May 1,

2001 GOVERNMENT SERVICES ESTIMATES COMMITTEE

The Committee met at 5:15 p.m. in the House of

Assembly.

CHAIR (Mr. Joyce): Order, please!

Present we have Mr. Osborne, Mr. Sullivan, Mr.

Collins, Ms Jones, Mr. Mercer and myself, Mr. Joyce.

I would just like for someone to pass the motion with

the minutes for April 10.

On motion, minutes adopted as circulated.

CHAIR: I will just ask the minister to introduce

her staff and make a few opening remarks, and then we will get on with the

questions.

MS J.M. AYLWARD: Thank you very much.

I will say at the beginning, I am not going to make a

lot of opening remarks with respect to Finance. I understand we are going to do

Finance and the Public Service Commission separately. We will probably start

with Finance first if that is okay. Is that okay, or had you planned to do it

differently?

WITNESS: (Inaudible).

MS J.M. AYLWARD: It doesn't matter. Okay.

I will introduce John Bennett, from the Pensions

Division, Terry Paddon, Assistant Deputy Minister of Finance and Earle Saunders,

Debt Management. He is the debt man down there. We will do the introductions of

the Public Service Commission when we come to Public Service.

I am certainly willing and ready to answer any

questions that you might have on Finance. I think, by and large, it has been a

fairly steady budget in terms of looking at it year over year, and very minor

variations. So, by all means, carry on and ask any questions you might have.

CHAIR: Mr. Sullivan, would you like to start?

MR. SULLIVAN: I am not sure what way you might

intend. Maybe if we went through the items in order. Would that be -

CHAIR: Yes. I will just call the first subhead.

Subhead 1.1.01.

MR. SULLIVAN: I have no questions. My first

questions are on subhead, 1.3.01.

MS J.M. AYLWARD: Is everybody else moving up to

there too?

CHAIR: (Inaudible).

MR. SULLIVAN: Okay, so I will run right through

with mine. Is that okay?

CHAIR: Yes.

MR. SULLIVAN: With reference to subhead

1.3.01.01., Salaries, I notice a provision for salary increases of $40 million.

What amount, now, could that be in light of the recent, I guess, not finalized,

but at least an agreement has been reached - what would that figure now be or

was there some allowance made to -

MS J.M. AYLWARD: Yes, that accounts for the 3 per

cent salary increase that was identified for the public sector employees,

including the teachers. The annual cost, as you know, is higher but this is not

annualized this year.

MR. SULLIVAN: It is just part of a year, I know.

MS J.M. AYLWARD: It is part of a year. So, that is

what the $40 million covers. Next year, it will be annualized and, of course, we

have already announced that we are increasing our deficit to cover off the

remaining portion of that.

MR. SULLIVAN: Yes, just to my question: With that

extra 2 per cent now, how much would that equate to over and above -

MS J.M. AYLWARD: Well, that is $36 million.

Remember? It is $18 million per per cent.

MR. SULLIVAN: Yes, but each per cent on an

annualized basis.

MS J.M. AYLWARD: Right. So, it will not be the

full $18 million this year. We figure it will probably be around $15 million.

Okay?

MR. SULLIVAN: Yes.

MS J.M. AYLWARD: So, this $40 million is the

amount for this year. Annualized, it will be $18 million per 1 per cent next

year.

MR. SULLIVAN: What are the projections in the next

two years now based on those figures across the public service? I know it is not

directly in this Budget but it is an impacting thing that is occurring?

MS J.M. AYLWARD: What do you mean? As it relates

to the public sector wage increases or overall in terms of (inaudible)?

MR. SULLIVAN: Public sector wage increases.

MS J.M. AYLWARD: Well, as it relates to the

Budget, we know that in this year's Budget we have allocated approximately $50

million, as you knew. It was allocated for wage increases. For next year we have

identified the additional deficit to cover off that cost, and we believe in the

following year that we will have to have a deficit to do that. It will depend,

as you know, on our sales and our dropped balances and where we are in terms of

if we get the ceiling lifted off equalization. All those factors will come into

play. Right now, we know what it will be next year, by and large, or in this

fiscal year because we have got it budgeted out, we have identified the deficit.

With respect to the year after, I think it will be contingent upon a number of

things.

MR. SULLIVAN: So, roughly $18 million per

percentage point?-

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: So, if we made allowance - I know we

haven't done next year's budget yet but we are looking at the $40 million that

is plugged in here. There would be some variation, of course. Whatever way you

look at it, next year there will have to be a salary allocation, basically, on

this and a 5 per cent base up at $90 million.

MS J.M. AYLWARD: Yes, that is what it works out to

be, without that.

MR. SULLIVAN: With the pay equity this year, as

opposed to $1.265 million, that same item, 1.03.01, what accounts for the -

MS J.M. AYLWARD: The pay equity piece is a part of

it.

MR. SULLIVAN: A significant increase.

MS J.M. AYLWARD: Yes. As you know, all of the pay

equity piece was not addressed in 2000 and this covers off the inequities

associated with pay equity.

MR. SULLIVAN: So that should cover any

unaddressed? Are they still unaddressed?

MS J.M. AYLWARD: Most of them are all finished up

this year. As you know, that was part of the collective agreement piece, but it

works out to be under our commitment, under the various collective agreements.

Some of them are paid, but the rest of them would be paid out under this amount.

MR. SULLIVAN: Okay. That is it under subhead

1.3.01.

We will move to subhead 2.1.01.05. Professional

Services are projected to be more than double what was expended last year. Why

would that be necessitated in this Budget?

MS J.M. AYLWARD: Particularly, here we had to pay

for the cost of actuarial services as it relates to the pension program. You are

on 2.1.01.05., is that right?

MR. SULLIVAN: That is correct.

MS J.M. AYLWARD: As it relates to the pension

program, that is about $80,000. The preparation of the actuarial reports and the

audit fees charged by the Auditor General - as you know, she charges for doing

various Crown Corporations and others. The pension fund is seen as a separate

entity, so she charges a $10,000 fee to do that analysis.

MR. SULLIVAN: So, there was extra work done this

year. Would that be in anticipation of the public sector settlement and looking

at the fund itself? It was a factor in negotiations, the indexing and so on, and

the impacts. Did that necessitate expenses?

MS J.M. AYLWARD: No. That wasn't for this part. We

never looked at that part with respect to it. That is why we are not putting

indexing in place right away. We are going to be doing the work on the indexing

in terms of the actuarial work as part of a joint trusteeship. As you know, the

Public Service Pension Plan is the biggest of all the pension plans, and that is

one of the reasons why it is as expensive as it is. We believe that actuarial

costs will continue to increase because right now, for example, over the coming

year, we will be doing a lot more work on the joint trusteeship.

MR. SULLIVAN: Why would it be more than double

that last year? What would account for the extraordinary amount?

MS J.M. AYLWARD: As I pointed out, we paid, I

think, about $80,000 to William Mercer Limited for the actuarial work. In

additional to that, the other $10,000 that we paid was for the Auditor General.

We are anticipating this year, because of the extra work that we are going to

have to do, that that is going to rise significantly.

MR. SULLIVAN: So, this would not be done on an

annual basis? Maybe every so often -

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: - you would go back and assess.

Would that be correct?

MS J.M. AYLWARD: In fact, it is every three years.

That is what it works out to be.

MR. SULLIVAN: This is one of the three years in

which these are incurred?

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: Okay. That is it on that item.

Under 2.1.02., just a general question on Debt

Management. Over the past while, I guess, we have been reducing our foreign

debt. I think it is now at roughly 30 per cent of our total borrowing. How

cognizant is the department in moving now to look at transferring even more of

that debt? I know 30 per cent is not huge, but currency fluctuation, I think,

does have an impact. Sometimes the cost of borrowing might be lower but the

currency exchange more than compensates for that.

Number one, are they hedging on foreign debt?

Secondly, is there a move now, or is the department looking at a plan to further

reduce our dependency on foreign borrowing?

MS J.M. AYLWARD: You could see from our Budget and

from the Treasury Board piece that when we looked at our Sinking Funds and our

borrowing that we are heavily focused on Canadian money, and moved in that

direction.

MR. SULLIVAN: Yes, we have been improving.

MS J.M. AYLWARD: We have been improving and, as

you know, we would only turn over that money when the rates are appropriate. We

have an option of opting out within eighteen months of the conclusion, or the

retirement, of the bond. What we do is look at the markets and try to get the

best deal. We have been consistently moving, as you can see, away from a lot of

our foreign debt management to Canadian. I think, by and large, you can see that

it is working better for us because at least you know where you are to when you

are buying Canadian money.

MR. SULLIVAN: Does government do any hedging on

its foreign debt? Do you know?

MS J.M. AYLWARD: No, we have not been doing that

recently.

MR. SULLIVAN: Under subhead, 2.1.03.02., Crown

Agencies: $121,000,000 was budgeted last year and $53,000,000 was expended. I

guess that is because the $68 million is being deferred. That would be the

reason there.

MS J.M. AYLWARD: Where are you now? I am sorry.

MR. SULLIVAN: Subhead 2.1.03.02.

I guess there was $68 million that was deferred to

this year. That would account for that. Out of the $112,200,000 total, I think

it is indicated in your backup notes and so on that there is $45 million that is

regular dividends. They are just basing on the new recall and GWAC right,

solely? Out of that $112,200,000 there is $45 million regular dividends and $67

million are special dividends?

MS J.M. AYLWARD: For the new year?

MR. SULLIVAN: Yes, I am going through the new year

now.

MS J.M. AYLWARD: Yes, that is right. I am sorry.

MR. SULLIVAN: There is $67 million in special

dividends and there is $45 million, we will say, the regular dividends you are

referring to, the Guaranteed Winter Availability Contract under the new recall

arrangement. Would that be the sole sources of regular dividends?

MS J.M. AYLWARD: I can give you the breakdown

there, if you want, on what they are. The regular dividends are $9.2 million,

the recall is $29 million and the special dividends are $67 million.

MR. SULLIVAN: Could you just give the regular ones

again? There is $9.2 million under -

MS J.M. AYLWARD: Regular dividends. The recall is

$29 million, the special dividends are $67 million, and the GWAC is $7 million.

MR. SULLIVAN: Yes. That is basically what I said.

Forty-five million dollars, I guess you really would call that under regular,

wouldn't you? It would all come under the regular heading, except special

dividends?

MS J.M. AYLWARD: Yes, except for the special. That

is right.

MR. SULLIVAN: The $68 million was deferred in the

$112,200,000.

MS J.M. AYLWARD: That is deferred, yes.

MR. SULLIVAN: I know it is all lumped in the one

area, but out of the $68 million that was deferred, what was the breakdown of

regular versus special? It is probably not a highly relevant thing, but is it

broken down to that extent?

MS J.M. AYLWARD: We haven't taken any of our

special at all.

MR. SULLIVAN: You have taken no special?

MS J.M. AYLWARD: We have taken no special.

MR. SULLIVAN: So, all of your special in this

budget has always been rolled over to the next year, deferred?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: Under subhead, 2.1.03, Crown

Agencies - Recoveries, I am assuming then there are no other fees there? Any

fees we get on the debt, the guarantees are under the guaranteed fees

non-statutory that is in the Consolidated Revenue Fund. That would be correct?

MS J.M. AYLWARD: That is correct.

MR. SULLIVAN: This is strictly those areas?

MS J.M. AYLWARD: Right.

MR. SULLIVAN: Next, under subhead 2.1.04.,

Industrial Assistance, 10., Grants and Subsidies: What accounts for an estimate

of $400,000 as opposed to $171,500 last year?

MS J.M. AYLWARD: What this actually reflects is

what is required to maintain operations. What we have found is that the $171,500

has been inadequate every year and they come back with an inadequate amount of

money to maintain operations. This is just a more reflective view of what they

require to maintain operations out in the West Coast as it relates to the jobs

and the operation and, you know, the whole piece associated with it.

MR. SULLIVAN: Okay, you are talking about 2.1.04.,

Industrial Assistance?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: You spent $171,500 and budgeted

that, so where is the extra $228,500 going specifically? Has this been the

historical level? In the one seventies and so on, probably it has been

progressing at a more historical level, has it?

MS J.M. AYLWARD: I think it was probably more

historically was it?

MR. SULLIVAN: I did not go back in previous years,

now, just to see.

MS J.M. AYLWARD: It was a lot more historically

than it is now.

MR. SULLIVAN: Was it?

MS J.M. AYLWARD: Yes. What we have found is, the

grant was $171,500 and, despite the fact that in some cases we have had

excellent ski conditions, the $171,500 hasn't been enough to maintain it.

MR. SULLIVAN: So, where has the $400,000 all gone?

Is it more than one area?

MS J.M. AYLWARD: No, it is Marble Mountain.

MR. SULLIVAN: Strictly all Marble Mountain, in

that area?

MS J.M. AYLWARD: Yes, it is Marble Mountain and it

has seventy-five employees.

MR. SULLIVAN: Okay.

My next question is under 2.2.02., Fiscal Policy. Just

one particular question on

section 05., Professional Services.

MS J.M. AYLWARD: I am sorry, Loyola. What was the

heading again?

MR. SULLIVAN: Subhead 2.2.02.

MS J.M. AYLWARD: Subhead 2.2.02?

MR. SULLIVAN: Under 2.2.02.05., Professional

Services, there was a budget of $4,500 and an expenditure of $31,500. It is back

to the same level again in the Budget for this year. Why was it $31,500 this

year? Where was the expenditure made this past year in that particular area?

MS J.M. AYLWARD: We made a payment of $30,000 to

the Atlantic Provinces Economic Council, and this is a two-year commitment, part

of all of the other three Atlantic Provinces, for strengthening the Canadian

economic union project. It was a commitment that each of the provinces made for

that.

MR. SULLIVAN: So, you only had $1,500 besides that

spent? Did you say there was -

MS J.M. AYLWARD: No, that was $30,000. That was

the $30,000.

MR. SULLIVAN: Yes, so there was only $1,500

expended besides that in the last fiscal year?

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: Was that a new commitment or just a

one-shot -

MS J.M. AYLWARD: It was a one-time commitment, a

two-year commitment.

MR. SULLIVAN: Where it is not budgeted there or

followed through.

MS J.M. AYLWARD: No, that is right. It is a

two-year commitment, one time.

MR. SULLIVAN: What was the commitment? What

particular endeavour were they looking at?

MS J.M. AYLWARD: I think this is a carry-over from

the Frank McKenna initiative that was started a number of years ago with the

Atlantic Premiers, to try to grow the Atlantic economy - most of us are

functioning at about 69 per cent GDP of the rest of the country - to attract

business and to try to just work together as a group. You know, there has been a

fairly strong alliance. Western Premiers have always had it and Atlantic have

not. This is part of that initiative to strengthen that union.

MR. SULLIVAN: Is part of it to go towards staffing

or some other resources?

MS J.M. AYLWARD: There is a staffing component,

because I think a lot of it is around marketing and communications and trying to

attract groups and things like that; but it is more of an initiative to try to

strengthen positions like the Atlantic initiative that we are working on.

MR. SULLIVAN: Regional.

MS J.M. AYLWARD: Regional.

MR. SULLIVAN: Was that an equal input or sort of

based on a population factor for all four Atlantic Provinces? Are you familiar

with that?

MS J.M. AYLWARD: As far as I know it is equal, but

I am not sure. I would have to check with the rest to verify it. Is that right?

WITNESS: Yes.

MS J.M. AYLWARD: Yes, it is equal.

MR. SULLIVAN: That is fine.

Under 2.2.03., Project Analysis, 01., Salaries, last

year there was just about $100,000 less spent and we are back up to the level.

Were there positions unfilled, or was there a particular reason for that?

MS J.M. AYLWARD: That relates to some temporary

assignments and secondments that we had, and now they are gone back to their

original positions. That is why the salary is reduced.

MR. SULLIVAN: The costs were picked up, where they

were seconded.

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: Under 2.2.04., Tax Administration, a

similar question again on 03., Transportation and Communication. There was

$40,000 less expended there and it was back up to the regular budget amount last

year. Was that a particular position there?

MS J.M. AYLWARD: I asked the same question. Do you

know what that it? It is the cost of the dye that they put into the gasoline to

identify whether it is taxable or not taxable. We bought a lump sum amount which

we store, and that is one of the reasons why.

MR. SULLIVAN: You did not have as much last year?

MS J.M. AYLWARD: No, because we used what we had.

MR. SULLIVAN: I guess it is factored in when it is

purchased, not when it is utilized. I guess that is the only way to control it.

MS J.M. AYLWARD: That is right. We store it and

use it as we need it.

MR. SULLIVAN: You carry a sufficient store to

carry it over.

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: Okay, that makes sense.

Under 2.2.04.04., Supplies, there is a significant

difference there, $100,000 extra. What would that be?

MS J.M. AYLWARD: Hang on. I have it mixed up. That

is what the cost of the supplies are. The $40,000 -

MR. SULLIVAN: That was the dye.

MS J.M. AYLWARD: That was the dye.

MR. SULLIVAN: Okay, so we have $100,000 worth of

dye.

MS J.M. AYLWARD: No, we do not have $100,000 worth

of dye. You want to go back to the -

MR. SULLIVAN: Supplies were not dye only. There

were other things besides the dye?

MS J.M. AYLWARD: Yes, gas for the vehicles and

office supplies, routine.

MR. SULLIVAN: Yes, I would think that would be a

lot of dye.

MS J.M. AYLWARD: No, it is not all dye. There is

the shipment of the dye and there are other expenses associated with it.

MR. SULLIVAN: That is 04., right?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: What about 03. now?

MS J.M. AYLWARD: Under 03., Transportation and

Communications, basically it is in two components: the travel expenses to

perform the audits - they do regular checks to make sure you have the right

color gasoline that you are selling, attending conferences - and the other piece

of it is telephone and telecommunications. We have a 1-800 line that we use for

the filing of tax returns, and we have several modems that we have in use for

that. Basically, that is it.

MR. SULLIVAN: The monitoring of the use of fuels,

does that come out of this budget?

MS J.M. AYLWARD: Yes. The auditing, we call it.

MR. SULLIVAN: The auditing part. What about the

monitoring on site? The checks, inspection, and so on, does that come under

government services? Who does that?

MS J.M. AYLWARD: No, the audits are all done

through this department.

MR. SULLIVAN: I do get the occasional call,

saying: There is no enforcement out there. I am doing trucking, and I know

people who are using fuel without it, who are competing against me. How can I

compete?

MS J.M. AYLWARD: Tell them to call the 1-800 line.

MR. SULLIVAN: We have fallen down on that aspect

and I am getting out-competed. No one likes to squeal on somebody else. They

would rather have enforcement where they would not have to do it.

MS J.M. AYLWARD: As you can imagine, you do not

check every tank. You do spot checks and that is what makes it reasonable. There

is a 1-800 line that you can use.

MR. SULLIVAN: Yes, but what about in terms of the

personnel carrying out that function? Has there been a change in the last few

years in the number of people employed in that area?

MS J.M. AYLWARD: That is a good question. You

would have to go back over to Salaries, I guess, because it looks at all of the

group in there. The funding is provided for sixty permanent positions and I know

that we have not reduced positions, as best I know. I do not know if we have

increased.

MR. PADDON: I can speak to that, if you want. When

we harmonized our provincial sale tax, we sort of got out of the sales tax

business. At the time, a lot of the effort in our tax administration branch was

devoted towards cleaning up the sales tax accounts. That is largely done now.

What we have done is divert the people who were on the sales tax back into gas

tax, so really this was our first year getting back into that on a full-time

basis. I think you will see probably, a renewed effort next year towards gas

tax, which is our biggest tax in terms of administration right now.

MR. SULLIVAN: Okay, I guess the people were just

retained there. The numbers were mostly to clear up accounts that were already

outstanding, because it no longer necessitated a staff in that area, I guess,

once it phased out -

MR. PADDON: That is right.

MR. SULLIVAN: - but there will be no reduction

overall as a result? The personnel have been re-utilized?

MR. PADDON: A lot of our staff went to the federal

government when we harmonized, but the ones we had left - which is roughly about

forty-five audit staff, plus fifteen or twenty administrative staff - are still

here and they have shifted now from cleaning up the retail sales tax to gasoline

tax and, to a lesser extent, payroll tax.

MR. SULLIVAN: When they went to the federal

government, did they move -

MR. PADDON: Yes, they physically -

MR. SULLIVAN: - out of Province, went to P.E.I.?

MR. PADDON: No.

MR. SULLIVAN: They stayed here?

MR. PADDON: For the most part, they stayed here.

MR. SULLIVAN: But in the administration of the

HST?

MR. PADDON: In the HST, that is right.

MR. SULLIVAN: Paid by federal, basically?

MR. PADDON: Yes.

MR. SULLIVAN: The next one, subhead 2.3.01.06.,

Economics and Statistics, Purchased Services, there is just one last question

that I have. You budgeted $9,200, spent $48,500, and we are back to $9,200. What

would be the extraordinary expenditure?

MS J.M. AYLWARD: Which one are you on, subhead

2.3.01.?

MR. SULLIVAN: Yes, subhead 2.3.01., the last

section there, Economics and Statistics.

MS J.M. AYLWARD: Number 06., is it?

MR. SULLIVAN: Yes, subhead 2.3.01.06., Purchased

Services.

MS J.M. AYLWARD: That significant amount, moving

from $9,200 to $48,500, was for the installation of a security system that is

required by Stats Canada. That is what that was for.

MR. SULLIVAN: Okay, so that was the bulk of the

cost, was it?

MS J.M. AYLWARD: Yes, we also had maintenance

agreements and -

MR. SULLIVAN: The $9,200 generally covered these

other ones?

MS J.M. AYLWARD: These other ones, yes.

MR. SULLIVAN: So there was an expenditure in the

$30-some thousand range, was there, basically for that?

MS J.M. AYLWARD: That is right, for the security

system which was required of us because, obviously, of security reasons from

Stats Canada.

MR. SULLIVAN: Okay, Mr. Chairman, those are my

questions on Finance.

CHAIR: Thank you, Mr. Sullivan.

Mr. Osborne.

MR. T. OSBORNE: Thank you.

Generally my colleague is not very thorough. He asked

just about every question that I had, but I have a couple. I have three

questions, I think, remaining. The only reason he didn't ask those is because he

didn't cover those sections.

Under subhead, 1.2.01., Executive Support, 03.,

Transportation and Communications, there is some fluctuation there in the amount

budgeted last year, the actual amount expended, and then the amount budgeted

this year. I am just wondering if, Minister, you can explain.

MS J.M. AYLWARD: Sure. This is a travel

section

mostly, travel and communications. There was a significant amount of travel

associated with the Federal-Provincial Tax Committee, the HST policy committee;

related to income tax, the tax review consultations and tobacco smuggling. There

was a Finance Ministers' meeting, meeting with fiscal agents, and a number of

other meetings associated with the public service reform. All of that added to

the cost of the travel. I guess this year we anticipate, with the increased cost

in travel - we have all experienced it - that it has increased significantly,

but we do not anticipate it will be as high as this year past.

MR. T. OSBORNE: Thank you.

Under 1.2.02.06., Purchased Services, there is some

$33,100 additional from what was budgeted last year and what was actually

expended.

MS J.M. AYLWARD: Where is it, under 1.2.02.?

MR. T. OSBORNE: Purchased Services.

MS J.M. AYLWARD: This increase was due mostly to

advertising for pre-Budget consultations, taking out advertisements in the

papers and various sources of media, and also advertising that we associated on

the home heating fuel rebate.

MR. T. OSBORNE: Okay.

The only other question that has not already been

covered by Loyola is under Property, Furnishings and Equipment. There was an

increase there from $6,000 to $51,900.

MS J.M. AYLWARD: That is 1.2.02.07.?

MR. T. OSBORNE: Yes.

MS J.M. AYLWARD: This covered the cost for

refurbishing the Finance boardroom, replacement of office furniture for

Economics and Statistics Division, and also the purchase of a mid-size pickup

truck for the Taxation Division at a cost of $30,000.

MR. T. OSBORNE: Okay.

Thank you, Minister.

MS J.M. AYLWARD: You're welcome.

CHAIR: Thank you.

Mr. Collins.

MR. COLLINS: Anything with a 10 per cent variation

between Budget, Revised and Estimates has already been covered.

CHAIR: Okay, thank you.

Are there any more questions?

WITNESS: No questions.

CHAIR: We will call the subheads.

On motion, subheads 1.1.01. through 2.3.01., carried.

On motion, Department of Finance, total heads,

carried.

CHAIR: We will go to page 67, Public Service

Commission.

I will call subhead 1.1.01.

Mr. Sullivan.

MR. SULLIVAN: Thank you, Mr. Chair.

I have a couple of hundred questions for the Public

Service Commission. Actually, it is only one page.

MS J.M. AYLWARD: If I could, for just a moment, I

would like to take the opportunity to thank my officials from Finance who were

here with me this evening, and to introduce Alphonsus Faour, Chairperson of the

Public Service Commission, and Sheila Devine, Commissioner of the Public Service

Commission.

Basically, I would just like to make a couple of

opening comments about the Public Service Commission in terms of its mandate,

and I will not be long. I think the mandate is something that we are all

familiar with, although it has changed over the last number of years, to provide

an effective oversight of the merit principle in the recruiting process to

deliver confidential and credible services to employees, and to provide

conceptual leadership in innovation in the public administration.

The vision, really, is to try to ensure that we are

the employer of choice and that our service is the best that it can be. The core

mandate of the Commission is to ensure the application of the merit principle,

which provides for the identification, appointment and promotion of employees

based on principles of fairness, equity and transparency.

There has been a changing environment in the human

resources field in response to a lot of changes, many of which are demographic

and others of which are around human resources, not only in this Province but in

the country, and we are all experiencing skill shortages in many particular

areas, and certainly Newfoundland is no different.

We do, as a government, have a renewed commitment to

the public service, and the Commission has undertaken, through reform and other

organizational development initiatives, to provide leadership in innovation and

thought as well as planning and management of the public service.

There are 43,000 employees covered in the public

service. It is quite a large group and it is very difficult, I think, to have a

hands-on approach, and it is certainly not the intention of the Public Service

Commission; but there have been some very new and innovative programs that have

been started, many of which are along the lines of the EAP that we are all

familiar with, Employee Assistance Programs, and particularly the Respectful

Workplace and Wellness Program, as well as the Graduate Recruitment Program, I

think, which has been critical to try to attract our own graduates and educate

them in the public service and hopefully encourage and entice them to stay on

and work with us over that period of time.

We have also tried to improve communications and I

think the last couple of Public Service Weeks, over the last couple of years,

have been very positive, and I think they are an important part to recognizing

the value of our public sector and our public service.

So, without any further ado, I would like to turn it

over to you. I notice you are chomping at the bit to ask a few questions there,

so carry on. I do want to acknowledge the Chairperson and the Commissioner here

as well this evening.

CHAIR: Mr. Sullivan.

MR. SULLIVAN: Thank you, Mr. Chairman.

Before I get into some of those items there, just

generally, I notice that it has been the recent trend, in filling positions,

that people are getting, in a lot of cases - first of all, a lot of

responsibilities are delegated to certain departments in hiring and people get

put into temporary positions for a certain time period, and obviously then they

move into particular positions after. That, I suppose, gives them a leg up.

What percentage of hirings generally goes directly,

deals completely, out of departmental control, through the Public Service

Commission?

MR. FAOUR: Thank you, Minister.

Thank you, Mr. Chairman.

In terms of permanent hirings, the vast majority are

administered within departments now with our oversight. The Commission has

retained custody, I guess, of recruitments for HR directors, administrative

staff, directors of administration generally. Apart from that, our role

essentially is to oversee that process in departments and to provide assistance

to departments when they request it, provide training to departments to do it,

and to do an audit after the fact to ensure that our policies and procedures

have been adhered to.

Temporary appointments are not within our jurisdiction

so we don't count them. We do not have jurisdiction to go in and do that. We

have a sense that they are increasing. At this stage, I guess the fact that they

are increasing reflects the minister's comments that there is a change in

environment in the public service, there is a need to develop people, there is a

need to respond to changing circumstances. I will use this as an opportunity, I

guess, to make the comment: Frankly, our traditional recruitment processes have

been somewhat rigid. We are trying to respond to that. One of the things that I

hope members will appreciate over the coming months is the introduction of a new

approach to staffing in the public service because we think that, in responding

to demographic change and in responding to competitive labor markets around the

Province and around the country, there is a real need for innovative approaches

to recruitment that still maintain the merit principle.

I don't know if that answers your question, but it is

an introduction.

MR. SULLIVAN: I will probably just ask another

question on it. It is my understanding - and I haven't been around a long time,

since 1992 - historically, then, and initially, a lot of the hirings went

directly to the Public Service Commission. The delegation to the departments has

been a more recent thing.

MR. FAOUR: Yes.

MS J.M. AYLWARD: That was a result of program

review, for the most part.

MR. SULLIVAN: Yes, that is right.

MS J.M. AYLWARD: The public service was reduced in

size and a lot of HR - in fact, many of the departments are doubling up in their

work and they serve two or three departments in their HR.

MR. SULLIVAN: When you move it within departments

you have a tendency to raise, I guess, in the public forum and so on, the merit

principle of whether - certainly if there is a suspicion, it takes away from the

merit principle.

I didn't mean to imply that temporary ones come under

your jurisdiction. I didn't mean that. I meant that temporary ones are getting

hired within the departments and they are the most likely ones, if they were

hired by the department, of which department has control, then they are more

likely to move into that permanent position because they filled the role. There

is a greater chance, if you have been in that capacity, that you are going to be

retained in that capacity. Therefore, that circumvents the process of being able

to put someone in on a permanent basis on day one and go look for a permanent,

rather than fill it temporarily and then come back and fill it permanently.

Over the last number of years, I have gotten a lot of

calls from people complaining that we are losing the impartiality of hiring by

going through an abuse of the temporary system.

I don't know if you have any statistics to show what

percentage of permanent positions now being filled were occupied by temporary

people prior to that.

MS J.M. AYLWARD: We do know, too, that it works

the other way. A lot of times people who are hired in a temporary capacity do

not get permanent positions, because it can work in the opposite as well -

MR. SULLIVAN: Sure.

MS J.M. AYLWARD: - against an individual as well

as for an individual. I don't think we do that kind of tracking in terms of -

you have to look at the mandate in terms of numbers. What we do is: when every

permanent position is placed, we actually audit that to ensure, based on the

Auditor General's report, that the merit principle has been applied and that we

do try to follow the basics that have been outlined in fairness, merit and

promotion.

MR. SULLIVAN: If I was a minister and I wanted to

see if someone got in on a temporary basis, I probably could exert some

influence, if so desired, over that process.

MS J.M. AYLWARD: It depends, now. Remember, if it

is a bargaining unit position, which is not covered here, you can only do that

if it is a short-term, temporary position. Other than that, it has to go through

the normal posting process.

MR. SULLIVAN: Yes.

MS J.M. AYLWARD: This is different, as it relates

to the public service.

MR. SULLIVAN: I know, but still, initially, when

the foot is in the door, I guess, sometimes it is looked at as better than not

having a foot there at all. That has been used. I know I have had numerous

instances there. I am just wondering if there are any - and I gather there are

none - statistics to show how many people are in those positions and end up in

the position?

MS J.M. AYLWARD: No, because they move through the

system as well. They often go from one position to another; so, no, there isn't.

MR. FAOUR: If I may, Mr. Chairman, I guess there

are two factors that I will just draw to your attention. One is that, before

delegation and post-delegation, there has been no real change in the impact of

that issue. A person who is temporarily assigned, in some cases, is going to

have an advantage in a competition; not in all cases.

Secondly, I guess, when a particular staffing action

is seen to be unfair, we often get complaints. Now, the number of complaints

hasn't been increasing. What we are looking at is to see, when all the

circumstances are considered in a staffing transaction, whether there was some

effort to bypass the system. Now, our audit is not perfect, but these are the

kinds of things that we are going to look for in a process like that. I just

draw that to your attention as well. We have not seen any change in recent years

in the incidents of complaints arising from this kind of circumstance.

MR. SULLIVAN: Okay.

The next question: How many positions might have been

filled, say, in the last fiscal year now within the public service?

MR. FAOUR: I cannot tell you. We are just

beginning our review of the fiscal year just ending.

MR. SULLIVAN: Or the previous, for example.

MR. FAOUR: In the fiscal year ending March, 2000,

there were about 250 permanent positions filled, and in the year ending March

1999, there were about 335 positions. Historically it has fluctuated between 300

and 400, generally, in that range.

MR. SULLIVAN: How many of these might have been

newly created positions as opposed to filling a position that is already there?

Because, I guess, with changing times there are certain positions might be

needed that were not traditionally needed within the public service. Is there

any breakdown of how many are newly created?

MR. FAOUR: I am sorry, I cannot tell you that. I

do not know.

MR. SULLIVAN: Okay.

I will just move on to 1.1.01.01., Salaries. How many

people are employed there under the Public Service Commission? How many

employees?

MS J.M. AYLWARD: They have nineteen permanent

positions, temporary assistants, and overtime is covered, plus the funding for

the thirty graduate recruits.

MR. SULLIVAN: Okay, you have nineteen referenced

in the Departmental Salary Details. That amounts to almost $1 million and there

is $2.154 million listed here. What accounts for the difference between the

listed positions here, the nineteen, and the amounts there?

MS J.M. AYLWARD: The graduate?

MR. SULLIVAN: Are you talking about this new

program?

MS J.M. AYLWARD: The graduate recruits.

MR. SULLIVAN: The Graduate Recruitment Program

now?

MS J.M. AYLWARD: Yes, that is it.

MR. SULLIVAN: That is into what, its second year

now, is it?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: The second year, I believe. How many

are employed right now in that program?

MS J.M. AYLWARD: Right now?

MR. FAOUR: Mr. Chairman, we have twenty-one in the

program right now. We are funded for thirty, and we are currently in the process

of recruitment and selection of an additional nine, to round out our complement

for this year.

MR. SULLIVAN: The difference in salaries between

the nineteen regular employees and the total budget here would be the graduate

employment?

MR. FAOUR: Yes.

MR. SULLIVAN: That would account for the sole

difference? There are no other salary allocations there?

MS J.M. AYLWARD: There is some overtime there.

MR. SULLIVAN: Yes, considering overtime.

MS J.M. AYLWARD: But in terms of bodies, that is

it.

MR. SULLIVAN: Employee benefits increased. I guess

that is because that has to do with the program, the Graduate Recruitment

Program.

MS J.M. AYLWARD: There is membership and

conference registration fees included in that.

MR. SULLIVAN: It did double from last year, from

budget to projected to actual.

MS J.M. AYLWARD: There is attendance at

conferences and seminars, and also the membership and registration fees. That is

was that accounts for.

MR. SULLIVAN: Under 04., Supplies, there was an

increase from $26,000 to $49,500 and this year projecting $40,000. Why would it

have been almost doubled what was budgeted there? What would be the reason for

that?

MS J.M. AYLWARD: As I mentioned briefly in the

opening remarks, the public service reform initiative has really been activated

over the last year; plus, we have the Graduate Recruitment Program, which is

another program which requires it, and the Classifications Appeal Board. These

all account for those amounts.

MR. SULLIVAN: Under 05., Professional Services,

there is an extra $67,000 there.

MS J.M. AYLWARD: This particularly relates to the

increased cost of the Employee Assistance Program associated with

regionalization. Also, there was a political staff employment study and an

engineering study on office space.

MR. SULLIVAN: It is going to go back to where it

was, basically -

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: - or just a little higher. That is a

one-time expenditure, I guess, on some of these items?

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: The next item, Purchased Services,

is in the ballpark. It is actually a little under there.

Subheads 1.1.01.10 and 1.1.01.12 were just two

expenditures, I guess, last year. With Grants and Subsidies, who might the

Grants and Subsidies be to? With Information Technology, I guess that is an

updating, a one-shot thing, in that area?

MS J.M. AYLWARD: Yes. The Grants and Subsidies

relates to the payment of The Conference Board of Canada, for networking

services specifically. Number .12, IT, relates to upgrading of the computer

hardware and the software. Also, funding provided under the IT budget was

inadequate to do what needed to be done so that was why the extra expenditure

was there.

MR. SULLIVAN: The Grants and Subsidies thing, that

is just a one-shot thing? There is no follow-up each year? Payment is not

budgeted for -

MS J.M. AYLWARD: That is right. There was no

heading, so it came from within other sources. That is why it is not identified

again for next year.

MR. SULLIVAN: Okay.

Those are all the questions, Mr. Chairman.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: I think Mr. Sullivan has covered

everything sufficiently there.

MR. SULLIVAN: I left three for him the last time.

CHAIR: First of all, Minister and staff, thank you

very much for your time and patience with us.

On motion, subhead 1.1.01., carried.

On motion, Public Service Commission, total heads,

carried.

On motion, the Committee adjourned.