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MR. CHAIRMAN: Order, please. Good afternoon. I would like to call the meeting of the Subcommittee on Supply to order on the debate of the Estimates, 2002-03. This is day seven. The time in debate so far is 23 hours and 47 minutes. Before we reconvene with the discussion on Resolution E31, I would like to welcome the class here that I believe is from Lunenburg West.
I just wanted to explain to the classes present here today that it is a requirement of the government to present its budget for criticism and critiquing by the Opposition. It takes 80 hours of debate, 40 hours of which will be done in the Chamber and 40 hours in here. The Opposition will pick five major departments which they want to critique in the main Chamber, and that is telecast to the people and people can watch on television. In here it will be the other departments of government that don't have the higher profile of the major ones in there. In the other room, the debates will be on the Departments of Education, Health, Community Services, Economic Development, and Finance, whereas all the other departments are being done in this room.
We have had 40 hours of debate, and we are only allowed to meet for four hours a day so we can't ram it through in a short period of time; we have to do four hours a day and no more than four hours day. So there is at least 10 days of public opportunity for this to be scrutinized, not just by members of the Opposition, but the general public is welcome to attend and listen in also.
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That's one of the processes that we have. Another process that's done in this room is the Law Amendments Committee, where a piece of legislation is brought forward after sectoring in the House. The general public is allowed to come forward and make representations about what their thoughts and concerns are about any particular piece of legislation. In the very near future, I am pretty sure you are going to have some legislation about smoke-free environments. If there is anybody in your class or school or community who is concerned about smoke-free legislation, they should come here to this Chamber at an appointed time when they can make their presentations known should we have smoke-free legislation or not in this province. This is just one example of the Chamber and how it is used.
At other times the Red Room is used for ceremonial purposes, but a lot of times it is used for press conferences and committee use such as this. As you can see, we have the government on this side of the House, and we have the Opposition over here asking questions. I just wanted to let you know what we are doing here, and we will get underway.
The meeting was called to order at 1:55 p.m. The time is now almost 2:00 p.m., I will give it as 2:00 sharp as the start time. The Liberal caucus, at the end of the day you had 13 minutes allocated in your time. We are continuing the debate on Resolution E31 for the Department of Service Nova Scotia and Municipal Relations.
Mr. Boudreau, you have the floor. The time is now 2:00 p.m.
[2:00 p.m.]
MR. BRIAN BOUDREAU: I have a question in regard to the compliance officers, Mr. Minister. Apparently there was a budgetary review that was presented to you regarding the operation of the compliance division. The understanding I have is that the compliance officers themselves dispute the figures as indicated in this report. Such items as water are listed as a $500 cost. In fact, the compliance officers tell me that they do not purchase water. I would like to ask where these figures come from and if you accept these figures. I know you are in the process of making a decision on whether to contract out this service, I would like to ask, are these figures accepted by you, and do you feel that these are correct figures that are presented to you?
MR. CHAIRMAN: The honourable Minister of Service Nova Scotia and Municipal Relations.
HON. ANGUS MACISAAC: I have confidence in the figures that have been presented to me, Mr. Chairman.
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MR. BOUDREAU: Mr. Minister, then I would like to ask if - the figure of $500 for water - there are any receipts that could be provided, where this water was purchased by the compliance officers?
MR. MACISAAC: If water has been purchased, then we would be able to provide receipts. I think it's understandable that I would not have those receipts with me today, but we would undertake to provide them.
MR. BOUDREAU: Another item that they dispute is overtime pay. I believe there is a $4,000 item for overtime. In fact the compliance officers indicate to me that they are not paid overtime. I would like to ask you, could you clarify whether the compliance officers are in fact paid an overtime rate?
MR. MACISAAC: Certainly the records would indicate the answer to that, and we will take that question as notice and examine the records and provide you with the answer.
MR. BOUDREAU: I also understand that much of their equipment, particularly their vehicles, or some of the vehicles at least, are compiling a large amount of kilometres, as new vehicles have not been purchased for some time now. My question is if you decide to stay with the current compliance office, do you have any plan to replace the equipment that is required?
MR. MACISAAC: If no change occurs, then as equipment is required it will be provided, within reason of course. We do have to ensure that the service is being provided, and we would ensure that vehicles to provide that service would be available. Of course, that would become an additional cost to continue to provide the service.
MR. BOUDREAU: Could you indicate, please, is this included in your budget?
MR. MACISAAC: I understand the vehicles are all leased vehicles and, as the leases would expire, they would be replaced, where necessary.
MR. BOUDREAU: So there's no cost?
MR. MACISAAC: Yes, there's the cost of the lease, you have to pay a monthly payment for the vehicle.
MR. BOUDREAU: Is this included in the budget that you've presented?
MR. MACISAAC: Yes, that would normally be allowed for in the budget.
MR. BOUDREAU: Could you please tell me how much training costs were last year for the compliance officers?
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MR. MACISAAC: There is a number in the budget for that division. It is approximately $11,000 - it is $10,600, I believe.
MR. BOUDREAU: In regard to the assessment officers, I believe you indicated last week there was no money in your budget for the continuation of the operation as it stands today, is that correct?
MR. MACISAAC: The amount of money that would be required for the assessment service is recovered from the municipal units.
MR. BOUDREAU: What about the cost of the new computer system, is that included in this budget?
MR. MACISAAC: There is approximately $1.5 million allowed for in the budget for that purpose.
MR. BOUDREAU: Is that enough, Mr. Minister, or do the municipalities cost-share this computer system purchase?
MR. MACISAAC: That's our estimate as to what a new system would cost.
MR. BOUDREAU: So in fact the municipalities are not being charged for the system that you are putting in place, is that correct?
MR. MACISAAC: We have not made any commitments to purchase the new system at this juncture.
MR. CHAIRMAN: You have five minutes remaining in your time.
MR. BOUDREAU: Well, you do have $1.5 million in your budget allotted for that purpose if you deem it necessary, is that correct?
MR. MACISAAC: Yes.
MR. BOUDREAU: Could you indicate what you intend to do with the money if you don't use it for this purpose?
MR. MACISAAC: I'm sorry, I missed the question.
MR. BOUDREAU: Could you indicate what you intend to do with this money if, in fact, you do not use it for the purpose that you intend to?
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MR. MACISAAC: No firm decision has been made with respect to that at this juncture.
MR. BOUDREAU: So it will be spent in other areas, or would it go back into the general fund?
MR. MACISAAC: It would be a recovered cost, so if we don't spend it then we would not recover that cost. Because the municipal units will be paying for it, if we don't spend it we would not charge them for that amount of money.
MR. BOUDREAU: But what happens to the money if you don't spend it this year?
MR. MACISAAC: It doesn't see the light of day, I guess.
MR. BOUDREAU: So in reality your budget perhaps has a million dollars to manoeuver?
MR. MACISAAC: You have to understand that if the decision is made to spend $1.5 million, then that will be recovered from the municipal units. If the decision is not taken to spend $1.5 million, then we would not recover the money from the municipal units.
MR. BOUDREAU: And how would the money be recovered? What type of formula do you intend to use?
MR. MACISAAC: We bill the municipal units based on the service that we provide to them, and I guess it's prorated relative to the (Interruption) We recover the money based on uniform assessment and population. It's a formula incorporating both of those items and, if you look at the estimate, you will find that last year we did not spend that amount of money. I think it was about $1.2 million, and because we didn't spend it then we didn't recover it. We have only billed the municipal units $12 million for the service last year, and if the money is spent then of course we would recover that money from the municipal units based on the formula, which is a combination of uniform assessment and population.
MR. BOUDREAU: So if you don't use the money . . .
MR. MACISAAC: I'm sorry, it's not population, it's assessment accounts, the number of properties.
MR. BOUDREAU: Yes. So that money though is precisely for your department, that $1.5 million that you may not use. So, in fact, if you don't spend that money it goes back into the general revenues, is that correct . . .
MR. MACISAAC: No.
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MR. BOUDREAU: . . . or does it stay within your budget?
MR. MACISAAC: If we don't spend it, we don't collect it. So if we don't collect it, it doesn't exist.
MR. BOUDREAU: So you don't spend it unless you collect it?
MR. MACISAAC: That's right.
MR. BOUDREAU: That basically concludes our questioning, Mr. Chairman, and we're now prepared to allow the minister to be free I guess.
MR. CHAIRMAN: Are there any further questions for the minister from the NDP caucus?
MR. GRAHAM STEELE: No thank you, Mr. Chairman, thanks to the minister and his staff.
MR. CHAIRMAN: Are there any questions from the government caucus?
Hearing none, Mr. Minister, I invite you to make any closing remarks to the committee and thank you for your time in estimates.
[2:15 p.m.]
MR. MACISAAC: Mr. Chairman, I want to thank the members for their examination of our estimates, for their questions and for their suggestions. We certainly value the suggestions that they've brought forward, and I again want to indicate to all members of the committee that if ever the department can be of service to them, as they represent their constituents and represent the interests of the people of Nova Scotia, our doors are always open, and again I want to thank the staff for their efforts in assisting me with the defence of the estimates before the committee today. It goes without saying that the information we've been asked to assemble for you, we will assemble that and make it available through the Chairman and through each of your caucus offices.
MR. STEELE: Through you, Mr. Chairman, would you have an approximate time frame, when we might expect to see any information that has been requested and promised?
MR. MACISAAC: I'm told we should have it within two weeks. I'm very hesitant to give timelines, but we will do our best to make sure that you get it within that time frame.
MR. BOUDREAU: . . . information as quickly as possible as has been traditionally the case in these matters.
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MR. CHAIRMAN: Mr. Chataway, the member for Chester-St. Margaret's.
MR. JOHN CHATAWAY: This is not a long oration, but I certainly, the impression that I get as an MLA, the good work of the people in Service Nova Scotia and Municipal Relations, Mr. Minister, I think you certainly deserve a compliment, and the people in that department. Keep up the good work and we're certainly behind you.
MR. MACISAAC: Thank you, Mr. Chairman, and members of the committee.
MR. CHAIRMAN: Shall Resolution E31 carry?
Resolution E31 is carried.
I would like to call upon now the minister responsible for Natural Resources. The minister is en route, and I will read into the record while we're waiting for the next team to get into their positions.
Resolution E11 - Resolved, that a sum not exceeding $57,028,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Natural Resources, pursuant to the Estimate.
MR. CHAIRMAN: As well, we're dealing with Resolution E40.
Resolution E40 - Resolved, that the business plan of Nova Scotia Harness Racing Incorporated be approved.
MR. CHAIRMAN: So we're doing those two resolutions with the honourable Minister of Natural Resources, Ernest Fage. (Interruption)
It is started once I call the resolution forward. The team is just getting in place. Your clock doesn't start until I acknowledge you. The honourable minister is present. Minister Fage, we ask you to come forward to make your opening remarks and introductions of your senior staff. I ask you now to take the floor and present your estimates for the Department of Natural Resources, as well as the Nova Scotia Harness Racing Incorporated. Your time is 2:17 p.m.
The honourable Minister of Natural Resources.
HON. ERNEST FAGE: Mr. Chairman, first of all, I want to let you know how pleased I am to be here today to present the budget for the year 2002-03 on behalf of the Department of Natural Resources. First, I would like to introduce two staff members here today who will be assisting me. On my immediate right I would like to introduce Dan
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Graham, Deputy Minister of Natural Resources, and on my left is Kevin Boylan, the Budget Manager for the Department of Natural Resources.
Mr. Chairman, the natural resources industries are recognized as vital to the province and particularly to rural Nova Scotia. The province's economic growth strategy, as well Opportunities for Prosperity, outlines the valuable contributions our traditional or foundation industries have made in helping to build this province and how these industries will continue to make significant contributions to the future of Nova Scotia.
The mission of the Department of Natural Resources focuses on the road ahead. The department is driven to build a better future for Nova Scotians through responsible natural resource management. How do we plan to get there? It's reflected in the goals the department has set out for itself, and these goals, Mr. Chairman, include achieving sound natural resource stewardship, conserving the diversity of Nova Scotia's natural environment, supporting Nova Scotia's economy through the sustainable development of natural resources, improving the quality of life in Nova Scotia, and managing the department's financial, physical, human and information resources effectively and efficiently. The various branches of the Department of Natural Resources work to ensure that these goals are supported in all the programs, activities and policies the department develops and/or is involved in.
The department consists of six branches: the Planning Secretariat, the Minerals and Energy Division, Renewable Resources, Land Services, Regional Services and the Resources Corporate Services Unit. I would like to take just a couple of minutes on the roles of the different branches.
First of all, the Planning Secretariat ensures that policies and plans developed within and across the department are coordinated and support the goals of the department and the overall strategic direction of government. The secretariat also provides a range of administrative planning, research, information management, information distribution, graphic cartography, communications and occupational health and safety services.
The Minerals and Energy Division is responsible for policies and programs that deal with exploration, development, management and efficient use of mineral and energy resources. The concepts of environmental responsibility and sustainable development, as well as stewardship of and planning for the mineral and energy resources sector are also promoted by the department.
The Renewal Resources Division is responsible for the development and implementation of programs, strategies and plans for the sustainable management of Nova Scotia's forests, parks and wildlife resources. This branch takes a lead in industrial development, resource inventories and research, and forest protection.
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The Land Services Division administers and controls the 3.5 million acres of provincial Crown land in Nova Scotia. It provides services and achieves leadership on all land-related aspects of the department's mandate.
The Regional Services Division is responsible to the Natural Resources Department for this province's resource-based industries and many of our projects and programs of rural-based initiatives. Our Regional Services Division ensures that natural resources services are delivered through our various field offices throughout the province. The delivery of these program services include forest management; Crown land surveys; geological surveys; educational services; enforcement; hunting safety; forest fire prevention, detection and suppression; monitoring of insects and diseases; operation and maintenance of provincial parks; and conservation efforts.
Finally, the Corporate Services Unit, which is basically with Natural Resources, provides financial, human resources information and technology-related services to the Department of Natural Resources, as well as the Department of Agriculture and Fisheries, the Department of Environment and Labour, the Emergency Measures Organization, the Petroleum Directorate and, as well, the Department of Finance.
The work each of these branches undertakes not only helps the department achieve its goals, it extends further the support of government's overall theme, in particular to keep Nova Scotia's finances in order, to provide responsible and accountable governments, to create conditions that help the economy grow, and to foster an environment that allows and encourages Nova Scotians to work, live, raise families and stay in Nova Scotia. The Department of Natural Resources contributes to the realization of these themes through the sustainable and responsible management of natural resources with an eye to ensuring that Nova Scotia's natural resources will be available for future generations.
The future and our children's future is the reason for our commitment to a balanced budget this year and it is the same reason the Department of Natural Resources is committed to providing a balanced approach to the significant social, cultural, environmental and economic benefits to Nova Scotia. This balance involves dealing with the various demands on our lands and natural resources. Nova Scotia has a land base of approximately 12 million acres. About 3.5 million of this is Crown land, which the Department of Natural Resources is responsible for; therefore, the demands that are placed on our lands often outweigh the availability. That creates issues. Sometimes we see protection efforts pitted against development, recreation against harvesting.
This is why the continuation of the integrated resource management, or IRM project, is a top department priority. This enables the best options to manage and use Crown lands for both social and economic benefits. IRM is a process that balances various users and uses while ensuring sustainable resources and minimizing conflict with different interests. The process continues with the second phase, which is the development and implementation of
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long-range management plans for all parcels of Crown land throughout the provinces. These plans will provide a framework for land-use decisions and annual operating activities for the Department of Natural Resources.
Mr. Chairman, the forest industry in Nova Scotia provides in excess of 22,000 jobs. It provides $1.4 billion to our economy and it also is in increasing proportion with value added, which in 1999, $1.4 million was a 27 per cent increase over the previous year of 1998. Along with the protection sustainability of Crown lands, the Department of Natural Resources is also responsible for the geological activities, the promotion of the development of minerals and of proper and sustainable development of the entire mineral industry. As well, the Department of Natural Resources is responsible for energy development and promotion within the province.
Under that particular department, certainly the issues of green energy, greenhouse gases, CO2, climate change, Kyoto, are prime responsibilities and concerns that we share jointly with the Department of Environment and Labour and certainly are issues that not only Nova Scotians and Canadians, but worldwide have taken precedence over in the last number of years. The key integration of those achievements is very crucial to sustaining our environment, but they're also crucial to maintaining our economic development and growth strategy.
With those few brief opening remarks, I've touched a little bit on some of the department's responsibilities, areas we're involved in, and would welcome questions in regard to the 2002-03 budget estimates. Thank you, Mr. Chairman.
MR. CHAIRMAN: Thank you. I understand we will be going to the questions of the NDP caucus.
The honourable member for Hants East.
MR. JOHN MACDONELL: Mr. Chairman, I want to thank the minister for his comments and the brevity of them. Not to say that I don't hang on every word that the minister says, but I appreciate, considering our previous conversation, what he has said and I do have some concerns. One thing I may not have been paying close enough attention to, but I was curious again about the numbers you said who work in the forest sector. Do you have a number there?
MR. FAGE: Approximately 22,000 people are involved, their livelihoods are a result of the forest industry.
MR. MACDONELL: Is that directly and indirectly?
MR. FAGE: Directly and indirectly.
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MR. MACDONELL: Also, its contribution to GDP, was it $1.4 billion?
MR. FAGE: Yes, $1.4 billion.
[2:30 p.m.]
MR. MACDONELL: I guess the first thing I would like an explanation of right off the top is the sustainability fund and its relationship to stewardship agreements that mills have and along with that, I would like you to answer a question. On Page 20.5 of the Supplementary Detail of the estimates, it says, under Regional Services, Forest Improvement and then on Page 20.7, under Resource Enhancement Fund, it says Forestry Development Funding. So I'm just wondering how those two are either similar or different, and is the Forestry Development Funding the sustainability fund?
MR. FAGE: In regard to your first question, the forest sustainability fund, as you know, is up and running and required details and registration, as well as estimate and summation from last year, are out there. The majority of people have filed and now we're doing our audit checks. But in round terms, approximately $14 million worth of credits have been allocated to the sustainable fund during the previous year. I will pull up those line items that you requested there. The first one was the Resource Enhancement Fund and the allocation there is $3 million and that would be equivalent to our contribution to the private lands division of reforestation or silviculture.
MR. MACDONELL: That would be your contribution to the sustainability fund.
MR. FAGE: Yes. I didn't catch the other line item you wanted.
MR. MACDONELL: It is on Page 20.5 and it says Forest Improvement. So I was just curious, is that just Crown land?
MR. FAGE: That's the same $3 million done on private lands.
MR. MACDONELL: Okay, so it's $3.135 million and the other figure is $3.232 million.
MR. FAGE: Which line item was it?
MR. MACDONELL: The one on Page 20.5, Forest Improvement, it's $3.135 million.
MR. FAGE: We weren't looking at the same numbers, so that's what was causing the confusion. That's the contribution to Crown land.
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MR. MACDONELL: Okay, that's what I thought. Then the Forestry Development Funding would be for private lands, for the sustainability fund?
MR. FAGE: That's correct.
MR. MACDONELL: Well, I have a question around the credit system. My understanding is that the department gives certain credit values for treatments. Now, in talking to people involved on the silviculture side, they're told that the credits for a treatment are not on a dollar-per-credit basis. So, in other words, if it was 650 credits to plant a hectare of forest, when they're hired to do that, they dicker with the mill on doing this job and the mill might say, we will give you $100 or $200 to plant this two hectares and they will say, no, that's 650 credits, that means $650. So they wind up doing the job for what they're paid to do it, trying to make money at it, which might be $200, and that means that the mill actually has 450 credits to the good, which they can trade or barter or give away or whatever. Am I accurate in my assumption?
MR. FAGE: In the credit system, one credit does not automatically equal one dollar. The credit system is developed through the model forest, basically a point system. This is what that particular treatment is worth, x amount of credits, if that was a thinning or a reforestation, harvest technique, all those types of things. When the contractor then bids on that particular service and this many credits were allowed, then the contractor would negotiate directly with the registered buyer how many dollars he's going to receive per hectare to do that on top of that.
MR. MACDONELL: I don't know if it's on top of that, but certainly he would negotiate with the contractor as to what they wanted to pay to do the job. So my question is, let's say that the department says to do a certain job is 650 credits. A contractor takes the job and they do it for $200. Does the mill that hired them then say we have 450 credits to the good, we got the job done, but we have 450 credits that they can trade or give away to another operation?
MR. FAGE: If they negotiated the price at $200, they would have used the 650 credits up.
MR. MACDONELL: They would have used the 650 credits up, okay. You said the model forest, so am I assuming that Nova Forest Alliance came up with those credits.
MR. FAGE: The modelling drives those credits from those various techniques and that modelling unit would use, for example, the model forest or those types of things as a demonstration project to show and come up with a relative credit value. But the actual credit development is from staff and industry in the modelling unit out of Truro.
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MR. MACDONELL: I don't know if this will seem like an obvious question, but to me, what's a credit in the real world? If you say a certain treatment is 650 credits and they negotiate and they can pay x number of dollars and that uses it up, whether they pay $200 or $650 dollars, all the 650 credits, so what's the credit? What does it mean or what's it worth? I don't understand how you came up with the credit system based on anybody getting the work done.
MR. FAGE: The credit system is based on an evaluation of what value you assign to different treatments. If we take a number of 10, as a Dewey decimal, then you assign mid-range values to each treatment. So if we do 650 in, let's say, the reforestation and the modelling is five credits, on the average, that's the average amount that would be allocated to do a reforestation project anywhere on any woodlot in Nova Scotia. The variance will come in maybe that you only have to spot-fill, so they would allow less credits and negotiate that somewhat on that particular site because you have to be able to have enough flexibility to get it site-specific. In another spot where it requires 100 per cent reforestation, then that five would have to be varied up to a higher number if a contractor is going to do it. But the credits themselves are a way to measure how much work effort and capital effort is required to do that particular phase of a silviculture or reforestation procedure.
MR. MACDONELL: So that would seem to me that someone sat down and figured out what it's going to cost to do a treatment in a general way across the board and then depending on how that particular stand varies from the standard, then they may have to pay more or less.
MR. FAGE: Absolutely.
MR. MACDONELL: Okay, so that means there actually could be a dollar value attributed to the credit system.
MR. FAGE: The reason we've gone to a credit system is to allow a specific number to the treatment as a rating system rather than assigning a dollar value to every particular treatment and not allow for the variance.
MR. MACDONELL: Let's say that we say, right off the top, five credits for a particular standard across the board considering the mean of how acreages may be across the province and we establish that depending on how much work it takes to do that based on that five-credit standard that we've set, then certainly people in the industry could say well, look, in order for me to do that job at that standard of five credits, I would have to have x number of dollars. It would seem that the credit system could be assigned so many dollars for those credits and then if it was five more credits, it would be double that. So you could relate a credit to a dollar value. I'm wondering why the department didn't do that.
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MR. FAGE: There's probably one strong reason. The department, on recommendation and working with the industry, has never been in the business of moving into the marketplace and assigning specific values of dollars. It allows the marketplace, which is the negotiation between the contractor and the registered buyer, to arrive at that price. So if the example of five is the standard credit, if the contractor feels it's a seven and the registered buyer feels that it's a six, it's up to them to settle that price and that's why we were reluctant to base it on a dollar value rather than a credit system.
MR. MACDONELL: I guess three questions have come out of that for me. One is that when you say that the department has never done that, the department did do it under the old management plans because someone from the department went out and made an assessment of the stand and then the landowner hired a contractor to come in and the department came and wrote a cheque to pay for it. So the department must have done that at some point and I guess that's the thing I'm wondering. Now that we have landowners and the mills contributing to the sustainability fund, then I think the department would be further ahead to manage the fund and pay for the treatment.
MR. FAGE: I agree with your statement, but you have to remember those were federal-provincial five-year plans where the money was all taxpayers' money. These plans involve monies coming from the roundwood buyer, the property owner and the taxpayer. The industry and the landowner have a vested interest in letting the marketplace settle it. It's not the role of the department, as we view it under those terms as the dollars or credits are supplied into that system, that we would be in a position to dictate the price. That was part of the agreement and basis that they would have influence over the rate.
MR. MACDONELL: Well, I thought the department wanted to set up a system that secured sustainability. If the contractors can't make money through their dickering with the mills, then they won't be doing the work and, therefore, the government won't hit any targets for sustainability and that to me would seem to be the whole purpose of government being involved in it at all because if it's true that the province is putting $3.232 million into the sustainability fund, then the taxpayers have an interest. I would think that the sustainability of the forest is something that taxpayers are interested in.
[2:45 p.m.]
MR. FAGE: I guess when you have a couple of years of a new program under your belt, it's easier to estimate whether it's working or not. It's very hard and you can have a long academic discussion of whether the price, if you're doing the work, rarely is it high enough and if you're paying for the work, whether it's your own house and you're having the roof replaced, it's too high. But I think it's critical that they have the opportunity in the marketplace to negotiate that. I would say though that the estimations that you would see on this program, I believe there is $10.7 million expended this year. Obviously, if $10.7 million is the expenditure of those credits, there's work being done and somebody's doing it.
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MR. MACDONELL: When you say $10.7 million, are you saying $10.7 million or are you saying $10.7 million worth of credits?
MR. FAGE: It's $10.7 million worth of dollars and that would be a combination of, again, roughly a little over $7 million coming from the private sector, which is the landowner and the roundwood buyer, and approximately $3 million coming from the Province of Nova Scotia; roughly that one-third, one-third and one-third.
MR. MACDONELL: Well, Mr. Minister, I think there are about 50 silviculture contractors in the province. So at $10 million divided by 50, it is about $200,000 a contractor. Am I wrong?
MR. FAGE: The reality of the work being done is you have a lot of stewardship agreements. You have a lot of roundwood buyers that do their own silviculture internally.
MR. MACDONELL: So that would be credits?
MR. FAGE: So it's not a true reflection to use that number because those would be made up of primarily independent contractors, not the total source by a vast amount of who's out there doing work on the land. It's difficult to use just private contractors when many of the roundwood buyers who are mill owners have their own private staff do that entire amount of work that's included in the total.
MR. MACDONELL: Okay, but what we're saying is that even if they had their private staff do that work that's included in the total, you told me $10.7 million, and you said it was real dollars, it wasn't credits, so that meant $10.7 million was spent. That means somebody got it.
MR. FAGE: Again, this is an estimate for the coming year.
MR. MACDONELL: Okay, well tell me what you spent last year.
MR. FAGE: Excuse me, that's the forecast for last year. We haven't got the exact dollars in, but that's our forecast for last year. Until we get our June at the end of the year to close off the books, that's our closest forecast right now, how much expenditure for treatments happened in Nova Scotia last year.
MR. MACDONELL: I'm getting so many questions in my head, I'm losing some of them. I'm wondering, why is it you don't have your numbers to know what to tell me in budget estimates, if the budget is supposed to be ready by the end of March; why do you have numbers coming in in June?
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MR. FAGE: I think you will find every government department is no different. You have until June to sign off the books. There will be adjustments - and hopefully not huge adjustments, but I think you will find that if you check with Finance that every government department or expenditures within government, their final numbers get closed off in June. The closest actual estimate when you look at the book, that's why it says forecast, not final. If you look back at the year 2000-01you will get the exact number and that's when it occurs.
MR. MACDONELL: Okay. So, when we look at this budget, we're looking at the budget for 2003, forecast basically, I mean the estimate, then we're looking back at the forecast for 2001-02, which we actually don't have until June.
MR. FAGE: We don't have the absolute, finite, right down to the cent number. You have an estimate showing there and then you have the forecast. The forecast is the closest to actual as you're going to get.
MR. MACDONELL: Okay. In your own mind, as far as that $10.7 million, how close a number is that to what was actually spent? Do you have any idea today what that would be, whether it was $9.2 million?
MR. FAGE: I'm advised it's just cleaning up any extra bills coming in.
MR. MACDONELL: That's pretty close.
MR. FAGE: It should be very close and obviously, as those last few come in, it will be slightly higher, not decreased, because this is an actual total of what you have. It's not an estimate, it's an actual total of what you have now - there may be more.
MR. MACDONELL: Okay, good. Thank you. That's helpful. Do you have any idea who got the money; the $10.7 million, give or take; any idea who got that money?
MR. FAGE: The money . . .
MR. MACDONELL: There's $3 million of taxpayers' money in that.
MR. FAGE: That would have been allocated on receipt of work done to any private contractor who does silviculture work, any mill or roundwood buyer who did work and submitted receipts that they had done that work. The audit part of it begins now. We would do spot checks to ensure that what was billed for was what happened on the land.
MR. MACDONELL: My question the other day in the House was around compliance, around the end of February, and you said now you will go out and you would audit to see that everybody's compliant. Well, how do you know if everybody's compliant because you're not really sure what was spent last year until June of this year. How are you
[Page 455]
going to be able to know who's compliant for money that looks to me like it never gets spent for awhile?
MR. FAGE: Again, they've submitted their documentation. It's virtually all there. There will be a few stragglers coming in until the end of April and then the final adjustment to the books. We go out there and randomly check that those particular preparations were done that the invoices come in for. I mean, you have a list of every contractor, every landowner, every roundwood buyer that has submitted receipts and documentation that they've done the work in the previous year. Then staff officials would go out and ensure that treatment did occur on that piece of land, yes it is acceptable. You would do it that way.
MR. MACDONELL: When you send staff out to audit the work, is that part of the $3 million? Is that what you consider part of the government's funding?
MR. FAGE: That would not come out of the fund. That goes to sustainability. That would come out of regular department budgetary financing for staff.
MR. MACDONELL: That's reassuring because it's an idea that I have that I think the department should do that and I would say that the department should control the fund really. That's what I think they should do.
I have a question around the credits. I'm not clear about them. I will tell you a scenario I was told and from what you've said, if a certain treatment was pegged at 650 credits and a contractor does it for $200 then that means those credits are gone, they're used up, no matter what. The work is done. I was told of a mill that received $80,000 worth of credits from Kimberly-Clark. This mill buys logs from Kimberly-Clark. Kimberly-Clark takes back the chips. This mill also gets $80,000 in credits from Kimberly-Clark and they actually don't have to do the work. In other words, they got the credit so they tell the department we have $80,000 in credits of work, but actually no work ever got done. Is that possible? Does that make any sense?
MR. FAGE: I'm not understanding the question.
MR. MACDONELL: I'm not sure I understand it either.
MR. FAGE: Are you talking about Kimberly-Clark . . .
MR. MACDONELL: Giving credits to a mill . . .
MR. FAGE: So are you asking about the mill or Kimberly-Clark? That's what I'm not . . .
[Page 456]
MR. MACDONELL: Well, I think it's pretty hard to ask without including them both. I guess what I want to know, can a large operation allocate credits to another operation, first of all, in terms of credits; can one operation give credits to another operation?
MR. FAGE: What is derived, when you look at all the different products that come out of a log or a stick of wood, when it's harvested to the time it's entirely processed, at the end of that you're going to end up with approximately one-third - 25 per cent to one-third is going to end up in sawdust and chips of that round log that comes in. Kimberly-Clark, which is a pulp user, would receive chips and sawdust, then would reallocate to mills, based on agreements individually with each mill, that portion of credits, approximately one-third of industrial credits, depending on source, for those chips. That's why that transfer would come that way because if it didn't, the roundwood buyer or the sawmill would have to come up with one-third of that credit source or one-third of the reforestation from a product they didn't manufacture.
In essence, it's an agreement between each mill individually. There may be some variation, that's why it's hard to put an exact percentage of rule on it because they have a private negotiation. One-third of the log goes in sawdust and chips. The pulp mill gets it, that is how they would then reimburse that roundwood buyer for 100 per cent of their commitment.
MR. MACDONELL: Okay.
MR. FAGE: And then the credits would be used on the land in proportion as to whether it was small, private, industrial or where it came from.
MR. MACDONELL: Okay, let me get this straight. In a dollar value, what is it that the mills pay per cord if they were paying into the sustainability funds, $6 or $6.50 or $3.50 per cord?
MR. FAGE: For softwood it's $3 a cubic metre.
MR. MACDONELL: At $3 a cubic metre, that's roughly $6 a cord.
MR. FAGE: We don't have the exact conversion here.
MR. MACDONELL: Is it $2.25? Anyway, that's close enough - ballpark, $6 a cord or a little better. So what we're saying is that if a sawmill buys logs from Kimberly-Clark, because they wouldn't use them in their pulp operation, then Kimberly-Clark will take chips or sawdust back from that mill, which they will use in their pulp operation. Then Kimberly-Clark - we don't have to keep using Kimberly-Clark, but that's the example that was posed to me - then a larger operation or a pulp mill can allocate credits back to the other operation based on what?
[Page 457]
[3:00 p.m.]
MR. FAGE: There are two things I think you've got involved in this, the one you're using, by the detail you're starting to supply now. You have a trade on not only chips here, but you have a trade on round logs as being allocated to another mill. Remember the key here is the registered buyer. He is responsible to the forest sustainability fund for 100 per cent of every stick of roundwood, okay. Then you have a second transaction that's occurring here. All the roundwood has to be accounted for and if that mill bought that roundwood, went to logs, then that has to be credited, if it came off Crown land, it would have to go through our sustainability fund of Crown land; if it came off private or, you know, any type of private, then it has to be credited back there.
MR. MACDONELL: Before you go further, what you're saying is that if the pulp mill cuts the logs from a landowner, then they have to pay into the sustainability fund based on what they acquire from the forests, but if the sawmill gets the log from the pulp mill, then it's their responsibility to contribute, if they're a registered buyer, to the fund the same as if the pulp mill had. Is that what you're saying?
MR. FAGE: No, it's not what I'm saying. I think you're getting confused here and trying to follow a track . . .
MR. MACDONELL: Well, I'm willing to be straightened out if anybody wants to explain it.
MR. FAGE: We would have to review every transaction because no two of them are the same. All I'm saying is if the roundwood buyer, who is the registered buyer, purchases roundwood, then they are responsible for . . .
MR. MACDONELL: Roundwood from where?
MR. FAGE: It doesn't matter. To purchase wood you have to be a registered buyer in Nova Scotia. Whether you buy that off Crown, through a secondary harvesting company, an individual contractor, if you're the roundwood buyer, that's why this system was set up that way, so it kept it easier to track and so the chip issue is a separate issue.
MR. MACDONELL: I will deal with that separately then. I guess what I think you're saying is if a registered buyer buys roundwood, but to me there's a difference between a registered buyer going out and cutting off somebody's land and buying roundwood from a private landowner let's say, and then they would have to contribute into the sustainability fund or have a stewardship agreement to have that money somehow put in place for sustainability. Is that right?
[Page 458]
MR. FAGE: Again, that's why the registered sustainability fund is in place. You're a registered roundwood buyer to buy the wood. If it comes off private land, whether you particularly own it or you're contracting to somebody else, it's all registered, all creditable and has to be accounted for.
MR. MACDONELL: Sure. Well, that's what I'm getting at. So my point I guess, where I'm going is, how many times can roundwood be credited to the fund because . . .
MR. FAGE: Once.
MR. MACDONELL: . . . if a mill buys it from a landowner, how is that different from if another registered buyer, which could be another mill, buys roundwood from a mill? Which mill pays into the fund, the one that bought it from the landowner?
MR. FAGE: It's the primary one, the first person who would buy it. And it's common in Nova Scotia because of the set-up of some operations that there would be, you know, eight-foot stock or large logs, or a specific species would be milled in another mill. The primary buyer has already been responsible for that.
MR. MACDONELL: Right, already paid into the fund so to speak.
MR. FAGE: Yes, unless, they had a secondary arrangement where another - you know, it came off this situation that you're describing, went to the mill and they had an agreement that they would carry out the credits in the silviculture for the first proponent handled in the same way.
MR. MACDONELL: So then the two issues aren't necessarily separate then, Mr. Minister. The two issues about the sawdust and the chips and the logs are not necessarily separate from the credits if they have some other arrangement?
MR. FAGE: Again, the same byproducts exist on every stick of roundwood and the individual arrangements of how they're utilized is up to those particular operators. We, with the sustainability fund, are there to ensure (a) that silviculture work occurs from the credits, and (b) that all wood has the credits or the deductions taken off to go into the fund. We do not get involved in the secondary business market arrangements between two private companies, one that may want chips, one that may want 12-foot butt stock logs, or . . .
MR. MACDONELL: I understand that, that makes sense. But something that doesn't make sense to me is when you mentioned this other arrangement business because it seemed to me that if - and I will take my pulp mill and my sawmill arrangement, and each of them buy wood from landowners and they each are responsible to pay into the fund. So the sawmill is the primary user you say or the primary buyer, but then if they don't use it in their
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operation and convey it to another operation, they're still responsible because they bought it from the landowner?
MR. FAGE: Again, there are two or three concepts here that seem to be blurred.
MR. MACDONELL: You're right.
MR. FAGE: First of all, if you go back to the reason, the proper allocation when the fund was set up had to occur and then while it doesn't have to be the exact piece of land that that came from that the credit happened that year because it might be three years before you wanted to do it. So if the roundwood buyer, regardless of who it is, bought 10 per cent of his product off a small private woodlot, 10 per cent of his fund activity has to go back on a small private woodlot. We have the audit system in place to ensure that the roundwood, regardless of its use, whether the whole thing got chipped, or lumber or whatever, that we have the information and are able to credit it where it should go.
MR. MACDONELL: Right, that makes sense. I will try this from another side then, because it's not clear to me. Can one operation give credits to another operation?
MR. FAGE: Yes, that's part of the basis of making the program work, absolutely. They can transfer . . .
MR. MACDONELL: If they're both registered buyers, one can give the other one credits?
MR. FAGE: If they're trading and moving stock back and forth, yes, that would be a common practice.
MR. MACDONELL: How can they do that if you're telling me that the primary buyer of the wood is responsible to pay into the fund, because if they paid into the fund, that means that there are credits that they never used to do the silviculture work that they're giving to another operation?
MR. FAGE: You settle up after 12 months, that's the requirement to have it in. If you're buyer A and you've recorded the source from where it came, you've traded me 20 per cent of what you brought in because it's a specific item I need in my mill, as long as I transfer that amount of credits back to you to use toward the fund, we've got exactly what we want.
MR. MACDONELL: So those credits back and forth, are they done on a dollar value?
MR. FAGE: We go back to where we started half an hour ago, the credits are done on the basis of what the average silviculture treatment requires for that treatment. That's why it's credits.
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MR. MACDONELL: Right. So, a mill either pays into the sustainability fund at the rate of $6 a cord or they have their own stewardship agreements. If they do a treatment, that treatment is evaluated at a standard of credits. So how can they barter credits, because that would mean that their contribution either into the sustainability fund or in their stewardship agreements, they really shouldn't have any credits left over to barter with, they should be doing treatments on the land based on what wood they acquire. How do they have credits to give to somebody or trade or . . .
MR. FAGE: Okay, on that particular aspect, let's look at it. They purchase wood, a different number of sources. They have deducted $3 per cubic metre. There's a credit system out there. Let's take it simplistically, five credits for doing silviculture, three credits for reforestation and eight credits for thinning; those are all in reverse order of what they might be in totality.
They can either go out there and do that much work on private lands or Crown land or wherever the source was in proportion that they got it. They will go out and do that. They can hire a private contractor, they can work under a stewardship agreement, and the 12 months rolls through. At the end of the 12 months, if they haven't caused that much work to be done or have done it themselves, to use up those credits to an equivalent of what they have brought in, then they would be responsible to pay that $3 per cubic metre what they were deficient in. Let's say they never did any work, this particular buyer, then at the end of 12 months, they would then be required to pay into the fund.
MR. MACDONELL: Right. Okay.
MR. FAGE: They have the 12 months. They're buying wood through that 12 months. They have the opportunity to either do or cause to have done the credit values that are agreed to for all those types of treatments. When the year is over, then there's the reckoning. If you've done the work, then there's no cheque required for the fund. If you're deficient in the work or having caused the work to be done, then the equivalent amount of the $3 per cubic metre that you're deficient would be required to go to the fund.
MR. MACDONELL: To go into the fund, that makes sense. What doesn't make sense - or you can say, well, it doesn't make sense because it doesn't happen - can one primary buyer allocate credits to another buyer? You just said it happens all the time, but what you just told me wasn't that.
MR. FAGE: Okay. We described the single situation, if the person was isolated . . .
MR. MACDONELL: A primary buyer.
MR. FAGE: . . . and chose to - not a primary buyer, a licensed roundwood buyer.
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MR. MACDONELL: A registered buyer.
MR. FAGE: A registered buyer. That registered buyer in his common business practices may trade some stock with another mill owner as long as that stock went with him, he may receive credits from that other one to cover it. That's a business arrangement between them. What we're concerned about is that (a) we know how much is harvested, how many credits are there, and (b) that the work got done. The business arrangements between two entities, as long as the fund has been satisfied and the silviculture occurs, at the end of the day it doesn't matter whether it's transaction a, b or c.
As a province, in an industry, we're concerned that the sustainability work has been achieved. As long as that's recorded and we audit it on the buy side, through the registered buyer, if they want to trade stock, that's immaterial to the process. If they want to trade credits for that stock, i.e. the biggest example would be the arrangements between virtually every mill and a pulp and paper company on the chips, there's no difference between those trades, as long as the work gets done.
[3:15 p.m.]
MR. MACDONELL: That's a good point. If one mill acquires umpteen thousand credits from another mill, if one mill acquires credits from another mill, then how do you ensure the work gets done?
MR. FAGE: Because we audit it. Remember, the invoices come in . . .
MR. MACDONELL: So if that happens in June, if that trade happens in June, are you going to know the work got done in June?
MR. FAGE: Any audit system, physical or financial, the common practice is to have a time period. Again, we have a year. We require, when that year is done, that the work has been carried out or you submit money to the fund. Once the year is up, the snow is off, we send our people out to audit the work that has come in over the previous year to ensure that it was done.
MR. MACDONELL: Right. So what you're saying is there's a third step there. Either the work is carried out or you submit to the fund, or you submit your credits for the work to be carried out to somebody else and they did the work, as a third option there.
MR. FAGE: I think you're mixing apples and oranges there. Your question was how did we know that work was done and why wouldn't we audit the work before the work was done. You asked about an audit period and a time.
MR. MACDONELL: Right, how would you know?
[Page 462]
MR. FAGE: Again, we go back to the basic principle of who can do it. The registered buyer can do it. If you're a landowner and you don't want the registered buyer to do it, you want to do it yourself, you can do it. If you're a contractor, you can go negotiate those credits, the same as your initial case there. If you're a roundwood buyer, you may have your own crews and want to do it. The Act allows for independent contractors, the property owner themselves, stewardship agreements and the roundwood buyer. The important thing is the work is done.
MR. MACDONELL: Right, if there's no correlation between the credits and the dollar value, but we're taking off a dollar value of $3 per cubic metre, going into the fund or into a stewardship agreement, so how do you know that the dollars were actually spent? How do you know that $3 per cubic metre is actually being spent if the credit system has no correlation to dollars?
MR. FAGE: The dollars are deducted, the credit system is based on average treatment, as 1 to 10, if you want to use that example. The average amount of work or effort required to pick a treatment, do it, for the province, on the average is x amount of credit, developed by the model, the dollar amount above that. Then that individual roundwood buyer does it, causes to have it done or some of them may hire a contractor to do it. Then they would negotiate that contract - value would be assigned against it.
MR. MACDONELL: Okay, let's say that somebody pays - we assume they're either paying or accounting for - $3 per cubic metre for the wood they buy. They have $30,000 for 10,000 cubic metres of wood. But when they go out to do their treatments, then how is the government assured that $30,000 worth of work got done?
MR. FAGE: I guess the assurance that the work has been properly carried out and done goes back to the audit after the invoices and the receipts and the audit the year following once the books are closed in that year.
MR. MACDONELL: If they show you the receipts for what they spent and say it's $20,000, you say that $10,000 has to go into the sustainability fund.
MR. FAGE: We would have to then say you're not compliant or the work is inferior or insufficient and then we would have to assign them an adjustment, penalty or cause the work to have . . .
MR. MACDONELL: Why wouldn't they just pay into the fund? You said if the work wasn't done, they had to pay into the fund.
MR. FAGE: If they're non-compliant, it may be a little more difficult than just saying to them that you're deficient in this amount and you're required to pay into the fund. That is one of the options but that's part of the audit, making sure they're doing it right and what's
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the best mechanism to create it, to rectify it. Usually, in most cases, you would have to ask them to have the preparation brought up to standard which wouldn't entail putting into the fund. If all else failed and they refused, then that's probably the option we would use, but I'm just saying it wouldn't be the only option if something was deficient and in most cases, if you ran into that situation, it may not have been intentional or something else may have interfered with it, not to cause it to happen properly. Obviously, the ultimate goal is to have a good job done so you would want to go to the option of rectifying it first, rather than this amount of money going in.
MR. MACDONELL: How much time do I have, Mr. Chairman?
MR. CHAIRMAN: You have roughly five minutes left.
MR. MACDONELL: I will try to do this in five minutes. I have a question and depending on your answer, you may smooth out a number of rough spots for me. I've always been a bit curious, something I haven't been able to understand is how someone who does not sell wood to a registered buyer, but they would like to have silviculture work done on their land, what's the process to have that done, to approach a mill under their stewardship agreement let's say?
MR. FAGE: I think there are probably several options for that circumstance. One option would be a stewardship agreement with the roundwood buyer.
MR. MACDONELL: Okay, but how does that work? That's what I want to know.
MR. FAGE: A stewardship agreement would be an arrangement, a document, a contract, a legal agreement that they would sign about x amount of services are delivered in silviculture. The roundwood buyer would receive this in return over time.
Another option, remember, you as a private woodlot owner are eligible to do silviculture work on your own even though you haven't sold any roundwood off that piece of property or other ones you have bought. That's the component about not being time-specific because the treatment and a possible harvest date can have a large time span in between and that's why the requirement that is spent on the principle that's involved in the whole sustainability piece about like pieces of property is so critical.
In that circumstance, if you were the private owner and you wanted to do silviculture but you didn't want to hire a contractor, you didn't want to sign a stewardship agreement and you didn't want to go to a roundwood buyer, you apply to the sustainability fund to get the funding to do it on your own. You are eligible to apply to that sustainability fund because if you're a small-private landowner, small-private is spent back on small-private. So, if you desired to do it on your own, you would apply for those funds.
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Again, the same rules apply. Let's say it was commercial thinning, worth this many credits, you'd apply to the sustainability fund, they would allocate it to you and you would do your work.
MR. MACDONELL: So what you're saying then is that there is a dollar value associated to the credit?
MR. FAGE: I don't know how . . .
MR. CHAIRMAN: Two minutes.
MR. FAGE: . . . to explain the dollar value if you absolutely want to think in those terms, it's a variable dollar. It's not a $1/one credit system. It's a negotiated system.
MR. MACDONELL: But if I were a landowner and I applied to the sustainability fund and wanted to do the work myself, I would be applying to the government really, would I not?
MR. FAGE: You would be applying to the sustainability fund. You may think it is a 600 credit job because the ground's a little uneven and you're not a professional, it's going to take you longer so you think you need 900 credits. The staff would maybe say, no, a regular contractor could do that for 450, you would still be dealing in a system that assigns points based on individual circumstances, site-specific points on an average, yes, it's worth that, but you may be a plus- or a minus-two because your situation is that much better or that much worse.
MR. MACDONELL: But what you're really saying is, if I applied and somebody came out and said here's what this is worth, it would have to be a dollar value based on those credits. There's no way of getting around that. That's what you're saying.
MR. FAGE: At the end of the day, there will always be a dollar value, but the amount of credits is what will determine the dollar value. It won't be the dollar first, it will be how many credits required to do the preparation on that particular site.
MR. MACDONELL: Thank you, minister. That didn't make any sense but I know I've whipped this horse about as long as it can stand. Anyway, I would like to come back and I know some of my other colleagues have questions and I don't want to cut them off, but I would like to come back if I can do that. Thank you, I appreciate it.
MR. FAGE: Thank you very much.
MR. CHAIRMAN: Now for questions from the Liberal caucus.
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The honourable member for Victoria.
MR. KENNETH MACASKILL: Welcome to the hot seat, Mr. Minister and staff. I hope my dialogue can be as entertaining as that of my good friend, the member for Hants East. He always likes to be controversial.
Mr. Minister, let me begin with your statement of last year. I will read the quote to you that I prepared, taken from Hansard of April 19, 2001. "The mission of the Department of Natural Resources focuses on the road ahead, of course. The department is driven to build a better future for Nova Scotians through responsible natural resources management. The whole issue of sustainability with our forests is paramount with the department and it is certainly paramount with this government, to ensure that sustainable use of the forestry is there so that this renewable resource will continue to provide that base of employment in rural Nova Scotia, as well as social and recreational aspects that our forests provide to all citizens of Nova Scotia." I want to come back to that recreational aspect of it later.
[3:30 p.m.]
What I'm getting at I guess is what the department's plans are for this year, 2002-03, and as we look at the figures presented today of 22,000 people employed and probably a $1.4 billion level of revenue, I notice that has not changed much over the last three or four years. In your view, Mr. Minister, do you see a sustainable forestry, sustainable in terms of reforestation and protection as well as providing that same level of jobs for the next number of years?
MR. FAGE: A very good and insightful question when you look at the opportunities out there, but the important thing is that they're opportunities, as you've mentioned, that can be there next year and for the next generation. When we look at some of the things that have affected and impacted upon the forest industry in the last year, certainly issues dealing with the U.S. have affected the markets and the stability of them and other general economic issues associated with September 11th, and availability of supply in making sure that it's sustainable, I think, are key issues that the department and all Nova Scotians wrestle with and consider.
I think it's very important as a government and as a department that we make a strong commitment to sustainability and certainly when you look at the AGFOR report that was commissioned several years ago, it clearly indicated that Crown land was sustainable, that large-industrial holdings were sustainable, but we were not in a sustainable position in the smaller private woodlot landowner section in this province. When we look at this province, where it's approximately 75 per cent privately owned, obviously some of that is large-industrial, but it gives us all an indication of why it's so important to move forward on the sustainability section of that and that's why, certainly under the previous administration and this administration, it has been key to move forward on that sustainable forestry fund and
[Page 466]
making sure from both the private and the government sector that we commit those funds to sustainable work as in reforestation, silviculture.
I do believe that we can maintain a healthy industry that employs the numbers we have now if we ensure that we keep our eye strongly on the sustainability component and on the component of balanced use, as well, through that so there is the support of all Nova Scotians for that policy.
The registered buyers regulations dealing with water quality, wetlands, old growth, watercourses and harvesting plans, all these issues are the right steps to be taking to ensure that the sustainability issue can be addressed and we keep this industry vibrant. It is critical that we spend those funds and the industry and landowners spend those funds to get the small private woodlot section over to the sustainable category, and that can be achieved by making sure that we are working in our productive forests with silviculture treatments.
MR. MACASKILL: Mr. Minister, on Page 20.3 I want to look at Reforestation, the estimate for 2001-02, the forecast for 2001-02 and the estimate, of course, for 2002-03, and you see a reduction of $257,200.
MR. FAGE: Which Estimates Book is it?
MR. MACASKILL: The Supplementary Detail. Your estimate for 2001-02 is $392,500, the forecast for 2002-03 is $535,000, and the estimate for 2002-03 is $278,700. That's a reduction in my figures of $257,000, a decrease of over 50 per cent for Reforestation.
MR. FAGE: So the question is why is the number we're estimating for 2002-03 lower than what we had in 2001-02?
MR. MACASKILL: That's correct.
MR. FAGE: Oh, excuse me, I was confused.
MR. MACASKILL: The sustainability, of course, costs money. If we do reforestation, . . .
MR. FAGE: Yes, there are two explanations. There have been a number of forest techs transferred out of that budget in the coming year and the second reason is we're anticipating increased revenue which will be derived from more sales. We're anticipating having more orders for seedling sales this year, so we would derive more income and we have less employees involved. The $278,700, the reason that's down is there are less employees involved and that lowers our cost and there are more seedling sales anticipated
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this year. We have more orders for seedling sales, so that is more income and it lowers the cost to run the program.
MR. MACASKILL: So where will this balance out? Will it balance out to about the same as 2001-02, $535,000? Is that what you're saying? You're going to make up the money?
MR. FAGE: The reasons we have a smaller estimate for 2002-03 are two factors making a smaller estimate. We have less people working in that division, forest technicians, and, secondly, we have more orders and anticipate higher sales from our seedlings. So it will require less money in that division because we have increased our income for that as well. There are higher tree sales and less people working.
MR. MACASKILL: So, in other words, you are going to have less money on the spending side and more revenue on the . . .
MR. FAGE: On the income side. That's right, sir.
MR. MACASKILL: So, in other words, there will still be the same level of reforestation?
MR. FAGE: Yes.
MR. MACASKILL: Now on Forest Protection, you are estimating $1.934 million in 2001, you're forecasting $3.259 million and estimating, for 2002-03, close to $2 million. There is a reduction of $1.277 million. That's a 39 per cent decrease in forest protection. Can you explain that?
MR. FAGE: The reason the forecast for 2001-02 is substantially higher is because of the over-expenditure required to fight forest fires last year. The estimate reflects for 2002-03, bringing it back to a normal forecast.
MR. MACASKILL: So your department was over budget on forest fire protection last year?
MR. FAGE: Yes. The vast majority of that increase is the actual dollars involved in fighting a very long and very intense fire season.
MR. MACASKILL: Do you feel comfortable that the same thing could not happen this year? If you were over budget by a large degree last year, why do you cut it back for this year? Do you think you feel safe?
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MR. FAGE: I guess that's an extremely good question. When one budgets, and traditionally budgets for a forest firefighting season, one would pick an average number that's been used for a number of years. A year ago, the standard budget, I believe, was something over $300,000. We increased that to $550,000 last year to more accurately reflect what average costs have been for the last number of years. Last year was an exceptional year and, obviously, you're going to expend the money. If the forest fire is there, you have to fight it. Whether that's a realistic number, it's the best we can probably forecast, but if there's a forest fire, we will have to fight it and we will have to make it up.
[3:45 p.m.]
MR. MACASKILL: We will have to put it out.
MR. FAGE: Yes, we will have to make it up in our budget, the same as we did this year, in other places.
MR. MACASKILL: Since we are on the topic of firefighting, I understand from the news media that they're making changes in the firefighting equipment, the aircraft, water bombers, in New Brunswick. Aren't we part of that program?
MR. FAGE: Yes, what you're seeing with New Brunswick is a national agreement under the fire protection where there is a partnership and funds being made available from the federal government to all provinces and territories on a renewal basis over time for airborne firefighting fleets and it is our intention as a province to be involved in that. I believe this year our commitment under capital assets is the allocation of dollars to bring one new helicopter into service and continue on with that renewal program. But it's a federal initiative to all provinces and territories and each province's commitment will be whatever they're responsible for as far as airborne firefighting equipment. Ours is helicopters; New Brunswick's is planes. I believe I saw that same article. I think they're allocating two or three new planes in the coming year.
MR. MACASKILL: There was an article in the Halifax Chronicle-Herald about a week a ago. I took a copy of it: Forest industry doesn't buy uneven aged argument. I found it quite interesting. What is your view on that article? Have you read it? What are your views on even, aged harvesting?
MR. FAGE: I had the opportunity to read that article and I guess the article, if my memory serves me correctly, was generated by one small group's views on harvesting techniques and how they see the alternate opportunity to propagate and do selected thinnings and harvesting techniques, which is one technique. Obviously, the industry and proponents and their detractors have various discussions on clear-cutting as a technique. Obviously the article deals with condemning or not agreeing with if there's an uneven stand, eliminate the whole stand. Obviously, depending on what types of species are involved, what type of
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terrain is involved, how much is recoverable, it has a huge amount of variation, so it's very difficult to agree or disagree because, really, you have to get down to the given location and what's on that piece to determine if that would be a good management technique.
I think what the article to me really points out is there are harvesting techniques which are proper for one piece of property which wouldn't be proper for the next piece. It really highlights if you, as we move into the future, have an opportunity to provide proper forest management to a piece of property over time, you can develop the optimum technique. If you're beginning the initial, you have to deal with what you have and whether that's thinning, cutting or starting over again, that's a decision that has to be made at that point and it's very hard to apply to every case.
MR. MACASKILL: We have many contractors in the province already doing the normal pre-commercial thinning and the regular thinning that they do. The outcry towards clear-cutting, it seems to be getting stronger, at least it appears that way through media outlets. Do you think we will see the day when we may have to look more closely at our harvesting practices?
MR. FAGE: There's no question. I think harvesting practices always should and will have close scrutiny. Devising better harvesting and management techniques is a challenge that industry and government need to deal with and have to deal with. There certainly will always be applications, I think, that are applicable to given circumstances and species.
Certainly when you have the opportunity to tour different woodlots, there are some wonderful woodlots in Nova Scotia under private, independent, smaller independent ownership that are just models across the province. There are certainly larger independent or industrial holdings, you see some wonderful forest management techniques. Certainly the Crown requires harvest plans and the sustainable Registry of Buyers moves in that area. Those are all issues that are dealing with what is the best management technique, what is the best harvesting technique, not only economically but environmentally and sustainable. Certainly we're starting to see much more low-impact types of situations in the province than maybe somebody moving in and clear-cutting.
MR. MACASKILL: On the harvesting surveillance, as somebody who travels the woods quite a lot, as I do - I am an ATV fanatic - I find places where harvesting has been done. In some cases, not always, you see little blocks of cut wood in bunches. It would appear that it's probably not enough to make it worthwhile for a contractor to go back in and take this cord of wood out. Do we monitor the types of practices that these contractors do in all areas? Before you answer that, I notice areas where it's clear-cut right down to the highway. I thought there had to be a buffer zone between highways and harvesting. I thought that they weren't allowed to harvest right out to the highway. I'm wondering what type of surveillance is done on that. Do we have the resources to properly monitor the harvesting
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practices, or is this something that's probably the horse is out of the barn and it's too late to close the door?
MR. FAGE: I think the best way to address that is for the forest industry and private and Crown lands in Nova Scotia, and to myself as minister, one of the most significant things that has occurred is several months ago in the Province of Nova Scotia, for the first time regulations are in place that protect watercourses, that protect wetlands and as well prescribe for wildlife that yes, any given area that has been cut, that islands or clumps or representative stands have to be left for diversity of everything from insect to wildlife to flora and fauna, so that it will re-propagate on that particular harvest site.
That legislation or regulation also dealt with basal densities that have to be along watercourses, that complete harvesting and that equipment can no longer be in a watercourse or harvest on the banks of watercourses in this province, and clearly defines what they are. It is absolutely hugely significant that that covers private land for the first time, Crown land, and for the first time instead of a code of practice that really meant if you felt like doing some of those things you were describing you could, as a good management practice it's required in the Province of Nova Scotia as of February 1st.
That is hugely significant to go toward addressing some of those deficiencies that you've seen through the years when you have your ATV out, and I would see when I'm out on mine as well I might add. It was, in my view, time we moved forward on protecting watercourses, wetlands, and for the first time it's the law instead of a code of practice. I think that's hugely significant in going forward in addressing some of those issues you've raised there.
MR. MACASKILL: I think the regulations are there, Mr. Minister, but do we have the resources to police it? That's my concern.
MR. FAGE: In my mind, yes, no question. Obviously with harvesting plans, with silviculture reforestation, we have our people around the province who would be near harvesting and inspecting those sites. Even more critical, the citizens of Nova Scotia, if they see activity that they're concerned about, they're very proud of our province and our woodlands and our streams, and certainly if we receive a complaint we have our people on-site very quickly.
MR. MACASKILL: I'm going to be just giving you some general questions over the next 15 to 20 minutes. Tell me, as you recall, when I was minister we had, as one of the bigger issues, the Native harvesting. Have we done anything to reach a consensus with the Native community relative to harvesting? Are there Native harvesters out there, contractors who are taking advantage of our forest?
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MR. FAGE: Concerning Native harvesting, we have always been, as you were when you were minister, willing to talk about access or opportunity to contract, and certainly in some areas of Nova Scotia that has occurred. I guess on the broader issue of the entire subject, we are currently moving very close, with Aboriginal Affairs in this province and a number of federal agencies and the Native community, ready to sign a tripartite agreement where we would have the opportunity to sit down and discuss and negotiate those particular issues. The hope, obviously, would be to come up with a set of circumstances where a definition could be applied around that, and that an agreement could be reached.
MR. MACASKILL: Relative to next year, as we may or may not have a long, dry summer, do you have any threats of insect infestation on the horizon, like the gypsy moth?
MR. FAGE: As you're well aware, the brown spruce longhorn beetle that CFIA and we, in co-operation, are dealing with in Point Pleasant Park and the epicentre around here would be one we are dealing with, but the cost associated is a federal responsibility. As far as other Crown lands in the province, we're not anticipating any insect outbreak on the horizon.
MR. MACASKILL: The tussock moth is under control?
MR. FAGE: Yes.
MR. MACASKILL: And the gypsy moth?
MR. FAGE: Yes, that's the indication from staff. Having been a minister of the department, you would be fully aware, that can change if the wind blows the right way.
[4:00 p.m.]
MR. MACASKILL: And in your opinion or to the best of your knowledge, the brown spruce longhorn beetle - it's always a tongue twister that one - that's pretty well eradicated, there has been no sighting of new outbreaks?
MR. FAGE: That particular issue is one that CFIA directs and we have the industry committee, and privately the Maritime Lumber Bureau of the academic community, and people from our department on it. We can give you a much more detailed report, but to this point the entire effort has been identifying infected trees and then destroying those trees. I believe CFIA has spent approximately $4 million on that effort to this point and continue to work on that. They expect that to be at least another five- to 10-year effort for that eradication and control.
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Two trees had been identified outside the area, I believe, last November. They were in the Lower Sackville area. Those two trees obviously were destroyed and the entire area around Halifax here still has no roundwood leaving. It has to be no bark acceptable anywhere on the dressed lumber. It is the only type that's allowed out of this area here and Point Pleasant and the epicentre. But the two trees that were found in Lower Sackville, I believe last November, that is the largest distance from Point Pleasant Park that has ever been identified.
MR. MACASKILL: Mr. Minister, you say the trees have been destroyed. They're not marketable, are they?
MR. FAGE: The ones in Point Pleasant Park, there were a number of trees salvaged there. With that particular beetle, what CFIA requires is that absolutely all bark be removed and I believe the salvage at Point Pleasant actually had to be done on-site so that all material associated with the bark and the soft tissue area underneath the bark that's where the beetle would reproduce and would live and nourish itself. That's why they require the entire removal of the bark, but they do allow the salvage of the lumber or board material minus any bark.
MR. MACASKILL: So you remove the bark and burn it and market the log?
MR. FAGE: That's right.
MR. MACASKILL: Can I go back to your estimates for one moment on Page 20.3 on Parks Administration. You're forecasting $238,100 for 2001-02 and estimating $849,100 for 2002-03. That's an increase of $611,000. Can you explain why we have such a huge increase in administration?
MR. FAGE: What has happened there is actually allocations to different programs within that budget. If you take Parks Administration, Parks Planning, Park Design and Park Development, and deal with those numbers combined, they're virtually the same as what they were the previous year. What it is is different assigning of values within those three categories.
MR. MACASKILL: So it's a matter of branches swallowed up, is it? I see . . .
MR. FAGE: Yes, what has happened with reorganization . . .
MR. MACASKILL: Reorganization is the word I'm looking for. I see in Parks Planning it doesn't show any . . .
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MR. FAGE: Yes, and that has been rolled up into Parks Administration. If you take those categories dealing with parks there, Parks Administration, Parks Planning, Park Design, and take those with reorganization and roll those numbers together, they will give you virtually identical numbers as over here. The actual variance when you put those four together is $11,000 over a year.
MR. MACASKILL: I want to go to mining for a moment. You have a slight increase in the cost of lime or gypsum, whatever you call it. Has there been any backlash from the industry as we realize that gypsum is a low-price commodity which really has to be shipped in bulk, big time? Has there been any backlash from the gypsum companies relative to that increase?
MR. FAGE: The increase to gypsum actually was a 25 per cent increase which is sizeable and, obviously, when we were examining opportunities to receive more revenue, that was one of the lines that we looked at and there hasn't been an increase in that rate I believe since some time in the 1970s. So we made the decision for that to go forward. I have met with the representatives from the companies involved. I guess, obviously, my paraphrase of the meeting was a very good meeting. Obviously no one wants their costs to increase, but I guess their recommendation was one that a more advanced warning would have made it easier for them, but certainly they were here to do business in Nova Scotia and stay as long as there was a market for them.
MR. MACASKILL: I'm sure your department is well aware of the competition with foreign producers as well as synthetic gypsum or gypsum products. We have heard that over the last number of years where these gypsum companies, their profit is very small, and if they can't be competitive and if they can't ship in bulk and they can't move their stuff very cost-effectively, my understanding is they were under extreme pressure in Nova Scotia to try to compete with foreign producers. So we just hope that that won't have an effect on our gypsum producers in the province.
MR. FAGE: Yes, I'm certainly aware of those concerns and, obviously, we had a good discussion on those very points. Nova Scotia, when you look at the Carribean or Mexico, or Spain, the other primary markets, offers stability, a highly trained workforce and a number of economic issues that make us attractive.
I think on the short term, the biggest concern that was conveyed to me was probably, as you've raised, the synthetic gypsum that is a by-product of power generation and scrubbers. When you look at the volume we produce here in the province and that's new board and their various mixing components, their projections seem to indicate there looks like there will be a time period in the years ahead where the synthetic will be part of their market and decrease the amount that's required from somewhere out of natural mining from those major areas and the upgrades that have been done in the industry by the various plants,
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they certainly felt, and I would concur, those upgrades on the production side help our competitive position, and certainly that industry is a welcome investment to this province.
MR. MACASKILL: So at this point in time you have no backlash from the . . .
MR. FAGE: It's not my indication that we would.
MR. MACASKILL: Graves Island Provincial Park, I recall a few years ago there was a claim by somebody living close to the park about a right-of-way. Can you tell the committee, has that been settled with the landowner adjacent to Graves Island Provincial Park?
MR. FAGE: That particular park, certainly, it's our view that it is parkland and there's no question about that and, at this point, we have no intention of deeding Crown land out of a park for private use or ownership.
MR. MACASKILL: So that issue was put to rest?
MR. FAGE: Yes.
MR. MACASKILL: On Page 20.5, under Regional Services, there is a trend. Your District Offices - Central, and District Offices - Eastern have increased by over $100,000. Your District Offices - Western has increased by $400,000. Could you explain the increase of over $600,000 in these two districts?
MR. FAGE: That's the resource management and the regional - oh, you're talking district offices?
MR. MACASKILL: Yes, district offices, central and eastern.
MR. FAGE: The majority of that would be the wage increase component anticipated.
MR. MACASKILL: Parks Planning has taken a decrease in their budget of $325,000. Is that part of what you explained earlier relative to combining?
MR. FAGE: No, Parks Planning, that was all involved in those four park lines there and if you add those lines together so you can compare them year on year with the reorganization, it's out less than $11,000 to what it was before the reorganization on that particular page.
MR. MACASKILL: The Corporate Services Unit, Page 20.2, your Financial Services has increased over $250,000 since last year. Can you explain why there was such an increase?
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MR. FAGE: Two major components there are financial transfers from the Department of Finance as in employees and, again, the anticipated wage component increase there.
MR. MACASKILL: In your IT Services, there has been an increase of over $1.4 million. Can you explain to the committee the reason for the increase?
MR. FAGE: That one is also the employees' transfer; 21 people from the Department of Finance transferred to the IT unit at Natural Resources.
[4:15 p.m.]
MR. MACASKILL: Now can we go to deer for awhile. I'm looking at your numbers in the deer herd, particularly the kill, over the last three years, 1999, 2000 and 2001. We see a significant decline in the deer herd, at least the deer harvested or the deer killed, whatever. Can you explain? I know you can't grow deer, but I recall before, I think it was in 1998 when we opened the Antlerless Deer Draw, I think that was in 1999, I'm not sure, one of those years when we were only giving licences to hunt buck deer. Now do you plan anything to try to protect the herd?
MR. FAGE: As you are aware, the winter of 2001-02 was particularly severe so there was a drastic decline in the deer population. It was a very hard winter on them. In response to that, last year, after the counts in the Spring, the decision was made to reduce antlerless deer-hunting permits by 13,200 licences for the Fall of 2001. So that particular number really has the number of antlerless deer permits for last Fall. We've gone through this particular winter season, which is the most crucial part on deer numbers, and we are conducting those deer counts again, at this time, through the various zones and regions through Nova Scotia and once those numbers are in, then we would make the decision on antlerless deer or buck only, or whether it's male or female, and what zones you would be allowed to pursue those deer in. But until we get those numbers in this year and, hopefully, with what the winter appeared to be like, the deer possibly did very well last winter.
MR. MACASKILL: Do your scientists give a reason? Deer hunting is a very popular sport, particularly in the rural areas. It adds quite a lot to the economy. When I look at the County of Victoria and only 20 deer killed, it certainly would be a cause for concern to people involved in the sport.
MR. FAGE: There's no question, and I apologize. I don't have the exact breakdown of kills with me from last year, but the opportunity, if it's lessened in the area, many hunters will go to another zone where there is greater opportunity and, certainly, maintaining viable populations is the key role of the biologists and the recommendations that would come forward. There are areas in Nova Scotia, just as you've pointed out, that the harvest rate is low and, obviously, there can be two major things, but a number of minor things involved
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which are the number of licence sales and people hunting in that area, and then there is success ratio related to the population. But, certainly, that assessment on every zone on how much harvesting will be allowed, that's the highest component that there is enough population there that they can reproduce and you would see expansion, you would hope, in those areas.
MR. MACASKILL: But is it harvesting or predators that causes the decline, in your opinion?
MR. FAGE: I wouldn't speak on behalf of the biologists because I can't quote them right now, but there's no question when you have severe snow conditions in the wintertime, that is absolutely the most vulnerable time for the deer population because not only do they face the cold and starvation, also their predators have a very easy time corralling and catching them. So there's no question that we have a drop in deer population. It's rarely related to hunting pressure. It's related to availability of food supply and snow depth and the access of predators to easily get to the herd. Wintertime is when that happens, not hunting season.
MR. CHAIRMAN: You have 10 minutes remaining, sir.
MR. MACASKILL: I notice in your press release from last year, and we have the figures here and they're down significantly in every county.
MR. FAGE: In the survey, they were down last year, on average for the province, between 40 per cent and 50 per cent. In some areas the number was slightly higher than that, from the winter.
MR. MACASKILL: Now we're going to go to reindeer. As you know, there's a farm in Lewis Mills, where they have a farm of reindeer. Can you tell the committee, has that been a successful venture? Do you know about it?
MR. FAGE: There are a number of operations in Nova Scotia. They're licensed under the exotic species permits for production. I guess I would find it hard to comment on their economic viability. They're all private companies, and they have various methods or ways they can maximize their economic potential, from meat production to hide to horn production. It seemed to be a popular industry a few years ago, with a lot of interest in people getting in. By the amount of requests and interest out there, there's no question that in this province, probably the most optimistic view is it has stabilized; if you were less than optimistic, it's probably on the decrease.
MR. MACASKILL: Finally, I want to turn to the coal leases in Cape Breton. I know there's a very keen interest in the coal leases, and what the government plans to do with them when the time approaches that your department will deal with that issue. Am I correct in saying that there's a lot of interest in these leases as this point in time?
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MR. FAGE: No question, honourable member, there's a lot of interest. The interest is primarily, or almost exclusively at this point, centred in proposals coming from the local communities involved.
MR. MACASKILL: How many blocks of leases, as you see them, are there? I know there are the mining leases and the surface operations. Are they all in one block? How many blocks of leases are there?
MR. FAGE: I find it hard to describe in those terms. What we're dealing with here are lands or mineral rights. Obviously the surface rights, dealing with Devco, they have surface area that the federal government owns. We're actually dealing with the mineral rights, in most cases, below the surface. We're currently engaged in discussions and negotiations with the federal government. They're wishing to surrender them to the province. Obviously we're willing to accept them, but we want to make sure that the remediation and environmental issues that come with them are properly compensated for by the federal government so that the province doesn't end up with a large financial liability to ensure that correction.
I think the easiest way I could describe it is there are a number of surface or near-surface blocks, or lease opportunities instead of blocks, involved that would involve the Devco operation, as well as other ones that would involve natural resources or the mineral rights associated there, near-surface. Then there's the huge resource involved in underground, i.e. Donkin and the other related quarries there.
MR. MACASKILL: I know it's a difficult question to ask you at this point in time, but apparently there's equipment down at the Prince Mine and some people who are proponents - I guess we can use that word - would love to salvage that equipment if the leases could be made available before a certain period of time. Do you think there's a possibility that those leases will be released in the not too distant future, or in time to save that equipment that's down at Prince Mine?
MR. FAGE: There are a number of issues involved in that particular discussion. I think the first one is that Devco owns that equipment and a proponent would have to deal with the federal government; that would be the primary one. The other issue then is flooding and those issues related to recovery. At this point, ensuring that environment and remediation, the cost of that work needed to be done, stays or remains with the federal government is paramount. A decision by any proponent to recover that equipment and obtain ownership of it certainly is a discussion that they need to have with Devco or the federal government.
MR. MACASKILL: Devco has released the leases to the province, haven't they, at this point in time?
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MR. FAGE: No, we have not accepted the leases. They've petitioned us to return them to us. We have an obligation to ensure that remediation and environment are addressed before we accept those leases. We are in the final stage of those negotiations and discussions.
MR. MACASKILL: Thank you, Mr. Minister. Mr. Chairman, those are all the questions I have for the minister.
MR. CHAIRMAN: Your time is up a little early, but I appreciate that. Any questions from the government caucus, before we go to the Opposition again? Hearing none, we will go to the NDP caucus.
The honourable member for Cape Breton Centre.
MR. FRANK CORBETT: Mr. Chairman, I will be sharing my time with, among others, the member for Halifax Chebucto.
Mr. Minister, surprise, we're going to continue along the Devco line. I'm sure you're shocked. Caught you unaware. Mr. Minister, we've had this discussion before. I guess I've asked this question before, for the record, around, especially operations that Devco may have that they've actually operated, for instance the Prince Mine, isn't it in the best interests all around, that if you're going to hold off until you get environmental remediation work done to the province's satisfaction, to say, well, let's come up with a deal that will allow the pumps to run in Prince to make it appropriate for a couple of things: obviously easier to get at the resource, which indeed would be advantageous, obviously, to the province; and then would be advantageous to the federal government in that they could leave that equipment there with the possibility of resale to new owners, if it happened?
MR. FAGE: There's no question that those types of arrangements, if they could be achieved with the federal government, do offer some options. The situation right now, I think, though, is would proponents, who would want to look at that, want to invest the time, the money and the effort to convince the federal government to provide that resource and that expense, and that there would be a buyer for that equipment. I guess that discussion would be one that would be critical if the federal government had a proponent like that and would come forward with discussions with the proponent. That part has never happened yet.
MR. CORBETT: I appreciate what you're saying. I think there seems to be more of a pushing against each other than trying to work forward to see if there is a buyer for that facility. I guess what I'm saying is, has there ever been discussions with the federal government to say, look, while we're negotiating what you're going to do around environmental remediation, what we want you to do is to keep the pumps running in that mine so it would be easy if indeed someone wanted to buy that resource, we could sell it to them?
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[4:30 p.m.]
MR. FAGE: I think it's important to look at the process that the federal government has gone through here and, again, it's their equipment and their property. The federal government, if you follow their timelines or time frames, for four years actively and for two years openly, went worldwide because their option was to sell it as a going concern to a buyer. They were unable to find a buyer, do any of those types of things and sell it and that's why they want to turn the leases back to us.
Again, a proponent with the dollars to buy it and go forward wasn't identified in that process. Certainly the federal government had no appetite after going through that process to be in a situation that they want to continue to incur expense. Every time we've had discussions, they want to lower their expense.
MR. CORBETT: Well, I don't want to put words in your mouth, minister, but I guess then you're saying the possibility of Prince Mine being operated again, it's not very likely.
MR. FAGE: I certainly can't speak for private opportunities, mining companies or those types of issues. Once we have the leases back, we are more than willing and open to talk to any organization, group, company or individual that does not require financing from the Province of Nova Scotia to become involved in Prince or any other mining operation. We will enter into - surface or below surface - a tendering process to look at proposals, but one of the key tenets of those proposals is that it has to be privately funded or not funded by the Province of Nova Scotia. The province does not have the resources and is not looking to be involved in funding an operation to mine coal. We're looking to private enterprise to provide those opportunities and those expressions of interest, certainly the surface ones, are very regular which is very encouraging.
MR. CORBETT: Again, I'm trying not to put words in your mouth, but the likelihood of Prince being sold as a working operation is very minimal. The fact is that there's no active pumping of that mine if it's not operating. In my experience around mining, it appears that there are a couple of factors, that mine would be almost impossible to sell if it were flooded because of the environmental concerns around pumping it out. One could probably take an educated guess and say that a lot of people didn't want to buy those underground mines because they saw it as a large encumbrance around absorbing a larger-than-needed workforce.
With contractual obligations to its employees out of the way, I would have thought it would have made it a little easier to sell - I would say a lot easier. The fact is, to give that its best shot would be to ask the federal government, because we're talking minimal costs here of keeping pumps running until the leases were turned over to the province after successful negotiations on environmental remediation. Then we could try to market that mine.
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MR. FAGE: I obviously appreciate what you're asking and certainly I think when you review the opportunities there the Prince Mine, the underground operations, currently the assets are 100 per cent in federal hands. They spent a number of years searching for a buyer. None of those have been achieved. The province's immediate concern is keeping the federal government to their commitment on environmental remediation for the long-term health of the entire community and of those sites. We're negotiating through this process, but any physical expenditures or assets relating to the pumping and health and safety, all those types of things are clearly issues with the federal government, issues they would have to feel comfortable dealing with. To this point, they, because they are the owners, are calling the shots on that operation.
MR. CORBETT: I still think there can be some pressure put on. When Devco was operating, what was the per-ton royalty we got from Cape Breton Development Corporation?
MR. FAGE: The coal royalty was 25 cents a ton.
MR. CORBETT: I don't suspect you have this right at your fingertips, but could you tell me, or undertake to tell me, when we received the last cheque in royalties from the federal government and in total before they turned the leases over? How much did we get in royalties since 1968?
MR. FAGE: We will find that information for you. So, that was the amount of the cheque, the volume and the last date it was issued?
MR. CORBETT: Yes, the last one we got and the total we got in royalties since 1968.
MR. FAGE: No problem.
MR. CORBETT: A few other things before I turn it over to my colleague. The strip mining seems to be a fairly, if rumours - and I've talked to a few people who have said they're applying for leases. Indeed, Devco would have been one of the ones that had some of the larger tracts of land. Has there actually been an increase in interest and has anybody applied for leases on Devco property and off Devco property?
MR. FAGE: The process myself and staff have set up and how we've been dealing with various people who have expressed an interest is, once the negotiations are completed on the surrender of the licence with the federal government, then we will enter into a fair and open process on access to those. There has been a large amount of interest expressed from various groups and individuals on those surface opportunities there.
The other thing I think I should hasten to add is obviously there could possibly and may possibly be, in the short term or the long term, opportunities to export coal from Nova Scotia that tie into some of our earlier discussions as well as now, on the surface. The
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opportunity for contracts in Nova Scotia is some indigenous coal use in residential Cape Breton, but Nova Scotia Power would be the primary benefactor. The amount of sulphur, there are some limitations there. That will have a degree of influence on how much blending you would want to see and those types of opportunities to look at even more volume instead of less. One may be into a situation where you are asking for a blended coal instead of a single strip to meet the customer's demand.
MR. CORBETT: Again, I just want to go back to holding back, if we can use that term, from accepting the leases, because of, as you stated, environmental remediation concerns, and you want to make sure that the package is finished. To a point, I understand and appreciate it. There's another side that says things are being encumbered by that. There's really no pressure on those, whether you sign off or not. I'm thinking primarily in the Donkin situation where there's been no real mining on that. The only thing that's been done on that site was the two bore holes. There's really no on-surface environmental impact. I guess I'm asking, with that in mind, are you still saying that lease will not be put up for bid or auction or sold, whichever term, until the environmental concerns are all signed off?
MR. FAGE: The reality of surrendering the leases, you can't surrender part of a lease, you either surrender the lease or you don't surrender the lease. Assigning a new lease, if you don't have the lease back from the previous holder, then you don't have one to sign. That's why it's critical to finish one phase before you start the other. The lever here on forcing the federal government to honour their obligation is on the terms of surrendering the lease.
MR. CORBETT: That being fair, I guess where I have a real problem then, Mr. Minister, is that at no point did any provincial departments step in over an area that we would probably say is one of the best heavily polluted of the Devco sites, and that is the coal wash plant, it's called the VJ Plant, Victoria Junction Plant. That was allowed to be hived off and sold separately. I appreciate that we're not talking about leases per se, but we're talking about a Crown Corporation that was allowed to be hived off. If it's a real concern about the environment, the provincial government did not say one word about that. I'm perplexed over that.
MR. FAGE: Again, this has no relationship in reality to the leases. What you're talking about are surface assets owned by the federal government, which are not in any way part of the coal leases. Any regulation dealing with any department in regard to safety or environment, unless another level of jurisdiction superceded it, it would be automatic that those regulations had to be abided by. The federal government owned these assets, they held discussions on purchase and transfer of those assets. They chose to sell them.
MR. CORBETT: I hear what you're saying. If they chose to sell the Donkin Mine, do you feel they have the right to do that?
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[4:45 p.m.]
MR. FAGE: Well, they've been trying to sell the Donkin Mine, shopping it around worldwide, for a number of years. They were unsuccessful. That's why they want to surrender the leases to the province. Obviously, the equipment are the physical assets. Whether the hole in the ground is ownership or worth something at that point is debatable.
MR. CORBETT: I would disagree with you. I think there's been more than interest in Donkin resources. We've met with other groups and you, Mr. Minister. Just one more question, and then I will turn it over to my colleague here, on the area of Dominion Beach. I'm going to switch gears, way over. I just want to give you a chance to give yourself a pat on the back and tell me a whole bunch of good news. What's your department's plan this year for involvement with Dominion Beach, appreciating that I think the minister is aware there are committees in and around - you've met with our committee in Dominion about it and so on. Can you get me up-to-date on where your department is in regard to the beach, particularly any protection from erosion, one of the main things, and then moving forward about any other aspects of the beach you may have?
MR. FAGE: Honourable member, you're absolutely right, it was a nice opportunity for me to visit your constituency and meet with concerned people on that particular beach, and have a chance to see it firsthand. There appeared to be, when we met, an interest in forming a community group, and staff is available to help put that process ahead. Obviously our budgets are not huge or large. The issue of the erosion there is an important one and has to be addressed in some manner. As far as individual allocations of budget, we're looking at priorities of different beaches right now, and Dominion is one we're looking at and considering. Sorry, I don't have an announcement for you here this afternoon.
MR. CORBETT: You let me down again. (Laughter)
MR. FAGE: Did I build you up far enough though?
MR. CORBETT: No lifeline on that beach. (Laughter) I'm going to turn it over now to my colleague, the member for Halifax Chebucto.
MR. CHAIRMAN: The honourable member for Halifax Chebucto, your time is now 4:47 p.m.
MR. HOWARD EPSTEIN: Mr. Minister, I wonder if we can have a discussion about forestry. I would like to turn to a document that I'm sure you've seen, it's the report just done in November 2001 by GPI Atlantic, Genuine Progress Index for Atlantic Canada. This is a local research organization that specializes in looking at economic issues in a particular way, and what they're concerned about is the measure of what they call sustainable development.
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They did a report, a two-volume report, that was published in November called their Forest Accounts. I'm looking at Volume 1, which is called Indicators of Ecological, Economic & Social Values of Forests in Nova Scotia. In the executive summary they make the following state