GOVERNMENT SERVICES ESTIMATES

COMMITTEE

May 9, 1991

Department of Municipal & Provincial Affairs

(Unedited)

The Committee met at 7:00 p.m. at Colonial Building.

[Beginning of Committee not recorded, due to technical

problems]

MR. CHAIRMAN: Order, please!

The hon. the Minister of Municipal and Provincial

Affairs.

MR. GULLAGE: I would be happy to answer any

questions which members of the Committee may have. However, there may be

occasions, in some technical areas, where I would wish to defer to some member

of my staff to provide additional details or information. The Chairman has

already explained that that is, of course, acceptable.

I would like to introduce, firstly, the members of the

Executive Group from the Housing Corporation. Mr. Chairman, I would assume that

the Chair would entertain two opening statements, because we have two separate

ministries in the sense that the Housing Corporation is separate with a separate

Chairman and so on.

MR. CHAIRMAN: Yes. I do not think that will be a

problem.

MR. GULLAGE: So, I would like to introduce, to my

right, Mr. Robert Noseworthy, the Chairman and Chief Executive Officer of the

Newfoundland and Labrador Housing Corporation; Mr. Peter Honeygold, the Senior

Vice-President of operations; Mr. Ed Heath, the Senior Vice-President of Finance

and Administration Services; and also, Mr. Don Osmond, the Executive Director of

Development with the Corporation.

Mr. Chairman, I would like to take this opportunity to

review the Estimates of the Newfoundland and Labrador Housing Corporation and

provide an overview of the activity proposed for 1991-1992. However, before

looking at these areas I would like to provide a brief overview of the mandate

and activities of the Corporation.

NLHC is the housing arm of the Provincial Government

which strives to ensure that suitable and affordable housing is available to all

residents, with the priority to provide such housing to those most in need. In

these activities NLHC works in co-operation with the Federal Government,

municipalities and community organizations. To assist in the Province's economic

development, NLHC plans and develops residential and industrial land assemblies

in areas of actual and potential growth.

The Corporation's prime responsibility is the delivery

of social housing programmes for low income families, senior citizens and

special needs groups. These social housing programmes, which are cost-shared on

a 75/25 federal/provincial basis with Canada Mortgage and Housing Corporation,

are delivered and administered by NLHC. As well as social housing, NLHC

administers market rental housing, develops residential land assemblies, and

develops and administers provincially owned industrial parks. With regard to the

scope of NLHC activities, the Corporation presently manages a portfolio of some

6,000 social housing units and 1,000 market rental units. As well, the

Corporation administers a portfolio of some 8,000 mortgages and home repair

loans totalling in excess of $130 million.

In the area of land development, the Corporation has

developed close to 6,200 residential building lots of which 5,600 have been sold

to date. Over 1,000 acres of industrial land has also been developed of which

close to 600 acres have been sold.

Gross expenditures for the Corporation for the

upcoming fiscal year are estimated at $216.9 million, representing current

account expenditures of $112.6 million and capital account expenditures of

$101.2 million. It is important to note that the provincial grant of $16.8

million, referred to in the estimates, represents only the provincial share or 8

per cent of the total expenditures. Of the total expenditures anticipated for

1991-1992, 47 per cent or $101 million will be revenues generated by the

Corporation from its own sources, 37 per cent or $80 million will be provided by

the Federal Government, and 8 per cent or $18 million will be financed

independently by the Corporation through bank loans. The net current account

request of $12.9 million contained in the budget, represents an increase of

nearly $1.2 million over the 1991-1992 revised budget. Capital programmes for

the Corporation require no capital funding from Government.

The highlights of the 1991 - 1992 budget include the

provision of some 270 new social housing units throughout the Province to serve

families, seniors, natives, non-elderly singles and the disabled. Some 230 of

these units will be newly constructed at a cost of $24 million, while the

remaining forty units represent new rent supplements which will assist needy

clients living in private rental accommodation. All programmes will provide

financial assistance based on the tenants' actual annual income and their

ability to pay.

Members may recall, I made a Ministerial Statement in

the House just recently announcing successful proposals for the current year

under the Private Non-profit Housing Programme. This programme provides funding

to private non-profit sponsors to construct, primarily, senior citizens housing

projects; the provision of almost $21 million in federal - provincial home

repair funding to some 2,000 eligible recipients - this funding provides grants

and loans to low income home owners, including natives and the disabled, to

upgrade their existing homes, rehabilitation represents the greatest housing

need in the Province, and will continue to be a major focus of the Corporation -

the provision of some $35 million to fund residential land development, that

will see an additional 1,000 residential building lots developed; the provision

of some $5.8 million for industrial land construction in areas such as

Donovan's, Clarenville and Stephenville, that will upgrade existing facilities

and add some eighty acres to the inventory of lands available for sale; and the

continued sale to the general public of the Corporation's market rental units

with some 250 units, located in Goose Bay and St. John's, being offered for

sale. Upon sale of these projects, the Corporation's portfolio will be reduced

to approximately 750 units.

In closing, I feel the 1991-1992 budget of the

Corporation represents an excellent balance in recognizing the continuing need

for social housing in the Province, while considering the fiscal realities

facing Government. In total, the social housing needs of some 2,300 additional

households in the Province will be addressed through this budget in the coming

year. In looking at the year ahead, the residential construction industry

remains a promising part of our economy. Housing starts in the Province are

anticipated to increase over 8 per cent and a continuing strong performance is

expected in the renovation sector. Lower interest rates will improve the

affordability of new homes for both first-time home buyers and the trade up

market as well.

As the Minister responsible for the Newfoundland and

Labrador Housing Corporation, I am looking forward to another successful year

for the home building industry in the Province.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Tobin, I believe, is going to

speak for the Opposition.

Mr. Tobin.

MR. TOBIN: Thank you, Mr. Chairman.

(Inaudible) There is a prime need for Newfoundland and

Labrador Housing to do a lot more in the Province than increasing rents

(inaudible).

MR. CHAIRMAN: Mr. Tobin, I would like to interrupt

for a moment. As long as we recognize that you are questioning the Minister, I

would like for you to ask one question at a time and (inaudible).

MR. TOBIN: My question to the Minister is: Will

the Newfoundland and Labrador Housing Corporation refer all rental increases to

the Landlord and Tenancies Board?

MR. GULLAGE: Mr. Chairman, our rent increases, of

course, are substantially in the market area of our housing portfolio, and any

rent increases in the social housing side of our mandate, rent per se, is geared

to income as we know. So, they are still confined to 25 per cent of their

income. So, we are talking about the market side. We have had increases in the

market side, but they, from time to time, are necessitated because of the need

to maintain a rent that is reasonable, because we are normally at the lower end

of the market sale in housing, in any case, in the market sector, but we have to

maintain the units. They have to be refurbished and renovated from time to time,

and we have to, therefore, periodically increase the rents. We do, from time to

time, have to justify these rent increases of course, and appear before the

Tenancies Board.

If I take the question correctly, it is: Will we refer

all rent increases to the Tenancies Board? I think I would like the Chairman,

possibly, to speak to that.

MR. NOSEWORTHY: Mr. Tobin, all the market rental

units, within the Corporation, that we own in the Province, are subject to the

Residential Tenancies Board. Any rent increases relating to those individual

tenants have the right to appeal to the Residential Tenancies Board, and indeed

in many cases it does happen, and we appear before the board.

In terms of our subsidized social housing units, as

the Minister points out, all the rent increases there are simply based on the

individual's income. There is no increase in rent unless income rises. Indeed,

if income decreases we adjust the rent downwards.

MR. TOBIN: Is there going to be a substantial

increase in some of your housing programmes based on people's present income?

Have you decided recently to increase that?

MR. NOSEWORTHY: No. It is all based on income, and

there is a formula which is in place. We have made some adjustments to the

deductions which have affected a small number of individuals in the portfolio,

in a minor way. There may be one or two individuals within the portfolio who

might be affected in a substantial way. If you have a case there that I could

respond to, I would certainly be prepared to do it. But we have made some

adjustments, and looking at it across the board, there are no significant

impacts in terms of our social rental units.

MR. TOBIN: (Inaudible) adjusted up to 10 per cent

in some cases?

MR. GULLAGE: I think the question is directed,

really, to the market housing units and not the social units, and there is quite

a difference, as the Chairman has explained, in that the social units are geared

to percentage of income and any increases in the rents would have to be absorbed

by the Corporation.

On the market side, maybe the Chairman could define

which areas were impacted in the current increases.

MR. NOSEWORTHY: The 10 per cent increases that you

are referring to, Mr. Tobin, are in St. John's. They would be, primarily

Elizabeth Towers, where we have completed the renovations that have been ongoing

for a period of time, and indeed the rents have been frozen there for some two

years, while the renovations have been ongoing, and we have not increased rents.

So, the 10 per cent increase really reflects the increase in market rent to

adjust for the market at Elizabeth Towers.

MR. TOBIN: (Inaudible) significant increase

(inaudible) at Elizabeth Towers?

MR. NOSEWORTHY: After, I think, it is two and a

half years, which would reflect basically an increased adjustment for inflation

over that period of time. Indeed, it is based on a survey of the market

conditions and other comparable accommodation in St. John's that would be in the

private sector, for example. We would set these rents equivalent to those.

MR. TOBIN: So, has Elizabeth Towers been

subsidized up to now by the Corporation, or has it basically been paying its own

way for those years?

MR. NOSEWORTHY: It has certainly been paying its

own way up until these recent renovations, which were necessary at Elizabeth

Towers because of some structural problems that were being experienced with the

exterior of the building. Our financial projections, over the next two to three

years, would be that there will be some losses associated with the Towers, and

after that it should get into a healthy financial situation again.

MR. TOBIN: (Inaudible) Housing Corporation

(inaudible) at the Towers? Is any of that (inaudible)?

MR. GULLAGE: I will speak to that, Mr. Chairman.

Our intent, of course, is to not be in the market area

as far as construction of new units, or continuing to hold the units we

presently have, is concerned. Most of the market stock throughout the Province

has been taken by the Corporation as a result of amalgamation, for the want of a

word, of previous corporations, and the stock was in place. Our prime mandate,

clearly, is to deliver social housing, and we do not want to be in the market

sector. When the time is right and a good market price is available for these

units, we intend to divest ourselves of them. There may be the odd exception. If

we see that a particular group of buildings, or a building, is fulfilling a

particular social need, we may decide to hold onto it and use it in our social

portfolio.

I could give some examples, but I hesitate to do so,

because of identifying the people who are occupying the buildings. We do have

some buildings that are predominantly, for example 80 per cent, occupied by

seniors. So, we would hesitate to sell off those buildings, as long as they

continue to be occupied that way.

To answer your question, basically, I think we do not

want to be in the market sector. That is not the role of the Corporation, as far

as our rental accommodations are concerned.

MR. TOBIN: Thank you, Mr. Minister.

The housing, which you just made reference to

(inaudible) the allocation of funding (inaudible), do you know how you selected

these (inaudible)?

MR. GULLAGE: I did not play any role in it, so the

Chairman should probably speak to that.

MR. NOSEWORTHY: In the fall of each year, we go

for a proposal call for submissions under the programme, some time toward the

end of November. This year we had some fifty-seven proposals which were

submitted to us. There is SEED funding which is generally provided so that a

group can hire resource people to do a need and demand survey, to look for a

piece of land, to hire an architect to put together a concept plan, and that

sort of thing. The proposals are submitted to us, and they are reviewed, then,

by an in-house committee within the Corporation which is broad based. The

criteria essentially is the need and demand, which has been defined in a given

area; the ability of a group to deliver - in other words, certainly, if they

have an ability to deliver, if there is a portfolio in an area which they are

delivering now, that, indeed, provides us with some background to know that they

have the capability to deliver; the ability of a group to administer the project

in the longer term, if indeed they have been a viable operating group for a

while; and the economic viability of the project in terms of its cost

effectiveness. If the group, indeed, are prepared to contribute land or to

contribute some form of equity to the project, that will assist in their being

given a priority. Those are reviewed in detail by the Corporation and, indeed,

there is a selection process based on that criteria, and the groups are

priorized on that basis.

As you can appreciate, the funding that is available

in any given year enables us to do, perhaps this year, ten to eleven projects

out of a total of fifty-seven proposals which we had before us.

MR. TOBIN: The ones that were approved

(inaudible), in terms of those given priorization, the ones that were approved

here, and the ones that we have asked the Minister (inaudible), they were

considered top priority by the Housing Corporation in order of their ability?

MR. NOSEWORTHY: That is correct. The

recommendations were made to the Minister. That is correct, Mr. Tobin.

MR. TOBIN: Have you got indications that all of

these will be taken up this year, the people who applied have indications

(inaudible)?

MR. NOSEWORTHY: Certainly. The track record that

we have had over the past two years in this area has indicated that generally

there has been 100 per cent take up in the year they have been allocated. We

have not had to bring forward backup units in any given year. However, the

backup units do remain a priority for the subsequent year. So, there is no

reason, I think it is fair to say, why we would expect that any of these will

fall short. But there are, of course, no guarantees. If indeed a proposal comes

in, once the tenders are called for a project and it is above the maximum unit

price that is allowable under the programme, we may very well have to cancel

that project for that given year and look to another project, but certainly that

has not been the history.

MR. TOBIN: How many people are there (inaudible)

in a situation like this? What is the deciding factor (inaudible)?

MR. NOSEWORTHY: Well, as I indicated, there is a

need and demand survey which is produced which would show the waiting list in

any given area. There are census statistics which show factors in relation to

seniors' populations and that sort of thing, by a particular planning region

that the Province would use in terms of its planning and research. Those things

are compiled in a technical fashion, quite frankly, with a view to the need and

demand criteria. That is how they are selected.

AN HON. MEMBER: (Inaudible).

MR. TOBIN: I say to the Chairman, if I could be

more specific in that regard, Marystown (inaudible).

MR. CHAIRMAN: Gentlemen, I will have to ask you to

speak up (inaudible).

MR. TOBIN: I will try, Mr. Chairman (inaudible).

My question is to the Chairman again. I talked about

Marystown in my (inaudible). I understand, from that group, that they have

identified a desperate need for housing. The population of seniors has been

identified, as well, and we were led to believe by some people in the

organization that funding would be forthcoming. I was wondering if you could

tell me why they did not qualify?

MR. GULLAGE: Well, I have the list of projects

here with the criteria on them. I could only tell you why in respect of the

other proposals that were essentially approved.

MR. TOBIN: The question that I have been asked by

people down there, by the private (inaudible) is as to why they were receiving

this funding now, to say (inaudible)? You know, that is not going to satisfy

them. I would like for you to be as specific as possible, and say, `Listen, this

is why Marystown did not qualify.'

MR. CHAIRMAN: Order, please!

I apologize for interrupting, but I am going to have

to recess so (inaudible) determine what the problem is, because we definitely

want the proceedings to be recorded for Hansard. We are having some difficulty

(inaudible).

Recess

MR. CHAIRMAN: Order, please!

I must apologize for the delay. We were having some

problems with the recording equipment, and I would like to explain to you what

we have done. We have found five microphones that are in working order, so we

have put two of them in the witness stand, one on each of the MHA's tables and

one here. Because of the manner in which they are dispersed around the room, I

have suggested that the five of them be kept on at all times. That way, with the

five of them on, we will be able to do a sensible level of recording. I would

caution you that, with the five microphones on there should be no conversations

going on around the table, thinking that your microphone is turned off. So, you

can be recorded regardless what you say, of whom you say it, and regardless of

how discreet you think your comments might have been otherwise.

We have had the opening statements from the Minister.

Mr. Tobin has used up fourteen of his fifteen minutes. I believe when we

recessed, he had just asked a question and had not yet gotten an answer. Am I

correct?

MR. TOBIN: Yes, I believe so.

MR. CHAIRMAN: You were awaiting a reply?

MR. TOBIN: I was awaiting an answer, yes.

AN HON. MEMBER: What were you asking?

MR. TOBIN: If you want me to repeat the question

here, sure.

MR. CHAIRMAN: I would ask the officials, as well,

to please read their name and title into the record for us before speaking.

MR. TOBIN: My question, I guess, to the Chairman,

for the record, is specifically dealing with the request from Marystown, as to

why they did not score high enough on the list that was recommended for

approval, why they did not score high enough on whatever formula you use, to be

considered for funding from this year's projects.

MR. NOSEWORTHY: The primary reason, Mr. Tobin,

that I can read from here - there may have been others, as well - basically, is

the need and demand versus other areas and other projects that had submitted

proposals within the Province. That is not to say -

MR. TOBIN: What is the need and demand?

MR. NOSEWORTHY: The need, the waiting list, other

factors, other statistical information, in relation to the need for seniors'

housing in that area, that contribute to warrant a demand for social housing in

that particular area.

MR. TOBIN: So what you are saying, then, is that

the need and demand is not as great in Marystown as it was -

MR. NOSEWORTHY: In Marystown as in some other

areas.

MR. TOBIN: Based on what?

MR. NOSEWORTHY: Based on waiting lists and other

statistics that are used, Census Canada Statistics and what have you.

MR. TOBIN: That is a waiting list for people -

MR. NOSEWORTHY: People going in.

MR. TOBIN: Would you have copies of waiting lists

of all the applications?

MR. NOSEWORTHY: We would have information on the

need and demand information on all these projects, yes.

MR. TOBIN: Would you be able to share that

information with me if I dropped into your office some day?

MR. NOSEWORTHY: Certainly. I could review not only

the reasons in terms of need and demand, but other reasons as well, that I am

not totally familiar with here in all these fifty-seven proposals, but certainly

the technical people -

MR. TOBIN: I know there is information that you

would not have off the top of your head, so I will probably drop into your

office some day and then we can go through it.

My time has expired, and I will get back to it again,

Mr. Chairman, in some other instance.

MR. CHAIRMAN: Is there anybody here who would have

a question for the Minister on the estimates concerning Housing.

Mr. Short.

MR. SHORT: First of all, I guess I should thank

the Minister for his announcement the other day. I am not necessarily very

popular with my colleagues in Stephenville and Port au Basques because I got all

twenty units for my district, for the Western Region.

MR. R. AYLWARD: Must be a Liberal district.

MR. SHORT: It is definitely a Liberal district.

The question I want to ask the Minister is: The senior

citizens' complex in Stephenville Crossing has been working for some time, a

number of years, I guess, on - I do not know if you would call it a pilot

project - congregate housing. I believe there is now a move to, perhaps,

implement a pilot project, the first one in the Province, in terms of congregate

housing, Mr. Minister? Is that correct?

MR. GULLAGE: Yes. That project is in a backup

position for next year, as it sits right now. That is being considered in that -

MR. SHORT: It is being considered?

MR. GULLAGE: Yes.

MR. SHORT: The only other question, Mr. Chairman,

is: Has all the budgetary process, as it relates to housing, been completed now?

Because I get an impression in talking about doing up units, for example in my

district, that they do not have a budget in that area yet.

MR. GULLAGE: Where we are right now, we have

announced - and as you know, I announced in the House of Assembly, I think it

was last week - some of the units are being allocated this year on a cost-shared

arrangement, obviously, with the Federal Government, CMHC. We still have 50 per

cent of the budget with our partner, if you like, with CMHC, that has not been

released by the Federal Government as yet, and we time our releases and

approval, if you like, subject to the Federal Government approving their portion

of the budget first. So, there is still 50 per cent of that CMHC budget that has

not been finally approved, federally.

MR. CHAIRMAN: Thank you, Mr. Minister.

Mr. Aylward.

MR. R. AYLWARD: Mr. Minister, I did not get what

the Member for St. George's said about a backup project that is coming. Could

you explain that? I did not understand it.

MR. GULLAGE: Well, every year when we approve the

projects - and I stand to be corrected - in all the categories, in native

housing, seniors, and all the social housing components, we also approve

projects in a backup position, so that if, in fact, some of the approved

projects do not proceed, for whatever reason, the backups are conditionally

approved for the next fiscal year. So, we know that they are being approved,

assuming the list of approvals for the current year do not proceed. Some of them

could kick in and be done. But if, in fact, that does not happen, and all of the

approved list gets completed, then they are simply backups for the next year and

are automatically approved. Am I right in saying that?

AN HON. MEMBER: Yes, and it also allows for early

tendering and what have you for the following year.

MR. GULLAGE: That is right. That allows, of

course, for early tendering for the following year. It gives advance warning to

the project organizers and the applicants that they have a backup position for

their units and can start planning and tendering.

MR. R. AYLWARD: They were all on your list last

week, I believe, where they not?

MR. GULLAGE: Yes, they were.

MR. R. AYLWARD: These senior units that are being

built now with the federal/provincial money that was announced last week, are

they a part of the Department of Health's plans to create more respite beds, or

whatever you call them, these units or the beds that were to be created and will

be subsidized by the Department or Health, however it is done now, as senior

citizens' homes or whatever you call them?

MR. GULLAGE: These units are self-contained units

strictly within the Housing Corporation's mandate. We are, as part of the

revised mandate of the Corporation, looking at, and I think it is safe to say

that we will be working with a joint outlook as far as the housing sector you

are talking about is concerned. That is, delivering housing for seniors and the

various levels of health care, working with Social Services and the Health

Department. So, those three groups, if you like, Housing, Social Services and

Health, working together to provide the various levels of care and housing for

our seniors' population. So, we will be working more closely with them in the

future, but, as it sits right now, these are self-contained units that are

strictly within our mandate, as it presently is.

MR. R. AYLWARD: The Housing Department, announced

some time ago a very important change - and I congratulate you on doing it - to

the priorities list for acquiring a unit with Newfoundland Labrador Housing

based on people who find themselves in a battered family situation. I know, you

have tried to help me out on a couple of them already. There seems to be some

confusion out there, especially in the case that I had, of who actually will

qualify, as a person under this policy. What would be the criteria, I suppose,

or a clear definition of the criteria for someone who is in a battered

situation?

MR. GULLAGE: I think I would rather let that

question go to the Chairman or some other official in the Corporation, because

that is a day-to-day operational question, probably better answered by one of

the officials.

MR. NOSEWORTHY: Mr. Honeygold could probably

elaborate, but basically all we require, in terms of a priority, is proof

really, that the individual is in a battered situation, and we have referral

from an appropriate social agency. That is basically all we require, and on that

basis we will certainly treat that individual as a priority as long as units are

available.

Usually we have a point scoring system, as you are

aware, which is in place, but that essentially goes out the window in a

situation where we have a victim of family violence. As long as there is a

referral, as I say, from that agency we do not require any other criteria.

MR. R. AYLWARD: It's a good policy. I am glad you

did it.

Are there any plans now - I know Mr. Tobin touched on

this in his statement - to increase the privatization of your holdings now, say

the Churchill Park area, maybe, or areas that could be privatized, or that could

be getting market value rents, or maybe they are now. I am not sure what way it

works here.

MR. GULLAGE: Those units are presently in the

market sector right now. They do not serve a social housing need. I suppose you

could say, in a sense, that they are at the lower end of the market and could

fulfill a need for seniors in particular, a lot of these units, but they are in

the market sector right now.

MR. R. AYLWARD: Are you planning on privatizing

them? Is there a plan to sell off any of your properties?

MR. GULLAGE: That is really what I mentioned

earlier, that as market conditions improve, and assuming that we do not want to

retain them for social housing needs, we do not see ourselves being in the

market sector as far as holding units like that are concerned.

AN HON. MEMBER: There is a project in

Pleasantville this year.

MR. GULLAGE: Yes. Pleasantville, hopefully, is

presently in the process of being sold this year.

AN HON. MEMBER: Certain portions of Pleasantville.

MR. GULLAGE: Yes, certain portions, not all of

Pleasantville.

MR. R. AYLWARD: As blocks or as condominiums for

the people living there who might get a shot at them? What type of plan do you

have?

MR. GULLAGE: I think they are on the market right

now as blocks. Am I right in saying that?

AN HON. MEMBER: Yes.

MR. R. AYLWARD: And the people living there will

not necessarily get first shot at them, they will just continue to rent from the

new owner?

MR. GULLAGE: That is the intent right now, yes.

MR. R. AYLWARD: Was there any consideration given

to trying to get a condominium type operation, so that the people who are living

there now might have a shot at it? I know it is difficult to try to do on an

existing building.

MR. GULLAGE: The Chairman will answer that

question.

MR. NOSEWORTHY: The two projects we are currently

looking at are two apartment complexes. Actually, there are sixteen units per

building, I think, in Pleasantville, and these are commonly serviced and really

are not appropriate for condominium sale.

I think it is fair to say, as the Minister pointed

out, and looking at the privatization of the market rental portfolio, that

certainly where the opportunity arises we will look at a condominium type

approach. It may or may not be pursued. Obviously, in terms of a condominium

approach, unless the condominiums are sold in block over some period of time,

the Corporation is still involved in maintenance, and we are still involved in

the particular project. If, for example, condominiums are not necessarily a

popular form of housing, I think it is fair to say, even in the Urban Centre of

St. John's in many instances, we would have to weigh the cost of us continuing

to be involved, if, for example, only 25 per cent of the project were for sale

versus the sale of 100 per cent of the units to some private developer for

rental accommodations.

MR. R. AYLWARD: Have there been any discussions

with the present tenants in these units to operate them on a co-op housing basis

and sell them to them as a co-op housing unit? Has there been any discussion or

request from the tenants, or any consideration given to that?

MR. NOSEWORTHY: We have not called for proposals

for those projects at this point in time. Certainly, one of the options that the

tenants would have would be to put together a co-op project, and indeed come

forward with a proposal to the Corporation, which would then compete with any

other proposal as well. But we have not advertised and called for proposals for

those projects at this point.

MR. R. AYLWARD: Just one final question. We do

not, and it is probably not unusual, have any salary details for the Housing

Ministry of your Department. I do not think this is the first time, it has

probably always been done, but is there any possibility of getting the

comparison of employees this year as compared to last year, so we can get a look

at who was laid off and who is going to be working, similar to what we would

have with the salary details in all the rest of the departments?

MR. GULLAGE: That is no problem, is it?

MR. NOSEWORTHY: They are included with our

administration. Basically, it is rolled in with our administration budget and

the details you have.

MR. GULLAGE: It is in there?

MR. NOSEWORTHY: They are not isolated out, but

certainly we could get you whatever information you wanted on that basis.

MR. GULLAGE: Would you not have that?

MR. R. AYLWARD: I cannot find anything in the 1991

MR. NOSEWORTHY: No, it is not specifically in the

document, but we can provide that. That is no problem.

MR. R. AYLWARD: Thank you.

MR. CHAIRMAN: Mr. Barrett.

MR. BARRETT: Thank you, Mr. Chairman.

I guess, first of all, I want to thank the people at

the Housing Corporation for allocating the twelve units for senior citizens in

Whitbourne based on need and priority. They have been fighting for them for

many, many years, and they finally were successful this year, and I am sure that

the people, the senior citizens, and particularly the Royal Canadian Legion,

would want me to convey their gratitude in that respect.

The other thing, I guess - and it is not very often I

get a chance to say it - as an MHA, I have a lot of contact with the people

within the Newfoundland and Labrador Housing Corporation, particularly

employees. I know, from time to time, we have to contact the executive branch,

but a lot of times an MHA is dealing directly with the employees in the field,

and I guess I would like to express my appreciate for their co-operation,

particularly within the last two years. I found them to be very co-operative and

always very willing to help. I know, sometimes they cannot accede to our

requests as they have their limitations, but I have found the staff excellent to

work with, and I would like to convey that, through the Chairman, to the rest of

the staff.

MR. NOSEWORTHY: Thank you, very much. I will pass

that along.

MR. BARRETT: As you are probably well aware -

MR. R. AYLWARD: You are not getting anything for

that. Don't think you are getting anything for that.

MR. BARRETT: I give credit where credit is due. If

they were not doing a good job, I would be the first one to criticize them.

People who know me, know full well that -

MR. TOBIN: Are we supposed to believe that?

MR. BARRETT: I would like to, I guess, zero in on

the Bull Arm area, and some of the things that are happening in that particular

area of the Province right now. We all know that the workers are going to be

housed in accommodations on the immediate site, and there is going to be a very

elaborate camp and all kinds of facilities. One of the immediate problems,

starting already, seems to be the lack of social housing in that immediate area.

A year ago, rent in Arnold's Cove, for example, for a two-bedroom apartment or

even a house was $350 a month. It is my understanding now that there are some

two-bedroom basement apartments in an apartment building there getting $1100 a

month. I think we are probably going to be faced with pretty big choices if we

do not start thinking about some kind of a programme for social housing,

particularly for the people who are not working on site. People working on site

are going to be making anywhere from fifteen to the upper limits in terms of

wages, but we are still going to have a lot of people who are on minimum wages

and people who are low income people, and that is going to create a big demand

for social housing in that area. So, I would like to find out, I guess, if the

Housing Corporation is working on any kind of a plan in that respect.

MR. GULLAGE: If I might just comment first, and

then I will ask the Chairman to elaborate further. As you know, of course,

Municipal and Provincial Affairs, along with the Housing Corporation, have been

very, very involved with the whole Isthmus area, planning wise. When I say

planning wise, I mean the Isthmus area, per se, in terms of planning with

Municipal and Provincial Affairs. The Corporation, per se, has been very, very

much involved with Arnold's Cove, for example.

I think the problems you are speaking about with

housing and with those apartments, as it presently sits, are temporary. I

believe the accommodations for the executive management crew will be constructed

eventually and this is a temporary situation. We are aware of the possible

impact - and that is exactly why we are in there early - upon the communities

and the people who live in those communities for housing as demand increases, as

we see more business come into the area, hopefully, other than offshore,

directly related to construction and so on. We are going to see a lot of other

business come into the area. I would think a lot of communities are going to

grow significantly. So we are aware of that and, in the short term, we would

hope we will not see too great a rise in rents, while we are catching up with

the demand.

Maybe the Chairman could elaborate a little further on

the social housing side of it.

MR. NOSEWORTHY: I think there are a couple of

things here, certainly in terms of what we refer to as social housing, for those

people who eventually would need assistance in order to pay rent in a given

area. We would anticipate that most of the housing that would be needed in that

particular area, hopefully, would not be in the social housing category, and may

very well be housing which is provided, and the individuals who would require

that housing in the area would be capable of paying the rents that are demanded

there, based on the incomes and the jobs they would have associated with the

particular project.

It is not our mandate, nor do we feel it should be, to

get in and provide direct intervention in providing private market rental

housing which could be provided by the private sector. We would certainly want

to facilitate that in any way we can by way of providing land and labelling that

land for a private developer to go in and provide rental accommodation. I

believe Mr. Osmond can speak to the specifics of it, but there is one private

developer who recently purchased some land from us and is looking at providing

some mini homes, a substantial number of mini homes, in that particular area

now, which will, hopefully, satisfy a good portion of the market there. We are

looking at the area in terms of land development.

We will be monitoring the situation in terms of the

need for social housing, of those which perhaps are without jobs in the area,

undoubtedly coming into the Bull Arm area, Arnold's Cove, Sunnyside, and what

have you, or even the St. John's area, transients, the transient population,

which will, I think, gather there over time. They may not be skilled workers,

they may not be able to find jobs, and consequently may be in a homeless

situation. We certainly want to monitor that and provide social housing to meet

those needs in accordance with the monies that are available throughout the

Province, to provide and respond to social housing.

But we are hoping that the bulk of the need for rental

and home ownership that will be sparked by that particular project will be met

by the private sector and facilitated by the Housing Corporation in any way

through land availability and whatever. Don, I do not know if you would like to

comment further on that.

MR. CHAIRMAN: Would you identify yourself please

first, sir, and step up to the microphone.

MR. OSMOND: My name is Don Osmond and I am

Executive Director of Development with the Housing Corporation. I will just

elaborate a little bit about what our chairman indicated with respect to some

land development activity in Arnolds Cove. We did complete a physical plan of

the area over the past year and a half and about two months ago we responded to

a market demand that started to arise. In particular we were approached by some

private entrepreneurs who wanted to build some mini-homes in the area and we

responded to that by having a tender call for a fairly large parcel of land in

the Arnolds Cove area which could accommodate up to about 100 mini-homes. These

are modestly priced homes that - there are some, in fact, around here. The place

that comes into mind first of all is Gander, or Happy Valley, Goose Bay. There

is a fair sized congregation of them, but these are fairly modestly priced homes

that hopefully can address the lower end in terms of housing, price, needs, and

so forth. I understand that Mr. Hubert Hussey of (inaudible) Construction

actually was the successful bidder, that he will be beginning work now very

shortly, as soon as the summer breaks, and I understand he hopes to have some of

the homes -

AN HON. MEMBER: He has started now already.

MR. OSMOND: - available there some time later this

year.

MR. CHAIRMAN: Mr. Winsor.

MR. WINSOR: I just have a couple of questions. If

I heard the Minister correctly he said that there will be some $21 million spent

on repair of, I guess, the RAP programmes as it is generally known for some

2,000 homes which works out to -

MR. GULLAGE: $28 million actually.

MR. WINSOR: $28 million? It was $21 million you

said.

MR. GULLAGE: $21 million was it. Maybe I am

looking at the wrong numbers.

MR. WINSOR: $21 million for some 2000 homes, which

works out to something in the range of a $10,000 per household. My involvement

with the RAP programmes that I have seen of late, very few are coming in at that

amount of $10,000 unless an individual chooses to do it himself. If it goes into

the contractor field they will charge you $10,000 just to do an estimate.

MR. GULLAGE: Are you speaking of a rural area?

MR. WINSOR: A rural area, yes. $10,000 to do any

substantial amount of work if you are talking about rewiring which is generally

associated with an upgrading, water and sewer system, artesian wells in our area

run in the range of $5,000 to complete them. I am wondering how you got the

figure of $10, 000, it must be substantially less in other areas. Would that be

the case?

MR. GULLAGE: The average is $10,000.

MR. WINSOR: Yes, so I am just saying -

MR. GULLAGE: Yes, it is substantially less.

MR. WINSOR: Is it?

MR. GULLAGE: Yes.

MR. WINSOR: I keep hearing figures for

privatization throughout. Each time I look at something that Government intends

to privatize I always see the debit side and the credit side, and just about

everything that Government owns it owes more on it than it is actually worth.

What is the total assets of the corporation in terms of things that you would

sell, and what are the total liabilities?

MR. GULLAGE: Would you like to answer that Mr.

Heath?

MR. HEATH: Yes, my recollection is that at the end

of March we had about $404 million worth of assets. Our liabilities are $330

million, so we have an equity of about $70 million provided by the Government

over the last twenty-odd years by capital contributions.

MR. WINSOR: So, that would be $404 million -

MR. HEATH: We are talking of things like Elizabeth

Towers, the Churchill Square Apartments and that type of thing. That is $404

million.

AN HON. MEMBER: And land, of course.

MR. GULLAGE: And land. So $330 million. So, really

there is not a lot in terms of what the Province has invested in them for the

last twenty or twenty-five years, getting back $70 million. We have certainly

spent a considerable amount. Would that not be the case, in maintenance?

MR. WINSOR: Would that be any real profit? I mean,

I notice in difference you have $70 million, but in terms of -

MR. HEATH: The numbers I have given you are the

net book values of the assets. They do not represent market value. A lot of

those dollars are invested in areas such as social housing units, and we are not

there to make a profit, we are there to provide a service.

MR. WINSOR: No, I am not talking about social, I

am talking about the items that you would identify as saleable, the real estate

that you could sell.

MR. HEATH: The market rental housing?

MR. WINSOR: Yes.

MR. HEATH: The market value is probably $40

million.

MR. WINSOR: What is owing on it?

MR. HEATH: I think it is in the order of about $25

million, is it? Let me just refer to -

MR. WINSOR: The reason I ask is I know at some

time someone proposed the sale of Elizabeth Towers, and the market value of it

certainly seemed to be much less than was owing on that. After $1.5 million

being spent on it, I am told that the market value of the thing has not been

substantially increased very much in the real estate world.

MR. GULLAGE: That is right. It is going to take a

few years to get over the burden, if you like, of the debt we had to put in

place to bring Elizabeth Towers up to an acceptable standard. That work is

substantially complete now, and hopefully the market conditions will improve. We

cannot forecast what time in the future, but that is a project that could

possibly be sold.

MR. HEATH: We estimated, at the end of March,

1991, that the book value of the assets are $30 million, and the market value is

$42 million. There are monies owing at the various banks of $23 million. If we

sell all, we could come clean with a profit of about $18 million, if we sell at

market values.

MR. WINSOR: So I would assume that would go to the

tender system. Would you go through a real estate agent or would it have to be

tendered because it is Government property?

MR. GULLAGE: We would call for proposals.

AN HON. MEMBER: (Inaudible).

MR. GULLAGE: We would call for proposals for the

sale of those projects.

MR. WINSOR: Yes. The area of RRAP is the area that

Newfoundland and Labrador Housing has most of its involvement in in my district,

and all too often I am finding that two things occur. Number one, that the work

that was done twelve, thirteen or fifteen years ago is badly in need of repair

again, that there was not an adequate job done or materials were used that were

later found to be deficient, the wrong type of windows were put in, you know,

glass against glass, and now the tenants or the owners have lots of difficulties

with them. Each time they go to talk to the RRAP people, they are told that, as

a rule of thumb, second RRAPs are not given, which means that these people have

to live in, certainly, less than adequate housing for what appears to be a long

period of time. I understand $20 million is about the same figure you had for

RRAP last year, about $20 or $21 million.

In addition to that, I do not know if Newfoundland and

Labrador Housing is aware of it, but the Department of Social Services last year

used to engage in repairs on housing to a lesser degree. They gave word to all

their clients that, effective that date, they would no longer be doing any major

repairs, that now it was going to be done through Newfoundland and Labrador

Housing, yet in conversation with officials at Newfoundland and Labrador Housing

they indicate that no such thing is occurring. Is there a plan for Newfoundland

and Labrador Housing to do the repairs that Social Services formerly did?

MR. GULLAGE: No, not at this time.

MR. WINSOR: Have there been discussions?

MR. GULLAGE: There have been some discussions held

with Social Services on the matter, but there is no formal plan in place to

assume responsibility for that at this point in time.

MR. TOBIN: That was supposed to be done.

MR. WINSOR: Yes, it was supposed to be. I know it

is not your department, but last year Social Services stopped funding any type

of housing other than to make it weather tight and water tight because as of

April 1st of this year it was going to come under the auspices of Newfoundland

and Labrador Housing.

MR. GULLAGE: Was the intent to access the RRAP

programme?

MR. WINSOR: Basically to a degree, but there is a

fundamental difference in what Newfoundland and Labrador Housing were doing and

what -

AN HON. MEMBER: To get Social Services to help.

MR. WINSOR: But apparently some difficulty was

encountered because the standards that Newfoundland and Labrador Housing have

are much more rigid than what Social Services had. You know, you have a standard

but Social Services approved it as long as it was livable.

MR. GULLAGE: We have to follow the code.

MR. WINSOR: And you follow the code

whereas they

did not. Now I am finding that they are not doing any of it and people cannot

qualify for grants because they are too far down on the list and people are

basically caught nowhere.

MR. TOBIN: If I could follow up on that for one

moment, Mr. Chairman.

MR. CHAIRMAN: Before you do that, Mr. Tobin, for

the sake of Hansard the gentleman to the Minister's extreme right at the end of

the table has not been properly identified when he was speaking, and Hansard is

wondering if he would for his benefit repeat his name and title.

MR. HEATH: Yes, my name is Ed Heath,

Vice-President of Finance.

MR. CHAIRMAN: Thank you.

MR. TOBIN: Could I follow through on that for one

minute, Mr. Chairman?

MR. CHAIRMAN: Just one supplementary. Mr. Winsor's

time is up anyway.

MR. TOBIN: I just want to follow through on this

for one minute. Officials from Newfoundland and Labrador Housing and officials

from Social Services, when I was Minister of Social Services, got together and

meetings were held and agreement was reached. Newfoundland and Labrador Housing

resisted it somewhat, but the agreement was reached where the amount of money

that Social Services spent every year came out of the Social Assistance vote,

but the amount that was spent on housing would be transferred to Newfoundland

and Labrador Housing because they would have the people. It was felt at Social

Services at the time that the social workers in the field did not have any kind

of expertise in determining what houses needed to be repaired or how much repair

should be approved or anything else. So the decision was made to transfer the

money to Newfoundland and Labrador Housing and your people would become the

experts in the field to do it. I believe, sir, that you were one of the

officials from Newfoundland and Labrador Housing who was involved in that

meeting and agreed to it.

MR. CHAIRMAN: I would like to remind Mr. Tobin and

all other Members of the Committee that the questions can be asked only of the

Minister. It is only if the Minister so directs it that the officials -

MR. GULLAGE: I might just attempt to answer that,

Mr. Chairman. Let's go back to the start of your question. We have a terrific

demand for the RAP programme. As a result of that demand and the waiting list in

every region we were fortunate enough to get our allocation up above the per

capita percentage, I think per capita is probably the highest need in the

country. So the Member was talking about second time applicants and we have a

problem with first time applicants quite frankly, so there is a great demand for

the programme. As far as the social services clients are concerned, that

situation you mentioned with the relationship that was supposed to take place

some years ago had a demand in there from those social services clients for

other than housing as well. They were looking at the furniture and other items

that might be applicable. It was a very small amount of money. Peter, do you

know the funding that might have been put in place but was not proceeded with?

MR. TOBIN: Well what we have done, Mr. Minister,

we took the figures that were expended on housing over the past few years and

taken out of the social assistance vote for that period of time. We allocated

the money that was spent to Newfoundland and Labrador Housing and let them

administer it because we felt that they had the expertise.

MR. CHAIRMAN: I think probably the Minister would

like to speak to that or somebody on the executive group.

MR. HONEYGOLD: There is no doubt that the

agreement in principal was reached with the officials of Social Services. The

money has not been transferred from the department into the corporations hands,

so that physical activity of inspection and repair under our direction as

opposed to the Department of Social Services has not taken place.

One thing that the Department has done, that we are

aware of, is they have reduced substantially their effort in carrying out, let

us say, maintenance type repairs and normal type refurbishing of houses, and

have referred clients with any of that refurbishing need to our regional offices

for attention under the RRAP programme.

Whereas, I think, in years prior to last

in most of the offices we had a very substantial waiting list, I think you will

find now that that waiting list is at a very manageable level, and a lot of

those clients are being served. Social Services staff, themselves, are really

only handling the, sort of, absolute emergencies for their clients now, where a

chimney top blows off, something of storm type nature, a water line freezes or

some such thing as that. Those are the sorts of things being done by Social

Services, and they have, in fact, substantially reduced their level of

expenditure in that area of repairs.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: First of all, I am not as fortunate as

these two fellows, I did not get any units this year.

MR. TOBIN: You are the only Liberal left out.

MR. CRANE: I must be. I will have to come over

with you, Tobin.

MR. WINSOR: You will have to come over to our

side.

MR. CHAIRMAN: Order, please!

MR. CRANE: Several times since I came here, Mr.

Minister, you and I have chatted about the RRAP programme, and, as well, I had

one meeting with the Chairman about a year and a half ago. In the Carbonear

Office, people are still waiting about five to six years, from the time they

apply. I have to smile, because people say to me, `How can I get a RRAP

programme, my house is leaking?' I say, `If your house is leaking, it is no good

to apply to the RRAP programme, because it will be gone anyway before you get

it.' It is about six years, I think, they are behind right now.

When I talked to the Chairman about a year and a half

ago, he said they were going to try and come up with more inspectors, but so far

there have not been any. I wonder is there any possibility that there is going

to be any improvement in the Carbonear Office, as far as the RRAP Programme is

concerned.

MR. GULLAGE: Correct me if I am wrong, Mr.

Chairman, but I think the greatest demand in the Province happens to be in that

particular region of the Housing Corporation, and that is the reason for the

long waiting list and the long delay in getting approvals, the terrific demand.

As far as the figures are concerned, we are looking at $6 million?

AN HON. MEMBER: Six and a half.

MR. GULLAGE: Yes, $6.5 million of the allocation

for RRAP is in what we call the Avalon area, and that is predominantly the area

you are referring to.

MR. CRANE: What about, say, last year? What was

spent there last year? Did you spend all the allocated amounts?

MR. GULLAGE: Yes, all that was allocated. The

amount? I am not sure about last year's.

MR. NOSEWORTHY: It was slightly less than $6.5

million, but it would be in that order.

MR. GULLAGE: In that order.

AN HON. MEMBER: You are talking about the Avalon,

Whitbourne and the Carbonear area.

MR. GULLAGE: Yes. The largest portion and the

greatest demand is actually in Carbonear, and the bulk of the RRAP funding is

spent there.

MR. CRANE: I know, and people are still, I would

say, waiting since 1985 and 1986, people who applied back five or six years ago.

Do you see any hopes of that improving?

MR. GULLAGE: As I mentioned, at meetings with the

Federal Minister, in debating the allocation of units and dollars to make a

special case for the RRAP Programme, because of the terrific demand in

Newfoundland, we were fortunate enough to get it up. I think the percentage, of

the national budget, is in the 7 per cent range.

AN HON. MEMBER: Eight per cent.

MR. GULLAGE: Eight per cent. So we do very well

per capita. But, you know, we have a terrific demand and every year we try to

get as much as we can, as many dollars as we can, and I think we have done

reasonably well. I would agree, the waiting lists are long and it is a difficult

problem.

MR. CRANE: So, you do not see any improvement in

the near future?

MR. NOSEWORTHY: Could I just respond to that?

MR. GULLAGE: Yes.

MR. NOSEWORTHY: The outstanding RRAP enquiries we

have throughout the Province, roughly now are about 4,000. The bulk, close to

1500, would be in the Avalon area. Certainly, if we can maintain that same level

of 2,000 units over the next couple of years, I think we will be putting a

substantial dent in the current number of enquiries that we have. As the

Minister points out, we do spend every dollar that we get, no question about it.

We hound the Federal Government, literally, for everything we can, not only from

allocations, initially, but any money that is not spent elsewhere in the

country. We do that. So, I think, if we can look forward to maintaining those

levels over the next couple of years, I can see that the demand that we

currently have will be substantially reduced.

MR. CRANE: Thank you.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Thank you, Mr. Chairman.

I have a few questions I would like to get cleared up.

Again, on the rent increases that have taken place, I consider 10 per cent to be

a significant rental increase. In this period of time it is going to be

difficult for some people to make their payments, in my opinion.

I am just wondering who was responsible for these rent

increases. Would it be the Vice-Chairman of Finance? Is he the person solely

responsible for these recommendations to increase the rent?

MR. GULLAGE: I think the Chairman better answer

that one.

MR. NOSEWORTHY: I would like to blame it on him,

but no, he is not.

MR. GULLAGE: The Minister is ultimately

responsible.

MR. NOSEWORTHY: The 10 per cent increase is really

only in respect of a couple of projects. That is not in every project that we

have. Basically, Elizabeth Towers, and there are some units in Churchill Square

where we have not - in the case of Elizabeth Towers we have not increased the

rents there since 1986. So, the 10 per cent increase really, on a four-year

running average, is not a substantial increase and is in line with the current

market. In the bulk of other projects, I mean, we are talking about 3 per cent,

4 per cent and 5 per cent increases depending on the project and depending on

the location. The rental levels themselves are established by appraisers, our

appraisal group with the Housing Corporation, professional and accredited

appraisers who go out and do a comparative market analysis of rents in the

market place, and really establish rentals in these units on that basis.

MR. TOBIN: Well, I am certainly not satisfied with

your answer, Mr. Noseworthy. I think it is a real grab at the people who can

least afford to pay. You have people who get no increase in their pensions, you

have people there who have their salaries frozen for a year, who are renting

from the Housing Corporation, and you, Sir, and your Corporation turned around

and smacked a 10 per cent increase on these people. It is difficult to accept.

In any case, there is not much I can do about that tonight.

I wonder if you could give me the status of the

industrial park for Marystown.

MR. GULLAGE: Where?

MR. TOBIN: Marystown.

MR. GULLAGE: The status of the Industrial Park at

Marystown.

MR. TOBIN: The funding to the Industrial Park at

Marystown.

MR. GULLAGE: Don, would you like to respond to

that.

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Order, please!

MR. OSMOND: I just wanted to make sure - I did not

believe I needed any notes.

MR. CHAIRMAN: I would remind the witnesses that we

would still like them to state their name and their title each time.

MR. OSMOND: With respect to a proposed industrial

park for Marystown, there has been a fair amount of analysis and so forth over

the past couple of years in trying to put together a project that would work,

both fiscally as well as from a marketing perspective. To date, we have not been

successful in generating such a project. We have not given up on it, however,

and we continue to include a general sum in our budget to allow us to take

advantage of the opportunity if it does happen to come about.

The problem in the Marystown area is primarily a

financial one. The cost of developing an industrial park far exceeds the market

values that it would generate, and so therefore, the project requires a very

substantial subsidy to actually be implemented. As the hon. gentlemen are aware,

there is no subsidy programme available for industrial park development in the

Province. So, therefore, we are still endeavouring to look at any new

opportunities that might come up with a view to breaking even financially.

Otherwise, we do not have the ability to develop any industrial land in the

area.

I might add, however, that there is some industrial

land that has been developed by the Town of Burin along the main highway through

Salt Pond. We certainly have been watching that fairly closely and hopefully it

will be successful, and it may provide a means or a model, perhaps, for the Town

of Marystown.

MR. TOBIN: Are you promoting Burin?

MR. OSMOND: No, Burin is not one of our industrial

parks, so we are not promoting it as such. Indeed, there are a number of other

industrial parks in the Province that the Corporation does not have a financial

interest in, and so, therefore, it does not promote them specifically either.

MR. TOBIN: Mr. Chairman, I have one final

question, and I do not know if I am asking it to the right Minister or the right

department. I know the situation in Corbin has been addressed through

Newfoundland and Labrador Housing. The question I would like to ask now is

something that my friend from Bellevue would have as much knowledge on as I

would, or more. Some years ago the people from Port Elizabeth were resettled

from Port Elizabeth to Red Harbour, and they moved everything they had, their

houses, I mean they just took them across and moved over there and basically

started a new community. It was all done through the resettlement programme.

That is not there any more. When all that came about and the government was

involved in it, giving financial assistance and the whole thing when they moved

over. The only problem was no one got the land which was supposed to be part of

the package. The ownership of land, the outright grant and all of that was

supposed to be part of the package. It was not supposed to be a financial burden

on these people who came to Red Harbour, it was supposed to be done by the

Government. Percy, are you familiar with that?

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: No, I am sorry. The questions must

be asked of the Minister.

AN HON. MEMBER: By leave.

MR. TOBIN: No, I have no -

AN HON. MEMBER: After the break I will tell you

what is going on.

MR. TOBIN: Yes, I know what is going on. I know

that -

MR. CHAIRMAN: I recognize that Mr. Tobin might be

asking a question and he might very well want the answer but I am suggesting

that if you want to ask questions you ask them of the Minister.

MR. TOBIN: Okay, I am asking the Minister. I do

not know what the question is really to be honest with you. All I want to know

is (inaudible).

SOME HON. MEMBERS: Oh, oh!

MR. TOBIN: They want their land straightened out

and Government has a responsibility to -

MR. GULLAGE: The right jurisdiction is Environment

and Lands.

MR. TOBIN: Environment and Lands would have

jurisdiction over it.

MR. GULLAGE: Yes.

MR. TOBIN: Would you have any difficulty

supporting a request for that? There is no research. Where would the files be on

the resettlement programme, in Environment and Lands?

MR. GULLAGE: Well I would suggest that would be a

good place to start, and if they are not there I would suggest that they would -

MR. TOBIN: I raised this before. I remember back

some time ago the department then was going to get the engineering students from

university or Trades College, the surveying students, to go out and do that as

part of their programme so the land could be identified. Mr. Chairman, this

might not be important to some of my colleagues, but I can tell you that it is

important to the people of Red Harbour who are down there and cannot get

anything done. Newfoundland and Labrador Housing was just involved in another

one.

MR. GULLAGE: That is quite true, but I think in

the context that you are speaking of now after the fact where that has been done

the right agency would be Environment and Lands.

MR. TOBIN: So we can be assured of your housing

support in any way possible in order to help us get this matter resolved.

MR. GULLAGE: Well we can help you facilitate the

problem and get an answer, yes.

MR. TOBIN: Thank you very much. That is my

question, Mr. Chairman.

MR. CHAIRMAN: Are we ready to go to the sub-heads?

MR. R. AYLWARD: Can I get one more question in

first?

MR. CHAIRMAN: I will assume that you mean that

literally. Mr. Aylward.

MR. R. AYLWARD: I remember in a life gone by

seeing a very elaborate proposal come across some desks. A piece of land between

Mount Pearl and Cochrane Pond was planned to be developed, I believe, into a

very elaborate, exclusive housing project with two golf courses. I know it was

cancelled at that time, but is there any thought of Newfoundland and Labrador

Housing rejuvenating their project?

MR. GULLAGE: Mr. Chairman, we have had that

project on hold, I guess, for quite some time, quite some years I guess. The

land is either crown land or has been purchased by the corporation. I forget the

number of acres there.

AN HON. MEMBER: In the Watercrest Project -

MR. GULLAGE: Yes, he is speaking of Watercrest.

AN HON. MEMBER: - there are approximately 1,100

acres of land involved in that project.

MR. GULLAGE: Eleven hundred acres, and the

corporation's position on it right now is that we would like to see that

developed by the private sector predominantly with the corporation being a

facilitator, carrying out the necessary planning to co-ordinate, assuming that

it continues to be as it is right now, a project that would involve two golf

courses and a housing development with large estate lots, predominantly, and

other facilities that would tie into a project like that, in a stage where we

would see the private sector being the main developer, and possibly, on a

proposal call basis, see the private sector make proposals and ultimately be the

developer or developers, if that happened to be the case. But our role would be

one of planning and facilitating the project, per se.

MR. R. AYLWARD: Mr. Minister, would'nt you think

that that, being the largest block of relatively cheap land that is left on the

whole of the Avalon - St. John's - Mount Pearl area, that it would be more

advisable for the Newfoundland and Labrador Housing Corporation to try to

facilitate providing reasonable cost lots for people who might get to build

homes, rather than golf courses and exclusive housing?

MR. GULLAGE: We presently are developing the

Southlands, west of Mount Pearl, a combination of metro land and Mount Pearl

land, as the boundaries are presently set. The number of lots would be what in

the Southlands?

AN HON. MEMBER: Almost 5,000 units.

MR. GULLAGE: Almost 5,000 units. So, the land you

are speaking of for residential development and keeping land costs reasonably

low, which is, I guess, our role in this particular project, is being

accommodated in the Southlands development. Watercrest was not seen in that

context. It was seen as a project that could be developed whereby the sale of

the estate lots would pay for the development of the golf courses. So, it was a

different context entirely and really was not in the same area of planning for

residential lots as Southlands had.

MR. R. AYLWARD: The sale of all your lots in the

Southlands will pay for all the cost of Southlands also. That is not something

new.

MR. GULLAGE: No, no! That is correct.

MR. R. AYLWARD: But still it would be a good

project to land bank it, if necessary, for the future, to have reasonable priced

housing, other than have some exclusive -

MR. GULLAGE: If our current position on it

changed, that would be quite correct. I would think the demand, though, for lots

that far out and away from Southlands, in addition to the numbers of lots we are

developing in Southlands, which is a considerable number, we would be looking a

long ways away. The thought with Watercrest again, unless we change our position

on it, was that it would be a project similar, I guess, to Marble Mountain, in a

sense that we would be promoting an obvious need. Surveys have been done showing

that this region or this area could take as many as five golf courses. So, that

need is there, and if we wanted to follow that thinking, from a tourism,

recreation, sports standpoint, that it made sense to add golf courses to this

region, then the way to do that, very cost-effectively, might be to develop it

along with estate lots. But, there is no argument. We could change our position

and bank that land, as we do land banking elsewhere throughout the Province. We

could very well bank the land, that is quite true. It is banked right now, but

it is banked for the reason I just stated. I am not suggesting that our position

on it will never change.

MR. R. AYLWARD: Thank you.

MR. CHAIRMAN: You had a question, Mr. Winsor?

MR. WINSOR: Yes, within the subhead on page 257,

if I read it right, 1.1.01, Provincial Revenue last year was budgeted at some

$4,250,000. This year you are projecting that it is going to be down, if I am

reading it right, by some $350,000-plus, despite the fact that you have had an

increase of about 10 per cent in the number of units. What accounts for that

change from last year to this year, considering you got a rate increase?

MR. GULLAGE: I think the Chairman could best

answer that question.

MR. HEATH: I do not think a comparison of the two

numbers is really relevant. The first number you referred to, I think, is $4.2

million. That represents accumulated surpluses over the previous three to five

years, and primarily results from us not requiring the full grant voted to us by

the House. In addition, there were extraordinary profits made from sales of some

of our block lands on Elizabeth Avenue and the like. I think, for the past three

years, as a result of those extraordinary profits and as a result of more

volumes in sales activities in land, particularly in the St. John's area, this

has generated those additional monies that we regularly fund to the Government.

When we went through that budget exercise for last year and we identified that

$4 million as being excess surplus, as we had acquired, and we were able to

return that to the Government. Similarly, this year we have identified, over the

past couple of years, an accumulated surplus of $3.5 million. As of right now,

March 31, 1990, we have no surpluses remaining, providing when this year end is

complete and when our books are all added up and balanced, that we have remained

within budget. If we have remained within budget, that will clean out the

surpluses completely, meaning next year that number could very well be zero.

MR. WINSOR: So, at this point in time,

Newfoundland and Labrador Housing, then, makes a profit after it pays the

mortgages on all its properties? It runs at a profit, does it?

MR. HEATH: No. The net loss of this Corporation,

which I call a loss, is really a subsidy, a grant from the Government. It is

primarily to run the subsidized housing operations, which, by its nature, has to

lose money. We project that in the next fiscal year the Province's share of

those programmes, those social housing programmes primarily, will cost the

Province $16 million. The Federal Government, by comparison, would be

contributing three times that, $50 million. The total cost of the social housing

programmes would be in the order of $50 or $60 million.

That surplus is just monies - let me back up. When we

finish, the next year end, and we find that because heating oil does not

increase as much as we think, because we apparently may make more money as a

result of rents, we may not need that $16 million. At the end of the year, when

we complete the year and go through the final year end process, we may come in

under budget. If we come in under budget, the difference by which we come in

under budget at the time gets recorded and put into our surplus account to be

refunded at a later time to Government, when and if they so require.

MR. CHAIRMAN: Mr. Tobin.

MR. TOBIN: Just a quick question. Is the same

amount of funding in place this year for student employment as last year?

MR. GULLAGE: Pardon?

MR. TOBIN: Is the same amount of funding in place

this year for student employment as last year?

MR. GULLAGE: I do not think it is quite the same.

We are down significantly.

MR. NOSEWORTHY: We have, indeed, had to cut, as a

result of our budgetary exercise this year, monies for student employment, co-op

programmes, for example, that were formally sponsored by the Corporation. We are

not quite certain by how much it will be down, but certainly our student

employment is likely to be down significantly this year.

MR. TOBIN: So, will there be some activity then?

For example, where the students go around doing maintenance, cutting grass and

all that, will that be taking place basically the same as last year?

MR. NOSEWORTHY: Hopefully our maintenance

programme will not be affected very seriously. We had, I think, last year, maybe

twenty students or so at head office in accounting and some of the

administrative areas. Certainly, that is the part of the programme that will be

MR. TOBIN: So, are you saying there may be some

cuts in maintenance for student employment?

MR. NOSEWORTHY: We are hoping to maintain a level

of maintenance equivalent with last year, but there may be some reductions.

Hopefully, we will be able to maintain a substantial programme. Where they will

be mostly affected is at the head office, the twenty or so that we had there.

MR. CHAIRMAN: Thank you very much. I would like to

direct your attention to the subheads on page 257.

MR. TOBIN: Mr. Chairman, just before you get to

the subheads, I think that probably you have been more negligent in this than

anybody. I am sure that you did not notify the Minister that he was responsible

for the coffee and donuts.

MR. GULLAGE: I was not notified.

MR. TOBIN: So, probably if the Chairman -

MR. CHAIRMAN: It was as much a surprise to the

Chair as to anybody else, that we did not have any coffee or tea, or as much as

a kettle. So, when we take our coffee break we are going to have to take it

without our coffee.

MR. GULLAGE: If you would like to order some in,

Mr. Chairman, I would be glad to pay for it.

MR. CHAIRMAN: Would you be so kind as to do that

for us? The Minister says order in some coffee and charge it up to his

department.

MR. TOBIN: Coffee and donuts.

MR. R. AYLWARD: The meeting will be over by the

time it gets here.

MR. CHAIRMAN: The subheads on page 257.

MR. R. AYLWARD: Mr. Chairman, I note, when we are

doing our subheads now, we are going to vote on $12.9 million. I am sure the

Housing Corporation operates on more than $12.9 million? Is there a reason why

that cannot be broken down into subheads, like the rest of the department or the

rest of all departments?

MR. GULLAGE: Why is it shown as a global figure?

MR. R. AYLWARD: (Inaudible) reporting $12 million

in the Housing Corporation. Where is the administration? What do you spend it

on? I mean, we are just voting on -

MR. GULLAGE: That is the amount that flows in from

the Province, the initial subsidy or grant or whatever you want to call it. At

the end of the year we are required by the Government to return a surplus. That

is just a budget exercise, if you like, as the Vice-President of Finance

explained. Hopefully, that surplus will exist by way of savings in economies and

so on. I think all years it does, does it not? I do not think we have had a year

when we have not returned some dollars to the Province.

MR. R. AYLWARD: Yes, I realize that, but I mean -

MR. GULLAGE: Because out of the past number years

we have always returned some surplus.

MR. R. AYLWARD: Yes, I know that and (inaudible).

MR. GULLAGE: It is simply a global figure and it

is broken out into sub-heads of the corporation.

MR. R. AYLWARD: And I know the corporation gives

out an annual report every year that shows more expenditures, but what I am

saying for the purposes of the Committee and for the Budget purposes couldn't we

have a breakdown like everyone else?

MR. GULLAGE: A breakdown of the $12 million and

where it goes throughout the corporation.

MR. R. AYLWARD: Write down everything the housing

spends. I do not know why it is not done.

MR. GULLAGE: Mr. Chairman, maybe Ed should speak.

MR. HEATH: I think first of all some of the detail

that you might be looking for, to show, indicate or give you some reassurance

that we are responsible and accountable is in our annual financial statements.

We do present an annual financial report that is audited by the Auditor General,

and that is available to everybody.

The reason primarily why those numbers are not broken

out in any kind of detail within these estimates is simply that it is just not

practical from an administrative point of view. As you have sub-heads you have

to draw monies from the Government on those sub-heads specifically. Right now

for us to operate reasonably efficiently we simply draw it on one amount. We

request from the Government one amount every month, one twelfth of that Budget

amount. They, in their books, simply issue one cheque and charge it to one

account. If we had, for example, as many accounts as we had within our own books

within the Government organizations we would have to draw money in that same

manner, it would mean that we would have no flexibility to move monies from one

sub-head to another, we would have to go through special warrants. It would mean

that all revenues that come to this corporation would have to be deposited, as I

understand it, directly in the Government's bank account. We would not have the

power to receive and credit funds within our own account. It would be an

administrative nightmare for us to have individual sub-heads. That is not to say

that we cannot provide committees and individuals such as yourself (inaudible)

the kind of detail, but not on that one.

MR. R. AYLWARD: It is not only housing; I would

like to see it for Farm Products, I would like to see it for Newfoundland Hydro.

If you can get a financial statement and someone can read it you are okay, but

most of us trained monkeys are not up to that yet.

AN HON. MEMBER: I thought you were trained!

MR. R. AYLWARD: We are not trained well enough

then.

I would certainly like to see it for all those

Corporations.

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Back to the sub-heads on page 257.

On motion, sub-head 1.1.01 carried.

On motion, total heads, carried.

MR. CHAIRMAN: We will now turn to the Department

of Municipal and Provincial Affairs. I would ask the Minister to release his

officials.

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Order, please!

We will have a break when the time comes.

MR. GULLAGE: Mr. Chairman, can I get a minute to

change hats?

MR. CHAIRMAN: We thank the Minister's officials

for coming. We thank them for their indulgence and their co-operation, and we

would now ask that they be replaced with the officials from the other

department, and the Minister change hats.

We will begin now to review the estimates of the

Department of Municipal and Provincial Affairs.

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: Order, please!

Recess

MR. CHAIRMAN: The meeting will now come to order.

We are about to review the Estimates of the Department

of Municipal and Provincial Affairs. I will ask the Minister to introduce his

officials, and once he has done that, he can begin his opening statement.

Procedures are the same as before. The Minister will have fifteen minutes, and

the Member from the Official Opposition will have fifteen minutes to reply, and

that will be Mr. Tobin.

Mr. Minister.

MR. GULLAGE: Thank you, Mr. Chairman.

First of all, I would like to introduce the Deputy

Minister, Mr. Clarence Randell, to my left; Mr. Art Colbourne, at the far end,

the Assistant Deputy Minister of Municipal Support Services and Support and

Fitness; Felix Croke, who is there next to Art, the Acting Director of Financial

and General Operations; of course, Don Peckham who is the Assistant Deputy

Minister - Finance, Planning and Administration; and Frank Manual, of course,

the Chairman of the Canada Games Park Commission. Frank is also Chairman of the

Residential Tenancies Board and the Pippy Park Commission, which are under

separate Ministries.

I will read my opening statement first.

MR. CHAIRMAN: I apologize for interrupting, but

before you do that, Mr. Minister, you all have a copy of the Minutes of the last

meeting. Are there any errors or omissions.

MR. WINSOR: Yes, in

Section 1 they list the people

who were there. I seem to recall being there. Perhaps I was not, but I seem to

recall being at the last meeting.

MR. CHAIRMAN: That omission is noted. Are there

any further errors or omissions?

Would somebody move, then, that the Minutes be adopted

as amended?

On motion, the Minutes as amended, adopted.

MR. CHAIRMAN: Mr. Minister, you may continue with

your opening statement.

MR. GULLAGE: Mr. Chairman, I will commence by

highlighting the major items in the Estimates of the Department of Municipal and

Provincial Affairs. The total estimates for the Department are $168,474,300,

gross expenditure. There are revenues in both current and capital account

totalling $22,323,100, leaving a net expenditure of $146,155,200. These figures

include the Canada Games Park Commission expenditures. There are 557 permanent

positions in the Department operating all divisions.

Mr. Chairman, the Department is comprised of three

main branches, and it's delivery service embodies a number of regional offices

to ensure the best delivery of services to the municipalities, recreation

commissions, youth groups, cultural and historic resources organizations, etc.,

in the most efficient manner possible.

The Department of Municipal and Provincial Affairs is

responsible for matters relating to local government, municipal financing, real

property assessment, urban and rural planning, development control, engineering

for water and sewer, road construction and reconstruction, and co-ordination of

emergency planning to municipalities. It is also responsible for the office of

the Fire Commissioner, which is responsible for fire prevention, suppression,

and regulation and training throughout the Province. It administers the

operations of the St. John's Fire Department, which delivers fire services to

the North East Avalon Region.

The Department is responsible for amateur sports,

fitness and recreation activities, as well as youth services, historic

resources, and culture. It is responsible for communication policy for the

Province, as well as the operation of the Canada Games Park Commission.

The Newfoundland and Labrador Housing Corporation, as

I indicated, is a separate entity. That is really redundant now, as it was dealt

with earlier.

The activities of the Department are broken down

within activities into the following main categories: Executive and Support

Services; Services to Municipalities; Assistance and

Infrastructure; Municipal Protection Services;

Recreation Services and Facilities; Cultural and Historic Resources; Youth; and

Communications.

Mr. Chairman, I will now elaborate in more detail the

responsibilities of the Department following the order of activities which I

have just outlined.

Executive and Support Services; this activity mainly

provides the funding for the operation of the executive, administrative,

accounting and other financial support services for the whole department.

Services to Municipalities: Funding in this area

totalling $23,007,300 covers the provision of engineering services for water and

sewer installation, street reconstruction, and paving programmes, the provision

of town planning for municipalities, the provision of assessment services to

municipalities with real property tax, the provision of development control

services to areas on protected roads within municipalities, and the maintenance

and operation of industrial water systems. Funding is also provided to support

the Newfoundland and Labrador Federation of Municipalities, and the Newfoundland

and Labrador Association of Municipal Administrators.

Mr. Chairman, I would like to provide some details on

some of these services. Firstly my department has regional offices established

for the following regions: Labrador, Western, Central and Eastern. The idea of

these offices is to have the delivery of services provided in the areas more

close to the communities and groups served by the department. It also provides

for a better liaison between the department and the municipalities and will

provide for a more timely and meaningful response to municipalities and

organizations as departmental employees in the regions can get to know the

municipal needs of towns, cities, local service districts, sports and recreation

organizations and so on in the region more intimately than could be done

directly through the head office alone. These regional offices have been given a

considerable amount of authority and latitude to manage the responsibilities

within their jurisdictions.

The Real Property Assessment Division operates under a

separate Act and has responsibility for the assessment of real property in all

municipalities with a real property tax except the City of St. John's. At

present some 250 communities have adopted a Real Property Tax and the division

has assessed approximately 175,000 properties throughout the Province. This

division must continuously conduct reassessment in these municipalities on a

rotational basis.

To assist the division in its ever growing task my

department has purchased a computerized MASS appraisal system which when

installed by the end of the current year will fully automate the assessment

process. Using this new system my department will be able to catch up with the

backlog of reassessments and new assessments required to be done and over time

the reassessments which are now conducted every six to seven years will be able

to be conducted more frequently, probably every three years. This will be a

tremendous benefit to the municipalities as they will be able to be much more

current in their assessed values and it will eliminate the need for major

increases in the taxation value of properties which occur every six years due to

the large amount of inflation which normally occurs during such a long interval.

We also have the advantage of allowing the municipalities to earn more revenue

through the adoption of an earlier reassessment cycle without having to

necessarily increase the mil rate.

Within the services to other municipalities grouping

is a Municipal Inspection Division. A small staff of eight inspectors are

available on a continuous basis to all municipalities to undertake internal

audits when there are financial problems within the municipalities and to offer

them advice where they require it for financial planning or to advise them on

general municipal procedures. This service is especially helpful to new councils

when they are not used to the procedures and operations of councils.

There is the development control

section within the

Urban and Rural Planning Division which is responsible for the establishment and

monitoring of policies for the control of the Province's main highways and other

areas which are placed under this control. This ensures that proper planning is

adhered to in areas which are not incorporated which may be near municipalities

or in other areas where growth activity is taking place.

There is a Local Government Division with a staff of

five people. This group provides general support to the municipal operations

sector of the Department and provides advice to the regional managers on

managers of departmental programmes and policy.

Mr. Chairman, there is also an Urban and Rural

Planning Division. This division is staffed by professional town planners and

supported by planning technicians and other administrative staff. The role of

this division is to provide town planning advice, to provide municipal plans for

municipalities and to advise them on various planning policies and regulations

which may be used within the individual municipalities. The department also

occasionally hires town planning firms to supplement the work of the Urban and

Rural Planning Division and cost-shares the development of town plans with some

municipalities through this process.

There is an Engineering Services Division of the

Department. This Division is responsible for administering the municipal water

and sewer, street reconstruction and paving programmes of the Department. Within

this Division also is a Planning and Design

section and an Industrial Water

Services section.

The Planning and Design Group is responsible for

reviewing the plans and specifications of water and sewer projects which are

approved for municipalities throughout the year, and the Industrial Water

Services Division is responsible for the operation and maintenance of the

Government owned industrial water systems, which have been installed to service

certain industrial enterprises throughout the Province in some municipalities.

Mr. Chairman, within the services to municipalities,

my Department provides funding for the St. John's regional water facility at Bay

Bulls. I would like to note, while this activity is called the St. John's

regional water and sewer servicing activity, it is really the North East Avalon

regional water system, as it provides services to St. John's, the Goulds, Mount

Pearl, Paradise, Wedgewood Park, and Conception Bay South.

Grant funding is also provided for community water

services. This is separate from the other capital water and sewer installations.

It is designed to provide domestic water and sewer services to local service

districts and is comprised of smaller type systems. Funding is also provided to

assist municipalities with the development of solid waste management facilities.

Mr. Chairman, this year some $12 million has been provided for the development

of water and sewer facilities pursuant to a Federal/Provincial cost-shared

agreement for communities in Northern and Coastal Labrador.

Mr. Chairman, I am pleased to announce that this year

Government completely reformed the municipal grant system. For the first time,

grants to municipalities are made available using a formula which introduces the

concept of assessing economic needs and taking into account the community's

ability to generate its own revenues, as factors in determining the amount to be

made available to them. Previous structure embodied a straight line formula

which saw money going to all municipalities regardless of the need. This new

formula, in addition to changing that to a more equitable situation, also puts

Government, for the first time, in control of this portion of the budget. Under

the previous formula, municipalities received funding in accordance with the

level of their taxation rates, and, therefore, if they increased their rates it

meant additional funding was required from Government. Under the new formula

Government sets the total amount to be paid to municipalities, and this amount

is distributed according to the formula, and, therefore, puts Government in

control of the total amount in any given year.

Assistance and Infrastructure Support: Mr. Chairman,

this

section provides funding for the water and sewer programmes. The amount

provided in the estimates is the amount required to meet the repayment on the

debt, which is financed through the Municipal Financing Corporation when the

projects are completed. Some $55 million is available to cover the debt, both

principle and interest payment, for road construction and paving programmes.

Provision is also made for special assistance to

municipalities. This $1.5 million is provided to enable my Department to respond

to requests of the municipalities for special assistance when they are in dire

need. It covers such items as special assistance to meet administrative and

operational overheads, when there are insufficient revenues generated within the

town during the year. This fund is managed by a departmental finance committee

which reviews all requests for this kind of assistance and recommends whether or

not funding should be made available, and the amount.

Mr. Chairman, funding has been made available for

regional co-operation initiatives. This funding, essentially, is designed to be

used in conjunction with Government's amalgamation initiatives. The expenditure

of this funding is allocated upon recommendation to Cabinet for items designed

to support the amalgamation initiatives.

A considerable amount of funding is also provided for

the statutory grants to municipalities. This year, some $47 million will be

granted to municipalities under the Municipal Operating Grants and Adjustments

Programme.

Municipal Protection Services: Mr. Chairman, funding

in this

section covers emergency measures planning and response funding to

municipalities under the Joint Emergency Preparedness Programme which is

protection services and the operation of the Fire Commissioner's Office. Funding

is also provided to assist municipalities with the acquisition of fire fighting

vehicles and apparatus.

Recreation Services and Facilities: This programme

provides for the encouragment and financial support of recreation, fitness and

amateur sports for all ages throughout the Province. Support services are

provided to municipalities and sport and recreation organizations, by the

Department, and, as well, grant funding is made available directly to these

organizations to support in the development of approved activities.

The major activities of this service sector include:

Support to community groups in the amount of $3,080,900; and community sports

facilities, $1,743,500. A considerable amount of money is spent on the operation

of community sports facilities, such as the recreation centre at Torbay and St.

John's, swimming pools at Corner Brook, Happy Valley - Goose Bay, and Gander,

and the operation of the recreation centre in Happy Valley - Goose Bay.

Mr. Chairman, included in this area is the operation

of the Canada Games Park Commission. The Province provides an expenditure of

$900,000 for the operation of the facility.

Cultural, Historic Resources and Youth: This service

includes the responsibility for maintaining and promoting public awareness of

our heritage and cultural resources, through support for the development and

operation of museums, archives, historic sites, arts and culture centres and the

provision of a secondary touring circuit. Financial support is also provides for

Youth Services, the Public Libraries Board, the Heritage Foundation, the Arts

Council, and the Art Procurement Programme.

Mr. Chairman, my Department spends a considerable

amount of money in the operation and maintenance of the arts and culture

centres, which are located throughout the Province. In addition, funding is

provided, by way of grants and subsidies, to support the development of arts and

cultural activities throughout the Province.

Almost $6 million is provided to support the

Newfoundland Public Libraries Board which has libraries scattered throughout the

entire Province. Funding is also provided to the Newfoundland and Labrador Arts

Council. Government has increased its traditional level of support for this

area.

Funding is also provided for the operation and

development of historic sites. Mr. Chairman, there have been very exciting

developments in this area over the last several years, the most notable being

the research into the vast whaling activities at Red Bay, Labrador. This

activity is ongoing and the research should be concluded by the end of this

year. My Department is also responsible for the operation of the provincial

archives. It also provides grant funding to the Heritage Foundation of

Newfoundland and Labrador.

Funding for Youth Services is also provided within

this area. My Department has an active Youth Services Division which provides

support services to many youth organizations throughout the Province. Funding is

provided directly, by way of grants and subsidies, to various youth activities

throughout the Province.

Mr. Chairman, this is the last

section of the

Department of Municipal and Provincial Affairs - you might say, thank heavens -

and is the responsibility for the Communications Policy and Development for the

entire Province. This Division is responsible to oversee the regulation and

control of communications within the Province. It provides technical advice to

Government in the formulation of its provincial policy from time to time.

Mr. Chairman, that concludes my opening statement. I

trust that the details will be of assistance to the Committee and will have

answered some of the questions members may have. I would certainly be happy to

answer any questions now.

Thank you, Mr. Chairman. I welcome any questions.

MR. CHAIRMAN: Thank you, Mr. Minister.

I will now turn it over to Mr. Tobin.

MR. TOBIN: Thank you, Mr. Chairman.

I would like to start off by saying to the Minister,

and I do not say it in a vindictive way or anything like that, but I think that

the speech you just gave is probably the worse one that has ever been given in

this building, and whoever wrote it should at least get a week off without pay.

Having said that, I do not intend to spend fifteen

minutes responding to what the Minister said. I have some questions that are

probably going to get into my fifteen minutes, Mr. Chairman. I am surprised that

the Minister did not inform us tonight as to how much the capital funding will

be for water and sewer projects this year. I do not know why the Government is

sitting back and not making the announcement. I would suspect it is going to be

similar to the way the provincial roads were done, and that is, pork-barrelled

to the extent we have never seen before, and you are waiting for the House of

Assembly to close in order to do it, so you will not get the flack that you so

justifiably deserve on it. I think that that is the reason, or there is no

money.

I have had the opportunity to speak to some

contractors who are extremely concerned about the lateness of the projects being

put in place. I say that sincerely, they were concerned about it. I really think

that the time has come for you to make the announcement on the water and sewer

applications to be approved.

When you talk about the grant structures, what system

is going to be put in place this year in terms of water and sewer and roads, and

do you have to spend all your money first before you get to the roads or can

councils apply for the roads up front and get the funding without having to

interfere with the water and sewer programme?

I have been hearing, by the way, that water and sewer

will be the first priority, and by the time it gets done if all the money is not

spent then that is going to be what is left for roads. I do not know if that is

true or not. I will ask you to comment on that.

The grant structure: I don't think you should take any

amount of significant pride in the grant structure. Every council in the

Province is basically having a difficult time with it.

AN HON. MEMBER: (Inaudible).

MR. TOBIN: What was that?

AN HON. MEMBER: Lambast him.

MR. TOBIN: Lambasting the Minister, yes. I would

also like the Minister to tell us how much it cost to have Ernst and Young do

this tax grab on the people of the Province? How many millions in total? How

much was paid to have Ernst and Young show you how to take something close to

$10 million away from the tax payers in the municipalities of the Province? I

would like to hear a response to that.

On the amalgamation issue, I want to get into that in

great detail, Mr. Minister, and I think today we have done the bigger one in

this area, but I am talking about the ones in the rural part of the Province,

and I think particularly in my own District like Lewins Cove, Port au Bras, Fox

Cove, Mortier and Spanish Room, what is going to happen to these and when they

can expect it because they too are beginning to get frustrated as to what is

going to happen and when they are going to move, and there is nothing really

taking place there.

One other question I would like the Minister to answer

for me is when will we see the announcement of the First Regional Services

Boards in this Province? When can we expect to hear something about that, will

it be sooner rather than later? That is a question I would like to have an

answer on tonight, if we would hear something on the structure of the Regional

Services Boards.

There are a couple of other issues that I would like

to raise with the Minister. I have difficulty with the way the Government has

approached certain aspects of it. One, Mr. Minister, is the reduction of the

electrical subsidy programmes to councils. I met with the Marystown Town Council

the other night and they told me that in a meeting with you and your officials

on April 1st I think was the date, they had reference in it as Fool's Day so it

had to be April 1st, and they were told by you that there would not be any

reduction in the grant structure and that has taken place, and their budget has

already been submitted for approval.

The other thing that I was told the other night by the

Marystown Town Council is since they submitted their budget you have increased

the cost of industrial water supply to the tune of I think it is between $45,000

and $50,000 extra for the Marystown Town Council. I think that is extremely

callous for the department or whoever is responsible to do that in the middle of

the year. I think if you are going to do something like that, Mr. Minister, it

should be done when Councils are setting up and preparing their budget, not

after they are approved. And the situation, if I understand the Municipalities

Act, is that after the 31st of March or something you cannot increase the taxes

or whatever the situation is. So the Town of Marystown finds itself in a

difficult situation on that issue. Since the budget has been submitted to you

for approval Government has taken away or cost them an additional $50,000 plus,

and I think that is wrong. That should not be allowed to happen.

Crown corporations: I will read from, Mr. Minister, I

am sure you are familiar with it, it is called the policy manual for the Liberal

Party entitled 'A real change' and I have some ad stuff taken out during the

election campaign that I would like to reference as the night goes by, by

certain candidates. But one, Mr. Chairman, is the tax base received: crown

corporations and agencies would be required to make financial contributions to

the Municipalities equal to the tax paid by the private corporative sector. I am

wondering if he could tell me if that has been implemented, because the

Marystown Town Council, who received $35,000 grant in lieu of taxes from the

Marystown Shipyard which is a crown corporation, had been notified just a few

weeks ago that that is to be eliminated.

I am just wondering if you are familiar with this? I

do know there were commitments made by certain candidates in the election, based

upon the 'real change' Liberal policy, in that regard.

The other thing I would like for you to comment on is:

the Government would undertake immediately - and you are elected two years now -

to establish a provincial water and sewer corporation that would take over and

continue to operate all existing water and sewer facilities, and, over a period

of years, build and expand new ones to areas now not served, in much the same

way that Newfoundland and Labrador Hydro expanded electrical services to all

parts of the Province under the Rural Electrification Programme. In this way,

many people in all parts of the Province would, as they do now for electrical

power, pay basically the same rate for water and sewer services. The water and

sewer corporation could, like Newfoundland and Labrador Hydro, borrow to build

the systems to serve the presently unserved areas of our Province, and repay

those monies from its overall cash flow.

So, I would like for the Minister to tell me how he

has set up that committee, and, if he could, tell me who is on the Board of

Directors of that committee that was supposed to be set up in the Department of

Municipal and Provincial Affairs. I would also like for the Minister to give me

the details of how he structured that.

Mr. Chairman, there are other areas that we will get

into, I am sure, as the time progresses. Do you want to break?

MR. CHAIRMAN: We will have the coffee delivered to

the gentlemen's tables.

MR. TOBIN: Sure. No problem.

There are other areas that we want to talk about.

Particularly, if I may, are the grant structures that have affected - as a

matter of fact, when I met with the Marystown Town Council on Monday night - I

used that as an example - I was informed by the council that their reduction is

to the tune of probably a little in excess of $200,000, and the Town of

Marystown cannot absorb that kind of loss.

So, that is basically what I have got to say in my

opening remarks. I am sure I will have time to ask some questions, if the

Minister wishes to respond. If he does not, he will get no coffee. Probably you

should give the Minister a break to have a coffee, Mr. Chairman. It would be

only fair.

MR. CHAIRMAN: No, I prefer that the coffee be

brought to the tables.

MR. TOBIN: I think the Minister (inaudible).

MR. CHAIRMAN: That is right. Mr. Minister.

MR. GULLAGE: Were those questions given to me, or

a statement?

MR. CHAIRMAN: That was the time that was allocated

for his opening statement.

MR. GULLAGE: Okay. So, the questions come now.

MR. CHAIRMAN: He choose to use it to ask

questions. If the Minister would like to take the time to respond to them, you

may, by all means.

MR. GULLAGE: I took it as a statement, but luckily

I wrote most of it down, I guess, if that is the way you want to handle it. So,

what will I do, start with the first one and go right through?

MR. CHAIRMAN: That would be entirely up to you,

Sir, if you wish to respond to the questions, or if you want to just make a

general comment and we will throw it open to more questions.

MR. GULLAGE: Mr. Chairman, the first question was,

how are we going to handle the capital works this year, and water and sewer

allocations versus road allocations. Well, we are treating the capital works the

same as we have in previous years, in that there are still two distinct areas. I

will be proceeding to Government, if you like, with a recommendation that will

see a sum of money in total for water and sewer and a sum of money for roads.

So, we do not intend to focus on one to the detriment of the other, if that was

the question.

I do not know what Government will decide in the final

numbers, but our intent is to proceed to a recommendation that would include an

allocation for both water and sewer and roads. So, there would be two separate

components in the recommendation.

The member mentioned the grants and the fact that

every council on the Island had a problem. I do not know how he arrived at that.

I guess he maybe canvassed 500 communities and came up with that statistic, but

I would like to say that I do not believe that is so. I will try to explain, if

I can, some of the problems with the grants programme. The problems are not with

the grants programmes, per se, the grant side of it. They are with the debt

portion -

MR. WINSOR: The same thing.

MR. GULLAGE: - which are debt subsidies, if you

like. A lot of communities that were being impacted on the positive side by the

grants portion, per se, if I might say it that way, the four components that are

there, positively, saw a net negative impact after adjustments were made for

subsidies on debt.

MR. WINSOR: Substantial! Substantial!

MR. GULLAGE: For the first time a lot of these

communities who previously were asked to pay little or nothing towards their

debt, the fact that they were now asked to pay a portion of the existing debt in

the corporation meant that even though they had a positive impact on the other

side of the grants, if you like, ended up with a negative impact. So it has

created some problems. I must say the grants programme that we analyzed over

some fourteen or fifteen months, equalization component, incentive component,

roads and population being the main factors, that which I refer to as the grants

programme, I have to say, Mr. Chairman, has shown a redistribution of money that

has proven to be very successful because what we have done - and I guess the

proof of the success of it is the fact that substantially all the urban areas

have been affected - we have caused a shift in dollars away from the urban

areas, and I am mostly referring to communities that have populations in excess

of 2,000. It is really not an urban area, but let's say 2,000 and above and

there are about forty-six of them. Almost all of them were impacted to some

degree. As you rise in population it is kind of evident that you grow to be a

certain size because you had something going for you other than a residential

tax base. It might be a fish plant or it might be a paper mill, or it may be

that your service area for a given region, like St. John's is obviously,

whatever the reason you grew to be a certain size. So that gave you an advantage

because you have an industrial business tax base as well as a residential tax

base.

The grants programme saw a shift in dollars away from

those more affluent communities, if you like, towards the rural communities that

needed to be assisted with their revenues because most of them had very little

going for them except a very limited residential tax base. I believe, and I

think I speak for my executive as well that we have implemented a very good

grants programme. I am not saying it is perfect. As a matter of fact I have

invited the Federation of Municipalities to have input throughout this year and,

I guess, in future years; input in the sense that if they have suggestions to

make where we may make improvements, if improvements are warranted we will

certainly have a look at it. We do not pretend that like any Government

programme -

MR. TOBIN: There is a Liberal on the Regional

Services Board. Are you going to listen to him?

MR. GULLAGE: Nothing is perfect, Mr. Chairman, and

we do intend to continue to monitor and see how it is affecting the

municipalities. But the programme is in effect and like I say we will continue

to monitor it. I think mainly it has been very successful. I will say though

that the debt, which is only $2 million, the fact that we have asked

municipalities to pay something towards the existing debt on the books and the

capital corporation, has caused negative impact, perceived as negative impact

because a lot of them for the first time are asked to pay something on the debt

where previously the vast majority were paying little or nothing.

The Regional Services Board, the question was: when

will we implement the first one. We put the legislation in place because we saw

several situations in the Province that were sort of obvious, I guess, and I can

give you some examples: Grand Falls-Windsor, Bishops Falls currently with a

committee in place. They saw the possibility if they wished, if the need was

there, particularly if we get into large expenditure of funds for a treatment

plant or whatever it takes to bring the services up to an acceptable standard.

If we end up with debt sharing arrangements, Federal-Provincial-Municipal, some

sort of a legal entity, obviously more than a committee may be required to fund

and arrange for such cost-sharing. That is an example and you can apply that

example to any community. Obviously you all know the details of the Regional

Services Legislation. We do not want to impose that legislation on a given area.

Obviously it is available to be used. There may be situations, I cannot see any

right now, there may be situations where the Government may want to say: in

spite of the communities not wanting the legislation that it makes sense to put

it there. I do not foresee any like that, but to give you another example we may

have a service that has been used by three, four or five or more communities in

a region and yet is being maintained and operated by only one community because

the service happens to sit in that community or happens to be maintained and

operated by that community. In fairness, if the other communities absolutely

refused to pay any share, the Government may very well want to put a board in

place and insist that on a per capita basis or some other reasonable basis for

cost-sharing, that they all pay into a service that they use. I do not foresee

anything like that in the immediate future, but it may come to be.

The main intent of the legislation is to provide a

legal entity, if you like, a board that has legal status, can borrow money, and

so on, that can be -

MR. TOBIN: Will they see one soon?

MR. GULLAGE: I do not know off the top of my head.

I cannot predict any in the immediate future, but, no doubt, in the coming years

we will see many of them put in place, in my view.

The other question I have was on the electrical

subsidy programmes. Yes, because of cuts in the budget one of the areas

identified, where we made a change, was electrical subsidy programmes, mainly

for arenas, I think almost entirely for arenas. We caused that to be $10,000

subsidy across the board, where previously we had $15,000 in place for urban

areas. So, again we caused some problems, I suppose, for some of the urban

areas, in that we reduced their amount from $15,000 to $10,000.

MR. TOBIN: Some of the towns have not even been

notified about that yet, Mr. Minister, by the way, have not gotten a letter.

MR. WINSOR: Most of them got one, then, because

they have all called me.

MR. CHAIRMAN: Order, please!

I would like to remind members of the Committee that

Mr. Tobin has had his time. As soon as the Minister has finished answering the

questions that were included in Mr. Tobin's statement, I would like to turn it

over to Mr. Crane.

MR. TOBIN: The Minister is not finished, boy.

MR. CHAIRMAN: I was reminding you that I would

prefer it if you did not interrupt.

MR. GULLAGE: We found that with our industrial

water systems, because of budget cuts, we had to ask the communities to pay a

little more in the water rates. It is unfortunate that the timing was late. We

ran into timing problems on the grants, per se, anyway, because, as we all know,

we decided at the very end of the year to implement the programme. We would have

liked to, as I have said many times, have a decision on the grants back in

September, say, but we made it at the end of the year. We felt it was important

enough to implement, and we knew we had to bear the brunt of criticism and deal

with the lateness of it with the municipalities. So, it did create some

problems.

We have examined the question about the water and

sewer corporation. We have examined it in some detail. I am not saying we will

not find a way to do it. Again, I am repeating myself, because I have said it

several times in the House, that we have examined the option of a water and

sewer corporation. But, when you look at the figures I have seen, a $2.5 billion

problem with replacement and another $2.5 billion for new water and sewer needs,

it creates a terrific problem. If you put a water and sewer corporation in place

and you have to purchase the existing infrastructure and then start adding new

infrastruture, we are looking at a terrific cost per household. So, so far we

have not found a way to put it in place. We are still looking at it.

I think that was it, unless there is another question

that I missed.

MR. TOBIN: Yes, Mr. Chairman, there is one other

one. I asked you if you could give me the figures on how much it would cost to

get Ernst & Young to do this?

MR. GULLAGE: Oh, I am sorry. I do not know the

answer.

We can get you a breakdown on that, we do not have it

here tonight. Is there a ballpark figure?

MR. OSMOND: (Inaudible).

MR. GULLAGE: Well, we will get the figures for

you.

MR. TOBIN: Sure.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: I only have one question for you, Mr.

Minister. The Summer Games money, has that been approved yet?

MR. GULLAGE: Yes, the Summer Games monies for

Harbour Grace - Carbonear have been approved. I think it is $700,000 in total,

some of which is in the current budget and some of which will be in next year's

budget.

MR. TOBIN: How much?

MR. GULLAGE: $700,000.

MR. TOBIN: $700,000.

MR. GULLAGE: That is for facilities construction.

MR. CHAIRMAN: Mr. Aylward. I am sorry! Were you

finished your question, Mr. Crane?

MR. CRANE: Yes, thank you,(inaudible).

MR. TOBIN: What's that? I would like the Member to

say that again, I missed that.

MR. WINSOR: You have been asking questions to the

former (inaudible).

MR. CHAIRMAN: Were you finished with your other

question, Mr. Crane?

MR. CRANE: Yes, that is it.

MR. CHAIRMAN: Mr. Aylward, if you could begin your

questioning I am sure the Minister can still hear you.

MR. R. AYLWARD: First of all, Mr. Chairman, I

would like to ask a question of the new chairman of the Canada Parks Games

Commission, the man of many titles, I call him; he has many responsibilities now

and I was just wondering, does he still go fishing and, does he still use the

blue charm?

SOME HON. MEMBERS: Hear, hear!

MR. CHAIRMAN: It is most effective on the Hamilton

River; is it not?

MR. R. AYLWARD: I could not resist that although

it is a kind of a private joke -

MR. GULLAGE: (Inaudible).

AN HON. MEMBER: (Inaudible).

MR. R. AYLWA