March 12, 2003 PUBLIC ACCOUNTS COMMITTEE

The Committee met at 10:00 p.m. in room 5083.

CHAIR (Mr. Sullivan): Order, please!

I am Loyola Sullivan, the Chair of the Public Accounts Committee. First of

all, I welcome all of you here this morning.

Before we move any further, we will just start by doing introductions to make

sure we know who everybody is. I want to add, when you speak make sure you press

on the talk button and the light should come on. State your name, too, during

any questioning because we want to record it for Hansard. Kevin is doing the

recording there.

I will move to my right, the Vice-Chair. We will start with you, Eddie.

MR. JOYCE: Eddie Joyce, MHA for the Bay of Islands and Vice-Chair of

Public Accounts.

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

MS M. HODDER: Mary Hodder, MHA for Burin-Placentia West.

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

CHAIR: Next we will do the member here to my left.

MR. T. OSBORNE: Tom Osborne, MHA for St. John's South.

CHAIR: I just want to mention, Ernie McLean, the Member for Lake

Melville, is en route. He should join us when we are in session.

Next, if we could, we will do the Auditor General.

MR. NOSEWORTHY: John Noseworthy, Auditor General.

CHAIR: The members of your office.

MS MULLALEY: Julia Mullaley, Auditor Principal.

MR. WHITE: David White, Audit Manager with the Office of the Auditor

General.

CHAIR: We will go to Tim, the Deputy Clerk.

MR. MURPHY: Tim Murphy, Deputy Clerk of the Executive Council.

If I could take a moment to apologize on behalf of the Minister of Finance

and President of Treasury Board, who was invited here this morning as well, but

who could not make it due to unforeseen circumstances.

As well, another person, Dave Dempster, Director of Protocol, could not make

it. He is travelling on the road today with the Lieutenant-Governor.

CHAIR: The members from the Executive Council.

MR. O'NEILL: Jim O'Neill, Manager of Financial Operations, Executive

Council.

MR. HEFFERNAN: Doug Heffernan, Director of Financial and General

Operations with Executive Council.

MS MARSHALL: My name is Elizabeth Marshall. I am now a private citizen. I

am the former Auditor General. I retired about a year ago. I am not exactly sure

why I am invited here this morning, Mr. Chairman. I did receive an invitation

and I explained to Mr. Mark Noseworthy at the time that I no longer have access

to reports, files or staff; but I am here to provide whatever assistance I can

to the Committee.

CHAIR: Thank you.

We will just finish the other introductions and then I will get to your

question, or hopefully clarify it.

We have Elizabeth Murphy here as Clerk of the Committee; Mark Noseworthy, to

my right there, is Executive Director with the Committee; and Kevin Collins,

sitting here in the background, is with Hansard. He will be doing the recording

of this particular meeting.

Ms Marshall, I guess it came from the last meeting of the Committee when a

motion was moved by Vice-Chair, Mr. Joyce, and I think seconded by the Member

for Lake Melville, Mr. McLean, that the former Auditor General should be here. I

guess Mr. Joyce will have to answer why, but what I gathered at the time was

that there are some questions that did not get answered by the current Auditor

General. That was the reason given at that meeting.

Now, I want to add that there was a vote and I think there was a lot of

discussion. I personally went on record as indicating that I did not feel that a

former Auditor General should be here as a private citizen. In fact, I do not

feel that a former minister should be here at all. I know the PC members of the

Committee opposed that and the Liberal members of the Committee voted for it.

That is basically why you are here.

I am not sure if Mr. Joyce or anybody would want to comment any further on

that, but I did go through Hansard on the last sessions and read them - I have

them with me here - and I did not see anything by the current Auditor General

that was left unanswered at all. In fact, in Hansard, I could not find it. I

read through all three sessions of Hansard from front to back and I was

satisfied. I raised it yesterday here with the Auditor General, who we met with

yesterday.

In advance of public hearings, I want to be as informed as possible. It has

been customary - certainly as Chair I have done it on each occasion - to be

versed on the Auditor General's perspective on anything coming before the

Committee. I do not know if Mr. Joyce would want to comment on that. That is all

I can add to the debate.

MR. JOYCE: The reason why, Ms Marshall: In some of the statements even

after - one of the issues that has been brought up later on in the week, the

Labrador ferry and transportation, the expenses and, as you put it in your own

words, with the public tendering, how you can save hundreds of millions of

dollars in public statements. That was one of the issues.

The other issue is that when you read through the report - and I was not sure

who spoke to whom - but in your report some officials from the department told

me, informed me. So I do not know if you were told or who were told. The

invitation was an invitation; it was not a subpoena. If you did not attend,

there was no indication at our meeting that you were going to be subpoenaed

whatsoever. It was an invitation. Even if you go back in some departments, we

are not always informed of the expenditures. Now, if that is your signature and

you are going to stand by that, if you do not want to appear, there is no

problem whatsoever. There was never any intent of subpoenaing Elizabeth Marshall

to this.

Also, just for the record, after we asked you to appear, I think it was moved

by the Member for Bonavista South that the ministers appear also, and that was

approved also by the Committee. It was not that we were just trying to get

someone here. From my understanding, Minister Joan Marie Aylward contacted the

chairman personally and said that, because she was off sick last week, if you

went another time she would appear. The Minister of Works, Services and

Transportation, Jim Walsh, said he was out of the Province but if you delayed it

for another time, he would appear. So, there was never any intent of subpoenaing

you here. It was just that the information was here, if you wanted to appear.

MS MARSHALL: Mr. Chairman and Vice-Chairman, I am most interested in

coming and providing whatever assistance I can to the Committee. The only thing

I would like to point out is that I have been gone from the office for a year. I

no longer have access to - well, I do not have a copy of the report. I do not

have access to the files, and I do not have access to the staff. This was

pointed out to Mr. Noseworthy when I spoke to him.

Now, this morning when I left my home there was a package on my doorstep and

there was no return address on it. Upon opening it, it was documents relating to

the Committee, so I have not had an opportunity to look at that. It was

delivered to my home some time between 2 o'clock yesterday afternoon and 9 o'clock

this morning, so I have not had a chance to review them. Having said that, if

there is anything I can do to assist the Committee, I most certainly will.

CHAIR: Thank you.

I just want to add that I do not think it is imperative, to be honest with

you, that necessarily ministers be here. I did not speak, personally, with any

minister. An assistant of the Minister of Finance and Treasury Board left a

message at my office, asking for a postponement of the meetings on Wednesday and

Thursday.

For the record, I indicated that we met as a Committee recently and we were

all kind of annoyed that on March 8 we decided on these topics and here, a year

later - and we went through postponements before. We were told recently that,

with new ministers, they need to be briefed, that they could come but we might

not get the answers we want, so we delayed it on that basis until these dates.

With the House opening next week, we figure it is important.

I informed the assistant, when I called back, that we could not go on with

that. They said the minister would be busy, I guess, with pre-Budget things.

That is what Eileen, the lady I spoke with there, informed me.

I had a note passed to me by an assistant who received a call from Mr. Walsh's

office last week, and I notified Mark to notify people that Mr. Walsh's

office, the Minister of Works, Services and Transportation, had called last week

indicating that he would be out of town and would not be there. I conveyed that,

and I think members are all very much aware of that, but I wasn't aware until

this morning when I was notified by the Deputy Clerk that the minister would not

be here. I did not have any conversation with anybody after that, other than to

say that the hearings would be going ahead.

I am not requesting that we delay or anything, to have ministers here. I do

not really feel it is imperative that we have. I certainly do feel strongly that

former ministers should not be here, and former private citizens should not be

here. The Deputy Auditor General at the time, who is now the Auditor General,

oversaw who was involved with the audits here and is fully able to answer

questions. I think I have articulated that in our meeting before.

That is just to clarify those things.

MR. JOYCE: Again, I do not want to make this issue a political issue but,

Mr. Chairman, the reason why the last meeting was cancelled was not because the

ministers needed time to be brought up to speed in their departments. It was

because the departments, through technical difficulties which were approved at

the last meeting, were not notified until the day before the dates of the

meetings. It had nothing to do with the ministers being brought up to speed. It

had nothing to do with any minister or any department cancelling the last two

sets of meetings. It had absolutely nothing to do with it.

I am sure, if we had the copy of the last minutes, it would show that the

departments were not advised properly because of the technical difficulties with

the e-mails. That is why the meetings were cancelled. There was no attempt by

anybody in this room, or anybody I have been dealing with, departmental-wise,

that cancelled or delayed any of these meetings.

I have no problem, Ms Marshall, if we do not ask you any questions. I have

none whatsoever, absolutely none, and if you say that you feel you never had the

information, I will not direct the question your way. I have no problem with it

whatsoever.

MS MARSHALL: Mr. Chairman, I would like to stay, seeing as I was invited

here. I would like to stay, if it is okay.

CHAIR: Certainly, that is your right. We are delighted to have you here.

Just one point, before I move to the Auditor General: The department did

indicate they could proceed with the hearings when they were previously

scheduled, but I think our Executive Director indicated that we may not get the

answers we want because staff were tied up in briefings. Therefore, that was one

of the bases on which we decided to say: Look, we might as well wait and have

people here who can answer questions, rather than have to come back and revisit

it. I think that stemmed from it. I do think with Mark Noseworthy's e-mail,

Executive Director, there was some problem with at least one of the departments

involved in that.

Mr. Noseworthy.

MR. J. NOSEWORTHY: I would just like to say that I am quite surprised at

the suggestion that there was a question put to my office that was not answered.

We take that issue very seriously. We have mechanisms in place to make sure that

all questions are recorded. We go through Hansard, we make our own notes, and to

the best of my knowledge, and my staff - and we have checked on this - we do not

know of one question that ever went unanswered. So, I was surprised to hear that

comment. It is a discouraging comment from my point of view because we take

pride in addressing all the issues raised. I would like to go on record as

saying that I do not know of anything that was never answered.

CHAIR: Thank you.

The public hearing today is dealing with the review of protocol expenditures.

Of course, our Public Accounts Committee generally selects these topics from the

Auditor General's report. It is not limited to the Auditor General's report,

and the Committee has a fairly wide scope and powers in looking beyond that. The

hearing today, of course, is one that is based upon the Auditor General's

report for the year ended March 31, 2001.

I will commence the hearings here. I will give the Office Protocol an

opportunity if they want some opening comments to make on that, and then we will

certainly give the Auditor General an opportunity for any opening comments too.

Before I get to that, I would like to make one point. We have some people

here today who need to be sworn in, who have not appeared before the Committee

before. I would ask our Clerk, Elizabeth Murphy, to swear in Mr. Murphy, Mr.

Heffernan, Mr. O'Neill, and Mr. White. If there is anybody who was sworn in

before, I think that is understood to be long-standing, continuous, and wouldn't

have to be done again.

Swearing of Witnesses

David White

Douglas Heffernan

Jim O'Neill

Tim Murphy

MR. SULLIVAN: Mr. Murphy, if you are ready, if you want some opening

comments.

MR. MURPHY: Thank you, Mr. Chair.

Very briefly: Our first awareness that the Public Accounts Committee was

interested in having a hearing or requiring some additional information on this

aspect of the 2001 AG report came to our attention last May. In response to

that, we provided some information at that time which we believe fairly

expressed and indicated that we had addressed the concerns which had been

outlined in the particular

section of the AG report of 2001 on protocol

expenditures. That material, I believe, has been circulated here this morning,

and again was provided in response to a follow-up request from the executive

officer of the Public Accounts Committee in December. That information was

provided again early in January of this year.

I am prepared to answer any questions that people may have on that

information or any other aspect of the following question.

MR. SULLIVAN: Thank you, Mr. Murphy.

Mr. Noseworthy, do you have any opening comments? If not, I will, then, open

it up to any particular questions by any of the members.

Mr. Osborne.

MR. T. OSBORNE: Thank you, Mr. Chair.

I do have some questions and, I guess, I will direct my questions initially

to the Auditor General. In our document, page 2 - I think it is page 104 of the

Auditor General's report, under your Conclusions, "The $150,867 charged

to Protocol was not Protocol expenditure and as a result, expenditures were made

from this account for purposes other than those approved by the

Legislature..." Why were these expenditures, that were not Protocol

expenditures, charged to this account? Can you give us some indication as to

what the $150,867 was actually spent on?

MR. J. NOSEWORTHY: The first part of your question: Why

would they be charged to Protocol? We talked with officials at the department.

If you would turn to page 4 of your package, you will see at the bottom of page

4, it says, "We were informed by Departmental officials of the following:

in certain instances there were insufficient funds available in the Premier's

Office and in these cases, Treasury Board authority was being obtained for

additional funding..." They had no funding in the Premier's Office but

Protocol Office did, so they charged it there. That was one reason.

On the top of the next page, page 5, "It was a

convenient way to control expenditures and provided a way to redistribute the

expenditures to other Departments." Finally, the officials indicated that

they "...expedited payment of expenditures, travel claims and travel

advances since there was always sufficient funds in the Protocol account."

What we are dealing with here is we had this large budget in

the Protocol Office and it was being used for convenience. So all of the

payments would be charged into there and then, subsequently, as indicated, which

relates to your $150,000 on page 4 in figure 3, those amounts, the $150,867, the

vast majority of that related to travel and was redistributed to the accounts

shown above. For example, the Premier's Office received $78,000 back;

Financial Administration, $15,000, and so on. So, what you have here is a

violation, a contravention of the Financial Administration Act in that the

monies were not used for the purposes as voted in the House. The House had a

Protocol account budget set up used for protocol type activity and instead,

travel expenditures in the Premier's Office were being charged there and then

charged back, and you cannot do that.

MR. T. OSBORNE: Most of the funds that were charged back

to Financial Administration, Intergovernmental Affairs, still related to the

Premier's travel although they were charged out to other departments?

MR. J. NOSEWORTHY: Yes.

MR. T. OSBORNE: Okay.

In the Department's Response, they indicated - I believe it

is on page 8, the final paragraph, "It should be noted that the practice of

provisionally charging Premier's Office travel to Protocol was stopped in

March 2001, and there have been no further provisional charges to this account

by the Premier's Office since that time." Would you consider that to be

an accurate statement at this time?

MR. NOSEWORTHY: We have not audited that account after

that date. However, if you turn to the next page and look at the response that -

CHAIR: Mr. Heffernan

MR. J. NOSEWORTHY: Yes, Mr. Heffernan. On page 9 of that

response - under Travel on the first bullet - midway down it says,

"...since April 1, 2001 were charged back to the Premier's Office and are

now included in the Revised Budget..." What that implies is that if they

were charged back, that means they were charged somewhere else. While they were

probably brought back, they were probably put somewhere else first; based on

that sort of response.

We did not do a lot of audit work on that but when seen that

in the response we did run some computer programs, some CAATs, and we found

that, in fact, monies had been charged - subsequent to the date of our original

audit - to other accounts, not necessarily Protocol, but other accounts and then

brought back again. So that too is contrary to the Financial Administration Act.

It seems that in the current year the budget has been

increased to the point where the expenditures may be able to be charged in

there, but we have not audited that. Based on the response, if you look at

charged back on page 9, the implication of charged back means it was charged

somewhere else.

MR. T. OSBORNE: It would give an indication that -

MR. J. NOSEWORTHY: Departmental officials may be able to

MR. T. OSBORNE: - the practice had continued beyond March

of 2001.

MR. J. NOSEWORTHY: But not to the Protocol.

MR. T. OSBORNE: Okay.

CHAIR: Basically, Mr. Noseworthy, I guess in your update

on prior years - in this current year there would be a report on that, right,

two years after?

MR. J. NOSEWORTHY: That's right.

CHAIR: So we should see, in the next report, an update on

prior items too, which, from your perspective, would be able to have a statement

then whether that is being complied with or whether it has not, whether that

recommendation -

MR. J. NOSEWORTHY: Yes, exactly.

CHAIR: I do not know if Protocol wanted to comment on

that item, to give an opportunity - rather than run with a series of items, if

we could?

MR. T. OSBORNE: Absolutely.

MR. MURPHY: With respect to the practice of charging the

Premier's travel expenses and expenses for the Premier's staff back to

departments, that has been a practice that was in place going back to1989-1990.

When the Auditor General report came out partway through the 2001-2002 fiscal

year, it was recognized that this was a problem. There were better practices

which could be adopted to better reflect and better record where the Premier's

travel should be accounted for, and the changes were made immediately.

With respect to the Auditor General's comment on whether in

fact there may have been charge backs in the 2001-2002 fiscal year as well, the

Auditor General report - my understanding at least, I was not in this position

at the time, and Mr. Heffernan and Mr. O'Neill can speak to it a bit further.

My understanding was the Auditor General report came out partway through the

2001-2002 fiscal year. There had been insufficient provision made in the Premier's

travel account in the 2001-2002 fiscal year to account for all of the travel.

That has now been rectified for 2002-2003, but we subsequently went to Treasury

Board, had the necessary approval for the transfer of funds, and all of the

expenditures on Premier's travel have now been recorded under a revised figure

for the 2001-2002 fiscal year.

CHAIR: I guess that would probably be a reason. Maybe the

Auditor General can answer that, why you reported on it two years later? Because

January 31 of the following year is the deadline for the report and the fiscal

year is pretty well over, so that gives time to act on that in a subsequent

year. Would that be the rationale for reporting on prior items?

MR. J. NOSEWORTHY: Yes, it gives the department an

opportunity to respond to the recommendations and to take whatever measures they

need. Sometimes there is a period where midway through a year that those

transactions could have continued before they took action to make them stop. We

did not audit into the following year but we did look at charged back here and

we looked at some accounts. In fact, I do not want the committee to think that

everything was okay effective April 1, it was not. They were charged to other

accounts and then brought back in. That is the fact of the matter.

CHAIR: Mr. Osborne, sorry, I just wanted to clarify while

we were on that topic rather than having to come back to it.

MR. T. OSBORNE: That was my intention as well.

I will ask the Protocol Office if at this time there are

travels, for example, for the Premier's Office that are being charged to other

departments still, or other ministerial travel accounts.

MR. MURPHY: My understanding is that all of the Premier's

travel and the travel for his staff is now charged to the Premier's Office.

MR. T. OSBORNE: Okay.

Is there any travel being charged to Crown agencies such as

Newfoundland and Labrador Hydro, for example?

MR. MURPHY: My understanding again is that there is not.

MR. T. OSBORNE: Okay.

Auditor General, I wonder, for the Auditor General's report

that we are reviewing, was there any way of determining how much travel for the

Premier was charged to other accounts, other than the Protocol Office? For

example, Crown agencies and other ministerial offices.

MR. NOSEWORTHY: We did this work looking at the Protocol

Office. In our review of the Protocol Office, we saw these sorts of expenditures

so the audit focused there. While we were doing that, we noticed one of the

expenditures was reimbursed by Hydro and that is reported in here at $12,000. We

knew that was there, but the audit did not go to every Crown agency to determine

whether or not there would be travel in the Crown agencies. This was really an

analysis of the Protocol Office in this particular account where all the monies

were being charged and then redistributed, so that was the focus. We do make a

point in here that, in our opinion, it is very difficult for anybody to

determine how much travel the Premier had because of the way everything was

being redistributed and being charged around.

I think the department comment came back and they disagreed

with that. Their position was that, in fact, they had that sort of a record;

but, based on our understanding of the government accounts and using all of the

technology available to us, I can tell you, it was very difficult. It is very

difficult to go through that, and even then we could not conclude with 100 per

cent certainty that in fact we had identified every piece of travel related to

the Premier. If you do not have it in one area, it is very difficult to control

it.

MR. T. OSBORNE: Thank you.

I will ask the Protocol Office. For example, we are aware of

a Freedom of Information request that had gone in from The Telegram ,

which was reported back some time ago, on the Premier's travel. Were there

other expenditures that were not provided through that Freedom of Information

request? For example, the Crown agencies or other ministerial offices for

Premier's travel, that were not accounted for there?

MR. JOYCE: Mr. Chairman, are we going on the information

of the Auditor General or The Telegram ? From my understanding, we

are sticking to the Auditor General's report. If we are, fine; if we are not,

let's just say we are allowed to open up to other articles that we see in The

Western Star , that we see in The Telegram , so we can bring not just -

I am just opening this up for discussion because from my understanding we are

going to stay to the Auditor General's report. If we start getting into now,

all of a sudden, being the proprietor for some news media, I guess we can all

just pass on what we hear in the media. At the last meeting we decided that we

were going to stick to the Auditor General's report. I have no problem with

any questions, but....

CHAIR: At the last meeting, I think that came up when we

were dealing with the RNC. They had a list of things or inadequacies that they

needed to address. I indicated that I did not think it was the forum to bring

their concerns to the Committee, but the Committee has the scope to go just

beyond the Auditor General's report. That has been historic and has been

precedented. If questions arising around protocol and Premier's travel - that

is the topic that is discussed here today. If there are other areas dealing with

it, if we are going to be that restrictive, we could not ask what is happening

this year in travel, or what happened in the year after 2001, March 31. That is

within the scope of our Committee to deal with that. Certainly, we have the

authority and the powers to ask those questions. We want to see recommendations

corrected, and hopefully it is being done right now. That is one of the natures

of those recommendations. If we can get that information now, rather than have

to wait until next year to hear things like that, it is that much better for the

public at large.

MR. MURPHY: There are a number of requests that come in,

as people know, on Freedom of Information from time to time, to the Premier's

Office, to ministers, to various departments. I am just not familiar with the

specific request that you are referring to here, and whether, in fact, it has

been responded to. The only comment I would offer would be: If there has been a

response, the intent, certainly, from the officials' point of view is to

provide the information that was requested in full. That would have been,

certainly, the intent in responding to that request and any requests that we

would have received.

MR. T. OSBORNE: Thank you, Mr. Chair.

Those are my questions at this time.

MR. SULLIVAN: Mr. Fitzgerald.

MR. FITZGERALD: I would like for somebody from the

Protocol Department to just take me through the way that those expenses would

happen or would be transferred. I refer specifically to the Premier's Office,

because that is where the bulk of the money was spent. How would the Premier

access money from an account in the Protocol Department? Would it be done from

his office by requisitioning money and would the department officials know of

that requisition and adjust their budget at that time? Or would there be a

request put in for funding, be approved by the Protocol Office and then

dispersed?

MR. O'NEILL: The practice that we used at the time was:

When the Premier's Office and his officials were traveling they would look for

an imprest. There would be no money in the Premier's Office budget, we would

just charge it to the protocol account. Upon receipt of claims after the travel

was done, we would still charge it to the protocol account. When we get a

chance, then, we JV it out to the line department. If somebody said, charge

that, he traveled on a fisheries matter, we would JV the expenditure to the

Department of Fisheries.

MR. FITZGERALD: So, while it was not being spent for

protocol purposes, it was an account that could be accessed by any government

department for any amount of money of the requisition up to the amount of your

account?

MR. O'NEILL: No, not any government department.

MR. FITZGERALD: Well, there are quite a few listed here.

I see the Premier's Office, I see Executive Council, Financial Administration,

Intergovernmental Affairs, Fisheries and Aquaculture. Which ones would not have

had access to that account. Or is it just a situation where people who didn't

apply didn't get any money?

MR. MURPHY: I will try to answer that one, Mr.

Fitzgerald.

The reference to other departments, the charge to Protocol in

the first instance is really an intermediary step of the eventual charge to the

relevant department. The charging to the department of the Premier's travel

expenses again has been in place, was in place, going back to 1989. The charging

to Protocol was done for administrative efficiency. It was done to get travel

claims processed in an orderly fashion, in a timely fashion. There was no one

outside of Executive Council who accessed the Protocol account. Protocol is part

of Executive Council. The same group who handle the administrative expenses for

the Premier's Office handle the Protocol accounts, so they are quite familiar

with the amounts of money that are in various votes and in various budgets.

With respect to charging back to departments, I know one of

the comments in the Auditor General's report of 2001 is, it was done in some

cases without the advance knowledge and prior approval of the department. I

know, from reviewing this matter with officials in our Financial Operations

Branch, in the vast majority of cases - and frankly they believe in almost all

cases - advance notice was provided, discussions did occur with the executive of

the departments. There have to be discussions with the departments because we

need to know which accounts are in question, which accounts will be charged for

the various expenses.

Going back to 1989 when the Premier travelled on a fisheries

matter, legitimately the view had been for twelve years that it should be

charged to the Department of Fisheries. It is in accordance with generally

accepted accounting principles, I understand. Again, when the issue was raised

in the Auditor General's report with a suggestion that there is a better way

of doing it, that recommendation was adopted immediately and the matter was

rectified.

The other thing that I should say with respect to

departmental budgets is, the amount of money in question here - every dollar of

public funding is important, no doubt about it, but the amount of money that was

transferred to individual departments in many cases was a very small percentage

of the available travel budget that was in a given department. So, I do not

believe it was a case of departments increasing their budgets because there was

an expense of the Premier's Office that eventually ended up as being charged

to, let's say, the Department of Fisheries. It was a case of having to offset

within their vote that they were provided in the House for that given year. They

had to accommodate that additional charge. They may not have known about it at

the beginning of the year, but we knew about it when the Premier and the Premier's

Office planned this travel and the expenditure was incurred, and that is when

the charge took place. So, I do not think there was - and certainly the feedback

we have had from departments is that there wasn't a tremendous disruption in

the budgeting of departments with respect to this transfer back. Clearly, it was

an issue that could have been handled differently and handled better. That was

acknowledged by government and the changes occurred.

MR. FITZGERALD: When you go through the process of

putting forward a budget, obviously you put forward your budget with the best

knowledge that you have with what expenses you are going to incur in that

particular year. How did the Protocol Department come up with a budget and allow

this funding to be there to be extra funding to be accessed by any government

department that might requisition it?

MR. MURPHY: Again, I do not think it is a case of

departments accessing the funding. The sequencing is: the Premier's Office

incurs a travel expense and submits a claim for expenses. For administrative

efficiency, the charge initially was to Protocol and then charged back to

departments, so the control was always in the hands of the Financial

Administration General Operations Division of Executive Council.

In terms of the amount of money that is in the vote of the

Protocol division on a given year, it is fairly unpredictable what type of

events are going to occur in a twelve-month basis. At the beginning of a year,

of course, we will know there are going to be certain events. There could be a

Premiers' Conference in the Province, there could be a First Ministers'

meeting we need to plan for, and so on, but oftentimes during the year the head

of a foreign government, the head of an embassy, an ambassador, will show up in

St. John's and there will be an event that was not planned or was not foreseen

in advance of the budgeting for that fiscal year; and there was sufficient

flexibility built into the Protocol budget on an annual basis to allow for those

types of expenditures to be captured and to have sufficient resources and funds

there to respond to those sorts of developments.

MR. FITZGERALD: When you look at - I refer to figure 3 on

page 4, 106 of the Auditor General's report, to the tune of $150,867. Will all

of that money be spent for travel only, or would there be other purchased

services there to some of those departments?

MR. MURPHY: My understanding is that all of that

expenditure was for travel expenses.

MR. FITZGERALD: Was there ever a situation where one of

those departments applied to the Protocol Office or department and was refused

because it did not fall within your guidelines?

MR. MURPHY: In no case am I aware that there was any

application by a department for any use of this fund. Again, the sequencing was:

the Premier's Office would incur a travel expense, the claim would be

submitted, it would be processed, and, for administrative efficiency, would be

charged initially to the Protocol vote and then ended up being charged back to

the relevant department. If it was a fisheries matter, potentially it would be

charged to Fisheries. If it was a hydro expense, hydro related to travel, it may

be charged to Hydro; that type of scenario. It was not a case of department's

having an open season on the budget in Protocol. It was just used for

administrative efficiency purposes by the people who were processing travel

claims on behalf of the Premier's Office.

MR. FITZGERALD: When the Premier's Office - and I say

the Premier's Office again because that is the one that is so glaring there -

would apply to the Protocol Office in order to have funding advanced for travel,

would that be a situation then where that account for the Premier's Office

would be totally used up or would it be a situation where, at will, he would

apply and you people would reimburse him for whatever travel expenses were

incurred?

MR. MURPHY: My understanding, again, of the scenario was

there were insufficient resources voted at the beginning of the year for travel

in the Premier's Office. Again, it is not a situation where the Premier's

Office applies for the use of the funds. The Premier's Office incurs travel

expenses, a travel claim is sent to officials, and officials process the travel

claim. Really, for the accounting of it, what happened was the charge was

initially made again to the Protocol vote. There were sufficient resources

there. It was for his administration. It ensured that travel claims were

processed in a timely and orderly fashion and then charged back to the

department. It is not really this concept of an application by departments or

the Premier's Office. This account was purely used for administrative

efficiency purposes by officials and then charged to the departments. It is not

an application type process at all.

CHAIR: Mr. Fitzgerald, we will get back to you. Did the

Auditor General have a comment on one of the points, before we get too far

afield? Then we will come back to Mr. Fitzgerald, he will finish, and then I

think we will move to Mr. Butler.

MR. J. NOSEWORTHY: Related to the transfers to

departments and indicating that the departments were aware of those, there is an

accounting circular which requires that finance people in any department be

notified and be asked whether or not an account can be charged, if an expense

can be charged to their account. We found in one department, for example, where

the official was contacted and asked about taking this expenditures travel, and

the official said: No, it does not relate to travel so I am not taking that. In

fact, the expense ended up being charged there anyway without their knowledge.

When we brought it back to them they just could not believe it because they

said: I had rejected that already. But it was there.

We had another example where we went to a person and said:

Can you explain this? They said: That is not ours. We said: Well, it is in your

account. Those examples are there. We did find that monies were being charged to

other departments without the knowledge of some of the departments. That is one

thing.

The other thing is that on the redistribution you are looking

at that $150,000 and saying this has been redistributed. What we found on the

redistribution - another issue related to what you are talking about here - is

that not all of the redistribution was charged to minister's offices in other

departments. In fact, some of the charges were made to other accounts, in

operating accounts. It was not even in the minister's office. That, in itself,

was an issue. That is included in the conclusion on page 2 of your package, in

the second paragraph there, the third line down, "...in many cases, to

expenditure accounts other than the Minister's Office."

We found examples of the redistribution to other than the

ministers' offices and we found redistributions that were not known by the

finance people controlling the finances for particular departments. I just

wanted to clarify those two points.

MR. FITZGERALD: That was my next question actually, to

ask about when somebody would apply, or when the Premier's Office would apply,

would everybody in your department be notified of what happened and what funds

were disbursed at the same time? What is the chain of command if there is a

requisition that comes in for funding? Number one, who approves it? Number two,

who is advised of it? Is your Budget balanced then according to that latest

requisition, so everybody knows what is happening in their budget at the same

time?

MR. HEFFERNAN: Could you just repeat that question?

MR. FITZGERALD: That is going to be a hard one for me to

remember.

The question was: If there is a requisition that comes

through to your office for funding, whatever it might be, what is the line of

command? Number one, where does the requisition go to? Who is notified that the

requisition is approved, and who gives approval for that requisition? The other

part of the question is: Are all the pertinent people then advised of that money

being disbursed? How do you control the balance in your budget if people who

need to know those things are not informed and not kept within the loop as the

funds are disbursed? As the Auditor General stated, in some cases have refused

funding, but the funding had been approved anyway.

CHAIR: Do you mean people in other departments too, or

any department?

MR. FITZGERALD: No, the Protocol Department.

MR. HEFFERNAN: Just for the Protocol Department. If we

get a claim coming from the Premier's Office and if there are insufficient

funds in the Premier's Office, I would be the one who would authorize the

payment from the Protocol budget and then authorize the issuance of a journal

voucher to the other departments. Does that answer your question?

MR. FITZGERALD: The Auditor General referred to people

refusing to make a payment and the payment being approved anyway.

MR. HEFFERNAN: I was not aware of any such payments.

MR. FITZGERALD: Would you be the first line of contact

for a requisition of funding coming through to the Protocol Office?

MR. HEFFERNAN: The first line of contact would either be

myself or Jim O'Neill.

MR. FITZGERALD: Have you or Mr. O'Neill refused a claim

that has come through from either government department office?

MR. HEFFERNAN: Refused a claim from other departments?

MR. FITZGERALD: Refused to issue a claim from another

department?

MR. MURPHY: If I may. No requests come from line

departments for use of the Protocol budget. Again, the scenario and the

sequencing is: the Premier's Office incurs travel, a travel claim is prepared,

Mr. Heffernan reviews it and determines if there are sufficient funds either

within the Premier's Office or in the Protocol vote. Again, this is all

pre-2001-2002 because the system now is completely different. There is contact

with departments, and I understand at two levels. One with respect to the

mechanics of which account the charge will be made to. So, that contact will be

between financial administration officials in Executive Council and in

departments, but also, then, as necessary, with the executive departments,

depending on the nature of the expenditure and, more importantly, the size of

the expenditure and how it may impact on a department's overall travel budget.

MR. FITZGERALD: Would there be an authorization given

prior to the claim being submitted?

MR. HEFFERNAN: The authorization for travel comes from

the Premier's Office. I mean, if a member of the Premier's Office wants to

travel, then the Premier authorizes that.

MR. FITZGERALD: It would be signed off and paid for from

the Protocol Office, if it was put in that direction, even though it has nothing

to do with protocol?

MR. HEFFERNAN: Well, the Premier's Office wouldn't do

that, we would do that ourselves.

MR. FITZGERALD: Yes.

MR. SULLIVAN: Just to clarify, to make sure we are clear.

The Premier's Office needs to travel, a directive goes out: If it is in the

protocol budget or out of the Premier's travel, one or the other, depending on

what it pertains to, if we see that it is getting into the year and there is not

going to be enough money there - and it might be on a fishery related matter -

then they might say, look, there are not sufficient funds in his budget for

that, therefore that will get charged to the Department of Fisheries, and the

necessary steps will be taken. Is that what normally would happen? Are the

budgets exhausted before we go to other departments, basically, and do the

departments know? I think that might help clarify it, hopefully.

MR. J. NOSEWORTHY: What we found, to deal with the

report, is that all of the charges were being made to the Protocol Office. So,

all the cheques would have been cut there. People get paid from there. Then what

you have is, you have the charge in the Protocol Office. What we are dealing

with, then, is a redistribution of these charges. So, when it goes to another

department, the department doesn't have to approve a payment. The department

has to agree to accept the charge. This is a charge we are proposing to charge

to your department. They say: Well, what is that for? They will explain what it

is for and they will say either it is relevant, yes, okay, bring it over, or no.

In one case we found a person and they said: No, no. That is not ours. But that

was charged anyway.

What they are looking for from the redistribution from

protocol - protocol is the key. All the money is there. So, it is all paid

there, accumulated there and then sent out from there to departments and charged

to the departmental votes. The cheques are all cut through the protocol. That is

the process.

So, we are looking for approval in accordance with an

accounting circular from all of those departments. They should be contacted and

say: Listen, here is a charge. Will you accept this? They have to have money in

their vote to do it and they have to agree that it is related to their

department, that it is relevant to them. Then they take it. It comes from

protocol and gets charged to that department. That is how the redistribution

works. That is what the $150,000 relates to. It came from protocol and went out

to other departments. That is the process.

MR. SULLIVAN: Mr. Murphy.

MR. MURPHY: Again, just to reinforce the Auditor General's

comments. That practice has been in place, in terms of charging to departments,

was in place, from 1989 up to 2001, until the Auditor General report, and it was

accepted by government. Now, there are sufficient resources voted in the Premier's

Office for travel in 2002-2003 and presumably for the coming year and beyond.

MR. SULLIVAN: Yes. I think Mr. Heffernan, in his

response, indicated there is, I think, $235,000 extra right under the Premier's

Office basically, as opposed to that protocol reference as made.

Mr. Fitzgerald.

MR. FITZGERALD: No, I will pass it to Mr. Butler, thank

you.

CHAIR: Okay.

Mr. Butler.

MR. BUTLER: Thank you, Mr. Chair.

My first question is to Mr. Murphy, and it is just a short

question. You made a comment in your opening remarks that you did receive a

request from this Public Accounts Committee in May of 2002, and the information

was provided at that time, and again in January of 2003. I just want

clarification because that is something I have to deal with later on.

My next question is to the Auditor General. The information

in the file that we have before us, all of those figures are in relation to,

prior to March 31, 2001; is that correct?

MR. MURPHY: Figure 2 (inaudible).

MR. BUTLER: Yes, the $150,000 that we are talking about,

that is prior to March 31, 2001?

MR. MURPHY: Up to 31 March 2001.

MR. BUTLER: Okay, yes.

My next question then, is - and I do not know who can answer

this for me; hopefully somebody can - what amount of that figure is for the

period between February 13 and March 31, 2001? Does anyone have it detailed down

to that plan?

CHAIR: That would be the last month-and-a-half of the

fiscal year basically, right?

MR. BUTLER: Yes.

CHAIR: Would somebody have that?

Mr. Murphy.

MR. MURPHY: I do not think we have it here with us this

morning, but clearly it is something that we can provide, absolutely.

CHAIR: It is not unprecedented that a lot of the

transactions usually happen in the last month and month-and-a-half of a fiscal

year. Budgets get depleted later rather than earlier. Therefore, if something is

going to move, it would likely be done later rather than earlier. Would that be

a fairly accurate statement?

MR. MURPHY: I will offer a comment on it, and maybe Mr.

Heffernan or Mr. O'Neill can either correct me or clarify a little bit. My

understanding again, in terms of using the protocol account initially before

charge back, was for administrative efficiency and to ensure the orderly payment

of travel claims when the expenses were incurred. So I would be surprised, given

that was the concept and that was the approach, that there would be a whole lot

of expenditures left for the last quarter or even the last month-and-a-half of

the year that would actually be recorded for travel that had been incurred for

the previous ten-and-a-half months. I would think those would have been paid

prior to that, and then any claims that would have been provided on travel

incurred in February and March, at the end of the fiscal year, would just be

those claims for travel that would have been incurred for those months.

CHAIR: Mr. Butler, maybe Mr. Murphy could obtain these

and forward them to our Executive Director if they are not available, and we can

get a copy then through Mr. Noseworthy.

MR. BUTLER: I thought the Auditor General said he had it

there -

WITNESS: We do not have it put together. We can get it

(inaudible).

MR. BUTLER: Okay.

Someone from the Protocol Office - with regard to page 8, I

just want clarification on this. It is the Department's Response, right in the

very first paragraph. In the last three lines, it says, "These expenses

were unforseen by the Office, and exceeded the established Office travel budget

(which was decreased significantly in 1989 and has remained at a lower

level...)."

The

part in brackets, could I have that explained to me, what

is meant by that: it was significantly decreased in 1989?

MR. MURPHY: My understanding again is, the policy of

charging travel expenditures of the Premier and the Premier's Office staff

back to departments commenced in 1989. So, prior to 1989, presumably - again, I

am on a limb here a little bit because I do not have the facts regarding what

was budgeted and the procedures in place pre-1989 - presumably there would have

been more resources for travel built into the base budget of the Premier's

Office prior to 1989. That changed in 1989, for whatever reason, and the process

of charging back to departments commenced. That occurred for twelve years, until

2001 when the Auditor General released her report. Government accepted there was

a better way of accounting for this and, in essence, we returned to around the

1989 period of including sufficient resources in the Premier's Office travel

for travel to be incurred by the Premier and staff during a fiscal year.

CHAIR: Mr. Murphy, just on that, if I could just ask one

quick question before we move off it?

MR. MURPHY: Yes.

CHAIR: Did that occur in 1989 after the change of

government or before? Maybe with a new government they decided to follow a

different route, because obviously it was done up to 1989. I would assume it

occurred after, but I do not know. If someone could answer that?

MR. O'NEILL: That occurred after the change in

government.

CHAIR: Okay, thank you.

Mr. Murphy, and then we are back to Mr. Butler.

MR. HEFFERNAN: I am going to have to leave.

CHAIR: Okay.

Mr. Heffernan mentioned before that he does have a flight to

catch and I am sure, with traffic, we understand that. I am sure these other

gentlemen can answer any questions, or get back to us with any answers.

Mr. Murphy, was that your comment?

MR. MURPHY: (Inaudible).

CHAIR: Okay.

Mr. Butler.

MR. BUTLER: Why I asked that question, I was wondering,

it seems like prior to 1989 the numbers must have been significantly higher than

what they are since then. Am I interpreting that correctly?

MR. MURPHY: That is my understanding.

MR. BUTLER: Okay.

My next question takes in page 8 and page 9. I guess one is

from the Auditor General's report, up in the travel area, where it says,

"As a result, all travel claims charged out to the line departments since

April 1, 2001 were charged back to the Premier's Office...".

Then, when we switch back to page 8, it says - and this is

from the Department's Response - "It should be noted that the practice of

provisionally charging Premier's Office travel to Protocol was stopped in

March 2001..."

I would like clarification. Was there anything after March,

2001? It would seem to say here there was not, but then on the other side it

says since April 1. I think that document was signed May 3, where it says that

they were charged back after April 1. I was wondering if I could get

clarification on that.

MR. MURPHY: I will try, Mr. Butler.

Again, the Auditor General's report came out partway

through the 2001-2002 fiscal year. There had not been an increase in the Premier's

travel budget at the beginning of the 2001-2002 fiscal year, so there may have

been a period of time there prior to the Auditor General's report coming out

in 2001-2002 when the same practice that had been followed since 1989 would have

been followed. As soon as the Auditor General's report came out, government

addressed it and made the change and recorded for the 2001-2002 fiscal year in a

revised travel budget for the Premier the actual expenditures that had been

incurred for that year.

There could have been, yes, that period of time between the

commencement of the fiscal year of April 1, 2002 and the time the Auditor

General's report came out and the measure was changed.

CHAIR: Just for information, the Auditor General's

report did not come out, I think, until January 31, 2002, which meant there were

only two months left in the fiscal year. There were ten months of the fiscal

year 2001-2002 gone before the Auditor General's report came out.

On the same topic, maybe they might have moved from previous

discussions and when they requested a departmental response the department sort

of stopped its practice then during the stage before the report came out, or did

it - because they would have known basically what was coming in the report

because they had an opportunity to respond to that report. I think that is on

the same line. The point that Mr. Butler was making, if I understand it, is: Did

that stop right then? The Auditor General's report did not report right then,

and therefore it is highly unlikely it stopped until probably close to the end

of the fiscal year 2002 - ending 2002. Is that, I think, the point you were

making?

MR. BUTLER: Yes.

CHAIR: I had that as one of my questions too, actually.

MR. BUTLER: I do not know if this one is a question or

not, but I have to make the comment. If I am going to be ruled out of order, I

guess I will be ruled out of order and I will deal with it in another venue. Why

I ask this, and why I am harping on the dates from February 13 to March 31 so

much, I am wondering what percentage of the $158,000 is actually in that period.

Let me make it very clear.

CHAIR: Under a change of leaders?

MR. BUTLER: Yes, Sir. Two wrongs do not make a right. I

condone that. I respect every hon. gentleman around this table, from the

departments and from the Auditor General's report, but my comment goes back -

and I am glad, Sir, that you did not rule out of order anything that was

mentioned in the media because I reference your comments this morning. I think

they are totally inappropriate when we do not know the facts and figures, where

you are saying that the present Premier is under a microscope today because of

his expenditures that are buried within the departments.

CHAIR: I would like to correct that. I never said that.

That was a media statement; it was not made by me. Anybody who wants to check my

tape of that will find out that I referenced it was the 2001 fiscal year. I did

not talk about any current Premier at all. I talked about a former. In fact, I

think that interview might have been with one of the media who is sitting here,

who could confirm afterwards....

MR. BUTLER: I am only going by what is stated on -

CHAIR: It was not my statement.

MR. BUTLER: I would like to have a copy of it and I will

apologize then, Sir.

CHAIR: If you could. I would give you the name of the

media, in fact, if you would like to speak with him afterwards, and you have my

permission to listen to my tape if he is prepared to do that. I heard that, too,

and I said it probably was just a slip on the current Premier.

Any other questions, Mr. Butler?

MR. BUTLER: No, that is fine for me, sir, for now.

CHAIR: Any other questions?

MR. JOYCE: Yes, I have a few, if you do not mind.

I will ask the current Auditor General. There was a statement

made by the former Auditor General that this government was the least

accountable in Canada. Did you, as the Auditor General, review any other books

in Canada, any other provinces' books?

MR. J. NOSEWORTHY: What page is the report on?

MR. JOYCE: No, it was in the media and it was her

statement. That was a statement that was made. I am asking you, did you review

any other books in Canada, any other province?

MR. J. NOSEWORTHY: Not in the same detail as they would

be reviewed in this Province, but there are ongoing discussions with other

Auditor Generals.

MR. JOYCE: But you did not review the books in Canada. I

am not asking you to agree or disagree with this statement. When this Auditor

General's Report came out it was stated that it was the least accountable in

Canada, but you, as the current Auditor General, can stand here today and state

that you did not review any other books in Canada. So you cannot agree or

disagree with that statement?

MR. J. NOSEWORTHY: No, I did not say that. There is more

to it. I said I will start by saying that we did not review in any detail, like

we would in Newfoundland, the books of other provinces. However, when we went

through and we were looking at accountability and reporting requirements of the

House of Assembly we did look, scrutinize, obtain copies of, we have copies of,

every piece of legislation in Canada that would require government, its

agencies, departments and that sort of thing, to provide to the House of

Assembly a full accounting of what happened. That information is accurate and

that is what we use to report on. When you go through that, what was concluded

was that this is the only jurisdiction in Canada that does not have some sort of

a legislative framework which requires some reporting to the House of Assembly.

I stand by that. I said that again in my report.

MR. JOYCE: The least accountability mainly hinges around

legislation?

MR. J. NOSEWORTHY: It hinges around the fact that

information is not being provided to the House of Assembly.

MR. JOYCE: Okay.

MR. J. NOSEWORTHY: That's it, and the reason it is not

being provided, in one instance, is that there is no legislative requirement to

do it.

MR. JOYCE: Okay, so it is the legislation.

My second question to you is, the Auditor General has a

certain system whereby you look and prioritize what to review, I guess, because

of staff and other things. You prioritize, and from my understanding, there is a

certain system in place that you go through and then you take the top four or

five. This Auditor General's Report we are discussing now, did that go through

that system and did it follow that procedure?

MR. J. NOSEWORTHY: Absolutely. We have a computerized

system in our office that was developed some years ago and it includes various

criteria that are weighted. On an annual basis all the senior staff in the

office - the managers, the principals, the Deputy Auditor General and the

Auditor General - would sit down and look at all of the potential projects; look

at all of the budget books, the public accounts, based on prior years'

reports, our knowledge, understanding the issues being discussed in the House of

Assembly. Everything is taken into context, it is all put into this computerized

system and there is a waiting system put on it, we push a button and you get

from that all the projects in descending order. This is our starting point. We

would go down through that and then make determinations among the very senior

group, which would include right now: myself, as the Auditor General; Mr. Loveys

is the Deputy Auditor General; and Ms Mullaley is an Audit Principal. For sure

three of us would meet on that, plus discussions with our management team in

addition to that. That is how the work is decided.

CHAIR: Before we move to the next question, if we could -

MR. JOYCE: I am not finished yet, Mr. Chairman.

CHAIR: No, I am giving an opportunity - when questions

are asked, if it is the Auditor General, I will give Protocol an opportunity to

respond or the Auditor General. Basically, I have done that on each topic rather

than move. I think Ms Marshall wanted to address one topic before you move to

another question.

MR. JOYCE: Are you a sworn-in witness? Because if you are

a sworn-in witness we are allowed to ask you questions.

CHAIR: Yes, she is sworn-in. We had that done at the

beginning.

MS MARSHALL: No, I have not been sworn-in.

CHAIR: Oh, you were not sworn-in.

MS MARSHALL: (Inaudible).

CHAIR: No, she is a sworn-in witness.

MR. JOYCE: My question is, and I know there are other

people here, if you are going to answer questions - I mean I was just asking the

Auditor General - if you are going to answer questions, that means we are

allowed to ask you questions. I have no problem - if you would just step aside

because, as you said, you have not reviewed the books, and I have no problem

with it. There would not be another question asked to you about it. Now, it is

your decision.

MS MARSHALL: Right. Mr. Chairman -

CHAIR: First of all, Ms Marshall has been sworn before a

committee so she does not have to be re-sworn in. That

part is done, and by a

request to be here by the committee she is entitled to sit at the table and

participate reasonably and comment on specific points that pertains to her. That

is within the rules that are follows here. So I am going to give Ms Marshall an

opportunity to respond on that particular point and then we will move to Mr.

Joyce on his next question, and if Protocol or the Auditor General, or former

Auditor General, needs to respond on that point as approved by the committee,

that opportunity exists in fair play.

MR. JOYCE: Mr. Chairman and Ms Marshall - I am doing this

out of courtesy - are we allowed now to ask Ms Marshall questions? Because I

assumed, when you said earlier you were a private citizen and when we mentioned

before there was going to be no intent whatsoever to subpoena you here to ask

you questions, there was never -

CHAIR: I want to set the record straight. Everybody who

is invited here and is sworn-in is entitled to be asked questions and respond.

We do not have the power to subpoena our committee without going to the House of

Assembly. We cannot do that. If we want to subpoena somebody who does not show -

if we wanted to take action today on the minister, for instance, who did not

show, we would have to go to the House of Assembly and move a motion in the

House of Assembly to have the minister subpoenaed to be here. We can initiate

that action but we cannot approve that action. That is done by a vote of

majority in the House of Assembly.

Ms Marshall.

MS MARSHALL: Yes, I realize that, Mr. Joyce, but I was

invited here and I would like to provide whatever assistance I can.

The two issues that you raised with Mr. Noseworthy, one with

regard to accountability. Yes, I have seen reports from other jurisdictions. Of

course the quality varies from jurisdiction to jurisdiction, but there are

people within the Office of the Auditor General who are quite knowledgeable

about accountability in Canada. As I said, I have seen accountability reports

from other jurisdictions and the quality does vary. Some are better than others

and some are, what I would consider, leaders in the area of accountability. So,

yes, I have seen quite a significant amount of material that was reviewed before

that report item was written last year.

The other issue that you raised with Mr. Noseworthy was

whether this Auditor General's report followed the same system as in previous

years. I can only reiterate what he said: Yes, it did follow the same process.

The other thing I would like to mention is that when I became

Auditor General I did take an oath of office and that is outlined and I can just

briefly go through it. This is the oath that is in the Auditor General's Act:

I swear that I will faithfully, truly, impartially, honestly, justly and to the

best of my judgement, skill and ability, execute and perform the powers, duties

and functions reposed in or required of me as Auditor General under the Auditor

General Act or another Act and that I will observe and comply with the laws of

Canada and Newfoundland. So, I did take the oath and I followed it right through

to the last day.

MR. JOYCE: I will ack you a question now. I am assuming I

am allowed to ask a question.

MR. SULLIVAN: You certainly can. Anybody, whether it is a

witness -

MR. JOYCE: Ms. Marshall, on page 2 - this morning, after

her statements, I was assuming that we were just going to ask questions to the

current Auditor General, but I guess she is open now - on page 2 in the second

paragraph, and in many cases to expenditure accounts other than the minister's

office. Have you got an account of where these expenditures were given?

MS MARSHALL: I don't have access to the files, but Mr.

Noseworthy would have that. There were administrative types of accounts where

those -

MR. JOYCE: So, you don't have it now?

MS MARSHALL: No, because I have no access to -

MR. SULLIVAN: If I could: I said at the beginning that

the Auditor General's Act prohibits the Auditor General from releasing to

anybody, the former Auditor General, to me, to the Premier, to anybody - their

working papers are protected, on any breakdowns there. The Auditor General's

Act, I think, is similar across Canada. I am sure the Auditor General can

comment on that, and doesn't have access to it. That is why I have indicated

that the former Auditor General doesn't have access to these. She is not

entitled to go over and look at records, because the Auditor General is arm's-length,

it is independent, without bias, and nobody should have access to that. That is

protected, I think.

If there is a specific question, the Auditor General probably

could answer that based on the working papers they have. If Ms Marshall can

recall from memory any minute details, which is difficult, certainly she is

entitled to do that.

MR. JOYCE: I do not mean to harp on this. My question is,

that all of our questions have to go to the Auditor General -

MR. SULLIVAN: I am saying -

MR. JOYCE: I am asking a question here, Mr. Chairman.

MR. SULLIVAN: I was answering.

MR. JOYCE: Thank you.

Ms Marshall, I have no problem with you stepping aside. I

have no problem whatsoever, absolutely none. Are we going to allow someone to

interject and make statements and we can't question them back. So, either you

step aside and let us question the current Auditor General or you participate. I

have no problem with whichever one you want to decide. I am no problem

whatsoever, absolutely none. If I am asking questions to the current Auditor

General, who is answering those questions quite well, I have no problem with it.

If we are going to ask questions to the current Auditor General, are we going to

allow you to interject and not be able to ask questions on what you are saying?

MR. SULLIVAN: Ms Marshall.

MS MARSHALL: Mr. Joyce, I was invited here this morning

and I did indicate there are restrictions in that the report was written more

than a year ago and I do not have access to either the report or any of the

supporting documentations, to the audit files, which contain all of the

information, or to the audit staff. I was invited and I felt that I should come

and provide whatever assistance I could, and answer whatever questions any

member of the Committee may have of me.

MR. JOYCE: Okay.

CHAIR: Before we move on, as a point, Mr. Joyce requested

his motion to have her here, and your colleagues supported to have her here.

While she is here, if Protocol makes a statement that the Auditor General wants

to respond to as a witness around this table on this topic, I am going to

provide the opportunity, as Chair, for the Auditor General to rebut or make a

point on Protocol; or, if the Auditor General makes a statement, I am going to

give Protocol an opportunity to respond to that. I think it is only fair.

Ms Marshall has been invited here. I figure it was

inappropriate, but as long as you have her here, she is going to have the

opportunity, the same as the Protocol Office, the same as the Auditor General's

Office, to participate in areas that affect her. If we did not want her here, we

should not have invited her here, but if she is here and she can participate

based on her knowledge of it, keeping in mind the Auditor General's Act does

not entitle - in fact prevents - her from having access to that, we cannot

expect someone to say how much money was spent in 2001, in March of this year,

on a particular item for travel by a Premier who went somewhere. Nobody can

recall that without having access to working papers and background information.

MR. JOYCE: On page 2, I ask the Auditor General, in the

second paragraph, "...in many cases, to expenditure accounts other than the

Minister's Office." Have you got an account of what was expenditured out?

MR. NOSEWORTHY: Yes, I do.

That is not included in the report. (Inaudible) provide the

details. I will give you some examples, and departmental officials may have even

more. Intergovernmental Affairs Policy Analysis and Co-ordination, there was an

amount charged there. That is not a minister's account. ITT, general

administration; HRE, finance, general administration; ITT, Voisey's Bay

Project. These are non-ministers' offices where these ministers' travel is

being charged.

MR. JOYCE: Some of these expenses that were sent out, and

I guess the Protocol could verify this also, some of these expenses that were

sent from the Premier's Office to Protocol, say, to the Department of Mines

and Energy, were concerning the Voisey's Bay Project?

CHAIR: Mr. Murphy.

MR. MURPHY: Two comments, I guess.

One, with respect to where an expense is ultimately charged

within a department, the precise account, that is done, my understanding is, at

least, it is done in consultation between the officials who handle the accounts

of the Protocol Division and the department. It is a meeting of the minds, for

the want of a better term, between where it should be charged. That is again

another step of ensuring that the department is fully aware of the expense that

is going to be incurred and, in fact, agrees to the precise account to where it

should be charged.

The second point is, yes, legitimately there are - and these

are some of the major projects that have been on the go for some time: Voisey's

Bay and the Lower Churchill Development, which have separate offices set up,

separate budgets and so forth. Again, in keeping with the practice going back to

1989 when travel was incurred by the Premier or staff with respect to a Voisey's

Bay meeting or a Lower Churchill meeting, in keeping with the policy that was in

practice for twelve years, the charge was made to those particular projects,

again in consultation with the officials to determine where best it should be

charged.

MR. JOYCE: Just another question to the Auditor General.

The next paragraph down, I guess I am just asking for clarification of this.

"In addition, our review indicated that $12,815 in travel costs for the

Premier and his staff that was originally paid through the Protocol account was

subsequently reimbursed by Newfoundland and Labrador Hydro and recorded as an

expenditure in that Corporation. As a result, some of these expenditures are not

being charged to appropriate expenditure accounts." Can you explain that?

MR. NOSEWORTHY: The context of this report, the $150,000

is what we have identified as being inappropriately charged to Protocol.

Contrary to the Financial Administration Act, this money was transferred, was

paid out of an account that there was no authority to pay it from. That is what

this is all about. So, we had $150,000. What you are looking at here is an

example of something that was inappropriate and contrary to the Financial

Administration Act. In this particular instance, this was supposed to be,

apparently, a Hydro expenditure and, in fact, it was charged to Protocol. So,

when it was reimbursed, it does not make it right. It should never have been

paid through Protocol. Those are the sorts of issues. This is an example of one

that was done that way.

MR. JOYCE: Tim, this $12,815, was that concerning the

hydro when there were negotiations on the go with Newfoundland and Labrador

Hydro and Hydro-Quebec?

MR. MURPHY: Yes, that is my understanding of that

particular expenditure.

MR. JOYCE: So this expenditure again is an expense that

the Premier incurred on negotiations with Hydro, and the bill went to Protocol,

went to Hydro, because the bill was hydro related in some form of negotiations,

which was charged off to Hydro?

MR. MURPHY: Yes, the intermediary step of charging it

initially to Protocol, again, was done for administrative efficiency to ensure,

where there was a source of funds, we could turn around the travel claim fairly

quickly and then ultimately charge, as per the practice going back to 1989, to

the particular department, in this case Hydro, given that was the purpose of the

travel.

MR. JOYCE: Just the next paragraph down to the Auditor

General, "Contrary to Government policy, departments are not always

informed of expenditures being transferred from Protocol to expenditure accounts

in their departments." Who informed the Auditor General that they were not

being informed?

MR. NOSEWORTHY: When we went through and analyzed all of

the charges and the redistributions, we went and talked with officials in the

various departments.

MR. JOYCE: Who? Can you give names? I do not know if it

is appropriate to give names.

MR. NOSEWORTHY: Let me just tell you first that, yes, I

can. I have all the names and I have everything that I have on it, but normally

that sort of detail is not provided. If the department wants to provide it - I

usually speak to the report for what it is. I can add some information, but I am

not supposed to haul out working papers and put it there with names and that

sort of thing. I do have all of that. Yes, we talk with people; it is a fact. We

interviewed people, and what I told you earlier this morning is factually

correct. They rejected a claim and yet it was charged to their account anyway.

That is a fact. We have a couple of those.

MR. JOYCE: Mr. Murphy, did you mention that most of these

discussions did take place with the officials, from your understanding?

MR. MURPHY: It is my understanding again, and Mr. O'Neill

is sort of more hands-on than I am with respect to this, in fact in most cases

there are a couple of points of contact with departments. One with respect to

the precise account for which the expenditure will be charged ultimately in a

department. There has to be a discussion between - it is not as simple, I do not

think at least, and I am not an accountant here - it is not as simple as the

Protocol officials handling the Protocol account typing in where we think there

should be a charge in a department. There has to be a discussion with the

department to say: Where is the most applicable source? Is there enough money in

the account? Can it be charged there? That is one level.

The other level, of course, depending on the amount of the

travel claim, the amount of the expenditure to be charged, you go further up the

line. You do it more at the executive level in some cases with respect to where

the charge should be incurred, and seek concurrence and acceptance at that level

as well.

MR. JOYCE: Again, to the Auditor General, on page 5, I

will go back to Hydro because it is mentioned again. For whatever reason, it is

brought up again on page 5.

"In addition, travel for the Premier and his staff in

the amount of $12,815 that was originally paid through the Protocol.... As a

result, some of these expenditures are not being charged to appropriate

expenditure accounts."

I am not an accountant, but if it goes to Protocol, and

Protocol goes to Hydro, and Hydro says, yes, this is an expense that we had

because there were negotiations on the go, or business with Hydro, is that an

appropriate account?

CHAIR: Before you answer, if I could, I just want to

mention that the conclusions, Mr. Joyce, mention each of the points.

MR. JOYCE: No, no.

CHAIR: No, I just want to mention it. The reason is again

because conclusions touch on each topic and then they go into detail on each

one. That is why it is mentioned a second time, for your information.

MR. JOYCE: Thank you.

MR. NOSEWORTHY: The issue with the appropriateness of

that transaction gets back again to using the Protocol account, which is

inappropriate. The Premier's Office is travelling, the Premier is travelling.

You do not charge that to the Protocol account. That is the problem. That is

part of the $150,000 that we said contravenes the Financial Administration Act.

The redistribution to Hydro doesn't make that right. The transaction is not

right; it should not be charged to Protocol. That is the issue.

MR. JOYCE: Okay, that is the issue. So the issue is not

that the money was reimbursed. The issue is the procedure which was done, which

has stopped since April 1, 2002. Okay.

CHAIR: I just want to mention that Mr. Fitzgerald has a

commitment and he has to leave. When you need to leave, that will be fine.

MR. JOYCE: Do you want to ask any questions?

MR. FITZGERALD: No.

MR. JOYCE: On page 6, the last paragraph down, Mr.

Noseworthy, it states, "As Figure 4 shows, the budget for the

transportation and communication account of the Protocol Office is significantly

higher than actual expenditures." Was all the money used in Protocol?

MR. NOSEWORTHY: What that shows is that there is a whole

lot of money being budgeted in the Protocol Office when, in fact, the actual

expenditures are not that much. The reason there is such a big budget there,

apparently, is so it can be used as a convenient way of paying all of these

travel claims. They have this big budget, so they can absorb all of the travel

claims, and then they redistribute it all out. Then you are left with a small

actual expenditure. So it is like a clearing account.

MR. JOYCE: So, actually, did you ask anybody that? I am

just curious.

MR. NOSEWORTHY: Sure. I asked: why would you be doing it?

Earlier in the meeting we read that.

If you look at page 106 of the Auditor General's report,

you will see it starts on the bottom: The expenditures were initially charged to

Protocol and subsequently charged out to other departments. We were informed by

departmental officials of the following, there were several reasons: there were

insufficient funds in the Premier's Office, so they used Protocol. It was a

convenient way to control expenditures and provide a way to redistribute the

expenditures. This does not make it right. It is still wrong, but these are the

reasons. The third one, it expedited payment of expenditures, travel claims and

travel advances since there were always sufficient funds. Always sufficient

funds because of the big budget, like you said.

MR. JOYCE: Most of the funds were transferred back in?

MR. NOSEWORTHY: Most of the funds - it was transferred

out.

MR. JOYCE: Transferred out. Like if you went to one

department, in Mines and Energy for example, the money was transferred back in

to the Protocol?

MR. NOSEWORTHY: The expenditure in Protocol would have

been reduced by the amount transferred to Mines and Energy, or whatever

department.

CHAIR: Mr. Murphy has a comment on this one too. I will

give you the opportunity.

MR. MURPHY: Again, just a comment with respect to the

question. This Figure 4, on page 6, presents one year in the Protocol budget. It

indicates the budget for that year, the estimated expenditures, and the actual.

That fluctuates from year to year. If you looked at every year you would get

completely different numbers in terms of the actual expenditures. That relates

to the varying level of activity that occurs in Protocol related functions each

year. Some years - in cases when we host the Premier's conference we spend a

lot more money. When things come up during the year, when either a prominent

individual or somebody passes away when we have to be involved in state funerals

and high profile events like that, expenditures have to be incurred. It cannot

be foreseen at the beginning of the year. So there has to be sufficient flex

built into the budget for Protocol, to account for these things which come up

reasonably during the year. This is one year where we spent far less than we

needed to. In other years, I would argue, we probably spend closer to what we

needed to, given developments that occurred during the course of a fiscal year.

I do not have those numbers in front of me on a fiscal year by fiscal year

basis, but it varies over each year.

MR. JOYCE: Okay.

Page 7 - and I guess I am just asking for clarification on

this. The top of the page, Mr. Noseworthy.

WITNESS: (Inaudible).

CHAIR: Page 109, in the Auditor General's report.

WITNESS: Okay.

MR. JOYCE: In the middle of the first paragraph,

"This Transfer of Funds Policy' permits certain transfers of funds to

be made only with Treasury Board approval while others require only the approval

of the Deputy Minister." What does the Deputy Minister have approval to do?

MR. NOSEWORTHY: The policy within the main objects on

current account basis - or current account capital account or current account

main objects - the deputy minister can transfer among all of the objects except

allowances and assistance, some capital debt expenses, some capital ones, so the

deputy minister can make those transfers.

MR. JOYCE: Such as?

MR. NOSEWORTHY: He can transfer money from Purchased

Services to Property, Furnishings and Equipment, that sort of thing.

MR. JOYCE: Within their own department?

MR. NOSEWORTHY: Yes, but then what happens is that when

you make a transfer of money out, the issue that we have cited in here, you see,

relates to the fact that they transferred money out. You go down into Figure 5

and you look at Purchased Services, the $9,400 that was transferred from

Protocol, once the transfer is made out then you cannot transfer money back in.

That would be contrary to the policy because transfers out are supposedly made

only when you are considered to have permanent savings. So, the point we are

making here is that because the monies were transferred out they had to put

money back in, therefore they were not permanent savings. So that it is contrary

to government policy.

CHAIR: Just for information there, page 22, the Treasury

Board Directive outlines what the deputy minister can authorize and when

Treasury Board approval is needed and so on, just for your information.

MR. JOYCE: I have that, yes.

On page 8.

CHAIR: Mr. Murphy, if he could be afforded an opportunity

before we move to the next one.

MR. MURPHY: Just a comment with respect to that transfer

and the degree to which some of the savings may be permanent in nature. The

information, again, that Mr. Heffernan provided dated May 3 addressed this issue

as well. I am not sure what page that would be on in our documentation here.

Page 10, it is the second last paragraph, and it talks about the nature of the

transfers. At the time the transfers were made they were intended to be, and my

understanding was, they would be permanent in nature. Subsequent to that, events

arose which required the funds to be transferred back in. So there was no

intention to contravene any transfer of funds policy or the Financial

Administration Act. At the time the transfer out occurred, it was on the

understanding that it would be permanent in nature as per the requirements of

the policy in the act. After that, events developed which required something

different to occur.

MR. JOYCE: I will conclude soon, Mr. Chairman.

Page 8, the Department's Response, the first sentence

there, "During 2000-01 unanticipated travel expenses were incurred by the

Office of the Premier in several initiatives like the Churchill Falls

Development, the Voisey's Bay Project and the intergovernmental meetings (e.g.

First Ministers' meeting)." Do you have a breakdown - or Tim could

probably break down - of how much of that was used for these major projects, for

example, Voisey's Bay?

MR. MURPHY: I am sure we have it. We do not have it here

this morning, but I am sure we could provide it. I am sure the Auditor General

would have it as well.

MR. JOYCE: Oh, that is fine.

Is it safe to say that a lot of the travel that was used - I

guess the issue is a contravention of the act, that the money that was

transferred out and transferred back was used for these major projects.

CHAIR: Like out of the $150,000, how much might be used?

A ballpark.

MR. JOYCE: No, I did not ask that. What I asked is the

question - a lot of the money that was transferred out to the departments and

transferred back, was it for a lot of these major projects, like Voisey's Bay,

the Lower Churchill?

MR. MURPHY: Some would be clearly - I do not have the

actuals in front We would have to go through the whole list of the $158,000 and

determine which were for larger projects and which were for other events.

CHAIR: Page 106. Wouldn't that give the list of each

department? I guess it would show what went to each department. Is it possible

that we could get a copy?

MR. JOYCE: I didn't ask for a copy, Mr. Chairman.

CHAIR: But did you want it sent?

MR. JOYCE: No, I was just asking -

CHAIR: What was asked is if we could get a breakdown of

all of it and could it be sent to the committee, if we could?

Mr. Joyce.

MR. JOYCE: No.

CHAIR: Mr. Murphy.

MR. MURPHY: Just for clarification. So you want a

breakdown. Adding to the same figure of course, Figure 3 on page 4 of the

attachment, but broken down more in accordance with some of the headings that

are on the top of page 8.

CHAIR: A ballpark or even a guestimate would be fine for

me. I would not necessarily need to see - I would like to know, and to just put

it at rest, whether the bulk of this money was for those special things or

whether the amounts that went to departments was not for Hydro. In other words,

would it be safe to say that, by and far, the largest amount was for other than

Hydro, or would the large amount be for Hydro or special projects? Could anybody

give that answer now? If we did, that would be sufficient.

MR. JOYCE: Could I finish asking my question?

MR. SULLIVAN: Does anybody have that? If not, we will

move on to Mr. Joyce and the next question.

MR. MURPHY: We don't have it here, but it is certainly

something that we can provide.

MR. SULLIVAN: Would the Auditor General have just a

guestimate, even, a ballpark?

MR. J. NOSEWORTHY: We inquired, when we went through the

$150,000, to try to determine what they related to. In the documentation I am

browsing through here, I would say 70 to 80 per cent is marked as unknown. The

detail/purpose of the travel was not readily apparent. That is based on this

documentation that we looked at. So, 70 to 80 per cent was unknown.

MR. SULLIVAN: Mr. Murphy.

MR. MURPHY: Just one comment. I think we could provide a

bit more detail. In every travel claim, the purpose of travel, for both the

approval to go and the purpose after to claim, is indicated clearly. So, it may

have just been a case of how it was recorded. Clearly, the purpose is known in

advance and known when the claim is processed.

MR. SULLIVAN: The next question.

MR. JOYCE: My last question to the AG: So, there was no

follow-up done to see if actually this practice has stopped since March, 2001?

MR. J. NOSEWORTHY: We didn't complete an audit, but we

did run a computer assisted audit technique which showed us that, clearly,

subsequent to the date of our review they were charging - we ran some CATTS

subsequent to March 31, 2001 and what we found was that, although the amounts

were not being charged to the Protocol Office, they were being charged to other

departments and then were later brought back into the Premier's Office. So,

there is a difference. Technically the Protocol Office was stopped. They were

not using that big budget in the Protocol Office, but they was being charged

around the departments and then brought back, which again is still not correct.

CHAIR: Mr. Murphy would like -

MR. MURPHY: Just again to the point of clarification, it

is all about the timing and sequencing. When the Auditor General's report came

out, of course, we knew in advance that there would be this reference in the

report and measures were taken either prior to or certainly when the report came

out to change the practice, and that has occurred through Treasury Board

approval for the 2001-2002 fiscal year to transfer the necessary resources from

the departments that would have been charged directly to the Premier's Office

travel expense.

In 2002-2003, the amount of the Premier's travel vote was

increased by $235,000 and in the current fiscal year all expenditures were

charged directly to the Premier's Office with no charge back either to

Protocol or to the departments. I am sure if the Auditor General's office were

to look into that, that would be confirmed.

CHAIR: Okay, thank you.

Mr. Joyce.

MR. JOYCE: Just one last question on page 9, and I guess

I will ask Mr. Murphy this.

"Requests for information on the Premier's travel

difficult to determine." Mr. Murphy, the statement here, "In our

opinion this statement is inaccurate as the Premier's Office had a record in

place to record all travel by the Premier, including transfers to other

departments and to Hydro. Any requests through the Freedom of Information Act

pertaining to the Premier's travel have always been provided through this

record. This information was also available to the Auditor General."

Is that a statement made by your department?

MR. MURPHY: Yes. We certainly stand by the accuracy of

our comments here. Clearly, prior to the change in practice that has been in

place since 1989, I can easily understand how it might be more difficult to come

up with a tally, but in response to any Freedom of Information request or

requests that come to the Premier's Office, clearly records are kept regarding

the Premier's travel and it can easily be provided, and I am sure -

MR. JOYCE: So it is easy to determine, in your opinion,

the travel by the Premier through various - the Freedom of Information Act or -

MR. MURPHY: Or just for public accounts purposes. I will

give you an example. For the current fiscal year we will record the amount of

expenditure the Premier's Office incurred, and all travel expenses by the

Premier and staff will be recorded in that one vote within the Premier's

Office. There would have to be supplementary and backup information on travel

claims and other documentation adding to the figure that will be presented in

the House for clue-up purposes for the current fiscal year.

MR. JOYCE: One last question.

In the statement made earlier that it is difficult for

departments to manage and control their own operating budget because of this, I

will ask you just for a small - for example, for Mines and Energy, for the

$12,000 or $14,000 or whatever it was, what percentage of their budget is that?

Where the statement is made that it is hard for them to manage their departments

because of $12,000 from mining, have you any idea what percentage -

MR. MURPHY: I do not have the precise percentage. I do

know from just sort of general experience that for a number of these charge

backs, which are on Figure 3 on page 4, they would constitute, in many cases, a

very small percentage of the overall travel budget either of the minister's

office or the totality of a department. There is no doubt about that. The

percentages, I would not have the precise. To me, it would not be putting the

planning and the travel budgets of the department in disarray with respect to

this level of expenditure for the most part.

MR. JOYCE: Okay.

Thank you, Mr. Chairman.

CHAIR: Any other questions?

Mr. Osborne indicated earlier that he had some. Mr. Osborne.

MR. T. OSBORNE: Thank you.

I have a question for the Protocol Office. Does the Protocol

Office now oversee expenditures by the Premier's Office for travel out of the

allocation for travel in the Premier's Office, or is that no longer an area

that you would oversee?

MR. MURPHY: I will try to answer it. Maybe Jim can give a

little more detail.

We have a Financial and General Administration Division which

is a shared service within Executive Council that handles the processing of

claims for any number of parts of Executive Council. Protocol is one small part

of that. The Cabinet Secretariate, where I work, is a part of that. Women's

Policy Office, the Department of Finance, and Treasury Board Secretariat. My

understanding as well, and again Mr. O' Neill can confirm or correct me, is

that the claims, when they are put forward for travel in the Premier' Office,

for processing purposes, are handled in the same manner by the same officials,

but the charge is directly to the travel budget of the Premier's Office.

MR. T. OSBORNE: Based on that, back to page 2, or page

104 of the Auditor General's report, it does state: " In addition, our

review indicated that $12,815 in travel costs for the Premier...." and the

line directly above that " ... and in many cases, to expenditure accounts

other than the Minister's Office."

Are you able to give us a total of, in addition to what went

through Protocol, charges for travel by the Premier that were made to ministers'

travel accounts and other areas of other departments and to Crown agencies?

MR. MURPHY: Mr. O' Neill has indicated to me that there

were no travel expenditures by the Premier's Office in this fiscal year that

were charged directly to departments that would not have first come through, for

clearing purposes, the Protocol budget. We can confirm that, if there is any

question with respect to it.

MR. T. OSBORNE: Okay.

I wonder, would it be appropriate then to request, while it

is not covered by this particular Auditor General's report - and if it is not

appropriate in this venue, I can certainly do it through a request at a later

point - would it be appropriate to request a breakdown of the Premier's travel

that was charged to the Premier's travel account, to Crown agencies, to

ministers, and/or other areas in other departments for this particular fiscal

year to date?

MR. MURPHY: There is none. All of the travel expenditures

by the Premier and staff are now being charged to the budget in the Premier's

Office, which was increased by $235,000 for the current fiscal year for that

particular purpose, in responding to the issues in the Auditor General's

report. So the answer to that would be, there is no travel that is charged

outside of that vote.

MR. T. OSBORNE: Okay, so there is no travel to Crown

agencies or any other minister's office or anything at this particular point?

MR. MURPHY: No. That is our understanding of it, yes.

MR. T. OSBORNE: Okay.

Are we able to, for this particular fiscal year, up to this

date - can I request a total of Premier's travel out of the Premier's

Office?

MR. MURPHY: I am not shy about responding to any

requests. I just want to understand the procedures here with respect to the

question at this forum. I know it is a different issue we are dealing with here.

MR. T. OSBORNE: Again, if it is out of order in this

particular forum -

CHAIR: I could probably make a comment.

I think it would be safe to say, if we want to see that the

recommendations have been followed and we request that of Protocol, I think it

would be fair to ask that the Protocol expenses - because that is the nature of

what we are dealing with. Other travel, I guess, there are avenues there. We

could ask that of any item under Premier's Office in public accounts.

I would like to confine it, to be honest with you, in

fairness overall, to ensure that Protocol expenditures are Protocol

expenditures. If we would like to get a copy of that, I think it is fair. If we

want to go to various other areas of it, Mr. Murphy has said there is no other

travel by the Premier charged to any other departments, basically, other than if

it is a Protocol thing - a Protocol Office, I would assume - and Premier's

travel generally would be under Premier's travel. That is my understanding,

basically. I do not think we need to go beyond that, if that is the case. Would

that be -

MR. MURPHY: We have a record of expenditures under

Protocol in travel for the current fiscal year, up to the current point in time,

and that could be provided, I am sure.

MR. T. OSBORNE: Okay.

Thank you.

CHAIR: I have some questions. The first question I am

going to ask is concerning page 103 of the Auditor General's report, or page 1

in this information there. It lists the areas that Protocol Office is

responsible for, and I would assume any expenditure occurring under this budget

in the Protocol Office should fall under those headings there. Would that be

accurate?

MR. MURPHY: Yes, that would be accurate.

CHAIR: So, in other words, just to make it clear, there

are no other areas that might pop up that might be considered Protocol? That is

sort of an all-inclusive list, is it? The Auditor General's report, page 103,

for Protocol, that is all-inclusive? There aren't some other areas that might

come under Protocol that might not be referenced here?

MR. MURPHY: Just for clarification, are you speaking

about the list of responsibilities of the (inaudible) office?

CHAIR: Yes, I am including organizing large scale

intergovernmental conferences, programming visiting heads, as the Auditor

General's report mentions here, all those little bullets there. Would that be

the responsibility for those areas and basically no others?

The reason I am asking is because I want to ensure that

Protocol expenditures are Protocol expenditures, basically, under that heading.

This lists some. Sometimes you list several items that could be under it and

sometimes there could be others, too. To your knowledge, are there any others?

MR. MURPHY: I cannot think of any in specific. I can

think of something that is related to awards. I mean, the Newfoundland and

Labrador Bravery Awards are listed here. Last fiscal year we had, also, a

Volunteer Award, which was one year, and forty-eight MHAs were, I guess - we did

two per district. That would have been captured there as well. I guess I would

have put awards more generally than Newfoundland and Labrador Bravery Awards. We

are now in the process of organizing, as the Throne Speech has indicated in the

last two years, for the Order of Newfoundland and Labrador. That is an expense

that has been incurred in the last several months as well. I would think it

would be difficult to come up with something that you could not fit somewhere in

one of these headings.

CHAIR: Okay.

That leads to a question, I guess, that came to my mind when

Mr. Joyce asked a question. Why would hydro costs be paid out of Protocol

initially and recovered from Hydro? Why wouldn't it be paid out of Premier's

travel and then recovered? Wouldn't it be the logical thing for the Premier's

travel to do it and then charge it back? Because I do not see where a hydro cost

is a Protocol cost.

MR. MURPHY: Again, the sequencing and the situation going

back to the fiscal year in question, early into the fiscal year the amount of

money which was budgeted again for that twelve-year period from 1989 to 2001 was

such a level that, that was used up fairly early in the fiscal year for

administrative purposes and for ensuring that claims were processed in an

orderly fashion and cheques were disbursed. The Protocol Office and the

expenditures were used as that sort of clearing house, then charged to

departments. The charging to departments was in place since 1989. Again, when

the AG report came out in 2001, that was responded to, and the practice now is

not even along the lines, Mr. Chair, that you outlined. There is no charge back.

It is charged directly to the expenditure account within the Premier's Office,

clearly fully there.

MR. SULLIVAN: So, it would be safe to say the practice

was in place up until 1989.

WITNESS: It started in 1989.

MR. SULLIVAN: No, it was in place until 1989, a practice

to charge Premier's travel to the Premier's Office. That was the practice in

place up until 1989. With the change of government in 1989, charges for the

Premier's travel were charged all over the place, generally speaking, in

different departments. Now, I guess, upon the Auditor General report and

recommendations, the department has moved to accept that as probably being the

correct thing, and they are now going back and putting it on the Premier's

Office where it always used to be prior to 1989. I think that is the gist of

what I am hearing.

MR. MURPHY: I am not aware of the precise details of

pre-1989. I just know this is the model that has been followed since 1989 to

2001, and the decision was taken in 2001 to have a situation where the Premier's

Office travel is fully charged and recorded under the Premier's travel budget.

MR. SULLIVAN: Okay, but in 1989 it was charged to the

Premier's Office and it changed in 1989. Would that be accurate?

MR. MURPHY: I don't know what happened pre-1989. I know

it was different than what started in 1989. I don't have the details. I can't

think of any other option beyond that, but I don't know what happened

pre-1989.

MR. SULLIVAN: Would the Auditor General be able to

indicate that prior to 1989 travel for the Premier came under the Premier's

travel budget, and since that it has been farmed out, to a degree, to all other

departments, justifying if it was for that purpose. If it was a fishery matter,

they charged it to fisheries. If it was a hydro matter -

MR. J. NOSEWORTHY: Our audit included 2001 and some work

in the year before and that was all. So, we didn't go back to 1989. We couldn't

comment on that at this point.

MR. SULLIVAN: Okay, but, Mr. Murphy, it did change in

1989. I think that statement was made. That is when it did change, I think.

Just one other question: Wouldn't it be much easier - I

know that is being done now - to put all Premier's travel under the Premier's

travel budget? Wouldn't that be the easiest way to handle Premier's travel,

rather than have to deal with departments to see what could go here and there

and all over the place? Wouldn't that be a lot cleaner way to do it and much

easier and much less frustrating from an administrative point of view?

MR. MURPHY: All I can say is in response to the Auditor

General's report of 2001 the practice that you have outlined is now being

adopted whereby sufficient resources are budgeted in the Premier's Office. All

travel expenses incurred by the Premier and staff are charged against that

account.

CHAIR: Any other questions?

Mr. Butler.

MR. BUTLER: Just a couple. I want to make it very clear

because people are asking that information be provided and I still would like to

have the numbers or the amounts that are involved in this $150,000 from February

13 to March 31. I would also like to know what the difference is because it is

referenced here prior to 1989. Regardless of what system was used, I would like

to know why, because it was stated there that there is quite a reduction. I

would like to know what they were prior to 1989?

The last comment I will make, and I think from what we are

hearing here today, I just wanted to make this to the Auditor General and I

guess referencing your statement of yesterday. I do not want to misquote you,

sir, where you said that it seems like the issue has been addressed and

hopefully it is corrected. I think it was something along those lines. Really,

what we are saying, what is happening here and what has been discussed - I know

we went outside the realm on a couple of occasions, but really what we are

saying is the process that was used, the Auditor General felt that it was not

appropriate. Not that there was anything wrong with their monies missing and

cannot be accounted for, it was just a process that was used. Is that a fair

statement?

MR. NOSEWORTHY: Yes, it was inappropriate to use

Protocol. I think the department has acknowledged that by the fact that they

have increased the budget for the Premier's Office. There was an interim

period between when our report was completed and they had the mechanisms in

place to take full action on it. So, I guess you have another period there, an

interim period, where conceivably there were issues there. With the increased

budget, if the department charges everything there, then the issue will have

been addressed.

CHAIR: Mr. Butler.

MR. BUTLER: That is fine.

CHAIR: Okay, anybody -

MR. JOYCE: I just have one last question (inaudible) the

time.

CHAIR: No, you are entitled to ask as many as you wish.

MR. JOYCE: Mr. Murphy, these expenditures that were sent

out to other departments, were they - and of course it is against the

contravention of the act, that is fine. Were these expenses later brought back

and put up for public knowledge? Was there any deceit there from the department

to say we will divvy this out, but yet, we do not want anyone to know that we

put this to other departments? Was it just, in your response, more of an

accounting thing to keep control of it and move on?

MR. MURPHY: I can only speak to the overall intent of

officials in sort of carrying out their responsibilities. Clearly, there was no

deceit intended. There was no intention to contravene either the policy or the

act. It was a practice that had been in place for twelve years, of charging to

departments.

MR. JOYCE: When the statement was made that the expenses

were buried, that is just not true because they were brought back into Protocol

and exposed as what they were, expenses put out to other departments and that

were paid back for different reasons.

MR. MURPHY: Well, the expenses would have been recorded

in the department for which it was ultimately charged.

MR. JOYCE: Okay.

CHAIR: Would they have been identified in the department

as Premier's travel expenses?

WITNESS: Not necessarily.

CHAIR: So, in other words, we would not know what the

Premier's travel was. If the Department of Fisheries did not list its travel

under a line item there, or as Premier's travel, we would not know if it was

Premier's travel. We might think it was the minister's travel or we might

think it was minister's staff travel. That is the particular point of putting

it out in all different departments. You cannot find out how much travel the

Premier really did. I think what you have indicated is that: we don't know if

it is Premier's travel. So if it is not hidden, what is it?

WITNESS: Chair, when it came back from the Protocol you

knew what it was because it came from that department. I guess they knew what it

was for.

CHAIR: Mr. Murphy.

MR. MURPHY: (Inaudible).

CHAIR: Yes, the point that I asked basically - it might

get you back on track - is that if the Premier's travel went out to the

Department of Fisheries, for example, or wherever it was, ITRD or wherever, was

there anything to show under that department, whether it was under the minister's

travel or whatever, that this was travel done by the Premier of the Province?

Was there anything to indicate that?

MR. MURPHY: I am not aware of how the ultimate

presentation publicly of the final expenditures in the given department would

have been presented. That is a level of detail I just do not have. Virtually, on

an annual basis, there are requests for information either from Opposition

parties or the media on travel, not only by the Premier and the Premier's

Office but by virtually all ministers. I know those have been responded to. So,

if it is not directly provided to the public with respect to how much travel is

in a given year for the Premier, through a request process and response that

information is generally provided.

CHAIR: Would the Auditor General know the answer to that,

whether it was attributed to a source of the Premier if it was under minister's

travel, for example, in the Department of Fisheries?

MR. NOSEWORTHY: In the report we indicated that the

redistributions from Protocol to the various departments did not always go to a

minister's office. We said that in the report, and I read this morning earlier

examples of where it went to non-ministers' accounts. For example, IGA policy

analysis and co-ordination, ITT general administration, so then one is left to

wonder, if you tried to get all of the travel expenditures related to the

Premier, how would you do it? That relates back to the other comment we had in

our report. We are saying it is very difficult to gather this information, and

we stand by that. It is very difficult. We tried to go through and identify it,

and if its buried then it is very difficult. I mean, if it is in the minister's

office you can just look at the minister's office, but once it gets down in

the various programs and that sort of thing it just becomes more and more

difficult, and that was our point. We are not saying it is impossible, but it is

a heckuva lot of work and it is being redistributed not just to ministers'

offices which - you know, you would wonder why the Premier and ministers would

be travelling and charging it down under accounts underneath their offices, so

we just highlighted it. I do not know if the department officials can add more

but, from our point of view, it is very difficult to identify all those

expenditures.

CHAIR: That answered my question.

Does anybody else have a question?

If there are no other questions, we certainly thank all the

participants for their time and we will now adjourn this particular hearing.

On motion, Committee adjourned.