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May 8,

GOVERNMENT SERVICES COMMITTEE

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

substitutes for Betty Parsley, MHA for Harbour Main.

The

Committee met at approximately 6:09 p.m. in the Assembly Chamber.

CHAIR (Edmunds):

Okay, let's get

started here to go through the Estimates for Finance. I'll first ask the Members

of the Government Services Committee to introduce yourselves, starting with the

front row.

MR. HUTCHINGS:

Good evening, Keith

Hutchings, MHA, District of Ferryland.

MS. DRODGE:

Megan Drodge, Researcher with the Official Opposition caucus.

MR. FINN:

John Finn, District of

Stephenville – Port au Port.

MS. MICHAEL:

Lorraine Michael, St. John's

East – Quidi Vidi.

MR. MORGAN:

Ivan Morgan, Researcher, NDP caucus.

MR. REID:

Scott Reid, St. George's –

Humber.

MR. KING:

Neil King, District of

Bonavista.

MS. HALEY:

Carol Anne Haley, Burin –

Grand Bank.

CHAIR:

Okay, thank you.

I'd

like to point out that the Member for St. George's – Humber is replacing the

Member for Harbour Main in these Estimates.

Okay,

without further ado, I call for the first heading.

CLERK (Proudfoot):

(Inaudible) minutes for

the last meeting?

CHAIR:

I call for a motion to

approve the minutes from the last meeting.

MS. MICHAEL:

I was present but my name is

not here, and I have a number of witnesses who say, yes, I definitely was

present.

CHAIR:

Okay, we'll make that

correction to the minutes.

Do we

have an approver for the minutes, pending changes?

MS. HALEY:

So moved.

CHAIR:

Okay, moved.

Seconder?

Seconded.

All

those in favour, 'aye.'

Carried.

motion, minutes adopted as circulated.

CHAIR:

Okay. I call for the first

heading on the Office of the Chief Information Officer which is the first

section that we will be doing.

CLERK:

Subheads 4.1.01 to 4.1.05.

CHAIR:

Shall subheads 4.1.01 to

4.1.05 carry?

MS. C. BENNETT:

Mr. Chair, with permission

of the Members of the Committee, it might help if I make some initial comments.

The department has seen some transition and in order to help facilitate the

questions as we go through the headings, it might make sense for me to do some

opening comments, depending on if the Committee is okay with that.

CHAIR:

Yes, I'll call for the

minister's opening remarks now with the introduction of your staff.

MS. MICHAEL:

I have a question, Mr.

Chair, with regard to the headings that were called.

Could

it be repeated? We have 1.1.01, then we have 1.2.01, there is no 1.5.

CLERK:

4.1.05.

CHAIR:

4.1.01 to 4.1.05.

MS. MICHAEL:

Okay. Thank you.

I didn't get the four.

CHAIR:

Okay, Minister, can you start off by introducing your departmental staff? Then

we'll give you ample time to have a few opening remarks, then we'll go back to

the Committee for opening remarks. Then what we'll do is alternative

approximately 10 minutes between responders from the Government Services

Committee.

Minister.

MS. C. BENNETT:

Sure. I'm going to turn it to Ellen MacDonald and let the team introduce

themselves so they can make sure that their mics are aligned with where they're

sitting.

This is Ellen MacDonald, Chief Information Officer responsible for OCIO and

deputy minister.

MR. HARDING:

Craig Harding, Executive Director for Corporate Services and Projects Branch.

MR. MOULAND:

Randy Mouland, Executive Director of Operations and Security.

MR. GELLATELY:

Bruce Gellately, Director of Corporate Services.

MS. MUNDON:

Tansy Mundon, Director of Communications.

MS. TRICKETT:

Wanda Trickett, Departmental Controller.

MS. C. BENNETT:

I want to say welcome to everybody as we do the Estimates for the Office of the

Chief Information Officer, OCIO.

As you would know, OCIO supports all the information technology, IT, and

information management, IM, functions of core government and certain agencies,

boards, commissions and entities such as the Royal Newfoundland Constabulary,

the Provincial and Supreme Courts, and the Research & Development Corporation,

among others.

These activities include provisioning and supportive backend technology

infrastructure, client computer support, backup and protection of over 450

terabits of government data, and support of 500-plus existing departmental

systems. In case you ever wondered, to print one terabit of data on paper would

require approximately 50,000 trees, just to give you a sense of the depth of

information that OCIO is responsible for.

OCIO has 294 employees, and that would include both permanent and temporary, and

51 vacancies.

In the recent Flatter, Leaner Management exercise, the OCIO reduced its

management layer by 16 per cent. Eliminating nine positions, of which four were

terminations, four were vacancies and one was the elimination of a management

position which resulted in the incumbent moving back to their permanent

non-management position. This resulted in salary savings of $750,000 annually.

In addition, a total of $276,000

has been eliminated as part

of the overall salary changes in the last number of years.

OCIO

has not eliminated any services as a result of these changes. Resources have

been reallocated, and the work has been reprioritized to ensure that all

critical work items are dealt with in a timely manner.

OCIO

only uses consultants to augment staffing for two main purposes. That would be

for specific time-bound project work, and to fill some vacancies that are

classified as hard to fill due to lack of skills in the local marketplace, or

intense competition for people qualified to fill these positions. Multiple

attempts at recruitment for these hard to fill positions may not have been

successful and OCIO has seen a reduction of 29 per cent since 2015-16 in

Professional Services and has significantly reduced its reliance on contractors

over the past several years.

On an

annual basis the OCIO processes in excess of 155,000 requests for service, which

range from password resets to changes to existing systems, and managing a

portfolio of 40-plus active projects at any given point in time.

The

Estimates structure for OCIO has changed since last fiscal year, and this change

was a result of a resignation from an executive director last November and the

subsequent abolishment of that position. This required a realignment of

responsibilities across the three remaining OCIO directors in order to balance

workload. This was in addition to the Flatter, Leaner Management changes noted

above.

OCIO

has gone from four branches to three branches, each with a distinct set of

responsibilities. You may note that there are five unique activities in

Estimates, but two of them are for capital allocations.

We have

Corporate Services and Projects, both current and capital. This area would be

responsible for all new project work for the departments and agencies and for

Corporate Services.

The

second one is Application and Information Management Services, and this would be

responsible for support and maintenance of the existing 500-plus applications

and databases in use today.

Operations and Security, both current and capital; this area is responsible for

technology infrastructure, security of desktops, laptops, servers, wide area

networks, email systems, mobility management, support services, and backup and

recovery of all government data.

addition to the structural changes noted, OCIO performed a bottom-up build as

part of the zero-based budgeting exercise and noted where savings could be

achieved, but also reallocated funds to the appropriate areas to better

represent where the spending actually occurs.

For

example, spending in Professional Services related to the support for the LaMPSS

system, a system that manages the labour market program, was reallocated from

4.1.01 to 4.1.02 where the services are actually procured. These changes

impacted all branches and are the rationale for some of the year-over-year

changes. Variances that you will see when we go through each activity are mostly

recorded as zero-based budgeting entries; however, in some instances they are a

combination of annualization of prior-year decisions and new reductions for

'17-'18.

It is

also worth noting that OCIO has some differences from the rest of government in

terms of what is funded under certain accounts. OCIO activity 4.1.03, the

Supplies budget, covers software purchases, software maintenance renewals and

small hardware purchases. In this fiscal year, there are 159 different software

renewals in the Operations and Security's current budget, as well as an

estimated increase for new software.

Another

key difference is in Purchased Services, activity 4.1.03. Purchased Services is

primarily to cover the cost of the data centre and the service management

contract with Bell.

When

you look at Corporate Services and Projects and the current account, which is

4.1.01, and the Capital, 4.1.04, these accounts capture the funding required to

implement new projects. Some of these projects involve multi-year funding that

must be allocated between current and capital accounts, depending on what phase

of the project you're in.

This is

a complex budgeting area. While best efforts are made to budget funding into

each spending envelope at the onset of each project, there are often adjustments

to the envelopes for the out years and as projects progress. Budgets become more

refined depending on the progress of the project. We do have a handout here that

explains the various phases of each project, and whether the project is in a

capital phase or is in a current phase, that we'll be happy to share with the

Committee.

Predicting the timeline of projects is another challenge. A project can be

delayed at any point for a variety of reasons, changes in the department, a

delay or a change in procurement or implementation of technology platform, along

with expected contract negotiations, et cetera.

For

example, the OCIO budgeted the start of a project to put the Land Use Atlas

online early last fiscal but project start-up was delayed until October. OCIO

dropped some of the funds for this project last fiscal and is now projecting

them for fiscal '17-'18.

As you

will see in headings 4.1.01 and 4.1.04, most envelopes involve transfers of

funding depending on the projects for the next year. The integrated management

system implementation for Education and Early Childhood Development, and

Children, Seniors and Social Development is the largest ongoing project and it's

being implemented over multiple years.

OCIO

projected completing the project in the last fiscal year within the allocated

budget, noting that the build was 50 per cent complete at the time of that

projection. This is a very large, complex project with 45 work streams resulting

in 247 individual screens. The project ran into challenges early in the fiscal

due to many factors, one being incremental and unplanned scope changes.

ministerial committee was created that provided guidance, re-scope management,

resources and resources were redeployed while detailed scope refinement was

underway, which enabled the project to remain within budget but spread the work

out a little longer. Due to this delay, the Operating Accounts, both the Capital

and Current, show a smaller spend in last fiscal, and all related to the change

in the schedule.

The

budget for this fiscal show the carry forward of funding not utilized in last

fiscal. In terms of overall status of the project, the online build is now 100

per cent completed and the functional testing has started, as has the data

conversion. The user acceptance testing is due to start in June, which will be

followed by training, and the implementation for EECD is scheduled for the

November-December time frame with the final implementation set for March of 2018

for CSSD. The project remains within the approved budget.

The

majority of changes in 2016-17 in headings 4.1.01 and 4.1.04, an increased spend

in '17-'18 is driven by timing changes of the ISM project and a total of $4.1

million was carried forward. Other smaller project portfolio changes are also

reflected here. You will note that irrespective of the salary reductions noted

above due to Flatter, Leaner Management and to other salary changes, that the

salary budget for both 4.1.01 and 4.1.04 have actually increased in 2017-18 over

the actual spend in '16-'17. As I said, this is due to the carry forward of

funds not spent in last fiscal but required to complete projects this year.

Again, this is all within the approved budget.

With

that, I'll ask one of the staff on this side to pass you out the System

Development Life Cycle and if there are questions going forward, we can refer to

the chart.

I'll

turn it over to the Chair for questions.

Thank

you.

CHAIR:

Okay. I'll ask for an

opening response from the Member for Ferryland and then we'll alternate 10

minute intervals between the Government Services Committee Members.

MR. HUTCHINGS:

Thank you, Mr. Chair.

Minister, I just had a couple of questions in regard to some of your outline

that you gave. The 51 vacancies, did they become vacant in current year or were

they in the prior year as well?

MS. C. BENNETT:

My understanding is some of

the vacancies have been long-term vacancies and some would be driven from staff

turnover in the last fiscal year.

MR. HUTCHINGS:

Okay. You mentioned there

were those 51, you broke them down in terms of positions and I think you

mentioned it was $750,000 annualized, that was the saving. Is that correct?

MS. C. BENNETT:

No, the $750,000 was related

to the Flatter, Leaner Management.

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

And the changes the

department and the office went through as a result of Flatter, Leaner

Management.

MR. HUTCHINGS:

Would they intertwine, the

51 vacancies and the Flatter, Leaner Management approach? Do they cross paths

anywhere or is it two separate exercises?

MS. MACDONALD:

The flatter, leaner was done before March 31, and those numbers of the positions

and vacancies were as of March 31.

MR. HUTCHINGS:

Okay.

You

also indicated, Minister, because of the positions you went through there were

no services affected. Is that correct?

MS. C. BENNETT:

Yes.

MR. HUTCHINGS:

Okay.

You

also made reference to consultants and in the past few years a decrease in

consultants by OCIO. So based on what was just articulated in regard to leaner,

flatter and those positions, there's been no change in the use of consultants?

You wouldn't see an increase in consultants because of that? You'll accommodate

it inside, is that correct?

MS. C. BENNETT:

Right.

MR. HUTCHINGS:

Okay.

You

mentioned the Land Use Atlas project, and I think in your remarks, I'm not sure

if it flowed into – I think you used the acronym CCSD. What is CCSD again?

MS. MACDONALD:

EECD –

MR. HUTCHINGS:

Oh, sorry.

MS. MACDONALD:

– and CSSD. Education and Early Childhood Development –

MR. HUTCHINGS:

Okay.

MS. MACDONALD:

– are supposed to go live

with their new case management system at the end of this year and Children,

Seniors and Social Development are supposed to go live in March. The Land Use

Atlas is a different project.

MR. HUTCHINGS:

Okay.

The

child, youth, that one, how long has that been a project? When was that started?

It sounds familiar.

MS. MACDONALD:

It is. It's two, three years

ago or maybe even longer.

MR. HUTCHINGS:

Okay.

Was

that the one that was adopted from another Atlantic province? No.

MS. MACDONALD:

No. Well, the system, the bones of it I guess, a small part of it is in

operation in some places in Ontario.

MR. HUTCHINGS:

Okay, maybe that was it.

MS. MACDONALD:

Yes.

MR. HUTCHINGS:

Okay.

Just to

get back to the Land Use Atlas; I think, Minister, you indicated there were

attempts to move that through and complete the project in the past fiscal year

but, for whatever reason, I guess you couldn't meet what you needed to meet so

it's been pushed out to this fiscal year. Is that correct?

MS. C. BENNETT:

Yes. Some of the decisions

around where OCIO would have been focusing their attention based on priorities

would have shifted.

MR. HUTCHINGS:

Yes.

MS. C. BENNETT:

Certainly the project that

relates to the Department of Children, Seniors and Social Development, as well

as the one for education and early learning, was a priority for the department.

So the LaMPSS program, as an example, LaMPSS work would have been pushed based

on priority setting in the department.

MR. HUTCHINGS:

Okay.

The

Land Use Atlas, that's a service for Crown Lands, I think, is it? Correct?

MS. C. BENNETT:

Yes. Correct.

MR. HUTCHINGS:

With the move of Crown Lands

to Corner Brook, does that change anything in regard to that project or where it

will be operated from, the service or anything like that?

MS. C. BENNETT:

No. No change.

MR. HUTCHINGS:

Okay.

CHAIR:

Before you continue there,

Minister, I ask all staff to identify themselves before they – so it helps the

Broadcast Centre out.

MS. C. BENNETT:

Okay.

MR. HUTCHINGS:

We don't have to start over,

do we?

CHAIR:

No, go ahead.

Carry

on.

MR. HUTCHINGS:

Thank you.

Okay.

I'll go through a couple of line items, Minister, please, if I could; 4.1.01,

Corporate Services and Projects, when we look at Salaries there we can see there

was, I think, $836,600 saved on Salaries, and this year Salaries are being

reduced from what was originally estimated last year. Could we get some feedback

on that and what exactly those would be?

MS. MACDONALD:

The changes related to this are related to changes in the management structure,

some annualization of prior-year decisions and some of the carry forward of the

ISM project. We carried forward funds from last year to this year.

MR. HUTCHINGS:

Okay. Could you just list

those again please, because there's a lot going on there?

MS. MACDONALD:

Okay, sorry.

There

was $621,700 in changes to management structure –

MR. HUTCHINGS:

Okay.

MS. MACDONALD:

– which would be Flatter, Leaner; $544,500 for annualization of prior-year

decisions and $620,800 new funding approved in the budget.

MR. HUTCHINGS:

Okay. So the new funding

would be related to what?

MS. MACDONALD:

To the project carry forward. The money we did not spend last year, it carried

forward to this year.

MR. HUTCHINGS:

Okay. That project

carry-forward money would be for the same projects or different projects?

MS. MACDONALD:

The carry forward was all related to this big ISM project.

MR. HUTCHINGS:

Okay.

MS. MACDONALD:

Yes.

MS. C. BENNETT:

If I might, one of the

decisions we made last year as part of the budget process was that when there

were these carry forwards, because OCIO spends money that could be capital at

any given time or current, we felt it was appropriate that if money carried over

it would have to be approved as part of new decisions.

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

So that's why Ellen's

referring to it as new spending because it would have been part of new decisions

that would have said, yes, let the project continue. It's important the project

continue, rather than letting it carry forward through multiply years with any

visibility in Treasury Board; Treasury Board (inaudible).

MR. HUTCHINGS:

So it would be a

continuation of those projects, yes.

MS. C. BENNETT:

Yes.

MR. HUTCHINGS:

Okay, thank you.

I just

wanted to reference, last year – and it's about annualized savings – there was

reference to, as part of the Government Renewal Initiative, that there were

changes to the project delivery model, and I guess that's some of the things

you've talked about to this point.

There

were savings of $411,000 in 2016-2017; $2.9 million annualized savings when the

new project delivery model was implemented. There was also reference of changes

in technology support models and savings of $1.3 million in '16-'17 and $1.6

million in annualized savings when fully implemented. Has that been done? Have

those been realized?

MS. MACDONALD:

Yes, that's been done.

MR. HUTCHINGS:

Okay. So you've had your

one-time savings and then it's annualized. So it's –

MS. MACDONALD:

Correct.

MR. HUTCHINGS:

Okay.

If we

go to 4.1.01, we've got Professional Services listed there. There was a

shortfall from what was budgeted last year to what the actual expenditures were.

Could you just give me an idea of what that would have been? And this year the

estimate is down from what it was, the original estimate last year.

MS. MACDONALD:

That, again, relates to the ISM project. We didn't spend as much of the

Professional Services that we needed to spend because we delayed some of the

activities, but we have to pick them up again this year in order to complete the

project.

MR. HUTCHINGS:

Okay.

those Professional Services, would that number there pretty well include all

consultants' fees or would there be anything else in there?

MS. MACDONALD:

It would pretty well be consultants fees related to projects, yes.

MR. HUTCHINGS:

Okay.

In the

other headings, there's also some that would have the reference to Professional

Services. So throughout the headings, the Professional Services, with each

heading there would be a component of consultant attached to that heading. Is

that correct?

MS. MACDONALD:

Yes, that's correct. Some of it is for contract professional services that we

have for long-term support of certain applications and others are for project

work, new project work that we'll pick up and then they'll go away when the

project is done.

MR. HUTCHINGS:

Okay.

Mr.

Chair, that's all I have on that

section if you wanted to move on to Ms.

Michael, or I can go to the next section. It's up to you.

CHAIR:

You still have five minutes

if you want to move on, or we can move it on to the Member for ….

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

Mr. Chair, if I might, with

permission of Members of the Committee. I'd just like to remind the Committee

that OCIO has seen a reduction of 29 per cent since '15-'16 in Professional

Services, and that's been due to significant reduction and reliance on

contractors. So because of the unique technical nature of some of the

applications that OCIO works on, it does make sense periodically to look at

using contractors to support that, but a 29 per cent reduction I think is

progress in the right direction.

MR. HUTCHINGS:

Just on that note; Minister,

29 per cent, is that from one year to the next or just over the past couple of

years?

MS. C. BENNETT:

That would have been a

reduction since fiscal '15-'16, just over two years.

MR. HUTCHINGS:

Okay. Thank you.

4.1.02,

Application and Information Management Services; again on the Salaries line,

what was budgeted in 2016-17, there was a shortfall of approximately $300,000

and then the budget has been readjusted again for this year, compared to last

year's estimate. I'm just wondering if I can get some explanation on that.

MS. MACDONALD:

The '16-'17 monies reflect savings related to some hard to fill vacancies. We

tried to recruit and couldn't find anybody locally.

MR. HUTCHINGS:

Okay.

MS. MACDONALD:

The increase in '17-'18 – no, it's a decrease – reflects savings of $412,900,

which is annualization of prior-year decisions, and $50,900 due to changes to

the management structure.

MR. HUTCHINGS:

Okay, thank you.

Just in

terms of some of the hard to fill positions, what would some of those technical

positions be that were challenging?

MS. MACDONALD:

We have several different layers of hard to fill positions. We have a lot of our

big systems, our MCP and our MRD system runs on a mainframe.

MR. HUTCHINGS:

Yes.

MS. MACDONALD:

That requires a certain skill level that nobody's trained in anymore. People are

ready to retire. We can't hire them, so we use consultants.

MR. HUTCHINGS:

Okay.

MS. MACDONALD:

We also have PeopleSoft skills. We can't recruit them because we don't pay the

salary those people need and they can demand in the open market. So we end up

stuck using some consultants for some of those jobs.

MR. HUTCHINGS:

Sure.

A lot

of the consultants hired, are they local, local firms, or –?

MS. MACDONALD:

Yes, the majority of them are local.

MR. HUTCHINGS:

Okay.

Have

you seen a difference in the past couple of years in terms of the availability

of those unique skills, I guess because it's old mainframes, that type of

knowledge and expertise, people are probably leaving the industry and they're

not there anymore. Is that the biggest challenge, as you said?

MS. MACDONALD:

It's a challenge for a lot

of people. The banks, there's a lot of industries that are very reliant on

mainframe skills. So it's a bit of what you'd almost call a hot skill, even

though it's an old skill. It's very difficult to recruit them. We find it in

several areas that we're having trouble.

MR. HUTCHINGS:

Okay, thank you.

Profession Services in 4.1.02; again, it's a large number but that's based to

consultants, and as you just described, it's sometimes hard to get those

services in-house, so you need that amount to basically meet your needs.

MS. MACDONALD:

The mainframe skills sit in this group, and so that would be some of the skills

we need. It's also some contractual work for some systems that we did not build.

So we're contractually linked to somebody to provide that support and it comes

out of Professional Services.

MR. HUTCHINGS:

Sure. Okay, thank you.

4.1.03,

Operations and Security; again, I'll just ask you about the salary component.

There's a small reduction there, or about $300,000. That's again related to some

restructuring, what you're doing?

MS. MACDONALD:

Yes, it's $140,000 related to annualization of prior-year decisions and $80,500

for changes to the management structure.

MR. HUTCHINGS:

Okay. And that will be

related to some of the numbers we talked about earlier, right?

MS. MACDONALD:

Yes.

MR. HUTCHINGS:

Okay, thank you.

That's

good for me, Mr. Chair.

CHAIR:

Okay, we'll go to the Member

for St. John's East – Quidi Vidi for approximately 10 minutes of questioning on

the Estimates.

MS. MICHAEL:

Thank you very much, Mr.

Chair.

I'm

sure the minister and her staff appreciate how confusing this is because we

haven't seen any of this before. So I hope I'm not going to be asking questions

that sound very simple to you, but I do want to get a handle.

So if

we can just come back to 4.1.01 again. Mr. Hutchings covered the Professional

Services, but I'm interested in the Supplies, and it seems to me that the only

way to understand 4.1.01 is to also look at 4.1.04. Is that correct or can we

understand one without the other?

MS. MACDONALD:

They're essentially, in very many ways, the same thing. It's just different

phases of projects. One of them is current dollars operating and one is capital.

MS. MICHAEL:

Okay, so that's the main

difference.

MS. MACDONALD:

Yeah.

MS. MICHAEL:

Okay.

So if

we come back then to 4.1.01, could I have an explanation of the Supplies line

because the Supplies line again, maybe it's because of projects being finished,

but it's down by $341,600 from last year's budget. And maybe it's carried over

because last year the revision was down by $402,400.

MS. C. BENNETT:

Sorry, Ms. Michael, I missed

the heading number that you said.

MS. MICHAEL:

4.1.01, I'm looking at the

Supplies line. And in the Supplies line – it's connected, I guess, to something

else that you've said earlier – $402,400 was not spent last year but this year

the estimate is $156,900 which is down also $341,600 from last year's budget. So

could I have a full explanation of that line, please?

MS. MACDONALD:

Supplies in the OCIO world is not regular supplies. These are actually software

purchases.

MS. MICHAEL:

Right.

MS. MACDONALD:

So depending on the project that we're doing and the stage it is, we may have to

buy new software and we may not.

MS. MICHAEL:

Yes.

MS. MACDONALD:

So every year we have our list of projects that we're doing and the stage it is,

we may have to buy new software and we may not.

MS. MICHAEL:

Yes.

MS. MACDONALD:

So every year we have our list of projects and we estimate what we're going to

need to purchase that year, that's why that number varies so much. So last year,

we thought we were going to need to spend $500,498, we only spent $96,000 and

this year we're estimating we're going to need to spend around $157,000.

MS. MICHAEL:

Did that have anything to do

with the changes that have been made, et cetera? I'm really trying to get a

handle on this.

MS. MACDONALD:

No, it's just really about

the projects that we're delivering now.

MS. MICHAEL:

Okay, all right. Thank you

very much.

I think

Keith covered the rest, so I'll move on. I'll just go straight to 4.1.03. Could

we have a breakdown of the salary line there, please, because it's down $220,800

from last year's budget?

Oh, did

you do that, Keith?

MR. HUTCHINGS:

Is that 4.1.03?

MS. MICHAEL:

You did 4.1. Yes, you did

that, sorry.

See

what I mean by being confused. Okay, I don't repeat what somebody else has

asked. So now I just move over to the Capital, 4.1.04. I would like to breakdown

of this salary line, please, because it's down $209,600 from last year's budget.

MS. MACDONALD:

This again is related to our

project load and the number of projects we're doing. It's a couple of numbers.

It's actually the net effect of $1.7 million reduction in annualizing prior-year

decisions and $1.5 million increase for the projects.

MS. MICHAEL:

Yes.

MS. MACDONALD:

So again this would be money that we were due to spend last year and it's now

moved forward to this fiscal.

MS. MICHAEL:

Okay, thank you very much.

there are no changes in personnel or anything, it's just –?

MS. MACDONALD:

No.

MS. MICHAEL:

Yeah, okay. Thank you very

much.

MS. C. BENNETT:

Ms. Michael, one of the

challenges with OCIO is when they're working on a project, depending on what

phase they're in, the dollars have to be properly allocated to either a Capital

expense or a Current expense and when the budgets are done in the beginning of

the year and the project timeline changes, sometimes the allocation of those

dollars, whether it's Current or Capital, has to change. And that's what you see

oftentimes in these line items is that dollars will shift because they are

moving from one phase, either a Capital or Current, because the project timeline

shifted in the year.

MS. MICHAEL:

Right. Thank you.

Would

that then be the explanation for the Supplies line?

MS. MACDONALD:

Yes, it is. We have a lot of expenditures expected this year for Apprenticeship

Harmonization; it's a project we're running across the Atlantic region and we

have to spend money in this year, so that's why we have moved money into this.

MS. MICHAEL:

Okay. And did that start

last year because last year you spent almost $652,000 more than had been

budgeted? So that began –

MS. MACDONALD:

That's another project that started up that we didn't think was going to start

up then, so it's always a movement of the funds back and forth.

MS. MICHAEL:

Right. Okay, thank you very

much.

Now,

under Professional Services, last year it was just slightly over $4 million that

wasn't expended and then this year it's almost $2.5 million down from last

year's budget. So could we have an explanation there?

MS. MACDONALD:

Again, this is the ISM project, primarily.

MS. MICHAEL:

Okay.

MS. MACDONALD:

This is the large project that we delayed and we moved it out – we didn't spend

as much last year but we have to spend to complete the project this year.

MS. MICHAEL:

Okay, but it's still less

than – well, I guess maybe it has to be with the phase that you're in.

MS. MACDONALD:

Yes.

MS. MICHAEL:

Okay. Thank you very much.

Under

Property, Furnishings and Equipment, I presume that a major expenditure there.

It must have something to do with ISM too, does it?

MS. MACDONALD:

Yes, $400,000 of that is directly related to the ISM project. The other $900,000

relates to an upgrade that we have to do to really – we have a major server

refresh. We have so many new projects that are coming on that we're running out

of horsepower. So we have to do an upgrade this year to enable the systems to

run optimally.

MS. MICHAEL:

Right. Thank you very much.

Under

Operations and Security, 4.1.05, the Supplies line was $138,000. Last year, you

spent almost $120,000 more than budgeted and this year up another $100,000. I'm

sorry, not another, up $100,000 from last year's budget.

MS. MACDONALD:

This activity is to buy hardware and software. This is our infrastructure

backend; our technology. Some years we need to buy more software than hardware

and other years we buy more hardware than software. That's what the two buckets

really are all about. So we look at our technology investment plan and say: What

do we have to upgrade? And that's where we allocate the funding.

MS. MICHAEL:

Okay, thank you.

Under

Property, Furnishing and Equipment, if I could have an explanation of that line,

please.

MS. MACDONALD:

That relates to the hardware that we have to purchase similar to the software

which is the line item above.

MS. MICHAEL:

Okay.

I think

that's all the questions I have, Mr. Chair.

CHAIR:

Okay.

Mr.

Hutchings.

MR. HUTCHINGS:

Minister, it's a huge

system, obviously, the province has in terms of data. Who provides backup or is

there a data warehouse service that is contracted? How does that work?

MS. MACDONALD:

We have backup sites away from – we're situated in 40 Higgins Line and so we

have other alternate sites.

MR. HUTCHINGS:

Is that the province's site

or do you lease from somebody else?

MS. MACDONALD:

We're using province sites.

MR. HUTCHINGS:

Okay.

So you

don't lease any space from anybody else for that purpose?

MS. MACDONALD:

We do not.

MR. HUTCHINGS:

Okay.

I'm

good.

CHAIR:

Okay.

Call

the headings.

CLERK:

4.1.01 to 4.1.05 inclusive.

CHAIR:

Shall 4.1.01 to 4.1.05

inclusive carry?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 4.1.01 through 4.1.05 carried.

CLERK:

The totals.

CHAIR:

Shall the total carry?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, Office of the Chief Information Officer, total heads, carried.

CHAIR:

Okay, that concludes the

Estimates for Office of the Chief Information Officer.

MS. C. BENNETT:

Mr. Chair, as minister, if I

might, I just want to take a minute to thank the officials who prepared for the

Estimates tonight on behalf of the Committee. I also wanted to recognize the

work that this team does in OCIO is some of the more challenging work in the

context of they must serve many masters and many departments and many entities

who they have to serve in addition to those of us who are elected in the House

of Assembly to provide answers to the questions.

They

are responsible for a tremendous amount of things that I think many of us wish

we didn't have to understand but we need to understand. So I do want to say

thank you to them for all their hard work. There's been a tremendous amount of

effort put in this year, particularly on the ISM project. They've done some

incredible work in getting that project back on budget and also in a timeline

that will deliver it to the front-line individuals who need to use it.

Thank

you.

MR. HUTCHINGS:

Thank you.

Recess

CHAIR:

Okay.

CLERK:

Subheads 1.1.01 to 2.2.02.

CHAIR:

Shall subheads 1.1.01 to

2.2.02 carry?

We'll

go with opening remarks by the minister upon introduction of her staff and then

we'll go to Ms. Michael to lead off on the response.

Minister.

MS. C. BENNETT:

Okay, I'll turn it over to

Donna Brewer, the Deputy Minister of Finance, to introduce the team.

MS. BREWER:

Donna Brewer, Deputy Minister of Finance.

With me

is Maureen McCarthy. Do you want to tell them your new title?

MS. MCCARTHY:

Director of Pensions and Debt Management.

MS. BREWER:

Behind us we have Wanda Trickett, our Controller, and Tansy Mundon is the

Director of Communications.

CHAIR:

Okay.

MS. C. BENNETT:

With that, I'll make a

couple of opening comments with the permission of the Committee.

The

Consolidated Fund Services or CFS gross expenditures of just over $1 billion

represents the cost of servicing and managing the direct debt of the province

and the funding of the pension plans for employees of government and its

agencies.

CFS

expenditures are primarily statutory; expenditures of $524 million related to

debt servicing are provided under the authority of the

Financial Administration Act , while

expenditures of $437 million relate to employee retirement arrangements and are

provided for the most part under the

Pensions Funding Act .

Three

subdivisions of expenditures totalling just over $48 million are non-statutory

and have to be voted. These include: 1.3.01 relating to payments into sinking

funds established in 1993 for the lease purchase of health facilities in Burgeo,

Port Saunders and St. Lawrence; 1.4.01 relating to collections of loans and

guarantees; and 2.1.02 for special retirement salary and employer-related

payments as approved by Treasury Board.

Related

revenues, the Current account plus the Capital account, is estimated at about

$23 million in 2017-18. Major components of this are interest revenues of $14.4

million from the investment of cash balances and $7.1 million from Newfoundland

Hydro guarantee fees.

New

borrowings of $400 million are planned during fiscal '17-'18 and estimated

provincial borrowing rates as of March 31, 2017 are for 91-day Treasury bills,

0.6 per cent; five-year bonds, 1.87 per cent; 10-year bonds, 2.8 per cent; and

30-year bonds, 3.7 per cent.

Budgeted exchange rates for the US dollar in '17-'18 is at 1.3109 and a 0.01

change impacts debt servicing cost by approximately $1 million.

When we

took office in 2016-17, the borrowing requirements had increased from a budget

estimate of $2 billion to $2.4 billion, and only $400 million had been borrowed

through new bond issuances. Government of the day had to rely on a special

T-bill cash management program, and the extent of short-term borrowing of this

nature peaked on February 26, 2016, at $2.6 billion outstanding. Cash management

bills were fully repaid as of August 17, 2016. For 2017-18, we are planning for

our normal weekly $60 million T-bill program, bringing the maximum amount

outstanding to $780 million.

Since

December of 2015, the province has completed 11 issues in the Canada domestic

market totalling $4.9 billion. The details of these issues are on our investor

relations website on the Department of Finance website.

The

province has been working hard to execute its borrowing strategy. We've

partnered with Nalcor to get our collective story out to those who trade our

bonds and investors who buy the bonds. We launched an investor relations website

and conducted several investor relations road trips in Canada and in New York

that have been well-received.

I meet,

as the Minister of Finance, on a periodic basis with bank economists, our

banking syndicate and bond-rating agencies to ensure they have the facts as they

communicate our story to their clients.

continue to work on our first non-Canadian bond issue since 1993. We are working

hard to improve the timelines of the release of the financial statements, and we

have committed through legislation to having public accounts released before

November 1 each year.

Last

week, I was pleased to advise that Newfoundland and Labrador has been

acknowledged for improvements in a C.D. Howe financial report card that assesses

the quality of various government financial information and their success or

failure in achieving budgetary goals. The Government of Newfoundland and

Labrador scored a B grade in 2017 – up from an E grade in 2016 and a D grade in

reliability of government's financial reports across the country.

C.D.

Howe stated in the report that Newfoundland and Labrador has improved markedly,

and particularly with the quality and timeliness of its budget and its public

accounts documents. The report assesses whether individuals can get valid,

timely and readily understood figures for total revenue and spending in the

budget each government presents at the beginning of the year, as well as in

Public Accounts at the end of the fiscal year.

Mr.

Chair, these are just a few highlights of the activities impacting the head of

expenditure of Consolidated Fund Services.

With

that, I'll turn it over to the Committee for questions.

CHAIR:

Okay.

The

Member for St. John's East – Quidi Vidi.

MS. MICHAEL:

Thank you very much, Mr.

Chair.

I'm

just going to proceed with line items at the moment. I just want to get things

straight here.

If we

could look at 1.2.01, Executive Support, we had a jump last year – excuse me.

MR. MORGAN:

This is Finance. We're doing Consolidated Services and we have no questions.

MS. C. BENNETT:

That's okay.

MS. MICHAEL:

I have no questions, too.

MS. C. BENNETT:

That's okay.

MR. MORGAN:

It's been a long day.

MS. MICHAEL:

I have no questions.

CHAIR:

Okay.

MR. HUTCHINGS:

Thank you.

Minister, 1.1.01, Temporary Borrowings; if I remember correctly there was a line

of credit set at $200 million. Is that still at $200 million?

MS. C. BENNETT:

Yes.

MR. HUTCHINGS:

Okay.

I'm not

sure, the interest rate for short-term borrowing on the line of credit, what

would that be? Did you mention it already here?

MS. C. BENNETT:

We'd have to check that and

get back to you. I don't have that information here, but we can get it and let

you know.

MR. HUTCHINGS:

Okay. I think last year it

was prime plus one-half cent. I think you mentioned in the discussion we had.

So we

look at Temporary Borrowings, how much was the credit line used last year?

MS. BREWER:

There was very little. We try to manage the cash balances as best we can to

avoid going into overdraft. The overdraft is there in the banking agreement just

as added protection.

MR. HUTCHINGS:

Okay. In terms of looking at this year in terms of the line of credit, Minister,

as a need basis, I guess you don't really know as you go forward.

MS. C. BENNETT:

A line of credit is

typically designed for when you have cash flow peaks and valleys to smooth it

out. Certainly, avoiding using the line of credit means you're avoiding

incurring extra costs by not managing your cash.

MR. HUTCHINGS:

Yes.

MS. C. BENNETT:

And that's, I think, what

the deputy just referred to is that the officials are working very hard to

manage the cash on hand to make sure we have the right amount and that we

restrict and reduce and eliminate the use of a line of credit, but you need it

there when you have a rolling payroll, for example, the size that we have in the

provincial government. It's prudent to have a line of credit, but not prudent to

use it.

MR. HUTCHINGS:

Okay, thank you.

1.1.02,

Treasury Bills, the current interest rate on the T-bill program now, do you have

that? I think it was 0.67 per cent last year I think we discussed.

MS. C. BENNETT:

Yeah, as of the end of March

2017, T-bills were 0.6 per cent.

MR. HUTCHINGS:

Okay.

I think

the program last year was $780 million. What's the current size and balance of

the program?

MS. BREWER:

We're planning for the same level of borrowing. It's a weekly auction of $60

million a week.

MR. HUTCHINGS:

Okay, that's what you

mentioned earlier.

MS. BREWER:

So the maximum outstanding would be $780 million.

MR. HUTCHINGS:

Okay, thank you.

1.1.05,

Temporary Investments, I think this shows money that the province generates in

interest earnings. This year's estimate is $14.4 million. I think it was $3

million that was generated last year. So how come it's $14.4 million?

MS. BREWER:

You may recall that last year we had a borrowing program of $3.4 million and we

actually borrowed $2.95 million. So we're actually ahead. We actually have more

cash in the bank available to us than was available in previous years.

MR. HUTCHINGS:

What did you say it was $3.4

million?

MS. BREWER:

$3.4 million was the target.

MR. HUTCHINGS:

Okay.

MS. BREWER:

We actually borrowed $2.925 million, but the actual requirements ended up to be

less than that. We had completed our borrowing program in December, so we pretty

much pre-borrowed, in a sense, for the following fiscal year.

MR. HUTCHINGS:

Okay, thank you.

1.1.06,

Recoveries on Loans and Advances; last year I think there was some discussion,

and we talked about this, there was – contained the interest that the province

was receiving for student loans. I think the Student Loan Corp. was ending; the

final payments I think would be in '16-'17. Is that correct?

MS. BREWER:

That's correct, yes.

MR. HUTCHINGS:

Okay.

1.2.01,

Recoveries on Loans, Advances and Investments, that's in Capital. So that was

the same thing, it was related to the Student Loan Corp.? Is there any update on

that?

MS. BREWER:

It has been fully repaid.

MR. HUTCHINGS:

Fully?

MS. BREWER:

Yes.

MR. HUTCHINGS:

Okay, thank you.

1.4.01,

Guarantee Fees – N on-Statutory,

there's a thousand dollars required for '16-'17. What was that about?

MS. BREWER:

That was just a placeholder.

MR. HUTCHINGS:

Okay.

MS. BREWER:

At the time the Estimates were cut off for projected revised, they just left a

small balance there.

MR. HUTCHINGS:

Okay.

Who

were the organizations that were charged for guarantees in '16-'17, and what

would the type of organizations be?

MS. BREWER:

Newfoundland Hydro was the largest, and the Fogo Island Cooperative Society.

MR. HUTCHINGS:

Okay. So how much would be

charged to each?

MS. BREWER:

For '17-'18 the estimate for Fogo Island Cooperative is $15,000, and for

Newfoundland Hydro the estimate is $7.1 million.

MR. HUTCHINGS:

In 1.4.01, Guarantee Fees,

when you look at the revenue line there's a significant increase there. I'm just

wondering if you could explain that.

MS. BREWER:

The increase relates to Newfoundland Hydro. The budget was $4.5 million and

collected $4.125 million, and they're projecting $7.1 million for '17-'18.

There's more borrowing planned, more borrowing required for Newfoundland and

Labrador in '17-'18.

MR. HUTCHINGS:

Okay.

1.4.02,

Issues Under Guarantee, what would they represent, the Issues Under Guarantee

we're talking about here?

MS. BREWER:

Pretty much there, again, that's a placeholder. When we issue loan guarantees,

the Comptroller General sets it up as a contingent liability. It's only when

those guarantees are called then the payment would flow through here.

MR. HUTCHINGS:

So you just keep that open

for when that actually occurs, obviously.

MS. BREWER:

Yes. It's statutory; it's not an area that has to be voted.

MR. HUTCHINGS:

Okay. Thank you.

We'll

move to 1.5.01, Debt Management Expenses – Statutory. I think you mentioned just

earlier, Minister, last year in Estimates we talked a lot about debt expenses

related to the US market. You mentioned earlier, I think, just about getting

close to – I don't think you're into the US markets now, but can you give us an

update on that?

MS. C. BENNETT:

Sure.

The

work we did with investor relations was to ascertain whether or not there would

be investors outside of the domestic market that would be interested. We also

did a significant amount of research on a variety of options that would allow us

to enter the US market, but also potentially look at other markets.

MR. HUTCHINGS:

Yeah.

MS. C. BENNETT:

Whether it was European

markets, et cetera.

We also

did work around discussing making sure that we can mitigate the FX risk. As part

of the work to borrow outside you want to mitigate any exchange risk.

MR. HUTCHINGS:

Uh-huh.

MS. C. BENNETT:

So that was one of the

reasons we wanted to, yes, go outside the domestic market, but also want to do

it in a responsible way that we don't end up in a situation where we have

unintended consequences. The officials in the department are continuing to

assess options for us.

We feel

strongly that moving outside of the domestic market will help us lower the rates

on our bonds going forward. And when we have the right opportunity and we know

we can do it at the least amount of cost possible, with the best interest rate

we can, that's when we'll do it.

MR. HUTCHINGS:

Okay. So you foresee that in

the coming year or …?

MS. C. BENNETT:

I would anticipate that in

this fiscal year; however, when we undertook the analysis, we certainly were

planning, based on the borrowing requirements of last year's budget. Through the

work of government last year and certainly the budget for this year, we've been

able to lower the borrowing needs.

MR. HUTCHINGS:

Uh-huh.

MS. C. BENNETT:

We will have to continue to

work to make sure that when we do it, we're doing it, as I said earlier, in the

best interests of the people of the province and the Treasury, but we would hope

to do it this year.

CHAIR:

Okay, we'll go back to the

Member for St. John's East – Quidi Vidi.

MS. MICHAEL:

I have no questions in this

section.

CHAIR:

Okay, do you have any

questions on CFS?

MS. MICHAEL:

No, no questions on CFS.

CHAIR:

No, okay.

We'll

go back to the Member for Ferryland.

MR. HUTCHINGS:

Thank you.

1.5.01,

there was $19 million spent there. There was none related to US borrowing,

right, because we're not there yet. This number is going to drop to $3.5 million

this year. Can you just give us some understanding of that?

MS. BREWER:

Okay, a number of the issues that were issued during 2016-17 were actually

issued at a discount. That accounts for a significant portion of the $19

million. When we budget for '17-'18 we don't know necessarily if we're going to

be issuing at a discount or a premium at a par. But this particular one, there

was one done late in the fiscal year that was at a significant discount. The

other part of the $19 million would include any of the commissions that we have

to pay the people who underwrite our bonds.

MR. HUTCHINGS:

Okay.

What

percentage would that underwriting be? Would that be a percentage or …?

MS. BREWER:

It varies depending on whether you're the lead or a co-lead or a manager, and it

varies by the size of the issue.

MR. HUTCHINGS:

Okay. Thank you.

The

1.5.02, when you look at these line items here, a number of these Operating

Accounts are decreasing this year. I'm just wondering if you can give some

insight into that.

MS. BREWER:

This is the area where there was anticipated to be significant expenses incurred

relating to the US issuance –

MR. HUTCHINGS:

Okay.

MS. BREWER:

– that as the minister

indicated, we continue to watch that market. We're being opportunistic; we'll go

when the time is right and if the time is right.

MR. HUTCHINGS:

Yeah.

MS. BREWER:

Sorry, I made a mistake

there, Mr. Hutchings. This is the area where the banking agency commission fees

are paid under Professional Services.

MR. HUTCHINGS:

Oh, 1.5.02?

MS. BREWER:

1.5.02, yeah.

MR. HUTCHINGS:

Okay.

So the

fees and services are expected to be far less this …?

MS. BREWER:

Well, the borrowing program is far less, yeah.

MR. HUTCHINGS:

With the borrowing. Okay,

sure.

MS. C. BENNETT:

Just for the Committee, we

borrowed last fiscal 10 times the amount of money we're going to borrow this

fiscal.

MR. HUTCHINGS:

Yes, your servicing fees,

obviously, are –

MS. C. BENNETT:

Right.

MR. HUTCHINGS:

– reflective of that.

Okay.

Thank you.

Yeah,

the other questions I had I think we covered them moving through, so that's good

for me.

CHAIR:

Okay.

I call

for the head.

CLERK:

1.1.01 to 2.2.02.

CHAIR:

Shall subheads 1.1.01 to

2.2.02 carry?

All in

favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, subheads 1.1.01 through 2.2.02 carried.

CLERK:

The total.

CHAIR:

Shall the total carry?

All in

favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Carried.

motion, Consolidated Fund Services, total heads, carried.

CHAIR:

Okay, moving right along.

Minister, do you require time to switch out?

MS. C. BENNETT:

I just have to swap one

person out and we'll be good to go.

CHAIR:

Okay.

CLERK:

Do you want me to call it

again?

CHAIR:

No, we've already called it.

Okay,

Minister, we'll go to your department and opening remarks.

MS. C. BENNETT:

Thank you, Mr. Chair.

I'll

turn it over to Donna Brewer, the deputy, so she can introduce the officials

that are with us.

MS. BREWER:

Donna Brewer, Deputy Minister of Finance.

To my

left, Wanda Trickett.

MS. TRICKETT:

Wanda Trickett, Departmental Comptroller.

MS. MUNDON:

Tansy Mundon, Director of Communications.

MS. MILLER:

Ann Marie Miller, Comptroller General of Finance.

MR. MARTIN:

Craig Martin, Assistant Deputy Minister of Finance.

CHAIR:

Okay, carry on.

MS. C. BENNETT:

Thanks.

So with

the Committee's indulgence a couple of opening comments. The Department of

Finance is mandated to provide strategic leadership across government in the

development of fiscal, financial, statistical and economic policy. These

responsibilities are primarily achieved through the provision of timely analysis

and advice to government departments and agencies, Cabinet and Committees of

Cabinet, particularly Treasury Board for which I serve as the president.

The

department is also mandated to oversee the management and control of the

province's finances to ensure appropriate use of public funds and to provide

centralized and corporate shared services to other government departments in the

areas of such things as economic and project-specific analysis, statistical

services, internal audit, centralization of select accounts receivable and

collections, and the administration of such things as invoice payment processing

and support and maintenance of government's financial management systems.

Additionally, each year the department spends a considerable amount of time and

effort to prepare government's public accounts, the consolidated budget, the

supplementary cash estimates book, the Economy, the fall fiscal update and the

economic review. This mandate is delivered through the following lines of

business. We have revenue and expenditure policy and planning, federal fiscal

relations, Treasury management, economic and project analysis, statistical

research analysis and data development, comptrollership responsibilities,

supports to Cabinet and Committees of Cabinet, as well as tax administration.

The

total current and capital account gross expenditures for the Department of

Finance are about $118 million. This includes the salary and operating costs of

the Department of Finance, as well as blocked funds held on behalf of other

government departments. These blocks total $94 million, and are under subhead

1.3.01 for the payment of government's share of employee benefits for employees

and retirees.

Funding

is also included for compensation and contract adjustments that may be approved

from time to time by Treasury Board, and 2.1.05 and 2.1.06 for financial

assistance to support Corner Brook Pulp and Paper and various government

initiatives such as collective bargaining, Muskrat Falls oversight,

implementation of The Way Forward

actions and pension reform.

The

budget of the Department of Finance therefore is $23.6 million, down from

'16-'17 restated budget of $26.1 million. This is a $2.5 million reduction and

it represents a 9.5 per cent drop. This was achieved through a combination of

zero-based approach to budgeting and changes to the executive and management

structure.

I can

highlight some of the areas where we have identified savings through zero based.

We will reduce travel wherever possible using conference and video calls when

these modes are appropriate. We have limited travel to conferences, as well as

the number of officials attending per conference. I will continue my practice of

scheduling investor relations meetings around other work related trips such as

federal-provincial-territorial meetings.

We have

reviewed and, where feasible, removed phone lines. We have reviewed and reduced

printing requirements, relying on website communications wherever possible. We

have consolidated within one administrative area the budget for ergonomic

assessments and purchases of furnishings and equipment. We have assigned a

per-head budget for general office supplies.

continue to work with the Department of Transportation and Works to reduce our

lease square footprint through better allocation of space within Confederation

Building and Mews Place. The department has also continued its work with

Deloitte on the indirect taxation review. This work was completed over three

phases and identified almost $23 million in tax recoveries for government,

Newfoundland and Labrador Housing and government's group insurance plan.

I'll

now ask the Deputy Minister, Donna Brewer, to briefly outline the changes to the

Department of Finance structure and then, Mr. Chair, we'll be pleased to answer

questions from the Committee.

MS. BREWER:

The department has consolidated from four down to three branches resulting in

the reduction of one assistant deputy minister and the one ADM secretary. The

former Economic and Statistics Branch and the Fiscal and Economic Policy Branch

were combined into the fiscal and economic branch. This allows the ADM there,

Craig Martin, to take advantage of similar skill sets to create some

redundancies and to reassign resources to critical areas such as revenue

modelling and economic forecasting.

The

division of Debt Management was moved to the Financial Planning and Benefits

Administration Branch, while Tax Administration was transferred to the Office of

the Comptroller General.

Synergies can be achieved, we feel, by combining the functions of accounts

receivable and collections. That provides a first step in moving forward with

The Way Forward action to centralize

collections.

reflected in the Estimates, the Financial Planning and Benefits Administration

Branch includes the Treasury Board and budgeting operations, the general

insurance and financial analysis and Pensions and Debt Management. There was a

reduction in one director position through the consolidation of the Pensions and

Debt Management Divisions. There were also reductions at the manager level

within Debt Management due to vacancies and combinations of duties among some

managers.

number of pension staff have transitioned to Provident 10 – that's the

corporation that now oversees the administration of the Public Service Pension

Plan – while a few others will be moving to the Teachers' Pension Plan

Corporation.

The new

branch, the Fiscal and Economic Branch, now has three directors versus the

previous two branches had a combined five directors. Next year's Estimates, the

subheads 2.2.01 Tax Policy, 2.2.02 Fiscal Policy, 2.2.03 Project Analysis, and

2.2.04 Economics and Statistics, will be consolidated.

The

Office of the Comptroller General had a reduction of one director and was able

to reduce various management analyst positions though the reassignment of work

to existing directors and managers/analysts.

We went

through a review and we feel right now all the programs currently delivered by

the department are core to its mandate, and for the most part are required under

provincial legislation, such as the

Financial Administration Act , the

Statistics Agency Act and the Revenue

Administration Act .

There

are various initiatives currently underway across government that would have

been outlined in The Way Forward

document that once developed may have impacts on the department structure going

forward, such as the shared services review, the reduction in agencies, boards

and commissions, and more effective business financing.

With

that, I'll turn it back to the Committee.

MS. C. BENNETT:

Mr. Chair, we'll turn it

over for questions.

CHAIR:

The hon. the Member for St.

John's East – Quidi Vidi.

MS. MICHAEL:

Thank you very much, Mr.

Chair.

Okay,

looking at line items, then, in the Department of Finance, I will go to 1.1.01,

it's not a lot, but the Estimates for this year is $42,900 lower than last year.

So I presume that may be a position, or not?

MS. C. BENNETT:

No.

I'm

sorry, Ms. Michael, can you –

MS. MICHAEL:

1.1.01, the Salaries line –

MS. C. BENNETT:

Yes,

MS. MICHAEL:

– this year's estimate is $42,900 less than last year's budget.

MS. C. BENNETT:

Right. In '16-'17 there was

a decrease because the executive assistant wasn't at the top of the salary scale

and there was no temporary assistance required and for '17-'18 there's a

reduction. Requirements are less as per the zero-based budgeting in the

departmental submission.

MS. MICHAEL:

Okay. Thank you very much.

1.2.01,

here the budget last year was $1,276,600 and in actual fact the revision was

$629,800 more than the budget. If I could have an explanation of that first,

please.

MS. C. BENNETT:

Sure.

That

increase was due to termination costs for retiring employees and the reduction

of an executive position. I think the deputy minister mentioned there was a

reduction in the ADM.

MS. MICHAEL:

That's what happened here?

MS. C. BENNETT:

And that would have been

reflected here.

MS. MICHAEL:

Okay.

Would

that have included the ADM secretary there as well?

MS. BREWER:

The ADM secretary actually

ended up to be a retirement.

MS. MICHAEL:

Oh, okay.

MS. BREWER:

There was at least one other

retirement there as well.

MS. MICHAEL:

But the ADM was not a

retirement?

MS. BREWER:

The ADM, yeah, was an

abolishment there.

MS. MICHAEL:

Okay.

Is that

person still in the government system or …?

MS. BREWER:

He is now on pensioner

payroll.

MS. MICHAEL:

Okay.

MS. BREWER:

But he is providing some

continuity free of charge to the government – to the department.

MS. MICHAEL:

Okay. Thank you.

MS. C. BENNETT:

If I might, in fairness to

the individual, he's a long-serving employee. Very passionate about the work he

did and was very much wanting to be able to support residents of the province.

I'm really pleased with the leadership in the department to figure out a way to

make that happen.

MS. MICHAEL:

Okay. Thank you very much.

Then,

Minister, when we look at the Estimate for this year, it is $110,700 less than

the Estimate last year.

MS. C. BENNETT:

That would have been a

reduction as related to – requirements are less so that as per the zero-based

budgeting, the departmental submission was less.

MS. MICHAEL:

Okay. And of course we have

one less ADM as well.

MS. C. BENNETT:

Yes.

MS. MICHAEL:

Okay. Thank you.

Going

to 1.2.02, nothing major but under the Employee Benefits, it was $18,600 more

spent than was budgeted.

MS. C. BENNETT:

That increase relates to

additional workers' compensation costs as injury-on-duty costs increased in the

fiscal year. November 2016 claim had prior period out-of-province treatments

that were not approved but were awarded upon appeal. This one month was $19,500.

MS. MICHAEL:

Okay. Thank you.

Under

Property, Furnishings and Equipment is there something in particular that you

know you're going to purchase, $28,100? There was nothing budgeted last year.

MS. C. BENNETT:

Yeah, this would have been

the area in the

preamble where I referenced that we've consolidated things for

the department. So this is an increase that the zero-based budgeting

departmental submission centralized all Property, Furnishings and Equipment

requirements for 2017-18 in this account.

MS. MICHAEL:

Yes.

MS. C. BENNETT:

So you'll see it all in this

one.

MS. MICHAEL:

Okay. Thank you very much.

1.3.01,

here the budget was $8,980,700 and was underspent by $7,169,200; an explanation

for that.

MS. C. BENNETT:

Sorry, can I just confirm

that the head was 1.3.01?

MS. MICHAEL:

1.3.01, yes.

MS. C. BENNETT:

And your question is around

the Salaries?

MS. MICHAEL:

Around the Salaries, yes.

MS. C. BENNETT:

Right.

This

particular activity is government-wide funding. So this would be government's

share of Employee Benefits for current and retired government employees such as

the Canadian pension plan, Employment Insurance, Group Medical and Group Life,

Health and Post Secondary Education Tax and anticipated compensation and

contract adjustments for contracts that are negotiated or in process of being

negotiated.

The

decrease you would have seen in '16-'17; expenditures would allow for salary

adjustments throughout government. If any salary adjustment is required in the

year, the funding is transferred to the applicable department and the

expenditure will be reflected in the department's applicable activity.

Therefore, no expenditures are ever recorded under this particular activity in

the Department of Finance, it always looks this way. I'll ask the deputy to add

any other comments.

MS. BREWER:

The minister is correct with

one exception; there's an amount there of $1,811,500. That was a payment that

was made in relation to a settlement that is in process relating to the closure

of the transportation depots many years ago. As a result of that, that was a

payment that had to be made.

Wanda,

was it for EI overpayments or something? That payment was the only one that was

actually – the cheque was cut and was actually flowed through there. But the

minister is correct, the balance of that, like any funding that was there for

the Job Evaluation System, the JES funding, when that was determined that would

have been transferred to the applicable department. I believe there was some

money there in budget '16-'17 where they made to minimum wage changes. Those

amounts would have gone to the applicable departments.

MS. MICHAEL:

I'm just curious as to why

the budget would have been – what would have been the basis for having almost $9

million for the budget?

MS. BREWER:

The director of Budgeting or

the ADM for the budget would have had a discussion primarily with the Human

Resource Secretariat. We knew a possibility of minimum wage increases, we knew

the Job Evaluation System was being implemented and Labrador benefits contracts

were under negotiations. She would check with him and based on that, there would

be blocks set aside.

MS. MICHAEL:

And yet slightly over $7

million wasn't spent.

MS. BREWER:

Not necessarily, Ms.

Michael, that it wasn't spent; it wasn't spent in Finance. The way these votes

are set up, if you look in the Supply bill, it allows for funds to be

transferred to the applicable department, once the amount is known and the

amount is approved then by Treasury Board to be transferred.

MS. C. BENNETT:

These amounts wouldn't have

been expensed, as the deputy said, inside the Department of Finance, but they

would be expensed in other departments when they were transferred out from us

into their departments at their request. That happens on a normal basis.

MS. MICHAEL:

Right. I guess I'm not a

budget person, a finance person, but it shows up as budgeted what may be

transferred out. But when the transfer out happens, it doesn't show up as having

been transferred out.

MS. C. BENNETT:

Yeah, it does –

MS. MICHAEL:

That's how I read it when I

look at it.

MS. C. BENNETT:

And that's exactly how I

read it as well, until officials were able to demonstrate that those funds would

have been transferred to other departments. So other departments that would have

come in to Estimates would have seen increases in their salary lines related to

last year's spending.

MS. MICHAEL:

Right.

MS. C. BENNETT:

And it will be picked up in

Public Accounts, as well, as expenses incurred by the departments. I don't know

if the Comptroller General wants to add any texture to this.

MS. MICHAEL:

No, I'm –

MS. C. BENNETT:

Have I missed anything, Anne

Marie?

MS. MILLER:

No, that's correct. There is

an allowance. As long as the Supply bill contemplates the transfers in the

Supply bill that you actually show that you're going to transfer out to other

departments, that's allowable under the

Financial Administration Act .

MS. MICHAEL:

Okay.

MS. MILLER:

At the beginning of the

year, you don't know where the expenditure is going to be incurred, but for

Public Accounts purposes, you're actually showing the funding where it's

expensed which is the way it should be.

MS. MICHAEL:

Right, understood.

On what

would you have based, then, the decision for this year to estimate $5.8 million?

MS. C. BENNETT:

There is a breakdown that

Donna referenced that the budgeting team would have gathered information from

the HR team. It would have related to things like the continuation of the

Transportation and Works depot settlement.

There

are some monies there related to salaries around financial capacity that we

budgeted for, monies related to the Labrador Benefits Agreement that's in place,

the RCMP collective agreement and additional funding related to any collective

bargaining pressures from existing agreements.

MS. MICHAEL:

Okay.

MS. C. BENNETT:

That's what's in that salary

block.

MS. MICHAEL:

Okay. Thank you very much.

I see

my time is up, yes.

CHAIR:

Okay, we'll go back to Mr.

Hutchings.

MR. HUTCHINGS:

Thank you.

Minister, I just had a couple of general questions. I'm back to 1.2.01,

Executive Support. Treasury Board is mentioned there.

In our

briefing with your officials last week, there was discussion about the

zero-based budgeting process, building from the bottom up and transfer of funds

from, I guess, within departments and across department lines. There was some

discussion about the fact that you've – I don't know if you made new rules or

been very cognizant of future transfer of funds with your zero-based budgeting.

It can never be definitive, but a good shot based on past experiences of what

you expect you're going to have to spend.

question is: Is there a change to the ability to transfer funds within

departments or across departments and is there is any change reflective of that

in Treasury Board?

MS. C. BENNETT:

Treasury Board ministers

have provided feedback to the departments and strongly advise that if they come

in to Treasury Board looking for approval for transferring funds, that Treasury

Board will be asking: Why does that have to happen, based on the fact that

zero-based budgeting was supposed to be done and their budgets were built up.

So the

practice of transferring funds inside a department at the discretion of either

officials or a minister is one that we are working hard to provide additional

oversight to because the spending really must be reflective of the priorities of

government. While, undoubtedly, ministers and deputies would have great insight

into their departments and certainly can provide leadership, we feel strongly

that the decisions must be made collectively so that if there are savings in one

particular area of government, that may not necessarily be spent in that

department, they may have to be used in another department in next year's

budget.

Certainly, we're not expecting a transfer interdepartmentally this year, that

wouldn't be appropriate, nor is it allowed. But we certainly are working very

hard to make sure that ministers and deputies are making sure that their budgets

they presented this year are based on what they actually need. If they do have

some reason why they don't spend all their allocated money that's budgeted, that

they don't feel that it's a blank – pardon the choice of language, but a blank

cheque to make decisions inside their own department, that they have to have

some additional oversight and Treasury Board can support them in that.

MR. HUTCHINGS:

Okay. Thank you.

You

indicated in your opening remarks, Minister, about $23 million tax recovery. Can

you just give me some details on that, please?

MS. C. BENNETT:

Yeah. For the second year in

a row – second year, I think it is?

OFFICIAL:

Third?

MS. C. BENNETT:

Second or third, Deloitte

has been permitted to review government's expenditures and look for reclaims on

HST remittances that government shouldn't be spending. Over the last number of

years, that's proven to provide some much-needed funds that taxpayers of the

province should not be paying.

I'll

turn it over to the Comptroller General to add any additional texture.

MS. MILLER:

Yeah, there was roughly, in

the three phases, recoveries of about $23 million. Deloitte would claim a fee

associated with those total recoveries. So we roughly paid about $3.2 million

for the $23 million in recoveries.

MR. HUTCHINGS:

That would be remittances on

someone or companies in the province for the HST rebate and it was determined

that they weren't actually entitled to it?

MS. C. BENNETT:

This would be monies that

Gov.NL has paid in response to an invoice and we haven't claimed our portion of

HST. So as –

MR. HUTCHINGS:

(Inaudible) employer.

MS. C. BENNETT:

– our tax exemption.

MR. HUTCHINGS:

Yeah, okay.

MS. C. BENNETT:

There's no payment to

Deloitte in advance. They only get their finder's fee, so to speak, when they

actually find a savings that we can actually put in the bank. As an entity that

pays bills, we are entitled to certain credits and we haven't been claiming

those. Government as a whole hasn't been claiming those. Deloitte is working

through that to make sure we capture every single penny so we don't pay money

that we shouldn't pay.

MR. HUTCHINGS:

Is there a statute of

limitations on that, how far back you can go? I'm just curious if it hadn't been

done.

Deloitte would look at what? Look at the past 24 months or 12 months or

something? Is that how they do it?

MS. MILLER:

Yeah.

MR. HUTCHINGS:

Yeah.

MS. MILLER:

Yes, they've gone back roughly each period that they do. It's a two- to

three-year time frame of review they would go back.

MR. HUTCHINGS:

Okay.

well, Minister, you referenced in your commentary the lease per square foot.

You're looking at a reduction or have achieved reduction in that. Could you

describe that as well?

MS. C. BENNETT:

We're still working on the

reduction with Transportation and Works. We're looking at continuing to

consolidate staff into one area.

As I

think Members of the House would know, Finance is on the first floor here. We

actually had the Pensions division in with us. As the pension corporation became

live and active on April 1 that freed up some space.

We also

have some space that the Department of Finance has been responsible for paying

the lease on outside of government. We are working hard with Transportation and

Works to make sure that space is optimized. As the minister responsible for this

department, it comes off the departmental expenditures, so we can reduce the

overall footprint of the department, as all departments are supposed to be

undergoing.

MR. HUTCHINGS:

Okay.

Last

year you had an initiative, I think, with TW in regard to the sale of provincial

assets in regard to buildings and those types of things. I think there was a

target of $60 million that was predicted. How did that go in terms of achieving

that target?

MS. C. BENNETT:

That's a question for

Transportation and Works. They are responsible for that program.

Inside

Finance, we'd be responsible for the leases inside Finance. As Treasury Board

President we would have – through Treasury Board – done work to support

Transportation and Works on leases.

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

But the sale of government

properties would be Transportation and Works. They would lead that.

MR. HUTCHINGS:

Okay. Thank you.

1.3.01;

we had some discussion earlier in regard to Government Personnel Costs and

what's involved there. This is the entity – that's what's described there in the

heading and I think it's understood that provides that throughout government as

a whole. We had some discussion, Ms. Michael spoke, in regard to Salaries and

what was estimated, what the revision was and what the estimate was for this

year.

First

off, I've seen this before in some of the Estimates we've done. It's probably

about the reconfiguration and some of the things that are done within the

department. We've seen where the estimate for last year has changed when you

compare it to the estimate that's in this year's budget document. We've seen it

with this line for Salaries.

I think

last year the estimate in the Estimates

book for last year was a little over $11 million. This year it's restated here

as $8.9 million. Can you just give us some understanding of that?

MS. C. BENNETT:

Can we check that and then

we'll get back to you?

MR. HUTCHINGS:

Yeah, sure.

MS. C. BENNETT:

Wanda is looking here in her

book. If she gets the answer before we finish tonight, we'll let you know.

MR. HUTCHINGS:

Fair enough. Yeah.

MS. BREWER:

Sorry, I have it here. It

was folded over.

It was

money restated; $1,311,400 was restated to the Department of Health relating to

the interns and residents contract and $854,400 was re-charged out to the

applicable departments relating to the Labrador Benefits Agreement. So it's

$2,165,800 that was reallocated to other departments and we did a restatement.

MR. HUTCHINGS:

Okay, so I'm just wondering

– that would have been last year in the document, it would have been an

estimate.

MS. BREWER:

Yeah.

MR. HUTCHINGS:

And at that point it would

have been included in the department. But would that mean that for some reason

it's no longer part of Finance or it's just a transfer out?

MS. BREWER:

Well, once the money was

transferred out they restated the original budget for comparative purposes.

MR. HUTCHINGS:

Okay.

CHAIR:

Okay, we'll go back to Ms.

Michael.

MS. MICHAEL:

Thank you, Mr. Chair.

I'll be

moving on to 2.1.01, the next subhead. First of all, I'm looking at Salaries. I

don't often question or I often do not have questions around re-profiling, but

there was a major re-profiling in the Salaries line. The budget had been

approximately $803,000 I think and it was re-profiled by almost $1.4 million up

to $2,241,000. So what was that re-profiling about because it's been maintained,

although there's a drop, but it's certainly up from where it had been.

MS. BREWER:

There was a decision made last year as a pre-curser for transitioning the

pension administration work to the pension corporations that the Pensions

Administration would move from the Human Resources Secretariat back to the

Department of Finance. So you would have seen, when you did the Estimates for

Human Resources Secretariat, you should have seen a similar reduction in one of

their activities.

MS. MICHAEL:

Right.

MS. BREWER:

So all the Pensions people came together within Finance and then we worked with

the pension corporations to lead the transition to the corporations.

MS. MICHAEL:

Okay, thank you.

So then

let's continue along the line. That was the budget; the revision was $1.9

million, approximately, but this year, now in this budget, it is down by

$491,000.

MS. BREWER:

So what we did there, Ms. Michael, is we estimated the number of staff who would

be transitioning to the corporation and because that's not a government entity,

they essentially were resigning their positions. So we had to estimate whatever

termination costs they were entitled to, whether it was severance or overtime

they might have had on the books or leave provisions, things of that nature. So

we estimated that. As well, there is still a smaller number of staff that we

have to provide salary for, as well.

So the

combination of that, plus there was some vacancies that we didn't fill and those

got removed as well. So the net result was a lower requirement required as when

we did the zero-based budget build up for '17-'18.

MS. MICHAEL:

Okay, thank you very much.

MS. BREWER:

And that may change again in '18-'19 once we finish the transition.

MS. MICHAEL:

Right, okay. Thank you, Ms.

Brewer.

Under

the Professional Services, the budget last year was $307,000 and then the

revision added $30,000 and this year it is up again. So if we could have an

explanation of what's entailed in the Professional Services here.

MS. C. BENNETT:

The increase in Professional

Services of $30,000 in '16-'17 was related to greater actuarial requirements

than had been anticipated and the budget in '17-'18 is increased as part of the

zero-based budgeting. It was identified through the departmental submission that

there were additional requirements for actuaries and we wanted to make sure it

was in the right line item and that's what's reflected here.

MS. MICHAEL:

Okay, thank you.

2.1.02,

just a minor question, but under Professional Services there was $25,000

budgeted and nothing spent and now nothing budgeted this year either. What were

the professional services that one thought might happen in that line?

MS. C. BENNETT:

The decrease in '16-'17 was

budget extracts by actuaries were not required in this particular one. In the

'17-'18 reduction, during the zero-based budgeting the departmental submission

centralized all actuary requirements for the Department of Finance in 2.3.01 for

the finance of the Comptroller General under Professional Services.

MS. MICHAEL:

Okay, thank you.

When

you say centralized, Minister, can you give an explanation of what prior

decentralizing was?

MS. C. BENNETT:

Yeah.

MS. MILLER:

Previously, a number of

different areas in Finance who needed to use actuarial information, they all

budgeted for the actuaries in their own activities. But it was felt that it was

better placed in one area so that one area was dealing with the actuaries in all

of the requirements for the department.

Where

the Office of the Comptroller General is responsible for the financial

statements of the province, it was deemed that was the most appropriate place

for it to be, so it was transferred to us.

MS. MICHAEL:

Okay. Thank you very much. I

appreciate that.

2.1.03,

General Insurance and Financial Analysis; again, looking at the salary line

first, the budget was approximately $271,000, but the budget for this year has

gone up by almost $310,000. Could we have an explanation of that?

MS. BREWER:

You may have heard in the

preamble that one of the blocks there was an initiative for financial capacity.

So as a result of that there was money reallocated to this division. There are

two positions to support some Treasury Board initiatives. There needs to be a

review of financial policies. There's probably a list as long as your arm of

different requests that Treasury Board has asked, so we need some dedicated

staff to resource that.

Last

year, there were two people assigned through the Office of the Comptroller

General, but they were actually funded by the Human Resource Secretariat. It was

a major initiative that the department, through the Office of the Comptroller

General, undertook to provide online, some courses, to help any manager

understand the Financial Administration

Act , preparation of Public Accounts, preparation of budgets and just some

basic financial capacity initiatives.

That

worked so well, but because it's not in the training environment – we're moving

on to policy development and policy documentation – that money is now being

budgeted under this activity which is General Insurance as well as Financial

Analysis.

well, we put some money in place there. The ADM there, Denise Hanrahan,

Financial Planning and Benefits Administration, really felt that area needed a

director, at least in the short term, because there are certain projects that

have to be looked at such as the Vehicle Fleet Management Policy. Looking at

trying to identify ways we can save money through how we procure insurance and

things of that nature.

There

was a combination of some three contractual positions put in place to help

support some of the financial capacity and other work the Department of Finance

has to lead with respect to The Way

Forward actions.

MS. MICHAEL:

And do I understand

correctly that the director position is also contractual?

MS. BREWER:

It is, yes.

MS. MICHAEL:

All right.

Coming

down in the same subhead, down to Purchased Services, last year there was

nothing budgeted but $7,800 was the revision and this year $8,700. What are the

services that would be purchased here?

MS. C. BENNETT:

In fiscal '16-'17, there was

a requirement for an optic risk claims system and compulsory risk management

courses. So this would be to support efforts to manage insurance, manage

insurance costs and insurance claims, property insurance and the like.

'17-'18, the requirement – as part of the zero-based budgeting it was recognized

that an allocation needed to be provided for the optic risk claims system as

well as the continuation of compulsory risk management courses for those

individuals that are working in this unit.

MS. MICHAEL:

Okay. Thank you very much.

2.1.04

– I must be getting tired – again, the salary line here began last year in the

budget estimate as $743,300. It went down in the revision and this year it is

down again by $298,800 from what was budgeted last year.

MS. BREWER:

There were some delays in filling some positions that were provided for in

'16-'17, so that's part of the savings from '16-'17 revised. As well, this is an

area that has gone through extensive changes as a result of changes in

management structure. There was a director position that was eliminated there,

as well as, there was a combination of a couple of manager positions that saw

another manager position eliminated. There was also a vacant manager position

that we are not filling.

MS. MICHAEL:

Okay.

Did

those eliminated positions result in individuals losing positions? Well,

certainly one was empty so that didn't …

MS. BREWER:

Yeah, there was a director

and a manager. But then there was somebody who was also redeployed who would

have been impacted in another branch in another division. That individual was

able to obtain employment at a manager level.

MS. MICHAEL:

Okay.

MS. BREWER:

Then there was a retirement.

We're taking a couple of positions and combining and we'll be filling so,

overall, it's still a reduction.

MS. MICHAEL:

Okay and –

CHAIR:

Okay, we'll go back to Mr.

Hutchings.

MS. MICHAEL:

Could I just ask one

follow-up question?

CHAIR:

Okay, Mr. Hutchings, any

problem or ...?

MR. HUTCHINGS:

Sure.

MS. MICHAEL:

Yeah, it's just directly to

what Ms. Brewer just said.

CHAIR:

Right.

MS. MICHAEL:

I just want to get it

straight. Were there people who actually lost jobs that are no longer in the

system?

MS. BREWER:

Yes.

MS. MICHAEL:

Okay. And was that three?

MS. BREWER:

There were two.

MS. MICHAEL:

Two. Okay, I got it

straight.

Thank

you very much.

CHAIR:

Okay, Mr. Hutchings.

MR. HUTCHINGS:

Thank you, Mr. Chair.

I want

to go back to 1.3.01, the revision for Salaries, $1.8 million. I think,

Minister, yourself or your staff indicated that was due to a settlement or

issues related to maybe a benefit related to an issue with the closure of depots

with Transportation and Works.

Just

tell me again what that was. It was something to do with Transportation and

Works and some other element you indicated reflected the number.

MS. BREWER:

Anne Marie, can you speak

here? Were you involved in the payout of the $1.8 million?

MS. MILLER:

I know it had to do with the

HRS. I'm not sure if it was, maybe, EI related. It was paid directly from

Finance, yeah.

I don't

remember a lot of the details. I know it was just after – it was in January

month that we initiated the payment.

MR. HUTCHINGS:

Maybe if we could get just a

list of what it is and any trend.

MS. MILLER:

Yeah.

MR. HUTCHINGS:

So just explain to me as

well, the initial budget Estimate was $8.9 million, $1.811 million was paid out

by Finance and was used by Finance, but there could have been other transfers

that would have been done by other departments? You would have transferred the

money to them for certain needs, but that's not reflected here, is that correct?

MS. BREWER:

Yes, ordinarily, you would see zero there under revised for Finance, right?

MR. HUTCHINGS:

Yeah.

MS. BREWER:

Because if Finance was using something for its own purpose, it would be

reflected in the particular activity or division.

MR. HUTCHINGS:

Sure.

MS. BREWER:

It's just this particular one, like the transportation depots, you may recall,

was the government of the day closed a number of depots.

MR. HUTCHINGS:

Yes.

MS. BREWER:

And that was challenged by the union and grieved and went to arbitration and

they were award.

Basically, the government – then there's a negotiation process because they're

basically saying people lost their jobs, they shouldn't have lost their job and

there are all kinds of mitigations that has to happen. Some people might have

gotten re-employed elsewhere and things like that.

there was a fair bit of time, as I understand it, trying to determine what the

actual settlement was per person for that. This has something to do with the EI

because people would have been entitled to EI payments. So there was some sort

of one payment that was made and there was no ability to charge it off to

individual divisions so they left it. It was one cheque that was cut and

therefore was left in this particular vote.

MR. HUTCHINGS:

Okay.

MS. BREWER:

But I'm a bit hazy on the – because I wasn't directly involved in the actual

payment, but –

MR. HUTCHINGS:

No, fair enough. Maybe we'll

get just an explanation at some point afterwards (inaudible).

MS. BREWER :

Right, yeah.

MR. HUTCHINGS:

Okay.

So this

here, this wouldn't include, Minister, anything – and whether you include it or

not I don't know – anything included for future contract negotiations with –

would it?

MS. C. BENNETT:

No, there is no assumption

in any regard with regard to future collective bargaining and future contracts.

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

The dollars here that you'd

see in '17-'18, I listed earlier, where those assumptions are coming from, based

on discussions between budgeting and HR. They had been related to Transportation

and Works depot settlement, ferry captains, Labrador Benefits agreements, RCMP

collective agreements and any additional funding from existing collective

agreements that are in place.

MR. HUTCHINGS:

Okay, fair enough.

Anything related to JES, this would be referred out to applicable departments to

meet those needs? Would that be correct?

MS. BREWER:

The majority of the JES has been implemented and rolled out, but there is the

odd appeal that might happen. There would be –

MR. HUTCHINGS:

(Inaudible) there are over

400 appeals still existing, right?

MS. BREWER:

Four hundred appeals.

MR. HUTCHINGS:

So if there were any

implications of those appeals, it would flow out of here?

MS. BREWER:

We would look to the department first to see if they could find those.

MR. HUTCHINGS:

Okay, yeah.

MS. BREWER:

But if not, then that would be an area that if they came to Treasury Board and

Treasury Board agreed, we could transfer the money from there.

MR. HUTCHINGS:

Okay, fair enough. Could we

MS. C. BENNETT:

Sorry, if I could. Mr.

Hutchings, earlier you asked about Treasury Board. This would be a good example

of where Treasury Board is working hard with the departments to make sure that

if they're able to cover the costs of something that is unexpected or maybe that

they haven't anticipated, that they can actually work to cover those expenses in

the department before they come to Treasury Board.

MR. HUTCHINGS:

Okay. Thank you.

Could I

get the list of transfers, what was transferred out of this? Would that be

possible to get, as well?

Thank

you.

2.1.01,

Pensions Administration, there was just a conversation earlier, Ms. Michael

indicated, in regard to, I think it's Professional Services actuary

requirements. Under Professional Services in 2.1.01 there was an increase. Would

that be actuarial requirements related to something specific or is it just that

you feel that this year it will be a little bit more?

MS. BREWER:

I don't have the (inaudible)

with me, but the valuations of the various plans tend to happen on a triannual

cycle.

MR. HUTCHINGS:

Yeah.

MS. BREWER:

So it depends on when the

particular plans are due and –

MR. HUTCHINGS:

And you'd make the

projections on that, obviously.

MS. BREWER:

Yes.

MR. HUTCHINGS:

Yeah.

Okay.

Thank you.

There's

a line there, Revenue – Provincial. What exactly is that?

MS. BREWER:

Sorry, are you on 2.1.01,

Pensions Administration?

MR. HUTCHINGS:

Yes.

MS. BREWER:

All activities relating to

the administration of the pension plan are actually funded by the pension plan.

That would be a recovery to leave to the various plans.

MR. HUTCHINGS:

Of the cost and just pull it

out; the various plans would cover it.

MS. BREWER:

Right.

MR. HUTCHINGS:

Okay. Thank you.

I'm

just trying to work my way through here. I don't want to repeat things that Ms.

Michael has asked so I'm just trying to follow my notes. My writing is not very

good.

If I go

to 2.1.05, Financial Assistance, this particular heading is defined as promoting

business opportunity and financial support for departments and Crown agencies.

Relevant funding would be transferred to departments during the year as

required.

First

of all, can you just explain to me if there were transfers through the year and

what they were under the Grants and Subsidies of 2.1.05?

MS. C. BENNETT:

Okay, so that's with

reference to the $4.7 million?

MR. HUTCHINGS:

Yes.

MS. C. BENNETT:

Okay.

MS. BREWER:

There was $236,400 transferred relating to collective bargaining and there was

$2,041,000 transferred to Executive Council relating to their Government Renewal

Initiative and the Muskrat Falls-Lower Churchill project committee. A total of

$2,277,400 was transferred.

MR. HUTCHINGS:

You said $236,400 and $2

million?

MS. BREWER:

$2,041,000.

MR. HUTCHINGS:

And the total transfer was …?

MS. BREWER:

$2,277,400.

MR. HUTCHINGS:

Did you say collective

bargaining?

MS. BREWER:

Collective bargaining was $236,400.

MR. HUTCHINGS:

Okay, so what would that be

collective bargaining? What would those monies be for?

MS. C. BENNETT:

That would be related to

expenses that we would have incurred in departments that had expenses that would

have supported the work that government is undertaking for collective

bargaining. Justice may have incurred some expenses, and this would have been

where the transfer would have been from.

MR. HUTCHINGS:

Okay, so would you charge

off an hourly rate for their employers? Would it be for travel or something like

that or all of the above?

MS. C. BENNETT:

I think in the HRS

Estimates, Mr. Hutchings, you asked in HRS where the expenses related to McInnes

Cooper may have been?

MR. HUTCHINGS:

Oh, yes. Okay.

MS. C. BENNETT:

At the time my answer – and

just for clarity for the Members of the Committee I had said that the invoices

for McInnes Cooper would have been generated and invoiced to Justice. This would

be an example of one of the items that could be covering this transfer.

MR. HUTCHINGS:

I guess, Minister, just a

question in regard to McInnes Cooper. Would that be a law firm that's basically

retained by the Department of Justice; therefore, the easiest thing would be if

you wanted assistance, that it's with the Department of Justice and they would

bill it out and then you just …

MS. C. BENNETT:

Yeah, so specifically

related to McInnes Cooper's involvement in collective bargaining, they would

have a contract that would be in place and that contract would be for a certain

hourly amount. That hourly amount would be billed.

When

it's billed, the bill would go to Justice. Justice would cover the bill, or

monies would be transferred from this line item as we had said last year in

Estimates it would be.

MR. HUTCHINGS:

Okay, but I guess my

question is Justice would retain McInnes Cooper. The contract would be with

Justice.

MS. C. BENNETT:

Any contracts for law firms

would be held through Justice.

MR. HUTCHINGS:

Okay, yeah.

Thank

you.

CHAIR:

Okay, before we convene

again, we're going to take a short break to give Don in the Broadcast Centre a

short break.

Recess

CHAIR:

Okay, we'll reconvene and

hopefully clue up on this stretch.

We'll

go to Ms. Michael.

MS. MICHAEL:

Thank you very much, Mr.

Chair.

Minister, I'll pick up at 2.1.05 where Mr. Hutchings was before the break. The

$236,400, that is a cost attributed to costs of collective bargaining. Could you

tell us how much of that has been invoiced and paid to McInnes Cooper?

MS. C. BENNETT:

I don't have that

information here tonight, but I can provide that to you.

MS. MICHAEL:

Okay. Thank you very much.

Staying

in that line and going into this year's budget where the budget for this year is

$11,351,300, what is that about? Is that about the collective bargaining? Is

that anticipating? No.

MS. C. BENNETT:

No, there's no increase in

the amount that we are budgeting for collective bargaining over last year. This

amount and this increase are specific to the various government initiatives to

be transferred to the Department of Finance, such as things like Salaries and

Operating Accounts.

relates to work that has to happen on the enhanced federal loan guarantee,

Muskrat Falls oversight and Way Forward -led

initiatives that have to led by Finance, including things like shared services

and centralized collections. It also includes initiatives to support Treasury

Board financial capacity.

There's

also a contingency – and this is new and this would explain the difference from

last year to this year – related to pension reform. That's the primary reason

for this increase over last year.

MS. MICHAEL:

How much is that

contingency?

MS. C. BENNETT:

That contingency is over $6

million.

MS. MICHAEL:

Okay. Thank you.

And, of

course, all of that is in the briefing book? Yes.

Thank

you.

I'd

like to come back to 2.1.04 and if we could have an explanation of the Revenue –

Provincial, 02.

MS. C. BENNETT:

Sure.

The

decrease in '16-'17 was due to recoverable positions being vacant. The

recoverable amount from Newfoundland and Labrador Municipal Financing

Corporation and the sinking funds will be less than anticipated. So this

recovery was less for the (inaudible) market licence paid for by the sinking

funds.

Then,

in '17-'18, the reduction is related to the recoverable expenditures for the

division from the Newfoundland and Labrador Municipal Financial Corporation. The

sinking funds have declined further.

MS. MICHAEL:

Okay. Thank you very much.

Going

forward, then, to 2.1.06, Financial Assistance, Loans, Advances and Investments;

the budget last year was $10,731,400 and down this year. Well, first of all, it

looks like only $2,566,300 went out. This year the estimate is $8,165,100. So I

guess two things: the reasons for the big difference between budget and revision

last year and what exactly is covered in this line right now?

MS. BREWER:

The Loans, Advances and Investments: the budget is the remaining amount owing to

Corner Brook Pulp and Paper on the $110 million loan.

MS. MICHAEL:

Yes.

MS. BREWER:

You may recall there was $25 million available but it's for capital advances.

They submit a capital advance request when they're ready to implement some

capital expenditures. The amount of capital expenditures, the requests were less

than had been anticipated. When we asked, from a cash flow perspective, they had

indicated to budget the balance in '17-'18.

MS. MICHAEL:

Okay. I thought it was the

Corner Brook Pulp and Paper, but just verifying.

Again,

in the same subhead, 2.1.06, the provincial revenue, could you explain that

line, please?

MS. BREWER:

That would be the interest payments that are owed from –

MS. MICHAEL:

The interest payments.

MS. BREWER:

– paid from Corner Brook Pulp and Paper on the loan that's been issued to date.

MS. MICHAEL:

Right.

Okay.

Thank you very much.

What is

the interest on that loan?

MS. BREWER:

I think currently it's around close to 4 per cent, if I recall. If I'm wrong,

I'll get that to you.

MS. MICHAEL:

Okay. Thank you.

2.2.01,

Tax Policy and here, Professional Services – there's a big drop in the

Professional Services line. Last year, the revision actually went up by

$873,000. Then, this year, the budget is almost $237,000 less than last year's

budget. There's quite an up and down there, if we could have an explanation.

MS. BREWER:

Primarily, the increase in projected revised is relating to the commission that

was paid to Deloitte for the indirect taxation review that Ann Marie Miller had

mentioned. The provision next year is money there to commence the comprehensive

taxation review that was announced.

MS. MICHAEL:

Okay. Being done by

Deloitte?

MS. BREWER:

No, we haven't decided yet

in terms of how we're engaging outside expertise for that.

MS. MICHAEL:

Okay. Thank you very much.

MS. C. BENNETT:

Ms. Michael, I just want to

make sure that we're clear. The $236,000, the Professional Services amount for

'17-'18 – I wasn't sure that you heard and I just wanted to double check –

that's related to the tax review.

MS. MICHAEL:

Yes, I did hear that.

MS. C. BENNETT:

Okay.

MS. MICHAEL:

Yeah, thank you very much.

MS. C. BENNETT:

The HST work that Deloitte

would have done, the Professional Services line there in fiscal '16-'17 would

reflect what was paid to them. But if you look down at the bottom under

provincial revenues –

MS. MICHAEL:

Yes.

MS. C. BENNETT:

– you would have seen

revenues anticipated at $8.7 million. That would have been tax recovery.

MS. MICHAEL:

Where are you, Minister?

MS. C. BENNETT:

If you look down under

'17-'18 –

MS. MICHAEL:

Yes.

MS. C. BENNETT:

See where it says related

revenues provincial, the $9.9 million?

MS. MICHAEL:

Yeah, $9.9 million, right.

MS. C. BENNETT:

So that would be the revenue

coming from the work that Deloitte had done on the HST.

MS. MICHAEL:

Okay.

MS. C. BENNETT:

Or we anticipate coming from

the work that Deloitte has done on HST.

MS. MICHAEL:

Okay. I was coming down to

that.

MS. C. BENNETT:

Sorry.

MS. MICHAEL:

Okay. That's all right.

MS. C. BENNETT:

I'm always excited when I

get revenue from somewhere we don't expect to.

MS. MICHAEL:

Okay, very good.

Well

then, I have no more questions in that subhead because that would have been my

next question.

Coming

down to Fiscal Policy, again, just an explanation of the salary line there

because it's a fair bit below what was budgeted last year, over $100,000, I

think.

MS. BREWER:

Okay, Ms. Michael, this is

one of the areas where we indicated there was a consolidation. This division is

now part of the new economic and fiscal policy branch.

MS. MICHAEL:

Okay.

MS. BREWER:

So there was a reduction

there in the director position.

MS. MICHAEL:

Right. Okay, thank you very

much.

I think

what I'll do is just turn it over to Mr. Hutchings at this point.

CHAIR:

Okay.

Mr.

Hutchings.

MR. HUTCHINGS:

Okay, thank you.

I just

had a quick question. I want to go back to 2.1.04, Debt Management. There's

reference to loan guarantees. I'm just wondering the Fisheries Loan Guarantee

Program; would that be part of that, in terms of – because the province would

guarantee.

MS. BREWER:

Well, the minister signs off

on all guarantees, but the actual program is through –

MR. HUTCHINGS:

But a program like that

would fall under something like this, I guess, under this heading?

MS. BREWER:

Well, there's actually a

committee, I believe, through the Tourism, Culture, the department –

MS. C. BENNETT:

TCII.

MR. HUTCHINGS:

Yeah.

MS. BREWER:

TCII. But once a decision is

made to provide the guarantee, then the administration of that guarantee would

follow.

MR. HUTCHINGS:

It wouldn't happen here.

Okay.

Thank you.

If I

could just go to 2.1.05, the Financial Assistance piece there. I know you listed

what was included in 2.1.05 in the Grants and Subsidies. In the top it says

promoting business opportunities. Could you just explain how that relates to the

Grants and Subsidies?

MS. C. BENNETT:

Yeah.

Included in that $11,351,000 is money that the Finance Department will hold to

cover costs associated with things like

The Way Forward , I mentioned earlier the shared services and centralized

collections.

This

heading is not just about promoting business opportunities and financial

available to be able to implement activities such as shared services. It would

also be – as I mentioned in Ms. Michael's question, there's also a contingency

amount in here relating to pension reform.

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

That amount is over $6

million. I want to be clear because this is a significant increase in this line

item. I want to be transparent about what that is.

MR. HUTCHINGS:

Okay.

2.1.06,

Financial Assistance; it talks about here, one of the lines there, entities to

leverage federal funding initiatives. What federal funding initiatives have we

been successful with that would fall under this?

MS. BREWER:

Last year, if you look at

last year's Estimates, I believe that original budget, Wanda, was closer to $20

million. You may recall the federal government budget was late last year, so we

did not have a lot of information on how the federal government was going to

allocate, particularly to, I believe, it was social infrastructure.

During

the year there were initiatives approved, both from Memorial University and the

college. Some of that money was actually transferred then to the Advanced

Education. You'll probably have a discussion with them tomorrow if they're in

Estimates Committee tomorrow.

So this

year with the Canada Infrastructure Fund and the New Building Canada Fund, that

money is actually voted in the applicable departments.

MR. HUTCHINGS:

Okay, to leverage those

federal dollars to various departments, okay.

MS. BREWER:

Yes.

MR. HUTCHINGS:

I don't know, Minister, if

this is the right spot to ask, but I know with monies that were allocated for

the new science centre, there were monies from Voisey's Bay, I think, there were

monies allocated initially but then I think you reported or government reported

that was backfilled by federal dollars. Has there been a decision made on that,

or does that sit in Finance or –?

MS. BREWER:

That particular project, at the end of the day the government applied to the

federal government for federal assistance. So the money was then used for the

federal – I think it was $99 million approved, just under $100 million was –

MR. HUTCHINGS:

But from the feds?

MS. BREWER:

It was from the feds.

MR. HUTCHINGS:

Okay.

MS. C. BENNETT:

Mr. Hutchings, just to let

you know, that money would be flowing directly from the feds to the university,

that $99 million. So your question was around monies from Voisey's Bay that the

former administration had –

MR. HUTCHINGS:

Had allocated; a part of

that was allocated for the science centre, but I guess with the federal dollars

coming in that frees up that money.

MS. BREWER:

I'm not sure if it was Voisey's Bay or Hebron. I'd have to check.

MR. HUTCHINGS:

Oh, I'm sorry. Yes, you're

right. It was the Hebron Project. I'm sorry, it wasn't Voisey's Bay. It was in

regard to a building of one of the components. Bull Arm and Marystown were full.

They couldn't do it here. They wanted to get moving, so we negotiated that they

build it in Korea. I think it was $150 million, and part of that was $100

million to go to the science centre. But I guess my point is the feds have

backfilled that.

MS. BREWER:

If the feds have stepped in, then the money then became available as general

revenues used to fund government's share, the leveraging that's required for

other federal infrastructure projects.

MR. HUTCHINGS:

Okay, thank you.

Could I

just go to 2.2.01, Tax Policy? Under Grants and Subsidies, there's an amount

there; $23,600 was estimated – was paid last year and it's in again. Is that

related to paying for the harness racing, the Maritime racing commission.

OFFICIAL:

Yes.

MR. HUTCHINGS:

Okay. So we're still paying

basically to be a member of the Maritime harness racing association, I think

it's called.

MR. MARTIN:

Yes, we're still a member at

this point in time.

MR. HUTCHINGS:

Okay.

MR. MARTIN:

But we have been speaking

with IGA at looking at our membership in terms of methodology, given that the

racetrack is currently closed.

MR. HUTCHINGS:

Yes, unfortunately.

2.2.03;

the Salaries for what was estimated and what was revised and then the Estimates

for this year have been readjusted. I'm just wondering about those changes and

the reduction. I guess that's related to positions or …?

MS. BREWER:

The reduction from budget to

revised was there was a senior policy analyst who was on unpaid leave for a

period of four months and there was an analyst position that was vacant for the

entire year. Then, there are changes as a result of changes to management

structure. There was actually a manager position that was eliminated there.

MR. HUTCHINGS:

The senior policy and the

analyst; were they positions that just were vacant and they're going to be

filled at a later point or …?

MR. MARTIN:

There was one position that

was eliminated through the process.

MR. HUTCHINGS:

Okay.

MR. MARTIN:

There was another position

that was vacant for most of last year, that has since been backfilled, but since

it was backfilled at a lower scale, it's budgeted at a lower salary scale as

well.

MR. HUTCHINGS:

Okay.

MR. MARTIN:

So it's a combination of the

two.

MR. HUTCHINGS:

Okay. Thank you.

We'll

go down to Economics and Statistics, 2.2.04. I wonder under Salaries there as

well, if we could just get some explanation in regard to what was budgeted last

year, the revision and again the estimate for this fiscal year.

MS. BREWER:

The reduction is due to vacancies and recruitments were longer than anticipated.

As well, there's some contractual work. It depends on the volume of the survey.

There was some survey unit work that had been delayed. So that accounts for the

majority of the savings from budget to revised.

Then,

as well, going into next year the money is up because part of the work here is

some contract work that the division does for other jurisdictions. As a result

of that, there were some contractual resources that were supplemented. As well,

there were also some reductions in positions due to changes in the management

structure.

MR. HUTCHINGS:

Okay, so contract work with

other jurisdictions would be related to sharing of statistics and …?

MS. BREWER:

It could be the City of St. John's helping with some economic projections.

MR. HUTCHINGS:

Okay.

MS. BREWER:

One of the projects that the former ADM, I know, has particular passion in is

some work they're doing with the Irish – there's a professor who they're

documenting a lot of the work, from a census perceptive, that he has with

respect to the Irish immigration.

MR. HUTCHINGS:

Yeah.

MS. BREWER:

It varies and it fluctuates from year to year. You can see the revenue line

would be higher as well.

MR. HUTCHINGS:

Okay, yeah.

MS. BREWER:

Because we actually bill for

this work.

MR. HUTCHINGS:

Most of the revenue would be

tied to the activity you just described, basically.

MS. BREWER:

Right, yeah.

MR. HUTCHINGS:

Okay, Mr. Chair, my time is

up I think.

CHAIR:

Okay.

Ms.

Michael.

MS. MICHAEL:

Thank you, Mr. Chair.

Minister, I'd just like to come back to 2.2.01 for a minute. I'm just curious

why we're still paying the harness racing fee if we no longer have harness

racing happening in the province. I know it's not a lot but …

MR. MARTIN:

It was last year when the actual racetrack closed; it's currently for sale at

this point in time. We still have an obligation to be in a regulatory part.

However, given the fact that they are closed, we have been discussing right now

with Intergovernmental Affairs – this is an interprovincial harness racing

association – to discuss with them the opportunity for us to, rather than

strictly withdraw, whether or not we can put either our piece of the (inaudible)

or at some reduced fee amount, recognizing the fact that it's not currently

operating.

MS. MICHAEL:

Okay. Hoping that something

might operate again?

MR. MARTIN:

Obviously, while it's sitting there we do have a regulatory authority.

MS. MICHAEL:

Right.

MR. MARTIN:

It could impact the business

as well.

MS. MICHAEL:

Okay. Thank you very much.

With

regard to the tax review, is that report done? Would it be available?

MS. C. BENNETT:

The tax review for the HST

or the tax review that we're going to do around personal and corporate tax?

MS. MICHAEL:

For the HST. You haven't

started the other one yet. You're waiting on the federal government, aren't you?

MS. C. BENNETT:

No.

MS. MICHAEL:

No.

MS. C. BENNETT:

With the tax review –

actually, let me correct. The federal government had done their tax review in

two phases.

MS. MICHAEL:

Yes.

MS. C. BENNETT:

They had originally

announced they were going to do it in one phase. They have since said they're

going to do it in two. They have the first one done.

We're

going to start ours this fiscal year with the hopes of concluding it before next

year. I have ministerial meetings in June and I'm hoping to get an update on

phase two of where the federal government is with regard to theirs, so that we

can link it into ours so that there will only be one tax change happening at the

same time.

MS. MICHAEL:

Right. Okay.

What

about the HST?

MS. C. BENNETT:

Sorry, I misunderstood your

question. I thought you were asking about the work that Deloitte was doing on

HST recovery.

MS. MICHAEL:

Yes, right – oh, no, that

wasn't what I was talking about.

MS. C. BENNETT:

My apologies.

MS. MICHAEL:

Okay. Thank you very much.

Okay,

then moving forward. Keith was at 2.2.04, right, and he asked about Salaries.

2.2.04;

if we could have an explanation of the Supplies line. What exactly are the

supplies here? It's gone up by almost $19,000 in this year's budget.

MS. C. BENNETT:

The increase in the Supplies

line; when the department did the zero-based budgeting review and looked at what

their expenses were going to be from the ground up, they noted there was going

to be a one-time funding of $15,000 to purchase census data. That's primarily

the reason for the increase this year.

MS. MICHAEL:

Okay. Thank you very much.

Minister, what is the source of the Revenue – Provincial in this subhead? Last

year the budget for that was $86,400, but it looks like $288,000 more actually

came in and then this year it's actually up by $335,000.

MS. C. BENNETT:

There was a variety of

recoveries made in '16-'17: Newfoundland and Labrador Housing, the City of St.

John's, Newfoundland Hydro, Eastern Health, workers' comp and MUN. In this

coming year, this '17-'18, we're anticipating revenues coming in from the

Northern Policy Institute, Memorial University, Newfoundland Hydro, the City of

St. John's, WorkplaceNL and the Irish Project that Ms. Brewer spoke about

earlier. In your Estimates book,

these line items are detailed out with actual dollar amounts.

MS. MICHAEL:

Right.

MS. C. BENNETT:

So you'll be able to see

those revenue line items.

MS. MICHAEL:

Okay. So this is sort of

paying for the services to the department.

MS. C. BENNETT:

That's correct.

MS. MICHAEL:

Okay. Thank you very much.

Guess

what? We're down to the last subhead, I think, 2.3.01, Office of the

Comptroller.

Just an

explanation of the salary line here; it's down by about – how much, $1,000, is

it? Yes.

MS. BREWER:

The reduction there is –

again, significant changes occurred there through our changes to the management

structure. As I indicated earlier, there was a director position that was

eliminated there, various manager positions, as well as management analyst

positions.

MS. MICHAEL:

I guess the book probably

has all that detail does it, the briefing book? Not necessarily.

MS. BREWER:

I think as a separate

exercise you're going to be releasing – it might not – the positions throughout

government?

MS. C. BENNETT:

Yes. As I said, in HRS,

within the next day or so we'll be able to table in the House the final numbers

related to the management changes.

MS. MICHAEL:

Right, because it's $1.03

million. So it's a fair bit.

MS. C. BENNETT:

Yeah. But, Ms. Michael, that

$1 million is built from a number of items. It's built not only from the

management structure, but also savings from zero-based budgeting and the

annualization of last year's decisions. There are a number of items that are

contributing to that, and the dollar figures will be in the book.

MS. MICHAEL:

Okay. Thank you very much.

Professional Services has gone up considerably from the budget last year. It

went up in the revision and now gone up by $126,000, give or take, above last

year's budget for this year.

MS. BREWER:

You may recall, Ms. Michael,

the earlier discussion where Ann Marie mentioned that it was decided to

consolidate into her area –

MS. MICHAEL:

Oh, right. Yes.

MS. BREWER:

– to better manage the actuarial contracts. As well, based on discussions with

the Auditor General, there are evaluations that will need to be done in the

future with respect to sick leave.

Ann

Marie, what was the other one, severance? No, it was just sick leave.

MS. MILLER:

Just mostly.

MS. BREWER:

Mostly sick leave.

MS. MICHAEL:

Okay. Thank you.

Then,

under Purchased Services, this has dropped by approximately $164,000. Could we

have an explanation of that?

MS. BREWER:

As the minister indicated,

we're working hard with Transportation and Works to try to shrink our lease

footprint. This is an area out on Topsail Road where our payment processing is,

and there was some excess space there that we managed to work with

Transportation and Works. I believe it's being sublet to one of the units

belonging to Eastern Health, if I recall. So they're going to take over some of

that space and some of that rent.

MS. MICHAEL:

Thank you very much.

Finally, the revenue line, Revenue – Provincial, what is that about?

MS. C. BENNETT:

That would have been related

to international fuel tax agreement fees. In '17-'18 we expect the same, that

there'll be changes in the international fuel tax agreement registration and

decal fees, and this is also zero-based budgeting related.

MS. MICHAEL:

Okay, thank you.

That's

the end of my questions at the moment. A question may come up again, but at the

moment I'm finished.

CHAIR:

Okay, thank you.

Mr.

Hutchings.

MR. HUTCHINGS:

Thank you, Mr. Chair.

Minister, I just want to go back and clarify something earlier, 2.2.01, just so

I'm clear on the Professional Services. It was $1.2 million, and I think that

was tied, you said, to Deloitte and some of the work they've done on HST and I

think directed down to $9.9 million in terms of the revenue.

The

expenditure in Profession