which was the residency refund option. We still had a legal obligation to provide the employment contract mentorship option because those are the terms under which those nominees had applied.

We began discussing how we would deal with the issues after determining that no matter what fixes we put in place, they were not fixing the problem, in about May 2007. We looked at all sorts of options. It wasn't until the Fall that we finally concluded we would go forward with the residency refund option. We had approval to do so and we announced that in mid-October.

In the meantime, as we were working on these options, we were meeting with nominees. We were meeting with them personally, something that hadn't been happening before. We were encouraging them to wait. We were encouraging them to improve their English skills; we were encouraging them to allow us to find better matches, better business matches for them but they were anxious to move forward.

The reason why we didn't come out and say outright, don't sign this employment contract, there is going to be another option, was because until we had Cabinet approval for the second option, we couldn't say with certainty that this would occur. So we were encouraging people to take their time.

It was good advice because many of them did need to improve their English, even before they could accept a middle management position. Now I would say in retrospect, knowing what we know now, we certainly should have put a moratorium on making those matches but hindsight is 20/20.

MS. WHALEN: I appreciate your saying that because I think the people who were caught, particularly those caught doing their mentorship at the time that the change arrived, or even those that had not yet begun but who had signed the contract was certainly a great cause for concern and I know they were at your doorstep as well, wanting to stop the contract in its tracks because people didn't want to continue to do that. They wanted to be part of the refund option which they were now excluded from.

So I think it is good that you've recognized a problem there, in having overlooked the impact on those people at that time, because it had a huge impact on those families. I know a lot of people were very depressed, upset, angry, and I think rightfully so. I think the minister's decision to say that he will now look at refunding the funds to those immigrants who had done the mentorship and had been excluded previously from the refund, is the right thing to do.

On that note, I'd like to know - certainly there were months that passed from the June 1^st Auditor General's Report until we heard again October 1^st and the minister had indicated a willingness to look at refunding to more people than had originally been included in the refund option. That was done in June, yet again in October we still don't have any details around the option that will be made available or how it's going to be rolled out for those roughly 100 families that are still here in Nova Scotia who had had mentorships. Can you say why there was not a plan in place when the second Auditor General's Report came forward?

MS. MILLS: As the minister announced on June 11^th, the government was going to expand the residency refund pending the result of the Auditor General's Report. So the Auditor General tabled his report on October 1^st. Subsequent to that, we have looked at how we might proceed with regard to the details of the expanded residency refund. Those details will be announced on or before October 24^th.

MS. WHALEN: Can you give us an indication if your intent is to go through each and every file and, in some respects, have a bit of a witch hunt to see who might have done everything according to the letter of the program and who didn't?

MS. MILLS: I can't pre-empt the announcement that the minister will make on or before October 24^th but I will say that this is intended to be administered as a residency refund.

MS. WHALEN: So the main criteria being residency - okay, that's something. I feel it's really important that we don't discredit the province and our program even further by seeking out all of the things that may not have been according to the plan because, in fact, the government didn't meet their part of the plan either.

We see in the selection of companies, again these immigrants were encouraged to come here under the assumption that there would be many companies that they could select from. That wasn't the case when they came here and in the Auditor General's Report, we have a number of figures showing that 24 out of 41 mentor applications didn't meet the criteria, 21 out of 57 nominee files identified couldn't be located, and 20 out of 41 mentors didn't have the - well more than that - didn't actually meet the criteria.

I think if you took all the different criteria they were missing on the companies, it was easily half of them didn't meet the criteria and yet we were approving them and making these matches. So we were approving nominees who didn't meet the basic English, and other criteria; we were approving companies that didn't have five employees or more or didn't meet some of the other criteria, so we let them down as well in a great way.

So I think it's important that because the program has been so flawed with so many different deficiencies pointed out that we not go down the path of trying to assign blame to either the companies or the immigrants at this point in time and that we move forward. So I hope that is something in your mind.

I would like to look particularly at this matching process that's in place and it might be questions from Mr. Taylor perhaps, I'm guessing. In this case, we found that a lot of the companies that were approved didn't meet the criteria that was set out by ourselves for what would be a good company for the matches. I wonder if you could tell me, first of all, why we didn't allow any publicly traded companies? It seemed that it had to be small businesses.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: I honestly can't answer that question. That decision was made before my time at Economic Development, I honestly don't know the answer to it.

MS. WHALEN: Okay. I mean it certainly limited our choices because a lot of our big and most prominent companies were excluded and it meant that we were really looking for small companies and it was difficult to find them, clearly.

As we go forward in terms of the committee, could you explain to us how companies would apply and who made the decision on whether they were accepted or not?

MR. PAUL TAYLOR: As I understand it, under the contract, Cornwallis was responsible for finding mentor companies and ensuring the application was filled out. Under the contract, as I understand it, really there is no role for the province in that process. However, it was soon recognized in dealing with companies in Nova Scotia, that the expertise that the province had, particularly in business financing, that there was a role for civil servants to play in trying to make some assessment of the financial viability, the financial wherewithal of the companies that were signing up to be mentors. So two people were added to the Cornwallis committee - one from NSBI and one from Economic Development - to provide that advice on the types of companies that were being . . .

MS. WHALEN: Could you say how far along we were in the contract before it was a committee of three?

MR. PAUL TAYLOR: I don't think the committee started up until the Fall of 2004.

MS. WHALEN: There still weren't very many nominees arriving at that time. Okay. I think there is quite a responsibility to be borne by that committee for accepting companies that just clearly didn't meet the criteria. Can you explain why the committee would have approved so many companies that didn't meet the criteria?

MR. PAUL TAYLOR: Well the material that was brought forward to the committee through Cornwallis was usually a summary of the application that was made. So there was a bare bones assessment of the companies themselves brought to the committee.

The two civil servants started working for the committee in, I think it was November-December of 2004. As I said, their two cents worth was on the strength of the company financially. They would have this material put in front of the committee and they would make an assessment on the basis of the information in that summary as to whether the companies were suitable as mentors and they would be put on the list.

MS. WHALEN: Mr. Taylor, do you know if they had a checklist that would say, are there five employees, have they been in business for so many years - those kinds of questions?

MR. PAUL TAYLOR: I've never seen one of the summaries but I do believe the summary did include an assessment of how they met those criteria.

MS. WHALEN: Can you explain why they would have accepted the company that wasn't resident in Nova Scotia - the one that it was noted had a New Brunswick address? It was just a phantom in Nova Scotia.

MR. PAUL TAYLOR: That company, I believe - I could be mistaken but I believe that was the very first company that was accepted. This is the time to, I guess, recognize that the immigration system very often is not a right or wrong, black or white, yes or no, on/off switch. There is an awful lot of judgment required all the way through the process in dealing with this immigration file.

[9:45 a.m.]

In the very early days they were using those criteria, as I understand it, as guidelines. They were applying those guidelines to try to get companies in the queue to get this program started. This program had taken an awfully long time in the gestation period and I suspect there was an urgency to get this program moving. We had certificates being issued, we had nominees showing up. There had to be companies to match them with to allow this program to proceed.

So they were using these guidelines but clearly the way those guidelines were being applied in the early stages led to companies getting into that system that should never have been there, and that was certainly one of them.

MS. WHALEN: I think that's very clear, that the Auditor General has pointed that out as being perhaps the most startling of the errors that were made in assigning that. Can you tell me right now if the committee is still meeting?

MADAM CHAIR: Ms. Mills.

MS. MILLS: It hasn't met for some time.

MS. WHALEN: And can you tell me how many companies are currently approved that are on the list? Or is there a list?

MS. MILLS: There is a list. There is a total of - I don't have the addition done right here.

MS. WHALEN: Just approximately.

MS. MILLS: A total of 212 matches have been made. I'm not exactly sure of how many other companies are still on the list. I would hazard a guess, however, that some of those companies may want to be withdrawn from the list if they hadn't been matched at this point.

MS. WHALEN: Ms. Mills, I wanted to ask you about the fact that you're continuing to offer that. You said a few minutes ago that you feel there's a legal obligation to continue to offer the mentorship. I think as much as we have now got an Auditor General's Report that showed just how flawed the whole program was and that from the very start it was defined as a pilot project, which meant you're going to be checking it along the way and making changes and so on, that gave you the flexibility to do so. I would like to ask today why we are still offering any immigrant the option of a mentorship which, in fact, asked them to pay 80 per cent of their money to a company - $100,000 in exchange for $20,000 back.

The government pointed out years ago - the federal government - that they didn't think that was a fair split, that it wasn't a sound program, they had concerns about it. I think it's wrong to continue to do that. An editorial that came out just after the Auditor General's Report actually called it "The flawed and now defunct plan." I think it's interesting to note that people do think it's defunct, it's gone. It should be gone and I would like to know why we're still offering it in Nova Scotia.

MS. MILLS: We are definitely offering the residency refund option and we encourage every new nominee who lands to take that option, but we have been advised that we have an obligation to provide the option of the employment contract because those are the terms and conditions under which nominees first applied.

MS. WHALEN: Ms. Mills, wouldn't it be possible to simply explain to them that in the three years or two years since they've applied that these things have occurred? I mean they'd be free to make their own arrangement, if they wanted to, but I don't believe that the Government of Nova Scotia should be involved in making these matches.

I feel if they had their funds to do as they liked, they're still free to go and find a company that will employ them for that kind of an arrangement, but why would we be involved?

MS. MILLS: They're having Supreme Court challenges wherein immigration policies are changed and individuals have been first told they have to comply under the new rules. When it was challenged in the Supreme Court, the Supreme Court indicated that they had applied under a previous set of terms and conditions and, therefore, they were to be treated accordingly.

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

I recognize Mr. Bain for the PC caucus. You have 20 minutes, until 10:07 a.m.

MR. KEITH BAIN: Thank you, and good morning. Madam Chair, I'll probably be sharing my time with my colleague as well. I'd like to know your initial reaction to the report of the Auditor General.

MS. MILLS: Certainly we were disappointed in certain aspects and we were alarmed about some areas. We were pleased, however, that the trust fund was fully in order and everything could be accounted for and publicly stated in that way. We were also pleased with the fact that our residency refund option was being administered well, but we were disappointed in some areas. I will say we didn't fully agree with everything the Auditor General said with regard to the business mentor companies and with regard to nominee files, but we believe that the Auditor General was fair and very professional in their work, and we were concerned about matters that were turned over to the RCMP.

MR. BAIN: Was there anything in the report that wasn't previously known to the department?

MS. MILLS: There were some items, yes, that we were not aware of. We did not know about the franchise, the purchase of the franchise agreement that is referenced in the report. We were unaware that over $700,000 was in the Cornwallis account not yet paid in commissions to agents or lawyers. So there were some issues that we were not aware of, and certainly some other issues with regard to bona fide business mentor companies that we were not aware of.

MR. BAIN: Did you suspect any of the activity that you saw going on with the program that required police involvement?

MS. MILLS: We knew of issues and concerns and that's why we ended the agreement with Cornwallis. We knew of those issues and concerns later, that's why we introduced the residency refund. We had no evidence to suggest that there was wrongdoing that would require the RCMP.

I would just say that in the Auditor General's Report the Auditor General is very clear that there were matters they identified as being irregular and that it wasn't within the scope of the Auditor General's work to proceed any further with those investigations, so they felt it prudent to pass on those matters.

MR. BAIN: Thank you for that. I wonder if you could describe the working relationship between your staff and Cornwallis.

MS. MILLS: Well, at the present time the contract is ended, so there is no current relationship.

MR. BAIN: I guess I'm referring to when the contract was in force.

MS. MILLS: The duties of Cornwallis were to market the Nova Scotia Nominee Program and to identify and pre-screen applicants to ensure that they met the minimum qualifications. The Office of Immigration would accept a file from Cornwallis Financial - an applicant file. That file was to be completed and fully in order and then our staff would do a file assessment, would do interviews and so on. So there was regular, daily contact with the program staff at Cornwallis.

Cornwallis also provided regular quarterly reports and an annual report. There was also a financial audit done each year and there were regular meetings between senior management staff of the Office of Immigration and senior management staff of Cornwallis Financial.

MR. BAIN: I'm interested in the $20,000 agent fee. Am I correct in understanding that a nominee wasn't required to have an agent? Is that right?

MS. MILLS: Under the Citizenship and Immigration Canada situation, nominees are not required to have an agent but, if they do, they are to report that they have an agent or a representative, it's called. There is a federal form, it's called an IMM 576 form, something like that, and they have to indicate that they authorized this individual to be their representative and, in some cases, to be their paid representative.

Citizenship and Immigration Canada has attempted to regulate this field so that only those members in good standing in the Canadian Society of Immigration Consultants, or lawyers in good standing, can receive payments for representing immigrant applicants. So under the federal system, that is not required.

MR. BAIN: So if a nominee chose not to have an agent, what was supposed to happen to the $20,000?

MS. MILLS: That issue was first identified by Cornwallis. At the time it was decided that any funds that were not expended would be held in trust with other unallocated commissions. It would be determined at a later date what would occur with these funds.

At the time we thought only a very small number of people would fall into this category because most applicants, in fact, did use an immigration consultant or a lawyer, so that issue was never fully clarified or resolved.

MR. BAIN: So you're saying that Cornwallis would hold this $20,000 in trust, at that point, at the time . . .

MS. MILLS: At the time the trust fund was being managed by Cornwallis Financial.

MR. BAIN: Okay. Mr. Taylor, you mentioned that Cornwallis was responsible for finding the mentor companies. I guess my question would be, who in the department would monitor the matches between the nominees and the mentors? Would it be someone in your department or would it be through Immigration?

MR. PAUL TAYLOR: Well, when Economic Development was responsible for the program, we had one person on the file and that person was responsible for monitoring the activities of Cornwallis. When the program was transferred to the Office of Immigration, that staff person went with the file to Immigration.

MR. BAIN: Was there ever a concern that the businesses, such as car detailing, small fish plants, were not able to provide the middle-management experience that the nominees had paid for?

MADAM CHAIR: Ms. Mills.

MS. MILLS: Business mentor applicants were required to submit a job description or a duties description and also a mentorship plan. So those forms were reviewed and assessed by the committee.

In many instances many of the economic nominees, in fact, were entrepreneurs in their own country. What they were really looking at was purchasing a company, or starting their own company in Nova Scotia, so they wanted to observe how the company was run, how it was managed, so that they could learn that business acumen here in Nova Scotia.

MR. BAIN: What kind of feedback did you get from the nominees about the mentorship process?

MS. MILLS: Until October 2007, when the residency refund was announced, we had positive feedback from almost all the nominees. Only a very few number of nominees had complained and when those complaints came in, we took every action to try to resolve their issues and concerns, but until that time we had positive feedback from nominees.

MR. BAIN: So nothing really happened until there was an awareness there of the nominees. Once they became aware of it, that's when you started hearing some things.

MS. MILLS: That's correct.

MR. BAIN: Okay, that's it for me, Madam Chair, if I could turn it over to my colleague.

MADAM CHAIR: Thank you. I recognize Mr. Dunn, you have until 10:07 a.m.

MR. PATRICK DUNN: Thank you, Madam Chair. Good morning, everyone. The Auditor General's Report mentioned a Halifax lawyer who may have been improperly listed as an agent for some eight nominees and was paid despite not performing any work. How could this have happened and what explanation is there for Cornwallis to give $20,000 to this lawyer?

MS. MILLS: The files were prepared by Cornwallis, all the documents were assembled and nominees who may not have had agents or lawyers were told that they could provide a suggested name for them. In some cases nominees did agree and that was recorded in the paid representative form that was sent in the file.

I'm not exactly sure of all the terms and conditions under which legal work was performed or not performed. That is one of the issues that has been turned over to the RCMP for further work.

MR. DUNN: Is there a possibility that Cornwallis could have somehow profited from this arrangement?

MS. MILLS: I can't answer that question at this point because I don't know.

MR. DUNN: Were you or are you now aware of any arrangements or relationship between the Halifax lawyer and Cornwallis?

MS. MILLS: Yes, I am aware of a relationship between Cornwallis Financial and the Halifax lawyer.

MR. DUNN: Could you expand on that?

MS. MILLS: I know that on at least one occasion that lawyer performed legal duties on behalf of the company and that would have occurred in the Fall of 2005.

MR. DUNN: Did Cornwallis recommend any other agent or was it only this Halifax lawyer?

MS. MILLS: I'm not aware of the answer to that question, I don't know.

MR. DUNN: Could you please explain why the lawyer would have returned $15,000 to the trust? What explanation would there be for that, if any, that was given to your staff? It's my understanding that he kept the remaining $5,000 and I was wondering why.

MS. MILLS: We don't know the answer to that, that's a question for the Halifax lawyer and one that will be pursued in the various court claims we have underway with Cornwallis Financial.

[10:00 a.m.]

MR. DUNN: With regard to the residency refund, the plan to expand it, do you foresee any potential problem moving on with that?

MS. MILLS: I think that we'll have a large volume of applicants shortly after it's announced and we will have to allocate additional resources to process that, and I think we will certainly be doing due diligence with regard to the residency, proof of residency and proof of actual full payment received by nominees.

MR. DUNN: Going back to the pilot itself, one of my colleagues mentioned earlier about the stigma that was left after this program was well on its way. We are aware that the pilot did not meet all of its objectives, there were some deficiencies in the pilot program. However, the program did have some success stories - could you expand on that or perhaps even give some examples.

MS. MILLS: I could expand, yes. There are a number of nominees who have been successfully employed as a result of their employment contracts, I know of at least two. There are nominees who are currently living in Nova Scotia. Just recently, I'm sad to say, one of our nominees passed away. Until this time we've had births, we've had divorces, we've had marriages and remarriages, and this was the first death. I did go to the funeral and I was amazed at the fact that Saint Mary's Basilica was full of nominees. They were individuals not just from the Filipino community but nominees from other ethnocultures, so sometimes in adversity people will come together and form extended families and you can see that it's a very close-knit nominee community that exists.

Just recently I was away at Thanksgiving, I received about 10 e-mails from different nominees in Nova Scotia wishing myself and my staff the best and thanking us for our work with them in the Nominee Program. So there are people who may have felt they were unfairly treated and not being given the option first for the expanded residency refund, but they have all said that they are happy to be in Nova Scotia, they appreciate the work of the Government of Nova Scotia, and they're anxious to move forward in staying here.

The residency refund option, I think, will also auger well for those 106 economic nominees who have not yet landed. I think some of them may originally have thought that

this was a way for them to get into Canada and they were not necessarily committed to coming to Nova Scotia, so they were willing to waive the benefit of the $20,000 to go elsewhere, but the $100,000 may be a greater incentive for them to actually come to Nova Scotia and settle and spend at least a year here and, hopefully, put down their roots and start their lives here.

So while there was a lot of difficulty and deficiencies, there are nominees who are in Nova Scotia today and are trying to be successful, trying to settle. It's not easy for any newcomer to settle in a new country and in a new area, but they are working hard to do so.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: Just a couple of points I'd like to add to what Elizabeth has mentioned. Certainly two of the lessons that have come out of this process is the incredibly complicated nature of the immigration business, how it is not a simple business to get into and be successful in and how we would have learned that management of a business that complicated through a third party is very challenging for government. So certainly that's a lesson that we have learned, without question.

But perhaps the biggest benefit that has come out of this program, because I know Elizabeth wouldn't mention it herself, is we are now blessed with some of the most professional immigration people in the country, working in the Office of Immigration, including this lady to my left. So that resource that we've developed really stands this province in good stead, in going forward, to be successful and continuing to drive those numbers up. So that wouldn't have happened if we had not run into the complications we did and realized that we had to get people on our own, in our own seats, in our own resources, to apply to this program.

MR. DUNN: You mentioned earlier about suspicions occurring perhaps around June 2006. Were you surprised or alarmed when nominees started to come to the committee with regard to their disappointment about the pilot program, to the extent?

MS. MILLS: As I said, we had suspicions and our suspicions were around a number of matters, but we were really quite surprised when so many people came forward in mid- October to tell us that they didn't have a good experience or that they were upset they were excluded from the residency refund option. So we were quite surprised, at that point, at the extent of the problems. Until that point we knew there were issues but we had no idea of the magnitude.

MR. DUNN: Thank you, Madam Chair.

MADAM CHAIR: The time has expired now for the first round of questions. We will have a second round, 15 minutes per caucus.

I recognize Mr. Preyra from the NDP caucus.

MR. PREYRA: Thank you, Madam Chair. Ms. Mills, I'd like to follow up on Mr. Dunn's questions about your suspicions. In fact, if there's one thing that stands out in the documents it's that there was a "see" change in attitude when you joined the department, and I think it's a compliment to you that you paid much more attention to that file. I think it would be fair to say that you had more than just suspicions. From the documents you can see allegations of wrongdoing on the part of agents and brokers and consultants and suspicions of corruption in the process, or at least an attempt to clarify some of these murkier areas of the policy.

Again, we see a lot of these suspicions, all of these questions going to your political masters in a way. When did the minister first become aware of these allegations of wrongdoing and corruption that we see in the documents at the bureaucratic level?

MS. MILLS: As issues came to light to us, we continued to brief ministers throughout the process. I mentioned earlier that in June 2005 we became aware that interest had been removed from the trust account and we - you would see from the documents - insisted that the money be returned to the trust fund. It was eventually returned to the trust fund, it is in the trust fund, but it was returned under protest. The company indicated that they believed they had legal ownership of that interest and they would return the money, but they wanted the matter resolved.

So as time went on, issues came to light. We tried to look at measures and solutions to resolve these issues, but as more time went forward, more alarming issues came to light. At the time of the interest, we were concerned but we also realized that the contract didn't speak to the matter of the interest. It didn't talk about who owned the interest or who didn't, so the ownership of the interest was something we felt had to be resolved. We did try to do that and we had direction to move forward. We had direction that the list of business mentors was to be transparent, was to be published on the Web site. So we had direction to try to resolve issues at various points in time and we did attempt to do that. By the time June 30, 2006 came along, it was clear that we weren't able to do so.

MR. PREYRA: So it's your recollection, and the documents support it, that in June 2005 you were aware of all of this - maybe not all of the exact cases that the Auditor General has noted, but you were well aware that this is a murky area in policy that needed to be cleared up and that the minister was made routinely aware of these suspicions as they came up.

Did you at any time consider, or were you advised to go to the RCMP to investigate some of these allegations that you were suspicious of?

MS. MILLS: We do not have the authority that the Auditor General has under his Act to acquire more documents and to subpoena witnesses, et cetera. We looked at the documents that we had, the information we had, and at that point we didn't have sufficient evidence of wrongdoing to be turned over to the RCMP.

What we are involved with, however, is a series of court claims and we are in the process now of exchange of documents. So we anticipate that we will receive more and more documents, which will shed more light on this matter for us and we'll be looking at that situation.

MR. PREYRA: Thank you. I have some questions about the committee and maybe Mr. Taylor can answer part of this question. This committee that was established to vet the business mentor side of the arrangement, Economic Development was at the table, the Office of Immigration was at the table. We know that there are 809 potential applicants and we also know that at the moment there may be 40 business mentors listed as eligible, and that's notwithstanding what the Auditor General has said about whether they fit the criteria.

Is it fair to expect that the nominees would get a useful mentorship under those circumstances? You've got 809 potential applicants, you've got 40 businesses, how can we not reach any other conclusion than to say that the nominees were forced into very poor mentorship arrangements because they didn't really have much of an option?

You were also in the end forcing them to take on a mentorship within a year of landing. So they went out and they beat the bushes to find a suitable mentor and they fell prey to these corrupt agents and consultants. Is that fair?

MADAM CHAIR: Ms. Mills.

MS. MILLS: First of all let me just clarify the numbers for you because you said 809 and only 40 business mentors. You're correct, there are 809 economic nominees who have been approved, 212 have been matched with business mentor companies and there are an additional 40 or so companies that theoretically are available for business matches. There are another 157 economic nominees not yet landed and there are about 300 and some who have applied for or are participating in the residency refund - maybe 243, something like that.

To answer your question, yes, certainly, I think economic nominees would have the expectation that they would have a quality employment contract and a business mentor experience. I believe that yes, that would be a fair statement.

I would say, however, some nominees have told us that it was not their intention to participate in the employment contract, that they were looking to recoup $20,000 of their $100,000. They didn't plan to do an employment contract at all and a number of them had indicated to us that they would prefer to use those funds to establish their own company -

they would prefer to use the $100,000 to establish their own company, rather than have an employment contract.

We also know that there are a number of nominees who never intended even to come to Nova Scotia and had not intended to participate in the employment contract. But I would agree with you that the obligation and the expectation is there and should have been there.

MR. PREYRA: My point is a simple one. Let's say there were approximately 600 eligible and at any given time there were not more than 40 businesses listed as eligible, so the odds were against the nominees getting a mentorship arrangement. But the other side of that question is whether or not the nominees - it was reasonable for the nominees to understand that the mentorship they were arranging, or had been offered, had the blessings of the Office of Immigration and the Office of Economic Development, and this was a contract they had entered into in good faith and trusting the Department of Economic Development and the Office of Immigration.

MS. MILLS: Again, I would say that they would have an expectation that these companies have been approved by the Office of Immigration or the Department of Economic Development and they're available for the business mentorship. I would say, however, not all those contracts were entered into in good faith, because the same nominees have subsequently told us they never intended to go to work and they had a shadow contract agreement involving themself, the company and a third-party entity.

MR. PREYRA: Well, I understand that, but I'm not asking about the motivations of the nominees. I'm asking about the fact that the contract was signed under the authority of the Office of Immigration, that the Office of Immigration and that committee approved of that relationship. Whether or not they entered into it in good faith and whether or not the terms of that agreement were implemented is another question. The Auditor General says there was no mechanism for really determining that anyway. But it's fair to expect that the nominees would say, well, we thought that the Office of Immigration had approved of this and that we would be getting a middle-management experience.

[10:15 a.m.]

MS. MILLS: Yes, I agree, I was just correcting a statement that these contracts were all entered into in good faith. I was making a correction there, sorry.

MR. PREYRA: I have a question about the committee itself. I had asked Mr. Terrio, who was the Nova Scotia Business Inc. representative at the table, about why Nova Scotia Business Inc. was at the table and he said he wasn't exactly sure that it was the role of Nova Scotia Business Inc. to comment on the suitability of the businesses themselves, that it was the responsibility of the Department of Economic Development or the Office of Immigration. Yet we see nothing in the policy or any mechanism in place for the Department of Economic

Development or the Office of Immigration to vet these business mentors, or to at least do some due diligence to ensure that they met the terms of the agreement. Was there a mechanism in place to follow through? Everyone we asked says we were not responsible for the business mentor side of it.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: Well, it's quite clear under the contact that Cornwallis Financial had the responsibility for attracting, selecting and matching the businesses. That's clearly what the contract says. There is no role in the contract for government people in that matching process. They were brought in, first a member of the Department of Economic Development and subsequently a member of Nova Scotia Business Inc. for, I understand, two reasons: their familiarity with Nova Scotia businesses, because that's the business they're in; and secondly, their ability to be able to look at the financial viability, the staying power, if you will, of these businesses - are these businesses viable? Will they be there for the long run? Is this something that the nominees can rely on?

So they come into the process to provide that advice. They sit on the committee, but then the decision is made at the committee level that these companies are appropriate. They go into the database and Cornwallis subsequently makes the match to the nominee out of that database.

MR. PREYRA: Well, maybe this is a nuance but the committee of four selected the businesses and Cornwallis may have matched them later on, is my understanding, because the committee of four approved it.

If I could just move on to a final set of questions, and that relates to the refund question itself. In light of these problems with the matching program, in light of what the Auditor General has said about the failure of the program to meet the needs of nominees - in fact, to meet the needs of the businesses themselves because many of them found nominees who were not qualified to do middle-management jobs, and I think the Auditor General has said that as well. Is there any thought being given to refund the program beyond what is currently being contemplated, beyond those who are currently resident here?

Many of the nominees who left, left in frustration and anger that they just didn't get what they were promised. They threw up their hands and essentially some of them might come back if they were given $100,000 to set up their businesses, to re-establish their families here, because they really couldn't earn a livelihood here in Nova Scotia under those terms.

MS. MILLS: As I said earlier, I'm not able to pre-empt the announcement that the Minister of Immigration will make on or before October 24^th but I will say that all nominees who applied under the Nova Scotia Nominee Program applied and indicated their interest in

settling and staying in Nova Scotia. So at the time that they applied to be nominated by the Province of Nova Scotia they indicated their sincere intent to settle here. Their nomination was made to the Citizenship and Immigration visa post with that understanding that they were sincere in settling.

MR. PREYRA: Thank you for that but my point is, in a way many of them were brought here under false pretenses, they fully intended to come and stay here and if they had been given middle-management jobs, if they had been allowed to set up their networks to establish themselves and their families here, they may well have stayed. Given that we didn't meet the terms of our commitment, in the commitments we made, that we consider that in considering whether or not they are entitled to a refund.

I have a final question about the NAABEX group. The minister has said several times that he's in negotiations with the NAABEX group on the refund question. It seems to me it's exploitative for the nominees to be paying a large sum of money to negotiate a refund in a private arrangement when the department itself is contemplating a refund. I mean they've already been exploited by agents and consultants and mentors, and here we have another situation where they're paying the legal costs of trying to get something that's really just fair. I mean they shouldn't be allowed - I'm wondering how the minister can reconcile negotiating with the NAABEX group while it's also in the process of announcing a general residency refund.

MS. MILLS: We are not aware of NAABEX members paying legal fees. We have been very clear to people who have contacted the Office of Immigration, who are either members of NAABEX or not, that we will deal directly with them when the details of the criteria are announced. So they do not need to be a member of any group, what they will need to do, of course, is be resident.

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

I recognize Mr. Colwell for the Liberal caucus, you have 15 minutes, until 10:35 a.m.

MR. KEITH COLWELL: Thank you. I'll be sharing my time with one of my colleagues. Mr. Taylor, you referred to a checklist to match Immigration to businesses. Could you provide us with a copy of that checklist, to the committee?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: No, what I said was Cornwallis provided a summary statement of the qualifications of the company.

MR. COLWELL: No, that wasn't my question. My question was, you indicated that there are staff now, in the departments, that do a checklist on the financial viability of the

companies and other issues that were there. Is there a checklist? You indicated there was a checklist that the civil servants use. I just want a copy of that blank checklist, to see what's on the list - supply it to the committee, not to me.

MR. PAUL TAYLOR: There was a list of criteria that the committee used to assess the companies and if that checklist exists in the written record, either the committee already has it or we'll endeavour to find it for you.

MR. COLWELL: Yes, because there must be some kind of checklist or criteria, I'd really like to have that.

MR. PAUL TAYLOR: Yes, it's a list - I presume somewhere in that record of those thousands of documents there is a record of the criteria that were used.

MR. COLWELL: Okay, thank you. Was there ever a study done of the possible positive economic impact to Nova Scotia, before this project was started?

MR. PAUL TAYLOR: Not that I'm aware of, in terms of a formal study of the economic impact of immigrants to Nova Scotia. There was a general recognition within the Civil Service that there were going to be challenges from our labour-supply point of view, into our economy. I think that's the principal reason that Economic Development became involved in the process in the first place, to principally find a way to get more people into Nova Scotia to support the economic growth that we anticipated was coming, that there would be shortages of certain positions that we needed people to staff.

MR. COLWELL: It seems unusual that something of this magnitude, I mean 800-plus immigrants, which I think is great to have that many immigrants come into the province, if they stay and if it is successful, that some kind of a real justification is put forward. It's hundreds of millions of dollars we're talking about here and a major impact on Nova Scotia, either positively or negatively.

In this case, unfortunately, a lot of negative things have come out of this and there had to be something, there had to be some kind of a document placed at Cabinet and said okay, we're going to move this forward. Somebody someplace had to think this was a great idea to go forward with something of this magnitude.

MR. PAUL TAYLOR: Certainly there were many conversations between the people in the Department of Education and the Department of Economic Development throughout government with organizations like MISA, with organizations like the chamber of commerce, that led up to the development of the program.

The government had gone to - people who are generally interested in the business of immigration are generally interested in the business of growing the economy of the Province

of Nova Scotia. Try to understand that if, indeed, we are looking at the type of out-migration issues that were going to challenge the province from our people who were living here, what could we do to supplement the labour supply through, in one way, immigration?

So we had discussed the issue with many organizations in the Province of Nova Scotia, and with the federal government, to see what it is we could do to put a program in place, under the constraints I mentioned earlier, to try to do something about those numbers.

Certainly the impression that I've gotten from the written record in that time is there was almost a unanimous belief amongst people in the immigration business and in the economic organizations of the Province of Nova Scotia that we had to put a focused effort on immigration or it just wasn't going to happen on its own.

MR. COLWELL: During that process, when you go through that process, would the Cabinet Ministers responsible for those departments have been aware of this?

MR. PAUL TAYLOR: Certainly I've been in the Civil Service at a senior level long enough to know that when you are developing new programs you get to a point where yes, you bring your minister into the loop, you explain the process to them but it's the minister's eventual decision as to whether he wants to proceed with the development, with a budget submission, with the approval of a new program. So you've got me at a little bit of a loss here because this all occurred before I joined the department, but I can certainly speak from my experience as a senior civil servant that yes, you don't leave your minister out of the loop. Ministers are there for a reason, they are the decision makers.

MR. COLWELL: Yes, and as a former minister, I would concur with your conclusion on that.

Why didn't the department initiate a program of hiring staff with expertise in immigration? I realize that we've developed that at very high expense and I believe your staff is very capable now but it's a very complex issue. Why wasn't that done initially? Why didn't they hire somebody to actually even train the existing staff what to do, what not to do, and what to watch out for? A lot of pitfalls, especially when you're dealing with outside the country, with different organizations, different people, different groups, even with Immigration themselves. Why wasn't that done"

MR. PAUL TAYLOR: If you go back to that period, 1999-2000-2001, when this was occurring, government wasn't in the business of getting bigger, government was in the business of getting smaller. The Progressive Conservative Party had just come to power in 1999 and they came to power with a pretty firm mandate to balance the budget of Nova Scotia. That took a number of years to do.

Most government departments were looking for ways to reduce their complement of staff and to reduce the number of programs they had. At the same time there was a general recognition that this had to form sone kind of priority in getting more people into the province. So you had to balance the two issues: the resources available to do it and the priority that it was forming. It eventually got to the point that in 2004, even while the budget balancing process was still underway, the province did a full-scale immigration strategy to demonstrate that need, that this had to be a priority that had to be resourced.

MR. COLWELL: Yes, and hindsight is 20/20, of course, as has already been said, but when you get to something of this magnitude, I mean this is not a small little pilot project that you were doing here. This is a huge project, a tremendous amount of financial input by immigrants, and by the department itself, and a huge possible impact on Nova Scotia's economy, either positively or negatively, depending on how it was operated.

It doesn't make sense that the proper staff weren't put in place or people provided to the staff to train them properly so that they could do these things. You don't have to hire new staff if you could train staff that you have because we've got, as far as I'm concerned, a very capable Civil Service. But if they're not given the tools to work with, they can't perform the job. So that doesn't make any sense to me at all and it appears that some decisions were made at a very high level that didn't support really what the intention of the program was.

MR. PAUL TAYLOR: I certainly think, as I mentioned earlier, there was a quantum leap, if you will, in the oversight of the program when professional civil servants were hired to oversee this program. I think we've seen a dramatic change in the program since that. So I would agree with your comments that this program, in 20/20 hindsight, a preferred solution would have been to have done it in-house, not tried to manage such a complicated file through a private party.

MR. COLWELL: That is the case but, still, this internal staff should have had the training to know how to deal with the private party, if that's, in fact, what did transpire - which it did - and understand immigration, because the limited amount I've worked with people in my community on immigration, it's very complex. I'm by no means even - I know very little about it, so if you start to train staff on these very complex issues, it takes time and you have to have somebody who really knows what's going on to make it work.

[10:30 a.m.]

MR. PAUL TAYLOR: That would certainly be one of the principal lessons learned. I think there was very little understanding at the outset inside the Civil Service of Nova Scotia just how complicated a process this is. Outside of the Nominee Program, the process of immigration can take five, six, seven years from the time someone actually makes an application to the time they successfully enter the country.

I don't think there was a very strong understanding of the incredibly complicated nature of the business, which became infinitely more complicated as soon as 9/11 occurred. Right in the middle of this process, suddenly the restrictions on security and who got into this country and visas and the whole works landed right in the middle of this process, so it became infinitely more complicated at the time that we were not staffed to deal with the complication that existed before that.

MR. COLWELL: Ms. Mills, you indicated that there's finally been approval to give some funds back and to work with people - who gave that approval?

MS. MILLS: Cabinet - for the residency refund?

MR. COLWELL: Yes, who gave that approval?

MS. MILLS: Well, certainly the minister communicated to me that his direction was to do this.

MR. COLWELL: Okay. Was most everything done in this program by the ministers - approved by the ministers? Pretty well every major part of this would have had to have been approved by one of the ministers or by Cabinet.

MS. MILLS: Sorry, I just want a clarification, if I may, Madam Chair. Were you asking about the existing residency refund, the one that's being managed now?

MR. COLWELL: Yes.

MS. MILLS: Yes, we have direction and approval to proceed, and we have been. We've processed 78 applications so far. We have 45 in the queue and we have another 170 people who have notified us that they will be applying - and it was approved by Cabinet.

MR. COLWELL: And what about the expanded program, the same sort of approval, minister and Cabinet?

MS. MILLS: The minister will be making his announcement on October 24^th and once he does that, he'll be giving me directions. So until then, I'll be waiting for the direction.

MR. COLWELL: So if I can go back in time, the program would not have been started or moved forward with, indeed without approval of Cabinet or the Cabinet Minister of the day?

MS. MILLS: Cabinet approved two things: it approved that the minister at the time could enter into an agreement with the Government of Canada for a Nominee Program, and also gave direction that any contract to a private company would need to be tendered.

MR. COLWELL: Yes, but the point I'm getting to is - and Mr. Taylor indicated as well - that all through this process that you've identified problems and issues with the thing, it's your responsibility as a civil servant to bring this to the attention of the deputy minister or the minister - in your case, as acting deputy minister, it would be directly to the minister - through this whole process. Was that done in 2004 when you became aware of problems?

MS. MILLS: No, in 2004 we were not yet aware of those problems. The contract had only been in place for a short while and they were just ramping up the program. What did occur in 2004 was a fair amount of research - somebody asked about research that was done. Significant research was done, consultations were done, which led to the development of an immigration strategy, and that was brought before Cabinet. Cabinet approved the immigration strategy itself, and Cabinet approved the establishment of the Office of Immigration and the allocation of resources to that office.

It also, in approving the immigration strategy, approved a number of initiatives that would guide the Office of Immigration forward on the Nominee Program. So, for example, the fact that a fee review was to be done, that was part of the immigration strategy approved by the minister - or by Cabinet, excuse me.

MR. COLWELL: Yes, and you were in this program right from the beginning. I think it must have been very difficult for you when you first started to learn all this stuff. All the way through it, were the Cabinet Ministers responsible - there are some seven Cabinet Ministers who would have been involved in this through the whole process - were they kept aware all the time of the processes it went through and if there were any difficulties - or not only just difficulties but positive things that happened with possible positive matches? I've talked to some people who have had some very positive experiences.

MS. MILLS: First, I'd like to clarify that I was not involved with the program from the very beginning but I was involved as a staff person, a senior policy analyst, at Treasury and Policy Board with the development of the immigration strategy. I was a policy analyst at that time, assisting with it.

It wasn't until late February, early March 2005 that I was hired to actually be the executive director of the Office of Immigration. It wasn't until, as I said earlier, June 2005 that I became concerned about some issues.

I would say yes, throughout all the time that I've been executive director or acting deputy minister, I've continued to keep the minister briefed and have continued to seek direction and implement the directions I've received.

MR. COLWELL: Who was responsible for this prior to you becoming a staff member, looking after it, who would have reported the information?

MS. MILLS: It was Economic Development.

MR. COLWELL: Who in Economic Development did that?

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: You're asking who actually administered the program?

MR. COLWELL: Yes.

MR. PAUL TAYLOR: In that short period of time there were probably five different people who oversaw this, one person who worked in Immigration.

MR. COLWELL: Could you give us a list of those people?

MR. PAUL TAYLOR: I could.

MR. COLWELL: Thank you. And would they have kept yourself . . .

MADAM CHAIR: Order. I'm sorry, the time has now expired for the Liberal caucus.

I recognize Mr. Dunn for the PC caucus, you have 15 minutes.

MR. DUNN: Thank you, Madam Chair. You mentioned you were surprised by the extent of disappointment nominees felt about the program and I assume your staff did some follow-up and some briefings after a mentorship was complete. Did some nominees give your staff a favourable review, only to express disappointment to this committee and, if so, how do you explain this?

MADAM CHAIR: Ms. Mills.

MS. MILLS: I'm not exactly familiar with who came to the committee and expressed disappointment, so I don't want to speak to that part of the question. But I will say that we instituted a process whereby before the second $50,000 cheque was issued to the business-mentor company, that both the business mentor and the nominee were to advise the Office of Immigration that the employment contract was fulfilled in the manner in which it was intended. We received positive confirmations from both companies and nominees that this was occurring.

So yes, we were surprised in mid October when a number of nominees came forward with concerns. What I would like to say as well, though, is that a number of these nominees came forward and said, we had varying experiences - some of us actually had a good experience, some of us didn't take advantage of the experience and some of us had very poor experiences. Our concern is that we were not treated fairly in that the Residency Refund wasn't extended, that option wasn't extended to us at the time that we first came to Nova Scotia. So they felt that fairness - but just to go back to your question, I will reaffirm that we did have reports from nominees and business mentors that all went well. Then, after the Residency Refund was announced, we heard different complaints.

MR. DUNN: Did some of the mentor matches cause your staff to be a little perplexed? For instance, we heard of some very unusual matches from the nominees themselves. Was the value of the work experience to an individual nominee taken into account, or was the goal simply to make a match?

MS. MILLS: As I indicated, there was an application process whereby businesses that applied to be business mentors provided job duties, a description of the job duties, and provided a description of the mentorship. When those agreements were entered into, it was our expectation that those would be the duties that would be performed and they would experience the type of mentorship feedback that was described.

MR. DUNN: It sounds like the world of immigration has somewhat of a dark side involving agents. Was there any way the government could have eliminated part of this process?

MS. MILLS: Many immigrants do use immigration consultants or immigration lawyers, and that's true no matter what program they come under or what province they choose. We did have an unusual situation in Nova Scotia, though, in that we did have commissions part of the fees that were paid by the economic nominee. So this is something that didn't exist in any other province.

In retrospect, it may have been a better situation not to have those commissions part of the full payments made by nominees. But as we said, in retrospect, we've concluded that the entire category, the economic category, had deficiencies and didn't meet the program objectives.

MR. DUNN: Thank you. Madam Chair, at this time we have no further questions. I think the information has been exhausted, and I want to thank the deputy minister and acting deputy minister for their answers and co-operation. I'm looking forward to Mr. Taylor's closing comments.

MADAM CHAIR: Thank you. At this time the rounds for questions have concluded. I would invite Ms. Mills for some concluding comments.

MS. MILLS: I will defer to Mr. Taylor.

MADAM CHAIR: Mr. Taylor.

MR. PAUL TAYLOR: Thank you, Madam Chair, and members of the committee, for the opportunity to discuss the Auditor General's final report regarding the economic stream of the Nova Scotia Nominee Program. The pilot economic stream was created as one of a number of proposed strategies to grow and sustain our economy. More specifically, it was a way for us to attract and retain skilled workers to complement our strong and talented workforce.

There is no doubt we are disappointed that the economic stream did not meet the needs of some of the nominees. We also acknowledge that the program did not fully meet government's objectives. We have learned a number of lessons from the pilot economic stream, and we continue to apply what we've learned as we develop new and improved programs to attract newcomers to our province.

As you've heard today, we can be confident that steps are being taken by government to respond to the Auditor General's Report and recommendations. Now is the time for us to move on to the business of attracting newcomers to our province. The Nova Scotia Nominee Program is the only provincial government strategy in place that allows us to proactively attract new immigrants to live and work in Nova Scotia. It is a strategy that is vital to our ability to ensure sustainable prosperity for our people and this province.

With focusing commitment, the Nova Scotia Nominee Program will be successful in inspiring individuals and their families from around the world to call this province their home. Thank you.

MADAM CHAIR: Thank you very much. On behalf of the committee, I'd like to extend a thank you to you all for being here again this morning. I'd like to also ask you to make note that there were two documents that a commitment was made to provide to the committee, through the clerk, a checklist of the criteria that are used by the committee with respect to business mentorships, and a list of people in the Department of Economic Development who administered the program within that department.

At this stage we have no further business. I draw the members' attention to the fact that our next meeting will not be until November 5^th. This is because many members of this committee are also on the select committee that will be touring the province doing public hearings and focus groups on democratic participation in the next two weeks.

Additionally, I would like to draw to the attention of the members that the subcommittee will be meeting on November 5^th, at which time we will have on our agenda

a number of items, including dealing with the documentation that the committee still has with respect to the Nominee Program.

There were some questions here today, and we have a commitment for some further documents to be given to the committee, but we still have not dealt with the large number of documents that we have received and not released. I would ask members in each caucus if there are documents that you are looking at that you feel should properly be in the public domain, then please make the subcommittee aware of this so we can deal with that when we meet and make a recommendation back to you on those documents.

I would really like, and I know the clerks would very much like to see that aspect of our work on this file brought to some conclusion. Mr. Colwell.

MR. COLWELL: Yes, thank you. The information that we've requested from the Department of Economic Development, the two items you talked about, can we have that before the end of this month? Is that possible?

MADAM CHAIR: Certainly, yes.

MR. COLWELL: Thank you.

MADAM CHAIR: If there's no further discussion, we stand adjourned. Thank you.

[The committee adjourned at 10:45 a.m.]