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. Patrick Dunn was replaced by Mr. James Muir.]

[Mr. David Wilson (Sackville-Cobequid) was replaced by Mr. Gordon Gosse.]

[Mr. Keith Colwell was replaced by Mr. Manning MacDonald.]

WITNESSES

Sydney Tar Ponds Agency

Mr. Kevin MacDonald, CEO

Mr. Corrie Stewart, Director of Support Services

Mr. Wilf Kaiser, Manager of Environmental Services

Mr. Gary Campbell, Executive Director of Operations -TIR

In Attendance:

Mrs. Darlene Henry

Legislative Committee Clerk

Mr. Terry Spicer

Assistant Auditor General

HALIFAX, WEDNESDAY, FEBRUARY 4, 2009

STANDING COMMITTEE ON PUBLIC ACCOUNTS

9:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Order. I'll call the committee to order. Good morning. We have with us today guests from Cape Breton and welcome. In spite of the terrible weather, you've been able to make it here and we're very glad of that.

There are members of the committee on the road who we are expecting so people will be drifting in as the meeting proceeds.

I don't know if you're aware but our process is that when questions are directed, the members will attempt to identify who they are directing the question to. If another member of the panel wishes to answer, you can notify me, or if you're going to ask another member to add more, if you would say you're going to do that and who you're going to direct that to, it helps Legislative Television to know which microphone to turn on.

These microphones are for the purpose of recording, our session is recorded in Hansard. There is a small red light that will come on and you will not be recorded until that light comes on, so if you could just make sure that occurs.

So with those few directives, we'll start with introductions.

[The committee members and witnesses introduced themselves.]

MADAM CHAIR: Thank you, and I understand you may be joined by an additional person as well. So, Mr. MacDonald, if you wish to make some opening comments, the floor is yours.

MR. KEVIN MACDONALD: Thank you for your invitation to appear, it is appreciated. We are entering a new phase on this project and with that comes many opportunities as well as challenges. At one time the fear was that the tar ponds would never be cleaned up and that the community of Sydney would be stuck with the tar ponds and coke ovens indefinitely. Although it took some time, we gained the confidence of others that this project can be done, and we're doing it. Now the attention has shifted to "on time and on budget". This is of particular importance to the province and myself.

In June 2008, an organizational audit was conducted to ensure the agency was solidly positioned to complete the project on time and on budget. The project director has been replaced, we have added additional support staff, enhanced our information technology capacity, and are hiring another contract manager. My primary objective is to make sure this project is complete by March 2014, and we are within the $400 million agreement. Anything less, quite frankly, is just unacceptable.

Like before, we will gain the confidence of others that this job is being completed on time and on budget. We have dedicated, competent and professional staff working daily to meet our collective objective.

The resources available to the agency are vast, there's a provincial and federal lead. The agency has more than 20 highly motivated professionals dedicating the majority of their waking hours to managing this project. There is an independent engineering firm and one of the top engineering companies in North America designing the project and overseeing the construction. There's also a secretariat made up of both provincial and federal representatives that monitors the day-to-day project activities, and a project management committee of senior government representatives that meets quarterly to discuss and direct the agency on key project objectives.

The lead regulator for the project is the Department of Environment, which is tasked with providing all permits and approvals for this project. To some this may sound excessive but we're accountable for $400 million in spending and to deliver a sound, safe and absolute solution to the tar ponds and the coke ovens contamination. I want you to know that we're proud of the progress we've made to date.

The first Aboriginal set-aside in the province, the cooling pond, is complete and it was done using local Aboriginal labour. The material processing facility is underway, a multi-million dollar project contracted to a Sydney company. Barrier walls are being constructed and several other preventive works have been completed.

We have tender calls out now for two multi-million dollar projects which have a combined value in the area of $100 million, with one contract just weeks away from award. And we still have five years to go.

We want to continue to maximize the community's ability to benefit from the project. We have held several well-attended vendor workshops to keep local contractors updated on progress on the project and to provide tentative tendering dates.

Our most recent initiative to engage local businesses was a networking opportunity held in Sydney in January. Nearly 100 local and off-island companies had an opportunity to learn about the solidification and stabilization of the tar ponds sediment and to talk about each other's business needs in an informal setting. We know that partnerships were made and these local companies are going to work alongside some of the top experts in the field of S and S.

We're doing this under a watchful eye of a nation. The tar ponds cleanup was the top story in the Daily Planet for 2008 and we have been prominently displayed in several national and international magazines, have presented the project to thousands of experts in the field of remediation and environmental technology, and stay close to our community with the help of volunteers on the project's Community Liaison Committee.

From what I've seen and experienced since joining the agency four months ago, I am confident we'll succeed. We'll do this right and when we do, this cleanup and everyone involved in it will share in its success. Together we'll be known as leaders in the field of environmental remediation, an image we'll gladly spread around the world. As well, Sydney will be transformed. When this cleanup is finished, we'll be unleashing two prime parcels of land in the heart of Sydney and the surrounding communities will have input into a solid plan for future land use.

To conclude, Madam Chair, we will complete this project on time and on budget. We are making significant progress. The surrounding communities - Cape Breton, the Province of Nova Scotia, and Canada - will be proud of the work when done. Together, we'll make history. Thank you, Madam Chair.

MADAM CHAIR: Thank you very much. Before we proceed with the opening round of questions, you've been joined by an additional member and I would ask you if you would introduce yourself, please.

MR. GARY CAMPBELL: I'm Gary Campbell, I'm actually with the Department of Transportation and Infrastructure Renewal and I'm the provincial lead on the tar ponds project.

MADAM CHAIR: Thank you very much, good morning. Mr. MacDonald.

MR. MANNING MACDONALD: I noticed earlier, Kevin, that Tanya Collier MacDonald, your communications person was here. She's able to come in here if she wants.

MADAM CHAIR: Order. It's not the practice of the Public Accounts Committee to have the communications people sit on the floor. We've actually had a discussion about this quite recently. We have the witnesses and I'm sorry, but that is our practice. Thank you. So the opening round of questions is 20 minutes per caucus. I recognize Mr. Steele.

MR. GRAHAM STEELE: Thank you very much, thank you for being here. I know that you've all travelled from Sydney and we very much appreciate you being here. The project is important and perhaps hasn't received as much attention here in this House as it could have. I know it was raised by my colleague, the member for Cape Breton Nova, in the Fall sitting of the Legislature, but we believe much more needs to be asked and we're glad you're here today to answer our questions.

The Sydney Tar Ponds Agency is responsible for a $400 million project. Nova Scotia pays $120 million of the first $300 million and the federal government pays the next $100 million, but this is the essential point; if there are any cost overruns, Nova Scotia pays every single dollar of those overruns. So the federal government has a fixed upper limit to its liability, Nova Scotia has no upper limit. We are potentially on the hook for an unlimited amount of money and that's why it is so important that the project be managed well, so important that it come in on budget.

On May 22, 2008, the Deputy Minister of Transportation and Public Works, who plays a key role in overseeing the project and, in fact, is on the Project Management Committee, wrote in an e-mail: "Recent developments have caused key stakeholders, including me, to doubt the . . . agency's ability to deliver the project on time and within budget." As a result, the department asked the firm of Grant Thornton to perform an audit. The audit was done in June and July 2008.

Grant Thornton reported in July 2008 that there had been a loss of focus on the primary objective of completing the remediation on time and on budget. Factors contributing to the loss of focus included internal conflict; a universal loss of confidence in agency leadership; deterioration in relationships with stakeholders due to concerns related to potential cost overruns and delays, and a failure to address those concerns; and a lack of a united front in dealing with a design engineer.

The report says, "During the interview process, virtually all stakeholder representatives expressed concern regarding cost overruns and delays on individual project components that could greatly reduce the likelihood of project success. All interviewees felt that significant change was needed to bring the project back on track."

Those words were written six months ago. Today in February 2009, you come here and you say that the project is on time and is on budget. What specifically, Mr. MacDonald, have you done to make the changes identified in that audit report?

[9:15 a.m.]

MR. KEVIN MACDONALD: Madam Chair, the audit document was provided to me by the deputy when I was in the decision-making process, if you will, to accept the position. Quite frankly, I actually really enjoyed the position I had. I recognized, however, the absolute huge importance this project is to the community and to the CBRM as a whole, and to the province and everyone else.

I read the report and understood the concerns expressed in the report and I prioritized my actions. Specifically, I'll try to tick them off, Mr. Steele. Two of the smaller items like the implementation of Primavera - which is an extremely powerful software tool for project management - that is underway and, as a matter of fact, trainers will be coming in mid-February to train our staff to use that piece of software. There was concern about the Web warehouse and the management of documentation. We have dedicated a full-time person to that now and that concern has been alleviated.

The project director has been replaced. One of the issues when you read the audit that they talked about was that sometime in the past previous years, when the previous project director had left, over a year went by to replace him and it was a pretty key position in the organization. The project director who was there when I joined, Mr. Larkin, he basically came on for a year and decided he had enough and he just announced he was leaving. Immediately we began searching for a new director and we recruited a new director within a month. As a matter of fact, his name is Mr. Donnie Burke and he will be joining the agency starting Monday.

Another huge concern of the audit and again, one of the risk factors, was the management of change. Oh, before I continue into that, before Mr. Larkin announced his departure, I was working very closely with the two directors to address the schism issue that is mentioned in the audit, as putting it on the table that the project is more important than any of us, let's get over it and let's get on and try to work with the two. One has left, so that in a sense has solved itself, and the gentleman arriving is a consummate team player and extremely technically competent.

The change management was another issue in the audit that was highlighted as a high risk, especially as it impacts what you were speaking to of cost and cost management. What was happening was work was getting done without proper authorization through the change order process. That also caused another issue, on the street the sayings were that the agency doesn't pay its bills. Quite frankly, the agency was correctly not paying its bills because the authorization to pay those bills wasn't put in place, the proper procedures weren't being followed.

The proper procedures are being followed now and another very important position, which we have just filled and also will be starting Monday, is a job we call a contract

administrator. What that contract administrator is going to do is assist the contract managers whose focus should be on the day-to-day construction, oversight and management of the project, assist them in the paperwork, if you will, of the change management process to ensure that proper authorizations and approvals are in place prior to implementing a change in the project.

MR. STEELE: The project is structured in such a way as to include an independent engineer, Conestoga-Rovers & Associates. The purpose of the independent engineer is to provide, as the name suggests, an independent evaluation on whether the project is unfolding as it should. It is apparent from the Grant Thornton report that it was concerns expressed by the independent engineer, who are independent and credible, which triggered the audit and yet this committee has before it none of the reports from the independent engineer. Can you confirm that the independent engineer files monthly reports?

MR. KEVIN MACDONALD: Yes, he does.

MR. STEELE: Will you provide this committee with copies of those reports going back to the beginning of 2008 and up to the present day?

MR. KEVIN MACDONALD: I don't see why I wouldn't, I suppose.

MR. STEELE: Do you have them with you?

MR. KEVIN MACDONALD: No.

MR. STEELE: Do any of your colleagues have them with you here in Halifax?

MR. KEVIN MACDONALD: I don't believe so, no.

MR. STEELE: To me it is fundamentally important that this committee receives those reports. You understand that you have come here today and you have asserted that the project is on time and on budget. Only six months ago it was clear that the project was going off the rails, threatening to go off the rails very badly. If we are going to accept on behalf of the public that the project is back on the rails, then I would be looking for some independent verification of that.

I have to say the agency has not distinguished itself with openness for the community. One of the outcomes in the agency's business plan for this year is to show progress openly with the community. This is to be measured by the extent to which, "The community is informed, aware of project happenings, and has trust in the cleanup." Yet there is still far too much secrecy. There was one recent example where it was only due to the persistence of a concerned local citizen, Marlene Kane, that certain testing results were released after the agency posted to its Web site an incomplete or edited copy of certain test results. So if the

agency expects the public to accept that the project is indeed on time, on budget, despite what was said in that operational audit only six months ago, then we really need to see those reports from the independent engineer because they are independent and they are credible.

Now, I understand that the agency also files at least quarterly reports to the Project Management Committee. Can you confirm that is the case?

MR. KEVIN MACDONALD: I'm sorry, I missed that.

MR. STEELE: Can you confirm that the agency prepares and files with the Project Management Committee quarterly reports?

MR. KEVIN MACDONALD: Yes.

MR. STEELE: Can you provide copies of those quarterly reports to this committee?

MR. KEVIN MACDONALD: Your previous question with reference to the IE and his reports and this one, I would ask that I defer that to my provincial colleague here as it is a provincial contract and I'm not totally aware of all the protocols in reference to what reports we can provide or not. So I ask Gary to comment.

MR. STEELE: Mr. Campbell, is there any reason why this committee can't receive copies of those reports.

MR. CAMPBELL: Absolutely not. The IE reports to the two levels of government and we have the contract with the IE to provide their independent comments to the two levels of government. The reports are all in my office and you're certainly welcome to them. Quarterly the Project Management Committee meets and a report comes to the committee from the agency, and you're certainly welcome to those.

MR. STEELE: So I'd be looking for all of those and we'd ask you to send them to the clerk of the committee, who will distribute them to all of the committee members.

Now, Mr. MacDonald, in your remarks you referred to certain issues having to do with personnel, so I'd like to turn to that question now. The Grant Thornton audit identifies agency leadership as a key factor in the agency's dysfunction and, in fact, not too long after the audit, the former CEO was moved to another position within Nova Scotia Lands Inc., presumably at the same salary and then you, Mr. MacDonald, were hired as the new CEO. Did you apply for the job in an open, advertised competition?

MR. KEVIN MACDONALD: No.

MR. STEELE: How is it that you came to have the job if there was no competition?

MR. KEVIN MACDONALD: I received a phone call from the deputy minister and he asked me to have a chat with him. I came up and did and he told me what was going on in the agency, and so on, and he asked me if I would consider the challenge.

MR. STEELE: In the strategic plan it says that the agency aims to have the highest level - or seeks to follow the high standard of human resource practices. Do you think it's a good human resource practice to hire people just with a phone call and not with a competition?

MR. KEVIN MACDONALD: As the employee, it's a little difficult, I guess, for me to comment on that. I don't know if I might defer this to the employer.

MR. STEELE: Mr. Campbell, why was there no competition for such an important job?

MR. CAMPBELL: Because the president is an OIC appointment, so there generally was no competition. It is simply an OIC appointment.

MR. STEELE: The fact that it is an Order in Council appointment doesn't in and of itself mean that there can't be a competition. Often what will happen is you'll have a competition to find the best person and then appoint them by Order in Council. If we're looking for the best possible person to lead the agency, it's possible that we have him and he's sitting here, but we don't know because we didn't have a competition. Why was there no competition?

MR. CAMPBELL: That's a question I can't answer. It has always been just an appointment for the president of the agency.

MR. STEELE: Mr. MacDonald, you were hired, as I understand it, you were the director of engineering for the Cape Breton Regional Municipality. Did you go to the agency at a higher salary than you were earning previously?

MR. KEVIN MACDONALD: Yes.

MR. STEELE: Are you on leave from the municipality or have you severed all of your ties with the municipality?

MR. KEVIN MACDONALD: A secondment agreement has been struck for the period to January 4, 2010. The reason that was arranged was so it would not affect the pension that I have with the CBRM. That date gets me to a point where I can retire from the CBRM without penalty.

MR. STEELE: It sounds to me like technically you're still on staff at CBRM. You're on secondment, correct?

MR. KEVIN MACDONALD: I am on secondment until January 4^th, yes.

MR. STEELE: You mentioned in your remarks that you recently hired a new project director and you said that his name is Donnie Burke. It's my understanding that Mr. Burke also was an employee for the Cape Breton Regional Municipality, is that correct?

MR. KEVIN MACDONALD: That's correct.

MR. STEELE: In fact, he used to work for you as director of engineering.

MR. KEVIN MACDONALD: No - yes, sorry, I thought you meant he was the director of engineering. Yes.

MR. STEELE: No, he used to work for you. Was there an open and advertised competition for his job?

MR. KEVIN MACDONALD: Yes, there was and that position was recruited through Nova Scotia Lands. The reason being, if I may, Madam Chair, we were having extreme difficulties trying to recruit. You may remember earlier I mentioned the contract manager that we hired, and the contract - we were interviewing people and making offers based on the employment nature of the Sydney Tar Ponds Agency, which basically is temporary employment, and we couldn't attract anybody. That wasn't even discussed in the audit and to me was a real systemic problem with the charter, really, and the ability for the agency to recruit and retain people.

I had several discussions with the deputy about this and we were trying to find solutions and such, as agency employees were not employees of the province and cannot be based on the charter. Then, as I said earlier, Mr. Larkin announced that he wasn't going to renew his contract, so that just ratcheted the whole thing up, as you can appreciate. So I had several discussions with the province and basically the job was advertised as an executive director with Nova Scotia Lands.

MR. STEELE: It's my understanding - and I may be wrong - that the job was not advertised. Do you have a copy of the job competition, the advertisement that was printed in the Cape Breton Post, or what newspapers it was printed in?

MR. KEVIN MACDONALD: I believe it was put on CareerBeacon.

MR. STEELE: How many applications did you get for the job?

MR. KEVIN MACDONALD: Ten or 11, I believe.

MR. STEELE: Do you see a problem with the agency relying on somebody else to do its hiring? Is that a good human resource practice?

MR. KEVIN MACDONALD: The difficult nature the agency has right now, trying to recruit based on when the project is over you're out of a job, I saw it as a solution that would help attract the best people.

MR. STEELE: Is Mr. Burke still on secondment from CBRM like you, or has he severed his ties with the municipality as well?

MR. KEVIN MACDONALD: He will have severed his ties.

MR. STEELE: It's my understanding that Mr. Burke is not, in fact, an engineer, is that correct?

MR. KEVIN MACDONALD: No, he has a degree in environmental sciences and he's a technologist.

MR. STEELE: But he's not an engineer?

MR. KEVIN MACDONALD: No.

MR. STEELE: It used to be under Mr. Larkin that that division of the agency was called the engineering division, so would it be fair to say that the engineering division of the agency is now headed up by a person who is not himself an engineer?

MR. KEVIN MACDONALD: That's correct.

MR. STEELE: Do you see a problem with that?

[9:30 a.m.]

MR. KEVIN MACDONALD: Not at all. This is project management, it's not design. What's needed in this position is a true project manager, a true team leader and team player. There are engineers working directly for him and also working for him through the consultants and so on. We are replete with engineers, what's needed is a manager.

MR. STEELE: You don't see any difficulty then with the fact that the head of the engineering division who is supervising other engineers is not himself an engineer?

MR. KEVIN MACDONALD: Not at all.

MR. STEELE: The Grant Thornton report also identified the lack of a job description for the CEO as one of the sources for the problems. Has that deficiency been corrected?

MR. KEVIN MACDONALD: I'm not in receipt of a formal job description as yet, I know it's being developed. Mr. Steele, quite frankly, when they handed me the audit that was a pretty good job description as far as what needed to be done and moving forward.

MR. STEELE: Nevertheless a job description is identified as the source of one of the problems because if it wasn't clear to the CEO what it was he was supposed to do, it shouldn't be any surprise that maybe he was doing things that the audit identified that he shouldn't have been doing.

Now, the same audit report also emphasizes as a considerable source of problems the lack of a clear description of the relationship between the agency's two divisions, the engineering division and the support services division. This is identified as a key source of problems because the directors of the two divisions were pursuing two different visions of the relationship. Now, has that been corrected? Is there now a clear, written delineation of how the two divisions should relate to each other?

MR. KEVIN MACDONALD: That written delineation existed. There was talk of confusion of roles and responsibilities in the audit and it could be read that those were personal, that people didn't know what their job descriptions were. That's not the case at all, it's not what I found at all.

MR. STEELE: You disagree with the audit?

MR. KEVIN MACDONALD: I just said people know what their jobs are. There was, however, and I think it's directly tied to the fact that it took well over a year - the audit also talks to that - to replace the project director. I think some confusion, if you will, or some overlapping took place during that period. Then, when the director was hired, there had to be a separation of that, which maybe was troublesome.

It's very difficult for me to say exactly what it is because I wasn't there, but that's the sense I get from talking to people and trying to understand how they feel and what they think they should be doing and such.

I spent a lot of time talking to the employees to try to understand where they see where the deficiencies were and to make sure they understood what their roles were and responsibilities.

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

I recognize Mr. MacDonald for the Liberal caucus, you have 20 minutes.

MR. MANNING MACDONALD: Thank you very much, Madam Chair. I, too, along with my colleague from the NDP, want to welcome you here today, you and your group travelling up from Cape Breton in this nasty weather - except for Gary, he was probably here this week.

Anyway, I do want to make a few comments and then perhaps at the end I'll ask a few questions. The fact that I'm from the area where the tar ponds are located gives me perhaps an insight as to - and I would welcome any comment from anybody over there regarding my comments when I finish, but it probably gives me an insight into the history of what has gone on with the tar ponds project over the years. In my 31 years in elected life, 15 of those were spent as Mayor of Sydney, which housed the tar ponds - still does - for all of those years and until today.

Since coming to this august Chamber, after leaving the mayoralty in Sydney, I ended up in government and, as a result of that, in the Executive Council for some period of time, in various Cabinet posts. All through that experience the tar ponds and the issue of the tar ponds, more importantly perhaps, occupied my attention through all of those years in various stages, including the fact that there were a number of proposals over the years put into place to try to remediate the tar ponds.

I have to say, Madam Chair, if there's one word that would describe the ongoing attempt to remediate the tar ponds over the years, it would have to be "debacle". That would be the single word that comes to mind most of those years, but thankfully not today. I believe that Kevin MacDonald perhaps said it all when he says that they're on time and on budget and he won't be satisfied with anything less than coming in on time and not costing the taxpayers any more money than has been allocated, and I believe that to be the case.

I look across and I see a very good group of dedicated people and I don't think any of those people over there have any ulterior motives in this regard. I believe that they're genuine in their attempts to get this project done.

I say that because I've received some feedback in my area from people who are involved or who have said to me, finally we seem to be on the right track. Madam Chair, there's less political rhetoric today than there was in the past and more adherence, perhaps, to business professionalism, with business, with labour, the need to get on with the program that will finally put to rest the tar ponds issue. This issue will only be put to rest when it's done in a way that satisfies the people of the area, satisfies the public purse of Nova Scotia and is done in an environmentally correct manner.

I believe all of those things are in place. I think the recipe is there to have that done. What we don't need here now is more suspicion about what's happening with the cleanup of the tar ponds. What we need is action to clean up the tar ponds.

I believe there's a plan in place to do that. The feedback that I'm getting from local suppliers, the university, the local professionals who are involved, the labour component, the people who are doing some ancillary work connected with the tar ponds - all of the players seem to be singing from the same song sheet, that finally we have a recipe that may work.

For those who haven't enjoyed the long history of going down the road with the tar ponds that I have, will know that over the past years attempts to clean up that toxic mess down there were nothing short of bizarre and the taxpayer was perhaps hoodwinked over the years with hundreds of millions of dollars that need not have been spent at those times, in those days. So if there's any suspicion lingering out there, I can understand why - because of the history.

I think the way this has been handled in the past couple of years, I believe we're on the road to success here. I believe that there are some obstacles or hurdles to be overcome, yes. I believe that there was some difficulty with management down there that I believe is on the road to being corrected. All I can do, Madam Chair, in my experience, is look at the people who are heading up the agency now and I see good track records there and I see a dedication that perhaps may not have been entirely there in the past, because of not only perhaps constraints in the past as to what the management could or could not do and the ever-presence of politics in that particular project over the years.

I've always been an advocate that if you want to do something, you have to trust people to do the job. You can't second-guess people all the time when they're out there trying to do a professional job.

I'm confident, anyway, that we have the people in place to do the job. I believe the budget is adequate. I believe that my area is going to benefit over the next few years from not only the work that's going on now and the work that is going to be going on and also the impact it's going to have on local suppliers and local labour, that's all positive. I would hope that - and I have to cross my fingers when I say this - I would hope it doesn't go off the rails again, because too often in the past it has gone off the rails. I would hope we don't lose sight of the purpose, which is to clean up the tar ponds safely and restore that area in the centre of Sydney so it will be a plus to the community rather than a minus.

Now, maybe I'll stop the comment right there and ask a couple of questions. It was asked some time ago about the internal conflict in the organization. I believe that was in a couple of - at least one study that I saw, or one report, and I'm just wondering - and anybody over there can pick it up and answer it, Gary or Kevin or anybody - do you think that the organization set-up today, that the internal conflicts that were there are now history and that

everybody is moving toward the same direction in the degree of professionalism needed to clean this mess up and do it on time and on budget?

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: If I might, I'll take a stab at that and then defer to whomever else would like to speak to it.

In any organization I've worked in my career, there's always internal conflict. The internal conflict that existed in the agency, however, was significant. There were many reasons for it and they are very personnel and personal - personnel-related and personal, I should say. Having said that, I've worked very hard to get to know these people and internal conflict is not resolved with paper, it's resolved with communication, support - at least that's been my experience. It's what I've been trying to do, to heal those conflicts. I believe we've had significant success.

A real good measurement of that is laughter, I find. It's only a small building, it's not like what I'm used to, with 400 employees in CBRM, you get to see these people every day. I have witnessed the change, I have seen people laugh and smile - they weren't when I first went there. I've had staff tell me that they're happy to come to work again, where they weren't four months ago. I take great personal pride in that.

I had one of the contract engineers say to me when we were chatting about that - I was trying to get a feel for how he felt and did he feel that we were working better as a team and so on. I said, well, that's great. He said it's you, which was really touching - I know it's getting a little soft and fuzzy here. It's what he said that was important - he said, you're engaged.

I asked him what he meant by that and he said, well, you know, we didn't really chat that much, the former CEO and myself - those weren't quite his words. But basically these people arrive to work at 7:30 a.m. and they leave at 7:00 p.m. They are extremely dedicated and I think they're happier in their work than they were four months ago.

Do we still have room to improve and move forward? Absolutely. But the focus - perhaps I can say with some confidence - is back on the project totally, as opposed to symptoms that result in trying to manage the project. I'll just stop there and defer to anyone else who would like to say something.

MR. MANNING MACDONALD: Thank you very much, Kevin. I can't speak for the other political people in my area but I can certainly give you my impression of what the people are telling me down home. They're telling me to tell the people running the tar ponds to get on with it and to get it done. That's the message I'm getting.

In regard to that, maybe my next question would be, what is the reaction - and anybody can jump in on these questions, it doesn't have to be the point man there - what's the reaction of local companies and local labour toward the amount of work they're getting and the time frame for the project?

MR. KEVIN MACDONALD: Mostly positive, although, as you saw, I get it second-hand. I haven't really chatted with any contractors directly. We had a little bit of a bump on the cut-off walls - it was all in the paper that some people came in from Alberta, and so on, to do some work, but we managed that. We brought some people in to basically gain the knowledge of how to build a slurry wall, and that's how we managed and prevented another scar if you will.

[9:45 a.m.]

I guess I can say at the vendors' forum we had at Membertou, that was the one time I talked to a lot of local contractors and they all seemed to be reasonably pleased and looking forward to bidding.

MR. MANNING MACDONALD: Along with that, Mr. MacDonald, can we use more local people? Can we use more local companies? Are you investigating the possibility? What's the ratio now between local labour, local construction, local supplies, local professional expertise versus sort of off-island expertise?

MR. KEVIN MACDONALD: I don't have the actual numbers here with me but certainly our intention is to maximize local labour, and I think we're well above any targets set by the LEB. If I could defer to Corrie, he may have some details he may want to bring forward on that.

MADAM CHAIR: Mr. Stewart.

MR. CORRIE STEWART: Well, regarding some detail, we are currently compiling all LEB labour hours, as well as LEB content for the - we have compiled for the first four years of the project and now we're compiling the last quarter of this fiscal year. We are seeing some very healthy numbers, upwards of over 75 per cent of Nova Scotia content is what we're seeing in those numbers. The EIS, the panel report spoke to approximately 75 per cent of local content - we're seeing in excess of that. So it appears to be a very good record at this time and we're always keeping the local economic benefits first and foremost in our minds as we move through the project - of course, always with the first criteria of being on time and on budget.

MR. MANNING MACDONALD: To follow up with that, the importance of local labour and local business - and as an extension of local business they employ people, as well - it's important to my area. It's important to the area in Cape Breton because of the fact that

their unemployment rate is still unacceptably high. There are people now returning from out West who were working there, who have skills that could be employed there. I'm just hoping, I guess - you know, $400 million is quite an injection into the community in my area. I hope that we can maximize the potential of that money being spent there by allowing as many benefits as possible to flow to local people who are in need of work. Having made that comment, I'm sure that you partially answered it before I made the comment.

Can you tell me, Mr. MacDonald - or, again, anybody over there - what the present role of the university is, are they keeping in close touch with what's happening there? There is some indication that once this is done, there could be a chair of excellence or something at the university regarding the success of this project and perhaps as a result of that success, something that could be employed in similar projects elsewhere in the world so that the technological gains that we make here, or are about to make, I guess - I certainly wouldn't recommend the past attempts to clean up the tar ponds as any school of excellence to move forward with, but certainly right now I believe that the university has an opportunity here to piggyback on this project and to do something in the future. Do you want to comment on that?

MR. KEVIN MACDONALD: I'd be happy to. Gordie MacInnis and myself have had several conversations along those lines and, of course, the establishment of the chair of remedial studies is something that's internal to the university. The tar ponds itself is very much promoting that, and partnerships with the university - but it goes beyond the university, actually. There have been discussions with the university, with CBRM, with Devco, Nova Scotia Lands. When you take all of, let's say, these silos - and the tar ponds, of course - you take all these silos and you look at the infusion of capital that's coming into this community. We're talking about trying to manage, as opposed to managing in each of our silos, to try to manage this holistically for the betterment of the community and to leave a legacy of economic development, if nothing else, with the municipality.

So there's a lot of discussion with the university, but much larger than that, of course, it ties to the municipalities' port-to-port vision and so on. So the chair at the university is part of a much larger plan. But then that also ties to the Devco issues, whether it's the mine water, the geothermal issues tied to Devco and so on. So the university is very interested in working not just with the tar ponds, but Public Works and Government Services Canada and Nova Scotia Lands as well.

I should mention one thing on your previous question, Manning, on the labour - the contractors, if they were happy and such. There's one thing they're not too happy about. There was talk about - and we spoke to it through the CLC and with the Cape Breton partnership and so on - there was an understanding that the solidification and stabilization project would be cut up - that one big piece of pie would be cut up into several pieces of pie. That understanding predated me but the government partners - and I agree with this decision, by the way - have decided that's not the way to properly manage the S and S.

Simply put, if you have more than one main contractor managing the most important aspect of this project, how do you deal with any potential liabilities? How do you deal with any potential failures? How do you deal when one contractor meets another contractor? That's why we worked so hard to create this vendors' forum, this bidders' forum that we had, because the experts - we will be the experts when this project is done, and most hopefully our labour force will be going to locations to do this work.

What the vision is now is that we bring in one of the world's - well, we assume there will be a successful bidder, of course, from somewhere else, that doesn't exist in Nova Scotia. Whether it's the United States, Germany, wherever, they'll come in, they'll bring their key staff and then what they will do in order to get the equipment and manpower to do this work, they will subcontract to the local contractors. That's the vision, that's what we tried to facilitate with the vendors' forum and it worked very well. You could see during that forum that partnerships are already being formed to maximize the use of local labour.

Employment is one thing, but the most important thing that's going to deliver is the exchange of knowledge. The skills will be left in Cape Breton and Cape Bretoners will be out doing this work in other locations. Thank you.

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

I recognize Mr. Muir for the PC caucus. You have 20 minutes.

MR. JAMES MUIR: Thank you very much. I have listened to your presentation with interest and at one time in another role that I had as a minister, I did have the tar ponds thing as part of my portfolio - at that time it was Health. It has gone through a number of iterations since then. How we ended up with it there, I'm not quite sure. Anyway, a couple of things and a very quick question. Are GENIVAR or SNC-Lavalin companies that are doing any work on that project?

MR. KEVIN MACDONALD: At this point, no.

MR. MUIR: Okay. Are they companies that have indicated some interest in this?

MR. KEVIN MACDONALD: I'm not sure, I will defer to anyone who may know though.

MADAM CHAIR: Mr. Kaiser.

MR. WILF KAISER: In the past, there was a bid received from SNC-Lavalin. They were part of a team.

MR. MUIR: Thank you, it was kind of a personal question that I had as opposed to a general one.

I wanted to pick up from where Mr. MacDonald started. One of the questions he asked was the relationship between the university and the Sydney Tar Ponds Agency, and I was thinking the answer that you gave was a very good one. I know there was talk of the university trying at one point to become a world leader in environmental technology - the cleanup thing - and I was interested in your comments that once this project has been completed, we're going to have a set of skilled people in the Cape Breton area who may be able to ply their trades in other parts of the world. I think that's a very good thing, I think that will hopefully be a real plus for the completion of this project. You said there were some people who - you had a job fair or something?

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: A vendors' forum.

MR. MUIR: A vendors' forum. Maybe you could clarify that for me and where we are in that process.

MR. KEVIN MACDONALD: Basically, it was more of an event than a process. The stabilization and solidification contract is out to tender now and closes April 2^nd, which is a long bidding process because of the nature and size of the job. What the vendors' forum did was to try to - like an open house, I guess - introduce all potential off-island and on-island contractors that may have some interest in bidding on this work, to help facilitate and build relationships or partnerships between them. I think I said earlier, it was a very pleasant surprise to see that was already underway, it was very reassuring for us. We may have another one, we'll see, but it was set up to try to facilitate the partnering, to maximize the local content on the project.

MR. MUIR: I guess the other part of that question is, hopefully Xstrata will have that mine at Donkin running before too long, and we also have the Devco sites over there - there are still other types of remediation to be done up there, outside of the tar ponds and the coke ovens. I was looking at that maybe as a whole package, getting into remediation of more than one type of thing.

Can you give me a brief overview of the Tar Ponds Agency - what its divisions are, how many people work there, and what your annual budget is?

MR. KEVIN MACDONALD: Approximately 20 people, all professionals. Basically, it's a project management office. It has engineers and technologists working on the technical side, and of course we have support services - whether it's a technology person for the

computers, financial people, HR people and so on. It's basically a small project management organization. With reference to budget, I'll defer to Corrie.

MADAM CHAIR: Mr. Stewart.

MR. STEWART: The agency's budget ranges between $2.6 million and $3.1 million, depending on the particular year of what's happening for the required resources.

MR. MUIR: So the actual management of the project - what percentage of the project's gross cost will be attributed to management by the Tar Ponds Agency? Do you have a percentage on that thing?

MR. STEWART: Approximately 5 per cent.

MR. MUIR: When the project has been completed - and I'm just really delighted to hear on time and on budget - what is the area going to look like? Once it's remediated - let me start and just back up a little bit. Back in the early 1990s, I understand, the agency tendered for the solidification and stabilization of the ponds settlement. Is that the process that's still going to be used?

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: I don't know what that was in the 1990s, but the solidification/stabilization process - if you will, in simple terms - is the imprisonment of these contaminants and it is the solution, yes.

MR. MUIR: How are they going to do that? What's going to do that stabilization and solidification? Do we have an engineer over there who can answer?

MR. KEVIN MACDONALD: Yes, we have one here who is better at answers.

MADAM CHAIR: Mr. Kaiser.

MR. KAISER: Basically, the stabilization/solidification process is a process that has been in use for over 50 years in many different locations across North America, and across the world actually. It involves the addition of additives to a contaminated material which will bind the contaminants such that they aren't leachable or mobile anymore into the environment, and therefore it reduces the human health and ecological risks associated with the contaminants as they may formally reside.

[10:00 a.m.]

MR. MUIR: What is the binding agent?

MR. KAISER: In our case, the binding agent is primarily Portland cement, which is typical cement mixed with aggregates to produce concrete. In our case, we don't try to achieve the same strength as concrete, we're just simply trying to bind the contaminants that are there. We also do testing which includes the addition of things like fly ash or carbon mixtures, and primarily the aim is to come up with a recipe of additives that will act as a binding mechanism that provides the greatest efficiency in terms of both meeting the criteria that you're attempting to meet and reducing the cost to the most effective level.

One of the interesting parts of our project - and there are many - is that we have undertaken a process not unlike a typical engineering process that would be used in any of these types of projects around the world, where we embark on a stepwise testing procedure that gives us the ability to test the recipes or the additive mixtures in the laboratory at the bench scale. Then we stepped that up into a field scale test called a pilot testing, where we go in and do the process in full field scale conditions just to ensure there are no issues around scaling up from the laboratory. That gives us a set of parameters where we know we can get the job done with a certain mixture.

In our case, where we will go out and contract this work to others, we also allow them the ability to come up with their own mix, and that again provides for an ability for the contractors to gain efficiencies - efficiencies both on the performance end as well as on the financial or cost end.

MR. MUIR: I come from the central part of the province and we actually do produce cement in the riding of my colleague in Colchester-Musquodoboit Valley. I'm wondering if the cement that's being used - if you're at that stage now - is it coming from Brookfield?

MR. KAISER: We definitely have used some in the testing processes that we have undertaken, but we'll leave that up to the contracting process.

MR. MUIR: Once that stabilization is done, then what happens? How do you get the land back to a shape that we could put a park on it or a building? Will you ever be able to put anything on top? For example, the tar ponds - would you ever be able to put anything on top of the tar ponds or does that have to be a green area? Would it be stable enough to build something on?

MR. KAISER: Absolutely. The tar ponds will, at the end of the remedial project, be capable of supporting some facilities, some buildings - very lightweight sort of slab-on-grade-type buildings.

Our process - the path we have followed to get to where we are today - has included the signing of a memorandum of agreement with the funding partners, of course. Part of that is we have agreed that we will leave the site amenable to future uses. So in order words, we don't have a mandate at this point in time to determine what those future uses are, but I

believe Kevin has already mentioned that there are discussions with some stakeholders that may lead in that direction.

I guess the salient point is that we are undertaking a remedial activity. The remedy we'll apply to this contaminated site includes many factors - the stabilization/solidification process is but one. We will go in over top of the solidified monolith and install a cap, which will be an engineered system of layers that will, at the end of the day - in answer to your question - leave the site as a green space, a green-grass area with water now flowing past the remediated area.

MR. MUIR: Once it's cleaned up fully, would it support residential development, or would the best advice be to stay industrial?

MR. KAISER: The best advice is to avoid residential development on the sites and that is definitely the recommendation that we would make.

MR. MUIR: One of the unique things about the Tar Ponds Agency is the partnership that it has had with First Nations communities. Could you tell us a little bit about that?

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: Basically there is a set-aside agreement as part of the $400 million, which totals $19 million. That's the budget, if you will, for the set-aside for Aboriginal and we will be tendering certain projects to fulfill that. As a matter of fact, we have to build construction roads, if you will, on either side of the tar ponds to facilitate the actual work in the tar ponds and we've just awarded, actually, an Aboriginal set-aside - an Aboriginal company received the construction road tender, and there will be others.

MR. MUIR: You said, I think, $19 million - is that what it was?

MR. KEVIN MACDONALD: Yes.

MR. MUIR: I thought there had already been part of that Aboriginal set-aside, a project completed prior to the one you're talking about.

MR. KEVIN MACDONALD: I'm sorry, I forgot about the cooling pond, you're right.

MR. MUIR: Okay, thank you. I've been told that worked out pretty well, I guess.

MR. KEVIN MACDONALD: Yes.

MR. MUIR: One of the things we've heard a lot about, and I guess probably answers why I had that file at one time, was the health concerns of people in the immediate area - they're up in Mr. Gosse's neighbourhood, in particular. I haven't heard anything about that for a long while. So the communication, I guess, that's been with the local residents must have been very good. Have those fears basically been allayed at this time?

MR. KEVIN MACDONALD: It would be difficult for me to say whether fears have been allayed. I can say, however, that there has been an enormous effort put into communication. We're trying to be good neighbours, is probably the best way to put it, and our manager of communications puts a lot of effort into getting out ahead of projects - delivering information pamphlets and such to the residents and informing them as to what is taking place before it begins. I think that's had a really positive effect.

With reference to environmental issues and air monitoring, and things like that, it would be helpful maybe if Mr. Kaiser here could take a minute or so to explain just how intense that is, as well.

MADAM CHAIR: Mr. Kaiser.

MR. KAISER: Thank you. Actually this is one of the areas that we are very proud of the work that we have done. We have undertaken basically a two-stage or a two-step process to doing air monitoring. Of course air monitoring, we recognized very early on, was one of the key aspects of this project that had both the ability to affect the health of nearby residents, as well as the ability to make them concerned about any project activities that we undertook. So over 10 years ago, we started to collect baseline air quality data in the community, and that included all of the surrounding areas of the tar ponds and the coke oven sites.

In 2001, we became very aggressive in terms of the type of program we were operating. We are now, as a result of that, very proud to say that we have an extensive library of data in terms of the air quality in our community.

It shows us, when we look at trends, that we have certain contaminants in our site that we need to be concerned about and we can tell if we're doing something wrong, but we also see activities that take place in the community, such as when the Fall comes and people in the surrounding areas start to run their home heating units and whatnot.

I guess the point I'm trying to make is, our program is very deliberate and it's very comprehensive and it can give us a lot of information. We use that data to determine what our baselines are or what our air quality is, normally. We have then stepped out and undertaken a management tool development on the side of air monitoring that we call our Real-time program. We went off and looked at 13 other jurisdictions across North America. We determined what set of criteria best suited both the contaminants that we need to deal with and the activities we will be undertaking, as well as the sort of surrounding conditions.

From that activity, we came up with what we call a budget approach to air monitoring. So at the beginning of any particular day, we have an understanding of what would be going on in the ambient air conditions on that given day, had we not undertaken any work. Then we go out and start to undertake our work and every 15 minutes we take air quality readings and we determine if our activities are going to negatively affect the surrounding air shed. Using that approach, we're able to determine if we need to change our activities at any point in time during that day or if we need to shut those activities down or what we may need to do. We find it's a very effective management tool and we will continue to use it. We will also continue to further develop our program.

MR. MUIR: Thank you. In terms of the process that you're using there, are there other places in the world - was this, I guess, really uniquely designed for the tar ponds/coke ovens site, or was it sort of a model that has been used successfully in other places that you picked up and brought here, or your contractors picked up and brought here - I guess the agency doesn't do that - and if so, where was it used before?

MR. KAISER: The processes or the technologies which we will apply on our sites have been used and have been proven effective at many other locations. This was actually one of the commitments that arose out of the Joint Action Group process which took place several years ago over an extensive period of time. What we are doing at this point in time is continuing to live up to commitments that we've made in the past, and one of those is to not make Sydney an experiment or not make our project an experiment and add additional risk beyond what typically exists with this type of project.

As a result of our approach and as a result of the circumstances in which we are doing our work, there are certain unique aspects. I guess by that I mean we have a significant amount of contaminated material in a tidal estuary, so that means that every day the tide is going in and out over parts of the site. That is quite unique in terms of these types of contaminants, but these types of contaminants are found in many other locations and these technologies have all been used and proven effective elsewhere.

MADAM CHAIR: Order. The time has now expired for the PC caucus. The second round of questioning will be 14 minutes.

I recognize Mr. Gosse from the NDP caucus.

MR. GORDON GOSSE: Thank you, Madam Chair. Thank you for coming in today on such a nasty day and driving up either yesterday or today. Some of the questions I have came out of the review, but one of the main questions I have is that you just touched on the set-aside project for the Native people being up to - I knew this - $4 million, now $14 million and up to $19 million. Now, I live in that community and I guess I hear different things than my colleague at the other end of the community because I live in Whitney Pier.

Some of the things I hear are of the community's ability to benefit from this project. Now, that's great, it's a beautiful thing to have a set-aside project for the Natives, but how has the project benefited the African-Nova Scotian community and the communities of Ashby and Whitney Pier by employment to those residents and those people?

MR. KEVIN MACDONALD: I certainly don't have the statistics by area of Sydney and so on with me, I don't even know if they exist to that detail, so I don't know if I would be able to even guess. I can only say, as I said in my opening remarks, pretty much everything that is being done on the site as we speak is being done by local companies, companies that are on the ground at CBRM.

[10:15 a.m.]

I believe there is a clause in our contracts now regarding employment of African-Nova Scotians and, as a matter of fact, I had a wonderful meeting with a lady I just met, her name was Crystal Taylor, with Public Works and Government Services Canada and she's trying to establish a program - I just forget the name of the program, but we're trying to work with the agency to promote the employment of African-Nova Scotians.

MR. GOSSE: Yes, I know that and that lady that you just mentioned would have met with Karen Green MacIver at the African-Nova Scotian . . .

MR. KEVIN MACDONALD: Yes, and who I have met through this . . .

MR. GOSSE: Yes. See, I do know what's going on without being on that site on a daily basis because I live there and that is my community.

The only other question I would have is that's what I hear, that the African-Nova Scotian community is not happy with no employment for their members. The former steelworkers who spent their lifetime and didn't get a pension on that site - the only two people you have out there working right now of the former steelworkers would be Mickey Cipak and Terry Hyisky, who I see on a daily basis because I drive through there either shovelling or doing something and we're on the cooling pond aspect of it. The security aspect of it would be another part that is done by former CUPE members and the security firm that is doing the coke ovens site and the tar ponds site - and doing a great job - but that's all I can see of former steelworkers, except for some of the ones in the office like Nancy, Brenda, George, and those people. Realize, I spent 18 years in the coke ovens, so I'm pretty familiar with that site and every piece that's out there.

I have talked to Gary before about this and Gary has been very good to me, as an MLA in that area, and anytime I've ever called he has met me or been down there for anything, and I really appreciate that, Gary, I want you to know that. But that's what I'm hearing within my community.

I have talked to leaders of the African-Nova Scotian community and they're not happy and that sort of thing, so I thought the agency may be going forward with some of those things. Also, I do know of the contract with HAZCO and what happened with the guys from Alberta and the agency picking up the local labour to work with those guys to pick up the technology - I pretty well know everything. So that's all I have to say and would like to pass on the remainder of my time to my colleague, Mr. Steele.

MADAM CHAIR: Mr. Steele, you have until 10:28 a.m.

MR. STEELE: There is a problem, I believe, with the communication of information to the local community. The way that this problem shows itself is in the number of rumours in the community, things that people are saying about what is going on. If they had good, clear, accurate information, that would kill all of the rumours because then people would know what is going on. For example, here today we have been told that there's no reason why this committee can't have the monthly reports from the independent engineer, which gives an independent and credible analysis on what's happening on the project. Now, if there's no problem with us having it, there should be no problem, for example, with posting the monthly on the agency's Web site.

I think what people are feeling is that they're only being told the good news, they're only being told the positive spin and if anything happens that is negative, they're just not told. The incident with the edited testing results being posted on the agency's Web site is an example where Marlene Kane had to request that the full report or a more full report be posted to the Web site.

Let me talk about some of the things that are being said in the community, and you can tell me whether they're true or not. There have been rumours in the community of quality problems with the cooling pond portion of the project. Can you confirm whether there was or was not, about eight months subsequent to completion, a cave-in?

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: By cave-in, you mean the settling that took place in the cooling pond?

MR. STEELE: Was there a problem that might be described by people as a cave-in?

MR. KEVIN MACDONALD: Yes.

MR. STEELE: Okay, tell us about that problem, what was done to fix it and how much it cost.

MR. KEVIN MACDONALD: The problem was identified that because the project was being done in the wintertime, this time of year, there was some ice that got mixed into the burrow fills, and so on, that were used to put in the cooling pond. When the temperatures warmed up and such, that ice disappeared which caused the settling.

MR. STEELE: How much did it cost to fix?

MADAM CHAIR: Mr. Kaiser.

MR. KAISER: Can I just add to that? I'll actually assist Mr. MacDonald in this instance since he was not with us last year when the cooling pond project was undertaken. I guess what I would like to add is that the cooling pond project began in the middle of January last year and it ended very early in April last year. We were undertaking this project during a very challenging period of the year, as last winter was quite cold, as is typical in Cape Breton and in Nova Scotia.

We saw the formation of ice on the cooling pond and the contractors simply moved the ice ahead of them as they went. Understand that this is a very confined area that we were working in. Some attempts were made to melt the ice as the project proceeded, but in other instances, due to the nature of the work going on, the ice would get covered with some of the sludge and become a little bit hard to discern as ice.

At the end of the project, some of the ice was buried - these would be relatively large chunks of ice. So there was some settling that occurred at the cooling pond after the ambient conditions warmed up, as they were during the summer. We had some settlement of the covering layer over the monolith, but I just wanted to add the point that we had no issues whatsoever with the material that was stabilized and solidified at the site.

MR. STEELE: How much did it cost to fix?

MR. KAISER: That's actually something that I can't answer.

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: Approximately $30,000. May I add something to that?

MR. STEELE: Only if it's a response to my question, because my time is running short.

MR. KEVIN MACDONALD: Approximately $30,000.

MR. STEELE: How much communication was there with the public about what was happening?

MR. KEVIN MACDONALD: I really don't know how to quantify it.

MR. STEELE: Okay, I'd like to suggest to you that the answer to the question is none, which is why rumours start. Another rumour - there are also rumours about problems with the cofferdam. Can you confirm whether the cofferdam, according to the independent engineer, does or does not meet the quality specifications in the contract?

MR. KEVIN MACDONALD: The project predates me but I believe the answer is that there are quality issues with the barrier, yes.

MR. STEELE: Okay, what are the quality issues and how much is it going to cost to fix them?

MADAM CHAIR: Mr. Campbell.

MR. CAMPBELL: The quality issue was the amour stone size did not meet the spec and the independent engineer identified that and we went back to the company that built the cofferdam and said, how are you going to fix it? They didn't respond quick enough so we have since turned it over to the Department of Justice, so it's a legal issue now.

MR. STEELE: So it's going to litigation now, okay. What's the value of the problem, in your estimation?

MR. CAMPBELL: I really can't put a number on that, to tell you the truth. If you've got to take that armour stone out and replace it, it's probably substantial.

MR. STEELE: Are we talking in the millions?

MR. CAMPBELL: Probably close to it, yes.

MR. STEELE: Okay. Mr. MacDonald, you referred in an earlier answer to a "bump" with respect to the cut-off walls, which is a lovely word suggesting that there was a problem - you referred to it as a "bump". What was the problem with the cut-off walls and how much is it going to cost to fix it?

MR. KEVIN MACDONALD: We have a QA failure on the permeability.

MR. STEELE: QA being quality assurance?

MR. KEVIN MACDONALD: Yes, on the permeability issue on the wall, and it's going to be addressed by the contractor and managed by the design engineer. I don't have a number yet because it's shut down.

MR. STEELE: Now, to me as a non-technical person, when somebody says to me there's a permeability issue, what that says to me is that stuff is getting out that shouldn't get out. What's getting out that is not supposed to get out?

MR. KEVIN MACDONALD: That's right, that's why we have a QA/QC program. That program and that quality assurance is what has uncovered it and the contractor will be dealing with it.

MR. STEELE: And what's getting out that's not supposed to get out?

MR. KEVIN MACDONALD: It's under construction, it's just been constructed. When this is remedied, what's getting out will no longer get out.

MR. STEELE: How much communication with the public was there about the problem with the cofferdam?

MR. KEVIN MACDONALD: The cofferdam predates me, I can't . . .

MR. STEELE: I'm going to suggest to you that the answer to the question is none. How much communication with the public has there been about the problem with the cut-off walls?

MR. KEVIN MACDONALD: I would say none at this point, it's under evaluation.

MR. STEELE: So do you see what the problem is here? You've got a cave-in in the cooling pond, you've got problems with the cofferdam that are now going to litigation, you've got a quality assurance problem having to do with the permeability of the cut-off walls, and there has been no communication with the local community that Mr. MacDonald and Mr. Gosse represent, about what is going on and what conclusions people should draw from these issues. What are you going to do to change your communications with the local community?

MR. KEVIN MACDONALD: I think our communications with the local community are very good.

MR. STEELE: Do you see a problem with the fact that there have been no communications with the public about these quality problems?

MR. KEVIN MACDONALD: First of all, the cut-off wall issue is being managed by the agency through its design engineer and its contractor. No construction project is ever done without hitches or without problems and that need to be dealt with in the field. That's all this is; it will be fixed.

MR. STEELE: I agree with you. You can't have a major, innovative, $400 million project and expect everything to go perfectly the first time, but that's not what I'm asking you. I'm not getting after the agency for problems because there are going to be problems and we all rely on you to identify them and fix them. The issue that I'm raising with you is communication with the community around the tar ponds so that they don't have to find out about these things at the local Tim Hortons, but they can go to the Web site and say, okay, here's what's going on, we've been informed about what's going on, we know how serious or insignificant it is, we know how much it's going to cost. The issue is talking to the local community.

Now, you do have something called a CLC, which stands for Community Liaison Committee. Does that committee consider part of its mandate to be actually communicating with the community?

MR. KEVIN MACDONALD: Yes, absolutely.

MR. STEELE: Okay, so why aren't they doing this job? Why aren't they doing the communicating?

MR. KEVIN MACDONALD: I suggest that they are, at least judging by the questions they ask us for the very purpose of communicating back to their constituents. Your point is well taken on communication, and so on, with reference to the Web site and maintaining information and so on. To that end, one of the issues I failed to mention previously with reference to staff is our manager of communications - we will be engaging the services of an assistant, if you will, to help better.

MR. STEELE: One of the other persistent rumours is that local politicians are trying to exert pressure on the agency to award contracts to certain companies and asking why certain companies aren't getting more of the business.

I was wondering if each of you could say whether you have or have not ever received a call from any of the local politicians, having to do either with the awarding of the contracts or the appointment of staff.

MR. KEVIN MACDONALD: Absolutely, I have not.

MR. STEELE: Okay, Mr. Stewart.

MR. STEWART: I have not.

MR. STEELE: Mr. Kaiser.

MR. KAISER: I have not.

MR. STEELE: Are any of you aware of anybody else in the agency having received those kinds of calls?

MR. KEVIN MACDONALD: I am not.

MR. STEELE: Mr. Stewart.

MR. STEWART: I am not.

MR. STEELE: And Mr. Kaiser.

MR. KAISER: I am not.

MR. STEELE: Okay, thank you. I think my time is up.

MADAM CHAIR: Your time has expired. Mr. MacDonald, 14 minutes, until 10:42 a.m.

MR. MANNING MACDONALD: Madam Chair, I'm just going to pick up on the last comments of the member for Halifax Fairview. I want to assure this committee that if he's talking about local politicians, I hope he's not talking about the member for Cape Breton South because I can tell you I didn't call.

When you don't mention which politicians you're talking about, it throws it out that all local politicians were probably doing this and I can assure you, Madam Chair, that I never called the Sydney Tar Ponds Agency about anybody or anything. All I want them to do is to get on with it and fix that job down there. So I can assure the member for Halifax Fairview that if local politicians are doing that, it's not this local politician.

I also want to say, Madam Chair, that I don't deal in rumours, I deal in facts. I can tell you that the facts are out there that this project seems to be moving along. I do believe that the member for Halifax Fairview has a point about communications. It perhaps would stop a lot of rumours if the communications were a little bit better, but you can't micromanage that. Everything that happens over there, you can't stop the presses and start making public releases on everything on a daily basis. You'd never get the job done if you were doing that.

[10:30 a.m.]

I believe that any information I want, I can readily get from the agency or its people. There are some questions I would like to ask regarding the related projects in the area. I'm looking for information here, factual information. I'm not basing my questions on any rumours that I've heard. I'm basing it on the need to know.

I believe we met recently with the people from the port development in Sydney. They were up to see us at our caucus meeting and they're moving ahead with the development of the Sydney Port. There's the issue of the slag dump on the Sysco property. Because I'm not an expert on what goes on over there, I'd like to find out whether that's - I believe they're going to be using that in terms of fill, and I'm wondering, is that your responsibility to come up with a deal for them? Is that your property - I guess, let me ask that - or whose property is it?

MADAM CHAIR: Mr. Campbell.

MR. CAMPBELL: Thank you. As you may or may not know, when we shut Sysco down, there was a slag operation. We have since encouraged a local company to continue that, so there is a company that is now mining the slag and is being fairly successful, is now marketing in the States, and we've just shipped a sizeable load off to a cement plant in Ontario. So we would like to bring - the slag is an excellent product, it's used all over the place for road building. It's a product, as you know, as we wound Sysco down, we tried to recycle everything we could recycle and we were pretty successful at it. The slag operation certainly has been used and hopefully will continue to be used as part of the tar ponds project.

MR. MANNING MACDONALD: Thanks, Mr. Campbell. A related question then is, Jim Wooder and his group are very anxious to use a lot of that material for filling in what they need to fill in when they dredge the harbour and the lay down area they're going to have there, the area they're going to put a lot of that settlement on. That doesn't present a problem for you people, I guess that's what I'm asking?

MR. CAMPBELL: It's an opportunity more than a problem.

MR. MANNING MACDONALD: That's great. The other issue regarding the Sysco property and the future need to remediate part of that property that's going to be there, the expertise that you're getting now in terms of the remediation of the tar ponds, can any of that spill over into future remediation projects on Sysco properties and abandoned mine sites in Cape Breton? Is this technology - or the people that you're training and the people that you're using, can they be used successfully in the future? There projects are going to come up - you know that and I know that. There is the Sysco remediation that needs to be done down the

road and there's also the need to finally do something with some of the abandoned mine sites in the area. Do you want to comment on that, Gary, or Kevin, or Wilf, or anybody?

MR. CAMPBELL: Maybe I will. I guess a lot of people don't know but on the Sysco site, as part of the decommissioning of Sysco, we have a 150,000-ton solidification project that's almost done. I was in the north end where we had oil tanks that came down, free product and groundwater - we have been working extensively for almost two years now and it is a pretty major project that a lot of people don't even know about. Where the tar ponds is going to be solidified in situ, they're going to mix it in the ponds. We've been removing it and have a pug mill, a big cement mixer doing it there and putting it back above ground level. So the technology for decommissioning the Sysco site is quite similar to the tar ponds. As you may know, we are now starting to look at other Sysco properties - there are two over on the north side we are now looking at for future remediation.

MR. MANNING MACDONALD: I think what I'm saying is, the success of this project will probably catch the attention of federal and provincial people, in terms of doing more in this area, in terms of remediation. That's important to keep in mind and something that's very significant to the future employment of people in my area, and also important for the environmental well-being of the community in the future.

MR. CAMPBELL: Yes.

MR. MANNING MACDONALD: Just a comment regarding the set-aside that my friend, the member for Cape Breton Nova, had mentioned. Just for information - I believe I'm right on this, Kevin - is the set-aside program for First Nations a federal requirement?

MR. KEVIN MACDONALD: That's correct.

MR. MANNING MACDONALD: I just wanted to clear that up because it is a federal requirement for the operation and has nothing to do with any local wishes of anybody.

MADAM CHAIR: Mr. Campbell.

MR. CAMPBELL: It is a federal and provincial requirement. When we negotiated the agreement, the federal government asked us if we would consider doing a First Nations set-aside since no province has ever done one of those and we agreed, so it's federal-provincial.

MR. MANNING MACDONALD: Okay, but the impetus came from the federal government, right?

MR. CAMPBELL: Yes.

MR. MANNING MACDONALD: Madam Chair, I'm not going to spend too much more time, I don't think I have that much anyway. Let me conclude by saying $400 million is a lot of money to be spent in any community, but it's important that this money is being spent in my community, in the community of Cape Breton Nova and all the other areas that will be affected in Cape Breton.

You mentioned the number of people who were working was around 20 in your office, but I don't think the whole story was told there. There are many more people than that working there and they're working under contracts. Perhaps if I can receive from you a list of the number of contractors and how many people they're employing, the local people, if at some point that information could be made available. We get asked from time to time why there aren't any local people working there. The problem is there are no local people working for the Sydney Tar Ponds Agency other than the 20, but there are local people working for the contractors who are employed by your agency. Is that a fair statement to make?

MADAM CHAIR: Mr. MacDonald.

MR. KEVIN MACDONALD: Absolutely.

MR. MANNING MACDONALD: Because most of your stuff is contracted out, right?

MR. KEVIN MACDONALD: Yes.

MR. MANNING MACDONALD: All of it pretty well, except your in-house design?

MR. KEVIN MACDONALD: Absolutely, and it's a big number and we're presently putting that number together, including all aspects. Even beyond the contractors, what about the government people who are on the ground tied to this project? Our LEB reporting has been limited to the 400, but there are more than 400. Yes, we'll produce the report and share it with you.

MR. MANNING MACDONALD: That's one kind of communication I think we'd like to get and I hope Tanya is listening to that up there because that's what we need to know, we need to know how many people, how many contractors and how much money is being spent in the community. That type of information would be invaluable as a go-forward support of the project.

Let me wind up by saying that I wish you luck in the next couple of years. I have no reason to believe the group managing the tar ponds are not capable, committed or dedicated to seeing the project through to its completion. I have every reason to believe that the people I know who are connected to the project, including the ones here today, can get the job done if your political masters allow you to do it over the next couple of years. I would hope,

Madam Chair, if nothing else happens in the future that the political people will yes, keep an eye on the project, because we are dealing with federal dollars, but I would hopefully suggest to those people who are in control both federally and provincially that they let the people get on with the job and I hope you achieve your goals, if that's the case. Thank you very much for coming today.

MADAM CHAIR: Thank you, Mr. MacDonald. I recognize Mr. Muir.

MR. MUIR: Madam Chair, it's very interesting this morning. I have two or three questions that I just wanted to finish up with. The Community Liaison Committee has been referenced here on a number of occasions this morning. What is the composition of that and how was that group put together?

MR. KEVIN MACDONALD: Basically it's representative of stakeholders in the community. There is a member from the former JAG process, there is a member from Cape Breton partners, there is a member from CBU - I could go on - there's a member from the labour unions, there are business members, there's a member from the health authority, there's a member from CBRM council. I'm sure there are others, but it's very representative of the community.

MR. MUIR: How many folks would be on that committee, do you know?

MR. KEVIN MACDONALD: How did I know you were going to ask that question. I'm going to estimate 15, I don't have the exact number in my mind. She does.

MR. MUIR: Okay, thank you. You just mentioned the JAG group, you have a representative from the former JAG group. JAG is over and done with now, is it?

MR. KEVIN MACDONALD: It is from a government participation perspective, but I think it still exists as an entity in the community. Francis Sirois is the member.

MR. MUIR: Does it do anything other than exist right now?

MR. KEVIN MACDONALD: Very active in the CLC.

MR. MUIR: The overall governance of the tar ponds/coke ovens cleanup - what department of the federal government is involved with this? Which department is it and what does it do? What is its involvement now?

MADAM CHAIR: Mr. Campbell.

MR. CAMPBELL: The signatories to the $400 million agreement are the provincial and federal governments. The federal government used to be represented back when you

were involved with Environment Canada. Now that we've gone into the actual working, it puts them in conflict, they can't be a regulator, so they have transferred over to federal Public Works. Federal Public Works is the federal representative, Transportation and Infrastructure Renewal is the provincial representative. The management committee consists of four people, two from each of these bodies.

MR. MUIR: How frequently would that committee meet?

MR. CAMPBELL: The committee actually meets formally, quarterly, but there's a lot more activity than that. I'm on the Project Management Committee and I'm on the project regularly. I have a counterpart with federal Public Works and we talk daily.

MR. MUIR: Yes, and I guess that was the point I was trying to make that although there are former points, I think it's a lot closer than that. I think that may be one of the reasons why we're at the stage we are.

After four years into the project, are we where we should be, or where we hoped to be when we began?

MR. CAMPBELL: I think we stumbled a bit coming out of the blocks, no doubt about it, and that was a problem. We really had a problem staffing-up with the technical - I mean this is a highly technical project and we had some problems staffing-up, getting the Sydney Tar Ponds Agency ready to take over and so we stumbled a bit. But right now we're on schedule, we're on budget.

As of March 31, 2014, both federal and provincial governments turn the key on the door. There's no ability to provide funding beyond that, so that's the real pressure point. We've got to have this thing wrapped up in 2014.

MR. KEVIN MACDONALD: Just a quick note with reference to - from the agency's perspective. The government partners have been absolutely co-operative, fully supportive of the agency. I'm in daily contact with the provincial and the federal people on the secretariat - and particularly the province, a lot through Gary and David, himself, and others. It's just nothing but support and it's very reassuring. Thank you.

MADAM CHAIR: Mr. Stewart.

MR. STEWART: Thank you. I just want to add, there's been a lot of talk of on time and on budget and I thought I would add that currently during our annual budgeting process, what we were seeing, recognizing that nearly all of the 100 per cent designs for the project elements are complete, is that we started with a contingency in the project of $57 million. We have only allocated less than $1.9 million of that contingency with nearly all of the 100 per cent designs complete. Of course, this means then that we will have nearly 97 per cent of the

contingency remaining to deal with issues out there on the ground when the shovels are in the ground and so on, which is exactly where we want to be.

We have $55.1 million left to deal with any of those unknowns that we might be confronted with. So that's why we say, we are certainly on budget. Thank you.

MR. MUIR: Well, Madam Chair, those are the comments I have. I'll just say, looking back over my 10-year history with the project, I'm delighted to see where we are and I know a fair bit - or I did know a fair bit - about the struggles as the project developed, so thank you very much.

[10:45 a.m.]

MADAM CHAIR: Thank you. Our rounds of questions have concluded. I would invite Mr. MacDonald, if you have any concluding comments that you would like to make.

MR. KEVIN MACDONALD: Well, again, thank you for your interest and your invitation to appear. From a personal point of view, I can tell you that I've worked with some wonderful groups of people over my career, particularly at CBRM, but I have never, ever worked with a group of individuals as dedicated as the people at the Sydney Tar Ponds Agency. They are hard-working, highly intelligent, highly motivated, and I am actually very proud to be associated with this project.

In a previous life, I had 10 years invested in the JAG process to help make this project. We're going to do everything humanly possible to make this happen on time and on budget.

MADAM CHAIR: Thank you. On behalf of the committee, I'd like to extend a thank you to you for being here today.

Just an administrative detail. During the questions there were requests for certain information: copies of reports from the independent engineer, from 2008 to the present; copies of all quarterly reports filed with the Project Management Committee; as well as information regarding the number of people employed, besides the 20 in the agency; and financial reports on what is being spent in the local community, I believe. So that information can be provided to the committee clerk and she will distribute it to the members of the committee.

So again, thank you very much for being here today. At this point, we stand adjourned until next Wednesday.

[The committee adjourned at 10:47 a.m.]