March 28, 1995                                    GOVERNMENT SERVICES ESTIMATES COMMITTEE


Pursuant to Standing Order 87, Gerald Smith, M.H.A. (Port au Port) substitutes for William Ramsay, M.H.A. (LaPoile).

The Committee met at 9:00 a.m. in the House of Assembly.

MR. CHAIRMAN (D. Gilbert): Order, please!

I would like to welcome the Minister of Municipal and Provincial Affairs and his staff here this morning. I will start of by saying who I am, and then I will ask the members of the Committee who are here to introduce themselves. I will then ask the minister to introduce himself and his staff.

My name is David Gilbert. I am the MHA for Burgeo - Bay d'Espoir, and I am Chairman of this Government Services Committee.

MR. FITZGERALD: My name is Roger Fitzgerald, MHA for Bonavista South, and I am the Vice-Chairman of this committee.

MR. J. BYRNE: I am Jack Byrne, MHA for St. John's East Extern.

MR. SMITH: I am Gerald Smith, MHA for Port au Port.

MR. CRANE: I am John Crane, MHA for Harbour Grace.

MR. CHAIRMAN: Thank you.

Mr. Minister, if you would now introduce your staff. I would say for the benefit of the people who are going to be transcribing this afterwards, when one of your officials is asked to speak, I would ask that they identify themselves. The transcribing staff might know some of us, but to make it easy in the first couple of meetings I am going to ask everybody to introduce themselves when they are speaking so it will make it easier for transcribing. Mr. Minister.

MR. REID: Good morning gentlemen and ladies. I think there is probably a new definition of the term lady after that person I saw on TV last night representing the EU. I know my sister-in-law looked at her and said: Make no wonder men have the impression they do of women - `some' men have the impression they do of `some' women. Anyway, I think both Tobin and the Premier, and everybody representing us, did a very good job yesterday.

Mr. Chairman, let me introduce my staff who are with me. First of all, I have Clarence Randell on my immediate right. He is the Deputy Minister. Then we have Don Peckham, Assistant Deputy Minister, Finance and Planning and Administration. We have Art Colbourne, Deputy Minister of Municipal Support Services. Gary Callahan is the Director of Public Relations, to my extreme right, and Mike Dwyer, Chief Executive Officer of the newly created Government Services Agency, and Felix Croke is Manager of Financial Operations.

What I am going to do this morning is the two sets of Estimates. The first one we are going to do is the main Department of Municipal and Provincial Affairs, and at 10:30 a.m. I have asked Bob Noseworthy and his people from housing to come in. I said 10:30 a.m. - I didn't know what time - maybe we won't even get through this this morning, but sobeit. I will make my staff and myself available at any time if you want us to come back. I am hoping to have a good time here this morning with you gentleman, and we can go through a fair amount in two or three hours.

I will commence by highlighting some of the major items of the Estimates of the Department of Municipal and Provincial Affairs if you don't mind, Mr. Chairman. The total Estimates for the department is $185,048,100; that is the gross expenditure for the next year. There are revenues in both current and capital account totalling some $42,299,400 leaving a total expenditure in this department of $142,748,700. There are 332 permanent positions in the department operating out of all -

MR. CHAIRMAN: Could you speak up, Mr. Minister? Some of the members over there can't hear you.

MR. REID: You can't hear me?

AN HON. MEMBER: You must be getting old.

MR. REID: I must be.

The department is comprised of three main branches, and its delivery service embodies a number of regional and sub-regional offices to ensure the best delivery of services to municipalities in the most efficient manner possible, and I say that with tongue-in-cheek based on, I suppose, the amount of funding that is provided to this department by government each year which sometimes dictates in some areas the level of service that we can provide.

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 sewerage, road construction and reconstruction, and for emergency measures which deals with provincial emergencies and provides emergency planning and training for municipalities. It is also responsible for the Office of the Fire Commissioner which is responsible for fire prevention, suppression and regulation and training throughout the Province.

The first time this year my department has the responsibility for the newly created Government Service Agency. Employees for this branch have been transferred from other departments to mine. The creation of this agency is an important first step in creating an organization which can make government services more available to members of the general public.

The activities of the department are broken out within the following categories; Executive and Support Services: this activity mainly provides for funding for the operation of the executive, administrative, accounting and financial support services for the whole department. Services to Municipalities: this covers engineering services, water and sewage installations, street construction and paving programs, the provision of town planning for municipalities, the assessment services to municipalities with real property tax, developmental control to areas of protected roads inside municipalities and outside on main highways, for example, and last but not least - sometimes I wish it was - the maintenance and operation of the industrial water systems. Funding is also provided to support the Newfoundland and Labrador Federation of Municipalities. We have cut that back somewhat over the last few years but we are still giving something to the tune of $40,000 to the Federation of Municipalities for general operating expenses.

Permitting and Inspection Services; these services which are now provided by many departments of government will be delivered by the Government Service Agency. Mr. Chairman, I would like to give you some details on this because this is something new. First my department has regional offices established in Labrador, in western, central and in the east. Other offices are in the process of being established to meet government service agencies, places like Bonavista, Marystown, Clarenville, Carbonear, Bay Roberts, or wherever John, and Stephenville. So even though there are going to be four regional offices there will be a number of sub-offices around the Province providing whatever services we can provide. Nine locations according to this, we will expand beyond the four. The idea of these offices is to bring delivery of services provided in these areas closer to the communities and groups served by the government. It also provides for better liaison between the department, municipalities and other groups and individuals and will provide for a more timely and meaningful response to these groups. These regional offices will be given a considerable amount of authority and latitude to manage the responsibilities within their jurisdiction.

The Real Property Assessment Division: this division operates under a separate act and has responsibility for the assessment of real property in all municipalities with a real property tax, except St. John's. At present some 207 communities have adopted a real property tax and the division has assessed approximately 165,000 properties throughout the Province. This division must continuously conduct reassessments in these municipalities on a rational basis, a rotation basis. Within this service, to other municipality groupings, is a municipal inspection division. A very small staff of nine inspectors are available on a continuous basis to all municipalities to undertake internal audits when there are financial problems within the municipalities and to offer them advice where they require it for financial planning or to advise them on general municipal procedures.

Gentlemen, take note that it is only nine, with the number of communities that I have in the Province, we just cannot do justice in assisting municipalities around this Province with just nine bodies. We just cannot do it. The service we do provide though does provide those helpful hints, I suppose, and tips to councillors around the Province, and assist with a number of procedures and operations of councils, council meetings, and the day to day operation of councils. As a local government division with a staff of three this group provides generous support to municipal operations, etc., and the department 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 the 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 the individual municipalities. There is also a developmental control section within our urban and rural planning division. The operation portion of this section has been placed under the new government service agency and this ensures proper planning, especially in the rural parts of our Province.

There is a Engineering Service Division: as I said a few minutes ago, they are directly involved with municipal water and sewerage, and road projects within the Province. That group is the one that makes recommendations with regard to the priority list of government under health, environment and all the other things that would rank a particular project high or low.

Assistance and Infrastructure Support: This section provides funding for the water and sewerage programs, road construction and paving, as well as a third party private sector project. There is a considerable amount of work going on throughout the Province this year because of the large amount of funding approved last year. Most of this work is already under contract and will be carried out as soon as the weather permits. I think we are looking at around $15 million to be quite honest about it.

This program is financed jointly by the Government of Canada and the Province, and in some cases the municipality acts as the third partner. In the majority of cases there are only two partners, the feds and the Province, and the Province picks up the share of the community. Provision is also made for special assistance to municipalities. This is provided to enable my department to respond to requests of municipalities for special assistance, those in dire need. They cover such items as special assistance to meet overhead cost administration. Some communities have insufficient revenues generated in the town. This fund is managed by the department's finance committee which reviews all aspects of this kind of assistance and makes recommendations.

A considerable amount of funding is provided for the statutory grants to municipalities. That is the Municipal Operating Grant. Each year the Province gives out $41,500,000.00 in grants and adjustments to municipalities around the Province. Cost-shared funding of $750,000 is provided for environmental improvement projects currently ongoing in the Province. The cost of these projects are cost-shared between the federal, provincial, and municipal governments.

Protection Services: emergency measures planning and training, emergency response, joint emergency preparedness program which is cost-shared with the Government of Canada. We have been doing, in the last couple of years, a number of seminars around the Province that municipalities, councillors, and others have taken part in. I have been speaking to a number of them at their dinners and different things, and I am finding that most communities find these to be quite worthwhile.

The purpose, Mr. Chairman, of the Government Service Agency that I mentioned a few minutes ago is to bring together a number of services and make them more readily available to the general public in more convenient locations. In order to do this, staff from a number of departments have been brought together and the services offered individually by each of these will now be combined and offered in a co-operative manner at unified locations. This should provide a much improved government service where they are located.

Mr. Chairman, this concludes my opening remarks. I will have problems today for sure answering some of your questions. I will pass those types of questions on to my Deputy Minister and he can then ask his people if need be. Not a lot in regard to this year's Budget. My department hasn't lost a lot. I know some of you will ask questions of where we did lose money and some plans that we have for the future. I appreciate the opportunity, Mr. Chairman, of coming here and making my presentation.

MR. CHAIRMAN: Thank you, Mr. Minister. Before I recognize Mr. Fitzgerald I would like to welcome Mr. Walsh, the other member of the government side of the House to this Committee. He has arrived.

Before we start I think we should clear the ground rules. I notice that Mr. Carter has come in. In those committee meetings as I understand it the members of the Committee have the right to speak, and then if any other member comes in it is by leave of the Committee. I would like to get that established. Is that the understanding that we have?... it mightn't rear its ugly head today but some other day it might, so let's get it cleared up now. That is the understanding.

AN HON. MEMBER: What do you mean by leave of the Committee, Chairman?

MR. CHAIRMAN: I will recognize the members of the Committee, but if you speak it is by leave.

AN HON. MEMBER: Unless he is representing another member.

MR. CHAIRMAN: Unless he is representing another member.

MR. WALSH: Mr. Chairman, for example, if I wanted to give my five minutes to a member, or two minutes.

MR. CHAIRMAN: You can do that.

MR. WALSH: Okay.

MR. CHAIRMAN: That is the way it has been done in the past so that if you say: I was going to ask a question but if Mr. Carter wants to ask one he can have it.

As long as we understand that, I will now recognize Mr. Fitzgerald. He has ten minutes for his opening remarks or he can question the minister back and forth for the ten minutes.

MR. FITZGERALD: Thank you, Mr. Chairman. Mr. Minister, the offices that you referred to, would they be the same offices that are referred to in the 1995 Budget where it states that five government service centres will be established across the Province? Are those the offices that you were referring to when you named the possible locations of some of those sites?

MR. REID: Yes they are.

MR. FITZGERALD: They are. So you don't know yet where those offices will be located, it is not...?

MR. REID: No, we are not 100 per cent sure. What we've done, Mr. Chairman, is we are concentrating right now on the West Coast, Labrador, Central and the East Coast, getting those offices opened. When we get the regional offices open, then we are going to branch out and go. We are not 100 per cent. I'm not sure in Conception Bay North, for example, where the district office will go: whether it will be Bay Roberts, Carbonear or Whitbourne or anywhere else. I'm not sure at this particular point in time. The five references in the Estimates are the five principal ones: St. John's, Clarenville, Gander, Corner Brook and Goose Bay.

MR. FITZGERALD: That would certainly be a positive move, because I know many districts or many councils in my district, with the problems today of trying to balance the budget, find it very difficult in order for them to travel to St. John's every time they want to meet with the minister or his officials. It is always not the ideal thing I suppose for them to expect the minister to travel out there every time there is a meeting or a problem.

In the Estimates on page 271 I notice that Community Water Services, there has been just about $500,000 taken out of that. When I see that I read into that that those are places which are local service districts that would ordinarily apply for water services, and now that is going to be cut back pretty well in half of what it was in other years.

MR. REID: That is correct. Yes.

MR. FITZGERALD: That is certainly going to have a negative impact on a lot of areas, especially in my district as well. Because a lot of those communities I think have applied already and were looking forward in a positive way to seeing something brought forward this year.

Mr. Minister, I wonder what would entice somebody today to want to come out and offer themselves to be a councillor in a rural Newfoundland community? I am not talking about the Ganders of the world, or the Mount Pearls, but places like Plate Cove East and Musgrave Town, and Port Blandford and those places. At one time you would go and offer yourself to become a councillor, you would go to government and there would be funding there for you, and you would have some input into giving direction where that money would be spent. Now it seems that most of this has disappeared, the funding has pretty well dried up completely. In order to go and borrow money, you have to go to Municipal Affairs. In order to balance a budget you have to go to Municipal Affairs to get direction and to find out what you can or cannot do. I fear that in the future we might be finding a problem in getting good people to offer themselves to serve on council, because I am not sure that they perform any great function any more.

MR. REID: Well, I don't tend to agree with you on that particular question because, regardless of how bad it gets in the community as it relates to government funding or services provided, if you are living in the community there is still a certain amount of community spirit that you have and, regardless of how bad it gets, you will still need volunteer people there to keep the community intact. If everyone took the attitude of: What's the purpose in offering my services to council, or volunteering my services for anything - a community wouldn't survive. The heart and soul of any community is, especially in rural Newfoundland, I suppose, centred around the people who volunteer on a regular basis to keep that community up and running and surviving.

I understand what you are saying, and I sympathize somewhat with the plight of some communities around, but I don't think it is quite as bad as what we sometimes perceive it to be. Rural Newfoundland is going through a rough period, I guess, because of the downturn in the fishery and a number of other reasons, but we as a Province are going through a rough time as well. We are being hit continuously with the federal government downsizing, I suppose, and not being able to have the ability to collect the taxes we need to collect, and since 1949 I think consecutive governments, both Liberal and Conservative, have kept pouring monies and monies and monies into communities, and we have created a condition in communities - in some communities - where councils and people think: Oh, don't worry about it, the government is going to come and bail us out. I don't have to say this to you; you know that we are not in a position any longer to be able to do that, to keep driving the Province in the hole further and further.

With that said, why can't communities survive? I think they will. They will probably have to survive with a little less than what they are used to getting from the provincial and federal governments, but they will survive.

Down in your district, for example, there is no reason to think that Bonavista or Catalina, or any of those communities, will die because the provincial government has to stop or slow down the influx of money to your communities. So I agree, but then I don't think we can give up and say, as people living in communities: Well, it's a waste of time to be doing anything. If you do that, then that is when your community starts to die.

MR. FITZGERALD: I will use Plate Cove West as an example, I suppose, in my district. I am sure that it can be related to a lot of communities across Newfoundland and Labrador. Here is a small community with about probably 220 people. Somewhere government, in their wisdom in the past, convinced this community to take over the local road. It is a dead end road off route 235, leading down through this one community only. The road has gotten so bad there now that it is almost impossible to drive over the thing, where it was paved and there has been no maintenance done on it, and there have been some ditches cut across the road to look after somebody putting in a water line or a sewer line. It is absolutely ridiculous driving down there.

Mr. Minister, I brought this forward to your attention first when I got elected back a couple of years ago. At that time I think your officials stated to me that they were looking at some form of regional government for the area and they weren't about to go back and take back things that somebody else had already assumed responsibility for. I don't know for the life of me how some form of regional government can work in that particular area, because all communities find themselves in exactly the same plight. There are a few people there with a lot of needs and not a lot of money.

I'm wondering if you as minister would take a second look at that and have a look at this particular road. It is about three kilometres in length and it is totally ridiculous the condition that particular road is in. The only way that it can be repaired is if you sir would do it through your department.

MR. REID: It is a road that was taken over by Plate Cove, was it, from the Department of Works, Services and Transportation?

MR. FITZGERALD: That is right. A few years ago, as you know, I think the communities at that time were getting paid $2,000 per mile or per kilometre for maintenance and upkeep of roads. I suppose at that time those people looked at it - whoever was on council at the time - and for all intents and purposes now I think the council is probably pretty well non-functional, in that most of the people who were on council have moved away. This particular road there now is pretty well impassable. The only way that it can be solved, the only solution to it, is for government to take a look at it and take it over. I'm not talking about local roads or local lanes leading to other people's houses. I'm talking about the main road through the community.

MR. REID: We will look at it again for you, Roger. That is all I can say for now.

MR. FITZGERALD: Okay. The sewerage treatment plant in Bonavista. There has been a study I think just about completed on this particular sewerage treatment plant. It was a $45,000 study. It was put forward by Municipal and Provincial Affairs. The study is just about complete. I think the report might be coming back within the next couple of weeks. I'm wondering if there is money set aside - that I know hasn't been spelled out - to look at the corrections that might be suggested in this report.

MR. REID: Art, can you make a comment on that? Do we have the report on Bonavista? Art Colbourne.

MR. COLBOURNE: We have a report with the Department of Environment, and our people are looking at that.

MR. CHAIRMAN: Mr. Fitzgerald's time has expired. I have Carter by leave, then I have Byrne, then I have Smith. So do you want to let Mr. Carter go?

AN HON. MEMBER: I will pass for the time being.

MR. CHAIRMAN: Okay, Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. I have a number of specific questions with respect to the Estimates and I have a number of general questions with respect to the Auditor General's report. Before I get into that there are a couple of comments I would like to make on something that Roger brought up with respect to the rural towns.

I agree, and I've been maintaining this for a number of years now, that the rural towns have been hit too hard, and in particular been hit too hard by the budgets that this government has brought down in the past number of years. Especially with respect to the cutbacks in the road grants and the municipal operating grants and that type of thing. I believe the rural towns are fading away and that this Budget is helping that along.

You talked about volunteers. I was a mayor of a local town before I got involved in provincial politics and I had my mind made up. It was probably one of the better run towns or financially sound towns in the Province. I had my mind made up that I wouldn't be running again as a volunteer for a municipality because of the hardships that were being brought on it by the cutbacks that the towns were getting. As far as I'm concerned, what is coming down the tubes in this Province, and the sooner the people in the rural communities realize it, is that we are being forced into centralization by the economics of the budgets that have been brought down, and the people are going to be told in due course, as far as I am concerned: Yes, you certainly may live in the rural towns, you know, smaller towns, 100 miles, 200 miles away from centralized areas, certainly you can live there, but there won't be any services. You can live there as in the days prior to 1949.

That is what I feel with respect to what is coming down the tubes for the rural communities in this Province, and there are a lot of factors, I know. It is the world economics, the country itself, the federal government cutbacks, it is all playing a factor. But I think the people should be at least warned or forewarned or something of what is coming down the tubes in this Province. I'm not going to make any comments on that because I going to get into some specific questions now with respect to the Budget.

MR. REID: You are probably right. I said it then when I was mayor of Carbonear, but you have to remember it started in the early 'eighties. You were around in the early 'eighties, and do you remember the racket that we had at the Federation of Municipalities when Mr. Peckford and Mrs. what's-her-name from Gander, she was the minister then, cut the five cents off the fifty cents? It started then. It has been going on ever since. I agree. Yes, it has been going on ever since.

MR. J. BYRNE: Getting worse every year.

MR. REID: I don't know about getting worse, if you are saying it is getting worse, I don't know how you could say in the last three or four years that this department has been getting worse, because we haven't lost any great amount of money. You take $1 million -

MR. J. BYRNE: Yes, but the municipalities have lost the money.

MR. REID: Where have they lost it? The MOG hasn't been touched again this year. It is the same as what it was last year, same as the year before.

MR. J. BYRNE: What was it prior to say my becoming mayor in 1986?

MR. REID: (Inaudible) faintest idea. Because it wasn't based on a cap then either.

MR. J. BYRNE: Major cuts to the municipalities.

MR. REID: There has been $7 million taken out of it in the last four years.

MR. J. BYRNE: There have been major cuts in the municipalities. The road component itself will tell you. The towns are finding it very hard. I was driving through a few communities not long ago out in Trinity Bay and I was saying to myself: What is the future for these people in these communities?

MR. REID: But just let me answer you for a second, and I will be very brief, Mr. Chairman. You are right in a certain respect. But you do have to agree that there are rural communities in Newfoundland out there right now that haven't been paying even close their way in the past twenty years. I had a community come in to see me just last week from the northwest coast. I asked the mayor what his mil rate was and he couldn't tell me. Do you know what the mil rate in that community was? One of the most affluent communities on the northwest coast of Newfoundland. Three mils. He got on with exactly the same thing that you got on with.

What do I do other than swallow when I hear things like that? That is all you can do. What can you do about it? People living in rural Newfoundland - I agree with you, you've got a point.

MR. J. BYRNE: Where are they getting the money to pay the 6 mils or 10 mils?

MR. REID: I will give you an example. Bonavista was on the radio on Friday lambasting us about our Budget.

AN HON. MEMBER: Yes. So they should.

MR. REID: I wish the people of Bonavista could see Bonavista's budget, and could look at in comparison to other communities in the area what Bonavista was like. Do you follow what I'm saying?

MR. J. BYRNE: Yes, but -

MR. REID: So I agree with you to a certain extent, but I've said it right from Day One, that if they are going to survive - you used the word - then they are going to have to become more responsible.

MR. J. BYRNE: But you have to realize too, as minister and as a department, that they can get to the point of diminishing returns, which we've gone beyond now. You've got the small towns out around this Province that are people, and I said this five or six, seven years ago, that once the main industry in that town is gone, what is going to happen if they keep getting hit with the cutbacks from the provincial government? Where are they getting the money? You might ask somebody to up their mil rate from 3 mils to 6 mils or up to 9 mils, but the people are not going to be able to pay it. They may be able to pay 3 mils, but they are certainly not going to be able to pay 6 mils or 9 mil. So you get to the point of diminishing returns. It is foolishness to increase it. It depends too on the service they are getting.

MR. REID: (Inaudible).

MR. J. BYRNE: Yes, the towns over the years were getting services. Down my way, when I campaigned and ran for council, I campaigned on no water and sewer in that town because of the cost involved. I had enough sense to know that. A lot of towns should have never had it in the first place, granted, and they can't pay back their debt.

MR. WALSH: How many of them are after cancelling their cable TV since, I wonder?

MR. J. BYRNE: I can't answer that. That is something I never looked into.

AN HON. MEMBER: (Inaudible).

MR. J. BYRNE: That is pushing it, $3 or $4 dollars a month as compared to...

AN HON. MEMBER: Where are you getting cable for $3 or $4?

MR. J. BYRNE: Well, $10 then, big deal.

MR. WALSH: It's not. It's about $40 or $50 a month for cable.

MR. CHAIRMAN: Mr. Walsh will have a chance to speak later.

MR. J. BYRNE: Thank you, Mr. Chairman.

I would like to know what town you are living in, paying $40 or $50 a month for cable. I have cable, and I am certainly not paying $40 or $50 a month, and I have everything available. Anyway, we could go on all day on this, I suppose, because it only boils down to people's views.

In the Estimates, page 265, Executive and Support Services, the minister's office, you have transportation and communications. You budgeted $52,900 and spent $82,900 and have $52,900 this year. Why would you spend $30,000 more this past year than you had budgeted, and only budget the same as you budgeted last year?

MR. REID: Well, I am expecting that it will probably be higher than the $52,000 this year as well, with the travelling that I have done in the past year, and the beating around. I will give you an example of the cost. I believe it cost me almost $2,000 to take Harvey Hodder and myself and go to a funeral out in Port aux Basques earlier the year, if you remember that. I have made it a point to go to Labrador, for example, the southern coast one year, and the northern coast the next year, because of the complaints of people up there that they never see ministers and this sort of thing. I have done, according to what my staff tell me and Felix tells me, more travelling to municipalities, and had more meetings in municipalities, than most ministers have done in the past.

MR. J. BYRNE: I am not questioning the increase, what was budgeted versus what was spent. I am questioning why, if you spent that much last year, would you not budget the $82,900 again this year?

MR. REID: We did, and Treasury Board came back and said: No, you are only going to spend $52,000 this year.

MR. J. BYRNE: Is that how the Budget was balanced?

MR. REID: That is the simple answer to it, so I guess I am going to be restricted in my travelling next year.

MR. J. BYRNE: You were supposed to restrict it last year, or whatever.

Again, in purchased services, you had budgeted $3,700 and had spent $15,700 and you are back to $3,700 again. Back to trying to balance the Budget, we don't have a balanced Budget. We are not getting real figures in the Budget then, are we?

MR. REID: Well, I don't know if you are getting real figures or not, but -

MR. J. BYRNE: We are not getting realistic figures.

MR. REID: One reflects the other one. With increase in travel, automatically then your other expenses will increase, and that is why there was an increase there in that list.

I really don't know. I am going to have to try to stay as close to it as I possibly can. You understand. I get invitations from all over the Province, and how can you say to the Humber Joint Councils in Corner Brook, if they are meeting next weekend, no, boy, you can't go because you can't afford it.

MR. J. BYRNE: You are missing the intent of my question. The question is, you are budgeting a certain amount, spending almost, I won't say double, but a fair amount over, and this year you are budgeting the same amount as the previous year, and you are planning on doing the same travel. What I am saying, the figures we have in the Budget, if this is prevalent throughout all government departments, the Budget that we have, the final figures are not based on realistic figures.

MR. REID: No, you look at your total budget, you look at your total cost. If I, for example, as a minister, go above the $3,700 this year for that particular item, then they have to find it in my budget, in some other area, to transfer. At the end of the day, the bottom line of the department has to be what it shows, and it will show unless some emergency comes up, and then we have to come back to the House for Interim Supply or extra money to put into it. So the bottom line has to be what the total net expenditure is.

MR. J. BYRNE: On page 266, Administrative Support, section 02, Employee Benefits, you had budgeted $95,100. You revised it to, or actually what was spent, I suppose, was $63,100 and it is back up to $78,600. Now, it is just the reverse happening. Why would you be doing that?

MR. REID: Is that under Executive Support?

MR. J. BYRNE: Under Executive Support Services, page 266.

MR. REID: Felix.

MR. CROKE: Workers compensation.

MR. REID: Workers compensation?

AN HON. MEMBER: Reduction.

MR. REID: Workers compensation reduction.

MR. J. BYRNE: That is claims under workers compensation?

AN HON. MEMBER: (Inaudible).

MR. J. BYRNE: Alright.

MR. CHAIRMAN: I will recognize Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman.

There is just one area I wanted to speak to briefly, Mr. Minister, and it was raised by the Vice-Chairman in his opening remarks, and that is in regard to the community water services. Perhaps the biggest concern in my district right now is with regard to services provided by local service districts, and these are primarily trying to provide or maintain community water supplies.

In the short time that I have been in this position, that has occupied a tremendous amount of my time. I think right now I have something like six or seven local service districts that are vying for some assistance in this area and, as was pointed out earlier in the budget this year, we are looking at a major reduction, which means that obviously there is very little that is going to be coming to these communities this year. I am just wondering, in terms of the department and its thinking, where do we go and what do we do with these local service districts?

The reality is that they do exist. They are not going to disappear tomorrow, regardless of the situation with the rural economy, and the concerns are serious. I visit these communities, and in recent years, most of them are now on their own sewer systems on land, which means all of a sudden the shallow wells that they have been using for years are no longer suitable. Some of the communities in my district, it is just not possible to get water from the traditional shallow wells. It is a real concern.

I am wondering, in terms of the department's thinking, where are we going to be going with these... I know, from talking to you before, it is a concern of the department, but where are we going to be going with regard to these local service districts?

MR. REID: Let's hear a bureaucratic point of view on this, Gerald. I want Clarence to answer you on that.

MR. CHAIRMAN: Mr. Randell.

MR. RANDELL: Thank you, Mr. Chairman.

Certainly we do not perceive and we do not support a concept there are going to be major reductions, but I think the reality of the day is what causes these situations to evolve. I think also you will find that there is a great deal of concern expressed by municipalities, of which there are a much greater number than local service districts, over the lack of funding, which has already been enunciated here, available to municipalities, for which they will pay, and their concerns expressed relate largely to the fact that with local service district committees, these constitute largely and directly plans.

I think the major concern, the major issue here, is what does the future hold for local service districts and local service district committees? The area which has now currently been explored by the department, particularly with the minister, is the concept of regional councils. If you familiarize yourself with the Municipalities Act, local service districts and local service district committees are supposedly creatures of regional councils ultimately. They act in an advisory capacity. The regional council would be the body responsible to generate a) the revenues, and b) put forward the proposals to government to fund water and sewer and other basic necessities in local service districts.

I think the key to it, which is what the municipalities have expressed concern with, is that under that scenario then local services districts, or I should say, people living within these local service districts, would contribute on a comparable base as municipalities do with the provision of these services. I don't think anyone would argue the fact that under the current set-up $450,000 is certainly not adequate in terms of funding required for local service districts, but I feel the same argument would definitely hold water in relationship to capital funding for municipalities as well, in view of the demands.

MR. SMITH: You say the concept of the local service districts is developed and was envisioned in terms of the larger regional council. Where is the department in terms of its thinking with regards to regional councils?

MR. RANDELL: Maybe you should comment on that, minister.

MR. REID: We've done our assessment of Fogo, we have our reports back on Fogo Island. There is a paper in the system right now that will ultimately go to Cabinet and ultimately I suppose show up in the House of Assembly. We are hoping to have a regional council set up in Fogo Island - I think we are looking at a projected date of June 1 for the first election out there, I believe. So by June 1. We have a committee working almost on a daily basis - in fact, before I came over this morning we had a meeting strictly on the regional concept. We are looking at areas of the Province now that we can concentrate on.

One of the recommendations by the way from the Federation of Municipalities and a number of towns that have been advising me on the regional concept is that: If we are going to do it, Reid, make sure that you get out as the minister into rural Newfoundland and in Newfoundland and talk to councils in specific areas. Talking about spending money again. Talk to councils in specific areas and see how they can feel so they can have an input into the development of a regional concept.

Honestly? We are striving as a department to have the regional concept introduced in as many areas as possible. There are areas we can't do it. But as many areas as possible within two years. Hopefully by the end of this year there will be a number of other areas besides Fogo that will be taken in under a regional council.

MR. SMITH: So under this arrangement - what happens to these communities in isolated areas? They don't lend themselves to this sort of arrangement.

MR. REID: They will be represented on the regional council and they will be basically run then on a regional basis rather than on an individual basis. They will maintain their own autonomy and their own communities and their names and some of the services that they have, but generally the services provided to local service districts, like water and sewerage, snow clearing, road construction, anything that goes on in the area will be controlled then by the regional body. I'm not going to hide this from you. The regional body will then have the right to tax those people living in the local service districts for the services being provided to them. They will have to pay.

MR. SMITH: In terms of, Mr. Minister, your discussions to date, how well received is this concept?

MR. REID: On Fogo Island - and I will be particular about that one - there are two local service communities on Fogo Island, and they weren't too fussy about it. They've since, as far as I know, come on side. They are going to elect now a representative to sit on the regional council for Fogo Island and I think it will work out.

Going around the Province in the past year, two years, most incorporated municipalities will say to you: It's time.

You see, the problem - and Clarence referred to it a few minutes ago - that somebody living in an incorporated community, paying eight or ten or twelve mil rate water and sewage taxes and so on, the same question you asked a few minutes ago, is that those local service districts and unincorporated communities are looked upon as communities getting everything for nothing. Because the Department of Transportation provides the snow clearing for them at no cost, in comparison; they have garbage collection; they have, in some cases, street lights, and the government provides recreation funds for them. So there is a little bit of a conflict between one community and another, one that is incorporated or not. So, overall, the Federation of Municipalities and the incorporated communities of the Province think that the regional concept is an excellent idea. I can't say that for the local service districts.

Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Reid.

If the committee would permit me a question to the minister before I recognize Mr. Carter, I was interested in the question that Mr. Smith asked concerning local service districts. I have an anomaly, I feel, in the district I represent, in that, in the case of communities like Grey River, François and McCallum, I don't know how you could put them under a regional board. They are separated twenty miles apart down the coast. Each of them will be maintained as separate entities. I wonder, what is the opinion of the department as to how they plan to handle those communities in the future?

MR. REID: David, that is not the only area. You take the Labrador Coast, for example; there is no way that we are going to be able to introduce a regional concept to a number of areas, especially on the South Coast. There are areas of the Northeast Coast where it is going to be useless for us to do it. We have identified those areas, and we could end up with as much as between 80 per cent and 90 per cent of all the communities under the regional concept, but there will be a large number of communities like the ones you referred to that will have to still make it on their own.

MR. CHAIRMAN: And there will be funding provided through the department for those on an individual basis; is that my understanding?

MR. REID: Oh, yes, definitely. We will still have our water and sewerage projects, and other things made available to those communities; of course, we will.

MR. CHAIRMAN: Thank you, Sir.

Mr. Carter.

MR. CARTER: I want to raise the same issue that Mr. Smith raised -in fact, that is why I am here this morning - because my district is probably unique, in that about 84 per cent of the communities in Twillingate district are unincorporated. We have four incorporated towns, Twillingate, Crow Head, Summerford and Cottlesville, and in recent years these four communities have done very well. Mind you, there is still a lot that needs to be done, but they are catching up.

The problem that I have, that I find it difficult to rationalize, notwithstanding the defence offered by the minister, or at least the suggestion, that maybe some of these communities are getting a lot for nothing, or words to that effect, but I find it difficult to rationalize the reduction this year in, I think it is called the Community Services vote.

Now, I know there is some revamping that needs to be done. I think the whole system has a lot of weaknesses in it, and I think the government, at some point in time, is going to have to address some of the problems, but the fact remains, with respect to people living in those communities where we don't have any kind of tax base, or any organized municipal government, these people still need help. I can name probably a dozen communities in my own district where I would have to think twice before I would drink some of the water that is being supplied in those communities, and certainly the sewer disposal facilities leave a lot to be desired also.

Quite frankly, I am disappointed that the vote is reduced almost in half, gone from $900,000 down to $500,000, and it seems to me if we are going to initiate - call it what you want - a regional concept or whatever, I think we should have maintained the vote at its status from previous years and then hopefully, before too long, have a proper system in place.

I'm wondering what hope we can offer people living in those communities. I have to go my district periodically and I have to talk to local service district councils and citizens there, and invariably the question of the inadequacy of their water and sewer services is raised. I quite frankly don't know what to tell them. I know they are not paying very much in taxes. In fact, I suppose in some communities they are not paying anything. But I wonder whose fault that is. Should we not take a look at it and - force is not the word, maybe, but certainly point out the advantages in becoming incorporated and hope that maybe they will see the advantages and offer to become part of an organized municipal government. I'm wondering can the minister tell me, what hope is there for people living in those small communities. Is there something in the wind? Is there a plan now being formulated that maybe we can tell them about, at least give them some hope.

MR. REID: The only plan that I know of, Walter, to be quite honest about it, is the regionalization concept. That plan, in itself, is trying to, I suppose, through efficiencies, make it as easy as possible on communities, both incorporated and non-incorporated, in the Province. The argument that the local service districts will suffer doesn't hold weight with me, because as government continue to reduce funding to municipalities overall then all communities, I suppose, not only local service districts, will get less and less.

I am not sure at this point in time that it is as bad out there as some people say it is in rural Newfoundland. I can make available to you a number of studies that have been done in the Province, i.e., fisheries downturn as it relates to the economy in a community, and our specialists and people can't find a relation, can't find a correlation, between downturn in the fishery and problems with municipalities with regard to their tax collections and taxes collected and so on.

There were communities in your district, Walter, that haven't received one cent in local service district money in years. You have always got a share of it, I suppose, over the years but there had to be areas where you didn't spend any money. What are those people doing? What are they surviving on?

MR. CARTER: These are the people in whose behalf I speak this morning. They haven't received any; that is not to say they haven't applied for money and funding.

MR. REID: No, that's right.

MR. CARTER: Therein lies the problem. The needs are so great out there that - last year in my district I did very well, and I'm grateful for it. I believe we got close to $100,000 out of a $1 million budget, which is not bad, but that is only scratching the surface. If we are going to encourage outport Newfoundland to remain viable, then we have to find some way to help those people. The larger centres are reasonably well looked after. But there is so much catching up to be done in the small have-not areas that I dread to think what is going to happen and where the money - for example, Virgin Arm, Carter's Cove, in my own district, as Clarence knows. You are talking $3 million or $4 million there for a water system. I believe the study that was conducted by your department indicated a fantastically large amount of money needed. I quite frankly don't know where that is going to come from. I don't know how we can even justify spending that kind of money.

The question - my time is probably running short. I'm wondering, Mr. Minister, if we are not imposing cadillac systems on communities. I will give you one example, Crow Head, in my own district. Because of the aggressiveness of the late former Mayor of the town, Walter Elliott, Crow Head had a water and sewer system installed - how long ago, Clarence, twenty years ago? - at a very minimal cost, done through a lot of make-work and LIP grants, and little federal subsidies and provincial subsidies, but I say to you, with all of the regulations that are being imposed, and requirements and so on, Crow Head could never afford that system today, and I suspect that if an inspection were done, from a technical point of view, the system they have there now should not be working, probably, because it was done without any professional supervision, as far as I know, maybe an engineering technician, but I am wondering if we are not imposing too rigid a restriction, cadillac systems, on some of the smaller communities, Herring Neck, in my own district, Carter's Cove, and I can name twenty communities in my own district. I don't think they need the expensive and costly engineering plans and supervision, and all of that. There is a lot of ingenuity out there in rural Newfoundland that is not being tapped. In the case of Crow Head, it was tapped and put to very good advantage, and the people in Crow Head today are benefiting from it.

I guess the question I am asking, in a roundabout way, is this: Are we maybe imposing too rigid requirements on some of those smaller communities where water and sewer systems are badly needed?

MR. REID: Well, if we are, Walter, it comes down to the finances again. If we are imposing too rigid requirements, it is a question of the vote that government jointly sits around a table and decides to give.

You know, Walter, that when I went to do my estimates in Cabinet, I fought to hold on to the local service district money and a number of other things, but it comes down to whether or not we can afford to keep going. We have to save. You know; you sat in Cabinet for five years, and every year you were there your budget was cut, and every year I have been there, I have been cut as well. Where do you go?

You said something earlier that I wanted to pick you up on. Are you suggesting that in the case of the wealthier towns in the Province, we should reduce capital or monies to those towns and give it to the poorer ones?

MR. CARTER: I don't get your question.

MR. REID: You said earlier that there are a number of communities in the Province that can afford, the St. John's of the world, for example.

MR. CARTER: No, I don't recall having said that.

MR. REID: Well, you did. You made a comment about maybe we are giving larger towns -

AN HON. MEMBER: (Inaudible).

MR. CARTER: May I just give one more little example - this is a good one - to make my point.

MR. CHAIRMAN: By leave.

MR. CARTER: Am I permitted?

Tizzard's Harbour has a water and sewer system, a good one. Last year, they rebuilt the road, and the engineers from the road building department said, `You are going to have to relocate your water line because we are going to disrupt it.' Your department gave them an estimate, had an engineering plan done, or whatever, and they said, `It is going to cost $40,000 to divert that water pipe, and we don't have the money, so good luck to you.'

The chairman of the committee there took the initiative to talk to a contractor - $40,000 plus the cost of the pipe. That contractor relocated that pipe and provided the pipe for $4,200. That is 10 per cent of what... Now, this is what I mean by cadillac. I can't seem to understand why that would have happened, quite frankly. I don't expect you to have the answer, but certainly it is something worth looking into, and I think your Gander officer can probably give you some information on it.

MR. REID: It would be interesting to see the answer, Walter, to tell you the truth.

MR. CARTER: It would be. I would be interested. In fact, I -

MR. CHAIRMAN: (Inaudible).

MR. CARTER: Well, I think there is an answer required, because it is difficult to rationalize that.

MR. CHAIRMAN: I now recognize Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Just to get back and, I suppose, continue on the thoughts of regional governments. Mr. Minister, do you feel that the regional government concept is going to save us money or do you think it will work much better? Why the idea of regional government? It certainly can't be a positive thing in every area of the Province. You have heard several stories here this morning of areas where we feel it won't work, and I'm certain it won't work in a lot of areas in the district I represent. Because if the people don't have the money to pay for the services they don't have the money. Whether you put a regional government there or whether you continue to cater to the local service districts or the local town councils, it doesn't make any difference, the money is not there.

I don't see why we are always waiting for this new form of government to take place before we can go out and do something. Or at least let's tell the people the truth and say: There are no such things as artesian wells anymore, there is no such thing as a filter for your water system, unless you pay for it. Regional government is not an option in a lot of the areas.

MR. REID: Not an option in a lot of the areas but certainly down in your area - I can see a regional council down in that area. The regional council concept is not to provide extra money, it is to use the money available there now, what is being collected, and use it in a wiser way. For example, out in our area - John Efford's, John Crane's and mine - there are thirteen fire departments in less than twenty miles - thirteen fire departments. Each one of them has as many as - Harbour Grace, Carbonear and Bay Roberts, I think, have four trucks. In fact, I know Carbonear has six trucks.

MR. CRANE: Harbour Grace has no truck.

MR. REID: Well, Harbour Grace has a building out there full of something. The idea is, can a regional council help save money in an area, like coming together with a fire department? I will give you another example. The Conception Bay North incinerator is an incinerator located between Harbour Grace and Carbonear where all the communities from Salmon Cove to Brigus bring their garbage. That is working. It is a co-operative area and everybody pays on a per capita basis for the area.

Sand and salt: We did a survey out there last year, and there are four distributors of sand and salt in Conception Bay - four different distributors of sand and salt, four different prices for sand and salt. Couldn't the communities of Conception Bay North come together and tender on a total package and possibly get a reduction in the cost? I'm talking about saving money which in the end then could go towards providing services in some of the local service districts, with the few dollars maybe that the government will have to contribute to it as well. I'm not talking about saving money for the government, I'm talking about saving money within the municipalities, so that people can stay in rural Newfoundland.

I will be honest and say this to you: If we don't try, as a government, to do something like that, what would you suggest we do? What do you suggest we do? Go out and tell these people what you said, that: I'm sorry, we are going to cut you off, we are not going to clear your roads anymore? We aren't going to provide ferry service to you? This government have no intention of doing that, and you know they don't. Rural Newfoundland -

MR. FITZGERALD: That is what you have already done in places.

MR. REID: No, we haven't done it -

MR. FITZGERALD: Yes you have.

MR. REID: We haven't done it any more than any government has ever done it in the Province. Based on the amount of money that we have to survive with on a yearly basis, we do the best we possibly can. I don't think for one minute that rural Newfoundland is going to go. In fact, I think if rural Newfoundland suffers in any way the rest of the Province will suffer. St. John's is maintained on a daily basis by people coming into this city from around the bay, and don't tell me it isn't because I know it is. It is the bay that is going to keep the rest of the Province alive. I don't accept that.

MR. FITZGERALD: I don't know where the money is going to come from in the lower part of the Bonavista Peninsula. Because you can look at both of the districts there, and every one of the communities today are taking away street lights, cutting back on services, no road clearing, no road construction. There is no money there to do anything with. Whether you put a form of regional government there or you maintain them as they are, there still has to be an infusion of government money. The money is not going to appear because all of a sudden there is a form of regional government. The money has to come from government in order to put the dollars there to create things and to upgrade some of the services they have.

Getting back to what I think was your question to Mr. Carter, when you asked him if he would go along with the idea or if he was proposing that some of the larger centres might very well be exempt from capital funding from government, and I agree with that. Why should government - there goes the avalanche - Mr. Chairman. I don't understand why government have to go and direct large amounts of capital grants to the City of St. John's if they can afford to maintain their own infrastructure. Why can't it be spent in rural areas? And if you don't agree with that concept, then I don't see how we can expect the Government of Canada to be bringing forward their transfer payments to us. It reflects and ciphons all the way down the tube.

The cadillac water and sewer systems referred to earlier have certainly got us into trouble. Down in my district (inaudible) and Plate Cove East, in excess of $1 million was spent there on a water supply, a cadillac water supply for which they can't even afford to buy chlorine. As things happen there, they go out and they disconnect it; somebody has to go down there in the morning now and turn on the pump and fill up the tank until it starts running over and they have to go back again in the evening when that happens and turn it off. There are so many leaks in the lines that they can't maintain pressure and can only use it for certain hours of the day, that's because there was a cadillac water system put in there where, probably two or three artesian wells might have provided them with an ample supply of water and a much better supply than they have today.

Mr. Minister, also, you talked about the mil rate, somebody coming in and you were embarrassed by the three mils that they were being charged. Well, that might very well be a reflection of the services they have. I heard the former Minister of Environment get up here when she was addressing the Throne Speech, and talk about the great need in her district, and the great need was sidewalks and street lights! My god, I wish she would come down to rural Newfoundland and see some of the needs that are out there.

You know, people are not opening their minds or are not getting out and seeing the need that is out there and I think that is what we are lacking here today. And I suppose the biggest change that has come about from rural areas, Mr. Minister, is the change in the formula and the way that government get back their money from the infrastructure that was put forward in communities.

At one time - and you can't blame municipalities for doing it - at one time they would go after government money and all they would be expected to pay, I think, was 20 per cent of their gross revenue, and then all of a sudden this formula was imposed on them and they find themselves in dire straits and in order to come forward and be considered for infrastructure money, now, you, Sir, have said you must pay this over a four-year period, and I am wondering if that can't be looked at again? I know there may not be a lot of money left there, but you must also realize that some of those communities just can't pay the money they owe for the last twenty or twenty-five years in four years.

MR. REID: They are happy enough to take it though, aren't they?

MR. FITZGERALD: I beg your pardon?

MR. REID: They were happy enough to take it.

MR. FITZGERALD: And you can't blame them for that, because at that time they could afford to pay it because it was only - well, you can't blame them, the money was pushed at them and they were told: `Here is the money for you, you are only expected to pay back 20 per cent of your gross revenue,' and I would have taken it as well.

MR. REID: Where do you stop? Where do you stop giving it to them?

MR. FITZGERALD: Well, what you are saying is that maybe you should have stopped giving them -

MR. REID: When does a government say to a community: Boys, you are up to your necks in debt and we can't give you any money; you are suggesting that you don't worry about that, you drown (inaudible).

MR. FITZGERALD: No, I am not. I am suggesting that you take a longer period for pay-back, where other areas or other communities could probably take advantage of the infrastructure money. Instead of doing it over four years, maybe, if you could see that they were making an honest effort to pay - and you can see that, I mean you review their budget every year.

MR. REID: That's right, and the ones who will not get any funding this year have come in to me and said: Here's what we are going to do, here is the length of time we want to repay it, we are going to make the first payment next week and they never show up again.

Bonavista is a prime example. Bonavista made a commitment with me last year, signed a deal last year, just to avail of over $1 million in infrastructure funding. The day it was announced, you went down and announced it, Bonavista said: to hell with the provincial government, and I have not heard tell of them since.

Now, you tell me that I should go to any community in this Province, representing this government, and set up deals like that, set up deals around the Province where then municipalities are going to come back to me and tell me straight where to go, and you have one there in your district.

MR. FITZGERALD: Mr. Minister, you are not exactly telling the true story there. You know very well that the town of Bonavista have increased their taxes this year in excess of $200 to pay back the commitment they made to you when they got that $600,000.

MR. REID: Well, why haven't they done it?

MR. FITZGERALD: Well, they have just passed their budget into you for approval, where they have increased their rate from 6.5 up to 8 mils. They have increased their poll tax from $135 to $175, and they have increased their water and sewer, I think, from $10 a month to $20 a month, which is a huge tax hike in one year, and because of that the people down there are parading in the streets saying that they have been treated wrong. The council is being responsible and they are living up to their commitment.

MR. CHAIRMAN: Does the minister want a minute for rebuttal to that?

MR. REID: No, it is too long a rebuttal.

MR. CHAIRMAN: Okay, fine, your time is up.

I now recognize Mr. Crane. When Mr. Crane is finished there is coffee in the government member's room, so we will then break for ten minutes and you and your officials, sir, and the members of the Committee can mingle over coffee and discuss some of the things we did not get here. I will ask the clerk to make sure that she gets us back here at 10:30, so Mr. Crane your on and the length of time you take cuts into your recess time.

MR. CRANE: This will not take long then, Mr. Chairman. First of all I though you had something against me this morning.

MR. CHAIRMAN: Not likely.

MR. CRANE: You passed me a couple of times, and then Gerald Smith said you could not see me, and I said if he cannot see me then he had better get his glasses changed because there is really something wrong with his eyesight.

Before I ask a question, Mr. Minister, I would like to say that wherever Jack Byrne is plugged in for his cable, he must have an inside track somewhere for $4.00 or $5.00 a month.

AN HON. MEMBER: He is a buddy with Danny Williams, I guess.

MR. CRANE: He must be a buddy of Danny, yes.

Anyway, on that property assessment, I notice you did not increase the budget in the assessment department this year very much, $100,000, and that will not do much for anybody. We have towns in our area that are behind ten or eleven years, that have not been assessed. The year before last I went to the minister and he said: we are coming up with a computer system now and everything should be ready by next year. Then last year the computer system still wasn't ready and we are about ten or eleven years behind. Is the computer system up-to-date and will we get our towns assessed and reassessed this year?

MR. REID: Let me tell you what happened, John. We were going along fairly well and we were ready this year to go out and do some new assessments and some reassessments. If you remember I brought in a piece of legislation earlier this year that caused some uproar from among some of my colleagues and some others who sit on the other side, and that was to exempt equipment from assessments in the Province, in buildings and in businesses. We were going to exempt equipment, that was the bill, but there was that much of an uproar over it from the Federation of Municipalities and a number of other communities that they convinced the government - and I give the Opposition some credit there, especially the Member for Labrador City, they convinced the government to postpone that for one year but there was one problem. We had already done our assessments in all the major areas of the Province and had excluded equipment from the assessment role. When we postponed that for one year we had to go back, John, and do a number of reassessments in those communities that we had already done. We are now behind this year by six months.

MR. CRANE: Six months?

MR. REID: At least six months. So, John, what I said last year was I was hoping at the time that it would happen and I was hoping the year before but we are behind right now at least six months in regards to what we would have picked up. Now I know that Don probably can make a comment on it, maybe I will ask him because he is on top of it on a day to day basis. In regards to the assessment though, John, and the amount of money, it was last year that we hired those extra people. We hired eight new people last year so you are not going to see a reflection in the budget this year of that because those people are already hired.

MR. CHAIRMAN: Don Peckham.

MR. PECKHAM: Mr. Chairman, the new assessment system, computerized system, is on-stream and running. The only thing is, all the data that was compiled initially in the old system all had to be converted, all 160,000 copies in the Province. That is being done on a rotational basis as the reassessments are done in each municipality. So that is taking up a lot of work, a lot of time and it will be done over the six year cycle. As each municipality is done, reassessed - they are done on the new basis and then put into the computer and will be done that way. So about 40 per cent of the municipalities are converted now and in. The rest will happen over the next couple of years but not withstanding that, there has been a catch up happening over the years except - as the minister just pointed out - for this year because of the workload having to do with the equipment, that there has been a gradual catch up with those communities who wanted first time assessments being done but there will be about another years delay. I think there are twenty-three municipalities waiting for first time assessments.

MR. CRANE: Yes, I have one waiting for the first time assessment in my own community, it must be ten years now since it was reassessed. What the council has been saying to me and rightly so, is that they raised their taxes a couple of times and now it comes in - I say over an eight or ten year period that taxes are going to jump another great hike and people are going to go off their heads I suppose like they do everywhere else.

MR. PECKHAM: Yes, there should not be any one ten years old, the oldest one should be six years, maybe seven. There are a few there seven years old on reassessments. Generally speaking, they were done on a six year cycle. Some of them slipped back to seven.

MR. CRANE: You check on Upper Island Cove for me and get back to me will you because they are telling me that it is ten years or more? So give me a check will you Mr. Peckham, and give me a call?

MR. PECKHAM: Yes, okay.

MR. CRANE: Fire fighting equipment: the minister keeps insisting we got too many fire departments out in our area and I suppose we have enough fire departments but he refers to Harbour Grace with two or three trucks. Well Harbour Grace is one town that has neither truck right now. They got part of a truck in 1972 and when I look at the amount of money there for fire equipment this year, it is kind of sickening and I am sure they are not going to get a fire truck out of that, I am definitely sure.

MR. REID: Well they might, John. They might be lucky enough to be the one that is going to be done this year. Maybe the minister should insist that that one be done -

MR. CRANE: Yes you should.

MR. REID: - but then I will have everybody, the other fifty-one members coming after me.

MR. CRANE: Pigs might fly he said but they are unusual looking birds.

Last years budget for the infrastructure program showed $35 million budgeted and the revised showed $19.7 million, is that what you spent?

MR. REID: I am sorry, say it again?

MR. CRANE: Last years budget for infrastructure, the Newfoundland Infrastructure Program showed $35 million was budgeted and $19.7 million was spent, is that right?

MR. REID: No, that is our money that we had to budget for contingencies. I am going to let Clarence explain that to you, but that is really misleading.

MR. RANDELL: Mr. Crane, what you see in the budget is actual dollar pay out by the Province which represents; a) the federal contribution, one-third, which is then recovered from the federal government - you will notice a net out effect there -

MR. CRANE: Yes.

MR. RANDELL: - and also the direct... I will call it cash contributions for projects with a value less than $100,000. The projects which cost in excess of $100,000 are financed by way of long-term debenture, through the Newfoundland Municipal Financing Corporation. Consequently that would not appear in the budget.

MR. CRANE: I see.

MR. RANDELL: In actual fact the total outlay on the infrastructure program last year, there was $123 million in committed projects. Of that amount there was approximately $60 million to $65 million spent, and there is a remaining roughly $55 million to $60 million to be spent this year, in addition to any projects that are approved in the current year. So these figures do not indicate (inaudible).

MR. CRANE: Okay sir. That is good enough. We will have coffee, I think.

MR. CHAIRMAN: We are going to break now till 10:30, so you are invited to have a coffee and mingle and then join us back here at 10:30.

 

Recess

 

MR. CHAIRMAN: Order, please!

I recognize Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. It seems to me I have a lot of questions to ask and I don't know if I will have enough time to get into them all. Just specific questions with respect to dollars and cents and changes as I was mentioning earlier. But there are a couple of things I want to get into now before I go too far, more generalized things.

I want to talk a bit about the regional concept again. In particular, with the northeast Avalon with respect to what is planned on the northeast Avalon, and some comment on amalgamation versus regional government; and the approach that will be taken with respect to - will it be the same type of approach that was taken with respect to amalgamation, with respect to forcing it, and/or being dictated to. In particular, the benefits. Because when amalgamation was being discussed there were never ever any specific benefits being shown to the towns. Of course, you know where I stood on that at that point in time. I was opposed to it because there were never ever any specific benefits told to me dollars-and-cents-wise to explain the pros of amalgamation. I would like to see the comparisons between amalgamation and regional government.

Taxes. You mentioned that the regional government or governments, or whatever you want to refer to them as, would be permitted to tax. Would those taxes be over and above what the municipalities in that regional government would be taxing? Would the towns involved in a regional government be required to reduce taxes in a given area if the regional government took over responsibility say for garbage collection in five or six or seven towns? That type of thing. I would like to have some response from the minister on that, and/or the Deputy Minister.

One other comment on that one before I get too far. I mentioned earlier about centralization, I believe. Is this just another form of centralization? It wouldn't be so much (inaudible) on the northeast Avalon because we are pretty close to St. John's now, but if you take an area say on the northeast of the Province fairly distant from Gander and/or Corner Brook, whatever the case may be, would they get centralization because of regional government? Is that the ultimate goal?

That is a number of questions in one, I know, but....

MR. CHAIRMAN: Mr. Minister.

MR. REID: The comment on amalgamation versus regionalization. I prefer to say regional council rather than regional government. Because as soon as you mention the word "government" all these flags go up and say: Not another form of government, we are governed to death in Newfoundland. We have enough government now. So we have no intention of setting up that entity as a government.

MR. J. BYRNE: What is the difference between a council and a government?

MR. REID: Here is the difference. Let me tell you what we see. Now, when I say that I am being serious in saying that what the people in a particular area see themselves might be totally contrary to what we see, and if that is it, sobeit. The decision of the type of structure, regional council that will be set up, will be determined by those people representing those towns in the region. We are not going to go out and impose an idea of regionalization, our concept of regionalization, on municipalities. It will be left entirely up to them.

There is a great difference between amalgamation and regionalization. Amalgamation, basically, wrapped its arm around a number of communities, and a council, then, dictated how much the tax rate was going to be, and the services that were provided, and everything that went along with basic community councils. The regionalizational concept is entirely different.

I see a regional council as the members of a regional council representing communities in that region, so Jack Byrne would sit as the member representing, let's say, Torbay, on the regional council. The regional council then, the types of services that they could provide could be regional fire services, for example, on the northeast Avalon; it could be waste disposal. In St. John's, for example, on the northeast Avalon, the water services that are provided on the northeast Avalon come from - most communities, or most people living on the northeast Avalon are serviced by the St. John's watershed. Maybe that could be taken over. Maybe the stadiums in an area could be taken over - maybe; I am saying maybe - and operated on a regional basis.

The communities, as such, will maintain what they want to maintain. If the Town of Carbonear is part of a regional council of Conception Bay North, it will be up to the Town of Carbonear to decide what services they want to put over on the regional council. It is entirely up to them. The council in Carbonear - and I have to use that, or Harbour Grace, because that is what I am most familiar with - would then still operate and collect taxes the same as they are doing now. They would provide services like street lights, possibly snow clearing. They would provide recreation services, smaller recreation services. Carbonear may have a stadium. Carbonear may wish to take that stadium and pass it over to the regional council.

You said: What would happen to taxes? Would a regional council have authority to tax? And the answer is yes, but only for services provided outside of incorporated areas. They would have no authority to go into an incorporated town and tax that incorporated town. The areas in the district, or in the region, would definitely have to be taxed. Local service districts, for example, if they are going to provide snow clearing and fire services and garbage collection and street lighting for local service districts, they would have to charge the residents of the local service district a reasonable fee to provide those services, but certainly not in Carbonear or Harbour Grace or these places.

MR. J. BYRNE: So if a regional council was set up, say, in the northeast Avalon, down my way, and the council was going to be responsible for waste disposal, and a particular town did not want to partake of that service they could continue on themselves until such time as they felt it was...

MR. REID: Exactly, because it would be you, as the representative and, I said a few minutes ago, representing a particular town, who would sit on the regional council. They would not have the authority to be able to come in and say: Now, here is what we are taking over, contrary to what the towns are saying they want taken over.

The bottom line is, when we go in and start talking regional councils we are going to ask the councils and the people in the area: how do you perceive a regional council and what types of services, for example, could a regional body maintain and operate? We have a regional body in Conception Bay North now called the Conception Bay North Incinerator Association and it works beautifully. All they do is, send a bill to the municipality of Carbonear and Harbour Grace each year on a per capita basis for taking their garbage, and it works. There has not been a problem with it from day-one. That is the idea of the regional concept, but if Carbonear did not want to take part in that, did not want to take part in the incinerator, for example, Carbonear would then have to go to government, or wherever, and ask for permission to set up their own dump site.

MR. J. BYRNE: So there would be elected representatives on that council?

MR. REID: Elected or appointed.

MR. J. BYRNE: Appointed from the towns?

MR. REID: That is going to be entirely up to the people of the region, and I am stressing that, it is entirely up to the people of an area. For example, if you have an area with one arena, should the people of that community that the arena is in be paying the full shot for that arena?

MR. J. BYRNE: That is a good point because that is the next thing I wanted to bring up, and that was a plug for the application I made on the infrastructure program which was the five towns coming together to cost-share a facility which is truly a regional facility.

MR. REID: And that is the regional concept.

MR. J. BYRNE: When I was the Mayor of Logy Bay - Middle Cove - Outer Cove, we approached Torbay - Pouch Cove - Flat Rock for an animal control officer which we got in place. All this to me is happening by natural evolution anyway but there is nothing wrong with encouraging it.

MR. REID: By us talking about regionalization that is all we are doing, we are encouraging co-operative efforts to save some money for these towns so they have more money to go out and spend on their roads.

MR. J. BYRNE: I can see the benefits but I think it is going to have to be clearly explained to the municipalities involved, the benefits, because that is not the approach that was taken with respect to amalgamation. They never did see any benefits.

MR. REID: The services that are provided them by the regional council will be billed back to the town, each town on a per capita basis. That is how we see it, so then everybody in a particular area will contribute to a facility or a service that is being provided to everyone in an area, rather than just one community having to pay the shot for everything.

MR. J. BYRNE: Well, I would suggest that a good example of that would be an arena in the northeast Avalon with five towns coming together, a good plug for your proposal.

I have a situation with respect to what Mr. Carter brought up, and that is, what is being done to encourage the rural communities? I do not know if there is a lot being done. Down in Flat Rock, for example, last year I approached Municipal Affairs because there was a problem down there with sewerage and nine wells being polluted. They do not have water and sewer but they have $500,000 in the ground now for a system that does not service a house at this point in time, and they are paying $35,000 or $40,000 a year back to Municipal Affairs. There are nine houses down there with wells that are polluted. I asked Municipal Affairs for some assistance but they washed their hands of it. I then went to the Department of Health who had given approval for some of these houses to be built, and Municipal Affairs had obviously had inspections done, and I went to the town.

I do not know what to tell these individuals down there anymore. The government is washing their hands, both the provincial, Municipal Affairs, the Department of Health, and the town is not taking responsibility because they are saying the Department of Health approved them and Municipal Affairs was involved also. Here is the problem we have so I would like some direction as to what I can do in this situation.

MR. REID: It has been an ongoing problem and the town has pretty well tried to wash their hands of that $500,000 system during the last number of years.

MR. CHAIRMAN: Clarence, do you want to react to that?

MR. RANDELL: Mr. Byrne, the only involvement our department would have had with respect to these new housing units would be simply the pressure that the council brought to bear to rezone the area to permit the residential dwellings to go there, but surely there should have been some controls with respect to how they went there and the services provided?

Presumably Health would have inspected and issued the necessary approvals if it was suitable for a well and septic system, would they not?

MR. J. BYRNE: Right, but the thing is, before a town plan is approved - a town plan has to be approved by Municipal and Provincial Affairs for that town before they can adopt it and/or use it, which - Municipal and Provincial Affairs have to have some responsibility there - the Department of Health approved these - some of them, not all of them, because some were fairly old. The Department of Health had some input into it too, so there has to be some responsibility on the shoulders of government to take care of that situation.

MR. RANDELL: What is the council's responsibility though?

MR. J. BYRNE: Why did the town need to come to Municipal and Provincial Affairs for approval for a town plan if it is the town's responsibility?

MR. RANDELL: They came to amend the plan, Mr. Byrne, to allow these dwellings to go there.

MR. J. BYRNE: Yes.

MR. RANDELL: With the assurance that they would be controlled development.

MR. J. BYRNE: Municipal and Provincial Affairs has to approve the plan, and ultimately the responsibility is back to Municipal and Provincial Affairs for approving that plan in the first place. The town only applies the regulations.

MR. RANDELL: The town requested the regulations.

MR. J. BYRNE: Anyway, getting on.

MR. CHAIRMAN: Your time is up, Mr. Byrne, but in view of the fact that there is nobody else there I'm prepared to recognize you again. Before that I would ask the minister - I understand his officials from Newfoundland and Labrador Housing Corporation have now arrived, so if you would introduce them so we will have them in the records of this meeting. Then I will recognize Mr. Byrne.

MR. REID: I have Robert Noseworthy, who is Chairman of the Housing Corporation, and Ed Heath is our vice-president of financial administration. I've done it, Mr. Chairman.

MR. CHAIRMAN: I was in a side conversation, so you've done it. Now Mr. Byrne, we will give you your round again.

MR. J. BYRNE: Okay, alright. Assessments. We had a lot of discussion on assessments, getting the towns done. I beg to differ with Mr. Peckham. There are towns out there that haven't had assessments done in ten years and I know one in particular. Any plans to privatize assessments?

MR. REID: Any plans to privatize? Not right now. But as you can see in the budget there, and I notice you haven't picked it up, but I'm going to bring it up anyway. Baker in his speech mentioned the fact that we've got to start talking to municipalities, and we've got meetings scheduled with the Federation of Municipalities right now. We are looking at the total department in trying to find ways of saving some dollars, and maybe encouraging the government, by us saving dollars in the department, maybe it can be transferred to more monies for municipalities, or cheaper ways for municipalities to operate. There are no immediate plans to address the question of assessment, but I will tell you that assessment, like everything else, will be given major scrutiny in the next three to four months.

MR. J. BYRNE: I picked up on it. I had certain questions that would be asked in due course. I will go back to the specifics here now for a few minutes, if I can.

MR. REID: Yes, go ahead.

MR. J. BYRNE: Page 269, Urban and Rural Planning, under the Estimates.

MR. REID: Urban and Rural Planning, yes, go ahead.

MR. J. BYRNE: Page 269, Salaries. Last year you budgeted $412,000, spent $869,000, and this year you have budgeted $897,000. I just made a note here. Why would that be? When you talked about lay offs last year, I think it was in this section that you were talking about laying off so many planners last year? You've changed your mind on that? (Inaudible) has doubled.

MR. REID: Exactly. That is the reflection. The budget in 1994 reflected $412,000. We put them back in. Remember we had it announced. We hired those people back again which drove it up to $869,000, and then, because of employment expenses, we are up to $897,000 this year. If you had a previous year you would have probably found $897,000 or thereabouts in the previous year's budget.

MR. J. BYRNE: Okay. Page 271, Waste Management Facilities. That is section 2.3.04. Under Debt Expenses.

MR. REID: Yes.

MR. J. BYRNE: You had $190,000 budgeted, spent $175,000 and now you have $243,000. Can you explain that to me?

MR. REID: If I am not mistaken - and maybe Clarence can explain it - that is basically because of the fact that last year we put an extra $500,000 into communities around the Province for waste management facilities, and that has basically just raised our expenditures for this year to that amount. Go ahead, Clarence.

MR. RANDELL: Mr. Byrne, basically what it is, it is projects that were approved in prior years that are being refinanced, and these are the debt charges, and it reflects the increased cost to government for the additional waste disposal facilities that were approved in, say, the previous two years that are now refinanced.

MR. J. BYRNE: Thank you.

MR. RANDELL: This is the government share, of course, (inaudible).

MR. REID: There is no way of controlling that. The more money we give out to communities for waste management, and having to pay, in some cases our share, and in even some cases as much as 100 per cent, that is going to continue to increase as we put more money into waste management.

MR. J. BYRNE: Page 272, Services to Municipalities, Water and Sewer Servicing - Coastal Labrador, section 05 there, professional services, you had $940,000 budgeted, spent $1,269,000 and have $784,000 budgeted this year. Basically, between the $940,000 budgeted and the $1,269,000 there is $329,000 difference spent. What would be going on there?

MR. REID: I think I can answer it, but I am going to let Clarence answer it.

MR. RANDELL: This purely relates to the federal/provincial agreements for Labrador. One is the coastal agreement, the comprehensive agreement; the other is the native agreement, and funds are allocated on an annual basis for water and sewer services in the Labrador communities.

You will notice that the reason professional services increase, if you look at the figure directly below that, the actual dollars allocated and spent went up by a corresponding amount in the last year, $4.3 million up to $5.8 million, and the professional services are, of course, the engineering and consultants fees associated with these projects.

AN HON. MEMBER: (Inaudible).

MR. RANDELL: Well, you are more in the order, Minister, of about 20 per cent to 25 per cent in Labrador because of the cost associated with transportation and so on in those areas.

MR. REID: So as the amount spent increases, so do the engineering fees. You should know all about that, as mayor of a community. Consulting engineers have a habit of making dollars on these budgets. They don't do them for nothing.

MR. J. BYRNE: Well, I can go on further on that, but I won't. I will just accept your answers.

Page 276, Environmental Improvements, grants and subsidies, you had budgeted $1,693,000 and spent $1,200,000 and this year you have $750,000. That is less than half of what you budgeted last year, and quite a bit less than what was actually spent. Can you explain that? Is it just a cut for the sake of cutting, or what?

MR. RANDELL: What this is, is a wind down of a particular capital allocation provided through ACOA to fund three projects in the Province. One was the Corner Brook Neighbour Improvement Project, one was Placentia for the breakwaters, and the other was for the regional water treatment plant for Grand Falls - Windsor - Bishop's Falls.

What is happening is that these projects are now winding down, and that is the final phase of completion. In fact, Placentia was completed last year, and there is a small amount remaining with respect to the Grand Falls - Windsor - Bishop's Falls water treatment plant, and a small amount for the Corner Brook Neighbour Improvement Project. These are cost-shared, incidentally, one-third by the federal government, one-third Province, and one-third municipality.

MR. J. BYRNE: On that same page, Canada-Newfoundland Infrastructure Program, you have salaries - from 01 down to number 07 - there was nothing budgeted for because last year was the first year I suppose with the Canada-Newfoundland infrastructure program, but down here it says: amount to be voted $40 million, it was revised $20 million last year and was budgeted $35 million. Can you give me some explanation as to what is going on with that whole section there? There seems to be a lot of confusion on that.

MR. RANDELL: Mr. Byrne, what you are looking at here, is what I mentioned earlier this morning, and is in relationship to contracts that were awarded, work was started and not completed, so there is about $50 million to $60 million worth of work remaining -

MR. J. BYRNE: How much?

MR. RANDELL: $50 million to $60 million, but I again reiterate what I said earlier. These figures purely reflect the federal share and projects less than $100,000. The remaining funding is by way of government guaranteed loans financed on long term through NMFC, so the figure here is not the total funding flowing through that infrastructure program it actually only reflects probably about one-third maybe to a half, maximum.

MR. CHAIRMAN: Okay, Mr. Byrne, you time has expired and I recognize -

MR. J. BYRNE: May I just finish this section here?

MR. CHAIRMAN: Okay, okay if it is by leave.

MR. J. BYRNE: So, are you telling me now then, this year, there is only $10 million budgeted for the Canada Infrastructure Program this year?

MR. RANDELL: No, $40 million.

MR. J. BYRNE: The total Canada-Newfoundland Infrastructure Program -

MR. RANDELL: Yes, but that is net outs against the federal recovery of $30 million.

MR. REID: We are hoping to get $30 million from the feds which will mean that we then will have to put $10 million in this year. Now that figure is up and down, that could change from day to day and will be based on a number of contracts that are awarded and completed when they are completed, and when we get our system in place so that we can bill the federal government and so on, so that could be up or down, that could be almost any figure.

MR. J. BYRNE: Yes, but that $10 million is actually new dollars, that is the only new money this year, right?

MR. REID: No, no. That's only money that we put aside in our department to take care of our cost of programs that will go on this year. It has nothing to do with new money at all; it is just financing money, that is all that is, to finance these projects.

MR. CHAIRMAN: Mr. Fitzgerald, do you want to go back again?

MR. FITZGERALD: Thank you, Mr. Chairman.

Mr. Minister, 3.3.04 on page 276 of the Estimates, and listening to the deputy minister, he stated that the $750,000 was for the cluing up of projects in Corner Brook, Placentia and Central Newfoundland. Is it fair to say then since there are no other monies there, that your department will not be looking at any improvements to environmental problems this year?

MR. REID: No, it's not fair to say.

MR. FITZGERALD: Any major improvements?

MR. REID: No, no. This is just a particular program, a special program. Clarence, where does that date back?

MR. RANDELL: That goes back, sir, three-and-a-half years.

MR. REID: Three-and-a-half years. This was a particular environmental program that the Province, the communities and the feds agreed to three-and-a-half years ago; that is just for that particular program. There are other programs and there are other monies in waste management, in studies, environmental studies and this sort of thing throughout the budget, in other areas.

MR. FITZGERALD: Thank you. Departmental salary details on page 173, states overtime and other earnings, Department of Municipal and Provincial Affairs, to the tune of $296,300; when you are being paid a salary, do you usually get paid overtime as well? My experience in being a salaried employee is that overtime -

MR. REID: Where are we again?

WITNESS: Page 173.

MR. REID: Page 173.

MR. FITZGERALD: Yes. My experience of being employed with a company and being on salary is that I never did get paid for overtime or extra hours worked and I am wondering why just about $300,000 was paid there in overtime and other earnings or if it is a different situation than (inaudible).

MR. REID: As you are aware, I can't make any overtime so it is not my money so we will just ask Mr. Randell here, where he spent it?

MR. RANDELL: Basically, what you are looking at there, there are overtime costs reflected there particularly in areas such as

inspections, assessments and things of this nature, fire fighters training programs but a lot of the cost reflected there relate to travel time more so than overtime, if they have to travel from point a to point b and return. I think there is also, Mr. Peckham, monies provided there as well for a specific temporary situation, mostly overtime travel time.

MR. FITZGERALD: So some employees do get paid for overtime in addition to their regular salary?

MR. RANDELL: Oh yes. I will say down in the ordinary workers, with the union employees, I mean basically there is minimal if any, overtime paid directly to management (inaudible)

MR. FITZGERALD: Hourly paid employees only or salaried employees as well?

MR. RANDELL: It would apply to salaried employees because we have very few hourly paid employees.

MR. REID: Take for example the regional office in Labrador, our people could leave the regional office and could be on the road for three or four days in parts of Labrador because of weather and this sort of thing and under the union contract we have to pay these people overtime. It doesn't take long to run up $200,000 or $300,000 in overtime when you are talking about out in rural Newfoundland travelling around. You will probably see, next year, a rise in that because we are taking on the inspection services now. Not this year of course, we have enough but that will probably increase because of the inspection services that we are taking on. When you look at electrical inspections, the Department of Health and having to call people out on weekends, night time and this sort of thing, so that is going to increase.

MR. FITZGERALD: In a town in my district, Little Catalina, two years ago - they did not receive any funding last year but two years ago they received ample funding in order to just about complete the town there with water and sewer. Due to the sewer line having to take another route off the main highway there was something like $56,000 or $58,000 there in slippage money and because it had to take this extra route the money had to be returned. If it was a continuation of the main pipeline there would be no problem. In that particular area now, it is probably the worst area in the whole of the town, people have to leave their house to go out and get showers and do their washing in other places because of the problem with the drainage there in their sewer system. In conversation with a couple of home owners there the other day, they were wondering if it is possible for them to extend the sewer line to make on to the main sewer even though it is probably 200 or 300 feet away. Since it is now the councils property and the Department of Municipal and Provincial Affairs put it there, would they have to go through getting an engineer to engineer that process, have it inspected and this sort of thing or would it be able to be done through the community council or the town council there in the area, just for information?

MR. REID: No, it is strictly the responsibility of the council. They know the health and environment questions and the necessary permits they need and so on. The council can basically go and do that without, I suppose, notifying us that they are doing it as long as they abide by the rules and regulations of occupational health and safety. Oh no, council can go and hook that on no problem. It is entirely up to them.

MR. FITZGERALD: Many times when councils make suggestions or send in their five year plan, they identify work that they consider a priority in their communities and I don't know if anybody knows in their communities better than the municipal councillors. Why does the Department of Municipal and Provincial Affairs many times change what they put forward as their priorities rather than accepting the words of the councillors and accepting the priorities that they have submitted?

MR. REID: Several reasons MHA, when the applications come in from a particular community they are given to a group of individuals who represent environment, health, our department and fisheries. They sit down and they rank the particular projects that come in, say from Little Catalina.

Quite often the area that the council wants done doesn't rank as high as what the government officials rank based on environmental reasons and so on. The other problem with it too is that when the minister sits down and he has a certain amount of money and he is trying to take into consideration the ranking system, and at the same time trying to be fair to individual MHAs around the Province in giving them a few dollars so they can get re-elected or whatever, quite often the question is: How much can you afford to put into a particular community?

So Little Catalina applies for $1.5 million for a water and sewerage project, its number-one priority. The ranking system doesn't look at that $1.5 million but looks at another project they've applied for and ranks it higher. The minister looks at it and says: If it is being ranked higher, this smaller project, maybe it is better to give them that than it is to interfere with the system and give them the bigger one.

Quite often, I would say in more cases than not, the ranking system identifies projects in a community that are not the priorities of the council. That is the reason. There is no other way around it.

MR. FITZGERALD: Mr. Minister -

MR. REID: If you stuck with just the priorities, there are chances that the councils wouldn't get anything because they wouldn't rank. So they move down the list, they go down, because of the economics of it as well as the ranking. That is how it works out.

MR. FITZGERALD: I don't know how we can let them know - I will leave that with you - but sometimes it is a very embarrassing affair. The council goes and makes a commitment to certain people who live on certain streets and says: Yes, your streets are going to be included because this is what we've applied for and this is the amount of money that we have. As a result they find themselves going back and apologizing to people because government has changed it.

Mr. Minister, a quick question regarding the clearing of snow in some local service districts and community councils this year. Due to them being unable to go and get a private contractor to clear their snow many people have availed of the services of Works, Services and Transportation. I know bloody well that a lot of them are not going to be able to pay the bill that they are going to get from Works, Services and Transportation. Much of it is probably going to be much higher than what you will be able to intercept as money coming from your government. Where do the extra charges go?

MR. REID: Good question. If they haven't got their bill paid I guess by next year at snow clearing time then Works, Services and Transportation - and they will do it, they've already done it - they just won't clear their road.

MR. CHAIRMAN: That concludes your questioning for this time. I now recognize Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman. Just two or three questions with regards to housing, as we now have the officials from Housing here.

MR. REID: Can we wait? Excuse me, Mr. Chairman. I was going to do Housing separately, unless you want to do it altogether. It doesn't -

MR. CHAIRMAN: If they want to crisscross it and -

MR. REID: I'd be happy to do it altogether, to be quite honest about it, and probably speed it up a little bit.

MR. CHAIRMAN: Well, it would, for then we can call the heads, we will have it all, so I would say go ahead and....

MR. SMITH: We have to deal with it so I don't see any problem.

MR. REID: No problem, go right ahead.

MR. SMITH: First of all, in looking at the Estimates there for Housing as they are presented here, it is not broken out very well. I don't -

AN HON. MEMBER: Page number?

MR. SMITH: Page 283. Of the total budget there, how much is being expended on administration?

MR. REID: Can we get the page for administration? You have to remember now that a lot of the money that we spend on administration in Newfoundland and Labrador Housing comes directly from the federal government in administering federal programs like RAP and a number of other programs. It won't be reflected in our Budget, the Province's Budget.

If you look at the total amount of money that we are going to spend in Newfoundland and Labrador Housing this year in comparison to what actually the government puts into Newfoundland and Labrador Housing, which will be $13 million this year, there is a drastic difference, so I am going to ask Bob if he would identify the page and go down through it, if you want to do that.

MR. HEATH: The total administration costs are $15,300,000 made up primarily of salaries $10 million, occupancy expenses $1.3 million, travel $770,000 and various other categories, cost of information technology, our computer systems and operation of our computer systems, $1,500,000. A lot of these costs, as the minister pointed out, are cost-shared with the federal government and, as a result, we are able to distribute approximately $7 million of that $15 million to our various rental housing programs, the majority of which are cost-shared on the basis of 75/25 with the federal government.

MR. REID: That is difficult to understand, isn't it?

MR. SMITH: What is the total budget, and what are we talking about in terms of total budget? Can you give some idea as to what -

MR. NOSEWORTHY: The total budget, Mr. Smith, is $142.6 million relating to current account expenditures in the order of $110 million and capital account expenditures of $32.2 million.

MR. SMITH: Okay, that makes it a little clearer.

MR. REID: It is not reflected in our estimates, because we are not required to reflect it in our estimates. The bulk of the funding comes in from the federal government, so we only show what we actually spend, what government spends.

MR. SMITH: In terms of my own district, the biggest concern that I have had in the last few years in dealing with the URP program, I am just wondering what is contained in the budget this year with regard to the Urgent Response Program.

MR. NOSEWORTHY: We have $1.6 million, which is the same amount as we had last year, for the URP program for 1995-'96.

MR. SMITH: Last year you said you had $1.6 million. In terms of the demands, how adequate was the $1.6 million?

MR. REID: We went looking for some more money this year, because you know that social services has basically put that responsibility over on us to some degree, and we went looking for some extra funding this year but we were turned down. The money just wasn't there for it. I felt fortunate to hold on to the amount that I had last year.

In our estimation, we are not putting enough into it - definitely not putting enough into it - but, given the financial situation of the Province at this particular point in time, and the fact that social services lost $10 million out of their budget, and in most cases that is to whom we deliver the RRAP or the Urgent Repair Program to, those people who are on that, or just above that, level. I felt fortunate just to hold on to what I had last year.

MR. SMITH: Minister, I am sure you are aware, and you have mentioned that - certainly, I know, in my own district, and I suspect a lot of the rural areas in particular, in talking to them, and I don't imagine it is something peculiar to the rural areas - that is a major, major concern. I visit, on a regular basis in my district, people who are trying to get some of these things done, and it is a major problem, especially when it is the Urgent Repair Program, in trying to get some of that work done.

We do have people in this Province who are living in very, very poor housing, and the difficulty I find is that over the years, because of the existence of the RRAP program, which did an excellent job, that you go and visit someone who was able to avail of this program a few years ago and you feel good because they are in very good housing, and then you walk down the road and visit somebody who has been on a waiting list for probably three years, their roof is leaking, and there is very little that can be offered to them. If you go to social services the option will be, well, we will take them out and put them into a rental unit which I, personally, have great difficulty with. If we take them out and put them in a rental unit and pay their rent I can understand it makes sense to government that we only have to pay one month's rent now rather than have to pay whatever the full amount would be upfront, but I think in the long-term it does not make a lot of sense to me and it certainly does not make a lot of sense to the people out in the communities who are faced with this on a daily basis.

MR. REID: What it comes down to is a question of financing and nothing else. I would not know, and even the people in social services cannot tell you today what would be an adequate figure to address that situation because it just continues to mushroom as you get into one level and you get into another. I totally agree, but it is fiscal reality, I suppose, that is what it boils down to.

MR. SMITH: What is the situation with the RRAP program itself?

MR. REID: Well, we are going to maintain a small semblance of the RRAP program this year. We are going to do 500 units this year which is down drastically from last year.

MR. SMITH: What was the figure again, Mr. Minister?

MR. REID: Five hundred units. The reason for that, of course, is that the federal government announced some years ago that they were getting out of the RRAP program and capping the amount of money that CMAC provides each year to the provincial governments to avail of RRAP and like programs, native housing programs, urban programs, and so on. The federal government this year, in its budget, announced a further decrease of $457 million over three years and that basically means that the RRAP program after this year will disappear. There will be no RRAP program. Whether or not there will be any delivery of any federal programs in the coming year, next year, I should say, is questionable at this particular point in time. I cannot say what else will disappear. If the RRAP disappears then the rest of it is meagre in comparison to the RRAP.

Last year we were asked to look at savings from coast to coast in regards to our programming. We found substantial amounts of money that we could save but not to the tune of $400 million, so the federal government is still looking for those savings now to reduce their deficit, whereas last year those savings could have been put back into programs such as RRAP and we might have been able to maintain the RRAP program for another couple of years. While I believe I am correct in saying that if they follow the course they are going now with regards to the recovery of that money and savings there will not be a RRAP program in 1996, or if it is it will be pretty small.

MR. NOSEWORTHY: Actually, the federal Budget that was brought down a few weeks ago clearly stated, Mr. Minister, that the $457 million would be found through existing programs and essentially there will be no new programs funding for social housing beyond this year, and that the priority of the federal government would be to try and maintain the existing housing stock, and if that remains the position of the federal government it will clearly mean that the RRAP program will be terminated and there will be no new social housing funding for things like senior citizens projects, family social housing, or any other social housing programs that have been available in the past.

MR. SMITH: One final question, does the corporation have any plans to sell off any of its rental properties during this year, particularly in and around the metro St. John's area?

MR. REID: Let me jump in on this one, because I am sort of proud of this one, Bob. We have gone from something to the tune of 1400 units down to 500 units left. The past three years we've sold off 800 units, 900 units. We are going to continue to do that. We have plans this year to once again look at the possibility of selling off the majority of our units we have left in St. John's, Arnold's Loop, Pepperrell, the Churchill Square apartments and so on. It is the policy of this government to sell off all those units and I think we've been pretty successful in the last two or three years, and I'm sure we will be as successful this year.

Not only our apartment units, our industrial units, our industrial parks, any properties that we own - for example, in Stephenville, in the airport - any properties that Newfoundland and Labrador Housing is in possession of now are up for sale.

MR. CHAIRMAN: Thank you, Mr. Minister.

MR. J. BYRNE: Thank you, Mr. Chairman. I want to get back to the infrastructure program again. Can someone tell me exactly what the bottom line is this year? How many new dollars will be put into that program all-inclusive - federal, provincial and municipal - this year?

AN HON. MEMBER: Infrastructure?

MR. J. BYRNE: Yes. The Canada infrastructure program.

MR. REID: None yet. I've got a problem. I might as well say it here. It is just as well to say it here. We are working with the federal government - you heard me last week announce that the federal government asked for a $5 million hold-back till 1997, 1998. We have since found out that the $5 million hold-back was - we thought it was a total amount, but then it turned out to be: No, it was the federal government's share. Which would mean a $15 million hold-back. Do you follow me? Five million dollars from the Province and $5 million from the municipalities and (inaudible).

We've been dealing with, as recently as yesterday afternoon - Clarence is on a committee made up of representatives from provincial and federal people who are making up the federal group. We are working now with that group to go to the minister in Ottawa with Mr. Baker, who is the chairman of the infrastructure program, the committee, to try to convince the federal government that you can't do that to us in Newfoundland. We are optimistic that it is not going to happen. If it does, then we will have approximately $25 million to spend, but if you take $15 million out of that you are looking at a $10 million budget for infrastructure this year.

MR. J. BYRNE: That is the figure I mentioned earlier, $10 million.

MR. REID: That is just coincidence.

MR. J. BYRNE: That is the way it is with me. I hope you have some success in that one then.

Page 279, Municipal Fire Operations. Amount to be voted. Last year $2.7 million, spent $3.15 million, and $2.5 million this year. That is the Grants and Subsidies. That is a fair difference from what was actually spent last year to what you are going in planning this year.

MR. REID: Are we talking about section 4.2.02?

MR. J. BYRNE: Yes.

MR. REID: Okay.

MR. J. BYRNE: Is that because of the extra $450,500 you gave the city because of the regional thing and the (inaudible)?

MR. REID: That whole section there relates to what we pay the City of St. John's and the City of Corner Brook.

MR. J. BYRNE: The deal that was worked out, yes.

MR. REID: Yes. Just that section relates to St. John's and Corner Brook.

MR. J. BYRNE: The other one was Firefighting Vehicles and Apparatus, Grants and Subsidies. From $1 million down to 25 per cent of what it was. That is going to be hard on the towns which are expecting some funding for fire fighting equipment, isn't it?

MR. REID: Yes, I tend to agree, but then it was another financial decision that we had to make. We are down to $250,000. I want to just tell you something that you probably don't know. We are the only province in Canada that has a fire fighting package like that. All municipalities outside of Newfoundland foot the bill completely for fire fighting services, in every other community. Only province in Canada.

MR. J. BYRNE: That doesn't mean it is right or wrong.

MR. REID: I never said it was right. I tend to agree, that it is going to be hard on some communities now to come up with money to pay the full shot for fire fighting equipment. I agree with you.

MR. J. BYRNE: Especially in towns who maybe are trying to start their own.

MR. REID: Mount Pearl will not have any trouble.

MR. J. BYRNE: Page 280, under Support Services, 5.1.01, Purchased Services (6) $68,100 was the revised and this year it is $612,500. Can you give me some idea what that is?

MR. REID: That is ours. Mike, do you want to answer that?

MR. DWYER: The difference there, the $612,500 reflects leased spacing for the new service centres that are going to be incorporated this year, five regional service centres and larger operational centres. What is happening now is that there are various departments that are coming over, parcels of departments, and there is some combination of whether or not they are in leased space or whether they are in government space. What will happen, for argument sake, where we are leaving government space, the leased spaced departmental people who are left behind will move into government space.

MR. REID: In that whole section there is an increase in just about every category, but if you go back through the other estimates I think you will find decreases in relevant departments we are taking people from.

MR. J. BYRNE: Robbing Peter to pay Paul.

MR. REID: Rob Peter to pay Paul, exactly.

MR. J. BYRNE: Newfoundland and Labrador Housing. I want to get into that now. There is not much I have to ask on that because some questions I wanted to ask were asked. The grants and subsidies are being cut by over $3 million for housing. Is that correct? You had $18,376,000 budgeted last year and this year you have $15,244,400, so there is a $3 million cut. Is that money actually from the provincial government given to housing?

MR. REID: The reason why the housing budget has been reduced was because last year we sold over $3 million in property and we anticipate selling $2 to $3 million and the profits then go back, reflected in our Budget which reduces the overall commitment by government to the Housing Corporation. I am hoping that we are going to be able to come in here one of these days and have a negative number there on the bottom.

MR. J. BYRNE: Last year sometime there was some talk about a policy being put in place - I do not know if it was through housing, one of them, CMHC or Newfoundland and Labrador Housing, there would be some funding available for landlords in the City of St. John's to upgrade their premises. I had a serious problem with that from day one. Is there any money allocated for that this year?

MR. REID: That is a federal government program. There is $350,000 allocated. It was something that the feds asked us to get involved with. We had the choice of where we were going to put the money. Well, we had some choice. It had to go into an urban municipality with over 50,000 in population, so with the problems we had that little bit of money, $350,000, we figured it would be better to go down in central St. John's and spend it down there because of the problems that have been expounded upon by the member down there for the last little while.

It is not very much money but if you take the money it is based on the landlord investing himself, like the RRAP, investing himself so much money and this is a subsidy, then it may be able to help at least alleviate some of the problems that we have in St. John's.

MR. J. BYRNE: My concern with that is, here I am a landlord with some twenty homes downtown, twenty buildings - I will not refer to them as slum landlords, but in getting this money from the federal government to upgrade their premises and make money of that seems wrong to me. If you had taken that $350,000 and gone to the people who are down there leasing properties, with lease buy-back, and put it into that, or something, to me that would make more sense.

MR. REID: But there is another advantage to it, by putting the $350,000 in then landlords who apply for it will automatically, just by applying, if they want to avail of it, will then have to stick to the stringent regulations that are imposed by CMHC, Newfoundland and Labrador Housing and the Fire Commissioner, which means that it is a little bit of bait that you wave in front of them so that you can get into their apartments, the ones that you referred to, the slum landlords, get into their apartments and force them to upgrade the living standards and the conditions in their apartments. So there is an advantage to it and - how much is the money, Bob, 90 per cent or 75 per cent federal?

MR. J. BYRNE: It depends on your perspective I suppose.

MR. NOSEWORTHY: Minister, 75 per cent comes from the federal government but if I could just maybe comment on it. First of all, we are restricting it to a rooming house program and I guess 60 per cent of the inadequate accommodation, as it relates to rooming houses, is in the downtown core of St. John's. As the minister pointed out, there is a limited amount of funding available. We would anticipate that this would probably do about thirty units only. There are requirements under the program that rents charged will be below market levels generally speaking and that there will be rental agreements put in place after the assistance is made available to ensure that the rents remain affordable to low income occupants. So there are requirements under the program which will specifically target the program to improving the plight, I guess, of low income people living in rooming houses in downtown St. John's where the bulk of the need exists.

MR. J. BYRNE: I have a number of questions on this but I think I will save them for the House.

MR. CHAIRMAN: I am going to recognize Mr. Walsh and then I will come back to you and clue it up, if you would. Mr. Walsh.

MR. WALSH: I only have a couple of quick questions. The minister refers to the fact that the department will now be assuming some of the responsibilities from social services in terms of emergency repairs and so on. Sometimes these emergency repairs can go anywhere from I suppose $500 up to $7,000 or $8,000 in some cases. Is it possible to go that high?

AN HON. MEMBER: $10,000 is the limit under the agreement.

MR. WALSH: $10,000 is the limit. When we do that do we take a charge on the property so that at some future date government has an opportunity to recover it? In my own district, for example, I have seen a number of homes that I fought to have brought up to some kind of a standard back in 1989 and '90 and in the last twelve months or so I have gone by only to find out that some of those homes have been sold. I am just wondering, do we take a charge?.... because if you have $2 million or $3 million in a pot like that it might be ten years down the road and it might be five years down the road but is there an opportunity to recover that money on the sale date of the house?

MR. NOSEWORTHY: There are two particular programs here, Mr. Walsh, one is the RRAP program and indeed under the RRAP program loans are available of up to $20,000 and up to $5,000 of that would be forgivable. The repairs that are conducted under that program generally speaking, are quite extensive. There are two items in relation to that program. One is the fact that the forgivable portion of the loan is earned over time. So it is only earned over a five year period roughly. Secondly, there is either a promissory note or a mortgage taken back on the unit. So we can take action in terms of the sale of the property before the repayment of the loan.

The Urgent Repair Program, which we deliver on behalf of social services, while there is a $10,000 cap under that program, the bulk of the emergency repairs - and they are only emergency repairs; I think Mr. Smith would contend that we probably don't even cover the full scope of the emergency repairs that are required - the average under that program is around $1,000 and we do not take back any type of security in relation to that.

MR. WALSH: So, on the RAP homes themselves it could be $10,000 in terms of a loan; $5,000 could be forgivable. I have seen some of those homes in the last twelve months now being sold, and there is no doubt that whatever amount was in there in the mortgage is going to be repaid, but I am just wondering, should the taxpayers' other $5,000 not come back as well, because repairs have been finished, the home is now upgraded, the loan will be repaid, but we did it for that family to be comfortable in that environment. They have now sold, and I am wondering, it doesn't take many $5,000 grants that were given free as long as the person was living there and owned the home themselves, it doesn't take much for that to start adding up, and housing itself has, in itself, generated that many more funds if the home is sold, that that money probably should come back as well. Have you given any thought to doing that? In other words, whatever we gave them, if they decide to sell the home at the end of the day, should it all come back? I suppose I am right wing enough to believe that it should come back, and I am wondering what might be in place to do that.

MR. NOSEWORTHY: Well, it actually does come back. The forgivable portion, or the grant portion of the loan, is earned over five years. If, after the second year, that unit is sold, the remaining three years component of that forgivable loan becomes non-forgivable and is recouped by the Housing Corporation at that time.

AN HON. MEMBER: You have to stay in the house for five years (inaudible).

MR. WALSH: I specifically used 1989 as an example because I now, in the last year, have seen some homes that I fought for the people to upgrade now being sold, and I am saying to myself: I have a house two doors up the road that probably needs help today, and if that other $5,000 that they have now stayed for five years has disappeared, it is a windfall profit for the people who now are selling the homes, and I would like to see that come back as well, but maybe I should talk to the Treasury Board Chairman on that.

The next one is the same thing. Are you going to be administering the social services housing in terms of the lease/purchasing of the homes? Are you going to administer that, or is that still with social services?

AN HON. MEMBER: It is still with social services.

MR. WALSH: Okay.

The other one I wanted to touch base on very quickly, and I want to do it because there tends to be, in a lot of cases, a misunderstanding in terms of what housing does, and I say that because it is a very positive program but most people look at it sometimes as being negative, and that is that you develop a subdivision in an urban area like St. John's or Mount Pearl; you sell the lots. People tend to forget that the profits from those lots, in actual fact, then go out to rural parts of Newfoundland as well. The most recent one that I have heard some criticism on happens to be at Marble Mountain. People are saying: Why are Newfoundland and Labrador Housing out there?

If my memory serves me correctly, you are out there to administer a particular program on behalf of that corporation, but my understanding is, at the end of the day, you will make a profit?

MR. REID: No, that is not correct. The role Newfoundland and Labrador Housing is playing there now is an assistant's role to the Marble Mountain Development Corporation, and we are out there working on behalf of the Development Association. We are secondary in the promotion of Marble Mountain right now. If there is any profit entailed or result from any sales or promotion of Marble Mountain, I would think, it goes right back to the Development Corporation. Am I correct, Bob?

MR. NOSEWORTHY: Mr. Minister, perhaps I could probably comment a little bit on that?

MR. REID: Yes, go ahead.

MR. NOSEWORTHY: I guess our involvement with Marble Mountain really, is as the minister points out, at the request of the Marble Mountain Development Corporation to aid in the servicing of the new base lodge essentially. We have some capabilities and expertise in land development which they requested and we felt that we could offer in that regard. The whole notion of the land development was with the view to all the servicing that essentially was put in place for the base lodge; there was a road required in a road required out; there was the sewerage treatment which had to be brought to the site; water had to be brought to the site et cetera, et cetera.

The only thing that we did was to look at the opportunity that existed quite frankly, for possibly some land development, residential development at the base, which would then contribute some revenues back into the servicing and be applied against the servicing to reduce the overall costs. The only thing basically provided there was the fact that we oversized the pipe so it could accommodate the additional requirements and we put in some distribution lines and that was it. We are now looking at some residential type of development there and I won't belabour that unless the committee wishes, but if indeed we are able to go ahead and there is a possibility of a profit there, it will be essentially put back into the hill and would indeed support whatever additional development is necessary.

MR. WALSH: I guess my question stems from the fact that I am quite familiar with your involvement there, that in another life I think, I looked to involve you there specifically, but my understanding was at the end of the day the corporation would not be out of pocket and I guess that's the point that I am trying to make, that at the end of the day the net result is, that you are either going to break even on costs or indeed if some properties were sold, that you would get, you know, a certain percentage of the sales or there was something built in that you could walk away.

My reason for asking the question is that I have been in some quarters of late where they have reason to believe that this is an expense being incurred by Housing, that really, they shouldn't be there and I guess I am trying to clear that fog to say that at the end of the day, there really is no net cost to Housing and I just wanted to get that on the record.

MR. CHAIRMAN: Minister Reid.

MR. REID: You are absolutely right, Jim. In fact, our proposal to Cabinet was that we not be involved. We did what we were asked to do at Marble and we did it and we went back in and proposed that Marble Mountain Development Corporation and ITT or whomever, should continue now with the development. I will say this to you, that there is active negotiations ongoing right now with a number in the private sector that could possibly move in and take over the whole thing from us in the very near future, and I believe that the - well, I am sure that the government wishes to do that. We would rather farm that out to the private sector to develop and expand, and you know what I am talking about when I say expand, than to have the Development and Corporation and ourselves involved in it, so you are absolutely right.

MR. WALSH: So at the end of the day, net cost to Housing is really zero and I want that on the record for Housings sake, because you are doing a good job in a lot of other places, and even though the funds are coming from places, be it like Mount Pearl or Cowan Heights, I want the people in the Province to know that although you are involved in those high density areas, that those profits are the profits that go into the smaller communities around Newfoundland, be it for industrial parks that sometimes sit empty for a number of years while you are waiting, that the profits are coming from that and that Marble Mountain at the end of the day is at no cost to you and those who think it might be, should check this, in defence of the Corporation.

MR. CHAIRMAN: Mr. Fitzgerald.

MR. FITZGERALD: Just to get back to the point Mr. Walsh has raised here. At the end of the day if there is no program and you start to make some money there, then how does it balance out? Now you are taking money from the program, directing it in those areas. When they finally begin to make money, where does the money go that they finally make? It doesn't go back into a housing program any more if there is neither one.

MR. REID: Do you understand the question? I don't understand his question.

MR. NOSEWORTHY: I guess you are referring to monies that could be made in terms of land developments or what have you. Indeed, what happens to that, it is taken back into our revenue and is applied in support of other activities such as social housing programs or what have you. We have an ongoing portfolio of something in the order of 8,000 units, plus we administer RRAP and other social housing activities. Essentially those are the only activities that cost us money. Other than that they are break even or we generate a profit. So those monies are indeed reinvested back into social housing.

MR. FITZGERALD: Back into housing again.

MR. REID: I'm assuming that even though the feds may not have a program like RRAP there is a possibility that the Province would have to I suppose to some degree continue on with some of its own programming.

MR. FITZGERALD: That was my question leading up to that, because the RRAP has been a very positive program. When you look around some rural areas a lot of the housing, especially on the fringes going in, left a lot to be desired. All of a sudden they've been fortunate enough to get a RRAP; the next thing you see new siding going on, new windows, and when the snow cleared away the following year you saw the fellow towing his car wreck to the dump and you saw him towing away the old skiddoo track, and they begin to take a little bit of pride in their property. I think it reflected very well and positively on rural Newfoundland.

MR. REID: RRAP is a great program, I agree with you.

MR. FITZGERALD: My question was, that even if the federal government - and I understand this program was participated in on a 75-25 basis?

AN HON. MEMBER: Yes.

MR. FITZGERALD: Seventy-five per cent federal, 25 per cent provincial? Even if the federal government decides that it is going to opt out has the provincial government, has your department, considered continuing with the amount of money that you've put forward into this program in the past, the 25 per cent up until now, shall we say?

MR. REID: Right now, today, we are in the process of putting together a presentation with some options that we would have if and when the federal government should withdraw. I'm supposed to be going to Ottawa next week or the week after, as soon as I can arrange a meeting with Dingwall - he is the minister responsible - to talk about this very thing. We are okay for this year in regards to the RRAP - we are going to deliver another 400 units or whatever - but next year if it disappears then we have to be ready. The Housing Corporation and myself have been working now for some weeks in putting together a proposal to the government in case the federal money should dry up. We are working on it, and hopefully we will get some funding for it next year.

MR. FITZGERALD: Thank you.

MR. CHAIRMAN: Thank you. As there is nobody else who wants to ask any questions I think we could now ask the Clerk to call the heads. Maybe to expedite the thing we could ask her to call from the beginning to the end, and then call the total.

On motion, subheads 1.1.01 through 5.1.02, carried.

On motion, Department of Municipal and Provincial Affairs, total heads, carried.

MR. CHAIRMAN: Newfoundland and Labrador Housing Corporation.

On motion, subhead 1.1.01, carried.

On motion, Newfoundland and Labrador Housing Corporation, total heads, carried.

MR. CHAIRMAN: Very good. Thank you, Mr. Minister, and your officials for coming and enlightening us this morning. I'm sure that if the members haven't had a chance to ask all their questions we will have ample time in the House to ask a few more questions concerning the subjects. Thank you.

The Committee adjourned.