May 7, 1998

GOVERNMENT SERVICES ESTIMATES COMMITTEE

Pursuant to Standing Order 87, Rick Woodford, MHA

for Humber Valley substitutes for Gerald Smith, MHA for Port au Port.

The Committee met at 7:00 p.m.

CHAIR (Wiseman): Order, please!

For the record, my name is Ralph Wiseman. I am the

Chair of Government Services Committee. I have with me this evening the members

of my Committee. They are the vice-chair, Mr. Byrne, Mr. French, Mr. Oldford,

Mr. Woodford and Mr. Sparrow. I want to welcome the minister and his officials

to this hearing, and I'm sure that it will be quite interesting and hopefully

not too long.

There are a few rules that have been pretty well

standard since we have been doing these hearings. The minister has fifteen

minutes for his opening remarks. The vice-chair can either respond for fifteen

minutes or he can go directly into questions.

I also have at the table this evening the Clerk,

Mr. Noel, and Mr. Collins upstairs who is the recorder.

Minister, when you are ready you may proceed.

MR. A. REID: Mr. Chairman, I apologize for

being late but I was unavoidably detained by a person who I do not want to tell

you anything about. If you would allow me, I would like to do the Housing

Corporation first, if that's okay?

CHAIR: I apologize, Minister. I should have

said that we are reviewing the Estimates of the Department of Municipal and

Provincial Affairs and the Newfoundland and Labrador Housing Corporation.

MR. A. REID: If you agree then on doing the

Housing Corporation first, because I think that we can -

CHAIR: That's no problem.

MR. A. REID: You have some questions I guess

for the housing people, and then we can let them go on and then we can get into

Municipal and Provincial Affairs.

To my right is Clyde Granter, the Chairman and CEO

of the Housing Corporation. He has some staff with him, and I am going to ask

Clyde to introduce his staff.

MR. GRANTER: With me is Ed Heath, who is the

Vice President of Finance and Corporate Services for the Corporation. That's all

I have with me.

MR. A. REID: The total current account

expenditure for 1998-1999 for the Housing Corporation is $101 million, of which

$4.7 million or 5 per cent comes from the Province of Newfoundland and Labrador.

Four point seven million dollars is what has been budgeted this year from the

coffers of the Government of Newfoundland and Labrador to the Housing

Corporation.

I stress that because a lot of us do not realize

that the Housing Corporation, with the help of the federal government and from

its own generation of revenue, is basically self-sufficient. I have often said

that if we were forced to live with less than $4.7 million we could do it, if we

were left alone and that agency to do I guess what we wanted to do. Some $58

million is from the federal government, with the remaining $38 million being

derived internally from rents, interest payments and land sales. Of course, as

we get into land sales - and we have been selling a number of assets in the last

few years - there is going to be less and less opportunity for us to come up

with those dollars that we normally put back into our budgets, because we do not

have a lot left to sell.

A reduced grant from the provincial government of

$2.1 million is due to a combination of expenditure reductions and increased

revenues from the introduction of the new rental scale. That is over last year's

amount. Social housing programs consist of 13,000 subsidized rental and mortgage

units in 1998-1999 and will cost both the federal and provincial governments

some $70 million. These units are home to 36,000 people including 15,000

children. Of course, the greater percentage of those people live in and around

the St. John's metropolitan area.

Repair programs will provide grants and loans to

2,000 needy clients, totalling $5 million under the federal-provincial RRAP

Program and the provincial Urgent Repair Program. The Corporation has 4,000

acres of land and 450 unsold building lots throughout the Province. Due to

depressed markets, new developments will be kept to a minimum. Privatization of

the market rental portfolio is virtually completed with only 120 units remaining

in Pleasantville. Those are the only ones we have left. As you all know, we sold

Elizabeth Towers, Churchill Square, Linden Court and Allandale. That is all we

have left.

The 128 units that are presently at Pleasantville,

during the past year the Corporation was able to sell 300 units consisting of

Elizabeth Towers, various projects around Churchill Square and the Arnold's Loop

unit in Pleasantville. I will say here to you publicly that we have reassured

the people of Pleasantville, the residents of the 128 units, that we do not plan

to sell off those units immediately. I will say that we said that to that group

of residents because they were afraid they would be jeopardized like the people

of Linden Court were and they would be turned into condominiums and so on. That

does not mean that we cannot arrange to make some deals with some people living

in the area, co-op housing or something along that line. We still might unload

them, but if we do that we are going to do it protecting all the people who live

there. We will do it in there in consultation with those people.

I can run down quickly, too, some of the figures I

suppose that illustrate in the budget what we spend. The subsidized rental

housing program, for example, last year cost us $55.1 million. Our portfolio

consists of 11,200 units and includes 4,000 units transferred from CMHC. Last

year's transfer from CMHC put an extra 4,050 units over to us. The average

annual subsidy amounts to $4,900 per unit. The rent supplement program put $3.4

million into that last year. The portfolio consists of over 1,000 units. The

average annual subsidy is $3,400.

Mortgage program costs. A lot of people are not

familiar and do not know that we are, as an agency now, involved with a lot of

mortgages that we picked up through CMHC and on our own. The total costs for

mortgage programs is $2.9 million. The portfolio of subsidizing mortgages - I

think most of you know about that -, some 1,200 units, that total cost is $45

million a year, and the annual average subsidy amounts to about $2,500 per unit.

In the residential rehabilitation program

subsidies, provision has been made for some 300 new home loans to be committed

during this year at a total of $3.2 million. Some $2.4 million of that will be

in forgivable grants. Portfolio loans under administration consist of 500

accounts at a total value of $40 million.

Delivery and administration costs are as follows:

gross expenditures amount to about $1,400 a year; salary costs about $10 million

a year. Other major costs include a total administration budget of computer

system costs of $1.3 million, occupancy expenses $1.09 million, and travel

$455,000. By the way, my expenses, I do not think you have that there, I do not

know if you do or not, but it amounted last year to about $35,000, I think it

was something like that (inaudible) the Minister's Office, was it, $35,000 to

$40,000, something along that line?

The revenue from CMHC is as follows. Fixed payment

for the devolution agreement amounts to $55.3 million. A further $2.8 million

represents CMHC's share of RRAP program together with other miscellaneous items.

As for land development, we are still trying to

sell as many lots as we can in Southlands. In 1998-1999 we have projected we

will sell about fifty lots. I do not think we will have any problems in reaching

that number. New commitments of $4 million have been put in for land development

this year at Southlands.

Our sale of assets will bring us in some money this

year, not a lot. Our interest revenue through our RRAP loans and so on will also

bring us in some anticipated revenue, and that is about all I need to say at

this particular point in time.

I will say to you that government has been, for the

past two years, committed to privatizing I suppose as much of Newfoundland and

Labrador Housing assets that we have as we possibly can, in properties like

Elizabeth Towers, Churchill Square and others, and we will continue to do that.

The idea is to continue on a gradual basis to do it. You just cannot throw all

of what we have on the market at the one time because you will upset the market

to the extent where nobody will be able to sell any thing, and I guess

ultimately the returns on your investment would be very low.

We have to be cognizant that we are not the only

ones in the business, especially in and around the St. John's area. There is a

lot of private sector money invested in land development and housing. We have to

be cognizant of the fact that they are out there trying to compete, I suppose in

some instances, with us for the same dollar. Those are my opening remarks, Mr.

Chairman.

CHAIR: Thank you very much, Minister. Before we

proceed, I would tell the officials that if you are responding to a question you

identify yourselves for the purposes of recording so that they will know who you

are.

Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. I'm just

going right on into the questions, no opening statements. Newfoundland and

Labrador Housing presents a statement or a report, I suppose, to the House each

year. I believe there was one submitted not long ago. The detail that you just

went through, Mr. Minister, I do not remember seeing that type of detail in that

report. Why would we not have that type of detail in these Estimates like we

have with other departments? Because to come here now and try to start asking

questions based on what you just told us - I mean, it would be nice to have it

up front. Is there any explanation for that?

MR. A. REID: Most of what I told you you have

had I suppose in dribs - I understand where you are coming from - and drab over

the year. You heard it somewhere but you just cannot put it all together, and I

suppose that is a good question to ask. I do not know if the report is the place

to put it, but maybe if there were a statement issued to the Committee prior to

tonight, to the Estimates, outlining some of the things that we actually did and

some of the things we plan to do, maybe next year would be a good time to that.

I understand where you are coming from, but I am going to ask Clyde to react.

MR. GRANTER: I am not sure that I can say much

more than it seems to be a tradition for Crown corporations that they prepare an

annual statement, as I guess is common for most corporations. The Auditor

General of course audits, but beyond that I really cannot explain it. We get a

very small annual grant relative to our total expenditures, I grant you that,

but essentially I think we are complying with our legislation, and that is the

way it has always been. I am not sure it has ever come up in the past.

MR. J. BYRNE: It would just be nice to have

more information so that you can be prepared to ask questions on it. Because

this is what I had, one sheet. In the meantime -

MR. A. REID: It is difficult. If you do not

mind me saying, the Auditor General in the five years that I have been - and Bob

was here too, because Bob was here for three years, three-and-a-half years, and

then Clyde. In the Auditor General's Report I wish she would come back the

following year and say and give some credit to people who -

MR. J. BYRNE: Follow up?

MR. A. REID: - follow-up. Because this is one

of the agencies that has continuously been given recognition privately by the

Auditor General who said: Thank you very much. She has written me and said that

the Housing Corporation has always been so cooperative in doing the things that

in this case she has asked it to do, but then she will not put that in her

report. I suppose she is in the same situation as he is in, that she is not

required to do it. I will say quite honestly, and I think you can check it out

as Chairman of the Public Accounts Committee, that I do not think the Auditor

General has ever had very much trouble with the Housing Corporation in regards

to what she would consider good financial management.

MR. J. BYRNE: Where I am coming from this

evening is not to say that Housing is doing anything right or wrong. It is just

to have the facts that you just put out so one could make general questions on

policy, maybe, whatever the case maybe.

MR. A. REID: I will try to remember that and I

will make note of it. The minutes will show it anyway. Next year if I am still

around here in this portfolio I will provide you a day or two in advance of at

least my opening statements.

MR. J. BYRNE: Fine.

MR. WOODFORD: Just to add for my information

and understanding - I do not mean to take away from Jack's time -, but doesn't

Newfoundland and Labrador Housing Corporation issue an annual report every year?

MR. A. REID: Yes.

MR. WOODFORD: That is the same as Newfoundland

and Labrador Hydro. The details of Newfoundland and Labrador Hydro are not

mentioned in the Estimates, but the details are always in their report. We could

never get it in the Estimates. Like Jack said, we would always have to go to

Newfoundland and Labrador Hydro's report. All Crown corporations I understand

follow the same rule.

MR. A. REID: They do, but I do not think the

Housing Corporation needs to try to conceal anything. We have never ever had any

problems in regards to questions from the Opposition or from anybody.

MR. WOODFORD: Because it is in the report, it

is just it is not in this.

MR. A. REID: I can understand where Jack is

coming from in regards to coming in here tonight with very little information

other than half a page in a budget (inaudible).

MR. J. BYRNE: Even if we do have the report,

there are some details there, but not nearly what you just went through in that

report.

MR. WOODFORD: You cannot question it then.

MR. A. REID: If I remember it next year, maybe

someone will remind me, I can do that. Maybe you can make note of that, Mr.

Heath.

MR. J. BYRNE: I have some other questions here

now based on some of the notes made when you were speaking. First, the sale of

Elizabeth Towers. I asked some questions in the House on Elizabeth Towers. One I

know I was going to ask but I cannot remember if I asked it, and that is with

respect to the repairs of Elizabeth Towers. It was sold for x amount of dollars,

and there were some repairs I think to maybe the decks and some other things

down there, maybe upwards of $1 million in repairs. That was paid for by

government I think, so that reduced I believe the actual amount of money that we

received for Elizabeth Towers. Can you say a few words on that?

MR. A. REID: This question has come up on a

number of occasions, and because the question has been asked in the House I have

never had the opportunity to go into detail about the actual deal on Elizabeth

Towers. I think it would be worthwhile for us to take a couple of minutes and

actually tell exactly what it cost us, what we sold it for at the end of the

day, and how much we actually lost or gained on it. Would somebody, as quickly

as you can, do that?

MR. GRANTER: I can tell you part of it. I am

going to have to defer to Ed Health to provide some of the other information.

Essentially, the selling price for Elizabeth Towers was $5.26 million. The new

owner is required, as part of the package, to do the repairs to the balcony. I

think that is the only significant requirement that the Housing Corporation

placed on him as part of the package. If you want to go back into history in

terms of what the Housing Corporation spent on Elizabeth Towers with re-cladding

it some years ago, and to get some sense of the cost of that and the outstanding

debt, I think I would have to defer to Ed.

MR. HEATH: Elizabeth Towers back when it was

built, I think in maybe the early 1960s cost, about $5.7 million. Throughout the

years we have depreciated that building by the tune of about $3.7 million. We

spent $8.2 million in major renovations throughout the years. The biggest part

of that I believe was something like $6 million or $7 million for the exterior

cladding about five or six years ago.

In any event we capitalized that on our books,

which made the net book value $10.3 million. Our selling price was $5.3 million,

so in fact we have lost $5 million over the past three years made up of a

write-down in our book value in 1995-1996 of $2.7 million. We further wrote it

down at the end of 1996-1997 by another $1.9 million as a result of various

appraisals that we had and based on appraisals as a result of our attempts to

sell. Finally this year, when we did sell the building, we had to record a

further loss of $465,000.

MR. J. BYRNE: Did you answer my question, with

respect to the money being spent on the... I heard a figure of $1 million being

paid by government to do the renovations or the repairs on the balconies and

what have you after it was sold.

MR. GRANTER: No. The Housing Corporation did

not incur any expenses for repair of balconies. That was a requirement that we

placed on the new owner. That is something he has to do as part of the agreement

to sell.

MR. A. REID: As a government we provided some

options for everyone when they bid. We have done a deal with the new owner. Will

you explained what the deal is too, please?

MR. GRANTER: Basically, we have provided the

owner - we have taken a mortgage, and his down payment was approximately 10 per

cent.

MR. J. BYRNE: Right, that (inaudible).

MR. GRANTER: As a condition of the mortgage he

is required to incur the cost of repairing the balconies.

MR. J. BYRNE: Taking the mortgage out,

government offered that to each group that bid on it. They had the same option,

did they?

MR. GRANTER: They had the same option, yes.

MR. J. BYRNE: Okay.

MR. A. REID: That was offered to everyone up

front.

MR. J. BYRNE: Yes, that is what I am asking.

With respect to CMHC and the deal that was worked between them and I suppose

Newfoundland and Labrador Housing and the provincial government, you mentioned

4,050 units.

WITNESS: Yes.

MR. J. BYRNE: I am just wondering about the

impact that had on Newfoundland and Labrador Housing with respect to staff, jobs

and what have you. Did it go up, down? Who took the responsibility for this? Is

CMHC completely gone now, is it a phased in process, and are you going to be

taking over the jobs that were there with them? Because I know there has been a

pretty big lay off or retirement, however you want to refer to it, down sizing,

in Newfoundland and Labrador Housing over the past couple years. If you are

taking on all this extra work, why is the staff going out the doors?

MR. GRANTER: The extra work that we have taken

on as a result of the agreement, as a result to taking responsibility for the

administration of the CMHC units, required that we essentially hold the

decrease. We held back six people to take over the administration of the CMHC

units.

MR. J. BYRNE: Six people, that's it, for 4,000

units?

MR. GRANTER: (Inaudible) basically the staff

reductions that we were planning last year. We decreased the number of

reductions by six to be able to handle the CMHC portfolio.

MR. J. BYRNE: What about all the employees with

CMHC? Where did they go?

MR. A. REID: Don't assume that 4,050 are 4,050

apartment units. Four thousand and fifty units are a mixture. Explain that. I

think that is where he is coming from.

MR. GRANTER: The CMHC units are not units that

we operate directly. Basically, we are administering agreements that were

established between CMHC and sponsor groups. For example, it could be a service

club that is involved with the administration of the group. We are not

maintaining them as such.

MR. J. BYRNE: I get you. Like, say, the

Kinsmen's Centre in Torbay (inaudible) -

MR. GRANTER: Yes.

MR. A. REID: Agnes Pratt Home, for example

(inaudible).

MR. J. BYRNE: I have a couple more questions

along that line. You mentioned mortgage costs, $2.9 million. That is a

$2,500-subsidy. Is that per unit? If that is the case, are we getting any money

from the feds for this? Do you know what I am talking about here now?

MR. A. REID: The mortgage program cost, $2.9

million?

MR. J. BYRNE: Yes, and the $2,500-subsidy?

MR. A. REID: Annual average subsidy amounts to

$2.5 million, (inaudible).

MR. GRANTER: I think that is the difference

between what we collect in terms of payments from the mortgagee as compared with

the actual cost of borrowing the funds that were used. Am I close (inaudible)?

MR. A. REID: That is the amount that we

subsidize.

MR. GRANTER: That is the amount that we

subsidize. Basically the owner of the property is paying an interest rate that

is lower than the going rate.

MR. A. REID: We pick up $2,500 on an average

per RRAP grant, say, or for a RRAP mortgage. Do you understand that?

MR. J. BYRNE: Yes. With respect to the RRAP

program itself, that is another note I made here -

MR. GRANTER: Just to finish that, that subsidy

is cost-shared with the federal government. Sorry.

MR. J. BYRNE: This was the question, yes. What

percentage is cost-shared?

MR. GRANTER: It averages 75 per cent.

MR. A. REID: Seventy-five twenty-five.

MR. J. BYRNE: Seventy-five twenty-five?

MR. A. REID: Yes.

MR. J. BYRNE: Twenty-five from who?

MR. A. REID: Us.

MR. J. BYRNE: It is really not costing you

$2,500, is it?

MR. A. REID: It costs us about $600 for the

$2,500.

MR. J. BYRNE: The RRAP program itself, what is

the story on that this year? You made an announcement not long ago with respect

to that program. Can you update me on that?

MR. A. REID: It is hard for me to update you,

Jack. Because it was only this afternoon the Minister of Finance and Treasury

Board and I were having another conversation. We are waiting for the Premier to

come back to discuss with the Premier the possibility of changing our RRAP

program this year.

MR. J. BYRNE: Changing it.

MR. A. REID: Yes. What has been suggested, and

I will say to you it has only been suggested, involves a sizeable outlay of

money by the provincial government to the tune of something like $3 million

extra. You know yourself in the House, you know that the Minister of Finance and

Treasury Board has been pretty rigid when it comes to any extra money going

anywhere this year. Because we are tight on dollars, there is no two ways about

it.

What we are looking at, and I might as well say

this, because I think some people know it anyway, is the combination of RRAP

emergency response under social services, for example, and the possibility of

the Housing Corporation contributing an extra $1.5 million per year for a two

year program. Instead of us having a RRAP program as we know it, giving out

loans up to $25,000 to upgrade a house to a mortgage standard - and you know

what I am talking about. Most people who get RRAP grants have to spend $15,000,

$20,000, $25,000, and in a lot of cases they do work on the houses that they do

not want done. They go in and say they need a few windows, and they end up doing

the roof and the basement. I think everybody understands what I am saying here.

We have talked to the federal government about

this. We feel that there is a lot of work that you could do around, especially

in rural Newfoundland, with RRAP if you were not forcing people into taking

loans of $25,000 or $30,000. What I am saying is you could do a lot of work with

$5,000 grants, $10,000 grants and smaller RRAP loans and grants which would go a

longer way.

If you are going to put social services emergency

stuff into it as well, well why not? The Housing Corporation delivers that on

behalf of social services anyway. It is called Human Resources or whatever it is

called now, I don't know. I am sorry, I should not be calling it social

services. If you throw that in there too, it means that you take care of the

social service end of it, but also under the old RRAP program take care of some

of the senior citizens, so you are getting a greater cross-section.

You are talking here with a basic RRAP program of

doing 300 houses this year. Under the program that I am talking about - we are

talking at least 1,000, am I correct? We are talking at least 1,000 units

getting done up. Not necessarily up around the $25,000 to $30,000 bracket, but a

lower level. We would still do some RRAP, but the majority of the RRAP that we

would do would be a lot less than what we have been doing in the past.

Now Jack, I don't know if I am going to get that or

not. If you ask me a question in the House, the way I am going to answer it is

the same way as I answered tonight. I don't know honestly -

MR. J. BYRNE: I will ask you a question now -

MR. A. REID: If we do that we will be

announcing it in the next week or so.

MR. J. BYRNE: The question I ask you now is

this. It sounds all well and good in theory, but I would imagine some of the

problems that were incurred before through Newfoundland and Labrador Housing,

why they had to go to $15,000, $20,000 and $25,000, were because of certain

electrical standards, building codes and what have you. Will you be able to get

around that?

MR. A. REID: We have talked to the federal

government about that and about providing the money, and yes there is. We feel

that if we go and inspect a house and find that they only need new shingles on

the roof, then why don't we just put new shingles on the roof, and have a

program of a higher level of forgivable money. So you are actually then going in

and just giving these people a grant, and not tying them up in a mortgage.

The other point I will make to you as well is that

over the past, I suppose, almost ten years now, myself as an MHA, I know my

district well enough to tell you who needs RRAP and who does not need RRAP. I

feel that the MHA himself or herself should have an input into who should

qualify for assistance when it comes to repairs to one's house. If we can get

that program, I think that the government would like to see the local MHA having

direct input into the amount of money and who would get it at the end of the

day. Don't go out and repeat that because you know what will happen. Everyone

will be after you for a RRAP grant tomorrow.

MR. J. BYRNE: I don't know (inaudible). You

mentioned Pleasantville and the apartments down there. I believe you said there

are 120 left. You talked about if you do something with it down the road it will

be different from what happened with Linden Court, and you will probably keep

out of the situation that developed over there. You mentioned co-op housing.

Could you say a few more words about that, what you have in the back of your

mind type of thing?

MR. A. REID: Yes. There is a group down in

Pleasantville that has been after us for five or six years that are interested

in putting together a group of people who would own and operate the buildings

down there, or at least one building that we know of. It is the same group that

came to me some time ago. They were afraid that we were going to privatize it.

You know what I am talking about.

Personally, everything is on hold with regard to

Pleasantville, and I have told that to the people down there. I am not going to

sell off Pleasantville for someone to move in and turn it into condominiums. I

am saying that I'm not. As long as I am minister I'm not. I think I can say it

on behalf of the government because the Premier talked to me about it too. We

are not going to turn around and sell it off to somebody who is going to

increase their rent by a substantial amount, but we might consider a group of

citizens coming in and saying: Look, we might buy this ourselves. If the

government made the right deal with us, we might take over this building

ourselves. That would be the first option as far as I am concerned, and I would

certainly look at that.

I don't think the Housing Corporation for some time

will ever have the authority to just go out and sell it. I think they are going

to have to make a commitment to the residents of the area, and ultimately, I

suppose, go to the residents and ask: What would you think would be the best

thing to do with it? The residents are definitely going to have a say in what is

going to happen in Pleasantville. We only have 128 units left down there, and

that is all we have left in the city, so it is not going to mean a lot one way

or the other to us.

MR. J. BYRNE: Buckmaster's Circle. I got a call

a while back on this - and I'm not sure if it came up in the House or not - that

Newfoundland and Labrador Housing had hired a contractor to do a fair bit of

work up there: renovations, repairs, maintenance, blah-blah-blah. It went on for

month. The work was never completed. The contractor was paid for it, and they

eventually had to get someone else to go in and complete the job. Is that fact

or fiction?

MR. A. REID: I cannot answer that one. I'm

sorry.

MR. GRANTER: I don't know how far back you are

referring to. The only thing I can tell you is that from about 1992 to 1995

there were four -

MR. J. BYRNE: Within the past two years, I

would say.

MR. GRANTER: Not in the past two years, no.

There were four separate contracts and three contractors who were involved with

modernization and improvement activity at Buckmaster's. The circumstance you are

referring to, I am afraid I cannot deal with that.

MR. A. REID: I will get you an answer to it. We

will research it, come back and I will give you an answer. Because I don't know

anything about it either.

MR. J. BYRNE: Because definitely something went

on there, because I went and looked at it.

MR. A. REID: We will find an answer for him as

soon as we can. Go ahead, say it.

MR. HEATH: I don't know very much detail, but I

think you are right. There is a problem with one of the contracts that surfaced

in the past year-and-a-half maybe.

MR. J. BYRNE: That is right.

MR. HEATH: We did bring somebody else in. I am

not sure if our own forces or another contractor had fixed it up. That is about

as much as I know.

MR. J. BYRNE: The work was never completed by

the original contactor. He was paid for it -

MR. HEATH: I think it was completed, but it was

faulty.

MR. GRANTER: I am sorry, maybe I can fill in a

little more of this. Last year after the contract was completed we started to

receive complaints from some of the tenants that water was coming in through the

windows and so on. We did hire another contractor to go in to do some repairs,

and in the course of doing that we asked him to take a look at the quality of

the work that had been done generally. He inspected one building of four units

and discovered some workmanship problems, I guess you might say. We are not sure

at this point whether that extends into other contracts or not, but we have

taken preliminary sort of legal precautions, I guess you might say, to protect

our position until we can get in and more fully evaluate the problem.

MR. J. BYRNE: Can I have the name of the

original contractor who had done the work, the amount of work he has done, how

much he was paid, if he completed the job, and the same information with respect

to whoever had to go in and follow up?

MR. GRANTER: I can provide you with that

information within the next day or two, sure.

MR. J. BYRNE: That's it for me for now.

CHAIR: Mr. Oldford.

MR. OLDFORD: Pass.

CHAIR: Mr. French.

MR. FRENCH: No, I think Jack has pretty well

covered it.

MR. A. REID: He usually does, doesn't he?

MR. FRENCH: He usually does. He is pretty

thorough, Jack is. Just one question. On page 247 we have reduced the Grants and

Subsidies by some $2,102,200. What is the reason for that?

MR. A. REID: Go ahead.

MR. GRANTER: That is a combination of

reductions in cost and increases in revenue primarily from increases in rent

geared to income scale. I guess included in there as well would be some asset

sales which get reflected into that bottom line.

MR. FRENCH: That is why it is down $2 million.

MR. A. REID: The better we do, the less the

subsidy is. The more money the Housing Corporation makes the less the government

gives us. You think it would be the other way around, wouldn't you? That's a

fact, the Housing Corporation operates that way. The more efficient the Housing

Corporation is, the more money the government takes away from us. That is all

(inaudible).

MR. FRENCH: Jack, do you have any more

questions for the Newfoundland and Labrador Housing Corporation?

MR. J. BYRNE: Yes.

MR. FRENCH: I will give Jack - because that is

the only question I had for Housing.

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

like Cowan Heights and these places, you mentioned some time ago that you were

thinking about getting out of that business altogether across the Province. Can

you give us some update on that situation?

MR. A. REID: The mandate of government back in

(inaudible) Program Review in October of 1996, we were directed as a housing

corporation to get out of competing with the private sector in every possible

area. We put a bit of an argument forward to government about Southlands at the

time, because we wanted some organized development and so on. You remember that

argument went on and I made some comments in the House about it. Other than

Southlands we were basically told that the private sector were looking at us now

as being in competition with them and that this government did not feel that the

Housing Corporation should be actually out there doing that.

We proceeded immediately to sell off a lot of

service land, valuable land, especially in the Mount Pearl area. Almost

immediately after that we started to sell off property. We still have a sizable

portfolio of property which stretches from Port aux Basques to Goose Bay, to

Carbonear, to St. John's. Within the next couple of weeks or so, you are going

to see an advertisement in the paper basically offering a large amount of our

property for sale, a general statement that we are in the process of selling off

some of our properties.

Like I said earlier, you have to be careful, you

cannot throw it all on the market the one time because you will upset the whole

market. We are in the process of selling off. We don't have very much left in

regard to property other than vacant land, raw land property. For example, we

still own a sizeable chunk of land on the Kenmount called the Kenmount Lands.

All the land in on the back of Kenmount Road, on the right hand side as you are

going out. We own that. We still have some land in the Mount Pearl area. We

still have Southlands, for example. What else do we have in St. John's?

WITNESS: Residential lands.

MR. A. REID: We have mostly residential land.

On top of that, gentlemen, we own a lot of land in St. John's that we lease,

that there are buildings on. Believe it or not, we have long-term leases with a

large number of properties that we make good bucks on. What I am talking about

is we basically own the land and people have gone in there, built buildings on

the land, and are paying us so much on a lease for land in and around the St.

John's area.

We are hoping to convince the owners of those

properties as well to buy those out and get them off the books. I don't know how

many units we have, gentlemen, in regards to residential units outside St.

John's that are vacant, but there is a large number I believe.

MR. GRANTER: There is not really as large a

number as you might think. In some of the smaller communities where many years

ago developments were done, there are residential lots for which there is just

no demand. In the urban centres, in Gander and Corner Brook - in Gander we have

some undeveloped land, and each year we sell some of that in block form to

developers and they carry through with the lot developments. The major one

really is Southlands in St. John's.

MR. J. BYRNE: Mr. Granter, could you provide me

with a list, since 1996, since the policy change, especially of, I suppose, the

developed lots that have been privatized and sold off, and to whom and for how

much?

MR. GRANTER: Developed lots?

MR. J. BYRNE: Do you know what I am asking? Any

of the land -

MR. GRANTER: Since when?

MR. J. BYRNE: Since the policy change. You

mentioned 1996, didn't you, just a few minutes ago?

MR. A. REID: Two years ago.

MR. J. BYRNE: Two years ago.

MR. A. REID: No, less than two years ago.

MR. GRANTER: I am sorry, I am not sure I

(inaudible) the question.

MR. J. BYRNE: The question is, could I get a

list -

MR. GRANTER: Residential?

MR. J. BYRNE: - of any properties that have

been sold by Newfoundland and Labrador Housing, to whom, and for how much?

MR. GRANTER: The list of land sales, to whom

and for how much.

MR. J. BYRNE: Yes.

MR. GRANTER: It will be a long list.

MR. A. REID: (Inaudible) lot of work.

MR. J. BYRNE: Maybe I am asking for too much.

Maybe if I just asked for -

MR. A. REID: You want to know if there was a

house in Boswarlos on the West Coast sold, do you? Is that what you are looking

for?

MR. J. BYRNE: No. I am thinking about in and

around Cowan Heights, these large tracts of lands that you had developed and

probably surveyed. Different extensions in there, Cowan Heights extension No. 15

or something. I don't know.

MR. GRANTER: I think we can do it.

WITNESS: Block lands.

MR. J. BYRNE: Block lands, yes.

MR. GRANTER: We can do it -

MR. J. BYRNE: Basically I am asking: What

developers in and around St. John's bought up these properties? I am just

curious to know who that may be and how much they paid.

MR. A. REID: (Inaudible) all of them that time.

Close to it.

MR. GRANTER: There have not been a lot of block

sales in the St. John's area. In recent years we have done some in the Mount

Pearl area, in Pearlgate, for example.

MR. J. BYRNE: Whatever, (inaudible).

MR. GRANTER: Cowan Heights was developed by the

Housing Corporation.

MR. A. REID: The last block of land was sold in

Cowan Heights last year, am I right?, the last parcel. A couple of years ago.

More than two years ago. So it is not Cowan (inaudible) -

MR. J. BYRNE: Whatever. Mount Pearl, St.

John's, what have you, you know what I am talking about.

MR. A. REID: Pearlgate and places like that, I

guess that is what he is asking about.

MR. J. BYRNE: Yes.

MR. A. REID: Yes, we can provide that to him.

Yes, we can provide that, sure, no problem.

MR. J. BYRNE: With respect to the subsidized

housing that you have been selling off - for example, Linden Court and these

places, I suppose, and other housing individual units, I would imagine - you say

you changed that policy. What I was always lead to believe was that if you take

areas like Cowan Heights, Pearlgate, these Newfoundland and Labrador Housing

developments in and around St. John's, the argument that was being put forward

all the time by Newfoundland and Labrador Housing and the Department of

Municipal and Provincial Affairs was that they used the revenues from these

developments to subsidize their housing units.

MR. A. REID: Social housing.

MR. J. BYRNE: Social housing, yes, there you

go. Now we see that these properties are being sold off. There is going to come

a time, of course, when you won't be having any revenues from land development.

Is this a chain reaction? Are we seeing the selling off of the housing because

of the fact that you have no income from the land developments? Do you following

what I am asking you? It is like a chain reaction there.

MR. A. REID: No. The only reaction that

Newfoundland and Labrador Housing has made is a reaction to the private sector.

It is a reaction to pressures coming on the previous government -

MR. J. BYRNE: I can understand that.

MR. A. REID: Okay?

MR. J. BYRNE: Not to cut you off. I can follow

that. I really won't put up an argument against that. What I am saying is that

you use the money from private developments for social housing.

MR. A. REID: Yes, we do.

MR. J. BYRNE: If you don't have the revenues

from that now -

MR. A. REID: That is right.

MR. J. BYRNE: - which wouldn't surprise us,

what impact is that going to have on your social housing program?

MR. A. REID: It is going to have a severe

impact unless the government replaces the dollars.

MR. J. BYRNE: How are they going to do that?

MR. A. REID: That is a good question. I suppose

when we reach a point where we are down to less than what we can - if this year,

for example, we don't make any sales and generate any revenues, then the

Province's grant to us in going to have to increase. It is as simple as that.

That is the whole question of what this Province and what this government is

going to do in relationship to a social housing policy.

We are working on that now. We have a paper ready

now to go in the system and we are making some recommendations. There has been a

lot of work done it. We are making some recommendations to the government. We

are okay now because the federal government, in the devolution, has given us

enough dollars to keep going at least as good as we did the year before last and

the year before. Don't forget, we have had a fair profit in the last three or

four years in regards to selling these buildings.

MR. J. BYRNE: Yes, that is right.

MR. A. REID: This year it is going to be

harder, and next year is going to be harder again. As you get out of it all -

MR. J. BYRNE: And the feds, and the feds.

MR. A. REID: You are absolutely right. Now, you

made a comment to start with and I have to correct you.

MR. J. BYRNE: Okay.

MR. A. REID: You talked about subsidizing units

in St. John's that we subsidize and you said in Linden Court.

MR. J. BYRNE: Yes, I did.

MR. A. REID: Linden Court is not subsidized. It

never was subsidized.

MR. J. BYRNE: I meant social housing.

MR. A. REID: Churchill Square was never

subsidized. These people who are living down there pay full shot for everything.

They are not subsidized people.

Yes, you are right, the government is going to have

to come up with a policy in regards to social housing and what it is going to

do. Because sooner or later we are going to run out of areas to sell and we are

not going to have the money to reinvest into social housing. I agree with you.

MR. J. BYRNE: I'm (inaudible).

CHAIR: That ends the question on Newfoundland

and Labrador Housing, then. We can go back to municipal and provincial affairs.

MR. A. REID: Are we finished with Newfoundland

and Labrador Housing?

CHAIR: Yes.

MR. A. REID: We will provide you with that

information you asked for, Jack, and we are only too glad to. You can see we are

pretty open. We have nothing to hide at Newfoundland and Labrador Housing, not a

thing. Gentlemen, thank you very much.

MR. WOODFORD: Mr. Chairman, do you want to pass

that head?

CHAIR: Yes. I was about to ask the Clerk to

call that head.

On motion, subhead 1.1.01, carried.

On motion, Newfoundland and Labrador Housing

Corporation, total head, carried.

CHAIR: Mr. Minister, I don't expect to give you

another ten minutes. You had fifteen minutes. I will go to Mr. French to start

off with the Department of Municipal and Provincial Affairs.

MR. FRENCH: On page 235 under 1.1.01.01,

Salaries, in 1997-1998 we budgeted $214,000 and we went to $287,700, an increase

of $73,700.

MR. A. REID: Bob, I haven't got it. Why haven't

I got it? Tell me.

MR. FRENCH: Page 235. I am sorry.

MR. A. REID: The Minister's Office?

MR. FRENCH: Executive and Support Services, the

Minister's Office, yes.

MR. A. REID: Executive and Support Services,

okay.

MR. FRENCH: Salaries increased by $73,700. Can

you tell me why? How many people were hired?

MR. A. REID: I had a fellow working for me, and

have had a fellow working over in my office for the last five years called

Walter Milley. Walter Milley's salary has never been budgeted in the department.

MR. J. BYRNE: Did he used to work with Crown

Lands?

MR. A. REID: No, that is another Walter Milley.

He works now as a secretary to appeals and this sort of stuff. He does all the

workers' compensation and the Canada Pensions stuff for me. Basically he is

political. You know Walter Milley. He used to be president of the party years

ago. You know who I am talking about. You don't want to hear that? I am not

trying to cover it up. His salary had to be taken care of last year. There was

no heading to put it under, so I asked for it to be put in there. I am not

trying to cover it up.

MR. J. BYRNE: So you covered it up for the past

five years.

MR. FRENCH: Is that his salary?

MR. A. REID: That is his salary, plus a

secretary that we had in there as well. That is what it is.

MR. FRENCH: Where have we charged his salary

for the past five years?

MS COLE: If you remember from last year, the

revised in the Minister's Office was also up, and that was the same reason.

MR. FRENCH: I noticed in -

MR. A. REID: I have done it every year.

MR. FRENCH: - 1998-1999 we have gone back down

to $229,500.

MR. A. REID: That is right. It is still not

there again this year.

MR. FRENCH: Why wouldn't we show it this year?

MR. A. REID: I don't know why. What is the

answer? We just don't have an answer to it.

MS COLE: We don't have it. We are never given

the money for it so we have to try to find it during the year.

MR. A. REID: What Treasury Board does to us is

say every year: See if you can find the money in your own budget. Of course, by

the end of the year we cannot find it and we have to go back and ask for it.

Then they have to put it in under a special warrant or whatever they put it in

under at the end of the year. I agree, I am not trying to cover it up, that is

exactly what it is. They did the same thing to me this year. I asked for his

salary and they said: You see if you can save his salary and the secretary's

salary and come back to us the end of the year again.

WITNESS: Same answer last year too.

MR. A. REID: Same answer every year. Am I right

in saying that?

MR. J. BYRNE: Why don't you fix it so we don't

have to ask the question? (Inaudible).

MR. A. REID: What?

MR. J. BYRNE: Fix it this year so we won't have

to ask the same question next year and save five minutes (inaudible).

MR. A. REID: I will have to go back to Paul and

ask him to fix it.

MR. FRENCH: Purchased Services went from $3,700

to $14,900. Why was that?

MR. A. REID: Which is that, Purchased Services?

MR. FRENCH: Under 1.1.01.06.

MR. A. REID: Go head, Ramona.

MS COLE: From $3,700 up to $14,900? That is

your entertainment vote.

MR. A. REID: That is my entertainment vote, is

it?

MR. J. BYRNE: Your what?

MR. A. REID: My entertainment vote. What is

that? That is my trips. I know what that is. That was part of the

regionalization, the travelling I did around the Province, and some of the

expenses that we had. We are back down to $3,700 again this year, and that is

what it will be.

MR. FRENCH: In 1.2.01, Executive Support,

Salaries is up just a small amount, by $15,600 from 1997-1998, general

administration.

MR. A. REID: Secretarial support for the

Director of Communications.

MS COLE: Again that is one that is not

budgeted.

MR. A. REID: Speak up more.

MS COLE: That is another position that is not

budgeted and we have to find money within our existing Salaries allocation to

cover it.

MR. A. REID: The Director of Communications is

Gary Callahan. His secretary.

MR. FRENCH: On page 236.

WITNESSES: (Inaudible).

SOME HON. MEMBERS: (Inaudible).

MR. A. REID: Did you know that? You did not ask

that question. Off the record. Turn it off, please.

[Master Tape turned off at this point for an off

the record exchange.]

MR. FRENCH: Don't tell John Efford that,

Arthur. She's gone.

MR. A. REID: I had to say it, Jack. A good girl

too by the way, one of the best we have over there.

MR. J. BYRNE: She has been there for ages, boy.

MR. A. REID: I know she has.

CHAIR: There is no blood relation. It is his

sister-in-law, Minister.

MR. A. REID: Bob, pretty good hey? That's not

bad, hey buddy.

MR. J. BYRNE: I was going to be out of here by

8:30 p.m., but for that I'm here till 10:00 p.m.

MR. A. REID: I know Tobin wouldn't laugh if he

heard that one.

MR. FRENCH: In 1.2.02.01, Salaries, there is an

increase in salaries of $256,600 in the 1997-1998 Budget. Again, who was that

for, what were the positions, and how many positions were there?

MS COLE: In our central services group we

provide services to three different departments. When that was merged late in

the previous fiscal year, 1996-1997, we were not sure exactly how much we would

need in the budget. For 1997-1998 it became apparent that we were short-staffed

and we had to find the money again within our existing allocations and move it

in there.

MR. A. REID: You do understand that we do the

administration for three departments? Did you know that? You did not know that,

did you?

MR. FRENCH: I knew you did it for Ernie

McLean's department.

MS COLE: Also for Development and Rural

Renewal.

MR. A. REID: We were given that last year and

we were not given a budget at the time to do it. This is the money, that

increase that we needed in order to do that. We are administering three

departments, and I guess a lot of people did not realize that.

MR. J. BYRNE: Administration.

MR. A. REID: No administration.

CHAIR: Is that to your advantage, Minister, to

be administering three departments?

MR. A. REID: I don't know. I wonder sometimes.

CHAIR: We are getting carried away here. Go

ahead, Bob.

MR. FRENCH: In Transportation and

Communications, we went over by $32,000. That is 1.2.02.03. It went from $61,900

to $93,900.

MR. A. REID: Increased requirement for travel

to regional offices of the three departments, serviced by the central service

group, especially by the information technology staff. It was a direct result of

taking over those other two departments.

MR. FRENCH: Again, Supplies were over budget by

$25,000.

MR. A. REID: Additional supplies required as a

result of converting the central registry from filing cabinets to open shelving.

MR. FRENCH: Information Technology went from

$340,000 to $409,700. What would we have purchased for $409,700 in Information

Technology?

MR. A. REID: Increased usage cost and

additional computers for staff involved with the department's debt relief

program. You know what the debt relief program is. That was the $12 million.

MR. FRENCH: I am really curious about

something. We had revenue of $3,500. Where did that come from? I am just

curious, that's all, so I have to ask it

MR. CURTIS: That is miscellaneous revenues that

are collected that are not attributable to any subhead, like overpayments from

prior years; or people who are repaying travel advances, where they got too much

and it is not really applicable to any area. They get lumped in under the

administration activity.

MR. A. REID: We have to shove it in there

somewhere. They will not give it to me.

MR. FRENCH: They should give it to the MHAs.

MR. A. REID: I give you fellows enough now.

CHAIR: Thank you, Bob.

MR. FRENCH: You will get no argument on that.

CHAIR: Well deserved.

MR. FRENCH: On page 237, 2.1.01.01, the

Salaries were over by $71,200.

MR. A. REID: Additional staff person to

administer the debt relief program, and additional secretarial staff for the

Corner Brook regional office. That is where it came from.

MR. FRENCH: Who would have been hired?

MS COLE: What we did was we actually

transferred one of our regional managers from the Eastern regional office to

handle the debt relief program, and then temporarily assigned somebody from

within headquarters into that position. There was nobody new hired, we just

moved some people around.

MR. A. REID: Keith Warren came over from

regional office. He was a regional director over there. He is not over there

now. We had to replace him with someone else who cost us extra money.

MR. FRENCH: In Transportation and

Communications we spent $189,100. What would we have spent that on?

MR. A. REID: Debt relief, again. Increased

travel by regional staff in relation to debt relief.

MR. FRENCH: Down at the bottom, Municipal

Finance, 2.1.03, the decrease in Salaries was $25,500 in the 1998-1999 year. We

are going to go down $25,500.

MR. A. REID: We have laid off one municipal

financial officer position.

MS COLE: (Inaudible) laid off, he retired.

MR. A. REID: He retired and he has not been

replaced.

MR. FRENCH: On page 238, in 2.2.01.01,

Salaries, we are up $15,100.

MR. A. REID: Additional support person to

administer the special employment initiative. Do you see what is happening here?

I had the debt relief and the employment initiative, and it is costing me - just

listen to this - and my department to administer this, and I am not getting a

copper from the government for it. We go back continuously. Am I right?

MS COLE: Yes.

MR. A. REID: All the time fighting with

Treasury Board and saying: How can I administer these programs unless you let me

take some money out of the programs to use for administrative staff? They say no

every time. It ends up coming out of my budget. That is the special employment

initiative, and we have not talked very much about that, as you know.

MR. FRENCH: Local Government Policy, 2.2.01.10,

Grants and Subsidies, $61,000. What would we have spent that on?

MR. MOORE: That is an annual grant of $49,000

to the Federation of Municipalities and an annual grant of $12,000 to the

Association of Municipal Administrators. It is an ongoing grant program that has

been in place for a number of years.

MR. FRENCH: In 2.2.02.01, Salaries, we were

over by $16,600 and this year we are going down lower. We were up and then we

went down.

MR. A. REID: Down because of one position, a

departmental program coordinator. That position will remain vacant for awhile.

We are down because of that, and up because there is no money funded for a

clerical position.

MR. FRENCH: Again in Revenue-Provincial we

received $8,000. It is not a large amount, but I am just curious about it.

MS COLE: That is in Urban and Rural Planning.

That would be fees for appeal hearings on planning.

MR. A. REID: We brought it in last year. It

charges fees now to have hearings.

MR. FRENCH: On page 239 I will go down to

Industrial Water Services, 2.3.02. Salaries were over budget by $49,400.

MR. A. REID: Increased results from delays in

transferring industrial water systems to municipalities. Explain that, Ramona.

MS COLE: As you know, last year and over the

next two years we are working on transferring all the industrial water systems,

the twenty-two systems that we operated as a government. The figure that was put

into the original budget was based on transferring one-third of the systems at

the beginning of the year. We were not quite ready at the beginning of the year.

We actually transferred more than one-third but it was over the period of the

year. We were not able to reduce it by a position.

MR. FRENCH: Did we hire? Because the salaries

are up $49,400. Did we hire somebody to do that?

MS COLE: No, we didn't. The figures that were

put into the original budget assumed that one person would be laid off, and we

did not lay off a person. We kept them on, and they will be kept on actually

until the end of the third year because we are divesting of the systems across

the Province. We cannot lay off. We have one person in each of the three

regions, so we have to retain all three of them.

MR. J. BYRNE: But for next year it is gone

(inaudible) $74,800, I can understand what you answered (inaudible), $124,200,

but next year it is up to $137,500.

MS COLE: Yes. From $124,200 to $137,500 would

provide for some overtime related to transferring those systems, plus the salary

increases that have already been announced. We would have had to put provision

there, and an extra pay day in this fiscal year.

MR. FRENCH: Farther down, 05, Professional

Services. We spent $200,400. It is an increase there of actually what was

budgeted. Where would we have spent that?

MS COLE: That would have related to some

engineering work on some of the systems. Sometimes the systems required

additional work before we could turn them over. Until we actually got into the

process of negotiating with the municipalities we had no idea how much we would

have to spend on those.

MR. FRENCH: Would they be consultants whom we

hired?

MS COLE: It would not necessary be consultants.

Some of it would probably be some additional work that would have done been out

there.

MR. CURTIS: That also covers the wages of the

system operators. They get paid an honorarium for operating the systems and just

checking on the systems to make sure they are running smoothly, so that covers

the wages they get.

MR. FRENCH: Still on page 239, there is

$950,000 in Revenue-Provincial. Would that have been from the sale of water,

say, to municipalities?

MS COLE: Yes. We charge a tariff of $0.55 per

1,000 litres, I believe.

MR. A. REID: After we devolve ourselves of the

industrial systems this is going to down substantially because this is a

detractor in some cases, like Marystown for example. We make a good buck on that

system but we have to get rid of that system because we are getting rid of all

of them. The town of Marystown eventually will be making that money.

MR. FRENCH: We would never, say, get rid of the

water system in St. John's, would we? I realize that is run now by a regional

board or -

MR. A. REID: It is not ours.

MR. FRENCH: That is not ours in there?

MR. A. REID: No.

MR. FRENCH: That regional water system is owned

by the city?

MR. A. REID: Yes.

MR. FRENCH: They are the ones who charge the

water (inaudible).

MR. A. REID: Yes.

MR. FRENCH: On page 240, Debt Servicing, there

was a decrease of some $3,109,500. Would that be because municipalities had

refinanced with banks rather than through municipal financing?

MR. A. REID: One refinancing of an interim bank

loan through NMFC instead of an anticipated two, and a greater portion of

payments went towards the outstanding balance. Ramona, do you want to give us

some more detail on that?

MS COLE: That basically says it all. Normally,

we would have two refinancings through NMFC in a year and this year there was

only one. Because of the fact that some of those were going out to banks, and

also because some of the money that was coming in from the refinancing through

the banks could be used to reinvest in new loans instead of having to go out and

borrow through NMFC again for the second lot of loans.

MR. FRENCH: Under Municipal Operating Grants

there is revenue of $175,900. What would that have been from?

MS COLE: With the Municipal Operating Grant

system, the grants are paid out on a quarterly basis. At the end of the fiscal

year we do a recalculation to be sure, because sometimes things change during

the year, and some municipalities actually owe us money and send it back in to

us.

MR. FRENCH: Because it went from $2,516,800 to

$8 million.

MS COLE: No. The revenue figure was the one up

above from $200,000 down to (inaudible).

MR. FRENCH: I am sorry, I'm ahead of you know.

3.1.03.10, Grants and Subsidies. It went from $2,516,800 to $8,983,800.

MR. A. REID: Increase in expenditures of this

program are related to the following: $6.1 million for the Special Employment

Initiative, and $367,000 to the City of St. John's related to the stabilization

of the Lower Battery.

MR. FRENCH: I hope you have the same program

again this year. I mean that, sincerely. In my district out of those grants I

got some very good benefits. I managed to get some work done that needed to be

done that was beneficial to me.

MR. A. REID: I have been here now over nine

years and I can honestly say that in the nine years I have been here I have

never had a program in my district as beneficial as that one. I don't care about

the water and sewerage or any (inaudible), there has never been one as good.

MR. FRENCH: I don't mind. I would certainly

compliment the minister on that one. Because like I said, in my district I got

some great benefits from it. In other words, I got a good bang for the buck that

we spent, and both towns that used the money did well, and the school up there

did an exceptionally good job on what they wanted their money for.

MR. A. REID: No politics played with it at all,

as you know.

MR. FRENCH: Yes, (inaudible).

MR. A. REID: A little bit on your side over

there more than anyone else, because some of you got more money than some

others. I am not going to say anything about that.

MR. FRENCH: I won't argue that with you.

AN HON. MEMBER: (Inaudible).

MR. FRENCH: I hope he does find out.

AN HON. MEMBER: Who?

MR. FRENCH: John Efford. Doug said he hoped

John Efford doesn't find it out. I said I hope he does. Again, on page 240,

under the Regional Cooperation Initiative, 3.1.04.10, look at Grants and

Subsidies, which says $158,500.

MR. A. REID: Task force and regionalization,

their expenses, and the commissioner's review on Southlands. The cost of the

regionalization hearings and also the commissioner for Southlands, that is where

the increase is.

MR. FRENCH: On page 241, Assistance and

Infrastructure, there was an increase in expenditures of $1,304,000 that was

under 3.2.01.11, Debt Expenses.

MR. A. REID: A greater portions of payments

went towards a principal than were estimated at the time in 1997-1998 when the

Budget was prepared. We had to put more money in it. Ramona, pick up on that.

MS COLE: If you remember back in 3.1.01, the

second reason the minister gave for the reduction there was that a greater

portion of the payments went towards principal. 3.1.01 is the interest part, the

current account, and 3.2.01 refers to the capital part. As we made the payments

there was just more towards the principal as apposed to the interest.

MR. FRENCH: In 3.2.02, the Canada-Newfoundland

Infrastructure Program, it shows for 1998-1999 an expenditure of $7,264,300. Is

that what is left?

MS COLE: Yes, that is the remainder of the

agreement.

MR. A. REID: How much is left?

MR. J. BYRNE: Has that been allocated?

MS COLE: It is $7,264,300. That is all

allocated, right? That has been allocated, that is just carryovers -

MR. FRENCH: Yes, it is committed.

MR. A. REID: Not spent.

MS COLE: Yes, that is what is left over to be

spent in this year from what was announced last year.

MR. A. REID: Yes, that is not spent.

MR. J. BYRNE: (Inaudible).

MR. A. REID: None of it left, it is all gone,

every copper. If there was anything left over (inaudible).

MR. FRENCH: On page 242, the increase in

expenditures. In 1998-1999 the Professional Services under 3.2.03 are going from

$212,100 to $472,800.

MS COLE: That is related to the new Coastal

Labrador agreement, the one-year agreement that was signed during (inaudible).

MR. A. REID: Yes. Go ahead, you answer.

MS COLE: We had a one-year new agreement signed

during 1997-1998 which goes into 1998-1999, so the figures in for 1998-1999 are

basically to cover the new agreement, money that was not spent during 1997-1998

related to it that carries over.

MR. FRENCH: In Purchased Services we are going

to go up $1,455,400 in the 1998-1999 fiscal year. Why would that be?

MS COLE: Again, that is related to the new

agreement. That is where the bulk of the money comes in. That would be the

contracts, when we go out and hire the contractors to do the work. That is where

that would be charged, and that would be the bulk of the money.

MR. FRENCH: What kind of work?

MS COLE: Water and sewer projects in Labrador,

or anything related to Labrador, road work in Labrador.

MR. J. BYRNE: Are you saying (inaudible) those

boats - because I marked that to ask you later on anyway. The one above it and

that one, that is because money that wasn't spent that was allocated this year

has been carried over into next year?

MS COLE: Basically, if you look at the budget

for 1997-1998, for instance, the Purchased Services budget was $3.2 million, and

that was in anticipation of the new agreement. The agreement actually got signed

sometime during the year, so we did not spend it in 1997-1998, so it carried

over to 1998/1999.

MR. J. BYRNE: Right, so you just carried it

over, okay.

MR. FRENCH: There was $296,900 spent under

Grants and Subsidies, that is .10 there, but there was no allocation in

1997-1998 (inaudible).

MR. A. REID: No. That has to do with the

agreement again. See, what I do sometimes with the agreement, when we know it is

coming, we pay up front and we get things done. That provides for reimbursement

of costs incurred by the towns of Makkovik - $276,500 - and Nain - $20,400 - for

water and sewage projects completed in the town. I'm surprised that you didn't

ask me about the $142,500 prior to that one.

Gentlemen, my colleagues, that was for the...

escalator, right? He is not here. It is a personal joke. This is an excavator

that we used in Nain for digging out - is he up there?

WITNESS: He is gone.

MR. A. REID: An excavator. Wally called over

one day and asked where his money was for the new escalator, and Bob didn't know

what he was talking about. There it is, gentlemen, and that is what it was for.

MR. WOODFORD: He will be soon in again now.

MR. A. REID: He will be in any minute

(inaudible).

MR. J. BYRNE: I had it marked (inaudible).

CHAIR: I guess it is into the record now,

Minister.

MR. FRENCH: On page 243, 4.1.01.03,

Transportation and Communications. We spent $97,600.

MR. A. REID: That is increased use of

helicopters for the purpose of searching for missing persons. No control

whatsoever over that one. That is under Emergency Measures. As you know, last

year was a bad year for us. Where it cost us the most money is out of Goose Bay,

believe it or not, and you can go into Nain and different places. It is really

expensive.

MR. FRENCH: Under 4.1.03, Property, Furnishings

and Equipment, $600,000. That is under Disaster Assistance for Infrastructure.

MR. A. REID: That was the estimated cost

resulting from Hurricane Louis in 1995, and outstanding claims we had from that.

Ramona, where, down on the South Coast, am I correct?

MS COLE: That was out around Clarenville and

Bonavista, that area.

MR. A. REID: Yes.

MS COLE: Also the Burin Peninsula (inaudible)

MR. A. REID: The Burin Peninsula?

MS COLE: Yes.

MR. A. REID: Yes. I do not know why we put that

in there, because it is misleading when you have Property, Furnishings and

Equipment. It is too bad it is not identified as - and you use those three

names. Maybe we should look at changing that and putting (inaudible).

MR. FRENCH: It looks like you went out and

bought $600,000 worth of furniture.

MR. A. REID: That's right, you would not know

the difference. How would anyone figure it out that it was damage from a

hurricane?

MR. FRENCH: On page 244, 4.2.01.09, under

Allowances and Assistance, we spent $231,900. What would we have spent that on?

MR. A. REID: Workers' compensation premiums for

volunteer fire-fighters in the Province. We pay the premiums for all volunteer

fire-fighters.

MR. FRENCH: On that note, Mr. Chairman, thank

you very much. I don't have any more questions.

CHAIR: Thank you very much, Bob. Rick, do you

have any questions?

MR. WOODFORD: I will pass.

CHAIR: It is all yours, Jack.

MR. J. BYRNE: Does anybody have any idea what

my first question is going to be? How much did this cost?

MR. A. REID: I don't know. How much did that

cost?

MR. NOSEWORTHY: I don't know how much that

cost. It was very little. We would have produced it ourselves. It would have

been prepared by our Director of Communications, written by him, some editing by

our staff, and we would have sent it over to Printing Services. However much

Printing Services would have charged us, that would be it.

MR. J. BYRNE: Minister, you are aware that down

in the town of Logy Bay-Middle Cove-Outer Cove they have a fire hall under

construction. It is going to cost, to equip and build it, probably $500,000 that

the town is going out and - no input from Municipal and Provincial Affairs, no

money, plan. Of course, they are purchasing a fire truck. One of the other towns

down my way got some money last year, and there is another town that recently

got some funding to go towards the cost of a fire truck. What is going to be the

possibility of that town getting some assistance?

MR. A. REID: Have you any money on your list

for it?

MR. J. BYRNE: They applied for money this year

that they are funding themselves, for a road down there. They are borrowing

$30,000 to do a road and putting in $10,000 of their own. They are not getting

any money from Municipal and Provincial Affairs this year, and they did not last

year, and probably the year before and probably the year before, since they

incorporated.

MR. A. REID: I don't know. I will have to look

at it. Oh yes, that's right too, I forgot about that. The Department of Works,

Services and Transportation made a deal with you, right, down there?

MR. J. BYRNE: Oh, come on now, don't go getting

me into that one.

MR. A. REID: How much did they give him? We

gave him $800,000. Can I ask Ramona where that $800,000 came from? Ramona?

MR. J. BYRNE: The Department of Municipal and

Provincial Affairs.

MS COLE: That was provided in the budget

(inaudible) Municipal and Provincial Affairs.

MR. J. BYRNE: Yes, but look what they are

taking over. They are taking over eight kilometres of road for that (inaudible)

the provincial government.

MS COLE: The deal was negotiated through the

Department of Works, Services and Transportation (inaudible), but the money came

from our department.

MR. A. REID: You will have to ask me some other

time, tomorrow or whenever. I (inaudible) give you a answer tonight.

MR. J. BYRNE: Anyway, let us move on to page

MR. A. REID: We are going back again.

MR. J. BYRNE: Oh yes, we are going through

again now.

MR. A. REID: Go ahead.

MR. J. BYRNE: Bob hit most of my questions, to

be honest with you, but under 1.2.01.03, Executive Support, Transportation and

Communications. The amount was $39,800, it went down to $23,700, and up to

$39,800. When you looked at the Salaries, there was more paid in Salaries, yet

there was a decrease in Transportation and Communications. Next year there is

going to be an increase, or stay the same, and it is going back up. Why? Do you

follow what I am getting at there? It is a contradiction.

MR. A. REID: We do not travel as much as we did

in the past. That is what it boils down to.

MR. J. BYRNE: What I am saying to you is there

is a contradiction there. It is going back up next year -

MR. A. REID: No. We put it in there because we

had our estimates for 1998-1999 up there, so we left it up there. We actually

spent $23,000, and I guess that is what we will probably end up spending this

year.

MS COLE: We probably will not spend the $39,800

again this year.

MR. A. REID: You do not move your figures. If

you move your figures, if you move them down, that's it, Treasury Board will

leave them down forever and a day. You better cover yourself off and have enough

there just in case (inaudible).

MR. J. BYRNE: We won't get into the

(inaudible).

MR. A. REID: Here is the reason. I'm sorry, I

apologize to you. Here is the reason why it was so low. We hosted the

ministerial conference in St. John's this year. That meant that the minister and

all his staff did not have to leave and go to some part of Canada. Now, when you

go to a ministers' meeting you usually end you taking four or five people with

you. The year before last it was in Saskatchewan somewhere, so you can imagine.

It is a $10,000 bill to go to a ministers' conference, no two ways about it.

That is where the saving was.

MR. J. BYRNE: Page 236. Let me see what I have

here now. There again, under 1.2.02.01, Salaries - you have already addressed

that - went up by roughly $300,000. What you had budgeted for Employee Benefits

was $72,400 yet you only spent less than half that, yet your Salaries went up.

Shouldn't that $72,400 have been more than that? That is a contradiction.

MR. A. REID: No, that is not a contradiction.

MS COLE: That employee benefits account covers

mainly Workplace, Health, Safety and Compensation Commission benefits for

departmental staff.

MR. A. REID: Also fire-fighters.

MS COLE: The fire-fighters are also covered

over under the Fire Commissioner's Office.

MR. J. BYRNE: That is right.

MS COLE: That number is hard to estimate. It

fluctuates from year to year, depending on how many people are injured on the

job and are on workers' compensation.

MR. J. BYRNE: It is directly related to the

number of injuries.

MS COLE: Yes.

MR. A. REID: Yes. It moves up and down each

year.

MR. J. BYRNE: Page 237, 2.1.01.01. This was

touched on. Salaries, $1,111,700 on that, and Purchased Services, $242,300. I am

just making a comparison again. What are those Purchased Services for and why is

it down? When you connect it to the salaries that are paid you would think it

would be higher. Do you know what I mean?

MR. A. REID: Here is what it is. The rental

costs are down because the Municipal Assessment Agency now pays for the cost of

its own accommodations. They have moved out of our building and they are paying

their own costs. That is why it is down. The Municipal Assessment Agency now

pays for the cost of its own accommodations.

MR. J. BYRNE: For the what?

MR. A. REID: The rental on its office space.

MR. J. BYRNE: Yes.

MR. A. REID: They pay for it themselves now. It

comes out of their own money, the Assessment Agency. They are not in my

building, not in my department anymore. That is why there is such a reduction.

MR. J. BYRNE: Page 238, Local Government

Policy. 2.2.01.03, Transportation and Communications, doubled. Why is that?

MR. A. REID: Increased travel to meet with

municipal councillors and administrators. Will you explain that, John?

MR. MOORE: That had to do with some increased

travel dealing with the regionalization initiative -

MR. J. BYRNE: (Inaudible)?

MR. MOORE: - and last year's municipal

election, in particular, with the two major things that (inaudible) increased

travel.

MR. J. BYRNE: I assume it was mostly municipal

elections, because the travel for regionalization is already covered under

another subhead that was addressed earlier.

MR. MOORE: No. My personal travel was included

here under regionalization initiatives. The minister's was covered in another

area.

MR. J. BYRNE: Urban and Rural Planning,

2.2.02.05, Professional Services. There was $30,000 budgeted, $20,300 spent, and

it is back up to $30,000. What professional services would that be?

MR. A. REID: Board members for the Regional

Appeals Board required from year to year based on a number of appeals hearings.

It had to do with appeals hearings and their cost.

MR. J. BYRNE: Page 239, 2.3.01.05, Professional

Services, $103,000 down to $23,000, and again $23,000 next year. That is $80,000

in the difference.

MR. A. REID: Eighty thousand dollars is the

difference. Eighty thousand dollars provided for a study into the safety tanks

and storage facilities throughout the Province. It started off with the

Southside Hills and now it has gone into places like Lewisporte and other places

around the Province. Safety.

MS COLE: The study was not done.

MR. A. REID: It was not done, by the way. Is it

still there?

MS COLE: No, it is gone for this year

(inaudible).

MR. A. REID: No, we lost it this year. It is

not there this year.

MR. J. BYRNE: Industrial Water Services,

2.3.02.06, Purchased Services. There was $675,300 budgeted and you spent

$867,100. In Grants and Subsidies there was $1,735,000, and there is none

budgeted. I don't think Bob touched on that. What is that all about?

MS COLE: As to the Purchased Services, the

increase there in Revised again relates to the fact that we didn't transfer

seven systems at the beginning of the year, we transferred ten during the year,

so there were some additional costs there. The $1,735,000 in Grants and

Subsidies, the bulk of that is the Twillingate system, the problem we had up in

Twillingate with the hospital supplies being found in the water supply,

(inaudible) medical waste.

MR. A. REID: Also, $65,000 to the town of

Trepassey and $20,000 to the town of Ramea as a result of the transfer.

MR. J. BYRNE: Page 240, Municipal Operating

Grants. That was already touched upon. That is $24,552,000. Back in 1993, from

memory, wouldn't that have been up around $46 million?

MR. A. REID: Yes.

MS COLE: It was at one point. I think it was

(inaudible).

MR. J. BYRNE: Back at that time. It has been

almost cut in half in that length of time.

MR. A. REID: It is getting (inaudible), yes.

MR. J. BYRNE: When are you going to get to the

point where you are not going to have any?

MS COLE: There are two more reductions

scheduled.

MR. A. REID: There are two more reductions

after this year, and then we will end up, I think, at the end of that with about

$12 million left over.

MR. J. BYRNE: Total? For each, for the

Province?

MR. A. REID: Hopefully there will be a few

dollars around to put back into it by that time. I shouldn't say put back into

it, because I hope it is not determined the same way as previously. I hope the

municipal operating grant per se disappears and some other formula is concocted.

MR. J. BYRNE: Page 241, 3.2.02.05, the

Canada-Newfoundland Infrastructure Program. Professional Services, $20,000 and

$20,000, and up to $34,400 this year. What would those services be for?

MR. A. REID: That is the audit funding, Ramona,

to cover the cost of the final program audit. Go ahead.

MS COLE: This is the last year for the existing

infrastructure program. There is additional money put in there for a final audit

at the end of it to report to the federal government on how we spent it.

MR. J. BYRNE: Purchased Services, the next one,

.06, $56,400. That is two-and-a-half times what was there last year.

MS COLE: Yes. Again, that is related to

printing and final reports and that sort of stuff. It is all -

MR. A. REID: Winding up the program.

MS COLE: - related to the wind-up, yes.

MR. J. BYRNE: Page 243, 4.1.02.04, Emergency

Planning. You had $20,000 budgeted, $16,000 spent, and up to $30,500 for

supplies. What would all that be (inaudible)?

MS COLE: That is a program that is funded, to a

significant extent, by the federal government. Each year the director of EMO

will just basically try to allocate the total amount of funds she has available

into the appropriate areas where she feels it will be best spent. Those

allocations may change again during the year but the bottom line will not

change.

MR. J. BYRNE: And .07, Property, Furnishings

and Equipment, $33,500, $44,500, and it is only $15,500 this year.

MS COLE: I guess she probably purchased as much

furniture as she is going to need, or pretty well as much as she is going to

need.

MR. A. REID: That is not the vehicle in last

year is it, I wonder?

MS COLE: I don't know.

WITNESS: (Inaudible).

MS COLE: Yes, they did move into new offices

during 1997-1998. She would have bought new furniture. That is why the revised

would be up.

MR. J. BYRNE: Thank you. One more question

here. On page 243, 4.1.03.07, Property, Furnishings and Equipment. I know what

the $600,000 was spent on last year. You answered that question for Bob. That is

money that is for disasters or whatever the case may be. You have $500,000

budgeted for this year. It depends on the situation if you are going to spend it

or not.

MR. A. REID: (Inaudible).

MS COLE: Actually, that $500,000 will pretty

well all be spent on Hurricane Louis claims also. There are still outstanding

claims.

MR. J. BYRNE: Is that right? I thought the

$600,000 had taken care of that.

MS COLE: No, that was a substantial amount of

claims (inaudible).

MR. J. BYRNE: If we get another disaster we

will have to worry about that next year

MR. A. REID: Still coming in, right?

MS COLE: Hopefully not.

MR. J. BYRNE: Fire Protection Services.

4.2.01.06, Fire Commissioner's Office, Purchased Services. There was $30,100

budgeted, $45,400 spent, and the same thing this year. What was the $45,400 for?

MR. A. REID: Vehicle lease cost, as well as an

increase in vehicle repairs and maintenance.

MR. J. BYRNE: That is it for me.

CHAIR: Thank you very much. I will ask the

Clerk to call the head.

On motion, subheads 1.1.01 through 4.2.01, carried.

On motion, Department of Municipal and Provincial

Affairs, total heads, carried.

CHAIR: Before we go, I would ask that we have a

motion to approve the minutes of our May 5 meeting.

On motion, minutes adopted as circulated.

CHAIR: Minister, on behalf of the Committee I

want to thank you for appearing here this evening. You and your officials have

done a superb job, very precise, with to the point answers. In fact, I'm

impressed with your clarity. I think the Committee fully understands all the

answers that you gave, even though they were pretty precise questions.

MR. A. REID: If you have nothing to hide there

is no trouble to answer questions.

CHAIR: I think the questions were precise and

the answers were precise. Again, on behalf of the Committee I want to thank you

and your officials very much.

MR. A. REID: Thank you.

On motion the Committee adjourned.