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HALIFAX, THURSDAY, MAY 5, 2005
SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY
2:03 P.M.
CHAIRMAN
Mr. Mark Parent
MR. CHAIRMAN: I would like to call the meeting to order. We will begin with the opening statements from the Minister of Finance.
The honourable Minister of Finance.
Resolution E8 - Resolved, that a sum not exceeding $1,017,065.00 be granted to the Lieutenant Governor to defray expenses in respect of Debt Servicing Costs, Department of Finance, pursuant to the Estimate.
HON. PETER CHRISTIE: Mr. Chairman, I am pleased to be here today to speak to the estimates of the Department of Finance. I hope this provides a good opportunity to promote understanding of our budget priorities, and the activities they represent.
Our government is committed to sound fiscal management and Finance plays a key role in the delivery of the commitment. We have made some important changes in recent years that have vastly improved how we manage taxpayers' money. We have produced four consecutive balanced budgets that are a direct result of careful financial management. The examples include: being leaders in implementing GAAP; having good financial tracking through the year of all government departments; pension plan performance that is above the Canadian average; lower debt servicing costs; and a much lower foreign currency exposure.
We have now been upgraded by all three bond rating agencies, they recognize some of the positive trends here at Finance and across government. Having said that, we know there is more to be done. While performance has been good, it can be better. Our business plan will focus on a number of key priorities for this year and I would like to outline a few here today.
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The budget I introduced last week shows we are following through with the proactive fiscal plan for 2005-06. We have made a number of key investments that will help Nova Scotia's children and families, these include new money for health, living initiatives, expanding programs for education, and new programs for health care.
In addition, we have released a revised debt reduction plan. We will take the $830 million in offshore money from Ottawa and use it to accelerate the rate at which we can reduce the debt in the coming years. We are continually refinancing our debt and we have worked very hard to reduce the annual cost of borrowing significantly. In our debt servicing area alone, Nova Scotia is in a much different position than it was 10 or even five years ago.
A decade ago we had 70 per cent of our debt financed in currencies like the yen and Swiss francs. The ratio has now dropped to around 16 per cent, where it should be. Our current budget has also made some small changes to business taxation this year, which the Bank of Nova Scotia noted last week, can serve as an economic stimulus to the provincial economy.
This year we want to do more work in this area. We will review the province's system of taxation and overall level of tax burden, with a view to ensuring efficiency, promoting competitiveness, and responding to the social needs of Nova Scotians within the fiscal resources available. Our progress on Generally Accepted Accounting Principles is well known, and this year we will take that a step further. We intend to improve some of our financial reporting practices to comply with the new Public Sector Accounting Board Standards.
A very positive new initiative for Finance is in the area of accounts receivable. We intend to combine systems throughout government into one corporate accounts receivable, by moving most of the accounts into SAPAR. This corporate system will improve data management, report and analyze functions, and the enhancement of internal controls, including relevant policies and procedures.
We were fortunate in 2004-05 that the Government of Canada recognized some of the legitimate provincial concerns around funding for health care, equalization, and as we've mentioned before, the offshore royalties. The progress you have seen in recent months on some of the federal-provincial files is the result of consistent hard work by staff at many levels within the Province of Nova Scotia, as well as other provincial and territorial governments.
This year we will continue these efforts. Staff will analyze events, provide advice to government, and represent the province's position on key federal-provincial funding agreements. The priority in 2005-06 will be to make sure Nova Scotia's position is represented when a panel of experts goes to revamp the equalization formula. While our long-term goal is to stop receiving equalization payments that derive from taxes paid in other
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provinces, Nova Scotia will continue to need support for some time to come, to be able to deliver programs and services at a level that is comparable to the rest of the country.
As you know, in December 2004, we released the result of an audit of governance and control framework prepared by Deloitte & Touche. They looked at that department's investment management, liability management, and capital market administration sections. We intend to implement the recommendations of this report in 2005-06; much of the work is already underway.
We are establishing a middle office function that will provide ongoing audit and compliance services for Treasury services, investment in capital markets, enhanced governance, and a more complete segregation of duties for transactions. We have planned for three FTEs and operating dollars for a total of $243,000. We also recognize the need for more auditors in government, as well as a new approach to the corporate audit function.
A new plan was developed in 2004-05 and will proceed with implementation this year. This means a revised governance and organizational structure for internal audit that will reflect a corporate business approach and will provide the required assurance of accountability and good internal management. Our budget includes funds for two additional FTEs and funding of $134,000.
The corporate audit activity will be complemented by a stronger focus on compliance functions in key departments such as, Service Nova Scotia and Municipal Relations, Community Services, and Health. We are also taking a responsible approach to managing our pension liabilities so that taxpayers in the future will be able to meet their pension obligations. Although the funds have exceeded average market returns in Canada by 1 per cent per year over the last 10 years, we have been working to improve the liability ratios to ensure funds will be in place for a large number of employees who will retire in the next two decades.
In April 2006, we will implement joint trusteeship for the Teachers' Pension Plan, in consultation with the Nova Scotia Teachers Union. We will also continue governance discussions with stakeholders regarding the Public Service Superannuation Plan to see if improvements are possible in that area.
Staff at the Department of Finance, Office of Economic Development and human resource functions across government will be working this year to finalize the implementation of eMerge, the new human resource and payroll system. Finance runs the hardware behind this new SAP enterprise resource planning system and we have also included money in our budget to ensure that it is appropriately staffed. In recognition of the importance of human resource planning, the Department of Finance will implement a series of human resources strategies, to enhance employee career planning and development, and to support a department-wide approach to succession management and to encourage
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diversity. We are also working to enhance the Division of Occupational Health and Safety efforts by broadening our focus. We believe it's essential to include the wellness issue.
The Department of Finance budget will increase to accommodate many of the above activities this year and I'm pleased to see that the department is moving forward with these initiatives. I believe they will make a significant contribution to helping the government continue to improve financial management practices.
As Minister responsible for the Gaming Control Act, I want to say a few words about the work they're doing this year to promote responsible gambling. We anticipate that revenues from gaming will be about $160.9 million in 2005-06. This is a decrease of $8.8 million over last year in the Nova Scotia Gaming Corporation budget. As you know, this is a result of implementation of the new gaming strategy. We are placing a greater focus on social responsibility and reducing the government's reliance on gaming revenue.
The strategy includes measures that will reduce the net income from video lottery by $19 million. In addition, the Nova Scotia Gaming Corporation will spend $1.6 million more on responsible gaming expenditures and the Office of Health Promotion will spend an extra $3 million on prevention and treatment programs. In addition to these strategic revenue reductions, and increased expenditures on treatment and prevention, these are two areas of gaming where the province will see managed growth.
Ticket lottery revenue will increase by 16 per cent due to anticipated growth in sports games and Lotto 6/49, as well as a rejuvenation in some instant ticket categories. Halifax casino revenues are also expected to increase due to modest revenue growth and a reduction in amortization and interest.
Mr. Chairman, with that I will conclude my remarks and take any questions.
[2:12 p.m. Mr. Gary Hines takes the Chair.]
MR. CHAIRMAN: We will start our questioning with the NDP.
The honourable member for Halifax Fairview.
MR. GRAHAM STEELE: Just so I can keep track, Mr. Chairman, what time is your clock showing?
MR. CHAIRMAN: It's 2:14 p.m.
MR. GRAHAM STEELE: Thank you very much, Mr. Minister, I'm pleased to be back here for another year as the Finance Critic and am pleased to lead off on the questioning of your budget.
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Many of the people in the room I recognize but not all of them. I wonder if you could just let me know which staff members you have with you here today?
MR. CHRISTIE: Certainly, you know Deputy Minister Vicki Harnish, and Joyce McDonald, Greg Sewell, Byron Rafuse, Doug Stewart, Marie Mullally, John MacDonald, Liz Cody, Nancy Benoit, Frank Dunne is back there, Roy Spence, and Cathy Shaw.
MR. STEELE: Thanks, very much. I'd like to start with the document that I got in the proverbial brown envelope this morning. The document reads as follows: Could you please ask the minister to explain why his very capable and hard-working executive assistant did not get a bonus last year? Signed, Mark Winn. (Laughter) No, I'm only joking. Although I think Mark does want me to ask you that.
MR. CHRISTIE: Well, he probably does, yes.
MR. STEELE: Seriously, how much did your deputy minister get as a bonus last year?
MR. CHRISTIE: It was $12,700.
MR. STEELE: Was that the maximum amount available?
MR. CHRISTIE: No, that's not the maximum. The maximum is higher than that and nobody got the maximum.
MR. STEELE: Who else in your department received a bonus last year?
MR. CHRISTIE: The assistant deputy minister.
MR. STEELE: And how much was her bonus?
MR. CHRISTIE: Let me just check here, I believe it's about $10,000.
MR. STEELE: That's okay, I don't need the exact amount, just a ballpark. If I were looking in the budget documents for where you budgeted for bonuses for this year, where would I look?
[2:15 p.m.]
MR. CHRISTIE: Within the salary budget of the department.
MR. STEELE: So you budgeted for . . .
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MR. CHRISTIE: We do projections of what we anticipate might happen. We anticipate there might be this number of FTEs, there might be these bonuses, there might be this and then, of course, you manage within that.
MR. STEELE: So if there is a bonus this year it's going to come out of your salary budget?
MR. CHRISTIE: Yes.
MR. STEELE: Why is it that only two people in the department are eligible for a bonus? You have a room full of very capable staff here, why is it only the top two - the two who, I assume, are already among the two highest paid? Why is it the highest paid people who are eligible for the bonus and nobody else?
MR. CHRISTIE: I will have to be a little cautious here because I think you're aware - and we had this discussion last year - that we have people in investments and pension management who also get bonuses too in Treasury Services.
MR. STEELE: Okay, but I just asked you who else in the department got a bonus and you only mentioned one so I assumed nobody else got a bonus.
MR. CHRISTIE: You asked me and I said the deputy and the assistant deputy minister and then I'm also saying there are people in Treasury within the department, too.
MR. STEELE: How many people in your department got a bonus last year?
MR. CHRISTIE: Printed in the 2003-04 Supplement showing there were four additional others than the two I mentioned to you.
MR. STEELE: Okay and who are they and how much to they get?
MR. CHRISTIE: They are Andrew Tambone, $18,500; Peter Van Loon, $35,600; Elizabeth Vandenberg, $14,898; and Jennifer Grabmann, $6,381.
MR. STEELE: And what do those four people do, what's their job?
MR. CHRISTIE: They are Investment and Treasury Services.
MR. STEELE: All four of them?
MR. CHRISTIE: All four of them, yes.
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MR. STEELE: Let me go back to your deputy minister because I'm not actually opposed to bonuses, I'm not against them. What I am against is bonuses being awarded when nobody knows what they're being awarded for. So what I want to ask you is what are the criteria for your deputy minister's bonus? What does she have to do to earn it, or what would have to happen for her not to earn it? What are the criteria?
MR. CHRISTIE: Well, I'll get the full list here for you but basically, the government has to meet its budget targets overall for people to get bonuses, so government bonuses aren't paid if you find that the government is not in a surplus position.
MR. STEELE: Rather than drawing this out of you sort of one painful line at a time, do you have a document that lists the criteria for bonuses in your department?
MR. CHRISTIE: I do not have it here, it's in the department, yes.
MR. STEELE: Okay, would you agree to table that when we go back at these estimates tomorrow?
MR. CHRISTIE: I will look up that particular piece of paper.
MR. STEELE: Now let's make sure that it's clear what I'm looking for. I'm not looking for a job evaluation, or anything like that. What I am looking for are the criteria that your deputy minister and the others who are eligible for a bonus in your department have to meet, so that we know if they do x they get the bonus and if they don't do x they don't get the bonus. Doesn't it seem a little odd to you, Mr. Minister, that your deputy minister would get a bonus for the government meeting its overall fiscal targets, when the overall fiscal targets depend on so very many factors like the state of the national economy, the state of the American economy, the exchange rate, interest rates, all of these things over which your deputy, as capable as she is, has absolutely no control and yet it dictates whether she gets a bonus or not. Doesn't that strike you as odd?
MR. CHRISTIE: No, because in the corporate world that's the same situation that happens. Corporations have to meet profit targets or people don't get bonuses, so that's no different.
Now, let's come back, you had asked a question, in the Manual 500, there is the list of criteria and I'm going to assume what you asked me for is a copy of that, in terms of how our deputies are evaluated?
MR. STEELE: That's not what I asked for, or it may be or may not be, but I wanted to be clear, whatever the list is that you use to determine your deputy's bonus, wherever it's found, that's what I'm looking for, and if it's that document in the management manual, that's what I want. What I want is the document. I can't identify for you in advance where
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that document is to be found. Somebody must sit down at some point in the year and say, has Vicki Harnish earned her bonus or has she not, and they must be measuring that against a set of criteria, that's what I want, whatever that document is, that's the one I want.
MR. CHRISTIE: As you know, it's not done by the ministers, it's done by the Deputy to the Premier.
MR. STEELE: It's done by who?
MR. CHRISTIE: The Deputy Minister of the Premier does those evaluations. So, I don't perform those evaluations for the deputy in the department, they're done by the Premier's Deputy Minister. However, your question still is, what were the criteria, and those are the issues I indicated are in the Manual 500 that you asked me to present to the committee tomorrow.
MR. STEELE: What I want from you are the criteria that the government uses. If it's that page out of the management manual, that's what I want, but if it's not, then it's not what I want. If you don't know what criteria the Deputy to the Premier used, I don't want a document that may or may not be the actual criteria, I want the ones that are actually used to determine the bonus for your deputy and the other people in your department.
Let me go back to a question that I didn't actually get an answer to because I had moved on and that is, why in your opinion, are there only six people in your department eligible for a bonus? Why aren't more of the fine staff of the Department of Finance eligible for a bonus? We'd all love to be eligible for a bonus that are set by criteria over which we have no control, like your deputy's bonus. Why can't more people get a bonus? Why does the government cut it off at those six?
MR. CHRISTIE: The pay-for-performance initiative is involved with the MCPs. To be in certain things you have to be in that particular classification.
MR. STEELE: Yes, there's more than six people in your department in the MCP.
MR. CHRISTIE: The other pay-for-performance are other people who are within that group. Then the other question of the number of people who are in the investment group that would be because that's what their contracts say.
MR. STEELE: Okay, so they have a contract that stipulates the criteria?
MR. CHRISTIE: Yes.
MR. STEELE: I assume that that's related to things like investment return and things of that nature?
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MR. CHRISTIE: Performance and so on, yes.
MR. STEELE: I know that that particular unit of your department has to operate somewhat differently from the rest of government because of whom you're competing within terms of jobs.
MR. CHRISTIE: Right.
MR. STEELE: Now, if I were being mischievous - which is not my nature, that's more the member for Glace Bay who does that kind of thing - I would ask your staff in the room, how many of them feel if they want a bonus, put up their hand, but I won't. It just seems odd, the whole bonus program is difficult to explain to the public, there's a certain number of people who get it and not others, and the criteria aren't public. We have to kind of pull it out and say, okay, what do you have to do, and for your particular department it seems like your deputy qualifies for a bonus based on things over which she has absolutely no control, like the performance of the national economy.
MR. CHRISTIE: However the deputy and the people within our department are required to look at that as we start to build a budget. They can't forget that the national economy, forget the growth in Canada, forget the other impacts as we're building a budget because we obviously have to do that . . .
MR. STEELE: Of course you would have to look at it, the question is whether you should be rewarded for it?
MR. CHRISTIE: Or the other fact is, maybe your argument is saying, should they be penalized and not get a bonus if it doesn't happen? The fact is there has to be something that is set to how it's going to be triggered.
MR. STEELE: Okay, but the problem is, it's a pay-for-performance program, and that means that if you're on a baseball team and you have the highest batting average on the team or the league, maybe you get a bonus because that's measurable, everybody can see it. But if your deputy is rewarded for whether the government keeps within its budgetary targets, and that depends more than anything else on the state of the national and the U.S. economies, it's difficult to see what exactly it is about the deputy's performance that has attracted that bonus. Surely you can see the Canada/U.S. exchange rate is unaffected by your deputy's performance. No matter how wonderful, brilliant and capable she is, she simply can have no effect on the exchange rate, but that can be one of the factors that affects the government's budget. So, how can you call that kind of thing pay for performance? In what sense is it pay for performance, when whether it is achieved or not, is out of her hands?
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MR. CHRISTIE: Well, I disagree with you on a couple of cases. I don't argue the fact that she has no influence over the exchange rate, she has no influence over whether there's a BSE scare, she has no influence over the softwood lumber. What we do have control over, as every corporation does, is that you have to manage given the conditions that you have to deal with. Whether those conditions are changing interest rates, whether those conditions are natural disasters, then you have to control within those parametres that you have, and that's, indeed, why we've had some balanced statements over the last number of years. The fact is that the last number of years, things haven't been perfect. We've had the equalization reduction, we've had softwood lumber, we've had a number of those situations. However, that's what a government has to do, manage within the terms and conditions they have, just as you do in your household you have to manage, so do I, so does everybody, and that's what we're doing. Bringing that performance in is one of the things that is the responsibility of the deputy.
MR. STEELE: Now, I was going to go on to some of the other finance stuff, the boring but very fundamentally important stuff that your department does. Your department often is under the media radar, I guess, because a lot of it is so technical and so challenging, it's difficult for the media and the public to understand what exactly it does. I was going to do that, but I will save that for a little later. There was stuff that came up in Question Period today that I just can't help asking because the suggestions that were made in Question Period were so startling that they need to be explored. I've been around here just long enough to know that you don't necessarily believe everything you hear in Question Period, but this is a perfect opportunity to ask you some more details and, of course, this is with your Gaming Corporation hat on.
[2:30 p.m.]
MR. CHRISTIE: Yes.
MR. STEELE: The suggestion was made in Question Period today that the Gaming Corporation has offered, to people in the Town of Windsor and area, $50 grocery vouchers if they participate in the Smart Card Program, is that true?
MR. CHRISTIE: It's almost correct. There is an incentive for people to attend workshops and to attend focus groups and, as focus groups do, the Gaming Corporation hired a group to do some research for them and, as part of the normal procedure, that research group gives incentives for people to take part in the focus groups.
MR. STEELE: The words that you used were workshops and focus groups. Now, I just want to make sure, workshops and focus groups.
MR. CHRISTIE: I used the word, in those two-hour focus groups, yes, I did use the word focus groups.
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MR. STEELE: Okay, because the allegation that was made in Question Period, as I understood it - which may be wrong, but as I understood it - was that these vouchers were offered to people to participate in the Smart Card Program, essentially to go out and gamble with the Smart Card, is that true?
MR. CHRISTIE: Yes, that's true. Those people will be involved in playing and using the cards.
MR. STEELE: Okay, so it's more than workshops and focus groups, I mean I can understand. (Interruption) Well, I'm using the polite word because you said workshops and focus groups but it's more than that. I can understand giving people money to attend the focus group; in fact, it happens all the time, that's the way you get people to attend focus groups. Certainly I would understand in the gambling context, where people go through their ready cash very quickly, if you were to say, well, instead of giving $50 in cash, we'll give them a voucher that's redeemable only at a grocery store because that's a responsible way of putting money in a gambler's hands. Okay, that much I could understand, if that's what's happening, but if I understand you correctly, that's not in fact what's happening, that the $50 is an incentive to get them to go out and gamble, is that not correct?
MR. CHRISTIE: The issue was they were using gift certificates as opposed to cash for the reason that you cited, however, there are two parts to this. One is the part that they're going to be involved in a focus group. The other part is they're going to use and test the Smart Cards, they're going to physically test those on machines.
MR. STEELE: So in order to get the $50, what does the person have to do?
MR. CHRISTIE: To get the $50, they do the first initial information assessment and $50 for each of the follow-up surveys. Participants are chosen randomly at VLT sites and during the orientation sessions of the initial recruitment our researchers also excused other players who indicated that they were in treatment for gambling problems.
MR. STEELE: Okay, you're reading from a document. Can I get the minister to table that document? Okay, Mr. Minister, if you could just table whatever document that is and if we had a Page here, we could get them to copy it, but we don't have a Page here. (Interruption) Just for the record, Mr. David Wilson, the honourable member for Glace Bay, has volunteered to go out, oh, I thought he was going to photocopy it himself, but he's going to go out and get a Page.
My understanding is, if I understand what was said in Question Period, the person then is eligible for another $50 after four months. Is that correct and what does the person have to do in order to be eligible for that second $50 voucher?
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MR. CHRISTIE: This is part of the follow-up survey and they follow up after they have used the card, they've participated in the focus groups, then they're part of a wrap-up survey and the conclusion of the survey of their reactions and their findings by using the card.
MR. STEELE: How many people were offered this incentive?
MR. CHRISTIE: I'm told 120.
MR. STEELE: And how many accepted?
MR. CHRISTIE: We'll have to get that information, we don't have it right here because, as I indicated, it's going through a research company. So we would have to go to the research company to get that piece of information.
MR. STEELE: And the name of the company is Focal Research, is that correct?
MR. CHRISTIE: No, the name of it is Omnifacts Bristol Research and when you get your copy, that will be available.
MR. STEELE: And how did the Gaming Corporation, through its contractor, go about picking these people and did it pick people who are already gambling, did it pick problem gamblers, did it pick people not currently involved in gambling? How did it go about picking these 120 people?
MR. CHRISTIE: This was done through a competition, inviting people to . . .
MR. STEELE: No, I don't mean how did you pick the contractor, what I mean is how did your contractor pick the 120 people? How did they decide who to offer this voucher to?
MR. CHRISTIE: The participants are chosen randomly at VLT sites by the researchers.
MR. STEELE: Okay, that sounds like they go out to VLT sites and just say, are you interested in participating in this program?
MR. CHRISTIE: Yes.
MR. STEELE: Do you think it's a good idea to give money . . .
MR. CHRISTIE: To do research?
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MR. STEELE: . . . to people to gamble? No, I didn't say is it a good idea to do research. What I said is, is it a good idea to give money to gamble?
MR. CHRISTIE: Well, do I think it's a good idea? We can't do the test without having people to participate.
MR. STEELE: The Gaming Corporation that you're responsible for obviously feels that they couldn't get people to participate without an incentive. Do you think it's a good idea to give people already involved in VLT gaming money in order to do more gambling?
MR. CHRISTIE: Well, as I indicated before, we don't give them money, we give them, in this case there were grocery certificates or various other things that they can be involved in.
MR. STEELE: Mr. Minister, you're splitting hairs and by doing that you're avoiding what I'm really getting at. Is it a good idea, in your opinion, your personal opinion as the Minister responsible for the Gaming Corporation, is it a good idea?
MR. CHRISTIE: I view this as a good idea to do the testing and the testing requires people to be involved.
MR. STEELE: You're avoiding the question again, Mr. Minister. We all agree it's a good idea to do research. Is it a good idea to give money in the form of food vouchers, or grocery vouchers, to people in gaming in order to encourage them to continue gambling? Do you believe, Peter Christie, do you believe that's a good idea?
MR. CHRISTIE: Peter Christie doesn't believe this is encouraging people to gamble. He believes this is getting some research done to allow us, as part of the survey, as part of the plan we indicated. Here's the plan we indicated, we said we were going to follow up and research and Peter Christie believes that it's necessary and it's valuable to do follow-up research, yes.
MR. STEELE: Can you see how some people might be concerned that this would motivate people who might withdraw from gambling, that this might motivate them to actually do more than they would otherwise intend?
MR. CHRISTIE: There's always that possibility. As the researchers are testing people and talking to people, they have to look at that and they have to make some evaluations on that, but that's always a possibility.
MR. STEELE: Who approved this program? Who said it's a good idea, let's go ahead with it?
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MR. CHRISTIE: The directors of the Gaming Corporation.
MR. STEELE: Did you know about it before it was raised in the Legislature today?
MR. CHRISTIE: I knew that they were doing testing, yes, I knew the Smart Card was going to be tested.
MR. STEELE: Did you know about the $50 grocery voucher program?
MR. CHRISTIE: I did not. I did not know the approach the research company was going to do because I hadn't been involved in selecting that. I knew the initiatives the Gaming Corporation was going to take, but I did not know which research company was picked and the methodology they were going to use.
MR. STEELE: And so in terms of the $50 grocery vouchers today, this afternoon, it was the first you had ever heard of it?
MR. CHRISTIE: That's correct.
MR. STEELE: And when you first heard it, did you think it was a good idea?
MR. CHRISTIE: As I indicated to you, I knew that the research company was going to undertake, I'm aware that when you go to focus groups, there are initiatives and incentives to go to those focus groups. So it didn't surprise me that the research group was using incentives and using methods to get people involved.
MR. STEELE: Have you ever heard of this particular method being used before, this method of giving people money in order to gamble more?
MR. CHRISTIE: No, I haven't heard of that method used to give people money to do research on gambling, no.
MR. STEELE: Do you know if the Gaming Corporation investigated whether people would participate willingly without actually being given money to do it?
MR. CHRISTIE: The recommendation of the research company to the Gaming Corporation was that they go through with that. The Gaming Corporation made the decision to move on.
MR. STEELE: So you sit here before us today saying the first you ever heard of it was today?
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MR. CHRISTIE: I knew their program was being tested and I knew there was a research company, but I had not sat with the research company to see how they were going to implement it.
MR. STEELE: I'm sure you can tell from the line and tone of my questioning that it just struck me when I heard about it today as an extraordinarily dumb idea. We'll see what happens. The idea of giving gamblers - especially when the researchers have gone out to VLT locations to find their research subjects - money in order to gamble more, in order they can be studied. It just strikes me as an extraordinarily dumb idea, really, it does. That wasn't a question, that's a comment.
I'd like to move back to some of the Finance stuff now that I've clarified that particular aspect of the Gaming Corporation program. I'd like to take you to your department's business plan. Let me say first of all that I admire the staff at the Department of Finance. I've been the Opposition Finance Critic now for three years and over the course of that time, I deal more and more with your staff, and I get to know more and more of them. They are nothing less than thoroughly professional in the face of endless provocations from the Opposition. I mentioned Vicki Harnish, Liz Cody, Byron Rafuse, Roy Spence - I shouldn't start listing people because then I'm going to leave some out - but, your staff are nothing less than thoroughly professional and I'm sure you thank your lucky stars every day that you're supported by such an excellent staff.
MR. CHRISTIE: Indeed I do.
MR. STEELE: I wanted to say that I feel like I needed to get that off my chest because the next thing I'm going to say is more critical - not of your staff, of course, but of your department's business plan. I have to say, as the Opposition Finance Critic, I don't find it nearly as useful as it could be.
In many ways, it seems designed not to give useful information. I would say by way of comment before I go through my long list of the difficulties I have with your business plan or the questions that are raised by it, that it could be so much more. The best business plan that I see every year in my capacity as Finance Critic and Chairman of the Public Accounts Committee is that produced by the Office of the Auditor General. It is clear, straightforward, the goals are understandable, specific and measurable and it's an excellent report. I really would commend to your department's attention that particular report because to me, as a member of the Legislature, it is useful. This particular plan is not useful and I want to spend some time - the rest of the hour that's available to me and later - to say exactly why.
One of the main reasons, of course, is the goals are so vague that almost any action would count as meeting the goals. The targets that are listed are usually not measurable and/or there is simply no information on whether the target has been met or not. There is little or no information about why targets have been met or not met, and what the factors
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were that contributed to targets being met or not met. These are all the things that you would expect to find in a useful business plan, but I just have a feeling the whole thing gets put through the PR grinder and anything resembling useful information gets washed out.
Let me start now, I've a long list here and it's certainly going to take me more than the half hour that's left to me to explain in detail what I mean about that. When we're examining your budget, I actually don't spend a lot of time on the Estimates Book, sort of line-by-line budgets and dollars. What, for me, is much more interesting and much more important is what you're actually going to do with the money that you're asking the Legislature to vote to your department.
One of the things that was not in your budget that frankly I read for the first time in your business plan was that it is one of the objectives of the government in this fiscal year to do a comprehensive review of the Nova Scotia taxation system. This would be found - this is the only document in which reference to that fact is made - under Strategic Goal, No. 1, Paragraph 3.
[2:45 p.m.]
Here's a perfectly good example of a strategic goal that is so vague that it's meaningless. Let me read Strategic Goal No. 1. "Develop fiscal and economic strategies to help government realize its fiscal, social and economic development objectives." What does that tell us as representatives of the people? It tells us nothing because anything your department does would count as meeting that objective.
The third action your department proposes to take under that heading is, "Review the province's system of taxation and overall level of tax burden with a view to ensuring efficiency, promoting competitiveness and responding to the social needs of Nova Scotians within the fiscal resources available." What is your department doing to review the province's system of taxation? What are you doing and when can we expect it?
MR. CHRISTIE: You indicated that that was the first time you saw it. I don't recall if you were at the Chamber dinner, but we announced that particular initiative then. That particular issue is in the budget document. What we are doing is to implement and look at where we are as a competitiveness factor or personal and corporate income tax in Nova Scotia compared to the other provinces, what opportunities there are and what might be the sense of direction that we take in the future.
In, moving on, the competitive side of things, when we talked about the large corporation tax and the small business threshold we've indicated that we were making moves in that direction to stay competitive. The object of this exercise is to ensure this province has a policy of moving forward in the future that remains competitive. It's not something you do on the spur of the moment, you've laid out your initiatives and your plan for the future.
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MR. STEELE: When did the public consultations start and who's doing them?
MR. CHRISTIE: We've started to develop the strategy, that will come along as the policies and the initiative gets put together and completed, and that probably will lead us into the Fall and the Winter. Obviously, as we move to the Spring, to budgeting for next year, you have to start doing that. I can say to you one of the things that we are criticized for most by businesses and other tax groups is that we don't do the consultations and all these initiatives in the Fall. Their comments to us is that we should be having the dialogue in the Fall so that as the Winter comes, you are finalizing those policies to get ready to implement them in the next year's budget.
MR. STEELE: But you are going to do a comprehensive, public review of the taxation system, aren't you?
MR. CHRISTIE: We're going to do a review, yes, whether you would call it comprehensive, we use the word comprehensive. There's a number of groups that have indicated to us that they want to be part of that initiative whether it's manufacturers' groups, small business groups, whatever groups it might be. The Halifax Partnership has indicated, and the Chambers of Commerce across the province have indicated that they want to be involved in that dialogue as to the direction where we go.
MR. STEELE: Okay, but those are all business groups. What about the other groups that are just as interested in taxation? Some of the poverty groups, some of the groups dealing with low-income people and the effect of the tax system on them. Some of the people just representing regular, middle class Nova Scotia consumers, at what point are you going to listen to what they need from the taxation system?
MR. CHRISTIE: Well, obviously, as we move through these there will be the opportunity for people to make input, whether it's person x or they are an association of whatever group it is, they will be able to make input. I guess your question is, do you have dates set for public hearings to have people come in and the answer is no, we don't as yet. It's fully intended that any Nova Scotian who wishes to speak to this issue will have the opportunity to do it. I listed some of those groups. Some of those groups have already indicated to us how they would like to see it go and I suspect their philosophies won't change between now and the Fall. However, in terms of getting other groups coming in, that's part of this process.
MR. STEELE: Just to give you one example of the kinds of things that need to be addressed - and it needs to be addressed in a public way, not behind the closed doors of the Department of Finance - is the growing mismatch between federal deduction levels and provincial deduction levels and once we decoupled, they started being different which is a real loss. It is a real increase in taxation by itself, it's very subtle, but nevertheless it represents a real increase in taxation to Nova Scotians, particularly the young people on low
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incomes because we're talking about things like the disability amount, the age amount, and the other amounts that particularly apply to people at the lower ends of the income scale. The provincial deductions are not matching, they are becoming increasingly out of step with the federal deductions. When are we going to address that in a public way so that the people who this affects know that they have been heard by the person who's actually making the decision? When is that going to happen?
MR. CHRISTIE: Well, as we start through this public process the people will have an opportunity to express and share those views. In reality, after you have all these views shared, whatever they might be, then you still have to pick your priorities. You still have to have staff to pick which initiatives you're going to take. However, your question was when are people going to have the opportunity? It will be part of this process that we will be developing now that will be coming along towards the Fall, so that will provide the opportunity. I guess what I hear you saying is that in the completion of this program that you're going through, please, ensure that there's an opportunity for anybody who wishes to speak on any matter to have the opportunity to do.
MR. STEELE: What Nova Scotia is long overdue for is a comprehensive and public review of the taxation system to make sure that everybody is being treated fairly and that everybody is paying their fair share. The vagueness of the objective listed in the department's business plan worries me. I have no doubt that those business groups that you've listed off will have their voices heard, they have no trouble having their voices heard. The problem is that I'm not sure that the people representing the individuals at the other end of the income scale are heard by your department. There's no forum for them to be heard and to know that they have been heard.
Going back to my general theme of the inadequacy of the department's business plan, what you've written here is so vague that just about anything will allow you to say a year from now, look, we met that objective in our business plan and almost anything counts as success when you state your goals so vaguely. What I am saying is that what we need are not vague promises that can be met by a few meetings with business groups, but rather an open comprehensive review of who bears the burden of taxation in Nova Scotia and whether there are some improvements that can be made on which we can get a broad provincial consensus.
Let me move on then to Strategic Goal No. 4. Now, let me read to you Strategic Goal No. 2. It says, "Create understandable and informative reporting on financial results while applying PSAB recommendations." That's great, it's fairly vague, though, and in the measures further back in the business plan, in the items listed as the measures, I think I'm right in saying that the only measure includes the timing at which the Public Accounts is published and an unqualified audit report. So those are the two things, but the goal is so very different and the timing of the publication of the Public Accounts, I mean the goal is a very important and necessary one. In fact, in many ways it is exactly what the Auditor General criticized you for in his special report in November 2003, precisely the fact that the financial
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reports, other than the audited year-end financial statements, had holes and gaps and inconsistencies and were not as clear as they could be or should be. But there is nothing here about checking with the users of the reports about whether they find the reports clear and useful.
So my question to you about the financial reports produced by the Department of Finance - I am not talking now about the year-end financial statements, those are fine, nobody has got any problem with those, I'm talking about everything else your department publishes in between - what steps will your department take in this fiscal year to make sure that the people who use those reports find them clear and useful?
MR. CHRISTIE: Well, I think the first thing is, and you referred to the Auditor General's Report as to the budgets and the interim statements, having some discussion on those. You will recall that in December the Auditor General thought our presentation wasn't as he thought it should be. We've since had that discussion with the Auditor General, so I think in a lot of cases we view it as moving and working in conjunction with the Auditor General to make them readable.
Now, the other part is, does that make it readable to the citizens of Nova Scotia just because the Department of Finance and the Auditor General do it? The deputy just reminds me, one of the discussions with the Auditor General was to have a discussion with the Public Accounts Committee to seek input as to interpretation and as to simplicity and readability and, obviously, with some of the other committees of the Legislature. So your question was, what are you looking at doing? Those are the two steps that we have envisaged to take between now and this time next year to try to get input as to how people view and read our statements as simply as possible.
MR. STEELE: I don't mean this as a criticism, Mr. Minister, but you have the way of saying, so what you're saying is, which makes me think that you're taking what I'm actually saying and sort of reframing it and I feel as if I keep having to go back to what I'm actually saying, not the way that you have rephrased it. What I'm actually saying is that if you want to have understandable and informative reporting on financial results - those are your department's words, those aren't my words that's your strategical goal number two, and there are only four, so I assume that you're committed to doing this - what your department needs to do, is focus on who is using these reports and do they find it informative and understandable. It would be nice to see among your measures in the table at the back of the business plan, what does the Public Accounts Committee think, what does the Opposition Finance Critic think, what does the member for Richmond think, do we find it understandable and informative, do the media find it understandable and informative, do other people who read and use these reports, do they find it understandable and informative?
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What doesn't count is what your department thinks. When you're talking about communicating, what matters is not what's said, it's what's heard. I would like to see the measures that your department adopts in its business plan be a lot more in line with that kind of way of thinking rather than when I look at the measures, it's what date are the Public Accounts published, and do you get an unqualified auditor report. Those things have nothing whatever to do with whether the reports are understandable and informative.
[3:00 p.m.]
Let me move on then to Strategical Goal No. 3, Paragraph 7. Just for the record, I'm going to read what that says, "Work with the Federal government and other provinces to address issues that arise with respect to our Federal-Provincial Tax Agreements respecting Income Taxes, the Harmonized Sales Tax, as well as Reciprocal Taxation Agreements." Let me just start by saying again, how just terribly vague that is. Anything your department does with respect to federal-provincial agreements counts as working towards that objective but you can't have a business plan where anything, no matter what you do, counts as meeting that goal. It has to be a lot more concrete about what it is your department is doing so that we, as legislators, a year from now, can come back and say did they do this or did they not. But when you have such a vague goal we have no way of knowing, is your department doing a good job? Is it not? Is it making progress on behalf of Nova Scotians? Is it not? We can't do that when your business plan has such vague and meaningless goals.
That's not really the question I want to ask you about that one. What I really want to ask you is, what is on the horizon in this fiscal year with respect to the agreement on the harmonized sales tax? First of all, are there any discussions currently underway on any aspect of the harmonized sales tax agreement?
MR. CHRISTIE: The answer is yes and that has to do with the regulations. If you're asking me if there are specific additions or exemptions, the answer is no.
MR. STEELE: As concisely as you can explain it, what is the nature of those discussions about the regulations? Mr. Minister, I'm having a little trouble hearing you, I'm just wondering if I could ask you to be a little closer to the microphone or else pull the microphone a little closer to you. Thank you.
MR. CHRISTIE: There are always the discussions every six months with different officials as to looking at how the regulations are going to be interpreted, how they're going to be applied and those are the kinds of discussions I was speaking of.
MR. STEELE: And if somebody on the street in your riding - I think I've asked you to sit too close because now we're getting feedback - said what's in it for me, what are these HST regulation discussions? What's it about? How is it going to impact on me, a regular person? What would your answer be?
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MR. CHRISTIE: I would say these would not have great impacts on people on the street. I would say to them they don't have great impacts on them. These are the way the pool is dealt with, this is the way the tax collection money is done. The other thing I'm just reminded of, and of course you are aware of it, the loss of the $90 million in the tax pool. You will recall last December we had that issue about the pool being re-balanced and so on and we had to make adjustments for that. Those are the nature of the discussions that they're having in terms of that tax pool, and how they're going to be interpreted.
I think I indicated to you at the time that one of the positions we took was that we wanted the federal minister to undertake an audit to review why that happened, to see if there was going to be a possibility that that could happen in the future, and to give us some sense of comfort that it wasn't just some numbers that happened to get changed, but that there was some depth and focus to it, and somebody had reviewed it. Those are the types of discussions that we're talking about.
To say that a $90 million loss of revenue won't have an impact on the average citizen I suppose, is not correct, because it will.
MR. STEELE: If I ever knew what that $90 million issue was about, I have forgotten. Can you remind me what it's about?
MR. CHRISTIE: I recall you being over at our office at the briefing and us discussing it when we were having a briefing on it. I'm just reminded that it was at the December quarterly update that we did.
MR. STEELE: But just to get to the bottom line though . . .
MR. CHRISTIE: The bottom line of the issue was after they had done the tax pool and made adjustments, the amount that Nova Scotia got was $90 million less than we had anticipated because of these adjustments. It had to do with prior years and you might recall the discussion about corporations delaying paying of HST, holding back, and using their input tax credits in years that were attractive to them, which changed the tax pool and changed the amount. I think I indicated to you at the time, and the other critics from the other Party that our plan was in the Atlantic area to write to the federal minister to ask him to have that audited, to give us an in-depth response as to how it happened, why it happened, and to ensure we weren't going to be subject to the same fluctuations in the future.
MR. STEELE: Have your staff found that the current turmoil at the federal political level has had any impact on discussions between officials on federal-provincial agreements?
MR. CHRISTIE: No, Liz just advised us no.
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MR. STEELE: So we can assume that despite the turmoil at the political level that things are continuing more or less on a business-as-usual basis on the Civil Service level, is that correct?
MR. CHRISTIE: That's correct. One example was the committee that the federal minister appointed to look at equalization in the future. They have been in Halifax and I posed that same question to them about if there's a government change and their answer to me was, we're mandated to do this and whoever is in government, it doesn't matter who, we will report to whoever is sitting in that spot when we finish our report.
MR. STEELE: Has Nova Scotia or any of the other HST provinces raised as an agenda item for any future meetings, any change in the HST tax base in the goods that are subject to HST?
MR. CHRISTIE: We have raised that issue in the past and that was more than a year ago. However, we didn't get any uptake from the other provinces or the federal government to move in that direction. You said, were the other provinces proposing those things, they are not proposing them to us at this time.
MR. STEELE: Remind me what exactly it was that Nova Scotia was proposing?
MR. CHRISTIE: We were talking at the time about home heating fuel and children's clothing, we were talking about those issues and those are the issues we had raised, but they are not moving forward.
MR. STEELE: Can we assume that Nova Scotia has abandoned any attempt to put that on the agenda of that particular group?
MR. CHRISTIE: No, we haven't abandoned that. We're prepared to talk about a full slate of things. What I did say to you, though, is that we don't have other provinces saying they would like to do this or like to do that. We will continue to discuss those items with the other provinces.
MR. STEELE: I would like to move on to your Strategic Goal No. 4, Paragraph No. 10. Just to continue my theme, I can't resist reading this strategic goal as well, Strategic Goal No. 4 and the department only has four, "Continue to enhance the department's strategic focus overall, with immediate concentration on effective risk management and workforce strategies (development of our people)." It is to continue to enhance the department's strategic focus overall and that's one of the department's four strategic goals. Sitting here as a member of the Legislature, how am I supposed to know what that means? It's just so ethereal and vague that anything your department does counts as progress towards meeting that goal. Continue to enhance the department's strategic focus, I don't even know what that means. Anyway, I'm not asking you that, that's just a comment.
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What I do want to ask you about is Paragraph No. 10 under Strategic Goal No. 4, which has to do with the pension plans. The thing that I noticed about this, what I did was I took this year's business plan and compared it to last year's business plan and the thing that jumped out at me, of course, is when you look at the outcome measures on this particular item, they have changed. In last year's business plan with respect to the funding of the two large funds, the Teachers' Pension Fund and the Public Service Superannuation Plan, the goal was listed as 100 per cent funding. I remember speaking to you about this last year and saying is that realistic, is that just a number pulled out of the air, is there any real chance that we could actually get to 100 per cent funding?
In this year's business plan the goals are a lot more modest. The goals are considerably less than 100 per cent - I'm just having trouble locating it at the moment but they're in the high-80s. Over the next few years, the objective is for the - here it is, it's on Page 14 of the business plan. The goal of the Public Service Superannuation Plan for the end of this fiscal year is 87 per cent, the year after that is 88 per cent, the year after that is 89 per cent. For the Teachers' Pension Fund the goal for the end of this year is 86 per cent, the year after that is 87 per cent, the year after that is 88 per cent. This is in contrast to last year's business plan, which listed the goal for each of them as being 100 per cent, presumably in that fiscal year. What is the most recent data the department has, draft or otherwise, that you can give this committee on the current funding status, today, of those two plans?
MR. CHRISTIE: The most recent numbers that we have for the Public Service Superannuation Fund is 86 per cent, and the Teachers' Pension Fund is 82.2 per cent.
MR. STEELE: I'm sorry, Mr. Minister, I'm going to ask you to repeat that and the date as of which those levels are true.
MR. CHRISTIE: December 31, 2004.
MR. STEELE: December 31, 2004 for the Teachers' Pension Fund is 82.2 per cent?
MR. CHRISTIE: That's correct.
MR. STEELE: And yet the goal by December 31, 2005, actually it's not even the end of the fiscal year, it's the end of the calendar year, which is less than seven months away, is 86 per cent. Is that realistic? Is that going to happen?
MR. CHRISTIE: Well, you'll recall, within part of this there are some changes in the funding of Teachers' Pension Fund. You're familiar with the details; you're familiar with the funding numbers. So, yes, that is realistic within this year.
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MR. STEELE: So, seven months from now, the funding of that particular plan is going to go from 82.2 per cent to 86 per cent? I just want to make sure there's no misunderstanding.
MR. CHRISTIE: That's our projection. The projection is 86 per cent. We believe it's attainable because, as I will repeat again, there's $142 million that we're putting in for the unfunded liability.
MR. STEELE: When can we expect that plan to be 100 per cent funded?
MR. CHRISTIE: Sometime after December 31, 2007.
MR. STEELE: You must have more of a plan than that.
MR. CHRISTIE: I guess in the long term, it would probably be out in the 2020, 2024 range. What I can't say is what the teachers and joint trustee might do in terms of pension deductions. But given the assumptions that we have right now, that funded liability will become 100 per cent in the range of 2022, 2024.
MR. STEELE: I'm going to want to go back to this probably tomorrow. Once again, Mr. Minister, the current funding of the Public Service Superannuation Plan, is it realistic that it will be 87 per cent at the end of this calendar year?
MR. CHRISTIE: From 86 per cent at the end of this year, yes, that's reasonable.
MR. STEELE: So what's it at now, the most recent figure you gave us?
MR. CHRISTIE: I think the figure I gave you for the end of December - did you ask for the Public Service?
MR. STEELE: Yes.
MR. CHRISTIE: The Public Service figure at the end of December is 86 per cent.
MR. STEELE: It's 86.0 per cent?
MR. CHRISTIE: That's correct. So, we're saying that it's targeted to go to 87 per cent at the end of this year. I think we see two things, we see the contribution levels that really aren't changing, but with some additional people, remember with some of the budgetary items we have, we are going to require additional staff, plus the market scope is relatively strong.
MR. STEELE: When is it going to be the 100 per cent?
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MR. CHAIRMAN: The time for the NDP caucus is finished. We'll now move to the Liberal caucus.
The honourable member for Richmond.
MR. MICHEL SAMSON: I, too, Mr. Minister, would certainly want to thank your staff. On budget day, they were very forthcoming with information, as much as possible, to some of our questions. I know that our Leader, being the first time he had the experience to see the budget process and lockup and everything, was certainly appreciative of the professionalism of your staff in answering our questions as best as possible.
[3:15 p.m.]
I just want to continue a bit on the issue of the teachers' pensions. Well, I guess he was in a different position at the time, but Howard Windsor, I think he's with Treasury and Policy Board now, is he?
MR. CHRISTIE: That's correct.
MR. MICHEL SAMSON: He had appeared in front of the Public Accounts Committee a few years ago. During that appearance, there were questions raised about the Teachers' Pension Fund. During his testimony, he indicated that there were deficiencies in some of the investment targets, and that they had not been achieved. When we asked him if he could provide us further information on that, as to what happened, was there anything specific you can provide us with, he indicated, sure, I'll get you the information.
About a year later, he appeared in front of the Public Accounts Committee again. I asked him, I believe at that point he was Deputy Minister of Treasury and Policy Board, if he would provide us with the information. Again, he said yes. That was about a year ago. We still haven't gotten an answer. Yet, your government continues to tell us that there was nothing wrong with the investments of the Teachers' Pension Fund, you're not making any changes, there are no lessons to be learned, it's all the market's fault and everything.
Can you explain, as minister, why would the deputy minister refuse to provide us with information that he alluded to in the first place?
MR. CHRISTIE: I can't speak for him. I can say to you it's on the Web site. I can say to you it's in our annual reports, the performance over the years. I can't speak for the deputy.
MR. MICHEL SAMSON: He made specific reference to deficiencies, and went on to speak broadly but indicated he would get us further information on that. He didn't tell us to go to a Web site or anything else, he said he would provide us with that information. Why would he not have provided it to us? In fact, I wrote a letter to him a couple of months ago,
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asking for this, and I think I'm going to have no choice but to get up in the House on a point of privilege and demand that the Speaker ask this public servant to provide information he made commitments to on two occasions in front of committees and has yet to do so. If there's nothing to hide, why is he not providing the information that he made commitments on two occasions to provide?
MR. CHRISTIE: I can ask him for you, I just simply can't tell you why he's not doing it. If your question to me is, do you have information as to the performance over the years for the pension fund, the answer is yes, I have it here, and I'm certainly happy to provide it to you.
MR. MICHEL SAMSON: Is it still your position that the markets alone and not investment decisions made by your government are to blame for the collapse in the Teachers' Pension Fund?
MR. CHRISTIE: I don't consider there was a collapse in the Teachers' Pension Fund.
MR. MICHEL SAMSON: Well, you realize we went from almost 95 per cent funded in 1999-2000 down to 76 per cent funded, a drop of almost 20 per cent. You don't consider that to be a significant drop? In fact, it required a bail-out from your government and from teachers. What do you consider it, then?
MR. CHRISTIE: Certainly there was a change in the unfunded liability. The change in unfunded liability has to do with, as you know, the mixture of people, their age and so on, and it has to do with investment. Clearly, yes, the investments didn't return as much as they did in previous years, and they didn't return as much as they did this year. There was a change in the unfunded liability. That was, of course, why we were working with the Nova Scotia Teachers Union to work towards the joint trusteeship to fulfil that requirement, to bring the unfunded liability back up.
MR. MICHEL SAMSON: So, $142 million later, changes are made to the benefits for the teachers. The other thing I understand is that with this new deal, the Teachers Union accepts 50 per cent responsibility for any deficiencies there are in the plan in the future. Is that correct?
MR. CHRISTIE: That's correct.
MR. MICHEL SAMSON: Is that accounted for in any way in the budget that you presented?
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MR. CHRISTIE: We account for it, of course, in the budget, because the whole unfunded liability is the responsibility of the government. You will recall that the agreement with the teachers was to start the joint trusteeship on April 1st next year. So it will be accounted for in next year's budget, not this year's.
MR. MICHEL SAMSON: Just in layman's terms, what impact does that have? What can we expect to see in your budget? What kind of financial impact will that have on your budget, as a result of the Teachers Union now assuming that 50 per cent liability starting next year?
MR. CHRISTIE: Well, we expect it to stabilize our costs, in terms of the cost of the pension plan. Obviously the Teachers Union will have, as you clearly pointed out, part of that responsibility of the unfunded liability. So, that will affect whatever the unfunded liability is at that time. That is on the debt side. What I am responding to you in terms of the budget is the budget itself and the changes of the budget itself won't have a significant impact because it's going to be more or less stabilizing the operating costs. There is a significant shift in the debt, and I don't suggest that there isn't, that there will be, but it will be in those two areas that the changes will be.
MR. MICHEL SAMSON: Just a few quick questions. I'll certainly resume this at a later date, before my colleague for Halifax Citadel has a few questions. On Page A16 of your estimates you're expecting the Nova Scotia Liquor Corporation to rise 4.1 per cent in this coming fiscal year. In it you're saying that you expect it to be based on products and everything else. Are you prepared to tell us today that you have no intention of increasing taxes on liquor in the upcoming fiscal year?
MR. CHRISTIE: There are no tax changes in this year's budget, no.
MR. MICHEL SAMSON: Okay, but you realize in the past there have been changes that have been made to both tobacco and liquor tax that didn't have to be in the budget, it was made throughout the fiscal year. I guess my question is, do you have any intention or are you prepared to make a commitment today that during this upcoming fiscal year, there will be no increase in either liquor taxes or tobacco taxes?
MR. CHRISTIE: What I can say to you is what's in the budget. As I indicated to the other member before you, our job and the job of the Finance Department is to manage within the envelope that we have. Now whether there are changes, whether there are storms, whether there are other crises, to say that we aren't going to be exactly on every dollar that's in the budget is not realistic and I can't say that. What I can say to you is that is the plan that we have now and unless something changes, we won't be doing any taxes. If we have to manage because of other situations, we will have to do that.
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MR. MICHEL SAMSON: So no tax, but maybe a tax, I guess is the plain answer. You're showing on Page A14 for tobacco tax, you're expecting revenues to be $177.6 million for the upcoming year, or I believe that was the revenues last year. I'm just curious, $177 million, how much of that goes to smoking cessation programs?
MR. CHRISTIE: We'll look that number up for you and get it. I know that the Health Promotion program has the now stop smoking, they have a variety of other programs in there, somewhere in the $6 million to $8 million. If you are suggesting that we direct money right from that revenue over, no. We build the budget in terms of programs, in terms of needs.
MR. MICHEL SAMSON: But you figure it's around $6 million to $8 million?
MR. CHRISTIE: It's in that range, but we'll confirm that number for you. We'll get the programs listed.
MR. MICHEL SAMSON: I think it's worth knowing that there's $177 million that comes in, $6 million to $8 million is what's being spent to try to prevent Nova Scotians from smoking and living healthier lifestyles. I think that's telling in itself.
One of the last things I'm going to raise with you, your predecessor, Mr. LeBlanc, whenever we'd raise concerns about high gas prices, and the fact that government was reaping a larger benefit financially because of high gas prices, his response always was, well, no, there's no benefit because consumer consumption goes down as a result of higher gas prices. Do you hold to that theory, as well?
MR. CHRISTIE: I do know that in some years that has been true. In the last year that has not been true. In the last year gas prices have been increased and the consumption hasn't risen, as the numbers will show you.
MR. MICHEL SAMSON: So, you now do agree that higher gas prices has meant higher revenue for your government?
MR. CHRISTIE: Yes, that's correct. In terms of the HST, the amount of fixed amount per gallon doesn't change, but the HST is there. I will remind you, again, of the discussion I was having with the honourable member ahead of you about the tax pool of HST and the adjustment that we had in the 90 minutes. If what you are proposing is that every dollar that comes in comes right to us, I will remind you that this money goes to the tax pool and comes to us from the HST tax pool with the federal government.
MR. MICHEL SAMSON: Higher gas prices brought to you an additional $7.1 million in higher revenue than what you expected last year?
MR. CHRISTIE: We got higher revenues, yes.
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MR. MICHEL SAMSON: That's right, and in fact in your own budget you said it's because of increased consumption?
MR. CHRISTIE: That's correct. The price per gallon doesn't change, it's the HST we're talking about. So, when we're talking about the Motive Fuel Tax there, it is the fixed number per gallon that comes in, and that's the amount that's in there. The numbers are up because the consumption is up, that's what we indicated.
MR. MICHEL SAMSON: So, even though we've had higher gas prices, Nova Scotia consumers are still consuming more gas?
MR. CHRISTIE: Yes, that's correct.
MR. MICHEL SAMSON: I just thought that was interesting in light of Mr. LeBlanc's former assurances that that was not the case. I guess I'll ask one more question until my colleague is ready. On Page A18, on some of the assumptions of the federal money coming in, you've indicated of the other federal revenues coming in that you are expecting money from the wait times reduction fund, and then you go on to indicate that you believe that this is either already done through previous legislation, or it's in the budget. So, which one is it? Is this guaranteed, or this again something that's in the federal budget that we're waiting on?
MR. CHRISTIE: The wait times have already been resolved. Those aren't in the budget.
MR. MICHEL SAMSON: It has already been resolved?
MR. CHRISTIE: Yes, that was the agreement they signed last year with the Health Ministers and the First Ministers.
MR. MICHEL SAMSON: Okay. I'll just point here then to your Budget Address. On Page A18, you have here, "The federal government has committed, either through its 2005 budget or previous legislation, to additional funding for the province . . . tied to specific projects and provincial expenditure . . . funding for diagnostic and medical equipment, immunization . . . " Which one is it? Have you received this money, or it's still tied into that budget that's not going anywhere?
MR. CHRISTIE: I was just advised and reminded that the wait times money and the equalization money went through the House of Commons in March of this year.
MR. MICHEL SAMSON: Okay. What about the money that you have here for diagnostic medical equipment, immunization, public health and early learning and child care?
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MR. CHRISTIE: Yes, that was included with that March legislation. The early learning and childhood is money that is included in the budget this year. So it's offshore and the early learning and child care money that is in Bill C43.
MR. MICHELE SAMSON: That's still tied into the budget?
MR. CHRISTIE: That's correct.
MR. MICHEL SAMSON: That's it for me for now. I'll put over the rest of my time, Mr. Chairman, to my colleague, the member for Halifax Citadel who, I'm sure, has interesting questions for the minister.
MR. CHAIRMAN: The honourable member for Halifax Citadel.
MR. DANIEL GRAHAM: Mr. Chairman, thank you, Mr. Minister, and colleagues. I'd like to pick up as we begin on a subject that I just left off on. I understand that some of the discussions in the first hour from the member for Halifax Fairview related to some of the questions that I had in Question Period, for you, the Premier and the Minister of Health Promotion. Just now I came from estimates in the Department of Health and I referenced for the Minister of Health a commitment that he made back on May 5, 2004, in which he said that there would be a comprehensive report on gambling and its social and economic consequences that will be ready before the end of the year, and that will investigate the link between gambling and suicides in the province. He went on to say, the people of this province need to have a better handle on the entire field of gambling and gaming. We need to be aware that there are problems that result from this activity and that these problems need to be adequately addressed. That was a report that came in the newspapers exactly one year ago today, May 5th.
[3:30 p.m.]
I also have before me, you might recall, Mr. Minister, the responses that were provided by the Minister of Health in Question Period about whether or not this was a doable thing. There was an exchange of letters starting with a letter from Ms. Mullally, whom I see has joined you, to the Chief Medical Examiner, Dr. Vernon Bowes, that is reported from March 8th. In that letter, I don't want to repeat the whole context of it, the essence is that the medical examiner says that there are challenges associated with tracking suicides, but he also goes on to say that if the province or the Gaming Corporation is really interested in this approach, then we would co-operate in a properly constructed and properly funded perspective study into such an important subject. I would be more than willing to participate in the development and implementation of such a project.
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It sounds like Ms. Mullally and the Gaming Corporation are interested in this and after about 24 minutes of questioning just now in Supply, the minister said that not only would he seriously look into a request by the coroner if he were to ask for this study to be properly funded, but he went on to say, after some questioning, that he will initiate contact to have such a study done. Now, as the Minister responsible for the Office of Health Promotion, knowing that this was a request from the CEO of the Gaming Corporation, can we assume that now that the Minister of Health has said that he will initiate it, he's interested in it, he has favourably disclosed that indeed this will be something that's funded and that the coroner will get the resources to do the study properly?
MR. CHRISTIE: I take what you read to me as the testimony of the Minister of Health, I didn't have the opportunity to be there. The question is, is this going to be funded and is it going to move forward. Well, I think if the Minister of Health has given that indication, then that's what he proposes to do. So if you're asking me, is the Gaming Corporation going to block this, then the answer certainly is no.
MR. GRAHAM: I think it appears that the Gaming Corporation was in fact expressing a positive interest in being a champion of this and I see Ms. Mullally nodding. Given that you have initiated this and now the Minister of Health says that he would like to initiate it, the coroner is saying that he is interested, do we have a deal here?
MR. CHRISTIE: It sounds like we have three parties that want to move forward and so I think some progress has been made on moving that initiative forward.
MR. GRAHAM: It would be welcome if that were to happen. I note for interest, I know Ms. Mullally would be aware of this, that the Canadian Health Council has indicated that there is approximately one suicide a day from gambling. The Ontario coroner has been calling for research into this particular issue, it certainly is timely and Nova Scotians would welcome this as a development.
If I could turn to the most topical matter that perhaps has risen in discussions that we've had today, and that's the one related to the groceries for gambling exercise in Windsor. We're all familiar with the work that organizations like Bristol, their Omnifacts group do, and focus groups, and CCL would do these types of things, and it's not uncommon for people who participate in this type of activity to receive a stipend in order to provide information. You would agree with me, hopefully, that the scenario that is presented in Windsor is fundamentally different from a scenario where somebody is simply providing information? They are actively engaging in an enormously dangerous exercise with what have been described as killing machines, and that it was clearly inappropriate to put grocery certificates in front of people in order to get their participation in the Smart Cards, as they're called, scheme.
MR. CHRISTIE: Is your question, do I agree with what you just said?
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MR. GRAHAM: Yes.
MR. CHRISTIE: I take a different view. I take the view that you have to do research, that research is done through focus groups and through study groups, and that research is part of the process. I will remind you, again, that part of our strategy was to look at where we were, to look at what had happened, and to analyze it and evaluate it, and I view this as being part of that.
Now, the focus groups and the research group was tasked with determining that information. We had indicated the use of the Smart Card was something that we were going to have a look at and perhaps it had possibilities in the future or perhaps it did not, but without doing some research on it and some testing, we couldn't determine that. So I view this as a reason of going and testing and doing other things. Do I agree with you that machines cause problems with people? I certainly agree with that, but I don't think the two, that you tie this and the fact that machines are dangerous, together. I don't make that link as you have made it.
MR. GRAHAM: Nobody is going to have any difficulty with the general idea of doing research, especially around machines like this. The concern relates to the transaction and that a transaction where you're exchanging grocery certificates for people who would be encouraged to gamble before these lethal machines - the crack cocaine of gambling - was inappropriate and qualitatively different from taking people into a focus group discussion where you asked them questions over an extended period of time, for example.
MR. CHRISTIE: Yes, I agree it's different from taking people and asking them questions about laundry soap, I completely agree with you on that.
MR. GRAHAM: Let me ask this a different way. Who did you consult to tell you that you needed to create this incentive of a transaction to get people there in the first place?
MR. CHRISTIE: You have a copy of that, okay. The process that we indicated was that expressions of interest were done. People competitively bid on this and then they were asked to go out and determine the Smart Card analysis, and determine if it's of value or it's not of value. I did not sit down with them and say, now, I'm going to design your program for you. I didn't do that. They brought to the table that they have research capabilities and they were tasked with a specific task. So if you're asking me if I sat down and said to them, let's design the program, the answer is, no, I did not. What we did is we set out the broad objectives for them, we set out what our needs and requirements were, and they set out the process of how they were going to determine that.
MR. GRAHAM: I guess, minister, all we've got the benefit of right now is hindsight, but I think it's important to know what happened in the initial instance. I'm troubled by your unwillingness to admit that this was a mistake, I think Nova Scotians are going to find that
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very troubling. The concern is that this perhaps puts a window on whether or not your department and the Gaming Corporation and others get it with respect to how dangerous this activity is, to have allowed this to happen.
In a sense, if you were trying to determine how many people successfully injure themselves through some kind of Russian roulette, I'm just citing this hypothetically, and it was an important social question, would you go about encouraging people with grocery money to play Russian roulette?
MR. CHRISTIE: No.
MR. GRAHAM: I think there are obvious parallels, although one is more extreme, and I'd like to draw out the obvious distinction between those extremities. Are you aware of the frequency with which somebody develops a problem when they are first introduced to these machines? Do you have any idea how addictive these machines are when somebody simply steps up to them and uses them for the first or second or third time?
MR. CHRISTIE: I've had the opportunity to see the research and see the work. I had the opportunity to be at the gambling meetings that were held in Halifax in November and to get some flavour of that. I guess I would like to come back on your suggestion in terms of the research and so on, to remind you this is not encouraging people to play, this is to find and go through the research and get some testing done. The question of whether people choose to do that or not is entirely up to them.
MR. GRAHAM: What's the importance then of having this incentive? Couldn't you have done it without it?
MR. CHRISTIE: In terms of the research section, their analysis and the way they approached it is that there would not be enough participation if you didn't have them involved in this kind of a pilot. To get people to be involved and to stay involved to enable the research to finish, there had to be some incentives and that's consequently how they arrived at the incentive program they did.
MR. GRAHAM: It seems to me that you've just admitted that it is an incentive; it was intended to get more people involved.
MR. CHRISTIE: The incentive was to keep them involved.
MR. GRAHAM: To keep them involved. So . . .
MR. CHRISTIE: Obviously, their research indicates whether it's soap or whatever it might be, if you're going to have people involved, they won't stay involved if there's no incentives or no reason to do that.
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MR. GRAHAM: So if you've a problem gambler who wants to quit, they're on the verge of quitting, you admit this scheme - groceries for gambling - was intended to actually prevent them from doing that?
MR. CHRISTIE: No, what I said to you was it was intended to keep their participation so they would stay involved in the participation of the study and the focus groups.
MR. GRAHAM: Well, isn't that the same thing, that you're keeping them involved and you're keeping them in front of the machines?
MR. CHRISTIE: You're assuming that everybody that's there is a problem gambler and I'm not making that assumption. I'm assuming the people are there to do a study and they're there to be part of that study, and they have this program laid out for them whether they want to participate or not, and then they make that decision.
MR. GRAHAM: I'm not assuming that everyone's a problem gambler. The question is whether or not you're creating incentives for people to remain before the machines? It's obvious, you said it yourself, this is intended to keep people doing that.
MR. CHRISTIE: Keeps them participating in the focus groups and the other parts of the program, yes.
MR. GRAHAM: So, for a person who's on the verge of quitting, this is another roadblock that is potentially created?
[3:45 p.m.]
MR. CHRISTIE: Well, what the program is intended to do is to look at the research. If a person chooses not to participate in that, they can certainly do that, this is strictly voluntary. The fundamental part of this is to be able to get the research to determine whether that particular vehicle, the Smart Card, is going to be of any value to us, that's the purpose of the exercise.
MR. GRAHAM: Just back to my earlier question about how lethal these machines are when people play them, even casually, do you have any sense of just how lethal they are or what the research suggests?
MR. CHRISTIE: As I indicated before, I've had an opportunity to look at the research and I've had an opportunity to look at what people responded through the strategy that was going on in the last year. I've had a chance to talk with people at the different seminars and various others, as we have as a government. Consequently, that's what led to some of the moves in terms of the gaming strategy.
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MR. GRAHAM: In terms of the specifics, you're ultimately responsible for this at the Cabinet table. A corporation that you're responsible for entered into this arrangement and it would strike me that as an essential question, it's important to know just how dangerous this activity is. I'm not sure, given your lack of acceptance of responsibility about this, that you even turned your mind to the question that this was creating increased danger. I won't bother with a question on that.
In terms of the number of times somebody has to appear before a machine in the run of a month before they are at risk, do you have any sense of whether or not if somebody appears two or three times in a month before these machines, that 1per cent of Nova Scotians are going to be hurt or 10 per cent or 15 per cent? Do you have any sense of how many people are actually put at risk?
MR. CHRISTIE: Your question to me is, how many people at any given time that are playing machines are at risk? I'll go back to the prevalent study that was done last year and the purpose of the study was to determine that, to refresh the data from previous years, and to look at what the prevalence was and that indicated in the 15 per cent range.
MR. GRAHAM: Would it surprise you to hear that 20 per cent of the people who would appear before these machines and play them more than once a month are at risk of becoming problem gamblers?
MR. CHRISTIE: I'll accept that number and I'll accept the fact that because the prevalence numbers were showing to be about the same or slightly higher than the previous study, it was the reason the Gaming Corporation, the government, entered into some of the programs that they did - some of the advertising and some of the programs - to remind people of that very fact, that it simply was a game, it had to be dealt with responsibly and because of that data, that's why the government moved the way it did.
MR. GRAHAM: You referenced gambling meetings that you attended back in November, that wasn't the international conference?
MR. CHRISTIE: No, it wasn't. There was a conference put on by the Gaming Corporation to bring people in and I was invited to go down and make the opening comments, and join with people on the first day of the session. That's the one I attended, the name of it was, The Industry Session on Gambling, that was the one I was invited to go to.
MR. GRAHAM: The Industry Session.
MR. CHRISTIE: Yes.
MR. GRAHAM: I take it that had an industry focus?
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MR. CHRISTIE: It had a universal focus. There were people there from all areas of the gaming industry, people concerned with problem gambling, people that were concerned with gambling, so there was quite a range of people. There were social workers, presidents of companies, quite a variety. The object of the exercise was to bring those views together to try to get those views together, it was laid out as part of this gaming strategy and it was one of the products of that.
MR. GRAHAM: You attended the industry conference in November. A month earlier there was an internationally recognized, internationally attended conference that was put on by the Gaming Foundation which is concerned about the health issues with respect to this. It had, obviously, people from industry as well, but you didn't attend that?
MR. CHRISTIE: That's correct. I did not.
MR. GRAHAM: In fact, nobody from Cabinet attended that conference - is that correct?
MR. CHRISTIE: I can't speak to that, I know I wasn't there.
MR. GRAHAM: I'm going to suggest to you that nobody from Cabinet happened to attend - you attended the industry side of one, but not the health side of one. I'm going to suggest to you - I know Ms. Mullally was there and she presented - that the presenters at that conference, many of them are recognized as world leaders from various continents, who provided important and relevant information that could have been helpful to Nova Scotia as it moved out.
I guess I'm just troubled, I know that the chairman was there for that conference, sorry, the member for Dartmouth North was there as well, I recall that, in fact, but the absence of Cabinet, the decision-making body of government, was noted by many people. I'm just wondering if you can give us any insight into the decision that must have been made at Cabinet not to attend this conference?
MR. CHRISTIE: No, there was no decision to not go, I guess then your question would be, well why wasn't the decision to go? I guess my recollection at the time was, I knew about that conference, I had been at the previous one. I knew that our gaming strategy was moving forward and we were getting input from people, and I made the decision not to go.
MR. GRAHAM: You would have to agree that it plays into the hands of those who feel that the government is sticking its head in the sand and not wanting the best information, but I'll leave that, you're welcome to comment on it. I would like to turn back to the earlier discussion about the transaction, the groceries for gambling issue. I understand that you hired an independent source, or that would have been done through the Gaming Corporation, I
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understand Bristol Communications was that party. Can you tell me whether or not Bristol has any in-depth experience in the area of problem gambling addictions, counselling and knowledge?
MR. CHRISTIE: Bristol has been involved in doing other research and other analysis of responsible gambling and they have been involved with some of that. Their presentation in the request for tender, they had a background which would give them some insight into that, yes.
MR. GRAHAM: Can you cite or provide to this committee an indication of what kind of sensitivity they showed to the issues related to increasing people's problems as a result of this approach that they've taken?
MR. CHRISTIE: I don't think I understand the question. I guess I would interpret that to say, can you show me their proposal to win this contract?
MR. GRAHAM: Can you show me in their proposal anywhere or for that matter in an exchange of e-mails or letters, amongst anyone, that the issue of whether or not this may create more problems was addressed?
MR. CHRISTIE: We will undertake to look to see if that information is available and then provide it. I can't tell you right off.
MR. GRAHAM: I assume that Ms. Mullally would know that because it would have been the Gaming Corporation that would have been at the heart of this. There's no indication? Okay, you say that you will provide that.
This goes to a larger issue with respect to the government preparing these types of strategies that are intended to support and help people without a full gathering of all of the information. When he appeared before the Public Accounts Committee on April 13th, Mr. John LaRocque, the Office of Health Promotion's gambling addictions expert said he had many problems. He talked about being ignored with respect to bill acceptors and the speed of the machines being increased. He talked about the preparation of the name of the document last August, the document that was to be the foundation, consultation, public document to lead to the ultimate presentation of this where he had serious problems with respect to the presentation of that document.
He indicated that he wasn't involved in the development of the final strategy and that there were numerous disagreements around whether or not proper attention was being paid to the health concerns of Nova Scotians. Now, I'm going to guess that Mr. LaRocque was also not consulted in this particular matter. Is that fair to say?
MR. CHRISTIE: In this particular matter?
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MR. GRAHAM: This particular issue involving the Windsor groceries for gambling?
MR. CHRISTIE: No, as I indicated, this was done by the directors of the Gaming Corporation and Mr. LaRocque is not an employee, nor involved with the Gaming Corporation.
MR. GRAHAM: The concern that Mr. LaRocque expressed was that Cabinet and the Premier were not getting a balanced view of all of the information. What we have in some respects here is a potential manifestation of that, where it doesn't appear that he was in the loop and he's the province's expert. Would you not have thought that if Mr. LaRocque, as the gambling expert in the province, the government employee, that before you went forward with this kind of plan that he should be consulted?
MR. CHRISTIE: My response to that would be we had laid out in our strategy that we were going to do testing. We had indicated last year that the Gaming Corporation was going to undertake strategies at various universities, provide pamphlets and information, they were doing plays in certain areas, and they were going to move into this area of testing. We had laid that all out and whether Mr. LaRocque wrote to the Gaming Corporation to indicate he had concerns with that, I don't know. That strategy of how we were moving forward was introduced last Fall. I recall pamphlets coming out perhaps September or October, and they were moving to the university campuses around October, I believe it was. So that was a plan that had been developed close to a year ago as we were moving into the responsible gaming strategy. One of the obvious parts of the strategy and one of the comments that we heard through all of this was, there had to be more research, there had to be more education and evaluation. Those issues that we were doing were all part of those initiatives.
MR. GRAHAM: For those people who have concerns that the government is sticking its head in the sand when it comes to finding out all of the health concerns, are you not concerned that they have further ammunition by the fact that Mr. LaRocque does not appear to have been consulted on an initiative that, I would suggest at least, is risky for problem gamblers and non-problem gamblers?
MR. CHRISTIE: Your question is does there have to be consultation and yes, there does. The Office of Health Promotion and the Gaming Corporation have to stay in close consultation. Whether it's a particular individual in Health Promotion depends on the person's skills and how the department brings the resources together to approach it. I agree with your statement that you have to have consultation with the Office of Health Promotion, yes, I agree with that.
MR. GRAHAM: The suggestion that I will make explicitly is that when you turn a deaf ear to the experts in government who have the best information and who are informed - and I note that Mr. LaRocque was, for 10 years, the vice-president of one of, if not the more prestigious addictions research agencies in the world and he has worked with this
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government for 10 years - when he's not consulted on initiatives like the Windsor one, we find ourselves down the path with a debacle like the one we've had today, quite frankly. Insufficient attention, again, is being placed on the health concerns of Nova Scotians and it's because there is this blind determination to stay with the status quo in the same way that we had that blind determination in the documents that were prepared last year, especially with respect to the criticism that was levelled by the addiction counsellors from the districts around the province where they had the scathing letter about whether or not there was proper consultation, I will get to that just a little later on, but I do want to touch on the second line of questioning that I spoke of earlier today and that relates to whether or not members of the Gaming Corporation were in the process of building a case of some sort against Mr. LaRocque and his credibility?
[4:00 p.m.]
MR. CHRISTIE: A few minutes ago we were talking about the Gaming Corporation's relationship with Health Promotion and the number of people. If your direct question is, was the Gaming Corporation building a case against Mr. LaRocque, I'm advised that they are not and I know of none that they are doing. I know there was information that Mr. LaRocque had appeared before the Public Accounts Committee and the Gaming Corporation is appearing before the Public Accounts Committee next week and, obviously, they were putting together information for that appearance. So I can tell you that's what I understand is the process being developed at this point in time.
MR. GRAHAM: This specific allegation isn't just about gathering information, it is that perhaps the second most senior official in the Gaming Corporation was referring to affidavits and lawyers around questions of Mr. LaRocque's credibility in an appearance he made before the Public Accounts Committee. The simple question is, is that correct that that was being done?
MR. CHRISTIE: The answer is, yes, they were preparing themselves to fully investigate all of the comments that were made, fully investigating all of the issues, before their appearance before the Public Accounts Committee this Wednesday, yes.
MR. GRAHAM: So you are confirming that, in fact, senior members of the Gaming Corporation have been looking to prepare affidavits that challenge the credibility of Mr. LaRocque?
MR. CHRISTIE: No, I'm not confirming that. What I'm confirming is that they are doing the research and due diligence to appear before the Public Accounts Committee as to the information that you've had before, the information that they will present, that's what I'm saying to you.
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MR. GRAHAM: And specifically, this isn't Question Period, are they preparing affidavits that challenge the credibility of Mr. LaRocque?
MR. CHRISTIE: They are not preparing anything to challenge the credibility of Mr. LaRocque, they're doing their due diligence to appear before the committee, is the information that I'm given.
MR. GRAHAM: Have they been consulting with their lawyers with respect to the implications of Mr. LaRocque's testimony before the Public Accounts Committee?
MR. CHRISTIE: Did you just ask me, have they hired a lawyer?
MR. GRAHAM: Have they consulted with counsel? It could be in-house counsel or it could be external counsel.
MR. CHRISTIE: The statements that Mr. LaRocque made had significant allegations, and they're reviewing that over, but I will repeat again, they're doing the due diligence to appear before the Public Accounts Committee, they're looking at the information that was presented before, and they're looking at the information that they will present, and that's what they are undertaking at this time.
MR. GRAHAM: Are they doing that with the assistance of counsel? Are the taxpayers of Nova Scotia paying for lawyers to address that issue?
MR. CHRISTIE: The answer is no.
MR. GRAHAM: I would like to go to the issues with respect to the public consultation. There was public consultation announced back in August of this year and, as I mentioned and you have, it's the foundation document for moving forward. Why didn't you have a public meeting?
MR. CHRISTIE: We had undertaken to have a variety of people to write in. The question of whether you have public meetings only in Halifax, we viewed this as a province-wide initiative and so people from the province could respond. That was the way the strategy was set up so we proceeded with that.
MR. GRAHAM: I wasn't restricting my question to the geography of Halifax. Why did you not have public meetings across the province?
MR. CHRISTIE: It was our belief at the time that as we move forward with the strategy as it was being developed, people could make their comments, people could write in and do that, and that was a vehicle that was the best way to approach it. That way allowed
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everybody to comment, as opposed to perhaps having a meeting in Bedford and people not being able to get there from other parts.
MR. GRAHAM: Wouldn't you agree that that would have been a useful exercise?
MR. CHRISTIE: It would have if we could ensure that that would provide access to everybody across the province. Once you make the decision that that wouldn't provide access to everybody across the province, then you look at the way that would best provide access and that was through allowing them to send in e-mails, written forms, and get their submissions in on that basis.
MR. GRAHAM: There are many questions that flow from that, one is whether or not you're suggesting that public consultation is a useless exercise because it doesn't access everybody in the province?
MR. CHRISTIE: No, I don't think I've said that. What I said is that in this particular case we were moving to have people do submissions. Why we didn't have public meetings on this, in some cases you can move to public meetings and people will come to locations, but in this case we wanted to get as broad a perspective as possible and that broad perspective allowed people to write us, and to e-mail us and get their comments in through that method.
MR. GRAHAM: We live in the Province of Nova Scotia, Mr. Minister, and when people say that they're going to have public consultations, what people expect is that the doors get opened and that meetings are held in various parts of the province. You said that you had a public consultation, but you didn't open the doors. Surely you would agree that it would have been helpful to have some public meetings? Is it not useful to have public meetings?
MR. CHRISTIE: Clearly it is useful to have public meetings and it could have been that it would have been useful in this case, it would have provided perhaps a few more people to express their views. However, those people had the opportunity to send in their submissions, to send in their e-mails, to send in their letters, to send in their views and put it in that way.
MR. GRAHAM: The obvious concern for those people who feel that the government has been sticking its head in the sand with respect to this issue is that they didn't want to hear what people had to say and so they changed what is the traditional pattern of public consultations in having open public meetings because they were afraid of what might be said at those open public meetings.
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MR. CHRISTIE: Well, I guess if one of those people was to say that to me, I would simply suggest to them that through the consultation process, through the process of people responding, we did make a change, and that is the strategy. So I would say to that person, if you didn't take the opportunity to send in a submission, that's unfortunate because we were seeking those submissions and based on that information we did make a significant change in the way gaming is conducted in this province.
MR. GRAHAM: How many problem gamblers are there in Nova Scotia?
MR. CHRISTIE: It's 0.8 per cent, about 6,000.
MR. GRAHAM: It's indicated in your recent prevalence study that there are 15,000 problem gamblers in Nova Scotia.
MR. CHRISTIE: That's potentially a problem, those are people possibly at risk in that strategy.
MR. GRAHAM: At risk is in the range of 30,000.
MR. CHRISTIE: The moderate risk in our study shows about 9,000. In terms of higher numbers than that, it depends on whether you start moving up the scale as to whether people are 50 per cent users or not 50 per cent users.
MR. GRAHAM: Your own material, Mr. Minister, and I invite you to look at them, use the words problem gamblers, 15,000 people. I'm wondering if you can indicate that of the 15,000 people, how many of those 15,000 did you hear from in your public consultation?
MR. CHRISTIE: We heard from, what, 400, 500, 600 people. (Interruption) We had a couple hundred submissions and 40 organizations. If your question is, are those people in the organization, I don't know the answer to that, but we did hear from 40 organizations also.
MR. GRAHAM: I'm sure that you spoke with Mr. Bernie Walsh who would be an obviously visible person, but after Mr. Walsh - and maybe Debbie Langille - can you say how many of those 400 or 500 people were actual problem gamblers out of that maybe 15,000?
MR. CHRISTIE: They didn't indicate that on their submissions.
MR. GRAHAM: So you couldn't tell us if you even had a dozen of the 15,000 problem gamblers speak to your issue, address your public consultation?
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MR. CHRISTIE: No, we didn't qualify submissions or we didn't ask them to identify whether they were problem gamblers or if they didn't gamble. We simply asked for their opinions on that.
MR. GRAHAM: Many of us, the MLAs, have been receiving letters over the last period of time and people self identify as having had problems. I would have expected that at least we would have been able to track how many of those people were people with problems. So we don't have an idea if we have even a half-dozen people who are problem gamblers who were involved in the development or the feed into this public consultation, I'm assuming that's correct?
MR. CHRISTIE: Yes.
MR. GRAHAM: Mr. Minister, do you know how many of the thousands - and I invite you to go to the 15,000 figure in government material - but of the thousands, which we do agree on, do you know how many of them are receiving counselling?
MR. CHRISTIE: No, I do not know that number.
MR. GRAHAM: If I told you that it was less than 1,000, would you be surprised by that?
MR. CHRISTIE: I would be somewhat surprised because I'm aware that the help lines and the Office of Health Promotion are getting a dramatic increase in calls. So I presume that the advertising and the promotion work they're doing is allowing people and giving people that information they can call, but I will take that number that you gave as correct data.
MR. GRAHAM: Well, I don't want you to do that, I want you to confirm that if you could, if that's okay. If I'm wrong, then I welcome any other input.
MR. CHRISTIE: If you would like for us to seek through the Department of Health to confirm that number, I'm happy to do that. We don't have that number.
MR. GRAHAM: Yes.
MR. CHRISTIE: The specific question we're going to ask is, how many problem gamblers are receiving counselling?
MR. GRAHAM: And if you could determine, I mean the information may already be known on this item. I know that I just have a few seconds left in the time that's available. Has there been a formal response to the letter that was sent by the gambling addiction experts back in the Fall of this year - the letter that was tabled in the Legislature?
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MR. CHRISTIE: These are the district health authority letters?
MR. GRAHAM: The district health authority letters.
[4:15 p.m.]
MR. CHRISTIE: I can't answer you on that. I can't confirm a letter, I can confirm that the Deputy Minister of Health had meetings with them, and that they've indicated through those meetings that they felt they were productive.
MR. CHAIRMAN: The time is up for the Liberal caucus. We will turn to the NDP caucus.
The honourable member for Hants East.
MR. JOHN MACDONELL: Mr. Chairman, I thank the minister and staff for their time, I really appreciate this opportunity. I'm going to be fairly brief. I do have an issue of concern in my constituency and it has to deal with woodlot owners who had damage to their woodlots by Hurricane Juan. These woodlot owners have actually been kind of hit in two ways, one is because of the hurricane, the process of harvesting their woodlots, if they could get them harvested, was slowed down in some cases by about 40 per cent. So they actually got less for their wood simply because the contractors charged more to harvest it.
The Disaster Relief Program initiated by the province didn't really compensate to that level, if it compensated at all. I know of woodlot owners who even, one gentleman had 100 acres and was refused by the program. So along with getting, in some cases, perhaps less value because of the hurricane, but certainly they had to pay more to have it harvested, but there's no mechanism to give them a tax break because they're going to have to claim that as income for that year. So I'm asking the minister, number one, if he has considered, but if he would consider some way to kind of mitigate the effects that they're feeling because of having to claim that as income, because they're going to be dinged tax wise, plus the cost of harvesting. Can you comment, Mr. Minister, have you given it some thought and, if so, what?
MR. CHRISTIE: I'm familiar with the issue because, as perhaps you'll be aware, the member for Colchester-Musquodoboit Valley wrote a letter to the federal minister.
MR. MACDONELL: Yes, I'm aware.
MR. CHRISTIE: It had to do with that issue of first year, second year and you will recall that because I believe, if my recollection is correct, you were copied on that. At a federal-provincial meeting I have since followed that up with the federal minister, to ask if that was in the realm of possibility. His indication was yes, it was not on the top of the list,
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but it was in the realm of possibility, so that's the extent to which I have had involvement in that.
The second part of your question is, would it be something that we could consider too? What I will say to you is that we will continue to follow up with the federal government and perhaps we can come up with some sort of sharing arrangement, some sort of trade-off there, but as the Minister of Natural Resources indicated today, there is a significant federal question of some of that too. So what my undertaking to you is, is to continue with the federal government to follow up on that, to see if we can bring that to fruition. Barring that, then we would have to build it into our priority schedule along with a lot of other things.
MR. MACDONELL: I appreciate that, I mean that's an offer I'm not going to knock. But it was my understanding that this government, this province, decoupled from the federal tax system back in, I will say 1999 but it may be 2000, and I thought that gave you the flexibility to do something on your own. So I'm just wondering, is that not the case?
MR. CHRISTIE: That's the case but, remember, we still have to use the federal calculation of net income before we start to do our calculation. The challenge that you and I are speaking about is whether it's previous to the net income calculation or it's after. I was suggesting the discussion would be prior to which would have impact on both of us, I understand, but it would require the federal government's CRA to make the forms and allow the process to do that.
MR. MACDONELL: So I guess what might be my final question is, I'm thinking of the timeline. The income is going to be claimed in the year that it's achieved, so I'm thinking if this doesn't happen fairly quickly, there may not be a mechanism to provide any benefit, so if there is one, can you explain it?
MR. CHRISTIE: I guess the earliest timeline, let's presume that the federal government agreed and we moved on, that would put it in the 2005 taxation year for next year and that would be the earliest possible time. Some of the people you're referring to, their first year income is going to be 2004, some will be 2005, and so that won't help them, but there will be others that will follow in future years. We won't be able to respond to all of those, but as we indicated to your colleague, the member for Halifax Fairview, we were discussing the whole issue of provincial government revenues and taxation and how that was going to happen, and the fact that we were going to do discussion groups and we were going to do some thinking on that, this all ties in it. I know when the member for Colchester-Musquodoboit Valley mentioned this to me, he had written the federal government, and I indicated I would follow up, so we've started that route. The route of whether we do it on our own provincially would clearly be a selection of priorities after we've reviewed the tax policies and what we're going to do for the previous year.
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MR. MACDONELL: This certainly may benefit woodlot owners in the future but not necessarily related to the Hurricane Juan case, simply because that downed wood, if it's not cut within a certain time period, it's going to be valueless as times goes on. So anybody trying to salvage any value out of those woodlots, if they haven't done it, they're probably soon going to do it, otherwise the value will be so low, it's probably not going to be worth the expense. I guess all I can say is I appreciate your comments, but I encourage you to try to see if there is a way to help these people. I encourage you to still pursue the federal government, if that's the route you want to go, but to look, if it comes to prioritizing a mechanism within the province, then I can only ask on behalf of those constituents of mine. I think those individuals and other people's constituencies have run into this problem, as well.
MR. CHAIRMAN: The honourable member for Dartmouth North.
MR. JERRY PYE: Mr. Chairman, I want to thank my honourable colleague, the member for Halifax Fairview, for giving me the opportunity to speak to you, Mr. Minister. The portfolio I'm going to be talking about is that of the Gaming Corporation. I'm wondering, Mr. Minister, if you want a second?
MR. CHRISTIE: They'll make the shift, depending on the quality and type of your questions.
MR. PYE: Mr. Minister, I do want to go back on the track of last year. Last year I brought up the issue with respect to suicides occurring as a result of persons gambling in the Province of Nova Scotia. I thought that this was a very serious issue, and that it ought to be addressed. In fact, the Gaming Corporation should know that there is that real problem out there. Obviously the Gaming Corporation admitted last year during Budget Estimates that there was a real problem and that, in fact, you could identify individuals who had committed suicide as a result of gambling. I think there was even a number of approximately 10 individuals in Nova Scotia who had been identified as individuals who had committed suicide as a result of gambling.
I do know that the honourable member for Halifax Citadel brought to this committee meeting today the fact that he had conversations, during Budget Estimates, with the Minister of Health and that there is some sort of an agreement that they will go back to the chief medical examiner and have the chief medical examiner look at the possibility of tracking those individuals in Nova Scotia who had committed suicide as a result of gaming. I guess my question to you, Mr. Minister, is, if there is an agreement, who will absorb the cost? Will the cost come out of the revenues that now arrive through the Gaming Corporation?
MR. CHRISTIE: As you indicated, the member for Halifax Citadel indicated in discussions with the Minister of Health that they wanted to proceed with that. His scenario was to bring that to the Gaming Corporation, Health and the medical examiner. We indicated
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to him, from the Gaming Corporation, we had no issue with that and could move forward with that. Obviously, the medical examiner is funded by the province now, obviously that's a situation that's funded by the province. Whether it's going to need additional resources to achieve what we're talking about here, I don't know.
But once the decisions are taken, then if the decision taken is to move on with that, and how you're going to go through and gather that data, then the resources will be provided. Perhaps it will be through Health, perhaps it will be through the Gaming Corporation. I can't make that evaluation at this point.
MR. PYE: Mr. Minister, my concern is that we know how precious health dollars are. If, in fact, suicides are a result of a form of entertainment, and it's being managed by the Gaming Corporation, in this particular case, then I would want to know if the Gaming Corporation is going to put the dollars in to assist the chief medical examiner with whatever means he needs with respect to resources, be those human resources, be those financial resources?
MR. CHRISTIE: I can indicate to you - I'll just look up the numbers here - that the Gaming Corporation is redirecting quite a few dollars. I'll just look at their sheet, their balance, their budget for the year. Responsible Gaming Contributions and Programs is $4.6 million; Office of Health Promotion is $3.1 million, so they're moving to $7.7 million. The money has been directed into different programs, Responsible Gaming and the Office of Health Promotion. The direct question you're asking is, once you determine what the resources are for the medical examiner, will Gaming fund this? I'll simply say to you again, the determination of whether it's more oriented toward Health or Gaming would be determined at that time.
MR. PYE: Mr. Minister, I'm very much aware of the new dollars that are going in from the Gaming Corporation into the Ministry of Health and Health Promotion. I do know that those new dollars are tagged for prevention and for treatment. This is neither a prevention nor a treatment, but is a method of tracking to see if gaming, as a form of entertainment, is responsible in this province, and if the province recognizes it as a responsible entity. This, in my opinion - and it's just my opinion - is not directly related to Health dollars. So my question is, once again, will the Gaming Corporation commit to funding or at least partially funding any of the work that is needed by the Chief Medical Examiner to bring about the results of tracking those individuals with gaming addictions in this province?
MR. CHRISTIE: Let me come at it this way, the Gaming Corporation revenues come into the general funds of the province, so a decision of that type would be made by the province. Whether we call it taking from their funds, taking from Health funds, we would make that as a priority and move on it. To simply say it would be out of this fund, I'll simply say their funds come into the general revenue pot and we would make the allocation from
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there. I would think this would be more of a government initiative, as opposed to one that we would ask the Gaming Corporation to undertake.
MR. PYE: Mr. Chairman, through you to the minister, there is a commitment that the Gaming Corporation won't stand in the way of the province providing sufficient funding for resources to the chief medical examiner.
MR. CHRISTIE: As the Minister of Health has indicated, he wanted to move on that. Health and the Gaming Corporation are in consultation all the time, and between them, they'll work out the way it should proceed. Obviously, the Gaming Corporation is not standing in the way of that.
MR. PYE: I want to go back to the Smart Card. I know that a number of my colleagues have talked about the Smart Card here during your Budget Estimates. You have obviously contracted this out to, I believe, Omnifacts Bristol. This is at arm's length from the corporation with respect to how they're going to do their research, and how they're going to compensate individuals who are participants in the research. I guess my question to you is, why was Windsor selected as the site to do this work?
MR. CHRISTIE: I'm advised there were three reasons. First is that Windsor has a good-sized population to be able to test in. The second area is that the retailers were receptive. The other is that it's in relatively close proximity to the Atlantic Lottery Corporation, so if there were other issues, technical issues, to deal with, they could be dealt with easily.
MR. PYE: I would say to you that many communities are similar to the size of Windsor and they're in close proximity, that doesn't give me any impression as to why we would select Windsor. Technology today gives you close proximity to the Atlantic Lottery Corporation, within minutes, within seconds. Are there more gamblers in the Town of Windsor than in towns of other sizes?
MR. CHRISTIE: No. As I said, the issues are - whether you agree the size is a good size or not, or whether it should be a bigger population - they were looking, as they started to look at test groups, you look and see what kind of a response you can get from a test group, and they look for the population. Now, in terms of the population, certainly there's other places with the population of Windsor, 4,000 people. But then you mix in the retailers being co-operative and you mix in the issue of being close to here in case there are technical difficulties, that's what it was that swung in Windsor's favour. It really is just that simple, there's no other reason, it's just clearly that simple.
MR. PYE: I guess there had been no previous conversation with Omnifacts Bristol with respect to how they were going to compensate participants who would be involved in the focus studies and in the workshops, because had there been, I'm sure that the Gaming
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Corporation wouldn't have recognized the notion of providing certificates for groceries and/or - and this is not the only thing - electrical bills as well. I'm wondering why, Mr. Minister, the corporation or you would not have initially participated in seeking - because this is such an important issue, gambling in Nova Scotia - or knowing the kind of remuneration that might have been provided to individuals who were going to be participants in these focus studies and workshops?
[4:30 p.m.]
MR. CHRISTIE: I think from my perspective the issue was moving forward with the strategy that we have outlined, in terms of education and doing the testing. I was aware that a selection process was going on but, indeed, once you select these companies to go do testing - it's the same as when I go to the doctor, I don't tell the doctor what is wrong with me and how to fix it, for the same reason - I don't view it as my role to go to the testing company and say, I want you to do it this way or that way, I rely on their experience and background to be able to do that.
MR. PYE: I'm sure you don't tell the doctor that but this is a significantly important issue. I think to remunerate someone for engaging in their services is not uncommon, we know that that happens, it's the method of remuneration. I think that it is such a sensitive issue, with respect to gambling in Nova Scotia, and I'm sure the Gaming Corporation and you, as Minister of Finance, have heard time and time again about Nova Scotians who are having a serious problem with respect to gambling addictions. It would have been the right thing to do to at least tell the successful consultant group that there were areas which you don't think should be considered for remuneration. Mr. Minister, I, like other colleagues, think the optics of this is not good at all. I'm wondering, is it too late to go back to the consultants and talk to them about rethinking their method of remuneration?
MR. CHRISTIE: Did you get a copy of the sheet that I provided?
MR. PYE: Yes.
MR. CHRISTIE: On that sheet you can see that there was an initial contribution towards a person and then a final one at the end. If you're asking us to rethink with the consultant that last phase of it, we're certainly prepared to do that, but the first phase of it, the people have started in the program and they've received the compensation, we certainly can't say, we negate that agreement that we had. As the program goes into the final stages, we can revisit that decision.
MR. PYE: Thank you, Mr. Minister. I think it would be important to rethink and go back to talk about remuneration to participants. My next question is around financial counselling. I know there has been talk that the Gaming Corporation was open and receptive
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to providing a financial counselling program to individuals with gambling addictions in the Province of Nova Scotia. Can you tell me if that is still in the thinking process?
MR. CHRISTIE: The corporation is still coordinating that. If your question is, are they specifically doing that, the answer is no, they're coordinating the process of bringing the counsellors and the people together.
MR. PYE: So this will be at arm's length from the corporation?
MR. CHRISTIE: Yes.
MR. PYE: And will there be any seed money or any money set aside for individuals to rebuild their lives as a result of their gambling addiction?
MR. CHRISTIE: No, in terms of the budget and in terms of the Gaming Corporation, no, there is no money budgeted for that.
MR. PYE: Mr. Minister, I'm wondering if you would give that some consideration? I think it is extremely important to provide counselling services to individuals who have lost everything and they not only need the counselling service, but they also need the additional funding, or seed money, or dollars to help them rebuild their lives that they have already destroyed. I'm not an expert and I'm sure you're not an expert on how many dollars that should be, but there should be at least some funding in there or there ought to be a mechanism whereby, individual gamblers who have reached that point, are able to access those dollars. I'm sure that they would access those dollars by being participants in a financial counselling program.
MR. CHRISTIE: Your question was, would you consider that and sure, we can look at that. I'm going to make the assumption that you're not restricting your comments to people of a particular addiction, that your comments would be for universal addictions?
MR. PYE: No, however, that would be great . . .
MR. CHRISTIE: I'm not trying to put words in your mouth I'm just trying to be clear on what you're . . .
MR. PYE: I have to tell you that I was specifically speaking to those individuals around gambling addictions.
MR. CHRISTIE: Let me say in terms of the programs that Health and Health Promotion has coming up, we view addiction as addiction, as opposed to trying to single one out over the other. That's why I asked that question, because from where we approach it it is addiction and not specifically targeted.
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MR. PYE: I certainly don't have any difficulty with respect to including all addictions, to have some seed money, or rebuilding their lives dollars at all, I'm open and receptive to that, that's for sure.
I do know there is a need to talk with the First Nations and casinos with respect to their existing contracts. I'm wondering if there has been any ongoing conversations with the First Nations and/or the casinos about the possibility of reviewing or looking at changes within their contractual agreements?
MR. CHRISTIE: I can only say to you that the Office of Aboriginal Affairs has had some discussions. I haven't been involved in those so I would have to direct you to them for specifics. I have heard there have been some discussions with them.
MR. PYE: So those discussions would not go through you, but through the Office of Aboriginal Affairs?
MR. CHRISTIE: That's correct, because if you recall, the arrangements for the terms and conditions of Nova Scotians involved with First Nations is through the Department of Aboriginal Affairs, whether it's VLTs, gasoline, a whole variety of things, and it's all part of the major negotiations. You will recall they have been doing some of those major negotiations over the last couple of years with the different bands and the different First Nations. The whole question of that would go through Aboriginal Affairs, yes.
MR. PYE: So I guess we can't talk about the hours of operation?
MR. CHRISTIE: I can't. In terms of the hours of operation there are a number of things that they will talking about. The only features within our strategy that will affect the First Nations is the slowing down and the stop buttons, those will be universal across the province. The other issues, in terms of removal of machines, the hours and so on, are items that are part of the agreement that Aboriginal Affairs would have to have discussions with them on.
MR. PYE: The Gaming Corporation has a long-term strategy on gaming in the Province of Nova Scotia. I've heard some conversations with respect to possible locations of racinos in the province. I have also heard of the possibility there might be some locations for mini-casinos or theatres of entertainment. Have any of those thoughts materialized, presently?
MR. CHRISTIE: Let me deal with the first one. We indicated we weren't moving to racinos now as part of the strategy, as P.E.I. was. You know that Nova Scotia has certain games, Keno and on certain items that are being introduced in New Brunswick that were not moving toward. The issue of the strategy of where this province goes is the question in front of us now. We have done the analysis, we've moved on a couple of parts of the strategy. That
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whole issue of where it goes, whether it's destination, gaming facilities, various others, is the question that is the big question mark in front of us. If you have heard from somebody that it's going this way, then they're ahead of us, because those decisions haven't been taken.
What we indicated in the strategy is we wanted to move on these issues, wanted to evaluate. We have tasked the Gaming Corporation and the Office of Health Promotion to evaluate how things are moving and then to provide us some view of where we go in the future.
MR. PYE: I guess, in fairness, that will come out in the social impact study that comes forward starting in 2006 and finalized in 2008?
MR. CHRISTIE: The social impact study is 2006, the prevalence study is in 2008. All of these different things will give us information as to how it's going to move.
MR. PYE: So that's not to say you will not take that action, it's a matter of waiting for the studies to come forward, digesting the studies, and seeing what the recommendations are that Nova Scotians have.
MR. CHRISTIE: Exactly, and see where you are going to go, yes.
MR. PYE: There has been the thought, because charities have lost significant revenues, particularly around bingos and ticket lottery draws, and casino nights that they normally have these venues for fundraising to assist those charitable organizations in the community helping Nova Scotians. We have reached an agreement with the Legions that, in fact, the VLTs, despite the revenues, will not be removed from the Legions and they are assured that there will be a set revenue for the Legions in this province.
With the bingo operations there has been some talk and discussion around electronic bingo gaming in the Province of Nova Scotia. That means that all bingo halls, as I understand it, would be able to compete for the same prize in this province on a given night, or maybe every night, for a major jackpot, to those bingo operations that are linked up to a central operation. Now, I don't know, I'd like to hear some explanation of this and I would certainly like to hear as well, if you don't believe that this is another form of electronic gaming and that, in fact, it has the potential not only to increase revenues to charitable organizations, but to increase revenues to the Gaming Corporation - bottom line.
MR. CHRISTIE: There's a number of things but let me first go back to one of the comments you made where you said, that guarantees the Legion income. Now what the guarantee for the Legions is, they keep the number of machines, so it wasn't as if we said we'll freeze the amount of commissions you get, they're going to keep the machines they have. You understand that but I just wanted to make sure.
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[4:45 p.m.]
The other thing you're talking about is what's referred to as link bingo and it's something that has been going on in Alberta. As you described, people can buy cards, there's a bigger prize, and the object of the exercise is to bring more people into your bingo. This is something that the charities have suggested to the Gaming Corporation we should do, to bring people back to the bingo halls, to bring people back and get some additional money. Simply, it's another one of those issues that is yet to be decided, it's something that has been laid on the table, something that we've been talking about, but it will be part of the analysis of where we go in the future. It was included in the gaming strategy because it's not going to be an issue that we get any revenue from, it will just be facilitating that to allow this to happen in the province.
MR. PYE: I'm wondering, since you recognize that there is link bingo, or that electronic bingo is going on in Alberta, do you know any of the negative aspects of this or have you followed it closely to see what kind of an impact that will have on gaming addictions in this province?
MR. CHRISTIE: No, I haven't. I know that it's in Alberta and as I indicated, the charities have indicated that's an option for them. They cited the reasons that you cited, that their bingo revenues are going down and they need to find something to bring it back up.
We know the Internet gambling and some of these other products are attracting people away, but they view it as something that will bring the revenues back up. For us, if their revenues come up, it's not a question of us sharing in those revenues, that would be directly through the people operating the bingos and charities themselves.
MR. PYE: You've indicated that as a result of the gaming strategy, there will be a reduction of some 2,000 VLTs in the province . . .
MR. CHRISTIE: One thousand.
MR. PYE: One thousand VLTs, excuse me, yes - 800 actually . . .
MR. CHRISTIE: Eight hundred in the first year, and then 200.
MR. PYE: . . . and the remaining 200 by attrition, I guess, as business operations may close out and they will not go back into service. My question is, you said you would lose approximately $8 million in the first year and that's because it's a partial year and what you're going to introduce this . . .
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MR. CHRISTIE: No, I said that we'd lose $19 million. The $8 million is the reduction the Gaming Corporation taking the $19 million and other increases that they have in lotto tickets and the casinos. So the net reduction, in terms of the transfer from the Gaming Corporation is $8 million, the impact this year on VLTs we expect to be $19 million.
MR. PYE: Is there some way that you've measured that, assessed it? Was there a formula or is this purely speculative?
MR. CHRISTIE: No, I can read you off all of the model calculations they had here in terms of, for example, reducing the number of hours . . .
MR. PYE: Mr. Minister, excuse me. Instead of reading it would you table it?
MR. CHRISTIE: I can make this available to you, sure.
MR. PYE: Thank you. I guess then that gives us some sense of direction on how you arrived at the number $19 million.
MR. CHRISTIE: There was a model look at each one of the issues that we did and the impact to arrive at that $19 million. We will copy that sheet and you can have a look at it.
MR. PYE: Many people who have played the VLTs, many who have taken gaming as a source of entertainment, and some individuals who have addiction problems have indicated to me - mind you, there is a Help Line notification on each and every one of the VLTs - that when they want the service, to them it's like a 9-1-1 service, an emergency service, and something should be there to help them immediately. What I'm told is that they don't have that kind of service available to them. I'm wondering, Mr. Minister, if you can tell me why that service is not available to them?
MR. CHRISTIE: Having the . . .
MR. PYE: No, the addiction services that should be available to them. Let me put it this way, if an individual is so depressed because they've gambled and they're down to their last dollar, nowhere to go, they call the addiction centre, Drug Dependency. There are supposed to be beds available for them but when they're told there are no beds available for them, and there is two beds, this is devastating to those individuals. I wonder if this service to them is adequate or sufficient?
MR. CHRISTIE: Whether it is adequate or sufficient would be based on individuals. What I can say to you, as the Minister of the Office of Health Promotion has indicated, the help lines are there, they are being promoted for people and are trying to get the information out to them. As the Minister of Health indicated, as part of the new bed structure, in terms
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of getting convalescent beds, he indicated in his remarks that there would be beds for addiction, and I specifically say for addiction, as opposed to individualizing. So, there are a number of things that have been happening, whether it's enough to meet all the needs of all people, I don't know that, but there are a number of initiatives happening.
MR. PYE: You indicated that the stop button would come in, in January 2006?
MR. CHRISTIE: I think that's right.
MR. PYE: And you have been told that this will address some of the issues with respect to reducing the potential for addictions to gambling. I guess you have done research on this and obviously the research has indicated that the stop button was one of the features that should be removed, in order to reduce the potential for persons to become addicted to gambling. The other question is, with respect to the stop button and moving away from the stop button, and just providing a maximum prize payout of less than the amount of $500 and the maximum amount of bet that one can make, less than the $2.50. Have you given any serious consideration to reducing both the maximum at prize payout and the maximum bet?
MR. CHRISTIE: Those are some of the things that have been perhaps part of the consideration and as you'll see from the calculation sheet, when we get it for you, you'll see the calculation of the impact of these steps that we're taking and those are significant first steps that we're moving toward. Your question was, have they considered doing that? Well that's always a question that's there but the direction that we're taking is the direction that the strategy has indicated and what we feel are significant moves that will help people. People might say, turning the machines off from Midnight to two o'clock doesn't make much difference.
The fact of the matter is, that is a significant reduction because those are the hours, statistically, that show a lot of people who spend the most money on VLTs will probably have the highest occurrence of being there at those times, that's a significant one. It ties in with the slowing down of machines, the removal of stop buttons, and obviously the payouts and dollars are something else to look at, but these are the ones that were deemed to have the most dramatic effect and the most positive effect on the issue.
MR. PYE: I guess you will find much of that when the socio-economic impact is brought forward in 2006, much of that information will come forward then.
Finally, before I turn the floor over, I want to thank the honourable member for Halifax Fairview, for giving me the opportunity to speak to you today briefly. Before I go, I'm wondering, Mr. Minister, what are your thoughts on Nova Scotians having the opportunity to have a plebiscite on this very important issue?
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MR. CHRISTIE: As we move with the strategy and how these plans develop, we are going to be able to analyze that. I don't think any of us are in a position to make some decision until we get some of this analyzed, until we see what the reaction is. I guess my answer to that is I would have to wait before I could answer that question, to see the response, the feedback, the research and analyses we get back.
MR. PYE: Personally, would you support it?
MR. CHRISTIE: I think I personally would need to see the research before I could make that decision. To make the decision as to say, this is right or this is wrong, I think we need this time to do the evaluation and so on. After that is done, perhaps that question becomes one that could come into play, but at this point in time I think we need to do what we're doing and follow the evaluation and research.
MR. PYE: Thank you.
MR. CHAIRMAN: The honourable member for Halifax Fairview. You have 16 minutes left.
Mr. Minister, while your staff are moving, I couldn't quite hear the answer at the end of my time because the chairman was talking at the same time. My question had been, at what point does the Department of Finance project that the Public Service Superannuation Plan will be 100 per cent funded?
MR. CHRISTIE: We have been concerned with that question and there's going to be some actuarial work done on that. If I was to give you an answer now it would be a guess. What I do know is that we've indicated to you what the percentage is by December, but we need to do some actuarial work before we do have that projection, or give you anything now.
MR. STEELE: This is a statement not a question but it concerns me when I see that any fund is not 100 per cent funded and that the time at which it is projected to be 100 per cent funded is some time in the distant future, because it simply represents an inter-generational transfer of wealth. It means that future civil servants are going to be paying for the benefits enjoyed by current civil servants. It means future teachers are going to be paying for the benefits enjoyed by current teachers and, generally speaking, that's not fair. I'm not suggesting that's your fault, I'm not suggesting it's your government's fault, I'm just saying that in principle, having these kinds of funds underfunded over a long period of time is not fair. I think we all need to do more to address that issue.
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I'd like to go back to your business plan, which is a document that I find fascinating. I'm not sure how many people read it, but I find it fascinating, anyway.
MR. CHRISTIE: My guess is you are about the third in the province.
MR. STEELE: Yes, I think I probably am the third outside the department, maybe inside the department, too.
MR. CHRISTIE: I'm assuming the deputy and I have read it. (Laughter)
MR. STEELE: Let me move on to Strategic Goal No. 4, Paragraph No. 11, it has to do with internal audit. This is something that I've been learning quite a bit about over the last few months, it has come up in the Public Accounts Committee a couple of times. I just want to confirm that it is, in fact, your department that's responsible for the government-wide internal audit function, is that correct?
MR. CHRISTIE: That's correct.
[5:00 p.m.]
MR. STEELE: I'm going to say how many people, you may answer in terms of full-time equivalents, how many people currently work in the Internal Audit Division?
MR. CHRISTIE: There are 13 FTEs there now.
MR. STEELE: How many of those are actually auditors?
MR. CHRISTIE: Do you mean are CAs or work on the audit?
MR. STEELE: Well, whatever the qualification one needs to be an auditor as opposed to - the distinction I'm drawing is between auditing staff and support staff.
MR. CHRISTIE: Looking at that, apart from the director and the manager, they are all auditors so, of the 13, and they are auditors themselves but there are 11 people who are constantly auditing and then the directors and the manager would be reviewing the audit.
MR. STEELE: The last time we asked this question in the Public Accounts Committee, the answer that we got was there were seven. Has that number gone up suddenly, recently?
MR. CHRISTIE: The figures I'm looking at is 11 in 2004-05 and 13 in 2005-06. The number of seven I don't see on this sheet.
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MR. STEELE: Where are those people currently assigned?
MR. CHRISTIE: There are four at Community Services, three doing the audit of the eMerge project and two at the department.
MR. STEELE: I just want to repeat that. It's four at Community Services . . .
MR. CHRISTIE: Correct.
MR. STEELE: . . . three in the eMerge project.
MR. CHRISTIE: Yes.
MR. STEELE: Two in the . . .
MR. CHRISTIE: Department of Finance, in the department, itself, and the rest are vacant right now.
MR. STEELE: Okay. So you have 13 approved positions but you don't have 13 people?
MR. CHRISTIE: That's correct.
MR. STEELE: One at the Department of Finance, I assume, is the director or manager, whatever her title is. So does it concern you that we have a $6 billion government and we have nine people in internal audit, seven assigned full time to specific projects and we have two people, including the manager, covering a $6 billion government? Does that concern you at all?
MR. CHRISTIE: Yes, it does and that's why you see that goal here, you might suggest the goals are fluffy or not, but you have to define goals of where you are going to move and that's why we are adding. When I say we are approving more FTEs for the department, that's why we are doing it, because we are concerned.
MR. STEELE: It was mainly the strategic goals that I was complaining about being vague but even No. 11 is, I as a reader, I as an interested user of this business plan, have no idea, reading item No. 11 there, what your department plans to do this year. Are you staffing up? Are you giving them more money? Are you giving them a different mandate? Are you pulling people back from these projects so that they can be assigned on an ad hoc basis like the Auditor General? I need to know this stuff. This is what the business plan is supposed to tell me but what it says instead is you will implement a revised governance and organizational structure for internal audit that will reflect a corporate business approach and
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will provide the required assurance for accountability and good internal management. That tells me nothing.
So here is your opportunity now, please give me, in as much detail as you care to, what is going to happen in fiscal 2005-06 with the internal audit unit? What exactly are you going to do?
MR. CHRISTIE: Well, I will speak on two areas. The first is the area responding in one instance to the Deloitte report. The Deloitte report had to do with risk management in the Department of Treasury. What we will be doing this year, we will be adding three people there. We will be following the Deloitte report to put in a middle office. We will follow their report to put in additional controls there to meet the goals and objectives of the Deloitte report. We have done this in conjunction with the Auditor General in terms of moving on this.
The other area we are moving on is to add additional people and, as we indicated, additional FTEs in terms of the internal audit, because we know we have to provide additional services there. At the same time while we are doing that, Service Nova Scotia is adding some people there to strengthen up their compliance controls and area.
MR. STEELE: Would it be fair to say that the assignment of some people to Service Nova Scotia is related directly or indirectly to that particular fraud case that was in the news?
MR. CHRISTIE: The new people would be, it would be fair to say that was generated because of that. However, prior to that case, there was still the Deloitte report which indicated to us in terms of the Treasury area, we had to look at ways of bringing more resources to bear there in terms of more internal audits. So those two things combined would have led to the addition of compliance officers at Service Nova Scotia.
MR. STEELE: Now in terms of governance, which there is a reference to here, one of the problems, as I understand it, is that the manager of the internal audit unit doesn't report to you, the minister, doesn't report to the deputy minister. I may be wrong but I don't think they even report to the assistant deputy minister. Who is the hierarchical superior of the manager of internal audit?
MR. CHRISTIE: That person reports to the deputy of the Treasury Board, the Steering Committee of Deputies is the direct reporting structure for that person.
MR. STEELE: I'm sorry, I don't understand. I'm talking about Pam Muir now. Who does she report to?
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MR. CHRISTIE: The new structure, I'm just reminded, that administratively she reports to the controller. From a functional point of view and from the audit point of view, she reports to Treasury and Policy Board and the Deputy Minister of the Treasury and Policy Board.
MR. STEELE: You are accountable for what that unit does, correct?
MR. CHRISTIE: We are accountable to staffing that unit. We are accountable for the administration and operation of that unit. The reporting of that unit, the decision was taken that the report should go to another body, a committee of deputies, which is chaired by the deputy of Treasury and Policy Board.
MR. STEELE: I just want to make sure that I understand this. If I'm understanding you correctly, you are saying that as a result of the changes that will be made that the internal audit unit will, for substantive audit purposes, not be reporting to the controller but will take their guidance and direction from the committee of deputy ministers.
MR. CHRISTIE: That is absolutely correct. The Standard Audit Committee and that is part of, as I say, part of the Deloitte report, part of the risk management thing and that is the change, yes.
MR. STEELE: It is my understanding that in internal audit circles, it is not considered acceptable that the manager of internal audit report so far down the hierarchical chain.
MR. CHRISTIE: You are speaking to the fundamental reason for the change.
MR. STEELE: When will the change be in place?
MR. CHRISTIE: It will be effective within the next few weeks. Our goal in all of these changes with the middle office was to have things done by the end of May. This is one of them and we are on target for that.
MR. STEELE: At the end of 2005-06, how many staff will internal audit have? I'm not talking about positions. How many people will actually be on the ground doing audit work at the end of the fiscal year?
MR. CHRISTIE: It's our plan to have 13. It's our plan to fill all of those empty positions.
MR. STEELE: Here's the problem I have. At the end of all of this reorganization, we still have no idea about whether the internal audit function is being adequately discharged because in your business plan it talks about revising the governance - which is fine, good idea, I support that - revising the organization, but there is no mention anywhere in the
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business plan about whether internal audit is actually effective, there is no measure of that. So all that we, as members of the Legislature are given, is that there is going to be a shuffling of the deck and some of it is all to the good but we have no idea whether we have enough internal auditors. Do we have enough internal auditors?
MR. CHRISTIE: So as we move from the 13 toward the 18 that is what we determine we need. Do we have enough now? No, if we had enough now we wouldn't be moving toward 18 to get to a best practice.
MR. STEELE: Tell me again when you expect to have the 18 in place.
MR. CHRISTIE: In the next two years.
MR. STEELE: And how did you arrive at the number of 18? What is the formula by which you calculated that 18 is just the right number?
MR. CHRISTIE: We had KPMG do an assessment of looking at bringing their experiences of what would be required to do a business of the size that you indicated and that was the suggested plan of implementation that they had suggested to us.
MR. STEELE: One of the other things I just scratch my head over is that when you have these very limited resources, you have nine people currently in internal audit, four of them are assigned to the Department of Community Services. What's going on over in the Department of Community Services that requires such a large allocation of the very limited resources of internal audit? What are those four people doing over there?
MR. CHRISTIE: I specifically don't know what task they are working on. I know they are working on tasks such as the allocation of monies and the claimbacks from other departments and working on those, but if you want me to get you a specific task list, I will have to get that.
MR. STEELE: My understanding is that we will be continuing with you into tomorrow, Mr. Minister, and I would find that very useful. Mr. Chairman, how much time do I have left?
MR. CHAIRMAN: You have a minute.
MR. CHRISTIE: I indicated that that was filed at the Public Accounts Committee meeting. The question had arisen in the Public Accounts Committee as to the tasks that they do and it was filed there but we will get another one.
MR. STEELE: I don't recall seeing it but then I didn't recall being briefed about the $90 million. Here's the concern I have. I believe, and I could be wrong, . . .
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MR. CHAIRMAN: The member's time is now over. We will move to the Liberal caucus.
MR. STEELE: That wasn't a minute.
MR. CHAIRMAN: The member's time is over. We shall move to the Liberal caucus.
The honourable member for Richmond.
MR. MICHEL SAMSON: Mr. Minister, your government has made great fanfare about the provincial bond ratings that our province has received. I look at your D6 and note that we are 8 out of 10. There are only P.E.I. and Newfoundland Labrador that have a lower rating than we do. Is that correct?
MR. CHRISTIE: I guess that is correct, yes.
MR. MICHEL SAMSON: Have we ever been better than that?
MR. CHRISTIE: I don't know. No, it's been in that range. I'm just informed Moody's has been doing it since 1917 and it has just recently been higher in some areas but it has gone back. The point that we make there is all three have moved us forward at the same time and that is a new phenomenon.
MR. MICHEL SAMSON: I guess that's the whole point because even I, before looking at this list, just listening to the spin, if I could put it, that the government has put out, that the rating is going up and we are doing a great job and everything, at the end of the day, we are still 8 out of 10. We haven't moved ahead of any provinces and apparently not only have our ratings gone up but apparently their ratings have correspondently gone up as well. So Nova Scotia doesn't seem to be doing anything spectacular here, it seems the bond ratings are still keeping everyone else, in essence, ahead of us. There are only two provinces behind us, so I guess I'm just curious, when one looks at the big picture, compared to other Canadian provinces, we haven't really changed, have we?
[5:15 p.m.]
MR. CHRISTIE: Yes, we have improved. All three bond rating agencies have improved.
MR. MICHEL SAMSON: But all the rest have improved as well.
MR. CHRISTIE: Well, their rating has remained the same. Ours has moved up and I think that's no small feat. I think that is something that Nova Scotia should be proud of.
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MR. MICHEL SAMSON: Sure, and I'd probably be even prouder if I was New Brunswick because I notice that they are now rated as number five on the list, yet I was always of the belief that our economy was much better than New Brunswick. We had a more solid base and we were performing better but apparently that's not the case and New Brunswick is doing better than we are. In fact, even Saskatchewan is also ahead of Nova Scotia. So I guess when we look at the big picture, we are still lagging behind what other provinces are achieving and even compared to the province next door, New Brunswick.
MR. CHRISTIE: All of the provinces are different and we had the discussion before about how they do their accounting, how they do other things. But there is a variety of issues that go into the bond ratings determination. One of the big things, of course, is the business plan and being able to stay on your business plan. Another one, obviously, is the debt. Another one is the economic conditions that the province is experiencing. We are moving up, yes. We have a ways to go. I don't think anybody disputes that. We have a ways to go but the fact is that through balanced budgets, through our debt management plan, through the economy, through a variety of things, the bond rating agencies have improved us.
MR. MICHEL SAMSON: It's interesting. It just puts it a bit in perspective and I'm curious even though Ontario has had significant deficits, their rating is still much higher than ours. Anyway, I just wanted to make note of that.
I just want to get down to some of the details that you have proposed in the budget. In 1999 the Premier, I've repeated the quote several times, as saying that once you are in office, all off debt and on debt, all off books or what was off and what was on, there would be no increase in the debt, that was basically the message. Basically we now know that the debt has increased, for all intents and purposes, by $2.5 billion since 1999, and this year our understanding is that if all of your projections are met by your budget, that the debt of the province is actually going to grow again by $90 million this year under your projections. I think that has all been agreed.
One of the things in the budget document you provided us with, which is a bit peculiar, is that you are proposing, in this coming fiscal year, to borrow an additional $340 million on top of the revenues that you expect. You also indicated you expect to have a surplus and you are going to add to the debt and you are going to borrow $340 million. Can you try to put that in layman's terms, as to how you are doing all this and yet you can claim you still have a balanced budget if you are borrowing $340 million and adding $90 million to the debt?
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MR. CHRISTIE: Well, initially, quite correctly, we will be acquiring an additional long-term debt this year of $93 million.
Now, as simply as I can I will talk about the net direct accounting debt and I will talk about the cash debt. The cash debt is where the $830 million is going to go and I think as another part of our agreement, $1.6 billion of debentures are going to turn over, that's the number I'm advised will be coming up for renewal and we will be turning that over. I'm just looking for the additional calculations of the $343 million you specifically asked about, which would be the borrowing for this year. So, the $343 million is the $1.1 billion, less the $833 million, plus the draw down from the discretionary fund, and that will be the borrowing that we have for this year.
MR. MICHEL SAMSON: That's why you are borrowing $340 million?
MR. CHRISTIE: That's correct. I refer you to Schedule 18 in the Budget Book, that's where we're working from.
MR. MICHEL SAMSON: That's right, which shows your total borrowing requirements on the bottom as showing $340 million.
MR. CHRISTIE: That's correct.
MR. MICHEL SAMSON: Now, I see here you are estimating for 2006-07 to borrow $874 million?
MR. CHRISTIE: Yes, that's the rollover, yes.
MR. MICHEL SAMSON: So, you're saying that you're borrowing as a result of the debt?
MR. CHRISTIE: What we're talking about is replacing debt and basically, if you look at the change in short-term borrowing, if you look at the transfer of monies, that Cash Debenture Retirements, it's the net of all of those. So, it's not that we're borrowing new money, the new money borrowed is what we're doing for Tangible Capital Assets. The cash side of it is the differential and the rolling over of the short-term debentures.
MR. MICHEL SAMSON: Did you at anytime in preparing your budget consider putting a budget forward that would have stopped the growth of the debt? Could we have done that this year with the revenues we had and the unexpected amounts of money that were coming in?
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MR. CHRISTIE: We could do that any particular year, any particular item in the budget, you could choose to do or not do. So the answer is yes, we could have done that.
MR. MICHEL SAMSON: Now being that the Premier made such a personal commitment, we all know now the quotes, talking about his children, grandchildren, and the commitment he made in 1999, he did it again in 2000, and even when he tabled the budget in 2002, he said, here's our balanced budget and from this day forward the debt will no longer grow. Yet, here we are in 2005 and we're still talking about a budget that's going to see the debt of the province, which is already one of the highest per capita debts, I think only Newfoundland and Labrador has the dubious distinction of being worse than us, is growing again by $90 million.
We know our economy has been doing well, the Canadian economy has been doing well, the U.S. economy has not. The question is, how much longer can we continue to do well while they're continuing to be in a slump? Without getting into too much economic forecasts and some of the predictions, I think it's safe to say that we're hearing quite frequently that interest rates are going to go up. The question is, by how much and how quickly and that there is more than likely going to be a cooling down of our economy, which will certainly have an impact here in Nova Scotia.
My question to you is if we could not find it to stop the growth of the debt this year, in light of all of the fiscal stars that came together and aligned, if there's any sort of downturn in the economy, interest rates go up and any sort of negative factors to our economy, what are the chances that we're going to be able to meet the targets that you've set out, that would actually see us continue to increase the debt for two more years, and live within that limited increase that you've proposed?
MR. CHRISTIE: I'll answer your question two ways. The first is in terms of the global economic picture and the forecast. As you start to do a budget, the Finance Minister has an opportunity to sit down with economists from most of the banks, from the Conference Board of Canada, and talk to them in terms of projections. Indeed, there are things that are of concern to economists, there are the spikes in interest rates, there is the oil costs. However, on the other side of the coin there are issues that we have just come through, we've come through SARS, we've come through mad cow disease, we've come through the closing of the U.S. border to our lumber, we've come through a variety of different things.
The thing that I would say to you is that most economists and most business people I had a chance to meet with were optimistic about the way this economy is going, they are optimistic in the investments. One of the reasons that makes them optimistic is because there's investment in community college, there's investment in new schools, there's investment in universities, there's investment in a variety of things that make them optimistic about this province. Can we control all of those factors? No, of course we can't, but as you
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look at the projections out there, one of the clouds on the horizon is the U.S. economy and that's something everyone is concerned about, and everybody is concerned with the size of the U.S. debt and how that's going to reflect on our Canadian dollar, so that is a concern.
Do we expect? No, I don't expect that there will be other years where we'll sign an equalization deal and we'll sign an arrangement on health care and quite interestingly, that's why we put out the Debt Retirement Plan, so people would know. As I indicated to you before, one of the things the bond rating agencies say to you is, they want to see your game plan, they want to see what you're doing with your budget, they want to see what you're doing with your long-term debt and these other things before they do the rating. That is why we brought them all together.
Why did we increase the debt? We increased the debt because we believe we have to move on some of those hospitals and schools, that we can't continue. Will we stop the debt from growing? Yes, our projection is for 2007-08 to stop the debt from growing. Clearly, the challenge for this government or any government is to manage within the conditions and situations given to them.
I was mentioning to the member for Fairview not so long ago, last year we were in a situation where we had the adjustment on the HST pool of $90 million. Well, those are things you have to manage through, next year it could be something else, so you have to manage through that. Do I think we need to continue to invest in hospitals and schools? Yes. Do I think the economists say that's part of the reason we get the bond ratings and part of the reason why our economy is going to grow? I would submit that the answer to that is yes, too.
MR. MICHEL SAMSON: Our total revenue that you're projecting in the budget for this year, if I'm not mistaken, is just going to be over $6 billion, is that correct?
MR. CHRISTIE: It's $6.4 billion, I think.
MR. MICHEL SAMSON: If I'm not mistaken back in 1999, the total budget of the province, the total revenues, were about $4.6 billion.
MR. CHRISTIE: I'll take your word for it, I would have to look it up.
MR. MICHEL SAMSON: It's in that range, I remember it quite well, the days of 1999. The revenues have grown by almost $2 billion in that period of time. We were faced with the same pressures you are being faced with now, back in 1999. You now have an additional $2 billion in revenue per year and you still couldn't stop the debt from growing and, in fact, you're bringing forward a budget that says you want to increase that debt for two more years before you would stop that growth from happening. So I guess I ask you again, based on the Premier's personal commitments, based on the Offshore Accord - the Accord
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signed by Ottawa that even you have admitted you don't expect to see those again - why did you not use this golden opportunity to stop the debt of this province from growing?
MR. CHRISTIE: As I indicated to you, in any given year you can stop the debt from growing, you just do not do capital things. You do not do funding for the teachers' pension, you don't do capital projects, you don't do those, and it doesn't have to be this year, it can be any particular year, you can make that decision to not do those things. The question you are faced with each year is what are the priorities and what's reasonable to do? Your government was faced with it, you had the same challenges, as you indicated. What were the things for you to do?
[5:30 p.m.]
At the end of the day, the decision we took was to build those hospitals and schools, those listed items that are on the Tangible Capital Assets, to put $142 million into roads. That was a higher priority than not growing the debt because we knew we would be able to contain the debt and start it down for an additional two years. It clearly is a decision that a government has to take.
MR. MICHEL SAMSON: Certainly one I expect Nova Scotians will make their decision on. Just for clarification, the $830 million, if the deal is not delivered by April 2006, what does that do to your budget?
MR. CHRISTIE: We have projected $20 million in interest savings in our budget. The $57 million we had flowed directly through to the surplus, so that would be the two years allocation of the $830 million for the first eight years. The immediate effect would be the $20 million in interest we had projected to receive by the end of September and we projected a $20 million interest savings, that would be the immediate effect on us.
MR. MICHEL SAMSON: Would you have to borrow additional money than what you've already proposed, if you don't get that money by April 2006?
MR. CHRISTIE: Either borrow it or we would have to manage the arrangements. It could be that something won't be started as early as it might have, a variety of things. So the options are that you manage within the envelope the money you have or the other option is to borrow it. I guess, in terms of confidence, we're confident that will happen so we're not trying to prejudge a determination at this time.
MR. MICHEL SAMSON: So, if you keep your budget spending the way it is, as you propose, and take out the $830 million, how much additional borrowing - if you're to stick to the expenditures you propose in your budget - would you have to do if you don't get the $830 million?
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MR. CHRISTIE: Twenty million.
MR. MICHEL SAMSON: An additional $20 million, on top of the $340 million that you are already proposing?
MR. CHRISTIE: On top of the $93 million. The $93 million, as I indicated, is the difference between the Tangible Capital Assets and the amortization. The chart we are indicating is the short-term borrowing turnover, along with that it generates the $343 million. In terms of the impact of this year, initially, we would be short $20 million, so we either borrow the money or we do program changes. That would be a decision that we would take at the time.
MR. MICHEL SAMSON: The Premier has indicated publicly that each week that goes by that the Accord is not signed and delivered to this province, we're losing a million dollars a week. What is that calculation based on?
MR. CHRISTIE: It's based on the estimate fact that for a full annualized year, based on our interest rates, by not paying that down it would be about $50 million to $51 million per annum. So you divide it by 52 and you get the $1 million.
MR. MICHEL SAMSON: If this deal is not finalized before September or after September, what impact does that have by losing that $1 million per week on your budget, if any?
MR. CHRISTIE: If you make the assumption that this deal had been done April 1st, as opposed to June 30th, then you can add that 12 weeks on there and what that means is that there's not $12 million more in our interest expense reduction this year.
MR. MICHEL SAMSON: So it's safe to say, based on your surplus projections that each week that goes by, you're being knocked down $1 million per week?
MR. CHRISTIE: No, because we've only assumed an interest savings of $20 million and that would become affected. What would happen if it came in earlier, the $20 million would become $30 million, if we got the $830 million on July 15th, so we would have an additional $10 million on the surplus.
MR. MICHEL SAMSON: So in your budget you are predicting you would only receive it in September to start off with?
MR. CHRISTIE: That is correct.
MR. MICHEL SAMSON: If it does not arrive in September and it's in April of the next year . . .
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MR. CHRISTIE: Then we're $20 million deficient in revenues. Our interest savings are $20 million more than we had anticipated.
MR. MICHEL SAMSON: One of the means your government has used to increase the revenues that come in every year has been by the radical increase in user fees that took place a couple of years ago. I'm wondering, has your government been keeping track, through the Department of Finance, as to the difference in revenues from user fees, let's say for example, from when you took office in 1999 to what that revenue is today in this budget that you're tabling?
MR. CHRISTIE: I'm advised that the user fees have gone from $40 million to about $50 million to $52 million over the last six years.
MR. MICHEL SAMSON: So in 1999, it may have been in the range of $40 million and you're now saying it's in the range of $52 million, about a $10 million to $12 million increase.
MR. CHRISTIE: I'm advised to clarify that. Those are the fees that are collected and retained by the departments. Your question was, you didn't care which department, you just talked about general fees?
MR. MICHEL SAMSON: Overall user fees, that's right. So the increase has been about $10 million to $12 million per year, as compared to 1999.
MR. CHRISTIE: Correct. Now, I'm just looking at the recoveries and at the end of 2005-06, the recoveries will be $56.6 million.
MR. MICHEL SAMSON: And you're saying back in 1999, it would have been in the range of about $40 million, okay. That's how much revenue we bring in from those user fees?
MR. CHRISTIE: Yes.
MR. MICHEL SAMSON: Can you show me where in the budget we can look to see how much it costs to administer those services that you're charging for?
MR. CHRISTIE: I don't think so. No, that would be within the departments and you'd have to analyze each department as to how they provide that service.
MR. MICHEL SAMSON: That's not being done?
MR. CHRISTIE: It is within the department being analyzed as to what's happening with this particular fee and this particular service.
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MR. MICHEL SAMSON: Okay, but you're the Minister of Finance, you are the Finance Department, you're the department they came to asking to increase the user fees because it's not reflective in the costs of providing the service. You are saying today that you don't have the information readily available to you, if it does exist, of what the costs are per service that Nova Scotians pay fees for?
MR. CHRISTIE: What I'm saying to you is that those are done in the different departments and they are done to calculate annually the cost of delivering that service, and they are not within the Department of Finance but they are within the departments.
MR. MICHEL SAMSON: How much does it cost to administer a driver's licence in Nova Scotia?
MR. CHRISTIE: I would have to check on that, I can't tell you right up front.
MR. MICHEL SAMSON: Do you think someone knows the answer to that?
MR. CHRISTIE: I'm sure Service Nova Scotia does know that, yes.
MR. MICHEL SAMSON: Is that right? But you're not aware of it in the Department of Finance? I understand what you're saying, it's in each department, but the way I see Finance is that you're the tent and everyone else is under you. Anything that happens in those departments financially has to be reported back to you, because you're the one who presents the budget, not the departments, they can make suggestions to you.
The question that we've always had was when your government increased user fees was it based on sound financial data, or was it meant to be a revenue tax increase to bring in more revenue? The fact that you here today, in 2005, can't tell us how much it costs to administer a driver's licence in Nova Scotia leaves the question, what formula are you using in calculating how much Nova Scotians should have to pay, whether it's a driver's licence, birth certificate, marriage certificate, unless you can specifically come here and tell us, well, here's what the fee is to administer driver's licenses, birth certificates, marriage certificates and here's why we charge this much because of that. You are unable right now to give us that detail.
MR. CHRISTIE: I don't have that detail, it's with the department. The departments look at their expenditures, they look at the revenues they are collecting, they do that calculation as part of the budget process. Ultimately, at the end of the day, the fee increases go to Cabinet for approval, as you are aware, and those documents in terms of the calculations for setting the price for collecting a motor vehicle licence and all of that, are available when that calculation comes along. What I'm trying to say to you is our department doesn't go to Service Nova Scotia and say, tell me what your fee is for collecting motor vehicles and we think it should be up or down. We rely on the departments to do that.
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MR. MICHEL SAMSON: Well, if you're not doing it I think you should be doing it because at the end of the day as Minister of Finance, you're responsible for the expenditures and revenues of this province. At the end of the day when people are paying their fee, they make it out to the Department of Finance and to the Receiver General, I believe is what the term is. Let me put this question to you, is it your position that user fees currently being charged by your department are simply cost recovery or are we making money off those user fees?
MR. CHRISTIE: Essentially, it is cost recovery, that is what the department is tasked to do, that's what they work toward. I suspect if we were to look down a full list we would see in many cases we don't recover the full cost. The basic premise and principle of the government is that it is cost recovery.
MR. MICHEL SAMSON: But you don't have anything you can provide us today that would give us comfort that it is cost recovery?
MR. CHRISTIE: I don't have it with me today. Those calculations are available, I can't pull a piece of paper out and give you that today.
MR. MICHEL SAMSON: Is there anything in the budget document you presented to us, as legislators, and to Nova Scotians, where they can go looking for this information to find it?
MR. CHRISTIE: No, as I indicated, those are within the departments. They can look at what the departments are collecting for recoveries against their departmental expenditures.
MR. MICHEL SAMSON: So, you've increased revenues and user fees between $10 million to $12 million since you took office, and it's your position that basically, you are just breaking even, is that correct?
MR. CHRISTIE: What I told you was fundamentally, they are just cost recoveries, yes.
MR. MICHEL SAMSON: Is there any way that you, as Minister of Finance, can provide elected members of this House with the information regarding all of the user fees you've increased and then showing us what the cost is involved with each of those user fees to give us and Nova Scotians a sense of when they're paying so much money for a birth certificate, that that cost is reflective of what it costs your government to administer that service. Can you provide that to us either today or anytime in the near future?
MR. CHRISTIE: What I can provide you with is an analysis of the recoveries by the department. In terms of getting from the departments the calculations and providing those in a certain time frame, I can't undertake to do that because we would require the
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departments to update it. The question in front of us, of course, is that fees didn't change this year so now the analyses of what happened last year, what the increased costs have to be done, it's an evolving, ongoing process. If you're asking me to provide a cost of the recoverables, by department, we certainly can do that, that's included in this book.
MR. MICHEL SAMSON: At the end of the day, you've increased user fees by $10 million to $12 million per year and yet you're unable to provide us, as Minister of Finance, with an actual breakdown of each user fee to show Nova Scotians, here is why we are charging you this much money to offer you this service, and here's what shows the costs, the expected revenue and that's how they match to show that it is just cost recovery and that this is not a backhanded form of taxation onto Nova Scotians. Unless you provide us with that information, other than taking your good word - and in this case, your good word is based on what you're being told by other departments, because you're saying your department isn't aware - we're left to question is this a fair increase, or is it taxation in disguise.
[5:45 p.m.]
The fact that you undertook these increases almost two years ago, which I would assume when they were done then that someone sat down and worked out the numbers, or did someone just sit down and say, how much more revenue do we need for this year's budget and then came up with a total. Unless you can provide us with an actual breakdown of each user fee, that's what we're left to conclude, Mr. Minister. The fact that as Minister of Finance of a $6 billion corporation, you can't tell us how much it costs to administer a driver's licence in this province, or a birth certificate, saying that it's the departments' responsibility to find that out, they don't tell me, and I don't ask, they only ask me when they want a fee increase and I bring it to Cabinet, that just doesn't seem responsible. It doesn't seem fair to Nova Scotians to ask them to pay more when you table a budget and you can't tell them what the cost of the service is.
In the budget you tell us what the total revenues are but you don't show us what the total expenditures are.
MR. CHRISTIE: Well, clearly, the total expenditures are in that budget by department line, they are clearly there.
MR. MICHEL SAMSON: So, I believe there is a line item where you show the revenues for the Registry of Motor Vehicles, I think that's one of the items. What are the costs of the Registry of Motor Vehicles to Nova Scotia taxpayers?
MR. CHRISTIE: That is included in the Department of Municipal Affairs and Service Nova Scotia estimates.
MR. MICHEL SAMSON: Is that in their estimates here?
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MR. CHRISTIE: It shows the estimates of the total operation, it doesn't break it down as to the Registry of Motor Vehicles, it breaks it down by program.
MR. MICHEL SAMSON: But you've been able to break it down on the revenue side but you can't show it to us anywhere on the expenditure side, to show if the two of them match?
MR. CHRISTIE: It's not shown in this book. A number of programs, for example, Program Management and Corporate Services, part of that would have to do with Motor Vehicles. Registry and Information Management Services, that would have to do with Motor Vehicles, it would have to do with land registration, it would have a number of things included in that. It does not just show the expenditures for the Registry of Motor Vehicles, it puts them together in different divisions and different groups.
MR. MICHEL SAMSON: Let me take you to Page A12. Now, on A12 you have listed your revenue outlook for April 7, 2005. Under that you predict what your tobacco tax is going to be, what your gasoline and diesel tax is going to be, what your interest revenues are going to be, and you also predict what the revenues of the Registry of Motor Vehicles are going to be. So you specifically looked at the revenues offered through the Registry of Motor Vehicles, you've been able to break it down to specific revenues. Why can't you tell us what the specific expenditures of providing that service are, if you've been able to specifically break down the revenue generated by that source? You can't say, well, they provide different services so I can't tell you exactly what the expenditure is, when on the flip side, you can tell us exactly what the revenues from those sources are, that argument doesn't work. You can't give one and say we can't give you the other, because you obviously have a system of collecting, of finding out exactly how much revenue you are going to get from the Registry of Motor Vehicles. It shouldn't be very hard to tell us exactly the expenditure involved under those same services.
MR. CHRISTIE: You're absolutely correct, we have the revenues for the Registry of Motor Vehicles, we have it for CHST, et cetera. In terms of the way we present the estimates, you've just said why don't you present the estimates that say, this is the expenditure of the Registry of Motor Vehicles that offsets this amount. What I'm saying to you is we present it in terms of program groups, in terms of the registries and the service delivery within the Department of Service Nova Scotia and Municipal Affairs. They show the expenditures that they're going to have for registries, whether it's motor vehicles, whether it's land registration, or whether it's business registration, or vital statistics, so they show it that way. Now, what we're trying to say here in the long term is, can you get me a number that shows me the offset to the revenue of Motor Vehicles? Yes, I can. I don't have it right here, it's within the Department of Service Nova Scotia and Municipal Relations. I can obtain that number for you, if you wish, and get that number so you can see that. That is readily available in the department. What we were talking about is, in this book can you point out
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to me the figure that says, this is what they spent on the Registry of Motor Vehicles and I'm saying no, because they roll them into different totals.
MR. MICHEL SAMSON: If I go through each department, they can show me any revenues they're getting and they can show me how much they are going to spend?
MR. CHRISTIE: Yes, they are.
MR. MICHEL SAMSON: But for this you are telling me, I can tell you how much revenue is coming in but I can't tell you the costs for delivering that service, as Minister of Finance, I've tabled a budget and I'm not aware of what that figure is.
MR. CHRISTIE: What I'm telling you is, I know what it costs to run the Department of Service Nova Scotia and Municipal Relations, that's one program they administer. So they administer a variety of programs and plans and that's the budget of Service Nova Scotia. If you're saying to me, go through them and determine how much is for the Registry of Motor Vehicles and how much is for this, I rely on them to do that and rely on them because what I know is they are charged with delivering these programs within the envelope that they're given, and that's the challenge that they have in front of them.
MR. MICHEL SAMSON: Let me put this question to you then. You don't have the numbers, you can't provide them today. I don't know if I heard a commitment that you will ever provide the numbers, maybe you can indicate that next time. Is it your position today, as Minister of Finance for the Province of Nova Scotia, under your budget, under Table A12, you are saying that under the Registry of Motor Vehicles you are showing an estimate of $87,716,000 of revenues to come in, is it your position today to this committee that that is an accurate reflection of the cost of administering the programs under this line item and that there is no surplus coming from that figure?
MR. CHRISTIE: It is that or greater to deliver that service within this program, within the controls they need and all the programs they need, that it would be greater than that figure.
MR. MICHEL SAMSON: Will the minister provide to me, and members of this committee, the numbers that would justify the statement that he has just made?
MR. CHRISTIE: As I indicated to you, I will go to Service Nova Scotia and Municipal Relations and we will get a cost centre analysis of what it costs to deliver Motor Vehicles. As part of that you have to understand that there are programmers, there are other things, you just can't say it is those eight people over in that corner, because you need to have a variety of other things. But that's not your question, you said what's the cost of delivering the program.
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MR. MICHEL SAMSON: I want to know if, in 2005, the Minister of Finance can stand in this House and say, on average, it costs this much money to give a Nova Scotian a driver's licence? I question that whether you, as minister, are capable or have the figures that would allow you to be able to make that kind of statement.
MR. CHRISTIE: Well, I guess I question why the Minister of Finance should do that.
MR. MICHEL SAMSON: Because if the Minister of Finance is asking Nova Scotians to pay a certain cost for that licence saying, this is a cost recovery, then he should be able to tell Nova Scotians, here's the figures, and here's why I'm charging this much because that's what it's costing me to provide that service. If you don't do that, then we are left to think that you sat down and figure, I need more money to come in, I need more own-source revenue, here's how much more I need, break it down, figure out how much each user fee is going to have to cost more to achieve that. Unless you can show us what formula you have used, that's what you leave us to conclude and you leave Nova Scotians to conclude why these user fees were increased and on what basis.
MR. CHRISTIE: Let me respond to you this way. Obviously there are taxes and there are user fees. What we are charged with as a province is delivering programs and you might say to me, show me where the equalization money goes, how that's being spent. What we do and what the budget clearly indicates is we achieve a certain amount of revenue and achieving that certain amount of revenue allows us to do certain programs. That is what happens at Service Nova Scotia and Municipal Relations, they have certain revenues coming in, they have certain recoverables, and it allows them to deliver a program. That's how we project it and that's what the budget document says, it says, we're going to have this amount of revenue and we're going to deliver these programs.
We don't say, with the VG Hospital, what we take in revenue and what we put in there, show me what the costs of that are and we're going to cut that off and that has to be a zero balance. We know the programs that that is delivering first is delivered through the Capital Health Authority and the programs that they're delivering are programs that the community and residents want. Pick any one of those, the same thing happens whether it's corporate income tax, interest revenue, whatever, those flow into our general revenue to deliver programs.
There are some areas, for example, we talked earlier about the gas tax or taxes on cigarettes that are fixed taxes, they are taxes that are set and those go for a variety of uses. These user fees that we're talking about are things that the department established overall to have cost recovery or in most cases, probably they don't cover the costs.
What you just asked me to do and I think we are doing it, you asked me to get an analysis, a sheet from Service Nova Scotia and Municipal Relations, that shows you what the cost of running the Registry of Motor Vehicles is.
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MR. MICHEL SAMSON: And let me make clear to the minister, you're referring to one department, that's just one. You have had user fees go up in Environment and Labour, in Justice, in Natural Resources, in Education, in almost every department one can fathom there have been increases and user fees. If I'm not mistaken, the last round of user fees, there were over 100 government services that were increased, it's quite a significant amount. The fact that you, as minister, are saying that you have left it to the departments to be able to tell you, here's what we think it costs to provide this service and here's what we are asking you to provide us as a user fee to try to recoup that, and that fact that you can't provide it here, again, raises the suspicion that this was not just meant as a cost recovery, it was meant as a revenue generator for your government.
MR. CHRISTIE: I simply don't know how you would draw that conclusion from what we've been talking about. What I have said to you is that the minister of the department is responsible for those fees, responsible for operating his department and those programs within that envelope. How you transition to that conclusion you arrived at, I don't understand.
MR. MICHEL SAMSON: Let me make it a bit easier for you, then. Is it your position that each minister who comes before this committee, both in this Chamber and in the main Chamber, when asked about specific user fees, will be able to provide us with a cost analysis of delivering that service in their department? Is it your position as Minister of Finance that they have that information and that they should be able to provide us with that when they come to do their own estimates, as per your statement that it's within the departments that they have those figures?
MR. CHRISTIE: My position is that those ministers are responsible to collect the fees and what they get, and are responsible to ensure that they deliver those programs. Those questions are what those particular ministers do and they look and they do the analysis of that as they're setting out their budget, yes.
MR. MICHEL SAMSON: So they will have that information so when they come to do their estimates we can say, look, the Minister of Finance indicated that you'd be able to tell us, for example, in the Department of Natural Resources the cost for a deer licence has gone up, they can tell us what the cost is of providing deer licences and here's why we charge this much for that service.
MR. CHRISTIE: They could share with you the cost of those programs, it's all built into their budget. That's what their budget is, is putting together the cost of those programs. Whether they have gone through and calculated whether it's a cost recovery or whether it's in deficit, is something they will be able to answer for you.
MR. MICHEL SAMSON: But, as far as you're concerned, you haven't seen those numbers, you just go by what they tell you?
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MR. CHRISTIE: I go by the fact that they are required, as they present it to Cabinet, the fees. I go by the fact they have certain agreed-upon programs they have to deliver and we're allocating them the money to deliver those programs.
MR. MICHEL SAMSON: Let me ask you this, then. In your view, is a user fee meant to be cost recovery?
MR. CHRISTIE: The true user fee is, sure.
MR. MICHEL SAMSON: If that's the case, with the increases you have made, why would you, as Minister of Finance, still suggest that we are offering services that the costs are not being properly recovered, if that's what a user fee is for and that's why you increased them? Why would you still suggest that there are services that we are not properly charging for?
[6:00 p.m.]
MR. CHRISTIE: Because every one has to be looked at individually. For example, if it costs you an exorbitant amount to get a car licenced it might not be practical. The fact is that not everything within the government that we put out in programs is recoverable, it's a question of setting your priorities.
MR. MICHEL SAMSON: Can you give us an example? What are we not charging enough for?
MR. CHRISTIE: Ambulance fees, for example. We subsidize that, there are a lot of things. If you were to get the cost recovery on that you would find it's clearly in excess, but that's just one example.
MR. MICHEL SAMSON: What else? Are you subsidizing driver's licences?
MR. CHRISTIE: No. Take the Seniors' Pharmacare issue, we're subsidizing that. We're subsidizing on university education fees, we're subsidizing on a whole variety of things. So there are some examples of where it's clearly not a cost recovery on all things.
MR. MICHEL SAMSON: So those are quite clear and I find it interesting with Pharmacare because in 1999, your Premier suggested that it was atrocious that the previous government even suggested putting a premium on Pharmacare and that it should have been free, only to watch your government increase it on a couple of occasions, but it's interesting that you would point out that one.
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The question again becomes - those are some of the obvious ones - through Service Nova Scotia and Municipal Relations and the many services they offer, can you tell us today whether we are subsidizing any of those services? The services that Nova Scotians traditionally rely upon: licences, birth certificates, marriage certificates, death certificate, unfortunately, can you tell us whether we are subsidizing those services or not?
MR. CHRISTIE: If I look at the total expenses of the Department of Service Nova Scotia and Municipal Relations and look at their revenues, they don't match, their expenses are substantially higher than the revenues that are generated, so, by any definition, we're subsidizing some of those services. Now you get into specifically whether it's the motor vehicle licence, whether it's the Registry of Deeds for corporations, that becomes the specific question. As I said, if you look at the recoveries, take motor vehicle registrations and subtract it from the cost of Service Nova Scotia and Municipal Relations, obviously, we're subsidizing a lot of them.
MR. MICHEL SAMSON: Your projections for the debt would see it increase by $90.2 million this fiscal year, $45.5 million next fiscal year, and then in 2007-08 you would start to see a reduction. That's all based on very specific revenue projections by your department. If we do have a downturn in the economy, which is something we always have to prepare ourselves for, is it still your government's position that regardless of revenue, you will stick to the plan that you have put forward as it relates to the debt?
MR. CHRISTIE: Not only is it our position, we elaborate on that in the Financial Measures Act which says that this government will not use any offshore money to bring it to a zero or create a surplus, that all of the money will go in. That's what the Financial Measures Act says in those clauses, is that we are required to have a surplus. (Interruption)
MR. CHAIRMAN: Sorry, did you want to finish your sentence, Mr. Minister?
MR. CHRISTIE: We're required to have a surplus and that the surplus is defined as a surplus before you apply the revenue flow, the surplus of the offshore money. (Interruptions)
MR. STEELE: . . . documents that the minister has promised to table. He has promised to table the criteria for the deputy minister's bonus, how the department calculates the $19 million Gaming Corporation loss from the new VLT strategy, and the duties of the internal auditors assigned to the Department of Community Services. Obviously, we're continuing with you tomorrow, Mr. Minister, and I'm hopeful that you could circulate that to this Subcommittee on Estimates before we begin tomorrow, if at all possible. I know you have at least one of those documents in your binder.
MR. CHRISTIE: Yes we do.
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MR. STEELE: Thank you.
MR. CHAIRMAN: We'll resume tomorrow with the Liberals having 10 minutes left.
[The subcommittee rose at 6:05 p.m.]