MR. CHAIRMAN: Order, please. The Committee on Supply will now reconvene. Before the committee this afternoon, we will again be debating the estimates of the Minister of Economic Development. The member for Cape Breton South has 11 minutes remaining.
The honourable member for Cape Breton South.
MR. MANNING MACDONALD: Mr. Chairman, once again it is a pleasure to rise and enter into debate on the estimates of the Department of Economic Development. I want to pick up where I left off yesterday, and perhaps make a few comments about the document Toward Prosperity, and to talk about the engine that will drive the government's agenda, namely the Department of Economic Development whose budget was gutted by some $40 million this year, and is a little more than a fraction of what it used to be. There are some comments I would like to make about that, specifically the document Toward Prosperity.
The only thing in that document, as I stated before, that would give any comfort to anybody is the examples that were cited in the document regarding success stories in Nova Scotia. As I said yesterday, it is a bogus document because those were not success stories of the current government, rather, they were success stories of the previous government. That having been said, the success stories were here in this booklet Toward Prosperity. Yet the very success stories that the minister and his department talk about are not going to be able to repeat themselves in Nova Scotia because the vehicle that made those success stories has been taken away; namely, the support that was given to these businesses by the Department of Economic Development, the Government of Nova Scotia, and in some cases in partnership with the Government of Canada.
When you look at the budget figures of the department, you look at a budget number here that jumps off the page. It is a reduction in the expenditures of this particular department, Mr. Chairman. The figures are so out of whack that no matter what explanation you could put on the table here, nobody would be able to figure out what is going on in this department at the present time.
You have a $40 million reduction, yet you have virtually the same staff complement. I heard yesterday from the minister, well, this staff member is going here, or that staff member is going there, or there are going to be transitions made. The fact of the matter is, in this particular document, the budget is literally cut in half, yet the complement remains virtually the same. It is called budget wizardry, that is what it is, and it is not confined to the mere six pages that are devoted to the Department of Economic Development in the estimate. There are only six pages in this document for the Department of Economic Development; that will tell you what importance that particular department now plays in the day-to-day operations of the Hamm Government.
This document is just a smokescreen for doing nothing in the next couple of years except some talking. It is a document that is backwards to the future. That is the kind of document we have here today. There is no budget contained within this document as to where we are heading in the future. There are no plans. There is no vision. There is nothing. What you have here is a mechanism whereby the Government of Nova Scotia can rag the puck for the next few years and do nothing, and say sorry to the success stories that are in here from the previous government; we are out of business; we can't help you anymore. We don't have any money, and we don't have any clout left in dealing with the federal government because we can't put our nickel on the table.
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When you look at this budget for a province this size, to dare to come to this House with this kind of a budget and suggest that this department is growing and is vibrant and is doing something in this province is nothing short of deceitful, Mr. Chairman. The engine that will drive the government agenda; there is not enough in this budget to drive an ice cream store. When you take away all the planned expenditures, the expenditures that have to take place in this department, the transfers, the various components of this department, the obligations in other words, there is nothing left in this particular budget. It is being gutted to pieces.
So who is going to drive the economic engine? Is it going to be the Halifax Metropolitan Board of Trade in consultation with various other interest groups throughout the province? They are going to do some talking like they did in Cape Breton. The partnership did some talking. But now they are going to do another round of talking down there. So that will actually mean that in Cape Breton the government, for another period of time, won't
actually have to do anything about the problems, they will just keep talking. Talking does not cost money. What costs money is creating jobs.
Nothing in this document is creating jobs in Cape Breton or anywhere else in this province. This budget doesn't allow for that. This budget is not even a status quo budget. It is worse than that, it is a regressive budget; a budget that tells you nothing about where this department is going in the future, except that it is trying to maintain its existence. That is all it is doing, Mr. Chairman.
I called it a department of no development yesterday, and I meant it. You can talk the talk in this particular department. The minister has done a very good job of that in the past few months. We hear these words - planning for the future, creating a new economy, Nova Scotia is going to be vibrant - as we continue to slip in terms of our economic input across this country. Pretty soon we will be in last place. We are galloping toward that right now in terms of economic clout. Other Maritime Provinces have jumped ahead of us.
As I said yesterday, I don't particularly blame the Minister of Economic Development. I am sure the minister would rather have come here with a number of plans and programs and a much bigger budget. I blame the Premier and the Minister of Finance because those are the gentlemen who are foisting their ultra-right-wing agenda on this province and are determined to destroy what is left of any economic development initiatives that would be assisted by the Government of Nova Scotia, including the success stories that are in this booklet.
There are many success stories in Nova Scotia that were helped by the government to get started, and that program is being jettisoned by this government, the very program that was successful. The number of people working out there right now that were helped by this government, a program this government has now jettisoned, there was a 97 per cent success rate in helping businesses in this province in the last seven years. I believe the minister and the people I know in his department did not want to have it this way. There are some very dedicated individuals working in the Department of Economic Development who I understand are leaving. Some of them are staying, some of them are leaving out of sheer frustration.
Although I don't have access to the Cabinet rooms - at least not at the present time - to hear what goes on down there, I suspect it would be very enlightening when the argument goes around the table as to who is dividing up the spoils in this province. It is obvious to me that the Minister of Economic Development has lost his fight, and I would expect lost something in the exchange between him and his fellow Cabinet members. I am sure that the senior people working in that department have told him about the direction they feel this department should be moving in.
I think the minister, had he been able to do so, would have tried to build on the success stories of the previous government, would have tried to build on the examples that are in this Toward Prosperity document and I notice the member for Yarmouth has a good
laugh about that. I might tell the member for Yarmouth that it was this government that supported the initiatives in Yarmouth and that member congratulated me on that when the initiatives for the new centre in Yarmouth were announced.
Those were the kinds of programs that we put in place as a government and Skate Yarmouth is a good project. We supported Skate Yarmouth and we will see how much further this government is going to go with that as well as the millennium project in Antigonish that we supported and I could go on and on. Are those bad programs for Nova Scotia? I don't think so, but this government is out of business on these programs; except they may make some exceptions in the future if it becomes politically expedient to do so, but that is not my point. My point is, there is nowhere in this document or that document or the estimates or in the plan for the department that calls for assistance to emerging small business and their entrepreneurs in this province.
As I said, the success stories that are in this booklet are the only thing in this booklet that I feel are relevant. The rest of it is just 50 or 60 or 70 pages, whatever it is, of talking, where they are going in the future. Talking the talk, but not walking the walk. I believe this government has a responsibility to build on success. This government is not building on success, this government is retrenching.
I realize my time is up. I will certainly come back to this and perhaps when I do, I will have some questions for the minister. Thank you.
MR. CHAIRMAN: The honourable Minister of Economic Development.
HON. GORDON BALSER: I appreciate the opportunity to respond to some of the comments made by the member opposite. Certainly he raised the whole issue of the document Toward Prosperity and spoke with some, I won't use the word contempt, but . . .
MR. FRANK CORBETT: On a point of order. Mr. Chairman, the minister gets to open and he gets to close debate on his estimates and the time allotted to the Liberal Party has expired, therefore the time should revert back to us without question. He does not have the right to answer that.
MR. CHAIRMAN: Order, please. My experience has been that the minister is given time to respond and it won't impact the honourable member's time. He still will be allocated one hour, however, the honourable minister has indicated that he is willing to yield the floor.
The honourable member for Cape Breton Centre.
MR. FRANK CORBETT: By way of statement, again, I reiterate, the minister if he will have time to open and close debate and certainly if he is not happy with some of the
questions, (Interruptions) the voice in the wilderness is going to speak. What we are trying to do here is to bring some order to this House.
What we have here again - and I wanted to go to where I was yesterday - as in all of these estimates that have come forward so far are incomplete numbers. These numbers are almost like, throw this one in here, throw that one in there and yet, when you ask these questions about come out and tell me where this is coming from, you get not much more than a blank stare.
In the Supplementary Detail on Page 6.7 under Net Program Expenses, Provision for Losses on Doubtful Accounts, no doubt the minister knows, if he looks at the figures from 1998-99 and 1999-2000, the estimate was grossly underestimated yet they want us to believe that is an accurate figure. What I am going to ask the minister is, first of all, for 1999-2000, what caused that estimate to go from $1.7 million to $15.022 million?
MR. BALSER: That came as a direct result of a need to recognize there were a number of accounts that had to be accounted for.
MR. CORBETT: Mr. Chairman, if we weren't in such a mess here, that answer would be laughable. Again, it is not good enough to tell this House in estimates that those were accounts you couldn't collect. I guess my question then to the minister is, could we have a listing of those accounts and why they weren't able to be accounted for?
MR. BALSER: I appreciate the question from the member opposite, but he knows full well that it is not appropriate to divulge priority information on the floor of the House. What I will say is that there are a number of companies located across this province who start out with a good strong business plan and who, unfortunately whether it is because of a change in the economy or a change in circumstances within the management of the company, can no longer meet their financial obligations. I would remind the member opposite that one of the main functions of the Nova Scotia Business Development Corporation is to provide financing for companies that are not able to arrange loans through traditional chartered bank lending institutions and so we do take a bit more risk in terms of putting forward monies and we do sometimes have to bring closure to those operations.
While I am not prepared at this point in time to give an itemized list of company names, I will say that when we take a decision to no longer work with a company, it is done after a great deal of consultation and through a process that includes working with the management and trying to be a very patient lender to ensure that, by and large, jobs that are created in rural Nova Scotia are maintained as long as possible.
Oftentimes, I know in Question Period, members of the Opposition will raise issues about companies that have had difficulties. I would also say that a number of the items that he is talking about are loans that were put forward under the previous administration. I don't
really feel comfortable being held accountable for decisions that were taken by a previous government. What I will tell the member opposite is that the document that we put forward, Toward Prosperity, and the changes that we are trying to implement within the department, will be clear and transparent and will be a means by which I, as the minister responsible in this government, can be held accountable for the decisions they will be making.
I realize that is a roundabout answer to the question, but again, I don't want to prejudice our relationship with the business community in this province by divulging information that may jeopardize their ability to continue to operate or start new businesses.
MR. CORBETT: That is just not an acceptable answer. If you are going to access the people's money, and that is what these groups are doing, and you are going to default on that money, then the people of this province have the right to know. The minister says in one breath that his ministry will accept companies because they have a bit harder time going to the traditional banks, but that is not good enough, Mr. Minister. If you access money from the public purse and if you default on that, then I think the people of Nova Scotia have the right to know. So, that answer isn't good enough. I believe that this minister should be able to table all of those bad debts and let us know today who they are.
MR. BALSER: I remind the member opposite that the write-offs are tabled once a year and I sign off on each and every one of them, as do previous ministers, as does every Minister of Economic Development. They are held accountable.
The other thing is that the whole process that the Business Development Corporation, the Department of Economic Development undertakes when lending, is open. It is an open process. We consult with the companies. In fact, there is a board of private sector people with some level of expertise who are brought together to review the business plans, to talk to people in the department who are working on a particular file, to make that decision around whether or not it is a loan that would be honoured. I would remind the member opposite that the bulk of the loans made by the Business Development Corporation are, in fact, honoured and are repaid with interest and do create jobs right straight across this province in every community in Nova Scotia. There are companies who have been able to have access to support from government who have gone on to create long-term sustainable jobs.
What this is all about, in fact, is putting in place a mechanism by which government can help the economy grow, and can help small business in rural Nova Scotia be successful. So, there is no behind-the-scenes negotiating of deals. This is done in an open and accountable process. That is what we continue to do, and what we will continue to do.
What we want to do is engage the business community and the people in this province in discussions about how we, as government, can do the job of economic development in a better manner. There are things that don't work. One of the things that is very clear in terms of the message we are getting from the taxpayers, and from the business community by and
large is that grants do not work. Grants do not reward success. That is why we have shifted our emphasis in the department toward payroll rebates. That is why the Business Development Corporation loan portfolio has only a 4 per cent default rate. That is very comparable when you think of the level of risk assumed by the department to the chartered banks which boast a 2 per cent default rate.
The reality is, if you talk to small business in the province, they cannot, generally speaking, arrange capital financing on assets in rural Nova Scotia. Large lending institutions are afraid they will not recover their investment if the business falls on hard times, and they are very reluctant to lend in those situations. So what is happening is the department, through the Business Development Corporation, has stepped in to fill that need. We will continue to do that, but we will also refine the way in which we do that very process to ensure that taxpayers' money is not put unduly at risk.
MR. CORBETT: Mr. Chairman, where he came from on his answer is exactly where we were going, that there is no public confidence in your department. You made one statement saying we don't divulge that information, the next question, oh we do, we table it. So, it is a matter, Mr. Minister, of your not knowing how your department works, and how people can have confidence in that. I don't need a lesson from you, telling me or anybody else in this House how people should be able to access money from this province and the purpose of a development agency. What I do have a problem with is the doublespeak. One answer is, we don't divulge that, the next one is we do. Mr. Minister, that goes to the heart of the problem. You have to have public confidence. When you are flip-flopping on answers, there is no public confidence.
What I want to get out of you, and you failed to answer in the first two questions I asked you, the estimate value of the doubtful accounts for the years 1998-99, 1999-2000, were both extremely low ball. Why should we believe that the point of $2 million for the year 2000-01 is an accurate figure? If we should believe you, can you enlighten us as to how you arrive at that figure?
MR. BALSER: The reality is the money he is talking about are reserves, they are not write-offs. The money is reserved when the decision is taken. In the event that a company is not able to meet its financial obligations, then the loan is written off. The reality is that he spoke about the discrepancy between the Estimates and the Actuals. The reality is in some instances there will be unique situations that occur. In one instance, I believe, a significant discrepancy occurred as a direct result of the support to the Michelin Corporation. Again, I would say that certainly Michelin has had a long and positive history in this province, that they have been here for some 31 years and in light of a resolution read by a member opposite today around the expansions being proposed for Bridgewater, they continue to be a good corporate citizen. Not only do they create jobs, but they get involved in those communities. So I think that is a good investment. When that occurs, because of an obligation undertaken, it does cause a blip.
So when we make a determination on how much money should be set aside, it is based on the current information available, it is based on what we see through consultation with the businesses involved as their business plan and their strength, and obviously because you are lending to some degree in a situation of uncertainty, there will be instances where companies cannot meet their obligations. While we planned for those, it can't be 100 per cent accurate.
Certainly the comment the member opposite made about how the public views the Department of Economic Development, I believe that in light of the fact that at any given time there are in excess of 1,000 active files in the department and literally hundreds of calls during the week about opportunities that new or existing businesses might have in this province, there is a great deal of faith in the government and in the Department of Economic Development and in what they are doing. The reality is we need to constantly be improving upon how we do these things.
Again, to go back to the document Toward Prosperity, this is the first substantive document on economic development put forth by a government since 1991. In fact, when I was appointed Minister of Economic Development, one of the issues they brought forward in the earliest briefings was the fact that it had been on the agenda of the previous government to bring forward an economic development strategy for this province, and they had failed to do that. So, I feel very comfortable in saying that we, by bringing forward Toward Prosperity at this point in time, are embarking on a journey that will take us forward for the next five years. We will put in place the level of confidence that the member opposite talks about not existing at this point in time. I feel there is a fair level of confidence, and what they are looking for is an idea of what it is government is going to be doing over the next four or five years to ensure economic growth continues. That is something that has not existed.
It would be my observation first in Opposition and now as the minister responsible, looking back, that the decisions that had been taken by the previous government were oftentimes made in the absence of any over-arching policy. They were one-offs, and the reason the public become somewhat sceptical about how these things are working is because they can't see any over-arching strategy about the support. It becomes a situation where, do we support this business, do we support that business. Oft-times when decisions are taken in that kind of situation, it becomes one of political expedience or perhaps even political intervention as opposed to the business case. That is what we are attempting to do in this department now, move towards a solid footing with sound business practices.
MR. CORBETT: Well, again, the minister because he knows absolutely nothing about his department, came absolutely nowhere close to answering the question of where the $2 million figure came from. Throw a couple of darts on the wall, and whichever one you hit, that is where you stay. That is what is wrong here, Mr. Minister. You are saying the reason you are getting a thousand calls a week that tells you people of Nova Scotia have some kind of respect for you. I am telling you the real reason is the way banks treat small business, that is the only place they have left to go. So don't pat yourself on the back. You are the bank of
last resort. That is why they are there. The guys right next door, that you give money to willingly, won't support the small business sector in this province. That is the problem.
For the years 1998-99, you low-balled it by almost $15 million; $14 million for the following year and God knows how much this year. Yet, you continuously blame your inadequacies on past governments. Now, my comment to you, Mr. Minister, is that you don't know what is going on in your department. We don't know where the $2 million came from. It was a nice round figure. It had all zeros on the end, so let's stay with that. They are easier to add up. (Interruption) One of your fellow ministers said it is easy for you to understand it, and I will take him at his word. (Interruption)
So, now we have (Interruption) The member for Sackville-Beaver Bank is back there chewing on his fingernails, and doesn't have the intestinal fortitude to get up and ask questions, so he is back there wailing and moaning. Too bad. The only time he gets in the press is when he takes his kid to school with the then Opposition member. You have no idea of what goes on and how the $2 million is arrived at. Time is fleeting, Mr. Minister, and I think that it will apply not only to these estimates but to your government's time in office if you are going to handle stuff like this.
While we have some time here, let's talk about the Sydney steel plant. I have never seen a piece of property sold as many times as the Sydney steel plant. Bernie Boudreau announced on November 30, 1993, it was sold. There was a headline from November 1996 in The Daily News here in the capital city, Manning crows about pending deal for mill to Global. December 24, 1997, sold again and then in the spring of 1998 that deal was cancelled. Lo and behold, December 31, 1999, it was sold again. What happened between December 31st and the first couple of weeks or the first few days of January 2000 when you told us at one time it was sold and then everybody in this province knows it wasn't sold but that is what your press releases and your own Premier said, it was sold. Why wasn't it sold? Why did you negotiate a bad deal?
MR. BALSER: Mr. Chairman, certainly the history of Sysco has been long and checkered. I know oft-times when it is being discussed they talk about 100 years ago when coal and steel were the real drivers of the economy and certainly there is a recognition that at one point in the history of this province, we all relied on the strong, vibrant economy in industrial Cape Breton, hence the term industrial Cape Breton. Times have changed and the need to move the province away from supporting a money-losing institution such as Sydney Steel has been on the books for some time.
Certainly I believe that while I can't comment on the previous sales processes other than to say that they all did - with the wisdom of hindsight - end in a failed attempt, I do believe that the people involved, the governments involved, were anxious to move forward to a resolution that would see the Province of Nova Scotia and the taxpayers of Nova Scotia divest themselves of that ongoing responsibility. In 30 years - the most recent memory of the
difficult times for Sysco - that operation has not turned a profit. That is an unfortunate but true fact.
The other thing is that if you look at the accumulated debt as a result of the province's ongoing support of that enterprise, $1.2 billion has been added to the net debt. We can no longer tolerate that and I believe that was what was motivating the previous governments when they attempted to sell that operation. When we became involved, after assuming responsibility, we also assumed responsibility for some existing agreements. Everyone well knows that in the months leading up to the election that the previous government had entertained an agreement, a management contract, with ABN Amro and with the Corus group, actually it was Hoogovens at that time. The intention was to try to redesign the business plan and to put in place a plan that would turn it around and make the company profitable. We looked at that agreement and we looked at the agreement that had been made with the ABN Amro Bank around trying to find a buyer for the company and decided that that was the best course of action. Even though it represented a continuing expenditure, there was a commitment made to a $44 million operating line of credit to keep Sysco going while the Corus group or the Hoogovens group attempted to turn this thing around. We agreed to work with them through that process.
At the same time, ABN Amro undertook to canvass the world to try to find a buyer, or buyers in the best of all possible worlds, who would come forward and continue to operate the plant. We agreed to that and we worked with them. We believed, right up until December 31st, that the process was going to come to a successful conclusion, as did everyone involved. In fact, in the course of my working with this file, the people in the government who had been around through each of the previous attempts to sell the plant, seemed to have some level of confidence that the ABN Amro process was going to work where others didn't. The reason it was going to work was because we had taken the politics out of the process. Historically, one of the reasons the attempts had failed, I believe, is because the decision making was often immersed in political posturing and things that took away from the business case.
So in the days and weeks leading up to December 31st, we worked with the people who were in the plant managing the operation and worked with ABN Amro to review the file to see who was coming forward as a buyer who would continue to operate the plant. At one point, there were actually two companies who were interested in moving forward. The difficulty was, in one instance, they wanted a significant investment of new capital on the part of the province with no real clear indication that the taxpayers would be removed from the scenario at some point. It looked like a continuation of the past history.
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The Rail Associates group, on the other hand, came forward with a plan that did not see the infusion of any new capital into the operation on the part of the province. It saw them coming forward with an incremental plan of payment that would continue to operate the plant
with a diversified product line. That was very much in keeping with where we wanted to go as a government. On December 31st, we had gone through about four or five days of very intense negotiations to bring forward a document that would, by and large, clear off all the outstanding items around the sales agreement. In the wee hours of the morning, we did, in fact, get that signed off.
The Rail Associates consortium was comprised of, at that point in time, we believed, a number of companies with the wherewithal to continue to operate. They came forward with documentation that said they had the financing package in place. The legal counsel for the province who, I might add, was involved in most of the previous sales agreements, indicated that the letter that had been signed off by both parties in the very early hours of December 31st, he was confident that covered off all the major issues that needed to be resolved to bring forward a final sales agreement. ABN Amro had told us that the group that they represented as being Rail Associates was a viable company with the ability to do what had to be done.
So we came forward and announced that there was a sale because there was a great deal of concern, not only in Cape Breton, but right straight across this province. Everyone recognizes that it is very disruptive for the families, and I admire the way in which they have handled this very difficult situation. They are to be commended with the way in which they have worked through difficult times and times of uncertainty, certainly times of uncertainty that have existed for over 30 years. Really, they are to be congratulated for the way in which they have been patient with the government, not just this government but every government.
So we had an agreement that would see them deposit $1.5 million Canadian in a bank in Nova Scotia as part of the first stage of moving towards a sales agreement. We acted in good faith and we were convinced that that would happen. On January 12th, the money was not forthcoming. That represented, truly, a breech of the agreement that we had signed but we contacted the Rail Associates representatives and talked to them about what had transpired and why there was a delay. They indicated that it was due to difficulties with the electronic transfer of finances. So what happened there was we worked with them. We allowed them some additional time and we tried to make sure that this could happen. We wanted to have a sales agreement move forward, if it was possible.
Eventually, it became increasingly obvious that behind the scenes the Rail Associates group, the consortium, if you will, had begun to come unravelled and that is unfortunate. Finally, when there was no real alternative, we simply severed the negotiations and said simply that it was not possible to continue with this. So it was very difficult for this government to make that decision but it was the right decision. We also said, as we had said leading up to the election, we were not prepared as a government, or as members of the Opposition, to support the continued infusion of taxpayers dollars into this operation.
So at that point we moved forward to the second scenario which was to retain Ernst & Young to act on behalf of the province to either find a company that would continue to
operate in an ongoing manner or to begin a liquidation process. We have now reached the point in that process where Ernst & Young is pleased to announce they have had significant expressions of interest and we are hopeful that we will be able to see the steel company transfer to a private sector operator so there will be a future for a steel plant in Cape Breton.
Now everyone knows that the operation will not, in any way, resemble the current, existing operation, but we have also said that we recognize the downsize will require working with the unionized workforce through this process. We made that commitment and we are working towards it.
MR. CORBETT: Mr. Chairman, we just witnessed the most inaccurate description of how to sell a steel plant you could ever possibly have put forward. (Interruption) Listen to Mr. Businessman from Dartmouth South. How would you know? (Interruption) Going to get tips from Rollie Thornhill.
Mr. Minister, you made pious platitudes towards the workers at Sydney Steel, but what I am going to tell you is you and your department have caused that. We can look at the history books and say that is 30 years of mismanagement, but it was your political platform that caused that. As in just about every other previous question I asked you, you went so far out of the way to answer it that you didn't answer it. It is as simple as that. You didn't answer that. You folks couldn't negotiate a lollipop from a baby if that is how you do business. It was so inaccurate, it is unbelievable.
You have shoved that deal down the throats of people from Cape Breton, and you didn't know what you were doing. The real shame is that they have another deal, the Duferco deal. Where has that gone? Now, he has people on the inside leaking information about why that is a bad deal. Your own department is leaking like a sieve, Mr. Minister. It was aired out here last week on the floor of the Legislature, so what is going on in there about this sale. You have one senior member of your staff coming here and making very partisan political statements about Sysco, and you obviously have somebody now within your management staff leaking information back to the Party to my right. Then somebody else is leaking information to the media about the amount of money that the group that Corus is involved with, what they are looking for. Now, you are going to say trust us again about the sale of Sysco.
Mr. Minister, I am asking you as someone who has a fair amount of common sense, think of what transpired since the new year. Why would anybody who is involved with that business have any faith in your department. We have asked you time and time again on the floor of this Legislature to bring in the United Steel Workers as a partner in this so they can help you through this maze. Yet you refuse to do that. You would rather allow Ernst & Young to do it all because for some reason I think your department has a grudge against United Steel Workers and against the Corus Group. So why should we trust you about this? Why should the people of Nova Scotia say, okay, this is a good sale this time?
MR. BALSER: Mr. Chairman, certainly the whole issue of trying to sell, as I said in my previous answer, has been very problematic. The comments that the member opposite makes about supposedly this company or that company putting forward a proposal clearly shows the need for confidentiality. It is very difficult to play out a negotiation on the floor of the House or in a public newspaper. It creates difficulty. So, as to who is leaking information to whom, I think it is clear there are problems. He is absolutely right. That is one of the reasons why we have been attempting as much as possible to ensure that the companies involved in the process have the issue of confidentiality addressed.
Certainly every company that has come to talk to Ernst & Young has signed a document that clearly limits its ability to divulge information. It is, indeed, unfortunate when people make suppositions or conjectures in the newspaper that may, in fact, damage a possibility for a real sale. You are right. It is very difficult to say this time is different in light of the number of failed attempts, but I will tell you that this government has set a clear course, and we haven't deviated from that course one iota. I believe that has given everybody involved at least some level of comfort that they understand where we are going. We have said from the outset that if we can find a private sector buyer who will continue to operate that steel plant with no additional taxpayers' money and will sustain jobs, then we will support and work with that company to make sure that happens.
In the event that cannot happen, then we are prepared to move through a liquidation process that will allow for the closure of that plant, respecting the issue of the contractual obligations to the steelworkers, and that is certainly going to require some give and take. In fact, the whole issue of working with the union to address that is being undertaken as we speak. We have had meetings, and we will continue to have meetings to try to address that.
The other thing is that member opposite has talked about whether or not the Ernst & Young people are able to carry on the operation. I will tell you that at this point in time the Sysco operation has a $17 million positive cash flow balance, something that is very unusual in the history of that operation, without the Province of Nova Scotia simply writing another cheque for the operating line of credit. That is a positive thing. Ernst & Young has used its network worldwide to canvass as was done before, but this time the Ernst & Young group went out and aggressively pursued the contacts they have in terms of trying to find a buyer who would come in and do what had to be done to turn that operation around. Believe me, I do believe that there is an opportunity for a private sector buyer. There is growing recognition that the workforce at the Sydney plant is second to none. They can, in fact, do what has to be done to turn it around. But it is going to require some give and take. It is going to require some faith. It is going to require working together, and it is going require respecting a need for confidentiality.
The other thing is that the member opposite suggested that we engage the representatives of the steelworkers union in looking at the proposals. We have, to some degree, done that. On the board of directors, there is a union seat, and that person has been
actively engaged, and I must say that despite his illness, he took part in a teleconference meeting the other day. He does keep in touch with what is going on, and does keep his membership informed. Certainly, the president of Local 1046 is on the phone regularly to members of my department or myself talking about those issues. So we are engaging them.
In fact, it is interesting to note that the steelworkers were very concerned about the future of the plant, as well they should be, and they undertook to try to find a buyer. They had some level of success. When we asked them about who their potential partners were and who they had been talking to, their response was, we are concerned about the issue of confidentiality, so we don't feel it is appropriate at this point in time to engage the province in talking about who we have been talking to. So it is rather ironic that on the one hand the steelworkers would want to be engaged in talking about who the province is pursuing as potential buyers, and at the same time be less than willing to divulge who it was that they were engaged in conversations with. Certainly, he also made mention of the history the province had with Hoogovens or the Corus group.
One of the reasons why we as a Party did not see any way we could support their business plan was that they had produced very optimistic production figures in the turnaround scenario. They had targeted 400,000 tons of steel being produced, and that had not been a production-level hit by that operation. I think in the 30 years if it did, in fact, happen, it was only once. So it came to pass that they were not able to get the kind of production numbers they needed. In fact, towards the end, they were going out taking out low-end, low-margin orders simply to fill the order book up so there would be some work, but it was money-losing work. That wasn't appropriate.
We are not comfortable with the Corus business plan. Again, if they have come forward as part of this new group that is working with this union, and they have numbers that work and a business plan that works, one that doesn't require the Province of Nova Scotia to put additional money in, we will support that. But, again he talked about media stories and the reference made in the paper last week. It looks as though the company that is working with the union is asking for the province's taxpayers to ante up something in the neighbourhood of $40 million to continue to operate this plant. If that, in fact, is true, and I am not saying it is simply because I am not privy to that information and if I did know it, it would not be appropriate to talk about it here on the floor of the Legislature, but certainly if that is part of the plan, the member opposite should know full well, based on what we have said consistently, the province is not going to put more taxpayers' money at risk. We do feel there are opportunities to make sure that it can happen and go forward with private sector management and private sector funding and we will be there to support that process.
MR. CORBETT: Mr. Chairman, again, it is quite entertaining, but it is too bad because it is a very serious subject here. He talks about leaks and stuff like that. It is your department that is putting out the leaks, not the steelworkers. No wonder they don't trust your department and it goes back to what I have said before, Mr. Minister, that is why people
don't want to deal with you. That is why they don't have a level of confidence because it is everywhere. You are not running your department. (Interruption)
I don't know who is running it, but I know the minister is not. We have all kinds of problems here with Sydney Steel and he likes to simplify it by blaming it on someone like Hoogovens or ABN Amro, someone like that. Yet he does not want to shoulder any of the blame for that despicable, disgusting card that was trotted around at election time by the now Minister of Education, both things which have come to pass. There will be the closing of Sysco if you guys have your way and there is closing of hospital beds.
So, Mr. Minister, you got involved in some little way with the call centre in Sydney and you feel that that is your obligation to industrial Cape Breton for the next four years by the way you are thumping your chest. You have not helped, in any positive way, the people in industrial Cape Breton. Your department's budget has been slashed. You don't have the wherewithal to stand up to the inner circle of Cabinet and tell them how important these programs are. You talk tough to the people in the RDAs, but you don't talk nearly as tough to the people in your own Cabinet. You allow your Minister of Finance to put $378.5 million on top of the debt from Sysco for clean-up costs and pensions. Yet when asked, you or he will not substantiate where that number came from. We have asked about numbers from the Estimates Book, on projected debt and so on, and you don't give answers on it.
Mr. Minister, you are basically lording over a ministry that is going to be probably cut altogether in the next budget, that this group does not want to see any kind of economic development in this province outside of maybe a few areas around HRM which Murray Coolican and his boys will, quite rightly, look after. We have talked about you giving Sobeys set-up money for their headquarters and whether they are getting a wage rebate. This does really very little to assure Nova Scotians that your department is working on their behalf. You put this document out that has no basis. You have no consultation with it. Yet we are supposed to buy into it.
You make cheap platitudes towards the workers at Sydney Steel. Yet you do not accept any of the anxiety that you have placed on them by your government's callous decision on the sale of that plant. You talk about the group that the union is involved with, that they may be looking for government money. You conveniently leave out whether that is through wage subsidies or whatever as most other bona fide companies in this province would or may have access to. You make it a blanket statement that this sale will cut all ties. This company, if it buys Sydney Steel for some reason, will not have access to government programs that other businesses in this province may have access to. That is what you are saying. You are telling people that whoever buys this plant, this plant will not get a cent of government money, that that will not cost this province any more money. You have said that, Mr. Minister. You said it here in these estimates.
So all I can tell you is you have made a political decision on who to sell Sydney Steel to. Whether you made that is not quite sure, but your department certainly has. I would suspect that that has even cleared through P & P, that that decision has been made and I would also go on to say that if you looked, that is probably where your leak came from in the sale process because there was someone disgruntled there.
Mr. Chairman, I have many more questions for this minister through estimates, but I am getting rather frustrated in some way, maybe he could admit to winning because he is not answering any questions forthrightly. The member for Pictou East is jabbering back there about not asking (Interruption) I asked a hell of a lot more questions than he did. He will not get up on his own two feet and ask any questions. Why does he not get up and ask some questions? Those folks down there are yappers. They don't do anything for their constituents except like little nodding ducks, yes, Mr. Minister, yes, Mr. Minister. They fill seats during Question Period and the minister, who is not far removed because he is on the outer Cabinet, sits here and fills time. So rather than waste this committee's valuable time, I am going to turn the remainder of my time over to the member for Halifax Chebucto for some questions of the minister and maybe he will have more luck than I did.
MR. CHAIRMAN: The honourable member for Halifax Chebucto.
MR. HOWARD EPSTEIN: Mr. Chairman, I was looking forward to having a chat with the honourable minister about his responsibilities with respect to matters having to do with oil and gas, both offshore and onshore. I would particularly like to try to focus on Nova Scotia Resources Limited and any plans that the minister has for the potential sale of it. What I want to do is let the minister know what my understanding is of the current state of play with respect to matters associated with Nova Scotia Resources Limited and in the end what I would do is invite the minister to respond by way of letting me know if any of my understanding is incorrect or needs some clarification or some elaboration. I think that would set the stage for a useful exchange.
To start with, let me say that it is my understanding that the government to which the minister belongs promised that there would be a comprehensive energy policy for Nova Scotia. They seemed to think that having such a policy was a good idea. I have to say I agree completely. In fact, I was heartened to see in the Speech from the Throne that came down last fall that there was a promise that an Energy Council would be created. It was rather my assumption that one of the jobs of an Energy Council would be to adopt an energy policy for the Province of Nova Scotia. On the other hand, that was never specifically said. In addition, of course, since this was announced back in October with the Speech from the Throne, there has been no Energy Council. There has been no legislation brought into the House that we could consider to establish an Energy Council. There has been no Energy Council created through Order in Council. There has been no Energy Council created by administrative action otherwise and we are left wondering exactly what it is that is going on when it comes to developing a comprehensive energy policy for the Province of Nova Scotia.
The relevance of this, of course, is that if we are about to take a major step in our energy activities, namely potentially sell off our offshore interests through the sale of Nova Scotia Resources Limited, it would seem that it would be a useful first step for us to adopt an energy policy before we do that. I know that the history in Nova Scotia has been that in the last decade major decisions about energy issues have been made without the benefit of an energy policy.
We privatized Nova Scotia Power without the benefit of an energy policy. Perhaps I should not say we. The predecessor PC Government to this one privatized Nova Scotia Power without the benefit of an energy policy. The offshore was developed without the benefit of an energy policy. Changes in the corporate structure of Nova Scotia Power were made without the benefit of an energy policy. The full-scale environmental assessment and National Energy Board review of the SOEP took place without the benefit of Nova Scotia having an energy policy. The Liberal Government decided to abandon the back-in rights that it had to own 50 per cent of the offshore pipeline without the benefit of an energy policy and, finally, a decision was made about allocating distribution rights with respect to natural gas onshore without the benefit of an energy policy. Well, I should not have said finally because I omitted the royalty package and the benefits package. That was developed without the benefit of an energy policy.
It is a pretty bleak picture when so many of the major decisions have been made without the benefit of an energy policy and yet I was heartened when I saw that this government seemed clearly on course for adopting an energy policy by way of announced statements in its election platform and in the announcement in last year's Speech from the Throne, but nothing has happened and yet at the same time we know that there are studies going on about the possible sale of Nova Scotia Resources Limited. This would be a major step, again, with respect to our involvement in energy matters and yet the government seems to be thinking about doing this without the benefit of an energy policy.
So I think the question is pretty obvious, Mr. Minister;, I would like to hear from you what timetable you contemplate with respect to the development and adoption of a comprehensive energy policy so that we can have a framework within which to understand what it is that the Province of Nova Scotia ought to be doing with respect to the offshore and, in particular, with respect to our ownership and potential sale of Nova Scotia Resources Limited? Now, I am not going to stop there and invite an immediate answer. I am going to get a number of my questions on the record so that the minister is clear as to the full range of my concerns if I can get them in in the remaining time.
The second point I want to draw to the minister's attention is that so far as I can tell there has been no change to the benefits package that was negotiated by the previous government with respect to SOEP since the change in government. As I understand it, his government has embraced complete and unaltered the benefits package that they used to spend time joining with us when we were comrades in the Opposition, criticizing when it was
the property of the Liberal Government, but since the change in government, there has been no change in the benefits package and that benefits package, let me be clear, consists of increased businesses, increased employment, increased educational opportunities oriented towards skills having to do with the offshore and, most importantly, the royalties that were to flow to the government as a result of developments in the offshore.
Now, I may have missed it. I would be happy to hear that there have been changes. Well, I would not if they were reductions. I would be happy to hear if there were improvements in the benefits and I would be happy to hear from the minister whether my understanding is correct. I would be happy to hear whether there have been improvements in the benefits package and, if so, I would like to hear details of them and if there have been no changes, I would like to hear details of what it is that the minister plans to accomplish in terms of improvements to the benefits package.
[5:00 p.m.]
Just to be extremely specific about that and I suppose it might even be a whole topic of its own, an important element of the benefits package is the way the equalization formula that is in place between Nova Scotia as a province and the federal government is affected so far as the flowing of revenues to the Province of Nova Scotia is concerned from the offshore. This is a crucial element of the benefits package because, as we all know, the equalization formula now requires that for every dollar of royalties that would otherwise flow to the Province of Nova Scotia from developments on the offshore, there is a 70 cent reduction to our equalization payments.
We know that just recently the federal Minister of Finance, the Honourable Paul Martin, was in Newfoundland and suggested in public statements that he made that he might be prepared to change the equalization formula for a 10 year period to allow have-not provinces, like Newfoundland and Nova Scotia, to benefit from their offshore wealth. What I would like to know is what steps the minister or his colleagues have taken to act with respect to that because, Mr. Minister, I have to tell you that the only information that has ever been made public about the possible flow of revenue to Nova Scotia from SOEP has come in dribs and drabs.
During the time of the National Energy Board hearings the Liberal minister was saying the flow to Nova Scotia would be around $2.5 billion to $3.5 billion over the life of the project. Well, it came out that, of course, this was before the reduction for the equalization formula. Last year we did manage to get, I believe out of the minister's department, finally a year-by-year dollar projection taking into account what the equalization reductions would be, showing that it was expected that over the life of the project, probably the total flow of dollars would be about $850 million. That is the 30 per cent after the 70 per cent equalization formula impact is taken into account.
Quite obviously, Mr. Minister, the equalization formula impact is of enormous importance to Nova Scotia's fiscal health. What that means is that we might stand to gain $1.5 billion to $2 billion additional revenues over the life of the SOEP project if the equalization formula were to change the way Paul Martin just suggested. I cannot think of any other single fiscal opportunity that is potentially more lucrative for us in Nova Scotia than taking advantage of what seems to be on the table at the moment with respect to the equalization formula.
I would have thought, Mr. Minister, that we would not see you here. I would have thought that you and your colleague, the Minister of Finance, and probably the Premier, would not - some of them - be in Houston, I would have thought they would be in Ottawa meeting with Paul Martin and the Prime Minister and whoever else is going to be the decision makers on this tout de suite, not miss any opportunity to swoop in and say, along with Premier Tobin of Newfoundland, we want that money and we want it now. Change the formula and I want to know what is happening. Is something happening here? This is potentially $1.5 billion to $2 billion over what could be a short period and I say short period because I think that the SOEP project will not last for the 25 years that it was first talked about. Clearly given the demands of the U.S. market, there will be pressurization of the line which will virtually double the extraction rate and that will mean that the six SDLs that comprise SOEP will be exhausted within a 14 year period of which we are already in the first year.
Mr. Minister, this would be wonderful for us because, if the equalization formula change that Paul Martin is talking about for a 10 year period were to coincide with that SOEP period, that would mean that the bulk of that advantage could flow to us now. Jam today, I say, rather than jam tomorrow. Let's take the money and run. Mr. Minister, another one of my questions is, what are you doing with respect to taking advantage of what surely has to be called the most golden opportunity that has ever presented itself to Nova Scotia?
I know there is a Nobel Prize-winning economist James Tobin after whom the famous Tobin tax idea came in, but I would be prepared to give accolades to Brian Tobin if it turns out that his suggestion for changing the equalization formula came in, he would deserve to be celebrated along with the Nobel Prize-winning economist James Tobin in my opinion.
Moving along, Mr. Minister, what I wonder is, since you and your colleagues seem intent on the possibility of selling off Nova Scotia Resources Limited, I wonder whether you can give us even a ballpark figure of your understanding of how much it might fetch on the open market? Now, I am not asking for an exact dollar figure. I am not asking the minister to compromise his negotiations right here in public on the floor of the House. I am asking the minister for a ballpark figure. Is the minister going to say to us that we will be lucky if we can sell it at a loss? Are we going to have to pay someone to take it off our hands? Is the minister going to say to us, well, we might get $10 million or $20 million or $30 million, something below $100 million? Or, is the minister going to say, well, no, the ballpark is somewhere
between $100 million and $500 million? Or is the minister going to say to us, well, no, the ballpark is over $500 million? Or is the minister going to say to us, well it is over $1 billion? Speaking out publicly on something like this, if the minister thinks he knows, gives him the opportunity to start highballing it. He can give a high figure, but I am just talking approximates. I don't know whether the minister can even tell us remotely what it is he thinks it might fetch on the open market, and we need details on that. Thank you.
MR. CHAIRMAN: The hour has expired for the New Democrat Party.
The honourable Leader of the Liberal Party.
MR. RUSSELL MACLELLAN: Mr. Chairman, I want to thank you very much and thank the minister and his officials. I want to join with my House Leader, the member for Cape Breton South and the member for Cape Breton Centre to thank the minister who we all feel is a very decent and well-meaning individual, but at times infuriating because of the situation in which we find ourselves.
I would like to start off with Sysco if I might; just general questions, not a lot of dialogue. I want to say that there was a statement in the press that North American Metals was looking for $40 million from the government. It was an undisclosed source, but treated very seriously and given a great deal of credibility in the print media. I want to find out, is that, in fact, true? Has North American Metals asked for $40 million from the government? Now I know that we don't want to negotiate this on the floor of the Legislature, but that is out there, Mr. Chairman, and I would like to know if that is true or not.
MR. BALSER: At the risk of being perceived as being obstructionist, again, it is not appropriate to talk about deals that are being negotiated, on the floor of the House. However, I would say in response to the question raised that we have consistently said that if we were to support a sales arrangement to a private sector buyer, it would have to be done without the infusion of additional monies on the part of the province. Now, while I do not want to digress entirely, one of the questions put forward before said that would preclude the government supporting this operation in the way in which it would support any other business. That certainly was not what I was implying. What I was saying is there has been a history of the sales process involving the significant injection of money outside of any traditional lending or traditional training programs that would be available.
What I would say in answer to the question asked was that if, in fact, the media reports are correct - and I am not saying they are - that if this company were to ask for significant amounts of government money in addition to whatever - and that would be directly put into the process to ensure a sale - that would not be something the government would look at very positively. In fact, it would be considered to be a detriment to that particular sales arrangement.
MR. MACLELLAN: Mr. Chairman, I take exception, with deference to the minister. I tell him why I take exception. It is obvious that this figure has been leaked out from his sources. I think I have a pretty good idea where it came from. The government feels it can release this information and yet hide behind the feeling that it has to negotiate behind closed doors. Now if the government isn't going to discuss figures like that, it shouldn't release figures like that, I don't think. Probably nowhere else would it even be taken seriously, but here in Nova Scotia it is. A whole article is hinged upon a figure released by a confidential source. The government can't have it both ways. They can't say that they don't want to negotiate on the floor of the Legislature while at the same time sneaking this little information out to the press. It has to be one thing or the other, Mr. Minister.
I think people who have been reading these articles in the paper have a right to know, whether it is true or not. Are they looking for $40 million from the government? Secondly, if they are looking for the money, is that ruling out their bid, or is it just a first offer and they can come back with another bid that isn't quite as expensive to the government and still be considered?
MR. BALSER: Mr. Chairman, certainly how information gets devolved to the print media or to any other media outlet is something I can't control. When we were dealing with the Rail Associates sales process, it seemed as though some people in the media had a more direct line of information than I, as minister, had. So how information gets conveyed to the public and appears in print is difficult to surmise. I do know that the name of one company that had come forward was brought to light in Question Period here and appeared in the media, so obviously there are many sources of information.
I will go back to my answer before, and that is that, if there is credibility to either of the names being put forward in the print media about being potential purchasers of Sysco, there probably will be some discussions back and forth in the negotiation process. I can't really comment on whether or not the North American Metals scenario is an initial offer and might be subject to change or if the other company is a firm offer. That is being left in the capable hands of Ernst & Young. They are doing the due diligence that will be required to bring forward a recommendation.
Again, I go back to the answer I gave before, and that is that if either or any of the proposals coming forward ask for significant infusions of money to make the sale go forward over and above those kinds of arrangements that are traditionally available through departments to support business initiatives in Nova Scotia, then that would not be viewed in a positive light during the process. But that doesn't preclude it, if, let us say, it is the only game in town. It would still be very, very difficult for this government to see putting forward $40 million, $50 million, whatever the ask might be, into that unless there was very clearly a demonstration that this was the sales opportunity that would create a private sector future for Sysco.
If you look at the failed attempts in the past, that has been the case. Any buyer who comes forward, generally speaking, has a significant ask of the province for ongoing financial support, and it simply means we continue this 30 year history. The whole point of this exercise is to get the taxpayers of Nova Scotia out of the steel business. In the absence of that, nothing has changed and that has been the history; when attempts to sell the plant have failed in the past, they simply looked for something else.
MR. MACLELLAN: Mr. Chairman, all I would ask is if the minister would keep his answer short because I only have an hour. In the spirit of congeniality and give and take, I would ask that. I am not quarrelling with the minister, saying that they don't want to give more money, another $40 million, I am not disputing that. My question to the Premier concerned the 500 jobs as opposed to a fewer number of jobs and a diverse product line from North American Metals as opposed to the fact that Duferco would be making slabs for its plant in Pennsylvania. I would ask the minister if it is just Duferco or a company that was just making a product for another plant and not selling on the market generally to those who wanted to buy the product of Sysco, is there any undertaking to assure that purchase of the product would continue for a certain period of time or would the plant be sold under the fact that the slabs would be sold and that they could discontinue the purchase of those slabs at any time, thus closing the plant?
MR. BALSER: Again, and I will keep my answer very short, that is that we have said consistently to either ABN Amro or to Ernst & Young that the first scenario in a sales arrangement is to ensure the plant continues to operate. Now, at the end of the day if that is 500 workers or 200 workers, we have to weigh product line versus how many people are going to be employed and how much it is going to cost the Province of Nova Scotia. All those things have to be weighed and subjected to some due diligence to determine what is in the best interests of everyone concerned.
MR. MACLELLAN: I just want to make a comment, when I was a Member of Parliament I was very involved in securing a better deal from the federal government for the Route Canada workers and if the minister remembers, Route Canada was CN Route, which was sold by the federal government to a private company and became Route Canada. That company only lasted 11 months before the monies went in different, strange directions and the company was bankrupt and those who owned trucks and worked for Route Canada were left unable to pay the leases on their trucks or even keep their homes. They were devastated. I think that it is important and I say this and I am not accusing the government or anything. All I am saying is if we can avoid that happening with respect to Sysco, so that the matter is upfront with the workers, I would appreciate it and I know the steelworkers would appreciate it.
My next question is, with respect to Sysco, has the minister - and I would assume he has, or Ernst & Young have - put a value on the assets of Sysco and what would that value be?
MR. BALSER: The terms of the sales value is what the market will bear and in response to the comment made opposite, certainly what we want to see is a sale that will continue to operate this plant in the the future. That is one of the provisions, too, in terms of deciding what is a good deal and we too are very concerned about the future of the steelworkers. It is in nobody's best interests to have that plant run for six months and then close and sell off. As far as the value of the assets and the liquidation process, it is oftentimes determined by how much interest there is in purchasing the assets and how much we can get in terms of how many bidders there are. How much is an electric arc furnace worth stripped down? It is difficult to determine.
MR. MACLELLAN: The minister has assured us that Ernst & Young, international experts in the steel industry, its assets and the equipment going into steelmaking, unquestionably, they would have had to - if they are in this field of selling Sysco, either as a going concern or the assets - put a figure, an estimate, on the value of the assets. All I am saying is that the value of the assets is going to be looked at at the time the plant is sold to see if the plant that is sold at a going concern is considerably less than the total value of the assets on a liquidation, whereas that liquidation could be carried out by the new purchaser that would buy the plant for a small modest figure, operate it for a while and sell the assets at a considerable profit later on. I want to know if the minister could tell me if any consideration has been given to that eventuality.
MR. BALSER: Certainly, there have been a number of proposals that have come forward that we have viewed in terms of our review as being less than in the best interests of anyone concerned so we are subjecting them to a fair amount of due diligence. In terms of a ballpark figure of what the assets are worth, we have done some analysis and we would say that the assets themselves would be worth something in the neighbourhood of $30 million, again depending on how much you could get in a sell-off. It is difficult to determine how much someone is willing to pay to buy that operation as ongoing because there are issues around how much it is going to cost to improve the capital structure.
MR. MACLELLAN: I thank the minister for that figure and I won't hold him to it as being an exact figure, but I think a ballpark figure is important to have. The minister talks about selling Sysco as a going concern. The government has booked the environmental liabilities at $300-some million. If Sysco was sold as a going concern, is the government still planning to do the environmental remediation at that time, or will the money be held in abeyance for a later date?
MR. BALSER: The decision to book the potential cost of environmental remediation was at the direction of the Attorney General and it would depend on how the sale moves forward - it may be possible to use some of the remediation work to bridge some of the workers. Any proposal to sell has looked at downsizing the existing workforce, whether it is ones from 1993 onward, but we will try to incorporate that. Obviously, regardless of whether it is all done at this point, whatever is not expended will be booked and held in abeyance until such time as it is needed.
MR. MACLELLAN: As the minister knows, you don't have to book it. Once you choose to book it, it has to be put on the debt. If only a part of it is spent, will the rest of it be put in a separate fund and held separately from the other revenues, or will it be put into general revenues that the government can use howsoever it wishes?
MR. BALSER: The final determination will be made in consultation with the Department of Finance, but I would say it would be my position that ultimately we are going to have to expend that money. There has been a history of simply diverting funds into general revenues and when the day comes when you need those monies, they are not available. I think it would be prudent to put that money aside so that it can accrue interest and be there when the cost has to be incurred because everyone knows that environmental remediation is expensive today and will be more expensive tomorrow.
MR. MACLELLAN: Exactly. If that money is put aside and interest allowed to build, then of course, the increased cost of environmental remediation, if it is put aside into a trust fund, then the interest built up will look after the increased cost of the environmental remediation. That is what the minister is saying would be done in his opinion.
MR. BALSER: What I said was that it would be a decision taken in concert with the Minister of Finance and other members of Cabinet, but it would be my wish, as the minister responsible, to put that money where it could be used at a future date and would, in fact, accrue interest. Again, I am not in a position to make that decision unilaterally, it is one made in concert with other members of Cabinet.
MR. MACLELLAN: If the plant is sold to a company that would just make slabs, would all of the plant and all of the assets be sold to that company even though they would only be making slabs and wouldn't be using the rail mill, for instance, or the wharf or whatever? If they did buy it just to make slabs, would they be at liberty to sell off the assets that wouldn't be used in the slab process?
MR. BALSER: Obviously, the final determination of what a buyer might want to undertake in the purchase would be determined through consultation. At one point they may be talking about doing slab casting initially, two years out if the markets are strong, and they are strong right now, there might be an opportunity to diversify product line. A final decision on what would or would not be included in the sale hasn't been determined. I would say that
we would in the course of negotiation, want to ensure that the province kept those assets under its jurisdiction. We would want to limit the sale of assets to that which is needed by the company.
My understanding is that the wharf facility very much figures in any of the proposals because they need to be able to move product and ship by water, whether it is to bring in scrap steel or to export finished product. So we haven't decided finally what will be included in the sale agreement. It will be subject to negotiation, but we are going to be very careful in our due diligence that we don't sell more than needs to be sold.
MR. MACLELLAN: Mr. Chairman, when I say that we as a government, myself, would not be in favour of giving more money, it is because when we increased the amount of the loan guarantee by $44 million, it was our position that everything that needed to be done to put the plant in a position to be sold could be done with that $44 million. Now, the government spent the $44 million, but didn't spend it in accordance with the business plan set out by Hoogovens. For instance, not all the training was done. The capital investment to make new types of round-cornered squares and new product lines. That wasn't put in even though it was figured into the $44 million that we approved. Where did the $44 million go that was involved in the increased guaranteed portion?
MR. BALSER: Mr. Chairman, in response to an earlier question at this point in time, the operation has a $17 million positive cashflow. In terms of the $44 million that was expended, one of the concerns we had when we were in Opposition and then when we were in government was that the $44 million was being expended on day-to-day operations of the facility. When it became apparent that we were moving through to a sales process, we made an arrangement with - part of the reason why this Rail Associates deal was such a difficult one to bring forward, was they wanted unlimited access to the unexpended line of credit and we didn't feel that was appropriate. The monies, the $44 million, were simply infused into the operation and expended simply to meet the day-to-day ongoing obligations of that facility. That is why it has such a checkered history. That has been the strategy for 30 years.
MR. MACLELLAN: So what the minister is saying, Mr. Chairman, is that the $44 million largely went to pick up the deficit in the operations of the plant, a deficit that was created because they couldn't sell the product because the province said they were going to sell the plant, and that the product wouldn't be available when the proposed purchaser needed that product. Is that correct?
MR. BALSER: That is a bit of stretch. What I said was that it went to pay such things as the management fees for Corus Consulting and the fees for ABN Amro. The reality is that in consultation with Hoogovens and with the ABN Amro group around whether or not to continue to work with them through a sales process, they said that the deadlines and process in no way impinged on their ability to take on new orders. I said in response to a question previously that one of the difficulties in the process, from our perspective, was that the
Hoogovens group had significantly overestimated their ability to find new markets and sell new product. Towards the end, they were scrambling simply to fill the order book with a low-end, low-margin product that really didn't do anything more than simply expend money and operate the plant at a loss.
MR. MACLELLAN: Mr. Chairman, the cost of Hoogovens management fee and ABN Amro was in the $44 million as we allocated. There is no problem. That was a regulation expenditure. But there were things that were in the business plan that were to be covered by the $44 million that were never, in fact, invested in. Money went somewhere else. I would ask the minister to tell us where that money went that was supposed to be in the $44 million according to the business plan initially. Where did they divert it from the initial intended use of the $44 million?
[5:30 p.m.]
MR. BALSER: The actual fact is they didn't; $44 million was simply an instalment if you will. Had we continued down the path that we were on as a result of the previous government's commitment to work with ABN Amro and Hoogovens, we would have had to expend additional monies. When it was determined that we were looking towards a sale, we said to them - we were either going to sell it I should say or close it down - it would not be appropriate at that juncture to put money into capital expenditures if we were going through a liquidation process. So had we continued on the same path that the previous government had embarked upon, we would have had to go back to get additional credit so the company could continue to operate. In fact, that was something that Hoogovens was putting out in terms of feelers at the point in time when we came to power.
MR. MACLELLAN: Yes, but that defeats the whole purpose of a business plan. When you put money in for a particular purpose in accordance with a business plan, we invested in the business plan as a common denominator to be able to sell the plant to say this is where monies had to be put in order to make the plant attractive. By not doing that, then of course the plant isn't as attractive, and you don't get the people investing. So the government was doomed to fail because of the fact they didn't market the plant, and they didn't allow ABN Amro to do their work. Now, the minister says that ABN Amro said that the fact that the government said they would sell the plant didn't interfere with the sale. Well, that is not what ABN Amro said in their report to the Sysco board in June. There is a very major discrepancy there. I would say to the minister that the deviation from the intended use of the $44 million was a major mistake.
I want to go onto something else for a minute. That is the Laurentian Sub-basin. As the minister knows, we have had a crack team representing Nova Scotia for about two years. Yet no progress is being made on getting this to arbitration. The federal government and Newfoundland seem to be pulling the string and leading Nova Scotia on. I just wonder why this is taking so long. The minister talks about wanting to develop the economy in Cape
Breton. There is no better hope for Cape Breton than to be able to invest in the exploration and development of oil and gas in the Laurentian Sub-basin. I want to know why this government isn't pushing harder to get this matter resolved.
MR. BALSER: Mr. Chairman, certainly we are anxious to see this thing move forward. In spite of what has been said, we have been working very diligently. The legal team that was put in place by the previous administration - credit where credit is due - went out when they recognized what was at issue here in terms of potential lost royalties to the Province of Nova Scotia. They went out and retained Ogilvy Renault to act on behalf of the province, and they are recognized as being leaders in the legal area of resolution dispute around this issue. We have had them in place. We have been working, we put together a crack team, expertise from the university with regard to offshore dispute resolution. I believe part of the difficulty is that Newfoundland has been so reluctant to entertain any kind of discussions. We, in fact, sat down with the arbitrator that was appointed, Mr. Stephen Owen to try to bring resolution to this. We have expressed a willingness to certainly move this along. I believe, to some degree, it has been the result of the Newfoundland government's unwillingness to move.
Certainly, make no mistake about Nova Scotia's position, and that is that there is a line articulated beginning in 1964 and certainly reaffirmed through a number of interactions with federal and provincial jurisdictions that the line articulated in that 1964 agreement is the one we want to stand pat on. We have indicated even a willingness as recently as yesterday. The Premier of Nova Scotia was in Houston, as was the Premier of Newfoundland. They have had some discussions.
Certainly, the position being put forward by Mr. Tobin in the media is not the same one that seems to be apparent when it is time to sit down and discuss. We have even indicated a willingness to put in place an interim arrangement that would allow for exploration to take place because, potentially, if this dispute can't be resolved through arbitration, it could result in a protracted legal wrangle that could literally take years and jeopardize the future. So is Nova Scotia willing to talk to the federal government, to talk to Mr. Tobin and his regime in Newfoundland to bring resolution to this? Absolutely. I believe the difficulty lies with Mr. Tobin's lack of willingness to sit down and move this forward. Certainly, we have indicated that arbitration will work so let's get this done so we can move forward and get the Laurentian Sub-basin onstream, as the industry wants.
MR. MACLELLAN: Mr. Chairman, with all due respect to the minister, I am having a problem with his reasoning. I don't know of an arbitration where both sides agree to go into the arbitration that one side can delay it indefinitely. I would say to the minister that Newfoundland knows now that its case is not as strong as it was and that they have no desire to rush into this. The federal government was the one that called both players to the table and said, this has to be resolved, we have to arbitrate this. Yet, the federal government seems to be siding with Newfoundland in delaying this whole process to the detriment of Nova Scotia.
You have major oil companies that are drilling in the corridor at St. Pierre and the fact is they can do lateral drilling for quite a distance and they are going to be putting their supply bases in St. Pierre. We are going to lose the opportunity in Nova Scotia to take advantage of that very lucrative activity, particularly at Sydney Harbour where the jobs are really needed. This can't be left like it is.
You can't say that you want to help the economy in Cape Breton and say that you are in an arbitration process and allow this thing to go on indefinitely the way it has been going, it just doesn't make any sense. Not only that but we are paying the big bucks, as they say, for these lawyers and consultants we are using, the meter is running all the time. I am not saying that it is not worth it, all I am saying is for heaven's sake, when are we going to use this? When are we going to put this together? What is the Government of Nova Scotia doing to stand up for the rights of Nova Scotia to bring this to a conclusion or at least to an arbitration or some kind of process?
MR. BALSER: Mr. Chairman, certainly in light of the experience of the member opposite in Ottawa he knows how slowly the federal government officials sometimes move. Are we anxious to move this forward and are we attempting to do so? Yes, we are but the difficulty lies in the fact where you have a party that is completely reticent about sitting down, discussing the issue and moving it forward. I do think Mr. Owen is recognized as one of the premier dispute resolutionists in Canada and he was brought in with a clear mandate to bring this thing forward. The member opposite made reference to perhaps Mr. Tobin's connections to the federal counterparts in Ottawa and I hope there is reason to negotiate on both sides. We are doing everything in our power to move this forward.
The member has also made mention of the cost for legal counsel and I would say when you are in a game where the potential cost, win or lose, could be in the hundreds of millions of dollars, I think money spent on the best legal minds in the world, if you will, is money well spent and certainly, that is what we have done. Nova Scotia has not been idle, we have been putting together a team that will ensure that when we sit down, whether it is to arbitrate a solution or to work through litigation to a solution, we will have the people on our team who will win the day. Certainly, Ogilvy Renault and the legal counsel we have in the province are top-notch. We have done a lot of the groundwork to ensure our case is strong.
The member opposite talked about perhaps Newfoundland's reluctance to come to the table and I believe he is absolutely right, Nova Scotia does have the strongest case. The reality is when you sit down with or wind up with lawyers bringing about resolution to a dispute, one has to be sure that one has the smartest lawyer, if you will.
MR. MACLELLAN: Mr. Chairman, I am not disputing what the minister is saying about the competence of the lawyers, we recognize that and, in fact, we retained them. We retained them because they are good and we are not saying that the fee is not justified by the value of what it is we are trying to achieve. All I am saying is that it is going on and on,
nothing is being brought to a head; one of the parties - Newfoundland - is able to frustrate the process and we don't seem to be saying anything and we are suffering. I will tell you, we are suffering big time as a result of this delay because the companies are setting up bases in St. Pierre. They are going to do lateral drilling and a lot of what we wanted to achieve through this is not going to benefit Nova Scotia.
The minister has to realize that he can't talk about the economy, the economic engine and things like that for Nova Scotia, particularly the Sydney Harbour area, and at the same time sit and wait for the federal government and Newfoundland to decide when it is time to proceed. Which is it going to be?
MR. BALSER: Mr. Chairman, certainly in light of the last few days in the Legislature, there are situations where you can't bring resolution or move things forward. I remember just a while ago we had bells ringing for about one hour and yesterday for three hours and so on. Sometimes even though there is a process in place it is very, very difficult to move things along. We, as a province, have made our concerns known, we have retained top legal counsel. There is a process in place that we have to adhere to to be part of that process. We cannot dictate when Newfoundland will come to the table and bargain in good faith. But what I can tell you is that the Premier of Newfoundland sat down with the Premier of Nova Scotia as recently as yesterday in Houston and I believe there has been some movement anyway that would give us some level of faith.
I am as concerned as anyone else in Nova Scotia to potentially see a loss of benefits as a direct result of the lack of movement. While there is some concern that drilling rigs can set up in the St. Pierre and Miquelon finger and do lateral drilling, the reality is that they would have only marginal access to that resource. The more real concern is that in the absence of any moving forward, opportunities to locate land bases for supply in the offshore would be lost to any part of Cape Breton. I know the member opposite has talked about industrial Cape Breton and the Port of Sydney but the Port Hawkesbury area has expressed interest and I think we had some conversation yesterday about how best industrial Cape Breton can position itself to take advantage. They have the unique geographical advantage of being close to the offshore so it is up to those companies to be ready when the opportunity presents itself.
Make no mistake that this is going to be resolved and there will be an opportunity for Nova Scotia companies to take advantage. In addition to that, I believe that the most obvious onshore destination for any natural gas flow or pipeline flow of oil to Canada would be through Cape Breton and down to tie in to the lateral at Guysborough. So there is going to be opportunity and it is up to us to make sure that happens. Can I force Newfoundland to come to the table? No, I can't do that but we certainly are doing everything we can, as a government, to ensure that they clearly understand our position.
MR. MACLELLAN: Mr. Chairman, the minister cannot force Newfoundland to come to the table but the federal government can. They are the ones that initiated the arbitration process and once again, we are being stuck with a bad hand here and we have to wait until this process is dealt with. I don't think the minister fully understands, I don't think anyone here fully understands the seriousness of what is going on in Cape Breton. In an area of 116,000 people, we are faced with a total economic collapse with losing the benefits of Sysco and Devco at the same time. These are very courageous people who want to make their community better and they are looking for the opportunities. They are not looking to their government for handouts, they are not looking for the pouring of money into nothing. They are looking for the chance to be able to take advantage of things that are going to come their way and this is the biggest, this is the most important because it is a major generator. I would ask the minister to consider this very, very carefully because time is very important in this.
The other feature, just moving on to something else and this seems to have been a problem on getting the actual meaning straight, in The Course Ahead, the government talks about decentralizing to the rural areas of Nova Scotia. Yet, the Minister of Agriculture and others have said no, there are not going to be any decentralized offices going to other parts of the province. What exactly did the province mean by decentralizing to the rural areas? Are there going to be offices and agencies decentralized out of Halifax, out of the metro area of the Halifax Regional Municipality to other parts of the province? Is he talking about service offices or putting a few more people in the Department of Transportation office somewhere? What does the government mean? I think it is important to clarify this.
MR. BALSER: Mr. Chairman, just to follow up on the comments around how the province can attempt to move the issue of the Laurentian Sub-basin dispute forward. The member opposite well knows that really, right now the ball rests in the court of the federal government, that they have to appoint the panel, that the minister responsible has the responsibility for moving this forward. Nova Scotia has clearly indicated its position and we would like to see this move along, so if the member opposite still has some contacts in Ottawa that could bring some pressure to bear on it, that would be greatly appreciated to move this along. We need to work together because as he said this is clearly an issue that impacts on all of Nova Scotia.
In terms of decentralization, one of the quick-fix kind of scenarios is that if we just simply move some government departments to areas around the province, then all of a sudden the economy will turn around. Certainly that would be a part of a larger strategy. In fact, it worked very well in the Summerside base closure where the federal government put a new agency in place. That is something that came to light in conversation with the Partnership Alliance. As I said in response to a question yesterday from another member opposite, they said in light of some of the difficulty that might be created around uprooting families and so on - and there are many people from Cape Breton who now live in metro and may want to move back home - but really it would have to be something that was part of a much larger strategy. I would say that the comment made yesterday was around relocating the Petroleum
Directorate offices there. What I said in response to that was, it might be premature to do that at this juncture, but as the industry begins to grow, certainly with the onset of the Laurentian Sub-basin, there may be an opportunity to open a branch office there.
As far as moving small offices out into the hinterland of Nova Scotia, certainly the Service Nova Scotia idea of putting some presence in each of the counties may mean there would be some diversification and new offices opened. But that has not been decided at this point in time. We really need to work through a process. It is not simply a matter of making a unilateral decision that the Department of Economic Development will no longer have an office in Halifax, it will be relocated to perhaps the riding in Digby-Annapolis which would be a nice place to have that and the jobs it would accrue. Certainly, we could argue very compellingly that we have significant unemployment, and I am sure the member for Shelburne would like the same thing and so on.
So stripping away government offices as a makeshift kind of economic development strategy I don't believe is appropriate nor will it work in the long run because, as I said yesterday - and I will cut my answer short because I do know the member wants some other opportunities to ask questions - that doesn't seem to have worked in the past, even when you had significantly high levels of participation on the part of federal or provincial Cabinet Ministers around the table. Simply throwing money into a situation doesn't solve the problem.
MR. MACLELLAN: Mr. Chairman, with respect to getting the arbitration process moving, whatever contacts I have, I don't know, but the minister and the government are in power right now, and it is incumbent on them to do it. The province is relying on them for this initiative, and I would stress that the government do this.
With respect to decentralization, I didn't bring this up as a philosophical discussion. I didn't bring it up by saying what should or should not be. The minister seems to look at the question of centralization as sort of a thought that has just come to him other than not something that was in the government's own document, The Course Ahead. All I am saying is that the government brought this up. The government created the expectation of decentralization. It is the government that has caused people in areas outside the Halifax Regional Municipality to think there are offices going into what he refers to as the hinterland of Nova Scotia, and they don't know what the government said. Was this done just to ingratiate the government with the people? It is only going to take a little time before they realize the government has no intention at all of decentralizing anything as the minister just said. What was the reason for putting that in there? What is the government planning to do in the way of decentralization in areas outside the Halifax Regional Municipality?
MR. BALSER: Mr. Chairman, as I said in response to the initial question, the whole idea of Service Nova Scotia centres in every county would mean there would be new offices opening, whether that means additional new employment opportunities remains to be seen, or whether it will be a redistribution of staff. We included it in the document simply because
we recognize there is a need for government services to be provided right straight across this province. The fact that you don't live in metro shouldn't preclude you from having access to information and services provided by government. We are trying to redesign and restructure government so there is a recognizable presence in each of the counties and we are working through that process.
MR. MACLELLAN: Mr. Chairman, I think I am no clearer, and I don't think anybody else is as to what the minister or the government means by decentralization, which they held up to be a flagship of economic development outside the Halifax Regional Municipality. It seems it was just smoke and mirrors, and once again the people have been misled.
He talked about Michelin, that Michelin was a good investment. That is not what the government was saying earlier when they were talking about The Course Ahead. They were talking about the new economic development would not put money into operations such as Michelin and Stora. I tend to think the minister may or may not know that it is not Massachusetts with whom we do the most trade with any state in the union. The state in the union with which Nova Scotia does the most trade is South Carolina because of Michelin. I want to just say to the minister, there is $9 million of further investment in Bridgewater. There is a rubber plant that was put in at Granton. It now makes rubber far exceeding what we need in Nova Scotia, so the potential is there for further Michelin investment. Is the minister ruling out government assistance to further Michelin investment in Nova Scotia?
MR. BALSER: Mr. Chairman, as I said in earlier remarks, we are very proud of this province's association with Michelin, as are they with us. Actually, the plants they located here 30 years ago were the first in North America, and came about as a direct result of the efforts of a man named Bob Manuge who has an exemplary record and visited and, in fact, was part of the celebration of Michelin's location. The announcement today about a $9 million expansion in Bridgewater is done in the absence of any provincial money, so will Michelin continue to be a part of the Nova Scotia economy for the future? Certainly so. Will we eliminate or reject the idea of supporting successful business in the Province of Nova Scotia? Not at all. What we have said consistently is we want to reward and support success. Certainly Michelin is a successful company in this province, as Stora, as is any one of a number of companies. We will be there to be a participant with them.
What we want to do is use companies such as Michelin to retool the economies of this province. Certainly the record they have in turning the Bridgewater area around is exemplary, as in Granton, as in Waterville and so on. We will be there when Michelin wants help, and we will work with them. Does that mean we are going to enter into a deal where we put $40 million or $50 million into a project? That would be difficult to determine at this juncture. We may very well be in a position to do that as the economy turns around as a result of us dealing with the deficit situation.
MR. CHAIRMAN: Honourable members, I would like to remind you that we are in Supply and your attention is required. The honourable member for Cape Breton North.
MR. MACLELLAN: Mr. Chairman, it is very important that members on the government side listen to these things. They get to hear how things really are. I would (Interruptions)
MR. CHAIRMAN: Order, please. Order.
MR. MACLELLAN: I want to further question the minister. In that respect, that is in relation to trade missions. He has said in this House that the importance of trade missions, and as he knows, what is spent by the government on trade missions comes back tenfold in increased business for Nova Scotia. I want to know just in the estimates where we would find the figure as to what was invested in trade missions this year as opposed to what was invested in trade missions last year? Is that the Investment and Trade section?
MR. BALSER: Certainly I am on record repeatedly as saying that I recognize the value of trade missions and the Investment and Trade Division in the department. In the very near future, we are going to be celebrating the Export Development Award ceremony. I took part in that ceremony last year. It is probably one of the moments that caused me greatest pride as a member of government to go and see recognition being bestowed on companies that are actually out there pushing the Nova Scotia economy ahead. As the comment was made around, what is it, $68,000 in export money returned to the province to create or sustain one job. That is a wonderful record. We will continue to work with our partners to ensure that we can put together trade missions that work strategically; 29 companies from Cape Breton took part in a recent initiative. Next week we are going to be going to the New England area as part of the Team Atlantic. We have to be more strategic, so certainly we are going to be there to move forward on the trade missions.
As to the level of the specific question, the detail the member opposite wanted, I don't have that at my fingertips, but I would take it under advisement and certainly get that information. Again, to reiterate, we are going to be there and take part in trade missions as we have done in the past.
MR. MACLELLAN: Mr. Chairman, the minister evidently with a sharp reduction in his budget will be downsizing the Department of Economic Development. There are quite a few contract employees. Will the services of these contract employees be terminated?
MR. BALSER: Certainly we have a number of vacancies within the department. We have a number of people in positions of responsibility who are on term contracts and in many instances they reach a point, either because of opportunity in the private sector or because of changes in family life, that they may want to discontinue their association with the department and move in a new direction and that is a decision they can make. In terms of who is going
to be affected and what will ultimately happen through the reduction in the workforce, that has not been finalized because, as the member opposite well knows, there are contractual obligations that must be considered and there are collective bargaining units that have to be brought into the scenario. So certainly it is possible that someone who is on a term contract may at the end of the time of the contract decide to move on. Some will be given extensions and some will perhaps remain in place. So those kinds of things are the natural fluidity of an organization the size of the Department of Economic Development.
MR. MACLELLAN: Fluidity, be that as it may, Mr. Chairman, there is a real concern here that I have. A lot of the contract workers, employees at Economic Development, have been given very important files to work on. If they leave, where do those files go? Do they go into the private sector? Do they leave Economic Development and go with these employees to the private sector and, if not, how is the minister proposing to make sure that the files all stay with the department; first, by making sure that these contract employees relinquish these files and, secondly, to provide people in the department who have the time to work on these files?
MR. BALSER: Obviously, we work with a team concept in the department and that is the division of Investment and Trade is a team. There are a number of people who come together to talk about files because when you share expertise and knowledge, you make a much better decision and certainly if, in fact, someone were to move on, there would be a process in place to ensure that succession occurred in a smooth and seamless manner and that has been the pattern in the department. Files are discussed and, obviously, followed and monitored very closely. So, obviously, in the department at any given moment there may be two or three people who are working on the same file. Well, there will, obviously, be a lead person, that is part of the purpose of a director of a division, to ensure that the people within the division are handling the files in an appropriate manner.
So if at some point someone was to leave the department, we would ensure that there was a process that brought closure and transmission of those files to someone who remained with the department and that is just the natural process in any division of any business, whether it is government or private sector.
MR. CHAIRMAN: You have less than two minutes.
MR. MACLELLAN: Yes, Mr. Chairman, I believe as well, as the minister says, in the team concept, but the minister, obviously, knows hockey and if your team is playing two men short, you know that your team isn't doing the job that the other team can do with two more players on the ice. I would say to the minister that his team is playing at least two men short and he is going to be killing off penalties for four years. I want to know what is going to happen to those files. Are they going to stay with the department or are they going to be going out into the private sector? I have a real concern about this in the interests of the people of Nova Scotia.
MR. BALSER: Well, certainly in terms of how best to handle files, one of the reasons why we have moved - or have moved in the past - towards having contract employees was simply because of the nature of the business environment. It changes dramatically. In off times you will need a level of expertise to handle a particular file or work to a particular opportunity that may not be available in-house. So we, obviously, see a need to ensure that we have enough latitude within the department to bring people on staff who have that level of expertise to move things forward. I am very comfortable in saying that within the department we have a level of expertise to address many of the issues that currently face us as a department. I am comfortable to think that we can do many things in-house and when we need to go outside, that is what we will do.
MR. CHAIRMAN: At this time the committee will recess and reconvene at 6:30 p.m., leaving the Liberal caucus with eight minutes in their turn.
[6:00 p.m. The committee recessed.]
[6:30 p.m. The committee reconvened.]
MR. CHAIRMAN: Order, please.
The honourable member for Cape Breton South.
MR. MANNING MACDONALD: How much time do I have?
MR. CHAIRMAN: Seven minutes.
MR. MANNING MACDONALD: Seven minutes, that is hardly enough time to get warmed up. There are fewer right-wingers in Cape Breton than there were on the Ottawa Senators of 1920. Six minutes now I guess, anyway, I will try to wind up and I understand that the critic for the NDP is going to do likewise and then we are going to actually get to a department where we may get some answers. That is the reason why I am going to wind up my comments because certainly the department of no development has not given us much reason to be optimistic about anything in the future when you have a department that has been cut by $40 million, Mr. Chairman, and it has not provided this House with any answers as to future direction except this document which is called Toward Prosperity, I call it Backwards to the Future, with the exception of, as I noted earlier, the success stories of the previous Liberal Government which are very well positioned in this particular document.
I think the department has missed an opportunity, the last opportunity perhaps for a long time, to build on past successes in the department, successes that the minister has talked about. Small business entrepreneurs are now going to have nowhere to go in this province to try to build their businesses because, as you know on both sides of this House, the banks in this province are not going to take a chance on anybody. The only people the bank is taking
a chance on these days are sure things. There are small entrepreneurs in this province who are trying to get their businesses off the ground and have gone to Economic Development in the past and have been assisted wherever possible. That does not seem to be the direction this department is heading. As a matter of fact, this department is heading towards yet another round of consultations over the next couple of years to prepare the province for God knows what because by that time there will be no small businesses left in this province.
I don't think, Mr. Chairman, that the minister really believes in what he has to project to this House. In past discussions with him and in past conversations in this House and out of the House, he has been quite supportive of initiatives of the previous government in regard to economic development and, particularly, the support to businesses in his particular area of rural Nova Scotia, but he is not controlling the agenda. The Minister of Finance and the Premier are and they have got a cut and slash agenda that they are not going to be swayed from. It is an ultra-right-wing agenda that this province can ill afford at the present time because our economy is not strong enough to absorb it.
I call the Minister of Finance and the Premier fiscal headhunters and that is exactly what they are and they have been infiltrating every department of government and ministers do not have latitude to do what they would perhaps otherwise want to do. I can tell you that in this particular department, Mr. Chairman, it is sad to see the way this department has gone, the way it is going, and the lack of initiative there to support small business in the future.
Mr. Chairman, I can tell you that there are many people in this province, small business people, who are going to be very disappointed when they go knocking on the Economic Development door and nobody answers. That, to me, is tragic. There are a number of small businesses that are flourishing in this province now because they had a head start from a government department that I felt was in tune with the needs of small business people in Nova Scotia. That, now, does not seem to be the case and I am disappointed in that. I would only hope that the minister would see his way clear to convince his Cabinet colleagues that they are indeed going in the wrong direction in destroying this particular tool of development for the Province of Nova Scotia.
I might say that if this department and this budget and this document are the engine that is going to drive this government in the future, then, as I said earlier, God help us because the small businessman in this province will have nowhere to go to try to access any kind of meaningful support in order to get their businesses off the ground. I would say in conclusion then and turn it over to my colleague from the NDP, I think in the next few weeks and months the folly of destroying this particular department is going to be quite evident in the minds and in the actions of this particular section of our province that needs help. I am talking about, again, the small business entrepreneur who is trying to exist in this province and is getting absolutely no encouragement.
There are good people, Mr. Minister, working in your department. I would hope that perhaps they and you can convince the other Cabinet colleagues who are running the show, and I named them earlier, the Minister of Finance and the Premier, with the help of one or two more, perhaps the Government House Leader, to change direction, to give you back some of the tools you need to help develop this province through the small business initiatives, then I believe the province will be better for it. I believe in the future the Cabinet members who are about to make that decision will be pleased that they did change direction here. I think it is important that we not lose sight of the fact that over the past number of years some of the ones that you have outlined in here have been very successful and perhaps could not have gotten that start from commercial banks in this province. They got their start from provincial and federal government initiatives and, Mr. Minister, I hope that when businesses coming knocking on your door, you will be there to answer it.
MR. CHAIRMAN: I would like to thank the Liberal caucus for their questions and also thank you, Mr. Minister.
The honourable member for Cape Breton Centre.
MR. FRANK CORBETT: I will just make a few observations. I don't think we are going to keep you all that long because I think time is growing short here in estimates and we would like to get some other departments up, but I think, like my Liberal colleague, the member for Cape Breton South, I would like to make a few closing comments, not the least of which is to make my statement public about the frustrations and the lack of forthright answers coming from you in these estimates; I would be loath to say frank answers, but I would not feel that way.
I think we have dealt with your department with a lot of numbers that you could not substantiate or would not. I think that is indicative of this whole budgetary process so far, that there are numbers in this budget that, pardon the pun, just do not add up. That really scares Nova Scotians and that is a problem. I think it is extremely important that no matter where the pressure comes from, you stand up for your department, Mr. Minister, because for a lot of people, and I think you have said this in the few questions you did answer, that it is the importance that Nova Scotians have a place to go to get investment because without getting involved with too much political rhetoric from either side of left or right, that the banks in this province and this country, I guess, have not been supportive the way they should be of small to medium businesses in this part of the country and, therefore, there is nowhere else to go but to government.
Now, it would be nice, I suspect, and I think you would get a lot of support from your colleagues, that if your department did not exist, that they do not want to give money to businesses, that they feel that they should just try the vagaries of the market and it does not work. It does not work in Atlantic Canada by and large and it does not work in a province that is structured like Nova Scotia where for years government has tried the hub and spoke
method of economic development and it is not working. We have a robust economy here in metro, but we have other areas that are sputtering, to say the least. That would be kind. We have an economy in Cape Breton that is teetering on the edge.
I agree with you that there are success stories there and that we have to talk about those success stories, that we shouldn't talk doom and gloom. But there is a reality, and that reality is that there is 40 per cent unemployment. The reality is that national studies show that we have people living well below the poverty line, but you have a budget in scope that is taking money away from them. On the other end of the spectrum, they are taking money away from your department that won't allow entrepreneurs to start up.
There is a theory from this side of the House that you have a very small inner-circle Cabinet there. Well, if there is any truth to that, I implore you in your wisdom and good nature to hoist yourself in the middle of that group because I am sure that you have the type of conscience (Interruptions) No, you are not, that is why I am telling you. The minister asked if he is part of the inner Cabinet. Well, I fondly refer to him as a junior minister. He is on the outside and that is why you have to be aggressive and get in there, as should the Minister of Community Services. While you may see your roles as different, they are similar, because you are helping the people of Nova Scotia to move the economy forward. It is not good enough for that minister just to cut money from social service recipients as it is not your role to cut money out of agencies that help garner employment for this province.
Mr. Minister, it disturbs me that you are smiling at these comments because it is very serious. We have people in this province going hungry, yet you had no problem laughing at a discrepancy of over $14 million. Well, if you invested that $14 million in education and if the Minister of Education was being truthful about her budget, it would almost be solved, but no, for some reason you have taken this process and it is a joke. Well, I am going to tell you that people in my riding are not laughing. The vast majority of the people in my riding, whether you want to call them dinosaur industries or industries of the past, are still dependent upon coal and steel. These are people with real jobs, real families, real bills. You may laugh and joke about it, but I dare you to come down to Official Row in Reserve, Plummer Avenue in New Waterford or Commercial Street in Dominion and tell them that this is funny, because this is not one bit funny.
You and your government are making a mockery of the poor people in this province, until you guys get the wherewithal to stand up and stop this silly rhetoric about people in the past not having any backbone. We are not talking about backbone, we are talking about compassion; people in this province who have worked all their lives, all they want is a hand up, not a handout. Treat them like human beings. Don't laugh at them, don't be silly, help them. Help them today, don't talk two years, do it today. Thank you.
MR. CHAIRMAN: If I recognize the honourable Minister of Economic Development it will be to close the debate.
The honourable Minister of Economic Development.
HON. GORDON BALSER: I think it would be appropriate now to bring together some of the comments and points that were raised by the members opposite in terms of their questioning process; it was truly a pleasure to be able to respond to many of the concerns that they raised. I believe that we are going in the right direction as we deal with the deficit and the debt in this province, and we will create an environment where there is truly an opportunity, not just for businesses but for all Nova Scotians, that will be passed on as a lasting legacy to our children and to our children's children. In fact, Nova Scotia has come to the realization that it is time to make the hard decisions, relatively late compared to other jurisdictions, whether it is the federal government or our sister provinces. We are doing the right thing and heading out on the right course and it is not going to be easy.
I do take a bit of an exception to the member opposite indicating that we are making light of a very difficult situation faced by Nova Scotians right across this province. The fact that industrial Cape Breton right now faces a very difficult time is indeed unfortunate. It is going to be difficult to deal with that problem and I understand the level of concern, not just from the members opposite but from all Nova Scotians, and we are treating this with the level of concern that is required and we are moving in the right direction.
The commitment this government made to put $3 million into a fund over and above that money that is earmarked for economic development in Cape Breton, is a clear commitment. The fact that we brought together a number of jurisdictions to work together towards a common goal, the partnership alliance putting aside their difficulties to work together, to put forward one voice to address the problem is truly a turnaround in terms of ideas. The fact that there are areas in the province, in Cape Breton particularly, where you do have an economy that is robust and growing, we need to look at what they have done to address their problem and replicate that right straight across the province, not just in other