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HALIFAX, TUESDAY, JULY 11, 2006
SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY
12:46 P.M.
CHAIRMAN
Mr. Alfred MacLeod
MR. CHAIRMAN: Welcome again, and we're going to continue with the estimates of the Department of Fisheries and Aquaculture.
The honourable member for Digby-Annapolis.
MR. HAROLD THERIAULT: First of all, I want to start off and talk about the owner/operator licence a bit, just for the record, for the people I represent. A lot of fishermen in my area, the Digby County area, who are owner/operators and probably 70 per cent of those people believe in keeping that owner/operator going for the sake of the coastal communities.
It was put into place by Romeo LeBlanc, back in 1979, and that's what that was put in place for, was to protect, and I'm talking about not the whole fishery, I'm talking about the 44'11" and under. The inshore fishery mainly. I think that's more the problem than the other sectors of the 45- to 65-foot range and from there on up. The smaller boats seem to be scattered around the coastlines more and they are more community related, and that's what this owner/operator is supposed to do, protect these small communities and keep them together.
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My family has been in the fishery for 15 generations, on the East Coast of Nova Scotia, since the early 1600s, when my forefather first came here. I'm French Acadian on my father's side and my mother is Irish. So a little mix there. I don't know whether it's good or bad. Anyway, for 15 generations, we've gone on in the fishing business. I'm 13th, myself and my grandchildren are the 15th, which, I hope, the fishery is still around when my grandchildren are prepared to go into the fishery.
I've stepped away from the fishery this past few years. One reason is because my whole family has been in the western area of this province for 13 generations to me, and everyone who is still alive in my family is still in that area, and to keep my children in that area, I have four boys and a daughter. My daughter works in Yarmouth in the veterans' hospital and my three boys are in the fishing business. I saw one way to help keep them here, was for me to walk away from what I worked for all my life. I built up quite a little enterprise through my lifetime of 35 years of fishing and whale watching, and in ground fishery, and the ground fishery went bad 15 years ago, it started. We stepped away from that and went into the tourism business of going to see the whales.
Anyway, I stepped away from that to let my children take over, so they wouldn't end up where a lot of our children are leaving for right now, and that's out West. So, I made the commitment that I would step away from it and do whatever I had to do to give my children a chance to be here, the same as 13 generations of us was, and they are the14th, and now they have the grandchildren of the 15th. I hope and pray that the 15th generation can stay here also.
So, this owner/operator concept means a lot to me, personally, but it means a lot to probably 60 or 70 per cent of the people who live in my area, of Digby-Annapolis, and further beyond that, but I represent the people of Digby-Annapolis, and if we keep seeing this being eroded the way it has been, I can see the 15th generation not being able to do what 14 generations of us have, and that's quite a serious thing to me, big time.
I've worked at this for many, many years, and pushed and shoved wherever I could, and tried to keep this and bring this to the forefront. Finally, two years ago, or a year and a half ago, it was decided that it would be done, that this would be worked on, and John Hanlon took this on. John Hanlon took this on and worked with the Department of Fisheries and Oceans of Ottawa, and John Hanlon has done a report. I don't know what's in it, I don't know if this department knows what's in it, the provincial department, but I'm hoping there's something in there that will say the 15th generation of my family, and probably a lot of other families, can continue on in the fishery.
My question on that is, will the provincial Department of Fisheries and Aquaculture contact, or work closely with John Hanlon right away to see if this will come to the forefront, this report, possibly before the end of this year, even before Fall if it's possible? Can this department work toward making that happen?
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HON. RONALD CHISHOLM: John Hanlon apparently was a consultant for the federal government to deal with this issue of owner/operator. I'm told that his work is about done. He was around the province, the different provinces, I guess, and did some consultation with the stakeholders. Our department had input into those meetings. I'm told now that the report has gone to the federal government, and when that's available we will have access to it and we will make it available to whomever. That's where it stands right now.
MR. THERIAULT: Could a letter go from the Department of Fisheries and Aquaculture stating that the province would like to see this report sooner rather than later?
MR. CHISHOLM: Yes, we can make inquiries. We will write a letter and ask the status of that report and ask them as soon as it's available to make sure we get our hands on it. The whole concept of the owner/operator, as you know, as we said yesterday, we put forward different recommendations that the owner/operator policy be strengthened for the inshore fleets, and that's the position of the government and the position of our department, and every avenue that we have we will try to move that forward.
MR. THERIAULT: Thank you. I would like to touch on a bill that was passed, I believe last Fall, the Fisheries and Coastal Resources Act. The Minister of Fisheries and Aquaculture put this bill forward, Bill No. 257, and amendments were made to this bill for independent fishermen to secure loans through the Nova Scotia Fisheries Loan Board for buying licences, not just the boat and gear, that's always been dealt with through the loan board.
So, anyway, this bill was amended and the amendment was accepted. As far as we're concerned, this province will accept the licence as collateral. Another bill was put through last night by the member for Shelburne, Bill No. 27, which is practically the same thing, but I believe it was brought up more for debate on this than anything, which is good. I'm glad he did bring it up again. We'll accept these licences; the province will accept these licences as collateral, but we believe until the federal government will hand these over to the province so the province could deal with them, if one was taken back when used as collateral, the federal government must somehow change its policy on how these licences are handed out and how they're dealt with once they are in the public hands. Like I say, I'm not sure what's in the Hanlon report - it's possible that there could be something in the Hanlon report regarding the licences and how they could be used as collateral. So I guess we'll just have to wait and see on that one.
I'm glad the province did accept this amendment on Bill No. 257, and I'm glad that Bill No. 27 was brought to the House again this summer for debate. Without the owner/operator - I guess it goes back to the owner/operator again - without this licence being used for collateral, I think it would certainly make the owner/operator hard to use, because that's the problem with the owner/operator, there was the problem that the fishermen never had a chance to borrow money to pay these big prices for the licence.
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I'm trying to get to a question here about that, has the department had any consultation with the Department of Fisheries and Oceans in Ottawa about the federal department letting the province use these licences as collateral?
[1:00 p.m.]
MR. CHISHOLM: That issue has been at the federal-provincial ministers' meetings, and it's an issue that has been brought up and discussed and worked on by different committees that are in place with the federal-provincial officials. It is ongoing. You're absolutely right, both those issues, the owner/operator and the loans for collateral, certainly go hand in hand. We are working with the federal government to make those changes. The bills that have gone through, basically they're not much good unless the federal government does what they have to do to change the policy on how they administer.
The bills are good in the sense that they sort of give us a hammer to work with the federal government and to try to get the changes that we're looking for - they do position us very well. We're ready to go if the changes are made federally. But until the federal government makes those changes, it's very difficult for us to really implement the changes that we have made with the bills that we have here. That's my understanding. But, hopefully, in a short period of time - and I know there are ongoing discussions with the federal government to make those changes - hopefully, very soon that will happen. All I can say is that we continue to work with the federal government and push those issues forward with them.
MR. THERIAULT: I may have missed this yesterday, I'm sorry if I did, but there has been talk of - and I believe it was in the provincial budget that we're going through right now - the downsizing of the Department of Fisheries and Aquaculture to an office. I'm not sure whether this could be a good thing or a bad thing. I know that we seem to be doing a lot of downsizing of everything in this province, and we seem to be losing a lot of people to other parts of this country because of downsizing, but if we downsize the Department of Fisheries and Aquaculture would that in some way or any way have an effect on the Nova Scotia Fisheries Loan Board?
MR. CHISHOLM: No, absolutely none. The Nova Scotia Fisheries Loan Board is legislated, that's enacted in legislation. So there's absolutely no change for the loan board. As far as what you're saying, the downsizing of the department, well I don't really see it that way. I see it as a major positive change for the Department of Fisheries and Aquaculture because now we have one Minister responsible for Fisheries and Aquaculture in the Province of Nova Scotia. Prior to that, there was one minister for agriculture and fisheries and aquaculture. So that's a major change for the government. I think it speaks well to both the agricultural community and the fishing community. Our budgets have been split. So I think there are a lot of good things coming about because of the change in the departments. I think
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they're positive changes. I think it will be good for the fishing community, the industry, as well as the agricultural community by that split.
MR. THERIAULT: What would the changes be when you go from a department to an office? Do you have any idea what changes that makes and why?
MR. CHISHOLM: Basically just a name under the Public Service Act, that's all it is. We still have the sixth floor of the Bank of Montreal Building dedicated to our Department of Fisheries and Aquaculture. The seventh floor is dedicated to our Department of Agriculture, the same as it was before. The difference is now we have a minister responsible for each department, very little change - no change in staff. We still have the same amount of staff that we've had prior, in the Fisheries part - well, when it was both departments. We have an extra $500,000 in the budget for the Department of Fisheries and Aquaculture.
So, as I also said yesterday, it's still a work in progress. There are still some things that maybe we're going to tweak here and there, but I can assure you it will be all for the benefit of the fishing industry in the Province of Nova Scotia.
MR. THERIAULT: So the financing for the department wouldn't go down, would it?
MR. CHISHOLM: No, there has been no change to the budget. We basically have the same budget in the Department of Fisheries and Aquaculture that we had last year, only this year there is $500,000 more that we're going to use for the aquaculture part of it as well as the lobster science; $450,000 for the aquaculture, $50,000 for - staff tells me that we have committed to meet with the Critics for Agriculture to explain the budget there, and we're prepared to do the same thing for Fisheries. There are some shared marketing services in both departments that will continue. We will have service agreements associated with those initiatives.
MR. THERIAULT: So going from a department to an office, it's just a name?
MR. CHISHOLM: Basically it's just a name within the Public Service Act.
MR. THERIAULT: Why? Why change the name?
MR. CHISHOLM: It's just a decision that was made, that's just what it is. It's now, I like to call it - well, I do call it Nova Scotia Fisheries and Aquaculture. The same people work there in Fisheries, we have the same office space we had before - well, I guess we have a little more office space now that we have a full-time minister designated for the fishery.
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That is still a work in progress and, as I said, there will be a few things that will be making it better over the next short period of time.
MR. THERIAULT: So why don't we call all departments offices?
MR. CHISHOLM: That's an answer I don't have, Mr. Theriault.
MR. THERIAULT: So, who came up with the plan to change from department to office? There had to be a reason.
MR. CHISHOLM: It's my understanding that would have been determined by Treasury and Policy Board.
MR. THERIAULT: But we don't know the reason?
MR. CHISHOLM: I don't know, I think it may have something to do with the legislation that you have to have changes to some part of the Public Service Act in order to - I'm not sure, I shouldn't even be saying, but we can get that information and find out why it goes that way. But I believe it has something to do with the way it's legislated.
MR. THERIAULT: It just bothers me to know that it could be a step backward; it's maybe a way of stepping back out of the fishery in time. You know, I believe in my heart and in my soul that we can put a fishery back here in this province, bigger and better than it ever was before - I truly believe that and I'll probably go to my grave believing that. I don't know, but I'm not going to quit until I do find out.
I know we can, and I would hate to see this province do away with a department that has a fishery that is down and out and it's still one of the biggest fishing industries in all of Canada. I believe it has the capacity to be four or five times bigger than it is today, I truly believe that, and I think we're going to see the day that's going to happen before we're done.
MR. CHISHOLM: I don't think the fishery in the Province of Nova Scotia is down and out. We have one of the most vibrant fisheries - I think we're the largest exporter of seafood products in the country, worth well over $1 billion. I don't think we're down and out. I think you'll see the Department of Fisheries and Aquaculture that we have in the Province of Nova Scotia will - I think right now we're better off than we were a couple of months ago where we had a Minister responsible for both Agriculture and Fisheries - I can tell you, I was there.
It wasn't for a very long time that I was there in both of those portfolios, but I can tell you it was probably the busiest, busiest time of my life. Probably in the four or five months I was there, I had maybe five days that I wasn't doing something for either Agriculture or Fisheries. Many nights I was over in the office until 10:00 or 11:00 o'clock
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at night, signing off on different things and dealing with different issues. It's very difficult for one person to dedicate their whole time to both of those. So I think it's a real positive move.
I know the Premier made the commitment during his leadership campaign that he was going to split the departments. He has done that, or we've done that as a government, and I think it's a very positive move. I think it's good for the fishing industry, I think it is good for the agriculture industry to have a minister responsible for both of those very important industries that we have in the province.
I know since we were sworn in as a new government, and when I was just responsible for fisheries alone, my whole time was dedicated to the fisheries, and it will continue to be dedicated to the fisheries. With the qualified, passionate staff we have over in Fisheries, I know it will only enhance what we're trying to do, trying to move the industry forward. We will continue to work hard to the best of our ability, and I'm sure you'll be quite pleased in the end.
MR. THERIAULT: I'm not saying the fisheries is down and out, I'm just saying it hasn't had the growth that it should have had. Our shell fishery is certainly keeping our billion dollars a year going, in our lobster, in our shrimp and our crab.
MR. CHISHOLM: Something over $400 million a year of that is the lobster fishery.
MR. THERIAULT: If it wasn't for the growth that we've had in the shell fishery and the stability there - like I said, I don't want to get into what I've said earlier but we've had 3 per cent growth in the past 15 years with a country not far away from us with 267 per cent growth. That's what I meant by down and out - we're not out, we're just down.
Anyway, we won't go back into that, where we were earlier. I believe we can make this fishery much, much better in this province. Like I said, it was the cornerstone of this province, it built this province, it built this country. We traded fish off to the world back in the 1940s and 1950s so they would buy wares from central Canada, we were giving our fish away then to other countries. When central Canada looks at us and says we're "have-nots", well, if we are, it's because we gave to them so they would buy their wares from central Canada many years ago. I don't know if they know that, but they should find out.
[1:15 p.m.]
I want to stay on the fishery, that's for sure. One of the things, we do have a $400 million lobster fishery in western and southwesten Nova Scotia, mostly down that way. Of course a lot of lobsters are trucked right from your area, Mr. Minister, and brought down in the Digby area and go across the boat. We used to take them across Yarmouth a lot more, before the Prince of Fundy left, but now we have one boat left down there.
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Has the Nova Scotia Department of Fisheries and Aquaculture been outspoken about this ferry boat? Is it concerned about what impact it could have on the fishing industry of this province?
MR. CHISHOLM: We certainly are aware of the impact that it will have on the fishing industry in the province if that ferry shuts down. I've had calls from some fishermen, some people in the industry regarding that issue. I've spoken to the Minister of Transportation and Public Works regarding that. I have also spoken to the Minister of Economic Development, who is the lead minister on that file.
So we're committed to working together to try to come up with whatever option we can to make sure that service from Saint John to Digby is maintained. Like I said, it is the file that is the responsibility of the Department of Economic Development, and we will work as closely as possible to make sure that service is maintained.
MR. THERIAULT: I would like to touch on fish processing for a few minutes. We know, especially since the downturn in the ground fishery many years ago, we've lost a lot of processing fish plants in the province - and I don't think it's done yet. I think a lot of the people who were in the processing lines earlier are now third and fourth crew mates aboard lobster boats, because lobster boats went from one and two people to three and four people to four and five people aboard lobster boats, so that took up a lot of the slack in the processing plants - especially down in the Digby and Yarmouth area where there are 960-odd licensed lobster boats, and taking a couple of people each aboard took up a lot of slack from the fish plants.
There are still fish plants having problems in this province and it's between the lack of fish and the lack of market, financially and whatnot. Has the department looked at anything to help these workers do anything different?
I know down in Digby a few years back - Joe Casey was the member down there then. Good 'ole Joe, he's still at it; Joe hasn't quit yet. Joe's 88 years old and he's still plugging away down there - I remember 10 or 15 years ago clamming went bad down there and the Department of Transportation and Public Works, probably, set up a program to put some of the clammers to work cutting alders in the ditches, and they worked all summer, most of them, or a lot of them did. We're having the same thing now; we're losing jobs in the processing sector. Down home, in the clam fishery, that's gone bad again. Does the department know of anything that could help these people out in the meantime? Whether they plan on staying in the province - the ones who want to stay in this province, is there some kind of program that this government could look at to help these people out? Is that possible?
MR. CHISHOLM: There is some economic development, I guess, and some HRDC programs that could be available to them in some of those cases - but you're absolutely right,
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you know, there are a lot of our fish plants throughout the whole province that are in very serious trouble. Throughout Cape Breton, I know in my own riding of Canso, the fish plant there is maybe operated - some people tell me they got 28 hours of work since last winter, which is not very much. They don't have enough for EI; they don't have enough for anything, so they are in dire straits. There are a lot of different things that are contributing to the problems in the processing sector: the global competition, particularly with China; lack of raw materials - a whole host of things that are contributing to the issues.
We will be conducting a detailed study as to the processing industry, which will describe the present state of the industry, the challenges it faces, and its potential opportunities, and there's another study that is taking place in Cape Breton which will focus on the groundfish. Nova Scotia Business Inc. is contributing to that study, and I believe ACOA is a part of that as well, federally.
There have been some ongoing discussions with the federal government, and there will be more discussions taking place on maybe some sort of worker adjustment programs to try to get us through the situation we're in now with fish plant workers. Those discussions are going on. Back in 1990, there was the TAGS program, I think they called it, that was implemented by the federal government and the province.
Right now we're in a major downturn in the processing sector - issues in Glace Bay, issues in Canso, issues in southwestern Nova with our fish plants there. They're there, and somehow we have to find ways to make things better, and how we do that is going to take a joint effort with the federal government, the provincial government, and possibly even the municipal governments. Anyway, we have to come up with some strategies to make it work.
MR. THERIAULT: I'd like to jump to another sector here, and that is aquaculture. Speaking of jobs, more jobs - we know aquaculture is a way to find fish, that's for sure, if we grow them. There are some people against aquaculture, against growing fish. In this province we've certainly seen - similar to the buffalo many years ago out West, I'm certain that fresh wild fish would probably be a lot tastier than a grown fish, and probably buffalo meat was better than growing steers or cows. We certainly learned that we couldn't all live on buffalo meat, so we had to start growing cattle and steer for protein. This province is starting to grow some fish, because we've watched our groundfish go down badly, just like we saw with the buffalo herds.
A lot of people are looking at aquaculture for a way of supplying protein to the world, and food to ourselves. Personally, I don't see anything wrong with it. I love salmon, especially the maple smoked. That's my favourite.
MR.CHISHOLM: St. Mary's River Smokehouses are good at that.
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MR. THERIAULT: That's good stuff, and good for you. It's the healthiest food on this Earth and . . .
MR. CHISHOLM: I'll speak to my friends at St. Mary's River Smokehouses to see if I can get you some.
MR. THERIAULT: Okay. It's a good food; it's a really good food. Doctors are recommending it more and more every day. After a while, I don't see how we're going to supply the people, because people are turning away from processed food and are going to the more natural, especially fish.
Has aquaculture come ahead any - how far is it in its growth, and dollar-wise? Has it come ahead any the past three or four years, well, even since last year? Is there some growth there in the aquaculture business?
MR. CHISHOLM: We think there are some really good opportunities in aquaculture. That's the reason why we put $450,000 more, that's going to be expended this year in our budget, towards aquaculture. We would liked to have had more, and maybe next year we'll get more. We think that with this $450,000 there may be a possibility that we can access some federal funding, as well, to put into our aquaculture.
I'm told that in 2002 the aquaculture industry was worth about $50 million in the province. It dropped down to $24 million, and it has recovered now and is back up to $42 million, so there is room for improvement, and we have to find ways we can enhance aquaculture in the province and work with the industry to better develop it, and we will do that.
We will embark on that this year. We're in negotiation with the federal government on the aquaculture framework agreement which, hopefully, sometime soon, we'll have that in place, this Fall probably. Like we said, there are opportunities. We know there are opportunities in developing the aquaculture industry in the province. So we want to work with that industry, because it does create jobs, as well.
I know there is one mussel farm in my riding, well, there's more than one, but there's one that I'm most familiar with in the Country Harbour area, which is not very far from home. That started 10 years ago with maybe four or five employees, and there are probably 15 to 20 employees there right now, and down in Whitehead, up in Marie Joseph, and Ecum Secum on the Eastern Shore, and it is employing local people in those small coastal communities who otherwise wouldn't have the opportunity. So we see it as an industry that can grow, and we want to work with them to see that it does.
MR. THERIAULT: I don't know if you know this, but how many jobs does it create right now in the province?
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MR. CHISHOLM: We have the number. . .
MR. THERIAULT: A few thousand, or something?
MR. CHISHOLM: Yes, it would be in the thousands. We have that number, we'll get that number to you. We don't have it here right at hand. We indicated at our meeting this morning that we want to have a presentation to your caucus and the NDP caucus as to the aquaculture industry in the province, what it does, and our Aquaculture Environmental Monitoring Program. So staff will make sure that information is available to you when we do those presentations. I think we might have found it. (Interruption)
Okay, in 2005, the aquaculture production totalled $45 million, almost double the previous year's performance. The sector employs 1,000 full-time and seasonal workers. Nova Scotia is a Canadian leader in developing new species such as halibut, cod and abalone. We were committed to growing that sector in 2006-07 and, this year, as we've said, we've put $450,000 towards the aquaculture industry, or programs. Also, we are developing a new strategy and a new federal-provincial agreement that will hopefully move the sector forward.
[1:30 p.m.]
MR. THERIAULT: I would like to touch on something else here. It's really maybe not anything to do with the Department of Fisheries and Aquaculture but it certainly has to do with fisheries, it's workers' compensation. Like I said earlier, I lobster fished all my life. I fished alone, and we fished two-handed, two people aboard the boat. We did that for a lot of years, and as the ground fishery went down, like I said earlier, we started taking more people aboard the boat. I know I did personally, I took an extra two people aboard. I wanted one more but I took two just to give him a job and paid him fairly well, as well as we could, but once we did that, once we went from the two people to the three people and four people, we got into workers' compensation, where it is mandatory when you have over three people, you have to pay into workers' compensation. To the small inshore fishery, that is a big bill. There are some boats paying as high as $8,000 or $9,000 a year to have that extra man or two aboard the boat. This year I know for a fact there are people being fired on board those boats because they cannot pay this bill anymore.
We figured it up - for the time you were on the water, workers' compensation costs you $20 an hour, $20 an hour for insurance while those people were on that boat. Once they stepped off that boat, that insurance wasn't any good at all. It was for just the time, the hours they were on that boat that they figured out it was pretty near to $20 an hour for insurance. That is pretty stiff insurance, I call it.
You can buy private insurance, and I have written letters to the Workers' Compensation Board about this, for fishermen, for fishing companies. It is high, and it is going higher, I think it is around $7 per $100 right now or whatever. I know this year it is
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going to cause some job losses in the fishing industry in western and southwestern Nova Scotia. I know that for a fact. It is happening right now, there are people who will not take a third man aboard, the lobstering is down a little bit, they are scared of it going further. They are saying you better start looking for a job now, before Fall. If we take you for a week or two and we see the lobstering is down again, we will fire you then, but we are saying to you now that you had better start looking for jobs right now because we are going back to the two people aboard the boats. With the gear they have now, you can go alone again and haul trawls out in 150 fathom water alone, you could do it with the equipment you have.
I am not saying anything against workers' compensation, I am saying that maybe there should be something different there for a fisherman other than having to pay $20 an hour for insurance versus when they can buy insurance from a private company for about $300 a year, covered 24 hours a day, seven days a week. It would not matter if they were in Bermuda on the beach, they are still covered; so $300 to $400 apiece versus $3,000 to $4,000 apiece for workers' compensation that covers you a few hours a day.
This has been quite a thorn in the side of inshore fishermen. I hear it every day. I have written letters steadily to the Workers' Compensation Board. They are fishing in the Bay of Fundy, especially, right beside New Brunswick boats. The New Brunswick boats can put up to 25 aboard their boat before they need workers' compensation in that province fishing the same species for the same market for the same price. That is quite a little issue with fishermen. Maybe it would be different if it was countrywide, I don't know, but we are seeing a problem that is going to create job loss in the lobster fishery this coming season. I know it is happening, I know that for a fact.
Is there something that the Department of Fisheries and Aquaculture could look into there, maybe consult with the Workers' Compensation Board on behalf of the fishermen to see if there is some kind of compromise that could be worked out for the inshore fishermen from 44'11" and under, would that be possible?
MR. CHISHOLM: Well, we can certainly talk to the WCB, the Department of Environment and Labour, talk to the minister about it. I certainly know your concerns are legitimate. There are other sectors, other industries that have relayed those same concerns but you know, having said that, workers' protection is very important - we will talk to the minister and relay the concerns you've raised here today with that issue of insurance.
I'm told, too, that we regularly bring in people from WCB to the ministers' conference to speak to fishermen and the industry as to any concerns they may have. We can do that as well, we'll bring them in again.
MR. THERIAULT: That may be a good idea to bring that up at the ministers' meeting. With a bill like that to the fishermen trying to help some of the young fellows out down there, to give them a little job through the winter, they're looking at that bill on top of
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it also, and I think that's - with what looks like the downturn in the fishery too, a little - it's kind of scaring people off. People are spending as little as they can.
My brother is in the business of building lobster traps and he has seen his business dropping off. People are holding back on their dollars more in that business - if they have to lay someone off because of a big workers' compensation bill, that's what they're going to do. So I think it's something that needs to be addressed. It could profit this whole province by maybe something different - New Brunswick has this, they have a different set-up from workers' compensation.
Well, anyway, Mr. Minister, I think I'm pretty much out of questions. I could probably . . .
MR. CHAIRMAN: The member's time has elapsed.
MR. THERIAULT: Has it elapsed?
MR. CHAIRMAN: Thank you, very much. I would ask the minister if he has a closing statement?
MR. CHISHOLM: I don't have much of a closing statement, Mr. Chairman, only to thank the members opposite, the members of the Official Opposition who asked questions, as well as the Liberal Party. I really appreciate the questions - it gives us all an opportunity to see what happens in the department and what direction we're taking, and working together.
I would also like to thank the staff I have here with me. They did a good job, as usual, and I thank them for their assistance.
MR. CHAIRMAN: Shall Resolution E22 stand?
Resolution E22 stands.
We'll now call the estimates of the Department of Finance.
Resolution E7 - Resolved, that a sum not exceeding $18,517,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Finance, pursuant to the Estimate and the business plans of the Nova Scotia Government Fund Limited and the Nova Scotia Power Finance Corporation be approved.
MR. CHAIRMAN: I would like to welcome the Minister of Finance, and I call on the minister to give his opening remarks.
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HON. MICHAEL BAKER: Mr. Chairman, first of all I'm pleased to be here today to speak to the estimates of the Department of Finance and, obviously, as well to other agencies and issues for which I am responsible. Today with me here I have, as far as the staff from the Department of Finance: Vicki Harnish, the deputy minister; Liz Coady, the assistant deputy minister; Byron Rafuse, the controller; Frank Dunn, an executive director; and Nancy McInnis-Leek, an executive director; and David Perry, Doug Murphy, Donna Boutilier, Steve MacDonald from the Gaming Corporation; Steve Snyder from the Halifax-Dartmouth Bridge Commission; Cathy Shaw, and Roy Spence.
The Department of Finance oversees the policy and administration of the government's finances. This leadership role is central in helping shape a better future for Nova Scotians. The work done by the Department of Finance helps us to continue to make strategic investments for tomorrow through sustainable fiscal planning, sound fiscal practices, a targeted debt management plan, and a solid economy, which have enabled us to be in a good financial position.
The Department of Finance has continually improved how we manage taxpayers' money, which has resulted in being able to produce five consecutive balanced budgets. The good work done by the department has also helped to bring us surpluses in the last few years, a fact that this government is very proud of - and that has been no easy feat, especially in light of the increasing costs of health and other social programs.
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Financial accountability is part and parcel of good fiscal management. The Finance Department continually makes improvements in processes and systems to better safeguard taxpayers' money and forecast and track government revenues and expenditures. Examples include improvement in control and risk management systems and enhanced financial reporting methods, and more is planned in this area.
Some of the other responsibilities of the department include borrowing money and managing the province's debt portfolio; preparing Nova Scotia's statistics and statistical reports; running the government payroll system; and government and operational accounting. Part of our job at the Department of Finance is to keep on top of all the factors that influence our economy and, ultimately, the quality of life for Nova Scotians. The Finance Department provides economic forecasts which will help us to understand happenings in our economy, as well as to understand the factors that can influence our economy in the future. The forecasts are one of the tools used to help us make the right choices and investments to benefit Nova Scotians.
Finance also sets tax policy. While this budget has introduced tax measures to benefit families and benefit businesses, we know we must continue to review our tax structure to ensure that it remains competitive and fair.
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Fiscal imbalance is a very important issue for Nova Scotia. The Department of Finance is responsible for communicating the province's position and strategy to ensure an equitable and adequate share of resources relative to federal-provincial funding arrangements. I am proud of the track record of the department - staff's wise management of the province's finances is helping to build a bright future, and I applaud their dedication to Nova Scotia and to Nova Scotians.
As you know, Mr. Chairman, I am also Minister of Aboriginal Affairs. Even though we have a short time, I would like to take a few minutes to talk about issues with respect to that responsibility. Aboriginal Affairs has been working with the Government of Canada and the Mi'kmaq of Nova Scotia to address outstanding issues of treaty rights and related matters. In that context, we have concluded initial discussions on the framework agreement, a road map for upcoming negotiations, and we anticipate a signing ceremony this Fall. We also are working on a process to consult with First Nations. Significant achievements are being made through the tripartite form, including collaborative efforts to address justice, health, economic, social, and cultural issues. This is a process that involves approximately 100 representatives from Mi'kmaq communities, the federal and provincial governments.
Last Fall our Office of Aboriginal Affairs undertook a film project to educate Nova Scotians about Mi'kmaq history and culture through the examination of a rich archeological find in the Mersey River. I am pleased to report that this film has met with widespread approval and will be used in our school system.
Mr. Chairman, I am also responsible for a number of other Acts. While these Acts are all important, my limited time today precludes me from addressing them in detail. However, I would be happy to respond to any questions regarding those Acts as well, and these Acts are: Part 1 of the Gaming Control Act - we continue to work hard in this area and the Gaming Strategy is proof of this; the next responsibility would be the Securities Act - securities is an area that is active on both the national and provincial fronts; the Insurance Act, where we continue to work towards improvements; the Elections Act; and not lastly, but nearly lastly, the Retail Business Uniform Closing Day Act, which I am sure you are well aware of and members will have heard of that responsibility; and the Utility and Review Board Act.
Mr. Chairman, I also would like to raise one issue which we heard about earlier today, and that is with respect to the Government of Canada's funding for education, part of last year's budget process federally. The federal government has set up a post-secondary education infrastructure trust designated to support investments to promote innovation and accessibility. Provisions in the FMA are there to make the legal arrangements for Nova Scotia to use that money from the federal trust fund - that is what amending the Provincial Finance Act will do.
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The money is for infrastructure and we have a moral obligation to use it for the purpose designated. Without the FMA measure we would not be able to spend the funds even in the way intended; however there is no way to amend the FMA to tie the trust fund money to tuition - of course we can appreciate that having funds to use, but having no way to spend them would be of no benefit to Nova Scotia. Infrastructure investments are certainly welcome and needed, too. We have been clear about our preference - to use the funds for tuition relief. That is why it was included in Bill No. 207, which was passed and later proclaimed last year. We would be glad to spend the funds in the way noted in the bill, however the federal government has targeted the funding - it must be used for specific purposes. These funds will help post-secondary institutions cut their infrastructure costs and we are hopeful that we will be able to have an effect on tuition through that method.
We still need to know more about the sorts of investments that are allowed and we intend to ask Ottawa to clarify the matters. For the benefit of members of the committee, I am pleased to table a copy of the trust agreement and the operating principles, together which constitute the binding provisions of the money that will be provided to Nova Scotia in October. We are providing them in sets, Mr. Chairman, I thought that was important because those principles I thought were very, very important and that members should have those to refer to.
I should also mention that from the Office of Aboriginal Affairs, the deputy minister will be over shortly - Judith Sullivan-Corney and other staff. And with that, I would be glad to entertain questions from members of the committee.
MR. CHAIRMAN: Thank you, Mr. Minister, and we'll now turn it over to the NDP caucus.
The honourable member for Hants East.
MR. JOHN MACDONELL: Thank you, Mr. Chairman, and thank you, Mr. Minister. My colleague, the member for Cole Harbour-Eastern Passage, I think it was his intention to be here, so I was asked to "rag the puck" and since I'm not a hockey player, I had to get a definition.
MR. BAKER: That's the first time I've ever heard the Opposition ask the minister to speak longer. I'm capable of doing that, by the way, as the honourable member would know.
MR. MACDONELL: Well, we're New Democrats and we live in hope that you'll actually say something that we'll agree with, so we're sure if we wait long enough that it will happen.
MR. BAKER: I'm sure anything is possible.
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MR. MACDONELL: I guess your last comments may be the place for me to start. When you talk about the federal agreement, my understanding is that this was part of an agreement that the New Democrats, federally, had gotten with the federal Liberals, for money to go to reduce tuition. So, you have kind of alluded, I guess, to the idea that by spending money on infrastructure, that that should help reduce tuition. I think that's a pretty long bow to draw - so, can you explain?
MR. BAKER: Well, what I'm indicating to the committee would be that, as we indicated before, our first preference would be that the money be directed to tuition. The trust agreement, which I filed, and the operating principles, together which constitute the terms on which Nova Scotia will receive the money - we haven't received the money yet, but we will receive the money - those two documents together, as I understand it, provide in simple terms that the money needs to go toward post-secondary capital kinds of expenditures. In fact I think the most important is in the operating principles section. It says: The Post-Secondary Education Infrastructure Trust is intended to support such short-term actions promoting innovation and accessibility, particularly investments that will enhance universities' and colleges' infrastructure and equipment used for academic purposes, therefore teaching, technology and training, as well as related institutional services.
It goes on to indicate, for example, the kind of things it can be used for, and possible areas of investment may include - and again you can see the nature of these - modernizing classrooms, laboratories, and research facilities; updating training equipment; developing and expanding interactive library technologies and facilities; enhancing distance-learning technologies - and here's the kicker, as they say - the Post-Secondary Educational Infrastructure Trust is not intended to support predominantly ancillary infrastructure or activities, or other ongoing expenditures, examples of which would include upgrades to parking lots and garages, maintenance of recreation, health or childcare facilities, or facilities that primarily accommodate administrative functions.
And this is what I call the ultimate kicker - the funding is also not intended to support rented or leased facilities or ongoing operation costs. And ongoing operation costs, as we all know, are really the great driver of tuition. This is a document prepared by the Government of Canada, as you can appreciate.
MR. MACDONELL: I guess I'm curious, in that agreement . . .
MR. BAKER: It's not an agreement. I want to make this quite clear. Nova Scotia was not asked to agree, nor did Nova Scotia agree. The federal government, with their own money, has created a trust agreement and operating principles with which we simply will be told, or are being told, to expend the money in terms of those conditions.
MR. MACDONELL: Thank you, I think you just answered three questions.
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MR. BAKER: There was no agreement, we were not asked to agree, nor did we agree.
MR. MACDONELL: Okay, great. Is there anything in that non-agreement that would tell you percentages that you would have to spend in any one of those particular areas you outlined? Could you spend 10 per cent on one and . . .
MR. BAKER: For example, as long as it's in a permitted area of infrastructure, we can, I think, target that money in particular ways provided it's not contrary to - and they indicated, as one example that we're not permitted to do, is university health facilities. That may very well be a very important need of universities. It may very well be an important need for students, but the agreement specifically alludes to that as being something we can't help. For example, they may need parking. We can also not expend it on parking. I just used those as examples to the member.
MR. MACDONELL: I was just wondering about the term accessibility. Did they give you a definition?
MR. BAKER: Promote access to post-secondary education for qualified Canadians. That is the principle. There's a series of principles: capacity and quality, enhance colleges' and universities' capacity and quality; mobility and portability, support the mobility and portability of learning credits and credentials; responsiveness, provide learners with the skills and knowledge needed to participate in the broader Canadian economy; and research and scholarship, enhance opportunities and supports for future and current researchers and innovators.
As I said before, there may be a problem, but the problem was in the original bill that was passed by Parliament, which provided significant discretion to the Government of Canada to further define the objectives of that money.
MR. MACDONELL: Have you had opportunity, or Finance Ministers across the country, have they raised any alarm bells on this, said they have a problem with it?
MR. BAKER: The federal government has not participated in any dialogue with Education or Finance Departments across the country, as far as we know. This is not a subject of which there's a dialogue. This is federal money which the federal government has directed to a particular purpose.
MR. MACDONELL: Well, that's the impression I'm getting.
MR. BAKER: That's the impression I was intending to leave.
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MR. MACDONELL: So, I guess my question would be, either you like it or you don't like it, and if you don't like it, have you pursued them to say that much?
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MR. BAKER: I think it's fair to say that one of the difficulties the Government of Canada, having done this, would have, is that they have created these trusts. They cannot alter the terms of their own trust, because one of the reasons that prevents this money from simply being flowed back on their deficit - because they have, somewhat, provisions to our own which requires the money, any surplus, to be expended on the deficit. This is an attempt by the Government of Canada to direct money that would otherwise go to the deficit to redirect that funding to other purposes.
Having created the trust, one of the conditions is that they can't have any more control over the money. So altering the terms of the trust would be, as I understand it, not possible, because otherwise, by virtue of doing that, they would take the money back into last year's and it would simply go on the debt. Having created the trust agreements, they have, in effect, limited their ability to alter those conditions, as I'm advised, at least.
MR. MACDONELL: I want to go to Aboriginal Affairs. You said a couple of things, I was trying to take notes, a framework agreement or a framework for agreement, I don't know if I . . .
MR. BAKER: A framework agreement.
MR. MACDONELL: What is it?
MR. BAKER: The framework agreement, in broad terms, is an agreement that sets out the parameters for future discussions and the kinds of ways and methods and the kinds of things that will be talked about, it's a road map in simple terms.
MR. MACDONELL: So are you developing that, or is it already created?
MR. BAKER: It is effectively created. The Province of Nova Scotia and the Government of Canada have both agreed to those principles in the framework agreement and, in point of fact, we are now awaiting ratification, for lack of a better word, by the Mi'kmaq. The Mi'kmaq governments are obviously involved in consultation with their own communities, and we're awaiting that.
MR. MACDONELL: The Tripartite Forum, what's that?
MR. BAKER: The Tripartite Forum is another consulted infrastructure that was established by an agreement between the Mi'kmaq, the Government of Nova Scotia and the
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Government of Canada. What it does is it allows certain issues, many social issues in particular, to be dealt with by the three different levels of government in a way that ensures that those issues get dealt with in an expeditious manner. Particularly after there were some modifications made by agreement with all the Parties it has been much more effective at actually moving forward with concrete decisions. There are seven subcommittees, for example, dealing with primarily social issues.
MR. MACDONELL: What's the speaking body or the name of it for the Mi'kmaq community? It's not the Confederation of Mainland Indians.
MR. BAKER: There are, in fact, two organizations that speak, but, really, there's almost a third developed, as well. They are technically the Confederation of Mainland Mi'kmaq, CMM, as it's referred to; the Union of Nova Scotia Indians, UNSI; and then the third one is the Nova Scotia chiefs organization. The Nova Scotia Chiefs organization, as its name implies, is composed of all the chiefs of all of the communities in Nova Scotia, and the two other organizations would be completely represented in that group, in that latter group. So it is a way to bridge the fact that they have two internal operating organizations, and different communities, for historical reasons, belong to one of those other two organizations. Primarily, the UNSI is composed of all of the Cape Breton bands and a number of the ones on the mainland.
MR. MACDONELL: I don't think it's all clear, I have the community of Indian Brook in my . . .
MR. BAKER: That would be a member of UNSI. Millbrook, not that far away from your community, would be a part of CMM.
MR. MACDONELL: Okay.
MR. BAKER: Indian Brook, just to use that example for the member, for historical reasons, is the member of the Union of Nova Scotia Indians, a very long established member of that community, and just down the road in Millbrook, they are a member of the CMM.
MR. MACDONELL: Both of those chiefs, Lawrence Paul and Alex MacDonald, would be part of . . .
MR. BAKER: Nova Scotia Chiefs organization, yes.
MR. MACDONELL: I think I know, in kind of broad strokes, where the federal government's responsibility stops, and I'm not entirely clear what the role - I always feel a bit that I can't easily represent the community because of the provincial and federal jurisdictions, so can you clearly define where we stop and they start?
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MR. BAKER: Well, there's been lots of constitutional cases based on that, but I think it's fair to say that the role of provincial governments proper has been expanding across the country with respect to First Nations. One of the historical contacts we know with the Indian Act in particular was very much an area where First Nations communities and people completely relied on services and programs that were of a federal nature. A number of things have happened, not just in Nova Scotia but in other parts of the country, which have changed that. I will give you some illustrations and probably one of them of course is education. Nova Scotia has an agreement with the Mi'kmaq which provides for what amounts to a Mi'kmaq School Board, education being a provincial responsibility, but we in fact have agreements that allow that educational system to meld with the provincial education system and make it work - that is an example.
It gets even more confusing because of course once First Nations people leave reserve, although the federal government still retains many responsibilities, we have an even broader range of responsibilities for those people off-reserve. But whether they are on- reserve or off, justice is another example. The Province of Nova Scotia, for example, provides I think it is 48 per cent of the funding for Aboriginal policing, whereas that is unique in fact to First Nations communities where otherwise they are paid for either municipally or federally, so that it is 52 per cent federal money for First Nations policing and 48 per cent provincial.
So, on the issue of policing, although delivered by the RCMP, not by constitutional necessity but in fact in Nova Scotia, the Province of Nova Scotia has a role to play in justice, as an example, and community economic development. Most of the discretionary money being spent by many of the communities in Nova Scotia is actually provincial money that is provided through gaming agreements and the like. We are providing, you know there is the gaming agreement, and of course the Sydney Casino money, both of which are significant sources of discretionary funding for economic development and community development that are flowing through to First Nations in Nova Scotia. I think that has been one of the most positive changes in the relationship between the provincial governments and the First Nations government.
I also should say that in the area of health care, part of the Kelowna agreements and leading up to the Kelowna agreements, we in Nova Scotia participated at length in fact in a very, very successful collaborative approach, so we worked with the provincial Department of Health, the Office of Aboriginal Affairs, other stakeholders, and the Mi'kmaq, in identifying what the Mi'kmaq's and Nova Scotia's priorities were, and they were the same. When we came to that meeting and we were talking to officials from the Government of Canada we had a united approach on what First Nations communities in Nova Scotia needed for health care, so that we could target those dollars in a way that everybody agreed was in the interest of Nova Scotia and of the First Nations people in Nova Scotia.
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MR. MACDONELL: My last point, I guess it will be - on- reserve, off-reserve, the role or responsibility, because you mentioned about when students leave reserve, but I am thinking in terms of community services - our provincial department has no role in those First Nations communities unless people leave the reserve, they can apply for benefits?
MR. BAKER: That is right, the band council would receive an appropriation from the Government of Canada which is designed to cover community services costs on- reserve; however, of course, the Government of Nova Scotia would provide assistance to people who live in other parts of Nova Scotia.
MR. MACDONELL: So a Native on a reserve would get funding through the band council?
MR. BAKER: The band council would provide that funding - so there is a demarcation based on where their source of funding is, yes.
MR. MACDONELL: I want to thank the minister and his staff. I will relinquish the rest of my time to my colleague, the member for Cole Harbour-Eastern Passage.
MR. CHAIRMAN: The honourable member for Cole Harbour-Eastern Passage.
MR. KEVIN DEVEAUX: I want to go back to the tuition and the agreement, Bill No. 207 that was passed and the trust agreement.
I understand what the federal government is attempting to do, but I am looking at it here and there are a couple of issues. Obviously one is access, and the other is research and scholarships. So what prevents, for example, the Nova Scotia Government from taking the $28 million and putting it into reducing tuition for science and engineering students? That is access, that's research, that's scholarship money. You could give it as a grant if you wish. What prevents you from taking that money and putting it into those circumstances? I guess I'm asking why can't we be a little creative about this? Why can't we think outside the box?
If the federal government has given us parameters that include, as I see on the front page, research and scholarship, enhanced opportunities and supports for future and current researchers and innovators, to me that sounds like that money could go specifically to reducing, either through grant or direct, tuition for students who we can encourage to go into the sciences, the health sciences, possibly even the social sciences, if we want to be broad enough in it, and engineering?
MR. BAKER: The short answer is, if there is any avenue within which we can provide the money more consistently, consistent with our own legislation, the Provincial Finance Act, we will do so. Quite bluntly, this is a condition that we, up until recently, hadn't anticipated would be an issue, and once the trust agreement's final wording came out, and
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the operating principles as well, because the two things have to be right together, then the problem became obvious to us. That led it, of course, to be put into the Financial Measures Act that was tabled just after the budget, May 11th.
So the short version of that is, we intend to review this to obtain the maximum amount of flexibility within which we can expend the money in accordance with the Provincial Finance Act.
MR. DEVEAUX: So they have a trust fund that they have set up in order to avoid having to pay down the debt with the money and setting the money aside so it's basically out of reach.
MR. BAKER: It's out of reach.
MR. DEVEAUX: What is it they're asking you to sign, a memorandum of understanding or - is there anything they're asking you to agree to?
MR. BAKER: They're not asking us to sign anything.
MR. DEVEAUX: Other than the fact that the money has to be spent in accordance with the trust fund.
MR. BAKER: The trust agreement and the operating principles of the trust, yes.
MR. DEVEAUX: What type of review - and I know this is a new government, but traditionally - does the federal government do of how the money is spent once the money is given to the province?
MR. BAKER: My understanding is the federal Auditor General has reviewed the expenditure of money in the past to determine whether money given to anyone is expended for the purpose for which it's intended. We all know of a recent situation where issues arose about whether or not money was being expended for legitimate purposes, and this would be within the argument of - I assume the federal Auditor General will track this money, it's a fairly significant amount of money, to make sure that provincial governments are expending it within the terms they receive it.
MR. DEVEAUX: I'll give you an example. Probably about four or five years ago this government was audited. I believe it was the first time ever that a government was audited by the federal government. I'm not sure who did the auditing, whether it was the Canadian Heritage Department, but there was money allotted for French language services, and it wasn't spent where it was supposed to be spent. I don't know if it was the Department of Canadian Heritage, federally, or whether it was the Auditor General who did an audit and
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made some recommendations with regard to us not spending the money where we were supposed to spend it. Can you tell me what happened with that?
MR. BAKER: I'm sorry, I don't know what you're referring to.
MR. DEVEAUX: It was about four or five years ago, maybe six. I remember bringing it up in the House, that there was money, and part of the memorandum of understanding between, I don't know if it was Acadian Affairs or Education, it was money that was allotted for French language education in the province, it was not spent where it was supposed to be spent. There was an audit done, I believe by the Department of Canadian Heritage, at the time. I was wondering if your department was aware of the audit, or knew anything about what happened to the results?
MR. BAKER: Staff doesn't seem to be aware of it. We could certainly check into it and provide you with further information. I just can't provide you with any information now.
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MR. DEVEAUX: It leads to my point, which is, as much as we'd like to think that these are cast-in-stone rules, I think we all know that as one sovereign government to another sovereign government, that the federal government rarely, rarely comes in and starts doing significant auditing of where the money is actually spent. Would you agree with that?
MR. BAKER: Well, I'm not so sure I'll accept the principle that they don't audit to see what the provinces use the money for, because I think they do. I would accept that we're certainly a sovereign government. The question here, though, is if we receive the money, accept the money with specific conditions attached to the money, whether we like those conditions or not, to expend those monies contrary to the provisions of the agreement, I am not talking about if the provisions of the agreement provide for that, I'm all for it, as I've indicated before, but contrary to the provisions themselves, would be a breach of trust, not in the legal terms but in the moral sense of a breach of trust. I personally wouldn't be very comfortable with that kind of breach of trust, because I think it's fundamentally wrong to do so.
Having said that, if within the legal terms of the provisions, reading them fairly, and we can find a way to expend the money in accordance with the Provincial Finance Act, I've indicated quite clearly our preference to do so.
MR. DEVEAUX: As I, in a cursory manner, have just reviewed, but I will look into it in more detail. If this trust says that money can go to scholarships for purposes of research and innovation, would you agree that then is a possibility that some of this money, if not all of it, could go to provide support for students to reduce the amount of money they have to spend on tuition for purposes of sciences or engineering?
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MR. BAKER: I'm not going to give a yes or no to that other than to say that we're certainly prepared to look at all of those kinds of options to determine whether or not there are ways that we can legitimately provide the assistance that is consistent with the spirit of the Provincial Finance Act.
MR. DEVEAUX: It's a significant amount of money, $28 million. I was sort of working this out. If we took every science and engineering student, that would probably be approximately $2,000 or $3,000 a year that could go to them for purposes of reducing, either as a grant or some other form.
If you think outside the box you can start to think about medical students or nursing students who then would have an opportunity to receive certain amounts. Even with our agreement with regard to tuition, if we provided it as grants to Nova Scotian students, it would definitely provide a lot of opportunity for students who may not otherwise afford it to be able to receive that education in sciences.
MR. BAKER: Exactly. As I indicated earlier, we will be examining the trust to determine - because my understanding is, certainly the intention of the bill, the Financial Measures Act, is not to eliminate our duty to expend the money in accordance with the Provincial Finance Act, only if we have no other choice. Any suggestions will be reviewed seriously. If people make suggestions about how it might be consistent with the trust and the operating principles, we will review those suggestions to see if they conform with the two documents.
MR. DEVEAUX: Well, you can take my words as a suggestion, then.
MR. BAKER: Yes, frankly, I did already. If there are, upon review, by any member of the House, other suggestions, we will treat those very seriously, because, quite frankly, up until we saw the terms of the trust agreements, we had anticipated there would be a great deal more flexibility than there turned out to be.
MR. DEVEAUX: Let's talk about the Elections Act and campaign finance reform - to turn on a dime, and talk about another issue, but that's under your purview as well.
MR. BAKER: Yes, absolutely, it is.
MR. DEVEAUX: In the Budget Speech you mentioned campaign finance reform and electoral reform, I believe.
MR. BAKER: I think it was municipal electoral reform.
MR. DEVEAUX: Municipal electoral reform? What are you thinking about in terms of that?
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MR. BAKER: Well, talk about the two separately. Provincial election financing, there are many people who have concerns about the current way in which we in Nova Scotia finance political Parties. There are other models in Canada, both federal and provincial models in Canada are financing political Parties and the election process. We believe that the Election Commission should have a very serious, and I might add, relatively expeditious review of those options to determine whether or not there is a better model for financing elections.
We don't have a particular model. It would be unfair for the government to drive its own model because some might perceive that as being not as fair a level playing field, but we certainly do believe in the principles of modification to the present system, because there are concerns raised about the source of funds. I'm speaking particularly around large donations by an individual or corporation or unions, any organization, as being an issue. There are people who believe that creates a problem.
We also understand that in order to run democracy in Nova Scotia, as any other place in the world, in order to have a healthy democracy, political Parties, as the source of public ideas that people can vote on, need to be financed in a way that allows them not only to develop those ideas, but to communicate those ideas during an election campaign, because an idea that you can't communicate is, frankly, very little idea at all. So that is what we're thinking of, and . . .
MR. DEVEAUX: The Election Commission, I think, is made up of equal numbers of the three Parties?
MR. BAKER: There's a chairman selected by the government and equal members from Parties, so the composition on the committee today would be three government members, two New Democrats and two Liberals.
MR. DEVEAUX: It's a tangential point, but one that I guess came into my mind as you were speaking - the Green Party, as a recognized Party under the Elections Act, do they now have a right to have an appointed person?
MR. BAKER: I'd have to review that. They certainly haven't been, but they may be entitled . . .
MR. DEVEAUX: I'm just wondering because they are, under the Elections Act, a recognized Party. They aren't within the House obviously, but in the Elections Act . . .
MR. BAKER: There may be that there's certain minimum criteria they have to meet.
MR. DEVEAUX: So at this point the government is not ruling out the possibility of harmonizing our rules with the federal rules?
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MR. BAKER: No, or mirroring other provincial rules in this country, or a combination of the two.
MR. DEVEAUX: With regard to that, you were talking about the Election Commission, you said "relatively expeditiously", so you must have in your head a timeline - are you thinking about this time next year or what are you looking at as a possible time?
MR. BAKER: Certainly I think it would be inappropriate for me to make that comment without having a chance to speak to the Chief Electoral Officer about this, and the Election Commission, but suffice it to say that I would think it would be in the interest of Nova Scotians in a perfect world to have this in place before the next provincial election.
MR. DEVEAUX: Okay, which I say could be next year, so I mean we're all hopeful it . . .
MR. BAKER: Yes, you figure it out for yourself.
MR. DEVEAUX: Right. So within this mandate you would like to see some proposals . . .
MR. BAKER: Absolutely. I think it has been long overdue, I think that political Parties, federally and provincially, recognize that and, quite candidly, we have rules in Nova Scotia - I'm talking about how you finance candidates at the local level, of course we're all aware of those rules, but there is at least time to re-look at those rules to determine whether or not they are fair in light of today's situation, whether the funding levels are reasonable, all of those kinds of things.
MR. DEVEAUX: I actually think it's interesting, because obviously all of us as candidates deal with this - I've dealt with it on other levels as well - but it's interesting, because watching the federal system somewhat as afar, and I'm involved in the federal elections because of various reasons, but the system seems to be fairly reasonable and one in which seems to have addressed a lot of the issues that people have had. Now it also involves public funding which people are aware of and maybe it isn't shouted from the rooftops, but I forget what it is, $1.75 per vote, I can't remember, something like but - so would you be presenting to the Election Commission some alternatives, or would you say, look at the systems across Canada and recommend to us how you would like to see the system perform?
MR. BAKER: Certainly we can assist them, but I think it would be most appropriate for that group to, in an ideal world - because they have access to all three political Parties at least - for them to develop the ideas, at least to a large measure on their own. I'm not ruling out assisting them in some way, but I'm thinking that again, from the appearance of transparency, it might be problematic to do that. We have to be financially responsible in
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Nova Scotia, too. While democracy is arguably the most important cornerstone of our society in some ways, we have to be able to afford that in light of health care, education, community services, economic development, all of those other needs - you can always devise a system that is so expensive that it is maybe the ideal, but it's not something that Nova Scotians can afford - so we have to find a balance.
MR. DEVEAUX: My understanding is that the electoral commission works on a consensus basis where all the members have to agree before something can be brought forward. Is that something you would still adhere to depending on what comes out of this, or is it your desire to see this . . .
MR. BAKER: Well, I'll put it this way, consensus is ideal - I'm not sure if consensus is legally necessary.
MR. DEVEAUX: There is an understanding amongst the three Parties - you would agree that, as a custom, we accept consensus.
MR. BAKER: If, however, the process became gridlocked, then I'm not ruling out that, hopefully, everybody would be responsible.
MR. DEVEAUX: Sure, yes. You wouldn't have any complaints from me on it. I think it's long overdue. I'm speaking on my own behalf here, not on behalf of my caucus, but it is a long overdue process that really does require - it's funny, because talking to people, as I do from time to time, and from other countries, when you tell them that you can get elected here for as little an expenditure as $10,000 to $20,000, there's a tendency for them to be in shock about that, particularly the Americans, of course, because you can't get elected dogcatcher without spending $100,000; even in other parts of Europe, to some extent.
I guess one of things I think is good about this system, is that you don't have to be wealthy in order to run, or you don't have to, as I've heard from many people in the United States - you have congressmen and congresswomen who spend 70 per cent of every day fundraising. That's all they do is fundraise, and they don't have time to actually deal with the other work.
I'll say for the record, whatever we can do to ensure that the system remains viable but at the same time allows for individuals to seek office not based on how much they make but on their desire to make a difference, I think, is an important part of the process that I'd like to see maintained.
MR. BAKER: Well, just to agree with you, I've spoken to colleagues in the United States and have spoken to people who actually run for what - by the standards of our state level, if you want to use American terms - offices are, there are people who run for very local offices with limited responsibilities who spend tremendous amounts of money running for
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public office, at great frequency, I might add, in some States, and quite bluntly, I think our system has much to commend itself.
I think that as an ideal, democracy in Nova Scotia or anywhere else in Canada should permit people regardless of their economic circumstances or the stage of life they're in, whether they're beginning career, middle career or at the end of their career, not only the ability to run for public office but to be able to afford to hold public office, as well.
I think those are important principles of democracy in Nova Scotia that are well worth keeping. I think, frankly, one of the advantages of our 52-seat Assembly, not to wax too philosophical, but for a 52-seat Assembly, it's because your districts are not gigantic. If you halved the number, which I think would be a huge mistake, but if you halved the number of seats in the House, what would happen would be, of course, you would effectively double the size of the districts.
Well, the cost of doubling the size of the districts would mean that individual people, in order to run for public office, would need much larger amounts of money to be able to finance those election campaigns, because no longer is door-knocking and personal communications with electors as important as it is in our provincial system. It would become a system where, fundamentally, everything is mass communication, must be done through TV or the mass media and that, frankly, is a very expensive means of communicating with people.
[2:30 p.m.]
MR. DEVEAUX: I know we just went through an election, so one of the things I appreciate about our system, it's funny, because you hear it sometimes in the negative, people will actually say - because part of the way we work is that people call. I knock on doors, but someone calls on your behalf to follow up to see how they are voting, and they will say to you - often I get a message when I return at the end of the day, there will be three or four of them saying - why hasn't he called me himself, or why hasn't he been at my door? Of course, with 7,000 doors in 28 days, it's not always possible.
As I say, it comes out in the negative, basically they're telling my workers, go pound sand - if he wants my vote, he can come to my door himself, kind of attitude. The dilemma is that the ridings are getting larger, at least in the metro area. If you're in the ridings of Richmond or Argyle or Clare or Preston, you probably can accomplish the task of going to every door, as the chairman will probably know - not saying he did or did not go, that's between him and his campaign manager. But for the purposes of a riding like mine - and mine actually is technically fairly small. I believe the member for Halifax Clayton Park would probably have one of the larger ridings. I can only imagine, she must be 10,000 or 11,000 units in her riding. So it becomes a real challenge.
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It's a good thing they still expect us to show up. I think that's a good thing. It's the retail politics, as people say. It's that handshake, looking the person in the eye, listening to their problems. I think that's a good thing about Nova Scotia politics, how we wrestle with that at a time in which multimedia and mass media have begun to have so much - you know as well as I do, they have a lot more influence over how people run their campaigns. As much as we would like to think that coming to a door and talking to them is going to influence their vote, more than anything it's the advertising they hear that is part of it. So I guess one of the questions I have is do you see part of that as well - limitations on advertising, or limitations on some other things in the Elections Act, or changing our approach as part of the reform that you're talking about as well?
MR. BAKER: Well, I guess a number of comments, but first of all I think you're right, I think that the politics in Nova Scotia is still very much a retail sport, although I'm certainly not going to argue the effect of large media, whether it be print, radio or television - and I think we shouldn't minimize the Internet, because I spoke to people during the election campaign myself, although my campaigning was a bit foreshortened, but having said that, I spoke to people who said that they had looked at all the Party Web sites on the Internet and had formed their conclusions based on that.
There are a number of concepts that have been tried, maybe successfully, maybe unsuccessfully, such as blackout periods where certain kinds of media advertising are blacked out for a particular period of the campaign . . .
MR. DEVEAUX: I think the federal government uses that.
MR. BAKER: The federal government does that, yes, for television, for example, or radio. Those are options that you can look at, but I think there's something that the Election Commission has to look at - I'm always very careful to realize that restrictions on advertising need to be very thoughtfully pursued because otherwise, for example, you can get into a situation where the Parties can't advertise, but third parties can, and I think that would be an ironic twist if the people running for public office couldn't advertise, but others would. So that's why I think that they have to be very thoughtfully pursued.
I think that as long as our seats remain relatively constant in size, and I know the number of households, and I actually have about the same number of households in my riding as you would have in your riding, just under 7,000, and there are obviously seats in this province with far fewer numbers of households - I can't get to every door, but I certainly do my best to try to get to as many as possible. It's always interesting when you've been there, people will tell you if anyone else has been there or, quite frankly, if you're the only one who has been there, and I think it's good that at least they're making some judgment on candidates based upon other factors other than mass mail-outs.
MR. DEVEAUX: Their ability to knock on a door evidently, but . . .
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MR. BAKER: Well, ability to knock on a door and at least present themselves reasonably well at that door.
MR. DEVEAUX: Yes, exactly. Not disheveled, or reasonably not disheveled.
Fixed election dates, is that something that your Party is considering at all?
MR. BAKER: We would like one four years from now; we don't want any exceptions to that.
MR. DEVEAUX: Yes.
MR. BAKER: We're looking for unanimous support for that, and we can probably get that bill introduced shortly. I think that the irony of fixed election dates has been proven by the fact that minority government exists . . .
MR. DEVEAUX: Right.
MR. BAKER: . . . and, in point of fact, what may have been a parliamentary fiction at one point, but has become a real reality in Nova Scotia, and federally, is that there are factors that lead to election dates, meaning the composition of the House, that transcend fixed election dates.
The other problem is I'm not sure Nova Scotians want a year-long election campaign, and the experience in both, not only in Canada but the United States, has been that fixed election dates do not create better government. What they do is create longer election campaigns which I could argue would create worse government because during the election period it's unreasonable to expect political Parties to co-operate, because at that point they're selling their ideas, as they should, to Nova Scotians or Canadians.
I'm a person who remains to be convinced about the efficacy of fixed election dates. It sounds like a great idea, but how do you stop people from effectively campaigning when they know the election date up to a year before the election? I don't know, and anybody who watches the American political system will know that in many places, particularly incumbents start campaigning a year before an election, which means that in the House of Representatives, or in a State Legislature where they have two- year terms, you have members who serve one year, after which they're in election campaign running mode with campaign teams and campaign offices, and the duty of governing becomes secondary during that period of time.
MR. DEVEAUX: A different system in that way, because if you sit as an Assembly member and you aren't part of the Cabinet, so I mean it's slightly different, but I do agree that the system itself - I worry. My biggest worry as well is that you end up having extended
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campaigns, which then means you have more costs, which then means it's prohibitive to certain people so, ergo, fixed election dates will mean more costly campaigns, longer campaigns, and therefore certain people are excluded from being able to run.
A couple of other questions around this because they are ancillary points - one I think is an issue that really hasn't been given full due and discussion, which is how the federal government will be dealing with the Senate because, in theory, they've been talking about the fact that they would recognize elected - because we now have two Senate seats that are open, I believe Mr. Buchanan's and Mr. Forrestall's - if Nova Scotia was to consider electing them, I believe the Prime Minister has said that he would accept those recommendations, did he not?
MR. BAKER: I'm not sure. I know that to my knowledge he hasn't appointed anybody who has been "elected".
MR. DEVEAUX: Well, other than Mr. Fortier and . . .
MR. BAKER: He hasn't appointed anybody who has been elected.
MR. DEVEAUX: Oh, hasn't appointed anyone who has been elected - right, I see what you mean. But I don't think he has appointed anyone either, since Mr. Fortier was appointed. Have you gotten any indication from the federal government as to where they stand on this issue?
MR. BAKER: No, not to my knowledge; that wouldn't be directly my knowledge. But one of the big problems that poses for us is because we have 10 Senate seats, which is a good thing for Nova Scotia, the difficulty we have, and it's a significant difficulty, is conducting general elections for the Province of Nova Scotia at random, with the exception of the Province of Quebec, which does have senatorial districts, we in fact have every one of our senators effectively appointed at large.
MR. DEVEAUX: There used to be boundaries.
MR. BAKER: Well, there used to be areas that would be represented by certain senators, but they never had districts as such, and the past habit of some federal governments of appointing people who don't live in Nova Scotia even to the Senate meant that it was - and I can think of two examples of that . . .
MR. DEVEAUX: I only know of one offhand, but . . .
MR. BAKER: . . . illustration of that, so not only did they not reside in the province, they didn't even reside in . . .
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MR. DEVEAUX: I believe there was one appointed who lives in Dartmouth but represents what she calls "Sydney", I think. So there is some boundary concept. I agree, it is a bit wonky.
MR. BAKER: But anyway, to your point, just to finish this. It makes it very difficult to conduct an election at a random time, completely not even depending of course on terms, but based upon, for example, when someone may pass away, and the cost of running an election in Nova Scotia is very high. You're talking about a provincial-wide election . . .
MR. DEVEAUX: Yes, you are.
MR. BAKER: . . . and it becomes very difficult to see how such an election system could work very well - and that is saying I, personally speaking, not for the government but for myself, I have no problem with the idea, the concept of elected Senators. I'm just saying I see many problems in the actual process of election.
MR. DEVEAUX: The Prime Minister has mused from time to time since he was elected in January that he would like to see constitutional reform, which I don't believe is your jurisdiction at this point, right?
MR. BAKER: Pardon?
MR. DEVEAUX: Constitutional reform would be Intergovernmental Affairs, you're not . . .
MR. BAKER: That's right, it is Intergovernmental Affairs.
MR. DEVEAUX: You're not into Intergovernmental Affairs?
MR. BAKER: No, I'm not.
MR. DEVEAUX: Okay. But can you tell me, how has the federal government approached the provincial government with regard to constitutional reform that would involve electing Senators?
MR. BAKER: I have heard nothing about electing Senators, and I would have heard it at least from the point of view of elections had there been. Now there may be constitutional discussions ongoing about the concept, but they certainly haven't gotten down to the level of the mechanism of elections, which is what I would be responsible for.
MR. DEVEAUX: Okay. A couple of questions around Aboriginal Affairs that just came up, listening to my colleague, the member for Hants East. People probably don't know, but I actually have a reserve in my riding as well.
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MR. BAKER: I do know that actually.
MR. DEVEAUX: I have a satellite of Millbrook, which is functioning very well and actually a great example, because they signed a contract for the replacement of the Sea King, to service the computers, and it's going to be built in the area. So it's actually very good - but one of the things that comes up from time to time is accountability. I know most of it's federal money they receive, but where they do receive provincial money, what type of guarantees of accountability are there - what strings are attached with regard to accountability for the money that's given to the reserves?
MR. BAKER: The largest, the vast amount of that money is under the gaming agreements, of course, which provide for that.
MR. DEVEAUX: That's just a flow of funds, isn't it?
MR. BAKER: Well, no, it's more than that because one of the things that we did, we modernized our gaming agreements to provide that they have a duty to provide to the province - they're for community development and economic development purposes, so the purposes are limited and there are, in fact, audited financial statements that are prepared by chartered accountants that the Province of Nova Scotia receives pursuant to those agreements which indicate the purpose to which those funds were paid, and it provides accountability obviously to us, but also to the First Nations community themselves who can then judge whether or not the money was expended properly. We have found that that particular change, which was instituted quite a number of years ago now, has made for I think much improved transparency with respect to the money.
MR. DEVEAUX: So how much money is transferred to them through the gaming?
MR. BAKER: It's approximately $40 million worth of casino profit.
MR. DEVEAUX: And is that based on the number of VLTs that they have?
MR. BAKER: It's based upon the VLTs of course, and then the Sydney Casino money is based upon a formula.
MR. DEVEAUX: Okay, and does every reserve have some VLTs?
MR. BAKER: No.
MR. DEVEAUX: How many don't?
MR. BAKER: Two.
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MR. DEVEAUX: And which two are those?
MR. BAKER: Bear River, I believe is one, and I can't remember the other.
MR. DEVEAUX: You say Bear River?
MR. BAKER: Bear River.
MR. DEVEAUX: And you don't know the other one, okay. So some have more presumably - I assume Millbrook has a fair number compared to others, Membertou, the larger ones I guess?
MR. BAKER: Millbrook has a fair number, Membertou - Eskasoni would have, but they reduced the number.
MR. DEVEAUX: Concerning Millbrook - it has a lot of them in my riding, they have three buildings and there probably must be 60, 70, or 80 of them there. So have we ever audited to make sure the money is being spent according to what they said it would be spent on?
MR. BAKER: My understanding is the audited financial statements we get, we assume that they . . .
MR. DEVEAUX: So a chartered . . .
MR. BAKER: A chartered accountant, an independent chartered accountant provides those audited financial statements.
MR. DEVEAUX: Your department, they haven't had any problems with any of these?
MR. BAKER: No. There were some issues early on when we came to office about how those monies were being expended, and we introduced the change of requiring audited financial statements and it seems to have worked well.
[2:45 p.m.]
MR. DEVEAUX: And the funding of Aboriginal police, there was an issue in Eskasoni, I believe, a couple of years ago around - didn't it . . .
MR. BAKER: The private police force.
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MR. DEVEAUX: But wasn't there originally a police force there and didn't it somehow collapse or it fell apart?
MR. BAKER: Yes, the Unamaki Tribal Police Force which had five communities on Cape Breton Island participating, and based upon a decision of the communities themselves that force was dissolved and replaced by the RCMP. There were governance issues that made that a desirable thing.
MR. DEVEAUX: I'm going to go on to a separate issue, education. I see where British Columbia just signed an agreement with its - is it one reserve or is it one band council, or is it a number of band councils, with regard to education and allowing more autonomy?
MR. BAKER: I think 13 to 15 band councils.
MR. DEVEAUX: Is that all of them in British Columbia?
MR. BAKER: No.
MR. DEVEAUX: I wasn't sure how many there were.
MR. BAKER: There are many, many more.
MR. DEVEAUX: Is this something that's being considered here, a similar agreement?
MR. BAKER: We actually have an agreement now with band governments in Nova Scotia, which any band council is welcome to join. It's a model. In fact the Mi'kmaq Education Act provides for that, and our understanding is that their legislation is very similar to the legislation that already existed in Nova Scotia.
MR. DEVEAUX: Oh, because they made it sound like there was a lot more autonomy in the process.
MR. BAKER: Well, all I can indicate is at one point I was speaking to a former federal Minister of Indian Affairs, and he indicated to me that Nova Scotia had one of the best arrangements for Aboriginal education in the country.
MR. DEVEAUX: How long ago did we get that Act and those agreements?
MR. BAKER: It's quite a number of years.
MR. DEVEAUX: Are they up for renewal at any point soon?
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MR. BAKER: It was signed in 1997 and will be up for renewal in three years.
MR. DEVEAUX: So it's a 12-year agreement.
MR. BAKER: Yes.
MR. DEVEAUX: The agreement on gaming with the reserves, when is that up?
MR. BAKER: They are six-year agreements, I believe. There are six-year agreements with a number of communities, and there are options for renewal.
MR. DEVEAUX: Each community has a separate agreement?
MR. BAKER: Yes, each community has a separate agreement.
MR. DEVEAUX: Why did I think that at some point there was a 12-year agreement?
MR. BAKER: There's an ability of renewal for a couple of communities, an extra six years.
MR. DEVEAUX: By agreement of both parties?
MR. BAKER: Yes.
MR. DEVEAUX: Sunday shopping. Just a few questions before my time is up - I have four or five minutes left, I believe.
MR. CHAIRMAN: Three minutes.
MR. DEVEAUX: What did you understand came from that plebiscite? What was your understanding when the plebiscite was defeated, that people were voting for?
MR. BAKER: My understanding, and I believe what Nova Scotians understood, was that they were voting for a status quo option, meaning not the elimination because we have Sunday shopping in Nova Scotia now. It's not complete, unlimited Sunday shopping, but we have Sunday shopping in Nova Scotia now, and have had Sunday shopping in Nova Scotia, practically speaking, for generations now. What we don't have is unlimited Sunday shopping.
My understanding is Nova Scotians were being asked to vote for a choice between the existing system and a system whereby - and the terms of the legislation were quite explicit - the number of hours would be not completely unregulated but would be much less regulated than the existing system. So, for example, the hours - people who talk about unregulated Sunday shopping are many times talking about no limitation on hours at all, and
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that means 24-hour Sunday shopping being possible. The bill did not propose that kind of Sunday shopping.
MR. DEVEAUX: So you would agree, though, that at the time of the vote there was one retailer who was opening grocery stores under the current rules - let's call a spade a spade, it's Pete's Frootique - would you agree that at the time of the vote, when people voted for the status quo, that included Pete's Frootique and how they were able to fit within the law?
MR. BAKER: I think people were aware of Pete's Frootique, certainly people I spoke to were aware, in many cases, of Pete's Frootique, but they looked at Pete's Frootique as being a limited exception, an anomaly, call it what you will. They were not anticipating that every large grocer in Nova Scotia would be open if they voted no. I believe that Nova Scotians did not expect when they voted no - and they did vote no by a majority - that they would be in a situation where every large grocery retail in Nova Scotia would be open 24 hours a day which is even, to my point, beyond the hour of regulation, which was anticipated in the legislation, potentially - I'm saying legally at least - and they did not anticipate that a no vote would have that outcome.
MR. DEVEAUX: Would you agree that if, today, Pete's Frootique wanted to open for 24 hours on Sunday, there's nothing stopping that under the current rules?
MR. BAKER: I didn't understand the question.
MR. DEVEAUX: If Pete's Frootique wanted to open at 12:00 a.m. on a Sunday and close at 11:59 p.m. Sunday night - because they fall under the current rules, they're allowed to open - would you agree that there's nothing stopping them from doing that?
MR. BAKER: I would agree with that. I think that's the legal effect of that. No different than a convenience store can operate 24 hours, or a canteen can operate 24 hours.
MR. DEVEAUX: So would you agree then that if that happened, would you say that's something your government would want to fix, because that's not what people were voting for?
MR. BAKER: Well, I'm not going to get into the area of speculation. I know of no plans that would lead me to believe that they're going to do that.
MR. DEVEAUX: If a retailer who met the criteria of the current Act decided to open for 24 hours on Sundays, your government wouldn't have a problem with that?
MR. BAKER: Well, no, I didn't say that. I said there are retailers today that are open 24 hours. Small grocery stores, for example, and if they choose to be open for 24 hours, that
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is part of the status quo, if you want to call it that, in Nova Scotia, and there are many retailers, certainly small retailers, that are open extremely extended hours and there may be Green Gables that are open, for example, 24 hours, Needs . . .
MR. CHAIRMAN: Order, please. The time for questioning for the NDP has expired. I will now recognize the Liberals.
The honourable member for Halifax Clayton Park.
MS. DIANA WHALEN: Thank you very much, Mr. Chairman, and welcome. I'm happy to have you here with your staff and I actually have questions that relate to Finance for you, just to change gears again. That's all. I was very interested in the other subjects.
MR. BAKER: That's one thing I know. I have a variety of interests, including Finance. So I have a fairly broad range of responsibilities.
MS. WHALEN: That's right. Like many members of the Legislature, you have to wear a lot of different hats.
MR. BAKER: Yes, that's right. Like I said before, I think in this room, only one head under all those hats.
MS. WHALEN: Yes, exactly. Well, I'm enjoying returning to the Finance area. I've just been returned as the Finance Critic, so I've had to brush up on this as well, but it's interesting to be back here and to be reviewing the department once more.
I wanted to actually go through the estimates and talk about certain line items just to begin with, so I have a few that I wanted to pick out, as we begin along. On the communications, right off the bat, which is on Page 9.2, the communications cost has gone up by about 43 per cent, this year, from the forecasted amount. Mind you, last year's estimate was higher as well, but the forecasted amount is $266,000 and you're looking at $373,000 for communications in the department?
MR. BAKER: We're looking. What page of the book is that, do you know?
MS. WHALEN: The Estimates Book, Page 9.2. So really my question is, what communications are you doing and does that cover the whole department and how many people? How much communications does Finance need? It's under Senior Management.
MR. BAKER: We have two communications officers. That would include both printing of budgets, for example, the budget highlights, budget communication. All of those things would fall under that rubric.
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MS. WHALEN: My question would be, why were you underspent last year then? From what you have forecast here for 2005-06, it's an increase of 43 per cent. So what would account for that?
MR. BAKER: It's very simple. The budget material last year wasn't tabled until after March 31st, so there was a period where there was - it was underspent last year.
MS. WHALEN: Would that additional be going into this year because you were late with the budget?
MR. BAKER: Yes, that's right, because you see if the budget were tabled before March 31st, then obviously the communication costs would be booked in the year they were expended. What happened, of course, is that you had the last fiscal year in which no budget was actually tabled.
MS. WHALEN: Yes, great, so some savings there. Now I just wondered what would make it go up and whether you had a sudden need for a lot more communication advice. So that's good. Thank you.
MR. BAKER: We probably do, but no, that wasn't the reason for it.
MS. WHALEN: Below that there are a few others that have changed remarkably in the year, under the Office of the Assistant Deputy Minister, the Policy and Planning Area, there's an increase there of double, really, the amount that was on for last year. You had estimated $302,000 last year, and this year you're budgeting $687,000. So it's more than twice the amount under Policy and Planning. So I'm wondering if you're tackling some new initiatives, hiring some new people, or what can we expect from that area?
MR. BAKER: That's fine. It's due to three newly created positions and three positions created by transfer of vacant positions from other divisions. So there may be internal savings that were obtained elsewhere. So that can also make the expenditure look higher.
MS. WHALEN: Can I ask, are there some special initiatives that are going on through Policy and Planning that would require the extra resources?
MR. BAKER: The six positions are: project manager, a Secretary III, a FOIPOP manager, a STAR/STOR administrator, a policy analyst and an HR adviser.
MS. WHALEN: Okay, that explains what the actual positions are, but is there an initiative they are associated with?
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MR. BAKER: There are a number of different - for example, two of them are dedicated to STAR/STOR. That is the records management system to keep adequate record management. I think that's one of the issues the Auditor General has spoken to in the past. We didn't have those positions then and we felt it was important to have those positions. One of the positions, of course, was also budget coordination, because that's very important, obviously; the policy analyst and HR adviser, that particular person is to develop succession planning.
We have a number of vacancies within the Department of Finance, making sure that we are able to recruit people and recruit the right people so that we can provide the quality of service that Nova Scotians expect. (Interruption) Yes, one position as well was with respect to coordination with third party entities because, for example, we have health boards, education boards, Crown Corporations, a whole host of external entities which are consolidated, and we need to make sure we have coordination so there are no surprises, for example.
MS. WHALEN: Exactly. No, I appreciate the explanation, because I'm certain that you wouldn't be hiring new people without having clearly identified their need.
MR. BAKER: There are, in fact - these were, I guess, deficiencies that were noted in the staffing structure of the department and there was an attempt made to enhance the departmental managing capacity by creating those positions.
MS. WHALEN: I appreciate that, and it's also a window for us into the initiatives of the department, if we see an increase in staffing?
MR. BAKER: Because you see where the staff is, that's where the initiatives . . .
MS. WHALEN: Exactly, and what is it signaling in terms of priorities?
On the same line, the next item there is the Administrative Services and they have gone up dramatically as well, and it looks as though you didn't have so many staff last year because your forecast came in under, but you had estimated last year $47,000. You're up to $106,000 this year, so are they supporting the same initiatives?
MR. BAKER: I'm sorry, I was getting an answer at the same time you were still talking.
[3:00 p.m.]
MS. WHALEN: It's the same question, one line down, Administrative Services. Again, it's doubled from your estimate last year.
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MR. BAKER: My understanding is that has to do with the Pension Agency. We have created a separate Pension Agency. We won't be getting a recoverable for rent and those kinds of costs around that and that will make a difference in that area. The Pension Agency was created to deal with not only the government pension plan, but also the teachers' pension plan. They will be moving to their own space because, quite frankly, we are under-spaced.
MS. WHALEN: If I understand you correctly then, because of the formation of the agency, you now have to absorb some of the costs that were previously cost shared.
MR. BAKER: That's it exactly, that would be picked up by that agency. The agency has to find their own space, so they took the budget money with them and so we were left picking up the cost.
MS. WHALEN: Okay, so that has an impact there. I did actually have some questions around the formation of that new agency. Maybe we'll just go to that for a change of pace. In that first page, under your departmental initiatives, you certainly mention as a major thing that you're changing the investments in Pension Services into a separate agency. I wondered if you could give me some background as to how that will be structured, what its relationship will be to the department, how much control you have.
MR. BAKER: First of all, it's a special operating agency created under the Public Service Act. The charter is being developed, but the reason it's not complete, quite frankly, is because we're consulting with the Nova Scotia Teachers' Union. As you would know, they're a joint management with the Nova Scotia Teachers' Union with the governance of that plan.
Obviously, we would hope that agency would continue to provide pension services to not only the government pension plan and other major pension plans, but as well, to the Nova Scotia Teachers' Union plan. That's why we're consulting over the charter for that organization to make sure everyone's comfortable with the structure.
MS. WHALEN: Is it uncertain whether the NSTU's pension will stay with this pension agency?
MR. BAKER: I guess it's not certain at this point. We're certainly supportive of that and we're hoping. Obviously we have a partner, and we have to make sure the partner's comfortable.
MS. WHALEN: So this will take a little bit of time. Do you have any idea of the time line?
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MR. BAKER: I know they're having lots of meetings. Staff were telling me about the fact that they're having lots of meetings on the subject, so presumably it's a very active matter.
MS. WHALEN: Do you have somebody designated yet to head up this new agency?
MR. BAKER: We have John Traves, a lawyer who's provided advice to the Department of Finance for many years. He's the acting CEO.
MS. WHALEN: Is it a full-time position?
MR. BAKER: It's a full-time position, yes.
MS. WHALEN: Did you have a competition for that position?
MR. BAKER: No, because it's internal to government. This Mr. Traves, being a government lawyer and employee, was simply a civil servant appointed to the position. There will be for the full-time position.
MS. WHALEN: That's what I want to know is whether you will have a competition for that position.
MR. BAKER: Yes, yes. Absolutely. The acting position is not being competed for, because it's by that definition, it's acting. We will be having a competition.
MS. WHALEN: What will be the size of the resources this agency will be responsible for, roughly?
MR. BAKER: There's $7 billion worth of assets and approximately 50,000 current and past members of the plans. So, it's a very significant number of amount of assets and a very significant amount of people and Nova Scotians, who are in receipt or potentially in receipt of pensions.
MS. WHALEN: Would you say the number of pension members again?
MR. BAKER: There's 50,000.
MS. WHALEN: Okay, thank you, I just missed that. At the moment, because it hasn't been fully constituted, are there any staff working in that now? You said you're still negotiating on the charter for it and so on, is there any structure to it yet? Does it exist?
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MR. BAKER: All of the former pension investment division of the Department of Finance have been transferred into that agency. That's staff who, historically, provided those kinds of services to the government have been transferred into that special operating agency.
MS. WHALEN: Okay. Can I clarify - when you call it a special operating agency, what's its relationship to the Department of Finance? Is it an arm's-length?
MR. BAKER: Yes, special operating agencies are no longer part of the department. The reason for that obviously has to do with the fact that they're potentially managing assets which are joint trusteeship with the Nova Scotia Teachers' Union.
MS. WHALEN: Because of that new arrangement with the Nova Scotia Teachers' Union, is that what precipitated this structural change?
MR. BAKER: That was certainly one of the major factors, yes.
MS. WHALEN: Would you have done it if the arrangement had not changed with the Teachers' Union?
MR. BAKER: Well, there's certainly an evolving relationship with the Nova Scotia Government Employees Union and CUPE as well with respect to other pension plans. There's a certain growing move towards co-management and as that co-management, co-governance model proceeds, it is increasingly important that people be comfortable, that the fund managers are not just the employees of one party to that co-management.
MS. WHALEN: I'm going back to the person who's going to be the CEO of this position. Have you determined what a salary range would be for that position?
MR. BAKER: No, they would develop an HR profile for that position and that would be then approved.
By the way, and I think it's important to realize, in this particular sector of expertise to get quality people, you earn very, very significant ranges for income. Particularly, we have a number of people who work in our investment division, which is still part of the department, and we need to pay those people very competitive wages because the private sector will otherwise ensure that you have nobody working for you because these people have a great deal of skills and those skills are in very large demand.
MS. WHALEN: I had determined already, I mean, the person is responsible for $7 billion in assets, so it's obviously a highly responsible position and again, even small mistakes or changes in rates and whatnot, can make a huge difference in terms of the bottom line. So, I don't disagree with you at all about the need for quality people and to pay them properly. I am actually comparing it a little bit to the other agency called Conserve Nova
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Scotia, which has yet to be constituted, does not yet have a charter, has no employees. We have probably a very small amount of assets compared to what we're talking about here, and I was looking for a parallel in terms of the CEO, of this agency.
As the Minister of Finance, of course, you're responsible for all spending throughout government and I would just question how we could have no competition and a person appointed to a position, which again, is a Civil Service position. I'm sure it's a similar, special operating agency of some sort, to have an arm's-length relationship with the Department of Environment and Labour. Is there a parallel that you could see there, or could you comment on it, please?
MR. BAKER: I'm not responsible for Conserve Nova Scotia, so it would be inappropriate for me to comment.
MS. WHALEN: Okay, I will leave it to you to discuss it at the Cabinet Table, then. I think that the agency you're talking about here for pensions is obviously very important. It's just the idea of having a fiduciary duty to the province, about making sure that we have the best qualified people in every position, and I think that you would share that concern with me as well.
There are so many questions in this department. I'd like to go actually, to your overall spending. If I could just go to the bottom line for the whole department, and that was estimated for the year at - I'm looking at 2006-07. It has gone up considerably. It's 16 per cent above the forecast amount and a 10 per cent increase over the estimate that was provided for last year. So I'm wondering if you could just speak about the overall increase in spending in the Department of Finance, and what might precipitate a 10 per cent increase?
MR. BAKER: Well, there's a number of things. First of all, the addition of various new positions across the department, including transfers from Agriculture and wage pressures, ACOA, step increments and reclassifications. That was part of it, and in rough terms would be just under $800,000 worth of the cost driver. The next cost driver would be initial funding in the CIS unit. That was really the extension of the contract with SAP. Increased maintenance and staff training costs. The SAP program is particularly relevant to the school boards, and taking over all of that payroll function, and all the support for SAP. So it's a very big project, and quite frankly, in order to do it correctly it required a significant staffing change. Transfer and funding from Service Nova Scotia and Municipal Relations regarding the ERM project. That's Enterprise Risk Management, and elimination of Community Services recovery in the internal audit, and that was $450,000, and then increased amortization costs of $232,000, which would be clearly just a matter of picking up SAP, computers, those kinds of things.
MS. WHALEN: If I could ask, under the SAP program, would that not be cost recovered from the agencies that you support, those third-party agencies?
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MR. BAKER: There's no recovery from Education, so it's effectively an assistance we provide to school boards, in delivering their program and we get some cost recovery from municipalities. There are municipalities that actually are part of our SAP system, but that is probably not even full cost recovery, and again, it's something we provide - in some cases, to smaller municipalities and some cases, not small municipalities - to assist them in making sure they have modern financials. We get recoveries from the following municipalities: Cape Breton Regional Municipality, Queens Regional Municipality, Halifax Regional Municipality, the Municipality of the County of Annapolis, the Municipality of East Hants, the Town of Berwick, the Halifax Regional Water Commission, the Town of Amherst and the Nova Scotia Pension Agency, for a very small - because it's an outside agency, so we're doing their SAP. It's an in and out for us.
MS. WHALEN: In your description of the overall increase in spending you mentioned the elimination of internal audit . . .
MR. BAKER: No, no.
MS. WHALEN: What did you say about internal audit? I obviously didn't hear you right - where's it going or, what are you doing with internal audit is my next question.
MR. BAKER: We're expanding internal audit, not eliminating it.
MS. WHALEN: Okay, so it's an extra cost.
MR. BAKER: We have a very large project going on with Service Nova Scotia and Municipal Relations, with respect to what's called Enterprise Risk Management. They provide us with the funds, but we, in fact, expand them so this is an internal transfer from Service Nova Scotia and Municipal Relations to us where we provide the auditing capability. In fact, we provide the internal auditors to Service Nova Scotia.
MS. WHALEN: Are you increasing the number of internal auditors on your payroll?
MR. BAKER: We are trying. There is a huge federal demand for internal auditors at the moment - I think we can all understand why that might be.
MS. WHALEN: Well, they perform a very important service.
MR. BAKER: They do provide a very important service and, as I said, it's a sellers market at the moment if you're an internal auditor.
MS. WHALEN: There may be a link here as well but I noticed that there was a new corporate services unit at Service Nova Scotia and Municipal Relations - it talked about 10 staff being transferred to that unit, this is how I read it anyway.
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MR. BAKER: There was some corporate service people moved from us to them, there's a bit of a trade going on there.
MS. WHALEN: Are those internal auditors?
MR. BAKER: No.
MS. WHALEN: Is that the link?
MR. BAKER: No, there are other personnel involved in management, but not internal auditors.
MS. WHALEN: They were financial people that were coming from the Department of Finance?
MR. BAKER: CSU people.
MS. WHALEN: CSU, okay.
MR. BAKER: Just for the member's information, the corporate service units - and there are a number of them around government - can provide a range of services from HR, IT, the classic money managers, the bookkeepers if you want to call it that function, those kind of functions are typically in a corporate service unit.
MS. WHALEN: In a number of the committees I've sat on, I think we've heard it at Public Accounts and a number of other places, the need for more internal auditors, that there was only something like seven or eight in the entire service.
MR. BAKER: There is an inadequate number. I think we would all agree there is an inadequate number of internal auditors - we would like to have more. We have seven and we're hoping to go to 15 so that's doubling.
MS. WHALEN: So seven is the number, similar to what I had heard before and you're looking to hire eight more then if you could.
MR. BAKER: That's right.
MS. WHALEN: Of those seven can you tell me where they are located right now?
MR. BAKER: Three are Community Services, one in EMO and the remainder in the Department of Finance.
MS. WHALEN: Three Community Services?
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MR. BAKER: Yes.
MS. WHALEN: One at Emergency Measures and the last?
[3:15 p.m.]
MR. BAKER: By my count, three more at Finance.
MS. WHALEN: Finance. Okay, do they float - your three from Finance?
MR. BAKER: The Finance three would be responsible for others other than the Department of Finance, but it's one of our own limitations. As you can appreciate, there's a lot of government left and we simply need more people , particularly for cash transactions or when a large number of cheques are issued - those are two high risk areas.
MS. WHALEN: It's a little disconcerting to see more at the Community Services Department and none at the Department of Health, for example, the highest spending we have in the entire government.
MR. BAKER: Yes, that's true, but when you look at the risk of missing funds, there are certain kinds of profiles that put you at higher risk. Obviously the Department of Health writes very few cheques to individuals where they are making the most of the DHAs, and the DHAs would have internal audit. We will be of course looking at Health as an area of improvement.
MS. WHALEN: Again, that gives a window on priorities too, but I'm glad to see an increase in the numbers, I hope you're successful in recruiting them.
MR. BAKER: That's been one of the challenges really because, as you can appreciate, it really has been a year when governments of all levels have begun to beef up that capability.
MS. WHALEN: About a year ago, there was a consultant study done. It was the Deloitte Touche study, on government control and framework, and related to the management of your pension assets. In that study, the one thing I recall that was discussed was, the consultant said it was impossible for them to assure the client, government, that the assets were being properly managed. There seemed to be some limitations in terms of what they could do as accountants to assure us that everything was proper, and they made a number of recommendations about major changes. I did see a couple of things added in the estimates. I wonder if you could just respond to that study, and bring us up to date on what has been done?
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MR. BAKER: In response to those recommendations in the Deloitte Touche audit, we've made significant progress in proving the government's and internal controls over the investment and liability management areas. These include: improving asset safeguards, such as that no one person can complete a transaction; establishing clear and appropriate oversight functions away from operational processes, separating those two; and establishing a middle office that conducts a real-time audit. This is a recognized best-business practice standard. These measures will increase the accountability and the transparency of these transactions. The middle office is quite a new innovation.
MS. WHALEN: The middle office did appear somewhere directly in these estimates, I did see that as a newly established agency.
MR. BAKER: It gives you current auditing capability, as opposed to after the fact.
MS. WHALEN: So it was begun last year, I gather? It has funds expended last year as well.
MR. BAKER: Yes.
MS. WHALEN: Can you tell me, since it's in its second year, is it working properly?
MR. BAKER: Yes, the staff are very satisfied that it has made a significant improvement.
MS. WHALEN: It's another agency where the amount is doubling in terms of what's being spent this year, but it looks like you were underspent last year. Could you explain, was it difficult to just ramp it up?
MR. BAKER: I think it was a question of it started late and they weren't able to expend all the money, staffing up and those kinds of things.
MS. WHALEN: So it was just a question of ramping up to full speed.
MR. BAKER: Yes. I think it's fair to say that one of the advantages that comes to Nova Scotians and the government as a result of our improved fiscal capacity is the ability to take and restore some vital positions that had been reduced by governments of all stripes in dire fiscal times, and to look at some of those re-hirings or the re-creation of positions, in this case, in order to protect the public better. What happens, of course, is when those decisions were made, they needed to be made. I'm not criticizing the people who made those decisions at all, I'm simply making the point that when you see a shortfall and you have the ability to at least partially address that, it's a good thing to do so.
MS. WHALEN: I agre