June 1, 1993

GOVERNMENT SERVICES ESTIMATES COMMITTEE

Pursuant to Standing Order 87, Mr. Rick Woodford,

M.H.A. (Humber Valley) substitutes for Mr. Roger Fitzgerald, M.H.A. (Bonavista

South).

The Committee met at 7:00 p.m. in the Legislative

Chamber of the Colonial Building.

MR. CHAIRMAN (Oldford): Order, please!

We are about ready to start. My name is Doug

Oldford and I am the Chairman of the Government Services Committee. We are here

tonight to review the estimates of the Department of Municipal and Provincial

Affairs, and the Newfoundland and Labrador Housing Corporation. I welcome the

minister and his officials, members of the Committee, our clerk for the evening

along with our recorder. Our Vice-Chair, Roger Fitzgerald is out doing some

constituency work and could not be here so we have Mr. Rick Woodford, the Member

for Humber Valley who is going to serve as Vice-Chair. He is substituting for

Mr. Fitzgerald. I will introduce the members of the Committee. We have Mr. Lloyd

Matthews the Member for St. John's North, Mr. John Crane the Member for Harbour

Grace, Mr. Walter Noel the Member for Pleasantville, and Mr. Jack Byrne the

Member for St. John's East Extern.

There are a few rules that we are living by this

evening. This meeting tonight will be scheduled from 7:00 to 10:00 and if at

10:00 o'clock we feel that we have not done an adequate job in reviewing the

estimates we will have to make a decision at that time whether we adjourn, carry

on, or whatever. We are going to give the minister fifteen minutes to introduce

his staff and have an opening statement. We will then give the Vice-Chair

fifteen minutes to either respond to the opening statement or ask questions. We

go from there to the government side and we will alternate from there giving

each member of the Committee ten minutes to either address his concerns or ask

questions of the minister and his staff. We will do that until everyone has had

a turn to speak and we have reached 10:00 o'clock. For recording purposes I

would like for everyone to identify themselves before they ask a question or

before the minister or staff responds. That is important. Other than that I

think we can get on with the meeting and ask the minister to introduce his staff

and present his opening remarks.

Mr. Minister.

MR. REID: Good evening, ladies and gentlemen.

First of all let me identify myself. I am Art Reid the minister responsible for

housing under Municipal and Provincial Affairs. To my immediate right is Robert

Noseworthy chairman and chief executive office of the Housing Corporation. To my

left is Peter Honeygold and Peter is vice-president of Business Development and

Corporate Affairs, and Edward Heath is our vice-president of Finance and

Executive Services.

Gentleman, my staff has prepared for me an opening

statement and you will have to bear with me, especially my former colleagues

from the House, who realize that taking on such a massive job I am not 100 per

cent, I guess, versed on the matters of either one of the departments I

represent, or agencies, and if I have to, throughout the night, divert your

attention or your questions to one of my staff I am certainly sure they will be

able to provide answers to you.

I would like to take this opportunity to review the

estimates of Newfoundland and Labrador Housing Corporation and provide an

overview of the activity proposed for 1993-94, however with some of the members

on the Committee being first time MHAs before looking at these areas I would

like to provide a brief overview of the mandate and activities of the

corporation. Newfoundland and Labrador Housing is the housing arm of the

provincial government which strives to ensure that suitable and affordable

housing is available to all residents with the priority to provide such housing

to those most in need. In these activities NLHC works in corporation with the

federal government, municipalities, and community organizations. To assist in

the Province's economy development NLHC plans and develops residential and

industrial land assemblies in areas of actual and potential growth. The

corporation's prime responsibility is the delivery of social housing programs to

low income families, senior citizens and special needs groups. These social

housing projects which are cost shared on a 75/25 federal/provincial basis with

Canada Mortgage and Housing Corporation are delivered and administered by NLHC.

As well as some social housing, NLHC administers

market rental housing, develops residential and land assemblies and develops and

administers provincially owned industrial parks. I would like to note that as a

result of a comprehensive review of the corporations mandate, the strategic plan

of the corporation has been adopted by government. This plan confirms the role

of NLHC in each of these categories and that is the continued active involvement

in the provision of social housing, privatization of its market rental housing

portfolio, the continued banking and development of residential land and the

continued planning, development and marketing of industrial properties. With

regard to the scope of NLHC activities, the corporation presently manages a

portfolio of over 7700 social housing units and 700 market rental units. As

well, the corporation administers a portfolio of some 8200 mortgages and home

repair loans valued in excess of $130 million.

In the area of land development, the corporation

has developed close to 6400 residential building lots of which 5700 have been

sold to date. Over 2,000 acres of industrial land has also been developed and/or

transferred to the corporation, of which close to 600 acres have been sold. In

excess of 7,000 acres of undeveloped residential and industrial lands remain in

the corporations land bank.

Gross expenditures for the corporation for the

upcoming fiscal year is estimated to be $162 million, representing current

account expenditures of $120 million and capital account expenditures of $42

million.

It is important to note that the provincial grant

of $16.48 million referred to in the estimate represents only the provincial

share or 10 per cent of the total expenditures of the corporation. I think that

point in particular should be noted especially by the new members, the fact that

the government itself only puts in approximately 10 per cent of the expenditures

of the corporation. The rest of the money is generated either through federal

government transfers and/or grants and what we generate ourselves.

The total expenditures anticipated for `93-94; 52

per cent which is $83.8 million will be generated by the corporation from its

various housing, loans and land programs, 36 per cent which is $57.8 million

will be provided by the federal government, 2 per cent, 4.0 or $4 million will

be financed independently by the corporation through bank loans. While the net

current account request of $16.8 million contained in the Budget represents an

increase of nearly $2.2 million over the `92-93 revised Budget, it should be

noted that the majority of the increase is due to the reduction of some $2

million in funding available from prior years surplus. Actual program costs will

only increase by $213,000 or slightly more than 1 per cent this year despite the

fact that the number of social housing units being subsidised will increase by

some 286 units. As well, new subsidised RRAP commitments will exceed 700 in the

new year. Capital programs of the corporation, which will generate some $42

million of expenditure, will require no capital funding from government.

Highlights of the `93-94 budget include the

provision of ongoing assistance to some 17,000 families throughout the Province

by means of subsidized rentals, mortgages and repair loans. These programs will

cost the federal and provincial governments a total of $75 million in 1993-94.

The provision of some 144 new social housing units throughout the Province to

serve families, seniors, natives, non-elderly singles and the disabled. Some 125

of these units will be newly constructed at the cost of $9.1 million while the

remaining nineteen units represent new rent supplements which will assist needy

clients living in private rental accommodations. All programs will provide

financial assistance based on the tenants annual income and their ability to

pay. Also, the provision of some $7 million in new federal/provincial home

repair funding to over 700 eligible recipients.

This funding provides grants and loans to low

income home owners including natives and the disabled to upgrade their existing

homes. Rehabilitation represents the greatest housing need in this Province and

will continue to be the major focus of the corporation for years to come. The

provision of some $6.5 million to fund residential land development that will

see an additional 230 residential building lots developed, and the provision of

some $1.5 million to continue a three year modernization plan for the 210 unit

Buckmaster's Circle project in St. John's. The total cost over the three year

period is expected to exceed $5 million. Major renovations to other social

housing projects in the Province will cost a further $3 million.

The provision of some $700,000 to industrial land

development in Clarenville - the Chairman will be glad to hear that - this is in

addition to the recent announcement concerning the Stephenville industrial area

which will see a start made on the comprehensive plan for this development to

allow for upgrading of existing streets and services to open up new properties

for industrial and commercial infill.

The continued privatization of the corporation's

market rental units. This year's Budget provides for the ongoing sale of

projects throughout the Province as well as several large projects in the city

of St. John's. In addition to the Elizabeth Towers and the Churchill Square

projects we are currently on the market, both the Linden Court and Arnold's Loop

apartment complexes in St. John's will be offered for sale later this year. I am

not sure if you are all familiar with that but a number of our properties

throughout the Province, like Elizabeth Towers, we have been trying to unload -

is that the right word?... to privatize, to sell. Unload is not the right word.

We are having some difficulty with some but others are gobbled up pretty quickly

and as fast as we can we are putting the other units on the market for sale and

hopefully this year we will have some success with some others. The introduction

of a new self-build housing initiative providing the construction of six units

in coastal Labrador for native families. This program provides for home

ownership while enabling builders to gain sweat equity and develop skills during

the construction period.

In closing, Mr. Chairman, I feel the 1993-94 budget

of the corporation represents an excellent balance in recognizing the continuing

need for social housing in the Province while considering the fiscal realities

facing government. In total the social housing needs of some 850 additional

households in the Province will be addressed through the Budget in the coming

year. As well expenditures of the corporation in the order of $162 million will

provide employment for some 1300 persons throughout the Province. I must,

however, express my very serious concern to my colleagues around this table over

the federal government cutbacks in new social housing expenditures which will

see new unit and repair loan production reduced by some 50 per cent in 1993-94.

Furthermore, in its recent Budget the federal government announced that no

funding will be provided for new social housing units beyond 1993-94. This

effectively means the termination of existing federal/provincial cost shared

agreements for the annual provision of new social housing. Current agreements or

similar arrangements have existed in this Province since Confederation and

indeed elsewhere in the country, well before our involvement.

This withdrawal is occurring at a time when there

exists a continuing need for social housing assistance in Newfoundland and

Labrador and effectively eliminates an important part of the social safety net

which has existed in Canada for decades. Attempts are being made by the

Provinces to have this decision reversed, and I can say here, I think, quite

honestly that every province in Canada are lobbying strongly at the present time

with the federal government to change their minds on this particular decision.

This will be one of my major focuses as I become more familiar with the housing

portfolio and I will have more to say about this in the House of Assembly once I

am better able to wrestle with the issue.

The residential construction industry remains a

promising part of our economy for the year ahead. Total housing starts in the

Province will advance this year by 5.7 per cent to approximately 2,400 units in

1993. Sustained growth in economic and labour market conditions is projected to

boost housing starts to 2,600 units in 1994. A gradual improvement in consumer

confidence, due in part to the resolution of the financial agreements in the

Hibernia project and the continuation of federal government initiatives,

reducing the down payment requirements, will support the gains in new housing

construction. These same factors combined with low mortgage rates will

contribute to a rebound of activity on the re-sale market in 1993. Additionally,

a slight increase in spending is expected in the renovation market. As minister

responsible for Newfoundland and Labrador Housing Corporation I am looking

forward to an improved outlook for the home building industry in Newfoundland

and Labrador in the coming year.

May I just make one comment to the Committee? I

think the most serious thing that I've faced since coming into the portfolio,

and the little bit of time that I've had to spend in the housing portfolio, in

the housing area, the one thing that disturbs me more than anything else - I

don't know if you realize what impact the federal government pulling out of

social housing will have on the Province of Newfoundland. That particular issue

in itself is probably the most important one that I'm going to have to deal with

as the minister in the next couple of years.

You'll see the discontinuation of RRAP programs.

John and I are really familiar with that out in our area. Not so much I suppose

in St. John's, but I'm sure us rural members are familiar with RRAP. Any new

expansion to social housing will be stopped immediately. Seniors' housing will

definitely suffer. In layman's terms, if the federal government backs out on us,

if this happens, if they do what they propose to do, the legs will be cut right

out from under Newfoundland and Labrador Housing next year. I really don't think

that we as a province can afford that. We've been doing very well in the last

few years and it's too bad that those programs can't continue, because there's

still a great need in the Province for that type of assistance.

With that said, gentlemen, I have to make one

correction. I haven't got your estimate books, but... is this the letter, would

that be in theirs?

MR. NOSEWORTHY: That's what's contained in the

estimates (inaudible).

MR. REID: This is what's here.

MR. NOSEWORTHY: The first two pages.

MR. REID: First two pages, the one from

Newfoundland and Labrador Housing, Hon. Bill Hogan. I need to change some

figures. The bottom figure of Net Expenditure (Current) on the bottom of the

page, I think on your page it says $16,792,000. The actual is $16,770,000. The

figure that you see there was a misprint. It was the 1992-1993 figure. So that's

the only change that I have. Am I correct?

MR. NOSEWORTHY: Under the line here, the Gross

Expenditure is changed.

MR. REID: I'm sorry, yes. The Gross Expenditure

is changed too. That's three lines up. From $18,470,000. Then the Less: Related

Revenue Current is 1,700,000, which would give you a bottom figure of

$16,770,000. Okay?

MR. NOSEWORTHY: This relates to the fiscal year

1993-1994.

MR. REID: Yes. 1992-1993, it says there in your

Summary of Expenditure and Related Revenue Fiscal Year. It should be 1993-1994

on that page. Those are the only changes. Am I correct?

MR. CHAIRMAN: Thank you, Mr. Minister. We now

move to Mr. Woodford, who will either make a statement or start the questioning?

Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman. First

question to the minister is based on the

section of his statement outlining the

expenditure of Newfoundland and Labrador Housing, the gross expenditure, the

current account expenditure and capital account expenditure.

You mentioned the fact that the provincial share

would be 10 per cent, which would be the same as last year I take it, but the

total expenditures anticipated for '91-'92 would be $83.8 million, which would

be generated by the corporation from its various housing loans and land programs

representing 52 per cent. How could $83.8 million representing 52 per cent, yet,

52 per cent last year, represented $91.4 million without the budget changing?

The total generated by the corporation last year

was $91.4 million representing 52 per cent of total expenditure; this year, and

the minister, just in his statement now, said it was 83.8 per cent but yet the

budget is pretty well the same, $16.8 million.

MR. NOSEWORTHY: I do not have the figures

exactly here as to the reasons, and I can speculate some of the reasons

certainly would be the fact that land sales are down this year, revenues are

down in relation to land sales. I would anticipate that a large portion of the

revenue that we are able to generate comes from individuals paying rent geared

to income, in certain instances particularly in rural areas, with the economy

being the way it is, a lot of those rents would be lower than they were last

year for example, and that would be one of the reasons for a lower revenue

component. I do not know - Ed, are there any other particular aspects that might

contribute to that?

MR. WOODFORD: Yes, I understand -

MR. NOSEWORTHY: Basically, it would be land

sales and rent.

MR. WOODFORD: Yes, I can understand it is down,

it is down approximately $6.6 million of your total expenditure that is

generated by the corporation, but I cannot get it from the estimates because

there is no breakdown and, how come that same figure $91.4 million last year

versus $83.8 million this year, unless I have it wrong, that is what the

minister read out as I was just listening to, represented 52 per cent last year

and represents 52 per cent this year.

MR. NOSEWORTHY: Well, I would imagine that it

represents 52 of the total budget, so it really does not matter what happens

here, right?

MR. WOODFORD: It does matter in the total.

MR. NOSEWORTHY: The expenditures, but the

expenditures this year as of - I do not know exactly what they were last year,

but what we are suggesting is that the expenditures this year, in total, are

lower than what they were last year, so this revenue represents the same

percentage of the lower total expenditure. I would think that could be the only

explanation and the reason for the lower revenues would be, primarily in

relation to rents and sales of land and properties by the corporation.

MR. WOODFORD: Did the minister read out $16.8

million in the estimates, in that particular

section or maybe I got that wrong?

MR. REID: Yes, $16.8 million is the provincial

grant, but that -

MR. WOODFORD: Yes, that is what I am basing it

on, but I can understand where the Chairman is coming from because if it is

based on $16.8 million from the minister's statement and when you look at the

estimates, it is $16.7 -

MR. NOSEWORTHY: $16.770 (inaudible) -

MR. WOODFORD: You might get the variation

there, but he read out $16.8, and that would change the rest of them too. That

would change the -

MR. NOSEWORTHY: That is just a matter of lower

expenditures, lower total this year -

MR. WOODFORD: - the federal government on the

one hand, the -

MR. NOSEWORTHY: - because certainly, our social

housing expenditures are down considerably because of the withdrawal of the

federal government terms of RRAP and social housing, so it is just that this

represents, by sheer coincidence the same proportion of the lower budget figure.

MR. WOODFORD: I see that the corporation called

for the disposal of Churchill Square apartments, and I think your closing date

was April 15 and there was another one, one

section there in Churchill Square,

the commercial

section at the bottom and the residential

section on top -

MR. NOSEWORTHY: That is correct.

MR. WOODFORD: - and I think there was another

one, or was that just the one? Deadline was April 15th?

MR. NOSEWORTHY: No. Essentially it was just

that building, on the east of the square -

MR. WOODFORD: Oh no, the other one was

Elizabeth Towers, sorry.

MR. NOSEWORTHY: The other ones are referred to

as Allandale. Linden Court is behind that building and that will be for sale

this year

MR. WOODFORD: But that was not called, that was

not tendered for?

MR. NOSEWORTHY: No, it was simply -

MR. WOODFORD: So it was just the Churchill

Square and the Elizabeth Towers. On the Churchill Square sale, why was there no

action taken on that after the three or four bidders came in? One bidder was

pretty well dead on. Was it because there was some correspondence from the Co-op

movement?

MR. REID: From the Co-op movement?

MR. WOODFORD: Yes. I saw some correspondence

from the - I did'nt take it with me tonight.

MR. REID: Not on the Churchill Square.... I

don't think there was any mention of the Co-op on the Churchill Square one, was

there?

MR. WOODFORD: Yes, there was.

MR. NOSEWORTHY: They did indicate that if there

weren't any successful bidders in terms of Churchill Square they would be

interested in negotiating a co-op arrangement in relation to that property, yes.

MR. REID: We had four bids on the Churchill

Square apartment ones. The highest bid in this particular case, the highest

tender, was in excess of $800,000 under what we appraised the building to be.

We're still now in the process of negotiating with....

MR. NOSEWORTHY: The second bidder.

MR. REID: With the second bidder. As well as we

haven't made a decision yet on what we're going to do with the Co-op group as

well. So that's still up in the aid Rick. We couldn't at the time accept that -

no, in fact, the top bidder has withdrawn, if I'm correct.

MR. NOSEWORTHY: That's correct.

MR. REID: The top bidder who was $859,000 short

has withdrawn their bid at this particular point in time. That's why we have to

go back and I suppose communicate with Community Cable.

MR. WOODFORD: That's not the numbered company.

The numbered company was the second one.

MR. REID: No, the numbered company was the

first one.

MR. WOODFORD: Okay. And the second one was way

below (inaudible).

MR. REID: Community Cable was $1.3 million.

MR. WOODFORD: Right. It was $3.5 million,

wasn't it, or $2.5 million that you had on the...?

MR. NOSEWORTHY : Roughly $3.4 million.

MR. REID: Three point four million.

MR. WOODFORD: Three point four million. But I

saw correspondence - I could have taken it down with me tonight - from this

Co-op movement. I just forget the name of it. That offered something, saying

that they would have paid $500,000 more than what the top bidder bid, and also

asking for a government guarantee to finance the whole project if they took it

over. Isn't that right?

MR. NOSEWORTHY: There was a piece of

correspondence that they did send into the corporation which indicated that if

we didn't receive any successful bids that they would be interested in

negotiating an arrangement on that. There was some reference made in there to a

bid. I don't recall exactly what it was, but it was certainly higher than one of

the top bids we would have received for the property. There were no performance

bonds, there were no securities, there was no bonding in place for that. Quite

frankly, we have been dealing with a property in Pleasantville from this same

Co-op group which dates back to 1991 where they would have made an offer in

respect of that property which would have actually exceeded the market value of

the property.

Previously there has been a co-op program in place

through Canada Mortgage and Housing which was cancelled two years go, but this

particular Co-op wanted to fund this through a particular mortgage arrangement

that they had with the bank which would require government guaranteeing the

property up front to the tune of about 120 per cent of what the property was

worth, and being prepared to accept a possible write-off in the order of about

$320,000 or something like that if indeed the Co-op ran into difficulty.

That clearly causes certainly the corporation some

concern. While we were attempting to negotiate that down to something which

would equate to 100 per cent there has been no way we're able to do that. This

particular co-op has absolutely no equity and can offer no security and wasn't

able to compete on the same basis which we called this tender. It's the same

type of deal that they were looking at as we've been trying to hammer out with

them for eighteen months in Pleasantville.

MR. WOODFORD: I got the impression out of the

correspondence that I read that it seemed like they put this in after the fact.

They saw in the media somewhere the actual assessed value of the properties. It

seemed to me like an intimating thing, especially where the one copy went to the

tenants in Churchill Square. I do not know if you read that part or not but that

is what I read into it.

MR. REID: Mr. Woodford, we are in the process

right now of evaluating that whole proposal and there has not been a decision

made on it yet. I am not in a position or my staff are not in a position as of

yet, to really make any comment on it. I would not want - this meeting is open

and I would not want to leave any impression with anyone that we are either

going to turn this offer down or accept it, at this particular point in time.

MR. WOODFORD: But the bottom line is that you

are going to try to divest yourself of that particular piece of property and

more besides that in the coming year?

MR. REID: The problem we have, Mr. Woodford,

with a lot of our properties is that we owe so much money on the properties

ourselves. We are trying to gain enough money in return for the sale of the

property to at least pay off some of the debts. In some instances our debt load

is much higher than some of the offers that have been made to us. So, of course

we have no choice but to take second looks at offers when they come in.

MR. NOSEWORTHY: In some of the properties that

is true. The other approach, from our perspective, is the fact that we have

assets here that we have appraised at a certain market value and certainly I

think in terms of a public asset, the corporation is obliged to try and realize

a fair return on that public asset. We are not prepared to accept bids that are

clearly not in keeping with full market value for those public assets.

MR. WOODFORD: That is fair enough. I do not

know how long ago it was, a couple of years I guess or many more, that they

switched the maintenance part of social services, put it over to Newfoundland

and Labrador Housing? The maintenance sector?

MR. REID: Last year.

MR. WOODFORD: Last year, yes. How is that

working out? Are you getting many complaints about it or is everything working

okay? What is your feeling on that or would you care to make a frank comment, an

honest comment?

MR. REID: May I say -

MR. WOODFORD: - you can say what you like.

MR. REID: - the only way that I could make a

comment would be based on my experience as a backbencher in this government and

certainly not as the minister. Maybe Bob can make some comment on it.

I know that there are some problems with it. It is

only a year old and you have to remember too that this money that we administer

comes back to us from social services. This is not in our budget. Basically what

we do is do the maintenance work for social services. Social services informs us

that they need a certain house done, repaired or whatever, and all we do is send

out our people to evaluate it and then have the contract completed as quickly as

we can.

MR. NOSEWORTHY: I think, as the minister points

out, last year was the first year we have had experience with the program. Mr.

Crane, you may wish to comment on it and the minister as far as that goes, in

terms of MHA's specific problems that were encountered. There is no question

about it, I think in relation to defining what an emergency situation was - it

was necessary to come to some sort of an arrangement with Social Services in the

way that the program was formerly administered. I think, to some degree, the

program was somewhat more flexible than it was last year. It was necessary to

define exactly what an emergency service was, what an emergency repair was and

come to an agreement on what basis the Department of Social Services were

prepared to pay for that emergency.

When we have our inspectors go out, determine and

inspect the unit, it can only be assessed in relation to the criteria that we

have agreed upon. There is not always agreement that what we would categorize as

a non-emergency, I am sure the home owner would probably categorize as an

emergency. So I think there were some problems in terms of getting the program

up and operating last year, there is no question about that. We have had some

discussions and we are having some discussions with the Department of Social

Services. We did do some monitoring of the program last year and we're hoping to

overcome some of those deficiencies certainly this year.

MR. WOODFORD: Will there be any increase in

funding for that particular program this year from Social Services to

Newfoundland and Labrador Housing?

MR. REID: I don't think so.

MR. NOSEWORTHY: The monies come from the

Department of Social Services budget and I'm not aware of any increases that

have been made to that budget, nor am I aware of any decreases either. It's

something that you'd have to probably ask the Minister of Social Services.

MR. WOODFORD: Yes I never went through the

estimates there on that particular program. I found it alright, I must be honest

about it. On the end of it I find, in the last few months of the fiscal year,

that's when I found it the worst to deal with. I suppose that's probably

natural. They're watching their budgets a little tighter, and it would really

have to be deemed an emergency.

MR. NOSEWORTHY: I think in the last portion of

the year there's no question about it, the funds had to some degree been

exhausted. There's only a small percentage of the funds left. Really I think at

that point in time the process involved actually the regional director of the

Department of Social Services and the regional manager of Newfoundland and

Labrador Housing Corporation sitting down and making an assessment on particular

applications. I think the criteria, quite frankly, became even more stringent

than it was throughout the year. So I recognize there were probably some

difficulties associated with that.

MR. WOODFORD: Are there any new housing units

scheduled for the Deer Lake area this year? Like something similar to the ones

you put there a couple of years ago, last year. Low rental.

SOME HON. MEMBERS: (Inaudible).

MR. REID: None for Deer Lake specifically, Mr.

Woodford. There are some for St. Anthony, seven units. Twelve units for Corner

Brook and eight units for Roddickton. That's all we've got on the West Coast

this year for a total of $489,267.

MR. WOODFORD: I'd like to commend Newfoundland

and Labrador Housing on the job they did with those last units in Deer Lake, no

question. Because that was always the complaint from the municipalities: we

don't want a Newfoundland and Labrador Housing unit there or we don't want it

here, because it takes away from the other houses in the area. But those

particular units I must say are a real plus and a real addition to any town.

MR. REID: That's a standard type of unit that

we're putting all over the Province now. From my experience, Mr. Woodford,

everywhere you go those houses are an addition to a community.

MR. WOODFORD: Yes. In fact, I got complaints -

funny how things happen. Before that I used to always get complaints about: my,

what did they do it like that for? Why didn't they put another few dollars in it

and make it look like - but now I'm getting the other. The other way. Why'd they

put such an expensive roof on that for? So you know - you're dealing with the

public, you know. Anyway, having said that, the units are a real addition to any

community or any town, no question.

MR. REID: Just for information's sake, the

average cost of one of those units in rural Newfoundland is $74,000.

MR. CHAIRMAN: Thank you Mr. Woodford, and thank

you Mr. Minister. Mr. Matthews.

MR. L. MATTHEWS: Thank you, Mr. Chairman. I've

got a number of questions that I can't say I extracted from the information that

was contained in the budget, or have them come as a result of observations of

what's here. But some of them have their genesis in my first and only political

campaign in the district. I haven't gotten around to address them to the

corporation or to the appropriate people in the corporation yet, so I'll take

advantage of the time that I have tonight to get some general answers.

What I should say is that St. John's North, the

area that I'm in, seems to have an inordinately high number of public housing

units in it. That's just an observation. I don't know whether that's factual or

not, or if you're aware of the boundaries that make up St. John's North, but

there seems to be a lot of public housing, NLHC apartment-funded properties

there. Some of them have been there for quite a while.

I'll be very specific. In the Wigmore Court area -

I believe that's an area where you have some interest as a corporation? - I was

asked a question by a constituent, and so I'll ask it to you, because I didn't

know the answer. They said that there hadn't been any maintenance done on that

particular building, Wigmore Manor, for twelve, thirteen years, and it was in

dire need of paint and window repairs and that sort of thing. I couldn't say yes

or no to it. I'm just wondering: what is the

schedule of maintenance on that

type of property as a rule, as a normal thing with the corporation? Is it on an

as-needs basis or is it on a cyclical basis of every year, every three years,

every five years, or as the needs come to your attention?

SOME HON. MEMBERS: (Inaudible).

MR. REID: We can only respond to you in

specific general terms. Maybe if you wanted more direct answers with statistics

and so on you can -

MR. L. MATTHEWS: No, that's not necessary. I

was just thinking of general policy and how maintenance is carried out on those

types of Housing owned units.

MR. NOSEWORTHY: I think there's probably two

issues in terms of our maintenance. One is the fact that we do spend millions of

dollars each year in just ongoing maintenance, and that would be in terms of

painting, normal painting of windows, interior painting, and general upkeep of

the property, That occurs in Wigmore Court and all other properties that we own,

although admittedly funding has been tight as you can appreciate, and has been

frozen at current levels for the past couple of years.

The other major effort that we try and undertake in

terms of our maintenance budget is what we would call major modernization and

repairs. That's where we would focus in and isolate a particular project. The

minister referred to Buckmaster's Circle, for example. I think you may be aware

of major upgrading that would have taken place a few years ago on Cashin Avenue,

Empire Avenue, certainly Dunfield Park in Corner Brook. That would have been

major refurbishment and upgrading and we target specific properties for that,

depending on their condition and depending on inspections and what have you that

we carry out. Wigmore Court has not undergone that type of major modernization

and upgrading. I am not aware of anything specifically that we have planned for

the next -

MR. REID: There's some drainage money I think,

about $50,000 they're spending there this year, is that right Peter?

MR. HONEYGOLD: Pardon?

MR. NOSEWORTHY: Three or four years that

preventative maintenance

schedule would have been done up for?

MR. HONEYGOLD: Well, we do it up to a ten year,

but I don't have all of that information but we do it. But it's done, it's a

three-year one that we do through CMHC primarily, yes.

MR. NOSEWORTHY: Again, it's a matter of trying

to allocate resources to the worst properties around and allocate them on the

basis of the specific needs of particular properties. Buckmaster's Circle would

certainly be in greater need vis--vis Wigmore Court. To be frank with you, the

next major area that we would hope to target, in St. John's in particular, would

be down behind the City Hall on Livingstone Street. That certainly hasn't had

any major repairs or renovations for some - I think they're probably twenty-five

years old or twenty-seven years old. So there's nothing immediate to be frank

with you, other than the regular ongoing maintenance and repair plan for Wigmore

Court.

MR. L. MATTHEWS: Mr. Chairman, thank you. Would

the corporation respond to an individual apartment owner, say in a Wigmore Court

Manor unit, for specific repairs, outside of a program that would be planned as

a more general, all-inclusive one for that type of a facility?

MR. NOSEWORTHY: If there were specific

requirements in terms of that apartment - and that could relate to an upgrading

of a bathroom, tiles on the floor, et cetera - we would certainly respond to

individual requests on that basis. We can do that, if you would pass that

information along to us, we can certainly send somebody out and have an

inspection done and see what we can do for the individual.

MR. L. MATTHEWS: I noticed, going through the -

and I think that area is representative of probably the city in the Province,

where, some very well kept and very old properties that I thought were in really

good shape, you know the Anderson Avenue, that area, Mitchell's, Copperwhite,

Keegan, I know they are thirty-odd years old because I have lived in the city

all my life, and yet there are some properties, town houses in the Empire Avenue

West area I would say that are much, much newer in terms of age, but their

conditions are deplorable and I do not know whether that relates to the original

construction, specifications or the crowd who lives there, I do not know, but,

do you have an observation on that?

MR. NOSEWORTHY: Where, specifically would you

be referring to?

MR. L. MATTHEWS: Well, as I said, the Anderson

Avenue and that area, all of these units for my money, are in good shape you

know.

MR. NOSEWORTHY: When you talk about the west

end of -

MR. L. MATTHEWS: I am thinking of Empire Avenue

West, but east of Jensen Camp Road, that area.

MR. NOSEWORTHY: We would own some units there,

but there is a large number of units there which are owned by the private sector

and would have been built years ago under various AHOP programs of CMHC and

probably would have been, and are still being operated by the private sector or

would have been sold a number of times and we would not have necessarily any

interest in those properties.

MR. L. MATTHEWS: So they may not be yours?

MR. NOSEWORTHY: They may not be ours. We get

blamed I think, to some degree for a lot of properties that are around probably

and owned by the private sector that we have no involvement in.

MR. L. MATTHEWS: I will certainly not allege

any blame. I was just looking for information. Probably I should search the

registry and see who owns the properties then I will talk to you.

MR. REID: Mr. Chairman, if any of the members

have anything about their districts or anything like that, I am available and I

will make anyone from the department or the corporation, available to sit down

and talk with you, whenever. If you have anything personal about your own

districts, just ask me and I will provide the opportunity for you to meet either

me personally or my officials, without any problems.

MR. CHAIRMAN: Mr. Jack Byrne.

MR. J. BYRNE: Mr. Minister, in your opening

remarks, you mentioned that there was land developments now for Newfoundland and

Labrador Housing of 6,400 lots you have done, would that include rural lots

outside say the City of St. John's, this total? If someone made an application

and had his piece of land or whatever the case may be and put a house on it,

with subsidizing from Newfoundland and Labrador Housing, to be paid back

according to your salary? There used to be a program in place like that, is that

still in effect? Do you follow me?

MR. NOSEWORTHY: No.

MR. J. BYRNE: If a person had a piece of land,

he could apply to Housing and get a mortgage through Housing and then he pays it

back according to his salary.

MR. NOSEWORTHY: That program is not available.

The 6,400 lots I think refer to residential building lots where we would have

developed the land assemblies and that could certainly be rural or urban areas.

MR. J. BYRNE: Okay, further to that, you say

that in the industrial parks we had 2,000 acres, 600 acres sold, residential

lands, you have thousands of acres, I think you mentioned over 6,000 acres?

MR. NOSEWORTHY: Yes.

MR. J. BYRNE: Okay, banked. I am just curious,

although I know that Newfoundland and Labrador Housing probably should be

involved in subsidized housing and are probably doing a good job type of thing,

but I am curious as to the minister's view with respect to having all this land

and actually competing with private industry?

MR. REID: That is a good question. I asked the

same question yesterday when we were going through this, and my question to my

staff was: How does having so much undeveloped industrial land sit with the

Economic Recovery Commission, for example? Basically, his answer was that it

sits quite well, because we have industrial lands spread right throughout the

Province and from the reports that I am getting or from what I have been told,

we are not competing to any great degree with any private concern in most areas

of the Province. Bob, am I correct in saying that?

MR. NOSEWORTHY: There are industrial land

developments in some eighteen communities throughout the Province. Not all of

that would be land acquired and developed by the corporation, some of it would

have been transferred and relates to some of the larger military properties,

former US defence installation, Argentia for example, Goose Bay, Stephenville

and those areas. There would be a number of land developments which would have

been funded a number of years ago through various DRIE and DREE agreements and

what have you in some of the smaller rural areas in the Province but also in

urban areas where there would not be any substantial industrial land

development.

MR. J. BYRNE: I am not concerned with respect

to the industrial lands but actually the subdivision lands, private residential,

like Cowan Heights, these areas and this type of thing. There are developer's

around who would certainly love to have their hands on that land, I am sure but

from that perspective - competing with private industry in that light. Would you

want to address that with respect to the residential lots rather than

industrial?

MR. NOSEWORTHY: Okay, I guess in terms of the

residential lots, certainly we would have gone to government a couple of years

ago with the strategic plan which would have addressed our role in residential

land development. There are a number of points that I would probably like to

make here, certainly the corporation does not get involved in developing small

residential developments which would compete directly with small residential

developments of the private sector. What we do is become involved in large

comprehensive land developments such as Mount Pearl and Cowan Heights. You will

see other examples in Corner Brook, Gander and a number of areas throughout the

Province. Those comprehensive development areas provide for - with Cowan Heights

you would have probably seen 1700 lots developed there, several thousand lots

developed in Mount Pearl and other areas. What we do is provide the

infrastructure, the main trunk servicing infrastructure, underground

infrastructure, transportation infrastructure in those areas which would not be

provided or could not be provided through the private sector.

MR. J. BYRNE: Why could it not be provided by

the private sector? If Newfoundland and Labrador Housing can do it, why could

not the private sector do it?

MR. NOSEWORTHY: What I am referring to is not

necessarily just the distribution services in the land assemblies themselves but

the major trunk servicing that you would see. The major water and sewer trunk

servicing that would go into for example - to be brought to develop Mount Pearl

would have either had to be paid for by government and then to allow the private

sector to develop that or provided within the development by the housing

corporation. There would be about, for example in Mount Pearl, about $17 million

worth of infrastructure that would have been facilitated in that development as

a result of our involvement.

Another point that we raised is the fact that -

when you talk about competing with the private sector, apart from the fact that

there are maybe ten or twelve people in the corporation involved in our land

development, everything that we do involves the private sector. The contractors

are involved in the private development, we engage surveyors and engineers to

plan the development. I think you will find that close to 100 per cent of any

development that we become involved in, indeed engages the work of the private

sector to involve that. We do feel that the role of the housing corporation, in

that broad scale basis, impacts directly on the affordability of housing. We

feel that it has served to keep land costs down. I think if you, while there is

no direct information, if you look at land cost in this Province versus land

cost through many, many areas of the country that you will see that - we feel in

any event, that public sector land development has indeed reduced the cost or

provided for an affordable housing environment, if you will, in the Province as

well.

MR. J. BYRNE: I have to interrupt because I

think you have answered my question. I do not need to go on at length with this

but I know where you are coming from. My time is almost up, so I want to get one

more question in to the minister. Is the minister aware of any plans or have any

talks been going on within housing or the department with respect to taking in

an area, say as an industrial park, maybe Gander or somewhere like that, just

pull out a parameter and say, this is what we want, here are the specifications

and you do it for us.

MR. REID: Well, certainly not for me, my

friend. I have only been here a week and a half and I do not know if it has

happened in the past. You means in terms of actually developing?

MR. J. BYRNE: The whole kit and caboodle.

Housing owns the land, here is the property, you develop it.

MR. REID: What are you talking about, putting

the infrastructure in there?

MR. J. BYRNE: Whatever is required to develop

it for the private sector to sell it and that sort of thing.

MR. REID: We have done it in Gander and Corner

Brook for residential.

MR. J. BYRNE: Well, I am thinking industrial

but possibly residential.

MR. NOSEWORTHY: We have parcelled out land to

private sector developers in Corner Brook and in Gander.

MR. J. BYRNE: And how does that fair out with

respect to doing it yourselves, with respect to monies into subsidized housing?

MR. REID: I think it has varied. It has worked

in Gander very well. There is a private sector that has developed in Gander. In

Corner Brook, for example, I know the private developers came back and wanted to

sell some of the land back to us, quite frankly, so it has gotten mixed reviews,

I think.

MR. J. BYRNE: It depends on the market at the

time, I suppose.

MR. REID: Yes.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: About this repair program in social

services housing. I was not saying you were not doing a good job. I think you

did a good job but you did not have enough money to do the job you were doing.

During the first six months of last year we found it great and the last six

months were terrible. I think you were so good during the first six months that

you spend all the money. There is one question I would like to ask you about the

RRAP program. Listening to the figures you were reading off there it looks like

the RRAP program is going to go down by 50 per cent. Is that right?

MR. REID: Well, it is down 50 per cent this

year.

MR. CRANE: Over last year?

MR. REID: Oh, yes.

MR. CRANE: That seems kind of strange because

it was only last week when I was in the RRAP offices in Carbonear and they were

saying, well, we are not going to get any money this year, just $20,000. Well, I

said, when I see Mr. Noseworthy I will tell him to close up the office. Why are

you going to keep an office out here for $20,000? They can bring that out in

their pocket after work. Is it that bad?

MR. NOSEWORTHY: It is not that bad. There would

certainly be more than $20,000 at the Carbonear office.

MR. CRANE: That would not pay the light bill.

MR. NOSEWORTHY: In the Avalon there was roughly

$500,000. That is forgiveness dollars and that may gross up to about $1 million.

MR. CRANE: Where?

MR. NOSEWORTHY: Throughout the Avalon with the

exception of St. John's. I could get the precise figure but I can assure you it

is well above $20,000.

MR. CRANE: I know that by listening to the

figures there, but you would have to be dead to only have $20,000 there. The

program would be gone.

AN HON. MEMBER: (Inaudible)

MR. CRANE: It is not enough for cigarettes even

though you were cutting them out. I will go back to those fellows and bug them

for the rest of the year until I get some money from them.

MR. NOSEWORTHY: I can get you the specific

figure tomorrow but we are down by roughly 50 per cent, but next year it will be

eliminated entirely.

MR. CRANE: That is going to be bad in the

meantime but in the meantime I knew there was something wrong with that figure

when you gave it to me.

MR. REID: There is. Here are the figures John.

Last year we did 1600 and this year we are doing 700 so it is 60 per cent.

MR. CRANE: The buddy who was talking to me was

talking about doing 20.

MR. REID: In your district?

MR. CRANE: No, in the whole area, the office

area.

MR. NOSEWORTHY: There is something wrong with

that.

MR. CHAIRMAN: Thank you, Mr. Crane.

At this time I should welcome Mr. Fabian Manning

who was not here at the beginning of the meeting. He is the Member for St.

Mary's - The Capes. I call on Mr. Manning if he has any questions.

MR. MANNING: Thank you, Mr. Chairman.

I apologize for being late. It is my first trip to

the Colonial Building.

I would like to ask the minister or one of his

officials, I was not here for the introduction so I am not sure who takes care

of exactly what, but senior citizens housing apartments, that is a joint

federal/provincial agreement, to what extent percentage wise, is housing

involved?

MR. NOSEWORTHY: The cost share is 75/25, 75 per

cent from the federal government and 25 per cent from the Province.

MR. MANNING: Okay. Is there a certain amount of

funding for that this year?

MR. NOSEWORTHY: We will be doing about 125 new

units this year, some of which will be seniors, will be housing for seniors.

MR. MANNING: What is that?

MR. NOSEWORTHY: Some of which will be housing

for seniors. Of the 125 units, some of those will be housing for seniors. I do

not have the precise figure with me but -

MR. MANNING: What would the other units consist

of?

MR. NOSEWORTHY: Well, they would be for family

housing for example, housing for the disabled, housing for natives -

MR. MANNING: So, that is 125 total that you are

planning on doing this year. Do you know how many you did for seniors last year?

Approximately, I know you cannot give the numbers off the top of your head.

MR. NOSEWORTHY: We would have done about 252,

something like that last year, and I would suggest there would have probably

been 200 of those for seniors.

MR. MANNING: Yes. So, really there is a

reduction of 50 per cent in the total number of units this year?

MR. NOSEWORTHY: Yes, that is what the minister

referred to, exactly.

MR. REID: That is directly because of the

cutback in federal government funding.

MR. MANNING: Yes, okay. I know out in my area,

we worked on a senior citizens housing project for three years. In the second

year of our application, I will call it, we were told that we were the first on

the waiting list. In the third year we became the first to be approved and we

received a fourteen unit complex. Is there a waiting list now? I ask for the

simple reason that I have another area of my district that is interested in

senior citizens housing. I am just wondering how far down the road, in regards

to applications that you have, could we expect word?

MR. REID: You are certainly not on this year's

list because I think you would probably know by now.

MR. MANNING: No, we are not on this year's

list.

MR. REID: Well, I am sorry to inform you that

there will not be a list after this year because there will not be any social

housing of that type next year at all. That is the funding that I am talking

about that is disappearing from the federal government.

MR. MANNING: So, this agreement that we

received our housing complex under is kaput as of next year?

MR. REID: That is right. All those seniors and

especially that type of one that you were talking about, I had one in Carbonear

as well, that is gone. If that happens - and for all intents and purposes it is

going to happen.

MR. MANNING: Is it a final decision from the

federal government in regards to this program or are there still negotiations?

MR. REID: No, I would have to say that from

what I have heard from my staff and what I have read, it is a fait accompli. The

only way that it could be changed would be that the new Prime Minister may wish

or the new government, whatever happens I guess, may wish to get back into

social housing but it is there in the Budget, the decrease is there and every

minister, every housing minister in the country is screaming blue murder and we

are not being listened to at the present time. There are more important things I

suppose with the transition and the change of government.

MR. MANNING: I realize to some I guess, there

are more important items.

MR. REID: It is deficit reduction, the same

situation as we are in here in the Province because that is what it boils down

to.

MR. MANNING: Yes, but I have seen this type of

complex in my own community and just talking to seniors alone, I think it is one

of the best things that ever came our way.

MR. REID: Definitely.

MR. MANNING: For a couple of reasons, for

seniors themselves and for the community as a whole, it is too bad. That is my

own opinion.

MR. REID: Well, let us hope that they change

their minds; let us hope that the ten of us can convince them to come back with

a new agreement. Maybe next year.

MR. CHAIRMAN: Mr. Noel.

MR. NOEL: How much money will that take out of

our economy next year?

MR. REID: Well, under the federal government

expenditures last year -

AN HON. MEMBER: Seventeen.

MR. REID: Seventeen, this year?

MR. NOSEWORTHY: That is 50 per cent decrease

over last year. If you look in 1991, we would have spent about $20 million in

RRAP and roughly about another $30 million so it would have been about $50

million which is down to $17 million now and it would be eliminated next year.

MR. NOEL: So that is total, that $17 million is

75 per cent federal and 25 per cent provincial. Is the Province or the

corporation planning to carry on a program like that on its own if the feds back

out?

MR. REID: I really cannot say Walter. I guess

it will be based on budgetary restraints and I will say that we have talked

about this and the Premier has talked to me about it as well, and he is as

concerned if not more about the federal government pulling out because there is

no plan in place, not yet, to compensate for that federal government loss.

MR. NOEL: Okay. Churchill Square, did you say

that you had an appraised value of $3.4 million or something.

MR. REID: Yes.

MR. NOEL: And an offer of $1.6 or something in

that area?

MR. REID: $1.3 million, I think it was.

MR. NOEL: $1.3. How does the corporation decide

whether it would be justifiable to sell at a particular price, like your

appraised value, that would be market value but would the income approach be

much of a factor in that? I mean it seems to me that the basic way for

government to decide how much a property is worth to government, is on the basis

of just what it is bringing in. You know, it is a very difficult time I guess to

put values, to appraise values of real estate in this city and other places in

the country, so in order to determine whether it is worth it for government to

sell something, I think you have to look at it from the point of view of how

much money it is bringing in.

MR. NOSEWORTHY: I can comment on that. In terms

of our appraised value, we have our own professional appraisers do that and

there are certain - I am not a professional appraiser myself - but they use a

number of alternatives in arriving at that appraised value and certainly the

income approach is one of those that they use, so that $3.4 million is

established quite frankly, on the basis of at least one alternative being the

income approach to what that property is deriving on an income basis both from

it's commercial and residential tenants, so it should comply reasonably well

with what a private company would arrive at or would reach from a private

appraisal firm that it is using as well.

MR. NOEL: You see, I do not see any point to

privatization if it means that we are going to be selling something for less

than its income value to the Province, all right? I think we are better off

keeping it.

MR. REID: That is the approach that the Housing

Corporation is taking right now. They are trying to secure the best dollar they

possibly can for any unit, that is why, these bids for example, have been

basically turned down, because they are not close.

MR. NOEL: But these days you can get quite a

difference between an appraised market value and an income value sort of thing.

If I were to support privatizing government property I would have to look

primarily at the income values of the property. But within that context, I think

if you're able to get that price for it you're just as well selling it off. I

don't see any reason for government to be in real estate if you can sell it off

for that value today.

MR. NOSEWORTHY: Our approach to these things

has been that really from a policy point of view there's no reason for us to be

in it, unlike residential land development, where we feel we do have a role

there for public policy reasons. We do not have the same role in terms of market

development. We don't own sufficient, for example, number of units in the market

to influence market rents, nor should that be an objective in any event. Really

there's no public policy reason for the Corporation to be involved, from our

perspective in any event, in market rental housing. Then it becomes a financial

issue of whether you should dispose of a property or not, and what's in the best

interest of the Province. In that regard you're exactly right. That's the way we

approach it.

MR. NOEL: There's no point in giving it away

cheap, it's better to keep it as an investment for the Province -

MR. NOSEWORTHY: Exactly, (inaudible).

MR. NOEL: - then to let it be a good investment

for some private developer.

MR. REID: And it is. The Churchill Square in

particular is a good investment. We owe very little money on it and it's a good

investment. I really don't think we're going to let it go for much less than

what the appraised value is.

MR. NOEL: That was another question I was going

to ask. You said now you have pretty high debt levels on a lot of these

properties.

MR. REID: Some of them we do and some we don't.

MR. NOEL: Like Churchill Square, that wouldn't

apply?

MR. REID: No. I think the mortgage on that is

around $800,000, I think.

MR. NOEL: So you haven't used the better

properties like - you haven't remortgaged the better properties like that in

order to provide capital for doing other things over the years?

MR. REID: No.

MR. NOEL: The housing down in the Newfoundland

Court area, in particular, in my district. I think that area is entirely owned

by you people. It hasn't gotten very much maintenance in recent years and some

of it is in really bad shape, to the point where it seems to me....

AN HON. MEMBER: Newfoundland Court (inaudible).

AN HON. MEMBER: That's Kenna's Hill, isn't it?

MR. NOEL: Where?

AN HON. MEMBER: Kenna's Hill?

MR. NOEL: No, no. The Newfoundland Court, down

off Newfoundland Drive. Virginia Park area. This is a particular

section of the

Virginia Park. I've gotten a lot of complaints from that particular area. They

say that they haven't had very much substantial maintenance for a long time. It

seems like you have a good investment there which is being allowed to

deteriorate because of a lack of adequate maintenance. I know that you have a

problem with funding maintenance but at the same time you're doing more

substantial maintenance and renovations in other areas. It's very difficult I

guess to make a choice about what to do, but you're spending a lot on one area

and you're not doing basic stuff in another area, it seems to me. You might be

able to reason that out to make good sense, and that wouldn't surprise me. I'd

ask you in particular to have a look at Newfoundland Court to see if there's

a....

MR. NOSEWORTHY: We can certainly do that. I

guess in terms of regular ongoing maintenance we try and do what we can there,

but in terms of the major renovation and repairs we are restricted, there's no

question about it, to money. We try to target areas because you can't do major

renovation to sort of half a project, if you see what I mean, and then do major

renovation to another half a project. This is why it's necessary to target it in

on the basis of some criteria that we would use in terms of looking at where the

greatest need is.

There's no doubt about it, and it doesn't

necessarily only apply here, but in many other provinces as well. The whole

issue of regeneration of the public housing stock in this country, and that

involves putting money back into it for major refurbishments, is a fiscal

problem. That's what we're encountering with Newfoundland Court and others.

MR. NOEL: Like in another area of my district,

Brophy Place, you've done quite a good job. But then the people down in Virginia

Park say: look at the great job they're doing for those people up there, why

won't they do the simplest things for us? Obviously it's complicated.

That's all, thanks.

MR. CHAIRMAN: If there are no further questions

I'd ask the Clerk to call the subheads.

MR. WOODFORD: I would just like to make a

comment. It's not very often you get the opportunity to do it when the officials

are here.

I think the minister mentioned that if we needed

any information at any time get in touch with him and he would tell the staff.

Well, I have yet to, I have to say, call Newfoundland and Labrador Housing

without getting information within their jurisdiction, whatever they are able to

tell me. You always get an answer. Mr. Noseworthy and two of his staff are here

so I have to say that as a member of the Opposition, I always get the best of

service.

MR. REID: Well, I can assure you, Sir, that as

the new minister I guarantee you as good a service, if not better, while I am

around.

MR. WOODFORD: I do not think you will have any

problems with your staff. If you are going to have any problems it will be with

yourself.

MR. CRANE: We should not have any problem if

there are no problems with your staff and if the minister is going to do a

better job.

Total Heads for Newfoundland and Labrador Housing,

carried, without amendment.

I want to thank the officials and thank you, Mr.

Minister.

MR. REID: Thank you, very much.

MR. CHAIRMAN: Your officials can now leave but

you have to stay.

MR. REID: Can I suggest that we take ten

minutes, Mr. Chairman?

MR. CHAIRMAN: I was just going to suggest that,

that we take a ten minute break to cool down.

RECESS

MR. CHAIRMAN: We will get back to the Estimates

for Municipal and Provincial Affairs using the same format as we used before. I

call on the minister to introduce his staff and make an opening statement and

then we will follow on as before.

MR. REID: Mr. Chairman, my opening remarks at the

beginning of my presentation for Housing would basically apply to this

department as well.

MR. CHAIRMAN: Excuse me. Mr. Minister could you

introduce your staff?

MR. REID: My name is Art Reid and I am the

Minister responsible for Municipal and Provincial Affairs. On my immediate left

is Don Peckham, Assistant Deputy Minister of Finance, Planning and

Administration. On my right is Art Colbourne, Assistant Deputy Minister of

Municipal Support Services, Recreation and Fitness. Also Mr. Winston Hiscock,

Director of Administration, Mr. Felix Croke, Manager of Financial Operations,

and Gary Callahan is the Director of Public Relations with my department.

I began my opening statement on the housing question

and I do not claim to know a lot about what is going on in the housing

department other than what I have learned in the last week or two, but in that

period of time I have had a fair number of meetings with departmental officials

and done a tremendous amount of reading. When you find yourself in a Cabinet

position sometimes reading on the weekend and late in the night time is probably

the best way of getting to know the department. I have been trying my best in

the past week and a half to wrap myself around municipal affairs and provincial

affairs and that in itself is a tremendous amount of responsibility as you will

see as we go through the estimates tonight for emergency measures, for example,

sports, recreation and fitness, municipal affairs and all the things that go

with that, the fire commissioner's office, so I will need a fair amount of

assistance from both assistant deputy ministers. I apologize for the deputy

minister. The deputy minister went on holidays some time ago, about two weeks

ago, and he is due back in the office next week. He is probably the luckiest one

of us all. He was up for holidays and he took three weeks. He flew the coop.

Mr. Chairman, I will commence by highlighting the

major items in the estimates for the Department of Municipal and Provincial

Affairs. The total estimates for this department this year is $139,653,400 gross

expenditure. Now, do not confuse this amount with the housing. It is separate

entirely. This is just strictly this department. There are revenues in both

current and capital accounts totalling $10,873,000 leaving a net expenditure of

$128,780,000.

There are 231 permanent positions in the department

operating all divisions. Mr. Chairman, the department is comprised of two main

branches and its delivery service embodies a number of regional offices to

ensure best delivery of services to the municipalities and sports and recreation

commissions in the most effective or efficient manner possible.

The Department of Municipal and Provincial Affairs is

responsible for matters relating to local government, municipal financing, real

property assessment, urban and rural planning, development control, engineering

for water and sewage, road construction and reconstruction, coordination of

emergency planning to municipalities. It is also responsible for the office of

the fire commissioner which is responsible for fire protection, suppression and

training throughout the Province. The department is responsible for amateur

sports and fitness and recreation activities as well. I don't know if there is

another department in government with so much responsibility or with so many

arms. I do not think there is. I think municipal affairs has to be one of the

largest departments that we have in government now in relation to its

responsibilities. The activities of the department are broken down in the

following categories;

Executive and support services: this activity mainly

provides the funding for the operation of the executive, administrative,

accounting and other financial support services for the whole department.

Service to the municipalities: funding in the area

totalling $13,246,000 covers the provision of engineering services for water and

sewage installation, street reconstruction and paving programs, the provision of

town planning for municipalities, provision of assessment services to

municipalities with real property tax, the provision of development control

services to areas on protected roads and within municipalities and the

maintenance and operation of the industrial water systems. Funding is also

provided to support the Newfoundland and Labrador Federation of Municipalities

and the Newfoundland and Labrador Association of Municipal Administrators.

I would like to provide some details of some of the

services, firstly, my department has regional offices established in the

following areas; Labrador, on the West Coast, Central Newfoundland and in the

Eastern part of the Province. The idea of these offices is to have the delivery

of services provided in the areas more close to the communities and groups

served by my department. It also provides for better liaison between the

department and municipalities and will provide for a more timely and meaningful

response to municipalities and organizations, as departmental employees in the

regions can get to know the municipal needs of towns and cities, local service

districts, sports and recreation facilities, etcetera, in their region more

intimately than could be done directly through the head office in St. John's

only. These regional offices have been given a considerable amount of authority

and latitude to manage the responsibilities within their jurisdiction.

The real property assessment division operates under a

separate act and has responsibility for the assessment of real property in all

municipalities with a real property tax except, the City of St. John's. At

present some 221 communities have adopted a real property tax and the division

has assessed approximately 165,000 properties throughout this Province. The

division must continuously conduct reassessment of these municipalities on a

rotation basis. To assist the division in its ever growing task my department

has purchased and just recently completed the installation of a computerized

mass appraisal system which has automated the assessment process. Using this new

system my department will be able to catch up with the backlog of reassessments

and the new assessments required to be done.

Now, over time the reassessments, which are now

conducted every six or seven years, will be able to be conducted more

frequently, probably every three years. This will be a tremendous benefit to the

municipalities as they will be able to be much more current in their assessed

values and it will eliminate the need for major increases in taxation value of

properties which occurs every six, sometimes seven years, due to the large

amount of inflation which normally occurs during such long intervals. It will

also have the advantage of allowing the municipalities to earn more revenue

through the adoption of an earlier reassessment cycle without having to

necessarily increase the mil rate. The new system can also provide information

to the private sector which can be sold to them and therefore produce some

revenue to reduce government's operating costs of the new system.

Within the services of other municipality grouping is

a municipal inspection division. The small staff of nine inspectors is available

on a continuous basis to all municipalities to undertake internal audits when

there are financial problems within the municipality, and to offer them advice,

where they require it, for financial planning or to advise them on general

municipal procedure. This service is especially helpful to new councils when

they are not familiar with the procedures and operations of council.

There is a development control

section within the

urban and rural planning division which is responsible for the establishment and

monitoring of policies for the control of the Province's main highways and other

areas which are placed under this control. This ensures that proper planning is

adhered to in areas which are not incorporated but which may be near

municipalities or in other areas where growth activity is taking place.

There is a local government division with a staff of

three people. This group provides general support to the municipal operations

section of the department and provides advice to the regional managers on

matters of departmental programs and policy.

There is also an urban and rural planning division.

This division is staffed by professional town planners and supported by planning

technicians and other administrative staff. The role of this division is to

provide town planning advice, to prepare municipal plans for municipalities, and

to advise them on various planning policies and regulations which may be used

within individual municipalities. The department also occasionally hires town

planning firms to supplement the work of the urban and rural planning division

and cost-shares the development of town plans with some municipalities through

this process.

There is an engineering service division of the

department. This division is responsible for administering the municipal water

and sewerage, and street reconstruction and paving programs. Within this

division also is the planning and design

section of the industrial water

services section. Any of you who don't live in rural Newfoundland or live on the

East Coast, you wouldn't know what the water service is, I wouldn't imagine. We

can get into that later on, industrial water service.

The planning and design group is responsible to review

the plans and specifications of water and sewerage projects which are approved

for municipalities through the year. The industrial water services division is

responsible for the operation and maintenance of government owned industrial

water systems which have been installed to service certain industrial

enterprises throughout the Province and some municipalities - for example,

Marystown.

Grant funding is also provided for community water

services. This is separate from the other capital, water and sewerage

installations. It is designed to provide domestic water and sewerage services to

local service districts and is comprised of smaller types of systems. Funding is

also provided to assist municipalities with the development of solid waste

management facilities and this year some $3 million has been provided for the

development of water and sewerage facilities pursuant to the federal-provincial

cost-shared agreement for the communities of Northern and Coastal Labrador.

Assistance and infrastructure support. This

section

provides funding for the water and sewerage program. The amount provided in the

estimates is the amount required to meet the repayment of the debt which is

financed through the municipal financing corporation once the projects have been

completed. Some $65 million is available to cover the debt - both principle and

interest payment for road construction and paving programs and water and

sewerage subsidies, $65 million.

Provision is also made for special assistance to

municipalities. This $1,138,000 is provided to enable my department to respond

to requests of the municipalities for special assistance when they are in dire

need. It covers such items as special assistance to meet administrative and

operational overheads where there is insignificant revenues generated within a

town during the year. The fund is managed by a Department of Finance committee

which reviews all the requests for this kind of assistance and recommends

whether or not funding should be made available, and the amount.

A considerable amount of funding is also provided for

the statutory grants to municipalities. This year some $42,500,000 will be

granted to municipalities under the municipal operating grants and adjustment

program.

Cost-shared funding of $4.5 million is provided for

environmental improvement projects currently ongoing in the Province. The cost

of these projects is shared equally between the federal, provincial, and

municipal governments. Municipal protection services; funding in this

section

covers emergency measures, planning, response funding to municipalities under

the joint emergency preparedness program which is cost shared with the

the operation of the fire commissioner's office. Funding is also provided to

assist municipalities with the acquisition of fire fighting vehicles and

apparatus. Recreation services and facilities: this program provides for the

encouragement and financial support of recreation, fitness, and amateur sport

for all ages throughout the Province. Support services are provided to

municipalities and sports and recreation organizations by the department, and as

well grant funding is made available directly to these organizations to support

in the development of approved activities. Major activities of this service

sector include support to community groups in the amount of $1.774,000 and

community sports facilities of $1,038,000.

Mr. Chairman, this concludes my opening statement and

I trust that the details will be of assistance to the committee, and if I do not

have the answers to some of the questions some of you may pose to me I am

certainly sure that my staff will be only too happy to help me provide the

answers.

Thank you, very much.

MR. CHAIRMAN: Thank you, Mr. Minister.

Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

I would like to ask the minister a few direct

questions. The new municipal operating grant which has been in the department

for awhile and your familiar with it, more than likely before you got into it.

What kind of feedback are you getting from municipalities pertaining to that?

Not only the change in the MOG but the change in the formula for repayment on

capital debt.

MR. REID: You are asking me a personal question, I

would assume, are you?

MR. WOODFORD: Yes, in a way, but I would say you

are in long enough now to say really whether you really agree with that new

policy or not. You do not have to answer that.

MR. REID: Mr. Chairman, I have discussed the MOG

somewhat with the assistant deputy ministers and there are questions, of course.

As a former mayor of a town there are questions that I have had as it relates to

the structure of the MOG and so on. I have found this year that there may not be

as much of an adjustment in this coming year than there was last year. We are

into our third year of that plan and things seem to be settling down somewhat. I

can honestly say that since I have come to office I have not had one - you are

the first person, to mention the letters MOG to me other than what I have asked

myself. I have not seen any correspondence relating to it and I have not spoken

to anyone about it. I am certainly sure, Mr. Woodford, that there are a lot of

people out there waiting to get after me about the municipal operating grants. I

am sure I will see it but I really cannot say anything other than that at the

present time.

MR. WOODFORD: I am getting it all the time and I

tell you, to be honest with you, that a lot of municipalities in the Province

today, especially smaller municipalities - larger centres are no problem because

really councillors in larger centres have staff who are doing most of the work

for them, but in smaller municipalities in the Province it is all volunteer

work. They are working all day long. They are open every day of the week. They

come in to try to run a municipality in the nighttime, sit down and look over

that - even today, after two years, under that new component system, gone is the

roads component pretty well, gone is the social assistance per capita component

and gone is the population component and the forty-five cents on every dollar

that is collected under the old system, this is the equalization component, the

local revenue component, the household component and then you have the other

one, the new formula for the repayment on capital debt.

Just look at the equalization component and the local

revenue component alone, for someone who is not familiar with it, that in itself

as far as I am concerned is a chore. To try to figure that out and figure out

where they are going and where they are coming from - all this was brought in in

`89 by Mr. Gullage at that time, after the budgets were down. How can you expect

municipalities to adjust mid-term? The road component was changed again in the

Summer of `90, again in the Summer of `91 and lo and behold, to add insult to

injury, I get word this evening that it is changed again. The road component, as

of today, is changed again from eighty-nine down to thirty-nine dollars from a

figure of $2,000 per kilometre four years ago.

I have one municipality in my area that has been

notified this evening that their road component is cut to thirty-nine dollars

and their local revenue component is cut by another $350. Now, that does not

sound like much but that is only the smallest municipality in my area, wait

until it hits the rest of them. So to me something is radically wrong. It is

obvious from the estimates in the budget that the grants this year are down

again. What was budgeted last year was not used, to me that is sinful, $650,000

allocated for grants went - there was $650,000 less than what was budgeted, put

out, now it is down to $42,500,000 this year. In municipalities, I said it

before and I will say it again, that you are soon not going to get people to run

in those smaller councils, there is no way in the world.

I know you cannot answer for the sins of the past,

although you were there as a backbencher, and I understand the system that you

worked under, I worked under it for four years, I know what it is all about but

something has to be done with regard to the total grant in itself, especially

the roads component. There has to be some flexibility. You have municipalities

in this Province that if they put their mill rate to fifty mills tomorrow

morning they will not collect the same amount of money that they got under the

old component system, no way. The infrastructure is not there. They have

properties that are tax exempt, there is no way in the world to get it. The

properties in the small municipalities - what I do not understand is that the

officials in the department do not know where they are coming from on this one.

The provincial average that you use under your equalization component is

$48,000. The provincial average in Jackson's Arm for instance, is $28,000. Now

they only get paid to the difference of the deficiency, that is all they get

paid. Can you imagine an average household in St. John's, $28,000 and compare

that with Jackson's Arm?

Now come on, you do not have to be a mathematician to

compare the taxable - what you are allowed - what kind of a tax return you will

get in Jackson's Arm versus St. John's, Gander, Grand Falls or anywhere like

that. There has to be some flexibility. One community out there, I do not mind

saying this, Cormack again, 28 kilometres of by-roads, Hampden is not so bad,

Jackson's Arm a little bit worse. How can they keep 30 kilometres of by-roads, a

population of 750 people with no infrastructure? The property value is $42,000,

there has to be something done about that. I know where the problem is coming

from, it is coming from ministers who are in urban centres who just do not

understand what is going on outside.

So I would suggest, Mr. Minister, that you are going

to have to have a look at that. Nobody has told me yet, I asked the officials

last year how they arrived at the provincial average in getting their

equalization component, how they arrived at the provincial average to get their

deficiency. How did they do it? I asked the minister in the House, he could not

tell me. I asked the officials here last year, they could not tell me. Can you

tell me tonight?

MR. REID: It is done by Stats Canada, the total

number of houses in the Province.

MR. WOODFORD: But even Stats Canada cannot tell me

what they used. I can understand how they arrived at that to get the deficiency

thing, what they pay on the deficiency. But how can you rationalize leaving out

- I take it they left out the cities of St. John's and Corner Brook, and Grand

Falls and Gander, when they came up with a provincial average and apply that to

rural Newfoundland. How can they justifiably say that equalization component is

right? Anybody who understands it, I mean, it's a glaring....

MR. REID: They left out the two cities and

averaged everybody else.

MR. WOODFORD: They left out St. John's and Corner

Brook?

MR. REID: That's right. And averaged everybody

else.

MR. WOODFORD: So what they did, they took the

total households in the Province, got the total property values.... So what they

did then they must have taken the total households in the Province, except for

St. John's and Corner Brook, taken the total property values, divided that by

the households, and came up with a provincial average.

MR. REID: Provincial average. And that's a fair

system.

MR. WOODFORD: Pardon?

MR. REID: Isn't that a fair system?

MR. WOODFORD: But when you look at that component

and what happens as you go down through it, as the households increase or as

your property values increase, your equalization component goes down. How many

communities outside of St. John's and Corner Brook are going to have their

property values increased and their households increased?

SOME HON. MEMBERS: (Inaudible).

MR. WOODFORD: I know it's a very complicated

formula, the two of them, especially when you get down to the local revenue

incentive one, I mean what you use on that. Took the total revenue per household

and the total revenue collected in that municipality and again used the

households. In order to come to the 40 per cent to get your maximums, a

municipality, if you go through it, it lends to the larger centres in the

Province. Every one of the components favours the larger urban centres in the

Province.

MR. REID: That's not correct.

MR. WOODFORD: If you want proof of it I can go

down through it step by step.

MR. REID: Look at the overall picture though,

Rick, last year and what communities lost and what gained and so on, if you go

down through, and the average and so on. I can't see where you can say that it's

geared towards the larger rural community. When I say the larger I don't mean

St. John's. Harbour Grace and Carbonear, for example, would you consider those

larger communities? Would you consider Victoria, Carbonear, a larger community?

It lost $32,000, $33,000. I think maybe you might be wrong with your facts

there.

MR. WOODFORD: If you want me to ask pointed

questions I can ask them.

MR. REID: In my district of Carbonear the one

incorporated community that gained under this system was Small Point and Adams

Cove, which is the smallest community in my district.

MR. WOODFORD: Yes.

MR. REID: Which was basically, I suppose - that's

what it was set up to do.

MR. WOODFORD: Yes, but see, it depends on the

area, it depends on the property values. All depends on property values and your

local revenue and your infrastructure. Harbour Grace and Carbonear have fairly

good infrastructure, You don't have to tell me about the property tax value of

those places. You don't have to tell me about the property tax value in some

other places. That's what it all comes down to. There's no way in the world that

some of those municipalities are going to survive. I mean I'm telling you,

there's - pointedly, if you go down through each one of those in point form it's

a....

MR. REID: Mr. Woodford, you're right in some of

your assumptions, but since I guess the new plan came in, the MOG came in, and

I've had the opportunity, I suppose, to be involved somewhat over the years in

municipalities, when you see what some of these smaller municipalities in the

Province are charging for property tax for example, or mil rates, in comparison

to - and basically getting practically the same services. If a community has a

property tax most likely that community is supplied with water and sewerage and

street lighting, garbage collection, the basics, and fire protection. If you

look at the average in this Province with regards to the mil rate it's just

beyond being unreasonable.

I'm still dealing with towns - and now as the minister

- in my district that have 4, 5 mils in a community and think it's a terrible

thing to raise the taxes by half a mil or a mil a year. I'm also dealing with

communities basically in the same area, the same size, with mil rates as high as

11 and 12.

AN HON. MEMBER: (Inaudible).

MR. REID: And the property value basically, yes. I

think the answer to it all, Rick, is that there has to be sort of a coming

together. Because of the financial restraints that the Province is in at the

present time, there has to be some cooperation by the people in the Province.

The cooperation is going to have to come, I suppose, ultimately, in higher

taxes. Taking some of the responsibility from the Province and shifting that

responsibility to some of the taxpayers as it relates to municipalities.

MR. WOODFORD: Yes.

MR. REID: Because you know and I know that

somebody charging a 4 mil rate in a community, and next door is someone charging

a 12, that's certainly not a fair and equitable arrangement.

MR. WOODFORD: But you also have municipalities,

which, like I said, if they put it up to 50 mils tomorrow, would get frig all

out off it. A lot of the municipalities you're talking about now have no bearing

on this with regards to when you come down to the repayment on capital debt. A

lot of municipalities that come under those component structures have no capital

debt, absolutely none, and getting absolutely nothing from the Department of

Municipal Affairs except what they get under the components. Not a copper.

So that's what I'm talking about. I've got a number of

them and there's a number around the Province, and that's where there's no

flexibility. They have no chance. The average is so low, how can they possibly

get up to where they - under the old system at least they collected forty-five

cents on every dollar. So if they got an extra $50,000 a year in revenue they

picked up another $20,000 from the provincial government without incurring any

capital debt.

MR. REID: Rick, you have to agree with what I said

a few minutes ago. Maybe some of these new MHAs don't understand what we're

actually talking about here. I don't know if they do or not. The MOG is a pretty

complicated thing. Maybe for their own benefit they should take the time to go

to the office and find out.

To be honest, and I think to be straightforward with

what he's trying to say, and what I'm trying to say too, I believe that the

member is sincere, but I also know that Cormack has probably one of the lowest

mil rates in the Province. Am I correct?

MR. WOODFORD: (Inaudible).

MR. REID: That's the area that he represents. What

is it, 4?

MR. WOODFORD: Yes. But it's not only Cormack.

AN HON. MEMBER: Three.

MR. REID: Three. Is it 3?

MR. WOODFORD: Yes.

MR. REID: I'm not picking on Cormack. The point

I'm trying to make is that there is a large number of communities out in this

Province which pay little or any taxes. Next door, there are communities that

pay sizeable amounts of taxes. Now, as a government, and as a minister, and I'll

be quite honest and I'll make this comment publicly, that those communities

which do not wish to tax their residents and are not being, I suppose, fair to

their fellow Newfoundlanders by keeping their tax rates as low as they are, I

personally feel that those people who are out there with high tax rates and

trying to support the communities in which they live, by having proper tax rates

set at proper time, those are the people who I would be more encouraged to lean

towards and helping with municipal grants and funding from our department.

I would have to say that. You know that's true,

Woodford, because you've gone through the same basic thing in the Federation of

Municipalities and being mayor of your own town and everything else. You know

that's the system. Until we can bring up the smaller towns, or the towns, in the

Province - and not necessarily the smaller towns, because Victoria, Carbonear,

is a prime example. That's not a small town. I mean, that's in excess of 2,000

people. Until we bring them up to a mil rate in this Province that is average or

above average we're going to have problems with these grants.

MR. WOODFORD: But you see, what I'm saying is that

if you brought it up what you'd have to do is increase your poll tax. What do

you get out of it? Under this you get nothing. That's what I'm saying about the

inequities in this. If you have a community that has no infrastructure, nothing

to increase their property values, how can they increase it under either one of

those components? You can't do it. You can put Cormack up to 50 mils. That's one

of the ones I'm talking about. What are you going to get? The property value out

there, you'll get three or four people. That's all it'd hit. Three or four

people who have -

MR. REID: Hit you.

MR. WOODFORD: That's right. That's all you'd get.

The rest are there, they're in the certain average, and that's it.

I know when you talk about mil rates you can get taken

aback by that, too, especially municipalities who do not understand it. Most

municipalities have some capital funding, they have capital debt, and that is

where they were hit bloody hard, and do not forget that. We have municipalities

in this Province with the mil rates good and high that cannot take advantage of

capital projects. With mil rates of 7.5 and a population of 300 in a community

you cannot take advantage of a capital project and with no way in the world to

increase the infrastructure. There is absolutely no business in the community.

In the community of Reidville there is no business and you cannot get anything,

one kilometre from Deer Lake. They cannot increase their mil rate. That is the

type of thing I am talking about. As far as I am concerned it should be looked

at. I do not want to take up members' time on it but it is something that

bothers me.

MR. CHAIRMAN: Thank you, Mr. Woodford.

Mr. Matthews.

MR. L. MATTHEWS: Thank you, Mr. Chairman.

I am not as well informed about the intricacies of

municipal governments in the Province as my hon. friend over here.

MR. REID: We are only pretending we know

something, that is all.

MR. L. MATTHEWS: Mr. Minister, I am sure if it

were one on one you could debate with Rick all night and I am not sure

who would come out the winner. You both put on a very good showing. I do not

know too much about municipal government but I do know a little bit about

business principles in terms of running business, and to a large degree, I

believe, municipalities and governments have to be operated somewhat along the

lines of sound business practices and principles. From the beginning of its

announcement the last government made when it was going to get into this

amalgamation thing I thought it was the right direction to go in as a

government. I know I told your predecessor, Eric, who is an old friend of mine

as well as an old school colleague, I congratulated him on the initiative. The

only thing I regretted was that he did not go far enough with the process. I

would state as an observation that amalgamation, I think, is a good thing and I

think is part of the answer to some of the problems that exist in financing

municipalities. Mr. Woodford just referred to Reidsville as a small place a mile

away from Deer Lake who cannot get any business and cannot do this and cannot do

that. I do not know if they are amalgamated yet with Deer Lake or if they are

under the microscope of being amalgamated.

AN HON. MEMBER: No.

MR. L. MATTHEWS: The question I wanted to ask is

where is amalgamation going? To me it is the right way to go. I think we are

grossly over governed in terms of school boards, in terms of municipalities, and

probably in terms of MHAs in the House of Assembly as far as that is concerned.

I think we are over governed and I think part of the answer to some of the

problems that Rick is alluding to is a further streamlining of municipal

boundaries within the Province. I would suggest that amalgamation should not

stop and should be further pursued, and should be carried forward for the

greater good, I would say, of the people in the municipalities and the Province

in general. If that is a

preamble, I guess, my question is, are we going to get

on with some more amalgamation initiatives?

MR. REID: Well, prior to me taking over as

minister, there are a number of groupings that have been recommended by a number

of commissions, and in a number of instances communities have agreed with the

amalgamation process so I do not see any problems with that per se. There are

others we are having some trouble with and it is a question of me having to find

the time, read reports, meet with the commissioners and so on, and talk about

exactly what we are going to do in relationship to amalgamation. I am not really

giving you an answer because I cannot give you an answer Mr. Matthews at this

particular point in time. I have a series of meetings arranged with my deputy

minister and my two deputy ministers coming up in two weeks time. I figure it's

going to take me maybe two or three days to handle the amalgamation question,

because it's a serious question, as you know.

I will say this to you. Of course, this is pure

speculation on my part, but I think it's going to happen. I think anyone who

lives in rural Newfoundland and is affected by the cod moratorium and the

downturn in the fishery, what you're going to see in this Province as far as I'm

concerned in the next few years is not amalgamation, but forced resettlement.

Not forced by the government, per se, but forced by circumstances.

The question of whether or not we as rural

Newfoundlanders can survive in small communities, especially in the Northeast

Coast of Newfoundland, is going to be a question that's going to be on the minds

of a lot of people. Because in 1994, if the fish moratorium is not ended - and

it certainly doesn't look like it's going to end - I don't know what's going to

happen to a lot of small communities on the Northeast coast of Newfoundland. As

Minister of Municipal and Provincial Affairs, I'm going to have to deal with

that. Maybe, just maybe, the whole question of amalgamation will become easier.

It may become easier. It may be a question of people wanting to move out of the

smaller areas, especially in the Bonavista - Trinity Bay - Notre Dame Bay area,

and up the coast further.

So give me a couple of weeks. There's a Judge Wicks

who's doing a fair amount of work for us right now as a commissioner with a

number of groupings. I've got an appointment set up with him for next week and

he's going to come in and give me some recommendations on a couple of more

groupings. There are some areas - Mr. Woodford, for example, has some problems

that he spoke to me about recently in his area. There are a number of other MHAs

who've spoken to me privately about amalgamations in their particular area. I'm

taking all that into consideration.

In the end hopefully the question of amalgamation -

because the principle I believe in. I'm not sure - and this is no reflection on

any previous minister, or even the staff today - that we went about it in the

right way. I think it could have been done in a little different way. I suppose

every minister sort of puts his own version or emphasis on different things, but

I think we could have handled it in a little better way than we did in the past

few years. I hope to be able to do something with that.

MR. CHAIRMAN: Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. This is my

third estimates meeting, and I'd like to commend the minister at the beginning.

Because the past two ministers, and I looked at their minister's office -

appropriations to provide operating costs, salaries - each minister was the same

or had increased. Yours actually decreased. Not quite as per the 4.5 per cent

decrease, but close. I commend you on that one.

I have some concerns with respect to the timing

tonight. We only have an hour left. There's no way I can see us getting through

this. That's the comment I make up front. I have a number of concerns, but the

first comment I'm going to make is what I said three or four years ago, which is

that the Premier's plan is working. You just stated it here yourself tonight. I

said three or four years ago when the amalgamation was brought in that the

minister or the Premier is going to force amalgamation through the finances,

through the cutting of the grants, the municipal operating grants and the

increased debt retirement to the municipalities. I had a note here: that's

forced amalgamation and forced resettlement.

I think in some of the smaller communities where

probably there's only one employer as a fish plant or something like that, and

if that fish plant goes out of business and we have mil rates up to 8 and 9 or

10 per cent in those municipalities, you certainly will see ghost towns develop

pretty quickly.

I would like to remind the minister that the previous

minister, Mr. Hogan, when it comes to the road component, we had a meeting this

past Spring down at the Radisson. He stood up and he guaranteed and made a

promise that the figures that were sent out to the municipalities with respect

to the preparing of this year's budget, would not be decreased. So I would

expect or hope that the minister would stick to that, although he did not make

that promise but the government of the day certainly made the promise. I do not

know if you can address any of those points but that is some food for thought.

I have a number of concerns. I have them all

highlighted here but I will have to just skim through them because I only have

ten minutes or a few minutes left, six now. The emergency response program, the

911 program: it is now under the regional fire fighting authority which was

brought in under the amalgamation, is there any plan to have this Province wide?

I believe there is and there are changes to the service recommended recently

with respect to the response itself. Apparently if 911 is dialed, it will go

into the regional fire authority who in turn will contact the General Hospital

who will make a decision as to who should respond depending upon the geographic

location and traffic, whatever the case may be. What are the ministers views on

that with respect to the emergency response vehicle or the General Hospital

responding and what are the costs going to be involved in that?

MR. REID: The 911 service that you are referring

to is in the St. John's area and has nothing to do with the provincial

government whatsoever. We are at present looking at studying the possibility of

expanding that beyond St. John's but that is all we are doing right now.

Anything in regards to response or emergency vehicles in St. John's, that

respond to 911, is solely the responsibility of city council.

MR. J. BYRNE: With respect to that, the city -

well, not the city council as such, it should be the regional authority. Would

it not?

MR. REID: Regional committee? Yes, I am sorry.

MR. J. BYRNE: That now is going to be the - namely

municipalities around the Northeast Avalon are actually being charged for that

service now. So indirectly, it probably does fall under the authority of the

municipal affairs with respect to the cost involved.

MR. REID: No, I do not think that you are correct

there. If it falls within the regional authority I cannot see us having any -

none whatsoever, no. We do not have any authority under the act to interfere or

to regulate under 911, we do not have that, sorry.

MR. J. BYRNE: Municipal assessments: I noticed

that in the comments there, in the beginning you said that you have another

system in place where possibly every three years we will have reassessments

done. Presently towns out our way were supposed to have assessments done back in

`91, they were promised for `92 and again promised for `93. Some of the towns

have gone for seven years and it looks like we may not get them for `94 and of

course that causes problems - that will be almost eight or nine years without an

assessment. So, when the reassessments are done and completed some of the towns

will be after increasing their mil rates to compensate in the meantime and then

when we bring in the reassessments it is going to be an awful substantial jump

in what the people are going to have to pay in any given year. I have to ask the

question, this program that they have in place now, is this really going to make

that much difference?

MR. REID: The new computer system?

MR. J. BYRNE: Yes.

MR. REID: First of all let me go back and tell you

why sometimes some of the communities are not - this is for the benefit of all

members - why some of the communities are not done like others are done. You

will find that some of the communities that you referred to in your district and

to other districts, do not have water and sewage services and there is no

massive amount of debt there. What we try to do in the department is, we try to

accommodate those towns who have secured or accumulated debt because of water

and sewage services and capital works debt over a period of years. By doing the

reassessment it gives the towns a better chance to pick up more money which in

the end would pay more towards their debt. If there is a town which has not been

done in seven years there is a good possibility that that particular town

probably does not have any debt at all as it relates to capital services. No one

has gone longer than seven, by the way.

To answer the question of whether the mass system will

work or not, I think it will, from what I am told it will work. Even though some

of the notes that I read tonight said within a three year turn around, I am

thinking that maybe in the first couple of tries it will probably be more like

four years than three but even at that, that will be a heck of a lot better than

what we have right now. Of course the bottom line with it all in past years is

that we just never had the money to employ the people, the assessors that we

needed to go out and do the reassessments.

MR. J. BYRNE: That leads me right into my next

question which has been addressed a number of times before but I was never

satisfied with the answer. That was with respect to assessors for the

municipalities, why could the municipalities themselves not subcontract out that

work to private industry? The answer that is normally given is for consistency

and whatever the case may be but we see inconsistencies within the individual

municipalities, so that is not a legitimate answer in my mind. So, has the

department given any consideration or will they give consideration to allow the

towns to contract out?

MR. REID: I am smiling because it was only this

afternoon that we were talking about the same thing.

MR. J. BYRNE: We must have the same train of

thought on a lot of items.

MR. REID: Well, you have to remember where I came

from, okay, it is hard sometimes to blank out what happened to you in eight

years. I always felt the same thing. I always felt that maybe there were people

out there - qualified people that could do it and maybe there are but I found

out today that there are not very many. Outside of the government there are not

very many qualified assessors in this Province. In fact, we have hardly any at

all. I think there are one or two companies in the Province that can do it and

that is the extent of it.

MR. J. BYRNE: A whole new industry.

MR. REID: Yes, and uniformity is the problem of

course. Now, I suggested today and it was only a suggestion, that maybe we

should try to encourage our university or Cabot Institute or somewhere like that

to introduce a registered course.

AN HON. MEMBER: There is a program in (inaudible)

MR. REID: We have one now? We cannot get enough.

Have we graduated anyone there?

MR. PECKHAM: We have graduated about three or four

a year.

MR. REID: Three or four a year and where do they

go?

MR. PECKHAM: We hire them or the city.

MR. J. BYRNE: If that be the case, that we are

taking everything that is produced in the schools here in Newfoundland, would

that not be even more of a reason to put it out to private industry instead of

government hiring them? Why is it necessary for the government to be doing it in

the first place?

MR. REID: Uniformity.

MR. J. BYRNE: That is a pat answer.

MR. REID: (Inaudible).

MR. J. BYRNE: Well you are leading the way -

Newfoundland is leading the way here, are we?

MR. PECKHAM: No, my observation is that every

single province in Canada is now gone to a centralized system. Many of them have

been gone to centralizing in and out and decentralized systems and every single

one are back to a centralized one now. The problems with a decentralized system

in assessment in municipalities within a provincial territory is that, the

question of uniformity is a big one in the courts. An easy example I will take

is, if you had all the Irving service stations scattered around the Province and

each municipality doing their own assessments and they used somewhat different

criteria and different levels in established varying values for what are

comparable kinds of properties with the only difference being the economic

climate in that location then they open themselves to challenges in the court.

Throughout the whole of Canada now, there have been a lot of court cases lost on

that basis. They found that going through the provincial system at least you

maintain that kind of uniformity and you just make adjustments only for the

market in the area itself.

MR. J. BYRNE: With respect to that, we do have

appeal systems to handle that very problem. If there is a person that feels that

he is not being treated fairly he can appeal it, he/she or a business can appeal

it. With respect to uniformity well, throw that out the window, in my mind but I

am not prepared to argue. So it is just a point.

On regional services development control and

monitoring, it says appropriation for the monitoring of zoning and development

regulations. It mentioned the commercial signage along the Provinces highways. I

was watching the news last night and there was a person they were interviewing

with respect to signs and the link to tourism and he was having problems

apparently with respect to certain types of signs that had to be put up by

Transportation or whatever the case may be, is there something we can do along

those lines to alleviate that type of problem?

MR. REID: I think in the next little while you

will see a new signage by-law or act policy introduced to the House of Assembly.

My department as well as the Department of Public Works and Transportation has

been working on a new policy relating to highway signage for the past while and

that particular report is ready now to go to Cabinet.

AN HON. MEMBER: To Cabinet and not the House.

MR. REID: Right on. You hit the nail on the head.

MR. CRANE: I have to go along with Jack Byrne on

one thing and that is the assessments. It does cause a lot of problems to the

communities. We had one community last year which was back about five years and

they jacked the mil rate, then got reassessed and it went up about 30 per cent

and 30 per cent in any area certainly does not do anybody any good. I talked to

you last year Mr. Peckham and the new system was going to be okay to go this

year, so are you up to par with it yet?

MR. PECKHAM: Well, we have every single

municipality in the Province on the new system as of January but we still have

about 245,000 properties that we are using old data for because they have not

been reassessed and we have not converted to new data. It will take us about

another two years to get everybody converted to modern data, but all

communities, as they are done now, are converted at the same time. Once done

they will be real easy to maintain and do afterwards.

MR. CRANE: What about new communities applying for

assessments? How long will they have to wait?

MR. PECKHAM : Well, we are giving a preference to

those at the moment and trying to get them done, those one with capital debt. If

it is a small municipality without capital debt then we give them a lower

priority, but if they are of reasonable size and have some capital debt that

they want to raise taxes for right now we are giving them a priority to do so

they should not have to wait many years. If they are on now we are looking at

trying to do them this year.

MR. CRANE: Many years - I like that one.

Amalgamation in our area is cluing itself up for

awhile but we do have one group to go together and they are all ready to go. The

only complaint I got from any group, for the minister, I got a letter today from

the volunteer fire brigade. I had to smile when I got the letter because I am

sure there are other things they could have complained about. The annual banquet

for the volunteer fire association, their annual banquet that was usually paid

for by you people, has been cancelled. I know you are tight for money and all

that but by the Lord dying, I mean, when you have to hit the fire departments

for one banquet a year, the volunteer department - I was amazed when I read

that, Mr. Minister.

MR. REID: Well, that is not all we pay for.

MR. CRANE: We are looking for fire trucks and

everything, I know.

That was sent in from a volunteer fire brigade who

wanted to ask the minister to reconsider that one.

MR. REID: Mr. Crane, we cut back our funding this

year to the Federation of Municipalities, to the Federation of Administrators,

and to the Provincial Fire Association.

MR. CRANE: Mr. Minister, there is a difference, I

think, in the other two you mentioned. Most of the councillors in any kind of a

sizable town right now are getting some remuneration, most of them are. Maybe

not in your town because you fellows are paying three mils down there but I am

talking about people who want to pay their way, right.

MR. REID: You are talking about the real

(inaudible). In the meantime most of the administrators are getting paid anyway

and most of the town councillors get some remuneration but we do have fire

brigades working all sorts of hours, taking all sorts of chances, and they are

not getting anything. If they go out after a fire and have half a dozen beer

everybody in the community is talking about them, what a bunch of so and so's

they are, and here we are cutting back on one banquet a year. The maximum it

could cost is $4000 or $5000.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: That's only about $1,000, $1,500.

AN HON. MEMBER: He's talking about the whole

Province.

SOME HON. MEMBERS: The whole Province?

MR. CRANE: Yes. No, I'm talking about the annual

one (inaudible).

MR. REID: Mr. Crane, it's not a question of

finding $4,000 or $5,000 for the fire department. Last year the dinner at the

Federation of Municipalities cost... $36,000.

AN HON. MEMBER: For a dinner?

MR. REID: A dinner.

MR. CRANE: Yes, but see, Mr. Minister -

MR. REID: For the Association of Administrators it

was $4,500. For the fire department it was $15,000.

MR. CRANE: Yes, well, okay, $15,000. The other

fellows see, Mr, Minister, the difference in those people, the fellow who's a

councillor in the community, he's not paying for it anyway. He's only taking it

out of the till. But I mean, he's getting his money from the council to go to

the annual meeting. So if he pays twenty-five dollars for a meal it's coming

from the council, ninety-nine times out of 100. But these fire fighters, they

got nothing like that. They're getting nothing. They get no remuneration

whatsoever. Fifteen thousand dollars.

MR. REID: I don't mean to answer your question

with a question, Mr. Crane, but then if that be the case, and appreciation

should be shown to those people, why doesn't the town council show the

appreciation?

MR. CRANE: Now, sir, come on now. There's a lot of

councils like in Mr. Woodford's area that can't even pay their way, and now

you're talking about sending the fire brigade and paying for a banquet. We're

talking about the government now, and $15,000. I'm as much in favour of

restraints as anybody in this room. But now I think we're going outside of

restraints when we're talking about cutting out $15,000 from the Newfoundland

volunteer fire brigade.

AN HON. MEMBER: (Inaudible).

MR. CRANE: Pardon?

AN HON. MEMBER: (Inaudible).

MR. REID: I could suggest to you, Mr. Crane, that

the $22,000 that the provincial government provides the fire fighters in the

Province for administrative support, which is a secretary or whatever, that they

could take that $22,000 and put towards their fire department banquet. Or they

could -

MR. CRANE: I can't even believe I'm hearing, Mr.

Minister, what you're saying.

MR. REID: Or they could - each year the Province

of Newfoundland pays $210,000 for every volunteer fire department in this

Province.

MR. CRANE: For insurance.

MR. REID: For insurance and workers' compensation.

MR. CRANE: Why wouldn't they?

MR. REID: This year -

MR. CRANE: Why wouldn't they?

MR. REID: Where does the responsibility of the

community come in here? Right? It's a volunteer system for the community. Where

does the responsibility from the community come from? Where is it?

MR. CRANE: (Inaudible).

MR. REID: Where is it? I can't agree -

MR. CRANE: If you go and buy a fire truck today -

MR. REID: - i