November 6, 1997

PUBLIC ACCOUNTS

COMMITTEE

The Committee met at 9:30 a.m. in Room 5083 of the

Confederation Building.

CHAIR (E. Byrne): Order, please!

Before we proceed with the hearing this morning, I

would just remind the witnesses that you are still under oath, so there is no

need to proceed with that formality again.

The issue this morning before us is dealing with

the Department of Industry, Trade and Technology, the Canada-Newfoundland

Strategic Investment and Industrial Development Cooperation Agreement, again an

issue that the Auditor General looked at in her 1996 annual report.

I guess we will proceed directly to the

questioning, and I will certainly ask members to my immediate right. Mr. Whelan,

would you like to start?

MR. WHELAN: Thank you, Mr. Chairman. Before we

really get into any line of questioning, there are a couple of things I noticed

in the report that sort of left me hanging to some degree. I suppose before we

go any further, unless we get it cleared up, it sort of probably takes away some

credibility from the department or the Auditor General's office.

I notice here the Auditor General mentioned on page

3 of our book: "The Committee did not comply with the Agreement in the following

respects: The Agreement was not properly administered as funding of programs was

not adequately controlled, managed or monitored in accordance with Agreement

requirements. For example...," and she lists a number of examples.

The response from the department was: "Information

to substantiate this was provided to your auditors and for some reason it

continues to be ignored." I would like to have that cleared up.

It goes on, on page 4: "In order to determine

whether the program achieved what it was expected to achieve, the Agreement

required that a plan for evaluating the programs and program elements be

developed and also that an evaluation framework be developed by December 1992.

As at 31 March 1996, no comprehensive evaluation of the Agreement had been

planned and no data had been accumulated which could be used to measure the

Agreement's impact."

The response from the department, on page 5, was

that: "There was an evaluation framework prepared by the management committee in

1993 and this was given to your staff. It is the committee's view that

compliance with the Agreement has been achieved and that sufficient data will be

available to allow for an independent evaluation."

There seems to be a difference of agreement here. I

would just like to have that clarified.

MS MARSHALL: Yes. I can speak to it first, and

then Mr. Ruelokke would probably like to discuss it. I issued the report to the

department and they did provide us with documentation and information, and I

wasn't satisfied with the information they had given me. Probably I can just

give you a couple of examples to demonstrate the problems I had.

If you look on page 21 of your book it outlines the

evaluation framework that was prepared by the department. I felt that evaluation

framework wasn't adequate. It really wasn't geared towards the Strategic

Investment program because most of the framework was excerpts from the

agreement. As you get towards the latter part of the evaluation framework, all

you have is something that looked like it came from a generic manual or textbook

as to how you should do an evaluation.

I felt that framework was not geared toward the

specific program. It was something that was very generic. You could lift that

out and almost apply it to my office, for example, or to an evaluation of any

government. I felt that for the amount of money that was going into the program,

the evaluation framework should have been geared directly towards the SIID

program.

Just to get a little bit more specific, if you look

at page 29 -

MR. RUELOKKE: Can I interrupt for a second? We

are going to have some difficulty following the commentary and questions because

we don't have the identical documents. It is a bit difficult to leaf through the

report.

CHAIR: Just one second, I have some extra

copies here. I had assumed those had been provided to you.

MR. RUELOKKE: No. Thank you very much, Mr.

Chairman. Sorry for the interruption.

MS MARSHALL: So if you go from page 21, Mr.

Ruelokke, to about page 27, most of that is lifted directly from the agreement.

When you get into page 29, for example, the approach to the evaluation, it is

very generic. For example, if you look under

section 3.1.3 it says: "The

evaluation planning phase will have four components: develop program profile;

identify evaluation issues; prepare a detailed evaluation plan; develop and test

data collection instruments."

That is very generic. For example, what kind of

data collection instrument is the department going to use to evaluate the

program? I felt that the evaluation plan should be specific and should indicate

exactly how they were going to evaluate that program. That should be done up

front, not five years down the road. In order to do a proper evaluation you need

to collect data with regard to the money that you have given out, and at the

point in time that we were into the department auditing they really had not

decided what type of data they were going to collect and use in order to

evaluate the program. I felt that should have been up front.

WITNESS: It was late into the program

(inaudible).

MS MARSHALL: Yes, I felt it was too late into

the program. That is one example of where we differ, and probably I can just

give you another example.

When the auditors went in to do the audit of the

SIID program, the department did give us some reports with regard to what has

been approved under the program, and this also is in the document that was

provided to you. For example, if you look at pages 34 to 37, it will tell you

the financial status of SIID, some general information there. Pages 38 to 44

have some general information. When you get to pages 62 to 71 this is sort of

the financial information that I was looking at, starting on page 63. They gave

us general reports like that, but the problem that I had was that this was what

had been approved. I was really interested in seeing what had actually been paid

out to these companies and I could not find out.

What I had to do was have the auditors go down to

ACOA. So, for example, the one that was mentioned, the building for $1.35

million, I wanted to know exactly how much had been paid out. $1.35 million was

approved; now, was $1.35 million paid out? Was it more or was it less? In order

to find that out - I couldn't get it from the department's records - I had the

auditors go down to ACOA. I couldn't even find out from ACOA how much had been

paid out under those approved projects. ACOA did provide me with a report, and

it is also in the document - it is on pages 103 to 221 - and I was trying to use

that document, but ACOA themselves told us that report of financial information

is not accurate.

CHAIR: This report.

MS MARSHALL: That big report there, from page

103 to 221. That is the only document that I have which tells how much has been

paid on those approved projects, and they said the information is not accurate.

They could not tell me exactly where it wasn't accurate, but apparently when

they were inputting some of the financial information some things didn't get in,

or they got in twice or something, but they did say to my auditors: We can't say

that is 100 per cent accurate.

So what I had the auditors do in certain cases, in

order to find out how much had been paid on a project, was to go down to ACOA

and go into the actual files and look at - what were the documents called Wayne?

MR. LOVEYS: There were some contract payment

forms indicating what the approved amount was, based on an inspection and

information obtained from the client, what the payment was for that eligible

expenditure.

MS MARSHALL: That is right, so we went to the

files themselves to see if we could find out. But the big concern that I had,

when the auditors were doing the work, we were always looking at the projects;

should they have been approved? But I was really interested in what had been

paid, because if they were approved but never paid then it sort of made a bit of

a difference. I was interested in seeing what exactly had been paid of the

approved amount.

The other thing I was looking for was, if they had

approved $1 million, did they actually get paid $1.3 million? That would have

concerned me. Even as of today, I don't know how much has been paid out under

each of those projects that have been approved. I haven't seen a document that

says: Look, $1 million was approved for this project; $99,000 was paid out, and

it is cost-shared for a certain amount. That is the type of information that I

was looking for.

Yes, the department did provide me with some

financial information, but in the information that came from the department

there was nothing that indicated how much had been paid. All of those reports

that are in here, that were provided by the department, focus on what was

approved, not what was paid, and I think that is where we are going to get a

difference of opinion. I wanted to know how much was paid, they were telling me

how much was approved.

CHAIR: Mr. Ruelokke do you want to -

MR. RUELOKKE: Yes, I would like to respond. We

have to set the scene here a little bit if we can; this is not a provincial

program, per se. It is a joint federal/provincial program, 70 per cent of the

cost of which was federal money, 30 per cent from the Province. When we agreed

on terms as to how to administer the program, very early on the decision was

taken - and for fairly obvious reasons to do with resource levels available -

the decision was made that ACOA would be responsible for all payment and

compliance under the agreement. Therefore, we did not issue cheques; we did not

keep records of cheques. We kept records of projects that were approved, and the

amounts approved.

It is obvious that what the Auditor General is

saying is true, that she and her staff would have had to go down to ACOA to get

those records because, in fact, that is who kept them. We didn't keep them. That

was an agreement made up front at the very first committee meeting of the

management committee. Because ACOA was funding the lion's share of the

agreement, and because they had a full compliance

section down there with

accountants, and were dealing with a lot of the same clients in aspects other

than SIID in any regard, it just seemed to make sense to us that they would do

that. It was within the authority of the management committee to make that

decision, and in fact it is not a unique decision. Quite often that is the case

with cost-shared agreements.

MS MARSHALL: I wouldn't have had a problem with

that if I could find the information and I was aware that the department was

getting that information and looking at it. I couldn't find that information in

the department, and I really couldn't find it down at ACOA either, right? I

don't audit ACOA. The federal Auditor General audits ACOA. I had a problem with

what is down in ACOA. I couldn't get the information, which means the department

couldn't get the information.

MR. TOBIN: Those reports were in the department

all the time, updated monthly. They were there, they were available.

MS MARSHALL: Yes, but the thing is though,

Perry, the reports that you had and the reports that you gave to us were reports

that indicated what had been approved, right?

MR. TOBIN: We also had ACOA's reports too, Ms

Marshall, on our files.

MS MARSHALL: But they were wrong. ACOA

themselves told me it was wrong.

MR. TOBIN: I can't speak to that, I guess, but

MR. WHELAN: When you say they were wrong, what

exactly (inaudible) -

CHAIR: Just one second, please. I am going to

make something clear up front. We are going to run the meeting in an orderly

fashion, and one at a time. You had the last comment; what was it again? You

can't speak to -

MR. TOBIN: We have the reports, they are on our

files. I can't speak to who at ACOA would have acknowledged or said they are not

accurate. As far as we are aware, they are completely accurate and up to date at

all times.

CHAIR: Don, just before I go back to you, you

wanted to make a point in terms of getting information. Do you want to make your

point?

MS MARSHALL: Yes. The point I wanted to make

was that the information should be in the department. We did ask for it and you

did give us information but, as I indicated, the information was either what was

approved and not what was paid, and any information on what was paid was

inaccurate, based on what ACOA told us.

CHAIR: Mr. Whelan, before I go to Mr. Ruelokke,

go ahead.

MR. WHELAN: How close a working relationship do

you have with ACOA? For example, if there were documents or reports requested,

could you not just make a phone call and say: Look, we would like to have these

forwarded to our office for the purpose of passing them on to the Auditor

General?

MR. TOBIN: I would like to speak to that. Our

relationship is on a daily basis. In case of the SIID Agreement, we were back

and forth with our compliance people I would say a dozen times a day by

telephone. The other thing to remember is that this report was generated by

G-MAX which the department shared with ACOA. We were on line with G-MAX, always

were, right from day one of the agreement. There is no reason why your auditors

couldn't have gotten this report right off the G-MAX system from our department.

MS MARSHALL: Well actually we did. We went down

to ACOA and worked with them, but we didn't work with the actual paper document

because we were told that this information wasn't accurate.

MR. TOBIN: Ms Marshall, I can't (inaudible).

CHAIR: Mr. Ruelokke.

MR. RUELOKKE: Perhaps it is a fine point here,

but there are quite a number of pages; it is a lengthy program, a lot of

projects, lots of payments. I think to say, based on someone's statement that

this document contained inaccuracies - I suspect that is what was said - I don't

expect that somebody said that all of this information is inaccurate. I would

suggest that people may have said this may contain inaccuracies, which is a bit

of a different context than saying it is all inaccurate.

The information we have here, just to pull one off,

a cheque paid out on October 12, 1995, for $35,894; $25,126 of which was the

federal share, $10,768 was the provincial share. That is fairly clear

information.

MS MARSHALL: If it is accurate.

MR. RUELOKKE: Yes.

MS MARSHALL: If you can carry on, then Mr.

Loveys (inaudible).

MR. RUELOKKE: I would like to understand the

basis for the assumption that it was generally inaccurate.

CHAIR: Before we proceed, I just want to ask

for some points of clarification before I go to the Auditor General's staff.

Could you explain for the record, the relationship between the department and

ACOA with respect to this agreement, what the make-up of the management

committee was, and what responsibilities the department had with respect to the

agreement, and ACOA had with respect to the agreement? I think that would be

necessary and probably an important point to clear up front for everybody's

point of view, if you could, please.

MR. RUELOKKE: Yes, I can speak to that. The

SIID management committee had four official members: myself as the provincial

co-chair for a period of time in my role then as an assistant deputy minister in

the department. I left the department on secondment to the Marystown Shipyard at

some point in time and was replaced by the individual who replaced me. The

assistant deputy minister for industry and technology development in the

department was the official position that was the co-chair. The other co-chair

was Paul Mills who was a senior manager at ACOA. The other federal member was

Patricia Hearn, who was the person responsible for Industry Canada. The official

provincial member, the second one, was Geri Lutz, I believe, in

Intergovernmental Affairs. We had an unofficial or an ex officio member from the

Economic Recovery Commission, Adele Pointer, and I don't know if we had any -

MR. TOBIN: We had other people who attended the

management committee meetings.

CHAIR: Upon request?

MR. TOBIN: Upon request. We had the director of

finance with ACOA, who attended most meetings. I attended as the provincial

manager, if you like, of the SIID Agreement, and another, Clayton Higdon from

ACOA, as federal manager of the SIID Agreement.

CHAIR: In terms of the responsibilities of the

agreement, (inaudible) the federal and provincial department.

MR. RUELOKKE: The management committee reviewed

projects on the basis of analysis that were made by the program officers, either

federally, provincially, or jointly. The SIID program could have been accessed

through ACOA's offices or through the department's offices. We shared the

responsibility to accept and analyze projects and make recommendations on them.

All of the decisions with respect to approval of the projects were made by the

management committee, but once the project was approved all responsibility for

compliance, for issuing of cheques, and for doing audits in terms of site visits

to make certain that projects were being properly evaluated, projects were

administered properly, were all done by the compliance people at ACOA. They

would report back to us if, in fact, they found any difficulties. That was the

general nature in which the agreement was administered, and it wasn't unique to

that agreement.

CHAIR: What was the responsibility of the

Province in terms of outside of participating in the management committee? You

are the provincial manager, so what would be your responsibility or the

designated responsibility on behalf of the Province with respect to the

agreement?

MR. TOBIN: I would have acted as gatekeeper, if

you like, for the department. Any applications coming in under the SIID

Agreement to the department would come through me. I guess my - I shouldn't say

staff because typically it was myself and a data entry person, would make sure

the project was entered into both our shared G-MAX management information system

with ACOA, which was on line with ACOA. At that point in time, as proposals came

in, I would meet with the line directors within the department to determine

which of our project officers in the department would do an analysis. Once that

analysis was completed it would come back to me to be registered and held on

file until a management committee meeting took place to make a decision on the

project assessments that had been done.

A parallel process would have occurred at ACOA. I

acted as secretary to the management committee for the duration of the

agreement. That was my other role as well, to make sure that all decisions were

duly recorded, minutes taken, and so on and so forth.

CHAIR: So there is a paper trail, you are

saying, basically.

MR. TOBIN: Absolutely, for all decisions.

MR. RUELOKKE: I don't mean to interrupt, but I

think we should point out that the federal Auditor General, to the best of my

knowledge has reviewed ACOA's involvement in the program. As I say, they were

totally responsible for compliance and administration. I am not aware that there

were any difficulties uncovered by the federal (inaudible).

CHAIR: If we can now, we will just refer to the

Auditor General and her staff to make some other points.

MS MARSHALL: Actually, I have the federal

Auditor General's report here. Yes, he found problems with the agreements. One

of the things he found was with regard to the monitoring. I had a problem with

the monitoring. I didn't have a problem if ACOA did some monitoring, but I felt

that where the Province had put in I think it was around $10 million in the

program, I felt that the department had a role in the monitoring. After I saw

the report of the Auditor General, where he wasn't satisfied with the extent of

monitoring that ACOA was doing on these cooperation agreements, I felt a little

bit stronger that our people should probably have been doing a little closer

monitoring.

MR. LOVEYS: If I could (inaudible) -

CHAIR: Just one second, please. Go ahead, Mr.

Tobin.

MR. TOBIN: I believe those references were to

the cooperation agreements overall, not specifically to the SIID Agreement.

MS MARSHALL: Yes, that is correct.

MR. TOBIN: Our federal partner has indicated

they are completely satisfied with the way in which the SIID Agreement was

delivered, in all ways.

CHAIR: Mr. Loveys, you were going to make a

point, I believe. After this I am going to move on to some more questioning.

MR. LOVEYS: Just to go back to the point about

the G-MAX report not being accurate, I just want to put it in a little bit of

context. We went to the department and asked for information on all projects and

we received these spreadsheets, starting on page 62, prepared by the department,

which did indicate what projects were approved. The next step we wanted to know

was what was paid. We were told that the only information about what was paid

was in these G-MAX reports, and both the departmental and ACOA officials

explained to us that the information was not totally accurate in this report.

CHAIR: Did they explain why?

MR. LOVEYS: The reason was there was a

co-operative student who was hired by either the department or ACOA, or some

combination, to prepare the initial report somewhere down the road after the

agreement had been started and some funding had been approved, and to arrive at

the first report there were some inaccuracies and they were still trying to

develop or understand where those inaccuracies were.

Also, I just want to clarify, we went down to ACOA

and approached the person down there to try to find some payments that were made

for approved applicants, and the person at ACOA had to get the physical files to

tell us exactly what was paid. He did not rely on this. He actually said to us,

he could not rely on this.

CHAIR: A quick question -

WITNESS: (Inaudible).

CHAIR: One second, because Mr. Tobin has a

rebuttal. I am going to give it right back to you then, Don.

MR. TOBIN: There is a whole compliance and

systems group at ACOA responsible for input into the G-MAX system. I can't for

the life of me, Wayne, imagine that group would say that there was some

co-operative education student who would have been responsible for... This G-MAX

system has been used by ACOA with its mainstream programs for several years

before the SIID Agreement was brought into place. This was just an add-on to

that G-MAX system.

MR. LOVEYS: The departmental officials told me

the same story.

MR. TOBIN: Wayne, could you tell me who that

would have been, Sir?

MR. LOVEYS: It was Mr. Tobin.

MR. TOBIN: I can only agree to disagree, I

guess, Mr. Chairman. I can't remember any such conversation, or any such

acknowledgment of the -

CHAIR: To the issue then, I will just ask one

question before I go back to Mr. Whelan. Is there a record available now that

the department can produce that would answer the Auditor General's question in

terms of: here are the approvals on one hand, but here is the money that has

been paid out on the other, so there is a comparison. That seems to be the

Auditor General's point in that she couldn't get access to that.

MS MARSHALL: Specifically, there was a

committee in place that was overseeing this program. What I wanted was to see

that this committee was actually tracking the program and the expenditures under

the program. That would be good financial management, plus it was a requirement

of the agreement. That is what I was interested in seeing, if they were actually

doing that, but we couldn't get that information. Now, if it is available and

you can produce it, that is great; I would love to have a look at it, but...

CHAIR: Can that be done right now?

MR. TOBIN: Mr. Chairman, there is a 111 page

report there, I believe, that shows every payment under the SIID Agreement since

its inception, for every project, Ms Marshall.

MS MARSHALL: Yes, but, Mr. Tobin, we were told

by ACOA - and two of my auditors indicated they got the same information from

you - that report is not accurate.

WITNESS: (Inaudible).

CHAIR: One second, please.

Mr. Whelan, go ahead.

MR. WHELAN: Thank you, Mr. Chairman.

Basically, I think most of the follow-up questions

that I had have already been asked. I just want to touch on one more thing

before I finish up, and that is that there are several expenditures there. You

have available funding here, Strategic Investment and Industrial Development

Cooperation Agreement Comparison of Available and Committed Program Funding -

CHAIR: What page are you on Don?

MR. WHELAN: Page 6.

You have available funding $4,500,000 and committed

funding $6,356,035, I think . In subsection 3 you have available funding

$5,500,000 and committed funding was over $10,000,000. Could you elaborate on

that? Was this a juggling of funding through the various aspects of the program?

MR. RUELOKKE: The agreement did allow the

management committee flexibility with respect to reallocation of funding to meet

the demands imposed on the programs. When the program was initiated in 1992,

there was an anticipation by the management committee and by the departments to

whom they were responsible that the demand for programs would reflect the column

headed `Available Funding'. As with any application-driven program, you have no

real way of fixing exactly where the demand is going to be.

With that in mind, the agreement contains

sufficient flexibility for the management committee to reallocate funding to

meet what the requirements of the client group was. The `Difference' column is

where that was done. If you look in the overall total agreement in the last row,

you see that of the $36.83 million that were available, there was $35.84 million

committed at the time when this document was produced.

CHAIR: Any more questions? Mr. Byrne.

MR. J. BYRNE: Just an observation first. You

might want to comment on it.

I have been on the Public Accounts Committee for

two years now and we have had a numbers of hearings, and we have had a number of

these reports, and I have always found the Auditor General's reports to be very

thorough, and her office. Yet in this report, when I read it - you don't need to

look at the pages - pages 4, 7, 8, 11, 12, 13, in the responses that were given

to the points made by the Auditor General's office, it seemed to me that there

was either some conflict or concern between your group and the Auditor General's

office to the point that I am wondering if the opinion was there, or the

attitude was there, that you shouldn't even be audited for this agreement. I

don't know if you want to comment on that, but that is the impression I got from

the responses. Often I don't know if the answers were given to the questions or

if it was more of, I won't say an attack, but certainly questioning the Auditor

General's office. Would you like to comment on that?

MR. RUELOKKE: I think I can see how that

impression is generated. Some of the to and fro between the department and the

Auditor General's office perhaps at times slipped from being totally

professional and got a little bit subjective. With respect to the department's

attitude towards audits, the department fully supports audits and for the most

part has a good relationship, I think, with the Auditor General's office. We

will from time to time have a difference of opinion. I guess in this case the

basic fundamental difference was that we felt the Auditor General expected that

we should have been responsible for the level of detail that was assigned, if

you like, by the management committee to ACOA with respect to payments and

compliance.

The management committee monitored and got reports

at every meeting in terms of payments that were made, but the detailed handling

of that was signed off, appropriately so, to ACOA. I think that was probably the

sort of difference. The department was viewing the audit from one perspective

and the Auditor General from another. I think that is what caused the problem.

MR. J. BYRNE: Thank you. Just one more question

really, I suppose, or two. It goes to the management committee's authority. On

page 7 in the second column there, second paragraph, it says:

"We are concerned with how your auditors obtained

differing views on the definition of high growth sectors and context of your

discussions in this regard. In fact, we understood one of the officials quoted

had no connection to the Agreement.

"The Committee, in a meeting dated 14 September

1993 dealing in part with an application relating to a ski facility..." - and it

goes on about $5.3 million. On the top of the next page, part of the response

was:

"Regarding the approval of funding for ski

facilities, your staff were provided with an exchange of letters between senior

Ministers of both governments to provide the assistance to Marble Mountain. To

suggest that the committee had the authority to reject such a project is

misleading. In fact, many press releases and a press conference attended by

Federal and Provincial Ministers and the Premier that announced this assistance,

were quite clear in identifying the source of these funds."

On page 11 it goes to that same point again. It

talks about the $3.5 million in the first column in the last paragraph down

there. It says: "Marble Mountain did not appear to meet the specific eligibility

criteria of the program element under which it was funded since it is not a

manufacturing, secondary processing, technology...," and it goes on. The

response was: "Your department was clearly advised as to how this project was

approved and to continually bring this matter up as one in which the management

committee had some control is misleading."

Basically what you are saying to me is that in this

instance the management committee could not fit and follow the criteria set out

in the agreement and it was overruled by the minister and the Premier. Is that

correct?

MR. RUELOKKE: When the agreement was signed, a

direction was given that this project was approved.

MR. J. BYRNE: So it had nothing to do with the

criteria set out in the agreement.

MR. RUELOKKE: It had nothing to do with the

management committee.

MR. J. BYRNE: So you are agreeing that the -

CHAIR: I think he has answered the question. Do

you have any other questions?

MR. J. BYRNE: Basically, you are saying that

the committee had no authority in this situation.

CHAIR: If I can intervene, I think he has

answered the question. He has indicated that. Do you have another question?

MR. J. BYRNE: Yes. In the number of pages you

were talking about, pages 103 to 221, it seems to me that there is a lot of

duplication here. I just popped open a page here, page 202, and there are one,

two, three, four, five, six, seven -

CHAIR: Page 202, Jack?

MR. J. BYRNE: Yes - Oceans Limited. If you go

to another page you will probably see another dozen companies, the same company

getting money. Can you explain to me what is going on there?

MR. RUELOKKE: What that does is just record

individual payments under a particular project. As the project was under way,

certain expenses from that project would become eligible and the applicant would

submit an invoice; that invoice would be paid by cheque. This just records the

flow of the project, if you like. That information could have been summarized so

that all you would see was Oceans Limited and the total amount of the

dispersement of the $38,762 that they were entitled to, but in fact the

information provided details every single payment that was processed. That is

why it shows up in that way.

MR. TOBIN: If you follow over there you will

see the project number for that project under that particular program, and I

guess the same thing would follow under different programs under which that

company receives money.

MR. RUELOKKE: Just for further clarification,

if you look at this whole spreadsheet you will see - if you take the example of

Oceans Limited on page 202, you will see claim no. 1 paid on June 17, 1994;

claim no. 2, December 14, 1995; no. 3, 4, 5, 6 and 7, so it all refers to the

same project, just (inaudible).

MR. J. BYRNE: Each time the same amount of

money has been paid?

MR. RUELOKKE: No, different amounts of money

being paid, but in total it would add up to the $38,762 for which they were

eligible.

MR. TOBIN: If I could intervene there, I think

that perhaps what might be happening as well is in that particular case there

may have been some reason why the actual payment amount was the same.

MR. RUELOKKE: You are right.

MR. TOBIN: It may have been, for example, that

we were making contributions towards certain salaries within that company as

eligible expenses under one of the programs and therefore the claims would have

been identical.

MR. J. BYRNE: Just one other question, I

suppose, before I finish. Back to the issue with respect to Marble Mountain. Is

it normal procedure or policy for the minister to overrule the committee? Can

you give an incidence?

MR. RUELOKKE: If I have left the impression

that the committee was overruled, that would imply that there was a difference

of opinion between the committee and the ministers, and that wasn't the case.

When the program was established and direction was given to begin activity, it

had been decided by both governments that funding for this particular project

was to be provided through this agreement, and the committee agreed with that

and accepted it and dispersed the payments and then went on about its business

to receive applications for other projects.

MR. J. BYRNE: Further to that, then, that begs

this question. Were there incidents where the committee has not had the

authority to approve or were overruled by the minister or the Premier for any

other projects?

MR. RUELOKKE: No, not to my knowledge.

MR. J. BYRNE: Thank you.

CHAIR: Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman.

Just to follow a little further on the line, I was

kind of intrigued in looking through the report in terms of the reference that

Mr. Byrne just made to page 7 of the report and a particular item, a reference

to a meeting of September 14, which noted that: `...the tourism sector is not an

eligible sector under the core programs', which I found rather interesting in

terms of the program.

Mr. Byrne has pursued the idea that funding was

made available to Marble Mountain but I note, in looking through the supporting

documents here, that in fact allocations were made to all of the major ski

operations within the Province, which would seen to assume at some point in time

that the board did agree that in fact this type of operation did qualify for

funding. Can you clarify that? Because I notice in there, in addition to Marble

Mountain, there are references to Copper Creek and to the White Hills as well.

Was there some sort of change? For example, here really you would assume - I

think that is the line Mr. Byrne was coming from - that in fact under this

agreement the board felt that this type of operation did not meet the guidelines

as set down in the program. So it would seem to follow at some point in time

that in fact the agreement was weighed to change that, because it is not just

Marble Mountain. White Hills is there, and Copper Creek is there as well. All

three of these operations access funding under this program.

MR. TOBIN: At the outset there was $2 million

allocated under this agreement from the federal share for White Hills. So the

$10 million Strategic Project Assistance Program, 1.1, in effect, wasn't really

a 70/30 program. I guess basically our share of that, if you look at the

numbers, was $2.4 million, in other words 30 per cent of $8 million, because $2

million of federal money went into White Hills. That was agreed to before the

actual subsidiary agreement was signed at all.

I think we have dealt with already the Marble

Mountain situation. Mr. Ruelokke spoke to the exchange of a letter between

senior ministers on that one. I guess you are correct, Mr. Smith, in saying that

subsequent to that the Copper Creek facility in Baie Verte received funding.

I guess as a little bit of a backdrop to that, this

agreement came into being at a time when a number of sectoral agreements were

falling off the table. These projects were coming forward, recognized as good

projects, yet the sectoral agreements were not there to do anything for them. I

guess the management committee in its wisdom, after struggling with a lot of

these things, determined that if the project was good, it was not an ineligible

project under the agreement. You will not find anything in the agreement to say

that you could not do a tourism project. It is just that in the initial stages

of the agreement, I guess, they would not have anticipated tourism to be one of

the major sorts of sector support under it.

I guess once again if you were to look at other

sectoral agreements like fisheries, mining, you would find the same thing sort

of happened in coincidence with SIID coming on stream. There were a number of

sectors that were supportive for projects that were good even though the sector

itself was probably not what was anticipated initially to be a forerunning one

under SIID.

MR. SMITH: If I could, further to that perhaps,

reference page 13. There is one other project there that the Auditor General's

report says, "...did not appear to fall within the scope...". I would be

interested in hearing the rationale that was put forward in terms of making the

determination that, in fact, this project did qualify for funding. That is in

reference to the international man-powered submarine race in Florida, for which

$24,840,000... What rationale was applied there? I have been scrambling as I

have been listening to this thing in my own mind, trying to see where this would

fit. I would be interesting in knowing the rationale that was put forward in

terms of (inaudible).

MR. RUELOKKE: If I could speak to that, and

Perry may want to go further, this was a competition between engineering schools

to... I guess as far-fetched as it may sound, there are a lot of very good

reasons why this kind of competition builds certain skill sets in engineering

faculties.

MR. SMITH: Was the university the applicant in

this instance?

MR. RUELOKKE: Yes.

MR. SMITH: Okay.

MR. RUELOKKE: I think we should take a little

bit of credit here for some of this stuff. This was the naval architecture

stream of engineering students at Memorial who were bound and determined to

prove that they could compete with students from other international schools. We

won't claim sole responsibility for this, but there was an audit done of naval

architecture programs by the Society of Naval Architects and Marine Engineers a

little while ago and they concluded that the basic undergraduate degree program

at Memorial, the Bachelor of Engineering program at Memorial's Naval

Architecture School, is equivalent of a Master's Degree in almost every other

jurisdiction. I think in this case it was money well spent.

MR. SMITH: One other question, Mr. Chairman. I

just noticed in looking through the applications, the record we have here, that

the Department of Industry, Trade and Technology appears here as an applicant. I

am just wondering, can you elaborate on that? Why would a department of

government be an applicant? And for what would they be looking for monies under

this program?

MR. RUELOKKE: I can only speak to it in

general, and perhaps if there is a specific question we can deal with that. Some

of the elements of the agreement allowed for departmental or other governmental

initiatives.

WITNESS: One point three in particular, Max,

was (inaudible).

MR. RUELOKKE: Investment promotion. That was a

program designed to allow the department to sponsor trade missions, both

incoming and outgoing, and it was used on a number of occasions to do just that.

MR. SMITH: How much money in total would the

department have accessed out of this program?

MR. RUELOKKE: I don't have a figure here in

front of me but it would be very easy for us to provide you with it.

MR. SMITH: Would you be talking about a

significant amount of money? Would the Auditor General have this -

MS MARSHALL: Just about $1.1 million.

MR. SMITH: What was the total amount of this

program?

MS MARSHALL: Thirty-six million dollars.

MR. SMITH: So about $1.1 million was accessed

directly by the Department of Industry, Trade and Technology to pursue some of

its objectives.

MR. RUELOKKE: I think objectives that the

department had responsibility for with respect to industry development, not just

things -

MR. SMITH: When I look through the list, the

question that I have with regards to this is, is this standard? Is this the

ordinary course of things, that the department of government would be accessing

monies out of these cooperative agreements to pursue its objectives? Because one

would assume that the departmental budgets that are allocated to them would be

such as to enable them to carry out their mandate and maintain their existing

programs. Maybe I can even be more specific. Would any of these monies have been

used to pay salaries to people within the department, and maintain positions

within the department?

MR. RUELOKKE: No, that would not be an eligible

activity under this program or others.

MR. SMITH: Okay.

MR. RUELOKKE: I would like to make a couple of

clarifications here because I think they are important. Departmental budgets are

based, in fact, upon departments' abilities to access funding from

federal-provincial agreements to accomplish some of their own ends. We have had,

and continue to have, some very tough times financially in the Province and in

government generally. I am personally very much in favour of using thirty cent

dollars to accomplish our objectives if I can get them, and will continue to do

so.

MR. SMITH: The only difficulty I have with

this, having been involved with organizations over the years, having great

difficulty in trying to access funding to promote development, especially in

rural areas of the Province, you are talking about a very limited fund of money

that is available for organizations, whether they be just community driven or

private sector. My understanding of the intent of these types of programs is to

actually be the hands-on. This is where the jobs are being created, and this is

where the economy is being driven.

Where I can appreciate there is a role for

government and the Department of Industry, Trade and Technology to go into the

blue sky thing and the broader thing in terms of trying to identify where

opportunities exist, I have to say personally that when I read that I had some

difficulty in looking at that and seeing that parts of the agreement were

actually being used for those types of activities. I would have thought that all

of these monies would have been, in fact, ending up on the ground in terms of

actual development projects, creating jobs for people in the Province.

MR. RUELOKKE: If I could just respond to that,

and just expand on it a little bit. The Investment Promotion program is one

where someone has to lead. Someone has to take the initiative to put together a

trade mission of engineering companies to go to Scotland to forge join ventures

with companies working in the offshore sector. You can't sit back and wait for

that sort of thing to happen on the basis of somebody making an application, so

the department would take certain initiatives.

With respect to the money being allocated sort of

on the ground, by far and away most of the money, as is proper, went that way.

We continue to have to provide support to departments and organizations. If you

look at the agreement that was just signed last Friday, the Comprehensive

Economic Development Agreement, which is not directly related to the SIID

Agreement but it is an agreement that has similar objectives, of the $50 million

pot of money that represents, something in the order of $15 million is allocated

toward the Regional Economic Development Boards, all twenty of them. That is

another area where money is not going directly to industry, but somebody has to

take responsibility for trying to coordinate the economic development

activities. That particular agreement recognizes the need to do that out in

rural Newfoundland.

People go into that looking heads up at it and

knowing that is what is going to happen. It is not something that happens as a

result of someone seeing a pot of money and saying, `I think we can take some of

this to use for that'. It is a case of designing it to work that way, and that

was the intent here because our partners in the agreement, ACOA, if they thought

we were doing something just to try and promote the Department of Industry,

Trade and Technology and hire new staff or whatever, the management committee

would have taken a very dim view of that.

CHAIR: It seems like that happened though, I

just want to interject for a second. It seems like the situation that you are

talking about in terms of a dim view being taken is exactly what happened. A few

moments ago you said that, as the deputy minister in the department, if you

could access thirty cent dollars you would do whatever you could to access it.

It seems to me that in the milieu of what was

taking place at the time of the agreement, and shrinking provincial budgets,

that - while I don't agree with the approach, and someone has to lead in terms

of that, the approach may be outside the agreement itself. I think that is the

point that maybe you should address, that in terms of accessing that $1.1

million for the department, at a time when the department's budget was shrinking

and all department budgets were shrinking, that it really fell outside the scope

and framework of the agreement. I think the point that Mr. Smith is making, and

he can correct me if I am wrong, is that as a result $1.1 million didn't get to

organizations or business (inaudible) on the ground where it should have, and

the department internally saw it as an opportunity. While provincially our

budget shrank, carved off $1.1 million, really their budget didn't shrink at

all; it may have increased that year.

That seems to be what you are saying because you

seem to be speaking, with great respect, from both sides of your mouth in terms

of the issue. Is that what happened? It seems to me that is exactly what you

have described as what happened. I am not making a value or judgement call on

it, I am just seeing it for what it is.

MR. RUELOKKE: I take some exception any time

someone tells me I am speaking out of both sides of my mouth.

CHAIR: Get used to it. I hear it all the time,

as do other members here.

MR. RUELOKKE: This framework of programs was

established up front, very clearly, and it was always intended that the

investment promotion activity would have been driven by government, by our

department on behalf of the Province, and by ACOA and Industry Canada on behalf

of the government, and there was every intent that while there were other

activities that could occur there, the intent was to allow us to undertake

specific activities with respect to the promotion of the objectives of this

agreement that would be led by the department or by our federal counterparts. It

wasn't something where we sort of part way through decided that this is a way we

can recoup some money; this was the intent going in.

WITNESS: (Inaudible).

CHAIR: Before you do, do you have any more

questions? I know the Auditor General wanted to make a quick point.

MR. SMITH: I don't want to belabour it. I wish

we had more time. For example, I am really curious. I would like to have - and

maybe the officials don't have them today - some of the particulars. When I look

at some of these items here, it would perhaps be of benefit to me if I could

follow more closely. For example, you say that we are talking in excess of $1

million here, which to me is a significant amount of money in terms of I know

what is available for development within the Province. I deal with this on a

regular basis. I have people in my district who are coming to me with ideas that

they are trying to promote. In situations where they could access $25,000, they

would be eternally grateful if they could do it. So if I see in excess of $1

million that a department of government takes and uses in the area of broad

promotion generally, which I have no difficulty with, I recognize there is a

need that has to be done, but in the meantime what that will translate into in

terms of actual jobs.

I can accept your argument and your rationale that

we have to do this and down the road we are going to see the benefits, that is

fine, but if someone comes to me today and says: I can create three jobs in Port

au Port, or I can create ten jobs in... - that, to me, is very tangible. I am

more interested in that sort of thing.

On a personal level, I would prefer to see whatever

monies are available going into that area as opposed to sending off delegations

to here, there, and everywhere. I am not saying that is not necessary, and that

we should not be doing that, but I am not convinced that the monies for that

sort of thing should be coming from agreements that have been concluded,

bilateral agreements with monies intended to actually be used in promoting

(inaudible).

CHAIR: Before I go to the Auditor General, I

just want to make a point. Take as much time as you need. That is what the

process is about. If you have other questions that are related -

MR. SMITH: The only thing is, for example, I

don't know if Mr. Tobin has particulars. Again, we could even talk about some of

these. For example, the amounts here that we are talking about in that

particular area, if we could speak specifically to what the -

MR. TOBIN: We should be able to do that, Mr.

Smith.

CHAIR: We will take a moment. Does the Auditor

General want to make a quick comment? Then we are going to take a fifteen-minute

coffee break before it all gets cold. We will then come back and get back to Mr.

Smith. Then we are going to Ms Thistle right after Mr. Smith is finished.

MS MARSHALL: The point I want to make is: I am

not saying that a lot of the projects don't have merit, like Marble Mountain,

White Hills, the submarine races. The point is that the agreement outlines

certain criteria and certain eligibility requirements that have to be met in

order for these organizations to tap into the funding, and they didn't comply

with the requirements of the agreement. We also saw instances where applications

were rejected. So if funding is going to organizations that did not meet the

criteria under the agreement, you know, is it possible that there were some

people who should have obtained funding but did not?

MR. SMITH: The thing that strikes me is that

when I read in one

section of the report that there is some question that

tourism would qualify, then I think it is really quite a stretch if you can't

make tourism qualify. It is quite the stretch to send a delegation off to

Scotland or Japan or wherever. It seems to be quite a stretch in terms of that,

if I follow that kind of rationale.

CHAIR: Okay, we are going to take a quick break

for fifteen minutes.

Recess

CHAIR: We will call the hearing back to order. The

Vice-Chair will be here shortly, I suspect. The Auditor General had made some

closing comments. Mr. Smith, I don't know if you want to pursue another question

or two at the maximum with respect to the issue you have raised. If you do,

certainly feel free.

MR. SMITH: Thank you, Mr. Chairman. I will not

prolong the issue much further, but I have asked the officials if they would

provide just some details as to the $1.2 million that was allocated under this

agreement to the Department of Industry, Trade and Technology. I think Mr. Tobin

is prepared to provide some particulars on that.

MR. TOBIN: Most certainly. First of all, if you

would look at the programs in the agreement which the department could access,

essentially, I guess, there were two or perhaps three: 1.3 was dedicated

exclusively to the management committee - directive initiatives, if you like -

and I guess 1.2, which was feasibility determination, also anticipated certain

projects being done by the management committee by, I guess, the implementing

minister for the agreement.

The projects that comprise that $1 million fall into a

couple of categories. There was some activity that took place since, but out of

that $1 million perhaps $400,000 to $500,000 involved the production of such

material as the lure brochures, the whole promotional package for the Province.

It has nothing to do with the Department of Industry, Trade and Technology

salaries or travel expenses, or any of our core budget as such. It was a

promotional project. We are there as the applicant, if you like, because we were

(inaudible) of the management committee, if you like, the implementing minister

who delivered that project.

Also falling into that category there were a number

of, I guess, professional services contracts, one involving an investment

prospecting project, the cost of which was $150, and then another $100 in place

for follow-up activity, and a second major professional services contract would

have been the development of the Information Technology Strategy for which

outside expertise was used. That would have been in order of $150,000.

In addition to that there were projects involving, for

example, the putting off of seminars. These would have been smaller amounts of

money for the environment industries, an export seminar for companies who wanted

to export their products, and odds and ends like that. All of the money went out

externally; it is just that we were there sort of as the lead agency, if you

like, for those projects.

CHAIR: Mr. Smith, are you finished?

MR. SMITH: Just one item there.

CHAIR: One more question I will allow, and then we

will to another member.

MR. SMITH: Thank you, Mr. Chairman.

Just one particular item there in that listing of the

projects on page 94. There is one project there, LEOS, for $11,600. What exactly

is that?

MR. RUELOKKE: LEOS is an acronym for Low Earth

Orbit Satellite. It was some work we wanted done which we did with C-CORE. What

it is, it is a method of communications using, instead of satellites that are

very, very high, several hundred kilometres, using satellites that have a low

orbit and cover a smaller area but offer some opportunities for remote

communications. That work was undertaken in part with C-CORE and what has since

become Stratos Global, Derek Rowe's company. They were involved in that as well,

trying to give them assistance in developing this technology that they could go

on and turn into a business opportunity.

MR. SMITH: Thank you, Mr. Chairman.

CHAIR: Ms Thistle.

MS THISTLE: Thank you, Mr. Chairman.

I guess anyone who read this report would pick up an

underlying theme of disagreement throughout the report between the Auditor

General and your department. I was particularly intrigued, I guess, with page 13

of the Auditor General's report. She noted in her report that approximately 39.1

per cent of the funding went to public sector entities. I looked on page 13 and

I saw these entities outlined here. I also went back to page 2. It was, I guess,

a chart of how the money was spent over the past five years up until March 31,

You can tell from that chart that the bulk of the

money actually went to applications in excess of $100,000. From $100,000 to

$499,000 there were sixty-one applications, which took up $14 million of the $35

million. Then there were only seven entities that were successful in having

applications approved from $1 million to $3.5 million, and that took up the

lion's share, which was $11 million. Are you satisfied that the spirit of the

agreement was met in approving these applications? Can you comment on that?

MR. RUELOKKE: Yes, we are satisfied that the

agreement was successful in accomplishing its objectives of providing strategic

investment to the industry sectors and to businesses, in that the objectives of

broadening the scope of the economy and creating jobs were met.

MS THISTLE: I wonder, how much money does it take

to actually get Newfoundland on the map? Because when I relate to what happens

in Central Newfoundland - and I have been in economic development for a long

time now - to bring it home, I guess, to tell you what we have spent on economic

development in our particular area, has always been a source of criticism,

particularly with the Town of Grand Falls-Windsor.

The taxpayers were always upset because we paid

$50,000 a year into an economic development officer's job. Some years the Salmon

Festival would make a profit, and more years they would not. The years they made

a profit we didn't hear anything. It took ten years to put that Salmon Festival

on the map, and now that event is one of the top 100 in North America, and it

generates between $7 million and $8 million a year during five days for the

Grand Falls-Windsor Salmon Festival.

I wonder, when I look over all this, at the money that

was spent, $35 million, are you satisfied? Did it create the jobs, in your

opinion, particularly when you look at the number of applications, the entities

that actually benefited from this chunk of money? Are you satisfied for, say,

the bulk of it, $25 million, that you created enough jobs out of $25 million?

MR. RUELOKKE: I would never say that I was

satisfied. I never would be satisfied, no matter how many jobs we created,

because there are never enough. We still have an unemployment level that is

unacceptable, but I think that we made a significant contribution through this

agreement, as we plan to through similar agreements that we have now and will in

the future, but we will never be satisfied.

MS THISTLE: I would like to draw your attention to

an internal memo that was written to your department. It is actually on page 38,

and it was addressed to the SIID Management Committee from the SIID Working

Group. I guess at that point it was a review of the approved applications and

the direction in which the department was going. The programs were, of course,

broken down into different categories. I guess from interdepartmental viewpoints

you had some concerns that certain categories were being used up rather quickly.

Particularly on page 41: (

d) A review of project 1.1 shows that $6.6 million of

the $8.4 million the total commitment for this program is related to three ski

hills.

I think we have addressed this in other questions

already this morning. Are you satisfied that the money that was spent on three

ski hills promoted Newfoundland's Adventure Tourism, not Adventure Tourism in a

sense but the capacity of those three ski hills to attract outside tourism money

coming into this Province?

MR. RUELOKKE: I am not as familiar with the ski

hill areas as I am with some of the other industry sectors because we don't deal

primarily with that sector, and I am not a downhill skier myself so I cannot

speak from personal experience, but I do understand that the White Hills, and to

a much greater extent Marble Mountain, provide income in-Province by attracting

visitors from outside of the Province. I think there is a very positive impact

that is felt in both surrounding areas of those hills, but I would have to defer

to my colleagues in Tourism to provide any level of detail with respect to the

numbers of people who use the facilities and the sort of broad spin-off

activities with respect to hotels and restaurants and bars and car rentals, and

things that it generates.

MS THISTLE: Originally the funding and the

approvals were placed in eight categories, early on. Was there ever a point

where funding was not used in a certain category, that it was then transferred

to another category to be used? It was outlined in the beginning, $42 million to

spend in eight categories. Was there ever a time when a particular category did

not receive any applications and a decision was made within the department to

transfer to another category?

MR. RUELOKKE: In fact, I think that was more often

the case than not. If you look back on page 6, at the table referred to as

Figure 3, and if you look at the two columns, Available Funding and Committed

Funding, the only ones where you will find there are relatively close matches

would be in programs 2.1 and 2.2 where there are not huge differences.

You come down the page, and the next time you find

that sort of similarity between available and committed is way back down in 5.2.

So all of the other programs have seen either more funding or less funding

depending on the sort of mix of applications and requirement for funding. It was

quite often the case that funds would be transferred from one program or

sub-program to another.

CHAIR: Before you proceed, Ms. Thistle, the

Auditor General has a comment to make with respect to the question you asked.

MS MARSHALL: Yes. There was a requirement under

the agreement that the management committee was supposed to look at the

available funding on a regular basis and the amount that had been used, and they

were supposed to make a conscious decision as to how they were going to move the

money around. That was one of the complaints that I had about the program. It

didn't seem that the committee had made a conscious decision as to how the

funding was going to be reallocated. It seemed that they treat all the money as

one big pot, sent from the one big pot, and therefore you came out with these

big differences. There was suppose to be a formal procedure to reallocate the

money.

MS THISTLE: Was there an authorization in writing

required to move funds from one category to another?

MS MARSHALL: We didn't see anything. I don't know

what the requirement was, just that they were supposed to do it and, in fact,

that they didn't do it.

CHAIR: Do you want to make a comment with respect

to that, Mr. Ruelokke?

MR. RUELOKKE: I would like to, yes. It may or may

not seem as though the committee consciously moved funding from one place to

another, having served on the management committee from September of 1992 until

January of 1994, I can certainly say with clarity and certainty that the

committee did, in fact, from time to time, review the funding allocated and made

decisions with respect to transferring funds from one program to another. That

was in the early days of the agreement. As the agreement matured, I am sure that

decisions were made in the same manner. While it may not have seemed that

happened, I can tell you that it did happen. We didn't regard all of that money

as one single pot, no.

MS THISTLE: I think my only concern in raising

that was the fact that if you had someone applying in a certain category that

funding was gone in that area, would their application be denied? That is not

the case; they would have been looked after by some other means?

MR. RUELOKKE: If we were near the ceiling on a

particular program and we had a good project that would fit underneath that

program, then we would consciously make a decision to allocate funds from

another program which had excess funding available into that program so that we

could accomplish the objectives of that individual applicant, yes.

CHAIR: Do you want to make a comment, Mr. Tobin?

MR. TOBIN: Yes. There is a further internal memo,

Ms Thistle. It begins on page 34, and is dated March 23, 1994. The

schedule on

page 37, in that memo, about a year into the main operating portion of the

agreement, you can see there that the management committee was alerted to where

the various program allocations and commitments were. They could see very early

on in the game that certain program components were having a high demand placed

upon them. For example, program 2.3, program 3.3. That continued to be the case

throughout the life of the agreement.

These original allocations were notional allocations.

It was a best stab at what might take place once the agreement was opened up.

Ultimately it is not what occurred. Some agreement components didn't really have

a great demand placed on them at all, and I guess the management committee

responded to where the demand was coming from.

MS THISTLE: Thank you.

CHAIR: First the Vice-Chair, Mr. Lush, and then we

will proceed to Mr. French.

MR. LUSH: I have more of an observation than a

question. I feel there is something inherently and innately wrong with this

process this morning. It seems to me that when we are examining a body or an

agreement, as it turns out to be of this place, that involves two government

agencies, one 70 per cent particularly, and the other 30 per cent, it seems to

me we must walk prudently and cautiously in pursuit of facts and in pursuit of

truth. Let's walk very carefully when we are dealing with integrity and

competence.

I see a group that is not able to answer all of the

questions because it is not in full control. I don't like that one little bit in

the world. I am not afraid to question people about their integrity and

competence if I think that is in question, but I don't like pointing an accusing

finger when I see people not fully in control of the process.

We are dealing this morning with one of the large

issues, compliance: compliance with the agreement, compliance with the

objectives. We are told that ACOA is in charge of that. If ACOA is in charge of

that, then that is who should be examined, not another group. I don't know how

we deal with that. I just want to put it forward for the consideration of the

Committee in future when we are dealing with matters that are federal and

provincial.

Some very serious things have been said here today. As

I said, we are dealing with truth. I know that if I were a person put on the

line by what somebody else said, some rumour or hearsay or whatever, without any

substantial information, it would put the devil in me, if my word was in

question and I had no way of refuting that.

I think that is the kind of thing we are in this

morning, and I think that has to be corrected. Maybe there should be a joint

examination by both Auditor Generals when we are doing this kind of thing. I

know that there has been some reference to the federal Auditor General but

again, as far as I can understand, the federal Auditor General's remarks were

generic. They didn't refer specifically to SIID, but talked about agreements

right across the country. To extrapolate that as referring specifically to ours,

and to make some inferences on that account, I think is a little unfair.

I just want to make these remarks. I think in the

future, if we are going to be dealing with a joint agreement that is managed by

both the federal and the provincial - the Auditor General herself mentions there

was information she couldn't get. Well, if we are going to get into examining

people we had better be able to get all of the information so that we know we

get a comprehensive picture of what is going on. To take one group and to hold

them up for not carrying out the rules, when another group of people was

involved, to me seems like an unfair and an unjust process, and I would like to

see that rectified.

Having said that, I will go into a question, a

follow-up to what Ms Thistle asked, the one about the reallocation of funds.

Maybe the Auditor General could explain for me because really I am baffled by

that one myself, how it is that objectives could not be realized in a program...

As I said, maybe my view is rather myopic in this one, but I can't see how the

objectives of a program could not be achieved because of a reallocation of

funds. The objectives of that particular program were made more possible because

sufficient monies were allocated to allow the company or whatever to carry out

the project. It might have taken away from another program, but the objectives

of that specific program certainly were realized. I am mystified. I want to

understand it, but how would the reallocation of funds stop the realization of

achieving and accomplishing objectives? I find it a little baffling.

CHAIR: Would somebody like to respond to that?

MS MARSHALL: Yes, I am going to respond.

CHAIR: Would anybody from the department like to

respond to that as well?

MS MARSHALL: I would like to jump in first.

CHAIR: Okay, go ahead, Ms Marshall.

MS MARSHALL: There is a

section in the agreement,

Mr. Lush, if you look at page 227, I am referencing

section 4.4. I am also

looking at the previous page, 226; there is a

section (

c) there under 4.3.

MR. LUSH:

Section (c).

MS MARSHALL: Page 226, 4.3 (

c) says that the

management committee is effectively supposed to do up an annual work plan each

year, because this is a multi-year program. They are also supposed to look at

the funding that has been allocated among the program elements, and they are

supposed to decide if there is some sort of reallocation warranted in order to

meet the work plan of the committee.

So if you look at

section 4.4 of the agreement, it

says: The Management Committee may, in order to ensure efficient agreement

management, reallocate funds between or within programs..., where it considers

that the purpose and objectives of the Agreement would be furthered by such

transfer.

Really, what the committee is suppose to do is sit

down each year, look at what has happened last year, do up their work plan for

next year, take a look at the allocation and decide, is this money allocated

going to meet our objectives in the upcoming year? Should we reallocate the

money around?

I didn't see any evidence where the committee had sat

down and make a conscious decision, for example, that the amount of funding on

the strategic investment of $15.48 million was the amount that should be

preserved over the five years of the agreement. I would think midway through

they would sit down and say: $15.486 million, I think we have to much money in

there, or we don't have enough. And really we should be more interested in

pursuing market development which right now only has 5.5 under it.

That is the source that I was looking at, and that is

required under the agreement. We didn't see any evidence of that. Instead it

seemed to us, you know, based on the audit, that money was approved under the

various program elements, and they went over on some and they went under on

some, but they really did not sit down and look at where they have been in the

past and where they should be going in the future with regard to the program and

the agreement.

CHAIR: Mr. Ruelokke.

MR. RUELOKKE: If I could ask a couple of simple

questions.

CHAIR: Sure.

MR. RUELOKKE: Is it the Auditor General's

understanding that the management committee had authority and responsibility to

transfer funds from one program to another?

MS MARSHALL: I would assume that you would have to

go back and have the agreement amended.

MR. RUELOKKE: I draw your attention to

article

4.4. It doesn't say that. It says, in fact: Such reallocation shall not be

considered an amendment...

MS MARSHALL: Okay.

MR. RUELOKKE: It specifically says that, so the

management committee clearly has the authority.

My second question would be: Did the funds get

reallocated? As evidence, I offer those two columns that say surely they must

have.

MS MARSHALL: But we didn't see any evidence where

there was a conscious decision made to that regard. It appeared to me that you

just kept spending out of the various allocations.

MR. RUELOKKE: I am unable to find anywhere in the

agreement where it says we had to provide evidence that you or any other body

could see of the decisions. The decisions were made. Clearly if there is no

evidence that is available to you, or that you can see, that indicates that they

should have been made, that doesn't (inaudible) that they were made.

MS MARSHALL: But in other to audit, though, for

compliance with the agreement, there has to be evidence. For someone to say to

me: Well, yes, we stand in a room or we had discussions on it... There was no

evidence, to me, that there was money transferred around or that there was a

conscious decision.

CHAIR: Mr. Tobin.

MR. TOBIN: I would like to ask Ms Marshall, what

would have been satisfactory evidence in that case?

MS MARSHALL: I would have liked to have seen

something whereby the management committee made a formal decision that money

would be reallocated.

MR. TOBIN: I guess each meeting day the management

committee received a report on commitments by program. They were aware at every

meeting of where the program allocation was.

CHAIR: Mr. Tobin, would that be referenced in the

minutes of the management committee - those decisions, the decisions of

MR. TOBIN: Any formal reallocation?

CHAIR: Yes.

MR. TOBIN: Perhaps not. The fact that the reports

were provided to the management committee on, I guess, a monthly basis, every

meeting is simply a fact. I think every management committee member would

acknowledge that. They were aware of where we were on every program at all

times, had several discussions on the fact that some programs were going... You

see, in the budgets for ACOA and for Industry, Trade and Technology, there are

not separate budgets for these programs. There is one budget: grants and

subsidies. In ACOA it is contribution funding. That is it. These are not pots of

money that were sitting in ten or fourteen separate pots somewhere. They are one

budget. As we point out, `notional allocations' is the term we use. That is, in

fact, what they were.

MS MARSHALL: Yes, but when the agreement was done

up there was some conscious decision made that you were going to spend funding

in each of these categories in order to meet certain objectives. At some point

in time somebody decided that no, you wouldn't spend $15 million in a certain

area, you would only spend $9 million.

MR. TOBIN: I guess the decision was consciously

made. It was consciously made in response to the demand that came in from the

business community. We were not getting applications under program 4.1, for

example, Management Training.

MS MARSHALL: But if that was the case, why

wouldn't the committee sit down and make a conscious decision that probably that

program element was over-funded, and in order to meet the objectives of the

committee that money would be transferred elsewhere in the program?

CHAIR: Go ahead, Mr. Tobin.

MR. TOBIN: One more time. In fact, Ms Marshall,

that did happen. Because rather than stopping at $2 million under program 3.3,

once we got there the committee consciously - very consciously - decided we were

going to continue on and fund projects where the demand was -

MS MARSHALL: Yes.

MR. TOBIN: - not where we, at the outset of the

agreement, thought they may have been.

CHAIR: I will allow one more comment on this issue

and then I would like to move on. Go ahead, Ms Marshall. You can respond if you

like, Mr. Tobin.

MS MARSHALL: All you were doing was processing the

applications and letting them fall into the categories. It didn't seem to me

that you sat down and made a conscious decision that in order to meet certain

objectives of the program you were now going to move money into another area in

order (inaudible).

MR. TOBIN: We showed the management committee

where they were every meeting on every program.

MS MARSHALL: I don't doubt that.

CHAIR: It seems to me the issue at hand here is on

process, how decisions were made, and what the evidence was in terms of

re-allocation. Did you want to...?

MS MARSHALL: I would like to just make another

comment, if I may, with regard to what Mr. Lush was saying.

CHAIR: One final one allowed then.

MS MARSHALL: I realize this is a

federal-provincial (inaudible) -

CHAIR: I am going to comment to that, that is

fine. Before we proceed, Mr. Lush, I just want to make it clear too, for the

benefit of the record, that this Committee certainly has every right to

investigate this agreement. While there may be some level of discomfort with

respect to members because of the federal-provincial nature of it, the reality

is that 30 per cent of the money expired or spent was spent by the Province. Had

we, as a Committee, had the power to call ACOA representatives or part of the

management committee on this agreement, we would have. The reality is that we do

not, as a Committee. They are outside the jurisdiction of this Public Accounts

Committee.

I want to be clear, and for the record to show as

well, that we as a PAC have every right to ask any questions with respect to

this agreement and other federal-provincial agreements. Any suggestion or hint

otherwise is clearly not the case. With the greatest respect to the witnesses

who are before the Committee, I appreciate the frankness to which you are

answering the questions. I am certainly not going to let anyone point fingers

and point at characters, or try to pursue any sort of character assassinations,

or the integrity of witnesses before this Committee.

I will remind all members that what we are after here

is the proper accounting and expenditure of public dollars. If we feel, as a

Committee, that the witnesses cannot provide all the answers then we will

reconvene the hearing and ask those witnesses who are within our power, whether

they be ministers or other members, to come before this Committee to answer

them. I want to be clear on that.

That is the way, as long as I am sitting in the Chair

of the Public Accounts Committee, that we will run it, in a professional,

up-front manner, and we will proceed with the hearing from there.

Mr. Lush, you have another question?

MR. LUSH: Yes, thank you. It is related to items

that you have scaled down for the SIID program, page 40 of this. I think I

probably follow the answers from the figures allocated there. The ones I want to

talk about are 2.2, the Diagnostic Analysis - these are elements that qualify

under the program - Diagnostic Analysis Implementation, and 4.2, Industry Skills

Enhancement. I think if we looked over then to page 42 we see where Diagnostic

Analysis is to discontinue. It seems to me a lot of the money was used up, and

in Diagnostic Analysis Implementation we went over the budget. That one is going

to continue, but the Diagnostic Analysis is to discontinue. Can you explain why

that is so?

MR. TOBIN: That was a memo put together by myself

and the other people involved with the direct delivery of the SIID Agreement

back toward the end of 1994 when, in actual fact, most of the money under the

agreement had been committed. There were subsequent times when there were some

savings and we re-committed dollars and what have you. We were trying to offer

the management committee some suggestions as to how they might allocate or deal

with the remaining dollars that were left. We were looking at where the demand

continued to be, and where we thought as a working group they could continue to

most effectively spend the remaining dollars in the agreement.

The Diagnostic Analysis Implementation program under

this agreement had a particularly high demand placed upon it because it allowed

for such things as QA/QC, the hiring of particular functional professionals

within firms, these sorts of things. Throughout this agreement those were the

areas where there was a significant demand placed.

In the case of Diagnostic Analysis, the way it was

originally envisioned that this would flow is a company would get funding from

the agreement to have a diagnostic analysis of its operation performed, and then

following from that there would be an implementation phrase. If, for example,

that Diagnostic Analysis recommended the hiring of a financial manager because

they were particularly weak in the area of financial operations, the Diagnostic

Analysis Implementation program could follow up on that.

The management committee determined throughout the

agreement that in actual fact companies were either having analyses of their

operations done outside of any assistance under the agreement, through using

their internal resources, what have you, so I guess the notion, given the scarce

dollars, of laying that one aside but continuing with the Diagnostic Analysis

Implementation program was certainly a logical one at the time.

MR. LUSH: Just one other question on that same

line of thinking, page 43 of the document, item 4.2. Again I look here and see

Industry Skills Enhancement eliminated. That would seem to me to be a pretty

important element, where industry is trying to advance the skills of their

people, their expertise. The other question is: It wasn't in demand a lot, it

seems like, and I just wonder why that is so? Because it seems like a pretty

important element of the program to me.

MR. RUELOKKE: I couldn't agree more, Mr. Lush. We

felt, when the Agreement was developed, that was an area where there was

significant room for improvement in our industry base, both in terms of the

management development side and in skills enhancement.

It is a case of you can lead a horse to water but you

can't make him drink. Both governments committed the funding to it and we

promoted it actively through the industry association and through particular

companies, but there was very limited take up of it. Not to say that there

wasn't some skills enhancement going on generally. There was a sort of a sister

program to this one under the Offshore Development Fund called an Offshore

Technology Transfer Opportunities Program. Maybe the fact that this agreement

coincided with the sort of start-up phase of the physical activity at Hibernia,

and subsequent developments, there may have been some diversion of interest from

this program to the offshore program.

In consequence, whichever way it happened, we just

didn't get the level of take up we had anticipated. If you look at the funding,

there was a total of $4 million available for management and sort of worker

skills, and there was less than $1 million, less than a 25 per cent take up.

MR. TOBIN: If I could add one more point to that.

CHAIR: Okay.

MR. TOBIN: One of the reasons there was such a

demand on program 2.3 is that program allowed companies to hire new expertise as

opposed to getting management development done in-house. I think there is a bit

of a correlation there as well.

CHAIR: So they could bring it in off the street is

what you are saying. If they accessed that part of the program, they could bring

expertise in off the street that would provide a higher level of skills, or a

wide and broader base of skills to the company. Is that it?

MR. TOBIN: Yes, exactly. That is correct. You can

see the correlation between the two, the increase in the demand on one program

and the less than anticipated demand on the other one.

MR. RUELOKKE: Just one further clarification.

Timing might have been a thing there too, the time required to develop the

skills in-house as compared to the time required to go and get them off the

street probably was a significant factor.

CHAIR: Mr. French, you have a couple of questions?

MR. FRENCH: Yes, thank you, Mr. Byrne.

First of all, I would like to point out that I come

from a pretty strong recreational background, having been involved in the

sporting community in this Province for a long, long, long, period of time. I am

certainly not going to knock money that went to Marble Mountain or Copper Creek

or the White Hills Ski Resort because in my view these are things that are very,

very worthwhile to our Province and to our tourism, but I have some difficulty -

and I will go back, I think it was Mr. Ruelokke who answered the question - when

we talked about the funding for Marble Mountain and for the White Hills. I

noticed - I can find it, I guess, in a minute of so - there was also $2 million

allocated under federal funding for the While Hills Ski Resort. The question I

am asking is: Were these amounts of money approved on an agreement with the

federal government, with the provincial government, and really done outside of

the committee?

MR. TOBIN: Yes, that is correct.

MR. FRENCH: Okay. Also, again, the amounts of

money. The Auditor General points out in her report that even though we allowed

only 50 per cent funding, in actual fact in all of these cases, I think - in

Copper Creek, Marble Mountain and the White Hills - the funding was actually 100

per cent. Any I correct in assuming that?

MR. TOBIN: The (inaudible) on Marble Mountain was

100 per cent, and certainly I think that is true of the White Hills project

funded by the federal side as well. That 50 per cent wasn't in the agreement; it

was a guideline developed by the management committee itself for projects under

that program, not (inaudible).

CHAIR: You were not limited by the agreement?

MR. TOBIN: That is correct, Sir, not in any way.

MR. FRENCH: So if I submitted a project, if you

wanted to, if it met the criteria, in actual fact you could fund 100 per cent of

it?

MR. TOBIN: We could certainly fund more than 50

per cent, yes.

MR. FRENCH: Okay.

Again, along the questions that Mr. Smith asked, I

find it very intriguing that the department could avail of funding through this

particular program. I am sure in Mr. Smith's district, and in the districts of

any of the members of this Committee, we all have people who would like to have

funding and so on, and I am not totally against the department using this money,

depending on where it was used. If we are going on trade missions and that sort

of thing, I am not so sure if the taxpayers of this Province should totally fund

that or if we should actually take all of the money from a particular fund. I

still really can't make up my mind whether I would be for or against it. But

when this funding was allocated, say for a trade mission to China, would that

then cover if your own minister went, or if the Minister of Health went, or

whatever minister went, or if the Premier went? Would they be covered under that

allocation, and officials from their department? In other words, if Mr. Ruelokke

went, or Mr. Tobin or whoever, would you then be covered under this particular

agreement?

MR. RUELOKKE: No. I may, in fact, have erred in

using trade missions as an example because under this particular agreement I am

not even sure that we did fund any trade missions per se.

MR. TOBIN: No, Deputy, that is correct. We would

have funded the individual companies from time to time who participated in those

missions, but our travel, or anything like that for the purposes of accompanying

them on those missions, would have come out of our normal budget.

MR. FRENCH: Yes, because I noticed in here there

are a lot where various companies attended various trade missions, but people

from your own department or from whatever ministry of government would not have

travelled with any funding out of this.

MR. RUELOKKE: That is correct, Mr. French. That is

required to come from departmental budgets, from the minister's budget or from

our budget, not from this sort of funding. That would not be an eligible

expenditure.

MR. FRENCH: Okay.

MR. TOBIN: If I could, Mr. French.

MR. FRENCH: Go ahead.

MR. TOBIN: $1.2 million of the administrative

funding allocated to the department for this agreement in actual fact was put

back into business projects. We use very little administrative funding under

this agreement. We use the resources that we have in-house as a matter of course

to undertake our responsibilities for this agreement.

MR. FRENCH: Did I also understand you to say, in

answer to Mr. Smith, that there will be a list supplied of what funding you

used, and in what areas you used the funding?

MR. RUELOKKE: Mr. French, there is a listing that

contains the individual projects that the government sponsored, if you like. It

is on page 94 of the book that we have before us. What we can do is provide

additional information, if necessary, on those individual initiatives.

MR. TOBIN: There is very little detail there

simply because there is very little room on the spreadsheet - you cannot get

into much explanation - but I can provide project authorization forms on all of

these projects so you can see the detail of it.

MR. FRENCH: Okay. I don't know if you planned on

sending it to all members of the Committee or just to Mr. Smith. If it is not to

all members, could I please ask you to submit me a copy as well?

CHAIR: Normal procedure and protocol would dictate

that any correspondence go to the Chair. The Chair then would disseminate it.

Just for reference, I guess, the information was asked for and (inaudible)

provided by the officials.

MR. RUELOKKE: Okay, we will do the same thing with

this.

CHAIR: I have a couple of questions related to the

report.

The spirit of intent of the agreement and the

process... Throughout the report I think the Auditor General has, from what I

read in her report, significant trouble with terms of compliance on one hand,

but in terms of process, management of the agreement, providing the follow-up,

decisions in some ways that were made outside of the agreement framework.

One that she refers to - and it goes towards

inconsistency, I suppose - she used the example that uses a project received in

June of 1995, and which received funding in November of 1995. There was a

proposal that came in June of 1995, it received its funding in November 1995,

but there were projects that came in previous to that, and the only reason given

for them not being funded was that there was limited funding. It wasn't that

they were not good projects, or they weren't projects of merit that would not

have met the spirit of the SIID Agreement or the criteria established. They were

turned down simply on the basis that there was limited funding. I think it is on

page 14, if I am not -

MR. TOBIN: I can speak to that, Mr. Chairman, if

you would like.

CHAIR: Yes, okay. I would like for you to comment

on it, number one; and, number two, if you could in your commentary reference

what the project was to which reference has been made.

MR. TOBIN: Yes, okay. Around, I guess, the latter

part of 1994, this agreement -

CHAIR: It is on page 20, actually.

MR. TOBIN: On page 20? Okay.

CHAIR: Here it is, British Confectionery Limited:

"...the contribution was approved towards an expansion of the company's

manufacturing operation. I should note..."

MR. TOBIN: Okay, around the end of 1994, or early

1995, this agreement was effectively committed for the first time, if you like,

to the point where the management committee decided that they had to put it on

hold. There were a number of projects, I guess, on file at that time which the

management committee could not fund because they would be over-committing the

agreement to do so. Those projects would have been directed to other funding

agencies, to ACOA, who also sat, of course, on the SIID management committee.

They would take it down there and try to deal with it under their ACOA

mainstream program or wherever we could find an alternate funding source for

that project at the time.

When the agreement opened up again, if you like, the

latter part of 1995, those projects, to the extent that they had merit, would

have gone somewhere else. Several months had gone by and there was really no

mechanism to go back to them and say: Okay, look, we are either open for

business again - notwithstanding the fact that nine or ten months had passed by

- do you want to come in with your project?

Since that project was approved, by the way, savings

were identified perhaps on three different occasions. There were sort of three

iterations done of this as projects fell off the table, did not proceed at the

level that they could potentially have proceeded, or whatever. I guess

approximately fifty projects from November of 1995 - and we would provide

details on all of those in our minutes - would have been funded out of

identified savings.

While this was perhaps one of the first ones that

started to get funding out of identified savings, it certainly was not an

isolated case at all. There was certainly nothing extraordinary about it, if you

like.

CHAIR: So it didn't come in after other projects?

Is that what you are saying, that it didn't come in after other projects had

been turned down based upon no funding? Did it all of a sudden jump to the head

of a pile?

MR. TOBIN: No.

CHAIR: The question seems to be there, and that is

why I am asking it?

MR. TOBIN: (Inaudible) question.

CHAIR: It is not done with any intent other than

to ask the point, because it is clearly there. The impression is clearly left

there that somehow this received a special sort of recognition and status as a

result of who the project was.

MR. TOBIN: The appearance is there certainly, but

if you look at the time that elapsed from when those other projects, if you

like, were not turned away but sort of directed to other funding sources because

we didn't have any left, there would have been several months elapse from that

time and the time that this project would have come before the department; and

it would have been a time when the agreement was being opened up again

periodically to commit some of the savings that we had identified.

We went through a constant process of seeing if

projects had died, or downscaled or whatever, and trying to pull that money back

to get it back out there, recommitting it to put it to work to meet the

objectives of the (inaudible).

CHAIR: Would other projects that may have applied,

or proposals that came into the department, that were turned down solely on the

prospect of limited funding, no other reason - the projects were found to be of

merit, they met the criteria but could not be proceeded with because of limited

funding - when funding did become available based upon what the management

committee discovered through that there would be extra funds because of whatever

reasons, projects didn't use all their money or whatever the case may be, were

these projects then given due consideration as well? Or, once they received

their letter saying that they would not be funded, was the onus then back upon

the proponents of those proposals to reapply again?

MR. TOBIN: I guess, Mr. Byrne, we would not have

just, at least in most incidents, simply told someone: We don't have the money,

go away. We would have tried to accommodate them under ACOA's other programs or

whatever, and the projects which would have had merit back several months before

that would have been handled to the extent that they could have been handled by

the other funding programs.

To the best of our knowledge there were not projects

sitting out there in November of 1995 that had not gone anywhere, that had

merit, that were still waiting on SIID to do something for them, or anticipating

SIID would do something for them.

CHAIR: The Auditor General also indicated that

there was inadequate reporting to the House of Assembly through the minister on

the discharge of accountability of the program. Would you care to offer any

comment on this? If you feel you are not in the position, tell me for the record

that you are not in the position to make a comment on it, but it is an important

question.

MR. TOBIN: Could I ask you just to refer to the

section and see what the basis for it is.

CHAIR: On page 5, I believe, if my memory serves

me correctly. Let's see here now. Yes, here is it. Under the first column, under

the

section Reporting, the Auditor General says: "There is inadequate reporting

on the discharge of accountability to the House of Assembly."

Under Department's Response: "Reporting to the House

of Assembly through the estimates process is consistent with the accountability

requirements of all government programs."

Could you elaborate on it, or would that be your

answer? Because that is a standard stock that anybody could use for any

department in terms of the Estimates Committee process. Those of us certainly at

the political level and certainly at the upper bureaucratic level who have gone

through the Estimates Committee process would realize that would be a stock

answer. I don't know if the Auditor General would like to make a comment on it,

because it is an important question.

MS MARSHALL: Sure.

CHAIR: Because within the estimates process you

can put anything anywhere, at any point, and not necessarily hide it - and I use

that term with the greatest respect - I am not impugning motives on anybody, but

I mean you are talking about a $6 billion or $7 billion budget provincially; you

can put anything anywhere and make it look like anything you want. I don't know

if you would like to make a comment on it.

MS MARSHALL: Well, this goes back to a comment I

have been making in my report for five years now about an accountability

framework for government departments and Crown agencies. I have always felt that

there is insufficient information really being available to the ministers even,

and onward to the House of Assembly, that I think there should be more

information going to the House on the cost of government programs and what they

are achieving.

So for this program here I think there should be

something going to the House as to how much money has been spent from the

provincial treasury, and what exactly has it achieved? It goes back to what Ms

Thistle was saying this morning with regard to the evaluation of the program; do

you think the program has been successful? You won't know until the evaluation

has been done, but I think it would be really interesting if the results of the

evaluation went through to the House of Assembly so that the members know that

for the $10 million that they approved for that program, here is what it

actually achieved.

CHAIR: The same sort of issue as yesterday, I

guess, in terms of the EDGE program.

MR. RUELOKKE: That certainly can happen. In fact,

there is an evaluation under way as we speak. The report is not done just for

internal purposes. We want to use it to help us do a better job at what we do,

but we can certainly make it available to whoever would be interested in it

because it is -

WITNESS: Most certainly.

MS MARSHALL: Another interesting development in

recent months is that there is public service reform under way now in the public

service, and one of the areas that is being looked at is the accountability of

government departments to the House of Assembly, and information going

(inaudible) programs. So it looks like government is considering doing something

along those lines.

CHAIR: Another question indirectly related. The

Province has just entered into a new $50 million agreement similar, I guess, in

terms of its overall approach to the Province, federal/provincial arrangement.

Are we looking at a similar sort of framework, similar sort of management

committee, similar process in terms of evaluation, reporting, compliance, etc.,

as what we have right here with respect to the SIID Agreement?

MR. RUELOKKE: I will start from the management

committee. The management committee has been struck, and it consists on this

occasion of two people, myself representing the Province, and Paul Mills

representing ACOA. I guess there are some similarities there, good, bad or

indifferent.

With respect to the program guidelines, they have been

developed in broad brush and we now have implementation committees that we are

putting in place to sort of sketch out how those guidelines can get turned into

something that will let people know what is eligible and what is not eligible

under the agreement.

With respect to the way that it will be managed and

administered, as we said yesterday with respect to the EDGE program, we have the

greatest respect for the efforts that have gone into the review of our work on

the SIID program and on the EDGE program, and we intend to do a better job of

making the Auditor General's job easier by way of perhaps having a little more

formal documentation of some decision-making processes by making sure that

information is available, but the sort of general framework will be the same.

We have notionally decided, for example, that ACOA

will be responsible for payment and compliance on this agreement, but we have

not sat down as the two co-chairs and formally signed off on that yet. In doing

so, when we make that agreement, I will be obviously cognizant of some of the

problems that the Auditor General has had in access of information, and we will

deal with them so she won't have to do that on future occasions.

CHAIR: Since becoming involved in the Public

Accounts Committee, I have felt strongly that any department, certainly with an

enlightened view of pre-existing programs, might take a more preventative

approach, so to speak, and call the Auditor General or her staff up front and

say: In terms of compliance and auditing and comparison and evaluation, do you

have any suggestions that we may be able to take from you? It certainly would go

a long way in terms of clearing up some of the agreements on disagreements here

this morning that we have seen, I think. I will leave that open-ended for a

moment.

With respect to the program, I think what is clear

here this morning is that the eligibility criteria as primarily established by

the SIID Agreement really, at the end of the day, didn't end up as the

eligibility criteria, but it was broadened. I don't think that was necessarily a

bad thing, but in terms of public scepticism it may add to the scepticism of the

public and those who are applying in terms of being turned down initially early

in the program and possibly finding out later that the program has been

broadened. The eligibility criteria, the message being given, is that anything

at all may apply at some point in time.

Would you like to respond to those few comments?

MR RUELOKKE: That is a really difficult issue to

deal with because you start out with any program with a certain mind-set towards

eligibility, and what sorts of projects you are trying to develop and encourage

and support. Invariably as you go through that you will find projects that are

perhaps of a unique nature, that make sense because in that particular region

there is nothing else that has happened and you really want to do something

there, but they don't quite meet the strict eligibility criteria. There are

always troublesome decisions, and management committees will continue to

struggle with them.

The basic mind-set of most management committees that

I have been involved with is that we prefer to err on the side of giving

somebody an opportunity, and guidelines will tend to be broadened rather than

shrunk. You just don't want to turn down good ideas because some situation with

the project that you could not have foreseen when you were developing the

guidelines renders them ineligible. I guess that is a situation where management

committees will - you can take two or three ways to do things. I don't want to

draw analogies in other programs, but one of the members of the committee and I

were at a meeting this morning with respect to an opportunity that may fall

through the cracks because people involved in making the decisions are

absolutely unwilling to bend or to - I won't say bend - even step aside a little

bit.

The way we would always go in any situation in which I

am involved in is that we will try and do what we can to broaden it, and if we

wind up getting in trouble for it then maybe we are just doing our job.

CHAIR: A last question. Certainly I think every

elected member at the table here would understand this more acutely than anybody

else, but people from the public who phone us, whether they be from our

constituencies or not, make one basic assumption, that we are in the know as

elected member on anything and everything with which government is involved.

Very often we are the last to know. Specifically on agreements such as this, I

think that would be the case, certainly; reading of the document and the Auditor

General's report certainly was in my instance.

Is it possible, in terms of the management committee's

point of view, that in some sort of monthly or weekly basis that updates on this

program, in some sort of generic fashion, can be forwarded to Members of the

House of Assembly? It would go a long way, let me tell you. It may be outside

the scope of the PAC, but really I think it is something that I would suggest in

the strongest possible terms. I don't know if other members want to make a

comment on it, but it is certainly an important function that would assist us as

elected representatives in being accountable ourselves.

MR. RUELOKKE: I certainly have no difficulty with

that, and we will be quite willing to -

CHAIR: So, as co-chair you could make somewhat of

a commitment to pursue that for us, could you?

MR. RUELOKKE: I will have to talk to my boss about

it.

CHAIR: Does anybody have any other questions? Are

there any closing comments either by the Auditor General or the witnesses?

MR. RUELOKKE: I would just like to thank you for

your consideration, and for the fair-minded way in which you dealt with the

questions. I hope the next time we come there will be fewer questions, and one

of these days we are going to have an Auditor General's report that says, `no

comment'.

CHAIR: Okay, the hearing is now closed. Thank you.

Committee adjourned.