May 28, 1996

GOVERNMENT SERVICES ESTIMATES COMMITTEE

Pursuant to Standing Order 87, Wally Andersen,

M.H.A., Torngat Mountains, substitutes for Gerald Smith, M.H.A., Port au Port;

and Gerry Reid, M.H.A., Twillingate & Fogo, substitutes for Douglas Oldford,

M.H.A., Trinity North.

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

Assembly.

CHAIR (R. Wiseman): Order, please!

The purpose of this meeting tonight is to review

the estimates of the Department of Municipal and Provincial Affairs and the

Newfoundland and Labrador Housing Corporation.

I would like to take this opportunity to introduce

to you the members of the Committee beginning with the Vice-Chair, Mr. Jack

Byrne. We have Mr. Bob French, Mr Wally Anderson who is filling in for Gerald

Smith, Anthony Sparrow, and Mr. Gerry Reid filling in for Doug Oldford.

We have established some ground rules prior to the

meeting and I think they are pretty standard. What we have done is, we have

given the minister fifteen minutes to have an opening statement, if he so

desires, and then the Vice-Chair will respond for fifteen minutes. In this case,

we have sort of an arrangement here, where the Vice-Chair is going to forego his

response time and pass it on to his colleague, Mr. French. We will then

alternate for ten minutes between each committee member, if they so desire.

I want to welcome the minister and his staff this

evening and ask him if he would be so kind as to introduce his staff and to

advise us as to whether he has an opening statement. If not we will have the

Clerk call the head and proceed from there.

MR. A. REID: Thank you, Mr. Chairman.

I will introduce, first of all, those from the

Newfoundland Housing Corporation. Bob Noseworthy sitting right behind me is the

CEO of the Housing Corporation and President and Ed Heath is our financial

administrator. Am I right?

WITNESS: Vice-President

MR. A. REID: Vice-President of Finance. On my

left is the new Deputy Minister of Municipal and Provincial Affairs, John

Abbott, and next to him is Art Colbourne - and I am sure you all know Art - and

Winston Hiscock, who is the Director of Human Resources.

I am going to take a couple of minutes. Elizabeth,

I have given you a memo that we sent out last week to all municipalities in the

Province. By the way, gentleman, I have a cold so you will have to bear with me

tonight, Jack, and tell me if I am speaking too low; shout out to me. This

letter went out to all municipalities last week and it basically outlines what

we have done in the Budget. We are also sending, if we have not already sent, an

individualized - it is gone, is it?

WITNESS: Yes.

MR. A. REID: There is a letter to each

municipality outlining how much their MOG will be cut this year, per quarter and

so on; so they should have that by now. So Elizabeth, if you want to pass that

out to the members - you did? Okay.

I have a few opening remarks and I am going to read

them if you don't mind, Mr. Chairman. I am not used to reading things but I have

to do it tonight because of my voice.

First of all, let me say that I am pleased to be

here this evening, to have this opportunity to present the estimates of the

Department of Municipal and Provincial Affairs. This is four times I have done

that, so I may be setting a record. Over the years, if you go back and look

through, there have been some of my friends - Norm Doyle: I think Norm was there

for four or five years; and a number of people. I think I am getting to the

point where I have probably been the Minister of Municipal and Provincial

Affairs as long, if not longer, than most people.

I was talking to John Crosbie on the weekend and he

said that he only had two years in Municipal and Provincial Affairs. He was

there a number of times and, of course, Mr. Peckford was there too; just a

little bit of history.

There are actually two sets of estimates to be

presented this afternoon, the main one being Municipal and Provincial Affairs

together with the Housing Corporation. Assuming the concurrence of the

committee, it would be my intention to present the Department of Municipal and

Provincial Affairs and follow that with the Housing Corporation.

For the benefit of the committee, I would like to

highlight the major items in the estimates. The total expenditures for the

department will be $145.2 million, but that is not the gross expenditures. There

are revenues both in current and capital accounts totalling $22 million leaving

a net expenditure of approximately $122.9 million.

There are 172 permanent positions in the Department

of Municipal and Provincial Affairs operating all divisions. The responsibility

for the Government Service Centre, which at one time rested in Municipal and

Provincial Affairs, is now with the new department of Government Services and

Lands even though we do still play a minor role in the operations of that

department, insofar as their finances and their human resources are concerned.

Mr. Chairman, it might be in order at this time to

review some of the major budget decisions that were taken as they relate to the

Department of Municipal and Provincial Affairs. Government has taken a decision

to discontinue funding for 1996-1997 for three community related programs,

including the community water and sewer program, the solid waste management

facilities program and the fire-fighting equipment purchase program. While

program funding will not be in place for this year there will be a budget in the

department to deal with emergency situations. Municipalities can continue to

request financial assistance for the kind of projects that normally would be

financed under the programs that are being discontinued this year. However,

funding will be available for emergency situations only. Every case will be

assessed on its individual merits and approval will be on the basis of optimum

need and use and the availability of municipal funds to cost share projects with

the department.

This year the Province will be reducing by 20 per

cent the grants to the cities of St. John's and Corner Brook for fire protection

services. For St. John's this will mean a reduction of $400,000 and for Corner

Brook it represents a $100,000 reduction. Government will be reducing funding

under the Municipal Operating Grant by 10 per cent for 1997 with a saving to be

achieved in the first quarter of the municipal year. In the first quarter of

1997 it will mean a reduction of $3.4 million, the first quarter of 1997. On

average, the reduction to municipalities will be in the range of 8 to 13 per

cent which goes anywhere from the smallest amount to a maximum in St. John's,

Art, of - how much in MOG reduction in St. John's?

MR. COLBOURNE: Twelve point nine.

MR. A. REID: Twelve point nine million - no?

MR. COLBOURNE: No, percentage.

MR. A. REID: (Inaudible) dollars in St. John's?

MR. COLBOURNE: Oh, about $2 million.

MR. A. REID: Is it that much?

An average reduction is between 8 and 13 per cent.

Most of the smaller communities in the Province - when I say smaller communities

I mean communities under a 2,000 population - will see a reduction of somewhere

between $3,000 and $6,000. Some of the larger ones will see larger - Carbonear

for example will lose $40,000.

Beginning this year, government will phase out its

subsidy to municipalities for property assessments. This comes on the heels of a

request from the Federation of Municipalities, that have been lobbying us for a

number of years, to do away with our assessment division. I have been standing

firm on that since the first request some three or four years ago. I base my

comments on the experience that I have had around the Province, especially in

smaller rural areas of the Province, with regard to being able to pay for

assessments. We have decided that we will be exploring ways to deliver

assessments, recognizing that this is really a municipal service which can be

delivered from outside the department rather than inside.

The department will be releasing a consultation

paper with respect to assessments to determine if they can best be carried out

by the town councils themselves, by a Crown corporation, by a private enterprise

or if the department should stay as it is right now, status quo. Regardless of

the method adopted after the consultation paper, assessments will be conducted

on a full cost recovery basis by the Year 2000. The current fee for real

property assessment is .0002 or two-tenths of one mil times the total tax value

of assessment role in each municipality. Are you all familiar with that? I hope

you are. If you have any questions on that I will explain it to you later on.

To increase cost recovery this year the department

is putting in place a minimum fee per parcel, per property. What it means

basically is that the municipalities paying less than $10.50 per parcel will now

have to pay the bottom rate of $10.50; they will be brought up to $10.50. At the

present time municipal contributions range from a high of $24.30 in Mount Pearl

to a low of ninety-five cents per household - that is somewhere up on the North

West Coast, I believe - per parcel. The change in structure will ensure greater

consistency with respect to assessment service fees.

In recognition of the impact that all of these

measures will have on municipalities, especially on the smaller ones, the

government will continually assess the consequences, and when required, will

provide assistance and support to municipalities to allow them to continue to

provide basic services to their residents. We are not going to see any

communities in a situation where they are going to go bankrupt because of a few

dollars. We will help them, if we need to, but it will have to be proven to us,

beyond a shadow of a doubt, that they are in dire straits, I guess.

Under Municipal Capital Works: We will continue

this year to fund the infrastructure program. There is approximately $40 million

left in work not tendered but work that has been committed; $40 million this

coming year. There will be at least $40 million of work going on in the Province

under the old infrastructure program. This program will generate considerable

construction activity in municipalities throughout the Province.

In addition to the $40 million, the government will

provide loan guarantees under the Newfoundland Municipal Financial Corporation

to any municipality which can fund 100 per cent of its cost obligations for

water and sewer, as well as road paving and reconstruction.

As well, government in the current fiscal year will

make available an amount of $25 million in additional loan guarantees either

directly or through NMFC, for municipal capital works. Government will suspend

the current financial formulas in favour of supporting those municipalities

which demonstrate to us that they are able to incur a greater share of the cost

of financing capital works projects.

As the minister responsible for local government, I

am pleased in these difficult financial times that we are able to put some

funding into the municipal capital works program. Among other things, the

municipal capital works serves to upgrade the quality of physical infrastructure

in local communities, and it provides timely and effective opportunities for

deployment.

In conclusion, Mr. Chairman, overall the

implications for municipalities emanating from the 1996 Provincial Budget will

see our municipalities take a greater financial responsibility for their own

affairs. Furthermore, I do not see this trend changing in the to near future.

In conjunction with this direction is a move by my

department to review all of its policies and programs with a view to removing

barriers to more independence for municipal governments, encouraging greater

self-sufficiency and promoting regional cooperation in the delivery of certain

services where circumstances warrant.

I hope to build on the Fogo Island Regional Council

Model and see versions of it adopted in other regions of the Province over the

coming months. I am referring to my own area of Conception Bay North, and that

one I am going to be concentrating on in the next two or three months,

hopefully, to be able to at least get a regional council started in that area.

Mr. Chairman, that concludes my remarks and I will

be glad to receive any questions that you might have for me this evening.

CHAIR: Thank you very much, Mr. Minister.

Before we move on, I want to introduce to you Mr.

Ed Byrne who has arrived a few minutes late and who is also a member of the

committee.

I guess we will ask the Clerk to call the Head.

MADAM CLERK: 1.1.01

CHAIR: Okay, 1.1.01.

I will now go to Mr. French for his fifteen

minutes.

MR. FRENCH: Thank you, Mr. Chairman.

First of all, I would like to apologize; I have to

leave because of another commitment, so our Vice-Chair has generously allowed me

to go first. I have several questions. I will not try and steal Jack's because I

know he has quite a few as he goes through.

On page 267, Transportation and Communications in

1995-1996 was budgeted at $52,900, went to $81,200, and is now to $52,900. Could

you tell me what that is for?

MR. A. REID: The $81,200 was basically after I

was given the new department of Government Services. The Government Services

department was added to my department last year. There was no money budgeted for

any communication or any travel on behalf of the minister and a number of other

officials. That part of my department now is gone, so that is the reason we are

back to where we are right now. Government Services was given to me halfway

through the year. I don't know exactly when it was, but there was nothing

budgeted in my budget for that last year when I took it on, and that is why it

went up as high as it did.

CHAIR: Before we move on, I forgot to say that

before you speak - the minister is fine, we can identify the minister, and the

Committee is fine, but if we go to the officials I would ask that the official

identify himself before he speaks for our recording purposes. Thank you.

Mr. French.

MR. FRENCH: Thank you. On the -

MR. A. REID: I will be honest too, Mr. French.

There was a trip I made to Turkey in there that cost a fair dollar, last April

when I went to represent the Government of Newfoundland on that trip with the

now-Premier, representing the battle of Gallipoli, the eightieth anniversary. I

think that cost something like $10,000, to be quite honest about it, by the time

I went and got back, with the staff that I had and so on. That is included in

that as well. That wasn't taken into consideration with the $52,900 when we

budgeted to begin with.

MR. FRENCH: In Executive Support, 1.2.01.01,

Salaries: They were budgeted at $416,500, went to $528,200, and now we are down

to $293,400. Would that be again because of the division moving out?

MR. A. REID: No, that is because we lost an

assistant deputy minister, a deputy minister and a number of staff people. Even

though the deputy minister was replaced we are still down one assistant deputy

minister and secretaries. It is because of the reduction in our staff in the

office, basically. Severance as well was in that $528,200. That is what drove it

from $416,500 up to $528,200 to begin with.

MR. FRENCH: Could you give me a rough idea of

what the severance would have been?

MR. A. REID: Do we know what the severance was?

WITNESS: I would say it was roughly $60,000 for

each one.

MR. A. REID: I can provide you with the exact

figures, but we are saying it is roughly around $60,000 each, for each one of

the two, the deputy minister and the assistant deputy minister.

MR. FRENCH: Around $60,000?

MR. A. REID: Yes.

MR. J. BYRNE: There was more than that

actually, wasn't there?

MR. A. REID: The secretary was transferred out

to somewhere else so she didn't get severance. There was accumulated leave too.

Do you want me to get the exact figures on that for you?

MR. FRENCH: If you can, yes, if you can

probably send them to us tomorrow or whatever.

MR. A. REID: I will send them over to you, that

isn't a problem. Honestly, I didn't know, I didn't ask. When Clarence left I

didn't ask what their severance was. I never had the opportunity to ask.

MR. J. BYRNE: Can I just interject?

MR. A. REID: Sure.

MR. J. BYRNE: With respect to the severance,

were there monies over and above the severance that the deputy minister and the

ADMs got when they left, in the form of a package?

MR. A. REID: Not that I know of. Wins?

MR. HISCOCK: No.

MR. A. REID: No.

MR. J. BYRNE: Straight severance, that was it?

MR. A. REID: That was it, yes. I don't know of

any. If there was it certainly didn't come from our department, did it?

WITNESS: If they did receive anything they

would have received a redundancy package which is one week's pay up to twenty

years (inaudible).

MR. A. REID: Yes, okay. Maybe that is what you

meant, the one week's pay up to twenty years and this stuff, is it? Is that what

you are referring to? John, do you want to answer that? Deputy Minister, John

Abbott.

MR. ABBOTT: Mr. Byrne, what happened, both the

former deputy and assistant deputy minister received both the normal severance

pay plus the redundancy pay because they were asked to retire.

MR. J. BYRNE: How many years? How many weeks?

MR. A. REID: Clarence had twenty, did he?

MR. ABBOTT: Clarence Randell, the former Deputy

Minister, had twenty-five years of service and Don Peckham, the former Assistant

Deputy Minister, had thirty-six to thirty-eight years of service. I think he

would have received severance based on his thirty-six years.

MR. A. REID: Then the public complains about

what us politicians get.

MR. FRENCH: Transportation and Communications:

From $59,800 it went to $86,000 and it is now budgeted down to $39,800.

MR. A. REID: That was just a straightforward

cut, I believe. There is nothing in particular. You will find out throughout the

Estimates that we cut in a number of areas in Transportation and Communications.

The new deputy minister has basically put the clamps on travel by any officials.

Also, with one ADM less in the department we will save some monies there. So it

was just basically taking the $59,000 and cutting $20,000 out of it, to save

$20,000. We are going to live within that $39,000 budget.

MR. FRENCH: On page 268, Professional Services

was budgeted at $32,100, we spent $13,200 and this year in the Estimates there

is $20,100 for Professional Services.

MR. A. REID: Professional Services: That is 06,

is it?

MR. FRENCH: 05.

MR. A. REID: 05, Professional Services. Do you

want to answer that, Art? Art Colbourne?

I believe, if I am not mistaken, that has to do

with a continuation of our computer services, does it not?

WITNESS: No.

MR. A. REID: No, that is Purchased Services.

Can you answer that one? Okay. Make a note, and I will get back to you on that

one, if you do not mind gentlemen. Go head!

MR. FRENCH: The next one, Purchased Services,

$88,300. It was budgeted at $113,300 and we only used $52,400, and this year we

are budgeting $88,300.

MR. A. REID: You are not going to be able to

answer that for me either, are you, Art? Can you answer that one?

MR. HISCOCK: Winston Hiscock, Director of

Administration. That is purchased services which covers the rental of photo copy

machines, the funding for the whole department, the cost of -

MR. FRENCH: Excuse me, I cannot hear you.

MR. A. REID: Explain, Wins, what the $88,000 is

for, first of all. Tell us what you spent that on.

MR. HISCOCK: It is provided to cover general

advertising costs for the whole department; also office equipment, the purchase

of photo copying machines, funding to support organizations and any advertising

costs, costs of a general nature for the whole department.

MR. FRENCH: In 1.2.02.07, Property, Furnishings

and Equipment, $33,600 down from $43,600.

MR. A. REID: That is what we actually spent

last year, $43,600, yes.

MR. FRENCH: Yes.

MR. A. REID: We went up to $43,600 last year

because we were responsible for furnishing and looking after - you will find in

a lot of these the answer to this is the service centre. When the service centre

was given to us we had to provide office space, accommodations and a number of

things that were not budgeted in our particular budget. So you will find in

certain areas that our budget went up actually. The actual expenditures went up

last year, but are coming back down to what they normally are this year, because

we are rid of the Service Centre.

You may find in Property, Furnishings and Equipment

that there may be some monies for furnishings and rentals, or leased space, for

a certain number of months until it was passed over. I can get you a full

breakdown on that whole heading.

MR. FRENCH: Okay, if you would.

MR. A. REID: I will get you a full breakdown on

that whole heading.

MR. FRENCH: Okay. Well then, I won't ask the

other question on 1.2.02.12, Information Technology, either. If I could get from

1.2.02.05 to -

MR. A. REID: Yes. I will give you a breakdown

on all that; it is not a problem.

MR. FRENCH: Okay, thank you.

I just have one other question. It is on page 269,

again Purchased Services, $242,300. It is under 2.1.01.06.

MR. A. REID: That is rental for our regional

offices. We have five regional offices in the Province and that is our rental

amount for the five offices in the Province, the $242,000.

MR. J. BYRNE: Are those the Government Service

Centres you are talking about?

MR. A. REID: No, those are the municipal

offices in Gander, Corner Brook, Goose Bay, and on Kenmount Road. That has not

changed. That does not change from year to year.

MR. FRENCH: Okay. Thank you, Mr. Minister and

staff.

Mr. Chairman, that's it for me. I have another

commitment in the district and ask to be excused?

CHAIR: No problem.

MR. FRENCH: Thank you.

CHAIR: Jack, do you want to go for five to make

up the fifteen minutes and then we will just check to see if the government

members have any questions. If not, we will have to wait on whatever you decide

to do.

MR. E. BYRNE: (Inaudible).

CHAIR: So you are going to take up the five?

MR. E. BYRNE: Yes.

CHAIR: Okay, go ahead.

MR. E. BYRNE: I have some questions dealing

with the Newfoundland and Labrador Housing Corporation. They have taken a big

hit this year, from $14 million to $8 million. What does that mean for the

Corporation, not only in the short term but the long term?

MR. A. REID: Do you want to take a chance at

that, Bob, or do you want me to answer it?

MR. NOSEWORTHY: It is up to you, sir. I am at

your pleasure.

MR. E. BYRNE: If you can, in detail, where

possible, explain what services or departments within the corporation have -

what has been the impact really on the entire corporation as a result?

MR. A. REID: We are hoping that there will not

be any impact on the corporation this year. In fact, we are -

MR. E. BYRNE: Pardon me?

MR. A. REID: We are hoping that there will not

be any impact at all on the corporation this year. In removing the $5 million

from the Budget, basically what we have been told to do is sell off assets that

amount to approximately $5 million. We have a number of assets in the Province

that every year generate profits for the Housing Corporation. By escalating the

sale of some of our assets that we have we can pick up the $5 million.

It is imperative that nothing happen to the Housing

Corporation this year in regards to what we spend at the end of the day, the

number of employees we employ in the overall operation of the Housing

Corporation because we are in the process right now of negotiating with the

federal government and CMHC, for the possible turning over of properties in

Newfoundland, held by CMHC, to the Newfoundland and Labrador Housing

Corporation. If we do that, considering that up to 75 to 80 per cent, in some

cases, of our budget is funded by CMHC and the federal government, then we are

trying to keep our base, our bottom line, as high as we can possibly get it

because that would give us a better negotiating opportunity when we have to

eventually, at the end of this year, sit down and talk to Newfoundland and

Labrador Housing.

So really, even though you see a cut, a substantial

cut, to Newfoundland and Labrador Housing this year, we will still be trying to

spend as much of last year's budget as we possibly can by the disposition of

assets and other ways of collecting the extra $5 million.

Bob, if you want to make a comment, you go ahead.

MR. NOSEWORTHY: The minister is exactly right,

we are negotiating with the federal government in terms of a block funding

arrangement as opposed to the traditional cost-shared 75/25 arrangement that we

have been using to deliver social housing over the last thirty years in the

Province. What the government has recognized this year is that in order to

negotiate that block funding arrangement we should be in a position to try and

retain our expenditures at a reasonable level so that we will be able to at

least maximize the federal monies coming into the Province. So I think that was

number one that was recognized there.

Number two, there will be some reductions in

maintenance and operating as it relates to the sale of units. So there will be

roughly about 200 units that we will be selling out of our market rental

portfolio. When I say market rental portfolio, these are the units of the

corporation that are rented on a market basis, and primarily, while probably

seven or eight years ago we would have had 1,700 of these units, today we have

somewhere in the order of 400. We are selling these to tenants in support of

home ownership or the private rental market who would turn around and rent them

as private landlords.

The bulk of those that are remaining are in St.

John's and we will be selling places like Arnold's Loop, Elizabeth Towers and

Churchill Square this year to satisfy, as the minister said, the requirements

for an additional $5 million in profit that the government has asked us to

achieve this year in terms of lowering our overall grant.

That, in essence, is the reason for the bulk of the

reductions through the sale of assets as opposed to reduced expenditures.

MR. E. BYRNE: Where is the housing corporation

headed ten years from now? There is a lot of discussion; I think there is

anyway. I have had a lot of discussion about the role of Newfoundland and

Labrador Housing in the Province, from what it was to what it is today.

Questions like: Should Newfoundland and Labrador Housing be involved in

developments like Southlands? Is it's role primarily to be involved in social

housing and not development programs?

I have my own views on it. I think Newfoundland and

Labrador Housing Corporation has an integral role to play, not only in the

Department of Municipal and Provincial Affairs but certainly stabilizing the

market. I guess it is more of a generic question of where you see the housing

corporation going in the next ten years, certainly to the minister and to the

Chairman of Newfoundland and Labrador Housing.

MR. A. REID: I think you would be putting the

Chairman of Newfoundland and Labrador Housing on the spot if you asked him to

react to your question, because it would be pure speculation. I guess it would

be pure speculation on my part too, what is going to happen.

MR. E. BYRNE: My question was not meant to ask

him what was going to happen but where you, as minister, see the Newfoundland

Housing Corporation - what direction is it headed in? Do you see a role for it

in the future? I am not asking anyone to predict what may happen ten years from

now. I am just trying to get a sense of where government's feelings and

intentions are as it relates to the Newfoundland and Labrador Housing

Corporation.

MR. A. REID: My feeling, as minister since I

have taken over, is that the Newfoundland and Labrador Housing Corporation, out

of every other department or agency of government, is probably the most

efficient operation that we have, considering that the Province puts $8.2

million in cash into an agency or department and from that $8.2 million there is

$123.7 million generated on an annual basis. Now you ask yourself: Where does

the money come from? For an $8 million investment, to get a return of $123.7

million, that is not to bad. I doubt if there is any other department in

government, even the liquor corporation, who could show you an investment as

well as that.

The reason I say that is, if we had to sit down and

break down the profits that we have made as a housing corporation over the years

and could show you the amounts of money that the housing corporation has made,

has generated through developments, such as Southlands for example, the

development of those properties around the Province has created a great asset

for the Province, because in doing that, the actual sale and investment in these

properties has always generated large profits for us. The profits go back into

the housing corporation which ultimately go back into social housing. So the

government has been getting away with, for the past twenty years, a pretty good

deal for very little money.

MR. E. BYRNE: I'm not questioning that. I

happen to believe in the Newfoundland and Labrador Housing Corporation and the

function and role it plays now in society and in government. What I'm worried

about is: Will it be able to continue to play that role and function? Some

people have speculated that Newfoundland and Labrador Housing shouldn't be into

large-scale private developments. I'm not promoting that viewpoint here from my

point of view as a private member. What I'm asking is: Do you see the

Newfoundland and Labrador Housing Corporation playing the role it does now over

the next decade, and continuing to be a generator of profits, not only for

government, that go back into social housing?

MR. A. REID: The answer is, no, I don't think

it will. I don't think it will remain as it is today. I say that because after

what Bob said a few minutes ago, when we dispose of the 400 rental units that we

have left in and around the St. John's area, well, that

section of the Housing

Corporation will be gone. We also own large tracts of industrial properties

around the Province that we will be putting up for sale in the near future.

There is low rental housing that I think we will have to maintain from a social

housing perspective.

So I think that there will be a change. I just went

through a consultation process with the pros and cons of us being involved in

Southlands. A number of large developers, who feel we should not be into the

private market -

MR. E. BYRNE: Private developers have always

felt that the Newfoundland and Labrador Housing Corporation should not be

involved in private developments.

I'm not trying to out you on the spot, I'm not

trying to trap anybody in terms of the questions I'm trying to ask. When you

look at the Housing Corporation ridding itself, or the sale of many of its

assets, where does it stop and what type of entity do we have left? What we are

left with at the end of the day, whether it is five or seven or ten years from

now, compared to what we have today, how much different will it be, and what

will be the cost, not only the bottom line financial cost of that but the social

cost of that? That is the importance of it, I think, is what I'm trying to get

at.

Last question, Mr. Chairman.

MR. A. REID: Let me give you a brief answer. I

think there will be a change. I won't say a drastic change. I'm not going to go

as far as to say that: No, we won't be into land development and land assembly.

I won't say that because I'm waiting now for the report to come back on the

meetings that we had. I will say that there will be some entity around here much

longer than you and I will be around here that will have to look after the

10,000 social housing units we have in the Province. If it isn't the

Newfoundland and Labrador Housing Corporation it is going to have to be Social

Services or some other department.

So I think there will always be a role for the

Housing Corporation as it relates to the social side of housing. How far we go

beyond that in regards to residential development and so on, I'm not in a

position right now to say. It wouldn't be fair for me to say that after just

going through a consultation process with a number of people in and around the

St. John's area. But you may be right.

MR. E. BYRNE: That is fine. Thank you very

much, Mr. Chairman. That is good.

CHAIR: Do you guys have any questions?

MR. G. REID: I would like to follow up on what

the Member for Kilbride said on the Housing Corporation. You talked about

investing $8 million and generating $110 million. Why would we be selling

properties that could do that for us?

MR. A. REID: I'm sorry, $123 million not $110

million.

MR. G. REID: Yes.

MR. A. REID: Why would be selling the

properties?

MR. G. REID: Yes. You were talking about how we

are going to sell properties around St. John's this year, and if we continue to

do that then we won't continue to generate $123 million, will we?

MR. A. REID: That is correct. It is the policy

of government, it has been the policy of government for - five years, Bob, 1989?

Longer than 1989?

WITNESS: Probably back to 1986.

MR. A. REID: It has been the policy of

consecutive governments since 1986 for the Housing Corporation to unload those

types of properties. It comes from a number of areas. It comes from the private

sector, it comes from co-operatives, it comes from individuals who are renting

these properties and basically want to buy or lease or whatever. We have

downscaled the department over the last four or five years. Even since I've been

here we have got her down from 1,700 to 400, and I'm expecting that before this

year is out those 400 will be gone. But it has been government policy to do

that, prior to 1989, during the term of the previous Premier, Mr. Wells and this

Premier.

MR. G. REID: Does the Federal Government feel

the same way about it? Are they going in the same direction?

MR. A. REID: Well, the Federal Government is

going even further. The Federal Government is getting out of housing, period,

and they are hoping to be able to convince us and Newfoundland and Labrador

Housing to take it over. So the Federal Government will maintain their $2

billion a year that they put into housing but they are going to do it on a one

time basis. What is it called, Bob?

MR. NOSEWORTHY: Block funding.

MR. A. REID: Block funding.

The Housing Corporation in Canada was one of the

seven sisters. Do you know what I am talking about.

AN HON. MEMBER: Yes, I do.

MR. A. REID: So housing in Canada is basically

going to be passed over to the provinces. It is the policy of government to sell

off properties, not only on break-even basis, but to lose as well. We are going

to lose money on Elizabeth Towers. There are no two ways about it.

MR. G. REID: I don't know, I guess, if I should

be (inaudible).

MR. A. REID: Okay. By the way, all these units

we are talking about are market rental units; they are not social housing units.

They have nothing to do with Social Services. These are people like yourself and

me and so on who are living in these and paying the market rental for those

units.

MR. G. REID: I did not realize until tonight

that maybe I should not be asking these questions.

MR. A. REID: Why?

MR. G. REID: Well, it seems like we have a cash

flow in the Housing Corporation. Why should we be selling it off?

MR. A. REID: A good question.

MR. G. REID: I know that private investors are

out there saying, we should sell it off because we are competing with them, but

if the Housing Corporation goes, then the cost of properties in St. John's, or

building lots certainly, are going to rise; and the cost of new housing. I guess

the Housing Corporation is sort of keeping us stable right now, isn't it?

MR. NOSEWORTHY: I didn't tell him to say this,

boys!

MR. G. REID: Again, Bob did not set me up. I

did not realize it tonight, but I do not think we have another agency that makes

money like them, except for the Liquor Commission, do we?

AN HON. MEMBER: Hydro. (Inaudible).

MR. G. REID: Yes, and Hydro. That was because

we were not taking any money out of it until now.

AN HON. MEMBER: You better stick with housing.

MR. A. REID: It is a basic question of whether

or not government should own the properties. Like Churchill Square, for example:

Should government own properties like Churchill Square? That is the question you

have to ask yourself? The answer apparently, from what I am hearing is, no, we

should not.

MR. G. REID: I guess it is a philosophy,

whether or not government should be in business.

MR. A. REID: Yes. Well, we are competing

against the private sector, there are no two ways about it, when you are talking

about rental units around the Province.

CHAIR: Okay, do you want to share your time

with Mr. Sparrow, Mr. Reid?

MR. G. REID: No, I am not finished yet.

CHAIR: Okay.

MR. G. REID: On page 272, 2.3.02, Industrial

Water Services: It looks like we are going to make a profit on that too, doesn't

it? The reason I am asking that question - and Mr. Colbourne will probably

answer it. Does the Town of Twillingate have an industrial water supply?

WITNESS: Yes.

MR. G. REID: Do they have to pay the government

for the maintenance of that?

AN HON. MEMBER: No.

MR. G. REID: No. So it does not fit under this

heading, because it looks like you charged for - under 2.3.02, what services are

you talking about there? Are they in particular communities? Industrial Water

Services: "Appropriations provide for the routine maintenance and operation of

industrial fresh -"

MR. A. REID: We have a number of communities

around the Province where we supply water services: To Marystown, for example,

yours is another one and Wesleyville is another one. There are how many, Art,

twenty-one?

MR. COLBOURNE: Twenty-one.

MR. A. REID: Twenty-one communities around the

Province that we have put in. Years ago we put in the water system for a

particular reason. It could be a fish plant, it could be -

MR. G. REID: That is what it was in

Twillingate, a fish plant

MR. A. REID: Basically, the operation of that

is still our responsibility. If the town council is using water from that system

then they are billed for so many litres per thousand or cents per thousand. We

do try to break even on it. I am told that even though it shows a profit of

$115,000 there this year, the maintenance on that particular system will far

exceed the $115,000 which will mean that we will basically go in the hole on it.

We very seldom in any year make money on that. Art Colbourne take it from there.

You can pick up from there.

MR. COLBOURNE: We make very little revenue on

it, just to break even, and we lose on all the industrial water systems with the

exception of Abitibi and Stephenville.

MR. G. REID: What I was wondering, though, is

the amount that the individual towns pay towards the maintenance on that. Would

it be greater than if they had their own system?

MR. A. REID: Towns don't pay anything towards

the maintenance. We charge the towns fifty cents per thousand gallons for

selling the water and the department picks up the operating and maintenance

costs of the system.

MR. G. REID: Yes, but what the town of

Twillingate is paying your department for the water, would it be over and above

what they would be paying if they had their own system in Twillingate?

MR. A. REID: I doubt it very much.

MR. G. REID: The other one is on page 275,

3.2.02, Special Assistance Grants.

MR. A. REID: 3.2.02, the $1,516,800.

MR. G. REID: Yes, it has increased by about

$700,000 over last year.

MR. A. REID: Yes it is. That is where that

money lies that we talked about, the slush fund that I had to help

municipalities, okay? That is the slush fund that I said I could use but now you

have to deduct this from the slush fund to start with.

MR. J. BYRNE: Has there been any lush fund in

the Budget document?

MR. A. REID: The what?

MR. J. BYRNE: I will get into it later.

MR. A. REID: For example, a special grant to

cover the department's share for additional equipment needed to provide

essential services to new areas resulting from a boundary expansion to the City

of St. John's. That is an agreement that was signed in 1985 for $172,800 a year

that we give them for that. That was when the town moved to Shea Heights and

Kilbride and so on.

Wabana: This is a special grant to the town of

Wabana due to the town's difficult financial situation. The original of that

goes back - my God, Art that goes back to the 1960s, does it? It is an agreement

was reached back in the 1960s, and that is $160,000 this year. No, I am sorry,

last year - the original grant authorizes $160,000. We have told them we are

going to phase it out over an equal base over the next five years. One hundred

and twelve thousand dollars has to come out of that for Wabana, so that leaves

basically an uncommitted vote of approximately $1.23 million. I would think that

at least $300,000 of that would have to go to the finance committee that looks

after small emergencies that occur in municipalities around the Province, little

things that amount to $1,000 or $2,000 and $5,000.

I figure that, at the end of the day if there is

about $900,000 left in that fund that is all that's there. That is the fund that

we referred to in the Budget Speech as being the fund where we could possibly

find some money to help municipalities get over a rough time. Now that is not

very much money when you stop and think.

All I need this year is to have one community in

Central Newfoundland come down with agaric, a beaver fever problem, and $300,000

to $400,000 of that will disappear overnight. That has happened every year in

the past three or four years. So we do not have much to work with. Anything

else?

MR. G. REID: One final question. I understand

that the banks are getting a bit more lenient or looking to do business with

towns in the Province which is unusual, and a sort of public private

partnership. Where do you see that going?

MR. A. REID: Would John Abbott like to answer

that?

MR. G. REID: I think, if I am not mistaken, it

is the first time. I know I worked in the Department of Fisheries and the banks

would balk sometimes even with a guarantee by the provincial government. It

strikes me as a bit strange that they are now coming forward and offering their

services to municipalities. It is either they have so much money that they don't

know what to do with, or something strange is happening.

MR. ABBOTT: Over the past six weeks or so, we

have had some discussions with various towns as they have come forward looking

for assistance in terms of municipal capital works. Up until the Budget we were

not sure if any dollars were to be allocated even for loan guarantees. So we

talked to them about approaching their banks and seeing if they were prepared to

support them in undertaking capital works.

At the same time, we had overtures from a couple of

banks here in the Province, their senior people who had approached the

department inquiring as to what our policies were with respect to them providing

assistance, i.e. loans to banks, and we said: Well, we don't have any

restrictions per se, but we don't want to get into competing with NMFC in terms

of providing loan guarantees. They said: No, in some cases they would like to

work with communities in terms of supporting their capital works as well as

refinancing some debt that they probably already have. They were looking at

rates lower than we could provide through NMFC, as well, without loan

guarantees.

That is where it is to date. We have left them to

talk to the communities and vice versa, to see where, in fact, this will go. We

have been encouraged by the response to date. The banks themselves have programs

structured to finance municipalities which, depending on the municipality's

ability to manage it's finances and govern itself, will determine the type of

loan, loan arrangements and interest rates that they would charge. So we are

going to see how this unfolds in the next couple weeks and months.

MR. G. REID: So they are actually offering

interest rates lower than we can do at NMFC?

MR. ABBOTT: Yes.

MR. G. REID: What about programs we used to

have such as paving in a community where it was 60-40, was it? How would they

operate that? What it would mean, I guess, is that the municipality would have

to borrow the entire amount now, wouldn't they?

MR. ABBOTT: Well that is the basis on which we

have been talking to them at this point, yes.

MR. G. REID: Why would a community want to do

that if they can come to the government and get a 60-40?

MR. ABBOTT: Well, I may now pass it back to the

minister, but I think we are trying to move away from that type of arrangement

where there is automatic either 60-40 or 100 per cent financing for water and

sewer. Where the Province cannot afford it, in some cases the towns can and in

some cases they can't; and maybe, we will have to stop there.

MR. G. REID: Granted, there are a number of

larger towns in the Province that can afford to go it on their own, but what are

you going to do with communities that can't?

MR. A. REID: Continue funding them, I guess, at

100 per cent.

It is interesting, I guess, that we are forced, as

a government and especially as a department, to look at ways of helping

municipalities. For one, I am not satisfied with every year going to CBS, for

example, St. John's or wherever it might be, giving them loose change to do work

that needs to be done in the cities and towns around the Province. That is what

we have been doing since 1949.

We never reach a point. We continue to give dribs

and drabs to communities around the Province to do water and sewer and it takes

them twenty to twenty-five years to complete the system, and by that time the

system is not fit to operate and you are right around the circle again.

So, one of the ideas we are pursuing - and I don't

mind saying this here publicly - one of the ideas that we are pursuing is, the

$25 million in capital that we have this year, maybe that could be used to

generate, to lever some larger funding. So rather than giving capital dollars to

municipalities out of that fund, small amounts to this community and that

community, maybe we could go to a community and say: Rather than use that on

capital funding, maybe you can use that to help finance bigger projects. The

City of St. John's, for example, might go in and do the Goulds and Kilbride,

that area.

WITNESS: That was the second priority of the

department, (inaudible).

MR. A. REID: That is right.

So, in CBS it is the same thing. CBS is out there

and it will take $50 million to finish CBS. We, on an average over the past five

or six years, have given CBS $1.5 million to $2 million a year except for the

last two years under the infrastructure program. Now, at $2 million a year, it

is going to take us twenty-five years to finish the system in CBS. It will take

us more than twenty-five because if that is based on this year's $2 million.

Twenty-five years from now, that $2 million will be worth about $500,000, so it

is going to take us maybe 100 years to finish the job. So why do it on that

basis?

What we are suggesting - and I don't know at this

point in time whether or not government will accept it, because at the end of

the day in certain areas of the Province the government is going to have to

provide a guarantee for the money, and a guarantee is basically the same as

giving money to a community anyway. So there are pros and cons to everything,

and we are weighing that out now. Maybe I might be able to convince my

colleagues in Cabinet that at least if we tried one test case this year and we

saw that it was working, then we may be able to get into more private-public

partnerships around the Province, and that way be able to get more work done.

CHAIR: Thank you very much, Minister.

We will move on now to Mr. Jack Byrne.

MR. J. BYRNE: My colleague would like to ask

another couple of questions, so I'm going to give him a few minutes.

CHAIR: Just a minute now. You wanted to do

this.

MR. J. BYRNE: Do what?

CHAIR: You wanted an opportunity to ask

questions. I'm giving you the opportunity to ask questions. We stopped Ed, we

went to Gerry. Now we will go to you, Mr. Byrne, and then we can go (inaudible)

MR. J. BYRNE: Is his time up?

CHAIR: Yes.

MR. J. BYRNE: Okay.

CHAIR: I wouldn't have called it if his time

wasn't up. You are the one who said his time was up, and I agreed, but he was

only a minute or so. Anyway, let's get to you.

MR. J. BYRNE: Alright. I'm going to be like the

Chinese now, start at the back of the book and go forward.

The Newfoundland and Labrador Housing Corporation:

When I looked at this when reviewing the Estimates, I made a couple of comments.

One, of course, was that it was obvious to me that - the question would be: Is

any part of this being privatized? When we saw such a dramatic decrease in the

Grants and Subsidies, I had a note here: Explain what services would be cut.

Overall, though, with respect to this breakdown, I'm asking: Can we get a better

breakdown, or a more detailed breakdown, for the Newfoundland and Labrador

Housing Corporation? I mean, you are really not telling us anything here.

MR. A. REID: I can certainly provide you with

the departmental (inaudible) last year's, I guess.

WITNESS: We have last year's annual report

here. We can provide that at the end of the evening. We have enough for

everybody.

MR. A. REID: Yes, that isn't a problem, Jack. I

can give you all of that.

Jack, let me answer you. You made a comment about a

cut. That really wasn't a cut. Let me tell you why it was. I gave it up.

MR. J. BYRNE: Pardon?

MR. A. REID: I basically gave it up. It wasn't

something that the government dictated to us. I went in under the advisement of

the Chairman of the Housing Corporation. I knew exactly how much we had out

there that we could probably generate this year in revenues. Being squeezed like

we were, we had to find every possible cent in every budget that we could find.

I knew when I went to the table that I could give up x number of dollars from

the Housing Corporation. It wasn't a question of us being squeezed out of it; it

was money that the Housing Corporation itself gave up to the government this

year.

MR. J. BYRNE: Well, that leads me to the next

question. What would be the profits for Newfoundland and Labrador Housing for

last year?

MR. A. REID: The profits? Gee, that is a heavy

question. The overall profits?

MR. J. BYRNE: Yes.

MR. NOSEWORTHY: The grant last year was

somewhere in the order of $15.2 million. I guess when you refer to profits from

the Housing Corporation, while a portion of our revenue is derived from profits,

the minister referred to the fact that, for example, this year we would be

receiving $8.2 million, or 7 per cent, of our budget from the Province. I would

just like to clarify that of the rest, I guess, 42 per cent of that comes from

the federal government in terms of cost-sharing of our social housing programs.

In other words, they provide 75 per cent of the cost-sharing for social housing

in the Province.

MR. J. BYRNE: Seventy-five per cent of what

figure?

MR. NOSEWORTHY: That would be 42 per cent of

$123 million.

MR. J. BYRNE: See, that is what we don't have

here, that is why I asked. I can't really ask questions with respect to

Newfoundland and Labrador Housing Corporation because I don't have the

information we had last year.

MR. NOSEWORTHY: We can provide all that,

Minister. I guess you had some opening remarks which really covered a lot of the

detail of this which you haven't had the opportunity to deliver yet. Indeed, we

can provide the detail. It is in our annual report, and we would have no problem

in providing you with the detailed breakdown as to what we spend on social

housing, what we spend on land development and what we spend on our various

activities. That isn't a problem.

MR. J. BYRNE: Where your revenues come from and

where your expenditures go, that is what I would like to have.

MR. NOSEWORTHY: Sure.

MR. A. REID: I had a short presentation to make

on the Housing Corporation, and my hon. friend and colleague over there asked

the first question on housing and we sort of skipped it. What I had planned to

do was to do Municipal Affairs and then do Housing.

MR. J. BYRNE: I see. Can you give me a copy of

that?

MR. A. REID: I have this statement, and mostly

all of the figures are available in this.

MR. J. BYRNE: Fine.

MR. A. REID: So what I can do is to make this

available to Elizabeth and she can pass it out to you.

MR. J. BYRNE: Fine. Good.

MR. A. REID: There are a lot of figures in

this. Then if you have any other questions, I have no problem with providing any

of the information you ask for on the Housing Corporation, none whatsoever.

MR. J. BYRNE: You mentioned revenue of $120

million. Mr. Reid got on to this, I believe, with respect to, it is kind of a

contradiction to be selling off the revenue generating residences or buildings

or whatever the case may be. Again the Newfoundland Hydro situation, I suppose,

why would you be selling of something that is turning over good bucks for the

government. I know private industry has been putting pressure on Newfoundland

and Labrador Housing not to be competing with the land developments. I suppose,

that is where a fair chunk of the bucks come from with respect to housing; the

revenues. Correct?

MR. A. REID: Yes, but you have been misled

somewhat. I do not know if I misled you or not. In what we are selling off, what

we are selling off does not necessarily mean that those properties are providing

profit for us. We own Elizabeth Towers, for example. We lose money on Elizabeth

Towers? We own Churchill Square. We break even, if I am not mistaken, or close

to it.

MR. NOSEWORTHY: We make a small profit, Mr.

Minister, on Elizabeth Towers, but it is a small profit.

MR. A. REID: How much, $30,000 or $40,000 last

year or something like that?

MR. NOSEWORTHY: Something in the order of

$100,000.

MR. A. REID: Okay. So there are properties we

have that we do not make profits on. These properties that we are talking about

selling off are not basically properties that bring us in large amounts of

money, in regards to revenue. It is not those properties that bring the revenue

in.

Bob, do you want to take it from there?

MR. NOSEWORTHY: I will. If I may clarify, the

involvement of the Housing Corporation, I guess, covers a number of areas. One

is our social housing. Indeed our social housing is cost-shared with the Federal

Government and there is no intent of selling our social housing portfolio. That

is not up for consideration at all.

MR. J. BYRNE: No, I know.

MR. NOSEWORTHY: The second avenue of rental

housing that we have is the market rental portfolio and that is the Elizabeth

Towers, the Churchill Square, the Pleasantville. We used to have units in

Stephenville, Goose Bay, et cetera, et cetera. Some years ago the government

decided that basically these are market rental units, they are competing with

the private sector and there is absolutely no role for the Housing Corporation

in that area to be competing with the private sector. We serve no useful purpose

in that business.

So since that point in time, we have been selling

off those units at a profit. In other words the profit is generated from the

sale of the units much more than it is from the annual operating of the units.

In other words, if we sell something like Churchill Square we stand to make $2

million versus perhaps $100,000 a year in the operating. So indeed the profits

are made in the sense of the selling market rental units, in terms of the actual

sale of the units themselves.

With regard to land development, we do make profits

in terms of the selling of serviced land and indeed that is an ongoing annual

profit that we generate each year, be it Southlands, be it Mount Pearl, be it

land in Corner Brook et cetera, et cetera. As the minister pointed out earlier,

the government is reviewing our role in terms of land development and they will

make a decision on that, presumably, in due course.

MR. J. BYRNE: Thank you. You just hit on

something that I made a note of here, and that is with respect to buildings like

Churchill Square, Elizabeth Towers and what have you; you are planning on

selling them off.

MR. NOSEWORTHY: Yes.

MR. J. BYRNE: And making - you just used the

figure of $2 million. I am looking at the short-term versus the long-term here

now. I mean, if you kept those buildings wouldn't you make more money in the

long haul, rather than just selling them off. The same thing with the South

Coast ferry, selling that off and spending the money. You know, it is going to

cost you money in the long haul.

I know it is a decision for government, but to me

it really does not make sense.

MR. A. REID: Well, I am not surprised you said

that, Jack, to be honest about it, because to some degree I feel the same way.

MR. J. BYRNE: Well why would you do it?

MR. A. REID: I am doing it, number one, because

I basically think the Housing Corporation should not be competing directly with

the private sector. Now, I don't think land assembly is competing directly with

the private sector. There is a difference in my philosophy as it relates to,

say, Southlands. I don't think the government should be out renting apartment

buildings to people living in St. John's at special market value rentals. I

don't think we should be in the market. We are not in a market, we are competing

against the private sector and we shouldn't be at it.

There are lots of things in government, of course,

that we are competing in and we shouldn't be in. The Liquor Corporation is

another one that I believe we should unload and unload immediately. I may have

gone too far in saying that, but I feel that way. If there is some way that the

private sector can own and operate and generate jobs and revenue for the

Province, I would prefer the private sector do it than the government be into

it.

You are asking the question: Why are we doing it.

Basically the philosophy of government, which I agree with, is that we shouldn't

be out there competing in the private sector with things like market rental

housing units. When it comes to social units, yes, there is absolutely nothing

we can do about that. We have to do that. That is part of our mandate, I think,

part of any government's mandate, but not to be out competing with a place like

Elizabeth Towers, for example, when there are condos around the city vacant with

no one to go into them.

MR. J. BYRNE: Another question with respect to

the block funding coming from the federal government, what is being proposed.

Central Mortgage and Housing now are basically responsible in St. John's for a

number of co-op groups.

MR. A. REID: Yes.

MR. J. BYRNE: There was some discussion, I

believe, with Newfoundland and Labrador Housing that Newfoundland and Labrador

Housing would take responsibility for those co-ops, I suppose. What is the

status on that now?

MR. A. REID: The co-op groups in the city will

have the same opportunity as the private sector to negotiate with us when and if

we decide at a particular time that those units will go on the market.

MR. J. BYRNE: Has Newfoundland and Labrador

Housing come to an agreement with CMHC to take responsibility for those units?

Have they actually passed it on to them?

MR. A. REID: No. There have been no

negotiations whatsoever conducted as of yet. The only thing that has happened

yet with regards to CMHC's - what's the word - downloading on the Province is

basically preliminary, between officials only, at this point in time. There

haven't been any decisions reached, ad I don't know, quite honestly - I'm hoping

to meet with the minister, Diane Marleau, some time in June to discuss the

proposal. I honestly don't know at this point in time when and if CMHC will be

ready to pass their properties over to the Province, and I don't know if the

Province will take them.

MR. J. BYRNE: Leading into that response, you

mentioned that the co-op would have the same opportunity as people in the units

that Newfoundland and Labrador Housing own.

MR. A. REID: Yes.

MR. J. BYRNE: So, is that the case or not?

MR. A. REID: That will be the case if we take

over federal housing. If we take over federal housing, I'm assuming that we will

maintain and operate the federal housing stock under the same guidelines as we

maintain and operate our own stock; and our own stock is up for sale right now

in a lot of those cases.

MR. J. BYRNE: Very good.

CHAIR: Okay. Do you want to change up?

MR. J. BYRNE: Pardon? Did you say finish up?

CHAIR: Change up.

MR. J. BYRNE: It is up to you. I have a lot of

questions.

CHAIR: Fine.

MR. J. BYRNE: But with respect to Newfoundland

and Labrador Housing, unless these individuals here have questions for them I'm

finished.

MR. G. REID: The social housing that the feds

participate in, what percentage do they pay into the social housing thing?

MR. NOSEWORTHY: They pay 75 per cent basically

of the costs of operating social housing. For the 10,000 units in the Province

plus a subsidized mortgage and loan portfolio, next year that will amount to in

the order of $93 million.

MR. G. REID: So if we increase the number of

social housing units by 2,000, would we get extra money for those 2,000; from

the federal government, I mean?

MR. NOSEWORTHY: The portfolio that CMHC

administers in the Province is somewhere in the order of 4,000. That portfolio

has a myriad of financial arrangements associated with it. What the federal

government has said is: We are prepared to transfer the financing to those units

over to the Province but we will not be putting any more in over the next few

years and you will have to administer it on that basis essentially.

MR. A. REID: Mr. Reid, I don't know if you

realize it or not but CMHC is involved in a multitude of things like senior

citizens' homes for example, the Pratt Home here in St. John's, the Interfaith

Home in Carbonear, a number of the seniors' complexes around Province that are

all operated by individual groups like the Legion, senior citizens' groups and

different things. They provide -

WITNESS: (Inaudible).

MR. A. REID: Yes, the Masonic Park and there

are a number of them. CMHC is involved in a number of those in providing really

low interest rates for mortgages. There are mortgages for those buildings with

CMHC and that is part of the stock as well.

So, you are not only looking at social housing here

as far as CMHC is concerned, you are looking at a whole mass of properties

stretching from one end of this Province to the other.

MR. G. REID: No, what I was getting at for

social housing, say social assistance recipients who have houses that are

supplied by the housing corporation, on an individual house does the federal

government pay a percentage, like 75 per cent?

MR. A. REID: Seventy-five per cent.

MR. G. REID: Well, wouldn't it be to our

benefit to have more of those if the federal government were paying 75 per cent

of them?

MR. A. REID: Oh definitely, but the federal

government is not providing any money for any new housing.

MR. G. REID: Yes, well that is what I was

asking, they are not going to pay -

MR. A. REID: No.

MR. G. REID: So where do the profits that you

get from the sale of lands, like Southlands, go?

MR. A. REID: It goes back into the Budget to

help offset cuts from the provincial government that we have had this year and

last year. That is basically where they go.

I am almost thinking, you know, and I suppose we

won't reach a point now, but we may, it may work out that the Government of

Newfoundland and Labrador won't have to put very much money at all into housing;

it may become self-sufficient. Bob does not think that but I think it could. If

you played with the figures enough and you had enough assets to sell over the

next ten or fifteen years, it may become self-sufficient. You are down to $8

million now and when you stop to think about it, $8 million it is not very much.

Also, when you say 75 per cent of social housing, every single employee who is

involved with social housing in Newfoundland and Labrador, their salaries are

being paid from that 75 per cent. The Chairman of the housing corporation, CMHC

is paying 60 per cent of his salary.

MR. G. REID: We need to get more employees like

him.

MR. A. REID: It is a good way of doing it. So

if you think about what I was saying to you, it is very important that we keep

the level of funding as high as we can for this year, because, if the feds come

back and say, we are going to take a base year, well the higher the amount of

funding money we have in the housing corporation, the more money they feds will

have to give us. That is why I am saying there is really no cut to the housing

corporation's budget. We have to find that $5 million somewhere and we will find

it.

WITNESS: Minister we are not supposed to tell

the (inaudible).

MR. A. REID: No, I don't want that to be

published. We are not supposed to tell them that.

CHAIR: Okay, Gerry -

MR. G. REID: I am finished.

CHAIR: You are finished? Okay. Do you want to

go back to Mr. Ed. Byrne? I did not mention it, but we are going to break at

8:30.

MR. A. REID: You will have it all finished by

that time, won't you Jack?

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

I would like to pursue an issue that one of the

Reid brothers from the District of Twillingate brought up in terms of the notion

of public/private partnerships. The minister and I have had at least one, maybe

two, conversations on this issue. I know in the district I represent, part of

the City of St. John's, it probably has the most acute problems when it comes to

municipal infrastructure, at least as great, maybe even greater, than the

problems that exist in CBS.

Do you see it going, Minister, do you see this

notion of private/public partnership really moving ahead and getting to a point

where it can work? I know from the estimates from the City of St. John's that

the degree of the problem in the area of the city that I represent is about $57

million. Private sector estimates are about $10 to $12 million less than that,

that we have had done. I think it is not a new or novel idea but it is an idea

that has come for municipalities that can afford to enter into such

arrangements, because it does a couple of things. It provides the service, which

is what the taxpayers want ultimately. They want the service based on, of

course, as long as the city can approve it and that the government are prepared

to enter into a long term arrangement, whether that be over a period of fifteen,

twenty, twenty-five years or whatever the case may be, and it provides the

service for the people who want it and who are demanding it.

I think, secondly, it gets the work done in an

expeditious manner, as you indicated, where it does not take twenty-five years,

and by the time we get it done we have to revisit and start again. A third

option related to this, I think, is the amount of economic activity generated

and the amount of jobs generated.

My question, therefore, to you is: You mentioned

something about testing one site this year, do you see this idea taking off in

other areas?

MR. A. REID: Let me just give you a little

background. You probably know this already. We don't have any control over

capital funding in the City of St. John's as it relates to water and sewer.

MR. E. BYRNE: No, I understand that.

MR. A. REID: They do it on their own. They

raise their own capital for it.

The City Council of St. John's has to have the will

themselves to spend those kinds of dollars in the area that you referred to.

They have to have the will. But in saying that, the City of St. John's has set

for itself a goal of 17.5 per cent of debt servicing. That is 17.5 per cent of

the total annual budget goes toward debt service and once they reach that amount

they stop, they won't borrow any more. It is good prudent management, basically.

I suppose in your particular case, and in some other cases in the city that have

arisen in the last few years, maybe if they wanted to go beyond that on a

special deal by going to the private sector to have this done and have it

financed over a period of years and come back to the Province - now remember I

said we don't give them any money for water and sewer, they borrow it and they

do it 100 per cent on their own. As a Province we could look at the possibility

of assisting them with anything over the 17.5 per cent of debt servicing.

MR. E. BYRNE: Got you.

MR. A. REID: If they came in to us and said,

`Look, we would like to finish the Goulds this year or whatever, what would you

contribute to it,' well I would have to go back to Cabinet and say: Look, in

order to get this work done this year the council needs a guarantee from us of

so much money towards the debt servicing for the next fifteen years or ten

years. Now I would do that, I suppose. Whether I could get that or not would be

another question.

We spoke to the mayor the other day about it and

John, the deputy minister, is having meetings with the staff at city council. To

be quite honest about it, we are trying to encourage them to do some extra work

this year than they normally had planned to do. When I say extra work I mean

work in the - we basically mentioned the Goulds and the Kilbride area to them

and we would like to see something done in there. I will give Mayor Murphy the

credit here too, he did say to me that if there was going to be any money

available this year from the Province, he asked for me to assign it to Kilbride.

MR. E. BYRNE: As I did.

MR. A. REID: As you did, and I have no problems

in doing that. I don't know how the council will feel about that but he - and

that was a personal comment, he was not speaking on behalf of council. His

personal comment was that we need to do some work in Kilbride, we need to do it

in a hurry and we need to do a lot of work and whatever money you have for me

this year direct it towards Kilbride.

Maybe it is a question of city council having to

look at their debt servicing of 17.5 per cent and going out and making some

special arrangements to have a particular project like Kilbride done that maybe,

John, at the end of the day we might be able to assist them with. Notice I say,

`might.' I am certainly sure that there are a lot of banks out there who would

love to have the opportunity to do business with the City of St. John's.

I don't know if that answers your question or not,

but I am hoping that we can at least get one or two projects this year.

MR. E. BYRNE: We will leave it there for now. I

appreciate your response.

MR. A. REID: It is difficult for me, knowing

that out of 278 communities in the Province, 200 of those communities are now

paying $340 per household towards their debt, and the City of St. John's is

paying sixty or sixty-seven dollars. We can pat them on the back for that

because it basically means that they are great financiers. It is difficult then

for me, when I get a miserable $25 million, to have to take out of that $25

million, boys, $4 million, $5 million or $10 million and give it to St. John's,

when I know there are other communities out there that are starving, you know.

Do you follow what I am saying?

AN HON. MEMBER: Right, I understand.

MR. G. REID: How do you determine what you give

CHAIR: Order, please!

Are you finished?

MR. E. BYRNE: Yes, I am finished, Mr. Chairman.

I am prepared to let Gerry speak.

CHAIR: Okay.

MR. G. REID: How do you determine how much St.

John's gets? For example, you said they raise their own money for water and

sewer projects? I mean, obviously they are not paying it all themselves. In

other areas of the Province they are getting help from government.

MR. A. REID: No, no. St. John's does not get

any help from government for water and sewer, not one cent. Am I correct?

AN HON. MEMBER: (Inaudible).

MR. A. REID: Yes. The only monies that the City

of St. John's get from government, up to this point, has been 60/40 cost-sharing

on (inaudible).

MR. G. REID: Like the employees of the Housing

Corporation we need more towns like St. John's, I guess, eh?

MR. A. REID: I guess we do. That is the reason

why they have got the tax base and nobody else has, I guess.

AN HON. MEMBER: Are we taking a break now?

CHAIR: Well we can. Do you want to go for nine

minutes, Jack?

MR. J. BYRNE: Take a break now.

CHAIR: Well, okay, we will take a break and be

back here at 8:40 p.m. We will break for a few minutes.

Recess

CHAIR: Okay, everyone, I guess it is time to get

started again. I would appreciate it if, when we start off this time, we just

have one individual from the committee speaking. The recorder finds it a bit

difficult when he tries to go hopping all over the place trying to put words in,

and it is important that we get this recorded. Maybe the answers can be a little

bit shorter too. It would be a great help because the longer the answer then the

longer it is going to take to get this done.

So okay, Mr. Byrne, you're on.

MR. J. BYRNE: Thank you.

Before I get into the estimates for municipal affairs

themselves, I would like to address a statement earlier, a circular to

municipalities from yourself, with respect to real property assessments. When I

was going through the estimates I had a question mark along side the estimates:

When would this be privatized? I was expecting it to come.

On the second page, under Real Property Assessments,

five sentences down: The current fee for real property assessments is .0002 or

two-tenths of one mil times the total taxable value of the assessment role of

each municipality. Would this be the same in all areas of the Province, this

breakdown?

MR. A. REID: With the exception of St. John's.

MR. J. BYRNE: With the exception of St. John's. So

is that an average or is it the same?

MR. A. REID: It is the same for each municipality.

MR. J. BYRNE: If you take, say, the town of Logy

Bay - Middle Cove - Outer Cove, with which I am most familiar, Torbay or

whatever the case may be, they are paying $6,000 or $7,000 per year, I think, or

it used to be, for their assessment.

MR. A. REID: Yes, two-tenths of one mil times

their total assessment. Their total assessment could be $15 million for example,

for everything in their community.

MR. J. BYRNE: That's the way it is charged out?

MR. A. REID: Yes, that's business and residential.

MR. J. BYRNE: By going to private assessment -

because I remember asking questions in the House before about this and this

seems to be a complete reversal of your stand in previous times when questions

were asked. If this is privatized, the municipalities will hire private

assessors to come in, because I checked this out myself. I went and asked

appraisers how much would it cost to go in and do, say, 600 properties in a town

such as blah, blah, blah. How much of an increase would you see this go to for

the municipalities?

MR. A. REID: If it was privatized outright?

MR. J. BYRNE: Which it is going to be by the year

MR. A. REID: If there was not some government

control over it a large number of municipalities would not do assessments, a

large number. I would be guessing, but I would say that only the more affluent

municipalities, the municipalities with populations of 3,500 to 5,000, up to the

City of St. John's, would probably do an assessment every four or five years.

You have to remember too that if they were paying for it privately themselves,

then if they were in hard times like they are in now, the last thing that they

would budget for would be $100,000 to have a property assessment done. So there

would be a large number of communities in the Province that would not get -

MR. J. BYRNE: So basically the smaller towns will

have to resort to - okay, we have 500 homes in the town and the town council

will probably make a decision that it is 500 times x number of dollars and

that's it?

MR. A. REID: Yes.

MR. J. BYRNE: To cover the services?

MR. A. REID: Yes.

MR. J. BYRNE: Under Municipal Capital Works in the

same document: Government will continue to fund the Canada-Newfoundland

Construction Program under which approximately $40 million will be spent in this

current fiscal year. Now I have not gotten to the estimates yet. That $40

million, how much of that is allotted now?

MR. A. REID: That's all allotted.

MR. J. BYRNE: That's all allotted? I remember a

figure of $21 million being in the estimates: Is that new monies to be spent?

MR. A. REID: No, no. The $21 million in the

estimates is to retire debt. That is not money at all; that is only just money

that we would have to put in to service the debt, not the $21 million.

MR. J. BYRNE: Well, I will probably pick up on

that when I am going through.

MR. A. REID: Yes, you will pick up on that after.

The $21 million that is there will be our share this year to service the $128

million that we put out in infrastructure altogether.

MR. J. BYRNE: In the next paragraph you say that

basically the 100 per cent of this cost obligation for water and sewer, as well

as road paving and reconstruction projects, NMFC: Is that what the boys picked

up on earlier, with respect to the private-public funding for water and sewer

projects?

MR. A. REID: No, not necessarily. There are

thirty-one communities in the Province now, approximately thirty-one, isn't it?

WITNESS: Thirty-five.

MR. A. REID: Thirty-five? There are thirty-five

communities in the Province right now which pay their own way anyway. Basically,

they come in to me with their five-year plan and say: Mr. Reid, we would like to

do water and sewer in the community this year. That is the way it has been since

I have been minister and long before that. Basically, if they do that, then all

we say to them is: Yes, go ahead and do it, you can do it. Now that is extra

money. That is like the Corner Brooks of the world, St. John's, the

Stephenvilles, the Labrador Cities, the Goose Bays and those people, who are not

up to the $340 per household.

MR. J. BYRNE: The $25 million in the next one is

(inaudible).

MR. A. REID: That is the capital program for this

year.

MR. J. BYRNE: The last paragraph: I am confident

that, in spite of these reductions, mayors and councillors will continue to work

in the best interests - I don't know if someone mentioned this earlier, but I

remember when I was mayor, and this was over three years ago now, and I was to

the point where I was not going to run again for council because of the

downloading and the impact that the downloading was having on municipalities;

and we had probably one of the better-run towns, better financially-run towns

around, I suppose. Would be harder to get people to run for councils, do you

think, because of this; and/or councils resigning?

MR. A. REID: Well, believe it or not, we are

finding the opposite of what you are saying, and it is surprising to me too.

MR. J. BYRNE: Don't compare Mount Pearl now.

MR. A. REID: No, no. We are finding, basically,

the opposite around the Province, if vacancies become available in communities.

Now, there are a number of communities you know you are going to have trouble

with anyway. We still have tens and tens of communities out there which do not

have their full slate of councillors. You will never, for some reason or other,

get them.

Believe it or not, if you look at the more affluent

communities, the larger communities especially around the Province, and in a

number of cases the smaller ones - for example, on Fogo Island when we put the

regional council there, you would be surprised at the interest that was in that,

which is unbelievable. The Federation of Municipalities brings up the same

argument to me and I think they have realized now that, basically, whatever it

is about the nature of Newfoundlanders, the tougher it gets and the more complex

things get, the more determined Newfoundlanders become. Now, I know that is a

general statement, Jack, but that is what is happening. People around the

Province are realizing that we are going through rough times and they have

accepted the fact that the federal government has to make cuts to balance the

budget and the provincial government has to make cuts to balance the budget.

Municipalities are accepting it too, so I don't agree with you. We will see next

year, in September, the number of people who will be offering themselves. If the

time before is any indication, it will be up again like it was last time.

MR. J. BYRNE: Well, according to that then, how

tough are you going to make it?

MR. A. REID: Well Jack, in making it tough, I

agree - you have to give me a little bit of credit, I suppose, for the fact that

I served as Mayor of Carbonear for seven-and-a-half years and I was President of

the Federation. I do have, maybe, a better feeling for municipalities than most

of my colleagues around the Cabinet table, I think, because of my experience.

You know that it hurts me to cut municipalities. I am cutting my own communities

here too, Jack. I am cutting Carbonear, Harbour Grace, Victoria and Saddle Cove,

places where I have to live on a daily basis and it is difficult for me to do

it.

In saying that, John and I have offered all kinds of

opportunities to councils. We are not going to see any councils in the Province

to the point where they are going to have to resign because of financial

difficulties. We will find some way or another to assist that community so that

at least they can maintain the services that they have. That is basically the

same philosophy that this government took and the previous government took.

When we looked at Baie Verte there a couple of years

ago, for example, last year, we had to come up, at the end of the day, with a

grant for Baie Verte to keep them alive, and we did it and we will have to do

the same thing again. So don't assume that we are the nasty beast that we are

sometimes accused of being, because at the end of the day we are not going to

allow communities, after we see and assess what is going on there, to disappear

or die because the council resigns over the financial difficulties they are in.

MR. J. BYRNE: With respect to that document - and

I have been preaching this for awhile now actually, and a lot of the questions I

ask lean that way. With the cuts that have been coming down, with downloading to

the municipalities, of course, back in probably 1988-1989, the previous

minister, Gullage, talked about amalgamation. I see a lot of the government

policies basically geared to nineteen regional counties or regional governments

in line with the nineteen regional economic zones. You mentioned earlier this

evening that I think you are going to start promoting that yourself in your own

area?

MR. A. REID: Yes.

MR. J. BYRNE: The bottom line is, that is what we

are facing from the government's point of view?

MR. A. REID: Well, no, because I don't believe

that we can create nineteen regional councils like the nineteen economic zones.

I don't think a regional council will ever work. In Mr. Andersen's district, for

example, I don't think it will work in the southern part of Labrador. I don't

think it will work on the South Coast of Newfoundland. There are going to be

large tracts of land in the Province, and towns in the Province, that will not

be able to avail of any services or any good from a regional council. So, no, I

don't profess or I don't agree with you when you say that we are going to go

with nineteen zones. It might end up being thirty zones; I don't know. There are

areas where you cannot do it, Jack.

That is another avenue where we believe, as a

department and as a government, we can provide more help to those municipalities

that are finding it tough.

The other thing, the bottom line too, Mr. Byrne, is

that there is an outcry out there in the Province right now from incorporated

municipalities, from the Federation of Municipalities and from a lot of other

organizations, asking why it is that local service districts and

non-incorporated communities can be provided services in this Province for

little or no cost to them and people living in incorporated areas have to pay

large sums of taxes. I will be honest and say to you that the plan of the

government, in regards to regional government, would be to encompass the whole

area, non-incorporated, incorporated, local service districts, under one guise;

and one taxing authority for those non-incorporated communities would then be

the regional council.

MR. J. BYRNE: Yes. Well, I understand where you

are coming from with respect to that. Even when the amalgamation issue was

underway, it was not handled properly at that point in time. What needed to be

done, I thought, was to show the municipalities and the people in the

municipalities the benefits and/or the pros and cons with respect to coming

together, and it was never done.

MR. A. REID: I agree, yes.

MR. J. BYRNE: It was a forced issue that was

trying to be forced and people got their backs up.

Anyway, I will continue on with some of the questions

because we can talk about that all night, the philosophical end of it.

Page 267, Municipal and Provincial Affairs: Some of

the questions have already been hit on by previous committee members. Under the

Minister's Office,

Section 1.1.01.06, Purchased Services, you have $16,000 there

up from $3,700. What was that spent on?

MR. A. REID: I haven't the foggiest idea. Do you

know Art?

MR. COLBOURNE: Entertainment.

MR. A. REID: My expenses, basically:

Entertainment, travel and a number of things that I did during the year.

MR. J. BYRNE: Yes, please.

MR. A. REID: Okay.

MR. J. BYRNE: Next section, Executive Support,

1.2.01.

MR. A. REID: Jack, let me tell you where a lot of

that was from. I'm just trying to remember. It was going out and meeting

regional councils and different things, and holding meetings around the

Province. A lot of that is in that there. And the Federation of Municipalities.

MR. J. BYRNE: Why wouldn't that have been budgeted

for now?

MR. A. REID: There would be no reason to budget

for it, not under mine. Those are my own personal expenses. That is like going

out and having a meeting in your district with a council and taking them to

lunch or something, basically.

MR. J. BYRNE: Yes.

MR. A. REID: Right.

MR. J. BYRNE: But you would think you would budget

for that. You budgeted $3,700 and it is back to $3,700 this year.

MR. A. REID: Well, I'm not allowed to spend it

this year. You will find that over here too, Jack, on page 276, 3.2.03. There is

$100,000 in there to assist municipalities right now under the regionalization

concept. We have put that in there. That money will be used this year to

encourage regional councils to get involved in regionalization. Used well, yes.

MR. J. BYRNE: I had that highlighted. I was going

to ask you a question on that.

MR. A. REID: That is what it is for. That will

cover off - on Fogo Island, for example, this year we had to provide - what was

the grant we provided to them?

WITNESS: (Inaudible).

MR. A. REID: How much?

WITNESS: Twenty-eight thousand dollars.

MR. A. REID: Twenty-eight thousand dollars. We

gave an outright grant to Fogo Island regional council to hire a town clerk or

whatever you want to call it, and some transition operating money.

MR. J. BYRNE: You only spent $6,000.

MR. A. REID: No, no. Where did it come from, Art,

then? It came from what vote, that $28,000?

MR. COLBOURNE: Special Assistance.

MR. A. REID: Special Assistance, okay? In that

$16,000 there is a mess of stuff like entertainment, meetings and different

things like that. I can provide that, that is not a problem.

MR. J. BYRNE: General Administration, Executive

Support, Supplies, $6,200 up from $2,200: What would that have been spent on,

$4,000?

MR. A. REID: Can you tell me what that is? What is

that in particular?

WITNESS: (Inaudible) description of it there.

MR. A. REID: Where is it? Provided for the

purchase of books and subscriptions as well as other miscellaneous supplies not

available from the Government Supply Centre. We did go up, didn't we? But it was

cut, was it? Where are we, which one is it? We had $2,200 allotted and we spent

$6,200.

MR. J. BYRNE: Thank you. Next page, Administrative

Support, 1.2.02.

MR. A. REID: Provides for the purchase of books

and subscriptions as well as other miscellaneous supplies not available from the

Government Service Centre.

CHAIR: Minister, we have gone on now to -

MR. A. REID: What is the next one?

MR. J. BYRNE: Administrative Support. I heard the

answer, by the way.

MR. A. REID: Yes, okay.

MR. J. BYRNE: Administrative Support, item

1.2.02.02, Employee Benefits, $78,600, down to $34,400 and back up to $78,600:

Why would that be the case?

MR. A. REID: Give us a minute now and we will tell

you. Provides for registration at seminars, conferences related to the

responsibility of general administration division. Funding is also included here

for payments to Workers' Compensation Commission for reimbursement of the costs

associated with work-related injuries. So what are we saying here? Are we saying

that we had more costs this year than we did last year?

MR. J. BYRNE: You had less (inaudible) -

MR. A. REID: Yes, Workers' Compensation is

included in that, so we have it in. I don't know what the reason was that we

only spent $34,400, John, just the same.

MR. ABBOTT: The difference there would be

contingency in the case of Workers' Comp.

MR. A. REID: Okay, so we may end up with $34,000

again this year.

MR. ABBOTT: Yes.

MR. A. REID: Okay. The year before last we

budgeted $78,600, last year it came in for $34,400 and we went back to $78,600

again. It will probably come in for $34,400 again.

MR. J. BYRNE: Why I ask these questions is I

picked it up with other departments. I mean, we saw a lot of people being laid

off. If you only spent $34,400 last year and you expect that you might only

spend $34,400 this year, I mean that is a job or a job-and-a-half I am sure,

within the civil service that may have been saved. I see this in a lot of the

estimates.

MR. ABBOTT: If I may, Minister. The difference

there is in what we will have basically as a contingency in the event that we

have any of our employees who have to go on workers' comp. or what have you. So,

that would be largely the difference there.

MR. J. BYRNE: Okay. Under

section 1.2.02.04,

Supplies $59,900 up from $54,900: That is an extra $5,000.

MR. ABBOTT: Yes, if I may, that represents

purchase of Supplies for what we call our Administrative Support Division. We

have added some staff there because we provide services to the Government

Services and Lands Department, Government Service Centre last year. Now that it

is a full department we have cut back significantly on that, as you can see, for

this year. It just represents routine purchases for the department.

MR. J. BYRNE: Subsection 1.2.02.07, you had

$33,600 budgeted and you spent $43,600. I ask the question: Why? I assume it

would be for the Government Services that you took over last year, but I heard

that same explanation from Work, Services and Transportation, that they were

spending money on Property, Furnishings and Equipment for those areas.

MR. A. REID: Works, Services and Transportation

would not be spending money on Furnishings and Equipment for those areas. They

would be spending money on leasing space, but they don't provide you with

Furnishings and Equipment.

MR. J. BYRNE: Well, Property, Furnishings and

Equipment.

MR. A. REID: We will provide the details, Jack,

but I think, to be honest about it, you are going t find out that a lot of this,

even mine over in Purchased Services, is related to that other department that I

had. It has thrown everything out of whack this year, everything.

MR. J. BYRNE: Yes, because some of the estimates -

I am not sure which department - were impossible to follow, really. Government

Services and Lands, you couldn't really do a comparison.

MR. A. REID: No, because we only had them for less

than a year you see. If you had had them for a full year, it would have made all

the difference in the world.

MR. J. BYRNE: Yes, but even with certain sections

within Government Services and Lands transferred over from other departments,

you should see in that

section what was spent last year and what is going to be

spent this year. You should be able to make comparisons, but we could not do it.

MR. A. REID: No, I know what you are saying. I

agree with you.

MR. J. BYRNE: Yes. Under Administration,

2.1.01.01, Salaries - I won't bother with that one. Purchased Services,

2.1.01.06, $242,300 - we already did that one so we won't hit on that one again.

Section 2.1.02, Assessment Services: "Appropriations provide for the

implementation of property assessment services for municipalities in the

Province." I have a note here: Privatize, when that would be happening. We

already have the answer to that.

MR. A. REID: Yes.

MR. J. BYRNE: I ask a question of the Minister of

Government Services and Lands the other day with respect to assessments on Crown

land, and he mentioned that Municipal and Provincial Affairs would be doing

those assessments.

MR. A. REID: I think there was a misconception; I

am not sure. Somebody quoted me your comment today and my immediate reaction to

it was that there was some sort of a misunderstanding between your question that

you asked the minister and his answer. Crown lands assessment within a

municipality would probably be provided based on the assessment done by my

people in my department.

MR. J. BYRNE: Yes.

MR. A. REID: There is no way that my assessment

people are going to go out in Central Newfoundland and go into the interior and

do an assessment. We cannot do it. It is impossible for us to do it. So I do not

know what the question was, but when I heard what you had said, I said: There is

some misunderstanding between both gentlemen here because there is definitely

something missing.

MR. J. BYRNE: My question was quite clear, and

that was: Would the $390,000, whatever, extra be for assessments or would

assessments be privatized and the applicant be responsible to hire an appraiser

to do an assessment? He said: No, Municipal Affairs will be doing the

assessments for us. I do not think he clearly understands himself, because I was

talking to him again today and he was saying that he has ten people who will be

hired for $39,000 a year. He thinks - and I do not know if he should be

responding to this - but he believes that those ten individuals will be actually

taking applications over the counter - what do you call it - a Crown land

administrator type of thing, just taking applications and processing

applications. Assessments have to be done.

Also, the point that you made with respect to going

out to Central Newfoundland or going out to Ocean Pond or Terra Nova somewhere

doing assessments, I mean they are going to have to be done or they cannot come

up with the assessed value of 20 per cent. You are saying now, Municipal Affairs

will not be doing the assessments?

MR. A. REID: No, and I think there is still a

distinction here that has to be made.

MR. J. BYRNE: Oh, there definitely is.

MR. A. REID: Rural remote cottage lots, for

example: What is the purpose of assessing a piece of property located on the

shores of Jubilee Lake? How do you assess a piece of property located up in the

wilderness area, for example, of the Central Avalon?

MR. J. BYRNE: Exactly. But what about doing an

assessment on a piece of land in Deer Park or Ocean Pond or out around Terra

Nova?

MR. A. REID: Yes, you may be able to do an

assessment on a piece of property in Deer Park because there is a set value

already established by the numbers of properties that have changed hands over a

number of years. I can see us, from my department's point of view, giving an

assessed value on a piece of Crown land located downtown St. John's, for

example, or located in Irish Town in Carbonear. That is pretty simple to get

anyway because all they have to do is go to the rolls of the town council and

they have it on the rolls. We have done the assessment on it anyway, so that is

not a problem there. I can assure you that I do not have the staff, I do not

have the ability, to do that. You know, that is a question that the minister

will have to answer for himself, but I am pretty sure, from what John is telling

me, that they are addressing that particular question right now on how they are

going to handle that.

AN HON. MEMBER: (Inaudible).

MR. A. REID: They have some money made available

to do it.

WITNESS: If I might, Mr. Minister, there may have

been some confusion in questioning when we came to the assessment of Crown lands

for sale purposes and the assessment of municipalities for rate purposes. So I

think -

MR. A. REID: Those are two different papers by the

way.

MR. J. BYRNE: Pardon?

MR. A. REID: Those are two different papers, Jack.

Those are two different papers.

WITNESS: Yes, that is the confusion.

MR. J. BYRNE: I know the difference. I am just

wondering if other people know the difference?

WITNESS: But, Jack there may have been some

confusion caused.

MR. J. BYRNE: That is a pretty simple question.

WITNESS: When we are into assessment of Crown

lands for sale, and we talk about -

MR. A. REID: Give him a chance.

WITNESS: A (inaudible) comes in here with an

assessment in municipalities, then it may have caused some confusion. But I

think the minister can probably go back to that at some point and help to

clarify it.

MR. J. BYRNE: Under that same section, under

Revenue - Provincial.

MR. A. REID: Yes.

MR. J. BYRNE: Revised last year $1,425,300 that is

going to $1,976,200. That is the extra money that now -

MR. A. REID: That is the extra $500,000 we will be

picking up from municipalities.

MR. J. BYRNE: In your statement here?

MR. A. REID: Yes.

MR. J. BYRNE: Municipal Inspection, Salaries,

2.1.03.01, $279,100: I am just curious as to how many positions that is

covering?

MR. A. REID: Nine. That is probably step

progression involved in that. From $265,900 to $279,100: I would say it is

probably a step progression, is it?

AN HON. MEMBER: Yes and Labrador allowances.

MR. A. REID: And Labrador allowances. Yes, go

ahead.

MR. J. BYRNE: Under

Section 2.1.04, Project

Implementation and Control, it says: "Appropriations provided for the

supervision of engineering design, project implementation and administrative

requirements relative to municipal capital works." I just wonder, is there is

any overlap with respect to Works, Services and Transportation with respect to

engineering design? Is it possible that those sections could be combined?

MR. A. REID: No, they cannot be, Jack. I will tell

you why. All the municipal supervision - we are down now to how many engineers?

We laid off three engineers, was it, last year? We are down to two now or three?

Two is it?

WITNESS: They are (inaudible).

MR. A. REID: Yes, we have two.

WITNESS: I'm sorry, these are the regional

offices.

MR. A. REID: These are all the regional offices.

We are down to a minimum now. What you are saying is: Can that be contracted

out? Is that what you are saying, or can it go over to Works, Services and

Transportation?

MR. J. BYRNE: I am just wondering if one

section

could do all the work for Works, Services and Transportation and Municipal and

Affairs?

MR. A. REID: Well, the answer to it is, no,

because we are reducing our staff and engineering staff in Municipal Affairs,

and Works, Services and Transportation just laid off a whack of theirs. I

suppose eventually what we are going towards is complete privatization of all of

it, both Works, Services and Transportation and ourselves.

MR. J. BYRNE: That's the answer.

MR. A. REID: That's what it seems to be.

MR. J. BYRNE: Yes. In Municipal Assessment - well

I had a note made there about privatizing so we will skip ahead of that.

Section 2.2.02, Local Government Policy, item 10,

Grants and Subsidies, $61,000. I just have a note: What for?

MR. A. REID: That $61,000 was the grant to the

Federation of Municipalities and to the administrators association; $49,000 for

the Federation of Municipalities and the rest of it goes to the administrators.

Okay?

MR. J. BYRNE: Yes. Urban and Planning.

MR. A. REID: Yes. That's reduced substantially

because we did away with practically all of our urban planning last fall and

that is reflected there in this year's -

MR. J. BYRNE: I know what is going on there. What

kind of an impact is that having on municipalities in the Province with respect

to their town plans?

MR. A. REID: Let me ask Mr. Colbourne to answer

that, Mr. Byrne, if you don't mind. Go ahead, Art.

MR. COLBOURNE: It is felt that planning will be

done locally in the municipalities, for municipalities to contract directly to

private enterprise, but at the same time we phased down, so recently, that we

have not seen any effect, as far as I can tell, not to this date.

MR. J. BYRNE: There will be extra costs to the

municipalities, of course, if they want to get the town plan done?

MR. A. REID: If they want it done, if the

municipalities want it done. We are handling the regular routine changes to town

plans, we are still doing that, and we are going to continue doing most of it, I

suppose, until we reach the point where we get bogged down and we have to say no

to a community and say: I am sorry we have too much other work to do.

MR. J. BYRNE: In comparing the salaries, okay,

from $979,900 that was spent last year down to $346,700 in urban and rural

planning, it is roughly a third this year. Yet when we look at transportation

and communications, it is cut from $63,000 to $35,100 which is less than half.

Now, why would that be?

MR. A. REID: Because it is going to cost just as

much for transportation, I suppose, with the few that we have left, to go to the

various places than when we had an extra fifteen. Stan Clinton himself, for

example, will have to do more travelling in the Province this year than he did

last year because now he is short fifteen staff. In fact, I mentioned the other

day that I thought it might be too low. You see, the travelling is still going

ahead because we are still doing, as I said, a fair amount of rural and urban

planning. You have to remember when we say urban and rural planning here that we

are talking about all the roads. We have control over all the roads as well in

the Province, all the primary and secondary roads. You understand that, do you,

that my department looks after all of that, all planning along primary and

secondary roads in the Province?

MR. J. BYRNE: The roads? Oh, yes.

MR. A. REID: Municipal Affairs does all of that

too. So if you wanted to build a place out on the main highway or somewhere you

would have to come to us for permission. So our people are still going to have

to travel a fair amount.

MR. J. BYRNE: Okay, page 272,

Section 2.3.01,

Administration and Planning, I just have highlighted: community water services

and other engineering services. I had a note here: Flatrock situation, which I'm

meeting with you to discuss already.

MR. A. REID: Yes.

MR. J. BYRNE: I'm meeting with the deputy minister

pretty soon.

Salaries, down from $434,200 to $274,500: Big lay offs

there or what?

MR. A. REID: Yes, that is still part of the

planning division. Which is he talking about now?

WITNESS: This one up here.

MR. A. REID: Oh, that is the engineering services.

Yes, there was a substantial lay off of my engineering people.

MR. J. BYRNE: We saw Professional Services go from

$34,400 last year up to $103,000. Is that to compensate for the lay offs?

MR. A. REID: No, it isn't. Professional Services

has nothing to do with that at all. Professional Services has to do with a

number of studies and different things that we have to do around the Province

this year. It has nothing to do with engineering or cost to engineering at all.

It is private sector work that we are going to have to go out and contract out.

MR. J. BYRNE: Okay.

MR. A. REID: It is a number of studies: Water and

sewer services, garbage services, all kinds of things in that.

MR. J. BYRNE: Industrial Water Services, 2.3.02,

under Revenue - Provincial, $874,300 last year, going up to $1,010,000: That is

the $0.50 per 1,000 gallons you were talking about earlier on, I think.

MR. A. REID: Yes, it is.

MR. J. BYRNE: Will we see an increase there in the

charge to the municipalities for that service? It has gone up by, what,

$116,000.

MR. A. REID: Yes, there will be an increase to

municipalities for the service.

MR. J. BYRNE: Ten per cent?

MR. A. REID: Pardon me?

MR. J. BYRNE: Over 10 per cent, twelve per cent?

WITNESS: Five cents per 1,000 gallons.

MR. A. REID: Five cents per 1,000 gallons.

MR. J. BYRNE: No. It is $0.50 per 1,000 gallons

now.

WITNESS: It is close to $0.55.

MR. J. BYRNE: Close to $0.55.

MR. A. REID: Yes.

MR. J. BYRNE: So it is, as I said, 10 per cent.

MR. A. REID: Yes, that is right. I'm sorry, Jack.

Yes, you are right, 10 per cent.

Abitibi-Price in Stephenville is hooked into that same

system and that has gone from $0.07 to $0.10. The largest portion of that profit

is there in that.

MR. J. BYRNE: Then the breakdown is going to be

different, yes.

MR. A. REID: Yes, but they are the biggest users.

MR. J. BYRNE: Yes, okay.

MR. A. REID: They are up to millions a day in

Abitibi. They have already been notified of this, by the way, and we haven't

heard a comment about it, not a sound. Most of that will come from

Abitibi-Price, not from the communities.

MR. J. BYRNE:

Section 2.3.03, Community Water

Services: Nothing budgeted this year at all, $450,000 cut.

MR. A. REID: Yes. You don't have any local

services, Jack.

MR. J. BYRNE: No, but still what impact is that

going to have? Is that to put in water and sewer projects or is to maintain?

MR. A. REID: No, not sewer, just water.

MR. J. BYRNE: That is what I meant, water.

MR. A. REID: No, not maintain. They maintain their

own. It is to install new ones. Digging artesian wells, basically, and -

MR. J. BYRNE: So, no money this year.

MR. A. REID: That is unincorporated communities,

by the way. That is local service districts, unincorporated communities. That is

why I can't tell you what I'm going to do with $950,000 million. That is why I

can't tell you. To be quite honest about it, I don't know. That $950,000 -

MR. J. BYRNE: (Inaudible) use a quarter of a

million.

MR. A. REID: Yes. That $950,000 that I talked

about, I called it a slush fund, and that was wrong for me to call it that, but

I don't know what other name to put on it. The $950,000 that we have, that we

talked about earlier, we don't know how we are going to break that down yet. I

don't know. To be honest about it, I don't want to make a commitment to

municipalities for a certain amount of money. I would rather wait to see the

requests, see how urgent they are, the priorities of the communities, and then

do it that way, then set an amount. Because if I set an amount I'm going to have

to stick to that amount, and if I have to go over then it isn't going to be easy

to be able to go over that. I'm leaving that up in the air. There may be - and

you can quote me - some Community Water Services program this year.

MR. J. BYRNE: Thank you.

Section 2.3.04, Waste Management Facilities, Grants

and Subsidies, $250,000 budgeted, spent $45,000, nothing this year: Can you

explain what is going on there?

MR. A. REID: Which one are you on now, I'm sorry?

MR. J. BYRNE:

Section 2.3.04.10, Waste Management

Facilities, Grants and Subsidies: $250,000 budgeted, $45,000 spent, and nothing

this year.

MR. A. REID: That is the Waste Management Facility

Program, that is gone as well. That program is, basically anything under

$100,000 previous to this year, we could go out and give communities funding to

clean up their dump site, for example, for $10,000, $20,000 or $80,000. There is

no money in that budget this year at all for Waste Management. That is in my

statement too, by the way.

MR. J. BYRNE: Page 274, 2.3.06, Water and Sewer

Servicing-Coastal Labrador, item 06, $2,761,500: Do you know where that is going

now?

MR. A. REID: Where it is going now?

MR. J. BYRNE: Has it been allotted? Has it been

approved?

MR. A. REID: Yes, it has been allotted. Do you

have that sheet there, Art, please?

Now, let me tell you about the community water and

sewer services in Labrador. I don't have any control over that; that is done by

a committee of representatives of the Inuit Community, the Labrador Community on

the South Coast, the federal government and representatives of the provincial

government. Never has the provincial government ever interfered with what they

decide. They are the ones who decide themselves where the money is being spent

in Labrador.

The total budget for Labrador that will be spent this

year is $3,115,000. That is the Labrador Agreement which takes in all the

Labrador agreements; so that means there would be so much of that already

committed. I can't tell you where the $3 million is going. This is last year's

stuff, tendered last year: Nain, for example, over a million; Hopedale and

Makkovik. Hopedale was tendered last year, Postville was tendered last year.

There will be work going on in Nain, Makkovik and Rigolet again this year. That

is all I can tell you. I don't know anymore.

MR. J. BYRNE: That's fine.

MR. A. REID: That is all done under contract

through that committee, Mr. Byrne.

MR. J. BYRNE: Page 275, Water and Sewer Subsidy,

section 3.2.01, Grants and Subsidies, $28,487,500.

MR. A. REID: The $28 million is what the

government of this Province will have to pay towards debt financing to the

Newfoundland Municipal Financing Corporation for work that has been done over

the last fifteen years.

MR. J. BYRNE: Basically, I have a note here: How

much is owed by the towns and how much by Municipal and Provincial Affairs? Is

that all Municipal Affairs?

MR. A. REID: That is all Municipal Affairs.

MR. J. BYRNE: What is the total amount, then, that

is owed to these people?

MR. A. REID: The total amount owed to -

MR. J. BYRNE: NMFC?

MR. A. REID: About half-a-billion dollars,

approximately $500 million.

MR. J. BYRNE: Say what?

MR. A. REID: Approximately $500 million.

MR. J. BYRNE: Million, you said $500,000 first.

MR. A. REID: A half-a-billion dollars is owed to

NMFC, billion.

MR. J. BYRNE: Okay. Special Assistance:

Appropriations provide for special assistance to municipalities. That is your

$950,000, is it?

MR. A. REID: That is the $950,000, with Wabana and

St. John's taken out of it.

MR. J. BYRNE: That is a good spot to get my money

for Flatrock.

MR. A. REID: How much are you looking for for

Flatrock?

MR. J. BYRNE: It is only $35,000 a year.

MR. A. REID: What is it for, Jack?

MR. J. BYRNE: I mentioned that to you before when

I met with you, at the meeting with the deputy minister.

In the Town of Flatrock, a number of years ago, the

policy was that if you put in (inaudible) -

MR. A. REID: Oh yes, yes. We are going to deal

with that. That is another one (inaudible).

MR. J. BYRNE: That then could help alleviate the

problem down in Flatrock with respect to the water.

MR. A. REID: You never know. Based on how well you

treat me tonight, you never know.

MR. J. BYRNE: Can I keep her going, I won't be

much longer?

CHAIR: Well I -

MR. A. REID: Let him continue, let him continue.

CHAIR: How much longer do you want?

MR. J. BYRNE: I would say by 9:30 p.m. I will be

finished.

CHAIR: Okay, go for it. If the minister keeps his

answers short, we could probably make it by 9:29 p.m.

MR. J. BYRNE: I don't know about that.

Regional Co-operation Initiatives,

section 3.2.03.

MR. A. REID: That is the $100,000 that will help

me convince people to go to regionalization this year.

MR. J. BYRNE: We already addressed that, yes;

done.

Municipal Operating Grants And Adjustments, 3.2.04:

There is a 25 per cent cut basically from $41 million down to $31 million. I am

just curious now, and you kind of alluded to this in the House and I have been

saying it for a number of years, when do you expect that you are going to be

down to giving the municipalities nothing for MOGs? I mean it is getting to the

point -

MR. A. REID: I have to be honest and say to you,

Mr. Byrne, I am expecting another 10 per cent cut next year.

MR. J. BYRNE: Ten per cent for 1996-1997?

MR. A. REID: Well, the following year.

MR. J. BYRNE: 1997-98.

MR. A. REID: It would be 1997-98 which will be a

year from January coming; so a year and three-quarters from now.

MR. J. BYRNE: There is $30 million or $3 million

in the first quarter?

MR. A. REID: Three million.

MR. J. BYRNE: Three million?

MR. A. REID: Yes.

MR. J. BYRNE: So the whole brunt of that is coming

in the first quarter?

MR. A. REID: Yes. It has to, because I have to

show the savings in our fiscal year which ends March 31.

MR. J. BYRNE: Right on.

MR. A. REID: So I have to take it in the first

quarter which means then that the second, third, and fourth quarter will be

readjusted up.

MR. J. BYRNE: But if you take it in the first

quarter and you bring in next year's budget, are they going to get hit twice in

one year?

MR. A. REID: No, no. They are not being hit twice

this year.

MR. J. BYRNE: Well, they got hit back in November

sometime.

MR. A. REID: That is right. So they are going to

go right on through this year now and they are not going to be hit until January

1 of next year. This is January 1 of next year, see. So if they get hit another

10 per cent it will be January 1, 1998.

MR. J. BYRNE: Okay.

Section 3.2.05: Certain

municipalities to assist in meeting interest charges. That is: Appropriations

provided for the payment of municipal grants to certain municipalities to assist

in meeting interest charges. Do you want to explain that?

MR. A. REID: That is a whole host of things,

stadiums and different facilities we have put around the Province in the past

ten or fifteen years. There are stadiums in it. Do you have them there? I can't

tell you the exact facilities but they are in Bishop Falls, Grand Falls, St.

John's, Anchor Point and Badgers Quay. In Bay Roberts there is a stadium, in

Bishop Falls there is a stadium, in Conception Bay South there is a stadium and

in Fortune. I can go on and on and on. There must be 100 of them. Recreation

grants, different things that we subsidized under agreements with different

municipalities over the past fifteen years, and that is our share towards it

each year.

MR. J. BYRNE:

Section 3.2.06, Municipal Councils:

Appropriations provide for the payment of municipal grants to certain

municipalities to assist in meeting principal charges and other expenses.

MR. A. REID: That is the principal payments of

what I just said a minute ago. The one before that is the interest payment. The

same thing.

MR. J. BYRNE: Debt Servicing, Paving, 3.3.01.

MR. A. REID: That is the interest that we pay

every year on 60/40 paving projects that have already been given out from last

year.

MR. J. BYRNE: My question was: How much is the

total owing by Municipal Affairs?

MR. A. REID: For paving? What portion of the MFC

Debt is paving?

MR. J. BYRNE: Wait now, (inaudible).

WITNESS: The total monies owed from that

particular program?

Six million dollars is the interest. He wants to know

what the total owed is on that project?

MR. A. REID: The total owed is approximately 15

per cent of the $500 million. So five fifteens, what is that? About $75 million.

MR. J. BYRNE: This is a combination of the

previous one, where I asked and you told me it was $500 million; this is part of

that $500 million?

MR. A. REID: Yes. You asked me what the total debt

to MFC was and I told you it was $500 million. In that $500 million,

approximately $70 to $100 million is for paving and the other $400 million plus

is water and sewer.

MR. J. BYRNE: You misunderstood the question, but

that is okay I have the answer now.

MR. A. REID: The next one, 3.3.02 that is the

principal we pay. We pay $9,000,000 principal and $6,000,000 interest.

MR. J. BYRNE: Yes, okay.

I had a note made, when I looked at the two of these

together, Debt Servicing for Paving and Road Construction and Paving. I was just

going to ask the question: What is the different between the two?

MR. A. REID: Road Construction and Paving.

MR. J. BYRNE: Well, it looked to be the same thing

to me.

MR. A. REID: It is the same thing.

MR. J. BYRNE: Well, why would you have it broken

down twice?

MR. A. REID: Because one is interest and one is

principal.

MR. J. BYRNE: It says: "...share of interest

payments on debt owing to the Newfoundland," et cetera.

MR. A. REID: Share of interest payments on debt

owing.

MR. J. BYRNE: Okay, I missed one word. Good

enough, yes, interest on principle.

MR. A. REID: Okay? It says: "...share of principal

payments on debt owing...." One is principal, one is interest.

MR. J. BYRNE: Right on. I read that two or three

times and missed those two words, you know that?

MR. A. REID: Don't feel bad.

MR. J. BYRNE: Municipal Infrastructure, 3.3.03,

Water and Sewer Systems: You have Grants and Subsidies, $25,262,500. That is the

money I was talking about earlier. Is that new monies to be spent?

MR. A. REID: No it isn't. That is towards the

capital cost of the water and sewer. That money is already spent and that is

what we are going to have to pay this year towards it.

MR. J. BYRNE: Next section, blank, blank, blank,

3.3.04: No money again. Is that completed?

MR. A. REID: Yes it is. That fund ran out this

year. That is 100 per cent funded by the federal government. That program ran

out this year.

MR. J. BYRNE: Under 3.3.05, Canada-Newfoundland

Infrastructure Program, amount to be voted, $22,100,000. Federal revenue is

$14,300,000, so you put in $7 million, roughly.

MR. A. REID: Yes.

MR. J. BYRNE: Is any of this money allotted?

MR. A. REID: No. Is there any of it allotted?

MR. J. BYRNE: I mean, is this open to applications

(inaudible)?

MR. A. REID: No, this is pure payments towards

capital funding that has already been allotted.

MR. J. BYRNE: I'm trying to get a few bucks for

something.

MR. A. REID: You are going to have trouble. You

are going to have to find it in the $25 million or you are going to have to come

over and be very, very good to the deputy minister, and he might be able to find

you a