April 3, 1995

GOVERNMENT SERVICES ESTIMATES COMMITTEE

The Committee met at 9:00 a.m. in the House of

Assembly.

MR. CHAIRMAN (Gilbert): Order, please!

We will now call this meeting to order.

The purpose of the meeting today is to discuss the

Estimates of the Department of Finance and the Public Service Commission. We

have a couple of housekeeping things to do before we start, so I would ask

someone to move that the minutes of our March 30th meeting be approved.

On motion, Minutes adopted as circulated.

MR. CHAIRMAN: I will ask the Committee to

introduce themselves and then I will ask the minister to introduce the officials

he has with him and then we will open. Normally what happens then, the minister

has an opening statement of fifteen minutes, the Finance Critic and the

Opposition will then have an equal amount of time and then we will go into a

ten-minute question and answer period when each member will indicate to me that

he wants to speak. So I will now introduce the Committee.

My name is David Gilbert, I am the MHA for Burgeo -

Bay d'Espoir. Roger Fitzgerald, MHA for Bonavista South. Jack Byrne, MHA for St.

John's East Extern. John Crane, MHA for Harbour Grace. Bill Ramsay, MHA for La

Poile. Jim Walsh, MHA for Mount Scio - Bell Island. Neil Windsor, Opposition

Finance Critic and MHA for Mount Pearl. Thank you.

Now Mr. Minister, if you would, you may introduce

your officials and if the officials are asked a question, I would like them to

identify themselves before they speak, because the people who are transcribing

this do not recognize your voices as they would most of the ones on that side

so, if you indicate that one of your officials is going to answer, I would ask

the official to identify himself before he speaks.

Mr. Minister.

MR. BAKER: Thank you very much, Mr. Chairman.

First of all, I would like to apologize to the

Committee for being a few minutes late; I got hung up on a phone call, those

things happen so I would like to apologize for holding you up this morning.

This session deals with, I guess Department of

Finance and the Public Service Commission so I have officials from both

departments.

First of all, from the Public Service Commission,

Jim Byrne and Sheila Devine and they are sitting behind me. From the department

itself the deputy is not available this morning as he is away on a meeting. I

have the three ADMs; first of all, Bob Vardy on my right who handles fiscal

policy and Bob Clarke who handles the tax collections and tax policy and on my

left, John Bennett who is debt management and pensions.

MR. CHAIRMAN: Very good, sir. Do you want to

have an opening remark, Mr. Minister.

MR. BAKER: Not very much. The Department of

Finance obviously is a department that does two essential things. It handles the

collection of money and has an important role in terms of policy of government,

and is instrumental in preparing the Budget each year. The three general areas:

in the area of fiscal policy we have an awful lot going on at the current time

in terms of discussions with the federal government and that department

obviously is very active in the intergovernmental area. We have a lot of cases

to make to the federal government in terms of transfer payments, in terms of

equalization payments, in terms of what this Province should be receiving, what

changes we see and Mr. Vardy is in charge of that area.

The collection of taxes, of course, is obviously

very important and involves all taxes collected by government called Taxes of

General Application. I guess the biggest area of course is retail sales tax but

involves a lot of other areas as well. In terms of the debt management pension

side, obviously it is very important. We have tremendous pension problems that

have to be solved in the near future and this division is keen on that

resolution. In terms of debt management, our debt is huge. The borrowing program

has to be managed properly, the investment has to be managed properly in terms

of the sinking funds and in terms of the pension funds and so on. So John

Bennett also has a pretty big job to do there.

I don't think I will get into any more detail and

ask hon. members for any questions they might have, or anything they might want

commented on. Obviously anything of detail I will pass on to the appropriate

officials as they would be able to give a better detailed answer than I would.

MR. CHAIRMAN: Thank you, Mr. Minister. Mr.

Windsor.

MR. WINDSOR: Thank you, Mr. Chairman. First of

all I would like to thank the Committee for their courtesy in allowing me to

speak here this morning by leave of the Committee. I recognize that I am not

here officially as a member of the Committee. I certainly do appreciate the

opportunity to speak and appreciate the courtesy in being allowed to speak first

as finance critic.

Mr. Minister, you mentioned first of all fiscal

policy which is an interesting area because I noticed in the Budget the amounts

increased from $333,000 this year to $459,000 while your Budget last year was

$473,000. So you were well under budget last year but you are projecting to go

back up again this year. Can you tell us, first of all, why that amount? In your

opening statement you gave some indication that you are very much involved with

negotiating transfer payments and the whole fiscal policy area with the

negotiations on tax reform, harmonization of GST and RST and also would you like

to tie in with that the government's present position on payroll tax? Are you

proposing, as part of this overall tax reform, to eliminate the payroll tax and

if so, how do you propose to replace that?

MR. BAKER: Yes, first of all we have no

definite plans in place to replace the payroll tax or eliminate the payroll tax.

It is a very important source of revenue and has to be looked at in light of all

other taxation levels in the Province. In terms of businesses, we have taken

great strides in lowering the tax levels on businesses in the last few years. As

you know, we are still determined to make this Province business friendly by

announcing this year a research and development tax credit that is again a

positive on the tax side in terms of businesses but there are no plans in place

at the present time to eliminate the payroll tax. The tax effort on businesses

in this Province is very low in comparison to other provinces and unfortunately,

whereas we would like to, we cannot eliminate all taxes.

In terms of the discussions with the federal

government, certainly we are still pursuing harmonization. That has run into a

lot of snags in other provinces. Most other provinces are not prepared at this

point in time to accept a nationwide harmonization of any kind and we are still

continuing these discussions. There is a finance minister's meeting, I believe,

sometime in June where the issue will probably be discussed again. We perhaps

may have the opportunity at some point in time to do a partial harmonization -

and talk about partial in terms of Canada - if we can come to some kind of

agreement to harmonize Atlantic Canada with the GST, but that is still off in

the future. Our position is that we want harmonization, which would mean

broadening our base considerably to as closely as possible match the GST base,

and then hopefully being able to lower our rate. This is where we would like to

be but I cannot give you an estimate as to when that would happen.

In terms of the numbers in tax policy they were low

last year primarily because we had two vacancies during the year that were not

filled, but we intend to fill these vacancies.

MR. WINDSOR: Thank you, very much, Mr.

Minister.

In the area of fiscal policy you budgeted $352,000

and actually spent $586,500. Would you like to tell me why fiscal policy should

go up by 50 per cent? There are primarily salaries in that particular subhead,

your salaries doubled from $280,000 budgeted to $542,000, and projecting the

cutback this year to $287,000 again. Would you like to explain that to us?

MR. BAKER: I am told, Mr. Chairman, that that

number, $542,300 is a mistake in the estimates and that should have been in fact

$271,000 instead of $542,300. I will see how that translates through the whole

estimates. I am assuming there is no affect on the bottom-line. Perhaps before

we finish today I can get a further explanation of that, but that should have

been $271,000, and I am assuming there is another comparable mistake somewhere

there. I will see if I can find out from Treasury Board budgeting people.

MR. WINDSOR: Getting back to the payroll tax

issue and tax harmonization. How would you propose to truly harmonize Atlantic

Canada as long as we have a payroll tax in place and other provinces in Atlantic

Canada do not? How do you justify harmonizing part of Canada? If you are looking

at harmonization there is give and take here, and part of the give is that we

give up a tremendous amount of flexibility in using the taxation system to deal

with social policy. Government has always retained that and I suspect that is

why most provinces of Canada are not totally in favour of harmonization. How do

you justify partial harmonization if other provinces of Canada are not going to

be part of this and we have gained the benefits, and there are some, of

harmonization but we have given up all of the costs?

MR. BAKER: You are right there are some

benefits to harmonization and some, I guess, extra revenue to the Province

making it easier for the federal government to carry out their duties at the

border and so on. There are advantages to harmonization. The payroll tax is not

a consumption tax and harmonization refers to simply the harmonizing of the

consumption taxes on the individuals.

Harmonization, I guess, also involves a shift in

tax burden, as the hon. member probably realizes, because there is a rebate of

business inputs which have to be made up somehow. It does limit our flexibility

but we believe that the advantage in terms of business growth of having a

harmonized system would be substantial.

I don't know if ever we will get it, this is the

point. These are the reasons why we've been aiming towards it. The major

stumbling blocks to harmonization of course have been, first of all Alberta has

no retail sales tax, and they are already, as they proudly proclaim, fully

harmonized, because they have no RST. Some other provinces have elections coming

very soon and they have made a commitment to no new taxes. They would envision

that if they were to harmonize, then the base broadening that would result could

be construed as being a new tax and therefore would be very inopportune just

before an election. So I think our system is conspiring against it.

MR. WINDSOR: I remind the minister that his

budget claims no new taxes either but they are very cleverly hidden in there. It

is just I would submit to him the way of premiums through Hydro and a few other

things of that nature, that eventually will come back to the consumer, and we

will get into that in a little while.

Before we leave harmonization, Mr. Chairman, I

would like to ask the minister: How can you truly have harmonization? I hear

what you say, that you are just talking consumption taxes. The real benefit of

harmonization ties in with the whole concept of interprovincial trade barriers

being removed. Clearly if we have a payroll tax - all provinces of Canada,

particularly Maritime provinces, do not, so we are not truly harmonized, are we?

Neither is there equal opportunity to do business in this Province. It is a

different playing field, it is not a level playing field.

MR. BAKER: Yes. We can also I guess point out

that some of the provinces have a provincial property tax. We don't have that. I

believe Nova Scotia still has a school tax. We don't have that. It is not a

one-sided affair. Our tax effort is slightly above the national average but it

is not very much above the national average, and there are differences in every

tax I suppose that you care to look at. We are not talking about complete

harmonization of all taxes. If we were I guess there would have to be some more

give-and-take on the part of all provinces and not just this Province.

MR. CHAIRMAN: Mr. Windsor's time has now

expired, but no one else has indicated he wants to speak. By leave of the

Committee I will let you and Mr. Windsor continue until somebody wants to speak.

Is that alright with the Committee?

Carry on, Mr. Windsor.

MR. WINDSOR: Thank you, Mr. Chairman, and I

again thank the Committee. I don't wish to take up the whole morning, and I

don't want the other members to get off too easily either.

WITNESS: As long as we stay friendly.

MR. WINDSOR: As long as we stay friendly. I

won't promise that, Mr. Chairman, because I will probably be cut off in due

course.

Getting into the area, again in Financial Policy,

under research, I notice we've increase the budget amount this year from $97,000

expended last year to $140,000, primarily in the area of Salaries. Is that

simply one additional person being added to that division? It just seems a

little strange that research in fiscal policy would be going up that much this

year.

WITNESS: 2.1.02.

MR. WINDSOR: Page 36, 2.1.02. At the same time,

Investments underneath it has gone down by a similar amount.

MR. BAKER: Yes. That is an increase because of

a change with the credit unions. There are more individuals working in this area

now rather than working with the credit unions. That accounts for that increase.

MR. WINDSOR: 2.2.01, Crown Agencies -

Recoveries, $26 million. I assume that is the premium from Hydro. At least part

of that is a premium from Hydro which I understood was $20 million this year. So

there is another $6 million there. Would you also tell us what was the $1.7

million from last year that was not budgeted but that was received. What was

that for?

MR. BAKER: Yes, that was the privatization of

NLCS, that $1.7 million.

MR. WINDSOR: Is that the full amount received

for NLCS? Maybe you could tell us, what was the final sale price of NLCS?

MR. BAKER: These are the dividends for last

year. The final sale price was about $9 million.

MR. WINDSOR: (Inaudible) twenty-five?

MR. BAKER: Yes. I think the final sale price is

about $8.5 million but I can check the number.

MR. WINDSOR: Eight-and-a-half million dollars.

The $26 million is Hydro plus what? NLCS again?

MR. BAKER: Yes, I'm sorry for the hold-up, I

was just getting a rather detailed explanation from Mr. Bennett. I think what I

should do is get this in writing and get it to you, sort of the detailed

explanation. It is a number of things that we will put down in writing and get

to you.

MR. WINDSOR: Thank you, Mr. Minister.

MR. BAKER: You are right - that is not all

Hydro, there are a lot of other things in there.

MR. WINDSOR: Recoveries on Loans, Advances and

Investments, 2.2.02: I notice here last year we budgeted recoveries of $1.6

million, actually got almost $11 million, and we are projecting $20 million this

year. Perhaps the Recoveries on Loans, Advances and Investments is Hydro.

MR. BAKER: That is where the amount for NLCS is

in there as well.

MR. WINDSOR: In that $10.9 million?

MR. BAKER: In that $10.9 million, yes. That is

why it was that much higher than the $1.6 million that was budgeted.

MR. WINDSOR: You tell us the final price of

NLCS was $8.5 million, so that would account for all of that, or at least up to

$10 million.

MR. BAKER: Pretty close to it, yes.

MR. WINDSOR: There is another $1 million

besides, and you told us there is $1.7 million up in Crown Agencies -

Recoveries. There has to be something else besides just NLCS.

MR. BAKER: The $1.7 million was dividends, not

the sale price. That was simply normal dividends cluing up the year-end. The

full amount, which I will get for you - I recalled it was around $9 million, my

ADM says it is around $8.5 million - is part of that $10.9 million number.

MR. WINDSOR: Nineteen point eight million

dollars this year. Is that your projection on Holiday Inn and Hardwoods? Is that

what you are proposing?

MR. BAKER: Yes, those plus some minor

recoveries, but 95 per cent of it is that, yes.

MR. WINDSOR: So it is Holiday Inn.

MR. BAKER: Yes, and Hardwoods, and I guess

anything else of a minor nature that we recover.

MR. WINDSOR: I assume you are going to sell

both of those. Do we have reason to believe - Holiday Inn, I know you are in

negotiations and you probably have a handle on it. Do you also have a handle on

Hardwoods as well?

MR. BAKER: Yes. Hardwoods, we went public and

called for proposals or tenders, whatever they were - and I'm sure we will get

into that later, too - and everything is in and is being analyzed. We do have a

handle on approximately what that will bring according to the information we

have. We don't on Holiday Inn. We have not gone public yet because we have a

consultant to put together the tender package. That should be ready, I suppose,

within a week or so. So we don't have a handle on Holiday Inn yet.

MR. WINDSOR: Newfoundland Hardwoods, I

mentioned in debate in the House the other day, that with Hardwoods, one of the

key concerns I would have would be the sale of the asphalt operation, the

monopoly. Are you proposing to sell that as part of Newfoundland Hardwoods

operation? Will that be privatized? If so, what controls can we put on the price

that is being charged for asphalt, because it would impact on government more

than anyone else. You are the biggest purchaser of liquid petroleum asphalt.

MR. BAKER: Yes, we are very aware of that. As

we just said, I have not seen the proposals that are in; I have not seen the

bids that were made on that asset, so I am sorry, but I can't really answer your

question as to what is there. Obviously, fairly soon, once a recommendation is

made to me, then we will know all about what safeguards are in there to protect

government in the future, but you make a good point, and right now, that's the

only sourcing we have for the liquid asphalt. I don't know what protections are

built in, to be honest with you.

MR. WINDSOR: It is also the only source of any

of the paving companies anybody else in the Province has; it is a monopoly

situation which, you know, you might almost want to consider as a public

utility, in that regard, regulated by PUB or something.

MR. BAKER: Well, I think this is something that

is very re-active to pressures and if, in fact, whoever buys Newfoundland

Hardwoods has a price that is too high, I am sure somebody else will bring in

liquid asphalt if there is any money to be made on it. You are not saying this

is the only company in the Province that is allowed to bring in liquid asphalt.

So, if the prices get upwards, it is possible for somebody else to make a buck,

and obviously, they will start bringing it in, too.

MR. WINDSOR: It is very unlikely unless

government went to tender for the bulk amount.

MR. BAKER: Yes.

MR. WINDSOR: It would not be feasible to start

another asphalt operation here unless you had government contract because that

probably represents 80 per cent of the market; unless, as I understand, you

haven't changed the policy. The Department of Works, Services and Transportation

always provided the liquid petroleum to paving contractors, so in calling

tenders for highway work, you would assume that. Now, if you are going to change

that so individual contractors are going to be purchasing as well - but your

cost of pavement will go up as a result of that so you are much better off doing

as we have been doing forever which is providing the liquid petroleum.

MR. BAKER: Yes. This is something that I am

sure you will watch as events unfold in the next few weeks and so will I.

MR. WINDSOR: Maybe I should.

Pensions Policy: I notice we had a budget last year

of $55,000 and actually only spent $23,000 - there was a recovery in there

somewhere.

MR. BAKER: Yes. That recovery was budgeted in

the $50,000 you are talking about, wasn't it?

MR. WINDSOR: Transportation and Professional

Services are down. Those are the two items that have changed there. Is there a

reason for that?

MR. BAKER: Yes. The saving is there, obviously,

in Transportation and Communications, which means that I guess the need for the

travel was not there in relation to pensions, the pensions division. I think

that is probably it.

In terms of Professional Services, again, last year

we budgeted $15,000 and only spent $200, but we have to put some money in there

in case there is some consulting work we need to get done in terms of pension

policy so we put the standard sum of $15,000.

MR. WINDSOR: Mr. Chairman, I won't hold up the

Committee too much longer. There is just one more series of questions, if I may,

with the Committee's consent. In the area of Tax Administration, Compliance and

Audit, Minister, we budgeted $6 million last year and spent only $5 million,

projecting $5.4 million this year. In Support Services we actually spent $3.6

even though we only budgeted $2.2, projecting $2,086,000 this year. Would you

like to explain those variances to us?

MR. BAKER: Again, I have to go back because in

terms of the revised for 1994-'95 I am told that amount should be $933,000 and

not $1.7 million.

MR. WINDSOR: I am sorry, Mr. Minister, I lost

you. Which figure are we talking?

MR. BAKER: I am talking about Salaries and

Support Services under Tax Administration 3.1.02. We budgeted $937,400 and it is

in here as $1.7 million. That should be $933,000, and again, I will get an

explanation from the budgeting people in Treasury Board.

MR. WINDSOR: Errors in the Budget due to the

fact we sold NLCS this year? Have our computers gone ill on us?

MR. BAKER: I am sure there is an explanation,

however, this is something that perhaps you could bring up when we do, in the

House, the estimates of Executive Council, because at that point in time I will

have this information from the Treasury Board budgeting people. I have made note

of those two.

MR. WINDSOR: I am sure the minister will agree

that it is highly unusual to have these mathematical errors in the Budget

document.

MR. BAKER: Absolutely.

MR. WINDSOR: I don't recall ever seeing it in

my time. There may well have been, but I don't recall it.

MR. BAKER: I don't recall it in the last three

years either, to be honest with you.

MR. WINDSOR: In the area of Compliance and

Audit, I assume your budgeted amount is still accurate for Compliance. That has

not changed any, but Support Services has changed.

MR. BAKER: Yes.

MR. WINDSOR: Are we still putting the same

effort into Compliance and Audit or have we increased it? Where are we on that,

and how are the recoveries? Are we satisfied that we are getting reasonable

recoveries?

MR. BAKER: Well, I have asked this question a

number of times. We have Compliance in our division so I will ask Bob to give

you a more detailed answer in a second. In terms of RST, which is the one that I

keep an eye on mostly, our collection rate is extremely good, probably

approaching very close to 100 per cent in terms of the taxes that are owed. We

probably don't collect that percentage of interest and penalties but certainly,

in the taxes that are owed, we are well up on the game. The percentage is

extremely high, probably approaching 100 per cent.

I ask Bob to make a comment on that.

MR. CLARKE: As the minister has said, the

receivables have been, I guess, fairly steady. They have increased by about $4

million over the last few years, but I guess the dollars are a little bit harder

to get because of the economy and the GST collections. We have increased our

auditors by four people over the last few years and that has brought in some

extra audit revenue.

MR. BAKER: It is kind of a balancing act, as

the hon. member knows. You have the information that if you hire an extra

auditor you can bring in an extra $200,000 or $300,000, therefore, you end up

gaining by hiring more auditors. There might be some validity to that except

obviously, there is a point where your return doesn't match your expenditure.

The question is to find the right balance. I would be willing to accept the fact

that if we hired a few more auditors we could probably raise revenue, but

whether we are at that point where we are at the maximum efficiency I don't

know, have no idea.

MR. WINDSOR: Mr. Chairman, I want to ask the

minister a question on - being more specific, actually, on collections. On the

policy of write-offs, particularly in the case of companies that run into

financial difficulties, do we write off taxes that are owing? Have we written

off taxes for companies that have been in financial problems?

MR. BAKER: Our approach generally is, I guess

as follows: There is authority, for instance, to write off interest under

certain conditions; there is a policy to write off taxes under certain

conditions. The conditions under which interest can be written off generally are

that if it is long-standing, more than thirty-six months owing, and collection

procedures have been exhausted, and if there is, we believe, no possibility to

collect and it is an old debt, then we have the authority to write it off.

Sometimes we do that, depending on the circumstance.

We can write-off and make settlements in cases of

bankruptcy where again our procedures are exhausted, there is a bankruptcy,

there is only a certain amount to be obtained through the procedures, and we can

either have or get through Cabinet the authority to write-off under those

conditions. But with the volume of letters that I write ending "I regret my

reply could not have been more satisfactory," we don't do very much of it. I

will ask Bob if he wants to comment on that, because it takes up 90 per cent of

his time, I believe.

MR. CLARKE: Speaking of write-offs, in

approximately the last four years, we have written off about $4 million. That is

a very small percentage, of course, of the total revenue. Most of that would be

bankruptcies.

MR. WINDSOR: Over what period of time is that?

MR. CLARKE: Over about four years. Most of it

was written off this year, actually, in just this past month - about $3 million.

MR. WINDSOR: (Inaudible) company?

MR. CLARKE: No, that is quite a long list. It

was an accumulation of probably about three years, I guess, of bad debts.

MR. WINDSOR: Why would that just be written off

this year?

MR. CLARKE: Why would it be -

MR. WINDSOR: Is it that you just got around to

looking at all of these and saying: We will write all of these off?

MR. CLARKE: Yes, it is an accumulation. There

is an accumulation of bankruptcies. Instead of going to Treasury Board every

couple of months or every six months we accumulated them, I guess, not because

of not wanting to do them, it is just trying to get around to doing it. We are

spending most of our time trying to collect it.

MR. WINDSOR: (Inaudible) I discussed with you,

Mr. Clarke, privately, dealing with a company that was involved in building

trusses in this Province. I requested some information on the terms and the

circumstances surrounding a write-off to a particular company which technically

went bankrupt, but I understand was sold from father to son. For the first time

in twenty years, you didn't give me the answers I requested, so I said I would

ask them of the minister. Perhaps now the minister would like to give me that

information.

MR. BAKER: What were the details?

MR. WINDSOR: I don't know if there is any news

media here. I hesitate to publicly use company names, in fairness to the

companies, until and unless I know that there is some impropriety here, then I

will deal with it.

MR. BAKER: Yes, okay.

MR. WINDSOR: I think Mr. Clarke is familiar

with the situation and a request comes because another company really is

complaining that this is unfair competition. I am told that an amount of

$125,000 was written off in taxes for this company, and the company was

transferred, really, from father to son, and to avoid total bankruptcy, the

Province agreed to write-off a portion of that. I think that was half the taxes

owing if I am not mistaken, I maybe wrong on that, Bob. If the minister doesn't

want to give me an explanation, that's fine.

MR. BAKER: I have just been given the name of

the company - Bob remembers it. This was about three years ago. It seems it is

an old case about three years ago. I remember vaguely a lot of requests crossing

my desk and being passed along. I would have to look it up again.

MR. WINDSOR: I am just as happy not bringing

these kinds of details up publicly either as long as I have an undertaking from

the minister that he will give me that information.

MR. BAKER: I will dig out the files and you can

come down and we will have a chat about it, certainly. I know that file crossed

my desk at least half-a-dozen times, but that was three years ago, I guess.

MR. WINDSOR: The other company that was

involved had a lien placed on it for a small amount, $17,000 for taxes owing,

apparently. They actually only owed about $5,000 at the time and had been

reducing their payment, I am told. I won't get into the details here but perhaps

we can discuss that at the same time, and try to clarify that whole situation.

MR. BAKER: Generally, as long as there is a

satisfactory repayment

schedule put in place, and so on, as far as I know, we

are fairly lenient and it is only when a business or an individual has indicated

through their history that they don't live up to commitments and so on that we

start doing those things, so I would have to look into it.

MR. WINDSOR: In this case, I am told, they were

not even advised that a lien had been placed on them. They read it in Dun and

Bradstreet, which I find unusual. Surely, you would notify people.

MR. BAKER: You have to recognize, too, that

with the thousands of cases that are dealt with, every now and then you are

going to find one, where perhaps something has been done that maybe shouldn't

have been done. You are bound to find that, out of all the cases that are dealt

with. Normally, when it is brought to our attention, we correct it, but you are

going to find areas of inequity when you try to apply laws of general

application, regardless.

MR. WINDSOR: Well, I will leave that there,

unless Mr. Clarke wants to say something. I am prepared to drop it until we can

meet privately.

MR. CLARKE: I was trying to explain that when

we register stats or liens right now, and that is what you are saying is in

Dun's bulletin. If somebody is in our receivables, they are registered almost

automatically, and if there is a return filed today without payment and it is

$16,000, that may have been paid or partly paid two days later but it will still

be published as the original amount, and then there will be a correction in a

subsequent publication.

MR. WINDSOR: But it will only be published if a

formal lien is in place, I assume. There are all kinds of people who owe taxes

or owe something else - if you published that list you would own Dun and

Bradstreet. So you are only going to publish the ones where a lien has been

actually placed. In this case, this company, I understand, were not even aware

that you had applied a lien against them and only found out through Dun and

Bradstreet on the same day they applied for some other financing and were told

there was a third party demand on their bank account because of this lien. They

were restricted from doing business for a period of time because of that. It's

not our normal practice, I am aware, but this one does concern me.

MR. CLARKE: That is a new policy of registering

stats or liens, because of the new Bankruptcy Act. Previously, they weren't

registered but they were there. They weren't visible. So that is something that

has been done in the last year.

MR. WINDSOR: Mr. Chairman, thank you very much,

and again, I thank the Committee for their tolerance.

MR. CHAIRMAN: Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman.

With respect to the Estimates for 1995 for the

Department of Finance, the finance critic has asked all the questions that I had

highlighted myself, on the Estimates.

MR. WINDSOR: Is that correct?

MR. J. BYRNE: Every one.

MR. WINDSOR: Surprised, are you?

MR. J. BYRNE: Not really. So I am going to ask

a couple of questions on the Auditor General's Report, if I may?

MR. BAKER: Absolutely.

MR. J. BYRNE: On page 86, under Management

Practices, it says: "the human resource management process needs to be expanded

to include employee performance objectives, regular performance evaluations and

an assessment of employee training requirements" and it goes on. Are there any

plans along this line by the government to -

MR. BAKER: Which page is that, Mr. Byrne?

MR. J. BYRNE: Page 86, under Management

Practices. It is basically talking about the regular performance evaluations of

employees. Are there any plans along that line?

MR. BAKER: Yes. I think the Auditor General,

this time, concentrated to a large extent on written policies, policies that

were written versus not written and so on. The only comment is that we agree a

strategic planning process should be put in place and we will start to do that.

It is one of the recommendations that we are saying we are proceeding with, yes.

MR. J. BYRNE: On page 81, under Conclusions,

and it is the second one, it says: "Government has not developed a plan to

address its unfunded pension liability". Then, on the next page it says:

"Government should appoint a Superintendent of Pensions who is independent of

government". Is anything planned along those lines? I know you are trying to do

something with the pensions.

MR. BAKER: Yes. We simply don't agree with her

conclusion. We believe the independence is already there and we believe that

person can be and should be an employee of government and part of the Department

of Finance, so it is an area of slight disagreement. But, she is absolutely

right - well, she is not absolutely right; we are dealing with or trying to deal

with the unfunded pension liability, but it is not as simple as an accountant

looking at it and saying: Oh, something should be done about this. This involves

people, it involves unions, it involves a lot of other things and government's

fiscal capacity as well. We are trying to put a plan in place and we are

carrying on negotiations and discussions with our unions with a view to doing

that, but if we were to suddenly come up with something, then that wouldn't be

proper either.

MR. J. BYRNE: Page 94,

section 3: Legislation,

and then it goes on about Clearance Certificates?

MR. BAKER: Yes.

MR. J. BYRNE: The first one there, says: "13

August 1991 the seller went into receivership with an amount owing to government

of $96,761"; and right through the whole list, another says: " 10 August 1992,

the Branch made a credit to the account of $96,868 so that the system would

allow the refund of $107".

The next one is of similar-type stuff going on. Can

you make any comments about what is going on here? I mean, it seems to me that

(inaudible) $96,000 so you could pay back $107; unless I am reading it wrong, it

seems to be a poor system and needs to be changed or some corrections made or

something.

MR. BAKER: Yes. Well, again, I guess it goes

back to a general comment I made a moment ago. If you have a law of general

application where there are thousands and thousands of things being done, I

don't know if there is any way to avoid one or two errors in those instances,

and

whereas it would be nice to have a totally efficient, totally error-free

system, I think it is next to impossible. I believe we have maybe 15,000 of

these going through, and in one or two cases there may, in fact, have been

errors made, either through people not being available at the time to do

something or whatever. I believe this is a very minor problem but I'm glad she

pointed it out. I don't think we could ever have an error-free system.

MR. J. BYRNE: So basically what has happened

though, you had to put in $96,000 or $97,000 to pay someone $107. Is that

correct? Am I reading that wrong or what? In number three there, one, two,

three.

MR. BAKER: Yes, I'm just going through that

now. I'm not familiar with the individual case Mr. Byrne, so you may be right.

Does anybody know? Bob?

MR. CLARKE: That was the only error in the

whole system like this. I don't know how it got picked up, but that is the only

one. The system is such that you can't process or refund unless there is a

credit in the account, and that is a control feature. There was an amount that

went in there that was paid by a receiver that shouldn't have gone in there, and

in order to get that refund out this fictitious adjustment had to be made.

Through some timing and some staff being off it didn't get put back in,

essentially. That's why that error occurred.

MR. BAKER: Yes, this was an error in the

system.

MR. J. BYRNE: An error in the system. That

error in the system, will it be corrected in the future, won't happen again, or

can it happen again?

MR. BAKER: When you are dealing with 15,000

instances and there is one error, you can't sort of change the whole system for

that. I don't know if Bob has done an evaluation of the system. (Inaudible).

MR. J. BYRNE: But you are saying there is only

one error. We really don't know that, do we?

MR. CLARKE: What I am saying is, there is only

one of this nature.

MR. J. BYRNE: Yes.

MR. BAKER: Yes.

MR. CLARKE: There is no other like this.

MR. J. BYRNE: Okay.

MR. CLARKE: It is a question of whether you

should change the system because of this one, or leave it and avoid others,

essentially.

MR. J. BYRNE: As I said earlier, the questions

I had lined up to ask were asked by the finance critic, so I have no more.

MR. BAKER: Okay, thanks.

MR. CHAIRMAN: Thank you, Mr. Byrne.

Before I recognize Mr. Fitzgerald, normally at

10:15 a.m. we would break for coffee, but if it is the intention that we carry

on and we can finish up the Public Service Commission very quickly - say by

10:30 a.m. or so -, I won't call a break and we will pass the heads at that

time. Is that alright with everybody?

WITNESS: Okay.

WITNESS: Okay with me.

WITNESS: Okay.

MR. CHAIRMAN: Alright. Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Mr. Minister, with regard to the school tax, can

you tell me how much money has been actually written off in - monies that are

uncollectible in that particular department?

MR. BAKER: I will let Bob answer it. My

understanding is that we first of all inherited a series of records that were -

less than perfect is an understatement. A lot of confusions, a lot of problems

with the records we inherited from the school tax authorities, and we have been

the last three years trying to sort them out - people going by hand through

hundreds of thousands of documents and so on. It has not been a simple job.

Whether there was a lot written off depends upon

what you mean by written off. There were a lot of instances, we discovered,

where people who were on the rolls as having owed school tax - and as we carried

through the investigation we discovered they didn't really owe it in the first

place. So that is really not written off. It is instances where people would

automatically go on school tax lists simply because they existed and were there

previous years, even though they for that year weren't working or were in

university or had retired or whatever, you know, and their income had dropped

below the level, but they were still being charged.

There were a lot of those that I don't look at as

written off - there is, I think, a recognition that they didn't really owe the

money. Bob can perhaps deal with it better than I can. Bob, what about the

write-offs and so on?

MR. CLARKE: You are right, Minister, the

write-offs mostly were adjustments because the debts weren't valid. The true

write-offs are probably about $2 million and that would be for people in

hardship situations.

MR. FITZGERALD: So all monies that are

outstanding and are owed to government are still being collected?

MR. BAKER: We are still going through normal

collection procedures, however, again I should stress that I believe some of

what is still on our books is not legitimately owed, so we have perhaps not been

pushing as hard as otherwise we would have because there is that recognition.

The records were thoroughly confused and perhaps there are still a lot of people

out there who, on the books, owe money, but really don't, but then, of course,

there are the people who legitimately owe money and we should go after them with

all the vigour we have, and with everything we have.

MR. FITZGERALD: I get many calls from several

people in my district who supposedly owe money, according to the Department of

Finance, but I think they should be considered as not owing money due to the

circumstances when those bills were brought forward, but government in their

wisdom still continue to add on interest and still deal the heavy hand saying,

`You owe, you owe.'

MR. BAKER: However, in all those instances

where it is reported to us, we look at the case, we send out the forms to be

completed, because obviously, we can't simply make a decision on our own without

having something back. Generally we need something back from them, either a

notarized statement, an exemption form filled out, or something. Normally we

need a form back and when the form comes back then we deal with it. But a lot of

people have a tendency to simply ignore stuff and it just gets ignored, and

ignored, and obviously, if they don't send the information in, then we keep

sending them the bills.

Now, having said that, because of the volume as

well, and you have to remember we had what - close to 200,000 of those to start,

Bob?

MR. CLARKE: We had 157,000.

MR. BAKER: Out of that 157,000, and stuff being

sent out and so on, again there are bound to be a few errors made, and I believe

in one computer run there were a couple of hundred that went out that should not

have gone out. They were supposed to be flagged in the computer as `stop'

because we were looking at it, and the computer inadvertently spewed them out.

There have been some mistakes like that made but they are very easily corrected.

MR. FITZGERALD: Is your department willing to

look at some kind of an incentive to encourage those people who do rightfully

owe the money, such as reducing the interest rate or wiping out the interest

altogether and having them pay the principal amount they owe?

MR. BAKER: Where people legitimately owe money,

we have an obligation to get it back and I, as I said, have no authority to

write off interest. However, we look at hardship cases and if they don't

legitimately owe the money, then we write the whole thing off if there is some

reason why they didn't. But if they legitimately owe the money, we have an

obligation to the other taxpayers who did pay their taxes to pursue it with

whatever vigour we can within the law.

MR. FITZGERALD: I think it was last year, Mr.

Minister, that your government brought in a new way of collecting taxes from

fishermen. When they make a purchase, they pay the retail sales tax and then

they submit a form and collect it at the end. I think there was some concern

raised, at the time, about the length of time involved from when the

fisherperson actually makes a purchase until the refund is made. At one

particular time I remembering questioning a member of your department, who

indicated it was entirely up to the fisherperson, that he could submit his

purchase quarterly or at the end of the year or when the purchase was actually

made, if it was a large amount. I wonder how is that system working.

MR. BAKER: I don't know so I will pass it over

to Bob Clarke again. He probably knows. I don't know the detailed workings of

that system.

MR. CLARKE: The system, as far as I know, is

working quite well. I'm not aware of any problems right now. It was a bit slow

getting started because it was something new, but if we get a legitimate claim,

original invoices and so on, I don't think there has been any delay in getting

the refunds out.

MR. FITZGERALD: Here again, I've had several

calls from fisherpeople in my district. One person had bought an outboard motor

and up until - I'm going back a few months ago now, in the last conversation I

had with him - and some four-and-a-half months had elapsed - and up until that

time he had not received his refund on the taxes he had paid. In fact, it was

indicated to me that several fisherpeople now are going to Nova Scotia and New

Brunswick and making purchases where they don't have to pay any tax whatsoever.

They don't have to part with their money, and within a day or two they have

whatever they need right here, and some kind of a courier service. I'm wondering

if the whole thing has been a detriment to some of the local businesses in the

area.

MR. CLARKE: In the case of an outboard motor,

we have to establish that it is being purchased by a fishermen, and that is an

item we have to be careful with. In that particular case, there may be some

dispute, I don't know. As for somebody going outside the Province and buying

something, well, they are supposed to pay tax when they bring it in, and that

goes for anybody. I haven't heard any cases like that.

MR. FITZGERALD: Whether it is happening or not

I don't know, but I know it was something that was brought forward to me, that

they found it much more convenient. Rather than parting with their money here,

their 12 per cent, they can make purchases somewhere else and keep their money

in their pocket, and still really get the same level of service.

MR. BAKER: They are breaking the law if they do

that, you know.

MR. FITZGERALD: I'm wondering, Mr. Minister, it

has been talked about free economic zones being created here in the Province. I

think Argentia is probably one place that has been put forward as a possible

place for something like that to happen. Is your department considering allowing

a free zone to exist here in the Province and taking into consideration the

benefits that it might be able to -

MR. BAKER: What you are talking about is a

request that we have with the Federal Government to allow the set-up of what we

call duty-free zones, or free ports. It is entirely a federal decision. We are

in favour of using such mechanisms to try to stimulate business growth and

businesses moving into the Province to create jobs. However, it is totally a

federal decision as to whether this is allowed or not. In the United States it

is allowed and these duty-free areas are engines of growth. In Canada, the

decision was made by the Federal Government that we would not allow the

existence of these duty-free zones. That is the current federal position. As

part of the fisheries response and economic renewal program for the Province,

one of the things we are suggesting is that they do allow duty-free zones in

this Province. All I can tell you is that we are in favour of using the

mechanism but we can't because it is under federal control.

MR. FITZGERALD: In your last Budget, I believe,

if I'm correct, there was $1.2 million brought forward for extra surveillance on

the Burin Peninsula and I think around the Labrador-Fermont border, as it

related to the bringing in of tobacco products and liquor. Have you seen any

difference in the amount of sales on the Burin Peninsula, or have you seen any

difference in the number of people who are being charged or caught with this

contraband?

MR. BAKER: Yes. I believe - although one of the

gentlemen here with me might be able to give you some detail, I don't know - I

believe we have been adequately rewarded for that extra surveillance. Our

tobacco tax revenues did not collapse, and in fact increased a bit. There have

been more seizures and convictions, and therefore, more revenue gained through

that process. For periods of time, I believe, we have had an effect on the whole

smuggling business. Whether that is a permanent effect or how long it lasted, I

don't know. Does anybody know anything about the cases and so on?

It is really an RCMP matter, but there has been a

fairly big increase. Again, I can do you a

summary of that. I have to go to

Justice. I can do you a

summary of the arrests that have been made, the seizures

that have been made. I know there are a lot of cases pending now before the

courts so it has paid off in terms of apprehension. It has also, we believe,

helped keep our tobacco revenues where they are, so I'm pretty happy with that.

MR. CHAIRMAN: Mr. Fitzgerald, your time has

expired, but if you have one question, just to clue up, I would ask leave of the

Committee.

MR. FITZGERALD: Just a couple of very quick

questions. Mr. Minister, is your government looking at reducing the cost of

tobacco products and liquor products in line with, say, Quebec or Ontario?

MR. BAKER: The quick answer is no.

MR. FITZGERALD: Okay. Monies collected from

Atlantic Lotto. Are those monies that (inaudible) or do they just go into

general revenue?

MR. BAKER: They simply go into general revenue

like all other monies that we collect. Our policy is that we don't earmark

revenues. We didn't want to start that practice of earmarking revenues.

MR. FITZGERALD: Have you had many complaints

coming through your department regarding - well, I will use teachers' pensions -

where people have been off on sick leave, have applied for an early retirement

pension due to ill health, and having to wait in excess of a year in order for

their government pension to be authorized and for them to receive funding?

MR. BAKER: Are you talking about people now

applying for medical pensions?

MR. FITZGERALD: Yes.

MR. BAKER: Okay. In a lot of cases I think they

are fortunate it is handled as quickly. It is an area that we have to be very

careful of. There is a procedure that has to be gone through in order to get a

medical pension.

Whereas if somebody has some sort of definable, well-defined

illness, somebody has been in an accident and so on, some of these cases are

very easy to take care of. Other cases are not. Particularly in the case of the

teaching profession when the teacher says: Look, I can't take it any more in the

classroom. Now, is that grounds for a medical discharge or not? They have to go

through quite a rigorous process and get recommendations from medical people and

so on, and sometimes we send them back for re-evaluation.

We have to be very careful because of the state of

the pension plan, and we have to make sure that the people who go off on medical

pensions are in fact people who should be off on medical pensions, you know.

There is some delay with some of them. Others are handled more quickly because

they are more obvious. I would suggest that if the delay is over a year it means

that there is some question, some thing we needed checked, and some new

information we requested or whatever. Mr. Bennett could answer that. He has been

handling those things for some time.

MR. BENNETT: Just slightly to elaborate,

because the minister has really put it the way it is. We find it very difficult

sometimes with, say, psychologically-related illnesses to do a final

determination of whether the person is permanently disabled. That is the one

thing that the act requires, the permanency. That means at no other time, and no

time in the future, under the best assessment, can the person return to the

particular position. In these particular areas with teachers - bad back

syndromes with the public service will give you another type of example - that

is a very difficult determination.

Often what has to happen - and you will find that

with any of these; Workers' Compensation is the same way - is there are periodic

reviews for a period of time, at which time then a determination is made, and

sometimes in as high as two years.

MR. FITZGERALD: Yes. I was just referring to

one particular incident where one individual who is a school teacher had a

psychiatric problem, and his psychiatrist had moved I think outside the Province

and couldn't be located. As a result of that, after teaching in the classroom

for twenty-six years, found himself with no telephone, going to social services

to pay his light bill and this sort of thing, and it seems to be very degrading

when somebody would put that amount of time in and be assessed by other doctors

here and it will be shown that he was incapable of doing a duty that he normally

performed, so it kind of struck me that it was very uncaring on somebody's part.

MR. BENNETT: Just a slight response to that if

I may, Mr. Chairman.

As a result of sort of getting involved personally

by say, people of the pension division in the Department of Finance with a

medical problem, with the doctors of the patient, we recently appointed Atlantic

Offshore Services to act as independent medical advisers and this has removed

any personality problem that may develop between, say the staff who are looking

at these particular medical opinions and documentation and the doctors

themselves, so we do have an independent review, we don't see the medical

evidence any more. We have no say as to what the recommendation is that is going

to be made. Dr. O'Shea heads that up, and that has worked extremely well and

this is a chance for doctors to talk to doctors and to do assessments on this

basis. It is completely independent of us and also very importantly, completely

independent of the person's physician or specialist, because obviously that

person also has a vested interest in protecting the welfare of his patient, so

we feel that the current system which we introduced less than a year ago, is now

working quite well.

MR. FITZGERALD: With all the talk of attracting

new business here into the Province, Mr. Minister, at one time I know we could

invest in local businesses like Newfoundland Light and Power and Newfoundland

Power used the investments similar to an RRSP, where you could write it off on

your taxes at the end of the year. Is your government considering allowing that

to happen with other businesses here in this Province, in order to encourage

Newfoundlanders to invest locally and create employment?

MR. BAKER: That concept was tried. I would

suggest to you that companies like NewTel, Fortis and those companies have no

difficulty getting people to invest in them, and it would probably be a gross

waste of taxpayers' money to give rebates for people investing in NewTel and

Fortis and some of those other companies. We tried that scheme for a while and

it was not overly successful because most of the investment that we ended up

giving credit for, was the 10 per cent variety that was in Fortis, and they have

no need of risk capital, there is no risk involved in investing with them.

The whole concept of making a risk capital

available, is one that we are at this current time considering again. We believe

that there is perhaps a shortage of risk capital and we are having discussions

with some of the other provinces as well, in terms of pools of risk capital, how

to best make them available, so the concept is a good one, and I hope that

within the next six months or so I would be able to report back on an initiative

in that area.

MR. FITZGERALD: Yes. I am not thinking along

the lines of Fortis and Newfoundland Power -

MR. BAKER: I understand that.

MR. FITZGERALD: You should be able to broaden

the scope there and allow other entrants to be available and allow people to

participate in other ventures other than the sure thing, sort of thing.

MR. BAKER: Sure. I say that it is a good

concept and

whereas there is no money in the Budget at this point in time for

that type of initiative, we are having discussions about other mechanisms to

make venture capital available and hopefully, in the next few months, I will be

able to say something about it. It is obviously needed. There are discussions

going on now between the Maritime premiers that may lead to something there that

will involve credits for venture capital and provide access to a lot of venture

capital. I think it is very important.

MR. CHAIRMAN: If this meeting is going to

continue on much past 10:30 a.m. I think we should have a break now and come

back, but if it can be concluded within the next few minutes we will carry on

and finish. What is the consensus of the Committee?

WITNESS: Chairman, we are ready to move the

heads.

MR. CHAIRMAN: Mr. Byrne has asked to be

recognized, so I wanted to bring this up. Should we have the break and recognize

Mr. Byrne, or have Mr. Byrne and then come back?

MR. WALSH: Mr. Chairman, we are ready to move

the Estimates, but I have no problem in Mr. Byrne asking a few more questions.

If not, we can probably see ourselves here till 1:00 p.m. because at that point

in time government members feel that maybe they should jump into it as well -

we've been here for about an hour and a half now, so if we take an hour and half

that will be 11:30 a.m., 12:00 p.m. We will let Mr. Byrne have his few questions

and as I say, we are ready to move the Estimates.

WITNESS: What about the Public Service

Commission?

MR. CHAIRMAN: We are going to do the Public

Service Commission. What we will possibly do is ask Mr. Byrne to have his few

questions, we will adjourn for a break, and come back and do the Public Service

Commission here after. Is that alright?

Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. First

off, we have only been asking questions for an hour and four minutes, not an

hour and a half.

MR. BAKER: I was late, right?

MR. J. BYRNE: I have no questions on the Public

Service Commission anyway. I want to get back to the school tax. Has government

gone beyond the point of diminishing returns? Is it costing more now to track

and collect the revenues out there? When will it be completed?

MR. BAKER: Right now it is still taking in

about twice as much as it is costing us to administer. We haven't yet reached

the point of no return; however, I suspect it will come very soon, and we have

to go to other mechanisms to collect what is left. There was one mechanism

suggested in the House of Assembly in the last session and may in fact come back

in the fall in the form of a bill, but that will be dealt with at the time. But

you are right. You do reach the point of diminishing returns. We are watching

that very closely. When we reach it, I believe we plan to stop....

WITNESS: (Inaudible).

MR. BAKER: We are going through this year

because we are still recovering twice as much.

MR. J. BYRNE: So you figure it will be

completed this year.

MR. BAKER: But I suspect at the end of that

time that will be it.

MR. J. BYRNE: When you closed out the school

tax authority you increased the income tax to offset the revenues, or to collect

revenues for the schools. How much more is government receiving through income

tax than it was receiving through the school tax?

MR. BAKER: Yes, we did two things. We increased

the payroll tax to get the business side and then we made a change to the income

tax side to get the personal side. The calculation was done that this would be

revenue replacement, okay?

MR. J. BYRNE: That is all?

MR. BAKER: That is all. Since then obviously

there have been changes in demographics, the average wages have gone up or down

- in some cases down. I couldn't really answer your question accurately. Our

attempt was revenue replacement with the changes we made at that time. I don't

know if we can give a number as to whether it was revenue replacement or a loss

or a gain.

WITNESS: (Inaudible).

MR. J. BYRNE: More than likely it is up.

MR. BAKER: Bob Vardy says about even. He has

been following this.

MR. J. BYRNE: Is that right? I was figuring it

would be on the plus side. Anyway, in the Departmental Salary Details, page 21,

Department of Finance.

MR. BAKER: Yes.

MR. J. BYRNE: It says: Government Personnel

Costs, Overtime & Other Earnings, $1.8 million. Can you explain that? Is there

more personnel? Is this strictly for overtime for employees in the department?

Wouldn't it make more sense to have more employees? Or am I reading that wrong?

MR. BAKER: It depends. Is the $1.8 million

within the department overtime, Bob, or...?

MR. VARDY: The overtime amount for the

Department of Finance would be much lower than that. In some cases, particularly

in fiscal and tax policy divisions, there is a lot of overtime at one period

during the year, right, at budget time. People work in some cases twenty hours a

day in getting things done on time. You wouldn't be able to spread that out over

other resources. It wouldn't be feasible.

MR. BAKER: It wouldn't make sense at the time

to hire new people to do it because you have to use the people who are there.

There are these bump times.

MR. VARDY: Other personnel costs, that wouldn't

be overtime. The overtime amount is quite a small proportion of that.

MR. J. BYRNE: What are the other personnel

things?

MR. VARDY: Say, Canada Pension Plan

contribution, UI contributions, et cetera.

MR. BAKER: That is from the normal salaries.

Those contributions to the normal salaries within the department.

WITNESS: That figure is exactly the same as the

figure for pay equity. Would it be a possibility that that is the same figure?

Because it is $1.8 million on personnel costs on page 34 in the Estimates. I

didn't know if it might be just one is the same as the other.

MR. BAKER: Yes, you might be right. That is

probably the $1.8 million, that is probably the pay equity.

MR. CHAIRMAN: Thank you, Mr. Byrne. I think

before we carry on to the Public Service Commission I will ask the Clerk to call

the subheads and maybe go inclusive from 1.1.01 to 3.1.02. Would you do that,

sir?

On motion, subheads 1.1.01 through 3.1.02, carried.

MR. CHAIRMAN: Without amendment.

SOME WITNESSES: (Inaudible).

WITNESS: It hasn't been amended.

MR. CHAIRMAN: No.

WITNESS: (Inaudible).

MR. CHAIRMAN: No, no amendment, they have

admitted it and are going to change it.

WITNESS: (Inaudible).

MR. BAKER: I would like to point out that the

errors were not in the 1995-1996, the Budget, it was in the revised for last

year, which is going to be totally redone once we get the public accounts

anyway. Once the Auditor General gets at it.

MR. CHAIRMAN: I thank the member for being so

diligent.

On motion, Department of Finance, total heads,

carried.

MR. CHAIRMAN: We will move on to the Public

Service Commission. I recognize Mr. Fitzgerald. He tells me that he has a few

questions.

MR. FITZGERALD: Thank you, Mr. Chairman. I just

have a couple of quick questions. Page 52, Mr. Minister, Services to Government

and Agencies. 2.2.04, French Language: "Appropriations provide for French

language training and translation services for Departments, Crown Corporations

and Agencies...."

Two hundred and forty-seven thousand dollars

brought forward in the Budget of 1994-1995, $47,900 was the revision. Another

$247,000 for the Estimates for 1995-1996. Could you explain those figures,

please?

MR. BAKER: First of all I am not as familiar

with the Public Service Commission Estimates as I am the others so I will ask

Sheila Devine if she would attempt to give answers to those questions.

MS. DEVINE: The French language program is

governed by a French language agreement, a federal cost-shared agreement which

was entered into approximately two years ago, and that agreement provides for

75/25 funding for the French training program, and 50/50 per cent cost-sharing

for the translation services. Now, the program has been slow to get off the

ground and certainly what you see there reflected in last year's Budget figures

is the cost of one instructor.

The past year was spent developing the training

program, looking at some needs assessment, and what you will see over the next

year is certainly a regional component of the program whereby we will go out to

centres such as Labrador City to provide training for public servants there.

Basically, it is program expansion.

MR. FITZGERALD: So would it be fair to say that

due to not spending that money we lost approximately $110,000 in federal revenue

last year?

MS. DEVINE: We are certainly going back

formally to the federal government to see if we can renegotiate to have a year's

extension to that particular agreement.

MR. FITZGERALD: So that money will be

forthcoming, hopefully, this year?

MS. DEVINE: We would hope so, but we have not

concluded any discussions, no.

MR. FITZGERALD: That is the only question I

have.

MR. CHAIRMAN: Mr. Fitzgerald, I will now ask

the clerk to call the heads of the Public Service Commission, please.

On motion, subheads 1.1.01 through and including

2.2.05, carried.

On motion, Department of Finance, total heads,

carried.

MR. CHAIRMAN: Motion to adjourn now, please.

On motion, the Committee adjourned.