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HALIFAX, TUESDAY, MAY 4, 2004
SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY
2:03 P.M.
CHAIRMAN
Mr. Mark Parent
MR. CHAIRMAN: The Liberal caucus has 20 minutes left.
The honourable member for Cape Breton West.
MR. RUSSELL MACKINNON: Mr. Chairman, yesterday I was questioning the minister with regard to the different agents doing investments for the province of Nova Scotia. I believe the minister indicated that he would provide further detail on that. Is he able to do that today?
MR. CHAIRMAN: The honourable Minister of Finance.
HON. PETER CHRISTIE: We will have that very shortly and I will get that to you as soon as it's completed and ready.
MR. MACKINNON: Before the day is out?
MR. CHRISTIE: Oh, before the day is out, yes.
MR. MACKINNON: Okay. There are a number of issues. Number one, with regard to the government's 10 per cent tax break. Obviously when the government would make a policy decision of that calibre, he and his colleagues in Cabinet would have received some advice from officials within the Department of Finance. Would the minister please outline as to what advice officials within his department gave on that particular issue prior to the decision being made and what are the implications of the various options?
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MR. CHRISTIE: Well, my recollection of the events surrounding that was the fact that we had, as I indicated yesterday, gone through the budget process, we had set out the priorities where we solved the spending needs, and then we were looking at the revenues and how that was going to flow out. What we would have asked the Department of Finance officials to do was look at the opportunity to find a way to close that $90 million gap and that was the proposal that came to us, that we eventually chose.
MR. MACKINNON: Was there any advice given in written from, memo form or otherwise, e-mails?
MR. CHRISTIE: I'll check with them, but mostly it was presentations made to Cabinet, that they would come and make presentations to Cabinet. I don't recall written forms going back and forth.
MR. MACKINNON: Were all their presentations just oral? Were there any slides? Were there any charts?
MR. CHRISTIE: I think my recollection would be that on one day there was slides but most of the time it was looking at opportunities and looking at options that they would make in verbal presentations to Cabinet.
MR. MACKINNON: Yes. Those slides that you referred to, are they available within the Department of Finance?
MR. CHRISTIE: I'm advised that those slides that we were speaking of would be advice to Cabinet so they would have to look at whether those can be made available or not under the regular rules.
MR. MACKINNON: That's correct, but the decision has already been made, so that would be an after issue.
MR. CHRISTIE: Certainly, I'm advised that they'll look at it in the context of the decision having been taken, yes.
MR. MACKINNON: So you are confirming there's at least one presentation in written format?
MR. CHRISTIE: I think I used the word slides.
MR. MACKINNON: Slides. When a decision of Cabinet is made like that, as I understand, there are generally various options laid out and the implications, the benefits and the negatives to each of those options, did you present such an Order in Council to Cabinet?
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MR. CHRISTIE: No, I did not.
MR. MACKINNON: No, so it was a policy decision that was made based on those slide presentations and general discussions from officials within the Department of Finance?
MR. CHRISTIE: Most of the meetings leading up to the issue as I indicated were done verbally, but I do recall one set of slides relative to . . .
MR. MACKINNON: Who made those presentations?
MR. CHRISTIE: Generally, it would be the Deputy Minister of Finance.
MR. MACKINNON: Who else?
MR. CHRISTIE: Normally the assistant deputy minister was there and sometimes Mr. Hennebury was there. My recollection would be the three of them were there in most cases.
MR. MACKINNON: Okay, now at any point in time did officials within the Department of Finance recommend against the 10 per cent tax cut?
MR. CHRISTIE: Let's be clear, are you asking me the question, did they recommend against doing the tax cut at any point in time?
MR. MACKINNON: Did they raise concerns about what the implications were for the bottom line of the province in terms of number one, balancing the budget; number two, reducing the debt and so on?
MR. CHRISTIE: Well, certainly they would have looked at a lot of options, but their challenge for this year was to look at how to close the gap that had been created by the total of expenses we were going to have and once we had established the federal revenue. So that was the challenge they were working on this year.
MR. MACKINNON: Obviously, there's been some backtracking on that 10 per cent tax cut, so it's obvious that the government did not achieve its goal that it ultimately set out to achieve. What advice did the minister receive going into his budget that would rescind part of the 10 per cent tax cut, and was any of that advice given at the time when the 10 per cent tax cut was put on the table last year?
MR. CHRISTIE: Well, I have a disadvantage, I wasn't there last year, so I'm not able to speak to that.
MR. MACKINNON: No, but you were a part of government.
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MR. CHRISTIE: Oh, indeed.
MR. MACKINNON: And you were in Cabinet.
MR. CHRISTIE: I agree to that.
MR. MACKINNON: And there was a slide presentation before Cabinet.
MR. CHRISTIE: Well, the slide presentation we were speaking about was this year.
MR. MACKINNON: Yes, and even last year if they proposed it, you were part of Cabinet, they would have made a presentation.
MR. CHRISTIE: Yes, and they . . .
MR. MACKINNON: So there were two presentations to Cabinet?
MR. CHRISTIE: Oh, indeed. We're talking about two different years. There certainly were many presentations to Cabinet. I think your question was, what did the Finance officials recommend? Well, Finance officials last year looked at the way the tax reduction would be structured. In terms of this year, the challenge they had was to look at finding opportunities to close the gap that we had between the projected expenditures and the revenues we had projected.
MR. MACKINNON: Let's put it in layman's terms. Did anyone in the Department of Finance indicate considerable concern about the fact that this 10 per cent tax cut and this $155 rebate was not going to be in the best interests of the province before the decision was made? That it was better to play it safe, get control of the debt, pay down the debt, keep the budget balanced and so on?
MR. CHRISTIE: Yes. They did not make it when I was present.
MR. MACKINNON: So what you're saying, Mr. Minister, is everyone in the Department of Finance favoured this initiative?
MR. CHRISTIE: No, I said they didn't make that known when I was present.
MR. MACKINNON: I see. Do you know of anyone or anywhere within government that that concern was raised?
MR. CHRISTIE: Nobody has said that to me in my term as Minister of Finance.
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MR. MACKINNON: But do you have any knowledge whatsoever that there may have been concerns?
MR. CHRISTIE: In recollection, over the last six or seven months, there have been discussions about that being an option and the timing. Since the decision was to move forward with it, most of the work of Finance has been to support that decision and to move forward. Indeed, what we asked them to do was look at opportunities for closing the gap between revenue and expenditures this year.
MR. MACKINNON: The operative word is most, but not all. You said most within the Department of Finance but not all.
MR. CHRISTIE: What I also indicated is nobody has come and said to me, I think that was a mistake and therefore I think you went in the wrong direction. If there is anybody, they haven't identified themselves to me.
MR. MACKINNON: Okay. It's just that I find it so perplexing that the government was going 100 per cent in one direction with great fanfare and less than a year later, it's made a reversal, conceding that the government is going to have a shortfall in revenues forcing up user fees, which many would argue are tax increases, and then rescinding part of the tax break. I'm just wondering, what was the advantage? It would appear - forgive the cynicism - as if it were only for political advantage, which backfired.
MR. CHRISTIE: I take a different view of it, obviously.
MR. MACKINNON: You have to, you're on the government side.
MR. CHRISTIE: Well, but I think I'll share that view with you also. The view I take is that you have to look at the priorities that you're dealing with at that particular point in time. I mean, it's no question we were very clear on the fact that we, as a government, felt tax reductions would help the economy, it would put money back in people's pocket to allow them to spend it. As we've indicated, we still view that. Yes, we had to rethink a part of that decision this year to enable us to close the gap in the priorities we set. That's the view I take of it. I'm not quite so cynical as you are.
MR. MACKINNON: Well, you gave it to them in one hand, but when they came out the back door, you siphoned it out of their back pockets. That seems to be the suggestion.
If I could switch the initiative just slightly. In 1999, the government, under the Provincial Finance Act, made an amendment with regard to the SAP program. I think it's down towards the bottom part of the Financial Measures (2000) Act in that particular year. I don't have the actual wording or the section, but it was effectively to put all the various departments, agencies, boards and commissions of government on-line with what the
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provincial government had put in place. After that bill was approved - I believe the honourable Neil LeBlanc was Minister of Finance at the time - a directive was issued to all on-line departments and also to school boards and municipalities that they commence processing - at least begin a process - to go into the same computer system as the provincial government. That's the SAP program.
[2:15 p.m.]
Obviously, the minister and his department were contemplating a saving. What was the long-term objective? Is it to eventually start reducing the human resources component at these various levels so as to generate efficiency and government expenditure?
MR. CHRISTIE: I think the major objective is to make all of the government reporting consistent, to attempt to make more consistency and to make it better and more accurate. I think having read that report you'll know that when you consolidate the DHAs or the school boards, using different methods creates some issues. So the overall objective was to get everybody on the same reporting basis.
Part of that, also, had to do with the fact that we needed to make those reporting changes because we were moving to GAAP and GAAP requires certain things to be done. We had to ensure all the systems did that.
MR. MACKINNON: Was there a report prepared for the Department of Finance that contemplated a reduction in human resources, either at the provincial level, municipal level or school board level?
MR. CHRISTIE: In our recollection, there was no report that indicated reduction. The reports and the objective were more for the efficiencies in terms of achieving efficiencies.
MR. MACKINNON: So what would the $3.5 million be for in expenditure within the Department of Finance for SAP Canada Inc.? I would imagine every year there's been quite an expenditure on that line item.
MR. CHRISTIE: There's a variety of things, but licensing agreements would certainly be one of those as we license additional users and, obviously, as we move to additional training, to provide training to the various agencies and boards that are going to come onto that, we would require people to do training. You'll notice if you go into the Provincial Building on the third floor, you'll notice it says the SAP training room where people come down. It requires people to come in and requires training monies.
MR. MACKINNON: How many of the 55 municipalities now have the SAP program?
MR. CHRISTIE: The number that people can recollect is around seven.
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MR. MACKINNON: Seven out of 55?
MR. CHRISTIE: Yes.
MR. MACKINNON: And all 55 were directed to move towards the SAP program?
MR. CHRISTIE: As to the municipalities, that was going to be voluntary. That was volunteering of the situation for them to come. The direction was to the other, closer, organizations and we referred to, say, Sherbrooke Village or a number of places like that.
MR. MACKINNON: Were all school boards given that directive as well?
MR. CHRISTIE: I'm advised that the school boards would tender on that process, they would tender in terms of what system. They voluntarily chose to come towards the SAP system and they're starting to move in that direction.
MR. MACKINNON: Were they not given a directive in August 1999 to move to the SAP program by the Department of Education because the Department of Education was given that directive from the Department of Finance?
MR. CHRISTIE: The school boards were encouraged but not directed to take on this product. They had gone to tender and found out that it would be an expensive proposition, so at the time the province encouraged them to come towards the SAP system and we indicated we would, for example, provide support, training and so on if they moved in that direction. That's a voluntary choice of theirs to start and come in this direction.
MR. MACKINNON: So it's voluntary now, but in August 1999, it was a directive, was it not?
MR. CHRISTIE: I'm advised it was not. I'm being told that nobody's aware of any directive, but certainly they were trying to through moral suasion but there was no directive that says you must.
MR. MACKINNON: How many of the school boards in the province are now with the SAP program?
MR. CHRISTIE: All of them are now.
MR. MACKINNON: All of them. What about all the housing authorities in the province?
MR. CHRISTIE: I'm advised that there are not many, but the majority of things are working towards payroll and HR systems with them.
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MR. MACKINNON: Why that particular issue and not some of the other issues?
MR. CHRISTIE: Obviously, that was the issue they identified they wanted to move with first. That was what they viewed as their highest priority.
MR. MACKINNON: The housing authorities identified finance as the issue that they wanted to go to the SAP program?
MR. CHRISTIE: Your question is did they indicate they wanted to go to the SAP program?
MR. MACKINNON: Yes.
MR. CHRISTIE: They chose to move. As I indicated, on the human resources side, they are on the payroll. We do not have them lined up to come on the SAP program at this point in time. That's not to suggest they won't. But in terms of our priorities, the priorities they identified were working on payroll and HR portions of the SAP system first.
MR. MACKINNON: Would the minister be kind enough to table the directive that was given to the individual line departments back in July/August 1999 with regard to this particular issue of having various government departments and agencies of government to move to the SAP program?
MR. CHRISTIE: We will locate any initiatives that were in the Summer of 1999, regarding the SAP program to the line departments and certainly table those, yes.
MR. MACKINNON: I think the minister may find there is some rather enlightening detail there that he may not be aware of.
I want to go back, because I know the minister has indicated he's going to provide the detail on the investment portfolios. Some of the investor companies, the money managers were relieved of their duties because the government didn't get the value for dollar that it wanted, and so on. How many of those were relieved of their duties? Was it just that one that he referred to yesterday?
MR. CHRISTIE: Over the last couple of years, it was just the one.
MR. MACKINNON: Just the one. Did that company consistently not do well?
MR. CHAIRMAN: I'm sorry, the time is up. Please answer the question, then we will move on.
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MR. CHRISTIE: As I indicated to the honourable member yesterday, what had happened through 1996, that company was given $50 million. It was placed, in 2002, on the watch list for poor performance. In December 2002, it was terminated because their performance wasn't reading the target of the other companies. But your question was, was it only the one and the answer is yes, over the last couple of years.
MR. CHAIRMAN: Any questions from the government caucus?
The honourable member for Hants East.
MR. JOHN MACDONELL: Just a couple of issues for me, and whether or not that will mean a couple of questions, I'm not sure but I think it will at least mean two. I have a question around the teachers' pension plan. It's my understanding that in 2003 there was to be a review of that plan and that that never occurred. So can you tell me if it ever happened?
MR. CHRISTIE: Did you suggest that that had not occurred?
MR. MACDONELL: I suggested that had not occurred.
MR. CHRISTIE: Because I am advised it's still ongoing. It started and it's still ongoing, that review. They meet every couple of months surrounding that issue. Obviously, as I indicated to the member for Halifax Fairview yesterday, they have their guidelines that they have to look, and I indicated to him I would submit one of those guideline documents so you can see what the committee's performance targets are. But our pension people have been meeting with them regularly in terms of monitoring their performance and the discussions of the administration of the plan. I am just advised there's an additional part of that review, that Schedule B payments are part of the discussions that are ongoing too.
MR. MACDONELL: Say that again, the additional part . . .
MR. CHRISTIE: The Schedule B payments. That's part of the discussions they've been having too.
MR. MACDONELL: I guess two questions from that. One is, who is the they that have been meeting to discuss this?
MR. CHRISTIE: They is the Teachers Pension Partner Board that was set up in the late 1990s, they have been meeting with people from Finance - I'm sorry, it was set up in 1993. I am corrected on the dates.
MR. MACDONELL: This board was set up in 1993, and has this board been meeting since 1993?
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MR. CHRISTIE: Yes.
MR. MACDONELL: I don't think that's where I was going, but it might be where I'm ended. I was under the impression it was another body that was going to do this review in about 2003, 10 years after the province had looked at the unfunded liability. So is there supposed to be another body looking at this? Reviewing it?
MR. CHRISTIE: Yes, I am advised that you're correct on the 10 years, but this is the same body we are referring to as doing it.
MR. MACDONELL: The Schedule B payment, is that a known amount?
MR. CHRISTIE: It's something that's in the process of being calculated. If you look at the 1993 agreement you will see the calculation formula that's in there. That's being worked on as we speak, and that's part of what the group is meeting to to look at.
MR. MACDONELL: You didn't answer my question. Is it a suspected amount then, if not known, are we talking about a ballpark range, $300,000, $700,000?
MR. CHRISTIE: I am advised that that Schedule B, were payments that were going to be - as you realize payments were going to be made in that period of time - so, as that occurred, now they come to the period of time and they have to calculate what's left of the liabilities against the pension fund. That calculation is in the works, so we don't have that number. The actuaries are doing it. It's not the people in this fund, it's the actuaries. The people in the group are being supportive of the actuarial calculations.
MR. MACDONELL: Have you budgeted for that in this year? The possibility of that payment?
MR. CHRISTIE: Those payments have been being calculated out over the 10 years, and the terms and conditions of what's in that agreement will be met under the pension contributions plan that we have.
MR. MACDONELL: What's your timeline on having the calculation made, or coming to some final conclusion or resolution of that?
MR. CHRISTIE: We could suggest a timeline but, quite honestly, as you know, this is a joint board of the Teachers Union and us. So for us to say we'll be done there would be to make the assumption that the Teachers Union would be ready. Quite honestly, we're moving in concert on this.
MR. MACDONELL: Are you saying that the Teachers Union is not suggesting any timeline?
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MR. CHRISTIE: No, I'm just suggesting I can't speak for the Teachers Union.
MR. MACDONELL: I'm not asking you to. But if you were to say the teachers wanted it done yesterday, then I assume they're not the problem. Are you getting any indication from the Teachers Union when they would like to have this finalized?
[2:30 p.m.]
MR. CHRISTIE: I'm advised that this process has been in the works for about a year and a half. Neither group is lagging or anything, but the completion will be as soon as they can, based on the fact that they need the evidence to work with and get the actual report. Your question is, when will it be done? As soon as they can bring it to a conclusion. I am advised both sides are very willing participants and they want to draw this to a conclusion, but I'm not able to project a date at this point.
MR. MACDONELL: I'm not sure that retired teachers are so keen to see this drag on. I want to thank you for that, I appreciate it.
The other issue I want to raise is around Hurricane Juan. If my memory's right, the province budgeted $10 million for disaster relief after Hurricane Juan?
MR. CHRISTIE: That was the first number we posted. As you recall, you were required to indicate to the federal government what level of participation was going to be involved so we indicated the $10 million was what we were funding at that first instance.
MR. MACDONELL: Did you make a second funding indication? I wasn't aware of it.
MR. CHRISTIE: We'd have to refer you to EMO and TPW for that. We didn't make a second one, but the final claim numbers and so on would be with EMO.
MR. MACDONELL: But EMO was funded by the province, the Department of Finance would . . .
MR. CHRISTIE: Oh, indeed. The $10 million would be the negotiating point they would start with the federal government. Initially you had to respond at the time with the dollars that were going to be available so you could match them with the federal government. Then you discussed or negotiated the percentage they were going to have. What I'm suggesting to you is that was done by EMO. I wasn't involved in that, but clearly the $10 million we put up was so we could react to that.
MR. MACDONELL: So are you aware of what the uptake was? Have we spent the $10 million, have we spent $5 million?
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MR. CHRISTIE: I'm just going to look at the Public Service estimates which will show us the amount they had. I'm using the figures on Page 15.7, which is the Emergency Measures Organization, and the amount that was used for this fiscal year ending 2004 was $13.014 million. I'm giving you a net figure, after salaries and all the various others chargeable to other departments, but that's the figure - your question was, how did you do on the $10 million? The answer is about $13 million.
MR. MACDONELL: Okay, so you're saying you did $3 million more?
MR. CHRISTIE: Yes, that's right. It cost $3 million more at the end of the day.
MR. MACDONELL: I notice today the insurance industry had said they paid out $113 million, although that includes Prince Edward Island as well as Nova Scotia after Hurricane Juan. They're not indicating that's all they think they're going to put out and that claims are up about 40 per cent from what they were predicting. Without knowing how much of that $113 million was actually claims in Nova Scotia, but it would seem to me that if we made the assumption that all that money got spent on repairs, et cetera, plus the fact there would be money the people spent that wasn't insurance money - it was their own money, they didn't have things insured or the insurance didn't cover enough or whatever. I'm just wondering has your department put any notion to what the government may have taken in from that spending in terms of tax, HST, after the hurricane?
MR. CHRISTIE: So, your question is, through a stimulated economy because of repairs, tree cutting, et cetera - no, we don't have a number on that.
MR. MACDONELL: Okay. I was thinking, 15 per cent of that number is about $17 million - of course, not all of it applies to Nova Scotia. I think the number is probably greater than that so it would seem that disaster relief really wouldn't have cost the province much.
MR. CHRISTIE: I suspect that's the case, but I think the other thing you have to take in and if the Minister of Transportation and Public Works were here, they would indicate to you there were a lot of uninsured things that the government had to undertake in terms of road repair and others. You recall very well from the floods back in the Spring of 2003, there were bridges and roads and so on that weren't covered as part of that relief. When you build that in, I don't know if I think having a hurricane or flood is going to be a cost driver.
MR. MACDONELL: Not having one would be the preference, but . . .
MR. CHRISTIE: I think we all agree on that.
MR. MACDONELL: It's my understanding the province has made a claim to the federal government on those disasters. So, any idea where that is?
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MR. CHRISTIE: I'd have to refer you to the Emergency Measures Organization. They're handling that file, we don't have that.
MR. MACDONELL: Thank you. I appreciate your response.
MR. CHAIRMAN: The honourable member for Halifax Fairview.
MR. GRAHAM STEELE: Mr. Minister, I'm sure you will agree with me that each line item in your budget is made up of a number of smaller items and they're rolled up into one item. Correct?
MR. CHRISTIE: In a lot of cases, yes.
MR. STEELE: So, for example, if I asked you if you could give me a list of all the individual items that go into, for example, the Controller's budget, that I could have that? In principle.
MR. CHRISTIE: Yes, that's correct.
MR. STEELE: Similarly, if we took another line item out of your budget - let's say, Debt Servicing Costs - that's made up of a number of individual items that add up to a grand total and that in principle, if I wanted to have that list, I could have that list?
MR. CHRISTIE: Yes, that's true.
MR. STEELE: Okay. Now let's go back to the restructuring line item. You said in the paper today that it's a line item like any other and it's subject to the same amount of scrutiny as any other line item. Mr. Minister, you know and I know that's not the case. What I'm going to do now, I'm going to tell you what your answer is before I ask the question - your answer is going to be no. My question is, will you give me today a list of each individual item making up the restructuring line item?
MR. CHRISTIE: You're correct. The answer is no.
MR. STEELE: Okay, so how can you say that it's a line item just like any other?
MR. CHRISTIE: What I said is that it's a line item subject to review by the Auditor General, as is any other line item.
MR. STEELE: So, the quotation attributed to you in today's newspaper is incorrect?
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MR. CHRISTIE: I'm afraid I don't know what the quotation attributed to me was. What I do know and I indicated to you yesterday, I don't recall discussing with the press, but in a discussion you and I had yesterday, I indicated that line item was subject to the scrutiny of the Auditor General, as were all other lines.
MR. STEELE: I know that's what you said in here, but you're quoted in the paper as having said something different out there.
MR. CHRISTIE: I didn't have a discussion out there with anybody in terms of this. Obviously, they picked it up from here. I talked about other things out there. I did not have a discussion with anybody about this particular line item. I had no discussion with any reporter or any newspaper person other than the discussion you and I had in here.
MR. STEELE: So if there's a quotation in the newspaper it must be something you said in here which I don't remember. You may have said it, I don't remember.
MR. CHRISTIE: I can only attribute it to that. I recall my discussion with you yesterday was that this was a line item subject to review by the Auditor General, as is any other line.
MR. STEELE: But you'll agree with me it's not a line item like any other item in the sense that when I ask you for a breakdown your answer to me is, no I can't have it.
MR. CHRISTIE: I would agree with you. It is a sensitive line item, it is probably one of the more sensitive line items in our budget. There's a whole history of logic as to why that isn't open for public scrutiny and debate. We've all gone through that. In terms of the Auditor General, there's no lock on that line item, the Auditor General reviews it as he does on any other items.
MR. STEELE: Let me move on to another subject that we touched on yesterday that I want to go back to and that's the question of HST. Speaking of newspaper quotes, you were quoted last year as saying that there were discussions going on with other provinces about the possibility of taking HST off children's clothing and home heating fuel, and as we heard over in the other Chamber today, the other partners in the agreement were quick to say that no such talks had ever been held. So which is - I hesitate to use the word "truth" but which is the truth? They're contradictory, they can't both be true.
MR. CHRISTIE: I can only speak for what I know. I am not able to speak for the other provinces. They'll have to speak for themselves, but at the time there was, obviously as I indicated yesterday those groups were meeting on the sharing arrangements and the other things, and so there had been some discussions in terms of the possibilities, in terms of the mechanics and the possibilities. From my perspective, that is discussion on those items. If
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that's not discussion on those items from their perspective, then I'm not able to speak for them.
MR. STEELE: Your colleague in New Brunswick issued a news release saying that there were not, had never been, discussions on removing certain items from the tax base. It was pretty emphatic, it was unmistakably clear, he said, there are not now and there never have been such discussions. So what are the people supposed to believe? How far in your view, in Nova Scotia's view, did the discussions go? Who was talking to whom? How could the New Brunswick Minister of Finance issue such an emphatic denial that any such talks had ever been held?
MR. CHRISTIE: As I say, I can't speak for the Minister of Finance of New Brunswick. I can indicate as I indicated then, there had been preliminary discussions amongst officials, and that simply was to talk about more of the mechanics, but as you're having those discussions you talk about some other options. Obviously they didn't progress and obviously the Minister of Finance in New Brunswick has indicated as he indicated, but I'm not able to speak for him. I can only speak for this province.
MR. STEELE: Is it the current position of the Government of Nova Scotia that HST should be removed from children's clothing?
MR. CHRISTIE: What the current position of the government is, is what you see in the budget today and it is not included in the budget. We looked at establishing our priorities and that's what's laid out in the budget. In the future will the government consider that? Certainly we will look at that option, but as we presently stand it's not in our budget and our budget is our priority right now.
MR. STEELE: That's a masterful evasion of the question I actually asked you, which is whether - I know it's not in the budget, which means that conclusions with the other provinces haven't been concluded, but in discussions with the other provinces is it the position of the Government of Nova Scotia that HST should be removed from children's clothing?
MR. CHRISTIE: It's the position of the government that we should look at some of the opportunities under the HST. Quite honestly, more representations have been made to this government and to me about removing HST off fuel than children clothes . . .
MR. STEELE: We'll get to fuel in a minute, but what I'm asking, is it the position of the Government of Nova Scotia that HST should be removed from children's clothing? It sounds like a yes or no question.
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MR. CHRISTIE: I guess at this point of time it is not the position of the government to remove it because it's not included in our budget. So I would have to say, I guess from our budget it is not our position to do that.
MR. STEELE: I know it's not in your budget, Mr. Minister, but is it something that you're taking to the table with the other HST promises?
MR. CHRISTIE: I have no doubt that there will be discussions on it. I guess your question is, are we going to go and be the lead province on that and assist the other provinces?
MR. STEELE: Don't rephrase my question, Mr. Minister, it's not what I asked you. I asked you, is it the position of the Government of Nova Scotia, that HST should be removed from children's clothing? I didn't ask whether we're the lead province, or follower province or anything like that. Is that something that our government is currently taking to the other provinces?
MR. CHRISTIE: At this point in time this government doesn't have a position on that particular question.
MR. STEELE: Okay, now let's move to home heating fuel. Is it the position of the Government of Nova Scotia that HST should be removed from home heating fuel?
[2:45 p.m.]
MR. CHRISTIE: We don't have a position on that particular thing. We have indicated we are prepared to talk about it, but we don't have a position that says it is our position that it should be taken off.
MR. STEELE: When is the next meeting of the HST partners scheduled?
MR. CHRISTIE: It hasn't been scheduled but it will probably be, and normally those occur, late Summer, early Fall.
MR. STEELE: Has an agenda been set or is an agenda in the process of being set?
MR. CHRISTIE: That would happen later on in the Summer, as the lead province starts to poll other provinces as to what they want to have on the agenda. That would occur some months ahead, probably about a month ahead. In the normal flow of things, officials would talk and they would look at indications, what issues different provinces have and they would start to build the agenda from the officials. Normally after that the deputy ministers meet and they finalize the agenda from the provinces. They look and see what issues there are
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and what to bring together and then after that they have the meeting of all the provinces with the ministers and the deputies.
MR. STEELE: And will Nova Scotia be seeking to put on the agenda the removal of HST from children's clothing?
MR. CHRISTIE: At this point in time that's not on our to-do list. It's not on our agenda, so as of today that's not on our to-do list. When we look out at the meeting, obviously the caucus and Cabinet will be talking about those things over the Summer and as we start to get ready for next year's budget and it very well could be, but at this point in time it's not on our to-do list.
MR. STEELE: What do you think it would take to get it on your agenda?
MR. CHRISTIE: To get it on the province's agenda?
MR. STEELE: Yes.
MR. CHRISTIE: Well, obviously it's something that our caucus and Cabinet have to consider and in terms of looking at the priority items, they would set the priority items and that would then develop our agenda and to get it on our agenda from the province's side of things.
MR. STEELE: Do you have a personal opinion on it?
MR. CHRISTIE: In terms of moving in that direction? Sure, I think from people looking at that, that's something that would be nice to work toward. However, you know as a government, we have to be able to deliver a whole myriad of services and we have to be able to find money to finance them.
MR. STEELE: Do you have a personal view on the removal of HST from home heating fuel?
MR. CHRISTIE: I don't as much as that one because any time that I've had discussions on home heating fuel, the telexes and calls I get say it should be, you just can't isolate oil, there should be propane, there should be wood and there should be electricity, if you're going to go into that. That one is much more unclear in terms of the definition.
MR. STEELE: I didn't say home heating oil, I said home heating fuel. Do you have a personal opinion on that?
[Page 392]
MR. CHRISTIE: No, that one in terms of looking at children's clothes, that's something that certainly has a lot of advantage, but from a personal perspective, I don't have a view on that one.
MR. STEELE: Okay, let's talk about the question of HST fraud, which is, as I define it, HST that is lawfully owing but is unpaid because of business activity. Activity that would normally attract tax that goes unreported, for a variety of reasons. Of course it's impossible to put an exact estimate on the amount of money lost to HST fraud because if we knew exactly where the fraud was we could stop it. It's kind of like the Guinness Book of World Records listing the 10 best art forgeries of all time and number one is always the one that hasn't been discovered yet because if the forgers were really good, we wouldn't know they were forgeries. It's the same with fraud, we don't know how bad the problem is but I think we can all agree that it's a substantial amount of money.
The difficulty we have in the Legislature though is that it's impossible to get straight answers out of the government about what it's doing. In particular, when we're talking about the Canada Revenue Agency, they simply refuse to talk about it. They will neither confirm nor deny that they are investigating any particular matter. They will not talk about any particular matter or the nature of its enforcement activity even in general. Basically, when you ask them what's going on, it's a wall of silence. Whenever we ask your Department of Finance what they're doing about it, we get referred to the Canada Revenue Agency, which refuses to answer any questions of any kind about HST fraud.
So what are we to make of this? Do we have a problem? Is it being tackled properly? Does your department know what's going on but feels that it can't inform the public, or is your department as much in the dark about what the Canada Revenue Agency is doing, as everybody else?
MR. CHRISTIE: Well, I don't think we're in the dark. I've had an opportunity to meet with the Minister of National Revenue to talk about that issue and my recollection was that the Minister of Service Nova Scotia and Municipal Relations was there. I guess, and I'm sure the joint CCRA provincial underground economy committee that's been set up, is one of the initiatives that's going on, and it's tasked with the challenge of looking for ideas and opportunities as to how to be able to capture some of this. You mentioned in the first part of your question about the issue of defining the scope of the problem and the scope of the problem is, I'm sure, larger than anybody anticipates and I have no doubt that the Canada Revenue Agency has some numbers nationwide that they don't want to share.
I think in terms of some of the initiatives - obviously I mentioned the joint provincial CCRA committee - there's the town visitations with CCRA held at the tax service office in the visits they do; there are initiatives within Service Nova Scotia in terms of the gas tax and the tobacco tax and some inspections and some audits that they're working on there. There are initiatives taking place; whether it's enough or there should be more, I don't dispute the
[Page 393]
fact that there should be more. But I suggest to you that people should know that there are initiatives going on and that we do view it as a major problem.
MR. STEELE: Does your department have a working estimate of the amount of money that is lawfully owed but goes uncollected because of under-reporting?
MR. CHRISTIE: I have a rough estimate that the department takes and that's somewhere between $10 million and $15 million and that's for 2002, is the rough estimate.
MR. STEELE: I just want to make sure that I understand that because that, based on any other estimates that I've ever seen, is considerably low. I just want to make sure I understand, $10 million to $15 million of HST that goes uncollected because of fraud?
MR. CHRISTIE: For foregone HST due to the underground economy in Nova Scotia is estimated at $10 million to $15 million in 2002.
MR. STEELE: I'm sure you know the Government of Quebec has taken some pretty aggressive steps against sales tax fraud in that province, and that their estimates of the amount of money on a per capita basis, if the problem's the same there as it is here, would be substantially higher, not just a little bit higher but substantially higher like in the order of, if I remember right, $60 million to $80 million. Why would our estimate be so low? Do we just have more honest people than Quebec does?
MR. CHRISTIE: Well, if you look at using part of the estimates that Ontario made and if Ontario and Quebec are similar, between $128 million and $192 million was the forecast they were making in 2002, but it has to do with relative size and obviously the provincial portions of HST that you're calculating to be lost and obviously the position in the country of the opportunities for doing things and obviously in Quebec they have a challenge that they've identified, but what I am suggesting to you is, your question was do we have a forecast, and I'm giving you the numbers that we have.
MR. STEELE: So is that $10 million to $15 million the foregone provincial share of HST or foregone HST?
MR. CHRISTIE: That's foregone HST.
MR. STEELE: So the provincial share would be only like . . .
MR. CHRISTIE: I'm sorry, I'm corrected, it's provincial.
MR. STEELE: Okay, so the actual loss of HST would be roughly double that?
MR. CHRISTIE: Yes, that's correct.
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MR. STEELE: So what are we doing? Tell me the top three things we're doing to collect HST that we're not collecting now.
MR. CHRISTIE: In terms of the major initiatives, I would refer you to Service Nova Scotia in terms of the tobacco tax and the gas tax initiatives that they're undertaking. That's where those particular audits are housed and that's the challenge that they're doing. As I indicated to you, we're working on those, along with Service Nova Scotia, on those committees, to look at opportunities, as is the provincial underground economy committee. I think a more substantive answer would be through Service Nova Scotia and the initiative they're undertaking.
MR. STEELE: Why would I ask Service Nova Scotia about HST?
MR. CHRISTIE: Fundamentally because they're dealing with the CCRA on the collection of it and they have the collection of the gas tax and the tobacco tax housed within their department.
MR. STEELE: Okay, but I'm not talking about the tobacco tax or the gas tax. I'm talking about HST.
MR. CHRISTIE: Why you would ask them is because they're the administrative wing that the government has set up to look at the collection and to look at the initiative. We're involved in the broader picture, if you will, and looking at some of the initiatives, but on the ground, and the programs and so on that are going through, are done through them.
MR. STEELE: So when people talk about construction going up in Clayton Park West, where a lot of people - not just a few but a lot of people - are working for cash, working under the table, working in the black market, whatever expression you want to use - you hear about whole apartment buildings going up HST-free because they're just not reported on - that I should talk to Service Nova Scotia about that? Is that your answer?
MR. CHRISTIE: No, I can indicate to you that in the construction area, since you've raised that area, is one of the priority areas of CCRA. It's part of the rollout of the committee that we're looking at and how they're going to identify those situations that you mentioned. What I was attempting to suggest to you is that there is a body of expertise in Service Nova Scotia on those two taxes that I was referring to.
MR. STEELE: You know, Mr. Minister, I don't mean to be rude when I say this, but sometimes when I ask you questions, I just get the feeling that even the simplest questions you're dancing around, I'm getting the dance and I have to try to follow you around and bring you back to the question I'm actually asking. What I'm asking to me seems fairly simple, and yet you've said, oh go ask Service Nova Scotia about the tobacco tax and the gas tax and then I raised a particular example and you say, oh, no, that's one of CCRAs initiatives, which
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is kind of what I asked you in the first place. I'm asking what I think is a very simple question. What is the Government of Nova Scotia doing, name three things that we are doing, to tackle the problem of HST fraud? I don't want to be pointed over here, pointed over there, because you should know. I just want to know what they are. What are the top three things that we are doing to combat HST fraud?
MR. CHRISTIE: As I indicated, we are working with the CCRA on those committees that I indicated to look. We are looking at the audit procedures and some of the areas where they're targeting in so we can work, and we are bringing in additional resources so that government departments can zero in on those. Those are the three things that we're working on.
MR. STEELE: Zero in on what?
MR. CHRISTIE: Well, first off, we're zeroing in on things such as education, I mean there are a lot of opportunities to educate the public and businesses as to what their requirements are and the effects of the underground economy on taxpayers. As I indicated, we're doing increased enforcement to allow us to be able to target those areas and particular sectors and I mentioned one. The other top thing that we're doing is information-sharing between the provinces so we can know what trends are happening in one province or the other.
[3:00 p.m.]
I guess your question was, what are the top three? I would say to you, those are the top three.
MR. STEELE: Education, information-sharing and what was the second one?
MR. CHRISTIE: Education, enforcement and information-sharing were the three.
MR. STEELE: Then what are we doing in the enforcement field? That's really what I'm getting at - what are we doing?
MR. CHRISTIE: That's what I indicated to you was that additional resources were being hired to be able to complete more on-site field inspections. I indicated to you those resources were housed at Service Nova Scotia.
MR. STEELE: So the enforcement for the collection of HST is housed in Service Nova Scotia. Is that correct?
MR. CHRISTIE: A portion of that, for different product lines, yes.
[Page 396]
MR. STEELE: Okay. In that case, when I last wrote to you on this topic, why did you refer me to the Canada Revenue Agency?
MR. CHRISTIE: Because the overview and the overall initiatives are through the Canada Revenue Agency. The structures and the initiatives are through the Canada Revenue Agency, which we participate with and then we do the enforcement and we do these other initiatives in the province.
MR. STEELE: You've succeeded in completely confusing me. When I have a question about HST enforcement, who do I talk to - Department of Finance, Service Nova Scotia or Canada Revenue Agency? Who do I call?
MR. CHRISTIE: In most cases, you would call Canada Revenue Agency.
MR. STEELE: Okay, then why did you just refer me to Service Nova Scotia?
MR. CHRISTIE: In those cases of the product lines that I was talking about, the enforcement is over there. We would look at it and try to determine where your question was best appropriately answered and try to direct it to the most appropriate place.
MR. STEELE: Are you privy to all the information that Canada Revenue Agency has, or do they keep information confidential from you as well?
MR. CHRISTIE: We don't have all the information, but on occasion we can get it on request. Can we get it all, just go carte blanche to them and the answer would be no, but we can get specific questions answered at times.
MR. STEELE: Let me go from what I find terribly confusing and I would say almost deliberately confusing answers down to a specific case to see if I can get at it this way. There's been a specific issue raised which I'm sure you're aware of, of an individual who has a retail store down the South Shore in the constituency of the member for Chester-St. Margaret's. His main competitor is a retail store on a nearby Indian reserve. The Indian reserve is not charging HST to people who do not live on-reserve. They should be, but they're not. Because they're not, they can compete unfairly with the off-reserve retail stores, much to the detriment of the non-Native retail stores. The owner of that store has on numerous occasions, over several years, tried to get someone - anyone - to talk to him about this issue, to confirm that they're aware of the issue, to confirm that they take it seriously, to confirm that they're doing something about it.
At every turn, the owner of that store is told that he has no right to any information. Canada Revenue Agency will not confirm that they even consider it to be an issue. They will not confirm whether they are or are not taking any particular action against this particular store. They've basically told him to buzz off. None of his business. It's confidential. Even
[Page 397]
though this store owner has essentially - although it's not entirely clear, he's either lost his business or is on the verge of losing his business. He is being told by the responsible government agency, namely the Canada Revenue Agency, that it's none of his business to know what's going on. So, if a citizen has an issue with HST collection, who will talk to them about it?
MR. CHRISTIE: Well, initially, at the end of the day, they're going to have to talk to CCRA.
MR. STEELE: CCRA refuses to talk to him about it. It doesn't involve HST at his store, it involves HST at a neighbouring, competing store so they refuse to discuss it with him. What are we supposed to do? This fellow, who's lost his business or is on the verge of losing his business, can't get anyone to talk to him. We, the MLAs who are aware of this issue, including the member for Chester-St. Margaret's, can't get anybody to talk to us about it either. They say it's none of our business. I write to you, the provincial Minister of Finance, and you say talk to them, CCRA, who refused to talk to us.
What's going on here, Mr. Minister? Nova Scotians are on the verge of losing their businesses here over HST fraud, the people who are trying to report honestly and above-board are competing against people who are not. Their government refuses to talk to them about it, so what are we doing about it?
MR. CHRISTIE: That particular case that you've referred to, I know that the flow out of that one would be to get the information from CCRA. Now you indicate that CCRA won't provide that information. The issue that we are aware, that CCRA is saying you're not requesting information for your location, you're requesting it for another location and that seems to be the circle that we get into.
What is that person to do? I think that person - I accept the fact and I understand it, as we all do, that CCRA considers a lot of these things private. What should we do? Well, I suppose we could say to ourselves, we don't want to go that collection system, we can set one up ourselves so that we're not restricted by their conditions. But that's not practical.
I guess in terms of that, I would say rather than trying to think that situation through right here and coming up with a non-thought-through answer, I would undertake to think that answer through and provide you with a response of how I believe it should go.
MR. STEELE: One last question on this point. If you ask CCRA to inform you on that specific situation, would they tell you?
MR. CHRISTIE: I would have to do it to find out. There are certain things they won't tell us, but I haven't asked them on that question, so I can't say to you that the answer is yes or no.
[Page 398]
MR. STEELE: Are you troubled at all by the fact that we have aspects of the collection of the sales tax that we have no right to know about?
MR. CHAIRMAN: Are you asking for a point of privilege?
MR. JOHN CHATAWAY: A point of privilege. Is CCRA not coming before the Public Accounts Committee? Have they not committed to coming before the Public Accounts Committee?
MR. CHAIRMAN: No, that's a question.
MR. STEELE: I don't mind answering the member. I know this is a matter of a great deal of interest to the member - the answer is no, not yet.
MR. CHATAWAY: No, not yet. They have been invited and they have not said no, is that correct?
MR. STEELE: We're negotiating with them on the timing of their appearance. Not so much whether they'll appear, but the timing.
MR. CHAIRMAN: I'm going to have to interrupt and bring this back.
MR. STEELE: I can use my time however I want. Right? If I want to have a discussion with a member across the way, I'm entitled to do that.
MR. CHAIRMAN: He's not entitled to do that until this question period's over.
MR. STEELE: Remember, he's on your side. Okay, the question. Are you satisfied with a sales tax system where aspects of the collection, the enforcement of which, we, the province, have no right to have information?
MR. CHRISTIE: No, I think as part of the sharing agreement, as part of the agreement of the revenue-sharing part, that's something that all the provinces have worked towards, having some more access to it. So your question was, are you satisfied? No, I think there are improvements to be made.
MR. STEELE: One more question, Mr. Minister, one more question and then I'm done. It's a relatively minor point. On Page B34 of the Budget Speech document, there's a reference to what I will refer to as Crown Agency Loans and that is where various units of government, for example, the Workers' Compensation Board, loans money to the government. Perhaps you would want to take a minute to find that reference - Page B34 of the Budget Speech documents, it's toward the bottom as I recall. I don't have it just in front of me here.
[Page 399]
I will tell you what my question is, Mr. Minister, and give you a chance to look at the answer. My question is simply this. The reference there is to the fact that various units of government loan money to the central government and the question is, are those loans on commercial terms or are they at a favourable interest rate that effectively represents a loss to the loaning agency?
MR. CHRISTIE: I will check that for you.
MR. CHAIRMAN: Did you want to share some of your time with the member . . .
MR. STEELE: Do I want to share, no, I think I will wait until his turn comes around if he wants to pursue that point. Mr. Minister, I'm quite content if you undertake to find that answer.
MR. CHRISTIE: I certainly will. It appears it's going to take a few minutes, but I'm certainly willing to get you that and we have undertaken to get other material for you, such as the pension.
MR. STEELE: Mr. Chairman, the minister has undertaken to provide me with that answer at a later time. So on that note, I'm done.
MR. CHAIRMAN: You do have a few more minutes in your hour, but you're finishing up early - okay, 3:12 p.m., we'll go to 4:12 p.m., the Liberal caucus.
The honourable member for Cape Breton West.
MR. MACKINNON: Through you, Mr. Chairman, to the minister, I notice there are eight employees within the Department of Finance that when you add their salaries together, it comes up to $1.03 million. Now, I notice one of the individuals was the former Deputy Minister of Finance, Mr. Hogg. Who's the present deputy minister for the record?
MR. CHRISTIE: Vicki Harnish.
MR. MACKINNON: Is there an assistant deputy minister?
MR. CHRISTIE: Liz Cody.
MR. MACKINNON: When did Ms. Harnish take over as deputy minister, for the record?
MR. CHRISTIE: She started January 1st of this year.
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MR. MACKINNON: January 1st, so it would be four months let's say, three months. So we would be looking at around $1.4 million and then there's expenses. Who determines the pay scales for senior public servants?
MR. CHRISTIE: The Public Service Commission does that for deputy ministers, for all.
MR. MACKINNON: Have any of these senior employees, Ms. Cody, Mr. Hogg, Mr. Kevin Malloy, Roy Spence, Doug Stratton, Kalyan Sunderam, Andrew Tambone, or Peter Van Loon, received bonuses?
MR. CHRISTIE: I'm advised that the people in the Investment section have been receiving a bonus structure since 1996.
[3:15 p.m.]
MR. MACKINNON: The figures that are reflected in the Supplement to the Public Accounts here, do they include the bonuses?
MR. CHRISTIE: They do.
MR. MACKINNON: Would you be able to distinguish between their base salary and their bonus for us? There just seems to be quite a range here, like Doug Stratton, his is $186,110. What amount of that is bonus and what's his base salary?
MR. CHRISTIE: The base salary is $130,000 and the bonus was $41,170, are the numbers I have.
MR. MACKINNON: Roy Spence, what's his bonus?
MR. CHRISTIE: The figure I see is, the salary is $112,000 and the bonus was $26,253.
MR. MACKINNON: Kalyan Sunderam, is that her base salary or is there a bonus there?
MR. CHRISTIE: It would be a combination. I don't have those numbers, we will provide them.
MR. MACKINNON: What about Peter Van Loon, what did he get for a bonus last year?
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MR. CHRISTIE: Well, we know his base is $112,000, so whatever the difference is there.
MR. MACKINNON: And I would presume the other ones are pretty much base. William Hogg, was there a bonus for the deputy minister?
MR. CHRISTIE: If you're looking at the figure of $116,000, there is no bonus included in that.
MR. MACKINNON: Did he receive a bonus subsequent to that?
MR. CHRISTIE: Yes, subsequent to that.
MR. MACKINNON: How much?
MR. CHRISTIE: I don't have that number.
MR. MACKINNON: Will you undertake to provide it?
MR. CHRISTIE: I think the Treasury and Policy Board has indicated they are not going to provide that number and I think the minister has indicated that in the House on a couple of occasions.
MR. MACKINNON: Why would you want to conceal the expenditure of public dollars, as to who received those dollars, particularly if they're public servants?
MR. CHRISTIE: The Minister of the Treasury and Policy Board indicated that as a privacy issue they weren't going to release those numbers.
MR. MACKINNON: Why are they releasing the salaries and expenses of 7,000 other public servants in the province and not these?
MR. CHRISTIE: These ones are within the department and the performance appraisals of the deputies and so on and the bonuses, is what the minister indicated that he felt fell under the privacy condition, so he wasn't prepared to release it. So the difference here is you're asking me about specific departments and not the deputy minister's performance analysis and that's why we're providing those numbers because this is a plan different than the performance plan in terms of deputy ministers which you referred to under Mr. Hogg.
MR. MACKINNON: What you're saying is you have a plan to reward certain civil servants for achieving certain objectives that the government feels is what they would like to achieve, but you're not going to tell the taxpayers of Nova Scotia how much you're going to reward those selected civil servants?
[Page 402]
MR. CHRISTIE: The terms of the measurement as set out in the manual, Manual 500, which is certainly available to the public, the total dollars are released, but in terms of the individual allocation of those dollars, as I indicated, the Treasury and Policy Board has indicated they have made the interpretation that for privacy reasons they're not going to give out those individual numbers.
MR. MACKINNON: Do you personally support suppressing the expenditure of taxpayers' dollars to public servants and not disclosing those amounts?
MR. CHRISTIE: I support releasing the amount of the total dollars. I think in terms of the privacy and the other measurements, not releasing the individual amounts, I think is reasonable.
MR. MACKINNON: You think it's reasonable to pay public servants in the Public Service with public taxpayers' dollars and not tell the people of Nova Scotia who receives those dollars and for what purpose, other than to say that they're being rewarded for doing a great job?
MR. CHRISTIE: As I indicated, the total dollars are given out to Nova Scotians, the total amount of dollars, but the individual analysis, it has been interpreted that that should remain as a privacy matter.
MR. MACKINNON: At the risk of sounding really naive on this process, because I really thought that when you spend taxpayers' dollars, particularly my tax dollars and the tax dollars of everyone in this room and on the streets of Halifax, and in Nova Scotia in general, they have a right to know what's happening with their tax dollars. Given the fact that the government is saying it's open, it's accountable, it's accessible to the people of Nova Scotia, why would the government want to suppress some basic fundamental information about how it's rewarding its civil servants for the service that they provide to the people of Nova Scotia? I mean what's the philosophy? Why the secrecy?
MR. CHRISTIE: As I indicated, in terms of the total dollars, they're not being withheld, the total dollars are known, but there are issues surrounding the privacy issues.
MR. MACKINNON: Maybe if I could, through you, Mr. Chairman, what specific privacy issue is it that commands the government to suppress bonuses for public servants, how much of our tax dollars are being expended to public servants for a job that they were hired to do in the Public Service? What privacy issue is there that says we'll tell you how much their base salary is, but we're not going to tell you how much their bonus is, but yet you've been able to tell me the bonuses of some of your own public servants? This is a double standard.
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MR. CHRISTIE: One of the interpretations of your question is why would you not put out a specific dollar amount for a specific individual. Under the structure that presently is there, if you did that, then people would be able to look and see what the performance analysis is and what the job rating would be and it's that part of it, the rating between the employer and the employee, that is felt to have privacy matters and be held in private.
MR. MACKINNON: Well, with all due respect, that's hogwash because the employer is the Government of Nova Scotia and if we are to determine whether we, as taxpayers, are getting value for dollar, we deserve to know how all public servants are being paid and how much they're being paid. To suggest that we can tell the people of Nova Scotia the bonuses of senior civil servants, such as Roy Spence is getting a $26,253 bonus, Douglas Stratton is getting a $41,170 bonus, and Mr. Peter Van Loon is getting approximately a $29,000 bonus, and the rest of the public servants, oh, no, I'm sorry, we can't tell you because that would determine how good or how not good a public servant they are, that's what you're telling us?
MR. CHRISTIE: Yes. Also what I told you was that the Supplement to the Public Accounts would show for those individuals the total base salary and the bonus combined.
MR. MACKINNON: But we wouldn't know who they are, it just gives the bottom line. If I hadn't asked for that information with the employees in your department, I would never have known that because it doesn't make that distinction, but you're telling me that because other government departments do it, that's okay, it's okay to keep it a secret from the people of Nova Scotia. Why is it the people of Nova Scotia are only allowed to know that certain public servants get a bonus and others do not? It's a basic policy question of fairness.
MR. CHRISTIE: I think we initially started with Mr. Hogg on the list there and you asked the question, is that his base salary, and the answer was yes, and the answer was because the bonus hadn't been paid to him, so it wasn't included in that year. It would be included in the next year. What I'm saying to you is that the bonus and the salary, the combined total that people receive is listed in the Supplement to the Public Accounts.
MR. MACKINNON: But you've indicated Mr. Hogg is getting a bonus, but that would be outside this window?
MR. CHRISTIE: That would be in the next fiscal year.
MR. MACKINNON: You can't tell me how much, but you will tell me . . .
MR. CHRISTIE: What the Supplement to the Public Accounts next year will show on . . .
MR. MACKINNON: So you will tell me the bonuses of one, two, three, four public servants, but you won't tell me the bonuses of the rest because you say it's confidential?
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MR. CHRISTIE: I'm telling you what the Treasury and Policy Board has indicated its policy is, yes.
MR. MACKINNON: Who's on the Treasury and Policy Board?
MR. CHRISTIE: The Chairman is the Minister of Justice, the Minister of Transportation and Public Works, the Minister of Economic Development, the Minister of Health, the Minister of Education, and myself.
MR. MACKINNON: So you are a part of the Treasury and Policy Board?
MR. CHRISTIE: Yes, I am.
MR. MACKINNON: Yes, so you have expressed support for suppressing this public information as to how much our public servants are being truly paid?
MR. CHRISTIE: I suggest to you that we're not suppressing it, we're printing it in totality, that shows the total amount of money they have received.
MR. MACKINNON: Well, that being the case, has the Deputy Minister of Community Services received a bonus?
MR. CHRISTIE: I simply don't have that information.
MR. MACKINNON: Would you undertake to provide it?
MR. CHRISTIE: As I indicated, the position of the Treasury and Policy Board is that they print the salaries and things in totality, but in terms of the bonuses, the amount and so on, those are not released.
MR. MACKINNON: But you've just released the bonus information for the other public servants in your department.
MR. CHRISTIE: That's correct.
MR. MACKINNON: And you've indicated you're going to provide the bonus for the former Deputy Minister of Finance, but now you won't release the information for the Deputy Minister of Community Services. What's going on over there? I mean I will be honest, it just doesn't add up. Why do certain public servants enjoy executive privilege from the people of Nova Scotia and other people don't? What kind of a government is it that we can't even find out how much our public servants are being paid?
[Page 405]
MR. CHRISTIE: We indicate to you in total, in terms of total, how much the bonuses are to deputy ministers. So that's certainly available to the public.
MR. MACKINNON: The Deputy Minister of Community Services' salary here that we referred to, because ultimately it comes back to the Minister of Finance, is $82,163.79. Does that include the bonus?
MR. CHRISTIE: I'm sorry, I didn't catch what you . . .
MR. MACKINNON: The figure I just gave you for the Deputy Minister of Community Services, does that include a bonus?
MR. CHRISTIE: There was no bonus shown in those numbers in 2003.
MR. MACKINNON: So this reward system came after the fact?
MR. CHRISTIE: The amounts paid were after that fiscal year closed, yes.
MR. MACKINNON: Okay, so we have approximately 7,000 public servants, would that be correct? How many do we have in the Public Service altogether?
MR. CHRISTIE: Yes, 6,500 to 7,000.
MR. MACKINNON: Let's say 7,000. How many public servants, without listing names, have received bonuses?
[3:30 p.m.]
MR. CHRISTIE: In 2002-03 or the current year we're in?
MR. MACKINNON: Both.
MR. CHRISTIE: I think in terms of the number, if you look, for example, at people who are listed, probably about 1,100 would qualify for pay for performance. The number is not a small number, there is quite a number.
MR. MACKINNON: That wasn't my question. How many did receive bonuses?
MR. CHRISTIE: I guess we will have to undertake that. In terms of the deputy ministers and in terms of our department, we would have to look at other departments. Your question is how many people in total did receive bonuses and we just don't have that number right off.
[Page 406]
MR. MACKINNON: Would the minister undertake to provide that information?
MR. CHRISTIE: To get a number from the Public Service Commission as to how many people received bonuses on top of salary. That was your question?
MR. MACKINNON: Yes.
MR. CHRISTIE: Sure, we can undertake to provide that information.
MR. MACKINNON: What particular goals would a public servant within the Department of Finance have to achieve - or goal - in order to qualify for a bonus?
MR. CHRISTIE: They would have to obviously meet their performance targets that were set for them. Each one would have individual performance targets, whether it was on the investment side or whether it was on other sides. They would have performance targets set for them and they would have to achieve those, or partially way through.
MR. MACKINNON: If I understand, through you, Mr. Chairman, there are different criteria for different divisions within the Department of Finance, is that correct?
MR. CHRISTIE: You used the word department, I would use the word positions.
MR. MACKINNON: I said divisions within the Department of Finance.
MR. CHRISTIE: I would still use the word positions within because it's based on . . .
MR. MACKINNON: On job descriptions.
MR. CHRISTIE: Exactly, that's what we're talking about, yes.
MR. MACKINNON: Do you have a form for each of those job descriptions that you could provide to members of the committee?
MR. CHRISTIE: Yes, there are mandate letters for all of those different positions and they're evaluated on those, yes.
MR. MACKINNON: Will you provide those to the members of the committee?
MR. CHRISTIE: Which ones are you looking for?
MR. MACKINNON: All of them.
[Page 407]
MR. CHRISTIE: Within the Department of Finance?
MR. MACKINNON: Sure.
MR. CHRISTIE: I can only undertake to provide the ones in Finance and I can't commit to anything else.
MR. MACKINNON: That's fine.
MR. CHRISTIE: If your question is the performance of some of those in Finance, we'll be happy to provide those evaluations.
MR. MACKINNON: Half a loaf is better than no loaf. It seems that's all we're getting today, a half loaf anyway, but one step at a time.
The individuals we have identified there, the one, two, three, four individuals that we have identified with bonuses within your department, are there any other individuals in your department that received bonuses?
MR. CHRISTIE: I think there are probably eight or nine in total but your question was can you provide us with a list of the goals and objectives, so all of those people . . .
MR. MACKINNON: This is a different question. That was the other question.
MR. CHRISTIE: I was going to suggest when we provide you with those, those will be the total number of people getting bonuses because each one would have a particular evaluation structure for them.
MR. MACKINNON: Now, you've provided the bonuses for these individuals, will you provide the names of the individuals who received the other bonuses in your department?
MR. CHRISTIE: The names of those people?
MR. MACKINNON: Yes.
MR. CHRISTIE: Sure. You will probably see the name in terms of the evaluation report but if what you're looking for is the name and the evaluation report that goes with it, that's . . .
MR. MACKINNON: No, the evaluation report, I presume there may be some detail in the individual reports that may be confidential and I can appreciate that.
[Page 408]
MR. CHRISTIE: I understand, but we were talking about getting the analysis, the forms that people were analyzed on.
MR. MACKINNON: No, I wanted the form, the actual form. But you've indicated there are another four or five who have received bonuses. I presume you would have that at your fingertips, the names of those within your department?
MR. CHRISTIE: Yes.
MR. MACKINNON: Could you provide the names and the amounts of those bonuses?
MR. CHRISTIE: We will undertake to do that, to make a list of the names and bonus numbers, yes.
MR. MACKINNON: You can't do that now?
MR. CHRISTIE: We can if we take a moment, yes.
MR. MACKINNON: Sure. It's not an overly big staff within the Department of Finance compared to some of the other departments.
MR. CHRISTIE: I can give you some of those names and numbers if you wish.
MR. MACKINNON: Sure.
MR. CHRISTIE: Jennifer Grabmann, $53,234.35, bonus was $2,871; Tracey Anne Hardiman, total salary is $87,962.50 and bonus was $19,087; Doug Stratten we already talked about; Kalyan Sunderam, a bonus of $28,688; Andrew Tambone, $16,310; Stephen Thompson, $8,141; and Peter Van Loon, we had talked about earlier.
MR. MACKINNON: And that's it?
MR. CHRISTIE: Yes.
MR. MACKINNON: Sounds great. I would like to draw to your attention a commitment that was made when the John Hamm Government was elected, or ran for election. You probably heard of the Tory blue book.
MR. CHRISTIE: I'm familiar with that document.
[Page 409]
MR. MACKINNON: It's a nice glossy book with a picture of the Premier inside with a nice warm, cuddly message. On Page 19 there is a section called Making Government Accountable. "Nova Scotians expect their government to conduct the people's business in the open and to provide the public with effective opportunities for input. We expect our elected officials to be accountable to their constituents, ensuring that decisions are always made in the best public interest." Then, of course, it goes on to say, "During its first mandate, a PC Government will . . .", and one of the issues of commitment, "Base a significant portion of compensation for senior bureaucrats on performance;"
Would the minister not agree that that policy commitment, or statement in no way implies suppressing the payment to public servants for public service?
MR. CHRISTIE: That suggests that the government is going to be open and accountable, yes, that's exactly what that suggests.
MR. MACKINNON: That would mean that we should know how much our public servants are being compensated for their service to the people of Nova Scotia?
MR. CHRISTIE: And you certainly do. You see, in total, what they're paid and that is listed in the Supplement to the Public Accounts.
MR. MACKINNON: That being said, why is the government suppressing the bonuses for the other public servants?
MR. CHRISTIE: As I indicated to you, it was the decision of the Treasury and Policy Board that for privacy matters, that information would only be reported in total.
MR. MACKINNON: So out of a possible - oh, I do apologize. You indicated you would get back to us with the number of public servants that received bonuses.
MR. CHRISTIE: That is correct, we did undertake to do that, yes.
MR. MACKINNON: Let's fast-forward on to Page 62 of the Supplement to the Public Accounts. There is a line item there, Aurion Capital Management Inc. for a payment of $293,125.50. Could the minister please indicate what that payment was for?
MR. CHRISTIE: They are an investment management service.
MR. MACKINNON: What do they do? What did they manage? Besides money.
MR. CHRISTIE: They managed Canadian large capital funds.
MR. MACKINNON: How much?
[Page 410]
MR. CHRISTIE: It was $77 million.
MR. MACKINNON: So they managed $77 million and what was the rate of return?
MR. CHRISTIE: I don't have that number right here . . .
MR. MACKINNON: But that's their commission, the $293,000 . . .
MR. CHRISTIE: That's right. That would be their commission plus their fee for managing that. The $77 million is what they have now. This book that we're talking about is what was paid to them in the year ending 2003, but they're in that $77 million range.
MR. MACKINNON: Is that the amount that was given to them or is that the end product, the $77 million?
MR. CHRISTIE: That's the amount they have under portfolio.
MR. MACKINNON: Is that how much the province provided to them at the beginning of the portfolio?
MR. CHRISTIE: I would certainly hope that they made some too, I would hope that it would be less than that, yes. Otherwise, as we indicated, the people that didn't, we have asked them to terminate their employment.
MR. MACKINNON: Perhaps if the minister could indicate how much was provided to this investment company to invest and how much they have presently, if possible, or at least at the end of the fiscal year.
MR. CHRISTIE: We can provide that number and what you would like to know is how much that particular company got on day one and what they had at the end of 2003?
MR. MACKINNON: Sure. Like if it was myself, if I had $50,000 in your . . .
MR. CHRISTIE: The question is, how did they do?
MR. MACKINNON: Yes.
MR. CHRISTIE: Okay.
MR. MACKINNON: Barclays Global Investors Canada Limited. How much did they invest for the province?
[Page 411]
MR. CHRISTIE: How much did we give them? We will have to take that under advisement too.
MR. MACKINNON: How much do they have in the portfolio now?
[3:45 p.m.]
MR. CHRISTIE: They have $973 million.
MR. MACKINNON: That's not quite $1 billion dollars. Do we have any indication as to what the rate of return was that was generated in the past fiscal year?
MR. CHRISTIE: For the Barclays one?
MR. MACKINNON: Yes.
MR. CHRISTIE: We will check that. They have four different mandates so we would have to provide for each one of those, so . . .
MR. MACKINNON: Can you provide the detail on that? I can take it on notice.
MR. CHRISTIE: Absolutely, yes. They have the U.S. index, U.S. index, enhanced alpha, the e-tail strategy, and the Canadian small caps. Each one of those divisions - if you will - would have a different rate of return on them.
MR. MACKINNON: Before I keep going, these companies when they invest, if they achieve a certain rate of return do they get a bonus? Do they get a higher payout?
MR. CHRISTIE: The way they are compensated is a percentage of assets, so if their assets increase through performance, then they would achieve more. The structure is started at the beginning, so it's not a bonus - if you will - or a pay for performance, by increasing the asset base they achieve more dollars.
MR. MACKINNON: Baseline Business Geographics Inc.?
MR. CHRISTIE: That was census data, so they're not an investment firm. That was for census data along with the statistical division.
MR. MACKINNON: Given that particular issue with the census, I understand that we receive transfer dollars from Ottawa - correct me if I'm wrong - you get so many dollars, approximately $2,204 for every Nova Scotian, for transfers, is that correct?
MR. CHRISTIE: If you're saying equalization then that's correct.
[Page 412]
MR. MACKINNON: Now I understand in those dollars, in the calculation, the total numbers include the Native community of Nova Scotia, correct?
MR. CHRISTIE: Yes.
MR. MACKINNON: But yet the province does not provide any service to the Native community. Is that correct?
MR. CHRISTIE: No, I wouldn't say that.
MR. MACKINNON: What services do they provide? If you take the total number of dollars, $2,204 per person and there are how many Native folks in Nova Scotia? Are there 16,000?
MR. CHRISTIE: I would be guessing, I don't know.
MR. MACKINNON: Let's say 8,000 maybe. So you are looking at about $16 million, so what does the province provide in terms of that $16 million, in generalities?
MR. CHRISTIE: Certainly health care . . .
MR. MACKINNON: No, the province gets a payback from the federal government, does it not, for the provision of heath service?
MR. CHRISTIE: Not full compensation, no.
MR. MACKINNON: What percentage?
MR. CHRISTIE: I would have to look up those numbers from the Department of Health.
MR. MACKINNON: Would the minister undertake to provide that to the committee?
MR. CHRISTIE: Sure. Your question is what percentage of money is paid back for Native Canadians through the federal government for health care expenditures?
MR. MACKINNON: Well, on that particular issue but globally, I'm trying to get a handle as to what value for the dollar is the Native community of Nova Scotia getting for the $16 million, or whatever it is, from the federal government? My understanding is they can't even get the provincial government to enter into an agreement for infrastructure in Native communities, for example, in Eskasoni. The Native community there, the Band Council had to go with the federal government because the province refused to go in as a one-third partner because they said it wasn't their responsibility. So that's the type of minutia that we are
[Page 413]
focusing on, as well. I can take that on notice, unless he has something a little more specific to offer at this point.
MR. CHRISTIE: No, we can have a look at those numbers.
MR. MACKINNON: Burgundy Asset Management. How much money were they provided to manage for the province? And who are they and where are they from?
MR. CHRISTIE: Burgundy Asset Management is in Toronto, they manage $83 million worth of Canadian large cap funds.
MR. MACKINNON: Of course, I think I asked you yesterday about C.A. Delaney Capital Management. They received $480,539.28 commission. How much money were they provided to manage?
MR. CHRISTIE: The initial amount was $50 million. Then $25 million was removed for profit-taking, and, as I indicated to you yesterday, in May 2002 they were put on the watch list because their targets weren't achieving what others were. They were terminated in December 2002.
MR. MACKINNON: So altogether they were provided $75 million, or $25 million was pulled out?
MR. CHRISTIE: The $25 million was pulled out.
MR. MACKINNON: Because they weren't doing well with it?
MR. CHRISTIE: At that time the committee decided to do some profit-taking and take it out, yes.
MR. MACKINNON: The committee?
MR. CHRISTIE: Our investment group, yes. The Investment Advisory Committee.
MR. MACKINNON: From the Department of Finance?
MR. CHRISTIE: Yes.
MR. MACKINNON: And who is on that Investment Advisory Committee?
[Page 414]
MR. CHRISTIE: Our current makeup on that committee, it's chaired by Vicki Harnish, Bill Hogg is on that, Dave Peters from the NSGEU, Greg Blanchard from the NSGEU, Bill Redden from the NSTU, Jim Kavanaugh from the NSTU, and Cameron MacKinnon from the retired members.
MR. MACKINNON: We'll fast-forward down to James Evans and Associates Limited. Who are they and what were they paid $514,998.68 for?
MR. CHRISTIE: That's a licensing agreement for computer software for the administration of the pension system.
MR. MACKINNON: That's the program, is that compatible with the SAP program?
MR. CHRISTIE: I know that would be a separate program. Would they be compatible? I'm advised they aren't right now, but as part of the e-merge project, that is undertaken now through the Department of Finance, they will be at the completion of that.
MR. MACKINNON: Why wasn't that done prior to that? If the directive was issued in 1999 to make all these systems compatible, why is the government still spending money on systems that are not compatible?
MR. CHRISTIE: The systems will be compatible over a period of time. Certainly the administration of the pension fund and the administration for all of the retirees is something that had to be ongoing. This system was to provide that, and in the future it will become compatible with that system.
MR. MACKINNON: But this is five years later, since that directive was issued. This is a current expenditure. It sounds to me like somebody in the computer world is doing fine and dandy off the taxpayers of Nova Scotia, thank you very kindly, for a system that's not compatible with the major engine drive of managing the affairs of government, the SAP program.
MR. CHRISTIE: Well, it was compatible with the payroll portion of it, but . . .
MR. MACKINNON: Who recommended picking up James Evans and Associates? Who recommended this contract? Was this a tendered contract?
MR. CHRISTIE: There was an RFP in 1998, yes.
MR. MACKINNON: How many competed?
MR. CHRISTIE: I'm advised two bids were received on the RFP.
[Page 415]
MR. MACKINNON: When was the closing tender? When was this contract awarded?
MR. CHRISTIE: February 1998.
MR. MACKINNON: But it's just being paid now?
MR. CHRISTIE: No, this is ongoing. There are yearly fees for this, for software licensing and so on.
MR. MACKINNON: If the instruction was changed in 1999, why would you continue paying for something that wouldn't be compatible?
MR. CHRISTIE: It was compatible with the payroll system. Obviously, as we talk about the school boards and other ones, you just couldn't shut down every system because it wasn't compatible, you had to keep (Interruptions)
MR. MACKINNON: Jarislowsky Fraser Limited, $864,591. Who are they and what were they paid that amount of money for?
MR. CHRISTIE: They are an investment manager.
MR. MACKINNON: How much were they provided to invest?
MR. CHRISTIE: I'm just looking. The size of their mandate as we speak is $1.7 billion.
MR. MACKINNON: They have $1.7 billion in an investment portfolio for the Province of Nova Scotia?
MR. CHRISTIE: Yes, that's correct. That's pension . . .
MR. MACKINNON: That's pension funds?
MR. CHRISTIE: Yes.
MR. MACKINNON: What kind of rate of return are we receiving there?
MR. CHRISTIE: For the last year?
MR. MACKINNON: Yes.
MR. CHRISTIE: We have a number that we have to provide you, and we will add that one to the list, to go from the rate of return.
[Page 416]
MR. MACKINNON: They're not on a death watch or anything like that?
MR. CHRISTIE: No, they're not. If they were, that amount of money would be reducing.
MR. MACKINNON: I assume they're doing okay if you've provided them with $1.7 billion. That's out of the Public Service pension fund?
MR. CHRISTIE: Both the Public Service and the teachers. The committee that I just referred to a few moments ago would have made that decision.
MR. MACKINNON: Where is that firm from?
MR. CHRISTIE: That firm is located in Toronto.
MR. MACKINNON: Another Toronto firm. Knight Bain Seath & Holbrook.
MR. CHRISTIE: A special equity fund, yes.
MR. MACKINNON: Where are they from?
MR. CHRISTIE: They're from Toronto.
MR. MACKINNON: Another Toronto firm, $889,843.83. How much is in their investment portfolio?
MR. CHRISTIE: The figure I show as of today is $123 million.
MR. MACKINNON: That's all? And they're paid a commission of $889,000?
MR. CHRISTIE: There are different fee structures, but some of them we indicated were paid on the size of this figure I'm giving you today, the numbers that we have here, that particular one is unique, because they're managing indexes. They're an active manager, so their fee structure would be a little bit different. This number I'm giving you is what they have in their portfolio at the present time, and the numbers you have are for the end of 2002-03.
MR. MACKINNON: It just seems a little odd that Jarislowsky Fraser Limited would have $1.7 billion - is it?
MR. CHRISTIE: Oh, that firm, Jarislowsky Fraser is $1.7 billion, yes.
[Page 417]
MR. MACKINNON: They have $1.7 billion and they're getting $864,000 commission, and the other firm has $123 million and they're getting $889,000 commission. What special talents do they have that Jarislowsky Fraser Limited does not have?
MR. CHRISTIE: As I indicated, we're looking at different rates of return.
MR. MACKINNON: I appreciate that. Whether it be segregated funds, mutual funds or what have you, what specific package do they have that Jarislowsky does not have? What is it?
MR. CHRISTIE: What qualities do they have?
MR. MACKINNON: Yes, what are they offering? What are they managing for us that the others aren't that would allow them to be paid a higher commission?
MR. CHRISTIE: The reason that they are on the list is because they manage special equity funds as opposed to just the assortment of blue chip stocks which we referred to in Jarislowsky and those other ones. So they are . . .
MR. MACKINNON: Are these high-risk?
MR. CHRISTIE: No, but they require more in-depth knowledge and they require more research and so on. So that's why the committee has taken them on, because they have particular attributes.
MR. MACKINNON: Do you have any sense of what the rate of return is on this portfolio compared to, let's say, Jarislowsky?
[4:00 p.m.]
MR. CHRISTIE: We'll put that on the list. I don't have the numbers here and I'm advised . . .
MR. MACKINNON: Some of your Finance people must - any of the people who are familiar with these portfolios, are they here? It doesn't have to be exact, but it would be nice to get an idea - is it 4 per cent versus 12 per cent or 10 per cent or what?
MR. CHRISTIE: I think, as opposed to taking some guesses or approximates, what they'll undertake to do is give you a tracking of their performance over a couple of periods. That will give you an opportunity to look.
[Page 418]
MR. MACKINNON: Just so the minister will know where I'm coming from, it would suggest to me that perhaps if we're spending a lot of money, time and energy on a portfolio that's not yielding a great rate of return, you may put it into a more balanced and somewhat conservative - small "c"- portfolio that in the long term would yield a greater rate of return for the people.
MR. CHRISTIE: I did indicate to the member for Halifax Fairview yesterday that we would provide a statement of policies and goals that the committee's operating under. Obviously, perhaps that would be something that could be included in your package also to give you a sense of the overall requirements of the committee.
MR. MACKINNON: Okay. Perigee Investment Counsel Inc. Who are they, where are they from and why are they being paid $425,770.76?
MR. CHRISTIE: The new name of that firm is Legg Mason Canada from Waterloo, Ontario.
MR. MACKINNON: Another Ontario firm.
MR. CHRISTIE: Yes.
MR. MACKINNON: And how much money did they manage?
MR. CHRISTIE: They managed $460 million.
MR. MACKINNON: TD Quantitative Capital - I presume that's an extension of Toronto-Dominion?
MR. CHRISTIE: That's correct, yes.
MR. MACKINNON: And they were paid $284,333.40. How much money did they manage?
MR. CHRISTIE: They managed $431 million.
MR. MACKINNON: Have we missed any other investment or is that pretty well all? I know that would be pretty much the lion's share. Are there any others?
MR. CHRISTIE: Seamark. Did you mention Seamark earlier?
MR. MACKINNON: No, I don't believe.
[Page 419]
MR. CHRISTIE: Seamark Asset Management is the one in Halifax. It's a large capital amount, it says $129 million under its charge.
MR. MACKINNON: Is that the only Nova Scotia firm?
MR. CHRISTIE: No. Roycom Inc. in Dartmouth is another one. It's a real estate manager.
MR. MACKINNON: Okay, and how much were they paid?
MR. CHRISTIE: They have $31 million under asset management.
MR. MACKINNON: It's just that it doesn't show here.
MR. CHRISTIE: No and I suspect these ones have come on since those ones. This is our current list and these were the ones at the end of 2003.
MR. MACKINNON: And you'll provide those as well? How many other Nova Scotia firms do you have there?
MR. CHRISTIE: I just have two on the list here.
MR. MACKINNON: Just two. So the majority of your investment portfolios are held out of Ontario.
MR. CHRISTIE: They're held in Ontario and parts of the U.S., but the majority are held in Toronto, yes.
MR. MACKINNON: There's another line item there, Sun Microsystems of Canada Inc. I would imagine perhaps that would be for computer systems of some sort?
MR. CHRISTIE: Yes. That's a services support agreement for our computers and networks.
MR. MACKINNON: So there is an agreement with this private firm, is there?
MR. CHRISTIE: Yes.
MR. MACKINNON: Would you be able to provide a copy of the contract with that firm?
MR. CHRISTIE: Yes. Certainly. We'll make a note of that.
[Page 420]
MR. MACKINNON: So we have a total of $3.998 billion in the investment portfolio, or is there more?
MR. CHRISTIE: No. We would suggest the total under investment is $6.9 billion.
MR. MACKINNON: The figures that you've provided add up to $3.998 billion.
MR. CHRISTIE: Okay, those firms that you've picked out and you added up, obviously there are other . . .
MR. MACKINNON: Okay, would you provide a list of the other firms that manage the other amounts and the commissions?
MR. CHRISTIE: Yes, we've already undertaken to do that.
MR. MACKINNON: Okay, great. Any of those other firms, can you highlight the other $3 billion - where is the lion's share of that money being managed from? Is it Nova Scotia, Ontario, Taiwan?
MR. CHRISTIE: No, it would be Ontario and New York.
MR. MACKINNON: Where?
MR. CHRISTIE: A number would be in New York and some more in Ontario - Toronto - but when we indicated we would provide a list, we were going to provide a full list and then you would make the determination of where they were. That's what I was under the impression you wanted to get.
MR. MACKINNON: Yes. I guess I want to get a sense of the investment agencies here in the province. I know the government would certainly support "buy Nova Scotia first". Is it because they have limited capacity to be able to manage such large amounts of money because we don't have the market to deal with, or is it a lack of expertise or what's the situation?
MR. CHRISTIE: I think we should correct that because, of the $6.9 billion in funds, a fair amount of that is managed within the department - approximately 40 per cent. You referred earlier to people in the investment area and commissions and bonuses they get, it's because of their performance managing some of these funds. We were talking about the ones that were paid out to other people, we will provide you a list of them, but if you get a list of these fund people and you try to add it up to get the $6.9 billion, you won't because a number of them are managed within Finance.
MR. MACKINNON: So about 40 per cent of the $6.9 billion is managed in-house?
[Page 421]
MR. CHRISTIE: That's correct.
MR. MACKINNON: By the committee that you've referred to earlier?
MR. CHRISTIE: By the investment staff we were talking about earlier, yes.
MR. MACKINNON: Now, what percentage of the total $6.9 billion is pension fund?
MR. CHRISTIE: All of it is. There are two funds - the Public Service and the teachers.
MR. MACKINNON: Okay. I know with the Teachers' Pension Fund, if you do very well, if you go over a certain mark - whether it's 105 per cent or 110 per cent - then something has to be done with those additional revenues. Either go back to general revenues or something has to be done to pay out to the stakeholders. Have we had any instances in the last year where our portfolios have done well, that money has gone back into general revenues?
MR. CHRISTIE: The answer is no. The numbers of the monies in the fund are not of that magnitude, of the 100 or 105 per cent. The funds, as I indicated to the committee yesterday, are about 82 per cent and 86 per cent.
MR. MACKINNON: Okay. Those questions have been asked, so I won't go into it. I notice in the latest annual report of the community college system - I believe I may have just given the minister the heads-up on this a little earlier today - the unfunded liability is up in excess of 60 per cent. What is the plan to deal with that unfunded liability? It would appear to me that's separate from the Teachers Union, the unfunded liability.
MR. CHRISTIE: Following that question that you had posed to me, I'm advised that prior to 1996, the vocational school instructors were included as members of the NSTU. Prior to 1996, the Adult Vocational Training Centres were members of the Public Service plan. In 1996, when they created the Nova Scotia Community College, the members voted to join the Nova Scotia Teachers Union pension so they're included as part of the numbers we were talking about just a moment ago.
MR. MACKINNON: I guess I know my time is getting a little tight here, we can always come back. What's the average rate of return on all the investments? Can you give us an overview?
MR. CHRISTIE: Over the last number of years, 10 years, it's been about 9, 9.2 to 9.5 per cent - that's compounded, obviously.
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MR. MACKINNON: How does the rate of return on the portfolios managed from within house compare to those that are contracted out to the private sector? Which group has done better?
MR. CHRISTIE: When we talk about comparing them, you have to talk about comparing fixed - essentially they've been about the same.
MR. MACKINNON: Has there been any thought given to or maybe beyond the department and the government's capacity to do so if they're comparably the same, why wouldn't the government manage all and save themselves all these millions of dollars?
MR. CHAIRMAN: The time for the Liberal caucus is finished. We'll respond to the question and move on.
MR. CHRISTIE: I think, as I indicated, we would provide the honourable member with a list of the criteria for the setting of the asset mix and the goals and objectives of the committee and the issue that committee is looking for balance, looking for balance and as secure as possible. I suspect rather than try to quote to you from that report, I'll provide that for you.
MR. CHAIRMAN: Do the members of the government caucus have any questions?
The honourable member for Chester-St. Margaret's.
MR. CHATAWAY: I don't intend to take an hour by any stretch of the imagination, but it certainly was very interesting, the talk that the Chairman of the Public Accounts Committee, Mr. Steele, brought forth and basically I'm not sure, the CCRA has a responsibility with all Aboriginal things, collecting the HST and then submitting that at some time in the future to the provincial government, and that's their job. Giving the example Mr. Steele brought forward that basically CCRA has not committed to coming to the Public Accounts Committee, they responded to your letter in what respect, yes or no? I'd just like to hear it.
MR. STEELE: It's under discussion with them. They haven't said no, they haven't said yes, we're discussing with them the timing of their appearance.
MR. CHATAWAY: . . . come there on time or whether they will come or not come?
MR. STEELE: It's all open. They haven't said they're refusing to come. It's under discussion.
MR. CHATAWAY: But first you're discussing time and second you're discussing whether they're going to come or not, is that right?
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MR. STEELE: It's all connected.
MR. CHAIRMAN: Excuse me. If you want to continue with the questions let the minister . . .
MR. CHATAWAY: I just wanted to get it straight. The truth is what we have to do and it's very important, because here's the background and I don't want to spend an hour. Convenience stores are very important and most convenient stores are run by people who are very dedicated, at least 12 to 14 hours to keep the store open and all that stuff.
The problem is on the South Shore, and I don't think it's unique necessarily, is that you can go on the reservation and you can buy your cigarettes at about $1.50 less a pack. That's no problem at all. The Aboriginal people go on for years about how poorly treated they are over the years, but the thing is, I think most people have a card saying I'm an Aboriginal person and all that stuff and they can get it, but it's very infuriating for many people who just go in and they buy cigarettes for far less than that. I think that has to be straightened out, and of course everybody could go on for hours too that cigarettes are not good for your health and stuff like this and if we don't collect the taxes, the poor person who sells cigarettes at full market prices is working very hard to do that, having his business not do as good, everybody has to be treated fairly.
[4:15 p.m.]
Mr. Finance Minister, would you ensure that the next time that you are getting into discussions with other provinces and things like this about this Aboriginal thing to try to ensure that the CCRA, if they say they will do this and they will do that, because of the agreements and things like this, that they have to insist that they do it accurately. Do they ever insist that they will do it accurately, that is their facts and their figures jibe with reality, or do they ever talk about that?
MR. CHRISTIE: Well, to a limited extent. Our involvement with them is through the tax sharing agreements and the other procedures and things. If your question is, will you continue to raise this with them, certainly, we will do that and continue to keep raising these issues that we want to see a little more information-sharing and we want to ensure that this particular segment of the underground economy is being taken care of.
MR. CHATAWAY: From what I understand the reservation around Truro, they're fine. You have a card, you can do that much, they have the ticker-tape thing that you get there, it has HST calculated on it. It wouldn't be any great expense to do it. Thank you very much, it's very important to us all and I'm sure you really appreciate that as well too.
MR. CHAIRMAN: You're welcome. Thank you very much. Any further questions from the government caucus? Okay, we shall move to the Official Opposition.
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The honourable member for Halifax Fairview.
MR. STEELE: I have no further questions for the minister, we're ready to move on to the next department.
MR. CHAIRMAN: We'll now move to the Liberal caucus.
The honourable member for Preston.
MR. KEITH COLWELL: Okay, I'm going to ask a few questions about VLTs to start. I guess about two years ago there was a move toward removing VLTs from Legions. Is that still underway or have many VLTs been removed?
MR. CHRISTIE: I interpret your question to be as part of the efficiency operation to determine whether VLTs were meeting a target performance. They were being shifted around. That program is not active anymore.
MR. COLWELL: So you stopped that program, which I'm glad to see because it seemed like the government was chasing more revenue through VLTs which was definitely not in the realm of trying to stop people from compulsive gambling. So that program has stopped?
MR. CHRISTIE: Yes, we are not doing that program now, no.
MR. COLWELL: At the time when you were doing it, were there any VLTs and if so how many VLTs were removed from Legions to a more profitable location when the program was on?
MR. CHRISTIE: You'll recall a part of that program had to do with issues surrounding non-profits, so your question is, how many were moved out of Legions under that program? We'll have to get you that number. We don't have it here right now.
MR. COLWELL: So some were removed?
MR. CHRISTIE: Oh, there would have been a few removed, yes.
MR. COLWELL: Okay. What about the VLTs on reserves? How many are on the Native reserves now and how many were there last year?
MR. CHRISTIE: The actual number on reserves is 615.
MR. COLWELL: That's now?
[Page 425]
MR. CHRISTIE: That is now, yes.
MR. COLWELL: What about last year, how many were there?
MR. CHRISTIE: There were 48 additional ones in that number than there were the year before.
MR. COLWELL: How many has it grown this year as compared to other years, say two years ago, how many were there then?
MR. CHRISTIE: There are changes made each year, but the number I indicated to you, the 48 number increase, was increased in the year 2003-04. So now your question is, what number were added in the year 2003?
MR. COLWELL: Yes, 2002-03.
MR. CHRISTIE: I don't have that number right here, but we can get that number. You know, as part of the agreement with the Aboriginal Affairs Department, they're constantly looking at those numbers and looking as bands' agreements come up, they will make adjustments in those numbers, but we will get the numbers that correspond to the year prior to the 48 that happened last year.
MR. COLWELL: So the province sort of licenses or gives them permission to operate so many in the province, is that how it works?
MR. CHRISTIE: Well, we have a set number operating within the province. Now, the numbers that are included in the bands' totals are indicated under the agreements with the First Nations under Section 2 of the Act and those are outlined as not being ones that are under the moratorium restriction that was set out in the legislation.
MR. COLWELL: So the revenues from the ones in Native bands, the province has no revenue from them at all?
MR. CHRISTIE: No, there's a nominal administration fee that's charged. For example, yes, there's about $56 a week, in that range.
MR. COLWELL: So it's $56 a week per machine?
MR. CHRISTIE: Yes.
MR. COLWELL: Now, what steps have you taken to ensure that there are no more than 615 Native bands?
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MR. CHRISTIE: That's why Aboriginal Affairs and the First Nations have agreements to work out those details.
MR. COLWELL: Does anyone physically go and check to see how many are out there?
MR. CHRISTIE: Not from the Gaming Corporation, but Aboriginal Affairs, obviously, they're working with them on a variety of different issues and so they would be there to look at those.
MR. COLWELL: Over the past five years, what positive steps, or even the last couple of years, has the government taken to help prevent the problem of addiction? I know it's a big problem with VLTs. What positive steps have you taken?
MR. CHRISTIE: Well, a number of things. Obviously, one of the major initiatives that you take is the education process and trying to work and educate people as to how they need to react. The other initiatives have been pilot projects. You will see pilot projects in different parts of the province in retail locations indicating to people about being cautious and showing restraint and, of course, the other issue and the other part was the introduction of machines that limit your time and cashed you out at certain points in time. So those are the major initiatives.
MR. COLWELL: How effective have those been?
MR. CHRISTIE: Well, I guess in response to that, research and some studies indicate that three out of four of those features on the VLTs that I referred to indicated that they had advantages to people as to limiting their playing and doing some of the features and some of the initiatives they had hoped to do.
MR. COLWELL: Are you planning or discussing the possibility of taxing lottery winnings?
MR. CHRISTIE: What I do know about lottery winnings is that they indicated in Ontario that they were going to introduce a bill. We have not researched that. We have not studied that and at this point in time it was only an idea that was floated in Ontario. Now, a number of people have indicated to us that it is something we should consider, but at this point in time we are not actively researching or following that initiative.
MR. COLWELL: So you have no plans in the next couple of years?
MR. CHRISTIE: Nothing is on the schedule to go towards that.
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MR. COLWELL: Well, I guess this is a good thing, the next thing I'm going to ask, the gambling revenues are on the decline which is always a good indication, hopefully fewer people are gambling. You're estimating a 3.2 per cent reduction this year over last year in the growth. What do you attribute that to?
MR. CHRISTIE: I think, as I indicated to somebody on the committee yesterday, a lot of the issues surrounding this have to do - the Gaming Corporation people tell you that the products are becoming dated in terms of the lotto machines, in terms of the tickets, in terms of others, that people are finding that they're not new and exciting the way they once were. So that's one of the reasons. The other areas are, obviously, there's Internet gambling, and there are other opportunities for people to direct themselves to, so that's probably taking some away from our revenue and our gambling here in the province.
MR. COLWELL: In 1997, about seven years ago, the Auditor General audited the Atlantic Lottery Corporation and found that we were being shortchanged by about $4.5 million a year. When is the minister going to request an audit again of the Atlantic Lottery Corporation to see if we're on-line, underpaid, or whatever the case may be?
MR. CHRISTIE: Well, since that time the procedures have been set up so that they're being checked annually and they're being checked as to some of those issues that were raised by the Auditor General in terms of the amounts coming in and, more importantly, the allocation between the partners.
MR. COLWELL: In early 2000 the Premier indicated there had been a new arrangement made and Nova Scotia would get an additional $4.9 million annually from this. Has that been happening?
MR. CHRISTIE: Sorry, with Atlantic Loto?
MR. COLWELL: Yes.
MR. CHRISTIE: What you're referring to is the change in the profit agreement and, yes, it has been to our advantage in the range of $3 million to $5 million for the different years since then.
MR. COLWELL: If I look at the 2002-03 numbers here, it shows that the lottery ticket profits went up by $4 million in New Brunswick, $1.3 million in Newfoundland, $1.7 million in Prince Edward Island, and declined by $1.5 million in Nova Scotia. What's the reason for that?
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MR. CHRISTIE: What we would attribute it to is the reduction in the sale of tickets to offshore. You will recall that the Gaming Corporation took an active pursuit of eliminating that and so it's their belief that that would have had some effect and be influencing these numbers to a considerable extent.
MR. COLWELL: Those are all the questions I have.
MR. CHAIRMAN: The government caucus has no questions as they're not here and I assume the Official Opposition, you have already indicated no further questions. So any closing comments and, please, read into the record your resolutions.
MR. CHRISTIE: Mr. Chairman, I do want to thank the committee for their interest and for the good questions that we had and to exploring a number of these possibilities. I do want to reiterate my thanks to all the department staff for their co-operation and their work today to get us here and to get all of the tasks that are done. With that being said, Mr. Chairman, with your permission, I will read the following resolutions:
[4:30 p.m.]
Resolution E8 - Resolved, that a sum not exceeding $1,007,112,000 be granted to the Lieutenant Governor to defray expenses in respect of Debt Servicing Costs, Department of Finance, pursuant to the Estimate.
Resolution E16 - Resolved, that a sum not exceeding $7,890,000 be granted to the Lieutenant Governor to defray expenses in respect of Government Contributions to Benefit Plans, pursuant to the Estimate.
Resolution E33 - Resolved, that a sum not exceeding $56,474,000 be granted to the Lieutenant Governor to defray expenses in respect of Restructuring Costs, pursuant to the Estimate.
Resolution E34 - Resolved, that a sum not exceeding $10,000,000 be granted to the Lieutenant Governor to defray expenses in respect of the Debt Retirement Plan, pursuant to the Estimate.
Resolution E35 - Resolved, that a sum not exceeding $250,000,000 be granted to the Lieutenant Governor to defray expenses in respect of Capital Purchase Requirements, pursuant to the Estimate.
Resolution E36 - Resolved, that a sum not exceeding $111,187,000 be granted to the Lieutenant Governor to defray expenses in respect of Sinking Fund Instalments and Serial Retirements, pursuant to the Estimate.
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Resolution E38 - Resolved, that the business plan of the Halifax-Dartmouth Bridge Commission be approved.
Resolution E39 - Resolved, that the business plan of the Nova Scotia Gaming Corporation be approved.
Resolution E42 - Resolved, that the business plan of Rockingham Terminal Inc. be approved.
MR. CHRISTIE: Mr. Chairman, those are my resolutions.
MR. CHAIRMAN: We will recess for five minutes and be back here at 4:38 p.m. sharp with Human Resources, I believe.
[4:33 p.m. The subcommittee recessed.]
[4:38 p.m. The subcommittee reconvened.]
MR. CHAIRMAN: I call the subcommittee to order with opening remarks by the minister and perhaps you could introduce your staff who a