April 1, 2003 GOVERNMENT SERVICES

COMMITTEE

The Committee met at 9:00 a.m. in the House of Assembly.

MR. MATTHEWS: Before we begin, we have a routine issue to take care of. I

am advised that we need to formally elect the Chair of this Committee. We will

ask Jack Byrne, the Vice-Chair, who was already elected in a previous setting,

to conduct the election.

On motion of Mr. Byrne, seconded by Mr. McLean, Mr. Matthews was elected

Chair.

CHAIR (Matthews): Good morning, everybody. Good morning, Committee,

Minister Langdon, members of the Department of Municipal and Provincial Affairs,

and also the personnel from the Newfoundland and Labrador Housing Corporation.

This morning we are meeting to conduct the review of the Estimates of both

the department and the corporation as a separate entity, as is the norm.

Normally, we allocate three hours for these meetings. If we need to go beyond

that, of course, we would have to reschedule and reconvene at another time.

We will follow the same rules that I have been observing for the last eight

or nine years, and that are affirmed in Elizabeth's direction to me, in that

we will ask the minister to lead off with a fifteen minute time allocation,

followed by a fifteen minute allocation of time for the Vice-Chair or his

designate to respond. After that we will alternate, if it is your agreement, to

a ten minute speaking allocation of time. We will do that as often as we need to

do it until the Committee is satisfied that they have attested the Estimates

sufficiently and are prepared to vote on them.

Having said that, we will move forward. Minister Langdon, probably you would

like to introduce or have your staff introduce themselves. Before you do that, I

will ask my Committee to introduce themselves for the record. Then we will move

forward with your Estimates, starting with Mr. Butler.

MR. BUTLER: Roland Butler, MHA for Port de Grave.

MR. J. BYRNE: Jack Byrne, MHA for Cape St. Francis.

MR. McLEAN: Ernie McLean, MHA for Lake Melville.

MR. FITZGERALD: Roger Fitzgerald, MHA for Bonavista South.

MR. JOYCE: Eddie Joyce, MHA for Bay of Islands.

MR. FRENCH: Terry French, MHA for Conception Bay South.

CHAIR: Thank you.

Minister?

MR. LANGDON: I am Oliver Langdon, the minister, and I will ask each one

of the officials beginning with the deputy minister on my right to introduce

themselves as well.

MR. SMART: Bob Smart, Deputy Minister of Municipal and Provincial

Affairs.

MR. DEAN: Leslie Dean, Chairman and CEO of Newfoundland and Labrador

Housing Corporation.

MS MARSHALL: Mary Marshall, Chief Operating Officer of Newfoundland and

Labrador Housing Corporation.

MS COLE: Ramona Cole, Assistant Deputy Minister of Municipal and

Provincial Affairs.

MR. CURTIS: Ken Curtis, Manager of Financial Operations, Municipal and

Provincial Affairs.

MR. CHURCHILL: Wayne Churchill, ADM, Engineering Services, Municipal and

Provincial Affairs.

MR. ROSE: Baxter Rose, ADM, Policy and Planning, Municipal and Provincial

Affairs.

MR. CONWAY: Jim Conway, Chief Financial Officer, Newfoundland and

Labrador Housing Corporation.

CHAIR: Thank you, officials.

Minister.

MR. LANGDON: Thank you very much.

I want to thank my colleagues for giving up their time this morning to come

and do the Estimates for the department. This is the third time, I think, that I

have had the opportunity to come before the Committee, the second time as the

Minister of Municipal Affairs - or third time as Minister of Municipal Affairs.

One thing I want to say before we begin, I am not going to take up the full

fifteen minutes to go down through all the different programs in the department.

I do not think we need to do that. It will give more time to the Committee to

ask more questions and so on.

One of the things that I will say is this: the success of any minister in any

department of government depends, to a large extent, on the people who work with

you. It has to be a team approach and I value the work of the officials within

the department. It is invaluable. I know at the end of the day it is my

decision, in a sense, the final decision to make, but they give us, or give me,

all the options that are there to explore, to look at, and the consequences of

any decision that you would make and so on. I really value them, their

expertise. They are professional people in their own right. It really makes any

minister's job, in any department, much, much easier when you have people of

the stature of those people who are behind me this morning, and I really

appreciate that.

The department, of course, that I head, is the Department of Municipal and

Provincial Affairs, and obviously we are involved with that. Coming under my

direction as well is the Fire Commissioner's Office and the office of the

Emergency Measures Organization. In addition to that, the Registrar General of

the Province, and the other part of the department is the Housing Corporation,

which is an independent entity with its own board of directors and its own CEO.

Mr. Dean has already been here. That is the makeup of the department and I think

we will leave it with that.

As I said, the Committee members can ask questions and to the best of our

ability we will answer them. If, for some reason - last year, for example, Jack

Byrne asked me, or the Member for Cape St. Francis - we should not go by the

first name -

CHAIR: In Committee you can use first names. That is the rule.

MR. LANGDON: Okay, I will say Mr. Byrne. He asked me a number of

questions on housing that I did not have the answer for, but I did subsequently

get them and pass them along to him. The same thing would happen here this

morning. So, if we do not have the answer we will get it for you and give it to

you in the House, in individual form or in pamphlet or booklet or whatever. We

want to make sure that we make your work easy as well.

I am going to leave it with that, Mr. Chair, and let the Vice-Chair lead off,

and from time to time when it comes to all the details within the department I

will pass it off to those people. They know the answers more than I do; they

deal with it every day.

CHAIR: Thank you, Minister.

I am assuming Jack will respond, although I note that we have the critic, I

believe, for your department, Roger Fitzgerald, here. I defer to Jack as to who

leads off and how you take your first fifteen minutes.

MR. J. BYRNE: Thank you, Mr. Chair.

I already discussed with Roger that I would lead off and ask a few questions.

Before I get into that, I would just like to welcome everybody here this

morning. I do not know how long it is going to take to get through it.

Just one suggestion, and I think we did the same thing last year.

Newfoundland and Labrador Housing representatives are here, and it is not a big

lot of information there, so maybe we should go with that first so they will not

sit around all morning. Then you can probably leave if you want. That is up to

yourselves.

CHAIR: If the Committee is agreeable to that suggestion from the

Vice-Chair, the Chair is okay with that. Are you okay with that, Minister?

MR. LANGDON: We are there for the Committee, and what they decide is fine

with us.

MR. J. BYRNE: It is only a couple of pages, so it is a waste of time for

them to be sitting here all morning.

I am going to start right into this. I have a few questions with respect to

Newfoundland and Labrador Housing. The first one, and I brought this point up

last year, I have a note made here - detail. We have it here, Newfoundland and

Labrador Housing, Total: Housing Operations and Assistance, and there is nothing

really on the programs. The breakdown has: Program Funding

Summary, $11,125,000,

and we really do not have any detail that we could get into. I thought last year

that it was agreed upon that we would have that type of information this year in

the Estimates. I am just wondering why that has not happened.

MR. DEAN: Mr. Byrne, I raised the concern that you raised last year with

Treasury Board and, given the fact that the sustaining grant, which is basically

the single line voted, is not allocated line by line or program by program,

Treasury Board advised that it would not be appropriate to break out the $11.1

million on a program by program basis.

Now, last year, after the Estimates Committee met, we provided some

additional information which basically indicated that if you work on the

assumption that approximately $3.5 million of the sustaining grant is a

contribution towards the Provincial Home Repair Program, then the balance of

approximately $7 million would be allocated notionally, at least, at the end of

the year or during the course of the year, toward the full program portfolio of

the Housing Corporation, whether it be - particularly the rent portfolio of the

Housing Corporation which represents about 70 per cent of the total expenditures

of the Housing Corporation.

Mr. Byrne, my understanding as well is that in other departments, for

example, like the Department of Health, where you have a single line vote to the

health care boards, that is the format that is determined by Treasury Board, not

by the Housing Corporation.

MR. J. BYRNE: With respect to that, I do not know why it would not be

appropriate. If you have a budget and you have so much for the Provincial Home

Repair Program, whatever the case may be, and you have so much money allocated

for maintenance, so much for salaries, so much for whatever, I do not understand

why it would not be appropriate to have that information.

MR. DEAN: When we go forward each year to Treasury Board, what we will

outline, basically, is the projected expenditures by program area, and in that

context there is a document that would go forward to Treasury Board that would

notionally indicate the total expenditures, the total revenues, and then the

shortfall would, in fact, be the sustaining grant.

MR. J. BYRNE: That still do not answer why we could not get it here, as a

Committee or as the House of Assembly, why we would not get that.

MR. DEAN: I would be prepared to discuss that request with Treasury Board

and make that breakdown available to you.

MR. J. BYRNE: That is what I thought I requested last year, to be honest

with you.

With respect to the Provincial Home Repair Program, in the Budget Highlights

you have, "$11.5 million will be spent under the Provincial Home Repair

Program to assist low-income homeowners maintain their homes." Two thousand

homeowners will be affected, or helped.

Under the Program Funding

Summary for the fiscal year, you have $11,125,000.

This $11,125,000, that cannot be the whole amount of money budgeted for housing

is it?

MR. DEAN: That is the only amount voted in terms of provincial

contribution. The total current account budget of the Housing Corporation is

approximately $100 million. The Province's sustaining grant only represents

about 10 per cent of the total gross current account expenditures of the Housing

Corporation.

MR. J. BYRNE: I have to get back, to be honest. I really do not

understand why you would not have the full amount there, the whole budget, the

hundred and - what did you say?

MR. DEAN: Approximately $100 million.

MR. J. BYRNE: One hundred million dollars and all we are dealing with

here is 10 per cent of the budget of Newfoundland and Labrador Housing.

MR. DEAN: Yes, because that is the amount voted by the Province.

MR. J. BYRNE: Under Municipal Affairs you have a municipality that is

charging taxes, they have to have their expenses, their amount budgeted,

whatever the case may be, and present it to Municipal Affairs for approval.

Newfoundland and Labrador Housing comes under Municipal Affairs, municipalities

come under Municipal Affairs, I do not understand why there would be a

difference; why one would be required and the other not.

MR. LANGDON: There is a difference. The thing that you are looking at

here is a sustaining grant from the government. The monies that a person would

pay for rent in any of those housing units across the Province is not included

here. It is in their budget, but it is not for us to approve. This is rent that

is being paid to Newfoundland and Labrador Housing for clients right across the

whole Province.

MR. J. BYRNE: But Municipal Affairs is ultimately responsible for

revenues and or expenditures of Newfoundland and Labrador Housing, and

Newfoundland and Labrador Housing comes under Municipal Affairs. What are we

doing here then?

CHAIR: Would the explanation be as simple as saying that the housing

money voted in the budget is not unlike what is voted to health care boards, and

the issue of examining expenditures would be no different for housing then it

would be for the health care boards? We do not do the health care boards in the

Committee of the House nor do we do the Housing Corporation nor do we do the

Liquor Corporation. Is that the simplest (inaudible)?

MR. LANGDON: That has been the progress over the years.

CHAIR: I am just looking for clarification.

MR. J. BYRNE: That is exactly right. Thank you.

With respect to the social housing, in the Budget Highlights it says,

"$4 million will be spent on a cost shared Affordable Housing Agreement

with the federal government." Is that the $4 million from the Province or

is it $4 million in total? What is the breakdown on that figure?

MR. DEAN: As government has indicated, early in the new fiscal year

government will be entering into a cost-shared agreement, signing a cost-shared

agreement with CMHC, which is the federal government agency responsible for

delivering the National Affordable Housing Program.

Under the Affordable Housing Program, the provinces are entitled to receive

credit for expenditures that they have incurred as of January 1, 2001. In that

context, the Province is entitled to a credit of approximately $4 million

associated with the special housing initiative in Northern Labrador.

The proposal, in terms of cash flow in year one, is to flow $4 million, which

the Housing Corporation will borrow, but that will be offset by $4 million in

revenue from the federal government. So, in year one of the program there will

be no net expenditure on the part of the Corporation or the Government of

Newfoundland and Labrador.

MR. J. BYRNE: With respect to that, a few years ago - probably six or

eight years ago maybe - it could be longer, I thought the federal government had

gotten out of social housing and Newfoundland and Labrador Housing took

responsibility for it and it became a pretty big burden. Are they getting back

in now?

MR. DEAN: It is very, very interesting, Mr. Byrne, because this national

program is not referred to as a social housing program. It is characterized as

an affordable housing program. In the context of CMHC, it is a subtle

difference, I know, but they do not characterize this program as social housing.

They refer to it as increasing the supply of affordable housing across Canada.

Now, of course, they have also announced some other initiatives in support of

the homeless, for example. I guess in that context one could probably make an

argument that that is closer to the social housing challenge than the affordable

housing challenge.

MR. J. BYRNE: It sounds like we are playing with words - semantics

really.

On salaries with the Newfoundland and Labrador Housing, I am just curious. I

am hearing that there has been a recent employee employed, who was an executive

assistant of a former minister, whose job now is to be involved with the

Provincial Home Repair Program. I am just curious of what that individual's

salary would be? Was that position advertised? Can you show me in the

Departmental Details where that salary is? Would anybody like to comment on

that?

MR. LANGDON: In the Housing Corporation, for years and years and years,

there has always been political staff tied to the Housing. This is no different.

I had a parliamentary assistant over at Housing, Mr. Jim Walsh, who was there

for probably a couple of years and did a tremendous amount of work for me in

answering and interceding on behalf of all MHAs on work that was to be done.

When he left, there was nobody out of the political staff over at Housing to do

the work to intercede on behalf of the requests that came in from the MHAs. Then

I hired - not through the civil service, it has nothing to do with them. It is

not for three years, as was characterized in the media. It is a six month

contract that I gave him - political assistant to me, as the minister, to do

some work for me to intercede on behalf of the MHAs. His salary, I think, is

$48,000. That is the parliamentary assistant salary. It is not configured out of

any other thing. We follow the guidelines that are laid down, and that is what

it is.

You have to remember that it was not to bring him in at the time that he was

with Beaton Tulk. He had been at home for eight months. It was not put in

immediately at Housing. It was when the vacancy occurred, when Minister Walsh

moved out, and then I had to have somebody there. It was a political

appointment, and it was not advertised. No more did the Leader of the Opposition

advertise when he brought in Len Simms, or when the Premier upstairs decided to

bring in Robert Dornan. There is no difference; it is political.

For Fabian to think that somehow or other he is over there doing the work of

people who are in the civil service, that is not true. If you were in my place

tomorrow then you would hire your own political staff, and that is what it is;

no more, no less.

MR. J. BYRNE: Further to that, though, to make a comparison, I think to

say it is no different than having Mr. Walsh, who is a Member of the House of

Assembly, as an assistant, operating from the House, and bring in a person who

had not been elected, there is a distinct difference there, though, wouldn't

you think, if he is going to be doing the same work?

MR. LANGDON: Well, the thing about it is, there were people over in the

political staff over at Housing before Mr. Walsh went there. That has always

been the case. You can go back in the records and find it. I am sure you will

find it when every Administration from 1971 up had political staff, and one was

assigned to the Housing Corporation. In situations gone, there have been

ministers just of Newfoundland and Labrador Housing. That was their job; no

more, no less. So, there was no political bantering or whatever. I hired the

person, political staff for me, and you do not go out and hire. I went through

that one time before. When my parliamentary assistant went to work with the

Premier's Office and I hired another person, I did not advertise it. I mean,

that is a political staff for me and there is no difference -

MR. J. BYRNE: So you are saying that this position is not a - it is a six

month contract?

MR. LANGDON: It is a six-month contract.

MR. J. BYRNE: It is political.

MR. LANGDON: Political.

MR. J. BYRNE: And this person will not, basically - if there was a job in

the civil service, in a part of the public service, he would have to go through

advertising, an interview, and whatever the case may be.

MR. LANGDON: Absolutely. There is no way that he is part of any civil

service. It is just a political appointment for six months and that is it.

MR. J. BYRNE: Along the same lines now - I am not sure if it is happening

in Housing but it could very well be - it seems to me that a number of people

being employed in the public service these days, and Housing is a part of that,

are brought in on a temporary basis, they are in the system, and then they have

an unfair advantage to somebody, say, outside when they advertise a position, to

get that position. That is the way it has been happening through the line

departments. Is something like that happening at the Newfoundland and Labrador

Housing?

MS MARSHALL: I am not sure of the exact numbers, but the people who we

have as temporary appointed are people who are associated with the Provincial

Home Repair Program. Those employees receive their jobs through competitions.

They are temporary only by the fact that the Home Repair Program is temporary

until it is voted again in the House. As of yesterday, we were not sure - it was

announced previously but it could have ended yesterday. That is the kind of

temporary appointment that we have at Newfoundland and Labrador Housing

Corporation.

MR. J. BYRNE: If there was a job that was advertised at Newfoundland and

Labrador Housing, a permanent position, a full-time position, could these

individuals then have an advantage over somebody outside because they are in the

system, if it is an internal position?

MS MARSHALL: They would be able to apply as internal applicants but most

of these people have about ten years experience with us and they did get their

jobs through competition.

MR. J. BYRNE: I am okay for now. Is there any more? Does anybody -

MR. FITZGERALD: I would like to ask a few questions.

Minister, what is the number of applications on file now for help in the Home

Repair Program?

MS MARSHALL: Approximately 5,500.

MR. FITZGERALD: Approximately 5,500, and we will able to help

approximately 2,000 this year was the projection?

MS MARSHALL: Yes.

MR. FITZGERALD: So, what we are doing is, we are talking about

applications dating back to - where are we working from, 1999 maybe?

MS MARSHALL: It varies from region to region. Some are dealing with

1999-2000.

MR. FITZGERALD: It is kind of frustrating when you get, especially

seniors, Minister, calling. In fact, I had a call just yesterday from a senior

constituent of mine, seventy-six years old, who put in an application last year

and needed repairs done to his roof - his roof was leaking, so necessary repairs

- to be told, I am sorry, we are only doing 1999 applications and unless it is

considered as an emergency you will have to wait your time.

MS MARSHALL: That is correct.

MR. FITZGERALD: I do not know how that individual will be able to wait

for another three years, or another four years probably for him, before he will

ever be able to take advantage of a program that, when it was advertised, it was

advertised in such a way that, we are putting forward some help here to people

of low income, especially seniors, targeting seniors, to be able to do repairs

and maintenance and upgrades to their homes with a $5,000 forgivable loan - only

to find out when they go and try to access the program, they are on a waiting

list for three or four years and may never ever see the work done, or have to go

and borrow themselves in order to carry it out. Can something be done in order

to speed up that process?

Obviously a lot of those applications, by the time they are ever reached to

be considered, or ever come forward for inspection, probably the work is already

carried out because people cannot wait that long. There is certainly a great

need out there.

I know in the area that I serve there is a great need there. You get some

through the Gander office, and it is frustrating when you are dealing with that

kind of a situation.

MS MARSHALL: It is a difficult situation. It is difficult for staff to

try and deal with. I know that some of this type of work may be done but usually

the applicants, by the time they are served, if they do have to wait their time,

still have work that they can have assisted under the program. We do deal with

emergency situations where there are life safety issues, and those people will

be moved ahead on the list.

MR. LANGDON: In a situation like that, Roger, I do not go to the Housing

Corporation - these officials can tell you - to interfere with putting Roger

Fitzgerald ahead of Eddie Joyce, or something like that. I have never done it

and I do not believe in that. Because, if you do that, it is like - sometimes

you go out and some people say, or when you get a phone call: Can you intercede

in getting my father in for open-heart surgery, or whatever the case might be.

Well, if you did that, then Roger Fitzgerald, who was number one, than

becomes number two. Who has the right to do that kind of thing? I do not do

that. If there is a situation where you have an emergency situation like that,

where the roof is really leaking, then if you would bring it to me, I would then

take it to them or you could go directly to them.

I have always acted in good faith with the people in the House of Assembly

and I try to treat everybody fair and square by doing it. If you have a

situation like that, I would be only too glad to entertain it, to pass it along,

but I do not want to, in a sense, jump the cue because that would not be fair;

but if you have a situation, you bring it to me and I guarantee you that I will

personally look into it and take it to Mr. Dean to be done.

You can see the situation where I do not want to interfere with the list

because then the person who would have been number one would then become number

two and somebody else become number three, and I do not want to do that; but if

there is a problem, see me and I honestly will give it a best shot to see if we

can deal with it for you. I really would do that.

MR. FITZGERALD: Yes, Minister, I understand that, and I certainly have a

good relationship with the Gander office there. Norm Feltham certainly goes

beyond the call of duty to try to make sure what is needed to be done gets

recognized, but in most cases, in a lot of cases, before they will move somebody

ahead, it has to be deemed as an emergency. An emergency is a fire or a flood or

some reason why people cannot continue to occupy their homes. A lot of the work

today - and this is a good program. This is an excellent program. All you have

to do is drive around the Province and see the condition of some of the

properties in the Province today compared to ten years ago, and this program has

been responsible for a lot of that, but I am not so sure that we fund it in a

way that it should be funded, and I say that in that what we consider as normal

maintenance sometimes is not normal maintenance. When you look at people

occupying that home with children there, if windows need to be replaced or doors

need to be replaced, or the bridge leading up to the house needs to be replaced,

then we consider that as normal maintenance but it is not normal maintenance.

That is something that you need in order to occupy that house and call it a

home. A lot of those repairs and a lot of those applications sometimes fall

outside of the guidelines, and maybe we should look at those things in a more

compassionate way and include all repairs that continue to make that home

liveable.

MR. LANGDON: Last year we spent $6.26 million on home repairs. This year

we are doing a bit better. We are looking at $7.5 million. It will make a

difference in a number of homes, like you said. We do not have the money to do

it all, but $7.5 million is a good start and, like you said, it is in my area

and I am sure every person who is in the rural part of the Province can see the

difference that it has made.

Our fear was that the feds would not come through with a new program as of

March 31, but they did. We would have been in real trouble had they not done

that. This year we are spending about $7.5 million, is that right?

WITNESS: (Inaudible).

MR. LANGDON: They tell me here that about 92 per cent of that is in rural

Newfoundland.

MR. FITZGERALD: Does Newfoundland and Labrador Housing build housing

units any more?

WITNESS: (Inaudible).

MR. FITZGERALD: They do not.

The places where you see Newfoundland and Labrador selling housing units, is

that because there is no demand there any more, or is it an area where it is not

feasible to upgrade those units any more because of their condition?

MS MARSHALL: Generally speaking, if we are selling a unit anywhere in the

Province it is because there is a lack of demand. We have left them vacant for a

period of time, and what we are finding is that we are more likely to have

vandalism if they are left empty. We do have a rent supplement program, so we

feel that if something comes up in those areas later, particularly with the way

out-migration is affecting various communities, we do have opportunities to rent

from a private person possibly another house in one of these. Usually there are

more remote communities where we are selling. We are not selling our units in

Gander, Grand Falls, Corner Brook, those kinds of places. In Marystown we do

have vacancies but there is an exception there; there is an unusual number

because of the impact of out-migration.

MR. FITZGERALD: Thank you.

MS MARSHALL: Could I make one further comment with regard to the

Provincial Home Repair Program?

I think part of what you are seeing is as a result of the fact that we

realize that our outstanding wait list is fairly long. The way we deliver the

program, we do spread the program a little bit more thinly than we have in the

past, but it is in order to try and deal with the people, the type of people you

just mentioned to us. Because of that, we are not doing the full gamut of all

the repairs that people would like to have done on their houses but we are

trying to focus our money to the priority needs. That is the explanation as to

why you are seeing some of what you are seeing.

MR. FITZGERALD: Yes, but some things that I think are considered, or that

you people consider as normal maintenance, are certainly big ticket items to the

people who live in that house. It is kind of hard to live in a house if the

doors have a two inch opening on each side or the windows - when the wind blows

the curtains are out like the kitchen table.

Is there a ceiling on the amount of money that Newfoundland and Labrador

Housing will spend on a unit for repairs and upgrades?

MS MARSHALL: Of our own housing?

MR. FITZGERALD: No, on private housing.

MS MARSHALL: Under the Provincial Home Repair Program?

MR. FITZGERALD: Yes.

MS MARSHALL: Under the program, a client may get up to a $5,000

forgivable loan, which is basically a grant. They could get an additional $5,000

the main floor, or ramps, or something like that, and they can get up to $5,000

of a repayable loan. The absolute maximum is $15,000, but we have very, very few

of those.

MR. FITZGERALD: That would be the amount of money that you people would

spend as a forgivable loan?

MS MARSHALL: Ten thousand would be forgivable - the first two $5,000

amounts - and then the third $5,000 would have to be repaid.

MR. FITZGERALD: If I come to Newfoundland and Labrador Housing looking to

have my home repaired, and if the cost of repairing that home is over $15,000

then you would not participate in the program?

MS MARSHALL: We may, if you have a debt ratio that will allow us to see

how you could find the additional funding. We would also look at the value of

the house. It gets to be a very difficult judgement call to see if it is worth

investing that kind of funding. Many of the houses that we do deal with, they

are not luxury homes. We do look at them from the standpoint of whether or not

possibly there might be some other alternative that would be better for the

client. If there is an opportunity to find the total funding from some other

source, we may still participate up to the maximum of our program.

MR. FITZGERALD: If I am building a new home today and I do not have it

completed, you people would not take

part in providing me with funding in order

to help complete that home?

MS MARSHALL: No.

MR. FITZGERALD: Is there an age limit on the property that you

(inaudible)?

MS MARSHALL: We would normally expect people to be in the home for about

a five year period.

MR. FITZGERALD: Not necessarily completed, but living in the house for

five years?

MS MARSHALL: When you talk about people who are living in their homes -

MR. FITZGERALD: It is not uncommon in rural Newfoundland, as most people

know, you go and you do what needs to be done. You move into your house and you

complete it as you live there. If the house is not completed, would you take

part in the program then?

MS MARSHALL: If they are living in the house, we would allow them to

repair the portion of the house that they have to live in. We do not extend

houses. We would not build on an extension, or we would not finish another part

of the house which is -

MR. FITZGERALD: Or complete what has not been finished?

MS MARSHALL: If they are living in the house and say it is the bedrooms

they are living in and it were leaking, we may be able to fix that. If there was

another room that was not necessary for the family to live in we would not do

that kind of work. I have to say, the average house that we deal with is

forty-one years old. They are not new houses that we usually deal with.

CHAIR: Minister Ernie McLean - former minister. You indicated you wanted

to have an intervention.

MR. McLEAN: Thank you, Lloyd.

Just a couple of questions. One for clarification. On the new program, the $4

million program that is committed, it is identified for specific housing needs

for seniors, mentally and physically challenged, and also low income. Is that

only for repairs? Did I hear you earlier that there are no new builds?

MS MARSHALL: The new program is totally different, minister, it is for

the construction of new housing. Under the federal terms, affordable - I guess

affordable is in the eye of the beholder. The federal term affordable just means

average market rent. When we try to deliver this program we are going to try and

target a much lower income group of people. This new program provides subsidies

for construction. Predominately rental properties, although we may be able to do

some home ownership in Labrador. Again, under the federal guidelines there is a

different definition for the northern part of - actually, their definition, all

of Labrador fits what they call remote under that program. We may be able to do

some home ownership there but otherwise it is really geared toward the

construction of - subsidizing the construction of rental properties.

MR. McLEAN: There will be a new committee or a whole new circumstance for

this particular program than there is for the regular housing program.

MS MARSHALL: Yes, totally different.

MR. McLEAN: Just a second piece, for clarification. On your regular

program - each of the regions deal with their own necessities and needs. Is the

budget designed that way as well or is there an overall budget that everybody

feeds into to determine who is on the list and who is not, who has priority and

that sort of thing?

MS MARSHALL: Are you talking about the Provincial Home Repair Program?

MR. McLEAN: Yes, the Provincial Home Repair Program.

MS MARSHALL: On the Provincial Home Repair Program, yes, each region

deals with their own waiting list.

MR. McLEAN: But they have an allocation of money?

MS MARSHALL: Yes they do.

MR. McLEAN: So much money that will do that program.

MS MARSHALL: They do. If near the end of the year one region is having

difficulty for some reason delivering their funding and another region has a

shortfall, we will reallocate; but predominately, throughout the year each

region has their own budget and they are responsible for delivering that.

MR. McLEAN: Just a final comment. I certainly had a good working

relationship with the Newfoundland and Labrador Housing Corporation. I think in

order for us to address a lot of the needs there has to be some flexibility. I

found that the local office in Happy Valley-Goose Bay were able to deal with the

flexibility piece and accommodate our requirements for the most part. So that is

much appreciated.

CHAIR: Thank you.

Tom Osborne.

MR. T. OSBORNE: Under PHRP, minister, I have a couple of comments. For

the most

part I found that Housing have been cooperative with my requests. I

understand there has to be a level of reason in dealing with the timing of

applicants and when they get processed.

There are times, as my colleague, Mr. Fitzgerald, had mentioned earlier,

where we feel - I mean there is no possible way a person is going to be able to

wait two or three years. The deterioration of their property as a result of a

leaking roof, or whatever the case may be, may warrant an earlier look. For the

most part, I have found them, under PHRP, to be reasonable in my requests.

Having said that, I do have a question. It is with regard to the changing

policies of the insurance companies, where insurance companies are now

cancelling policies that homeowners have had for sometimes twenty-five and

thirty years and have never really laid claim, or made a sufficient claim under

their insurance, but because their electrical is not up to standard the

insurance company will cancel their policy; or because maybe their oil tank or

that type of thing is not up to standard, they will cancel their policy.

I know of a couple of cases right now in my district, where because the

electrical is not considered by Housing to be deficient or dangerous but it is

not considered by the insurance companies to be up to standard, their insurance

policies are cancelled. While that may not be considered an emergency in some

eyes, for a home owner, a senior citizen who always had insurance on their

property but simply cannot afford to upgrade their electrical panel or whatever

the case may be, that can cause a great deal of stress. I am wondering if there

are any provisions within the PHRP maybe to have another look at that policy?

MS MARSHALL: When we deal with applications for assistance under the

program, such as what you are talking about, we would look for an electrical

inspector's recommendation that the work would have to be done. If an

electrical inspector does not recognize this as being required work for life

safety, we cannot cover it under our program because, as we have already said,

we have so many other applications where there are life safety issues.

I think there is a question here as to why the insurance companies are taking

the stand that they take, where many houses in this Province, probably some of

our own houses, are not up to standard if you look at today's code, but we do

not upgrade them necessarily because it is not a life safety issue. The way you

describe it really is how we interpret and deliver our policy today.

MR. T. OSBORNE: Okay. The other question I have is with regards to the

new program for construction of new housing units - and I see the minister

nodding his head. I think he knows my question. I have presented a couple of

petitions, actually, in the House and it is regarding handicap accessible units

in my district, in particular. There is really a lack of handicap accessible

units in the downtown area and, in particular, in the Shea Heights area. I am

just wonder if, under the new program, there are any provisions for new

construction in Shea Heights and in the downtown area of St. John's?

MS MARSHALL: We have not, as yet, identified local areas as specific as

Shea Heights but we do know that the St. John's region is an area where the

vacancy rate, even in the private sector, is very low. Funding will be allocated

to the St. John's region.

proponents we will be making it a necessity to have a certain percentage of

those units made accessible.

MR. T. OSBORNE: I will give you one example now. There is a young girl,

only in her twenties, right now who is living in a senior citizens building

which is owned by Housing in my district because, quite simply, they cannot

place her in a handicap accessible unit. It is creating some complications

between the seniors and her because a young girl in her twenties obviously is

going to want to listen to rock and roll music and the senior next door is not

into that and does not like the music loud. Obviously, there is a compatibility

issue there.

The other question is - I know Housing have a very large shortage of one and

two bedroom units. Is that going to be addressed as well with the new

construction under the new program?

MS MARSHALL: I really think the predominance of units constructed under

the new program will be two bedrooms or less. We are not looking at large

families anymore. We still have a number of large families in our units but the

waiting list is going to be looking for smaller units. The aging population too,

generally most of those people only want one or two bedrooms.

MR. T. OSBORNE: Before I move on to my next question, I will urge the

staff at Housing, in particular the downtown area and the Shea Heights area - I

know in Shea Heights the families who live there want to stay there. That is

where their support networks are. While it is apart of St. John's, in many

respects it is like rural Newfoundland where people want to live in their own

community. They want to stay where they grew up and their families and friends

are. Because they have a disability, are forced to either live in a

non-accessible unit or move out of their community.

Whereas in many other areas

of St. John's you do not have that same dependence on your neighbours and your

community so to speak.

The other question I have with the PHRP program - a number of the applicants

that I have had approved over the past three or four years, I have given an

estimate as to what the repairs should cost. I do not know if is because of a

construction boom in the St. John's area, but they are not able to locate

contractors. I have one lady now who is approved to have her roof repaired. Her

roof is literally falling in. If you go into her house her ceilings are falling

in because her roof is that bad. She is approved, but she was unable to secure a

contractor until the winter. I guess when work was slow and a contractor was

willing to say: Yes, we will get to your job the first thing in the spring. She

was several months looking for a contractor and not able to find one who was

willing to do the work for that price.

Are there any provisions to make changes to that policy, where if a person

has gone out and sought prices from six or seven or ten different contractors

and not able to locate a contractor, either their application is going to be

cancelled or their work is simply not going to get done?

MS MARSHALL: Under those circumstances we would not cancel the

application. We do talk to people and we encourage them to spend the money that

has been committed. We recognize that, particularly in the St. John's-Mount

Pearl area last yea, it was very difficult to get contractors. It was not a

matter of money. People who had all kinds of money to have renovations done on

their houses last year could not get contractors. The industry was very busy. I

do not believe that increasing the cost is going to resolve that issue. It is a

matter of the forces that are at play in the market.

Our staff are recognizing difficulties that some of the clients are having in

trying to commit their funds. It is actually sort of an administrative

difficulty for us because the money does not get spent in the right year. We

have a budgeting issue that we have to try and reallocate things each year

because we do not want to cancel applications for people, such as the client you

referenced, but on the other side, if people who have come in and been given a

commitment but just do not proceed, we do need to be able to free up those funds

to give to somebody else. Again, it is one of these difficult areas where we

have to try and deal with it. Anyone who last year had commitments to do work

and did not get it done, they should be able to get someone to do it this year

because they can get someone right at the beginning of the year when contractors

are usually more ready to take something on because other people are not quite

ready. It is unfortunate that maybe a year lags but that is (inaudible).

MR. T. OSBORNE: Without getting into the specifics of this particular

case, I guess where the ceilings are now actually falling in, there would

probably be room within Housing to look at those repairs as well, that were

caused by the initial concern?

MS MARSHALL: Possibly, yes. There may need to be additional cost to cover

that, if there has been significant further deterioration.

Could I just come back to your comment, your questions, on the new program,

the affordable housing program? I would just like to make it clear, that program

will provide subsidies for construction, and generally most of the funding we

envisage being spent either by the private sector or community groups. There may

be some projects that government would take on as partnerships, maybe, Minister,

with your colleagues in Health or Human Resources and Employment, but

predominantly we are seeing that program being offered as a way to encourage the

private sector and community-based groups to put projects in place. They will be

coming forward in response to requests, or Statements of Interest that we would

like to hear from people to see.

We will be identifying for government, or on behalf of government, the areas

where we feel housing is most crucial, where it is really needed, and then we

are really looking for private and community-based components to go forward with

those projects.

CHAIR: Thank you, Tom.

Did I recognize your hand, Terry? Do you want to intervene?

MR. FRENCH: I just have a couple of brief questions, actually. Does the

Corporation have long-term leases with people who provide housing units to you

guys, rental properties?

MS MARSHALL: Through our rent supplement program, we have leases. They

are not long-term leases; they may be twelve month leases.

MR. FRENCH: They would not exceed twelve months?

MS MARSHALL: I am not sure if they go beyond twelve months. They may be

rolled over, but each time they will be reassessed.

MR. FRENCH: I guess it would be based on the demand in the community.

MS MARSHALL: Yes. There are about 1,000 of those around the Province.

Approximately 700 of them are in the St. John's and Mount Pearl area. That

portion of the program does allow us to have some flexibility. As the lease

rolls over, becomes mature, and the client is no longer needed there, we can

move that funding into another area of the Province where there is a higher

need.

MR. FRENCH: So, if the demand was high in a certain region of the

Province and there were five units available, you would not necessarily go out

and lock them in for ten years?

MS MARSHALL: No.

MR. FRENCH: It would still be a one year turnaround, or six months, or

whatever the case?

MS MARSHALL: Yes.

MR. FRENCH: Is it possible to get a breakdown of provincial districts,

how much is spent in each district in the Province?

MR. J. BYRNE: I asked about that, actually. I have it.

MR. FRENCH: You have it? Thank you.

I did not see those numbers. One other brief question. How many political

staff are actually at Housing?

WITNESS: One.

MR. FRENCH: Just one?

WITNESS: Yes.

MR. FRENCH: Okay. The rest are public servants?

WITNESS: Yes.

MR. FRENCH: Thank you.

That is all I have.

CHAIR: Thank you, Terry.

Are there any other interveners that have not yet spoken, wishing to?

Okay, we will revert to the Vice-Chair.

MR. J. BYRNE: Thank you.

Just a few comments, actually. I will get down to the nitty-gritty now.

I want to compliment Newfoundland and Labrador Housing on something. I had a

situation in my district this past winter and, let me tell you, it was a pretty

serious, dire situation. I had to get a representative from Newfoundland and

Labrador Housing, Community Health, Human Resources and the municipality

together, and we had a meeting. Usually, oftentimes you see in government where

people see the details, they do not see the broad picture. Newfoundland and

Labrador Housing representatives were key. They did see the broad picture and

they came together really quickly. I have to say, and I told them at the time, I

was quite impressed with what had happened and how it continued forward, and it

is still active now.

I just wanted to make that comment. We are here to ask questions but I do not

mind giving credit where credit is due, let me tell you.

Other than that, I just want to say thank you for your time, in being here

this morning, and I appreciate your answers.

WITNESS: Thank you.

MR. LANGDON: I will just conclude by saying, as I said earlier, if there

are some extenuating circumstances, the thing about it is - and I stand by what

I said earlier in the introduction - the people who work at Newfoundland and

Labrador Housing, like Les and Mary and other people, they do their best. They

recognize the need, and if there is sometimes a situation that does not go the

way you want it, then contact them personally. I am sure they are open to that.

The whole idea is to serve. We do not have all the financial resources to do

everything that we want to do, but I think there is enough flexibility, by

working with the people, that at the end of the day you can find a consensus and

a conclusion, like you did.

MR. J. BYRNE: Just to that again, you use the word flexibility. I think

in this situation - I do not know if you know the situation I am speaking of -

they went beyond, I think, and it was appreciated by everyone involved.

MR. LANGDON: Thank you.

CHAIR: Thank you very much, Minister.

Seeing no other interveners, I am going to ask the Clerk to call the heads

for the Housing Corporation.

On motion, subhead 1.1.01 carried.

On motion, Newfoundland and Labrador Housing Corporation, total heads,

carried.

CHAIR: That concludes, then, the hearings on the Housing Corporation.

Thank you very much for your interventions. Thank you, Minister and staff.

MR. LANGDON: Thank you very much.

CHAIR: You may wish to return to whatever you do on a normal basis and we

will see you in twelve months. Somebody will. If I am not here, do not come

looking for me. We will see you later.

I think the Deputy Chair has suggested that we break for five minutes after

the Housing Corporation hearings, if that is agreeable.

WITNESS: (Inaudible).

CHAIR: Ernie and Terry, the Clerk is advising it is going to be a little

while before the coffee is ready, in the event that you are interested in that,

so we suggest you take your seats again and we will let you know when you can

leave.

The Housing Corporation people can leave.

I will now ask the Clerk to call the appropriate head for the commencement of

discussion of the Department of Municipal and Provincial Affairs Estimates.

CLERK: Subhead 1.1.01.

CHAIR: Subhead 1.1.01.

Jack?

MR. J. BYRNE: Roger, do you want to lead off, or will I?

MR. FITZGERALD: No, go ahead.

MR. J. BYRNE: Okay, I will start off and you let us know when it is time

to -

CHAIR: I will let you know when the coffee is ready.

MR. J. BYRNE: Thank you.

On page 223 of the Estimates, under Minister's Office - the way we have

normally done this in the past, of course, is that we have the subheads and just

go down through them and make the comparisons and ask the questions why this may

happen or did not happen or whatever, or why some money was spent, was not

spent, or went over budget.

In the Minister's Office, under 1.1.01.01., Salaries, you had budgeted

$249,000 and you spent $266,000. I know it is only $17,000 there, but why would

that extra money be there?

MR. SMART: You will find in all our salary accounts, actually, the budget

for the Department of Municipal Affairs in salaries is no different this year

than before. Each year when we do our budget, we assume we will achieve a

certain level of savings because of vacancies and maternity leave and whatnot.

We have to make that assumption at the beginning of the year and assign that

level of savings throughout all these different accounts. Now, it never works

out the way we make our assumptions. The vacancies happen somewhere else and we

save money where we did not anticipate the savings, and in the places that we

did anticipate savings we do not. So what you will find as you go through the

salary votes is that some are over budget, some are under budget, we achieved

savings in certain areas and we did not achieve them in others, but overall the

salary budget itself is basically the same.

The other thing in the minister's account, we did have to pay out an amount

for vacation pay to previous political support staff not even under the current

minister, actually. There was someone who left the department a couple of years

ago and, for reasons I am not aware of, did not take her vacation pay at the

time and came back to us this year and said: You owe me money. So, obviously, we

did owe the money and we paid it out.

On the salary votes you will see that these go up and down. Really, the

litmus test for us in the department on salaries is what the bottom line was for

the department. One account went up, one went down. That is fine. As long as we

can balance to our bottom line we are okay.

MR. J. BYRNE: Under the same subhead there, .03, Transportation and

Communications, you budgeted $51,900 and you spent $74,400. Twenty-three

thousand, I suppose, is it? Pretty close.

MR. LANGDON: I can answer that.

One of the things I did when I became minister, I said to the councils: I

have an open door and whoever wanted to come in could, and I stood by that.

The other thing I have done is a lot of travelling. I had meetings in

councils where probably no minister had ever done it before. It is not because I

want to travel. It is because I think, as a minister, with so many of the small

councils across the Province, they deserve the right to see the minister as

well. I have done that.

Roger would know, for example, we went on a couple of trips down to Catalina.

We are working with Catalina, Little Catalina, Melrose and Port Union now to

bring them into one administration. We will know probably this week, Roger, if

Little Catalina is going to be a part of it or not. We are right into the throes

of it. They have their committee formed - as you would know, you are part of all

of this - and we have our committee. We are working together with the hope that

we can have one council and share some services.

I have travelled to Eastport and down to Sandy Cove with Kelly Blackmore and

the people there. I have gone to the Northern Peninsula. I have travelled to a

number of places to meet with councils. The thing about it, Jack, is I still

have a list that much where I cannot go to everyone of them, and it is expensive

to travel. For those of us who travel from here to Gander, you are looking at

$500 for a return ticket. It adds up. It is not something that you want to do,

but I have made a commitment to do it. That is where it is.

MR. J. BYRNE: That leads me to the next question, because I would assume

that what you did last year you are going to continue to do next year. You spent

$74,400 last year and you only budgeted $51,900 again for next year.

MR. LANGDON: Well, that is the type of situation. I might not have to go

to Port Union as much. I might not have to go to the Northern Peninsula. Because

we are working with Trevor and Wally up there, we are looking at, on that part

of the coast, where there are nine unincorporated communities and two

incorporated communities having one council. It is a lot of

work that has been done. I probably will not have to go back there to meet

with them again but I am telling you that it is - and all of you know, you have

been in public life like I have. If you have been in one hotel you have been in

them all. If you have been on one plane you have been on them all, but it is

commitment that you make to people who are out in the field. A lot of them in

this Province - as Roger would know, and Jack too, so would Tom and Terry - that

there are so many small councils and the guys get no remuneration, they get

absolutely zilch. A visit from somebody, as a minister, to meet with them and

help solve some of their needs, it is greatly appreciated.

MR. J. BYRNE: With respect to - I am not questioning your travel, I was

just wondering why you did not put more on -

MR. LANGDON: No, I understand, but I just thought I would make that

point.

MR. J. BYRNE: Purchased Services, you had budgeted $3,700 and $17,000 is

there. So you are looking at $13,300 more than what was actually - well, you are

looking at four times what was budgeted.

MR. LANGDON: It went from $3,700 to $17,000 to $3,700. Again, that is the

increasing costs with hosting meetings with municipalities and umbrella groups.

When you go out into an area you are going to have to invite the council to a

meal and stuff like that. You cannot do it and when they come in here into town

- if you come in from out around the bay, you have been there for awhile, then

obviously you meet the council for breakfast or whatever. It all adds up.

MR. J. BYRNE: On the same page under General Administration, Executive

Support. Again, you have the salaries. You had $491,900 budgeted, $536,300

spent. This year it is up even further, $554,100 - that is $63,000. So you must

have an extra -

MR. LANGDON: No, I do not have anybody extra but I think - and Bob can

clarify that for me. Some positions were clarified, I guess, or a classification

step and some people got higher.

MR. SMART: It is the exact same. We have the exact same number of

positions in Executive Support as we had before. It is just that the salary

levels on some of these have changed because positions get reclassified,

primarily secretarial and clerical support positions. Last year as well, we may

have assumed that we would achieve a certain level of savings because of a

vacancy, a leave or something in Executive Support, but that never happened so

we did not achieve the specific saving there.

No, there is no change in the staff complement at Executive Support, which is

essentially the deputy minister, three assistant deputy ministers and three

secretarial support staff.

MR. J. BYRNE: You are talking about savings here but we are spending

more. You are looking at between 10 per cent and 15 per cent of an increase in

that one allocation. To say that people were reclassified - then we have the

increase in salaries each year or whatever the case may be, but that seems to be

high, in my mind.

MR. SMART: If you are comparing it to the $491,000 -

MR. J. BYRNE: That is what I should do. That was budgeted last year. It

went from $491,000 to $554,100.

MR. SMART: Yes, but $491,000, as I said, when we do our budget we assume

a certain level of savings in the department, assuming we will save $300,000 in

salaries due to vacancies, and so on and so forth. We spread that throughout the

whole department. We really have no idea where we are going to achieve that. We

spread it throughout the department. In Executive Support we would have assumed

we would save something there but we did not because no positions became vacant.

Therefore, our revised expenditure, the actual current service level of

expenditure is the revised amount of $536,000 and you will see that adjusted for

salary increases and what not. It is all the same people actually, no staff

turnover at all.

MR. J. BYRNE: I don't know if I have a mental block on this one but I

am certainly missing something here. You are talking about $491,000 up to

$554,000 and you are talking about getting savings within the department. We are

talking about spending an extra $63,000 in that one subhead. Maybe you did not

explain it to me properly, I don't know.

MR. SMART: I am suggesting to you that the appropriate budgeted amount,

the cost of running the executive

section was $536,000 last year.

MR. J. BYRNE: Last year, that is right.

MR. SMART: We only budgeted $491,000. We had to assume we were going to

realize the savings somewhere so we said, well, we will assume that we will

realize the saving in Executive Support. We did not. No positions became

vacancy. No one went off on maternity leave. No one left, so we did not achieve

any savings. At $491,000 we under budgeted in Executive Support last year and

had to transfer money in, up to March 31 of this year, just to pay the existing

people we had. Next year we are not assuming that we are going to save any money

in Executive Support, so we budgeted for last year's expenditure plus salary

increases.

MR. LANGDON: Which is $18,000.

MR. SMART: Yes.

MR. J. BYRNE: Very good.

Transportation and Communications, $46,900 up to $52,700. That does not sound

like a lot of money, but if you go through the whole Estimates it all adds up.

MR. LANGDON: It is about $5,000 more than what was budgeted for, but it

is the same thing when you look at the cost of airline tickets for the

executives when they go to meetings. There are deputy ministers' meetings,

there are assistant deputy ministers' meetings, and the cost of travel has

just gone out of wack all together. In my case, like last year, I think it was a

couple of times I went out of town on ministers' meeting and that was it.

When the ministers' meetings are in Vancouver, for example, it is a long

ways away and it costs more. This year, the ministers' meetings are in Prince

Edwards Island so it would not cost you as much, so I guess when the budget is

made up again, the boys who do all of this stuff, like Ken and the fellows, do

not really know where the ministers' meetings are and, because of that, you

see a bit of overrun and stuff like that.

MR. J. BYRNE: Especially if you have to go on short notice, type of

thing, you pay through the nose.

MR. LANGDON: Yes, exactly.

MR. J. BYRNE: On page 224, I will get the same answer on salaries so

there is no point in asking that one.

Under 03., Transportation and Communications, again $189,200 budgeted,

$106,000 spent and $144,000 budgeted.

MR. LANGDON: We budgeted $189,000 and we spent $106,000, so we are under

budget on that.

MR. J. BYRNE: Big time.

MR. LANGDON: This year the boys have put in about $144,100. Again, it is

a budget item that hopefully, as I said, with the ministers' meetings in

Prince Edward Island and so on, will not cost as much as it did last year out

West.

MR. J. BYRNE: Under Supplies, you had budgeted $42,400 and $61,300. You

are looking at $19,000, say. What would those supplies actually be, and why such

an increase, a 50 per cent increase?

MR. LANGDON: Bob, do you want to handle that? I do not know what they

would be.

MR. SMART: I am going to defer to Ken Curtis, our manager, if you want a

listing of what exactly gets covered by the Supplies account. Is that your

question?

MR. J. BYRNE: Just generally. I do not need a list as such.

MR. SMART: Ken, can you address that?

MR. CURTIS: Generally, this covers the purchase of miscellaneous supplies

like pens, stationery and paper for photocopiers and just general office

supplies, letterhead and items like that. This covers supplies for all of the

staff at Confederation Building, so it is a fairly sizeable budget there.

MR. J. BYRNE: All the staff at Confederation Building. For Municipal

Affairs or...?

MR. CURTIS: Yes, I am sorry, for Municipal Affairs.

MR. J. BYRNE: Okay, but it has gone up by 50 per cent. You would think,

based on previous years, unless there was some abnormality that happened during

the year or something - it has gone up by 50 per cent.

MR. CURTIS: The costs in this area tend to vary from year to year, and

what we attempt to do is sort of budget what the average expenditure is going to

be over a period of time. In this particular area we would not have seen a

general increase over time so we just left the budget as is.

MR. J. BYRNE: Thank you.

The next one is

section 1.2.02.12., Information Technology. You had budgeted

$317,400, spent $353,000, and this year it is down to $258,000. Every year when

I am at the Estimates meetings at any department, I always seem to hit on that

one. There is a significant increase there from what was budgeted and revised,

but there is a significant decrease for next year. Is there something that you

did within the department this year with respect to computers or something that

was not allocated or budgeted for?

MR. CURTIS: Not really. A lot of this relates to computer hardware and

software, like a telephone or a calculator. In today's offices there is a

constant need to turn that equipment over and upgrade it, when you have as much

as we have. We will budget to replace as much as we can. We only have enough

money to be able to budget $258,000. If we got to the middle or end of next year

and we had savings in another account we might very well transfer it here and

upgrade some of our other equipment. This is very much a question of whatever

our budget permits, whether we will be able to invest in computer technology and

in hardware and software, because it is extremely difficult to keep pace with

it.

That is what you would have seen in (inaudible). We budgeted for a certain

amount but when we got towards the end of the year we had a bit of slack

somewhere else, so we put some money into upgrading some other equipment.

MR. J. BYRNE: Thank you.

On page 225, Support to Municipalities, you have Purchased Services, budgeted

$152,800, spent $158,900, then you have budgeted $153,100 for next year. What

would those Purchased Services actually be?

MR. SMART: Ken, you can perhaps - under Support to Municipalities,

Purchased Services, $158,000.

MR. CURTIS: This line generally covers the department's office and

rental costs in areas where we are renting office space. That is the bulk of

this expenditure. Also, some small expenditures on equipment repairs, printing

and similar types of items.

The revised is up slightly there because some equipment repair costs and

equipment rental costs were higher than anticipated.

MR. J. BYRNE: This is office space across the Province?

MR. CURTIS: Yes, in certain areas where staff are not located in

government buildings. It relates to the office in Corner Brook, the office in

Gander and the office in the Avalon Region, in St. John's.

MR. J. BYRNE: Thank you.

Could I get a breakdown of that office space and how much you are paying for

each one of those spaces, because I noticed - I am not sure if it is happening

here. When we looked at the exceptions for the Public Tender Act, there are a

lot of office spaces being renewed on a month-to-month basis rather than a year

or two year lease type of thing. I do not know if any of these are happening. I

would just be curious to see.

MR. LANGDON: I am not sure, but we will get the information for you. That

is no problem.

MR. J. BYRNE: Okay.

CHAIR: The Deputy Chair has indicated he is prepared to defer to somebody

else. I think what we should do at this point is defer to the government members'

caucus room for a five minute coffee break because that is where the coffee and

refreshments are. We would like the officials to join us.

MR. J. BYRNE: We will take ten minutes. Five minutes, we could hardly

walk out there in that length of time.

CHAIR: Well, for those who are aged and slower, we will take ten minutes.

Absolutely, Jack, we would not want to impair your trip.

SOME HON. MEMBERS: Hear, hear!

CHAIR: So we will meet back at 10:40 a.m.

Recess

CHAIR: Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

I will use some of my time just to stray a little bit away from facts and

figures because I find those meetings are a good place to get questions answered

and to find out information on department policy and the way things are

happening with your own problems in your own district.

The one thing that I want to ask the minister about is not incorporation of

communities but disincorporation' of communities. It is an issue that I

have raised every year since I have been elected here, ten years now. I have

continually been trying to disincorporate', if you would, because that is

the wish of the people. Two communities in my district were incorporated back in

the 1960s - that is Plate Cove East and Plate Cove West - the people in the

communities there wanted no part of incorporation. In Plate Cove West they took

over the main road leading through the community at a time when government

subsidies and road component grants encouraged them, I guess, to reach out and

use that direction as a source of revenue. Now they find that the road has

deteriorated to such an extent that even the school bus operator threatens not

to put his bus down over the road anymore to pick up school children.

Every winter it is a situation where we do not know if we are going to get

the snow cleared there, or ice control looked after there, until we have the

first fall of snow. Then, all of a sudden, somebody shows up. The Department of

Works, Services and Transportation reaches an agreement with Municipal and

Provincial Affairs and they do minor work so that they will not damage their

equipment going out over that particular piece of road, and they look after the

ice control and snow clearing.

Back a couple of months ago, maybe even longer than that, the department, I

think, realized that those two communities cannot function any more and do not

fit into - well, in the minds of the people there, they certainly do not want

their towns to continue to be incorporated towns. They put forward notification

of public hearings. Nobody came forward to attend the hearings so hence the

hearings were cancelled. I made representation to the department and let them

know what my views were on it, and the people's views as put forward to me.

Ever since that, I have been trying to get information as to when a decision is

going to be made. I have been unable to get that, so maybe the minister might be

able to give me some direction today.

I know it is a bold step, and I know there might be risk involved, but I

think it is about time. If we do not see something working and we do not see any

way of fixing it, then maybe we will try to do the next best thing and allow the

wishes of the people to be adhered to.

MR. LANGDON: I am preparing a Cabinet paper now, to go to Cabinet within

the next couple of weeks, because the legislation says that Cabinet must approve

the un-incorporation of the communities. I am bringing it forward to Cabinet. I

cannot say yes or no, that it will not be done, but from my point of view we

have the work done, we are bringing it to them to ask for the un-incorporation,

I guess, or dis-incorporation, whatever the word - I did not look that up this

morning before I came - but to your request the answer is yes, we have made a

decision on that. We are going forward with it.

MR. FITZGERALD: Something needs to be done, and I will not take it any

further. Obviously you have, and I commend you for that because those towns

still have to survive. When they had a town council there, they could not even

go out and have an acceptable waste disposal committee. Now, since the councils

have been dissolved there, as far as being active, that part of it is working.

They are saying that is all we want. Some of those communities probably should

never have been incorporated in the first place.

Having said that, Minister, I look forward to hearing some positive results.

MR. LANGDON: I will be in touch with you personally on it, but from my

point of view we are asking for it to be done.

MR. FITZGERALD: I know there is an old existing town council building

there sitting in front of somebody's house, that has not been occupied, and

there have been no utilities hooked up to it or connected to it for years. He is

saying now: I want to get rid of that. We have to move out of here.

He has a nice piece of property, well-kept, and this dilapidated old building

that the Department of Municipal and Provincial Affairs owns.

WITNESS: It will be done shortly.

MR. FITZGERALD: The other thing, Minister, I am a firm believer in

incorporation. I believe that most municipalities can derive great benefits from

it. It is a way to grow the community and to get benefits to provide to the

residents of those communities. Sometimes I think we step out and we step up and

do things in contravention of what municipalities have done and what they were

led to believe in the past.

I think about the community where I live, Musgravetown, and I served on

council there for a number of years and always promoted council and talked about

the benefits to be derived from incorporation. When you see government, in their

wisdom, stepping out and setting other examples of unincorporated communities -

neighbouring communities where they go by and pave all the local roads. They

provide them with water, not sewer, but with water. You see residents in

incorporated communities having to go and in order to realize benefits, to see

their taxes go up 100 per cent. I am wondering which direction government is

moving in?

What we should be doing is setting examples of what good is in incorporation,

rather than all the boogeyman that is involved in it by going to unincorporated

communities providing all those services at no cost to the people who live

there, and telling me and 700 people that if you want this benefit here than you

are going to have to pay for it. Can you tell me the mindset behind that kind of

a policy of your government?

MR. LANGDON: I certainly will. I am glad to take the opportunity to

expand on that. When you think of - for example, Musgravetown, they had a heavy

debt load. I do not know if it was there when you served on council or not, but

that is one of the 150 communities where we did restructure their debt. As a

part of the restructuring, of course, we are able to do some roadwork with them

and so on.

One of the things that I have looked at, Roger, from an incorporation point

of view is this, that many of the smaller communities need - incorporated

communities I am talking about now. I will come back to the others after. They

need a break, and we were able to do that in two ways, as I said, the debt

relief. Take it from a personal point of view, if you are making a certain

amount of money, for argument's sake, you are making $1,000 a month or take

home pay, and $600 or $700 of that is for your mortgage. Well, you are so

strapped because the debt service ratio is so high. I mean, where is the light

bill going to be paid for? Where is the phone bill, and where are all of the

other things going to be done?

What I have argued for, and have been able to have some success in, is to buy

down, if you wish, the debt of many of the smaller communities. We have done

that, and Musgrave Harbour was one of them. Now, if we buy down the debt, take

most of the debt from them, then that particular town - like Musgravetown, for

example - never, ever had within years a municipal operating grant because it

was always intercepted by the Department of Finance. It is not a case anymore

because we were able to work with them and bring their debt down. They can do

some things within the town and act as a result of it. Then when water and sewer

comes in, because as a result of their restructuring of debt, the councils have

said we will pay. We have insisted you pay a dollar a day for water and sewer,

and it is not a lot of money.

You take this glass here, if you went to any corner store you would pay $1.20

or $1.25 for it. Well, for that here you can flush your toilet, you can wash

your clothes, you can bathe and you can shower, you can cook and do all those

things for this here. I mean anytime you were to flush a toilet, people do not

realize it, it would cost you about eighteen dollars. You just go in and flush

because the water is there. They do not realize. That is for the unincorporated

communities. We have said, whether it is in Paul Shelley's district in

Burlington, or in Roger Fitzgerald's or whatever - like Trinity, we are

looking to do some work down there. What we, as a government, have said, we will

take up in the Canada/Newfoundland Infrastructure, which is one-third,

one-third, one-third. Provincial governments have taken up 70 per cent, 80 per

cent, 85 per cent or 90 per cent of the one-third that is by the municipalities

so that if you were to do a million dollar job in a small community with very

little tax base but they have decided to do the dollar a day for the water and

sewer and $300 for property tax, a million dollar project will cost you $70,000.

That is a way that we have been doing it.

Now, on the local service districts that you talk about right here, I have

said within the department that when you come to look for dollars from a local

service district and you are not paying any taxes like you say, whatever, we are

saying we will do the project with you but we will do it on the seventy-thirty

because taxes in your community, you can raise it the same as you can for

Musgravetown, if the community is (inaudible) and you are not paying any,

because it would not be fair, in a sense, to do ninety-ten to a community that

pays no tax as you would for a community like in your district. You talk about

Musgravetown, which pays $665 a year for water and property. What we are finding

is that some of the local service districts at the beginning of it balked at it,

they did not want to do it. When we looked at it and gave them opportunities to

see where it was all going, they decided to come in and to work with us and to

do it.

I agree with you. The thing is, being a member of the Federation of

Municipalities for years, and on council, it does seem unfair that a council

would have it and then everybody else get their roads paved for nothing. I am

hoping that, through the Federation of Municipalities working with government,

you might be able to find a way to get over it.

Like I said, Roger, your area was one that we talked about for Catalina and

Little Catalina. We have 278 councils in Newfoundland; 151 local service

districts and about 200 unincorporated towns, give or take. The population, the

size of the City of Winnipeg. We are just administrated, in a sense, to death.

Like in your way, I think it is a good start in Catalina when Darryl Johnson,

who is from Port Union, and the other mayors look at it say, okay, we need a new

piece of equipment for snow clearing. Well, you can probably buy one piece to do

four communities rather than four communities buying a piece each.

Those are some of the things that we are looking at, and we are saying to

them: Look, what is it that we have to do to make this work and use it as a

pilot project to be able to do others? There is no way that I see it, that the

small communities can afford to keep going on their own because eventually

everything is going up and up and up. Somebody said to me, you do it in a bad

time. No, I do not think you do it in a bad time. I think you do it in a good

time.

It is like CBS, which Terry represents. They have not lost their identity.

People still know that they live in Foxtrap, or Upper Gullies, or Manuels, or

whatever the case might be, but the seven communities have come together to form

one municipality, and we are encouraging it.

Today, for example, I probably would sign off on - because they came to me,

the Town of Bishop's Falls, and said: We would like for you to do a study for

us to see if it is feasible for us to become a part of Grand Falls-Windsor.

It is really positive and, while I am encouraging it, I do not want to

enforce it, because if you force people into doing it people would dig in their

feet and say: Who are you to tell me what to do?

I think, with encouragement, more and more encouragement over the next number

of years, you are going to see the municipalities number smaller, but it will

become that way because the people who live in the region, in close proximity to

each other, say: Let us share.

Look at the Northeast Avalon, like Mount Pearl, St. John's, Paradise and

CBS. They are sharing one water. They are sharing the same water, the same fire

protection, the same waste management, so the more you share then obviously the

more you can do for each region. That is the area now. Would I like to see it go

quicker? Obviously I would, but it is only so far that you can lead people to do

it. They have to see the merits of it, and I think they are beginning to see the

merits of it as being encouraged by the federation. I think all of us realize

that is where we want to be.

On the Northern Peninsula, up in Trevor's district - I was talking to

Trevor only a few days ago - nine unincorporated communities and two

incorporated are looking at one council. The thing about it is, from one end to

the other is eighty kilometers but they are looking at one administration

because they say: We are too small to do it on our own, let's see what we can

do to share. Now, at the end of the day they might not be able to share a lot,

but they might be able to share some things. If they do, then obviously it will

be a cost saving service for them and provide better services to the people

there.

CHAIR: Thank you, Minister.

That was a good tour of the Province after we got out of Plate Cove.

MR. FITZGERALD: I am almost afraid to ask another question.

MR. LANGDON: I won't go that long.

CHAIR: Your time is gone and his time is gone and Terry's time is gone.

MR. LANGDON: Mr. Chair, the thing is, it is fellows like Roger here for

Bonavista North, who is out in the rural part of the Province, who knows the

pros of this here and the value of doing it. When people like Roger has been so

supportive of me in his area, I think that we, as a group of people, can make it

happen by encouraging.

MR. FITZGERALD: The big difference with the approach that is being taken

now is regionalization rather than amalgamation. The people themselves are

coming and saying, we want it done, rather than the heavy-handed approach that

your predecessors used, because people won't accept that.

You are right, Catalina, Port Union, Melrose and Little Catalina are a

natural fit. They already share water services, they share garbage collection,

waste disposal, they share firefighting, and I think the only hang-up there with

the other municipality, Little Catalina, is the fear of losing their fire

department.

MR. LANGDON: And that is not going to happen.

MR. FITZGERALD: They have to be given some comfort there. I think they

have been given that, and that is why they are now coming back and saying: We

want to look at that.

Unfortunately, there are a lot of other communities out there where

regionalization and amalgamation cannot work. One has no more to give than the

other. You take places like Keels and Duntara, there is not even one business in

the community to provide a tax base. The only thing they survive on is

collecting a poll tax from the people who live there. They contract out their

snow clearing and that is the only activity that happens in the community there.

I don't know what the future is for those communities, be it in the form of

local government, or what we can do. If they amalgamate they have no more to

offer, regionalized, than they have right now.

Elliston is probably another prime example where they have been struggling. I

am surprised, although it hasn't been a problem, where you get people coming

out and offering themselves to serve on councils. I was to a function the other

night and the mayor of Elliston was there, and I said: What are you doing? He

said: Boy, I am working but I haven't had a weekend off in the last month,

working for council, repairing life stations, for no cost, because they do not

even have the money to look after the infrastructure that they have there.

Minister, when we look at the infrastructure program, you are right.

Thirty-three, thirty-three, thirty-three or one-third, one-third, one-third is

certainly not acceptable for some of those communities. While it is a good deal,

you only have to pay one-third, but if you cannot come up with the one-third

then you might just as well offer them ninety-ten or whatever. The ninety being

their part, because they cannot even come up with the 10 per cent. There is lots

of need there. Maybe with communities like that we should look at 100 per cent

funding for the things that are necessary there. I am talking about water, and

to repair some of the infrastructure that they have in the ground.

MR. LANGDON: One of the other things is that I have argued - every

meeting I have gone to, from the federal government point of view, they should

do the same as we are doing because it is not only Newfoundland. I mean you are

looking at Nova Scotia, Prince Edward Island, New Brunswick, Manitoba,

Saskatchewan and the Territories. We need more dollars because of the way our

population is spread out. If you are just going to do it on per capita - the

Government of Ottawa announced, I think it was the other day, a new

infrastructure program of $2 billion. That means $7 million a year for us for

three years, $21 million. You cannot even put a water treatment plant in Corner

Brook for that. That is a $35 million project.

It is something that we need to look at. So many, many times I have said -

and probably we will look at it sooner rather than later. Probably another

opportunity - like Peter Boswell did one time, he did a commission on government

to do it again.

CHAIR: I am going to recognize - because we are well beyond the ten

minutes that we have agreed to. Probably the only part of the Province,

minister, where you did not take us is Shea Heights. So I am going to recognize

Shea Heights now, and then I will recognize the Member for Conception Bay South,

who also indicated he would like to speak. That should just about round out the

tour, I would say.

Tom.

MR. T. OSBORNE: Thank you, Mr. Chair.

MR. LANGDON: Sorry about that. I did not mean to leave out Shea Heights,

you know that.

MR. T. OSBORNE: Oh, that is alright. You can make up for it by some

handicap accessible units. I do not mind.

MR. LANGDON: I will get after those for you.

MR. T. OSBORNE: Page 227, under Engineering Support, there is $102,000

increase in Salaries under Engineering Services. I am just wondering if -

MR. LANGDON: What line is that, Bob?

MR. T. OSBORNE: Yes, 2.3.01., Salaries.

MR. LANGDON: Water technicians. We are hiring some new technicians - that

we put in the budget last year saying we would - to help smaller municipalities

to test water and bring services to them.

I will just say this to you, Tom. One of the things we are looking at, we

have not gone as fast as we would like but in smaller communities rather than

having one community with a water technician, we have four or five communities,

again, in a geographical area, one technician or two technicians to look after

four or five water systems and then share the cost out with the four or five

communities. Again, it is numbers but the Federation is supportive of that move

as well. So that is where that is.

MR. T. OSBORNE: They were announced in last year's budget and only

implemented this year?

MR. LANGDON: I would think they were -

MR. SMART: Yes, it would have been implemented before but you are seeing

the full annualized impact of it this year. We would not have had all of those

positions up and running. We, in fact, got some of these up and running but the

people we had were so good they got hired away to the Department of Environment.

So we had to advertise again. You are seeing the full annualized impact here of

us having these positions in place for all of this year, where it was only part

of next year.

As you will notice when you look at last year's, the revised expenditure

under this salary account is down from budget because we did not get the

positions in place because we had to advertise and go through the Public Service

Commission; and there was a bit of staff turnover. These are very technical

people and, in fact, hard to hold onto quite frankly.

MR. T. OSBORNE: When did those positions become filled?

MR. SMART: I will defer to Wayne Churchill who has these positions in his

division. Water technicians, Wayne.

MR. CHURCHILL: They were filled initially as we had intended but what

happened, as the deputy said, the minute we had them filled we lost two of them.

They went on to bigger and better things, so we had to start over again. The

process takes a fair amount of time to hire somebody through the interview

process. That is what happened.

In one case we had one of them that we have only now replaced. What happened

is that when the position was filled it was filled internally which left a lower

position, but it also meant that one of our guys went elsewhere on the basis

that he could come back. He went elsewhere within government on a temporary

position. He could not tell us when he was coming back, so we could not do up

the proper ad to get anybody to apply for the position. That is the reason why

there was a position vacant for almost all of last year.

MR. LANGDON: (Inaudible) people into actual positions. You announce it

but then when you have to go through all of the rigamarole with the internal,

with the service commission and with the union, bumping rights and all that type

of stuff, it takes a long time to do it.

MR. T. OSBORNE: How many water technicians are there now in the Province?

MR. CHURCHILL: There are three. There is one in each of the regions on

the Island. The West Coast person also substitutes for Labrador.

MR. T. OSBORNE: Previously there was one?

MR. CHURCHILL: Previously the position did not exist. There was none.

MR. SMART: These positions were created. (Inaudible) new positions. These

are the positions we have. They are also on staff at the Department of

Environment. They can address that themselves but these new positions were added

as part of the (inaudible) the tap water strategy that the government announced

last year. Part of that strategy was to put us in a position to provide more

assistance to municipalities in being able to test their water and so. There are

other parts of that strategy which relate to the Department of Environment but

this was our piece, along with our disinfection assistance program.

MR. T. OSBORNE: Under 2.3.02, Industrial Water Services, there is an

increase in the amount there for Salaries as well, from $136,000 under the

revised last year to $164,700. I was wondering if you could elaborate on that?

MR. SMART: There is no substantive change of any nature in the staffing

of that particular

section which runs a number of systems that we, as the

department, still own around this Province. All you are seeing there is the

impact of salary increases, the fact that savings may have been realized there

before that will not get realized this year. I mean it is just the to and fro

within the salary budget of the department really. There is no change in

staffing levels, no increases, no reductions.

MR. T. OSBORNE: So, just an increase in salaries paid?

MR. SMART: Well, an increase compared to the amount we actually spent

last year but not an increase in relation to - this is one of these areas, as I

mentioned earlier, when you look at our budget you will see some accounts where

our salary expenditure was budgeted at a certain amount last year and it went

up. This is one of those ones where we budgeted salaries in here at $152,000 and

it went down because we did realize some savings. When we look at 2003-2004,

this is not an area where we are anticipating vacancies or any savings in our

salary account, so we are anticipating to budget at the normal operational

level. They may realize savings there again and our revised expenditure could be

down, but that is not what we are anticipating this year.

MR. T. OSBORNE: Okay.

How would you realize savings, Bob? The number of employees remains the same.

MR. SMART: We would realize a saving - it is basically a vacancy factor.

We budget in a division. We have ten people. The budget is ten times whatever

their salary is - let's say it is $500,000. Now, in terms of balancing our

salary budget, we will know that there is a vacancy somewhere in the department

and we may assume that a position may become vacant this year. If it does become

vacant, given the process we have to go through with the Public Service

Commission and the collective agreement to fill it, it would quite likely be

vacant for three, four or five months. So we would save $20,000 or $30,000 on a

vacant position before we even got around to filling it; or, in some cases we

may look at the position and say: Let's think about whether we need to fill

this at all, depending on the service level requirement.

Generally it is normal staff turnover, people retiring, people resigning. We

may have people in temporary positions that we had on for a special project and

their employment expires and we do not replace them. There are any number of

factors.

You will also see situations in some accounts where, when people do retire

and we do pay out severance pay, you will see that reflected in salary account.

So we sort of, in effect, pay the salary for the full year for the person and if

they retire near the end of the year we have to pass out another extra twenty

weeks pay in severance pay. That will drive up some of these accounts.

There are any number of reasons, which is why I made the point earlier that

in terms of salary budgets in the department we focus more on the total for the

department than we do on particular subheads, because it can go up and down for

any number of reasons.

MR. T. OSBORNE: Okay.

Under Purchased Services, the same heading, the revised amount last year was

$570,000. It is now $668,800. What would -

MR. SMART: The big item there is hydro increase. These industrial water

systems that we own are users of electricity, and when hydro rates do increase

we feel the brunt of it. What you are seeing there is a rather significant

adjustment, actually, in the hydro rates charged against these types of

industrial systems, which is not - they are treated differently than your normal

domestic usage. We are in a separate category. I do not know the details of it

other than we took a bit hit in our electric bill for next year because of a

hydro rate adjustment. That is mostly what that is. There is general inflation

there as well, obviously.

MR. T. OSBORNE: Under municipal financing, subhead 3.1.01., Debt

Expenses, the revised amount last year was less than what was budgeted and it is

up again this year. I am just wondering if you can give an explanation on that.

MR. SMART: Yes, this reflects the interest portion. When we do capital

projects, what you are seeing here is the amount that we pay to the Newfoundland

Municipal Financing Corporation for capital projects we have done in the past.

Our financing is arranged through the Newfoundland Municipal Financing

Corporation.

If you look straight across, on to the next page, this is the interest

portion of our debt, the same as when you pay your mortgage. You pay so much

towards interest and you pay so much towards principal. If you look straight

across on that other page, you will see that the principal portion of our debt

to NMFC and you will see that the principal portion is down - or the interest

portion is down while the principal portion is up.

These exact numbers are determined based on the capitalization, the principal

and interest rates, on a whole series of loans related to a whole series of

capital projects. It is not unusual at all that in any given year, depending on

what is happening with interest rates, depending on what is happening with

refinancing and capitalizations, that our actual interest expense, or principal

expense, will go up and down based on financing factors.

This reflects our debt payment on capital projects we have been undertaking

for ten years. Some of this payment relates to a loan we took out ten years ago,

that will become due this year, and it is paid off, and it will be replaced by a

loan that we took out last year to do another capital project last year.

There are hundreds and hundreds of individual loans tied up in these numbers

and, as interest rates and so on fluctuate, that is what affects these numbers.

We really have little control over this. It is likely the Department of Finance

would say to us at some point in the year, given what is going on with interest

rates, given what is going on with refinancing, you guys are probably going to

pay more in interest this year than in principal, so we changed things around.

MR. T. OSBORNE: They always reflect - if the interest amount is up, the

principal will be down, and vice versa?

MR. SMART: It can, yes.

If we ran into a situation where a number of loans that we had taken out

eight or ten years ago at a very low interest rate were now maturing and had to

be renewed, and given today's interest rates they had to be renewed at a much

higher rate - if we took them out for 5 per cent and we could only renew them

today at 10 per cent - the same as doing your mortgage, depending on where you

get caught when you go to renew after the term, whether the interest rate is up

or down, we could see our interest rate going up or our interest expense going

up, if interest rates have gone up. If we took out loans back in the 1980s when

interest rates were high and we go to refinance today when interest rates are

down, we would see savings in the interest account.

As I say, it is like taking 1,500 loans and trying to figure out the

principal and interest payment on all of them, and putting it in, knowing full

well that 300 of these are coming up to term this year and have to be renewed.

We can never be exact. I do not think we got this perfectly right yet, because

of the number of variables involved. Generally, one is up and the other is down,

or the other is down and this one is up.

MR. T. OSBORNE: Under 3.1.03., Special Assistance, obviously those grants

would not fall under the MOGs. Grants and Subsidies last year went from slightly

less than $5 million to slightly more than $16 million. I am just wondering what

those special grants were for, and why such an increase.

MR. SMART: Special grants, just to focus on the $4.8 million for a

moment, covers some very broad territory. It covers grants to volunteer fire

departments for breathing apparatus, it covers grants to community service

groups that provide various services in various communities around the Province.

In a lot of these areas it is community groups that actually provide the town

hall through the Lions Club or something of that nature, so we do pay out grants

to those groups as well. So, it is a very broad list of groups and

municipalities and volunteer fire departments that get supported out of the $4.8

million.

It took a significant jump up to $16 million in our revised expenditure due

primarily to two things. One is the job creation program which the government

introduced, which cost upwards to $4.6 million. That gets funded out of this

account. The other big item that is funded out of that account is the relocation

of Great Harbour Deep, which cost upwards to $6 million. That is why you are

seeing the big spike in the revised expenditure.

We would expect, barring some other unforeseen circumstances, that it would

go back to its normal level of $4.2 million or $4.3 million this year; but we

could have a crisis of some sort, in which case we would have to look at putting

some more money in, but we are not budgeting for a crises.

MR. T. OSBORNE: So, the job creation program that was in place last year,

you are not anticipating the same level of program this year?

MR. LANGDON: In the Budget, we did not budget for job creation last year.

We are not budgeting for it this year either, but if it comes then we will have

to get a special warrant through special assistance to make it happen.

It is the same thing with Great Harbour Deep. There might be another

community out there that will be asking us to relocate. I think there is one on

the Northern Peninsula that Trevor was dealing with. There are three or four

houses - I forget the name of the community - and there are eighteen kilometres

you have to snow clear to get to three families in a small community, and I

think Trevor was saying to me that they want to move. So, if we get a letter

from them saying they want to do it, then - we do not have it budgeted in but we

would have to go and get a special warrant to make it happen. That is why, as

Bob said, that is spiked there. That is what it is. I cannot anticipate it

because I do not know.

MR. T. OSBORNE: Okay.

MR. LANGDON: But, all things being equal, it is levelled out. You will

not see $16 million there unless we have another Harbour Deep or we have another

job creation program.

MR. T. OSBORNE: Under 3.2.02., the Canada-Newfoundland and Labrador

Infrastructure Program, under Grants and Subsidies there, compared to what was

actually spent last year and what is being spent this year, there is a

significant jump. I am just wondering if you could elaborate on it.

MR. LANGDON: I will just go briefly into it, and then I will ask Bob to

do it.

One of the biggest problems we have when we do, say, the Canada-Newfoundland

Infrastructure Program, is the time it takes to get the projects approved. It is

long and almost - I do not know the word I want to use for it, but here is the

situation: When I get a project approved - let's say I am going to do a water

and sewer down in Pouch Cove, in Jack's district - once it has been signed off

by the federal minister, then it has to go to ACOA, and ACOA has to look at it.

Then it has to go to the Canadian Environmental Assessment Agency and they

assess it. The thing is, I would like to speed it up.

When I got here the first year, I said: Well, we can do that. I will contact

the people in Halifax and they will speed it up for me because I am the minister

here.

It does not work that way. It is tedious, it is long. I will give you an

idea. We could have done twice as much as we did last year. We could not do it.

You just cannot get the approvals out in time to make it happen.

What we did this year is, I had all of my work done, pretty much so, by the

fifth of February, and gave it to the federal minister. I am waiting for it to

get back so we can announce it. So, if we get it started early in the year,

rather than start the water and sewer in Pouch Cove in October, I can get it

done in July or August, when it is a good season, get good tenders and get good

prices.

That is primarily it, Tom. Like I said, it is frustrating. I am sure that for

everybody who was here before me it was the same thing. It is not trying to

delay it. We want to spend it.

I will just give you one more example, Mr. Chair. We had a situation out in

Salmon Cove, Victoria, where the sewer was on the beach. I think it was the

Canadian Environmental Agency that said: Look, we are going to fine you so many

hundred thousand dollars a day if you do not get this done. We made it a

priority to do it because we were asked to. It took about six months before we

finally got the answer back to do it, so it is very frustrating.

CHAIR: Thank you, Minister.

Tom, if you don't mind, your colleague, Terry, has asked -

MR. T. OSBORNE: I just have one more question on that.

MR. FRENCH: One question. Okay, if you have one more.

MR. T. OSBORNE: With the almost $11 million in the grants last year that

was not spent, that was budgeted for, if with our general rule of thumb it is a

use it or lose it type of thing, before March 31, what happens to that amount?

Where does that go? Does it go back into general revenue?

MR. SMART: In this account here? You will notice if you look down lower,

there is a federal revenue here. This is the federal contribution towards the

Canada-Newfoundland Infrastructure Program. What we don't draw down from the

federal government stays there. It is just simply a cash flow.

MR. T. OSBORNE: Okay. So if you don't use it this year, it is there for

next year.

MR. SMART: I mean, the federal government is in the Canada-Newfoundland

Infrastructure for $50 million over a five-year period. If we don't use it

this year, we will use it next year. It doesn't disappear at the end of the

year, no, not on the Canada-Newfoundland Infrastructure or on Municipal Capital

Works either. That is a rolling amount of money, we will say.

CHAIR: Thank you, Tom.

I am going to recognize Terry French, and we will be happy to go back to you

or anybody else who wants to intervene.

MR. FRENCH: Thank you very much.

I have a couple of policy questions, I guess. I guess we can stray from the

actual numbers and feel free to ask what we like.

There is a situation that developed in Conception Bay South a couple of years

ago whereby the municipality at the time went into people's bank accounts. I

don't know if you guys are familiar with this. It became an issue, certainly,

with the town and eventually it was reported to the Ombudsman who was going to

investigate that issue. He went to the department and I believe he has been

stonewalled at the department, to use somebody else's words, and he cannot

seem to get the answers. Yet, he has been down that road on other issues with

municipalities and has had no trouble.

Is there some problem there as to why he cannot investigate that?

MR. SMART: We have had a number of files with the Citizen's

Representative that we have dealt with quite expediently, and brought them to a

quick resolution with a great deal of cooperation. With respect to

municipalities, the Citizen's Representative - I don't know if the

particular case you refer to was in fact one of them, but the Citizens'

Representative did come to us with complaints or investigations he wanted to do

with respect to decisions made by municipalities. We did say to the Citizens'

Representative that, as we read the legislation for the Office of the Citizens'

Representative - and there is a whole list of legislation attached to his act

which are things he has jurisdiction over. It was our view that the

Municipalities Act, the City of St. John's Act, the City of Mount Pearl Act,

and the City of Corner Brook Act are not legislation which are appended to the

legislation for the Office of the Citizens' Representative. So, yes, it is our

view - well, not just our view, it is our legal

interpretation that the Office

of the Citizens' Representative does not have jurisdiction to deal with

matters relating to decisions made by municipalities because that legislation

which governs those municipalities is not appended to his act. Now, if and when

it does become appended to his act, we would say: Yes, we will assist in this

regard. But he lacks the jurisdiction, in our view, and based on our legal

advice.

MR. FRENCH: Yet, he hasn't had any problems with other issues?

MR. SMART: Well, the other issues - he came to us, for instance, on

issues with respect to how we settled some claims in Hurricane Gabriel in St.

John's. People who did not get their claims settled in the manner that they

thought satisfactory, he came to us on those issues. Hurricane Gabriel is

handled through the Emergency Measures Organization which is part of our

department and governed by the Department of Municipal Affairs Act which is

appended to his legislation. So we said sure, and we cooperated with him; gave

him all our files. With his assistance, to the credit of his office, we were

able to settle a few issues that we could not settle on our own. So it was quite

beneficial, but on the issue of municipalities, he simply lacks the statutory

jurisdiction to go into it.

The other comment I made to the Office of the Citizens' Representative -

when I said to him that he lacked the jurisdiction - is: If you are going to go

down the road of entertaining complaints against the over 400 town councils and

local service committees in this Province, and they are going to become a matter

in which you want to have jurisdiction, that is going to take up a lot of time.

I mean there are over 400 local governments in this Province when you talk about

towns and local service districts. So his point: Did we cooperate? No, it was

our view that it is not a matter. It is a municipal issue between a municipality

and its taxpayers. It is not a matter that he has jurisdiction to deal with. Now

should someone rule later that we are incorrect in our legal

interpretation and

he does have jurisdiction to deal with it, well then we will deal with it and we

will cooperate on these files the same as the others.

MR. FRENCH: Yes, I see what you are saying, but if you want to go down

the road of municipalities, it is one thing to be upset that your road was not

paved before someone else's but it is another thing when you actually go into

someone's bank account. I think there is a big difference there personally.

Would the department investigate something like that?

MR. SMART: On the matter, no. I mean these are matters that, in our view,

are matters between the taxpayers in Conception Bay South and an issue they have

with the Conception Bay South council. That particular case, I think there was

even some court action on it which dealt with some of this in terms of whether

the hookup charge was legal and so on. Would we get involved in whether it is

legal for a bank to take a deduction against someone's bank account? We would

have to say to the person -

MR. FRENCH: It is not a bank it is the municipality.

MR. SMART: Well the municipality, in this case, made a deduction from an

account that the taxpayer is suggesting the bank should not have let the council

do. We would say: Taxpayer, maybe you have an issue with your bank.

MR. FRENCH: That is half the problem.

MR. SMART: It is at that level. It is not really a policy issue. It is a

municipal issue that we would not get involved in.

MR. FRENCH: The other thing I was going to ask you - again, in Conception

Bay South you currently have an infrastructure agreement signed with the Town of

Conception Bay South - I believe it is for $18 million, somewhere in that

ballpark. My understanding of it is that they come to you guys with a list of

their priorities. If you guys agree, naturally you sign a document agreeing that

this is the way the money will be spent. Has it ever been the case or could it

be the case that they could come back and change some of their priorities?

MR. SMART: That would not be an issue with you people at all, I would not

think. It would not mean the loss of that money or anything for the town. They

could easily change, for example, a community centre to water and sewer money,

or water and sewer money to pavement, depending if the need was there.

MR. LANGDON: The idea is, when we do the multi-year capital works, they

are the priorities that the town has deemed priorities, so we do not say to

them: You cannot do this. You have to do that.

We do not do that. We sign off. Now, if after year one the council comes back

and says, what we thought was a priority here we would like to change, we have

no problem - if they decide to do it. We will not do it to them without them

coming to us. That is right, isn't it, Bob?

MR. SMART: I would just like to put one caveat on that, because

Conception Bay South and Portugal Cove, St. Phillips and Paradise, all of whom

we have these agreements with, there are certain aspects of their multi-year

plans that, if they did come to us and wanted to change, we would say no. Those

aspects relate primarily to water issues, because Paradise, Portugal Cove, St,

Phillips, CBS, draw upon the same regional water system as St. John's and

Mount Pearl. They are all hooked into Bay Bulls, and there are certain things

such as reservoirs in Paradise, reservoirs in CBS, that we would insist -

MR. FRENCH: Or if there were treatments or something of that nature.

MR. SMART: Yes. If they came to us and said, we would like to take this

money off and put it into paving, we would say no. If they wanted to take it off

something else that we did not consider essential to the regional

infrastructure, we would be okay with that.

MR. FRENCH: Thank you.

CHAIR: Thank you, Terry.

Are there other interveners?

Deputy Chair?

MR. J. BYRNE: With respect to Municipal Infrastructure again,

section

3.2.03.06., Purchased Services, you budgeted $7.5 million, you spent $3.1

million last year, and this year it is up to $8.7 million. What are those

purchased services, and professional services above it, under .05 and .06? We

have two there.

MR. LANGDON: It is pretty much the same thing as it was for the

Canada-Newfoundland infrastructure. What happens is - go ahead, Bob.

MR. SMART: These relate to infrastructure projects being done in Labrador

communities under the Labrador agreement. All you are seeing there, really, is

an expectation under both accounts, professional services and purchased

services, which are being used to make payments to contractors for various types

of projects, be they projects on buildings, water and sewer projects and so on.

We had an expectation in 2002-2003 that we would spend a total of about $8.9

million or $9 million on both because, as the minister pointed out earlier with

respect to the Canada-Newfoundland infrastructure, the same thing happens here.

You run into delays, particularly in Labrador where you have a short

construction season. If you do not start at a certain point you will be delayed

in the completion of your project, so we had a substantial amount of slippage

and our revised expenditure was down and we will pick it up again next year. We

will carry over. We will start a bunch of new projects, plus we will carry over

what we did not finish in the previous year. It is a cash flow item in terms of,

we can only spend it so fast.

MR. J. BYRNE: With respect to professional services and purchased

services, the professional services, would that be like engineering design and

what have you, and then the purchased services would be the actual installation?

MR. SMART: Yes, that would be a good definition, I think. For this type

of account, yes.

MR. J. BYRNE: Emergency Planning,

section 4.1.02.07., Property,

Furnishings and Equipment, you had budgeted $239,300, spent $232,500, and

$13,300 for next year. What would -

MR. SMART: Actually, if you looked at Property, Furnishings and Equipment

there, and just up the page a little bit to Supplies, you will see the same

thing, significant expenditures in 2002-2003 and not in 2003-2004. What that

reflects is the investment we made last year in our HAZMAT initiative, which is

to acquire about ten trailers that we will equip with chemical spill gear,

HAZMAT suits, things of that nature, and distribute them around the Province in

strategic locations to deal with chemical spills on highways.

A lot of this flowed out of the reaction after September 11. The federal

government was prepared to do an arrangement with us to put these trailers and

equipment in place. What you are seeing in 2002-2003 is the purchase of trailers

and the purchase of equipment, but that is done now and we are in the process of

rigging them all out, so you do not see the expenditure in 2003-2004.

MR. J. BYRNE: How would you determine where those are going to be placed?

MR. SMART: Down by the Fire Commissioner.

MR. J. BYRNE: The Fire Commissioner's Office.

Disaster Assistance, 4.1.03.07, Property, Furnishings and Equipment. Again,

$2 million budgeted, $2.6 million spent, $3.3 budgeted for this year. Is that in

connection with what you just explained?

MR. SMART: No, what you are seeing in terms of 2002-2003 is the finishing

up of expenditures with respect to Hurricane Gabriel in St. John's and the

settlement of claims and so on. What you are seeing in 2003-2004 is our initial

provision to deal with the Badger flood. I mean that number, by its very nature,

this is an area where it can go up or down, depending on the nature of the

disaster.

You will also see as well, if you looked at the Federal Revenue in that

account, you will see we are actually making a $2.1 million profit on this

account this year. What all that reflects is a lot of the money the federal

government owes us with respect to Hurricane Gabriel, we are not actually going

to receive. We have spent this, which you are seeing in our expenditure account,

but we are not actually going to get our money back from the feds until this

year, which is why you see a big revenue item there.

MR. J. BYRNE: Just a couple of other questions - and you touched on this

earlier, minister. This is with respect to the situation with Harbour Deep, the

relocation of Harbour Deep. You mentioned a small community - three houses up on

the Northern Peninsula. Are you planning on putting a program in place to

address these concerns or just as it comes to you, as it comes type of thing?

MR. LANGDON: We are not asking - Harbour Deep, for example, I would think

that they were probably there when Mr. Chair was there asking for the same

thing; probably even for years. It finally came to - when I met with the mayor,

he said: Look, are you or are you not? We have gotten three plebiscites in the

community, 100 per cent of the people want to leave. That is the only way that

we are doing it. If, for example, we have the three or four houses down in - I

forget the name of the community that Trevor was telling me about. It will come

to me later on - but if there are three families and only one wants to move,

then we are not going to move one and leave the other two there.

MR. J. BYRNE: It does not make sense.

MR. LANGDON: It does not make sense. But, we are not initiating it, it is

coming to us. Once you have 100 per cent of the people in a community and they

do two or three plebiscites, and they come to you and say: We want to be moved.

Then I think it is incumbent on whoever is in this chair to have a look at it,

but we are not initiating it.

MR. J. BYRNE: What would happen if four or five communities came forward

and said: Okay, we have 100 agreement. We want to move three houses, ten houses,

twenty houses or whatever the case may be?

MR. LANGDON: I guess you would have to look at it, and from government's

point of view I guess, that we do not anticipate it but if they did we would

have to look at it. We would look at the cost of what it would be, for example,

if you were living in an isolated community, to transportation for ferries, what

it would cost hydro for diesel, what it would be for the school, what would it

be for health and all these types of things. You would examine it all when it

comes to you at that time, but we are not getting a large number of people

coming that way.

MR. J. BYRNE: One other thing, this concerns - and I am doing this from

memory now - debt retirement for the municipalities, that program you had. I

remember after the budget - Randy Simms, is he the President of your Federation?

He was saying, basically, that program is -

MR. LANGDON: It is not, and the thing about it is that -