September 11, 1992 (Afternoon)

PUBLIC ACCOUNTS COMMITTEE

The Committee reconvened at 2:30 p.m.

MR. CHAIRMAN (Windsor): Order, please!

I don't see any media present, so I don't need to

go through my usual instructions to the news media. For the benefit of the

witnesses who are joining us this afternoon I'll introduce the members of the

Committee. To my right is Mr. Tom Murphy, who's the Vice-Chairman, MHA for St.

John's South; Mr. Danny Dumaresque, MHA for Eagle River; and Mr. Garfield

Warren, MHA for Torngat Mountains. My name is Neil Windsor, MHA for Mount Pearl.

I would like to ask Mr. Randell perhaps if you

would introduce the people whom you have with you this afternoon who were not

here this morning.

MR. CLARENCE RANDELL: Thank you, Mr. Chairman.

The people with me this afternoon were not with me this morning. On my immediate

left is Ms. Elizabeth Batstone, who is the Director of Cultural Affairs for the

Province. On Mr. Frost's right is Mr. Wayne Guzzwell, who is the recently

appointed Manager for the Arts and Culture Centre in St. John's.

MR. CHAIRMAN: Thank you very much. The Auditor

General's people we've met and I assume the witnesses know most of the people

involved. Do you want to go through it?

MS. ELIZABETH MARSHALL: Bill Drover, who I

introduced this morning; Wayne Moores who is a Senior Auditor; and Bernard

Howlett who's an Audit Manager.

MR. CHAIRMAN: Okay, thank you very much. For

the benefit of the new witnesses the purpose of our meeting is basically to

gather information. It's no more than that. We're here to listen to your views

on the items that have been commented on by the Auditor General in this

particular case. The Committee has a mandate to look at any number of things,

things referred by the Auditor General's report, matters that the House of

Assembly might refer to us, or items that we may, as a committee, feel are

worthy of our consideration.

In this particular case, we're looking at an item

from the Auditor General's report of which you are aware, no doubt, and we're

simply here to gather information and ask questions and to try to get a better

feel for exactly what happened. Our role of course is simply to report back to

the House of Assembly.

The meetings are somewhat informal, although

they're serious. As you see, we've taken our jackets off because it's warm in

here. Feel free, if you have a valid point to make, to request an interjection,

or if a question is directed to you and you think somebody else - Mr. Guzzwell

or somebody - should answer it, please feel free to do that.

We have some witnesses to be sworn in, first of

all, so we'll ask the Clerk to proceed with that.

MR. RANDELL: Mr. Chairman, if I may.

MR. CHAIRMAN: Mr. Randell.

MR. RANDELL: Before swearing in, I should point

out that neither Ms. Batstone nor Mr. Guzzwell were employed in the department

in any capacity at the time covered by this report. So I would suspect that most

of the responses will have to come from Mr. Frost, with some help from Ms.

Batstone.

MR. CHAIRMAN: Mr. Frost is not in the

department now.

MR. RANDELL: No, thank heavens.

MR. CHAIRMAN: Are you still there?

AN HON. MEMBER: Yes, but I'm not with his

department.

MR. CHAIRMAN: We have a hodgepodge of people

from various portfolios.

I'm sorry for interrupting the Clerk.

SWEARING OF WITNESSES

Wayne Guzzwell

Elizabeth Batstone

MR. CHAIRMAN: Again, for the witnesses' benefit,

we have a recording system. I ask you to speak into the microphones. Unless I

identify you, which I try to do, identify yourself for the benefit of Hansard as

those people will have to do the transcriptions later on. I'd just like to say

to everybody, please speak fairly clearly, because this room is not great from

an acoustics point of view, and some of our ears are not what they used to be

twenty years ago.

The item that we're here to discuss this afternoon is

a matter relating to the Cultural Affairs division, particularly the Arts and

Culture Centres. Perhaps first I would ask Mr. Randell, do you want to make an

opening statement as it relates to this particular item? Or Ms. Batstone?

MR. RANDELL: Since Ms. Batstone is more familiar,

would you like to make any general comments about the operations per se?

MS. ELIZABETH BATSTONE: I'm not sure exactly what

you might be looking for. I would certainly start by saying that I came into the

position of Director of Cultural Affairs during early January of 1991. At that

time, I think, Mr. Moores was already in our office, had been for I think some

weeks or a month, and the audit was in progress at that time and continued on

until I think it was some time around April. Wayne, I can't remember for sure.

Around that time. So it was during the period that the audit was going on that I

took over as Director of Cultural Affairs and, after the audit was over,

obviously went through all the matters with Wayne at that time.

MR. CHAIRMAN: Thank you.

I normally go to the Auditor General first and ask for

a statement from that side and then let you respond, so I have done it in

reverse. If you wish to respond afterwards you may again, but I will ask the

Auditor General if she has some opening comments to make to introduce this

subject to us.

MS. MARSHALL: Thank you, Mr. Chairman.

Section 4.14 of the 1990-91 report to the House of

Assembly deals with our review and evaluation of the Cultural Affairs Division

and our audits of five Arts and Culture Centres within the Department of

Municipal and Provincial Affairs.

The objectives of our review and evaluation were to

ascertain compliance with legislation and also to review and evaluate the system

of financial management and control.

Our audit disclosed several areas of concern relating

to these centres, and I was not intending, Mr. Chairman, to go down through the

fourteen items that are disclosed on pages 132 and 133 of the annual report, but

they are there if anybody wishes to read them.

In addition to those matters, the following matters

came to our attention. There were certain expenditures of the Cultural Affairs

Division that were not in compliance with the Public Tender Act, 1984. Our

review disclosed that no documentation existed to indicate quotes were obtained

from at least three suppliers for certain purchases under $5,000 as required

under

Section 9 of the Public Tender Act.

Also, public tenders were not invited for purchases

over $5,000 as required under

Section 3 of the Public Tender Act, and the

Minister of Works, Services and Transportation was not informed when a tender

was not invited for amounts over $5,000 as required under

Section 10 of the

Public Tender Act.

The next matter that came to our attention was that

complimentary tickets were issued to certain patrons of the Arts and Culture

Centre, St. John's. Our review disclosed that the use of the complimentary

ticket voucher was discontinued in 1988; however, complimentary tickets continue

to be issued. Also, the guidelines for the issuance of complimentary tickets was

not strictly adhered to.

As a result of our review and evaluation of the Arts

and Culture Centres and the Cultural Affairs Division, we recommend that all

legislation and operating guidelines and procedures should be strictly adhered

to; the system of financial management and control should be strengthened; and

the computer system control should also be strengthened.

MR. CHAIRMAN: Thank you very much.

Perhaps, unless you wish to make a statement or

respond to any of that, we will move on with the questioning.

Mr. Murphy, would you like to open this afternoon?

MR. MURPHY: Yes, thank you very much, Mr.

Chairman.

Ms. Batstone, I see on page 10 of the distributed

document that you have already taken some action to correct some of the Auditor

General's statements in a memorandum to all staff, dated March 27, to handle, of

course, some of the discrepancies that were found through the audit. However, if

you do not mind, perhaps a quick overview of pages 2 and 3, in responding to the

findings of the Auditor General's Department, on the bottom of page 2 and

continuing on into page 3, you might want to make some comment for the Committee

there because I think a lot of the situations that were addressed by the Auditor

General are contained in those two pages; so perhaps you might want to comment

on that for us.

MS. BATSTONE: Yes. What I will do is run down

through each of the findings and make a comment and give you some idea of the

steps that we have taken in correcting some of the matters and problems brought

to our attention by the auditor's report.

The legislation operating guidelines procedures

mentioned in the first one, the legislation being referred to, I presume, is the

Public Tender Act. Having gone through, in great detail with Wayne Moores after

the audit was done, I subsequently set up a series of meetings with the

Government Purchasing Agency, with Mr. Joe Day, and I think on one occasion with

Larry Cahill, and discussed in great detail both with them and with my division

staff present, exactly what these problems were and why we were encountering

difficulties in adhering to the act.

We found that these meetings were very useful, and we

have set up a relationship with the GPA that will allow us, whenever we are in

doubt, to consult with them as to any particular thing that we have to do as to

whether or not these particular circumstances warrant doing things in any

particular fashion, and this has been pointed out in a memo of March 27 to the

staff, that they are to have strict compliance with the act and where there is

any doubt in their minds as to how to operate, they are to consult with Mr. Day,

and clarify it before proceeding.

MR. MURPHY: Okay, thank you. Just one other thing

in the memorandum that you issued. I suppose there is no one who is more

familiar with complimentary tickets than the Chairman and myself with all the

hockey we played over the years and what have you. We were always ready to put

our hands out and take a couple of tickets for someone to come down and watch us

make fools of ourselves. However, complimentary tickets I suppose can get

carried away with in some instances. It is not specific on that. It says that

complimentary tickets will continue to be issued according to the policy and

guidelines already in effect. Would you be a little more direct for the

committee?

MS. BATSTONE: During the time, I think in 1983,

when Len Simms was the minister in charge of the department of which the

Cultural Affairs Division was part, a policy was put in place concerning the

issuance of complimentary tickets, not only for the St. John's Centre but all

the centres in the Province and that has been in effect ever since and I think

the Public Accounts Committee was sent a copy of that. I have reviewed it

subsequently with my staff since taking the position of director and we have

found that it is adequate. The problem I think being referred to in the audit,

had to do with the process that was being used, in that complimentary ticket

vouchers which were supposed to be pre-numbered and issued through the manager

of the centre, that particular process was not always faithfully adhered to and

this has subsequently been corrected and in discussion with Mr. Guzwell, we feel

satisfied that we have a system in place now which will take care of that to the

auditor's satisfaction.

MR. MURPHY: Okay, thank you. I will pass on to one

of the other members.

MR. CHAIRMAN: Mr. Dumaresque, would you like to -?

MR. DUMARESQUE: Thank you, Mr. Chairman. I noticed

when you said that the process is now in place, where this will not happen again

in terms of the issuing of funds outside of the Public Tendering Act, have there

been any instances since this, where, anything like this has come up? We have

run across the situation as the last couple of days have shown where staff at

various levels of the division seemed not to know the policy of the Public

Tendering Act, or indicated ignorance for the benefit of their past experience,

so are you happy that all the staff out there fully appreciate the limits of the

Public Tendering Act right now?

MS. BATSTONE: One of the steps that I took

immediately in consulting with the Government Purchasing Agency, and I think you

will note in the memo I sent out on March 27 that all staff were to obtain a

copy of the Public Tender Act, and that they were to familiarize themselves with

it thoroughly and where they needed clarification they should seek it. I made it

clear to them in the meetings with the Government Purchasing Agency people, that

ignorance of the act would not be acceptable as an excuse for not complying with

it.

MR. RANDELL: Mr. Chairman, may I just interject?

MR. CHAIRMAN: Mr. Randell.

MR. RANDELL: One thing I should point out is there

was a suggestion in the process that we should be calling public tenders for the

acquiring of any service, goods or services, in excess of $5,000; even to the

point of suggesting that we should go to public tender for the various

performers we book for the centres. I just cannot see any logic or reasoning in

that. If you are going to bring in the Winnipeg Symphony Orchestra or the

Ballet, you are not going out to tender how many are going to offer their

services at what cost to come to Newfoundland.

MR. CHAIRMAN: No, I do not think we are suggesting

that.

MR. RANDELL: I am not suggesting you are

(inaudible).

MR. CHAIRMAN: While we are on this, that struck me

as I was reading through the documentation here and we will get into further

questioning later, but the concept of operating a bank account, paying the

performers directly - maybe in some cases you need to do that but would it not

be possible to have these performers issue an invoice and a cheque be issued

through normal channels? I was just wondering why it is necessary to pay cash on

the barrel head there for that sort of thing. You are not doing that?

MS. BATSTONE: There is no cash - are you talking

about cash as in money or in cheque?

MR. CHAIRMAN: I was reading documentation here,

and I remember from my reading last night that there was a bank account

maintained. Is that no longer in existence?

MR. BATSTONE: Yes.

MR. RANDELL: Mr. Chairman, I should make one other

point clear. Now I don't want to get into personalities here, but we had some

serious problems with the management at the Arts and Culture Centre for a number

of years past. There was disciplinary action taken, et cetera, and without

bringing up any names, the people are no longer with us. I am confident now,

even though they are no longer with our department, that with Mr. Guzzwell there

as manager that a lot of the problems that were encountered before no longer

exist, and that is certainly one of them, sir. There is no question.

MR. CHAIRMAN: But let me ask again. Are we still

issuing cheques to set up a bank account instead of issuing a direct cheque from

the centre for that, Mr. Frost?

MR. FROST: If I can respond, Mr. Chairman, the

answer to your question is yes. We still use that method and there is a good

reason for it, that is the operation of theatres is not your normal government

operation, it is a little different. Basically what happens is performing arts

companies come to our theatres and they enter into a contract with us previous

to coming, and they are told that they and we get a certain amount of the ticket

receipts for the performances. The scenario quite often is they will finish

their show at 10:00 or 10:30 p.m. and they want their trucks loaded up with

their sound equipment and their scenery and props and be out of there by

midnight, and they want the cheque in their hands before they leave. That is the

reason for this.

Quite often performers and performing arts companies

are paid within hours after their last show when we can compute who owes who

what. Therefore they are given their cheque and sent on their way.

MR. CHAIRMAN: Well I can see there certainly could

be exceptions where that would be required, but it would seem to me that the

general case would not have that kind of urgency, that they could be paid within

twenty-four or forty-eight hours or something. Is that not possible? Surely you

don't have all the performers skipping out of town in the dark of night. They

are going to be around for a day or two.

MR. FROST: Mr. Chairman, quite to the contrary,

many are gone the night or the afternoon of their performance. They have

aircraft to catch, they have trucks to put their equipment in. While I see no

problem in waiting twenty-four hours in many cases, and in many cases it may

even be longer than that before they get paid, but quite often part of the deal

is these people are on the road travelling all over the world, and they have

their managers with them, and they want to clue everything up before they leave

town. That is how it operates, as I have said. The theatre operation is rather

different and does not conform to your typical government operations.

MR. MURPHY: Just for clarification I would assume

then what you are saying is that in a lot of contractual arrangements with

groups and or theatre companies, or what have you, they get a base rate

guarantee for their performance and a cut, I suppose, on the tickets that are

sold?

MR. FROST: Mr. Chairman, it can become quite

complex. At times somebody simply hires the whole theatre. For instance VOCM may

say we want to rent your theatre for ten nights because we are bringing down the

Carlton Showband for ten evenings. We charge VOCM a standard preset rate to rent

the facilities and there are variations there. Do they want us to issue the

tickets through our own ticket office with our own staff or do they wish to

issue the tickets through various venues around the city? There are different

costs involved. Do they wish us to provide ushering services or are they going

to do it? Do they want us to have the coat check service available? There is a

set charge for all of this. So if that is decided upon there is simply a

straight rental. It is none of our business, in a sense, how much money or

revenue was earned as far as the Carlton Show Band is concerned. VOCM has paid

its rental. We make money on that rental. We do it for profit. VOCM takes its

share and gives the other part to The Carlton Showband. We're not involved in

money changing hands.

The other scenario: it's where we ourselves enter into

a contract directly with a performing arts group. We say: alright, the take will

be 70-30. We know that perhaps they're a well-known group, they're very

polished, they have a very good following here. We book them for five or ten

nights, and it is a split of the actual ticket sales. In that case it's usually

important to the group that finances be concluded very quickly after their last

performance. It's a case where we take a split.

There's also the other case that you suggested, Mr.

Murphy, whereby we'll agree on a set fee for a concert, and revenues over and

above that fee will be split a certain way. This is often done particularly for

Newfoundland performing arts companies when there is some fear that they will

actually lose money. Part of our mandate is not just to put on performing arts

for the Province, but it is to support our local, Newfoundland performing arts

companies. We are once in a while prepared to take a loss on that, so that we

will guarantee them so much, even though that revenue may not be achieved.

So there are quite a number of scenarios, but

basically, that's how the system works.

MR. MURPHY: Okay. Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Dumaresque?

MR. DUMARESQUE: I'm finished.

MR. CHAIRMAN: Mr. Warren.

MR. WARREN: I just have a couple of comments to

make. Ms. Batstone, you did say that now with respect to complimentary tickets,

it's sort of better organized and better run now than it has been, and maybe it

should be. I notice a letter here from Mr. Simms in 1983, page 21, and I notice

number ten. It does say: "A monthly report shall be furnished from each of our

Arts and Culture Centres listing the number of complimentary tickets...." Is

that followed now?

MS. BATSTONE: Yes.

MR. WARREN: Are there any other criteria other

than those ten listed that either he or she can receive a complimentary ticket?

MR. BATSTONE: I'm not sure that I get the impact

of the question. Are you asking whether anybody other than those people listed

here are authorized?

MR. WARREN: No. I'm asking if anyone can, other

than for those ten reasons for a complimentary ticket being issued, are there

any that are not within those ten groups, who could receive a complimentary

ticket.

MS. BATSTONE: No. The ten instances that are

listed here outline the scenarios that generally come up. The one that really

covers the widest possible range is number 4. Papering. Which means that in the

theatre business it is considered necessary and even desirable at times to

ensure that the performance that goes ahead does not go ahead to an

embarrassingly empty auditorium. There are instances where it is necessary, for

whatever reason, to ensure that there is a good-sized audience in place. In that

case, a large block of tickets might be offered to - it could be a senior

citizens group, a couple of schools, a particular group that we would like to

see there. That's referred to as papering.

This would only take place under specific

circumstances where it was called for and where it was absolutely certain that

these seats would not have normally been purchased by anybody. Outside of

papering for that reason, the other ones that you see listed there are the ones

- we get requests on numerous occasions that we turn down.

MR. WARREN: I guess it probably is a case where an

individual is taking advantage of one of the ten criteria that have been listed.

Again, I guess, you answered the question. When you need somebody to fill a

particular

section you may place a call and say: look, can you come down

tonight, sort of thing. Which has happened probably - I don't know about other

members here - but to me on a number of occasions.

MS. BATSTONE: Yes.

MR. WARREN: Is it very frequently that this will

happen?

MS. BATSTONE: No, I wouldn't call it frequent, in

the last couple of years we've been very pleased with the response to our

programming. In the St. John's Centre we've been maintaining close to at least

half house on most of our shows. Whenever there's a half house, papering is not

necessary, asking other people to come along who we'd like to see there to make

sure that they know what's going on in the Centres, that they're going to be

able to speak about the programming and encourage others to come - yes, I think

that's a tremendously good investment in the use of complimentary tickets when

those seats would have remained empty outside of that.

MR. WARREN: Again I go back to Mr. Randell's

comments earlier, without bringing any personalities into the picture, if you

now get a call from a particular group or a particular individual asking if they

can receive one or a number of complimentary tickets, can you outline very

briefly the procedure that you're following now that was not followed twelve

months ago, or two years ago?

MS. BATSTONE: Generally, the request for

complimentary tickets goes to the manager. In St. John's it's also frequent that

it might come directly to me or to our programming manager or one of our other

staff. Mr. Guzzwell and I have been discussing as recently as yesterday that all

requests that come through - whether they come through to Mr. Frost, to the

minister or to me - be channelled for signing through the Manager's office. If

there is any discussion to take place as to whether or not a request is

legitimate, that Mr. Guzzwell would consult with me and we would make a joint

decision as to whether this was appropriate.

MR. WARREN: Okay. Thank you.

MS. BATSTONE: By the way, this goes for the other

managers in the other Centres.

MR. WARREN: I have a couple of other short

questions, Mr. Chairman, if I can continue.

MR. CHAIRMAN: Go ahead, Mr. Warren.

MR. WARREN: Mr. Murphy earlier asked you to go

down through the findings on page 2 to 3, but after you got -

MS. BATSTONE: We got sidetracked.

MR. WARREN: Yes, after you got through one or two

I think we got just off course a bit. I noticed the last two items there on the

findings, swimming pools. I would assume we're no longer with swimming pools.

MS. BATSTONE: No, the swimming pools are not under

the aegis of the Cultural Affairs division and we, I think, have informed the

Public Accounts Committee that we would not be answering for those two items.

MR. WARREN: Okay. Including the swimming pool in

Happy Valley - Goose Bay?

MR. RANDELL: Yes, that's correct.

That was never under the Cultural division, Mr.

Warren. That comes under the Sports and Recreation division, which is still with

our department, in fact.

MR. WARREN: Still with your department, but not

under the Cultural Affairs division. Okay. My final question. I go to the Public

Tendering Act, particularly on page 14, where we did exceed $5,000 as required

under the Public Tendering Act. In particular, Robinson Blackmore and Moore

Business, and so on. I notice there are some notes taken there. This is probably

a little bit unfair for you, Ms. Batstone, but maybe to Mr. Randell: weren't

there any avenues open to other suppliers other than those listed there?

MR. RANDELL: In 1987, sir, I have no idea.

MR. WARREN: Maybe Mr. Frost.

MR. RANDELL: Mr. Frost might be best to answer

that, but we didn't pay for these goods. They were purchased on behalf of the

Provincial government.

MR. CHAIRMAN: Mr. Frost.

MR. FROST: Mr. Chairman, I'm unable to answer this

with accuracy for the reason alluded to by Mr. Randell a little earlier. We had

a difficult time in our history where we were without a Director of Cultural

Affairs for two years. It's during this two-year period that this particular

audit had taken place. I think it's fair to say that when someone as important

as a director is missing, things within the organization can become rather

loose. It's for this reason that I'm particularly grateful to the Auditor

General's department for pointing out to us some of the deficiencies that were

taking place.

As well we did have, as was said, particular

difficulty with one particular employee, who was retrained by us and was also

suspended without pay on several occasions. I think it's fair to say that that

employee was the cause of many of the things mentioned in this report. That

employee is no longer with us, and I have to say that I'm unable to answer Mr.

Warren's questions directly, as I had no direct knowledge at the time of these

things that had taken place.

Since the Auditor General's department brought these

matters to our attention we have held staff meetings, we have gone over each

item mentioned in the Auditor General's report, and made it quite clear to all

our staff that they must comply with all rules and regulations. So I've been a

little long to say that I apologize that I can't answer directly the question,

but I hope you'll understand the reason for that.

MR. WARREN: Mr. Chairman, just one question to Mr.

Frost. I understand there was a period of time that you never had a director.

However, I think if we go back to October 30, 1987, was there not a Director in

place at that time?

MR. FROST: I'm sorry, yes, in 1987 there was, Mr.

Warren.

MR. WARREN: Yes. Okay. So we look at the Robinson

Blackmore issue, we did have a Director in place at that particular time.

MR. FROST: Yes, that's correct. But I would not

have been made aware of this as being a problem until someone brought it to my

attention and obviously the Director at the time didn't do so.

MR. WARREN: Thank you, sir.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Yes, Mr. Chairman. It would seem to

me, even though I guess the letter of the law was not followed in this, what I

read into the October incident at Robinson Blackmore was that our friends at

Coca-Cola through an advertising promotion reimbursed the Arts and Culture

Centres, six of them, for a total of 200,000 envelopes that would contain

tickets. I really don't have a problem with that, because this was a recoverable

amount and I can understand - you know, it would have been better if Coke had

gone out and bought envelopes, obviously, then it wouldn't have gotten into the

accounting system of the Arts and Culture Centre.

AN HON. MEMBER: We paid for half of them.

MR. MURPHY: Yes. We paid half of it, and I

suppose, Mr. Chairman, it might indicate that - well, on page 14, it says:

"Recoverable expense - Provincial Beverages were invoiced in two instalments of

$6,399.60 each." So what I'm reading here if this is fact is that they paid the

whole shot. Is that what I'm seeing here?

MR. FROST: I find your comments astute in that it

is just unfortunate that the letter of the law was not applied at the time.

MR. MURPHY: Yes. If I just might make one more

comment. I get a sense this afternoon from the enthusiastic responses by the

Deputy and by the Assistant Deputy, and the confidence of the new Director, Ms.

Batstone, that we're dealing with a different situation than we were this

morning.

AN HON. MEMBER: Yes.

MR. MURPHY: I sense that these things seem to be

well under control now, under the directorship of Ms. Batstone. I think that the

audited statement by the Auditor General has been looked at extremely closely.

Ms. Batstone, I understand that's what you've said to us., The purchasing

situation seems to be clarified. You have a good liaison now, a satisfactory

liaison with GPA as far as you're concerned. They've offered you advice and

services. I would expect as a Committee member here that if we should be in this

position again to look at what's taking place at the Arts and Culture Centres

through your division, that we would see a dramatic change in the report from

the Auditor General.

These are niceties, but they're niceties because

that's the way I feel as a Committee member at this point in time. With that

statement, Mr. Chairman, I have no more questions.

MR. CHAIRMAN: Mr. Randell.

MR. RANDELL: Mr. Chairman, I just want to make one

point perfectly clear. This information is not coming forward to alibi for what

transpired. We're still responsible, irrespective if we had four chimpanzees

running the affairs for the last ten years. The bottom line is, it wasn't done

correctly, we are responsible, and I certainly hope to God it's corrected now.

MR. CHAIRMAN: Thank you. Perhaps I can ask the

Auditor General, in reading the documentation that was provided to the Committee

there were numerous letters back and forth, it appears that matters had been

dealt with. Are you reasonably satisfied now that corrective action has been

taken on pretty well every item?

MS. MARSHALL: Yes, based on the information that

has been relayed by the department, and by the Cultural Affairs Division, there

is an indication that there has been significant improvements regarding the

matters that were brought to their attention.

We have not carried out a subsequent audit to verify

that the changes have actually been implemented, but I feel assured that there

has been a significant amount of improvement.

MR. CHAIRMAN: Well I do not see much point in

sitting here all afternoon talking about things that were in the past which

these people were not involved in and that corrective action has been taken and

everybody is happy with. It does not seem to make a lot of sense.

I do not want to get into the details because there

are so many items here that have been dealt with that I do not think it serves a

worthwhile purpose. I do want to ask a question about the passes at the pool in

Gander. That matter has now been dealt with or something. The handling of the

tickets, I think it is referred to here, for the swimming pool in Gander.

AN HON. MEMBER: Yes.

MR. CHAIRMAN: That has been dealt with?

MR. RANDELL: Yes it has.

MR. CHAIRMAN: I assume. It was very, very, loose

according to the documentation we had here.

MR. RANDELL: We have colour coded the tickets; I

think that is correct. The one problem we still have not been able to come to

grips with is the matter of the turnstiles where you deposit the tickets in

terms of whether it is an adult or a junior passing through that turnstile when

they drop the ticket. I do not know if we are going to have to put in cameras

there or what.

MR. CHAIRMAN: At least you can reconcile the

number of people.

AN HON. MEMBER: Yes, the number situation has been

taken care of.

MR. CHAIRMAN: And the cash should be reconciled

with the number of tickets of each type and that.

AN HON. MEMBER: Yes.

MR. CHAIRMAN: So there is some control.

Ms. Batstone, you wanted to say something?

MS. BATSTONE: No, what I wanted to see was - you

do not want me to go down through the rest?

MR. CHAIRMAN: I really do not see any sense. If

the members of the Committee wish to ask any questions on it, or hon. gentlemen

- if everybody is content that this happened in the past; we know it was wrong;

it has been dealt with; we recognize the Public Tender Act has to be followed;

proper procedures are now in place to give us better control over accounting and

all the rest of it, then why are we here? It is too nice a day to be sitting

here talking about history that has been corrected.

We can learn from history but I do not want to relive

it.

Mr. Warren, you wanted to say something?

MR. WARREN: I just said to the Auditor General

that we should have the meeting out in the park.

MR. CHAIRMAN: I agree.

Mr. Murphy.

MR. MURPHY: I just wonder if the Auditor General

might be able to inform the committee: is it the Auditor General's intent to do

a follow-up now?

MS. MARSHALL: Yes, we will be doing a follow-up on

the Arts and Culture Centres and also the Cultural Affairs Division. There is no

audit ongoing at the present time and the audit

schedule for the next audit

cycle will take place some time in early October. So whether it will be done in

the next year or the subsequent year I do not know at this point in time. We

sort of weigh what our priorities are.

MR. MURPHY: Well I would think that would be the

flag, whether it be green or soft orange or red. Again, I do not anticipate it

would be red, but that might be the flag that would wave in front of the Chair

and he might very well want to, at that time, come back. But I would suggest

that what I have heard this afternoon, and what I have heard from the deputy and

assistant and director, that I am satisfied that things are now changed from

where they were, and I would hope that my observations are correct.

MR. CHAIRMAN: I am not sure if you are looking for

complimentary tickets (inaudible).

Mr. Warren.

MR. WARREN: My question probably is to Ms.

Batstone. I notice you have a very small uncollectible account. Is this

up-to-date uncollectibles, which is probably only about $200 or $300?

AN HON. MEMBER: What page are you on?

MR. WARREN: I am on page 43. Is this up-to-date

uncollectibles? I must say, to see such a small amount for such a large

business, it is very, very, small.

MS. BATSTONE: Those have been followed through by

our administrative officer, Beth Ann Channing, and I do not have the details on

each one of them but I know some of them have been written off, and I think one

of them has been collected, but I do not have the details as to which ones.

MR. WARREN: But there are no other newer ones than

this?

MS. BATSTONE: Sorry?

MR. WARREN: Are there any other newer ones?

MS. BATSTONE: Not to my knowledge today.

MR. CHAIRMAN: Mr. Randell.

MR. RANDELL: It is quite possible, Mr. Chairman,

that occasionally you get an NSF cheque and you have to go back over and collect

it, but generally if they are kicking around for two or three years and not able

to be collected then we, as we have done quite recently, went back to Treasury

Board for approval to write it off. Of course, Sir, as a former President of

Treasury Board you can realize Treasury Board does not automatically write

anything off.

MR. CHAIRMAN: Not very easily.

MR. RANDELL: No. They say: make sure you've gone

through every process imaginable to mankind before you come to us.

MR. CHAIRMAN: Normally with great reluctance, on

behalf of the departments, I might add, who would rather write it off.

May I just ask, on page 15 of the report it talks

about payments to Appa Communications for services rendered. I would assume this

was done without tender. These amounts were both over $5,000. How did Appa come

to be the agency that does this creative work for us? Was there a proposal call

or a tender call for those services? How long have they had this contract, and

what is the term of the contract?

MS. BATSTONE: As I understand it, just previous to

my taking this position, Appa Communications approached Cultural Affairs through

our programming manager and made a proposal to them regarding developing a

particular program cover and covers, and a showtime publication, which was

vastly different and considered to be much more effective than what was

presently being used at the time. They undertook, in conjunction with the

Cultural Affairs division, to do a developmental process for these publications,

whereby they would also solicit advertising and that sort of thing. So that part

of the cost would then be picked up in that regard.

It was a developmental process, which is we're now I

think almost to the end of. Once we're satisfied that what has now been

developed is the kind of vehicle that Cultural Affairs wants to use, then the

contract will be put to tender, as it would normally be.

MR. CHAIRMAN: So it was not tendered. When they

came with a proposal to do this for you there was no proposal call then?

MS. BATSTONE: No.

MR. CHAIRMAN: Quite often, groups and agencies

will come to government and say: we have an idea. They will be told: it's a good

idea, and we appreciate your initiative, but we should invite proposals from

other people who could do this as well. That is done. I take it that was not

done.

MS. BATSTONE: I wasn't there at that time. This

was during the period of time, I think, referred to when the Director's position

was vacant. Again, discussions have taken place with staff as recently as this

week concerning just where this process is right now. So that what you see here

as having been expended without public tender will, when this process is

finished that they've been developing, that this will then be going to public

tender as required.

MR. CHAIRMAN: So this is fairly recent. This is

1990, according to this, that this took place.

MS. BATSTONE: Yes.

MR. CHAIRMAN: Any other questions?

MR. MURPHY: No, I'm fine, Mr. Chairman, I'm

satisfied.

MR. CHAIRMAN: Mr. Warren? Does the Auditor General

wish to make any -

MR. WARREN: Just one short -

MR. CHAIRMAN: Mr. Warren.

MR. WARREN: - comment, Ms. Batstone. Maybe it's

probably out of the realm of this particular report, but approximately what

revenue do you receive - or expect to receive - during the issue of parking

tickets at the Arts and Culture centre?

MS. BATSTONE: That's under WST, we don't collect.

MR. WARREN: Is there any coordination with -

MS. BATSTONE: No, we don't involve ourselves in

Works, Services and Transportation business.

MR. WARREN: No coordination at all?

MS. BATSTONE: No.

MR. WARREN: Okay.

MS. BATSTONE: If you get a ticket, it's not from

us.

MR. WARREN: I don't.

MR. CHAIRMAN: Mr. Frost, you wanted to add

something?

MR. FROST: I just wanted to point out, there is no

coordination between us and the security people who work for Works, Services and

Transportation, but there is obviously coordination when specific requirements

are there for particular dignitaries and what have you who may be visiting. We

have absolutely nothing to do whatsoever with the issuance or otherwise of

parking tickets. That's purely Works, Services and Transportation's domain.

MR. WARREN: I know the biggest concern from the

general public is when you have the Kiwanis Music Festival, or the school groups

performing, because that's just a beehive of activity there. I'm sure you people

are just as much concerned about it as Public Works is, and probably we as

politicians are. Like I said, it's outside the realm of this particular issue.

It is a concern that I'm sure that you're aware of.

MR. CHAIRMAN: Mr. Frost.

MR. FROST: Mr. Chairman, that point is very well

taken. Every year there are discussions between ourselves and Works, Services

and Transportation in anticipation of the Kiwanis Music Festival, and other

large crowd-drawing events such as that, whereby it's made very clear as to what

the parking problem was the previous year, what the need is this year. Then WST,

which has the control, says: fine, there is a restricted area here, or an area

that is really used for the University, that we will leave open that week

because of the Kiwanis Music Festival, so there is good co-operation there but

we do not pretend to try and tell them how to do their business.

MR. CHAIRMAN: I can assure you they are very

efficient. Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

I just have a question and a comment I guess outside

of this whole report, but I am just using this opportunity to ask the manager of

the Arts and Culture Centre in St. John's about the emphasis that you play on

seeking entertainment, certainly from various regions of the Province and I

point that out because we just had four hours of tv and the Newfoundland show,

and of the four hours, there was not five minutes of Labrador talent. I have had

some submissions in the past from groups in Labrador about getting access to the

various Arts and Culture Centres and I just wonder if you have a plan to see

that Labrador culture, from my particular viewpoint, is a part of your program

throughout the year, not unlike CBC who do not seem to want to take

part in

that.

MR. GUZZWELL: I won't answer for CBC anymore

although I used to be a producer there. In the six months that I have been here,

no one has made a presentation from Labrador, so I have not had a chance to hire

them or not hire them. We do not seem to get many groups from Labrador

presenting themselves to us, well in the six months that I have been there

anyway; I do not know if Elizabeth knows of any in the past year and a half or

so.

MR. CHAIRMAN: Ms. Batstone.

MR. FROST: Mr. Chairman, if I could comment?

MR. CHAIRMAN: Okay, Mr. Frost.

MR. FROST: I am sorry.

MR. CHAIRMAN: Go ahead.

MR. FROST: We do not have a mandate to choose

performing arts from various regions of the Province. There is often confusion

on this and if you listened to the radio yesterday morning, you would have heard

comments about the St. John's Arts and Culture Centre versus The LSPU Hall in

St. John's. They are completely different operations. One is for experimental

theatre, where people learn to act, where people learn to write plays and what

have you. The six arts and culture centres that we run are there to put on

polished, highly professional acts that will respond to the needs and

requirements of Newfoundlanders, as well, we do have a mandate to assist

Newfoundland performing arts companies where feasible.

There is often a problem in finding Newfoundland

performing arts companies with very high polished qualifications. To put on acts

of poor quality destroys our reason for being there, people do not attend and we

lose a fortune. However, Mr. Dumaresque's point is well taken in that we have

made a special effort in the last couple of years to showcase good quality

Newfoundland and Labradorian productions, to the extend where, I was very proud

this past twelve months when our director had a showcase take place in Gander, a

Newfoundland showcase.

The purpose of this was to allow Newfoundland and

Labradorian performers, whether they be individuals or performing arts groups to

come into Gander, and privately, in the theatre there, show our people what they

could do and perform. Our people then chose from the best of those acts. I might

say that they were all good, not all of them though were of main stage quality,

so there is this problem that if a group does not advise us and let us see how

good it is, it is difficult for us to make a choice. We have made, at

considerable cost this attempt, by bringing groups into Gander and that has

worked well for us, but I would caution that I would not want people to feel

that we either have the mandate nor do we try to choose groups from various

geographical areas of our Province.

MR. CHAIRMAN: Thank you. Mr. Murphy.

MR. MURPHY: I might comment, Mr. Frost, about your

professionalism. When it comes to that review show and how polished it might be,

you and I might want to debate that some time.

MR. FROST: Maybe not.

MR. CHAIRMAN: I think we have rapidly ground to a

halt here. There are no further questions. Would the hon. gentlemen like to make

a closing comment?

MS. MARSHALL: There is only one comment I would

like to make on something that was referenced earlier, and that is there was

some discussion on the fact that the centre was operating its own bank account.

I just had some very brief discussions with my people as to whether it would

even be possible for the Arts and Culture Centre to have its own set of

financial statements. So I don't have a problem with them operating their own

bank account from an audit perspective provided they follow government's

policies and procedures and they have proper controls in place.

MR. CHAIRMAN: Yes. I pursued that line of

questioning, and I can appreciate that there are a few situations there that

need to be dealt with. I guess our only concern is that proper procedures are

followed, and I am sure from what we have heard that can be worked out.

That being the case I want to thank the witnesses for

taking the time in coming here this afternoon and giving us the benefit of their

knowledge of the particular matters at hand. I thank the Auditor General and the

members of her staff, the staff of the House of Assembly and my colleagues.

The meeting stands adjourned.