Pursuant to Standing Order 87, Rick Woodford, MHA for Humber Valley substitutes for Gerald Smith, MHA for Port au Port.

The Committee met at 7:00 p.m.

CHAIR (Wiseman): Order, please!

For the record, my name is Ralph Wiseman. I am the Chair of Government Services Committee. I have with me this evening the members of my Committee. They are the vice-chair, Mr. Byrne, Mr. French, Mr. Oldford, Mr. Woodford and Mr. Sparrow. I want to welcome the minister and his officials to this hearing, and I'm sure that it will be quite interesting and hopefully not too long.

There are a few rules that have been pretty well standard since we have been doing these hearings. The minister has fifteen minutes for his opening remarks. The vice-chair can either respond for fifteen minutes or he can go directly into questions.

I also have at the table this evening the Clerk, Mr. Noel, and Mr. Collins upstairs who is the recorder.

Minister, when you are ready you may proceed.

MR. A. REID: Mr. Chairman, I apologize for being late but I was unavoidably detained by a person who I do not want to tell you anything about. If you would allow me, I would like to do the Housing Corporation first, if that's okay?

CHAIR: I apologize, Minister. I should have said that we are reviewing the Estimates of the Department of Municipal and Provincial Affairs and the Newfoundland and Labrador Housing Corporation.

MR. A. REID: If you agree then on doing the Housing Corporation first, because I think that we can -

CHAIR: That's no problem.

MR. A. REID: You have some questions I guess for the housing people, and then we can let them go on and then we can get into Municipal and Provincial Affairs.

To my right is Clyde Granter, the Chairman and CEO of the Housing Corporation. He has some staff with him, and I am going to ask Clyde to introduce his staff.

MR. GRANTER: With me is Ed Heath, who is the Vice President of Finance and Corporate Services for the Corporation. That's all I have with me.

MR. A. REID: The total current account expenditure for 1998-1999 for the Housing Corporation is $101 million, of which $4.7 million or 5 per cent comes from the Province of Newfoundland and Labrador. Four point seven million dollars is what has been budgeted this year from the coffers of the Government of Newfoundland and Labrador to the Housing Corporation.

I stress that because a lot of us do not realize that the Housing Corporation, with the help of the federal government and from its own generation of revenue, is basically self-sufficient. I have often said that if we were forced to live with less than $4.7 million we could do it, if we were left alone and that agency to do I guess what we wanted to do. Some $58 million is from the federal government, with the remaining $38 million being derived internally from rents, interest payments and land sales. Of course, as we get into land sales - and we have been selling a number of assets in the last few years - there is going to be less and less opportunity for us to come up with those dollars that we normally put back into our budgets, because we do not have a lot left to sell.

A reduced grant from the provincial government of $2.1 million is due to a combination of expenditure reductions and increased revenues from the introduction of the new rental scale. That is over last year's amount. Social housing programs consist of 13,000 subsidized rental and mortgage units in 1998-1999 and will cost both the federal and provincial governments some $70 million. These units are home to 36,000 people including 15,000 children. Of course, the greater percentage of those people live in and around the St. John's metropolitan area.

Repair programs will provide grants and loans to 2,000 needy clients, totalling $5 million under the federal-provincial RRAP Program and the provincial Urgent Repair Program. The Corporation has 4,000 acres of land and 450 unsold building lots throughout the Province. Due to depressed markets, new developments will be kept to a minimum. Privatization of the market rental portfolio is virtually completed with only 120 units remaining in Pleasantville. Those are the only ones we have left. As you all know, we sold Elizabeth Towers, Churchill Square, Linden Court and Allandale. That is all we have left.

The 128 units that are presently at Pleasantville, during the past year the Corporation was able to sell 300 units consisting of Elizabeth Towers, various projects around Churchill Square and the Arnold's Loop unit in Pleasantville. I will say here to you publicly that we have reassured the people of Pleasantville, the residents of the 128 units, that we do not plan to sell off those units immediately. I will say that we said that to that group of residents because they were afraid they would be jeopardized like the people of Linden Court were and they would be turned into condominiums and so on. That does not mean that we cannot arrange to make some deals with some people living in the area, co-op housing or something along that line. We still might unload them, but if we do that we are going to do it protecting all the people who live there. We will do it in there in consultation with those people.

I can run down quickly, too, some of the figures I suppose that illustrate in the budget what we spend. The subsidized rental housing program, for example, last year cost us $55.1 million. Our portfolio consists of 11,200 units and includes 4,000 units transferred from CMHC. Last year's transfer from CMHC put an extra 4,050 units over to us. The average annual subsidy amounts to $4,900 per unit. The rent supplement program put $3.4 million into that last year. The portfolio consists of over 1,000 units. The average annual subsidy is $3,400.

Mortgage program costs. A lot of people are not familiar and do not know that we are, as an agency now, involved with a lot of mortgages that we picked up through CMHC and on our own. The total costs for mortgage programs is $2.9 million. The portfolio of subsidizing mortgages - I think most of you know about that -, some 1,200 units, that total cost is $45 million a year, and the annual average subsidy amounts to about $2,500 per unit.

In the residential rehabilitation program subsidies, provision has been made for some 300 new home loans to be committed during this year at a total of $3.2 million. Some $2.4 million of that will be in forgivable grants. Portfolio loans under administration consist of 500 accounts at a total value of $40 million.

Delivery and administration costs are as follows: gross expenditures amount to about $1,400 a year; salary costs about $10 million a year. Other major costs include a total administration budget of computer system costs of $1.3 million, occupancy expenses $1.09 million, and travel $455,000. By the way, my expenses, I do not think you have that there, I do not know if you do or not, but it amounted last year to about $35,000, I think it was something like that (inaudible) the Minister's Office, was it, $35,000 to $40,000, something along that line?

The revenue from CMHC is as follows. Fixed payment for the devolution agreement amounts to $55.3 million. A further $2.8 million represents CMHC's share of RRAP program together with other miscellaneous items.

As for land development, we are still trying to sell as many lots as we can in Southlands. In 1998-1999 we have projected we will sell about fifty lots. I do not think we will have any problems in reaching that number. New commitments of $4 million have been put in for land development this year at Southlands.

Our sale of assets will bring us in some money this year, not a lot. Our interest revenue through our RRAP loans and so on will also bring us in some anticipated revenue, and that is about all I need to say at this particular point in time.

I will say to you that government has been, for the past two years, committed to privatizing I suppose as much of Newfoundland and Labrador Housing assets that we have as we possibly can, in properties like Elizabeth Towers, Churchill Square and others, and we will continue to do that. The idea is to continue on a gradual basis to do it. You just cannot throw all of what we have on the market at the one time because you will upset the market to the extent where nobody will be able to sell any thing, and I guess ultimately the returns on your investment would be very low.

We have to be cognizant that we are not the only ones in the business, especially in and around the St. John's area. There is a lot of private sector money invested in land development and housing. We have to be cognizant of the fact that they are out there trying to compete, I suppose in some instances, with us for the same dollar. Those are my opening remarks, Mr. Chairman.

CHAIR: Thank you very much, Minister. Before we proceed, I would tell the officials that if you are responding to a question you identify yourselves for the purposes of recording so that they will know who you are.

Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. I'm just going right on into the questions, no opening statements. Newfoundland and Labrador Housing presents a statement or a report, I suppose, to the House each year. I believe there was one submitted not long ago. The detail that you just went through, Mr. Minister, I do not remember seeing that type of detail in that report. Why would we not have that type of detail in these Estimates like we have with other departments? Because to come here now and try to start asking questions based on what you just told us - I mean, it would be nice to have it up front. Is there any explanation for that?

MR. A. REID: Most of what I told you you have had I suppose in dribs - I understand where you are coming from - and drab over the year. You heard it somewhere but you just cannot put it all together, and I suppose that is a good question to ask. I do not know if the report is the place to put it, but maybe if there were a statement issued to the Committee prior to tonight, to the Estimates, outlining some of the things that we actually did and some of the things we plan to do, maybe next year would be a good time to that. I understand where you are coming from, but I am going to ask Clyde to react.

MR. GRANTER: I am not sure that I can say much more than it seems to be a tradition for Crown corporations that they prepare an annual statement, as I guess is common for most corporations. The Auditor General of course audits, but beyond that I really cannot explain it. We get a very small annual grant relative to our total expenditures, I grant you that, but essentially I think we are complying with our legislation, and that is the way it has always been. I am not sure it has ever come up in the past.

MR. J. BYRNE: It would just be nice to have more information so that you can be prepared to ask questions on it. Because this is what I had, one sheet. In the meantime -

MR. A. REID: It is difficult. If you do not mind me saying, the Auditor General in the five years that I have been - and Bob was here too, because Bob was here for three years, three-and-a-half years, and then Clyde. In the Auditor General's Report I wish she would come back the following year and say and give some credit to people who -

MR. J. BYRNE: Follow up?

MR. A. REID: - follow-up. Because this is one of the agencies that has continuously been given recognition privately by the Auditor General who said: Thank you very much. She has written me and said that the Housing Corporation has always been so cooperative in doing the things that in this case she has asked it to do, but then she will not put that in her report. I suppose she is in the same situation as he is in, that she is not required to do it. I will say quite honestly, and I think you can check it out as Chairman of the Public Accounts Committee, that I do not think the Auditor General has ever had very much trouble with the Housing Corporation in regards to what she would consider good financial management.

MR. J. BYRNE: Where I am coming from this evening is not to say that Housing is doing anything right or wrong. It is just to have the facts that you just put out so one could make general questions on policy, maybe, whatever the case maybe.

MR. A. REID: I will try to remember that and I will make note of it. The minutes will show it anyway. Next year if I am still around here in this portfolio I will provide you a day or two in advance of at least my opening statements.

MR. J. BYRNE: Fine.

MR. WOODFORD: Just to add for my information and understanding - I do not mean to take away from Jack's time -, but doesn't Newfoundland and Labrador Housing Corporation issue an annual report every year?

MR. A. REID: Yes.

MR. WOODFORD: That is the same as Newfoundland and Labrador Hydro. The details of Newfoundland and Labrador Hydro are not mentioned in the Estimates, but the details are always in their report. We could never get it in the Estimates. Like Jack said, we would always have to go to Newfoundland and Labrador Hydro's report. All Crown corporations I understand follow the same rule.

MR. A. REID: They do, but I do not think the Housing Corporation needs to try to conceal anything. We have never ever had any problems in regards to questions from the Opposition or from anybody.

MR. WOODFORD: Because it is in the report, it is just it is not in this.

MR. A. REID: I can understand where Jack is coming from in regards to coming in here tonight with very little information other than half a page in a budget (inaudible).

MR. J. BYRNE: Even if we do have the report, there are some details there, but not nearly what you just went through in that report.

MR. WOODFORD: You cannot question it then.

MR. A. REID: If I remember it next year, maybe someone will remind me, I can do that. Maybe you can make note of that, Mr. Heath.

MR. J. BYRNE: I have some other questions here now based on some of the notes made when you were speaking. First, the sale of Elizabeth Towers. I asked some questions in the House on Elizabeth Towers. One I know I was going to ask but I cannot remember if I asked it, and that is with respect to the repairs of Elizabeth Towers. It was sold for x amount of dollars, and there were some repairs I think to maybe the decks and some other things down there, maybe upwards of $1 million in repairs. That was paid for by government I think, so that reduced I believe the actual amount of money that we received for Elizabeth Towers. Can you say a few words on that?

MR. A. REID: This question has come up on a number of occasions, and because the question has been asked in the House I have never had the opportunity to go into detail about the actual deal on Elizabeth Towers. I think it would be worthwhile for us to take a couple of minutes and actually tell exactly what it cost us, what we sold it for at the end of the day, and how much we actually lost or gained on it. Would somebody, as quickly as you can, do that?

MR. GRANTER: I can tell you part of it. I am going to have to defer to Ed Health to provide some of the other information. Essentially, the selling price for Elizabeth Towers was $5.26 million. The new owner is required, as part of the package, to do the repairs to the balcony. I think that is the only significant requirement that the Housing Corporation placed on him as part of the package. If you want to go back into history in terms of what the Housing Corporation spent on Elizabeth Towers with re-cladding it some years ago, and to get some sense of the cost of that and the outstanding debt, I think I would have to defer to Ed.

MR. HEATH: Elizabeth Towers back when it was built, I think in maybe the early 1960s cost, about $5.7 million. Throughout the years we have depreciated that building by the tune of about $3.7 million. We spent $8.2 million in major renovations throughout the years. The biggest part of that I believe was something like $6 million or $7 million for the exterior cladding about five or six years ago.

In any event we capitalized that on our books, which made the net book value $10.3 million. Our selling price was $5.3 million, so in fact we have lost $5 million over the past three years made up of a write-down in our book value in 1995-1996 of $2.7 million. We further wrote it down at the end of 1996-1997 by another $1.9 million as a result of various appraisals that we had and based on appraisals as a result of our attempts to sell. Finally this year, when we did sell the building, we had to record a further loss of $465,000.

MR. J. BYRNE: Did you answer my question, with respect to the money being spent on the... I heard a figure of $1 million being paid by government to do the renovations or the repairs on the balconies and what have you after it was sold.

MR. GRANTER: No. The Housing Corporation did not incur any expenses for repair of balconies. That was a requirement that we placed on the new owner. That is something he has to do as part of the agreement to sell.

MR. A. REID: As a government we provided some options for everyone when they bid. We have done a deal with the new owner. Will you explained what the deal is too, please?

MR. GRANTER: Basically, we have provided the owner - we have taken a mortgage, and his down payment was approximately 10 per cent.

MR. J. BYRNE: Right, that (inaudible).

MR. GRANTER: As a condition of the mortgage he is required to incur the cost of repairing the balconies.

MR. J. BYRNE: Taking the mortgage out, government offered that to each group that bid on it. They had the same option, did they?

MR. GRANTER: They had the same option, yes.

MR. J. BYRNE: Okay.

MR. A. REID: That was offered to everyone up front.

MR. J. BYRNE: Yes, that is what I am asking. With respect to CMHC and the deal that was worked between them and I suppose Newfoundland and Labrador Housing and the provincial government, you mentioned 4,050 units.

WITNESS: Yes.

MR. J. BYRNE: I am just wondering about the impact that had on Newfoundland and Labrador Housing with respect to staff, jobs and what have you. Did it go up, down? Who took the responsibility for this? Is CMHC completely gone now, is it a phased in process, and are you going to be taking over the jobs that were there with them? Because I know there has been a pretty big lay off or retirement, however you want to refer to it, down sizing, in Newfoundland and Labrador Housing over the past couple years. If you are taking on all this extra work, why is the staff going out the doors?

MR. GRANTER: The extra work that we have taken on as a result of the agreement, as a result to taking responsibility for the administration of the CMHC units, required that we essentially hold the decrease. We held back six people to take over the administration of the CMHC units.

MR. J. BYRNE: Six people, that's it, for 4,000 units?

MR. GRANTER: (Inaudible) basically the staff reductions that we were planning last year. We decreased the number of reductions by six to be able to handle the CMHC portfolio.

MR. J. BYRNE: What about all the employees with CMHC? Where did they go?

MR. A. REID: Don't assume that 4,050 are 4,050 apartment units. Four thousand and fifty units are a mixture. Explain that. I think that is where he is coming from.

MR. GRANTER: The CMHC units are not units that we operate directly. Basically, we are administering agreements that were established between CMHC and sponsor groups. For example, it could be a service club that is involved with the administration of the group. We are not maintaining them as such.

MR. J. BYRNE: I get you. Like, say, the Kinsmen's Centre in Torbay (inaudible) -

MR. GRANTER: Yes.

MR. A. REID: Agnes Pratt Home, for example (inaudible).

MR. J. BYRNE: I have a couple more questions along that line. You mentioned mortgage costs, $2.9 million. That is a $2,500-subsidy. Is that per unit? If that is the case, are we getting any money from the feds for this? Do you know what I am talking about here now?

MR. A. REID: The mortgage program cost, $2.9 million?

MR. J. BYRNE: Yes, and the $2,500-subsidy?

MR. A. REID: Annual average subsidy amounts to $2.5 million, (inaudible).

MR. GRANTER: I think that is the difference between what we collect in terms of payments from the mortgagee as compared with the actual cost of borrowing the funds that were used. Am I close (inaudible)?

MR. A. REID: That is the amount that we subsidize.

MR. GRANTER: That is the amount that we subsidize. Basically the owner of the property is paying an interest rate that is lower than the going rate.

MR. A. REID: We pick up $2,500 on an average per RRAP grant, say, or for a RRAP mortgage. Do you understand that?

MR. J. BYRNE: Yes. With respect to the RRAP program itself, that is another note I made here -

MR. GRANTER: Just to finish that, that subsidy is cost-shared with the federal government. Sorry.

MR. J. BYRNE: This was the question, yes. What percentage is cost-shared?

MR. GRANTER: It averages 75 per cent.

MR. A. REID: Seventy-five twenty-five.

MR. J. BYRNE: Seventy-five twenty-five?

MR. A. REID: Yes.

MR. J. BYRNE: Twenty-five from who?

MR. A. REID: Us.

MR. J. BYRNE: It is really not costing you $2,500, is it?

MR. A. REID: It costs us about $600 for the $2,500.

MR. J. BYRNE: The RRAP program itself, what is the story on that this year? You made an announcement not long ago with respect to that program. Can you update me on that?

MR. A. REID: It is hard for me to update you, Jack. Because it was only this afternoon the Minister of Finance and Treasury Board and I were having another conversation. We are waiting for the Premier to come back to discuss with the Premier the possibility of changing our RRAP program this year.

MR. J. BYRNE: Changing it.

MR. A. REID: Yes. What has been suggested, and I will say to you it has only been suggested, involves a sizeable outlay of money by the provincial government to the tune of something like $3 million extra. You know yourself in the House, you know that the Minister of Finance and Treasury Board has been pretty rigid when it comes to any extra money going anywhere this year. Because we are tight on dollars, there is no two ways about it.

What we are looking at, and I might as well say this, because I think some people know it anyway, is the combination of RRAP emergency response under social services, for example, and the possibility of the Housing Corporation contributing an extra $1.5 million per year for a two year program. Instead of us having a RRAP program as we know it, giving out loans up to $25,000 to upgrade a house to a mortgage standard - and you know what I am talking about. Most people who get RRAP grants have to spend $15,000, $20,000, $25,000, and in a lot of cases they do work on the houses that they do not want done. They go in and say they need a few windows, and they end up doing the roof and the basement. I think everybody understands what I am saying here.

We have talked to the federal government about this. We feel that there is a lot of work that you could do around, especially in rural Newfoundland, with RRAP if you were not forcing people into taking loans of $25,000 or $30,000. What I am saying is you could do a lot of work with $5,000 grants, $10,000 grants and smaller RRAP loans and grants which would go a longer way.

If you are going to put social services emergency stuff into it as well, well why not? The Housing Corporation delivers that on behalf of social services anyway. It is called Human Resources or whatever it is called now, I don't know. I am sorry, I should not be calling it social services. If you throw that in there too, it means that you take care of the social service end of it, but also under the old RRAP program take care of some of the senior citizens, so you are getting a greater cross-section.

You are talking here with a basic RRAP program of doing 300 houses this year. Under the program that I am talking about - we are talking at least 1,000, am I correct? We are talking at least 1,000 units getting done up. Not necessarily up around the $25,000 to $30,000 bracket, but a lower level. We would still do some RRAP, but the majority of the RRAP that we would do would be a lot less than what we have been doing in the past.

Now Jack, I don't know if I am going to get that or not. If you ask me a question in the House, the way I am going to answer it is the same way as I answered tonight. I don't know honestly -

MR. J. BYRNE: I will ask you a question now -

MR. A. REID: If we do that we will be announcing it in the next week or so.

MR. J. BYRNE: The question I ask you now is this. It sounds all well and good in theory, but I would imagine some of the problems that were incurred before through Newfoundland and Labrador Housing, why they had to go to $15,000, $20,000 and $25,000, were because of certain electrical standards, building codes and what have you. Will you be able to get around that?

MR. A. REID: We have talked to the federal government about that and about providing the money, and yes there is. We feel that if we go and inspect a house and find that they only need new shingles on the roof, then why don't we just put new shingles on the roof, and have a program of a higher level of forgivable money. So you are actually then going in and just giving these people a grant, and not tying them up in a mortgage.

The other point I will make to you as well is that over the past, I suppose, almost ten years now, myself as an MHA, I know my district well enough to tell you who needs RRAP and who does not need RRAP. I feel that the MHA himself or herself should have an input into who should qualify for assistance when it comes to repairs to one's house. If we can get that program, I think that the government would like to see the local MHA having direct input into the amount of money and who would get it at the end of the day. Don't go out and repeat that because you know what will happen. Everyone will be after you for a RRAP grant tomorrow.

MR. J. BYRNE: I don't know (inaudible). You mentioned Pleasantville and the apartments down there. I believe you said there are 120 left. You talked about if you do something with it down the road it will be different from what happened with Linden Court, and you will probably keep out of the situation that developed over there. You mentioned co-op housing. Could you say a few more words about that, what you have in the back of your mind type of thing?

MR. A. REID: Yes. There is a group down in Pleasantville that has been after us for five or six years that are interested in putting together a group of people who would own and operate the buildings down there, or at least one building that we know of. It is the same group that came to me some time ago. They were afraid that we were going to privatize it. You know what I am talking about.

Personally, everything is on hold with regard to Pleasantville, and I have told that to the people down there. I am not going to sell off Pleasantville for someone to move in and turn it into condominiums. I am saying that I'm not. As long as I am minister I'm not. I think I can say it on behalf of the government because the Premier talked to me about it too. We are not going to turn around and sell it off to somebody who is going to increase their rent by a substantial amount, but we might consider a group of citizens coming in and saying: Look, we might buy this ourselves. If the government made the right deal with us, we might take over this building ourselves. That would be the first option as far as I am concerned, and I would certainly look at that.

I don't think the Housing Corporation for some time will ever have the authority to just go out and sell it. I think they are going to have to make a commitment to the residents of the area, and ultimately, I suppose, go to the residents and ask: What would you think would be the best thing to do with it? The residents are definitely going to have a say in what is going to happen in Pleasantville. We only have 128 units left down there, and that is all we have left in the city, so it is not going to mean a lot one way or the other to us.

MR. J. BYRNE: Buckmaster's Circle. I got a call a while back on this - and I'm not sure if it came up in the House or not - that Newfoundland and Labrador Housing had hired a contractor to do a fair bit of work up there: renovations, repairs, maintenance, blah-blah-blah. It went on for month. The work was never completed. The contractor was paid for it, and they eventually had to get someone else to go in and complete the job. Is that fact or fiction?

MR. A. REID: I cannot answer that one. I'm sorry.

MR. GRANTER: I don't know how far back you are referring to. The only thing I can tell you is that from about 1992 to 1995 there were four -

MR. J. BYRNE: Within the past two years, I would say.

MR. GRANTER: Not in the past two years, no. There were four separate contracts and three contractors who were involved with modernization and improvement activity at Buckmaster's. The circumstance you are referring to, I am afraid I cannot deal with that.

MR. A. REID: I will get you an answer to it. We will research it, come back and I will give you an answer. Because I don't know anything about it either.

MR. J. BYRNE: Because definitely something went on there, because I went and looked at it.

MR. A. REID: We will find an answer for him as soon as we can. Go ahead, say it.

MR. HEATH: I don't know very much detail, but I think you are right. There is a problem with one of the contracts that surfaced in the past year-and-a-half maybe.

MR. J. BYRNE: That is right.

MR. HEATH: We did bring somebody else in. I am not sure if our own forces or another contractor had fixed it up. That is about as much as I know.

MR. J. BYRNE: The work was never completed by the original contactor. He was paid for it -

MR. HEATH: I think it was completed, but it was faulty.

MR. GRANTER: I am sorry, maybe I can fill in a little more of this. Last year after the contract was completed we started to receive complaints from some of the tenants that water was coming in through the windows and so on. We did hire another contractor to go in to do some repairs, and in the course of doing that we asked him to take a look at the quality of the work that had been done generally. He inspected one building of four units and discovered some workmanship problems, I guess you might say. We are not sure at this point whether that extends into other contracts or not, but we have taken preliminary sort of legal precautions, I guess you might say, to protect our position until we can get in and more fully evaluate the problem.

MR. J. BYRNE: Can I have the name of the original contractor who had done the work, the amount of work he has done, how much he was paid, if he completed the job, and the same information with respect to whoever had to go in and follow up?

MR. GRANTER: I can provide you with that information within the next day or two, sure.

MR. J. BYRNE: That's it for me for now.

CHAIR: Mr. Oldford.

MR. OLDFORD: Pass.

CHAIR: Mr. French.

MR. FRENCH: No, I think Jack has pretty well covered it.

MR. A. REID: He usually does, doesn't he?

MR. FRENCH: He usually does. He is pretty thorough, Jack is. Just one question. On page 247 we have reduced the Grants and Subsidies by some $2,102,200. What is the reason for that?

MR. A. REID: Go ahead.

MR. GRANTER: That is a combination of reductions in cost and increases in revenue primarily from increases in rent geared to income scale. I guess included in there as well would be some asset sales which get reflected into that bottom line.

MR. FRENCH: That is why it is down $2 million.

MR. A. REID: The better we do, the less the subsidy is. The more money the Housing Corporation makes the less the government gives us. You think it would be the other way around, wouldn't you? That's a fact, the Housing Corporation operates that way. The more efficient the Housing Corporation is, the more money the government takes away from us. That is all (inaudible).

MR. FRENCH: Jack, do you have any more questions for the Newfoundland and Labrador Housing Corporation?

MR. J. BYRNE: Yes.

MR. FRENCH: I will give Jack - because that is the only question I had for Housing.

MR. J. BYRNE: With respect to the developments, like Cowan Heights and these places, you mentioned some time ago that you were thinking about getting out of that business altogether across the Province. Can you give us some update on that situation?

MR. A. REID: The mandate of government back in (inaudible) Program Review in October of 1996, we were directed as a housing corporation to get out of competing with the private sector in every possible area. We put a bit of an argument forward to government about Southlands at the time, because we wanted some organized development and so on. You remember that argument went on and I made some comments in the House about it. Other than Southlands we were basically told that the private sector were looking at us now as being in competition with them and that this government did not feel that the Housing Corporation should be actually out there doing that.

We proceeded immediately to sell off a lot of service land, valuable land, especially in the Mount Pearl area. Almost immediately after that we started to sell off property. We still have a sizable portfolio of property which stretches from Port aux Basques to Goose Bay, to Carbonear, to St. John's. Within the next couple of weeks or so, you are going to see an advertisement in the paper basically offering a large amount of our property for sale, a general statement that we are in the process of selling off some of our properties.

Like I said earlier, you have to be careful, you cannot throw it all on the market the one time because you will upset the whole market. We are in the process of selling off. We don't have very much left in regard to property other than vacant land, raw land property. For example, we still own a sizeable chunk of land on the Kenmount called the Kenmount Lands. All the land in on the back of Kenmount Road, on the right hand side as you are going out. We own that. We still have some land in the Mount Pearl area. We still have Southlands, for example. What else do we have in St. John's?

WITNESS: Residential lands.

MR. A. REID: We have mostly residential land. On top of that, gentlemen, we own a lot of land in St. John's that we lease, that there are buildings on. Believe it or not, we have long-term leases with a large number of properties that we make good bucks on. What I am talking about is we basically own the land and people have gone in there, built buildings on the land, and are paying us so much on a lease for land in and around the St. John's area.

We are hoping to convince the owners of those properties as well to buy those out and get them off the books. I don't know how many units we have, gentlemen, in regards to residential units outside St. John's that are vacant, but there is a large number I believe.

MR. GRANTER: There is not really as large a number as you might think. In some of the smaller communities where many years ago developments were done, there are residential lots for which there is just no demand. In the urban centres, in Gander and Corner Brook - in Gander we have some undeveloped land, and each year we sell some of that in block form to developers and they carry through with the lot developments. The major one really is Southlands in St. John's.

MR. J. BYRNE: Mr. Granter, could you provide me with a list, since 1996, since the policy change, especially of, I suppose, the developed lots that have been privatized and sold off, and to whom and for how much?

MR. GRANTER: Developed lots?

MR. J. BYRNE: Do you know what I am asking? Any of the land -

MR. GRANTER: Since when?

MR. J. BYRNE: Since the policy change. You mentioned 1996, didn't you, just a few minutes ago?

MR. A. REID: Two years ago.

MR. J. BYRNE: Two years ago.

MR. A. REID: No, less than two years ago.

MR. GRANTER: I am sorry, I am not sure I (inaudible) the question.

MR. J. BYRNE: The question is, could I get a list -

MR. GRANTER: Residential?

MR. J. BYRNE: - of any properties that have been sold by Newfoundland and Labrador Housing, to whom, and for how much?

MR. GRANTER: The list of land sales, to whom and for how much.

MR. J. BYRNE: Yes.

MR. GRANTER: It will be a long list.

MR. A. REID: (Inaudible) lot of work.

MR. J. BYRNE: Maybe I am asking for too much. Maybe if I just asked for -

MR. A. REID: You want to know if there was a house in Boswarlos on the West Coast sold, do you? Is that what you are looking for?

MR. J. BYRNE: No. I am thinking about in and around Cowan Heights, these large tracts of lands that you had developed and probably surveyed. Different extensions in there, Cowan Heights extension No. 15 or something. I don't know.

MR. GRANTER: I think we can do it.

WITNESS: Block lands.

MR. J. BYRNE: Block lands, yes.

MR. GRANTER: We can do it -

MR. J. BYRNE: Basically I am asking: What developers in and around St. John's bought up these properties? I am just curious to know who that may be and how much they paid.

MR. A. REID: (Inaudible) all of them that time. Close to it.

MR. GRANTER: There have not been a lot of block sales in the St. John's area. In recent years we have done some in the Mount Pearl area, in Pearlgate, for example.

MR. J. BYRNE: Whatever, (inaudible).

MR. GRANTER: Cowan Heights was developed by the Housing Corporation.

MR. A. REID: The last block of land was sold in Cowan Heights last year, am I right?, the last parcel. A couple of years ago. More than two years ago. So it is not Cowan (inaudible) -

MR. J. BYRNE: Whatever. Mount Pearl, St. John's, what have you, you know what I am talking about.

MR. A. REID: Pearlgate and places like that, I guess that is what he is asking about.

MR. J. BYRNE: Yes.

MR. A. REID: Yes, we can provide that to him. Yes, we can provide that, sure, no problem.

MR. J. BYRNE: With respect to the subsidized housing that you have been selling off - for example, Linden Court and these places, I suppose, and other housing individual units, I would imagine - you say you changed that policy. What I was always lead to believe was that if you take areas like Cowan Heights, Pearlgate, these Newfoundland and Labrador Housing developments in and around St. John's, the argument that was being put forward all the time by Newfoundland and Labrador Housing and the Department of Municipal and Provincial Affairs was that they used the revenues from these developments to subsidize their housing units.

MR. A. REID: Social housing.

MR. J. BYRNE: Social housing, yes, there you go. Now we see that these properties are being sold off. There is going to come a time, of course, when you won't be having any revenues from land development. Is this a chain reaction? Are we seeing the selling off of the housing because of the fact that you have no income from the land developments? Do you following what I am asking you? It is like a chain reaction there.

MR. A. REID: No. The only reaction that Newfoundland and Labrador Housing has made is a reaction to the private sector. It is a reaction to pressures coming on the previous government -

MR. J. BYRNE: I can understand that.

MR. A. REID: Okay?

MR. J. BYRNE: Not to cut you off. I can follow that. I really won't put up an argument against that. What I am saying is that you use the money from private developments for social housing.

MR. A. REID: Yes, we do.

MR. J. BYRNE: If you don't have the revenues from that now -

MR. A. REID: That is right.

MR. J. BYRNE: - which wouldn't surprise us, what impact is that going to have on your social housing program?

MR. A. REID: It is going to have a severe impact unless the government replaces the dollars.

MR. J. BYRNE: How are they going to do that?

MR. A. REID: That is a good question. I suppose when we reach a point where we are down to less than what we can - if this year, for example, we don't make any sales and generate any revenues, then the Province's grant to us in going to have to increase. It is as simple as that. That is the whole question of what this Province and what this government is going to do in relationship to a social housing policy.

We are working on that now. We have a paper ready now to go in the system and we are making some recommendations. There has been a lot of work done it. We are making some recommendations to the government. We are okay now because the federal government, in the devolution, has given us enough dollars to keep going at least as good as we did the year before last and the year before. Don't forget, we have had a fair profit in the last three or four years in regards to selling these buildings.

MR. J. BYRNE: Yes, that is right.

MR. A. REID: This year it is going to be harder, and next year is going to be harder again. As you get out of it all -

MR. J. BYRNE: And the feds, and the feds.

MR. A. REID: You are absolutely right. Now, you made a comment to start with and I have to correct you.

MR. J. BYRNE: Okay.

MR. A. REID: You talked about subsidizing units in St. John's that we subsidize and you said in Linden Court.

MR. J. BYRNE: Yes, I did.

MR. A. REID: Linden Court is not subsidized. It never was subsidized.

MR. J. BYRNE: I meant social housing.

MR. A. REID: Churchill Square was never subsidized. These people who are living down there pay full shot for everything. They are not subsidized people.

Yes, you are right, the government is going to have to come up with a policy in regards to social housing and what it is going to do. Because sooner or later we are going to run out of areas to sell and we are not going to have the money to reinvest into social housing. I agree with you.

MR. J. BYRNE: I'm (inaudible).

CHAIR: That ends the question on Newfoundland and Labrador Housing, then. We can go back to municipal and provincial affairs.

MR. A. REID: Are we finished with Newfoundland and Labrador Housing?

CHAIR: Yes.

MR. A. REID: We will provide you with that information you asked for, Jack, and we are only too glad to. You can see we are pretty open. We have nothing to hide at Newfoundland and Labrador Housing, not a thing. Gentlemen, thank you very much.

MR. WOODFORD: Mr. Chairman, do you want to pass that head?

CHAIR: Yes. I was about to ask the Clerk to call that head.

On motion, subhead 1.1.01, carried.

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

CHAIR: Mr. Minister, I don't expect to give you another ten minutes. You had fifteen minutes. I will go to Mr. French to start off with the Department of Municipal and Provincial Affairs.

MR. FRENCH: On page 235 under 1.1.01.01, Salaries, in 1997-1998 we budgeted $214,000 and we went to $287,700, an increase of $73,700.

MR. A. REID: Bob, I haven't got it. Why haven't I got it? Tell me.

MR. FRENCH: Page 235. I am sorry.

MR. A. REID: The Minister's Office?

MR. FRENCH: Executive and Support Services, the Minister's Office, yes.

MR. A. REID: Executive and Support Services, okay.

MR. FRENCH: Salaries increased by $73,700. Can you tell me why? How many people were hired?

MR. A. REID: I had a fellow working for me, and have had a fellow working over in my office for the last five years called Walter Milley. Walter Milley's salary has never been budgeted in the department.

MR. J. BYRNE: Did he used to work with Crown Lands?

MR. A. REID: No, that is another Walter Milley. He works now as a secretary to appeals and this sort of stuff. He does all the workers' compensation and the Canada Pensions stuff for me. Basically he is political. You know Walter Milley. He used to be president of the party years ago. You know who I am talking about. You don't want to hear that? I am not trying to cover it up. His salary had to be taken care of last year. There was no heading to put it under, so I asked for it to be put in there. I am not trying to cover it up.

MR. J. BYRNE: So you covered it up for the past five years.

MR. FRENCH: Is that his salary?

MR. A. REID: That is his salary, plus a secretary that we had in there as well. That is what it is.

MR. FRENCH: Where have we charged his salary for the past five years?

MS COLE: If you remember from last year, the revised in the Minister's Office was also up, and that was the same reason.

MR. FRENCH: I noticed in -

MR. A. REID: I have done it every year.

MR. FRENCH: - 1998-1999 we have gone back down to $229,500.

MR. A. REID: That is right. It is still not there again this year.

MR. FRENCH: Why wouldn't we show it this year?

MR. A. REID: I don't know why. What is the answer? We just don't have an answer to it.

MS COLE: We don't have it. We are never given the money for it so we have to try to find it during the year.

MR. A. REID: What Treasury Board does to us is say every year: See if you can find the money in your own budget. Of course, by the end of the year we cannot find it and we have to go back and ask for it. Then they have to put it in under a special warrant or whatever they put it in under at the end of the year. I agree, I am not trying to cover it up, that is exactly what it is. They did the same thing to me this year. I asked for his salary and they said: You see if you can save his salary and the secretary's salary and come back to us the end of the year again.

WITNESS: Same answer last year too.

MR. A. REID: Same answer every year. Am I right in saying that?

MR. J. BYRNE: Why don't you fix it so we don't have to ask the question? (Inaudible).

MR. A. REID: What?

MR. J. BYRNE: Fix it this year so we won't have to ask the same question next year and save five minutes (inaudible).

MR. A. REID: I will have to go back to Paul and ask him to fix it.

MR. FRENCH: Purchased Services went from $3,700 to $14,900. Why was that?

MR. A. REID: Which is that, Purchased Services?

MR. FRENCH: Under 1.1.01.06.

MR. A. REID: Go head, Ramona.

MS COLE: From $3,700 up to $14,900? That is your entertainment vote.

MR. A. REID: That is my entertainment vote, is it?

MR. J. BYRNE: Your what?

MR. A. REID: My entertainment vote. What is that? That is my trips. I know what that is. That was part of the regionalization, the travelling I did around the Province, and some of the expenses that we had. We are back down to $3,700 again this year, and that is what it will be.

MR. FRENCH: In 1.2.01, Executive Support, Salaries is up just a small amount, by $15,600 from 1997-1998, general administration.

MR. A. REID: Secretarial support for the Director of Communications.

MS COLE: Again that is one that is not budgeted.

MR. A. REID: Speak up more.

MS COLE: That is another position that is not budgeted and we have to find money within our existing Salaries allocation to cover it.

MR. A. REID: The Director of Communications is Gary Callahan. His secretary.

MR. FRENCH: On page 236.

WITNESSES: (Inaudible).

SOME HON. MEMBERS: (Inaudible).

MR. A. REID: Did you know that? You did not ask that question. Off the record. Turn it off, please.

[Master Tape turned off at this point for an off the record exchange.]

MR. FRENCH: Don't tell John Efford that, Arthur. She's gone.

MR. A. REID: I had to say it, Jack. A good girl too by the way, one of the best we have over there.

MR. J. BYRNE: She has been there for ages, boy.

MR. A. REID: I know she has.

CHAIR: There is no blood relation. It is his sister-in-law, Minister.

MR. A. REID: Bob, pretty good hey? That's not bad, hey buddy.

MR. J. BYRNE: I was going to be out of here by 8:30 p.m., but for that I'm here till 10:00 p.m.

MR. A. REID: I know Tobin wouldn't laugh if he heard that one.

MR. FRENCH: In 1.2.02.01, Salaries, there is an increase in salaries of $256,600 in the 1997-1998 Budget. Again, who was that for, what were the positions, and how many positions were there?

MS COLE: In our central services group we provide services to three different departments. When that was merged late in the previous fiscal year, 1996-1997, we were not sure exactly how much we would need in the budget. For 1997-1998 it became apparent that we were short-staffed and we had to find the money again within our existing allocations and move it in there.

MR. A. REID: You do understand that we do the administration for three departments? Did you know that? You did not know that, did you?

MR. FRENCH: I knew you did it for Ernie McLean's department.

MS COLE: Also for Development and Rural Renewal.

MR. A. REID: We were given that last year and we were not given a budget at the time to do it. This is the money, that increase that we needed in order to do that. We are administering three departments, and I guess a lot of people did not realize that.

MR. J. BYRNE: Administration.

MR. A. REID: No administration.

CHAIR: Is that to your advantage, Minister, to be administering three departments?

MR. A. REID: I don't know. I wonder sometimes.

CHAIR: We are getting carried away here. Go ahead, Bob.

MR. FRENCH: In Transportation and Communications, we went over by $32,000. That is 1.2.02.03. It went from $61,900 to $93,900.

MR. A. REID: Increased requirement for travel to regional offices of the three departments, serviced by the central service group, especially by the information technology staff. It was a direct result of taking over those other two departments.

MR. FRENCH: Again, Supplies were over budget by $25,000.

MR. A. REID: Additional supplies required as a result of converting the central registry from filing cabinets to open shelving.

MR. FRENCH: Information Technology went from $340,000 to $409,700. What would we have purchased for $409,700 in Information Technology?

MR. A. REID: Increased usage cost and additional computers for staff involved with the department's debt relief program. You know what the debt relief program is. That was the $12 million.

MR. FRENCH: I am really curious about something. We had revenue of $3,500. Where did that come from? I am just curious, that's all, so I have to ask it

MR. CURTIS: That is miscellaneous revenues that are collected that are not attributable to any subhead, like overpayments from prior years; or people who are repaying travel advances, where they got too much and it is not really applicable to any area. They get lumped in under the administration activity.

MR. A. REID: We have to shove it in there somewhere. They will not give it to me.

MR. FRENCH: They should give it to the MHAs.

MR. A. REID: I give you fellows enough now.

CHAIR: Thank you, Bob.

MR. FRENCH: You will get no argument on that.

CHAIR: Well deserved.

MR. FRENCH: On page 237, 2.1.01.01, the Salaries were over by $71,200.

MR. A. REID: Additional staff person to administer the debt relief program, and additional secretarial staff for the Corner Brook regional office. That is where it came from.

MR. FRENCH: Who would have been hired?

MS COLE: What we did was we actually transferred one of our regional managers from the Eastern regional office to handle the debt relief program, and then temporarily assigned somebody from within headquarters into that position. There was nobody new hired, we just moved some people around.

MR. A. REID: Keith Warren came over from regional office. He was a regional director over there. He is not over there now. We had to replace him with someone else who cost us extra money.

MR. FRENCH: In Transportation and Communications we spent $189,100. What would we have spent that on?

MR. A. REID: Debt relief, again. Increased travel by regional staff in relation to debt relief.

MR. FRENCH: Down at the bottom, Municipal Finance, 2.1.03, the decrease in Salaries was $25,500 in the 1998-1999 year. We are going to go down $25,500.

MR. A. REID: We have laid off one municipal financial officer position.

MS COLE: (Inaudible) laid off, he retired.

MR. A. REID: He retired and he has not been replaced.

MR. FRENCH: On page 238, in 2.2.01.01, Salaries, we are up $15,100.

MR. A. REID: Additional support person to administer the special employment initiative. Do you see what is happening here? I had the debt relief and the employment initiative, and it is costing me - just listen to this - and my department to administer this, and I am not getting a copper from the government for it. We go back continuously. Am I right?

MS COLE: Yes.

MR. A. REID: All the time fighting with Treasury Board and saying: How can I administer these programs unless you let me take some money out of the programs to use for administrative staff? They say no every time. It ends up coming out of my budget. That is the special employment initiative, and we have not talked very much about that, as you know.

MR. FRENCH: Local Government Policy, 2.2.01.10, Grants and Subsidies, $61,000. What would we have spent that on?

MR. MOORE: That is an annual grant of $49,000 to the Federation of Municipalities and an annual grant of $12,000 to the Association of Municipal Administrators. It is an ongoing grant program that has been in place for a number of years.

MR. FRENCH: In 2.2.02.01, Salaries, we were over by $16,600 and this year we are going down lower. We were up and then we went down.

MR. A. REID: Down because of one position, a departmental program coordinator. That position will remain vacant for awhile. We are down because of that, and up because there is no money funded for a clerical position.

MR. FRENCH: Again in Revenue-Provincial we received $8,000. It is not a large amount, but I am just curious about it.

MS COLE: That is in Urban and Rural Planning. That would be fees for appeal hearings on planning.

MR. A. REID: We brought it in last year. It charges fees now to have hearings.

MR. FRENCH: On page 239 I will go down to Industrial Water Services, 2.3.02. Salaries were over budget by $49,400.

MR. A. REID: Increased results from delays in transferring industrial water systems to municipalities. Explain that, Ramona.

MS COLE: As you know, last year and over the next two years we are working on transferring all the industrial water systems, the twenty-two systems that we operated as a government. The figure that was put into the original budget was based on transferring one-third of the systems at the beginning of the year. We were not quite ready at the beginning of the year. We actually transferred more than one-third but it was over the period of the year. We were not able to reduce it by a position.

MR. FRENCH: Did we hire? Because the salaries are up $49,400. Did we hire somebody to do that?

MS COLE: No, we didn't. The figures that were put into the original budget assumed that one person would be laid off, and we did not lay off a person. We kept them on, and they will be kept on actually until the end of the third year because we are divesting of the systems across the Province. We cannot lay off. We have one person in each of the three regions, so we have to retain all three of them.

MR. J. BYRNE: But for next year it is gone (inaudible) $74,800, I can understand what you answered (inaudible), $124,200, but next year it is up to $137,500.

MS COLE: Yes. From $124,200 to $137,500 would provide for some overtime related to transferring those systems, plus the salary increases that have already been announced. We would have had to put provision there, and an extra pay day in this fiscal year.

MR. FRENCH: Farther down, 05, Professional Services. We spent $200,400. It is an increase there of actually what was budgeted. Where would we have spent that?

MS COLE: That would have related to some engineering work on some of the systems. Sometimes the systems required additional work before we could turn them over. Until we actually got into the process of negotiating with the municipalities we had no idea how much we would have to spend on those.

MR. FRENCH: Would they be consultants whom we hired?

MS COLE: It would not necessary be consultants. Some of it would probably be some additional work that would have done been out there.

MR. CURTIS: That also covers the wages of the system operators. They get paid an honorarium for operating the systems and just checking on the systems to make sure they are running smoothly, so that covers the wages they get.

MR. FRENCH: Still on page 239, there is $950,000 in Revenue-Provincial. Would that have been from the sale of water, say, to municipalities?

MS COLE: Yes. We charge a tariff of $0.55 per 1,000 litres, I believe.

MR. A. REID: After we devolve ourselves of the industrial systems this is going to down substantially because this is a detractor in some cases, like Marystown for example. We make a good buck on that system but we have to get rid of that system because we are getting rid of all of them. The town of Marystown eventually will be making that money.

MR. FRENCH: We would never, say, get rid of the water system in St. John's, would we? I realize that is run now by a regional board or -

MR. A. REID: It is not ours.

MR. FRENCH: That is not ours in there?

MR. A. REID: No.

MR. FRENCH: That regional water system is owned by the city?

MR. A. REID: Yes.

MR. FRENCH: They are the ones who charge the water (inaudible).

MR. A. REID: Yes.

MR. FRENCH: On page 240, Debt Servicing, there was a decrease of some $3,109,500. Would that be because municipalities had refinanced with banks rather than through municipal financing?

MR. A. REID: One refinancing of an interim bank loan through NMFC instead of an anticipated two, and a greater portion of payments went towards the outstanding balance. Ramona, do you want to give us some more detail on that?

MS COLE: That basically says it all. Normally, we would have two refinancings through NMFC in a year and this year there was only one. Because of the fact that some of those were going out to banks, and also because some of the money that was coming in from the refinancing through the banks could be used to reinvest in new loans instead of having to go out and borrow through NMFC again for the second lot of loans.

MR. FRENCH: Under Municipal Operating Grants there is revenue of $175,900. What would that have been from?

MS COLE: With the Municipal Operating Grant system, the grants are paid out on a quarterly basis. At the end of the fiscal year we do a recalculation to be sure, because sometimes things change during the year, and some municipalities actually owe us money and send it back in to us.

MR. FRENCH: Because it went from $2,516,800 to $8 million.

MS COLE: No. The revenue figure was the one up above from $200,000 down to (inaudible).

MR. FRENCH: I am sorry, I'm ahead of you know. 3.1.03.10, Grants and Subsidies. It went from $2,516,800 to $8,983,800.

MR. A. REID: Increase in expenditures of this program are related to the following: $6.1 million for the Special Employment Initiative, and $367,000 to the City of St. John's related to the stabilization of the Lower Battery.

MR. FRENCH: I hope you have the same program again this year. I mean that, sincerely. In my district out of those grants I got some very good benefits. I managed to get some work done that needed to be done that was beneficial to me.

MR. A. REID: I have been here now over nine years and I can honestly say that in the nine years I have been here I have never had a program in my district as beneficial as that one. I don't care about the water and sewerage or any (inaudible), there has never been one as good.

MR. FRENCH: I don't mind. I would certainly compliment the minister on that one. Because like I said, in my district I got some great benefits from it. In other words, I got a good bang for the buck that we spent, and both towns that used the money did well, and the school up there did an exceptionally good job on what they wanted their money for.

MR. A. REID: No politics played with it at all, as you know.

MR. FRENCH: Yes, (inaudible).

MR. A. REID: A little bit on your side over there more than anyone else, because some of you got more money than some others. I am not going to say anything about that.

MR. FRENCH: I won't argue that with you.

AN HON. MEMBER: (Inaudible).

MR. FRENCH: I hope he does find out.

AN HON. MEMBER: Who?

MR. FRENCH: John Efford. Doug said he hoped John Efford doesn't find it out. I said I hope he does. Again, on page 240, under the Regional Cooperation Initiative, 3.1.04.10, look at Grants and Subsidies, which says $158,500.

MR. A. REID: Task force and regionalization, their expenses, and the commissioner's review on Southlands. The cost of the regionalization hearings and also the commissioner for Southlands, that is where the increase is.

MR. FRENCH: On page 241, Assistance and Infrastructure, there was an increase in expenditures of $1,304,000 that was under 3.2.01.11, Debt Expenses.

MR. A. REID: A greater portions of payments went towards a principal than were estimated at the time in 1997-1998 when the Budget was prepared. We had to put more money in it. Ramona, pick up on that.

MS COLE: If you remember back in 3.1.01, the second reason the minister gave for the reduction there was that a greater portion of the payments went towards principal. 3.1.01 is the interest part, the current account, and 3.2.01 refers to the capital part. As we made the payments there was just more towards the principal as apposed to the interest.

MR. FRENCH: In 3.2.02, the Canada-Newfoundland Infrastructure Program, it shows for 1998-1999 an expenditure of $7,264,300. Is that what is left?

MS COLE: Yes, that is the remainder of the agreement.

MR. A. REID: How much is left?

MR. J. BYRNE: Has that been allocated?

MS COLE: It is $7,264,300. That is all allocated, right? That has been allocated, that is just carryovers -

MR. FRENCH: Yes, it is committed.

MR. A. REID: Not spent.

MS COLE: Yes, that is what is left over to be spent in this year from what was announced last year.

MR. A. REID: Yes, that is not spent.

MR. J. BYRNE: (Inaudible).

MR. A. REID: None of it left, it is all gone, every copper. If there was anything left over (inaudible).

MR. FRENCH: On page 242, the increase in expenditures. In 1998-1999 the Professional Services under 3.2.03 are going from $212,100 to $472,800.

MS COLE: That is related to the new Coastal Labrador agreement, the one-year agreement that was signed during (inaudible).

MR. A. REID: Yes. Go ahead, you answer.

MS COLE: We had a one-year new agreement signed during 1997-1998 which goes into 1998-1999, so the figures in for 1998-1999 are basically to cover the new agreement, money that was not spent during 1997-1998 related to it that carries over.

MR. FRENCH: In Purchased Services we are going to go up $1,455,400 in the 1998-1999 fiscal year. Why would that be?

MS COLE: Again, that is related to the new agreement. That is where the bulk of the money comes in. That would be the contracts, when we go out and hire the contractors to do the work. That is where that would be charged, and that would be the bulk of the money.

MR. FRENCH: What kind of work?

MS COLE: Water and sewer projects in Labrador, or anything related to Labrador, road work in Labrador.

MR. J. BYRNE: Are you saying (inaudible) those boats - because I marked that to ask you later on anyway. The one above it and that one, that is because money that wasn't spent that was allocated this year has been carried over into next year?

MS COLE: Basically, if you look at the budget for 1997-1998, for instance, the Purchased Services budget was $3.2 million, and that was in anticipation of the new agreement. The agreement actually got signed sometime during the year, so we did not spend it in 1997-1998, so it carried over to 1998/1999.

MR. J. BYRNE: Right, so you just carried it over, okay.

MR. FRENCH: There was $296,900 spent under Grants and Subsidies, that is .10 there, but there was no allocation in 1997-1998 (inaudible).

MR. A. REID: No. That has to do with the agreement again. See, what I do sometimes with the agreement, when we know it is coming, we pay up front and we get things done. That provides for reimbursement of costs incurred by the towns of Makkovik - $276,500 - and Nain - $20,400 - for water and sewage projects completed in the town. I'm surprised that you didn't ask me about the $142,500 prior to that one.

Gentlemen, my colleagues, that was for the... escalator, right? He is not here. It is a personal joke. This is an excavator that we used in Nain for digging out - is he up there?

WITNESS: He is gone.

MR. A. REID: An excavator. Wally called over one day and asked where his money was for the new escalator, and Bob didn't know what he was talking about. There it is, gentlemen, and that is what it was for.

MR. WOODFORD: He will be soon in again now.

MR. A. REID: He will be in any minute (inaudible).

MR. J. BYRNE: I had it marked (inaudible).

CHAIR: I guess it is into the record now, Minister.

MR. FRENCH: On page 243, 4.1.01.03, Transportation and Communications. We spent $97,600.

MR. A. REID: That is increased use of helicopters for the purpose of searching for missing persons. No control whatsoever over that one. That is under Emergency Measures. As you know, last year was a bad year for us. Where it cost us the most money is out of Goose Bay, believe it or not, and you can go into Nain and different places. It is really expensive.

MR. FRENCH: Under 4.1.03, Property, Furnishings and Equipment, $600,000. That is under Disaster Assistance for Infrastructure.

MR. A. REID: That was the estimated cost resulting from Hurricane Louis in 1995, and outstanding claims we had from that. Ramona, where, down on the South Coast, am I correct?

MS COLE: That was out around Clarenville and Bonavista, that area.

MR. A. REID: Yes.

MS COLE: Also the Burin Peninsula (inaudible)

MR. A. REID: The Burin Peninsula?

MS COLE: Yes.

MR. A. REID: Yes. I do not know why we put that in there, because it is misleading when you have Property, Furnishings and Equipment. It is too bad it is not identified as - and you use those three names. Maybe we should look at changing that and putting (inaudible).

MR. FRENCH: It looks like you went out and bought $600,000 worth of furniture.

MR. A. REID: That's right, you would not know the difference. How would anyone figure it out that it was damage from a hurricane?

MR. FRENCH: On page 244, 4.2.01.09, under Allowances and Assistance, we spent $231,900. What would we have spent that on?

MR. A. REID: Workers' compensation premiums for volunteer fire-fighters in the Province. We pay the premiums for all volunteer fire-fighters.

MR. FRENCH: On that note, Mr. Chairman, thank you very much. I don't have any more questions.

CHAIR: Thank you very much, Bob. Rick, do you have any questions?

MR. WOODFORD: I will pass.

CHAIR: It is all yours, Jack.

MR. J. BYRNE: Does anybody have any idea what my first question is going to be? How much did this cost?

MR. A. REID: I don't know. How much did that cost?

MR. NOSEWORTHY: I don't know how much that cost. It was very little. We would have produced it ourselves. It would have been prepared by our Director of Communications, written by him, some editing by our staff, and we would have sent it over to Printing Services. However much Printing Services would have charged us, that would be it.

MR. J. BYRNE: Minister, you are aware that down in the town of Logy Bay-Middle Cove-Outer Cove they have a fire hall under construction. It is going to cost, to equip and build it, probably $500,000 that the town is going out and - no input from Municipal and Provincial Affairs, no money, plan. Of course, they are purchasing a fire truck. One of the other towns down my way got some money last year, and there is another town that recently got some funding to go towards the cost of a fire truck. What is going to be the possibility of that town getting some assistance?

MR. A. REID: Have you any money on your list for it?

MR. J. BYRNE: They applied for money this year that they are funding themselves, for a road down there. They are borrowing $30,000 to do a road and putting in $10,000 of their own. They are not getting any money from Municipal and Provincial Affairs this year, and they did not last year, and probably the year before and probably the year before, since they incorporated.

MR. A. REID: I don't know. I will have to look at it. Oh yes, that's right too, I forgot about that. The Department of Works, Services and Transportation made a deal with you, right, down there?

MR. J. BYRNE: Oh, come on now, don't go getting me into that one.

MR. A. REID: How much did they give him? We gave him $800,000. Can I ask Ramona where that $800,000 came from? Ramona?

MR. J. BYRNE: The Department of Municipal and Provincial Affairs.

MS COLE: That was provided in the budget (inaudible) Municipal and Provincial Affairs.

MR. J. BYRNE: Yes, but look what they are taking over. They are taking over eight kilometres of road for that (inaudible) the provincial government.

MS COLE: The deal was negotiated through the Department of Works, Services and Transportation (inaudible), but the money came from our department.

MR. A. REID: You will have to ask me some other time, tomorrow or whenever. I (inaudible) give you a answer tonight.

MR. J. BYRNE: Anyway, let us move on to page 235.

MR. A. REID: We are going back again.

MR. J. BYRNE: Oh yes, we are going through again now.

MR. A. REID: Go ahead.

MR. J. BYRNE: Bob hit most of my questions, to be honest with you, but under 1.2.01.03, Executive Support, Transportation and Communications. The amount was $39,800, it went down to $23,700, and up to $39,800. When you looked at the Salaries, there was more paid in Salaries, yet there was a decrease in Transportation and Communications. Next year there is going to be an increase, or stay the same, and it is going back up. Why? Do you follow what I am getting at there? It is a contradiction.

MR. A. REID: We do not travel as much as we did in the past. That is what it boils down to.

MR. J. BYRNE: What I am saying to you is there is a contradiction there. It is going back up next year -

MR. A. REID: No. We put it in there because we had our estimates for 1998-1999 up there, so we left it up there. We actually spent $23,000, and I guess that is what we will probably end up spending this year.

MS COLE: We probably will not spend the $39,800 again this year.

MR. A. REID: You do not move your figures. If you move your figures, if you move them down, that's it, Treasury Board will leave them down forever and a day. You better cover yourself off and have enough there just in case (inaudible).

MR. J. BYRNE: We won't get into the (inaudible).

MR. A. REID: Here is the reason. I'm sorry, I apologize to you. Here is the reason why it was so low. We hosted the ministerial conference in St. John's this year. That meant that the minister and all his staff did not have to leave and go to some part of Canada. Now, when you go to a ministers' meeting you usually end you taking four or five people with you. The year before last it was in Saskatchewan somewhere, so you can imagine. It is a $10,000 bill to go to a ministers' conference, no two ways about it. That is where the saving was.

MR. J. BYRNE: Page 236. Let me see what I have here now. There again, under 1.2.02.01, Salaries - you have already addressed that - went up by roughly $300,000. What you had budgeted for Employee Benefits was $72,400 yet you only spent less than half that, yet your Salaries went up. Shouldn't that $72,400 have been more than that? That is a contradiction.

MR. A. REID: No, that is not a contradiction.

MS COLE: That employee benefits account covers mainly Workplace, Health, Safety and Compensation Commission benefits for departmental staff.

MR. A. REID: Also fire-fighters.

MS COLE: The fire-fighters are also covered over under the Fire Commissioner's Office.

MR. J. BYRNE: That is right.

MS COLE: That number is hard to estimate. It fluctuates from year to year, depending on how many people are injured on the job and are on workers' compensation.

MR. J. BYRNE: It is directly related to the number of injuries.

MS COLE: Yes.

MR. A. REID: Yes. It moves up and down each year.

MR. J. BYRNE: Page 237, 2.1.01.01. This was touched on. Salaries, $1,111,700 on that, and Purchased Services, $242,300. I am just making a comparison again. What are those Purchased Services for and why is it down? When you connect it to the salaries that are paid you would think it would be higher. Do you know what I mean?

MR. A. REID: Here is what it is. The rental costs are down because the Municipal Assessment Agency now pays for the cost of its own accommodations. They have moved out of our building and they are paying their own costs. That is why it is down. The Municipal Assessment Agency now pays for the cost of its own accommodations.

MR. J. BYRNE: For the what?

MR. A. REID: The rental on its office space.

MR. J. BYRNE: Yes.

MR. A. REID: They pay for it themselves now. It comes out of their own money, the Assessment Agency. They are not in my building, not in my department anymore. That is why there is such a reduction.

MR. J. BYRNE: Page 238, Local Government Policy. 2.2.01.03, Transportation and Communications, doubled. Why is that?

MR. A. REID: Increased travel to meet with municipal councillors and administrators. Will you explain that, John?

MR. MOORE: That had to do with some increased travel dealing with the regionalization initiative -

MR. J. BYRNE: (Inaudible)?

MR. MOORE: - and last year's municipal election, in particular, with the two major things that (inaudible) increased travel.

MR. J. BYRNE: I assume it was mostly municipal elections, because the travel for regionalization is already covered under another subhead that was addressed earlier.

MR. MOORE: No. My personal travel was included here under regionalization initiatives. The minister's was covered in another area.

MR. J. BYRNE: Urban and Rural Planning, 2.2.02.05, Professional Services. There was $30,000 budgeted, $20,300 spent, and it is back up to $30,000. What professional services would that be?

MR. A. REID: Board members for the Regional Appeals Board required from year to year based on a number of appeals hearings. It had to do with appeals hearings and their cost.

MR. J. BYRNE: Page 239, 2.3.01.05, Professional Services, $103,000 down to $23,000, and again $23,000 next year. That is $80,000 in the difference.

MR. A. REID: Eighty thousand dollars is the difference. Eighty thousand dollars provided for a study into the safety tanks and storage facilities throughout the Province. It started off with the Southside Hills and now it has gone into places like Lewisporte and other places around the Province. Safety.

MS COLE: The study was not done.

MR. A. REID: It was not done, by the way. Is it still there?

MS COLE: No, it is gone for this year (inaudible).

MR. A. REID: No, we lost it this year. It is not there this year.

MR. J. BYRNE: Industrial Water Services, 2.3.02.06, Purchased Services. There was $675,300 budgeted and you spent $867,100. In Grants and Subsidies there was $1,735,000, and there is none budgeted. I don't think Bob touched on that. What is that all about?

MS COLE: As to the Purchased Services, the increase there in Revised again relates to the fact that we didn't transfer seven systems at the beginning of the year, we transferred ten during the year, so there were some additional costs there. The $1,735,000 in Grants and Subsidies, the bulk of that is the Twillingate system, the problem we had up in Twillingate with the hospital supplies being found in the water supply, (inaudible) medical waste.

MR. A. REID: Also, $65,000 to the town of Trepassey and $20,000 to the town of Ramea as a result of the transfer.

MR. J. BYRNE: Page 240, Municipal Operating Grants. That was already touched upon. That is $24,552,000. Back in 1993, from memory, wouldn't that have been up around $46 million?

MR. A. REID: Yes.

MS COLE: It was at one point. I think it was (inaudible).

MR. J. BYRNE: Back at that time. It has been almost cut in half in that length of time.

MR. A. REID: It is getting (inaudible), yes.

MR. J. BYRNE: When are you going to get to the point where you are not going to have any?

MS COLE: There are two more reductions scheduled.

MR. A. REID: There are two more reductions after this year, and then we will end up, I think, at the end of that with about $12 million left over.

MR. J. BYRNE: Total? For each, for the Province?

MR. A. REID: Hopefully there will be a few dollars around to put back into it by that time. I shouldn't say put back into it, because I hope it is not determined the same way as previously. I hope the municipal operating grant per se disappears and some other formula is concocted.

MR. J. BYRNE: Page 241, 3.2.02.05, the Canada-Newfoundland Infrastructure Program. Professional Services, $20,000 and $20,000, and up to $34,400 this year. What would those services be for?

MR. A. REID: That is the audit funding, Ramona, to cover the cost of the final program audit. Go ahead.

MS COLE: This is the last year for the existing infrastructure program. There is additional money put in there for a final audit at the end of it to report to the federal government on how we spent it.

MR. J. BYRNE: Purchased Services, the next one, .06, $56,400. That is two-and-a-half times what was there last year.

MS COLE: Yes. Again, that is related to printing and final reports and that sort of stuff. It is all -

MR. A. REID: Winding up the program.

MS COLE: - related to the wind-up, yes.

MR. J. BYRNE: Page 243, 4.1.02.04, Emergency Planning. You had $20,000 budgeted, $16,000 spent, and up to $30,500 for supplies. What would all that be (inaudible)?

MS COLE: That is a program that is funded, to a significant extent, by the federal government. Each year the director of EMO will just basically try to allocate the total amount of funds she has available into the appropriate areas where she feels it will be best spent. Those allocations may change again during the year but the bottom line will not change.

MR. J. BYRNE: And .07, Property, Furnishings and Equipment, $33,500, $44,500, and it is only $15,500 this year.

MS COLE: I guess she probably purchased as much furniture as she is going to need, or pretty well as much as she is going to need.

MR. A. REID: That is not the vehicle in last year is it, I wonder?

MS COLE: I don't know.

WITNESS: (Inaudible).

MS COLE: Yes, they did move into new offices during 1997-1998. She would have bought new furniture. That is why the revised would be up.

MR. J. BYRNE: Thank you. One more question here. On page 243, 4.1.03.07, Property, Furnishings and Equipment. I know what the $600,000 was spent on last year. You answered that question for Bob. That is money that is for disasters or whatever the case may be. You have $500,000 budgeted for this year. It depends on the situation if you are going to spend it or not.

MR. A. REID: (Inaudible).

MS COLE: Actually, that $500,000 will pretty well all be spent on Hurricane Louis claims also. There are still outstanding claims.

MR. J. BYRNE: Is that right? I thought the $600,000 had taken care of that.

MS COLE: No, that was a substantial amount of claims (inaudible).

MR. J. BYRNE: If we get another disaster we will have to worry about that next year

MR. A. REID: Still coming in, right?

MS COLE: Hopefully not.

MR. J. BYRNE: Fire Protection Services. 4.2.01.06, Fire Commissioner's Office, Purchased Services. There was $30,100 budgeted, $45,400 spent, and the same thing this year. What was the $45,400 for?

MR. A. REID: Vehicle lease cost, as well as an increase in vehicle repairs and maintenance.

MR. J. BYRNE: That is it for me.

CHAIR: Thank you very much. I will ask the Clerk to call the head.

On motion, subheads 1.1.01 through 4.2.01, carried.

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

CHAIR: Before we go, I would ask that we have a motion to approve the minutes of our May 5 meeting.

On motion, minutes adopted as circulated.

CHAIR: Minister, on behalf of the Committee I want to thank you for appearing here this evening. You and your officials have done a superb job, very precise, with to the point answers. In fact, I'm impressed with your clarity. I think the Committee fully understands all the answers that you gave, even though they were pretty precise questions.

MR. A. REID: If you have nothing to hide there is no trouble to answer questions.

CHAIR: I think the questions were precise and the answers were precise. Again, on behalf of the Committee I want to thank you and your officials very much.

MR. A. REID: Thank you.

On motion the Committee adjourned.