May 14, 1992

GOVERNMENT SERVICES ESTIMATES COMMITTEE (FINANCE)

The Committee met at 7:00 p.m. in the House of

Assembly.

MR. CHAIRMAN (P. Dicks): Order, please!

I would like to call the meeting of the estimates

committee for the Department of Finance to order.

The people from Hansard indicated to me, Mr.

Minister, that when your officials speak they should identify themselves, the

reason being that the delicate voices of the members are well known to the

people of Hansard, but not necessarily those of our benighted civil service. So,

Dr. Kitchen, I would ask you to make any opening statements you wish.

DR. KITCHEN: Thank you, Mr. Chairman. I think

first of all what I would like to do is to introduce the people who are here to

help me with this difficult task of defending my estimates before this committee

opposite. On my right is the Comptroller General of Finance, Mr. Carew. On my

left is the Deputy Minister of Finance, Mr. Gilbert Gill. Over here on the right

again, in back, is Mr. Ray Gruchy who is the Assistant Comptroller General in

charge of government accounts and internal auditing. Next to him is Bob Clarke,

Assistant Comptroller General in charge of tax collections. Next to him is Phil

Wall, Assistant Deputy Minister of Finance, who is in charge of debt management

and pensions. Next to him is Fred Lyall, who is an accountant with the

Department of Finance looking after the department's accounts - just the

departments within the department, and for both sides of our department. Missing

is Assistant Deputy Minister Bob Vardy who supervises the tax fiscal policy and

tax policy.

I would like to say a few words. I would like to

just give you a brief overview of some of the things that have happened in the

Department of Finance during the past year, and some of the things that we

anticipate doing that are different from what we have been doing in the past. I

think I will start with Ray Gruchy's department - government accounting. I

think, Ray, the main thing that we have been doing is computerizing, upgrading

our computerization of accounts, so that things become extremely efficient.

AN HON. MEMBER: Could you turn up the volume a

little bit?

DR. KITCHEN: Oh, I will shout a bit louder.

AN HON. MEMBER: Yes.

DR. KITCHEN: Okay.

What we have been doing in government accounting is

basically improving our computerization of accounts so that things become more

effective and efficient. In the tax collection part of it, which in my view is

one of the hardest jobs of government, the most thankless jobs of government in

some cases and sometimes the most thankful jobs of government, because we have

so many people coming in, business people and others, who talk to us about taxes

they collect, so that particular group collects all our taxes. They collect the

retail sales tax, almost $600 million worth every year from businesses of all

sorts, both in the Province and they go outside the Province. We have a series

of auditors up there who move around and travel, and we have people who help out

businesses in getting their accounts established. Then we have the collectors up

there who, when things are not sent in on time, get on the phone and take

various steps to do it.

This past year we have gained experience with the

payroll tax, and this coming year because the payroll tax is going to be

extended down as far as the ceiling is concerned, we are going to collect now

from everybody who has a payroll of $100,000 or more, that means we will be

having to hire a few extra people - not a lot, but a few, to help us with that.

Then we have also been entrusted, or will be

entrusted now starting the first of July, with taking over the remnants of the

school tax and collecting all these arrears. So that is an extra responsibility,

a temporary one, for the tax collection department. That is about all I can say

on that.

On the pension side, coming back to the other part

of the department now, the part that Phil Wall is running, he looks after debt

management and pensions, and just a word about pensions. We have changed the

pensions quite a bit now so that the current cost is now paid for, so that this

deficit that we have in the pension fund will remain more or less stable in the

future; it will not be added to, because we are covering the current service

cost. So every year that a person gets pensioned, that you build up in your

pension fund now, the employee pays so much and the government pays so much, and

that is enough, when it has been properly invested, to take care of the

additional pension that person will be getting for that year's service. So the

current service cost is being covered - it is a major change - for all three

pension funds; but one is not handled yet, and that is the MHA's pensions. We

are hoping to be able to come to grips with that in the coming year; maybe it

will not take too long.

Another thing that has happened in pensions is that

there has been a transfer of the administration of teachers' pensions from the

Department of Education to the Department of Finance. The small contingent of

people there, I think there were five or six in the teachers' pensions, are now

working for the Department of Finance in this building.

On the debt management side a number of changes

have taken place this year. You know interest rates have gone down and that

enabled us to refloat, to pay off some of our loans that were callable, and to

replace them with loans at lower interest rates, saving the government

considerable sums of money.

In addition to that, we have increased our treasury

bill borrowings from $10 million a week, these thirteen week treasury bills,

which is about $130 million - a maximum of $130 million we had all along - to

$22 million a week. We have done that to enable us to take advantage of the fact

that short-term rates are lower than long-term borrowings and debentures. That

too has saved us considerable sums of money. These are two of the major changes

in the debt management side.

The other part of the department, fiscal policy, I

would like to say a few words about tax policy and fiscal policy changes. Fiscal

policy is largely concerned with negotiations with the federal government with

respect to fiscal arrangements, and they were concluded this year but normally

these are five year arrangements on equalization, on EPF, and all the other

transfers from the federal government, and these are now going to be in place

only for two years to enable further changes to be made before they are locked

in for five years.

A couple of major things have happened in Canada as

a result largely of the activities of the people in our department. One is that

the federal government has decided that they are going to look seriously at the

notion of expenditure need. Under the constitution, the equalization clause

there, I think it is

Section 36, states that provinces should have comparable

levels of service at comparable levels of taxation. Up until now the

equalization has dealt with comparable levels of taxation and it has not looked

at the fact that in Newfoundland, for example, it is harder to provide a given

service because of our geography and the terrain and things like that than it

would be, say, in Alberta. It is harder to dig a road in Newfoundland than it is

to put one across Alberta, or across the prairies of Saskatchewan. So we feel

that this concession by the federal government to explore seriously this

question of expenditure need will be of great value to this Province should it

be realized.

We have had people study that and we will be

increasing slightly the size of that small division to study expenditure need in

great detail. We have also, on the same thing, been able to get the federal

government to look seriously at the question of tax back on offshore oil because

right now if we get revenues from offshore oil we get our equalization reduced

just about dollar for dollar. This doesn't seem much of an incentive to develop

offshore oil, so the federal government has agreed to study that more seriously.

These are two major things that have happened I think largely because of the

initiative and hard work of our department, also I would like to pay a tribute

to the federal government as well in this because Mr. Mazankowski, whom I used

to know in another life, has been very thoughtful with respect to his dealings

with this Province on some points. So the federal government agreed to do what

we asked them to do, and they did with a will. So I would like to pay a tribute

there because it is deserved.

Now on the tax policy question there are two parts

to that part of the department. The tax policy side: we have in the last year or

so been engaged quite seriously on the question of whether we should harmonize

with the GST and what direction the sales tax should take. We have had a general

look at this because there are many possibilities or roads down which we could

go. We have narrowed these down considerably after considerable public input. We

had quite a number of briefs presented to us. I can't remember exactly how many,

maybe it was sixty to eighty or more. It was a large number. I have a great big

binder with them all in it, and I have read them all. We have looked at it and

now we are going to look precisely at whether we will harmonize with the GST,

lower the rate and extend it to the services side, and what it will mean to

businesses.

So we have already asked them for their input,

other sectors of the community, not just businesses, to give us their input as

to how, if we harmonize - now that they are use to the GST - how about if the

Province goes along with that and taxes the same items and the same services

that they do, how that will affect each business, so everyone will know how the

GST affects them so they will be able to tell us how the other will affect them

- if it will be harsh. We have some pretty good ideas how it will be, but we

want to check it out very thoroughly because we don't want to do anything that

would be inappropriate. So that is a major thrust of the tax policy division in

the coming year.

Mr. Chairman, I will be very glad to answer

questions on our estimates here in the estimates book running from pages 27 to

36. They are not very long actually. We might be out of here in half and hour.

Now that is basically our estimates in that section.

The consolidated fund which also comes under the

department is usually examined, as I understand, Mr. Chairman, in the House

itself rather than in committee. Though I suppose if people do have questions on

that I don't see any particular reason why, if you so desire, I wouldn't answer

some questions here as well. Anyway, we are ready.

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

we will start with Mr. Winsor.

MR. WINSOR: Obviously the estimates book runs

from page 27 to 36, but another document with which the Minister of Finance

might have some familiarity with is obviously the Budget of 1992 which he

delivered in the House. But first I want to react to some of the issues that the

minister raised and one of them deals with the pension funds.

The minister indicated that the pension fund is

stable, henceforth on, I would assume that the current service cost basically

will take care of any of the pension funds that will accrue from this day forth,

type thing. The minister failed to address the question of the unfunded

liability, which is considerable, and I think I will come back to it later on,

but I do not know if the minister will want to react to it in a few minutes.

The infamous payroll tax to which the minister

alluded, I am sure the minister has had representation as we have, from a number

of small businesses out there who feel that that payroll tax will impact

significantly on them. For example, a business that last year had a payroll of

$350,000 for example, we will just use that, last year paid a payroll tax at 1.5

per cent on $50,000, and this year that same business is paying the payroll tax

of 2 per cent on $250,000. Certainly in the construction sector, a small

business, electrical, carpentry and so on it would not be unusual to have that

kind of a payroll during the summer and the ones who have voiced concerns to me,

indicate that that could have a significant impact upon their businesses to the

extent that it would take one person paying them $300 or $400 a week, ten weeks

which is basically the summer work, they are quite concerned that they will be

unable to afford it because there are a number of other businesses that are

marginally smaller, who will not be impacted by the payroll tax and they are

going to find difficulty in competing. I wonder if the minister did any studies

before he implemented this as to the impact this tax would have particularly on

small businesses.

In 1991 if I recall, the old policy of tax reform

came up in the back

section of the Budget, a discussion paper I think it was

referred to in the paper, and the minister spoke then of harmonizing GST and the

retail sales tax with a one standard tax across the board. The minister had a

full year to study it, he has had input from a number of people and there

certainly are some thoughts and confusion as to what direction this Province is

going to take. Are we going to harmonize completely? I think one province might

have done it already, why didn't the minister choose to do so, and does he

intend to do so? On the matter of transfer payments, both transfer, equalization

and EPF, could the minister give some indication as to the actual difference in

money we received in 1992 as opposed to 1991. I will stop there now.

DR. KITCHEN: Okay. I can answer three, I may

need some help on the fourth one, on the EPF, because I do not have the precise

figures in front of me now.

The unfunded liability of the pension fund: the

three pension funds together I think, are somewhere in the vicinity of $2

billion or maybe a bit over $2 billion. The year before last, I think, when we

found it out first, we put in $20 million to start, covering the unfunded

liability, with the thought that we would try to make periodic contributions

into that fund. We were unable to do so this year because of budgetary

restraints but it is still our intention to put money into the pension fund, and

over time to reduce the unfunded liability perhaps to 50 per cent or something

of that nature. We are on that target at the moment but we did not do anything

this current year and we did not do anything for the last year. What did we do

last year? I cannot remember when it went in but we did put $20 million in.

MR. WINSOR: Of that unfunded liability - you

say it is $2 billion now?

DR. KITCHEN: Yes, it was something over $2

billion.

MR. WINSOR: That is based on actuarial studies

that have been done?

DR. KITCHEN: Some of the actuarial studies are

somewhat dated now, because we do it every three years.

MR. WINSOR: What is included in that? Could the

minister give some indication? What is the assumption, in those studies?

DR. KITCHEN: Well the assumption is that if

government stopped operating now - no more collections, no more government

putting in - and everybody drew out what they were entitled to draw out, and

they lived until they died and kept getting their pension, and their survivors

took out what they were entitled to, we would be $2 billion or so short, and the

teachers' fund would have run out - I cannot remember the year, 1997 or

something like that?

AN HON. MEMBER: 1997.

DR. KITCHEN: 1997, and the public service

pension plan some time later.

MR. WINSOR: But that is on the assumption that

contributions cease?

DR. KITCHEN: Yes, that is right.

MR. WINSOR: Is that a fair assumption to take,

because I see these figures all the time.

DR. KITCHEN: Yes, but if contributions are made

then the amount that you can draw out increases. What we are doing now is that

our present contributions take care of any additional liability that is

established for the year. So if an individual puts in his 6 per cent and the

government put in their 6 per cent, and that is properly invested in our fund,

that is part of the point, then that will accumulate to enough to pay him that

additional year's pension that he has built up. So it will not get any worse in

that sense, but the unfunded liability will still be there.

MR. WINSOR: Of that $2 billion, or the unfunded

liability of the pension plan, how much of it is a result of government for a

number of years, I think from 1949 up until 1979, not matching dollars? I know

that the contracts usually say that the government is responsible to maintain

the pension plan - but in the actual dollars and cents, what is the government's

share that, I guess, it owes that pension fund?

DR. KITCHEN: Yes, how much of it was caused by

government not contributing to, or in the case of the Public Service Pension

Plan, neither government nor employees contributed until a particular year. I

cannot remember the year.

AN HON. MEMBER: 1967.

DR. KITCHEN: Until 1967, alright, so some of it

was caused by that policy; but as far as teachers were concerned, teachers had

been contributing a portion, 3 per cent or 4 per cent, and government had not

been contributing anything until about the same year... was it?... that

government started contributing to teachers? I do not know the exact date.

AN HON. MEMBER: The same date.

DR. KITCHEN: It is the same again. Government

started contributing then, but teachers had been contributing for many, many

years before that; but even the teachers' contribution was not sufficient to pay

the teachers' share of the liability that was set up each year, but the

government -

AN HON. MEMBER: You said -

DR. KITCHEN: Now I cannot break down at the

moment that $2 billion to tell you how much was due to each of the policies, but

I believe it is contained in the task force or commission we have set up on

pensions. I have a feeling that we may be able to get that figure for you.

MR. WINSOR: If I understood what the minister

said then - and it is the first time I have ever heard it and it certainly is

not what has been said before - the minister said that the government started to

contribute to the teachers' pension fund in 1967, in actually putting in

dollars?

DR. KITCHEN: Is that right?

AN HON. MEMBER: 1980.

MR. WINSOR: I think 1979 or 1980 was more like

it.

AN HON. MEMBER: That is when we started funding

as opposed to -

DR. KITCHEN: We started funding the teachers'

pension plan in 1980, the government did.

AN HON. MEMBER: (Inaudible) start funding

everything.

DR. KITCHEN: But now the teachers - what about

the 1966; is that -

AN HON. MEMBER: That is when we started

contributions.

DR. KITCHEN: Oh, government did not even fund

the public service until 1980, is that right?

AN HON. MEMBER: (Inaudible).

DR. KITCHEN: Okay, I am sorry if I mislead you.

I just misunderstood the comment. So the public servants began paying in in

1980?

AN HON. MEMBER: They began paying it in in

1967, any contributions, but they went into the consolidated revenue fund.

DR. KITCHEN: Okay.

AN HON. MEMBER: In 1980 they started to

actually fund.

DR. KITCHEN: So there was no fund before 1980?

Okay.

I am sorry about that.

MR. WINSOR: I understand that system, but I

have seen all those studies and occasionally there is some speculation as to

what government's liability is, in that for all these years with the teachers'

pension fund the money just went into general revenues to build roads, hospitals

and water and sewer throughout this Province. I've seen some studies that the

NTA has done, whether they're accurate or not, as to what should be in that fund

had government matched dollars and that had been invested wisely. I know the NTA

did one a number of years ago. I'm wondering if the government has done a study

and got a breakdown of the individual components of each plan.

DR. KITCHEN: I don't know. I seem to remember

that question was addressed in the Commission, but I don't know for sure, so I

can't give you the breakdown here now on that. I can say that the government has

accepted the unfunded liability as something that the government will put in.

It's not something that we're expecting the employees to fund. We are expecting

employees to share 50-50 the current service cost, the additional amount that

we're building up. But as far as the past is concerned government has assumed

full responsibility for funding that when the time comes.

On the payroll tax question, and its impact on

small businesses, we have increased the amount of the payroll tax and we have

lowered the threshold to $100,000 from $300,000. Some businesses whose payrolls

are in the order that you indicated will be paying more payroll tax. On the

other hand you have to realize that some of these businesses - perhaps all these

businesses - were paying school tax as well. Now they will no longer pay the

school tax. So the actual impact would have to be - in assessing the impact of

the increase in the payroll tax, one would have to also look at the impact of

the reduction in the school tax.

We have had very little negative reaction to our

move from businesses on the payroll tax, almost none. We've had some. The people

who are hard hit by the payroll tax, at least in the first year when the change

is made, are those people who are heavily into labour. Anyone with labour

contracting. That is all they do. They don't have any premises, they're

basically labour contractors. They contract labour out to other businesses and

so on. Their payroll was up, and they'll say: well, sometimes we're caught in a

fixed contract. Well, sometimes the contract is not fixed, so that it can be

adjusted for taxes; sometimes the contract is fixed for a period. Then at the

end of the period it can be adjusted. Some of these businesses didn't pay much

school tax. Some operate out of a small office.

So it is true that there is a minimum, a very small

number of businesses which are negatively impacted by the payroll tax, and they

have made their concerns known. It's not that drastic and it's not going to be

permanent, they're not going to be permanently injured. The thing to remember is

that the total impact on business of our moves this year was positive.

Businesses this year paid $2 million less in taxes than they paid last year as a

result of the elimination of the school tax and the substitution of the payroll

tax.

Anyone want to explore that one a bit more?

MR. WINSOR: I take exception to the minister's

remarks. I don't think the business community that I've talked to - I talked to

some fish plant owners, I talked to owners of small businesses - that certainly

doesn't reflect in the information that they have. I see certainly that there

would be very little difference maybe in the owner of a large building here in

St. John's, who paid a significant amount in school tax through the mil rate

assessment.

It doesn't take into account the reality of what is

happening out there. Small businesses might have paid a property tax of $1,000,

but they could have a significant payroll. I think that at the end of the day

when the minister's assessment comes in he will find that it has impacted much

more severely. In fact I know already of three businesses that have told their

accountants to find one person in the system to lay off because of the

implementation of the payroll tax. It is, again, all in service sectors where

they pay virtually no property tax because many of them could operate out of

their homes or some small shed, ten by ten if you are into the carpentry,

electrical, plumbing, that type of thing, and they didn't need to have

buildings.

DR. KITCHEN: There aren't too many carpenters

who have payrolls of $350,000. We are talking about a $100,000 payroll. If you

are talking about part-time people in summer employment, you are talking about

quite a large business. The minimum wage comes to about $8,000 per year, and on

$100,000 that is about ten or twelve people. If it is only a part-time

operation, let's say three months a year, that is the equivalent of thirty

people. So we don't want to exaggerate what is happening out there. Overall,

businesses are pleased and they sure as heck haven't made any representations to

me about reinstating the school tax.

MR. WINSOR: The minister keeps using that line,

about reinstatement of school tax. I don't know when anyone has called for the

reinstatement of school tax. Since he brought the subject up I am curious. Two

things have happened with school tax: one, the announcement of its elimination

effective June 30. Under the present guidelines that we have, if a person's

income is below $7,000 a year, they are exempt from paying school tax. Because

of the seasonal nature of employment in Newfoundland, it is quite conceivable

that a number of people's income will be substantially reduced. What provision,

what kind of formula is being used to allow people to write off that portion of

the income tax as an exemption as it presently does, if you don't make $7,000

you are exempted, how does government intend to address that?

DR. KITCHEN: Government is unable to address

that question because we can't exempt A from paying income tax and not B. Income

is a general tax that is collect (inaudible) -

MR. WINSOR: I think the minister might have

misunderstood. You are liable to paying school tax from January up until June.

Under the old system, if you went from January to December and you made less

than $7,000 you would be exempt from paying school tax. Now every person who is

on the role of the school tax gets a bill saying that they owe $130 of which if

they pay $65 before June 30 then the rest will be forgiven. Is there now a

threshold at which a person doesn't have to pay school tax?

DR. KITCHEN: It is $7,000 for the calendar

year, so that when the person pays his $65 or whatever it is he has to pay, and

at the end of the year he comes in income tax wise under a threshold, we will

issue a refund. We don't know until the end of the year, for those people who

are on the margin, whether they are taxable or nontaxable. They pay and then we

will get them a refund. I just want to check that. That is correct.

MR. WINSOR: I am finished for now.

DR. KITCHEN: There are a couple of more

questions, Mr. Chairman, that he asked.

MR. CHAIRMAN: Yes.

DR. KITCHEN: One has to do with why didn't we

harmonize recently -

MR. WINSOR: I didn't ask why. Are you going to,

or what do you intend to do with it.

DR. KITCHEN: Okay, I thought you were asking

why we had to do further studies. I won't answer that part. We haven't decided

whether we are going to harmonize yet because it depends - and I will refer to

what I was going to say before because when we looked at it last we could have

harmonized, but the problem of harmonization was that we would have to allow

businesses to get rebates equivalent to $180 million or something like that. I

think it is $180 million that businesses pay in retail sales tax. Under the

goods and service tax method, businesses get rebated pretty well all they pay

and what we would have to do, would be to replace $180 million, and in order to

replace $180 million for the government to break even on it, we would have had

to increase other taxes by $180 million, and part of that could have been

accomplished by the spread into the services because we would be taxing services

and certain items for the first time, but, even if we had done that, we would

not have been able to retrieve $180 million and we would have had to raise other

taxes or, the economy, if the economy were on an expansionary mode, some of the

taxes that were in place might be able to realize more funds so that we would

not have to raise the tax quite as much, so when we came to that decision point

last year, we decided that this is not the time to do it and also we had a lot

of questions about the precise impact on a variety of businesses that we were

not able to answer as well as we would like, so that is why we decided to do it

and so, when you asked the question, will we harmonize?.. the answer is the

decision has not been made, but I think there are great advantages to

harmonization from the point of view of economic expansion in this Province,

because the Province is basically an international trading Province,

Newfoundland has always been an international trader; almost all our products

are sent outside the Province and in international trade the person who has the

business without retail sales tax in it, that province is in a very good - it

gives a great boost to businesses engaged in international trade and indeed in

interprovincial trade as well, so from our point of view there are many

advantages to this Province to harmonize; now there are certain disadvantages as

well of course. I do not know if the member wants to pursue that point a bit

more or -

MR. WINSOR: Okay.

DR. KITCHEN: The other one, the member asked

the question, what did we get from EPF? What we had planned to get this year as

opposed to last year? We are estimating we will get $945 million in the coming

year and last year the revised budget was $886.5 million that is on equalization

and on EPF which is your question, it is down this year. We are estimating we

will get $222.8 million and last year we got $224.5 million, so we are

estimating that on EPF we will be down a bit this year, but on equalization, we

will be up. Any more questions?

MR. R. AYLWARD: I have just a couple of brief

questions. Can the minister explain to me what was the change he made this year

in the Budget on the Newfoundland Liquor Licensing Board and the Newfoundland

Liquor Board?

DR. KITCHEN: The Liquor Licensing Board in last

year's estimates, the cost of operating the board was included in our estimates

in finance. Now, the Liquor Licensing Board is part of the organization, the

Liquor Licensing Board employees and their operating are part of the

Newfoundland Liquor Corporation and they will be paying out of their revenues.

The two boards are distinct, the only link being the Chairman, but the two

boards have different people on them, they had to preserve the integrity of the

Liquor Licensing Board so that it would not be dominated by the Liquor

Corporation, but the estimates of the Liquor Licensing Board have been moved

from the Department of Finance to the Newfoundland Liquor Corporation.

MR. R. AYLWARD: Does the minister see any

conflict of interest in the way it is set up there now? The Newfoundland Liquor

Commission is in the business of selling booze, as much as they can hopefully,

and wherever they can, and now the board is indirectly under their control.

Would you not think that it would be more to the Newfoundland Liquor

Commission's benefit now to have liquor licences, as many as possible, and as

scattered as possible, so they can get as many outlets as possible?

DR. KITCHEN: Well I guess what you are saying,

there is a potential danger there; but the reality is that the Liquor Licensing

Board can have five representatives, one of whom is the Chairman. The Chairman

of the Liquor Licensing Board is also the President of the Liquor Corporation.

That is the only connection, except for the employees. So the board itself,

which revokes licences and gives direction to the employees of the Liquor

Licensing Board as to the policies that they must carry out, that board is,

apart from the chairman, different individuals and they are appointed; but there

is that possibility, I will grant you, there. We have to be very much on guard

against that.

MR. R. AYLWARD: Did the minister or the Premier

have any say in revoking the beer licence in North West River?

DR. KITCHEN: The licence was revoked by the

board after a hearing. As I understand it, the person was asked to come before

the board for a hearing and the board then revoked the licence. I think they

temporarily suspended it prior to that meeting because of some information that

was made available.

MR. R. AYLWARD: The public information is that

the person who applied or was given the licence had a record.

DR. KITCHEN: Yes.

MR. R. AYLWARD: Has the minister had any

investigation done on the possibility of that person's wife getting the licence

now, because the reason for refusing the licence is not the case if the other

person who is a partner in the business applies.

DR. KITCHEN: Well normally I stay out of all of

this unless someone makes a complaint. If someone complains, about not only the

Liquor Licensing Board but any part of the department for which I am

responsible, I look into it; but I do not usually go in and tell people what to

do. If somebody does not like what is going on in tax then I will listen to the

tax collector out there, the person, the business who comes in, and listen to

their point of view. Then I will arrange a meeting with people in the tax

collection department to make sure that there is an understanding; but I will

never, ever, tell the people who collect tax to revoke this and do not do that,

alright; the same with the Liquor Licensing Board. If that person were to -

because some people come to me and say: You know, it would be nice if so-and-so

had a licence. So I say: Well I will make sure that remark is passed on, but I

will not be advising one way or the other. I will just be making sure that this

communication that you make gets where - you can pass it on and make sure that

is there. If someone should not have it, I will pass that on too, but it is not

my recommendation; it is just the communication channel.

If anyone who has been denied a liquor licence

comes to me with a very strong case, I will ask the Liquor Licensing Board to

look into it, but I do not tell them to change it and I do not mean for them to

change it if they should not. It is just a matter of - that is how I operate

anyway. I do not know if it is right or not, but that is how I try to operate.

MR. R. AYLWARD: I do not necessarily disagree

that the licence was suspended, by the way. I am not saying that. It is a very

sensitive area up there and I believe that you or somebody, because it is such a

sensitive area, should be involved in it directly.

DR. KITCHEN: Well, it is a sensitive area;

there is no doubt about it. I do not know what will happen, what the board will

do. It will be an interesting conundrum if some other person applies for a

liquor licence in North West.

MR. R. AYLWARD: It is a tough situation.

DR. KITCHEN: Yes.

MR. R. AYLWARD: I tried to restrict the sale of

yeast in Nain when I was there. It is a big problem up there. If it is not

selling beer it is home brew.

You mentioned when answering questions from the

Member for Fogo that overall businesses saved somewhere around $2 million, I

think you said, in taxes, when you take away the school tax and put on the

payroll tax. Do you have any figures in what areas were saved the most? You take

Newfoundland Light and Power company, which was paying a lot of school tax

throughout the Province, I guess they're paying triple the payroll tax that they

did last year now, because it went from $300,000 to $100,000. Is there a figure

on a corporation like Newfoundland Light and Power or the telephone company or

Hydro, one of those large companies that would have fingers into every

community, no doubt, and were probably assessed in every community for school

tax? Do they say whether they lose? Do we know?

DR. KITCHEN: I don't have that before me now

but we did do a rundown as to how much people would be affected by the payroll

tax. I'm just trying to figure out what the amount was but I can't remember the

amount. I don't know if the Member for Fogo remembers the answer I gave in the

House one time when you mentioned some fish companies. I went and checked it

out. I had it at my fingertips then but I don't have it now. That's something

that I could find out, though. You don't want necessarily to know the increase

in a particular company.

MR. R. AYLWARD: I would like to know how Light

and Power made out. A large, affluent company as compared to a service station

in Kilbride which would have fifteen employees, because it's open twenty-four

hours a day, and it's a marginal operation.

DR. KITCHEN: We'd have to find out how much

Newfoundland Light paid to the twenty-odd school tax authorities and add that

up. Then our payroll tax calculation would be pretty straightforward and we'd

have to subtract one from the other. I guess we could find that out, but I don't

have that figure.

MR. R. AYLWARD: Maybe you could supply it to

the Committee later on.

DR. KITCHEN: Pardon?

MR. R. AYLWARD: Maybe you could supply it to

the Committee some other time if you get it.

DR. KITCHEN: Yes.

MR. R. AYLWARD: One other thing which had to do

with the question one time from the Member for Fogo on the fish companies, fish

plants in particular, that are now charged payroll tax. One of his questions at

the time was the implication of fishermen on the payroll. Can you remember what

the answer to that was? Because I can't remember. Are the fishermen considered

part of the payroll or just the fish plant workers?

DR. KITCHEN: No, people who work on trawlers

are part of the payroll but people who are in long-liners aren't.

MR. R. AYLWARD: Inshore fishermen who would be

getting deductions are not -

DR. KITCHEN: Inshore fisheries are (Inaudible)

payroll, yes.

MR. R. AYLWARD: It is on the payroll?

DR. KITCHEN: Pardon?

MR. R. AYLWARD: An inshore fishermen who gets

deductions taken out from the product he sells. That's not -

DR. KITCHEN: No. His unemployment is taken in

that thing. That's a special arrangement that's made. But we have no such

arrangement on the payroll.

MR. R. AYLWARD: In the minister's Budget there

was fairly significant mention made of all the licence fees and I don't what

else you call it. Licences, I guess, and fees and everything else.

DR. KITCHEN: Fees.

MR. R. AYLWARD: Yes, whatever it was called.

The reduction in these things. I think the critic said there were only seven

really eliminated. The rest of them were...

DR. KITCHEN: Yes, that's right, I remember the

critic's comments. The problem in the Budget is that I don't get a chance to

respond until the end. So I have all these things ready to respond and I haven't

responded to it.

I believe they're in the back of the Budget, so

perhaps I could just look at that and comment directly. Because what he said

wasn't really correct because he was saying that we didn't eliminate any of the

paper burden. We really did eliminate a tremendous amount of paper burden. I'll

just go down through here, some of these things now, to indicate that... just a

second now.

The only licence a person will need now is a new

licence. A new person getting a liquor licence for the first time will need it,

but he will never have to renew that licence or have to pay for it again,

alright? So the only paper burden is at the first time. It is not an annual

paper burden; it happens once.

AN HON. MEMBER: That was for what?

DR. KITCHEN: If you have a retail store and you

have a beer licence, or if you have a lounge, if you have your licence now you

keep it. There is no further charge that you will ever have to make for your

liquor licence, and there is no more paperwork on that, alright, unless you lose

it. That is a different point, or if it was taken away or something like that,

but as long as things are operating normally there is none.

A lot of these things are in the same vein. For

instance, looking at development we have eliminated the fee for tourist

development. We have not removed the licence, but once he has his licence he

keeps it.

AN HON. MEMBER: What one was that did you say?

DR. KITCHEN: That is the tourist establishment

licence. That is the first one on

Schedule B in the Budget. So if you have a

tourist establishment with nine rooms or less, you used to pay twenty bucks a

year, and that involved sending in a cheque and getting your licence renewed.

Now you have your licence; you do not have to renew it next year; no twenty

bucks, and nothing to send in either.

AN HON. MEMBER: Had to renew it this year,

though.

DR. KITCHEN: Yes it is now renewed. We did not

give the money back because they had already paid up last January; they have a

certain time to pay. So next January when the time comes they will not have to

pay any money and they will not have to have any paper burdens sending in

letters and all this old stuff. I think perhaps the letters, in many cases, were

more important than the money, the actual nuisance of trying to remember to send

in your licence. The same thing is true with most of the other stuff here.

We hope to be able to go even further than that

this year, and we have a person and a bit assigned to do that. We are going to

try to concentrate on a couple of departments where we did not get much this

year because we did not have time to finish this. We are hoping to get as much

as this because there is a big problem. It has been identified by The National,

that thing that Peter O'Brien heads up for the Atlantic Provinces, that there is

a tremendous amount of paper burden, particularly on small businesses. A large

business probably has an accountant who can handle it, because that is all he

does. With a small business where the owner is also the operator of the business

and doing the books in the night, and stuff like that, we want to eliminate as

much of the paper burden as we can. We have not really started to make a dent in

it yet, a little bit but not much.

MR. R. AYLWARD: The idea for the eliminations,

as you say I guess, was to save the paper burden for government as well as

anyone else.

DR. KITCHEN: Exactly.

MR. R. AYLWARD: But there is one example you

gave as an elimination of a fee, birth certificates. Now what could you save by

eliminating a first time birth certificate? What kind of paper burden - I do not

know of anyone who, when they have a youngster, does not go out and get a birth

certificate before they are five or six and go to school.

DR. KITCHEN: Yes.

MR. R. AYLWARD: So you do not save anything.

DR. KITCHEN: Well maybe I should not say that

here, but this is step one. My thought is that we eliminate the damn birth

certificates completely so that if you want your birth certificate for some

reason, and you usually want it for some governmental reason, to get a passport

or to prove something or other to government, then the government issues you a

birth certificate; but there is a lot of money in birth certificates and we did

not have the money. They cut me back. I got so much money I could eliminate, but

they said: We cannot spend all our money eliminating taxes; so, sorry old man.

So next year I will be back for that one. I do not know if I am going to get it,

but I will try.

AN HON. MEMBER: (Inaudible) budget leak.

MR. R. AYLWARD: A budget leak for next year.

Well he will not have a budget next year.

MR. CHAIRMAN: I think, for the purpose of the

record, Dr. Kitchen, the intent is to eliminate the fee, not the birth

certificate.

DR. KITCHEN: Yes, that is true.

MR. R. AYLWARD: No, but what is the sense of

eliminating a fee for one time only? The major fees, or the major paperwork, or

the major saving to government would be to eliminate it - period.

DR. KITCHEN: Every child that is born,

automatically now gets a birth certificate sent to the mother, and maybe that is

the only one they will ever need. They may need another one later on if he or

she loses it.

MR. CRANE: It is always full of people down

there looking for birth certificates.

MR. R. AYLWARD: Now I do not understand that.

Every youngster that is born will get a birth certificate sent automatically,

and a ten dollar bill for it?

DR. KITCHEN: No bill. The initial one is free.

MR. R. AYLWARD: Oh, I see.

DR. KITCHEN: There was some confusion about

what initial meant because some people were coming and saying: Here I am, I'm

forty years old, I've never had a birth certificate and I want my initial birth

certificate. That sounded sensible, but what I meant by initial - it was my

fault because I should have been clearer in the Budget Speech - I should have

said that when a child is born the birth certificate would be issued free of

charge to the parent for that child.

MR. WINSOR: Automatically or only upon request?

DR. KITCHEN: Automatically. That is what we

instructed the Department of Health to do. The birth has to be registered. Once

the birth is registered the certificate is supposed to be mailed out.

MR. R. AYLWARD: So what other fees or licences

were done just for show rather than for any general benefit?

DR. KITCHEN: That wasn't for show. They are all

pretty general -

MR. R. AYLWARD: There is no general savings to

government for sending out one birth certificate free. You didn't save any paper

burden. I mean this was the intention of it.

DR. KITCHEN: No, it is not just paperwork.

MR. R. AYLWARD: You are still doing the same

thing. You are still sending out receipts for $10. You still have people down

there collecting it. You still have cashiers down there to do the same work that

they did six months ago.

DR. KITCHEN: There is a partial break there in

the sense that some of the people will never have to contact the government for

a birth certificate. They have one. Everyone in Newfoundland from now on will

have a birth certificate. The only question is they may lose it or they may not

retain it and they may need two in which case the second one under the present

rules, they will have to send for it again. From the point of view of the

citizen, they gain from that in my view because it is an automatic procedure

now. When the birth is recorded, the birth certificate is sent out because the

birth does have to be recorded. The same group who record it can issue the birth

certificate.

MR. R. AYLWARD: It is not the same for that

fellow who was forty years old to get one because he didn't want one when he was

one year old and he wouldn't have kept it until he was forty.

DR. KITCHEN: You have to keep track of it, yes.

AN HON. MEMBER: (Inaudible).

MR. R. AYLWARD: He only wanted it because it

was free probably.

The Newfoundland Stocks Savings Plan, that is

eliminated completely now.

DR. KITCHEN: The plan is not eliminated but the

money is, so in a sense it is on hold. There is no money for it this year, but

we haven't revoked the legislation.

MR. WINSOR: I want to find out about parks. It

is a pet peeve of mine because I think the minister last year sent people into

gravel pits by the change of taking the people who were sixty-five years and

older who were senior citizens and many of them were campers and charging them

fees. I drove this Province several times last year, and for the first time I

have seen villages spring up all along the coast within two to three miles of a

provincial park. The reason was simple, several seniors told me that they leave

their homes in June month and there are little groups almost like caravans, it

is not like the big airstreams that come in from New York somewhere, it is

senior citizens in pickup trucks with a little camper on the back and so on.

They, for a number of years, travelled and got

together in the provincial parks in the province, stayed a week or two weeks

there then they moved on to another place. I went on throughout the province

everywhere, and last year for the first time they had to start to pay the fee of

whatever it was, $7 to $10 a day seven days a week because they were camped in

the park for seven or eight days. They chose not to pay it, so they set up those

little villages all along the coast of Newfoundland. The part of the coast that

I live where a lot of people go berry picking bake apples - I shouldn't tell you

that because you might come out next year - but all along, every place that

normally would have been in the park you couldn't even get a place to pull off

the side of the road because there were fifteen campers out there. How much

extra revenue accrued in provincial parks last year as a result of the

imposition of the $10 a day charge or whatever it was for seniors?

DR. KITCHEN: We can check that, I guess, or try

to. The reason wasn't a money saving device. The main reason for that, if I

remember correctly, and I think I do, was that there were a lot of complaints

from non-seniors. In some parks seniors would block off the parks and leave

their campers there the whole summer regardless of whether they used them or

not. Not only seniors, but other people as well, but particularly some seniors.

When some other person wanted to use the park, for their family for instance,

there were no places there because they were all taken. I think that was the

reason.

MR. WINSOR: Yes, the reason was - because I

remember going through it last year - it was on a number of weekends, and

specifically about three weekends during the year when that occurred. The rest

of the time these parks are vacant. Most of them in this Province are vacant

during the week. From Monday until Friday the parks are vacant. If there are

fifty campsites there are ten to twelve utilized. The rest are vacant.

So if you had to do something with it the simple

solution could have been to charge them for weekends, these specific weekends.

Because what we've done is set up again the underground economy for the people

who are outside the parks. While most of them have been quite good with their

garbage, there's the occasional person who chooses not to be. There's no sewer

disposal facilities, no water, so they have to do all kinds of things. Is any

consideration being given? It should be interesting to check the utilization of

the parks last year compared with the year previous.

DR. KITCHEN: That's probably within the

department that looks after parks. I think it's Environment and Lands. But I can

look at the revenue figures here, and our revenue figures last year were

$600,000. Now, I don't have the previous years, but this year coming up we're

estimating it'll be less than that by $466,000 but that's not an answer to your

question.

MR. WINSOR: That's the elimination of the

seasonal -

DR. KITCHEN: Because that's because we've been

eliminating these day figures, right. I would have to look up the year before

that in order to get (Inaudible) -

MR. WINSOR: Well, what department?... I'll tell

you, I have the 1991 Estimates there.

DR. KITCHEN: Have you? The revenue is shown

under Exhibit II in the new book. In the old book it's probably still Exhibit

II, in the back, over in the back. Over in viii, Roman eight, over in the back,

in the new book. So it's probably around there in the old book.

AN HON. MEMBER: (Inaudible).

MR. WINSOR: The minister can go on, I'll look

for it in this book.

DR. KITCHEN: Yes. In the provincial tax sources

there's another thing called "other provincial sources," and well down there

there's a thing called "park permits."

MR. WINSOR: Which heading did you say it was

under then in the...?

DR. KITCHEN: It's under a heading called

Estimated Provincial and Federal Revenues, Exhibit II.

MR. WINSOR: Oh, that's 1992, I want this

year's.

DR. KITCHEN: Oh, I'm looking at the Budget,

sorry, and you're looking at the Estimates. Sorry about that.

MR. WINSOR: In 1991 park permits were $860,000.

You ended up with....

DR. KITCHEN: Six hundred.

MR. WINSOR: Six hundred.

Is there any consideration being given to changing

this policy?

DR. KITCHEN: I don't know -

MR. WINSOR: Because the minister, if he drove

through this Province last year, must have noticed it himself. There's certainly

an increase in the amount of what we call gravel pit parking. If you talk to the

seniors who are there they'll tell you that it was because of the imposing of

this....

DR. KITCHEN: I think it's an interesting point

that you make. I shall bring it to the attention of the appropriate minister

too. That's the Minister of Environment and Lands, who looks after parks. Maybe

she can make a special arrangement for caravans or something of that nature on

weekends. I'll mention that, she'll probably have a chat with you about that.

MR. SHORT: There was also another problem

there, Minister, in that it wasn't only the seniors who were using the sites. I

believe one of the other problems we were trying to get rid of was other family

members on sites. Once the senior got in there for free then their brother or

son-in-law or the daughter or son or whatever, there was a whole raft of those

people who were also taking up park sites, I believe. It wasn't just the seniors

using the sites and nobody else getting in, it was everybody else kind of

sponging off the system.

MR. WINSOR: The point is, though -

DR. KITCHEN: Through the seniors, you mean?

MR. SHORT: Pardon?

MR. WINSOR: But if they're not being used for

these number of days in the week then we might as well have them in the park as

out in the gravel pit. On weekends if there's a problem it is an easy matter to

address in that everybody who uses the park on a weekend has to pay. But if it

is during the week when they are not going to be filled anyway, the amount of

revenue you collected was peanuts and in fact was even down from the $860,000

projected and is growing less each year. If that kind of a trend continues the

utilization of the provincial parks - and it costs a fairly substantial amount

of money to run those parks throughout the province. Maybe that is why they are

going to privatize some - I don't know - and cut back the number of weeks that

people work there.

In any event, there is certainly a concern out

there that people who have used the parks for a number of years simply refuse to

do it. It was based on the fact that they were going to have to pay seven times

whatever the daily rate is. I don't even know what it is.

Getting back to this year's estimates, last year in

1991-92 the Budget had estimated that the retail sales tax would be to the tune

of $586 million. Your revised figures brought it in at $564 million. You are

estimating this year at $562 million. In light of the fact that we have seen

certainly a dramatic increase in the number of bankruptcies in the Province, the

economy is not performing as was anticipated, the mail order catalogue type

things are increasing throughout the world, what gives you the confidence, in

this recession, that you are going to come even closer to making that targeted

figure, because the unemployment rate continues to escalate in this Province?

DR. KITCHEN: I might add that the final figures

are in for this year on the retail sales tax, I guess we can call them final.

The revised figure is pretty well accurate. That is the final one. I think that

is right; $564 million through revised. Virtually the same within a million.

Next year we are estimating roughly the same amount, and your question

basically, and I can't answer it, is how do we do in April? We won't know in

April for a while yet. Usually what happens is that the people who collect

retail sales tax have until the 20th to send it in. We wait until the end of the

month, and then about the second week of the next month we do an analysis as to

what we predicted we would get that month because they predict it on a monthly

basis and add them up as opposed to what we actually got. I won't have that

figure for this April and I won't have that figure for close to another month

yet.

MR. WINSOR: The minister last year, in his

1991-92 Budget, projected $586 million.

DR. KITCHEN: Yes.

MR. WINSOR: We got $564 million.

DR. KITCHEN: Right.

MR. WINSOR: The recession was really just

getting a hold then. All the economic indicators out there for this summer, if

we believe what we have been told, suggests that the economy is in even worse

shape in this Province, and the minister is still projecting $560 million,

basically the same as last year, despite the fact that the recession and the UI

rate, Hibernia, the failure of the fishery, everything seems to be worsening in

this Province. What gives you the confidence to predict this? I hope you are

right, by the way.

DR. KITCHEN: Well I can't answer precisely what

things went into that, but I could say that there is an inflation rate on most

goods. The inflation rate in Newfoundland is projected at about 1.6 per cent for

the coming year. So 1.6 per cent inflation on goods, much of which is taxable,

would yield more revenue, and that would be part of it. The inflation rate would

bring in some extra to counteract some small decline in the economy. The economy

is going down .5 per cent; the inflation rate is going up 1.6 per cent, and that

probably would be the main figures in that, but I do not know for sure.

AN HON. MEMBER: It is gone up 1.8 per cent.

DR. KITCHEN: 1.8 per cent is it? Oh yes, I said

1.6 per cent for inflation; it is 1.8 per cent. We base these figures on 1.8 per

cent inflation and the dwindling in the economy of .5; but the Canadian economy

is not expected to diminish in size this year, and the equalization payments are

going to be greater this year than last year. Some of the money that people

spend is not from equalization payments; it is from transfer payments, most of

which are indexed, are they not? The old age pension is indexed a little bit

this year, not much, and the unemployment is indexed. It is all indexed a bit,

so all these transfers that are coming in to individuals will be at a higher

rate than they were last year, and the number of people getting them, but the

rates will be somewhat higher so that there is an inflation figure built into

the money that people get. That is probably what caused it, but I would have to

ask the people who made the calculations, and that is the one gap that we have

here tonight, the projectors.

MR. WINSOR: Okay, you also projected that last

year, and basically were right on target with your projection of what your

personal income tax would be. This year you have increased it by 517, some $40

million of which I know is going to come about through the increase in the

personal income tax because of the school tax. When you did your calculation on

the personal income tax for this year, was any consideration given to the fact

that the deep-sea fishery was shut down in February, with a real possibility

that several thousand people would be thrown out of work for the remainder of

this year?

DR. KITCHEN: All of these numbers are built in.

The Hibernia jobs are built in and the fishery is built in.

MR. WINSOR: The decline, was it based on a

normal fishery?

DR. KITCHEN: We have the economic projections

that are developed in the Cabinet and Secretariat, that unit, that economics

unit, and they make predictions and they publish that book on the economy. We

take their projections and sometimes modify them if we have any particular

reason to do so. All that stuff is calculated. Modifications were made for the

size of the fishing industry, the total allowable catch and things of that

nature, and each industry was taken, itself, and that formed part of the overall

projections.

The deputy reminds me that our projections that

came out of Cabinet and Secretariat for gross domestic product for the coming

year, was -5 per cent on the economy; we were going to shrink by half a per

cent. The conference board was still suggesting for us a 4.5 per cent expansion;

Toronto - Dominion 2.8 and so on. We were very conservative compared to any

other projection.

MR. WINSOR: These were early projections,

though. Most of these have been revised downwards since. Those are the

projections that came out in January.

DR. KITCHEN: Nothing very much has happened

since we made those projections in this Province. Hope Brook has opened. That is

the positive thing. Nothing more negative than that. Lundrigans may be a bit of

a - we do not quite know how that is going to shake out yet. If it is just a

matter of somebody else picking up a car dealership here and there it may not

make much of an overall effect, but it will have some effect. So it is pretty

hard to gauge the effect that has on personal income tax. If the economy further

deteriorates we will not get that money, for sure.

MR. CHAIRMAN: Mr. Short.

MR. SHORT: Yesterday in debate, the Premier

raised the issue of current revenues coming from the federal government -

transfer payments. This is in exhibit 3 in the budget document (IX). I guess

people probably do not understand this and I want the minister to make a comment

on this shortly, but since 1989, 1990 and 1991, from federal sources, the money

has actually gone down, the actual dollar amounts. The audited figure for

1989-1990 was $1,359,626,000 and then when you get over to 1991-1992, it is

$1,328,000,000 -

DR. KITCHEN: Yes.

MR. SHORT: - so, is that a result of the

Canadian economy and recession and so on? Transfer payments were less because

the economy in say Ontario and places like that was worse, is that what is

causing that figure to fluctuate?

DR. KITCHEN: Well that figure, from federal

sources is the total of several components, the main component being

equalization and the equalization ceiling, because it would have some effect on

that. But for the coming year, and you will notice that the figure went up a bit

this year, the coming year they changed the ceiling on to this current year so

there is no ceiling in effect next year.

The ceiling works this way: equalization can

increase as fast as inflation but no faster. If the GDP goes up 10 per cent in

Canada then equalization can go up 10 per cent, but if the GDP in Canada stays

constant then the equalization cannot go up, even though when you make the

detailed calculation showing a particular province is entitled to more, because

the entitlement is not quite the same and the ceiling is there to prevent the

entitlement kicking in if the GDP for Canada has not risen as fast as the

provincial provinces entitlements. So even though when the federal government

makes the detailed calculations, and they are very complicated, there are I

think thirty-seven separate formulae added together, each one of which is a

composite of what goes on in each of the provinces, for a variety of tax revenue

measures, and even though a particular Province like Newfoundland may be

entitled to a 15 per cent rise over what they had last year, if the economy of

Canada has not expanded by 15 per cent, then they cannot collect 15 per cent

more. They can only collect as much as the economy has expanded, and that is

what the effect of the ceiling has been.

Last year what they did was they changed the

ceiling and because the economy has been dwindling a bit, the ceiling really

hasn't had a great deal of affect. This particular year coming up, where they've

changed the ceiling base - because it was in 1987 I think it was - and what it

was, they referred the GDP back to 1987. So in the four year period if the GDP

had increased 20 per cent you could go up 20 per cent over 1987.

Now they've changed the base, so they don't refer

to 1987 at all, they refer to this current year. So that may be part of the

reason why there's an increase, because the ceiling has no affect this year. I

don't think that's the only reason though, I think there may be other reasons

there as well.

MR. SHORT: So we're expecting an extra $85

million?

DR. KITCHEN: We're expecting next year an

increase of $85 million over what we had last year in federal revenues, yes.

Most of that is equalization. Or a fair chunk of that is equalization. Today I

saw a breakdown. Do we have that breakdown of what we're expecting under each

item?

AN HON. MEMBER: Yes.

DR. KITCHEN: Okay. That's where the

(Inaudible).

AN HON. MEMBER: (Inaudible).

DR. KITCHEN: So federal sources of one billion,

four hundred and thirteen million (?)-

SOME HON. MEMBERS: (Inaudible).

DR. KITCHEN: Do you know where he's getting

this?

AN HON. MEMBER: That would have been probably

more than this (Inaudible).

DR. KITCHEN: Oh yes, that would include other

items as well, wouldn't it? Excuse me. We have to go back with this. This

federal source is more than equalization and EPF. It also includes the

cost-shared agreements and things of that nature. So it is kind of hard to say

what causes that unless we have the breakdown. The breakdown is not shown there.

AN HON. MEMBER: On that particular table.

DR. KITCHEN: It might be better to look at

Exhibit II and see that we are predicting more from equalization this year than

last year. We can answer your equalization question, and EPF is going down a

little bit, and Term 29 is the same, of course, and so on. That gives us the

right. That does not include those cost-shared agreements and the revenue for

cost-shared agreements would be shown under the various departments, would it

not?

AN HON. MEMBER: Related revenue.

DR. KITCHEN: Under related revenues to the

various departments in the estimates. When you look at the estimates you will

see that under any department you will see related revenues here. Some of that

is federal sourced, and that must be added to this on exhibit 2 to get exhibit

3. So it is almost impossible for me to comment on exhibit 3 as to what makes

the cause, unless I go back and get the background, and I do not have it here.

We could look at it though, if you want to.

AN HON. MEMBER: That is fine.

AN HON. MEMBER: (Inaudible).

DR. KITCHEN: Is it?

MR. SHORT: It is not exhibit 2; it is statement

2 - two pages back.

DR. KITCHEN: Statement 2, is it?

MR. SHORT: Three pages back.

DR. KITCHEN: Okay, let's go back to statement

2; 3135 - here we are. Yes, that is right. Go back to statement 2.

AN HON. MEMBER: In the estimates?

DR. KITCHEN: No, no, in the Budget.

AN HON. MEMBER: The Budget?

DR. KITCHEN: Statement 2 in the Budget breaks

it down there; that is right. You see under statement 2 the 3135 or 2974; that

is the basis of your question, and you can see which ones are great. The

equalization is up considerably and the Canada Assistance Plan is up by $8

million. The resource programs are up by $16 million; and that is it.

MR. SHORT: The other question I wanted to ask

was concerning a comment the Premier made yesterday, in discussion as well, when

he was talking about this same topic. I am just going to read a little bit from

Hansard from yesterday. I was just looking for an explanation of his comment. It

says: Not only did we have to cope with the reduction from 1989 down to 1991 -

the ones we just talked about - but he also said: Not only did we have to cope

with that, which if my memory serves me correctly - and here I am going from

memory - resulted in actual loss of about $500 million from what it would

otherwise have been from the rate of growth that was enjoyed in expenditures by

the former government when they were there - $500 million. To what would he have

been referring?

DR. KITCHEN: I do not know.

MR. GILL: I could attempt to answer that.

Back in about 1984 - since then there has been a

freezing of the EPF, that is the established program financing, and in the last

three or four years the equalization cap has kicked in as well. Now the

combination of the effect of those two things over the last eight or nine years

has been in excess of half a billion dollars; in fact it is close to

three-quarters of a billion dollars. So I suspect that is what was being

referred to there, the combination of those two things.

There is a table on page 7 of the Budget Speech

that shows the transfers as a per cent of revenue. The federal transfers have

gone down from 50.2 per cent down to 45.1 per cent since about 1986 or 1987.

MR. R. AYLWARD: (Inaudible) every year, sure.

We have been taking too much out of Newfoundland taxpayers. That is why the

percentage is down. We have been taking an extra $200 million or $300 million

out of our own taxpayers. That is why the percentage is different.

MR. GILL: Well the cut in the federal transfers

coming back is quite real. The cash portion of the EPF has been frozen and

reduced. It has been frozen for the last two or three years. Before that it was

reduced below the levels that it had been previously, as reduced to a level -

say GDP growth of -3 or -2.

So the effect has been that we have received less

money than we would have if that cap was not in there.

MR. R. AYLWARD: But in real dollars we have an

increase in funding by about 3 per cent over the last ten years. We have in real

dollars not what we expected to get but what we are actually getting. But it

looks as if, here in this Budget, we're getting an extra $90 million this year.

MR. GILL: Yes we are.

MR. R. AYLWARD: (Inaudible).

MR. GILL: Yes, and the minister -

MR. R. AYLWARD: So we should get $120 million

but we are getting $90 million.

MR. GILL: The minister explained that for this

year, 1992-1993, the difference is that the equalization cap has effectively

been removed. They have re-based it, which means that there is no effect of the

cap in 1992-1993. That is the big reason for that change in equalization. You

will see that EPF is down this year from last year, and that is because of the

continued constraint. The actual growth in the EPF is frozen for year over year,

so that is still down.

MR. R. AYLWARD: To $1 million?

MR. GILL: Yes.

MR. R. AYLWARD: Another big loss.

MR. SHORT: But, of course, that is only an

estimated figure - right - that $85 million?

MR. GILL: Yes, that is actually based on

federal estimates.

DR. KITCHEN: And it will change, guaranteed.

MR. R. AYLWARD: It changed last year $30

million to the good, didn't it?

MR. WINSOR: The only real glitch in the entire

thing, though, is from 1989-1990. In 1989 you audited $1,359,000,000 and it went

down in 1990-1991 to $1,318,000,000. But, if I recall correctly, the reason for

that was that the Ontario economy had slowed down, we were overpaid in the year

previous, they took some $30 million, I think, and we chose to take the $30

million in one shot, which accounts for that little discrepancy there. But every

other year it shows a growth. If you go back to 1988 and look at the federal

contribution, you will see it was audited at $1,266,000,000. When we look at

1992-1993, we're up to 1.4 - 150 million more over the period. The only time it

showed a decrease was in 1989-1990. Every year since it has shown a steady

progression.

If you look at percentage, obviously, as my

colleague said, the percentage of the overall Budget has changed because the

Province has increased revenues, and you would expect that now in the last two

or three years since the good doctor put 6 per cent on our personal income tax.

So we are all paying the shot for it, and we would expect it to go up.

MR. CRANE: Be quiet now. Don't be nasty, boy!

MR. CHAIRMAN: We normally break around 8:30 for

a few minutes. If we could finish up the next two or three, certainly, we could

continue on. But absent that sense I think we would probably normally take a

break and have a coffee or what everyone might be inclined to do.

MR. WINSOR: I have only a couple of more

questions and I would just as soon finish it up.

MR. CHAIRMAN: Okay, perhaps we could go on.

MR. WINSOR: The minister's officials are going

to have to be congratulated, because in the Salary Estimates for 1992-1993, I

see the total for the department is $333,000. I have written here, plus four.

The total for 1991-1992 was $329,000, I think. Do you have it there, $329,000?

AN HON. MEMBER: What's that?

MR. WINSOR: The Department of Finance's figures

have increased by $4,000, yet the minister, in his opening remarks, talked about

a number of changes that have occurred within the department. He has had to have

more tax collectors and he has to take some people now from School Tax Authority

to - not the people, but personnel to do that job. How does the minister account

for all these increased responsibilities and yet there are only four extra staff

people? Is it because computers have become so good or are the minister's

officials - does he drive his staff so that they are at a point of no return? Is

that what the minister is doing?

That's the way he's going. Some of the minister's

officials are nodding in agreement, so I'll be going to the Minister of Labour

tomorrow about an unfair labour practice in the minister's department.

DR. KITCHEN: Thank you. There have been a fair

number of people laid off. That question was asked about the number of layoffs

last year - I think the critic asked that question - the number, by sex, job

classification, bargaining unit, and a few other things. We laid off seven

people, four of whom were female and three male, which isn't very many. We laid

off three in the mail room, and two Clerk I, one Clerk II, and one Clerk III. We

eliminated twelve vacant positions and declared some positions redundant. This

year, we have declared some redundancies, a tax consultant position redundant,

and we are going to keep a number of positions vacant. Ten positions, we think,

are going to stay vacant, and we have abolished a position, as well. But there

hasn't been a great deal of change in personnel and, as you said, everybody

works very hard.

MR. WINSOR: The minister's answer was as clear

as mud to me. I was saying that the minister increased the number of staff by

four with everything the minister seemed to indicate then. He talks about

freezing positions, laying off, reducing. Now, the actual figures show a four

increase, but I am wondering, with all the new duties and responsibilities

assigned to them, with the school tax and a number of other agencies for which

they will be responsible, how is it possible to do all this work with an

increase of only four people?

DR. KITCHEN: You are looking at the permanent -

MR. WINSOR: I am looking at page 28.

DR. KITCHEN: Page 28, that is the permanent

staff.

MR. WINSOR: Three hundred and thirty-three -

DR. KITCHEN: Yes. Now, we have that thing

called temporary, and the people we will be having, if we add people for the

school tax, will be added temporarily, they will not be permanent positions. The

people we added last year for tax policies were temporaries and we are going to

continue to have some temporary positions in tax policy until we get this issue

resolved about the tax (inaudible), but they are temporary positions which do

not appear here.

MR. WINSOR: So there is no indication of the

number of people who are temporary employees, then, because the tax policy still

only increases the total budget in tax policies, where the minister said

temporary and other employees this year is $108,000, last year was $85,000, so

that is only $20,000, one employee.

DR. KITCHEN: Where are we now? - Tax Policy.

MR. WINSOR: Page 19.

DR. KITCHEN: The Tax Policy Estimates -

Salaries, $379,000.

MR. WINSOR: No, - Temporary and Other Employees

- you are including permanent in that.

DR. KITCHEN: Yes. Last year we had some

temporaries added, as well, in tax policy, because we were carrying out some

analyses there then. I think some of these people are gone, but we are having

some temporaries, as well, in Tax Policy, so that is the reason why the increase

is not that much. There is an increase over last year's because we budgeted last

year $342,000, on page 31 of the Estimates, and this year in Tax Policy, we are

budgeting for $379,000, so I suppose there is some step progression there, too,

is there not?

AN HON. MEMBER: Not much, just about $35,000.

DR. KITCHEN: Let me give you the breakdown on

that. Last year it was $342,000 and this year it is $379,000. A permanent is

$245,000, a temporary is $108,000 this year, and the rest is a bit of overtime

poked in there.

MR. WINSOR: I will make one last shot at it.

The minister, in his opening remarks, said that because of the department's

increased responsibilities, he has had to hire extra staff.

DR. KITCHEN: Right, or will have to.

MR. WINSOR: He talked about a number of people.

Now, if you look at the totals, in total number of employees that are full-time,

they have increased by just four. The total Budget has increased by really only

an insignificant amount, not enough to accommodate any great number of

employees. I think one of the totals is $11,936,000, and the other is

$12,125,000. So the total is only a small amount. Where, in the system, are

those people you hired? They aren't working for nothing, surely. How do you

account for them? Where, in the system, are the extra people you hired?

DR. KITCHEN: In the Tax Policy group, we had

extras there before.

MR. WINSOR: So they weren't hired this year,

then.

DR. KITCHEN: They're gone, if you like, and new

people are there, roughly in the same complement. Now, the additional staff - I

am going to have to defer here on the school tax. I don't know if the extra

staff we may need for school tax is in there yet.

AN HON. MEMBER: No.

DR. KITCHEN: That isn't in there yet, because

the decision wasn't made that Finance would take it over until several weeks

ago. So if we need extra money - we don't know yet, because we will be

scurrying, trying to save a few bucks here now - you know, we won't be hiring on

this person if someone quits. We'll be trying to cover that under our present

budget if we can.

So, the school tax people, we may be able to come

up with a fair amount of that - it won't be allotted to them anyway. But if

there are a few people we have to hire for school tax, then we will have to find

the money. We will try to find it internally, and if we can't find it internally

then we will have to get some extra money. I expect we will be able to cover it

internally.

MR. R. AYLWARD: May I just get in one question?

Does the minister or the department have any estimate of what percentages of

school tax have been collected by the Authority up until - well, it won't be

until the end of June, but you should know now if they have in 80 per cent of it

already or what percentage has been collected.

DR. KITCHEN: I myself don't know, but I will

defer to - we haven't taken over yet so we don't know what the state of the

thing is.

MR. R. AYLWARD: So you can't answer that.

DR. KITCHEN: The Department of Education has

indicated to us that they expect the arrears to be, I think, between $3 million

and $20 million. But I guess some of those arrears are aged receivables, and

some of them probably go back to five or six years. I'm not sure about that. I

don't know. They are fairly ancient and may not be realistic. So we haven't

really had a look at the receivables, or the arrears yet, to see which are

realistic and which are just paper figures.

MR. R. AYLWARD: But this year's figures - I

would suspect, because in people's minds school tax has been eliminated, people

are just giving up paying for it, period. Even though the details, if you pay a

half year, and all this kind of stuff. So I would expect you are going to have

60 per cent or 70 per cent arrears for this year. I'm not including what was

left over from other years.

DR. KITCHEN: Yes.

MR. R. AYLWARD: You have to know that to plan

how many people you're going to hire and how you're going to attack it.

DR. KITCHEN: Yes. We haven't really come to

grips with that yet, because we are not running it at this moment. One of our

senior people has gone around to visit the School Tax Authorities to get a

preliminary look at the state in which they keep their finances and all that,

whether it is done manually or by computer. So we are getting a fairly good look

at it. When we get it, we will be able to make a final determination. It is

hard, at this point, to make an estimate.

The Minister of Education did tell me some time ago

that some School Tax Authorities were doing pretty well, thank you very much,

because some people were paying up to take advantage of the 50 per cent

discount. Other school tax authorities apparently have not been so fortunate.

But I don't really know yet.

MR. R. AYLWARD: I have some figures here. We

have been told - or the Province has been told, about the reduction in federal

transfer payments, and the impression is that we are not getting as much money

as we should be getting. I know we are not getting as much money as we could

have been getting under an old formula or without the caps, but that is not the

impression that is out there. The figures I have, which is an estimate, show,

since 1980-1981 to 1992-1993, in real terms, at least a 16.6 per cent increase

in that length of time. In normal value, whatever that is supposed to mean - I

guess it doesn't take in inflation and whatever else. There has been only one

year of reduction, 1991-1992, a 2.6 percentage reduction; every other year,

there have been increases of 15 per cent, 10, 13, 6, 10, 4, 13, 3.8, and so on,

significant in the normal values. Now, when you reduce them, they all total up

to be a 16 per cent increase. So, how can the minister continue to say that we

are getting less money from the federal government, when we get a 16 per cent

increase in real value?

DR. KITCHEN: I don't know. I would like to look

at those figures to see where the 16 per cent real income occurred. I suspect a

lot of it occurred in the earlier years and very little occurred in the later

years, but I am not sure. I will have to look at it, examine the figures and

have them analyzed.

MR. R. AYLWARD: I will give you a copy of it

and I would like to have these researched on my behalf -

DR. KITCHEN: Okay.

MR. R. AYLWARD: - through the federal system

mostly. I don't know where our figures are getting mixed up. It definitely shows

that even in real terms there is an increase.

DR. KITCHEN: Okay, but were the increases in

real terms in recent years or were most of them in the earlier years before they

put the caps on them?

MR. R. AYLWARD: The only decrease in real

terms, which was an 8.2 per cent decrease, was 1991-1992; that was the only

actual decrease in real terms, the rest of them were 2 per cent or 3 per cent

increase in the last two or three years.

DR. KITCHEN: Okay, and that includes all

federal transfers to the Province, including shared cost agreements.

MR. R. AYLWARD: (Inaudible), yes.

DR. KITCHEN: Okay, we will look at that.

MR. R. AYLWARD: Anyway, I will give it to you.

My final question is - I refer the minister to

salary details page 19 - and this is my standard question to all ministers: I

want to know who gets paid the $10,000 overtime in the minister's office,

overtime and other earnings?

AN HON. MEMBER: Page 19 - salary.

DR. KITCHEN: What is that? Oh, the $10,000.

MR. R. AYLWARD: Do you get that yourself?

MR. CRANE: He wouldn't know. He is getting so

much he doesn't know anyway.

DR. KITCHEN: Well, that is my car allowance,

boy!

MR. R. AYLWARD: How come you get $10,000? Did

you get an increase this year?

DR. KITCHEN: The $8,000 is for the car and the

$2,000, I suppose, is for gas - gas and milage.

MR. CRANE: Telephone bills.

DR. KITCHEN: I suppose it could be for a

telephone. If I put a telephone in the car, would that be covered, Mr. Carew?

Would you be able to say that?

MR. CAREW: (Inaudible).

DR. KITCHEN: (Inaudible).

AN HON. MEMBER: It all depends on what we see

is billed.

MR. R. AYLWARD: I would appreciate it, though,

if some of the minister's staff could tell me why the $10,000, if it is gas -

DR. KITCHEN: Well, that is so, isn't it? The

car allowance is $8,000 -

AN HON. MEMBER: The car allowance would be

$8,000 and maintenance, $2,000; gas -

DR. KITCHEN: - and the gas and the oil; that is

all we get, gas and oil, anyway, isn't it? - as far as I know.

AN HON. MEMBER: Basically.

DR. KITCHEN: And that is a taxable allowance.

Anyway, I am not - that's what it is, gas and oil.

MR. R. AYLWARD: Yes, I realize that.

DR. KITCHEN: I don't know about the telephone,

whether it comes under the $10,000 or not.

AN HON. MEMBER: No.

DR. KITCHEN: The department would have to pay

that from other funds, if we had a telephone in the car, but I don't have a

telephone, anyway.

MR. R. AYLWARD: I realize that. The minister's

department is one that is a bit high, by the way, and I am surprised at that

because he is very careful about spending money, extremely careful, I know that.

Most departments are at $8,000, some at $8,500 but the Minister of Development

and Tourism got $20,000 and I don't understand why there are differences. I know

they are all supposed to get car allowances, $8,000 in there.

DR. KITCHEN: Wait now - let me look at the

Estimates and see how I did in the cash, the actual expenditures. If you look at

the Minister's Office, on page 27 of the Estimates, since that came up, we spent

pretty well all our Salary, $149,000 of the $150,000. We didn't spend much on

Transportation - we spent $24,000 and our allowance was budgeted at $42,900.

Supply is $3,400 and we spent $1,600. Under Purchased Services, $3,700, we spent

$1,200.

Overall, we were something like $9,000 under

budget, and this year we are planning to splurge.

MR. R. AYLWARD: I don't disagree that the

minister is careful with his money. What I don't understand is that heading,

which, as we found out last year, was where the ministers tried to hide away

their car allowance. That was found out - I do not mind that, but now - and I

can see; I think the minister is one of the few honest ones, by the way, who put

in his car allowance and expenses, maintenance or gas, whatever it is. Most of

them have $8,000 period, so I can assume that most ministers don't get any

maintenance, don't get any gas bill - except for the Minister of Development,

who must pay the whole shot for everyone else because he gets $20,000. I don't

understand it, I am telling the minister. You prepared the Budget and this is

your document. Is there a way to explain to me why each - not each department,

but many of the departments, are different.

AN HON. MEMBER: (Inaudible) Treasury Board.

MR. R. AYLWARD: Well, we will blame that one on

Treasury Board, okay. It wasn't the last government and it wasn't the media and

it isn't the feds, so we got it down to Treasury Board now.

DR. KITCHEN: Now, government accounting is our

responsibility. Maybe I can ask - Ray, can you answer that question?

MR. R. AYLWARD: Well, he can answer for his

department, but I am asking the minister, is it policy? This had to go through

Cabinet some time to be approved, when all departments were discussed, and if

the policy is -

DR. KITCHEN: No, I was thinking about the

differences in accounting, because you were mentioning that some people have

$8,000 there, and therefore they must put the gas and so on, in another item,

and if someone is up to $20,000, what in the world could that be? I was going to

ask the person in charge of all government accounting here, the Assistant

Comptroller General, or Mr. Carew, the Comptroller General, if they could help

me answer that question.

MR. GRUCHY: Basically, the answer is that

different departments put the allowances and overtime and car maintenance in

different votes. As Mr. Carew said before, we can always blame it on Treasury

Board, but what happens is that it does get put in different spots for different

departments. So the $20,000 in Development could include a lot more than just

the car allowance. As other departments could have just $8,000, the maintenance

could be in another vote somewhere else within the department. That is basically

what happens. It is not consistent throughout each department.

MR. R. AYLWARD: The overtime, too?

MR. GRUCHY: That could be a portion of

overtime, yes.

DR. KITCHEN: (Inaudible) don't get any

overtime. I don't pay my staff any overtime, but some people might, I don't

know.

MR. R. AYLWARD: That was the question I asked

other ministers. I know, when I had a department it was not considered - you had

your secretary, your executive assistant, yourself, and maybe a departmental

secretary, but it was never considered that you would pay overtime in your

office. I don't know the reason for the heading. I know why the heading was put

in there last year or the year before - it was to hide away the $8,000 and they

called it overtime and something else. That is the reason for it.

AN HON. MEMBER: Okay.

MR. R. AYLWARD: But there was never any

consideration of paying overtime to people on the minister's staff, surely; they

wouldn't expect it.

MR. CRANE: That's right, Bob, You learn some

things, don't you?

MR. R. AYLWARD: Well, we were pretty good at

it, too, sometimes.

MR. CRANE: Sure, you were.

MR. WINSOR: One final question that I don't

understand. If you will look at your Estimates, let's just take Fiscal and Tax

Policy,

section 2.4.

DR. KITCHEN: What page is that?

MR. WINSOR: That is page 31 in your Estimates.

DR. KITCHEN: Okay.

MR. WINSOR: It says Salaries $379,400. Are you

with me?

DR. KITCHEN: Yes.

MR. WINSOR: If you look at your Salary Details,

the departmental ones on page 23, you will find Fiscal and Tax Policy, Salaries

-$252,266. If you go through all of these headings you will find that some of

them are within a few cents; some of them are several dollars out. Pensions, for

example, is 1.5 and in your detail there it is 1.2.

DR. KITCHEN: Now, let me see, Tax Policy.

MR. WINSOR: Heading 2.4.

DR. KITCHEN: Page 31, is it? Let's look at Tax

Policy for a minute. The $379,400 consists of some permanent and some part-time

salaries. The permanent people come to $245,000. Those are the ones we should

compare with the Salary Details, because only permanent people are listed in the

Salary Details, and that is $252,000. So the question is: Why do we have

$245,000 in the Estimates and $252,000 in the Details?

MR. WINSOR: (Inaudible) you have $245,000 in

Details?

DR. KITCHEN: Of the $379,000 only $245,000 is

permanent.

MR. WINSOR: Okay, that's not in the Estimates,

that's in a document you have there, is it?

DR. KITCHEN: Yes, right.

MR. WINSOR: Yes.

DR. KITCHEN: That $379,000, I will give you the

breakdown: There is $25,000 for overtime, $500 for other earnings, and $108,900

for temporary. But the $245,000 permanent compares to the $252,000 in your

document, and the question you raise is: How come it is $252,000 in the Salary

Details and $245,000 in my breakdown? I think that is the clear question.

MR. WINSOR: Yes.

AN HON. MEMBER: (Inaudible).

DR. KITCHEN: That is the freeze, do you see?

This Salary Details was prepared before the final Budget was done, and that was

before the freeze was initiated. So that assumes an

increase. When Treasury Board got finished with telling departments about the

freeze and other adjustments they made in the salaries, that reduced it down to

the $245,000 that I am keeping track of.

AN HON. MEMBER: (Inaudible).

DR. KITCHEN: Okay, because Treasury Board made

a $7,266 adjustment in that after the Salary Details were prepared.

MR. WINSOR: So none of the figures in this,

then -

DR. KITCHEN: Pardon?

MR. WINSOR: None of the figures in this for

Salary are actually right.

DR. KITCHEN: They are actually correct. If they

do it's just by chance. Because the freeze - I am correct in that, am I not?

That is basically what it is.

AN HON. MEMBER: (Inaudible).

DR. KITCHEN: Pardon? What other adjustments

would they make?

MR. GILL: If you take that page 19 in the

salary document, you will see the permanent salaries at $252,266. Over in the

fourth column you have Permanent and Other Adjustments of minus $7,266. The net

of that is the $245,000 which the minister mentioned is in permanent salaries.

That bracketed figure really is forced savings. What's happened is we have to

hold positions vacant in order to live within the budget. That is part of the

restraint program and that's the way we have to do it.

MR. WINSOR: So the vacant positions don't show

up as salaried employees there anywhere, then? Positions that are vacant don't

show up in the Department of Finance as, for example, if there is someone in

Administrative Support, that position is held vacant, and it shows twenty-two,

there isn't actually twenty-one there, is there?

MR. GILL: Yes, it would be included. Twenty-two

would be the total number and from that we might be holding one vacant, or

vacant part of the year, that sort of thing.

DR. KITCHEN: We're getting there. The answer

that I gave (inaudible) correct, that the freeze is not there. The person's

salary that is listed in the salary estimates is the person's salary. How you

find that money is up to the deputy.

MR. WINSOR: Well, we have that figured out; you

have already explained it.

DR. KITCHEN: Alright. So he can only spend

$245,000 even though he is committed to spend $252,000.

MR. WINSOR: He is taking overtime and travel

away, and gas allowance and everything else.

AN HON. MEMBER: Or he is firing somebody

somewhere.

MR. WINSOR: I have no further questions, Mr.

Minister.

MR. CHAIRMAN: Thank you, Mr. Winsor. Are there

any further questions?

MR. SHORT: Mr. Chairman.

MR. CHAIRMAN: Yes, Mr. Short.

MR. SHORT: If there are no further questions I

move that the Estimates subheads from 1.1.01 to 3.4.03, inclusive, be passed. On

motion, Department of Finance, total heads, carried.

MR. CHAIRMAN: I have one further matter of

business, namely, the minutes of the last meeting of this Committee. Copies have

been circulated to the members.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: Thank you, Dr. Kitchen and your

officials.

On motion, the Committee adjourned.