PDF Version

June 18, 2019

GOVERNMENT SERVICES COMMITTEE

Pursuant to Standing Order 68, Scott Reid, MHA for St. George's - Humber,

substitutes for Pam Parsons, MHA for Harbour Grace - Port de Grave.

Pursuant to Standing Order 68, Gerry Byrne, MHA for Corner Brook, substitutes

for Derrick Bragg, MHA for Fogo Island - Cape Freels.

Pursuant to Standing Order 68, Steve Crocker, MHA for Carbonear - Trinity - Bay

de Verde, substitutes for Derek Bennett, MHA for Lewisporte - Twillingate for a

portion of the meeting.

Pursuant to Standing Order 68, Tony Wakeham, MHA for Stephenville - Port au

Port, substitutes for Loyola O'Driscoll, MHA for Ferryland.

The

Committee met at 9 a.m. in the Assembly Chamber.

CHAIR (Reid):

We're going to get started now. Sorry for the delay, I think there was some

notifications maybe that didn't go out. The Chair is not here, so I'm going to

fill in as the Chair this morning.

We're

going to go through the Public Service Commission, Consolidated Fund Services

and the Department of Finance this morning.

First

of all, I'm going to ask everyone to introduce themselves, I guess.

MR. OSBORNE:

Tom Osborne, Minister of Finance and President of Treasury Board.

MR. JOYCE:

George Joyce, Interim Chair, CEO, Public Service Commission.

MS. CHAFE:

Ann Chafe, Commissioner, Public Service Commission.

MR. SMYTH:

Mike Smyth, Manager of Appointments and Accountability with the Public Service

Commission.

MS. ELLIOTT:

Susan Elliott, Executive Assistant to Minister Osborne.

MR. BUDGELL:

Marc Budgell, Director of Communications, Finance and PSC.

MS. COFFIN:

Alison Coffin, St. John's East - Quidi Vidi.

MS. TUBRETT:

Denise Tubrett, Deputy Chief of Staff, Official Opposition.

MR. WAKEHAM:

Tony Wakeham, MHA, Stephenville - Port au Port.

MS. DRODGE:

Megan Drodge, Researcher with the Official Opposition Caucus.

MS. STOODLEY:

Sarah Stoodley, MHA, Mount Scio.

MR. CROCKER:

Steve Crocker, MHA, Carbonear - Trinity - Bay de Verde.

MR. BYRNE:

Gerry Byrne, erudite (inaudible) and Member for the District of Corner Brook.

CHAIR:

I think we've missed some people over here, did we? Did we get everyone?

AN HON. MEMBER:

(Inaudible.)

CHAIR:

You'll introduce them later

on. Okay.

I'm

Scott Reid, I'm the Member for St. George's - Humber and I'm going to fill in as

Chair today. Bear with me as we go through this. We're going to look at the

Public Service Commission first. So, we'll call the first heading.

CLERK (Murphy):

1.1.01.

CHAIR:

I'll ask the Minister if he has any opening comments.

MR. OSBORNE:

Thank you, Mr. Chair.

I guess

the only disappointing part about being 20 minutes late this morning are the

throngs of fans that are home waiting for us to switch channels to the other

version of Family Feud.

As the

minister responsible, I'd like to take the opportunity to make a few remarks

about the Public Service Commission before we proceed.

The PSC

has the responsibility to protect the merit principle and provide oversight to

staff appointments and promotions to permanent positions within the delegated

entity

schedule to the Public Service

Commission Act . In addition to their legislated mandate, the PSC offers

services which are compatible with its role as an arm's-length protector of the

values of the public service.

They

administer the Employee Assistance and Respectful Workplace Programs providing

services directly through the in-house professional coordinators, supplemented

by external service providers from across the province. They lead several

adjudication panels designed to resolve certain conflicts within the public

service, such as job evaluation, classification appeals, management

classification appeals and the Conflict of Interest Advisory Committee.

As an

advocate for the principles of merit, fairness and respect, as well as good

public administration, the PSC plays a vital leadership and support role for the

broader organization. With the establishment of the Independent Appointments

Commission in 2016, the mandate of the PSC expanded to support the IAC. Through

the IAC and the PSC, they have the statutory obligation to ensure that the

recommendations for appointments to the province's agencies, boards and

commissions are based on merit, through an open and inclusive process to

identify qualified applicants for the appointment of Tier 1 and Tier 2 entities.

Since

the merit-based appointments process was established in 2016, the PSC and IAC

have combined to put forward just under 2,000 application recommendations, which

has led to a combined 556 appointments.

With

that, Mr. Chair, we will open the floor to questions.

CHAIR:

Okay. We'll start with the

Member for Stephenville - Port au Port.

MR. WAKEHAM:

Thank you, Mr. Chair.

first questions today are general questions. I'd like to start off my talking

about the Independent Appointments Commission.

What

was the actual cost of the Independent Appointments Commission in '18-'19?

MR. JOYCE:

The number for the Independent Appointments Commission last year was

approximately $30,000.

MR. WAKEHAM:

How much of their budget was

spent on travel and how much was spent on advertising?

MR. JOYCE:

Travel and advertising, I'll defer to my colleague.

MR. SMYTH:

For travel overall; air travel was roughly $5,600 and another $1,300 for

accommodations. There was no spend on advertising.

MR. WAKEHAM:

What was the remainder of

the $30,000 spent on?

MR. SMYTH:

Twenty thousand dollars of that was for their part-time administrative assistant

and then there were some incidentals, some reimbursements for meal allowances

when they do travel. I don't have an exact total of that but those three or four

items were the main items.

MR. WAKEHAM:

Okay, thank you.

'18-'19 how many Tier-1 and Tier-2 appointments were made through the IAC

process?

MR. SMYTH:

I don't have the exact number of appointments; overall, we have the number. For

Tier 1 there were 21 requests that arrived and for Tier 2 there were 39. In

terms of recommendations that were submitted there were 19 recommendations

submitted by the IAC for Tier 1 boards and another 42 recommendations submitted

by the PSC for Tier 2.

MR. WAKEHAM:

Thank you.

Have

there been any appointments made by Cabinet which were not done on the

recommendation of the IAC?

MR. JOYCE:

There have been no appointments made by government that were not put forward by

the IAC.

MR. WAKEHAM:

Last year in the Estimates, the Committee was advised that the usage of the EAP

had levelled out after several years of increases. How would you compare the

demand in '18-'19 for EAP?

MS. CHAFE:

Demand has remained the same. Our pickup rate is about the norm. We're around 13

per cent of those eligible. The norm has been 11 per cent in other jurisdictions

with similar programs. We see our rate has been consistent and that's pretty

well been 10, 11 per cent for the last several years. It went to 13 last year

and the year before and that was a very small increase over last year.

MR. WAKEHAM:

Is there currently a wait-list for EAP?

MS. CHAFE:

No, there is no wait-list for EAP.

MR. WAKEHAM:

Okay.

In the

last Estimates meeting for the Commission there were about 150 management

classifications appeals outstanding. How many are now outstanding?

MR. JOYCE:

Are you talking management classification system?

MR. WAKEHAM:

Yeah.

MR. JOYCE:

Currently there are 161 outstanding.

MR. WAKEHAM:

Do we know how long they've been outstanding?

MR. JOYCE:

It varies. I will say that compared to last year – I chair the management appeal

program. In '17-'18 we brought 187 forward. There were 30 new received in

'18-'19, 10 were confirmed, 24 changed and 22 withdrew for the total of 161.

We're cleaning up; I intend to clean every one of those up this calendar year.

MR. WAKEHAM:

Right.

In my

own district, I know of at least three people who have been waiting since March

2017 –

MR. JOYCE:

2017, yeah.

MR. WAKEHAM:

– to have their reclassifications heard. When they call in, they're told to call

back in three months. Every time they call back three months later, they're told

to call in another three months. I think we need to give them a better answer

than simply call back in three months.

MR. JOYCE:

Sure.

As a

context to that, when I arrived at the PSC in August of '18, government had

appointed, I think, 16 or 17 new members to be part of the management review

committee. We went out and we retained an individual to train us all in the

methodology, so all that training has been completed. Hearings have been

conducted so far, and they're going to continue for this calendar year.

Hopefully, by the end of the year, I'll have every one of those done.

MR. WAKEHAM:

Your actual plan to do that is to

schedule hearings, so many per month?

MR. JOYCE:

Yeah, between now and, of course, until they're done. They're ongoing; we have

an individual with us who is in the process of scheduling all those hearings.

MR. WAKEHAM:

So the next time they call in they'll actually have some answers.

MR. JOYCE:

They'll have a clear answer in terms of when their hearing is.

MR. WAKEHAM:

Okay. Thank you for that.

The PSC

is responsible for the Conflict of Interest Advisory Committee. How many reviews

were conducted in '18-'19?

MR. JOYCE:

There were 14 conducted in '18-'19. I chair the Conflict of Interest Advisory

Committee, five deputy ministers, and we dealt with 14 cases.

MR. WAKEHAM:

Okay, thank you.

Going

back to the Independent Appointments Commission for a second, have there been

any instances where individuals were appointed to positions without first

applying through the IAC?

MS. CHAFE:

No, there has not been.

All

appointments have been through the process that's outlined on the website. Most

of our applications are received direct to the website. On occasion, we'll take

résumés, hard copy directly and then just incorporate it into our website

databank.

MR. WAKEHAM:

Right, so if someone applies to be a member of a particular board or agency, are

they then offered an opportunity to be placed on another board or agency, even

though they haven't applied to that board or agency?

MS. CHAFE:

In the databank we ask people to identify their interests. All Tier-1 and Tier-2

boards are listed there. Many applicants will indicate several; some will

indicate one sector only.

If, in

the course of searching for people, we don't have a good body of candidates to

look at for a particular board, we will often go into our databank and find

people who might be suitable for that board. We usually would, prior to doing

anything, call them and say, I know you applied for Nalcor. Unfortunately, you

didn't get Nalcor, but would you be interested in this other board. If they

indicate they are, we advance their name for consideration.

MR. WAKEHAM:

Okay, thank you.

Mr.

Joyce introduced himself as interim acting chair of the Public Service

Commission. I ask the minister: Is a competition planned for a permanent chair,

is it in progress, or what's the status?

MR. OSBORNE:

I will check the status of that and I'll certainly let you know.

MR. WAKEHAM:

Okay, appreciate that.

I'll

keep going now. I'll go into the 1.1.01 into the salary details. I notice that

the Salaries are forecasted to increase by $105,600 compared to the '18-'19

Estimates to the '19-'20. Can you explain why that is?

MR. JOYCE:

I think it was around September or October the PSC retained an adjudicator. The

money itself is not new money; it's been reprofiled from the Human Resource

Secretariat. It's for one year only, this calendar year, and it's for the

purpose of the job evaluation system, the reviews that were currently on the

books. It flowed from, basically, collective bargaining wherein all parties had

agreed to a review process that's appended to the back of the collective

agreements.

called for an independent adjudicator. That adjudicator would've been Human

Resource Secretariat, but for independence purpose and impartiality, it was

housed at the Public Service Commission. We have a full-time adjudicator now

adjudicating all outstanding JES appeals.

MR. WAKEHAM:

Okay, so that's what the new contractual position was that was showed up?

MR. JOYCE:

That's correct.

MR. WAKEHAM:

Okay, thank you.

In the

Transportation and Communications section, I notice that the budget amount was

not used, yet this year more is being budgeted for. Why is that? There was

$37,800 unused.

MS. CHAFE:

Yeah, in the past, most of our travel money has been directed with the IAC in

mind because we do have regional representation on all members. One of the

members I was fortunate enough to not have to pay his travel costs from

Labrador. That has since changed and so we'll need to now pick up that cost.

We have

two additional members who may incur costs. The adjudicator for the JES is

anticipated will also have to do some travel. On occasion, members of the EAP

staff in critical incidents will have to travel as well, but that's

unanticipated, you never know. But the other travels for IAC and for the

adjudicator, we do anticipate travel costs there.

MR. WAKEHAM:

So you do anticipate the cost of the IAC going up slightly, then, for travel

costs?

MS. CHAFE:

Yes, the member from Labrador had not been charging for his travel in the past

when he was attached to an airline industry job that brought him here anyway. So

he never billed us and, now, that will change.

MR. WAKEHAM:

Okay.

MR. JOYCE:

And just for context

purposes, government added two new members to the IAC in recent months, and we

anticipated that would be a little earlier, but it wasn't, it was late in the

fiscal year, but that will certainly have added pressures on the transportation.

MR. WAKEHAM:

Right.

Are

they two additional members or two replacement members?

MR. JOYCE:

No, two additional members.

MR. WAKEHAM:

And who would they be?

MR. JOYCE:

The IAC went from five

members to seven.

Correct, Ann?

MS. CHAFE:

Yes.

MR. JOYCE:

And the two additional ones

are Earl Ludlow and Cathy Duke. That brings the complement to seven.

MR. WAKEHAM:

Okay, thank you.

Professional Services, how much of the $630,000 was spent on EAP?

MR. SMYTH:

The Professional Services is all of the EAP services.

MR. WAKEHAM:

So there's nothing else in

there, just the EAP services?

MR. SMYTH:

Yes.

MR. WAKEHAM:

Okay.

2018-19, $21,000 of the $32,800 was spent. What accounted for the savings there?

This is last year's that I'm looking at – the budget of $32,800 and expenditure

of $21,200.

MR. SMYTH:

In Purchased Services, those are things like our photocopiers, our training that

could be done, any facility charges within the leased property. There are

budgeted amounts there for any non-discretionary that could come up for security

purposes. We also rent mats for Occupational Health and Safety. Interpreting

services is also in there as well. So there were some savings in that area for

this year.

MR. WAKEHAM:

So, you're budgeting back up

to $29,000 – $8,000 more this year – do you anticipate some of those costs going

up significantly?

MS. CHAFE:

We anticipate, potentially, relocating in October when the lease is up on the

building that we're in, so that will have some impact. We will need movers and

we will need other attachments to the services to facilitate that.

MR. WAKEHAM:

Sure, thanks.

Are you

in a leased property right now?

MS. CHAFE:

Yes, we are.

MR. WAKEHAM:

Okay.

And are

there possible savings when you move into your new space?

MS. CHAFE:

Yes, there's currently a tender out for space, and we will, ideally, see

savings. We're also currently looking at government-owned buildings that could

save again.

MR. WAKEHAM:

Okay.

MR. JOYCE:

For context purposes as

well, the PSC will follow more in line with government's approach – instead of

offices, we will have an open concept. We will have less floor space. We will

save money, yes. Based on the number of employees and based on the floor space,

it would be significant.

MR. WAKEHAM:

Good to hear.

Thank

you, that's all the questions I have.

CHAIR:

Before we move to the Member

for St. John's East - Quidi Vidi, I just want to remind officials that when you

respond to a question, to identify yourself, just for the transcripts and make

it easier for the people transcribing.

Ms.

Coffin.

MS. COFFIN:

Thank you very much.

Thank

you, everyone, for coming here today and taking all the time to prepare this

background document. I know a tremendous amount of work goes into that, so I

appreciate your professionalism and the dedication to this.

I have

a couple of general questions along the way here. Let's start with the PSC is

tasked with enforcing policy for the protection of merit principle and

recruitment and selection within the public service. Has there been any

consideration to bringing other principles, such as the equity principle, not

just gender equity, but equity with respect to people with disabilities, race

and things like that? Has that been included in any of the criteria?

MS. CHAFE:

We are looking at two areas here – the public service in terms of its oversight

role with the Human Resource Secretariat. It's often been discussed but, in

order to do that, legislative changes will have to be enacted, and there are s

also issues related to privacy.

With

the IAC, which has been here for three years, in advance of that, we did put on

our website the ability for people to self-identify when they choose to, and

that's gender, geography, Aboriginal, disabled. Many have, but there's no

compelling reason to make everybody do it. So we've kept stats on that. We've

also worked closely with the Women's Policy Office to advance more women

applying in that IAC process.

I'm

happy to report that almost half of what's been appointed to boards is female.

And within that, we make good attention to geography and, where possible,

Indigenous and disabled people are represented as well. We continue to strive in

that area to be more inclusive, and will go forward keeping our numbers where we

can.

I'll

even make a pitch right now that anybody in their districts who have the

opportunity to point people towards that IAC site should do so. And it's been

through the efforts of many people throughout the province that we've had such a

good response to our databank and the ability to identify citizenship that are

ideal to serve as board members.

MS. COFFIN:

Okay, I will definitely do that. I'm sure there are lots of very capable people

in my district, so I will certainly pass that along.

I did

notice that perhaps another way of looking at this, because I looked at the

website and looked at a lot of the criteria. A lot of the criteria for

individuals on the boards tend to be very sector-specific, a lot of

business-heavy things. You need accounting designation or other experiences on

boards and committees and a lot of things like that.

Perhaps

a way of getting around that a little bit, instead of saying we're having gender

diversity criteria, is in the list of things that you might want to have or

background that you might want to have could be listed there. So maybe a strong

history of community involvement, or an attachment to a particular association

or group might be something that could be added in in the list of attributes

that we would like to see in people who are applying.

That

might be an option. I don't know if you've considered that.

MS. CHAFE:

In some cases, we are actually doing that.

MS. COFFIN:

Oh lovely, okay, good.

MS. CHAFE:

Boards are composites and usually they're not cookie-cutter members. We actually

search for a composite of many skills and experiences and representation. We

also are very mindful of geography, among all the other factors that we

consider.

MS. COFFIN:

Good. That's very

reassuring, thank you.

Next

question – and this is more of a technical question, so perhaps you can answer

it but maybe not; maybe you can tell me where I need to go ask.

Professional Services, it's my understanding that the definition of what falls

under Professional Services has changed slightly. Now I know that you've

included here things that are associated with EAP, so imagine that would be any

kind of counselling and a number of other services that they offer.

But

more specifically, can you tell me what the definition of professional services

is?

MR. JOYCE:

For the purpose of EAP, we

have a myriad of service providers, professional associations that range from

providing services to mediation services, to coaching, to psychological

services, social work services, and that covers the whole gamut depending on

what's needed for a particular employee, family or the case at hand. So it

covers a broad category of professional services.

terms of the number of service providers, we have in excess of 100 service

providers –

MS. COFFIN:

Oh good.

MR. JOYCE:

– and their companies

providing different types of skill services.

MS. COFFIN:

Right.

Okay,

that's specific to you.

MR. JOYCE:

Right, yeah.

MS. COFFIN:

Do you know what the general

definition is across government? It's my understanding that that definition has

changed slightly?

MS. CHAFE:

Yeah, to be honest with you, we only use it in that term.

MS. COFFIN:

Okay.

MS. CHAFE:

I would suggest our colleague, Theresa Heffernan, when she comes, will be more

than able to answer your question. She's had a long history of knowing what

exactly fits into the Professional Services.

MS. COFFIN:

Okay. On the spot, there you go and you're not even up.

MS. CHAFE:

But our professional services, in many ways, because we are so small, our only

use is the service providers for the EAP.

MS. COFFIN:

Right.

MS. CHAFE:

And if you want a bit of history on that, I'm happy to provide that. We

basically have an intake system where we seek qualified professionals to offer

counselling services. Those professionals usually have to be affiliated with a

group such as clinical social workers or psychologists. We prefer that they come

in under a licensed professional body.

Then,

depending on their area of expertise and specialty, we often match our clients

to those professionals. As usual, there's no problem getting people on the

Avalon. We struggle at times to get people in Central, Western, Labrador,

Northern Peninsula and the South Coast, but we maintain the same standards and

we basically interview these people and reference check the people to ensure

their properly licensed and insured. Then we also keep close contact with

professionals and with our client group to make sure the relationship is

therapeutic and that it is working as it should.

MS. COFFIN:

Oh, good. That's very reassuring.

Thank

you.

MS. CHAFE:

But that's pretty well our only use for that –

MS. COFFIN:

Right, for that category.

MS. CHAFE:

I know other departments would have much broader applications.

MS. COFFIN:

Yeah, I'll wait until we get to the more general definition of that after.

One

more question – and this is perhaps for all of our benefits here. We have the

Independent Appointments Commission that does appointments to agencies, boards

and commissions. We have the Public Service Commission, but we also have the

Human Resource Secretariat. Can you describe the relationship between all three,

please?

MR. JOYCE:

In terms of the Human Resource Secretariat, they're the human resource arm of

government. In terms of the role of the Public Service Commission, the Public

Service Commission has very specific oversight capabilities and we have, under

MC – it goes back I think 7 years ago – very specific relative to HRS. This

includes the development of staffing policy, standards and procedures,

monitoring, auditing and appeals of Human Resource Secretariat staffing action

and certification of selection boards, and that is our role relative to HRS.

also, I guess not formally, work with HRS in terms of – as you asked the

question a little earlier about selecting whether it's females, people with

disabilities, we work closely with them on issues that arise and see what can be

done to accommodate it, vis-á-vis potential legislative amendments.

We also

work with HRS if the Public Service Commission conducts a review of a

recruitment issue. And if we feel that there's been a breach the

Public Service Commission Act , which

is rarity, or if we feel, during the review, that the procedures can be done a

little better, we meet with HRS on a monthly basis, sit down with their director

and go through it to try to be as efficient and client-sensitive as possible in

the public service. That's our relation, formal and informal.

MS. COFFIN:

Okay, interesting.

Do you

know what the rationale was to move the hiring function of government out of the

Public Service Commission and into the Human Resource Secretariat? I realize

this was a number of years ago. I remember a long, long time ago that they moved

everything to the Public Service Commission because they wanted that

independence and they wanted to have that one funnel, and now that seems that

had been reversed. So a little sense of the rationale and perhaps how that's

working.

MS. CHAFE:

The rationale came as a

realignment of human resource

services throughout the departments. And within a department, we often had

fragmentations by one department over another and more centralized services in

all HR functions. In the past, it was employee relations, classification, pay,

compensation, research, benefits, insurance. It's only natural that the staffing

function belonged with those like activities. So the operational aspect was

taken from the PSC and placed with HR as more of a composite service. When you

hire someone and they leave the service, they would be tended to by a central

group.

retained oversight over how staffing actions were done. We continue to audit,

review and investigate. We also take complaints when staffing actions are

considered by candidates not to be fair. And we still work very closely with HR

in the world of staffing. We also ensure the quality of the people who are doing

the recruitment must meet our standards.

So,

long range, you can also take your staffing people and develop them into more

full HR people. To staff in isolation of understanding employee relations,

labour contacts or how classification works is pretty well putting staffing in

an isolated spot when it could be a more composite service.

MS. COFFIN:

Right.

Can you

initiate your own, I guess, investigations?

MS. CHAFE:

Yes, we can do spot audits

and we do.

MS. COFFIN:

Okay, excellent. That's nice to know.

MS. CHAFE:

Often we do get complaints

from people who have applied, that

would like to have us look at a file, and we do.

MS. COFFIN:

Right. So a hire can

initiate an investigation or you can initiate one on your own.

MS. CHAFE:

Yes.

MS. COFFIN:

Okay, that gives me a little

bit of reassurance as well.

Thank

you.

CHAIR:

Before we continue, I just

got a message from the people downstairs. They ask that when people respond to

the questions that you speak into the mic. They're having a hard time getting

the message recorded.

questions from the government Members, no?

So I'll

move to –

MR. WAKEHAM:

I'd just like to ask a

couple of more questions, if I could?

CHAIR:

Yes.

MR. WAKEHAM:

I was wondering if we could

get a copy of that MC, if that's possible. Also, who's responsible for hiring

contract positions, or temporary contract positions, or temporary workers? Is it

the Public Service Commission or is it the individual departments?

MS. CHAFE:

It would depend on how they're being hired. You can come in as a consultant.

There are also some requirements under procurement that you would go to tender

on certain pieces of work.

There

is, under the union contract with NAPE, the capacity to bring in short-term

temporary to meet specific needs and then, within a specified time period, that

position must be advertised or the person must vacate. But we do not do that

activity, it's done through HRS. And they would have more detailed information

on how that's handled and what it is.

MR. WAKEHAM:

Yes, I'm quite familiar with

the 13-weekers that were used all the time. So that program is still available

to be used?

MS. CHAFE:

Yes. Again, that's an HRS

activity, not a PSC one.

MR. WAKEHAM:

Okay, thank you.

CHAIR:

Any further questions?

MS. COFFIN:

Good here, thank you.

CHAIR:

Okay, seeing no further

questions, shall 1.1.01 carry?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

All those against, 'nay.'

Carried.

motion, Public Service Commission, total head, carried.

CHAIR:

We'll move to the

Consolidated Fund Services now.

We'll

take a couple of minutes, just to allow the new staff to come in.

We're

going to start the Estimates for the Consolidated Fund Services. Since we have

some new staff here, we're going to ask people to introduce themselves, again.

So, we'll just start over here.

MS. HANRAHAN:

Denise Hanrahan, Deputy Minister of Finance.

MS. HEFFERNAN:

Theresa Heffernan, Assistant Deputy Minister, Finance.

MS. BOLAND:

Gail Boland, Assistant Deputy Minister, Finance.

MS. JEWER:

Michelle Jewer, Comptroller General, Finance.

MS. ELLIOTT:

Susan Elliott, Executive Assistant to the Minister.

MR. BUDGELL:

Marc Budgell, Director of Communications, Finance.

CHAIR :

Okay, I'll ask the Members to introduce themselves as well.

MS. COFFIN:

Alison Coffin, MHA St. John's East - Quidi Vidi.

MR. WAKEHAM:

Tony Wakeham, MHA, Stephenville - Port au Port.

MS. DRODGE:

Megan Drodge, Researcher with the Official Opposition Caucus.

MS. STOODLEY:

Sarah Stoodley, MHA, Mt. Scio.

MR. CROCKER:

Steve Crocker, MHA, Carbonear - Trinity - Bay de Verde.

MR. BYRNE:

Gerry Byrne, Corner Brook District.

CHAIR :

I'm Scott Reid, I'm the Member for St. George's - Humber.

I'll

open it up with the Minister of Finance for opening comments.

MR. OSBORNE:

Thank you.

Just a

couple of brief remarks regarding Finance and CFS. The Department of Finance

provides strategic leadership to all government departments in the development

of fiscal, financial, statistical and economic policy. We do this by providing

timely analysis and advice to departments and agencies and Cabinet committees,

such as Treasury Board.

The

staff in my department oversee the management and control of the province's

finances to ensure that public funds are used appropriately. In some instances,

we also provide centralized and corporate shared services to other departments,

such as economic and project specific analysis, statistical services, internal

audits, select accounts receivable and collections, and the administration of

such things as invoice payment processing and support and maintenance of

government's financial management systems.

Each

year the department is responsible for preparing Public Accounts, the

consolidated budget, the supplementary cash estimates book, The Economy document

that is distributed on budget day, the fall fiscal update and the economic

review.

There

are four main divisions of the Department of Finance: the Financial Planning and

Benefits Administration division, led by Theresa Heffernan; the Economic, Fiscal

and Statistics division, led by Craig Martin; the Policy, Planning and Corporate

Services division, led by Gail Boland, this is a new division that was created

this past year and will provide key support to the deputy minister's office, as

well as leadership on department-wide administration and operational improvement

initiatives; and the Comptroller General's office, led by Michelle Jewer. All

four of these divisions report into the deputy minister and myself. Each of

these branches also has sub-functions that feed into them, such as Treasury

Board staff and the minister's staff.

The

role of the Treasury Board is particularly important. As the President of

Treasury Board, I meet regularly with Treasury Board support staff, our deputy

and a complement of ministers to make key financial decisions affecting all

areas of government. Through Treasury Board, we've kept departments accountable

for their fiscal targets, cost-savings measures and expenditure control.

With

that, we will open it up for questions.

CHAIR:

Okay.

Before

I call the headings, I just want to remind people, when they're responding to

identify themselves and to speak up and speak into the mic.

CLERK:

1.1.01.

CHAIR:

Shall 1.1.01 carry?

MR. WAKEHAM:

Thank you, Mr. Chair.

First,

again, I'll start off with some general questions.

The

last time the province borrowed in the US market was 1993. Can the minister give

his thoughts on US borrowing? Are there plans to borrow outside the Canadian

market this year?

MR. OSBORNE:

We generally try to stay in

the domestic market, unless conditions are very favourable. Generally, when you

borrow outside you also have to incorporate mechanisms, such as hedging. We've

seen, for example, a couple of years ago, where Nalcor had lost money on

hedging. Generally, it balances out, but there are times that you'll win and

times that you'll lose.

Market

conditions on the domestic market have been favourable to us since we've started

borrowing again in 2016 and we continuously monitor foreign markets to determine

whether it's advantageous, but we've remained in the domestic market.

MR. WAKEHAM:

Okay, thank you.

How

much was borrowed last year?

MR. OSBORNE:

$1.45 billion, I believe it

was.

OFFICIAL:

$1.425 billion.

MR. OSBORNE:

$1.425 billion.

MR. WAKEHAM:

Okay.

How

much borrowing is planned for this year?

MR. OSBORNE:

$1.2 billion.

MR. WAKEHAM:

$1.2 billion.

What is

the impact of changing the interest rate of the debt-servicing cost?

MR. OSBORNE:

I'll let my official speak a

little more to that.

I guess

in a minority government, the bond rating agencies often look to whether or not

governments will remain on fiscal target in minority situations. So, there is

some concern, I guess, within the department as to how the bond-rating agencies

will view the performance of the minority situation, whether there are

additional pressures on government to expand its spending. A change in bond

ratings could result in millions of dollars additional borrowing costs on an

annual basis.

MR. WAKEHAM:

Okay, thank you.

Can you

provide the borrowing forecast for the next five years?

MS. HANRAHAN:

Yeah, that would be on our investor website.

MR. WAKEHAM:

Okay.

MS. HANRAHAN:

I don't have it right in front of me but I can get it for you. I think it's part

of our investor website, I believe.

MR. WAKEHAM:

Right there, okay.

MS. HANRAHAN:

Yeah.

MR. WAKEHAM:

Thank you very much.

We have

a banking syndicate who helps sell our debt. Who are the current members and who

are the lead members?

MS. HANRAHAN:

We share leads amongst our syndicate depending on the issues, so they kind of

take turns. They would be RBC, TD, CIBC, Bank of Montreal, Bank of Nova Scotia

and National Bank.

MR. WAKEHAM:

I have some more questions. On the Temporary Borrowings, is the line of credit

still set at $200 million?

MS. HANRAHAN:

Yes.

MR. WAKEHAM:

Yes. What is the interest rate on the line of credit?

MS. HANRAHAN:

It's prime less 50 basis points. Right now, that would be about 3.45 per cent.

MR. WAKEHAM:

Okay.

Does

the minister plan to use the line of credit this year?

MR. OSBORNE:

We've put forward, as part of budget, our borrowing requirements for this year.

We are looking at some treasury bills as part of that borrowing strategy. Staff

in the department always monitor in terms of whether we're going to go out with

fives, tens, twenties or whether we go out with treasury bills. In shorter term

borrowing, they'll monitor and evaluate the best course of borrowing, so it's

difficult to say today whether we're going to put fives or tens on the market.

In the next round, they evaluate that in motion.

MR. WAKEHAM:

Was the line of credit used last year?

MS. HANRAHAN:

No.

MR. WAKEHAM:

Do you know what the lines of credit are for the regional health authorities?

MS. HANRAHAN:

I wouldn't have the details in front of me now. I think it varies by RHA, based

on size.

MR. WAKEHAM:

Okay. Thank you.

What is

the current interest rate on the treasury-bill program?

MS. HANRAHAN:

For '18-'19 we would have

realized 1.54 per cent on our 91-day T-bills and about 1.93 on our cash

management bills. When we hold the cash, we would have realized just under 2.5

per cent on our cash balances under our new bank agreement. Our forecast for

next year, for '19-'20, is about 2.2, but that would have built in the

expectation of Bank of Canada changes, which continue to be unknown.

MR. WAKEHAM:

This year I noticed the debt

expense for the T-bill program has increased to $23 million compared to an

actual spend of, I think, $16.5 million last year. Why the increase?

MS. HANRAHAN:

It is a combination of an

increase in size in the T-bill program. Again, this year, we added an extra $15

million to each one of our 91-day terms for an extra $195 million in short-term

cash. Basically, we're utilizing the lower T-bill rate and our overnight rate on

our banking account is higher, so we have increased the size of our T-bill

program.

The

total program would be $1.1 billion, so that would lend more interest expense

here. You'll see the offset in 1.1.05, Temporary Investments, in related

revenue, because you'll pick it up on the other side where I'm realizing it in

overnight balances. We also had a little bit better yields in the prior year,

which is the projected revised a little bit lower than it should have been, but

once again you'll see that offset in related revenue.

MR. WAKEHAM:

Okay, so that's in your

Temporary Investments, that's where we're seeing why last year's – why was last

year's revenue not realized?

MS. HANRAHAN:

I'm sorry, what number?

MR. WAKEHAM:

In 1.1.05, under Temporary

Investments.

MS. HANRAHAN:

Oh, yes.

MR. WAKEHAM:

It was $23 million budgeted

and $17 million actual.

MS. HANRAHAN:

It is a combination. One is

we did a lot of our borrowing later in the year, so we didn't have as high a

cash balance for the first half of the year. Normally, we would spread our

borrowing program over the year, but based on market conditions, it tended to be

in the latter part of the year last year, given spreads. We're trying to

maximize that.

The

other thing is we realized when we did this year's budget that the method by

which we were recording this amount, historically we would have used our ending

cash balance, so what we thought the balance was at the end of the year. That

tends to be a little bit higher than throughout the year, because we're

anticipating April 1 payments, so we tend to keep more cash, but it's not really

indicative. We were noticing in most years the budget was higher than projected

revised. We actually corrected that this year and this is why you will see the

$19.6 million in '19-'20. It's more indicative of a daily average cash balance

calculation versus using an end-of-year balance.

MR. Wakeham :

Is the $19.6 million

number that's there in correlation with what you just talked about under the

treasury bills in terms of the increase in the extra revenue that you were

talking about?

MS. HANRAHAN:

Yes, you would see in that

$19.6 million fundamentally in that amount of the cash balance but, again, these

are projections. It all depends on how the cash flows during the year and what

our outlays are and the timing. A lot of it is timing and rates.

What we

do know is that our overnight cash balance that we get from CIBC – 2.47, just

under 2.5 – usually is significantly better than the cost we incur in those

temporary investments. Even when we issue them – and that's why we've increased

our plan because you end up generating more than it was costing you.

MR. Wakeham :

Okay,

that's it for me.

Thank

you.

CHAIR:

The Member for St. John's

East - Quidi Vidi.

MS. COFFIN:

Thank you.

Okay,

lots of interesting things going on here.

If I

could, let's go to Appendix III in the budget document to start. I noticed under

Crown Corporation and Other Debt we have Housing, Municipal and Other. Can you

give me some details on what other is? I noticed it has been declining over

time. It's page A-3 in the budget document, in Estimates.

MS. HANRAHAN:

I don't have details

specifically in front of me now, but I think we can get that for you.

MS. COFFIN:

Okay.

And

that's Crown Corporation and Other Debt, correct?

MS. HANRAHAN:

Yeah,

$281.7 million in '19?

MS. COFFIN:

Okay, yeah.

MS. HANRAHAN:

Yeah, because this

schedule

is at March 31 of '19.

MS. COFFIN:

Right. Yeah, that would be –

MS. HANRAHAN:

Whatever else is in the

consolidated cash that we would've had here, I just don't have it with me.

MS. COFFIN:

Right. Is that net or is

that an absolute?

MS. HANRAHAN:

That should be a gross.

Normally, we would have sinking funds stated if it was netted against it.

MS. COFFIN:

Right.

MS. HANRAHAN:

Unless it was in the

entity's financial statement as a net number, that's the only way it would

(inaudible).

MS. COFFIN:

Okay. That was a bit curious

there.

What

else did I want to ask about now? I'm not quite sure exactly what fits exactly

where, but I did have a number of questions that came out of the Auditor

General's report. Perhaps this is the right time or is it better to go to …?

In the

Auditor General's report, they focus on flexibility, sustainability and

vulnerability. I noticed in a number of occasions that the AG had said that the

fall update did not include information on a variety of different indicators.

Are those available now? I haven't marked them exactly, but there were a number

of times that very pointedly it was this information was not updated, so I can't

make comment on it; this information was not updated, so I can't make comment on

it.

So, I'm

a little curious if that information is available and how it might affect some

of these indicators, because throughout the course of the document they talk

about this is a either upward or downward and deteriorating trend, so that means

we haven't addressed those pieces, even though we're balancing the budget and

we're trying to focus on a balanced budget, but if we remain vulnerable,

inflexible and unsustainable, then a balanced budget is going to be unattainable

perhaps.

So, I'm

just a little curious about those. Do you happen to have that or should I go

through and look specifically for the things that were missing?

MS. HANRAHAN:

We can certainly cross

reference the report to see what the gaps are. The challenge has been the fall

update process and the documents generated are not as deep as budget day

documents, so from a reporting perspective, fall update tends to be

fundamentally an update on the deficit and an economic update.

Whereas, budget

day, it's about debt and borrowing and some of the other main supply and those

types of things, but we can certainly go back and cross reference because some

of the indicators may be very easy to do.

MS. COFFIN:

Certainly, and the only

reason I ask is because I'm very familiar with the AG's report and I have not

seen that type of discussion before. So, it implied that the information had

previously been available, and I know sometimes that the timing of these things

are a little bit off because sometimes the Public Accounts come out and then you

have a couple of beats before the AG's report comes out. I know the AG's report

they're trying to move to an earlier date, so that might be what's going on

there, but I think that will be a very important piece to get a more fulsome

picture of the actual state of the finances there. So that would be a bit

helpful.

Let's

see what else. I notice over here, just to give me some sense of what's going on

in terms of sinking funds, I know I can do the references myself, but we have

what I see as only one bond that is coming due right now, or one amount of debt,

and that's the borrowing in 1989/2000, AG, it's payable in US dollars. It's $150

million that is coming there.

Can you

give me some sense of how – I guess, if the sinking fund is available to pay

this off, and certainly the sinking fund says there's nothing there, so that's

going to come out of our general revenue or our borrowing?

OFFICIAL:

What page?

MS. COFFIN:

A-4.

MS. HANRAHAN:

You would be looking at the

$150 million, Series, AG?

MS. COFFIN:

Yes.

MS. HANRAHAN:

Yeah.

The

usage of sinking funds has been up and down over the last 30 years and the

latest trend has been not to tend to use them and then there was a period of

time where we did.

In most

times, it depends on if the issuer required them or if there was some reason for

it, because, generally, the interest rates are so low on the reinvestment of

those sinking funds that I'm paying to borrow it; I'm losing money if I also do

the sinking fund.

In this

particular case, and in fairness for the bulk of the debt even above in Canadian

dollars, there aren't any sinking funds to counteract against that.

MS. COFFIN:

Okay, so the sinking fund

stuff is the few things that I see in the second last column from the right.

MS. HANRAHAN:

In that column, that would

be gross sinking funds.

MS. COFFIN:

Yes. So, there's a

significant difference between the assets that we have and the debt that is

owing, correct?

MS. HANRAHAN:

Yes.

MS. COFFIN:

I noticed that there is a

number of debts that are coming due in rather short order. We're seeing a whole

pile in 2021. A number of borrowings that happened in 2016, 2015 that are very

short-term borrowings. Good job on getting the lower interest rate, which is

great, but I question the feasibility of being able to pay $650 million that is

going to be due in a year and a half or so.

I know

we can only pay debt as debt comes due, because you can't pay this off a little

bit early. That's a common thing that I often have to rebut in the media, but

I'm just a little concerned about our ability to pay because a lot of debt is

coming due in very short order.

MS. HANRAHAN:

I know there was a question

about the out years from a borrowing perspective; all of the maturing debt is

rolled into that. In most cases, we are utilizing current interest rates, and

it's really a save as we roll debt over.

We did

issue some short-term debt, five-year fixed or five-year floating notes, it's a

very small portion of our portfolio. Last year, we issued $1.425 billion, and

some of these would've been in 2016.

2016, we were new into the market and we noticed that our spreads were very high

because we hadn't been borrowing for about 10 years.

MS. COFFIN:

Yes.

MS. HANRAHAN:

I suspect back then this was

a cash management issue to try to get some interest rate relief, given that we

hadn't been in the market, but the floating note there, Series, 7E, for example,

would've been very much utilizing that under 2 per cent. We do have the ability

for the floating rate note to lock that in, to flip that over to fixed.

MS. COFFIN:

Good.

MS. HANRAHAN:

We're usually pretty

opportunistic about how we manage that. It is a big part of our cash management,

to constantly look at our maturing debt. Most of our debt in the last few years

has been 10- or 30-year debt, it's been long-term debt.

MS. COFFIN:

Right, which is actually not

a bad idea, given the low interest rate environment that we're in.

MS. HANRAHAN:

Yeah.

MS. COFFIN:

Now, good news on the floating is that the Bank of Canada is looking like there

might be a slowdown in our economy, and we're seeing that international as well.

So good from a borrowing perspective; however, it's probably going to

substantially impact our revenues at this point.

We've

budgeted oil at what this year? Was it $64?

MR. OSBORNE:

Sixty-five.

MS. HANRAHAN:

Sixty-five.

MS. COFFIN:

Sixty-five, and an exchange rate of …?

MS. HANRAHAN:

About 75.

MR. OSBORNE:

Seventy-five.

MS. COFFIN:

Seventy-five. Okay, I haven't checked the exchange rate in a while, but oil is

at $60 and a little bit and trending down at this point. So that's a bit

disconcerting.

What's

the lost revenues for every dollar in a barrel of oil? We lose, what, $22

million, is it?

MS. HANRAHAN:

I think it's slightly less than that.

MR. OSBORNE:

Yes. It's just higher than $20 million.

Oil is

a volatile commodity.

MS. COFFIN:

Yes.

MR. OSBORNE:

So last year we saw oil considerably higher than $75 a barrel; for part of the

year we saw oil at considerably lower than what we budgeted. We'll see months

where oil fluctuates within the month at a wide variance.

don't focus on what the price of oil is today, any more than a month ago oil was

considerably higher than what we budgeted. It's on an annual basis. Last year,

even though oil fluctuated from far below what we budgeted to far higher than

what we budgeted, we came out at just better than $71 a barrel. We budgeted $63.

MS. COFFIN:

Yes, all right, that's very reassuring. That $71 was in Canadian dollars or US?

MR. OSBORNE:

US.

MS. COFFIN:

Okay, all right. So that's actually much better than it – now we're going into

this year, we're going to see a decrease in production, as well as this lower

oil price. So what's that going to do to?

MR. OSBORNE:

We've got a 12 per cent increase in production this year?

MS. COFFIN:

Is that what I heard, that it was going to decrease production this year that

Terra Nova is shutting down? So, how is that going to impact our ability to meet

some our targets, or has that already been built in?

MR. OSBORNE:

That's been budgeted in.

MS. COFFIN:

That's been budgeted in. Okay, that's, again, reassuring.

I don't

know if I'm going to fit another question in here. Perhaps, no. I'll pass it

back to you, and then if there are more questions, then perhaps we can come back

to me.

CHAIR:

The Member for Stephenville

- Port au Port.

MR. WAKEHAM:

Okay, where are we now?

The

Interest Subsidy from CMHC, I noticed that there's nothing estimated for '19-'20

– 1.1.06.

CHAIR:

Which heading is that again?

MR. WAKEHAM:

1.1.06.

MS. HANRAHAN:

The mortgage that was there was paid off in '18-'19.

MR. WAKEHAM:

Okay.

MS. HANRAHAN:

Therefore, there's no future subsidy. There is a miscode. That revenue actually

should've probably been reflected in 1.1.05, Temporary Investments. It's still

revenue but when we checked it's a miscode.

MR. WAKEHAM:

I was going to ask you why the revenue of $1.8 million.

MS. HANRAHAN:

Why it's so large?

MR. WAKEHAM:

Yeah.

MS. HANRAHAN:

That's why. It's a miscode. It was our CIBC contract; it should have been coded

to 1.1.05. It's still related revenue and it's the same amount.

MR. WAKEHAM:

Okay.

MS. HANRAHAN:

It leaves behind a little bit less there but, basically, the mortgage was paid

off.

MR. WAKEHAM:

In 1.3.01 under the Guarantee Fees –

CHAIR:

Just before we move from the – the heading was –

MR. WAKEHAM:

1.3.01.

CHAIR:

I've been giving some flexibility but the heading that was called was 1.1.01.

MR. WAKEHAM:

Okay.

CHAIR:

I'd like to keep it to the 1.1 subheadings at this point. We can come back to

that later if that's the way the Committee would like to proceed. Is that okay?

MR. WAKEHAM:

That's fine, Mr. Chair.

I'll

ask one more question under 1.1 then and that is the mortgage that's been paid

off. What's the status of the asset?

MR. OSBORNE:

CMHC mortgage?

MS. HANRAHAN:

Harbour Lodge. It's the Harbour Lodge facility.

MR. WAKEHAM:

The asset is Harbour Lodge.

MS. HANRAHAN:

Harbour Lodge, Carbonear.

MR. WAKEHAM:

What would be the intent of the use of Harbour Lodge?

MS. HANRAHAN:

My understanding is that the regional health authority was transferring it to

Transportation and Works. I don't have the current status but the anticipation

was either sale, repurpose or demolish, if there's a more recent update than

that.

MR. WAKEHAM:

Okay, thank you.

CHAIR:

Any further questions?

AN HON. MEMBER:

(Inaudible.)

CHAIR:

Okay, we'll call that head

now.

CLERK:

1.1.01.

CHAIR:

Shall 1.1.01 carry?

All

those in favor?

CLERK:

1.1.02.

CHAIR:

Although we just called 1.1.01, I allowed some flexibility and I think we've

dealt with all the subheads under 1.1.01 through to 1.1.06. I'm going to call

those inclusively and we'll just vote those as well, before we move on.

CLERK:

1.1.01 to 1.1.06 inclusive.

CHAIR:

Are those carried?

All

those in favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 1.1.01 through 1.1.06 carried.

CHAIR:

We're going to move to

1.2.01.

CLERK:

1.201.

CHAIR:

Are those carried?

Are

there any questions on that heading?

MR. WAKEHAM:

None for me.

CHAIR:

No.

Shall

those carry?

SOME HON. MEMBERS:

Aye.

motion, subhead 1.2.01 carried.

CLERK:

1.3.01.

CHAIR:

Okay, we'll call heading

1.3.01.

The

Member for Stephenville - Port au Port.

MR. WAKEHAM:

Thank you, Mr. Chair.

1.3.01;

last year revenue was budgeted at $8.9 million, only $8.6 million was attained.

Can you explain why?

MS. HANRAHAN:

The $8.9 million is a

projection based on the guarantee fees that we would get. Fundamentally, the

variance would relate to Newfoundland and Labrador Hydro. The calculation of the

fees varied through the year, depending on the term of the debt, be it 50 basis

points or 25.

MR. WAKEHAM:

Can the minister provide a

list of which organizations were charged for their guarantees in '18-'19 and how

much was charged to each?

MS. HANRAHAN:

I have it here. There are

two people charged fees: Fogo Island Co-operative Society, their fee would have

been $15,000; and all the remaining fees would relate to Newfoundland and

Labrador Hydro.

MR. WAKEHAM:

Are there any new loan

guarantees being considered by Cabinet?

MR. OSBORNE:

Not at this time.

MR. WAKEHAM:

Okay.

there a list of which loan guarantees were approved and issued last year?

MS. HANRAHAN:

I think you would see a

change; all the loan guarantees are disclosed in Public Accounts. There was a

provincial on land in '17-'18 for Newfoundland and Labrador Hydro of about $600

million. There haven't been any increases since.

MR. WAKEHAM:

I noticed your projection is

to go back up to $8.9 million, even though only $8.6 million. Are you confident

that you will achieve $8.9 million this year?

MS. HANRAHAN:

It's a forecast, again.

Based on that timing of that $600 million that we did in '17-'18, we'll get a

full year now and I think the forecast should be okay.

MR. WAKEHAM:

Okay, thank you.

CHAIR:

Any further questions on that heading?

The

Member for Mount Pearl

- Southlands.

MR. LANE:

Yes, thank you, Mr. Chair, with the leave of my colleagues.

CHAIR:

Yeah, with leave.

AN HON. MEMBER:

Leave.

MR. LANE:

I just have a couple of general questions so I think it will fit in here

somewhere.

Minister, I guess my concern is more around the debt that we have and our

ability to pay that debt. First of all, I'm just wondering, right now I believe

– and correct me if I'm wrong – I think it's somewhere in the neighbourhood of

$1.3 billion a year to service our current debt or somewhere in that

neighbourhood.

I'm

wondering, at what point, if we keep borrowing – we're borrowing again, we've

been borrowing year over year; we're going to borrow another billion-plus this

year. I understand you have a target for 2022, I believe, to attain surplus, but

does anybody have a number? Is there a number out there that says once we reach

this much debt, we're simply not going to be sustainable? We keep hearing about

the fact that the debt is growing, growing, growing and pretty soon we're going

to have to be bailed out by Ottawa.

I'm

just wondering, at what point, at what number – how many years can we continue

borrowing a billion-plus dollars before that becomes a reality for us, or is it

just a myth?

MS. HANRAHAN:

The debt expense for '19-'20 is just over a billion dollars from an accrual

perspective, and it represents about 12 per cent of the total expenditure for

the province. The debt expense is really a by-product of the ability to borrow.

I guess the marker or the calculation will come down to the province's ability

to borrow and the interest rates that it will attract.

know, from a spread perspective, we pay more than some other provinces just

based on that. The question is, at what point, from a cash and borrowing

perspective, are you not able to do the other parts of the program? Some of our

cash expenditures are done for infrastructure so it doesn't impact deficit. Some

of the cash is used for different things. There are many mechanisms by which you

can manage your cash, there are lines of credit, there are all kinds of ways. We

have not done a calculation or a fine line in the sand to be able to identify

because it is very much subject to how Newfoundland and Labrador is seen from a

borrowing perspective which is a really wide variety of information, from bond

ratings to expenditure control to revenue generation. So I guess the long and

the short of that is we haven't been able to calculate a particular line in the

sand.

MR. LANE:

Okay, I appreciate that. Obviously, no different from your own personal

situation. At some point in time, nobody is going to lend you money. If we keep

growing the debt year over year over year, it just can't go on indefinitely for

sure. So, with that in mind, I will say to the minister that I support the

attrition plan 100 per cent, zero-based budgeting. Some of the things you've

done is good, as far as I'm concerned at least.

I just

want confirmation, the attrition plan, zero-based budgeting and all those other

measures, are they all applying now to all of the ABCs and institutions like

Memorial University, CNA, and so on? Because I do understand that at one point,

maybe a year or so ago, NLC weren't necessarily on board. I'm just wondering is

everybody now doing their part and following that same template, if you will.

MR. OSBORNE:

We've been getting co-operation from our agencies, boards and commissions. In

December, we introduced legislation into the House that allowed them to share

information with us more freely, without concern for privacy in sharing of that

information. The reason for that information was to enhance that level of

co-operation that we're receiving from the agencies, boards and commissions.

MR. LANE:

Okay, thank you, Minister.

Minister, I don't believe there's a process – you can correct me if I'm wrong. I

know we don't have an Estimates process, per se, for agencies, boards and

commissions. Personally, I'd love to see it where NLC and Newfoundland and

Labrador Housing, we would be able to do the exact same thing that we're doing

here, but that's not happening right now. But do you have that ability? Do you

receive something like this that you would review and ask questions every year

on their budget, like we're doing now, to make sure that they're handling their

affairs properly and spending the money wisely?

MR. OSBORNE:

Yes, the concept of being able to do that is an interesting concept. Probably

something that maybe we should have further discussion on. But yes, departmental

officials do monitor the financial reports of our agencies, boards and

commissions.

MR. LANE:

Okay.

Well,

as I said, Minister, as one MHA, I would certainly support a similar process as

to what we're doing here with those agencies, boards and commissions. Because,

at the end of the day, it's still taxpayers' money that's being spent.

final question relates to something that's been put out there by the Leader of

the Official Opposition, this whole idea of taxing Hydro-Québec on their power

generation. I'm just wondering is that something that's being even considered or

looked at, if there's a possibility of doing that. Can you say?

MR. OSBORNE:

That has been looked at for

a considerable period of time. I mean, it's a legal issue. Anything that's said

here is obviously on record in Hansard ,

so I think caution in anything that's being said, so as not to jeopardize what

may or may not be available as a legal avenue for the province would be wise for

me.

MR. LANE:

Sure, I understand.

As long

as it's being looked at. Obviously, I'm not a lawyer. I don't know the

background around it, but if there is a way of doing it, I think we should

explore every avenue we can. It was something that I wasn't aware of, but if we

can do it, why not?

That's

all I have for now.

Thank

you.

MR. OSBORNE:

Thank you.

CHAIR:

Any further questions?

MR. WAKEHAM:

Yes, just a follow-up

question.

As a

percentage of expenditure, the 12 per cent that we're currently spending now on

debt servicing, is that the highest it's ever been?

MR. OSBORNE:

Yes, it is. At one point,

Education, I think, in the '70s was the largest spend of any department, and

that was overtaken by Health; Education became the second highest. We're now

looking at debt servicing as the second highest expense. I mean, the province

has borrowed for Nalcor and for other purposes since 2016. Primarily we've

gotten back into borrowing, in a larger way. But I think that's the highest

percentage it's ever been.

MR. WAKEHAM:

And that's the 12 per cent,

that's reflective of this year's thing.

Just to

follow up with my hon. colleague there, in relation to the ABCs, the agencies,

boards and commissions and the reference to the return to surplus, there was

$617 million shown as a reduction in expenditure between now and the return to

surplus in '22-'23. Are the agencies, boards and commissions factored into that

particular number?

MR. OSBORNE:

They are. We've got what looks like a bit of a jump in expenditure this year.

First of all, when you factor in debt servicing, I mean, the cost of debt

servicing continues to increase. That's something that's not entirely within the

control of any Member of this Legislature without – once we get back to surplus

and we can actually start paying on the debt, that's when that will start to

reduce. Any increase in expenditures, or any increase in costs to government,

only adds to the wrong side of the ledger.

This

year, we've got about $130 million included in the budget in fully recoverable

expenses. And $125 million of that is federal money. Where the federal

government has provided funding for a particular purpose to be carried out in

the province, it shows as revenue and it also shows as an expense. So $130

million in total, but $125 million of that is federal.

We've

got $235 million, I believe, we've paid out in severance, which is a one-time

expense. Once severance is completely paid out, we no longer have to pay that.

So while it looks like the ledger is moving that way, some of it is very

explainable, such as the severance payout. Severance will save us $25 million a

year. The actual save is $35 million, but $10 million of it is the cost of

borrowing in order to payout the severance. The real savings is $25 million a

year, but we're still paying the severance out, so it is showing as an expense.

That's

a large chunk of it. A large chunk of it will come from 60 per cent of our

expenditures in terms of public spend is within our agencies, boards and

commissions, so they have to be part of the solution.

MR. WAKEHAM:

The $617 million will include a flattening, if you will, or a reduction in their

expenditures?

MR. OSBORNE:

Well, we're looking for efficiencies, similar to what we found in government. We

continue to work with our agencies, boards and commissions to find those

efficiencies.

MR. WAKEHAM:

Thank you.

CHAIR:

Any further questions under headings 1.3.01 and heading 1.3.02?

further questions. Seeing no further questions I'll call heading 1.3.01 and

1.3.02 inclusive.

All in

favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 1.3.01 and 1.3.02 carried.

CHAIR:

We'll move to call the next

heading.

Shall

1.4.01 carry?

Are

there any questions on those?

MR. WAKEHAM:

I have a question on 1.4.01.

The Professional Services category, the expenses were budgeted to be $11.2

million but only $6.67 million was required. This year we're estimating $8.7

million. Can the minister explain the variance?

MS. HANRAHAN:

The forecast for '18-'19 of

$11.2 million; we actually realized our fees were a little bit better than we

anticipated. We were able to utilize some of our short-term debt in order to

have some savings on commissions because it's all based on the size of what we

issue and the length of time.

We had

a slightly smaller borrowing program; in '18-'19 we were down to $50 million. Of

course, for budget '19-'20 you'll see it's down from $11.2 million to $8.7

million because the borrowing program is actually smaller than the $1.425; it's

now $1.2. We would have realized some savings as well in there. We've been very

aggressive with trying to manage our fees.

MR. WAKEHAM:

That's why I ask because

it's a $2-million increase. I was wondering if you were borrowing less than you

did the previous year would you be as successful as you were –

MR. OSBORNE:

We're borrowing less than we

projected we'd have to borrow.

MS. HANRAHAN:

It's more in line probably

with budget year over year.

The

challenge, of course, is it's hard to project and so we really reflected the

change in the programs. It's possible next year that we won't get the same

management fees and commissions because, depending on interest rates, we may be

doing all 30-year debt and that's more expensive.

MR. WAKEHAM:

I have one more question.

Last year there was $11 million in revenue and I'm trying to understand how that

occurred.

MS. HANRAHAN:

Depending on the type of

issue we issue, the accounting treatment differs. Under debt expenses, we record

any time we make an issue where there's a discount, and a discount would be

where there's a lower interest rate than market. If it's the reverse, we have to

record it as related revenue.

fairness, you need to look at the $11.07 million in conjunction with that $8.89

million to really get the picture of if our bonds have been issued at a discount

or premium. Combined it's about $2.18 million in net savings or revenue, because

premiums occurred more than discounts. So, basically, we got a higher interest

rate than the market rate when they were issued.

MR. WAKEHAM:

Okay, thank you.

1.4.02;

last year there was a very small budget for Transportation and Communications,

$4,500 and the expenditure actually went up to $23,000. You're budgeting $25,000

this year.

MS. HANRAHAN:

When we do our budget, we usually forecast investor relations as one single

amount, almost like one function. You would have seen that budgeted under

Professional Services and repeated again in the following year's budget.

When

the expenses are actually spent, depending on what was spent, they'll be coded

to the correct account. That $23,200 you see there actually relates to investor

relation work, such as travel, that occurred to go visit banks and investors.

That's why you'll see the change overall. We did not spend a significant portion

of that money for a US registration or those other costs.

MR. WAKEHAM:

Who exactly would be

travelling?

MS. HANRAHAN:

Normally, for our investor relations, it's the minister and myself, led by one

of the members of our syndicate.

MR. WAKEHAM:

Another question, under

Professional Services I noticed there was a budget of almost $1.3 million and an

actual expenditure of about $280,000. This year, the budget is back up to almost

$1.3 million again. Can you explain why that would be?

MS. HANRAHAN:

In both budgets, we would be having a nominal amount related specifically to our

borrowing program, including investor relations. We've been keeping a marker in

the last few years to keep the option open with respect to going outside the

domestic market. Our investors see these Estimates, they see that we have an

allocation there with the ability to do that, so a pretty strong message for

them as well.

However, every year we assess it a couple times a year, and if the costs

outweigh the benefit, we don't do it. There are jurisdictions that actually

spend money to go outside because it fits their programs. For us, we're very

cost conscious and if there's not an obvious cost benefit, we don't do it.

The

difference between the two years, you'll notice it's about a $20,000 difference.

We actually have one of our bond raters, DBRS, stopped charging us fees. They

stopped charging all the provinces, so we're reflecting that reduction in cost

there.

MR. WAKEHAM:

Under Transportation, would

the minister's travel be charged there as well?

MS. HANRAHAN:

For Consolidated Fund

Services it is.

MR. WAKEHAM:

Okay. Thank you.

CHAIR:

Any further questions for

headings 1.4.01 and 1.4.02?

MS. COFFIN:

Yes, please; a couple of

quick questions in here.

Let's

go back to the question that we had from the Public Service Commission. We're

over to you now. What is the new definition – you had lots of time to look it

up.

Can you

give me what I hear is the revised or new definition of Professional Services?

MS. HEFFERNAN:

I'm not sure that there is

one.

MS. COFFIN:

Oh, okay. That was something

that I had heard along the way and I thought, well, I had better check on that.

Perhaps

then you can give me just the general definition of Professional Services and

type – I know it's a bit of a catch-all in terms of it is services that we

acquire that are not currently provided in-house or that we need for

time-sensitive reasons or a variety of other reasons. Is there like a general

definition for that particular heading?

MS. HEFFERNAN:

I'm not exactly sure of the

actual definition, but I think from my experience of many years in government,

it has been used for numerous contractual-type engagements, anything from

medical to professional services like actuarial services, maybe some forensic

accountants, those types of things.

MS. COFFIN:

Legal fees, these types of

things. Yeah.

MS. HEFFERNAN:

Yeah.

It's

usually geared towards short-term, project-related-type things or, as you

mentioned, services that are not necessarily available in-house.

MS. COFFIN:

Right. Okay, good.

MS. HANRAHAN:

Every year, we find

instances where somebody's been charging something to a particular account and

they have done it many times, and then, in the course of Public Accounts or some

other audit process, we realize it really should be coded somewhere else. I

suspect that may be what they've encountered.

MS. COFFIN:

Right.

MS. HANRAHAN:

It's usually between

Professional and Purchased Services. It's usually that you've always charged

your actuary here, you should have been charging him over there, and it takes

two budget cycles to kind of get it realigned.

MS. COFFIN:

Yeah, to realign that.

Okay,

so maybe the difference between Professional and Purchased – Purchased Services

would be what versus Professional Services? I'm guessing Professional Services

are those with a professional designation, like a P engineer or your forensic

accountants or legal services or medical services.

Purchased Services, comparably, is …?

MS. HEFFERNAN:

Yeah. That would be a fair

assessment, I guess.

Purchased Services are more in line with when you're acquiring printing services

MS. COFFIN:

Right.

MS. HEFFERNAN:

– office rentals, maybe a cleaning service or some contractual work like, I

guess, maintenance and those types of things on buildings or whatever.

MS. COFFIN:

Right, okay.

MS. HEFFERNAN:

On the Professional side, it's probably more along the lines of medical doctors,

the legal profession –

MS. COFFIN:

Right.

MS. HEFFERNAN:

– the actuarials and accountants, that kind of thing.

MS. COFFIN:

Yeah, it's more of an individual service. A service provided by a particular

individual versus Purchased Services would be things that are more tangible

services, like that rental thing.

MS. HEFFERNAN:

Absolutely.

MS. COFFIN:

Okay, that's good, that helps frame a lot of stuff for me.

MS. HEFFERNAN:

Okay.

MS. COFFIN:

Okay, let's get back to something a bit more specific now.

We've

spoken a number of times about the bond-rating agencies. Perhaps you can give me

an overview of a lot of their criteria. I know that fiscal stability is a very

important thing, especially for us to even be able to access the bond markets,

at this point, as well as our bond rating.

Can you

give me a sense of what those criteria are?

MS. HANRAHAN:

They would release annually and sometimes every five years, comprehensive

documents that would fully disclose how they do their bond rating and what they

include. They're all a little bit different; they all do their own kind of

calculations.

I don't

have it right in front of me to read, but from a general perspective, they take

in all aspects of a risk assessment on the province, from the perspective of our

ability to repay, our ability to manage our budget, be it our revenue streams,

our expense streams, our debt levels, as well as long-term forecasts. So long

term for them will be a couple of years.

They

look at the political structure in a province. They look at the demographics.

They look at a very wide range of things. They look at consolidated expenses and

are predominantly focused on financial statements that are consolidated for the

province and the sources of that. They do have in-depth meetings with us to be

able to garner information that may not necessarily be – because it's a

confidential service, so they're always – like any bond rater would be, it's

about they telling people that we're worthy of investing in.

So they

do look at things like liquidity, for example, so our borrowing program is a big

part of our meetings with them. They also look at stability, the ability for

governments to be able to adhere to their budgetary plans, their ability to have

clean audit financial statements and they very much are interested in, from a

very big picture, our economic reports, the independent analysis that goes into

economic projections is a big portion of that.

MS. COFFIN:

Yes.

MS. HANRAHAN:

They tend, as well, to want

to meet with, or have questions about, really large initiatives that would be

going on in the province. For example, Muskrat Falls, oil and gas, those types

of things, and they're also interested in relationships we have with the federal

government or any interprovincial tripartite activities that are going on.

They

usually come with lots of questions and then they disclose to us how they've

judged those, and then we take that. They usually do their own metrics of our

numbers.

MS. COFFIN:

Right.

MS. HANRAHAN:

For example, they don't

amortize capital the way public sector accounting amortizes capital.

MS. COFFIN:

Right.

MS. HANRAHAN:

But because it's the same

process year over year, it's still comparative.

MS. COFFIN:

Right, yeah, so you can

compare each –

MS. HANRAHAN:

Right.

MS. COFFIN:

– bond-rating agency because

they have a standardized process by which they evaluate.

MS. HANRAHAN:

Right.

MS. COFFIN:

Are they available online?

MS. HANRAHAN:

That's how they make their

revenue, so in most cases, it's a subscription service.

MS. COFFIN:

Right.

MS. HANRAHAN:

They're very, very conscious

of what is shared.

MS. COFFIN:

Right.

MS. HANRAHAN:

They usually will do a news

release or some public release.

MS. COFFIN:

I've certainly seen some of

those.

MS. HANRAHAN:

In some cases they don't so

we tend to.

MS. COFFIN:

Right.

MS. HANRAHAN:

But that is their business.

MS. COFFIN:

Right, okay.

followed many of these updates and what the bond-rating agency says, just the

very superficial public announcements. Maybe that could be one of my first

subscriptions.

I'm

just wondering, when is the next assessment?

MS. HANRAHAN:

It's around this time of the

year now they would come, once the budget has been through the House. So, right

now, we're targeting meetings for late June, early July. This is the one time of

the year where they always visit us. We would go through in depth with them,

with the three bond raters that we have, at that point in time.

MS. COFFIN:

Is it at all possible for me

to sit in on those meetings?

MR. OSBORNE:

Sorry, no. Many of the

discussions that take place there are proprietary. We get into the business of

the oil companies and so on, so they are very highly confidential discussions.

MS. COFFIN:

Okay, all right. Thank you.

I think

that's my questions on this section. There are more on other sections.

Thank

you very much.

CHAIR:

Any further questions on

those headings?

MR. WAKEHAM:

I just have one comment.

The

minister alluded to the fact that the bond agencies are watching a minority

government to ensure that the stability of the expenditure doesn't increase. I

want to assure the minister that our party will not be increasing the

expenditure of the budget this year. It will not go up.

MR. OSBORNE:

I hope they're reading the

transcripts from this meeting.

MR. WAKEHAM:

That's why I put it out

there.

MR. OSBORNE:

I thank you for that.

MS. HANRAHAN:

We'll send a copy.

MR. OSBORNE:

That is important, Tony, so I appreciate it.

MR. WAKEHAM:

That doesn't mean we're not going to argue about some of these expenditures.

CHAIR:

Any further questions from headings 1.4.01 and 1.4.02?

Seeing

no further questions, I'm going to call that head.

Shall

headings 1.4.01 and 1.4.02 carry?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 1.4.01 and 1.4.02 carried.

CHAIR:

I think in the interest of

time, we'll call 2.1.01 to 2.1.03 inclusive.

Questions?

MR. WAKEHAM:

Thank you.

Under

2.1.02 is where I'll start. Last year, for '18-'19, $359 million was budgeted

but only $91 million spent in this subheading.

How

much was transferred and spent in other departments and what was the total

spent?

MS. HANRAHAN:

$171 million was transferred. With respect to what was spent, that would be in

all the individual departments in their salary plans, and I don't have that.

MR. WAKEHAM:

Okay.

Can the

minister provide some information on the ending of the severance and the payout

of the severance accumulated, have all the payments been made and for those who

choose to take the payment?

MR. OSBORNE:

Under most of our collective agreements, some of them are a little bit

different, but there are five choices. So, for example, I'll use NAPE as an

example, they could've chosen first, second, third or fourth quarter or they

could've deferred it to a later date in which they could take severance anytime

between the fourth quarter and the time they retire, whatever suited their

financial planning best.

So the

majority of people, I think it was over 70 per cent of individuals, requested

severance payout in the first quarter, was it?

MS. HANRAHAN:

Yeah.

MR. OSBORNE:

It was about 70 per cent. Some others requested it in second, third and fourth

quarter. NAPE is primarily looked after now, with the exception of those who

have requested to defer their payment to a later date, which is a very small

number.

The

Registered Nurses' Union, for example, was just recently ratified. So we're now

making plans with them for the payout of their severance. The teachers have been

ratified; plans are established on their payout. We had about $235 million paid

out last year.

OFFICIAL:

Between that, it was $263 million together.

MR. OSBORNE:

Yeah, so we're up to about $263 million. We're about half way in terms of total

payout.

MR. WAKEHAM:

So do expect that most of that will be paid out in this fiscal year or next

fiscal year?

MR. OSBORNE:

There's a large portion of the budget to be paid out again this fiscal year.

We've still got a couple of smaller bargaining units that we've yet to settle

with but, for the most part, most of the contracts have now been settled. So

yes, the majority of the balance should be paid out this fiscal year, or I guess

as early as the first quarter, maybe into the second quarter of the next fiscal

year, based on the timing worked out with the unions.

MR. WAKEHAM:

Okay, thank you.

Under

2.2.01, Deferred Pension Contributions, can the minister outline when the

payments are made to each pension corporation? Is there an annual payment,

quarterly payment, and on what date are the payments made?

MS. HANRAHAN:

The public sector pension plan is paid quarterly; $47 million a quarter

throughout the year. The Teachers' Pension Plan is paid annually in the fall,

$135 million. It's a one-time payment.

MR. WAKEHAM:

Okay, thank you.

Did you

call 3.1, Mr. Chair?

CHAIR:

No, I didn't. Just 2.1.

MR. WAKEHAM:

Okay, I have no further questions.

Thank

you.

CHAIR:

Okay.

Any

further questions on the 2.1.01 to 2.1.03?

MS. COFFIN:

Yes, please.

CHAIR:

The Member for Signal Hill - Quidi Vidi.

MS. COFFIN:

Okay, let's have a chat about some things here. There has been a move in

government to divest itself of outstanding debt, and that's one of the reasons

why we went to a jointly sponsored public sector pension plan as well as why we

went to the jointly sponsored Teachers' Pension Plan. About three years and

three ministers of Advanced Education, Skills and Labour ago, the university was

directed to move itself towards a jointly sponsored pension plan.

When

last I checked, a reform agreement with a pretty solid arrangement that fairly

mirrors the other arrangements was proposed and brought to government, as both

of the parties had been directed. My understanding is nothing has happened with

that, and I think the reform agreement was proposed September of last year. Can

you tell me what's happening with that? Is government still intending to move to

that? When can we expect to see that happen?

MR. OSBORNE:

We can get further details on that. I know that there was a proposal made. We'd

asked for MUN to revisit some of the items that were proposed at the time. That

file is primarily, as you say, in Advanced Education, Skills and Labour, but we

can seek an update to the extent that it doesn't contravene any issues between

ourselves and MUN, in terms of the information that's put out. It's still a

discussion that's in motion, so I'm …

MS. COFFIN:

My understanding was it was no longer in motion, but brought up solid.

MR. OSBORNE:

Well, we can get you an update to the –

MS. COFFIN:

That would be great.

MR. OSBORNE:

– greatest extent we can provide the details.

MS. COFFIN:

Certainly, yes. I'm fairly sure that both parties had agreed on the reform

agreement, and it was a very balanced approach in there. So I was just wondering

what the problem was. Especially given our debt situation, it would be very

useful to have that taken care of. And given that the markets are decreasing

right now, we're not seeing the same gains that we need, that debt is only going

to grow. So I think that's something that needs to be addressed sooner rather

than later.

Let's

go on. Ex-Gratia and Other Payments - Non-Statutory. Are these the severance

payouts that are going in here? Is this what I'm seeing in here? Okay.

Can I

also get a list of all of the individuals receiving ex gratia payments, or at

least a breakdown of the number of individuals who've been receiving ex gratia

pensions under this section? I know, historically, there has been a great number

of individuals that are in that, but I'd just like to have some sense of the

number of people receiving ex gratia pensions in under that heading, if that's

at all possible, please.

MS. HANRAHAN:

You're speaking specifically to the group under Employee Benefits?

MS. COFFIN:

I'm not sure if it's under Employee Benefits – I assume it's probably not under

Salaries. This is –

MS. HANRAHAN:

So under Salaries would be the big pension payouts.

MS. COFFIN:

The salary payouts. So that would be the Employee Benefits. I assume that's what

it's called.

MS. HANRAHAN:

Right. That's the historical amount there. They're particularly related to past

arbitration awards, there's a group of employees, the (inaudible) from 1976.

There was a redundancy payout in 1992. Those are the people that are still

receiving some form of ex gratia pension that would be that $2,347,700 figure.

MS. COFFIN:

Okay. That's good to know.

Let's

see here: Pre-1949 Special Acts, how many people are still getting those? I

imagine the dependants are perhaps well-aged at this point, if this was pre-'49?

MS. HANRAHAN:

Last year there were 43, and at the end of March of '19 there are 36, so our

budget for next year is based on 36 individuals.

MS. COFFIN:

There's 36 individuals, and

they're getting $37,000? Oh my.

Okay.

What else do I see in here? I think that might be it for this section. You say

the Deferred Pension Contributions are the payouts to make the pension plan

whole. So that's to fund the unfunded liability?

MS. HANRAHAN:

This would be the promissory notes that were part of reform.

MS. COFFIN:

Okay. So in that, does this also capture the deferred pension plan, or does that

sit under the public sector pension or Provident 10 now, is that where

that sits?

MS. HANRAHAN:

Deferred pension plan? This

$323 million is specifically one payment to Provident 10 and one

payment to teachers. Just based on (inaudible).

MS. COFFIN:

Well, that's the only things

that are –

MS. HANRAHAN:

That's all that's in there.

MS. COFFIN:

Okay. So once upon a time, I

was a member of government, so I do have a deferred pension, but that rests in

Provident 10 now.

MS. HANRAHAN:

So that would probably be sitting on government's liabilities, as pension owing.

MS. COFFIN:

Right, yeah.

So this

is not over here, this is contributions, yeah. I'm just wondering where that is

resting now –

MS. HANRAHAN:

That's it.

MS. COFFIN:

– so I assume that rests

with Provident 10 at that point. As a –

MS. HANRAHAN:

As a deferred pensioner would be part of the plan.

MS. COFFIN:

– in the deferred pension

section, yeah.

Currently under review now. I must have been bad, or good – one or the other.

That's

all of my questions under that section.

Thank

you very much.

CHAIR:

Any further questions under

sections 2.1.01 to 2.1.03 inclusive?

MR. WAKEHAM:

I have one more question,

Mr. Chair.

Just

curious, are all of the ABCs under the same rules with regard to paying out the

severance and the elimination of severance? I know the health authorities are,

but what about some of the other ABCs? Has there been any …?

MR. OSBORNE:

Anybody whose part of our

unions, all of them with the exception – Nalcor is slightly different, I think,

aren't they?

OFFICIAL:

Yeah, I think it would be specific to – be it their collective agreement or if

they were management, non-bargaining – the legislation that was put in related

to that. It would be whatever agreements were struck, but from what I understand

they were relatively the same from a processing perspective.

MR. OSBORNE:

The RNC had their severance paid out a number of years ago, as did Newfoundland

and Labrador Housing.

MR. WAKEHAM:

What about CNA and the Liquor Corporation?

MR. OSBORNE:

Yeah, they would be under the most recent round of negotiations. They'd be

included in that.

MR. WAKEHAM:

Nalcor?

MS. HANRAHAN:

I think they had different arrangements.

MR. OSBORNE:

Yeah, Nalcor has a different arrangement. It's not quite severance. They're set

up with a different arrangement. Everybody else would be similar to government,

but Nalcor has a slightly different arrangement.

MR. WAKEHAM:

What about the university?

MR. OSBORNE:

Pardon me?

MR. WAKEHAM:

What about MUN, the university?

MS. HANRAHAN:

As they do their collective bargaining, that's part of that.

MR. OSBORNE:

Yeah, they do their own collective bargaining. We don't do MUN's collective

bargaining.

MR. WAKEHAM:

Would they be doing the same payout for severance?

MR. OSBORNE:

Well, I don't want to speak to their bargaining process, but I would hope so.

MR. WAKEHAM:

Okay. Thank you.

CHAIR:

Any further questions?

The

Member for Mount Pearl - Southlands.

MR. LANE:

Yes, Mr. Chair.

doesn't actually fall under here but I forgot to ask. It just jogged my memory

when I heard the word. Just wondering, Minister, when it comes to the whole

concept of zero-based budgeting, attrition and all the other measures that have

been taken in core government and ABCs to try to cut expenditures, does that

apply to Nalcor?

MR. OSBORNE:

We are working with Nalcor now and they've been co-operating with government. In

fact, Finance officials and Nalcor officials have had ongoing discussions.

MR. LANE:

Okay, thank you.

That's

good to hear.

CHAIR:

No further questions?

Seeing

no further questions, I'm going to call the headings for 2.1.01 to 2.1.03

inclusive.

All

those in favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 2.1.01 through 2.1.03 carried.

CHAIR:

I think we'll do the next

two headings together in the interest of time and allow Members flexibility to

use their full time.

I'm

going to call 2.2.01 and heading 3.1.01 together.

Okay,

questions?

MR. WAKEHAM:

I'll move to

section 3.1.01.

I think I already asked a question on 2.2.01.

Under

3.1.01, the Contingency, can the minister provide a list of what transfers were

made out of the contingency fund in '18-'19?

MR. OSBORNE:

Yes, we made – to children's

care program under CSSD, to the integrated services management system

implementation under CSSD and judges' salary tribunal. I believe that was it.

Yeah, that's the three.

MR. WAKEHAM:

Do we know how much was paid

out to each?

MR. OSBORNE:

Yes, it was $12.3 million

for the children in care program, $3 million for the integrated services

management and $3.1 million to the judges' salary tribunal – or as a result of

the salary tribunal.

MR. WAKEHAM:

Is there any public

reporting of these expenditures?

MR. OSBORNE:

Yeah, I mean, it's –

MR. WAKEHAM:

Where would it show up?

MS. HANRAHAN:

It is here as part of the Estimates.

MR. WAKEHAM:

Yeah, I just didn't see any

revised expenditure there.

MS. HANRAHAN:

No, you would see them in the individual departments.

MR. WAKEHAM:

Okay.

MS. HANRAHAN:

For example, if you look at CSSD, you'll notice projected revised would have

been that much higher than their budget. This is where the money would have come

from.

MR. WAKEHAM:

Okay, that's what I was

looking for.

One

more question: What type of approval is needed to spend this money?

MR. OSBORNE:

It's Treasury Board, so it

would go to Treasury Board for approval before money is transferred. Then it

becomes a matter of public record through the Estimates program.

MR. WAKEHAM:

Thank you.

The

financial assistance pots of money, which are voted on in Finance, can be

transferred to other departments. This contingency fund can be transferred to

other departments. Why are they in different headings?

MS. HANRAHAN:

The financial assistance – the header in Finance is Capital and Current. It's

specific to particular initiatives. The contingency reserve is under

Consolidated Fund Services because of the process for approval and the way the

allocation is made. That's where the two of them have historically sat. The

contingency fund is not necessarily a Finance pot per se, it's more considered

for the entire consolidated fund.

MR. WAKEHAM:

Besides in the Estimates, is there any public reporting as transferring happens?

Is there anything publicly announced when transfers take place?

MS. HANRAHAN:

No. No different than it would be for financial assistance or any other

transfers that are provided for under the

Supply Act .

MR. WAKEHAM:

Thank you. I'm good.

CHAIR:

Any further questions under those headings?

MS. COFFIN:

I'm just curious. I guess nothing happened last year which is why we didn't

spend the $22 million?

MS. HANRAHAN:

The money shows up where it is transferred to.

MS. COFFIN:

Right.

MS. HANRAHAN:

It looks dropped here as zero. You would've seen the expenditures increase in

CSSD and Justice and Public Safety in their projected revised.

MS. COFFIN:

The CSSD and Public Safety?

MS. HANRAHAN:

Yeah. So CSSD got two of the transfers and Justice got the other one. You'll see

it in those programs.

MS. COFFIN:

Okay, in revised.

What

was the spending for exactly? I'm sorry, I wasn't at CSSD, I was at Justice but

there's been a lot going on lately.

MS. HANRAHAN:

For CSSD, there was $12.3 million transferred related to the children in care

program. That's the one in CSSD, you would've seen a large increase in their

projected revised expenditures related to that program. This is where the cash

came from.

MS. COFFIN:

Right.

MS. HANRAHAN:

The integrated service management is a system implementation. There was $3

million that you would've seen in one of their accounts in CSSD. For Justice you

would've seen this specifically in, I would suspect, their court appropriations

related to the salary tribunal which had a retroactive salary portion as well as

a new face.

MS. COFFIN:

That's the judges' one?

MS. HANRAHAN:

The judges –

MS. COFFIN:

Right.

MS. HANRAHAN:

– or civil, depending on where it landed in the Justice Estimates, $3.1 million.

MS. COFFIN:

And that was a one time?

MS. HANRAHAN:

Yeah, that was the tribunal. There's another tribunal then, every –

MS. COFFIN:

That's happening again soon. I think the judges got (inaudible) didn't they?

MS. HANRAHAN:

I think they're trying to get in the early part of the four years as opposed to

the end of the four years.

MS. COFFIN:

Yeah, which would make sense that way.

MS. HANRAHAN:

Well, the retro grows.

MS. COFFIN:

It does, yeah.

The

CSSD, the children in care: that was a one-time expense as well, or was that

something that we expect to be ongoing?

MS. HANRAHAN:

I wouldn't know the CSSD program.

MS. COFFIN:

Yeah, of course, because once that happened, they take over whatever the

expenses are.

MS. HANRAHAN:

It's the management of their program but our contingency is an annual fund, the

transfers go once. This account resets back to $22 million. If they need what is

beyond their Estimates, then they would go through this process again.

MS. COFFIN:

All right, good.

Thank

you very much.

CHAIR:

The Member for Mount Pearl - Southlands.

MR. LANE:

Could you explain to me the

$3.1 million for the judges' tribunal? Somewhere along the way I must've missed

that one.

I'm

just trying to understand. What exactly was the tribunal about and how far does

it date back? We're talking retroactive, so I'm trying to understand what

exactly that was for.

MS. HANRAHAN:

The compensation for judges

is decided based on a tribunal that's struck. I think it happens every four

years.

I think

I'll get Theresa to correct me if I'm wrong, having come from Justice.

MS. HEFFERNAN:

Three or four.

MS. HANRAHAN:

Three or four, yeah,

depending on what they strike.

Usually, what happens, by the time they strike the tribunal, the tribunal does

their evaluation of compensation for judges and makes their ruling and comes to

government with that ruling or recommendation and there's a decision. That's how

long it takes, ultimately, for the value to flow, if there is any, to the

judges.

MR. LANE:

Yes.

MS. HANRAHAN:

In this particular case, I

believe it went to court and it took a bit longer in this process, and because

they used up, I think, several years going through tribunal, their intention is

to strike the tribunal again, earlier. I believe that's the process that they're

going through right now.

MR. LANE:

When did this tribunal, if

you will, or this review start? Do you know?

MS. HANRAHAN:

I've got to be honest, I

think Justice would know more than we would.

MR. LANE:

What I'm trying to get at, I

guess, is that in 2016, when the budget came down and we had the levy and all

the other harsh measures that were taken, and public servants across the

province were all expected to take zero, zero, zero and zero. I'm trying to

understand why judges would be, sort of, placed out there and give them $3.1

million, albeit some of it is retroactive and so on. I'm just trying to

understand what makes them special.

I have

nothing against judges, don't get me wrong, and what they do, but they're still

paid from the public purse like everybody else in this room and in the public

service. I'm just wondering why they would've received special treatment and

gotten a raise when the rest of the public servants were expected to take zero,

and the people were expected to pay more taxes?

MR. OSBORNE:

You may recall back in 2016,

the Minister of Justice actually stood in the House and we put forward – I think

it was legislation or was it a motion, I can't recall, regarding the judges'

salaries. They challenged it; it went to a tribunal, and they were – so, I mean,

it's –

MR. LANE:

Okay. So the government did challenge that?

MR. OSBORNE:

Yeah.

MR. LANE:

Okay, I don't recall that. I'm sure if you're saying it happened, it did, but

there are so many things, of course, that go on in this House. I'm only one

person; I'm not (inaudible) –

MR. OSBORNE:

Yeah, we tried to impose the zeros; they challenged it, and the tribunal

overruled.

MR. LANE:

Okay, so you guys actually did challenge it?

OFFICIAL:

Yes.

MR. LANE:

Well, I'm glad to hear that.

Anyway,

okay, thank you, that's all I have.

CHAIR:

(Inaudible.)

MR. WAKEHAM:

No, all good.

CHAIR:

All good, okay.

You're

good?

AN HON. MEMBER:

Yeah.

CHAIR:

Okay.

Seeing

no further questions on these two headings. I'm going to call heading 2.2.01 and

heading 3.1.01.

All

those in favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 2.2.01 and 3.1.01 carried.

CHAIR:

Shall the total carry?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, Consolidated Fund Services, total heads, carried.

CHAIR:

Okay, I think we'll take a quick break, a five-minute break. We'll be back at

11:21 a.m.

Recess

CHAIR:

Okay, we're going to proceed

with the Estimates for the Department of Finance.

We'll

call the first heading, and then we'll allow the minister to have some opening

comments. I'm going to call headings 1.1.01 through to 1.2.03, inclusive.

Does

the minister have any opening comments?

MR. OSBORNE:

Thank you.

The

comments that I made earlier reflected Finance and the Consolidated Fund. We've

got the same staff here exactly, so we'll just carry on with questions.

CHAIR:

We'll start with questions

on those headings.

MR. WAKEHAM:

I got a few general questions, first, before we actually get into the section.

Generally speaking, throughout the subheadings, there are allocations for Office

Supplies. How is the budget for the Office Supplies calculated? Is there a quote

per person figure, or is it based on previous year's expenditures?

MS. HANRAHAN:

When we did zero based, we would have looked at per person in some regards, but

it depends on the nature of the work. So, for example, budget division uses a

significant amount of paper. If we used a per person, they wouldn't have

sufficient money. There are other groups where there might be 30 people in a

group processing on Topsail Road, they don't print anything. So we kind of do it

that way.

couple of years ago, we consolidated most of our expenses under departmental

operations in an effort to be able to play off a little bit when some divisions

need more, some need less. Every year it gives us a chance to squeeze that

little bit more out.

MR. WAKEHAM:

How many employees are in

the Department of Finance? How many of these are permanent, temporary, full time

and part time?

MS. HANRAHAN:

We have about 250 people. I think we have three positions – two people and a

vacancy – that operate outside of the St. John's area, those are tax people that

work in particular regions.

The

split, I think, would be based on the published salary plan, as probably a good

indication, that the majority of our staff would be permanent. We don't really

have part time. We have a little bit of seasonal as it relates to processing at

year end or Public Accounts. We may bring some clerks in for the six or eight

weeks of keying that we need to get through year end.

MR. WAKEHAM:

Do you have any vacant positions right now?

MS. HANRAHAN:

We always have vacant positions based on the nature of the type of work that we

do. We have several shops in Finance that are entry level positions, clerk IIIs,

accounting clerk IIs, those types of things. So, every day it varies.

Part of

the reason for that is we tend to have to utilize staff and move them in order

to make sure that work still gets done. So, if we have a vacancy, for example,

in our document scanning process, I can't pay invoices. So we often have to find

other people, and we temporarily assign them to those spots.

At any

point in time, from a turnover perspective, we seem to be around 10 per cent

vacancy, and most cases it's because it takes us some time to get competitions

completed, particularly public, big general calls that we would use for clerking

staff.

MR. WAKEHAM:

But the intent would be to fill the positions?

MS. HANRAHAN:

Yeah, fundamentally, when the department went through flatter, leaner, we

seriously reduced significantly our management and non-bargaining staff. With

respect to our bargaining unit staff, it's been processing, fundamentally, and

over time we've been reducing those. The exception has been when we moved in the

Student Loan Corporation we would've increased our complement as a result of

moving in that team.

MR. WAKEHAM:

What was the final cost of the Independent Tax Review Committee?

MR. OSBORNE:

We'll get that for you.

MS. HANRAHAN:

We'll have to get that.

MR. WAKEHAM:

Okay.

MS. HANRAHAN:

It spanned two fiscal years.

MR. WAKEHAM:

Okay.

OFFICIAL:

(Inaudible.)

MS. HANRAHAN:

It was, because that was the allocation each year.

MR. OSBORNE:

Don't quote me, but I think it was $175,000, but we'll get you the exact number.

MR. WAKEHAM:

Okay.

In the

Estimates over the last couple of years, there was discussion about an indirect

tax review to capture HST, which hadn't been recorded. Is it still ongoing or is

it finished?

MS. HANRAHAN:

It is finished. The intention of the review was to identify processes where HST

wasn't captured in invoices, so it's kind of imbedded tax.

MR. WAKEHAM:

Yeah.

MS. HANRAHAN:

Once the review was completed on a group, they changed the process to capture

the HST on a go-forward, so it really is a point in time. All the groups that

would've been part of that, as well as other groups such as Newfoundland and

Labrador Housing, changed their processing then to capture that tax on a

go-forward.

MR. WAKEHAM:

Was that process carried out

in the ABCs?

MS. HANRAHAN:

I know it was done for

Housing; I'm unsure where else it was done, but we can check to let you know.

MR. WAKEHAM:

Okay.

In last

year's Estimates meeting there was a discussion about consultant contracts. Over

the past 12 months, has spending on consultants increased, decreased, both

government-wide and in the department?

MS. HANRAHAN:

I wouldn't necessarily have

the information for all the government departments, so it would be specific to

them, but I can speak to Finance. We tend to have professional contracts for our

actuarial work and our particular pension system work. That tends to be,

fundamentally, the only consultants, as such, that Finance engages, generally,

with the exception, of course, of the McKinsey project, which would have been

coded to Finance.

MR. WAKEHAM:

Okay.

Under

pension reform – again, I think this might have been brought up earlier – it's

my understanding that the public service and teachers' pensions are now moved to

the appropriate pension corporation. What involvement does the department now

have with respect to these two pensions?

M S . HANRAHAN:

Pensioner payroll is

processed by the Human Resource Secretariat, so they would be in a better

position to discuss that. My understanding is they're working through

transitions in order to move those pensioner payrolls out to those particular

corporations in order for them to do that and to utilize those systems when they

go through there.

MR. WAKEHAM:

Okay, we can ask that

tomorrow.

One

more question here. Is there any reform plan for the Uniformed Services Pension

fund?

MS. HANRAHAN:

They would be the last, I

guess, fund that would be under the pooled pension fund that's not managed by

either the Management Commission, which is the case for MHAs, or the judges,

which is a tribunal. So, they would be the last group that could be considered

for pension reform.

MR. WAKEHAM:

But it is on the table?

MS. HANRAHAN:

I guess that's government's

decision.

MR. OSBORNE:

Yeah. I mean, we'd like to

see that with as many groups as possible, obviously. With the public service and

with teachers, for example, and the ongoing discussions with MUN, it was jointly

agreed by the unions and government, in terms of the public service and the

teachers. As I said, we're still working with MUN.

MR. WAKEHAM:

Right.

MR. OSBORNE:

It would have to be a

collaborative approach with the Uniformed Services, as well.

MR. WAKEHAM:

Okay. Thank you.

It's

been about seven months now since the implementation of the new carbon pricing

mechanism, carbon tax on gasoline and the industrial emission systems. Has there

been any analysis done by the Economics Branch of the department on the impact

of these changes to the provincial economy?

MR. MARTIN:

At this point we haven't performed any additional analysis from what we did at

the outset. However, it's still fairly early days at this point in time in terms

of the impacts from the actual carbon pricing perspective.

MR. WAKEHAM:

Do you intend to do that

analysis?

MR. MARTIN:

Likely we will be doing that analysis. It's likely we will have to do parts of

that in order to report back to the federal government on those pieces.

MR. WAKEHAM:

Okay, thank you.

Last

year in the Estimates, there was discussion about the P-Card program. Officials

noted that the more the P-Card becomes mandatory, the more efficient the system

can become. What's the status now on making that program mandatory?

MS. HANRAHAN:

We continue to implement

P-Cards everywhere that we can.

We have

increased the usage across most all departments, and I think direction has been

given from a procurement perspective to use it as the primary method. Depending

on the vendor there is a challenge sometimes, but it's a very small number of

them.

We are

finding as well that as you spread out the usage of the P-Card, our work and

diligence from a compliance and audit perspective grows as well and so we're

trying to balance those together.

MR. WAKEHAM:

That was my next question,

actually.

What is

the impact of the P-Card program on staffing levels?

MS. HANRAHAN:

At this point we're still in

the midst of working through what the P-Card really means. The P-Card, from a

processing perspective from paying the invoices, has allowed us to realize and

probably retain, in some cases, some vacancies.

For

departments, there is more rigour from a document perspective because everything

is before they – it's really just the usage of the cash. We are finding as well

that we need sufficient resources in order to make sure that it's audited

appropriately.

It is a

different way of operating for people, to have a card in their pocket, and so

we've done a lot of audit work and compliance work around that. It really kind

of switched, in some regards, but we have been realizing a slow change from a

processing perspective, particularly as we work through electronic funds,

scanning documents and other things like that.

MR. WAKEHAM:

At the end of the day, do

you think you'll have less requirements for staffing, or is it looking like it's

actually going to cost you more for staffing because of the audit function?

MS. HANRAHAN:

I think it will net to being

less. I would think that the work we need to put in at the beginning of the

implementation will reduce overtime as well, as people are trained.

I think

the other thing that's happening as departments look for efficiencies, they'll

change how they purchase. You may only have two people do it for the whole

department

whereas P-Card makes it very easy for everybody to purchase. From an

efficiency perspective, we may see that change so we're still working through

that piece.

MR. WAKEHAM:

Under 1.1.01, Minister's Office, Salaries, in '18-'19, $194,000 was budgeted,

$236,000 spent. Can the minister explain the difference?

MR. OSBORNE:

My staff have been with me for a significant number of years, so part of it

would obviously be vacation. I think there was a step progression in '18-'19,

there's another step progression in the next fiscal year. Part of it was

temporary staff hired during budgeting and so on.

MR. WAKEHAM:

Comparing the budget from '18-'19 to '19-'20, there is an increase in the budget

by approximately $40,800. The Salaries details show that a new position has been

added. Can we have an explanation as to what that might be?

MR. OSBORNE:

The same one? Yeah, that's the temporary position that I just mentioned.

MR. WAKEHAM:

Oh, so it's still on. I thought temporary was something just temporary. How long

is temporary?

MR. OSBORNE:

Well, we brought somebody on last year, particularly around budget time. I think

we'll see the same thing this year. Inquiries from other Members and between

departments was lacking because of the additional workload at budget time.

MR. WAKEHAM:

The actual function of the person is to coordinate with departments?

MR. OSBORNE:

No, the actual function was we brought somebody in on a temporary capacity as

constituency assistant. The longer term staff member that's with us moved into a

ministerial liaison position to help with inquiries from Members of the House

and members from other departments. It's similar to what's happened in previous

administrations and in other departments where there is an additional staff

member in the busier departments to deal with inquiries.

MR. WAKEHAM:

Under 1.2.01, the Salaries again. In '18-'19 Salaries were over budget by

$210,900. Can you give me an explanation for that?

MS. HANRAHAN:

That would've been termination and related costs for our retiring Comptroller

General and a secretary to an ADM.

MR. WAKEHAM:

Again, for '19-'20 they're actually showing executive salaries being decreased

by $136,500. Is this a result of restructuring or changes?

MS. HANRAHAN:

When we made the addition of a branch for policy – so the staff in policy now

are moved over to Departmental Operations. You'll see that the money was just

transferred here to there.

MR. WAKEHAM:

Okay, so one's down, one's up.

MS. HANRAHAN:

Right.

MR. WAKEHAM:

Okay.

I guess

I better stop right now, because I'm about to run out of time.

Thank

you, Mr. Chair.

CHAIR:

Further questions?

The

Member for St. John's East - Quidi Vidi.

MS. COFFIN:

Okay, let's start with the larger question of attrition and how that's being

managed within the department. I noticed there are a couple of instances where

'18-'19 is slightly higher than '19-'20, but in most cases, salary costs have

gone up. Can you explain how that aligns with the attrition model?

MS. HANRAHAN:

We had a net increase this year because we took in the portions of the Student

Loan Corporation that moved from AESL. We would've taken in 14 of those people.

The attrition targets would've been out of our base budgets, and so they'd be

fully realized in that '19-'20 as well.

We were

able to achieve those through looking at some efficiencies, particularly as it

relates to processing, those types of things. We ended up seeing a net increase

because you're seeing that addition of a new unit come in.

MS. COFFIN:

Right, okay. That explains an awful lot.

MS. HANRAHAN:

It's not a comparative.

MS. COFFIN:

Yeah. I know attrition is a big thing for us, so I wanted to say: How did all

these things align?

MS. HANRAHAN:

Yeah.

MS. COFFIN:

Totally fair, right? Totally fair. Let's see here. Professional Services under

Departmental Operations, so 1.2.02; a big spike in Professional Services there.

That's page 36. I'm just curious what the other, almost $1 million, was for?

MS. HANRAHAN:

That would've been the McKinsey contract.

MS. COFFIN:

Oh right, of course. The revenue associated with the province here, provincial

revenue, what's that all about? How are we getting revenue in from the

Comptroller General? I'm just pulling something out of the heading there, that's

all.

MS. HANRAHAN:

That would be good.

MS. COFFIN:

Wouldn't that be great? You're delighted over there.

MS. HANRAHAN:

That would be recoveries that we would realize through some of the work we do

through our statistical group and we work with other groups and we do surveys or

economic research. So those are actually recoveries for work where we would

charge them back our costs.

MS. COFFIN:

So this is Newfoundland Stats Agency?

MS. HANRAHAN:

It would include Newfoundland Stats, yes.

MS. COFFIN:

What else would it include?

MS. HANRAHAN:

It includes your Economic branch too?

MR. MARTIN:

It would also include the Economic branch. We will do the economic forecast for

the City of St. John's. We do pieces of work for Hydro –

MS. COFFIN:

I'm can't quite hear you.

MR. MARTIN:

Sorry.

MS. COFFIN:

Hydro in the City of St. John's?

MR. MARTIN:

We do the economic forecast for the City of St. John's, through that group. We

also do forecasting for Hydro as well in terms of economic impacts and such.

MS. COFFIN:

Right.

MR. MARTIN:

And then it's also the statistical group because they'll do work for other

entities and it's on cost- recovery basis.

MS. COFFIN:

Well done on that. So they also use the Community Accounts Committee – Accounts

Committee sits with the Newfoundland Statistics Agency or is that in the

Economic branch?

MR. MARTIN:

The Stats Agency and the Economic division are all in the same branch.

MS. COFFIN:

Yes.

MR. MARTIN:

And the Community Accounts itself sits within the Stats Agency, but it's really

populated by both groups. Information flows back and forth between the groups as

required.

MS. COFFIN:

Right. Yes, I'm quite familiar with it and it's an excellent, excellent tool. I

don't know if anyone else in this meeting has used it, but I certainly used it

on a number of occasions. So I often direct community groups that I speak to, to

that area and I make my classes sit through that stuff. I also read aloud to my

classroom the Auditor General's report. Yeah, funniest professor ever.

that's kind of an interesting piece there. It's nice to hear on the revenue

sides. And that grew last year? Yeah, so you went up by almost $200,000, so good

job on that.

MR. MARTIN:

And again, it depends on what projects come to us in any given year in terms of

people coming to us seeking to have work done. Again, it's primarily on a

cost-recovery basis.

MS. COFFIN:

Right. I'm going to direct more people over to you because I've talked to a

number of people and especially now in this role I do speak to a lot of

community agencies and a lot community groups and a lot of groups in general. So

that would be an excellent function that I will certainly share. So maybe that

will actually get us some more staff. How cool would that be?

Government Personnel Costs, 1.3.01, is that where we're finding the Student Loan

Corp?

MS. HANRAHAN:

No, (inaudible) Student Loan Corp would've came into Departmental Operations,

under 1.2.02. That's where you'll see that salary increase there. Government

Personnel Costs is fundamentally the employer portion of benefits for the

service. So EI, CPP and pension, those types of things is under 1.3.01,

Government Personnel.

MS. COFFIN:

It is 1.3.01, and under Salaries? Help me through that now.

MS. HANRAHAN:

This is related specifically to a particular salary adjustments that would be

related in there. For example, we did have a settlement payment that was several

years old, so that payment you're seeing there of $1.3 million directly relates

to that particular settlement payment. Generally, the Salaries money here is

transferred out to departments if they need it for a particular adjustment that

they may come across from that perspective. Collective bargaining-specific

settlements, for example, the tribunal or if there was something like that that

came from an arbitration or something like that and we needed to transfer it,

that's where we would take it.

MS. COFFIN:

Okay, so in the budget, we say we had $5.8 million – so '18-'19, there was $5.8

million there – only $1.3 million was used?

MS. HANRAHAN:

No, only $1.3 million would have been charged to this account. Some of those

funds potentially could have been transferred, not unlike contingency or some of

those accounts, because the expense shows up where we sent it to.

MS. COFFIN:

Right. So that's why this is kind of hard to track.

MS. HANRAHAN:

It's hard to follow.

MS. COFFIN:

Because you say the money comes in here, but it shows up elsewhere, so if we're

matching Estimates – and I've tried to do this, match Estimates to the Public

Accounts. Yeah, makes me fun at parties, I'm telling you.

Okay,

and then the employee benefits, that's your CPP, your EI, workers' comp falls

into that, as well, and that's apportioned out according to department.

MS. HANRAHAN:

All of that is charged to this one account on behalf of all of government.

MS. COFFIN:

Right.

MS. HANRAHAN:

Their salaries would be there, but their benefits would all come into this pot

here as well.

MS. COFFIN:

Okay, interesting.

Has

there been an adjustment? Certainly, this is an overarching thing, now. As I've

been watching salaries, and some are going down over the years as we get the

attrition models and stuff like that, and I know that we're not getting annual

increases because we're fixed at zero per cent for four years, but people are

getting step increases unless they're topped or they're red circled. I guess

that's being captured in the change in salaries as well? The attrition would

drop down the numbers, but then the step increases would bring it up a little

bit. Is that correct?

MS. HANRAHAN:

Departments would operate in a salary envelope, so if they had step increases,

they have to fund it from their envelope. Same with attrition targets, they

would fund it from their envelope. For this particular account here, which is

almost like an output for all of those salary plans, what you're seeing in a

change of a year over year has to do with any change in rates that are being

charged for employer portion.

For

'19-'20, we have t