May 10, 1999

GOVERNMENT SERVICES ESTIMATES COMMITTEE

The Committee met at 9:00 a.m. in Room 5083.

Pursuant to Standing Order 87, Percy Barrett, MHA

for Bellevue, substitutes for Eddie Joyce, MHA for Bay of Islands.

CHAIR (Wiseman): Order, please!

For recording purposes, my name is Ralph Wiseman,

Chairman of the Government Services Committee. This morning we are here to

review the Estimates of the Department of Municipal and Provincial Affairs. I

want to welcome the minister and his staff.

The procedure has been that the minister has

fifteen minutes to open his Estimates with comments and the Vice-Chair, Mr.

Hodder, will have fifteen minutes to respond. We will interchange every ten

minutes for Committee members.

Before we do that, we have some housekeeping

business for the Committee to do with the minutes of the last meeting dealing

with the Department of Government Services and Lands. If everyone had an

opportunity to have a look at the minutes then we will ask that we move the

minutes, if there are no errors or omissions.

MR. SWEENEY: There is one error I would like to

point out.

CHAIR: Where?

MR. SWEENEY: The Committee adjourned at

approximately 8:00. It should be "p.m."

CHAIR: Duly noted. Could someone make a motion

then to approve the minutes with the corrections?

On motion, minutes, as amended, adopted.

CHAIR: Mr. Minister, when you are ready you may

begin.

MR. H. HODDER: Mr. Chairman, if I could, before

we begin? Just so we know the procedure. The Member for Cape St. Francis is the

critic and he has joined us this morning. Not to be a voting member but to

follow procedure as a critic and wishing to participate in the discussion as we

have followed in previous (inaudible).

CHAIR: Okay, I apologize, I did not introduce

the Committee. The members are Mr. Hodder, Ms Osborne, Mr. Andersen, Mr. Sweeney

and Mr. Barrett, who is filling in for Mr. Joyce. As the Vice-Chairman has

stated, Mr. Byrne is here as a critic for Municipal and Provincial Affairs and

will be asking some questions. I take it, then, your other member will not be

here?

MR. H. HODDER: The other member is scheduled to

be here but -

CHAIR: Okay, but is unavoidably delayed.

Mr. Minister, when you are ready you may proceed

with the introduction of your staff.

MR. MATTHEWS: Thank you, Mr. Chairman. It is a

good way to start the week I guess, 9:00 a.m. on a Monday, getting lost as to

where we thought we had to go. We were on the fourth floor for a while wandering

around, forgetting that it was the fifth. So we apologize for being late by a

minute or so.

I am pleased to introduce my staff who are with me

this morning to assist in the Committee Estimates hearings, and before I go any

further and make any comments I think I should introduce them. To my immediate

right is the Deputy Minister of the department, and also the CEO of the Board of

the Newfoundland and Labrador Housing Corporation, Bob Noseworthy. He wears both

hats, and we will also be dealing with, this morning, the Estimates of the

Corporation as part of the Department of Municipal and Provincial Affairs.

CHAIR: Yes, Mr. Minister, actually it is my

fault. I forgot to say, when I introduced, that we would be doing both Municipal

and Provincial Affairs and the Newfoundland and Labrador Housing Corporation.

Thank you.

MR. MATTHEWS: A little further to my right is

Ramona Cole, the Assistant Deputy Minister of the department. To her right is

John Moore, director of local government planning. With me also is Ken Curtis,

Budget Analyst. Way back there, for whatever reason I don't know - the chairs

were that far back, I guess - is Brenda Caul, who was the Assistant Deputy of

Municipal Affairs, now in Treasury Board, but is also filling in this morning as

the Acting Chief Financial Officer for the Newfoundland and Labrador Housing

Corporation. Mary Marshall is the Chief Operating Officer of the Newfoundland

and Labrador Housing Corporation. Ralph Crocker and Joe Ashley are on my

political staff.

We will, with your indulgence, unless you have a

preference for order, Chair, do the department first and then we will move into

the Housing Corporation.

CHAIR: No problem, Minister.

MR. MATTHEWS: The Housing Corporation and the

department, of course, are about equal in terms of budget size and they operate,

in some sense, quite independently of the department, but in reality it is a

totally integrated part of the Department of Municipal and Provincial Affairs.

Housing is one department. Once upon a time, I believe, if my memory serves me

correctly, the Corporation had in fact its own ministry in government, its own

minister and a full political office there. Today they operate under the

auspices of the Department of Municipal and Provincial Affairs.

The historic role of the Department of Municipal

and Provincial Affairs over the years has been really a department that was

engaged as a service provider to the 400-odd communities out there in our

Province that are either incorporated or have local service districts. There are

291 incorporated municipalities in the Province, there are 175 local service

districts in the Province, and those two groups of 400-plus communities

represent about 96 per cent of the population of the Province. In other words,

that is about how many people live under some form of organized municipal

government, either a municipality or a local service district.

Over the last two or three years the role of the

department has changed somewhat in that we have been redirecting our efforts on

a policy basis and a practical basis from that of a service provider to a

department which has as its primary focus being a department of policy making

and facilitating the work of the towns and the municipalities that are out

there.

The idea and the intent, of course, is to encourage

the municipalities in the Province to be more autonomous in terms of the

provision of services, to take a more self-reliant role in terms of their

activities, and to hopefully strengthen them by way of providing them with tools

to do the job of providing municipal government, as opposed to the department

being a provider of services directly either through the towns or in parallel

with them.

You will probably recall that we entered into a

debt relief program for some of our municipalities about two or three years ago.

The reason for that was because municipal financing in the Province had gotten

to a point where many municipalities - approximately half of the municipalities

- had found they had gotten themselves in the circumstance of being unable to

handle the debt load that they were carrying, being unable to service it and

meet their obligations to the Newfoundland Municipal Financing Corporation

and/or the chartered banks, wherever their debt lay.

A debt relief program was instituted. Over the past

two years we have been able to assist about forty-nine municipalities in helping

them restructure their municipal debt. This year we have committed another $5

million in the budget to that effort, which brings a total of $17 million over

the past three years to debt restructuring.

There are still about seventy municipalities out

there - no, there are more than that. There are probably one hundred

municipalities out there that still need our assistance. I can give you a

breakdown more concisely, if you wish, later on, as to exactly where we are with

debt relief in terms of towns' health, towns in negotiation, towns that have not

been prepared to participate, and how many are left.

Also, over the past couple of years, we have had

about seventy municipalities that have refinanced over $100 million of their

debt. They have done that by being able to go to chartered banks, arrange

borrowing at lower interest rates, and repay NMFC monies that they had

outstanding there. As you will see probably in the Estimates, there will be a

noticeable re-balancing of the amount of money that we are now applying to

principle as opposed to interest on the overall debt of municipalities that we

assist with through the Newfoundland Municipal Financing Corporation.

We still have a fair ways to go in terms of getting

all our municipalities to a circumstance that they are able to carry their debt,

they are able to service their debt, and still provide the services and move

forward with a reasonable level of municipal services to their communities.

A couple of the other things that have happened

over the past short while, with respect to the City of St. John's, is that we

have finally been able to bring resolution to the issue of water tax. St.

John's, as you may recall, or you may or may not have known, is the only

municipality in the Province that was not getting water tax on the same basis

for all of its public buildings as all (inaudible) municipalities that are

billing for water tax were getting. We brought about a resolution to that last

January by announcing that we would be paying water tax on schools, hospitals,

and other government public buildings on the same basis as any other

municipality, and that is on the basis of the commercial mil rate in that

community or in this city. That really has been a welcome announcement by St.

John's but it is more than that. It has brought complete fairness and equity in

terms of how we deal with all other towns in the Province.

We have also promised to examine the issue of

property tax on government owned buildings. This was a recommendation that grew

out of the Russell commission on the Southlands issue. That review has now been

completed and I hope that within the next couple of months I can move to Cabinet

with some recommendations on that issue that will have general application for

the Province, of course, and see if we can bring some closure to that issue as

well.

One of the new major initiatives that we have

announced we will be undertaking - because it has been in train for a number of

years -is a full and complete review - if you like, a rewriting - of the

Municipalities Act. During this session of the House we will be introducing a

new Municipalities Act. It has been the product of many years of consultation

with towns, with town administrators and with all of the stakeholders that have

an interest in municipal government.

The focus of the rewriting of the act will to

essentially put all of our municipalities in a new and better circumstance with

respect to how they will be able to manage their government activities at the

municipal level. It will deal with the issue of economic development which has

become a significant activity with many towns in the Province. There will be

increased municipal autonomy in the area of taxation, in the area of

administration and financial management.

Eventually we are also committed - although it will

not be in this session of the House, but hopefully in the fall session - we hope

to be able to bring forward a new urban and rural planning act. That act will be

really building on the work of the new Municipalities Act. It will give greater

flexibility and autonomy, or authority if you like, to municipalities to be able

to deal with issues of urban and rural renewal planning within their boundaries,

if you like, at their own level, as opposed to the current situation where all

of these requests, I guess, have to come to our department for, ultimately,

ministerial sign-off before they can be effected. It involves, in many

instances, a lot of time being taken up with hearings and that sort of activity

prior to getting the plans changed with respect to their boundaries.

St. John's, Mount Pearl and Corner Brook operate

under their own individual acts as cities in the Province. They each have a city

act. Mount Pearl and Corner Brook are actively working together, I think

collaborating in terms of putting forward some suggestions for changes to their

acts. These three cities operate outside of the Municipalities Act. The other

288 of the 291 all come under the Municipalities Act, as we mentioned earlier.

In the case of the City of St. John's, they have

not shown much interest or certainly initiative, although it has been discussed

with them many times, I think it is fair to say. They are not involved with the

revisiting of the acts in concert with Mount Pearl and Corner Brook and they

have not shown as great an interest or desire to have their act rewritten.

Although I think that with it being the oldest of the three city acts in

existence by far, I think the time will come when they will have a heightened

awareness of what is happening in the other areas, stuff that they do not know.

Hopefully they will seek some changes to the St. John's Act to bring it up to a

modern standard.

We work very closely with the Federation of

Municipalities which represents most of the towns in the Province. They are a

significant contributor to our work in terms of policy development and

interaction with the towns and municipalities throughout the Province. Currently

about 70 per cent of all the households in the Province are serviced by or

connected to water and sewer servicing. However, only about 10 per cent of these

households have treated water and sewer in their towns, so there is a fair

challenge out there to meet certainly in terms of sewer and waste treatment in

particular.

If we were to meet all of the needs that are out

there - not including aging infrastructure that needs to be replaced - we would

need about $3 billion. So clearly you can see that a $20 million year-over-year

capital works program, even with the $100 million accelerator program which we

announced this year, will not make a significant dent in the overall need, if we

were to think about trying to address it.

We are also moving, in terms of policy direction,

to a new approach with respect to more cost-effective water and sewer

technologies. Essentially, what the department has been doing over the past year

or so is looking at standing back from the current way of planning and

delivering infrastructure for, particularly, water and sewer. While I would not

say we have decided to notionally throw away the book on what we required in the

past in terms of infrastructure, how it is put in the ground and the significant

costs that go with it, we are in the process of looking at new approaches, new

technologies, some of which are already being tried in the Province and some

which are completely new to our circumstance.

We will never get water and sewer and those types

of services to all the towns based on the rather expensive methods that we

currently use, using consultants for very high priced systems. We think that

somewhere in between wells and septic tanks there are other intermediary type

solutions that will be less costly and certainly just as effective. That is our

approach currently to those issues.

There are 466 local government structures, as I

said, in the Province: 291 municipalities, 175 local service districts. If we

were to compare ourselves - and it would not be a fair comparison in a lot of

ways - to other provinces, Nova Scotia has fifty-nine local government

structures for a population of 900,000, New Brunswick has 109 local government

structures for a population of 740,000, and we have 466 local governments for a

population of just over 550,000. Clearly there is a significant challenge, and I

would suggest, need to bring about greater levels of operation between our towns

and municipalities in terms of planning the delivery of municipal services,

particularly in the area of water and sewer, waste disposal, and in the area of

firefighting. These are three major areas where a greater cooperation must be

achieved if we are to, on any reasonable basis, have the towns in a circumstance

where they can get on with their business.

I do not think I need to say much more because I do

not want to take any more than the fifteen minutes that has been allocated to

me.

CHAIR: You have already arrived at that point

now, Minister.

MR. MATTHEWS: We have arrived at it. What I

would say, rather than any more concluding remarks, is simply this. The

department is a busy spot with a lot of stakeholders out there looking for help

and the challenges against our responsibility to delivery are enormous. We would

be pleased to answer any questions or entertain any comment you might have with

respect to the Estimates, a financial document, or to our policy direction at

the department generally.

CHAIR: Thank you, Minister. Mr. Hodder.

MR. H. HODDER: The Member for Cape St. Francis

is going to lead off our (inaudible) discussion.

CHAIR: Mr. Byrne.

MR. J. BYRNE: Thank you.

Minister, just off the top before I forget

something, over a year ago now five towns down in my district - Logy Bay-Middle

Cove-Outer Cove, Torbay, Pouch Cove, Flatrock and Bauline - had a meeting with

the previous minister and officials, the deputy minister, of the department to

have a study done for the benefits of looking at regionalization of services in

that district. The department was going to pay for the study. (Inaudible) I

think sometime this spring (inaudible), the town of Torbay spokesperson, the

Mayor of Torbay, wrote a letter wondering what had happened to that (inaudible).

Could the deputy minister respond to that and let us know what is happening

here? (Inaudible) remember that (inaudible)?

MR. NOSEWORTHY: Yes, I do. There has been a

number of other areas that have expressed an interest, I guess, in looking at

sort of a feasibility study in relation to a sharing of services. There are

probably four or five areas throughout the Province. I guess from where we were

sitting we wanted to look at a consistent framework. I know we have had a number

of requests and they have had various terms of reference. A different approach

has been taken in certain areas.

I guess from the point of view, as the minister

pointed out, from the whole efficiency aspect of municipal government, we see

this sharing of services and regionalization of services, be it waste disposal

and other services, as sort of a primary opportunity here in terms of

demonstrating, I suppose, a more efficient delivery, a more efficient means of

administering local government services. We are in the process now of pulling

together a terms of reference and a framework hopefully for a program that we

can come out with and offer to various municipalities which are interested in

this so we would at least have a consistent framework to go forward. That has

been the sort of delay in dealing with that.

MR. J. BYRNE: (Inaudible). That was probably

the first group to have (inaudible).

MR. NOSEWORTHY: Yes, it was, and there has been

three or four since then. I would anticipate that in probably another six weeks

or so we should be in a position to do that.

MR. J. BYRNE: I have a few other questions on

your comments (inaudible). I will get into some detail later on, I suppose. You

mentioned that the relief for the towns and the financing now - when you go to

the towns to (inaudible) refinancing through the private banks and what have

you, of course the provincial government, Municipal Affairs, is really

benefiting big time from that program because it takes away your debt load. Is

that correct to assume?

MR. MATTHEWS: The debt loan of NMFC, which is a

financial institution, the bank if you like, that the provincial government has

in place to deal with municipal financing, has had about probably $100 million

of its debt repaid. That is benefiting, to some degree, the contingent

liability, I suppose of the Province generally.

To some extent, we are not benefiting as much as

probably you might think. Because while the towns are getting the benefit of

lower interest rates because they go to the bank and refinance, a lot of the

debt of the Corporation is more long-term. The Corporation does not

automatically have the ability to refinance its debt, its borrowing if you like,

consistent with the towns. It means there is less money owed to the NMFC, and

eventually they will have to refinance less borrowing themselves to finance the

communities, so yes, there is a benefit there.

MR. J. BYRNE: That leads me to the next

question. What about the municipalities out there that cannot take advantage of

this refinancing?

MR. MATTHEWS: Cannot take advantage of it? We

have assisted forty-eight or forty-nine municipalities. We finalized

negotiations with them and got them straightened out, so to speak. There are

another nine that are awaiting approval. There are thirty-three negotiations

underway and there are only about ten, I think, in the final analysis that we

have sort of suspended negotiations with because they have not expressed the

willingness to deal with matters such as local taxation and that.

We are working through the worst situations, to

some degree, first, but also we are working too with situations that are most

willing to cooperate in terms of doing what they have to do in order to get

their debt down.

You say: What about the towns that have not been

helped yet? I guess the only thing I can say to that is while we have

straightened out about fifty of the 150 or 170 that needed help, the rest of

them are in various stages of either negotiation or determining in their own

minds the approach they want to take as towns.

MR. J. BYRNE: I have heard it said that some

municipalities that did do the refinancing, extended over X number of years,

they got a better interest rate and what have you, compared to some of the

municipalities that could not, Municipal Affairs were willing to pay down the

debt on some of these municipalities. Some municipalities are saying to me: We

are being penalized for being more efficient over (inaudible). That is a

legitimate argument, I think.

Is there anything being done to address that? If

you have municipalities out there and they have gone and refinanced because they

are in a position to do it, and they were efficient and they were responsible

over the years, whatever the case may be, other municipalities that were not are

getting their debt paid now and (inaudible). Is there something that could be

done to help these out too?

MR. MATTHEWS: Yes, we are doing some things.

First of all, the debt relief program does not, in any sense, put a town in a

situation where they can go out tomorrow, I do not think deputy, and start

borrowing and remortgaging their future. Part of the restructuring is really

putting a town in a circumstance where they can manage the debt load they are

left with and still deliver a minimal or an average level of municipal services.

It does not put any of these towns in a circumstance where the relief is such

that they can start now to go out and do major capital works. I think they can

get on with business as they should be able to get on with.

MR. J. BYRNE: I think you missed my point.

MR. MATTHEWS: One of the things we have done

for the larger towns, if you like, in some degree, is announce this $100 million

accelerated capital works program. Because a lot of the towns, as you accurately

described as being well-managed and not having need of debt relief, are in a way

being a little bit penalized, if you want to look at it that way. The $100

million accelerated program really is, at the end of the day, we believe only

going to be able to be taken up by a maximum of about twenty to twenty-five

towns. Those twenty to twenty-five towns will be mainly the larger ones that are

in good financial shape. That is one reason why we went with the multi-year

accelerated funding. I cannot think of anything else we have done for that

particular group of good, well-managed towns other than to say congratulations

and please do not get yourself in trouble.

MR. J. BYRNE: You are leading into the next

question now. With respect to infrastructure, you said there is a new approach

with respect to financing, and that there have been some talks of some

municipalities (inaudible) 50-50 cost shared program in the future. Then you

also mentioned you are going to take a new approach with respect to the wells

and septic tanks, what have you, like something in between water and sewer

(inaudible) septic tanks.

I remember the previous minister went to Japan and

looked at a system over there a few years ago. Nothing ever came of it,

(inaudible) to hook probably ten or twelve houses to one septic (inaudible),

that type of thing. Is that what you are talking about?

MR. MATTHEWS: Well yes, there are two things I

will comment on. Number one, you are right, the biogreen type technology was

looked at. It is not quite accurate to say that nothing has become of it. There

are some places where it is being tested. Deputy, probably you can share with

the Committee the areas where we are doing that, and where we are with it at the

moment.

MR. NOSEWORTHY: There are several areas

throughout the Province where a biogreen system is serving a number of housing

units or dwellings. There are also a number of biogreen systems that are serving

individual dwellings. That was entered into, as far as the department is

concerned, on a sort of demonstration project and we are currently in the

process of monitoring those systems now. One I know is in Cox's Cove, and we are

looking at the applicability of those on a broader basis. That will be a part of

one of the options, in any event, we are looking at in terms of our new

technologies, if you will, and this new approach that the minister talks about.

MR. J. BYRNE: This biogreen that you are

referring to in Cox's Cove, (inaudible) in conjunction or in agreement with some

other group or whatever the case may be, is this a private individual, one

house, two houses, five houses (inaudible)? (Inaudible) going to be (inaudible)?

MR. NOSEWORTHY: In certain instances it was

done through the Housing Corporation, I think, in terms of individual units. It

was applied to Housing Corporation units throughout the Province. There have

been instances where it was applied in a municipality to a number of houses it

was funded under. I think in Cox's Cove, it was perhaps the infrastructure

program and put in place in that way.

MR. J. BYRNE: You mentioned in your opening

remarks about the property tax in the City of St. John's and in government

buildings, that you are looking at that. When can you realistically look at

having some kind of a decision made on that?

MR. MATTHEWS: The study part of the activity is

concluded and the next step now is to take something to Cabinet for their

consideration. I am hoping over the next couple of months to be able to bring it

to that level of consideration and probably get some decisions made with respect

to how we are going to approach this whole issue.

You can understand that if we were to apply

property taxes at whatever mil rate exists in a town or community - because

there are public buildings all over the Province, although a lot of them are in

St. John's - at the same rate that towns tax other properties, that there is a

considerable amount of money involved in it. So it is a question, first of all,

of which way are we going to go in terms of a policy direction, and at what

level of implementation can we reasonably expect would be acceptable to towns or

cities and also be reasonable for the Province to bear.

We also do some things inside of cities and

municipalities now that are not done by other towns across the country which get

taxes paid to them. In Halifax, they get about 4 per cent of their budget from

direct government grants. Our city here of St. John's gets about 15-plus per

cent of its budget. In addition to that, we pay for things like policing inside

of our municipalities,

whereas every other jurisdiction pretty well has to

provide their own policing out of their own tax revenues. So just taking the

issue of taxing government buildings or not taxing government buildings, to be

consistent with other jurisdictions, is a broader issue than applying mil rates.

It has to factor in what other types of funding those municipalities and what

other types of services other municipalities are providing that our towns and

cities - our cities mainly - are not. So it is a big issue.

MR. J. BYRNE: Just two quick ones now. You

mentioned policing there, and of course you talked about community policing.

(Inaudible) Member for Conception Bay East & Bell Island said not long ago with

respect to the RNC, and we heard the response from the Premier and what have

you, at this point in time. If you are looking now at the newest policy for

taxing, property assessments and what have you - and you yourself just mentioned

the policing - are there going to be any discussions with the City of St.

John's, with the City of Corner Brook, and with Labrador City to include

community policing based on the fact that you would give X amount of dollars for

property assessments? Has that been - thrown out at all or considered or looked

at or whatever the case may be?

MR. MATTHEWS: Two answers, or two points, and

they are these. Number one, yes, we will be talking with the major towns and

with the federation with respect to this issue of grants in lieu of or taxes on

public buildings.

The issue of municipal policing as it is currently

delivered in the metro area of St. John's, Corner Brook, and Labrador City is

not, for my department, part of that consideration. The policing issues of

government are under the purview of the Department of Justice. I would not want

you to in any way think, or even remotely believe, that I am suggesting we are

going to negotiate policing when we get into the issue of property tax on

government buildings. They are two separate issues.

I can tell you from our department's point of view

that we have no mandate to deal with anything other than municipal issues as we

are currently dealing with. I only pointed out that in other jurisdictions they

get less money from the government directly, but they have to provide more

municipal service. That is the context in which I mentioned things like policing

and other services that some cities provide out of their municipal taxes and

still they get less money from governments for MOGs and that type of thing.

MR. J. BYRNE: The comment with respect to the

Municipalities Act, that has been on the go now for some time now, getting it

revised. There have been amendments to the Municipalities Act over the years,

some last year I believe. You are saying that is coming this session before the

summer break?

MR. MATTHEWS: Yes. It was announced in the

Throne Speech that we would be doing the new Municipalities Act in this session.

We may be in a position of being able to introduce that bill maybe as early as

this week, although I do not want to be held to that date because we are working

in terms of timing subject to the constraints of legislative council in

drafting, and in terms of announcements with the Federation. It is intended to

have it in this session.

MR. J. BYRNE: I would assume that a bill that

comes to the House, and a new municipalities act would be all inclusive, that

there would be a lot of new material in there, revisions and what have you. We

are now into mid-May. To have a bill come to the House of that magnitude, I

would not be surprised if (inaudible). I would expect a lot of debate on such a

bill, wouldn't you?

MR. MATTHEWS: Yes, I would expect some debate

on the bill. It is a major piece of legislation. It is May 10 and subject to -

if you are expecting the House to close earlier than we are, Jack, I guess that

would be a concern for you.

MR. J. BYRNE: Even to the end of June would be

quick, wouldn't it?

MR. MATTHEWS: We are prepared to stay as long

as it takes to get our legislation through. I am sure that (inaudible) agenda

will adjust to that as opposed to the concerns of wanting to get out earlier.

However, if you (inaudible) your hands at the end of the day in terms of debate

in the House.

CHAIR: We will move along here. Mr. Andersen.

MR. ANDERSEN: I have no comment at this time.

CHAIR: Ms Osborne.

MS S. OSBORNE: Newfoundland and Labrador

Housing, we can go right into that now, can we? Or are you doing that

separately?

MR. MATTHEWS: No, we will do the Housing

separately, sort of as a second department if you like.

MS S. OSBORNE: The Municipal Assessment Agency,

this is the last year that you are giving them a grant, is it? I am looking at a

lot of communities out there that are dying. TAGS is stopping and there is

out-migration. I am looking at the communities' inability to pay. The agency

would probably then go into a deficit. Who will be responsible for the agency?

MR. MATTHEWS: The agency is a stand-alone

operation. You are right, I think we are reducing the grants over three years

from $1.5 million to $1 million to $500,000 to nothing.

MS S. OSBORNE: I think they have gotten their

last. I think it is $500,000.

MR. MATTHEWS: Yes, $500,000.

MS S. OSBORNE: That is the end of it now.

MR. MATTHEWS: That is the end of it, yes. The

concept of the agency and the phasing out of financing, of course, is to put

them in a position where they could become self-sustaining and the service that

they would deliver to the towns would be based on full cost recovery. I think

that has been the principle that the Federation has accepted. The towns have

accepted that. The towns wanted their own independent agency, if you like. As I

understand it they have advocated for it historically. It was delivered to them.

There is no difficulty imminent with respect to the ability of the assessment

agency to do their work beyond this year because they were set on a course. At

this point in time the cost of the service they deliver will be fully recovered

from the towns. There is no indication of any problem at the moment.

MS S. OSBORNE: I know that some towns have

requested a moratorium, and (inaudible) requested a five year moratorium. A

letter came to our office just this week. There was one town out there

requesting a reduction in fees and a five year delay in paying the fees. This

circle will break some. If the towns do not have the ability to pay the

assessment fees, then who will be responsible for the municipal assessment?

MR. MATTHEWS: We are not at a point where that

has occurred. We are not at a point where the Federation has even raised it as a

concern. It is not a discussion item between the Federation and ourselves, so

obviously the concern would probably, I would have to suggest, be on a community

by community basis. There may be up to 291 towns out there. Yes, there may be a

few that are going to have difficulty depending on what they are prepared to do

with their own tax rates and assessment needs. For the most part, the agency is

on a course to be self-sustaining. The Federation and the towns have accepted

that principle and there is no difficulty from the Federation's point of view,

at least no difficulty that they have expressed to us.

MS S. OSBORNE: You do not foresee a difficulty

in them not being able to stand alone.

MR. MATTHEWS: No. We do not foresee any

difficulty. If there is a difficulty with a town the agency will deal with that

based on what the municipality wants to discuss with them.

MS S. OSBORNE: Would the municipality have the

right to attach the municipal operating grant for the assessment fee?

MR. MATTHEWS: Does the agency have that ability

to intercept MOGs?

WITNESS: No.

MR. MATTHEWS: I do not think so. The only

interceptions of MOGs, if possible, as I know, is from the NMFC or NMFC arrears.

Those are a debt to them.

MS S. OSBORNE: As to the forty-eight towns that

you have helped, the NMFC now has the ability to attach the municipal operating

grant, does it?

MR. MATTHEWS: No. NMFC have always had the

ability to intercept MOGs in case of arrears. Before we just did disbursements.

That is the extent of the ability of anyone to intercept MOGs, deputy?

MR. NOSEWORTHY: Yes.

MS S. OSBORNE: Thank you. I will get back with

Newfoundland and Labrador Housing.

MR. MATTHEWS: Sure.

CHAIR: Thank you. Mr. Sweeney.

MR. SWEENEY: No questions.

CHAIR: Mr. Hodder.

MR. H. HODDER: Yes, I have a few questions. I

wanted to go back to where you were talking about the new act. As you know and I

know, that has been in discussion for many years.

MR. MATTHEWS: Ten years, they tell me.

MR. H. HODDER: At least ten years (inaudible).

WITNESS: (Inaudible) eight (inaudible).

MR. H. HODDER: Don't make it any worse than it

is, but we will read into the record ten years.

MR. MATTHEWS: I wanted to get back to when he

was a mayor and blame him for holding it up.

MR. H. HODDER: All that kind of thing.

I'm pleased to see it is coming forward. I have had

some discussion with some municipalities on it and they are looking forward to

it. There has been a great deal of interaction and dialogue. However, there are

also some concerns about it. I'm pleased it is coming forward this spring, but

if there was a commitment made by the ministry that this particular piece of

legislation could be referred to the appropriate legislative review committee, I

think that would augur well, and it would permit open dialogue.

I am not anticipating great, shall we say,

controversies arising but there will be a need to have sufficient time. I am

wondering if the ministry has anticipated that. What that would mean,

essentially, is that there would have to be some opportunity for the public to

have some discussion, probably at this committee level, and then bring it back

to the House for approval in the fall session. Is that a viable alternative or a

viable part of your consideration?

MR. MATTHEWS: The decision to refer anything to

a committee of the House is, I guess, subject to the House Leader working that

out or making that type of decision.

As the deputy has just pointed out to me - I guess

John Moore can comment on it further to my comments - over the last eight years

there has been a number of consultation documents that have gone out. There has

been a high level of consultation between the mayors, between the towns and the

Federation, between the municipal administrators of the towns, their

association. As I understand it, quite frankly, Harvey, what is coming forward

in the new municipalities act will be of no surprise to the towns. As a matter

of fact, most of it will have come from the discussion, the dialogue, the input

and the consultation that has taken place with them. Whether or not we need to

go to a committee of the House to consider it is a question that will have to be

addressed when the bill is introduced in the House.

John, can you speak to the issue of consultation

and all this stuff, and how extensive it has been beyond what I have said?

MR. MOORE: Yes, Minister.

I think it is fair to say that this piece of

legislation has probably received more public consultation to this point than

anything that probably has been introduced in the legislation in a long time.

That probably has had something to do with the fact that it has been eight

years, because we have had ample opportunities to do it.

What is in the legislation, I guess, was

effectively concluded last fall, and there was a point of time where we thought

we might actually introduce it in the House last fall. We carried out a fairly

extensive further consultation with municipalities starting at the Federation of

Municipalities' convention last November. We released a discussion paper that

went out to all municipal stakeholders around the Province. We followed that up

with three public regional seminar consultations around the Province. We went to

the combined councils of Labrador annual meeting and gave them a presentation on

the legislation. We just recently did the same thing for the Newfoundland and

Labrador Association of Municipal Administrators in Marystown.

Up until last week we were making changes based on

things that came out of those consultations. As late as Friday morning we met

with a committee of the Federation that had worked with us on the act and gave

them a briefing on what the new act looked like. They made some additional

changes. These are being made over the weekend and whatever, so as the minister

said, whether there is a need for a further consultation, I do not know, but

there are no surprises in the legislation for municipal stakeholders, clearly

not. It is very much reflective of what they have seen and said to us about what

they have seen.

MR. H. HODDER: (Inaudible) comment, John, would

be to say that the fact that as of Friday you were still making changes would

kind of tell me that after eight years there may still be further need for other

Crown agencies or other groups like, for example, chambers of commerce, and

other similar stakeholders - school boards, for example, might be impacted - to

have a chance to comment.

Speaking as a former municipal person of

twenty-three years, often you find when you bring these things forward that you

sort of become aware of the fact that the municipal stakeholders, the elected

body as such, are not necessarily the only bodies that will have things that

need to be said. That is not unexpected, because in some ways elected municipal

officials are themselves cloistered people who are getting inputs on certain

issues.

I have not seen the legislation. I have seen some

drafts of it and I have had discussions with the municipal administrators. I

know you have had extensive consultation and that is to be expected and

commended. I just want to say that this is a substantial piece of legislature,

and if, when we see it, there is a need for some dialogue on it, I do not see

the - in fact, we have just gone through where there is not a new election

coming up in the fall. It needs to be passed for 2001 and for the next year's

budget. I don't see the need to have it pushed unnecessarily or passed by the

Legislature in this spring, but it does need to be passed in the fall session.

MR. MATTHEWS: The hope of municipalities is

that it can be effective January 1, 2000, (inaudible).

MR. H. HODDER: Yes, I agree with that.

MR. MATTHEWS: I think we would all support

that. The question of whether or not a committee will be asked to look at it is

a question that can only be addressed after the bill is introduced in the House,

so we will just have to wait and see.

MR. H. HODDER: A couple of things I want -

MR. MATTHEWS: Percy -

MR. H. HODDER: (Inaudible).

MR. MATTHEWS: Sorry to interrupt you. In terms

of when a decision is made as to whether or not a bill goes to a committee of

the House for review, when is that taken and by whom? I'm thinking in terms of

the House procedure now.

MR. BARRETT: That would be in consultation with

the minister and the House Leader.

MR. MATTHEWS: Okay.

MR. H. HODDER: The two House Leaders generally

get together and there would be appropriate - what we have all been doing since

I have been there is this. They bring it in to introduce it, you do second

reading, and then immediately upon Committee it is then referred to the

Committee here. You do your second reading.

MR. MATTHEWS: Even if the bill goes to a

committee, it still can be moved through the House.

MR. H. HODDER: Oh, yes.

MR. MATTHEWS: Yes, concurrent with it, so that

is (inaudible) holding up the debate in the House on it, if that were to happen.

I have no idea that it will or will not happen.

MR. H. HODDER: (Inaudible) would be to make

changes at the Committee stage, so therefore second reading in principle can all

be agreed to and then normally there is a motion to be (inaudible).

MR. MATTHEWS: After the bill passes in the

House and becomes law - as the deputy is pointing out to me - there is going to

be a need for a fair bit of training to take place at the municipal officials'

level and at the councillors' level as well so that they would understand how to

apply the new act when it becomes effective, hopefully next January. We will see

where it goes when we introduce it.

MR. H. HODDER: On the issue of conflict of

interest and election financing, disclosure statements, what is the current

position of the department relative to (

a) revising the conflict of interest

legislation that pertains to municipal office and, (

b) there have been some

discussions publicly on more control to election financing, bringing the

municipal level more in keeping with some of the policies and constraints that

apply to the provincial level, and also having more precise disclosure

statements?

MR. MATTHEWS: (Inaudible) John?

MR. MOORE: The new legislation actually makes

the issue of disclosure statements for municipal elected officials mandatory.

They are now discretionary. There is a process laid out in the new act that will

make that process mandatory. It spells out some of the things that would have to

be included, and there is a fair degree of flexibility left with each council to

determine the types of information they would require councillors to disclose.

The issue of election financing came up after the

municipal elections in 1997. The former minister, I think, made a commitment at

that point in time that before we went to the municipal elections again there

probably would be a review done to determine if it was appropriate to introduce

that kind of requirement here in the Province.

It is our intention as a department, once the

Municipalities Act is finalized, to begin a dialogue with all municipal

stakeholders about developing a new municipal elections act for the Province. As

I am sure you know, Mr. Hodder, there are four acts of the Province today that

govern municipal elections and they are all different. Many of the provisions

are antiquated and do not allow for new things like mail-in ballots and

telephone voting and these types of things -

WITNESS: (Inaudible) used to do that.

MR. MOORE: - some of which are being tried in

other jurisdictions, and there is a certain level of interest here in the

Province, I know, from some of the major centres for mail-in ballots and that

type of thing. It would be our intention, probably as early as this fall, to

begin a dialogue with municipal stakeholders about developing a separate, stand

alone, piece of municipal election legislation. Clearly the issue of campaign

funding, disclosure of that and that type of thing would be a very important

aspect of that new legislation.

MR. MATTHEWS: (Inaudible).

MR. H. HODDER: Sorry.

MR. MATTHEWS: Yes, I said thanks, John. Go

ahead.

MR. H. HODDER: The comment I heard was that

they would talk of having this apply to the major municipalities but that it may

not apply to the smaller municipalities. My experience over the years is that it

should apply to all municipalities. The reason for that is that in some small

municipalities there is some historical evidence to show that some of the people

who have run for public office are more likely to have a vested interest for

doing so than they might have in a large municipality.

So you have people who are landowners who say: We

have to get (inaudible) on council because of this or that. Nobody ever says it

quite that way, but in essence that is what has often been the practice. I think

we should be wary of looking at these matters only in terms of the large

municipalities. I think there have to be guidelines for all municipalities

regardless of what their size is and whether they are a town, a local service

district or whatever. The conflict of interest in these things are universal.

CHAIR: Okay -

MR. MOORE: Just a follow up comment on that. I

think if you develop a generic piece of legislation to govern the process, it

would be very difficult to cherry pick which municipalities it applied to and

which it did not. It would have to have universal application. It just would be

a rather simplified process in Tilt Cove versus the cities of St. John's or

Mount Pearl.

CHAIR: Mr. Barrett.

MR. BARRETT: No questions.

CHAIR: Mr. Byrne.

MR. J. BYRNE: Thank you.

Back to this point with respect to the conflict of

interest. I was going to bring this up because I had some discussions with

officials of your department with respect to conflict of interest and so on in

smaller municipalities. When I talk about conflict of interest I am more

concerned about people on councils doing things that would benefit themselves,

from that aspect.

Now in this new Municipalities Act -

MR. BARRETT: Point of order, Mr. Chairman.

CHAIR: Mr. Barrett.

MR. BARRETT: Point of order, Mr. Chairman. I

assume that we are here to consider the Estimates of the department. We are

really getting into policy issues, and these are more Question Period questions

that we can raise in the House rather than in Committee (inaudible).

MR. J. BYRNE: To that point of order.

I have no problem bringing these questions up in

the House of Assembly. Normally, over the past six years that I have been here,

we have had a pretty wide latitude with respect to the questions we ask here at

these Estimates. If the Committee decides it wants these questions brought up in

the House of Assembly, I certainly have no problems with that.

I will get right into the Estimates because that is

where I was going next anyway.

MR. BARRETT: I was just wondering when we would

get into the Estimates. We have been here (inaudible) and we haven't even -

MR. J. BYRNE: (Inaudible) asked some good

question (inaudible).

CHAIR: Do you have an opinion, Mr. Hodder?

MR. H. HODDER: Yes. This being a money bill,

therefore the standard practice of the Legislature is that it can be

wide-ranging. The people who ask the questions will determine what questions

need to be asked and the minister determines whether or not he will answer. As

to relevancy, it being a finance bill it has wide-ranging relevancy, and

certainly matters to policy are always relevant because matters to policy have

financial implications.

MR. MATTHEWS: I can only say that I am in the

hands of the Chair.

CHAIR: Members know what they want to ask. I

understand where Mr. Barrett is coming from. It is a policy issue, but

nevertheless we have never restricted the discussions in Committee on what

members choose to ask questions on. I am not about to say no, that we cannot do

it. I guess members will judge themselves accordingly if they want to get into

the financial aspect of the budget for the Department of Municipal and

Provincial Affairs and Newfoundland and Labrador Housing. Judge yourself

accordingly.

MR. J. BYRNE: Okay, I will judge myself

accordingly. I will save my questions for the House and I will get into the

details of the Estimates. (Inaudible) problem with that?

MR. MATTHEWS: I don't know if you did me a

favour or not, Percy.

MR. J. BYRNE: Take it from me, he didn't.

Anyway, on page 235 of the Estimates, Executive and Support Services, under

Minister's Office, 1.1.01, we have the Salaries there in .01 of $229,500

budgeted and you spent $347,900, which is $118,400 more. Does that have anything

to do with the new positions created, from my understanding, at Newfoundland and

Labrador Housing? I understand there were people in your office who were

(inaudible) to Newfoundland and Labrador Housing - $118,400 - and you dropped

back this year to $223,100. Could someone explain that to me?

MR. MATTHEWS: No, that would have nothing to do

with the addition of a political support person at the Housing Corporation

because that is in this year's budget. This is last year's. The expenditure last

year was revised. The actual last year was $347,900 as opposed to the estimate,

$229,500. That had to do with two or three things. There was an extra political

person on the minister's staff last year for five months. In addition to that,

the department had to carry two ministers because of a change and a severance

and that sort of thing for a period of time. There were political staff that

were severed last year because they resigned and ran for the House and were

successful. They are here and they can defend their own (inaudible), defend what

they did while they were there for the money they got.

There were a combination of things last year that

happened in the department, from the changing of ministers to a complete change

of political staff, and severance issues that had to be dealt with as a result

of that. You will notice this year's estimates are back to $223,100 which is the

same as the previous year except, I think, as you will see all the Estimates

this year - by now you have realized there is a pay period less this year in

government - are actually less than last year's Budget.

MR. J. BYRNE: You just (inaudible) of something

else now. When I asked the question with respect to the new position at Housing,

you said it was a political position in Newfoundland and Labrador Housing. Is

that really a new position for you as minister that has been created and that

hasn't been there, say these past six years, since I have been elected to the

House of Assembly? Why is that position then necessary?

MR. MATTHEWS: You are right, there has been a

new position created at Housing. It is the equivalent of an executive assistant

to the minister. Once upon a time, as I said earlier, the Housing Corporation -

I think in the life of the former government back in the mid-1980s - had its own

minister, its own political staff, its own deputy and everything. It was a

full-fledged department of government. It went from that to having nobody there

in terms of the minister or the minister's office.

My view was that it was appropriate to have some

presence of the minister over there, in as much as physically it is difficult

for the minister to operate out of two offices. There is a minister's suite over

there, there is a whole set up. I think Milton Peach was the first minister of

housing. So it went from having no minister or ministerial staff to my deciding

that it was appropriate to add one political staff person to the complement at

the Housing Corporation.

MR. J. BYRNE: In the same

section there, 03,

Transportation and Communications went from $52,900 up to $93,200, which is

$40,000. Why would that be necessary?

MR. MATTHEWS: It was essentially extraordinary

travel costs incurred by the minister attending conferences and travelling

generally throughout the Province. I know last year he took one particular trip

which was fairly expensive because I happened to be in the party when we had to

get into Baie Verte very quickly by helicopter to visit all the communities to

assess the extraordinary flood damage. It was that type of thing, and others,

that caused the extra expenditure.

MR. J. BYRNE: Executive Support, page 235,

1.2.01.01, Salaries. You had $245,000 budgeted, last year you spent $359,100,

and this year it is $409,500 budgeted. That is $164,500 more. What is the

necessity for that? Because I know over the past few years, with the restraints

in government, a high number of people were let go out of the civil service. I

know that over in Newfoundland and Labrador Housing over the past two years

there was a number of people let go and (inaudible) at the administrative level

let go. It seems kind of strange now that you would go from $245,000 up to

$409,500.

MR. MATTHEWS: In the department last year there

was an appointment of the equivalent of one extra ADM, for most of the year, to

work on some strategic issues in the department, mainly due to the work we are

doing on municipal financing.

What has happened in some of the departments,

particularly this department, is that the number, as you said correctly, of

senior executive people have been cut over the years and ADMs have been reduced.

What we have had to do in some instances is bring back some high level ADM

equivalents to do some specific project work, and this is where that occurred. I

think that is the explanation largely, isn't it, deputy?

MR. NOSEWORTHY: That's correct.

MR. MATTHEWS: Yes. You will notice this year

that the Estimates are for $409,500.

MR. J. BYRNE: Yes, that's $164,500. (Inaudible)

that is not for one person, is it?

MR. MATTHEWS: No, it has to do with the

appointment of two ADM equivalent positions to again undertake special projects.

One of the special projects was the debt relief. Another one is the issue of

municipal financing.

MR. J. BYRNE: Wasn't that debt relief on the go

for some time? Hasn't that been on the go for the past couple of years now? Why

(inaudible) necessary now?

MR. MATTHEWS: It has been on the go - this is

the third year.

MR. NOSEWORTHY: It basically concerns municipal

financing, the issue of the taxes in relation to the city, the issue of grants

in lieu. We are also looking at sort of a new approach to municipal financing,

municipal accountability. So that person basically is seconded to do that work.

WITNESS: (Inaudible).

MR. NOSEWORTHY: Yes, there is another position

there, if you look at the alternate technologies issue, and trying and advance

that as well. So there are two positions. At the Housing Corporation, there were

three executive positions that would have been cut over there. One of these ADMs

represents one of those individuals.

MR. MATTHEWS: We moved over to the department

(inaudible).

MR. NOSEWORTHY: That's correct, yes.

MR. J. BYRNE: On page 236, under 1.2.02.03,

Transportation and Communications, you budgeted $73,800, it went to $104,300 and

now it is budgeted for $95,800. So you have $22,000 budgeted over what was

budgeted last year, and last year you spent $31,000 more than you had budgeted.

What allowed that to happen?

MR. MATTHEWS: That is 1.2.02.03?

MR. J. BYRNE: Yes.

MR. MATTHEWS: It basically has to do with the

increase reflected in travel costs plus the extra degree of travel or level of

travel being done by our regional office. We have three regional offices. I

think it is three we have, is it?

WITNESS: No, it's about four. The Avalon

regional office.

WITNESS: (Inaudible).

MR. MATTHEWS: Yes, I was about to get to that.

As my official was saying, this division really supports three different

departments of government in terms of its activities. Deputy, you could comment

on that, but I mean that essentially (inaudible).

WITNESS: (Inaudible).

MR. J. BYRNE: That would not explain the extra

travel (inaudible). If that was there last year when you budgeted for $73,800,

you would assume that would be enough. There had to be something outside the

ordinary that would -

MS COLE: No, it was not anything outside the

ordinary. It was just found that in order to do the work effectively they needed

to travel a little bit more than we had provided for in the budget. As you can

see, the revised is up as a result of that. We have tried to accommodate that

now in the 1999-2000 fiscal year by moving some money from other areas. Because

we realized that the amount of travel that was budgeted last year was

insufficient to do the work properly for the three departments.

MR. J. BYRNE: The next section, .04 -

MR. MATTHEWS: Probably somebody could comment

for me on the other two departments that we support out of our regional offices.

MS COLE: Development and Rural Renewal is one

and Government Services and Lands is the other. In terms of the number of

regional offices, Ken can probably speak to that better than I can.

MR. CURTIS: Municipal Affairs has four regional

offices but really it is Government Services and Lands and Development and Rural

Renewal, where they have big Government Service Centres and the various zones.

Development and Rural Renewal has an office in each of the zones as well as

regional offices, so there is a fair amount of travel required, particularly in

the IT support area, to (inaudible) get these offices up and online and connect

them throughout the Province.

MR. J. BYRNE: Wouldn't the Department of

Development and Rural Renewal and Government Services and Lands have this

funding or budgeted within themselves?

MR. CURTIS: No, it is all budgeted in this

department because the administrative function is provided through Municipal

Affairs to these other two departments, so they have no separate administrative

staff.

MR. J. BYRNE: The next one is 1.2.02.12,

Information Technology. You just touched on it. It was budgeted at $270,600, it

went up to $407,300. Over the past six years since I have been involved with

these Estimates I always seem to be getting out of this Information Technology -

there seems to be an exorbitant amount of money spent on Information Technology

in every department under every section, almost. Why would it be gone up

$136,700?

MR. MATTHEWS: It went up, you mean, from last

year's budget to this year's Estimates?

MR. J. BYRNE: To (inaudible) budget. You went

$47,000 over, by the way.

MR. MATTHEWS: It has to do with a combination

of things, not the least of which is some project work they have been doing. The

Provincial Affairs side of our department is responsible for essentially

addressing or following or monitoring what is happening with respect to the Y2K

problem, and there was a lot of activity last year, and anticipated this year,

with respect to the Y2K.

We are the coordinating department of government to

ensure, as best we can, that government generally and government agencies, Crown

corporations, and our municipalities are all ready for the Y2K event. Whether it

is an ill-founded fear that everybody in the world seems to have about Y2K or

not, it has caused an extraordinary expenditure of funds on the IT side of it.

That is essentially where it is. Last year we went from $270,600 to $317,900,

and this year it is at $407,300.

CHAIR: Thank you, Mr. Byrne.

WITNESS: (Inaudible).

MR. MATTHEWS: Yes, and there was an automation

done in the Fire Commissioner's office as well, so there was some extra IT money

spent there on programming, if you like. Beyond that, the Y2K issue is a big

issue. As a matter of fact, there was a conference or something of provincial

people from the Provincial Affairs side of it. We were hosting people in from

the mainland just after I went over to the department.

MR. NOSEWORTHY: There has been quite a bit of

consultation that has been going on at the federal level. This has involved the

RCMP which is taking the lead federally in this, and also the Department of

National Defence, Minister.

The Department of Municipal and Provincial Affairs

have also been holding regional symposiums throughout the Province with

municipalities to indeed alert them and review with them their state of

readiness in terms of the Y2K problem. There has been a fair effort put into

that, not only from an IT perspective, but also in other areas as well.

CHAIR: Mr. Andersen, do you have any questions?

MR. ANDERSEN: Pass.

CHAIR: Ms Osborne.

MS S. OSBORNE: No, not right now.

CHAIR: Mr. Hodder.

MR. H. HODDER: Thank you very much, Mr.

Chairman.

I want to follow up from what you just said. It is

interesting that the department that is supposed to be coordinating the Y2K

problem receives such harsh criticism in the Auditor General's report over its

control over inventories of hardware and software.

For example, last September when she reviewed it

she said that the Department of Municipal and Provincial Affairs has not

maintained an inventory of its own computer hardware and software. She said

there were eight instances where micro-computer equipment purchased by the

Department of Municipal and Provincial Affairs could not even be located. In

fact, of all departments of government that she examined, she found the

Department of Municipal and Provincial Affairs to be absolutely the most

unprepared in terms of its handling of its hardware and software. In the report,

she makes quite condemning statements about the department's management in that

area, including the fact that some computer systems and programs that have been

bought for one computer is found on others. In some cases she found computer

software that was not even designated to the department.

I want to ask the minister: What has he done to

redeem the image of his department in view of the Auditor General's very

critical comments?

MR. MATTHEWS: We have taken extensive

remediation type measures, such that the criticism will not reoccur in future

Auditor Generals' reports.

Now, do you want to know what we have really done?

MR. H. HODDER: That doesn't answer the

question.

MR. MATTHEWS: If you want to know what we have

really done, I will have to ask my officials.

SOME HON. MEMBERS: Hear, hear!

CHAIR: Order, please!

The minister is not compelled to answer the

question, Mr. Hodder.

MS COLE: Actually, I can provide a little bit

more information on that. We are in the process of evaluating an inventory

control system, with a view of having it implemented by July if it is suitable

for our purposes, so hopefully we will have that fixed in very short order.

MR. H. HODDER: Is that a program consistent

with the one that has been developed for the Department of Finance as well?

MS COLE: The Oracle system, you mean?

MR. H. HODDER: Yes.

MS COLE: It is not directly with that. It is

just a prepackaged software program that we are looking at, so it may not be

tied in with that. It will be compatible with it, but it is not directly a

component of that.

MR. H. HODDER: Because one of the other

criticisms, since your department is supposed to be, as you said, keeping in

touch with these things - and I have a particular interest in this particular

area. They also indicate in the Auditor General's report that there is not much

consistency across government in terms of the way the whole computer technology

is being implemented. It is woefully inadequate in fact, if you read the Auditor

General's report. Also, based on questions that I have asked in another forum, I

do not see this centralized focus developing yet across government in terms of

control. Each department seems to be going on a stand alone basis.

MS COLE: I think as long as the system that

each department has is keeping adequate control of the inventory, I cannot see

that that is a big issue. It would be nice to have it all compatible, but if

there are certain specific requirements in some departments for different types

of systems, I think that would be acceptable also.

MR. H. HODDER: Yes. I think the comment from

the Auditor General is not that we have to have all the same systems, but they

have to be following somewhat the same philosophy and the same approach.

MS COLE: Yes.

MR. H. HODDER: You will never have a case where

- you know, the program for the Department of Human Resources and Employment is

not going to be satisfactory for the Department of Justice.

MS COLE: No.

MR. H. HODDER: That is not what is being said.

The Auditor General was quite critical and I just wanted to bring that point

forward, but I thank the minister that the matter is being addressed and that

there will be some action taken.

Now, on to the year 2000 compliance, the Y2K. The

indication that I had in the Budget document was that there was not any, shall

we say, commitment on the department's part to assure that municipalities

internally were being compliant. Your relationships with them might be

compliant, but they themselves internally were - I did not see any assistance

there, or any assurance that there would be some action taken by the minister to

assure, for example, that Stephenville, Mount Pearl, St. John's, or some smaller

town that they themselves would have a compliancy program that you would be

assuring that that was being pushed by your department.

MR. MATTHEWS: I will make two comments. First

of all, back to your question regarding inventory control and the criticism of

the Auditor General. We do not deny that there was a need for some extra work to

be done in terms of bringing our controls in line. I think that criticism, as

you indicated, was made across some other government departments as well. We are

doing what we believe is right in terms of ensuring that we do not have that

criticism again, but that we are also doing what is right in terms of inventory

control, program software control, and that sort of thing.

In terms of the municipalities all being Y2K

compliant, we are working with the municipalities, depending on their needs. I

would venture to say there are some municipalities out there still that are not

even computer literate, they are not even hooked up.

WITNESS: About half of them are.

MR. MATTHEWS: Yes. We are working with a group

of 291 communities which are, to some degree, at varying levels of computer

literacy or being computerized. Our relationship with the Federation is one

thing, but certainly the Federation is taking an interest as well in ensuring

that its membership have all the information and all assistance that they can

give it as an organization to make sure that they are all Y2K compliant.

We are working with them. I think it is fair to

say, deputy, we are where we need to be and where they need our help?

MR. NOSEWORTHY: If I could make a couple of

comments?

I guess for the most part, just on the computer

issue, last year the department would have introduced, actually, a computer

purchase program, a computer acquisition program for municipalities which were

without computers. We would have installed and provided funding for computers in

about one hundred municipalities. It is pretty well safe to say that by far the

bulk of municipalities in the Province now have computers. Those that we would

have installed last year would be Y2K compliant and it isn't an issue with

those. I think for the most part many of the larger municipalities have ensured

that their software and hardware is Y2K compliant as well.

From the point of view of the other initiatives

that the department is undertaking, we are not out there actually to ensure that

municipalities are Y2K. We cannot guarantee that for 291 municipalities

throughout the Province. It is an impossible task from our perspective. As the

minister pointed out, we are there at this point in time as a policy maker, we

are there as a facilitator, as a department to assist municipalities and do

everything we can to ensure that they are able to administer and maintain the

municipalities. We are not out there doing everything for them. With regard to

the Y2K issue we are providing information, we have gone out, we have

established a contact point within the department for any municipality to ask

questions. We will certainly follow up with them on that and do whatever work we

can to ensure that they are Y2K compliant.

We have set up a committee with the Association of

Municipal Administrators and the Federation. The Federation is sending out - I

do not know about a weekly basis but on a monthly basis - certainly info notes

and information on Y2K. We have held, as I indicated, a series of regional

symposiums inviting municipalities to attend and discuss the issue. To those the

RCMP have been invited, the Department of National Defense, and other federal

agencies which have been involved in Y2K. From an emergency measures standpoint,

we are looking at the emergency preparedness, sort of, in municipalities as far

as any particular outcome. We are working with federal agencies on that. DND has

a fairly comprehensive program in place nationally in relation to any

emergencies that could arise.

We are doing a lot of things, but at the end of day

we are not necessarily going to be in a position to put a stamp or a guarantee

on a municipality as far as their preparedness for Y2K is concerned. Hopefully

they will do everything themselves to ensure that that is covered off.

MR. H. HODDER: At what point will you be able

to say that across government you have now been able to advance your computer

testing program? Because there is no difficulty finding out (inaudible) Y2K

compliant. In a simplistic form, you can always do trial runs by simply

advancing your computer.

At what point will we be in a position to advise

the general public of the Province that we have completed all of the appropriate

testing procedures and that we have done the compliancy work for Y2K to assure

that hospitals and other agencies like that will indeed be unaffected in the

delivery of their service by the changeover in January?

MR. NOSEWORTHY: I would have to correct the

minister on one comment. We are not responsible throughout government for the

Y2K. We are responsible in terms of municipalities. We are responsible in terms

of the three departments and for the emergency planning. We are not responsible

for the internal systems. Treasury Board are responsible for that. I can assure

you that as far as the Department of Municipal and Provincial Affairs are

concerned, notwithstanding our inventory control systems, we are compliant.

MR. MATTHEWS: I'm sorry if I left the

impression that we were responsible for all of government. We aren't. It is only

as it relates to the emergency, the EMO side, I guess, (inaudible).

WITNESS: (Inaudible) municipalities.

MR. H. HODDER: I saw the anxiety on your

(inaudible).

CHAIR: Okay, Mr. Barrett.

MR. BARRETT: No questions.

CHAIR: Okay, Ms Osborne.

MS S. OSBORNE: No questions.

CHAIR: Mr. Byrne.

MR. J. BYRNE: Thank you.

I thought we would have been out of here by 10:30

a.m. I had a number of questions -

CHAIR: Oh relax, Jack.

MR. J. BYRNE: - I was going to ask the minister

on the Auditor General's report, but I will save them for the House. I had a

number of questions on Newfoundland and Labrador Housing that are not in this -

Newfoundland and Labrador Housing -

MS OSBORNE: (Inaudible) doing the housing now?

MR. J. BYRNE: No, not yet, because I have a

number of questions to ask. I will not ask them here either, I will ask them in

the House.

I will get back to the Estimates here. On page 237,

under Support to Municipalities, 2.1.01.01, Salaries, you can see a significant

difference there in what was budgeted, what was spent and what is budgeted for

this year. Why would that be?

MR. MATTHEWS: That is where, 2.1.01, Salaries?

MR. J. BYRNE: Page 237.

MR. MATTHEWS: The explanation I have for it,

Jack, is that there is an additional salary involved there with respect to the

eastern regional manager. We have had to fund and (inaudible) that position

twice because he has been seconded to administer the debt relief program. So

there is an additional person salary involved there as a result of that

secondment.

MR. J. BYRNE: While we are on that now, for the

past number of years - I want to get back to the numbers of employees in the

department. I would be curious to know, say, five years ago, what the number of

employees were with the department and what the number of employees are today.

Because it seemed like government let go a lot of people and they are hiring

back a good number of people. Are there any figures on that within your

department?

MR. MATTHEWS: I don't know what the complement

was five years ago. I have an idea what it is now.

MS COLE: I don't have the figures here with me

but they can certainly be provided subsequent to the meeting, if you would like

to have them. Yes, we can give you those.

MR. J. BYRNE: I appreciate that. If you could,

break it down enough at the levels. Were they extra administrative, political,

and if they are line workers?

MS COLE: Sure, yes.

MR. J. BYRNE: It is just that I am curious to

know that.

Municipal Assessment Services, 2.1.02, page 237. We

have already had some discussion on that but I want to go back to it again

because I have a concern with respect to it, and Sheila touched on it. There are

municipalities out there that will - and I can see it happening - not be able to

afford to pay their assessments, because over the years municipalities I think

were billed on a five-year span. It averaged out over five years. When I was

mayor you paid so much a year, and it is the same for five years. I am not sure

- the deputy or someone could confirm - that under the act, every five years you

have to have a reassessment done.

MR. NOSEWORTHY: Three years.

MR. J. BYRNE: Every three years. So if the

towns can't afford to have the assessment done through this agency and they send

out their bills on the fourth year that it was not done, what legal rights, what

legal ramifications are there for this for the people within the municipality to

come back and say: You have not done an assessment on my property. I am not

paying it. My property could have dropped in value, (inaudible) in value. If a

municipality can't afford to pay it, what is going to happen here in this

situation?

MR. MATTHEWS: You assuming that is going to

happen -

MR. J. BYRNE: It is more than likely going to

happen, I would say.

MR. MATTHEWS: - that some towns are going to be

billing without proper assessments done. I do not know what the legal

ramifications are for towns or for taxpayers in the towns. Deputy?

MR. NOSEWORTHY: It is not something that we

have addressed at this point in time, Minister, because it has not been an issue

that has been raised. The Municipal Assessment Agency as such, the new agency

that has been set up - and actually I chair the agency at this point in time -

is working extremely well. It is a model that other provinces actually across

the country are currently looking at. Represented on the Board of Directors are

four municipal representatives, four elected officials from municipalities, a

Federation representative representing the Newfoundland and Labrador Federation

of Municipalities, there are two taxpayer representatives, and for the time

being, while the government subsidy is there, there are two government

representatives. I chair the agency I guess on behalf of the department and on

behalf of government.

We are in the process right now, as a board, in

conjunction with the Federation and other municipalities, of looking, quite

frankly, at what the agency will look like at the end of this year. Because at

that point in time government will have pulled out and withdrawn its subsidy.

There are options, including the current scenario, for operating the agency

after that, and so there is a consideration going on on what the options are.

I will say candidly, in the last year or so in the

chair - and these bodies are all represented there - that issue has not come

forward in terms of the ability of municipalities. The price per parcel of land

in this Province in still the lowest among any equivalent assessment agencies

across the country. In addition, I think the agency, as an independent agency,

will be looking at opportunities to generate additional revenue in other areas.

There is a data bank on 170,000 parcels of property

in this Province which we feel, from a marketing point of view and an appraisal

point of view, may be worth something to real estate agents, may be worth

something to other people involved in public policy and what have you.

There are other opportunities in terms of raising

revenue and what have you, but quite frankly, that has not come up. I guess if

it is brought forward through the board or to the board we would look at what

options and what remedies we might put in place to address that. It really has

not been an issue, I would have to say.

MR. J. BYRNE: Why I ask that is this. Because

I'm not questioning the makeup of the agency or the intent or what you are

supposed to do. What I am saying is this. If you take Trepassey, for an example,

which had 1,500 people up there, but they are down 700 or 800 people now. If

they are not living in Trepassey, they are certainly not going to be paying

taxes. They are not going to be able to. The revenue from the municipality's

side is going to be down, and if they are going to (inaudible) - I mean, it has

got to (inaudible) something to me. I would see that looming as a big problem

out there, really it does, and to see that it has not been looked at yet

surprises me. I'm surprised it has not even been considered.

MR. MATTHEWS: The issue, Jack, is that quite

frankly, we are not to that circumstance. No municipality is bringing to the

agency the concern to the extent that they have had to address it. The

optimistic outlook, as opposed to the pessimistic one, would be that the agency

is going to work well on behalf of the towns and that the towns are going to be

able to afford to access the service at a rate that will be reasonable and that

they can afford to pay, and that nobody will be seriously disadvantaged or

disenfranchised at the municipal level.

MR. J. BYRNE: On page 237, Municipal Finance,

Salaries, 2.1.03.01, the budget was $189,100, revised up to $224,600, and then

it dropped back to $178,500 this year. Why would that be? Because this year is

less than what was budgeted for last year, but last year we spent more than was

budgeted.

MR. MATTHEWS: This year's Estimates are down

everywhere because of the one pay period less, but there were extraordinary

costs last year in that area because of the special employment initiatives that

we had. I think last year we had special employment programs in the area of $4

million to $5 million. We do not have staff in place to run those types of

programs, so once they are extraordinary to the program we take a small

percentage out of the funding and allocate it for support services. That is

where it shows up, right here.

MR. J. BYRNE: On page 239, Administration and

Planning, 2.3.01.05, Professional Services was budgeted at $23,000, you spent

$53,000 and it is back to $23,000 this year. That is an extra $30,000 last year.

What was it?

MR. MATTHEWS: Yes, this increase relates to

water tests conducted by Environment Canada on municipal water supplies. I do

not know if that was a one-time thing, deputy, or whether that is something that

gets done every year in terms of testing requirements on provincial water

supplies. Or was there an extraordinary situation? That is where the extra cost

was incurred, in the water supply testing. Was there anything extraordinary

about it? (Inaudible).

MR. NOSEWORTHY: I can only assume that it is an

extraordinary (inaudible). I would have to clarify that. In all honesty, I

really do not know whether it is (inaudible).

MR. CURTIS: What happened there, just for

clarification, is this. The problem last year was that the Department of

Environment in conjunction with Environment Canada and were doing some testing

of municipal water supplies. They sort of touched base with the department to

ask if the department had any interest in the issue, since the department is

responsible in some ways for municipal water issues.

The department decided that they wanted to, in some

areas, expand the samples and what type of things they were testing in the water

supply. So they agreed to contribute $30,000 towards the total cost of the test

to cover the areas that they asked to have expanded testing in.

WITNESS: (Inaudible) one-time (inaudible)

exercise, (inaudible)?

MR. CURTIS: Yes (inaudible).

MR. NOSEWORTHY: We are developing a new

information system in terms of municipal infrastructure to try and determine

what is out there, what level of treatment there is, what the condition of the

water supplies would be. I can only assume that this was an opportunity to add

to that base of knowledge and we took advantage of it.

MR. J. BYRNE: In the next section, 2.3.02.06,

Industrial Water Services, Purchased Services, I see $763,400 budgeted, you

spent $613,800, which is $149,600 less. (Inaudible) it is back up to $700,200

this year. What would the (inaudible) services be and why are you going back up

to $700,200 when you spent $613,800 this year, which is $149,600 less than what

you actually budgeted last year?

MR. MATTHEWS: Ramona, can you help me here? The

note I have here is very concise.

MS COLE: Yes, I can answer that one.

As you know, and as has come up in the previous

Estimates Committees, we are in the process of transferring all the industrial

water systems to the appropriate towns. Last year one of the water systems that

we looked at was Ramea. The operating costs of it would have been included under

Purchased Services, but rather than us keeping the system until we had all the

upgrade done we transferred it to Ramea early and gave them a grant to do the

work, which is why Grants and Subsides is up by about the same amount. That

covers that. It is down again in 1999-2000 because we are hoping to have some

more transferred.

MR. J. BYRNE: On page 240 - no, I will save

that for the House. Page 241 instead. Make a note of it now, be ready.

MR. MATTHEWS: Oh yes. Where are the rest of

them coming from, Jack? That is the only one you told me where they are coming

from (inaudible).

CHAIR: Order, please!

WITNESS: He has some other stuff for the House.

MR. MATTHEWS: What page are they on?

MR. J. BYRNE: You need not worry. They are not

included in this document.

MR. MATTHEWS: Alright.

CHAIR: Mr. Byrne, the time is up unless Ms

Osborne has questions.

MR. J. BYRNE: Then I will go again.

CHAIR: Listen, there is no argument. There will

come a point, we will give you ample time to ask your questions.

No questions? Ms Osborne?

MS S. OSBORNE: No.

CHAIR: Mr. Sweeney?

MR. SWEENEY: No, not a question.

CHAIR: Mr. Byrne?

MR. J. BYRNE: Thank you.

On page 241, 3.2.01.11, Municipal Infrastructure,

Debt Expenses, there was $35,684,600 budgeted, you spent $38,365,400, and you

have $38,414,300 this year. That has gone up $2,729,700. Anybody want to comment

on that?

MR. MATTHEWS: Yes, it has to do with an

increase, primarily from a shift in the portion of annual payments which go

toward principle versus interest. If you look on another page you will find out

that we are reversed.

MR. J. BYRNE: Page 240?

MR. MATTHEWS: Page 240, I am sorry, the reverse

situation is true. The bottom line is that we are putting more money, year over

year, marginally on debt as opposed to interest.

MR. J. BYRNE: Under the next section,

3.2.02.10, Grants and Subsidies, there was $7,264,300 budgeted and $5,780,200

spent. That is only (inaudible). This year you have $618,900 budgeted, so we

know that the program is (inaudible). Why is there a $1,484,100 difference in

what was budgeted and what was spent?

MR. MATTHEWS: I guess it has to do with -

MR. J. BYRNE: The carryover from (inaudible).

MR. MATTHEWS: The carryovers, yes.

MS COLE: Towards the end of the previous fiscal

year we had thought that we would have carryovers to about $7.3 million. We

actually got some of those done and paid prior to the end of that fiscal year,

so there was less to carry over.

MR. MATTHEWS: From 1998 to 1999.

MS COLE: From 1997 to 1998.

MR. MATTHEWS: From 1997-1998 to 1998-1999, yes.

That federal infrastructure program, for all intents and purposes, was clued up.

It was just a wrap up (inaudible).

MR. J. BYRNE: I was wondering, and I was going

to ask a question on that. Any talks or discussions federally with respect to

new programs along that line?

MR. MATTHEWS: I do not think there is anything

that would be construed as being substantive in terms of yes, there is going to

be a program and it is going to be close. I think that as a province we have

advocated the need for a new infrastructure program, and other provinces have as

well. The feds have not shown any keen interest in getting involved in another

infrastructure program like the last one. I would not hold out any hope that I

know of, deputy, that it is going to happen any time in the next year or two.

MR. NOSEWORTHY: There is no information

(inaudible).

MR. MATTHEWS: (Inaudible) no information

(inaudible).

MR. J. BYRNE: How close are we to a federal

election, I wonder.

MR. MATTHEWS: Two and a half years away, Jack,

I would say. Why, are you running?

MR. J. BYRNE: Oh yes, I am going to take on

George Baker. I was (inaudible) again, by the way.

Page 242.

CHAIR: Don't let that become public, Jack.

WITNESS: We can't hold that against him.

MR. MATTHEWS: You need a better reason than

that to take on George Baker.

MS S. OSBORNE: George has gone mute now, on his

way to the Cabinet.

MR. J. BYRNE: Page 242, Municipal

Infrastructure, Water and Sewer Servicing-Coastal Labrador, 3.2.03.01, Salaries.

They were budgeted at $39,300, they went up to $80,500, and are down to $78,400.

So this year it is doubled what was budgeted for last year, and last year it is

doubled with respect to what you had in - another employee hired, I suppose.

MR. MATTHEWS: No, it has more to do with the

reallocation of administrative funding under the federal-provincial agreement

from Purchased Services to Salaries. So it is really a reallocation. If you look

down below you will see a big drop in Purchased Services there.

MR. J. BYRNE: Yes.

MR. MATTHEWS: Part of that is restated in

3.2.01.01.

MS COLE: Basically, with those federal programs

there is a certain percentage allowed for administrative purposes. In the

absence of knowing specifically how that money will be spent, it is all put into

the biggest block there, Purchased Services. Then as the year progresses,

depending on how we see that we need to spend the money, it would be

reallocated.

MR. MATTHEWS: It is reallocated out.

MR. J. BYRNE: What about 3.2.03.05,

Professional Services? You had $472,800 budgeted, you spent $398,200, and it is

up to $650,300.

MR. MATTHEWS: Expenditures were down primarily

because there was a rather short construction season last year. This year we are

anticipating picking up the slack on that work and the new additional work. We

have budgeted for that accordingly in terms of Professional Services.

Professional Services basically are engineers and consultants, that type of

thing. It is based on the size and scope of the project that is being done.

MR. J. BYRNE: Say you have $500,000 budgeted

for the project or whatever the case may be here - not a project, but a certain

service - and you spend $400,000, can you carry over that $100,000 into the next

year?

MR. MATTHEWS: Under the agreement, you mean?

Yes.

MR. J. BYRNE: Now let's go to page 243,

Emergency Planning, 4.1.02.04.

MR. MATTHEWS: Page 243, 4.1.02?

MR. J. BYRNE: Yes, Supplies. We can see you

budgeted $30,500, spent $15,000, and it is back up to $38,000. Why would that

be?

MR. MATTHEWS: The expenditures in 1998-1999

were down due to the fact that a number of training courses were cancelled and

the associated supplies with them were not purchased. That would be an

explanation with respect to why there was a significant under-expenditure in

that category. The expectation is that we would be playing catch-up this year as

well as going on with the normal program. So it is at $38,000 as opposed to

$30,000 last year. That is partly a result of not getting a lot of the planned

activities last year concluded.

MR. J. BYRNE: Under .06, Purchased Services,

there was $25,500 budgeted, $17,500 spent, and it is up to $28,000 this year.

MS COLE: That would be tied in also with the

training. That would cover things like rental of rooms and whatever for training

purposes.

MR. MATTHEWS: These are not big ticket items

(inaudible), going up $2,500.

MR. J. BYRNE: The next one is interesting, and

curious too. It is .07, Property, Furnishings and Equipment. You budgeted

$15,500 and it went up to $53,400. You were down in the

section before that,

Purchased Services, because you did not have any programs or whatever the case

may be, and now you are gone up almost four times that amount in that section.

It doesn't make sense.

MR. MATTHEWS: There was a major purchase, Jack,

in that area. It was due to the purchase of a generator as well as some other

stuff like photocopying and kitchen equipment for the provincial emergencies

operation centre. It was not budgeted for, obviously, last year but the

purchases had to be made and that is why the big difference. This year you see

it is down to more historic levels of anticipated budgeting. Was that a

breakdown or was it a new generator we had to buy, deputy?

MR. NOSEWORTHY: It was a new generator

basically that was purchased, Minister, for communications primarily in relation

to power outages or anything that might occur. Indeed, emergency measures should

be fully functional in order to deal with those issues or those eventualities.

So there is a need for a generator purchase at a cost of, I think it was -

MS COLE: Some $40,000.

MR. NOSEWORTHY: Some $40,000.

CHAIR: Now I'm going to go to Ms Osborne on

Housing.

MS S OSBORNE: Newfoundland and Labrador

Housing.

MR. MATTHEWS: I understand that the way that

this happens is that you conclude this one and do the vote. No? You want to go

to Housing? Okay. Well, before we get into Housing then -

WITNESS: (Inaudible).

MS S. OSBORNE: Jack (inaudible).

MR. MATTHEWS: Sorry? Are you finished with the

officials from (inaudible)?

CHAIR: How many more questions do you have?

MR. J. BYRNE: (Inaudible) does it make?

CHAIR: Pardon?

MR. J. BYRNE: I would like to ask the question:

What difference does it make how many more questions?

CHAIR: Listen, Jack - Mr. Byrne. I am going to

be very formal about this. I have not in any way upset you. I think the Chair

has been pretty lenient with the questions. How many more questions do you have?

MR. J. BYRNE: I do not know yet.

CHAIR: You do not know. Okay. We will go to

Housing then.

MR. MATTHEWS: If we are going to the

Newfoundland and Labrador Housing Corporation I will -

AN HON. MEMBER: (Inaudible).

CHAIR: No, the officials are staying.

MR. MATTHEWS: The officials are all staying,

yes.

If we are going to Housing I will just make a few

brief opening comments with respect to the Housing Corporation, and then I guess

we will proceed as we did with the regular departmental Estimates. I'm assuming,

Chair, that you will be entertaining questions from the Committee, jumping back

and forth -

CHAIR: Yes.

MR. MATTHEWS: - from Housing to the department?

The Housing Corporation is essentially almost like

a separate department of government. It operates under its own legislation, it

has its own appointed Board of Directors, and of course its activities on the

financial side of it in total actually are subject to the review of the Auditor

General on a year to year basis.

One of the major differences you will see in the

Housing budget this year is that there is significantly less being provided by

government in way of grants for the Housing activities. Basically, we have been

directed to provide to the Treasury, on account of this year's Budget, $10

million from the equity that the government has in the Housing Corporation. I

think our operating grant, that year over year has been at a certain level, has

been reduced by $4.3 million.

The Housing Corporation, basically, has had a

significant shift in its mandate over the last couple of years as well. That has

resulted from a government policy directing the Corporation to basically devolve

itself in terms of activity from land development for both industrial and

residential purposes.

In addition to that, the Housing Corporation has

been getting out of the market housing business, managing, that is, inventory

that is really not related to social housing activities. As a result of that,

about 98 per cent of the inventory that was being managed and run by the Housing

Corporation, such as Linden Court and Churchill Square Apartments and those

types of things, have now all been devolved of. The only thing left in the

department's inventory at the moment is about 128 units, I believe, in

Pleasantville and about thirty-five pieces of government property such as group

homes and those sorts of things.

On the land side of it, we are entering into

arrangements with municipalities across the Province with the intent of having

the municipalities take over service to non-service industrial lands within

their boundaries, industrial parks that are not fully developed and land that is

set aside for industrial purposes that hasn't even been serviced in some cases.

The reason for that is because we believe the

private sector market is the place where that activity should primarily take

place. We believe the people closest to the ground, being the municipalities,

have a significant interest in trying to do economic development activities in

their jurisdiction, and having access to land that they can work with proponents

wanting to come in gives them more flexibility.

The concept is not to transfer land to them at cost

but rather to transfer land to them on a 50-50 basis so that at the end of the

day the sales of the land, whatever the profits are on them - because the

Housing Corporation has historically made profit on its land development

activities - would be shared 50-50 with the Corporation and 50 per cent with the

municipalities. This initiative is moving forward fairly well. A number of

devolutions have taken place and a number of others are in the negotiating

stages.

The Corporation has noticed somewhat of a decrease

in demand for social housing over the past few years. That may be in some

measure related to out-migration, because we have noticed it in the rural areas

of the Province more so than in the urban areas. Although, it is fair to say

that in the urban areas such as St. John's and Mount Pearl there has been a

decrease in the waiting list, Mary, as I see it from the numbers for people

wanting to get into social housing.

We manage about 13,000 units and we deal with about

35,000 families. That inventory, in terms of responsibility, increased, I

understand, quite significantly over the last period of time, as a result of the

federal government getting out of the social housing business and devolving that

activity, by agreement, with the provinces. I think there were 4,000 units that

came into our inventory.

While on the one hand the Housing Corporation seems

to have been getting out of certain activities and certainly reducing its

workforce by a significant number of people, the result of their new mandate,

their new focus, is that there has been an increase in activities on the social

housing side. Ultimately, the Newfoundland and Labrador Housing Corporation will

be an agency that delivers nothing much more than social housing programs.

These programs are basically delivered under three

broad categories. It is the social housing programs, as in housing people and

providing accommodations for people. Its activity will also be in the area of

provincial home repair programs, administering these and, in a very minor way in

the future, continuing in the market housing programs until such time as we are

out of that area 100 per cent.

Because of the shortness of time I do not think I

need to say more than that, other than it is consistent with government policy

with the department. Also with the Corporation there has been a change of focus,

a change of mandate. Ultimately the Corporation will always - as government I

suppose will always be, through some agency or department - heavily involved in

providing social housing and trying to meet social housing needs for people in

the Province. That is where we are at the moment.

The ability of the Corporation has not been

significantly impaired or weakened as a result of the reduction in government

grants this year. A review of the Corporation's financial situation indicates

that the Corporation can easily meet the reduction in the grants situation and a

return of some equity to this Province. Not unlike, I suppose, Hydro does in

terms of paying dividends, although this is the return of equity that year over

year government has put over many years into the Corporation. I think there is

about a $60 million equity position the government has in the Corporation, so it

is a question of re-balancing that actually.

Thank you, Chair. We will take whatever questions

you have on the Corporation now.

CHAIR: Ms Osborne.

MS S. OSBORNE: Do you know the average number

of vacancies you have at any one time?

MR. MATTHEWS: In St. John's?

MS S. OSBORNE: Yes, in St. John's.

MR. MATTHEWS: I think it is about 500 now that

we are averaging, isn't it? Oh, vacancies! I am talking about the waiting list

now. You mean houses with nobody in them?

MS S. OSBORNE: Yes.

MR. MATTHEWS: As a result of people moving out

and houses and apartments being refurbished, people moving in? I don't know.

Mary, what number would that be? There are always -

MS MARSHALL: I think there may be about thirty

to forty in the St. John's area.

MS S. OSBORNE: I get a lot of calls from people

who are looking to get into social housing, (inaudible) in the Newfoundland and

Labrador units. They will say to me: There is a vacant house on such-and-such a

place and it has been vacant for three or four months. I find it really

difficult to relate the 500 on the waiting list and the length of time that

houses are vacant.

I know up in my area - I follow the tenants moving

in and out - one house became vacant last July on Barachois Street and nobody

occupied it until September. If that were privately owned, the bottom line would

be that you get somebody in it right away. Apart from that is the fact there are

500 people out there waiting for a unit.

MS MARSHALL: (Inaudible).

MR. MATTHEWS: Sure.

MS MARSHALL: Basically last year, about a year

ago now, we changed the way in which we

schedule our maintenance work on

vacancies and we set them up as a different form of priority. I would doubt very

much if the unit you refer to is a one- or two-bedroom unit. Because what we

have done is we put a high priority on the types of houses the people who are on

our waiting list want. Because of our resources, we don't necessarily turn

around vacant units that may not be as suitable for the types of requirements

that the people on the waiting list are looking for.

MS S. OSBORNE: Barachois is a three-bedroom

unit, and they are in fairly big demand I know. Because people have phoned in

and they have two or three children, different sex children, so they need three

bedrooms.

MS MARSHALL: I cannot respond to that

particular one. I can find out. Because that is really unusual for something to

be vacant for that length of time.

MS S. OSBORNE: No, there are a lot of them out

there. When I call Newfoundland and Labrador Housing I'm told then that the

people moved out and didn't that they were moving. I know that is a problem as

well. You do not know it is vacant till somebody tells you. There might be some

kind of a mechanism in place - and I don't know what to suggest - that you could

check. Because obviously if they moved out and you had not gotten any rent -

MS MARSHALL: That is what I was going to say.

MS S. OSBORNE: You know what I mean? That would

be -

MS MARSHALL: If they moved out it and continued

to pay rent for some reason - because we have found that sometimes, that people

have improved their circumstances and not informed us, and they have gone on

extended holidays and continued to pay rent. Those we do have a tendency to have

difficulty finding.

MS S. OSBORNE: Finding, yes, (inaudible).

MS MARSHALL: If someone has just vacated they

don't pay the rent the next month. They may be a month behind and that would be

about it.

MS S. OSBORNE: I know that probably the

maintenance crew are down. I don't know if that is it, but it would probably be

more efficient to move some of your maintenance crew in, fix it up and get

somebody in it. It would be of benefit to the Housing Corporation that you do

not have a vacant unit, and it would be of benefit to the people who - I know I

get a lot of calls and there are a lot of people out there looking.

MR. MATTHEWS: I have noticed the same thing,

Sheila. Especially when you are campaigning (inaudible) you find -

MS S. OSBORNE: Yes, because you have a lot of

units in your district.

MR. MATTHEWS: - a lot of vacancies. Then I know

about some instances where you go back ten days later and people are in there.

So it is just part of the turnover, I guess.

MR. NOSEWORTHY: I think, Mary, the average at

least at one point in time was something in the order of two weeks in terms of

the turnaround. There may be exceptions to that, but the average is somewhere in

the order of two weeks.

What the Housing Corporation tries to sustain

basically is a maintenance capability which is really designed to address what

it would have on an average basis in terms of vacancies. What you have at times

is you have peaks in that, and it really does not have the capability to do

that. So then you have to go to tender and go through that process. That may

extend the period somewhat, because you have to go on that basis. I think it is

fair to say that the average turnaround - by the time you get in, do painting

and freshen up and repair any damages that are necessary - is generally in the

order of ten days to two weeks, something like that.

MS S. OSBORNE: I am finding it to be higher

than that now. It used to be that, and then I thought that maybe rather than go

to tender you could have a part-time crew or whatever that you could call in

when you do reach a peak. Because I do find that there are a fair number of

people phoning me and saying that there are houses vacant. They phone and say:

That house is still vacant, and you said they had somebody for it and two months

later it is still vacant.

Now I can let you know of any of them that happen,

if you want. I certainly do not mind doing that. I'm finding a fair bit of that.

MS MARSHALL: As the deputy indicated, our

target is a two week turnaround. Last year, as a cost-cutting measure, and also

because of problems with the configuration, we did actually lower the priority

of some. We recognize that those may be vacant for a longer period of time.

Anything that is in demand should be turned around on a timely basis. So if

there are some (inaudible).

MR. MATTHEWS: I don't think three bedrooms are

the ones that are most in demand any more, are they?

MS MARSHALL: No.

MR. MATTHEWS: It is mostly ones and twos,

smaller families, although people sometimes would like to have three or four

bedrooms. They would like to all have a bedroom themselves but -

MS S. OSBORNE: Oh yes. In that case there is a

policy in the department that same-sex children, up to the age of thirteen or

fifteen or something, share a bedroom. In that case, if you have more demand for

two bedrooms and you have more three bedrooms vacant, maybe you could say: Okay,

each of the same sex gets their own bedroom.

MS MARSHALL: That is the case in many instances

today. That is a written policy but we don't really stick to that. When we have

people who are on the waiting list, if we have a unit that is larger than their

requirement and nobody else needs that size of an accommodation, we will provide

it for them.

MR. MATTHEWS: Of course, there is always the

cost to the client in there, too. A three-bedroom unit usually costs a little

more to heat and that sort of thing.

MS S. OSBORNE: They are all subsidized

(inaudible).

MS MARSHALL: It is all subsidized, and really

they are charged on the basis of their income, so there is a possibility at the

end of the year if the heat subsidy runs out it could have an impact. Generally

speaking, that is not a significant (inaudible).

MS S. OSBORNE: Thank you.

There is another policy - well, I am not sure what

the policy is. If a person is offered a unit and that unit is not suitable, then

they don't get a chance for another year. Is that it?

MS MARSHALL: That is the current policy in the

St. John's area where we do have a large demand and so that we can turn them

around more quickly. I have to say that when people put in their request, they

identify what their requirements are and the specific area of the city where

they want to live. If we do find something that suits that list of requirements,

we do hold them to the first one that comes up.

MS S. OSBORNE: Because sometimes I get calls

from people who have small children and they are offered a two-bedroom unit in

an apartment building and they would rather have a two-bedroom unit that is out.

Obviously, if you have small children and you are in an apartment building, if

you want to put them outside you have to go outside with them. I have a problem

with that, and the people who have called do have a problem with that.

I guess I am suggesting that maybe the Corporation

could be a little bit more sensitive in that area, because it would not be

practical. If you had two small children, say three and four years of age, you

cannot put them outside to play from an apartment building, so you are either

tied to the unit with them or you have to go out with them all the time. That is

not really practical. I am just offering that as a suggestion now that we just

might have a look at a little bit more flexibility in that policy.

MR. MATTHEWS: Sheila, I've found generally that

- or not generally, but in some cases - people who are in need of Newfoundland

and Labrador Housing social housing, for whatever reason, seem to be more

prescriptive in what they want -

MS S. OSBORNE: Some are, you are absolutely

right.

MR. MATTHEWS: - than if they are out getting

their own market housing. You know, they want to live in this area because their

mother and their sister live there. They want this size of an apartment, and

they want it on the ground floor, and they want the front door facing south, and

they want it yesterday, you know.

MS S. OSBORNE: I find that -

MR. MATTHEWS: It is not easy to deal with -

MS S. OSBORNE: With all of them.

MR. MATTHEWS: - in the context of a policy that

is fair to everybody.

MS S. OSBORNE: I realize that, but I also

realize probably from being a stay-at-home mom for awhile that it would be

impossible to go outdoors with your children all the time. That could possibly

be looked at. It is not possible to raise children properly in an apartment

building - three and four year-old children - or even when they come home from

school, to put five-year olds, kindergarten people, out loose. I find that -

MS MARSHALL: Are you finding that happens

frequently? Because I'm surprised that we do not have -

MS S. OSBORNE: It has happened on a couple of

occasions.

MS MARSHALL: Most of our houses that we own and

operate ourselves are more or less sort of row units, or something along those

lines, in which case they do have their own backyard allocated to them. Where we

place people in apartments is where we use rent (inaudible) with a private

landlord. Most of those are designed for either seniors or single adults. I am

surprised that would happen frequently.

MR. BARRETT: That is St. John's housing you are

talking about.

MS S. OSBORNE: No, Newfoundland and Labrador

Housing.

MS MARSHALL: Our housing in the St. John's

area.

MS S. OSBORNE: Yes. I have one in particular

that I am dealing with right now.

MR. MATTHEWS: I have (inaudible) units in my

district, and I cannot think of one separate seniors' (inaudible) those corner

units up on Stabb Court area. I cannot think of any apartments that we have up

there. They are all -

MS MARSHALL: We don't (inaudible).

MS S. OSBORNE: No, in my district there are,

Pasadena in particular. There are two-bedroom apartments down in Pasadena.

MS MARSHALL: (Inaudible). They are private

apartments.

MR. MATTHEWS: They are the market housing that

we are subsidizing.

MS S. OSBORNE: There are some two-bedroom

apartments I think in Pleasantville. I do not know if it is a subsidized one

(inaudible), because I had to deal with one last year where a person was having

trouble in the area they were living. They had three small children. They were

offered a unit in an apartment building in Pleasantville. I'm not even familiar

with it because it isn't in my area, but it is either that way or no way. So

that policy is sometimes a little bit restrictive.

I know that I find the staff at Newfoundland and

Labrador Housing are really wonderful to deal with and sometimes it is hard for

them circumvent the policy. It is the policy, not the staff, that I would be

having the problem with.

Off that now, and on to group homes. Will they

remain as part of your inventory?

MR. MATTHEWS: I do not know where we are with

group homes. Deputy, or Mary, probably you could help me out. We have about

thirty-five of them I notice that they are in our inventory, and I guess they

are being run through the Department of Health and Community Services.

MS MARSHALL: The thirty-five includes any of

what we used to call PGs/PWs, the public works houses that may be made available

in (inaudible) areas for teachers and social workers. We would not have that

many of I think what you are referring to as a group home. Really, we have to

wait on the Department of Human Resources and Employment to determine what they

are going to do with that program.

MS S. OSBORNE: Oh, okay.

MS MARSHALL: There is only a handful, maybe

five or six of these physical buildings, that we still have and are holding

(inaudible).

MR. MATTHEWS: The rest is regular, otherwise

market housing.

MS MARSHALL: Yes.

MR. MATTHEWS: Yes.

MS S. OSBORNE: Thank you. Those are all the

questions I have.

CHAIR: Thank you, Ms Osborne.

Mr. Byrne.

MR. J. BYRNE: Is anyone else going to ask a

question?

CHAIR: Pardon?

MR. J. BYRNE: Is anyone else going to ask a

question?

CHAIR: Mr. Byrne.

MR. J. BYRNE: Fine.

You say you are getting less grants, which you are.

Property is being sold off. You are unloading industrial and residential

properties with respect to the industrial parks. You obviously have a revenue

loss. I'm just curious - we have touched on this already - that it is having no

impact really on the workings of Newfoundland and Labrador Housing. Is there any

impact at all with respect to social housing? Obviously when you are selling

building lots to make a profit it has to have some affect on the social housing.

Is there no impact at all?

MR. MATTHEWS: In the devolution with the feds

we took over responsibility for all social housing. There are streams of revenue

that have been identified that will be coming down over the next thirty years or

so to compensate for that devolution.

We are not in the business, and have not been for,

I gather, four to six years now, of building new social housing stocks. Really,

our main activity is in renting and maintaining the inventory that we have, and

in some cases managing property on behalf of others that we have been

historically tied into. The issue is whether or not we can absorb in our M and O

budget, I guess, the reduction that we have had to absorb. What we are doing is

effectively taking $3.6 million out of our equity to go against operations; and

for the $1.1 million that remains as a shortfall, absorbing that into our

operation.

There shouldn't be any impact at all on our ability

to continue to deliver programs. Obviously, over the next four or five years, if

government decided to continue to ask for their equity back, or reduced the

operating grant, then obviously there would be an impact over time. For this one

year it is achievable without any significant change in our operations.

MR. J. BYRNE: So this year it could see

(inaudible), is that what you are saying?

MR. MATTHEWS: You have to have a certain level

of funding to run your operation, and you either get it by government grant or

by revenue from your programs. There are ways of increasing your revenue if you

increase your rent base, that type of thing. We do not see that having to happen

this year to meet our mandate.

MR. NOSEWORTHY: Two other things perhaps,

Minister. One is the fact that, I think, for the time being in any event in

terms of the divestiture of land and what have you, the revenues, generally

speaking, are sustained. Because we are developing land and selling block lands

off, if you will, throughout the Province. In the short-term in any event those

are sustained.

The second thing is that with the signing of the

devolution agreement with the federal government and assuming responsibility for

all social housing in the Province, it means that as opposed to then

cost-sharing with us we have gotten a lump sum agreement now which will continue

on for a period of time.

Whereas before if, basically, we saved a dollar we had

to send $3 back to the federal government because it is a 75-25 cost-sharing

arrangement, essentially now, if we are able to effect savings in the total

expenditure in social housing, which runs roughly at $100 million, it means that

we benefit directly from that.

So with prudent management, basically, efficient

management, administration and maintenance of the stock we should be in

reasonable shape for the foreseeable future.

MR. MATTHEWS: Thank you, deputy.

MR. J. BYRNE: Thank you.

I remember last year asking questions on

renovations that were done on some housing in Buckmaster's Circle. I think I

asked the question last year for a breakdown of the cost and the people who were

doing work on it. Because my sources say that there was a contract put out, a

significant amount of work done, but not completed. The contractor who had done

the work did not complete it. He had to hire a new contractor to finish the

work. I think last year I asked questions. What was the original contract worth?

What work was not done? What was not done? Who was hired to finish the work, and

at what extra cost? I don't remember receiving the information. Am I close to

what actually happened there, that information?

MR. MATTHEWS: You mean you asked that question

last year in the Estimates?

MR. J. BYRNE: Yes.

MR. MATTHEWS: You did not get an answer? Yes,

boy.

MR. J. BYRNE: I'm pretty sure (inaudible).

MR. MATTHEWS: I don't recall it from last year

because I was not even here, and I have no knowledge of it.

MR. J. BYRNE: You weren't here.

WITNESS: None of us were here.

MR. NOSEWORTHY: None of us were here. I was

there, Jack, but I was only Deputy Minister of Municipal Affairs at the time. I

wasn't chairman and CEO of the Housing Corporation. I've just assumed that

responsibility again over the past few months. I know Mary was not there either,

so the best I can do is review that issue and get back to you with the

information.

MR. MATTHEWS: Could you give us some details as

to what you are referring to? I mean, it is all pretty vague. You are saying

somebody had a contract to do some work and somebody went out of business and

somebody else had to go in and do (inaudible).

MR. J. BYRNE: (Inaudible) one phone call to the

people who would be responsible for (inaudible) story.

MS MARSHALL: Can I comment on that?

MR. MATTHEWS: Absolutely.

MS MARSHALL: I believe I understand what it is

Mr. Byrne is referring to. It was not an issue of one contr