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MR. CHAIRMAN: I would like to call the Subcommittee on Supply, the debate on the estimates for the fiscal year 2002-03 to order. Today is day six, Tuesday, April 16, 2002. To date we have 19 hours and 47 minutes of estimate debate, and today we're welcoming a new portfolio. We're asking the honourable member for Antigonish, the Honourable Angus MacIsaac, to come forward regarding the Department of Service Nova Scotia and Municipal Relations. I shall read into the record Resolution E31.

Resolution E31 - Resolved, that a sum not exceeding $92,298,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Service Nova Scotia and Municipal Relations, pursuant to the Estimate and the business plan of the Nova Scotia Municipal Finance Corporation be approved.

MR. CHAIRMAN: Honourable minister, I ask you to make some opening comments, the introduction of your staff, and then we will start with the questioning. The time is now 1:50 p.m.

The honourable Minister of Service Nova Scotia and Municipal Relations.

HON. ANGUS MACISAAC: Mr. Chairman, and members of the committee, first of all I want to say that I'm looking forward to presenting my estimates and defending them, and answering questions relative to the estimates. Before I begin doing that, I would like to introduce those who are accompanying me today. First of all, my Deputy Minister, Brian Stonehouse, who is on my left; on my right is Joyce McDonald, who is the Director of Financial Services for this department; and on Mr. Stonehouse's left is Greg Keefe, he is the Executive Director of Program Management & Corporate Services. Also attending with us today is a Municipal Adviser, Nathan Gorall; Lori Esling, Manager of Financial Services; Joan Frizzel, coordinator of the process; and Peter Wilkins, budget officer with the department.

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So, Mr. Chairman, I have a few opening remarks, and I assure members of the committee it is not my intention to take up a great deal of your time, but I believe it is appropriate for us to give a brief overview and touch on some of the highlights and, in particular, I want to acknowledge the very significant contribution made by the staff of Service Nova Scotia. They are dedicated to the word "service" and it has been my pleasure to again work with them for another year, but that's one point that I would like to make and I know that from speaking to some of the members of the committee individually, you are free in your compliments relative to the staff, and that's very much appreciated.

If I can just say a few words about some things in the department, one item that warrants an explanation is the difference between the 2001-02 funded staff forecast and the 2002-03 estimate. Our department experienced about 80 full-time equivalent vacancies throughout the last fiscal year; these were offset by new hirings and filling positions on a casual basis. This resulted in a net difference of 50 from estimate to forecast last year. You will note that this year's estimate is very close to last year's estimate.

Our department is an interesting mix, Mr. Chairman. Virtually every Nova Scotian at some point in their lives has a direct contact with our department, from registering the birth of their children, to registering their car, to filing the deed to their home. All these major milestones in life involve contact with our staff. We view our role as one of making these necessary transactions as easy and convenient as possible. Our staff also plays an important role in the development of communities. We foster strong municipalities with information and advice and with financial support. We also provide property assessment data to municipalities and to over 530,000 property owners every year. Municipalities use that assessment roll for levying property taxes, which are the foundation of municipal finances. Through the Registry of Deeds the department provides a vast array of geographic information and property registration services.

Like every government department, Service Nova Scotia and Municipal Relations has wrestled with a significant challenge. Our budget this fiscal year is about $7.9 million smaller than last year, and like every other department we've taken a hard look at what we do. We made some tough decisions, but I think we've succeeded in protecting the services that are most important to Nova Scotians. For example, we have reduced funding for some discretionary grant programs that assist municipalities. There is still enough revenue in these programs available to municipalities, just not as much as last year. We have made every effort to ensure service to our customers is not affected by budget reductions. Accordingly, there have been no reductions in front-line service operations.

As you know, we have found it necessary to raise additional revenues through several fee increases. Of the 12 increases in my department this represents the first increase in 10 years for seven of them, and nine years for two more - one hadn't been increased since 1985. It is worth noting that throughout the decade most of these services did not experience any fee increases. Service to customers improved substantially. For example, 10 years ago you

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could only renew your vehicle registration by getting in line at the local Registry of Motor Vehicles or by mailing in a cheque, and today you can renew your registration over the phone, or the Internet, or you can pay by credit card or Interac. In that same time the department opened spacious new service centres in Yarmouth, Halifax, Dartmouth, Kentville, Antigonish, Sydney, and just yesterday in Port Hawkesbury.

I acknowledge that some of these were opened under the watch of my predecessors, but the bottom line is that service improvements did occur while the fees remained constant. Given the importance of getting the province's finances under control once and for all, I am comfortable that the fee increases, while unfortunately necessary, were reasonable. For example, the driver's license renewal has increased by just $2.20 a year.

At this time I would like to go over some of the highlights of our business plan for this year. This will be the first year of the new and richer municipal equalization program. We have increased the funding in this program from $24 million to $29 million. The province's contribution has been reduced by $3 million to $21 million, while $8 million of Nova Scotia Power revenue will be distributed to municipalities through the equalization formula. This formula was the result of a lot of hard work between staff from the department and the Union of Nova Scotia Municipalities. Strict application of the formula would have resulted in most rural municipalities losing revenues; however we implemented a safety measure to ensure that no municipality receives less in equalization this year than they did last year. We also recognize the cash flow implications to Nova Scotia Power of this increase in municipal tax; accordingly, we informed the company officials that they could wait until after January 2003, which is the start of their next fiscal year, to make their 2002-03 property tax payment.

As you know, these initiatives do not happen by themselves and I ask your indulgence to allow me to acknowledge the efforts of my Deputy Minister, Brian Stonehouse; David Darrow, Executive Director of Municipal Services; Nathan Gorall, Coordinator of Municipal Relations; and Program Admin Officer, Bob Houlihan. These dedicated public servants spent countless hours, at times very frustrating hours, devising the equalization program we have today.

[2:00 p.m.]

Throughout the coming year we will continue developing the Registry 2000 project. This project will transform 250-year old paper-based land registry into a state-of-the-art, on-line land registration and information system. Last Fall I had the pleasure of unveiling the Nova Scotia Business Registry. This on-line window offers 600,000 Nova Scotia businesses more than 40 federal and provincial registrations and licenses. Nancy Vanstone and her staff at Registry & Information Management services deserve a special word of thanks for their efforts to make it easier for businesses to do business with government.

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I've singled out some staff members, but I could easily go on about many, many others whom I have had the pleasure of meeting and working with over my incumbency as minister. Virtually every day I am impressed and amazed at the lengths civil servants will go to help their fellow Nova Scotians. I'm very proud to be their minister, and I am honoured to represent Service Nova Scotia and Municipal Relations today. If you have any questions, I would be pleased, with help from my staff, to answer them - and I'm sure you do. Thank you, Mr. Chairman.

MR. CHAIRMAN: That only took 10 minutes for your remarks. I want to advise you and also your senior staff that any information undertaken or requested during these debates, you are to supply that information not only just to me as Chairman of the Committee, which I will have forwarded to Hansard for record, but you're also to supply an identical copy to each of the three caucuses. So if a question comes from the NDP caucus or Liberal caucus, all caucuses get the same information. It has been requested of all ministers and it's going to continue all the way through.

Who will be asking questions on behalf of the NDP caucus?

MR. MACISAAC: I just want to make sure of the direction you provided there. So whenever we provide you with the information relative to a request, we would provide the same information to each of the caucus offices and the caucus office is sufficient?

MR. CHAIRMAN: Yes.

The honourable member for Halifax Fairview.

MR. GRAHAM STEELE: Mr. Pye will be starting off, but I did want to ask the minister, could we get a copy of his opening remarks?

MR. MACISAAC: Certainly.

MR. CHAIRMAN: The honourable member for Dartmouth North. You have the floor, and your time is now 2:01 p.m.

MR. JERRY PYE: Mr. Chairman, to the Minister of Service Nova Scotia and Municipal Relations. I know that it has been a trying year, particularly since the UNSM has been requesting his department to look at an equalization formula and to come up with an equalization formula rather quickly. There was an assessment issue re coastal properties, and there are also some other issues with respect to municipalities in difficulty that I may centre my comments around, and also maybe centre my comments around issues with respect to where the province stands with respect to the Halifax Harbour Solutions project and its support to the Halifax Harbour Solutions project.

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So if I can begin rather quickly, I want to talk to the minister, through you, Mr. Chairman, re the equalization formula. Now I know there were many formulas bandied about with respect to how one might come about with an equalization formula to assist municipalities across the province. There was, in fact, one comment made with respect to deed transfer tax, and I guess that was not an option for the minister's department. The minister finally decided that a way to address the equalization formula - and on a short-term basis, I believe, a two year period - was through taxation to the Nova Scotia Power Corporation - NSPI, I should say. Through NSPI, there was approximately $10 million that will be garnered from the reassessment of that property into the provincial purse. The minister stated today that he was putting some $8 million into municipalities across the province with respect to the equalization formula.

Through you, Mr. Chairman, to the minister, was this the only way the equalization formula could be developed? Number two is, how long will this be a matter of continuing to use NSPI's tax base as a real property tax base as a way of generating revenue, to bring in revenue for the equalization formula? Number three is, where do we cap that off, is it $20 million, $30 million, $35 million that you're looking at with respect to coming to the province? So some comments around that particular area would suffice.

MR. MACISAAC: Mr. Chairman, first of all, perhaps I will start with the last and work back to the first question. The issue of what is the appropriate amount to request a utility such as Nova Scotia Power to pay in municipal taxation is a question that is currently under study and review through the Treasury & Policy Board of the government. The reason that it is a question that needs to be weighed very carefully is that, as we all know, Nova Scotia Power is a regulated utility and as such it has requirements that are not requested of other businesses within the province. An example that I have used is that relative to the investment that they put forward for the distribution of electricity and the generation of electricity, then the amount of revenue that they may receive from remote parts of the province may be far less than would be required in order to pay for the capital cost of providing that level of service.

So those matters need to be taken into account and I'm sure they are matters that are taken into account by the Utility & Review Board in its assessment of rate applications, but it's also an issue that needs to be taken into account by government when it is making a determination as to what is an appropriate level of taxation for a utility such as Nova Scotia Power to pay, so I would love to be in a position to provide you with the number at this stage, but I can't provide you with that number. I can tell you that it is a matter that is under review and I can tell you that full taxation of Nova Scotia Power is not likely to occur for the reasons that I've just outlined.

The other question was what formula or what method of achieving equalization that we were prepared to consider - obviously there were two methods that were out there for a period of time. One related to a proposal which we had put forward - and I just for the record

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want to underline that it was a proposal as opposed to a statement of dogma or a statement of policy on the part of the province - that would have been to have some sharing of municipal taxation throughout the province. There is no need of me going into the history of the events that transpired relative to that. The other, of course, was the attempt made by the UNSM to provide a counter proposal to us. I want to make it clear, Mr. Chairman, that the UNSM, I believe, worked very hard at attempting to achieve a consensus relative to the proposal that they provided to us.

The difficulty that arose - and that was the one that incorporated the deed transfer tax - for us is that the municipalities found it very difficult to embrace in its entirety that particular proposal and, had we gone forward with it, it would have been a proposal that would have generated continuous debate as we moved forward, and would have been in our view a point of division within the UNSM as we moved forward. That's why we made the determination not to embrace that and made the determination that on a temporary basis - a two-year period - that we wanted to find another solution, and the other solution is one which did inject new and additional money into the program. It incorporated the new equalization formula that was worked out with the department and the UNSM, and it also began to address the issue of the taxation of Nova Scotia Power and providing host municipalities with some revenue from that.

I don't pretend in any way to say that this solution is an ideal solution, but we believe that it is a step in the right direction. We believe that it has addressed some fundamental concerns of municipal units that were struggling to provide service in the province and that it will be the basis of a go-forward program once this has expired and once we are able to deal in a much broader way with the issues surrounding industrial taxation within this province, NSPI in particular.

MR. PYE: Thank you, Mr. Minister. I guess if I can follow through on the track, you did indicate that NSPI may never reach its full potential of taxation. I guess we all know that NSPI for many years was paying a grant in lieu of. I don't know if that was reflective of the real property tax that should have been charged to NSPI, because we never did get clarity as to whether that grant was a reflection of the real property tax that should have been paid to NSPI; however now we do know that it was not, because you as minister have gone in and asked for an additional $10 million.

With that in mind - and although this is not the optimum of proposals that you would like to see, or policy, with respect to how to deal with an equalization plan to mete out to municipalities across the province - we know that this is the direction that you have taken, and we also know that there is a ceiling which in fact you reach in order to tap out all the revenue that you want to put into the equalization pot for this. We also recognize that there are municipalities in difficulty. When does it reach its saturation point of when you do not have sufficient revenues coming through the measure that you have now taken to extract

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money for an equalization pot to mete out to municipalities - when does that ceiling reach its maximum and then where do you go? Obviously it's an ongoing review, as you have said.

For some clarity, I think it's important to know what direction your government is going, or your department is going with respect to NSPI. Ultimately, I guess it's clear that the minister has not indicated where the remaining $3 million has gone. He had indicated that they put $8 million back into the pot, but has not indicated where the other million dollars have gone. What's going to happen when you reach that saturation point, then where do you go to get the money to provide for equalization across the province?

MR. MACISAAC: I guess if I knew the answer to that, and government knew the answer to that, we may have attempted to go there and not come forward with a program that would last for two years, but one which would be of a more permanent nature. I do note with interest that NSPI, for instance, in its rate application has allowed for a figure I believe of $31 million for municipal taxation, so we obviously are not there yet. The amount that we're taking is in the vicinity of $26 million. In their view at least, based on their rate application, there is room to move in that area, and we will be examining that very carefully. As I indicated previously, we are also examining in general the issue of utility taxation, and that of course includes NSPI.

[2:15 p.m.]

You made reference to a difference of $3 million. I pointed out in my remarks that the money from the province's equalization program, which was $24 million, has been reduced to $21 million, and that was part of the budgetary process of reducing our expenditures; we made that very clear to the municipal units when we announced the equalization program.

MR. PYE: So that, in fact, was part of balancing the budget or bringing the budget into play. I know there has been some conversation with UNSM on this proposal - what about municipalities who consider them host communities to the actual physical plants, the industrial portions of the Nova Scotia Power Corporation, has there been any concern expressed to you that the host communities have not received what they consider the appropriate taxation to put into their budget so that they can manage their budgets more appropriately?

MR. MACISAAC: I was just trying to recall the reactions that we received from host municipalities. I would point out that we allocated to host municipalities an amount of $2.4 million of the revenue from NSPI. For instance, I believe the Town of Trenton increased its revenue by some $400,000, and CBRM's revenue increased by $800,000 as a result of this. CBRM has been quite clear in its view that they should get full taxation from NSPI and we obviously have a difference of opinion relative to that.

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We have received some positive feedback from a number of municipal units. As we move forward, what the appropriate level is for host municipalities will have to be determined, but we certainly wanted to acknowledge that host municipal units should be receiving a larger amount of tax revenue from NSPI than they had in the past, and we made, I believe, a very significant effort to address that.

MR. PYE: Mr. Chairman - and I do apologize for this - in order to reflect the importance of this committee, the quorum should be six on this committee and it's not. Can I call for a quorum?

MR. CHAIRMAN: The quorum is six. We have six members in the House, in the room here. I allow flexibility for members to take off their jackets, have a snack, go for coffee, as long as they're in the room I count them as quorum. Once they leave the room they're no longer in the presence of this committee.

MR. PYE: Well, Mr. Chairman, I'm not going to get into the debate of where you count them as quorum. Quorum is present at a committee, and whether you want to read the rules or not, if members have to leave, then you should have someone fill the position. I don't want to review the rule book because you know the rule book as well as I do, but I do reflect that there is importance within this particular committee and this committee is of such importance that it should constitute a quorum.

MR. CHAIRMAN: Yes and quorum was in the room, as I stated. I allow the flexibility because we're short of staff in this room. We don't have Pages to go do the errands for members, so I allow them to get up to stretch their legs, go get a tea or coffee, whatever the case may be. So long as they do not leave the presence of the room, quorum shall be counted as that. We do the same thing in the House, we move around the Chamber of the House, and sit in different seats. The only time we're required in our seats is the time of a vote. That's when I call for people to be in their seats, when the vote is done on the estimates.

MR. PYE: I will not get into debate, Mr. Chairman. I will take this under advisement. I will direct this issue to the Speaker. You will be aware that, in fact, there must be a complement in the House when estimates are brought forward. Sorry, Mr. Minister. I do apologize.

MR. MACISAAC: No problem.

MR. PYE: I do know that we've talked around NSPI and I don't want to spend a great deal of time around NSPI, but I do know that HRM is a host community, the Nova Scotia Power Corporation as a result of the Tufts Cove Generating Plant. Can you tell me, Mr. Minister, if in fact the Halifax Regional Municipality was a benefactor as a host community in the formula set out?

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MR. MACISAAC: The old method of allocating revenue from NSPI was based on a revenue-generated model. As a matter of fact, if we were to have altered the situation with HRM and gone to the host model with them and abandoned the revenue model, they would have received less income from NSPI, about $1 million less.

MR. PYE: So, in fact, you brought a new model in when you extracted the money from NSPI, or is that an existing model that was already in place?

MR. MACISAAC: There was an existing model in place for HRM. We did not alter that model. But for other hosts, we did alter the model because it benefited those communities.

MR. PYE: I guess, Mr. Minister, as you know, there have been some increases set out by the minister . . .

MR. MACISAAC: Can I just clarify that? Our objective was to ensure that no municipal unit would get less and so when we altered the model, we altered it in a way that would ensure that that happened. Had we altered the model for HRM, then HRM would have wound up getting about $1 million less.

MR. PYE: So HRM received no more, but they received no less. So it was neutral in the position of HRM is what you're telling me. We do know that the Minister of Finance has imposed some increases that will cost the municipalities and those increases are with respect to, one in particular, with respect to fuel, a 2 per cent increase in a litre of gasoline. This will cost the municipality to fuel their machinery, their equipment. It will affect their operating budgets. I'm wondering if the Minister of Service Nova Scotia and Municipal Relations has given any consideration to a prorated basis by which fuel tax is extracted from municipalities and putting that fuel tax back to those municipalities by way of a grant or by way of a gas tax fund?

MR. MACISAAC: The municipalities in this province are exempt from paying tax on their fuel. So the increase was not an issue for them.

MR. PYE: It was not. Okay, thank you. Let's look at the mandatory contribution to education. The mandatory contribution to education increased as a result of this budget. Am I to believe that through the equalization and providing all that funding and the increase in the mandatory contribution that will be paid by municipalities, the municipalities are still either in a surplus position or will be in a win-win situation?

MR. MACISAAC: Yes, they will. For instance, the increase in dollars received by municipalities from NSPI is in the vicinity of $12.2 million. That's a global figure and it includes the payment to host municipal units. If we look at the reduction, and there are a number of reductions that we should consider, one of them is the reduction in the

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contribution to equalization of $3 million, which we had spoken of previously. There is a benefit from the loss of restricted license plates and that's about $1 million, which would impact municipalities. There's the increase, as you indicated, to the mandatory municipal education costs of $5.1 million and there's a reduction in discretionary grants. If you do that sum and you subtract it from the $12.2 million, I believe we're still in net advantage of about $2.7 million. I'm going from memory now. You can check my arithmetic on this. So they're $2.7 million better off as a result of the equalization program. That does not at all take into account the fact that municipal units are being relieved of $6 million for community services' costs in this year. So, all together, their net gain from this budget is a figure of about $8.7 million.

MR. PYE: But that's not for all municipalities?

MR. MACISAAC: I'm speaking globally.

MR. PYE: You're speaking globally, yes, because some municipalities might very well see a reduction of some $1 million. I do believe for HRM there is considered, after their calculations, a reduction of $1 million. But they appear to be somewhat satisfied with the approach as of now, I think, is the appropriate comment to make. There is, for HRM, I understand, approximately $1 million in the difference.

MR. MACISAAC: Not quite $1 million. It is about $680,000, in that vicinity.

MR. PYE: I want to go to the assessments in coastal properties. You know this has been an extremely big issue with respect to the assessments and how they are done on coastal properties. I would like, Mr. Minister, if you can, to give me a brief assessment of how assessments are done on coastal properties and then if your government has a plan to review the assessments of coastal properties and if, in fact, you have looked at other jurisdictions and their approach to coastal property assessments, particularly when the property has been the homestead or in the family for many years, for centuries, as well? If you can give me a brief about that, I would appreciate it.

MR. MACISAAC: Indeed, we have spent considerable energy over the last number of months on this particular issue because it is an issue that, as you indicated, affects people, especially from the trans-generational perspective, people who do not wish to participate in the market. They are people who have had their property, some of them for hundreds of years, others a longer period of time, but the property is very important to the family and the family have a very keen interest in preserving that property. The assessments that have gone on around them have put them in a situation where the tax that they are being asked to pay is a real challenge for some of them relative to being able to retain that property.

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So we indeed did look at other jurisdictions. We looked at Florida, for instance. We looked at a couple of the Midwestern States. We looked at the California experience where in California they started to try to freeze the level of taxation that's paid or put it on a very narrow increase. That created a lot of havoc there. There isn't a good sound parallel between ourselves and California, but there's enough. When you look at the California issue, there's enough there for you to know that you would have to be extremely cautious before you ever thought of embracing that particular model.

The situation is Florida is different than ours in the sense that Florida has a much bigger non-resident issue than we have. But, nevertheless, there are some examples in Florida that were worthy of our consideration and we did look at them and examine them in some detail. We are coming to the conclusion that what we need to do in this province to address the issue of people who do not wish to participate in the market and wish to be able to hold on to their property is to develop a solution that's very much a made-in-Nova Scotia solution. I expect to be in a position to bring that forward in the coming weeks. As I indicated in Question Period the other day, it's a proposed solution that I will bring forward before the House rises this Spring.

[2:30 p.m.]

MR. PYE: Obviously, you've been working very hard on this and you're bringing a solution through the Assessment Act, I would assume, to address this particular issue or is it going to be a separate bill that addresses the issue with respect to the coastal properties' assessments?

MR. MACISAAC: It's still a work in progress. At this juncture, I'm not able to say whether we're going to be dealing with major changes to the Assessment Act or whether we would be looking at some other form of change with respect to this. So we obviously have some very fundamental decisions to make in the very near future, but we are reaching the stage where we're going to make those decisions and we will have legislation ready to bring forward.

MR. PYE: So we can be assured that legislation is coming forward this Spring?

MR. MACISAAC: Yes.

MR. PYE: I want to talk to you about another important assessment issue that sometimes we overlook, yet has a significant impact on communities and that is what I term the gentrification of a community. That is where a developer may come in and develop upscale residential development in a modest neighbourhood. The modest neighbourhood then gets assessed because of the upscale residential development that has taken place and the people who live in that modest neighbourhood are people who are normally on fixed incomes, average working citizens and they own their homes and are just barely paying their

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taxes now at that level. What happens is when the developer rolls in and develops a part of that community, a year or two later when the assessment department walks out and does an assessment, providing there's a home sold in that upscale neighbourhood, it has an impact on that entire neighbourhood. You know that, I don't have to tell you that.

As a result, some significant increases in assessments go up to the point whereby people no longer can afford to live in those neighbourhoods. Those are modest neighbourhoods, were built in the 1940s and 1950s and sometimes in the early 1920s when the town was developing and then expanded its boundaries to become the city and so on. They're squeezed out. So I'm wondering if your department has looked at the effects of assessments on old - can I say - staid neighbourhoods? Has your department looked at that particular issue?

MR. MACISAAC: Certainly not to the extent that we have focused on the shorefront property issue. I'm becoming aware that it is something that we should take under advisement and we should examine. That's as much as I would want to say about it now. I recognize what you're describing as being a situation that we need to look at and we will once this other issue we're dealing with has been completed and put to bed.

MR. PYE: I can think of some neighbourhoods without singling out a lot of them, but Halifax North, for example; Dartmouth North, for example; and in many major cities; like Sydney and so on where often this happens and we don't take into consideration the future impact that it's going to have on the property owner with respect to assessments. You have to realize that this is something that only reflects after the development has been in there for a couple of years, a property has been sold and then the significant increase in assessments takes place.

There was a Voluntary Planning task force interim report on non-resident land ownership in Nova Scotia. I know that interim report was passed on to the government. Has the government done an assessment of that report and is the government prepared to make any recommendations as to whether they support the report and its findings or if in fact there are some recommended changes within the report or if they're going to adopt the report at all?

MR. MACISAAC: Thank you for that question. We indeed are currently in the process of - I'm about ready to bring forward some recommendations to government relative to our response to that report. We're not going to be in a position where we can embrace everything that's in the report, but there are a number of things in that report and there are directions in that report that we want to move on. I can't predict how government is going to react when I bring the thing forward, but I can suggest to you that some issues, I believe, are relevant and need to be addressed - the issue of the extent of foreign ownership.

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As you probably know from previous discussions and the report, we have a rough estimate of the ownership issue within the province, but it is not precise because much of the information we have is based on the address of property, of where the assessment notices go. Some of those notices go to certain addresses and they're really in care of individuals who look after that or they may go to a legal address or something of that nature.

The Land Registration Act that was passed when I was here before is one that really didn't do an effective job of keeping track of ownership of properties. So we're going to beef up that to ensure that we can do that so that as we move forward, we will get a better handle of who owns the land in this province. That's certainly one of the things that we want to address. We would love to be in a position to be able to provide the Department of Natural Resources with a much larger sum of money. The report, I think, indicated a $3 million figure relative to that. We're not going to be there and I understand you're sort of in the midst of the minister's estimates relative to that.

I better not speak for another minister here, but at any rate, we would (Interruptions) no, I'm not. We believe that we need to be in a position to take advantage of opportunities to secure properties that may become available, perhaps not as rapidly as the report would have indicated. The issue of access to shorefront, that's something that we want to address and to find the solution to that is - let's say it's much easier said than it is done in terms of doing that, but it is certainly something that we would want to do.

I expect in the near future, depending upon government's reaction to the recommendations that I bring forward, to be able to provide a much more detailed response to your question. We're in the process of bringing forward recommendations to government relative to that report.

MR. PYE: Again, you imply that that report is coming forward, so I assume that it's coming forward this Spring, as well?

MR. MACISAAC: I'm not sure. I'm very reluctant to put time frames on things. I've been caught out in left field a few times after doing that.

MR. PYE: I'm just getting some sense of direction, Mr. Minister, as to when I can expect the report to come forward.

MR. MACISAAC: You can certainly expect to see it shortly after I've had an opportunity to present it to government. That's the question as to when I'm going to have that opportunity. It is something that's considered to be reasonably important by government to deal with. So I don't anticipate having to wait a long time to bring it forward, but I'm extremely reluctant to start putting dates on things. I did that with equalization and I don't want to do it again. When I have it, you will have it shortly after.

[Page 382]

MR. PYE: Mr. Minister, I believe back in, it may have been September or October, the Deloitte & Touche consulting firm provided a report examining a possible five options for delivery of assessments in Nova Scotia. I'm wondering if you can bring me up to speed with respect to where that report sits in your department, if anything has been acted upon at present and what direction your department may be going with respect to this issue. My understanding is that government was looking at the assessment being delivered possibly by a not-for-profit organization and, obviously, there would be consultation. So I have a number of questions around consultation with the UNSM. I have a number of other questions which I will bring to you later, once I get into the gist of where your department is with respect to this report.

MR. MACISAAC: Yes, we did receive a report and there has been a considerable amount of discussion and consultation with the UNSM and that process is not complete and I want to emphasize that. It is our intention to proceed with a stand-alone, not-for-profit agency that would deliver the service. That will be very much a management function. The policy of assessment, the legislation and regulations relative to assessment, would remain the responsibility of the province. We, I believe, in the very near future, will put in place a temporary board of directors so that that agency can be up and running. The reason that we're doing a temporary board of directors is because the UNSM have expressed the desire to extend the time for consultation. So we will not put in place a permanent board of directors, but it will be temporary to allow us to have additional time relative to consultation with the UNSM. So, in the very near future, I expect to be able to state that that body will be up and operating and will deliver assessment service within the province.

MR. PYE: So, Mr. Minister, I guess the board hasn't been established yet?

MR. MACISAAC: No, it hasn't.

MR. PYE: And you don't know what it will be called? Do you know what it will be called, the not-for-profit organization? Will it be . . .

MR. MACISAAC: No, I haven't spent much time thinking about what the name will be, but I suppose if we were to use the Canadian model, it would be Assessment Nova Scotia. If we were to use the Nova Scotia model, it was be the Nova Scotia Assessment Agency or some name such as that. That may be something that the UNSM may have some views on. I haven't really spent a lot of time thinking about what the precise name would be.

MR. PYE: Does the UNSM sit as a partner on the established board, or will they sit as a partner should be the question? Will they sit as a partner on the established board?

[Page 383]

[2:45 p.m.]

MR. MACISAAC: The board of directors that we have in mind, and I believe I'm correct in saying this, that the UNSM has a different number in mind than we do, but the number that we have in mind is a board of directors of nine and we would anticipate that the UNSM would have five of those nine members. We would anticipate two being from the department or the provincial government and two from the community at large.

MR. PYE: I guess that leads me to the question of how will it be governed and structured? Will it be a not-for-profit body on its own, at arm's length from government, doing assessments, or will it have its tentacles out to your department and will it reach into the UNSM and the municipality? I guess I just want to try to get a picture of how this thing is going to govern itself.

MR. MACISAAC: It will, first of all, be a stand-alone agency. It will be not-for-profit. It will be municipally controlled in the sense that the majority of the board of directors will be from the UNSM. It will operate independently relative to the delivery of assessment service within the province.

MR. PYE: I guess rather than say negotiating, you're consulting with the UNSM with respect to this agency and you're still in that consultative approach. I'm wondering where would such an organization be based? Have you given consideration or thought to where it might be based, Halifax, Sydney or Yarmouth?

MR. MACISAAC: I'm open to suggestions.

MR. PYE: You are? But you haven't given any consideration?

MR. MACISAAC: I have not made any final decision, no.

MR. PYE: Has the UNSM given consideration to where it will be based?

MR. MACISAAC: I don't know.

MR. PYE: I guess another question, because this is new and it's going to be coming and I think you're going to be announcing it shortly, Mr. Minister, I think that you might even be announcing it this Spring. I don't know if you're that close or not. There may be a lot of work and fine tuning to do to bring it in place . . .

MR. MACISAAC: I hope you're right.

[Page 384]

MR. PYE: . . . but I do know that you have a deadline and you have some timelines set up. I guess my question is, what will be the legislative and regulatory measures that will be taken to administer this not-for-profit organization? Can you explain to me briefly what that might be?

MR. MACISAAC: It would require an amendment to the Assessment Act in order to create the agency. There obviously would be the need for some regulations relative to that. Those regulations may have more to do with perhaps a realignment of responsibilities from department to agency, wherever that's appropriate. So there may be a lot of words required to accomplish it, but it may not affect the fundamental delivery of service all that much because we do not see, in the short term, at least, any revolutionary change relative to the delivery of assessment service. But what we want to do because we were asking municipal units to pay for that service, we wanted them to have the opportunity to participate in the delivery of that service and that's why we looked at the stand-alone agency.

MR. PYE: I think in fairness, Mr. Minister, the municipalities wanted in because they were paying for the service as well. They wanted in as a result of that.

MR. MACISAAC: Occasionally, we want the same thing that municipalities want.

MR. PYE: You do. But I think the municipalities made it quite clear that if in fact they were going to be responsible for the assessments, the cost of assessments, then there was a need for them to be up front and be a part of that structure.

MR. MACISAAC: Just for the record, I have never, ever taken issue with that. I fully support that concept, it only makes sense.

MR. PYE: Thank you very much. The other question is, there is a whole other issue around this and I don't know if you have had conversation, and you probably have; there are the assessors themselves, these people who are employees of government who, in fact, are in this assessment department and who, in fact, the government may honour their agreement up until such time as the organization then becomes a stand-alone organization and is responsible for the employees themselves. I don't know where government then fits in and if, in fact, government has made a commitment to the employees within the assessment department with respect to protecting their jobs - if you have, then you will certainly tell me - and if, in fact, you are able to commit to guaranteeing and assuring that their jobs are protected under the new agency or not-for-profit organization?

MR. MACISAAC: The tenets of the five-point plan apply in this particular instance, so that contracts that are in effect at the time of the transfer will remain in effect, as the employees move to the new agency.

[Page 385]

The benefits that are outlined within those contracts would move with them as well, so that - from the point of view of the benefits to the employees - it will be a seamless transfer.

Now, after the fact, after the contracts expire, then, of course, the employees have their options relative to decisions that they want to take beyond that.

MR. CHAIRMAN: You have 10 minutes remaining in your time.

MR. PYE: Oh, I am sorry, I didn't realize that time was going by so fast.

MR. MACISAAC: I should point out to you that one of the reasons that we have not - and it is only one of the reasons - that we have not concluded an agreement with the UNSM at this juncture is that the UNSM does not share our view relative to the five-point plan. They believe that they should be able to make decisions and set the terms under which these employees would be transferred and we will not allow that to happen. It is very clear, the terms under which they will be transferred.

MR. PYE: I think that is comforting, Mr. Minister, and also I think that you and I both will agree that the five-point plan is effective only as long as those individuals are employees of the government. Once the employees are no longer the employees of the government, and I believe that they recently signed an agreement so they probably have two years left in their collective agreement or something to that effect; if, in fact, there are two years left in their collective agreement and the agency then is in place, then government will have no control, if it doesn't enshrine something within legislation that will protect the employees moving over from government into a not-for-profit agency.

So I guess, Mr. Minister, can you give me assurances beyond their contract and beyond the point whereby they become employees of the not-for-profit organization, if these individuals are going to be protected?

MR. MACISAAC: The level of protection is that which would be provided through their contract, which would move with them. Beyond that, the employees also have decisions that they can take relative to their future employment and representation relative to their collective bargaining interest.

MR. PYE: You did indicate earlier that this is not a favourable position from the UNSM. The UNSM does not agree that they should be tied to this responsibility, I guess. I guess that is one of the other things that you will be discussing over the term in which you reach final resolution on this issue. Correct?

MR. MACISAAC: Yes.

[Page 386]

MR. PYE: I want to come to another issue with respect to municipalities or towns that find themselves in difficulty. I don't know if your department, Mr. Minister, communicates with the Minister of Economic Development or any other governmental department that would be essential to assist communities or towns in what one would consider difficulties or crisis situations. The town I want to refer to is the Town of Canso. You and I both know that there was one mainstay of industry in the Town of Canso, that was, in fact, the fishing industry. They were relying on the federal government to provide quotas in order to sustain the employment so that individuals who were living in that town could continue to remain there.

When I look at the final census report I see there are a number of municipalities and towns that are declining in population. All that has an impact on the delivery of services to the existing community. It also has an impact on how government is going to look at those municipalities in respect to how they can sustain themselves.

My question to you is, has your department given some very serious consideration with respect to developing some sort of a framework or a policy that deals with - or I should say addresses - the issues of municipalities in crises?

MR. MACISAAC: The equalization program (Interruptions) Just be patient, okay, was an attempt to deal, first of all, fundamentally with municipal units that were having difficulty delivering service because of the level of service they were being asked to provide and the corresponding tax base within their boundary, relative to being able to pay for that level of service. So on the one hand, we wanted to do that.

We are also cognizant of the fact that municipal units must be organized in such a way that they have the capacity to be able to meet certain standards relative to the delivery of those services. So we are requesting and requiring that municipal units meet certain performance standards. There comes a time, or there may come a time, when a municipal unit has to seriously question its status as a municipal unit. We, as a government, are not going to prop up a municipal unit when it is not viable for that municipal unit to continue with its current municipal status.

Now, having said that, I want to point out that we also take very seriously our responsibilities as a department and work with other government departments to address the economic concerns that municipal units have. Even if we were to inject continuous dollars into a municipal unit to prop it up artificially, from an operations perspective, we would do nothing to address the fundamental economic problem that exists within that municipal unit. So, we do work with Economic Development, with the Department of Fisheries, in the case of the Town of Canso, the Department of Community Services, we are a partner with them in terms of attempting to address the fundamental problems of that town. Relative to the status - I am not talking about just Canso here now, but of any municipal unit - it must be

[Page 387]

viable in its own right in the long run, and we are not going to get into situations of artificially propping up operations that are not viable.

[3:00 p.m.]

MR. PYE: Mr. Minister, I think you're quite right in assuming that the municipal units, as operations, have to be somewhat viable, but I don't think that we can sit and watch municipalities diminish in status - for example, go from town to village status - because that has a significant impact on the equalization payments that they're going to receive, the kind of tax base that's going to be available to them as municipal units, all of which makes it extremely difficult for them to push themselves back up again if there is a future or new development that comes into the town or the municipality.

I guess my question to you is, there must be some short-term suggestions to addressing these issues on a short-term basis while you look at the picture in a bigger way, to bring back the life of a municipal unit, if in fact it starts to falter. You're absolutely correct, it's not only Canso, there are other small towns along the Eastern Shore - well, they're not actually towns because they're all now under the umbrella of HRM - but along the South Shore of Nova Scotia, as well, and in Cape Breton. My question to you is, I hope I didn't hear the comment that there is not going to be some justifiable look at stabilizing municipal units so that they don't diminish in status.

MR. MACISAAC: The fundamental objective of the enhanced equalization program is to provide municipal units with the opportunity of moving forward. When they get in difficulty beyond that, and it appears to be inevitable that that is not going to change, then some serious decisions have to be taken. There isn't any point in putting off those serious decisions. Sometimes it may mean that a municipal unit, in fact, if it were to change its status, would suddenly become part of a municipal unit that's much more viable and perhaps in a much better position to continue providing services to individuals because it has a much different tax base.

MR. CHAIRMAN: The time has expired for the NDP caucus. I am now transferring time to the Liberal caucus.

The honourable member for Cape Breton The Lakes. Mr. Boudreau, your time is now 3:01 p.m.

MR. BRIAN BOUDREAU: Thank you, Mr. Chairman. Good afternoon, Mr. Minister. The first thing I want to say is that I agree with your comments in regard to your staff, because in my prior life I did have some business that I did with your department. Mr. Stonehouse and his staff are very capable. I think that showed particularly true with the equalization scheme that your government was embarrassed over this year. If not for their abilities I think you would be in a lot bigger mess than you are right now, actually.

[Page 388]

Congratulations on the abilities of your staff, and perhaps you could say a little prayer to thank them for their abilities.

The first thing I want to talk about today is the equalization fund. Nova Scotia Power - could you tell me how much they are going to pay this year in municipal taxes?

MR. MACISAAC: It's $26 million, but I want to point out that the additional amount, over and above what they had planned to pay, the cash flow of that amount of money will occur in Nova Scotia Power's fiscal 2003, not fiscal 2002. So the impact on Nova Scotia Power will be that they will pay, in 2002, an amount of money equal to what they were previously scheduled to pay. We're able to accomplish this because of the difference in the fiscal years between Nova Scotia Power and the Government of Nova Scotia. Our fiscal year is the first of April to the end of March; Nova Scotia Power's fiscal year is the first of January to the end of December.

MR. BOUDREAU: I want to understand this. How much is the difference?

MR. MACISAAC: How much is the difference? They were originally scheduled to pay $15.7 million . . .

MR. BOUDREAU: So the difference is approximately $11 million, $12 million?

MR. MACISAAC: . . . and they have gone to $26.4 million, so it's a $10.7 million increase.

MR. BOUDREAU: Are you going to spend that money this year?

MR. MACISAAC: Yes, it will be spent and flow to the municipalities in fiscal 2002-03.

MR. BOUDREAU: So you're actually going to spend the money this year, and pay for it next year. Is that correct?

MR. MACISAAC: No. In our fiscal year, the fiscal year of the Government of Nova Scotia, all of the money will be spent in this fiscal year.

MR. BOUDREAU: When?

MR. MACISAAC: In 2002-03.

MR. BOUDREAU: When do the equalization payments go out?

MR. MACISAAC: They go out throughout the year.

[Page 389]

MR. BOUDREAU: They go out throughout the year. So . . .

MR. MACISAAC: Quarterly, they go out quarterly.

MR. BOUDREAU: Is there a cost to service this amount of money?

MR. MACISAAC: It's just a normal cash flow, and it goes quarterly.

MR. BOUDREAU: Mr. Minister, I wouldn't suggest that a cash flow is a normal cash flow of $10.7 million. I want to know, very clearly, if there are service charges associated with this $10.7 million, that the taxpayers will be left holding the bag? Will this cost be passed on to Nova Scotia Power?

MR. MACISAAC: That amount of money, the $10.7 million, we've indicated to Nova Scotia Power that they can pay that in the last quarter of the Government of Nova Scotia's fiscal year. That is when that money would flow to the municipal units.

MR. BOUDREAU: The municipal units shouldn't expect to get any money until March, is that correct?

MR. MACISAAC: No, that's not what I said. It's paid quarterly. They will receive the full amount of the money which we put on the table. The only issue here is when Nova Scotia Power will pay the entire amount to the Government of Nova Scotia.

MR. BOUDREAU: Your government is borrowing this $10.7 million and providing it to the municipal units. Now, Mr. Minister, I'm familiar with operations with the government. In fact, the operation money this year has been borrowed already, so you're operating on borrowed money. There is a service charge for that borrowed money. Is this calculated into the amount of money that NSPI pays your government?

MR. MACISAAC: I'm not sure I fully appreciate your question, but I will do my best to address it. We pay, as a matter of course, to the municipal units, their equalization on a quarterly basis.

MR. BOUDREAU: When's the first quarter?

MR. MACISAAC: The first quarter for us will conclude at the end of June. The first payment that goes to the municipal units would go in June. That would be approximately $6.5 million.

MR. BOUDREAU: When would the next quarterly payment be?

MR. MACISAAC: Three months after that.

[Page 390]

MR. BOUDREAU: So every three months you pay.

MR. MACISAAC: September. Yes.

MR. BOUDREAU: You're not concerned about the amount of interest that your government will be paying?

MR. MACISAAC: There shouldn't be any real interest question here, because NSPI will be paying the money that they had previously planned to pay on the basis, and it all comes out of the general revenue of the province. There isn't a fund that NSPI money goes into and then we take out of that fund. We do guarantee the municipal units that every cent that NSPI pays will, in fact, flow to them, but it all goes into the general revenue and then we make the payments and they're all scheduled and they're all part of the budget. We will have on hand the money we need to make the payments to the municipal units when those payments come due.

MR. BOUDREAU: Absolutely, there's no doubt about that in my mind, taxpayers' money, borrowed taxpayers' money, and there is a cost to service that money.

MR. MACISAAC: It's not going to be borrowed money. We have a balanced budget this year, so we're not dealing with borrowed money.

MR. BOUDREAU: We will see. In regard to UNSM, were they consulted throughout the process?

MR. MACISAAC: The honourable member would know that we have had a long process of consultation with the UNSM relative to the whole equalization concept. We did reach a stage in early December where we felt that the proposal of the UNSM was not a proposal that they were going to embrace in a manner that was adequate to allowing that program to go forward in a positive, productive manner. So we said we were not going to go forward with that. We did indicate to them that we would, in fact, develop an equalization program, that we would bring it forward so that it would be in place prior to April 1, 2002. We did that and, prior to its announcement, I was able to brief the president of UNSM, and he did attend that particular announcement and I believe you were there on that day as well.

MR. BOUDREAU: On that particular day I was, Mr. Minister. There were three proposals. In fact, the first proposal, UNSM appeared very surprised, and many of the municipal units were unaware that there was any consultation at all. In fact, they denied that there was any consultation ongoing between your department and the UNSM. I know on the other two proposals your department did consult with them.

[Page 391]

MR. MACISAAC: Just for the record, Mr. Chairman, I want to point out that the first proposal that was brought forward by this department was brought forward for the purpose of consultation.

MR. BOUDREAU: That was to create the process?

MR. MACISAAC: It was not brought forward as a done deal. It was brought forward to form the basis of a discussion. Before the day was out, the UNSM and people associated with the UNSM had blown the proposal out of the water. So it was interpreted by them as being a done deal. It was never intended that it be a done deal. It was intended that it be brought forward for the purposes of consultation. So I just want to make that clear, that the UNSM, from day one, disassociated themselves with that particular proposal and we eventually said to them, you go ahead and take some time. We gave an extension and we came to an agreement that as long as we had something in place prior to April 1^st, the UNSM would be in agreement, and we provided some additional time for them to come forward with their proposal. We spent a lot of time evaluating and considering that particular proposal.

I appreciate your comments about staff and the assistance that they have been to me relative to this particular proposal, but I do take issue with the use of your word as a failure. We, in fact, brought forward proposals. The final program that we've put in place is one that we're very pleased with and I will not take a back seat to anybody relative to that particular proposal.

MR. BOUDREAU: Given the fact that your government continually downloads, many of the wardens and mayors in this province, Mr. Minister, are not in support of your equalization. It's take it or leave it; they have no choice, they're taking it. It does not suit the needs of the people whom they represent, and they are telling you that directly. Yet your formula continually falls short. For instance, in the CBRM the mayor very clearly and publicly has stated tax increases as a result of the downloading and the inability of your department to provide a proper equalization formula to that municipal unit. In the Halifax Regional Municipality, the mayor in this particular city indicates that $5 million, this equalization formula will cost you, including some downloading that you, and your government prior to you being appointed minister, indicated very clearly to these municipalities that there would be no further downloading.

[3:15 p.m.]

MR. MACISAAC: Mr. Chairman, I can be extremely patient, but when facts are being misrepresented, the fuse gets a bit short. Here's the situation with respect to the Cape Breton Regional Municipality. They are receiving an additional $794,313 as a result of the NSPI. They are receiving an additional $1,974,862 from the revised equalization program. Their contribution to education has reduced this year, reduced, Mr. Chairman, by $225,503.

[Page 392]

Their contribution to social services has been relieved; they have been relieved of their contribution to social services by an amount of $795,000. The total impact on Cape Breton Regional Municipality is an additional sum of money of $3,789,678 and, as I have indicated in the House the other day, if you're having difficulty doing that math, I will gladly loan you a calculator.

MR. BOUDREAU: I need the calculator, I really do. When the municipality comes forward and tells you that they need a certain amount of money to balance their budgets, then you provide the formula far shorter than what that municipality required or indicated, at least, that they required. In fact, your formula, Mr. Minister, your proposal provided more money, the first proposal to that municipal unit, then you did with your closing formula. How do you explain that?

MR. MACISAAC: What I can explain is that the amount of money that CBRM is receiving under this equalization program meets the long-range fiscal plan of the Cape Breton Regional Municipality. It meets it.

MR. BOUDREAU: According to who, Mr. Minister?

MR. MACISAAC: According to the administrator of the Cape Breton Regional Municipality.

MR. BOUDREAU: Do you have that in writing?

MR. MACISAAC: I'm not sure if I have it in writing, but I've certainly heard it and I believe even the mayor has indicated that it meets the 5-year plan.

MR. BOUDREAU: Mr. Minister, the mayor has very clearly, publicly in the newspaper on a regular basis . . .

MR. MACISAAC: I understand what the mayor wants. The mayor wants full taxation from Nova Scotia Power. That's what the mayor wants, and full taxation from Nova Scotia Power is not something that is going to happen. We've made an initial step relative to the issue of Nova Scotia Power. What the final outcome of that will be, we will have to wait and see, but in two years time we will have in place a more definitive policy relative to the issue of utility taxation. The amount of money that CBRM is receiving, net change, this year, is approximately $3.8 million and they fare very well relative to any plan.

MR. BOUDREAU: What about the other municipal units? I don't want to dwell on - how many municipal units require equalization in this province, are you aware? Do you know how many require equalization to begin with?

[Page 393]

MR. MACISAAC: How many require equalization? We have determined that each town in this province should receive a foundation grant of $50,000, and we have provided each town with that amount of money. We have determined that no municipal unit should receive less, as a result of the equalization program, than they had received previously. The list that's in front of me is a list that shows zeros with a lot of rural municipalities because they did not receive less. The formula agreed to, the formula agreed to by the UNSM and the department would have resulted in its application in rural municipalities receiving less money than they had received previously. We allowed for those municipalities not to receive any less, and provided funding to ensure that they didn't receive any less. I believe it was $1.5 million that we made available to them to ensure that they didn't receive any less.

I'm going back to your question in the House, I seem to detect some difficulty in following what we are saying here. The net impact is that no municipality in this province is receiving less money as a result of this equalization program than they had received previously.

MR. BOUDREAU: How many are receiving the same amount as last year?

MR. MACISAAC: How many are receiving the same amount in equalization?

MR. BOUDREAU: Yes.

MR. MACISAAC: All of the rural municipalities are receiving the same amount as they received last year. I can tell you that amount of money that they are receiving in equalization is approximately $5.3 million. Those who are receiving the same amount are receiving $5.3 million in equalization.

MR. BOUDREAU: How do you, sir, suggest that they absorb the downloading costs that your government is imposing on those municipal units?

MR. MACISAAC: I would submit to you that very few municipal units in this province are receiving less money as a result of the education payments - and factoring in the social service factor - than they had received last year. The largest reduction that I see of any municipal unit is for HRM in the amount of $683,000, next to that none of the towns received less, and the largest number I see for rural municipalities is an amount of $63,000 less than received previously. That's attributable to the change in education.

MR. BOUDREAU: That's not my question, Mr. Minister. My question is simply that the rural municipalities that you're providing the same amount of money this year as last year, with the added downloading costs that your government is forcing on them, why do you feel that that is a fair shake for those rural municipalities? You, Mr. Minister, sat here today and justified increasing fees and recoveries for cost recovery. How do you suggest that these

[Page 394]

municipal units are going to acquire the funding that is necessary to continue their normal operations?

MR. MACISAAC: The rural municipalities, the net impact of the social service, the change in education, and the equalization program, they are ahead by an amount of over $300,000 as a result of these programs.

MR. BOUDREAU: Your policies are forcing municipalities to increase property taxes.

MR. MACISAAC: We don't anticipate any municipality should have to increase property tax as a result of this.

MR. BOUDREAU: So you don't recognize local governments have the same difficulty as your own department, when you redefine why your fees increase and your recovery costs increase. Mr. Minister, you're aware that they're not allowed to operate with a deficit, legally. How do you propose those municipalities to run on the same operating budget as last year without increasing property taxes?

MR. MACISAAC: Those municipalities I indicated earlier, all of the municipalities in this province are ahead by an amount of over $8 million.

MR. BOUDREAU: By your lack of response it indicates very clearly to me, at least, that you know full well that the municipal units are being forced to increase property taxes.

MR. MACISAAC: I provide no guarantees you're going to like the response, but the response is that they're ahead by over $8 million.

MR. CHAIRMAN: Order, please. I would just like to remind members of the committee when asking or answering questions that they not do it simultaneously.

MR. BOUDREAU: Do you understand what downloading means? Do you feel your department is downloading costs to municipal units?

MR. MACISAAC: We feel that we have provided sufficient funding and support to municipal units for them to be able to provide the essential services they have to provide in this province, and that's what we're committed to doing.

MR. BOUDREAU: So you anticipated how much, for instance, fire inspections are going to cost the municipalities to establish the system to pay the assessors to put the complete system in place. How much is that estimate?

[Page 395]

MR. MACISAAC: There's a fundamental difference in the concept of downloading and the concept of taking responsibility for those areas over which you have jurisdiction. Municipal units have jurisdiction for providing fire protection service in this province. Municipal units have the responsibility to keep up-to-date, relative to fire protection. They have a responsibility to meet standards. So, that is their job. Our job is to provide health care. Our job is to provide up-to-date health care, and we struggle to meet that particular objective. We had to put an additional $130 million into health care in this province this year.

There is no guarantee that municipal units in the conduct of their responsibilities are not going to have to look for more money in order to provide those services. It is never been anticipated that we should have to subsidize the provision of those services. We do recognize that we have to assist those municipal units to provide that service when their tax base is insufficient to allow them to do so and that is why there is an equalization formula in this province, but simply because the provision of a service becomes more expensive, as municipal units are required to meet certain standards, is not downloading.

MR. BOUDREAU: That's your opinion, Mr. Minister.

MR. MACISAAC: I will defend that opinion anywhere.

MR. BOUDREAU: Let's see what the municipalities say at election time. Your department's contribution, or your government, is reduced by $3 million in the equalization. Is that correct?

MR. MACISAAC: I said that in my opening remarks.

MR. BOUDREAU: Yes. Why? Given the consideration of the shortfall that the municipalities are crying - I'm sure you read newspapers, Mr. Minister.

MR. MACISAAC: Municipalities, through NSPI, they're receiving an additional - well, it depends on what number you want to take. Let's take the net impact of all of the services we indicated. Even with the $3 million reduction, the impact on municipal units is that they are $2.7 million ahead, relative to our equalization program, and when you put on top of that the social services cost of $6.6 million, then they're ahead by $9.3 million. You can cut that anyway you want; it's still $9.3 million and it's still an increase.

[3:30 p.m.]

MR. BOUDREAU: Mr. Minister, sometimes if you say it over and over people will begin to believe you, but people in this room are not going to believe it. They know the difference, sir.

[Page 396]

MR. MACISAAC: I think I can accept the fact that I'm not going to get you to believe it, but the fact is it is $9.3 million additional.

MR. BOUDREAU: Okay, let's get into staff. Do you have any staff difficulties?

MR. MACISAAC: There are 920 employees in the department, and they are all human, and the answer to your question is, yes, there are, from time to time, difficulties with a staff that large.

MR. BOUDREAU: How many grievances are posted?

MR. MACISAAC: Sixteen.

MR. BOUDREAU: Sixteen, is that a correct figure?

MR. MACISAAC: That's the figure I have just been given.

MR. BOUDREAU: Sixteen is the figure, because I have a larger figure, sir. So I just want to be sure on the figure.

MR. MACISAAC: That's what the figure was two weeks ago.

MR. BOUDREAU: How much do you anticipate these grievances will cost your department?

MR. MACISAAC: They're outstanding grievances. They've not gone through the process, so it's very difficult to tell what the final cost will be.

MR. BOUDREAU: I'm going to be fair. I'm going to be asking questions to one of them in regard to grievances and some information that I have in my office, and I will be bringing it here tomorrow during estimates to ask several questions in regard to several issues that are ongoing in your department. So I want to be fair and indicate that, sir.

MR. CHAIRMAN: Just to remind the member, you have 30 minutes remaining in your time and there will be no estimates conducted tomorrow because it will be Opposition Day.

MR. BOUDREAU: I will bring it up in the House, Mr. Chairman, Thursday, pardon me.

MR. MACISAAC: Mr. Chairman, I want to make one thing clear. We will gladly deal with any global questions any member has relative to matters like grievances and that sort of thing, but when it comes to the details of individual employees, that will not be

[Page 397]

discussed at this table, and I don't think anybody would want us to get into those discussions at this table.

MR. BOUDREAU: Absolutely not. I never suggested for one minute that I would bring individual cases in here, Mr. Minister. I did not indicate that.

MR. MACISAAC: We're clear on that and we agree on that?

MR. BOUDREAU: Yes, we are. How many hirings did you have this year, sir?

MR. MACISAAC: How many what?

MR. BOUDREAU: How many people did you hire for your department?

MR. MACISAAC: We will have to take that on notice and get back to you.

MR. BOUDREAU: Were there any full-time positions filled in your department last year?

MR. MACISAAC: Yes.

MR. BOUDREAU: Could I ask when you bring the numbers in that you bring in both numbers, please?

MR. MACISAAC: Yes.

MR. BOUDREAU: Discretionary grant programs, could you indicate how much money is left in those programs?

MR. MACISAAC: Which programs?

MR. BOUDREAU: Discretionary grant programs.

MR. MACISAAC: Discretionary grants.

MR. BOUDREAU: Yes.

MR. MACISAAC: What area in particular, discretionary grants . . .

MR. BOUDREAU: I noticed in your opening comments that you referred to them, so I'm just wondering how much are in those programs. It's on Page 6 of your opening comments.

[Page 398]

MR. MACISAAC: Thank you for your patience. The money that was referenced there, for instance, there has been a reduction in local government studies of about $100,000 and a community grants reduction of about $100,000.

MR. BOUDREAU: How much is remaining in the programs?

MR. MACISAAC: In local government studies there is $150,000 remaining, and in community grants there's an amount of $583,800 remaining.

MR. BOUDREAU: Okay, your budget, as you indicated, is about $7.9 million smaller than last year. Can you tell us why?

MR. MACISAAC: Well, we've already referenced the $3 million change in the equalization fund, so that accounts for $3 million of that $7 million. Another $3.5 million can be accounted for as a result of extending our contributions to the Canada-Nova Scotia Infrastructure Program from a period of five years to a period of seven years, the cash flow that would occur there would take place over seven years as opposed to five years. That accounts for the bulk of the $7 million.

MR. BOUDREAU: So Nova Scotia Power's contribution in lieu of the grant is approximately $8 million more this year than it was last. Is that correct?

MR. MACISAAC: No, $10.7 million. That's the increase in the amount of money that Nova Scotia Power is paying in municipal taxation.

MR. BOUDREAU: Could you tell me what the total amount in lieu of taxes NSPI will pay beginning this year?

MR. MACISAAC: What I can do is give you the amount of money that they paid last year, 2001-02; it was $13.7 million. Before we announced the equalization program, they were scheduled to pay, this year, an amount of $15.7 million. As a result of the announcement of the equalization program, they're paying $26.4 million.

MR. BOUDREAU: So they are paying $15.7 million more this year? Is that the correct figure?

MR. MACISAAC: No, no, that $15.7 million was the amount of money that NSPI was scheduled to pay had there not been the equalization program; $26.4 million is the amount that they are now scheduled to pay.

MR. BOUDREAU: And $8 million of that $26.4 million is put into the equalization fund, is that correct?

[Page 399]

MR. MACISAAC: Let's see now, I think I have it here. The equalization fund went from $21 million up to $29 million.

MR. BOUDREAU: How much of the $26.4 million that NSPI pays in grant in lieu of taxes is . . .

MR. MACISAAC: It's $5.7 million.

MR. BOUDREAU: It's $5.7 million?

MR. MACISAAC: Yes.

MR. BOUDREAU: Is that the figure put into the equalization formula?

MR. MACISAAC: That is an amount of money that they were going to pay - no, that would have been enhanced as a result of the host municipalities, would it? (Interruption) No. Okay. Yes. Sorry. That number is consistent. That number, the grant in lieu of taxes is what they had paid previously and it is what they will continue to pay. I can just give you a breakdown of the finance recovery. There was a program, and it's still in place, where NSPI pays an amount of money which is an HST offset fund and that was paid by NSPI and the province advanced the money to the municipal units, but it was not on a strict dollar-per-dollar basis. It began with the province paying a larger amount to the municipal units than NSPI was paying to the province and the object of the plan was that the province would recover its contribution in the out years of the agreement, and as a result of that particular program we were scheduled this year to receive an amount of $4 million, and what we were able to do to provide additional money to the equalization program is to extend that over a longer period and we're only recovering $2.5 million of the $4 million.

So that provided $1.5 million which we were able to use relative to the equalization program. There is an amount of $6 million which is part of the HST offset that's paid by NSPI; the host municipal units are receiving $2.4 million; equalization is the bigger of $8.25 million; and the foundation grant is an amount of $1,550,000. So that's the total break-out of the complete equalization funding.

MR. BOUDREAU: Can I ask that that be tabled, please. I want to get this straight, Mr. Minister, you collect approximately $26.4 million from NSPI now, is that correct?

MR. MACISAAC: Yes.

MR. BOUDREAU: And you have put approximately $8 million into the equalization fund. How much of that $26.4 million goes into the equalization fund, all of it?

[Page 400]

[3:45 p.m.]

MR. MACISAAC: I can table this for you. In 2001-02 the municipal equalization was $24,226,998. This year the equalization will be $29,487,288. The increase there is $5,260,290. Now the NSPI grant in lieu of taxes last year was $5.7 million. This year, 2002-03, it is $8.1 million and that is an increase of $2.4 million, and that $2.4 million is the amount of money that goes to the host municipalities. So it is part of the NSPI payment, but it goes to the host municipalities, and I believe CBRM received $794,000 of that for example.

The foundation grant did not exist in 2001-02. In 2002-03 there's $1,550,000 which is going to each of the towns within the province and that, of course, is an increase of $1,550,000. The HST offset, which was an amount of $6 million in 2001-02, will remain at $6 million for 2002-03. So the total flow of money to municipal units relative to the equalization, the NSPI grant in lieu, the foundation grant, the HST offset, in 2001-02 was $35,926,998. In 2002-03 the total flow of money to municipal units from those programs, municipal equalization, NSPI grant in lieu of taxes, foundation grant, and the HST offset grant, is $45,137,288 and the increase that represents is an amount of $9,210,290.

MR. BOUDREAU: So how much money does NSPI contribute to the equalization formula this fiscal year?

MR. MACISAAC: It's $8.25 million.

MR. BOUDREAU: What happens to the rest of it?

MR. MACISAAC: Well, $6 million goes to the HST offset which flows to the municipalities; $1,550,000 goes to the foundation grant for towns.

MR. BOUDREAU: What happens to the rest?

MR. MACISAAC: I think that would account for the increase if my numbers are right. Does that account for the increase? (Interruption)

MR. BOUDREAU: Okay, maybe it's the way I'm asking the question. Perhaps it's the way I'm asking the question, so I will rephrase it. NSPI now contributes approximately $26.4 million to the Province of Nova Scotia?

MR. MACISAAC: To municipal units in the province.

[Page 401]

MR. BOUDREAU: To the Province of Nova Scotia. The province then administers it and shares it, but what I'm interested in is how did you get to the figure of $8.1 million or $8.2 million - you know we have to take into consideration, Mr. Minister, that your department removed $3 million from this fund.

MR. MACISAAC: That's right.

MR. BOUDREAU: How did you get to the $8.2 million? Why wasn't it $11.2 million or $5.2 million? Why $8.2 million?

MR. MACISAAC: The $26.4 million that you're asking about is composed of the following amounts of money: there are grants in lieu of taxes of $8.1 million, and this is distributed among municipalities on the basis of NSPI property assessment, with the proviso that no municipal unit will receive less in NSPI grant in lieu of funding than it received in the fiscal year 2001-02; the municipal HST offset program of $6 million, and that is consistent with what went on in the previous year; municipal equalization of the $26.4 million, $8.25 million goes to the municipal equalization; the foundation grant, which I've already described for you, is $1.55 million; and the HST offset recovery is an amount of $2.5 million, and this recovery is related to the funding advanced to municipalities by the provincial government as part of the HST offset agreement.

The total amount outstanding, that is the total amount paid out to municipalities less the amount received from NSPI, as of March 31, 2002, is $10 million. Instead of being recovered at the rate of $4 million per year over the next two years and $2 million in the year thereafter, as planned, the amount will be recovered at the rate of $2.5 million a year for the next four years. So that is a change. The HST offset recovery would have been $4 million, it is now $2.5 million, and what that did was free up an additional $1.5 million.

When you add that $1.5 million to the foundation grant of $1.55 million, the municipal equalization of $8.25 million, the municipal HST offset of $6 million, and the grant in lieu of $8.1 million, you get an amount of $26.4 million that NSPI pays to municipal units in this province.

MR. BOUDREAU: Could you provide the figures for last year?

MR. MACISAAC: Yes. Last year there was a $5.7 million grant in lieu of taxes, municipal offset of $6 million, and there was the HST recovery of $4 million, for a total of $15.7 million.

MR. BOUDREAU: Really, in all fairness to the municipal units, $8.2 million is not as large, actually that's only the amount of money that your department removed from the budget in fact.

[Page 402]

MR. MACISAAC: No, no. We removed $3 million. The additional equalization money flowing from NSPI is $8.25 million.

MR. BOUDREAU: So it's really only an increase of $2.5 million from last year's figure.

MR. MACISAAC: No, no, it's much bigger than that.

MR. BOUDREAU: That one line, Mr. Minister, it's pretty clear. If it was $5.7 million last year, and it's $8.2 million this year . . .

MR. MACISAAC: Last year NSPI paid nothing in municipal equalization; this year they pay $8.25 million in municipal equalization.

MR. BOUDREAU: So your department put forth an equalization formula and you didn't take into consideration any of the downloading or extra costs - if you don't want to call it downloading, that's fine, that's your perception, but you, as the minister, are responsible to recognize that the municipalities this year, Mr. Minister, will be burdened with the cost of hiring fire inspectors - you've been around the municipalities a little bit, you know - and there's also assessment costs, and there are other costs, many of them, and you took none of those into consideration when you were setting this formula did you?

MR. MACISAAC: Those are all parts of the cost of municipal governments doing business. What we attempted to address was the issue of the provision of service and the tax base relative to that provision of service. That's what the equalization concept is all about.

MR. BOUDREAU: Perhaps you're not aware - are you aware that your government, in particular your Leader, committed not to download to municipal units or to provide extra costs, that downloading was wrong and that it would not occur under the administration if he was elected Premier? Are you aware of those commitments?

MR. MACISAAC: Providing an additional $9.3 million to municipal units is not what I would consider to be any movement away from that commitment.

MR. BOUDREAU: Why did you remove $3 million when you recognize that in your own department the increase in costs - and you just reflected on that when you justified the increase in the fees and the recoveries costs, you reflected on that fact, why do you feel it's any different for the municipalities in this province?

MR. MACISAAC: As I've indicated, we're providing an additional $9.3 million to municipalities as a result of our programs.

[Page 403]

MR. BOUDREAU: Mr. Minister, the municipalities in this province have clearly indicated that that's simply not good enough.

MR. MACISAAC: I've had one municipal leader indicate to me that he was dissatisfied with the equalization program that we brought forward.

MR. BOUDREAU: I really don't read the newspaper on a regular basis, but the mayor of the Halifax Regional Municipality indicated that there's going to be a shortfall now of $5 million on their budget this year because of your formula, Mr. Minister. If you didn't read that on the front page of every major newspaper in this province - I mean in reality, really.

MR. MACISAAC: The programs from my department, as they impact on HRM, result in HRM receiving no less relative to equalization and no change relative to NSPI. They do receive an additional $3.3 million through social services. The change in education is a simple application of an existing program that municipal units are expected by law to participate in in this province. The amount of $683,000 is the amount that HRM is being expected to contribute to, and they seem to, from all accounts that I've heard, feel that they can account for that and handle it within their budgetary allotment.

MR. BOUDREAU: Do you understand what downloading means? Do you know that that term means?

MR. MACISAAC: I think I have a fair idea, yes.

MR. BOUDREAU: So you don't regard your department as downloading any costs to the municipalities?

MR. MACISAAC: When I provide an additional $9.3 million to municipalities, the word "downloading" does not come to mind.

MADAM CHAIRMAN: Order, please. The member's time has expired.

The honourable member for Halifax Fairview.

MR. GRAHAM STEELE: Madam Chairman, if I could, my time for starting, according to your clock, is?

MADAM CHAIRMAN: It is 4:01 p.m.

MR. STEELE: Thank you very much.

[Page 404]

Mr. Minister, in the NDP caucus we divide your department between two critics. The member for Dartmouth North is the Critic for Municipal Relations; I'm the Critic for Service Nova Scotia. Virtually all of my questions will be related to Service Nova Scotia, except that I would like to start off with a couple, just to clarify what I heard on some of the municipal stuff, if I might.

The first one, in your opening remarks, if I understood correctly, one of the avenues that the department has used to save some money is in cutting out or cutting back on what you refer to, I believe, as discretionary municipal grants. I wonder if you could elaborate on what that means, please.

MR. MACISAAC: We have programs to assist municipalities with respect to studies. For instance, if they have a particular problem they want to address, we will participate with them in making a contribution. It might be an engineering study relative to the provision of additional water, or it could be something relative to the provision of sewer, some sort of plan. It might be some sort of a planning project; for instance, in the Strait of Canso area, the nine municipal units there are participating in a joint planning initiative to ensure that they are prepared for the developments that we hope will occur as a result of offshore developments. We have assisted them in getting going and getting themselves established, and will continue to work with them as they develop themselves relative to that planning initiative. It's that kind of money that we have. It's to be able to respond to needs as they arise, either through municipal units or through communities.

[4:00 p.m.]

MR. STEELE: Would it be at all possible to get an enumerated list of those items that were paid for, for example, last year? It would be helpful to have it in writing, I think. Is that possible, just to have in writing what you've just said verbally?

MR. MACISAAC: Yes.

MR. STEELE: There was another item that was referred to that with my non-accounting background I'm at a complete loss to understand, and really I'm just looking for you to explain further. I asked a question in the House yesterday of the Minister of Education who thought I was asking a trick question and was surprised and relieved to find out that I wasn't asking a trick question, so I want to assure you that, in all the questions I ask today, I've left my bag of trick questions at home, and I am really just genuinely looking to be educated here on some of these things. That's by way of background.

The item I'm referring to is the savings of $3.5 million that you referred to. In changing the terms of the Canada-Nova Scotia Infrastructure Program to stretch it out from five years to seven years, I wonder if you could just educate me on how that works and how that particular change saves the department $3.5 million.

[Page 405]

MR. MACISAAC: It doesn't in any way alter the agreement. The agreement still stands, and the term of the agreement remains in place. What it will do is allow us to spread the time in which we make those payments from a period of five years to a period of seven years. We have five years left in the agreement; instead of that money flowing over the five-year period, it will flow over a seven-year period. We have done this in consultation with the Government of Canada. They're aware of our plans relative to this and they will work with us to accommodate the cash flow.

You can appreciate that projects that are approved in the final year of the agreement, there's always a year or two prior to the expiry of an agreement, in wrapping up the agreement, because projects can get approved, we will say in the final year of the agreement or even in the second-last year of the agreement, they might be approved but the final cash flow relative to those programs may not take place until a year out or two years out so, this in a sense is some recognition of this. We hope that most of it can be accommodated in that sort of manner. Other parts of it, we may request that the federal government provide some of their money up front - they're aware of this - so that they would do the cash flow in the early period of the project and we would pick up the cash flow toward the end of it. That's my understanding of it; my non-accounting-background understanding of it.

MR. STEELE: Mr. Minister, like you, I'm not an accountant - although I did find $1 million yesterday. It's my understanding that the books of Nova Scotia are done on an accrual basis, not on a cash basis, so that the actual year when the cash flows is neither here nor there for terms of the budget, what matters is the year that the commitment is made, the year the obligation is incurred, so I'm at a bit of a loss to understand how, with just what we have unkindly in other contexts referred to as a wave of the magic wand, the department can record $3.5 million less of a liability on its books just by saying we're going to record it over seven years instead of five.

I don't really know what my question is out of this. I'm surprised that it's that easy to save $3.5 million when - if I'm understanding you, Mr. Minister, and maybe I'm not - the commitments are still being made within the original time frame. I don't really know what question I'm asking. Enlighten me. Maybe that's my question.

MR. MACISAAC: I will try. I will do my best here. There are projects that will be done under the Canada-Nova Scotia Infrastructure Program that have not yet been considered or even looked at from the point of view of approval. There is no commitment to projects that will in fact be done in the future. There isn't any great difficulty in putting off that flow of money until such time as the projects are in fact approved and then the money is committed to them. If we can work with the partners, the Government of Canada in particular, to have their money flow prior to our money, then we can meet our commitments relative to these projects, and it would just happen over a longer period of time. So we're not taking existing commitments and spreading it over a longer period of time, this would deal with commitments that would be made in the future as the program unfolds.

[Page 406]

MR. STEELE: I understand it about as well as I did when I started. It's not your fault, Mr. Minister, I want to hasten to add that. What I think I will do probably, if it's all right with you, Mr. Minister, is just discuss it privately with your staff afterwards.

MR. MACISAAC: Sure.

MR. STEELE: Because it really, truly is just a matter of helping me to understand. I'm not suggesting there's anything amiss here, I just don't understand it.

MR. MACISAAC: Our doors are always open.

MR. STEELE: I'm glad to hear that.

Now I would like to move on to what I would really like to ask you about, and that's Service Nova Scotia and Municipal Relations, which is really in one way just an amazing department because it covers so much. It's a grab bag of functions and responsibilities of different kinds and ways of serving the people. So the questions that I have really cover a whole array of issues, just like the department itself, and I'm going to try to cover them in the time that I have available. I have a long list of issues that I would like to ask you about, Mr. Minister, and they are not in any particular order of importance, just in the order that I've got them written down, more or less.

There's a reference on Page 128 of the Government Business Plan dealing with Service Nova Scotia and Municipal Relations, referring to - as part of the business plan for this coming year - undertaking initiatives to reduce the underground economy. What are those initiatives, and how successful have past initiatives been?

MR. MACISAAC: They're related to tobacco tax and working with CCRA to reduce the amount of smuggling that takes place, the reference is smuggling.

MR. STEELE: I wonder if you could elaborate on that.

MR. MACISAAC: We're developing a close partnership with CCRA. Just by way of example, that is what has enabled us to go with the Nova Scotia Business Registry, is working with them, and they of course have an interest in tobacco taxation, as do we, and we are able to work with them and use their resources as they monitor the flow of tobacco-related products. They are able to make a determination as to when there is an abnormal amount of product being moved in a particular area, and that of course is their clue that there is a problem that needs to be addressed, and we work with them in attempting to address that. It's very much a part of intelligence as well as attempting to take some action to ensure that we curb the level of illegal activity.

[Page 407]

MR. STEELE: On Page 127 of the Government Business Plan, there's a reference to Service Nova Scotia and Municipal Relations' debt collection unit. Debt collection is an issue that's of interest to me these days, particularly in a different context, but I was curious about the line in the Business Plan, which I will read just for the record, and I'm going to ask you to comment on it and, again, to elaborate on what exactly this means and what the department's objectives are. The sentence is - this is one of the objectives of the department - "Increase the number of Economic Development portfolios within the umbrella of the SNSMR debt collection unit and develop initiatives to attract the debt portfolios of other departments to SNSMR." I wonder if you could please elaborate on that and explain what exactly that means, what the implications are.

MR. MACISAAC: A lot of departments, but Economic Development in particular, have quite a bit of outstanding debt that we believe we could be instrumental in assisting them in the collection of that. We are looking to take on that responsibility and try to play a role in collecting more of that money for them.

MR. STEELE: Does the department have a debt collection policy manual?

MR. MACISAAC: I've never seen it, but yes we do.

MR. STEELE: Is that manual available to the public?

MR. MACISAAC: We will endeavour to provide you with more details and an answer on that. My only hesitation is that we do have partners in this and I don't want to speak for them - I'm thinking of CCRA, in particular. So I just want to make sure that any information that I would commit to provide to you is not information that our partners may have some difficulty with.

MR. STEELE: I used to be the lawyer for an organization that had a fairly active debt collection unit, so I do know that you wouldn't want every one of your policies to be available to the public. There are some that legitimately may be held back, like how often you try to collect a debt before you give up, things like that. You don't necessarily want that to be out there. But what I'm getting at is that I'm very concerned about the debt collection practices of certain organizations, not, I hasten to say, Service Nova Scotia and Municipal Relations in particular, but citizens need to have recourse if they believe that a debt collection agency is pursuing inappropriate tactics, if I may say. Ironically, it's the department itself that monitors debt collectors in Nova Scotia, and that's why I see Service Nova Scotia and Municipal Relations possibly having a leadership role in setting a standard for effective and ethical collection practices.

MR. MACISAAC: It will be a year in June, won't it, that we attended a federal-provincial conference in Newfoundland, and part of the objective of that conference and the agreements that came out of it was to come forward with standardized policies relative to

[Page 408]

debt collection, not just in Nova Scotia, but right across the country. Going by memory now, but for instance we came forward with guidelines relative to how often you can call somebody, at what hours you call them, what days that you can call them, and these have been standardized. So we're obviously going to keep our own standards well above that, but these are standards which have been agreed to right across the country.

[4:15 p.m.]

MR. STEELE: Now Service Nova Scotia and Municipal Relations regulates or monitors debt collectors in Nova Scotia, so what happens if somebody complains about Service Nova Scotia and Municipal Relations' debt collection practices, because you can't be your own watchdog, how are complaints about debt collection handled by the department?

MR. MACISAAC: Part of the reason I'm slow in answering this question is because I don't recall having received any complaints from citizens.

MR. STEELE: Okay, that's fair enough. Mr. Minister, is there any thought to taking over, or trying to take over, or proposing to take over the debt collection of EMC, Emergency Medical Care, the organization that runs the ambulance service in Nova Scotia?

MR. MACISAAC: There are no discussions underway with respect to that.

MR. STEELE: Because the particular context that I was talking about earlier was ambulance fees, where it's come to my attention that some particularly hard-nosed and distasteful practices, in my view, are being followed by EMC, which of course is the monopoly provider of ambulance services in Nova Scotia, and one of the difficulties is because they are nominally a private and nominally at arm's length from government - although they do have a public monopoly - there's no effective way of calling them to account for their practices. Because I think Service Nova Scotia and Municipal Relations' debt collection unit has a pretty good reputation, I would be very interested in whether Service Nova Scotia and Municipal Relations would be interested in taking this over from what is really a unit of government - to all intents and purposes, EMC is a unit of government. Anyway, that's not a question. I will leave that thought with you and your officials, and I will move on to my next question, which is on residential tenancies.

Last Friday, I believe it was, the government announced a proposed change to the system of residential tenancies adjudication in Nova Scotia. Now I'm not here to talk about the particular piece of legislation, but I wonder if you could elaborate, Mr. Minister, on the concept. If these changes become law, what's the concept of how residential tenancies complaints will be handled and, most particularly, why should Nova Scotians believe that this proposed new system will serve them better?

[Page 409]

MR. MACISAAC: Nothing will change other than the appeal process with respect to residential tenancies. What will be different about the appeal is that the appeals will now be heard by people with a legal background and we believe that that legal background will put in place a much better decision-making process than currently exists. I don't mean to put you in a situation where you might have to say something against legal people.

MR. STEELE: Actually, I know what you mean, Mr. Minister. It's just that I would be the first person to say that lawyers are not necessarily the best people to make decisions. For example, the Workers' Compensation Appeals Tribunal was staffed entirely with lawyers, and that was one of its downfalls. They took a very legalistic, technical, sort of logic-chopping approach to the issues before them and didn't actually solve most of the real issues. It was like a lawyer's paradise, where they produced decisions that nobody except other lawyers could understand.

It all flowed from this idea that only lawyers could deal with these issues in an effective way when the truth is that many other people with many other kinds of skills understand as well, or better, than lawyers the human relationships which are behind many landlord/tenant disputes. In fact, for example, in workers' compensation most of the issues in a case weren't legal at all, they were medical, so why on earth would you have lawyers deciding what were, at their core, medical issues?

It strikes me as the same in residential tenancies. Why would you think that a lawyer would have a better handle on landlord/tenant issues - this is a rhetorical question by the way in case you're wondering - why would anybody think that lawyers were so well-equipped to handle landlord/tenant issues that every landlord/tenant case would be decided by a lawyer? I'm a lawyer and I just don't believe it's true, and so I'm wondering if the department can point to any other province or jurisdiction where residential tenancies disputes are handled in the Small Claims Court?

MR. MACISAAC: I'm told that most other jurisdictions use people of legal background to handle appeals.

MR. STEELE: That's a little different though, Mr. Minister, than assigning it to the Small Claims Court; it really is different. I can see that most residential tenancies officers or appeal people might have a legal background, not all of them, but what the department has done now is assign - well, what they're proposing is abolishing the Residential Tenancies Board and assigning that function to the Small Claims Court. Now, for example, one of the differences is filing fees. What is the current filing fee for a tenant who wants to take a matter to the Residential Tenancies Board?

MR. MACISAAC: It's $10.

MR. STEELE: Do you know what the fee is for filing a Small Claims Court action?

[Page 410]

MR. MACISAAC: I believe it's $75.

MR. STEELE: So right there you've removed access to most tenants, because I don't mind saying that a $75 fee will utterly dissuade people from filing a claim because most people don't have that kind of money kicking around.

MR. MACISAAC: There is in the proposed legislation a hardship provision to allow that fee to be waived.

MR. STEELE: I read the legislation, and I didn't see that, could you refer me to a specific section?

MR. MACISAAC: We will find it for you, but I was assured that it was there.

MR. STEELE: And this is a hardship provision - well, maybe you could elaborate then, Mr. Minister, how is it anticipated that this hardship provision would work?

MR. MACISAAC: The same system that's in place for the $10 fee currently would be applied and it would work in the same way. So we have the provision to waive the $10 fee currently and the same criteria would be brought to the issue as to whether or not the $75 fee would be waived.

MR. STEELE: And what are those criteria, Mr. Minister? I don't know.

MR. MACISAAC: They have to demonstrate that they don't have sufficient funds to be able to pay the money.

MR. STEELE: Currently, Mr. Minister, if you know, what is the average time that it takes between filing a complaint with the Residential Tenancies Board and receiving a final decision, do you know that?

MR. MACISAAC: Perhaps in the interest of accuracy I can take that as notice and get back to you.

MR. STEELE: The other ancillary question which follows from it is how that compares to the waiting period in the Small Claims Court, because it has been awhile since I was in the Small Claims Court, and I frankly don't know where they're at in terms of backlogs and what this is anticipated to do to Small Claims Court backlogs to take residential tenancies matters and actually throw them over to a body which may or may not get more resources to deal with it. Are you aware, Mr. Minister, whether there's any provision in the budget for giving any more resources to the Small Claims Court to deal with this influx of new claims?

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MR. MACISAAC: What I am aware of is that it is anticipated that Small Claims Court will speed up the decision-making time.

MR. STEELE: Mr. Minister, has any study been done, any analysis been done within your department about the impact of this change on the process of resolving landlord/tenant disputes, about for example whether the new and higher fee will discourage people from filing a claim, whether people will or will not get faster decisions and what that's based on, and whether people will or will not get better decisions and what that's based on? Has there been any analysis of that, any sort of background paper within the department?

MR. MACISAAC: Yes.

MR. STEELE: Mr. Minister, is it possible that you could make that available to the members? Thank you very much. My last question on residential tenancies. On Page 128 of the Government Business Plan there is a passing reference to plans to improve the mediation process in tenant/landlord relationships. I wonder, could you elaborate on that, Mr. Minister, and let us know what the department has in mind?

MR. MACISAAC: It's an issue of providing staff with additional training and better training than previously was the case. We want to work with staff to allow them to become more proficient and more professional with what they do.

MR. STEELE: Sorry, Mr. Minister, if you wonder why I'm laughing I will tell you afterwards. I may have been involved in some previous training for the department. No, actually I will just say about five or six years ago I was involved in a training program on one day which was really open to anybody and a number of residential tenancies officers participated in that. I was very impressed by the level of knowledge and commitment that they have, but I was laughing because I had been, I guess you could say for at least one day, a corporate trainer on writing good decisions.

I would like to move on, if I could, to just one very quick question on assessment services and, in particular, because my colleague the member for Dartmouth North has gone over that pretty well, on Page 131 of the Government Business Plan, right at the very bottom there's a phrase that I just didn't know what it meant or what the implications were, and it says - again this is one of the program objectives of the Alternative Program Delivery unit of Service Nova Scotia and Municipal Relations - "Revitalize the provincial assessment inspection system in specific areas of the province." What does that mean?

MR. MACISAAC: What page was that?

MR. STEELE: It's Page 131, the very last item.

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MR. MACISAAC: That references what the department calls a PAIP, a property assessment inspection program, and it's where individuals are hired to do inspections in particular areas. I think, was it not parts of metro that were targeted in the past, certain areas of metro? So we're making a greater effort to ensure that properties are visited and receive the inspection that they need.

MR. STEELE: And, Mr. Minister, the word that's used at the beginning of that bullet is "revitalize", which suggests that maybe the program has fallen dormant, is that the case?

MR. MACISAAC: Last year there wasn't as much money in that program as there had been previously and it's our intention to try to revive that.

MR. STEELE: Would you care to share which specific areas of the province can expect an inspection this year, or would that be giving something away?

[4:30 p.m.]

MR. MACISAAC: No, I don't expect it gives anything away. I think what we attempt to do is ensure that we're visiting areas where there is a considerable amount of activity - real estate activity - and areas where there appear to be some issues relative to assessment and where there are changes that appear