The Committee met at 5:15 p.m. in the House of Assembly.

CHAIR (Mr. Joyce): Order, please!

Present we have Mr. Osborne, Mr. Sullivan, Mr. Collins, Ms Jones, Mr. Mercer and myself, Mr. Joyce.

I would just like for someone to pass the motion with the minutes for April 10.

On motion, minutes adopted as circulated.

CHAIR: I will just ask the minister to introduce her staff and make a few opening remarks, and then we will get on with the questions.

MS J.M. AYLWARD: Thank you very much.

I will say at the beginning, I am not going to make a lot of opening remarks with respect to Finance. I understand we are going to do Finance and the Public Service Commission separately. We will probably start with Finance first if that is okay. Is that okay, or had you planned to do it differently?

WITNESS: (Inaudible).

MS J.M. AYLWARD: It doesn't matter. Okay.

I will introduce John Bennett, from the Pensions Division, Terry Paddon, Assistant Deputy Minister of Finance and Earle Saunders, Debt Management. He is the debt man down there. We will do the introductions of the Public Service Commission when we come to Public Service.

I am certainly willing and ready to answer any questions that you might have on Finance. I think, by and large, it has been a fairly steady budget in terms of looking at it year over year, and very minor variations. So, by all means, carry on and ask any questions you might have.

CHAIR: Mr. Sullivan, would you like to start?

MR. SULLIVAN: I am not sure what way you might intend. Maybe if we went through the items in order. Would that be -

CHAIR: Yes. I will just call the first subhead.

Subhead 1.1.01.

MR. SULLIVAN: I have no questions. My first questions are on subhead, 1.3.01.

MS J.M. AYLWARD: Is everybody else moving up to there too?

CHAIR: (Inaudible).

MR. SULLIVAN: Okay, so I will run right through with mine. Is that okay?

CHAIR: Yes.

MR. SULLIVAN: With reference to subhead 1.3.01.01., Salaries, I notice a provision for salary increases of $40 million. What amount, now, could that be in light of the recent, I guess, not finalized, but at least an agreement has been reached - what would that figure now be or was there some allowance made to -

MS J.M. AYLWARD: Yes, that accounts for the 3 per cent salary increase that was identified for the public sector employees, including the teachers. The annual cost, as you know, is higher but this is not annualized this year.

MR. SULLIVAN: It is just part of a year, I know.

MS J.M. AYLWARD: It is part of a year. So, that is what the $40 million covers. Next year, it will be annualized and, of course, we have already announced that we are increasing our deficit to cover off the remaining portion of that.

MR. SULLIVAN: Yes, just to my question: With that extra 2 per cent now, how much would that equate to over and above -

MS J.M. AYLWARD: Well, that is $36 million. Remember? It is $18 million per per cent.

MR. SULLIVAN: Yes, but each per cent on an annualized basis.

MS J.M. AYLWARD: Right. So, it will not be the full $18 million this year. We figure it will probably be around $15 million. Okay?

MR. SULLIVAN: Yes.

MS J.M. AYLWARD: So, this $40 million is the amount for this year. Annualized, it will be $18 million per 1 per cent next year.

MR. SULLIVAN: What are the projections in the next two years now based on those figures across the public service? I know it is not directly in this Budget but it is an impacting thing that is occurring?

MS J.M. AYLWARD: What do you mean? As it relates to the public sector wage increases or overall in terms of (inaudible)?

MR. SULLIVAN: Public sector wage increases.

MS J.M. AYLWARD: Well, as it relates to the Budget, we know that in this year's Budget we have allocated approximately $50 million, as you knew. It was allocated for wage increases. For next year we have identified the additional deficit to cover off that cost, and we believe in the following year that we will have to have a deficit to do that. It will depend, as you know, on our sales and our dropped balances and where we are in terms of if we get the ceiling lifted off equalization. All those factors will come into play. Right now, we know what it will be next year, by and large, or in this fiscal year because we have got it budgeted out, we have identified the deficit. With respect to the year after, I think it will be contingent upon a number of things.

MR. SULLIVAN: So, roughly $18 million per percentage point?-

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: So, if we made allowance - I know we haven't done next year's budget yet but we are looking at the $40 million that is plugged in here. There would be some variation, of course. Whatever way you look at it, next year there will have to be a salary allocation, basically, on this and a 5 per cent base up at $90 million.

MS J.M. AYLWARD: Yes, that is what it works out to be, without that.

MR. SULLIVAN: With the pay equity this year, as opposed to $1.265 million, that same item, 1.03.01, what accounts for the -

MS J.M. AYLWARD: The pay equity piece is a part of it.

MR. SULLIVAN: A significant increase.

MS J.M. AYLWARD: Yes. As you know, all of the pay equity piece was not addressed in 2000 and this covers off the inequities associated with pay equity.

MR. SULLIVAN: So that should cover any unaddressed? Are they still unaddressed?

MS J.M. AYLWARD: Most of them are all finished up this year. As you know, that was part of the collective agreement piece, but it works out to be under our commitment, under the various collective agreements. Some of them are paid, but the rest of them would be paid out under this amount.

MR. SULLIVAN: Okay. That is it under subhead 1.3.01.

We will move to subhead 2.1.01.05. Professional Services are projected to be more than double what was expended last year. Why would that be necessitated in this Budget?

MS J.M. AYLWARD: Particularly, here we had to pay for the cost of actuarial services as it relates to the pension program. You are on 2.1.01.05., is that right?

MR. SULLIVAN: That is correct.

MS J.M. AYLWARD: As it relates to the pension program, that is about $80,000. The preparation of the actuarial reports and the audit fees charged by the Auditor General - as you know, she charges for doing various Crown Corporations and others. The pension fund is seen as a separate entity, so she charges a $10,000 fee to do that analysis.

MR. SULLIVAN: So, there was extra work done this year. Would that be in anticipation of the public sector settlement and looking at the fund itself? It was a factor in negotiations, the indexing and so on, and the impacts. Did that necessitate expenses?

MS J.M. AYLWARD: No. That wasn't for this part. We never looked at that part with respect to it. That is why we are not putting indexing in place right away. We are going to be doing the work on the indexing in terms of the actuarial work as part of a joint trusteeship. As you know, the Public Service Pension Plan is the biggest of all the pension plans, and that is one of the reasons why it is as expensive as it is. We believe that actuarial costs will continue to increase because right now, for example, over the coming year, we will be doing a lot more work on the joint trusteeship.

MR. SULLIVAN: Why would it be more than double that last year? What would account for the extraordinary amount?

MS J.M. AYLWARD: As I pointed out, we paid, I think, about $80,000 to William Mercer Limited for the actuarial work. In additional to that, the other $10,000 that we paid was for the Auditor General. We are anticipating this year, because of the extra work that we are going to have to do, that that is going to rise significantly.

MR. SULLIVAN: So, this would not be done on an annual basis? Maybe every so often -

.

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: - you would go back and assess. Would that be correct?

MS J.M. AYLWARD: In fact, it is every three years. That is what it works out to be.

MR. SULLIVAN: This is one of the three years in which these are incurred?

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: Okay. That is it on that item.

Under 2.1.02., just a general question on Debt Management. Over the past while, I guess, we have been reducing our foreign debt. I think it is now at roughly 30 per cent of our total borrowing. How cognizant is the department in moving now to look at transferring even more of that debt? I know 30 per cent is not huge, but currency fluctuation, I think, does have an impact. Sometimes the cost of borrowing might be lower but the currency exchange more than compensates for that.

Number one, are they hedging on foreign debt? Secondly, is there a move now, or is the department looking at a plan to further reduce our dependency on foreign borrowing?

MS J.M. AYLWARD: You could see from our Budget and from the Treasury Board piece that when we looked at our Sinking Funds and our borrowing that we are heavily focused on Canadian money, and moved in that direction.

MR. SULLIVAN: Yes, we have been improving.

MS J.M. AYLWARD: We have been improving and, as you know, we would only turn over that money when the rates are appropriate. We have an option of opting out within eighteen months of the conclusion, or the retirement, of the bond. What we do is look at the markets and try to get the best deal. We have been consistently moving, as you can see, away from a lot of our foreign debt management to Canadian. I think, by and large, you can see that it is working better for us because at least you know where you are to when you are buying Canadian money.

MR. SULLIVAN: Does government do any hedging on its foreign debt? Do you know?

MS J.M. AYLWARD: No, we have not been doing that recently.

MR. SULLIVAN: Under subhead, 2.1.03.02., Crown Agencies: $121,000,000 was budgeted last year and $53,000,000 was expended. I guess that is because the $68 million is being deferred. That would be the reason there.

MS J.M. AYLWARD: Where are you now? I am sorry.

MR. SULLIVAN: Subhead 2.1.03.02.

I guess there was $68 million that was deferred to this year. That would account for that. Out of the $112,200,000 total, I think it is indicated in your backup notes and so on that there is $45 million that is regular dividends. They are just basing on the new recall and GWAC right, solely? Out of that $112,200,000 there is $45 million regular dividends and $67 million are special dividends?

MS J.M. AYLWARD: For the new year?

MR. SULLIVAN: Yes, I am going through the new year now.

MS J.M. AYLWARD: Yes, that is right. I am sorry.

MR. SULLIVAN: There is $67 million in special dividends and there is $45 million, we will say, the regular dividends you are referring to, the Guaranteed Winter Availability Contract under the new recall arrangement. Would that be the sole sources of regular dividends?

MS J.M. AYLWARD: I can give you the breakdown there, if you want, on what they are. The regular dividends are $9.2 million, the recall is $29 million and the special dividends are $67 million.

MR. SULLIVAN: Could you just give the regular ones again? There is $9.2 million under -

MS J.M. AYLWARD: Regular dividends. The recall is $29 million, the special dividends are $67 million, and the GWAC is $7 million.

MR. SULLIVAN: Yes. That is basically what I said. Forty-five million dollars, I guess you really would call that under regular, wouldn't you? It would all come under the regular heading, except special dividends?

MS J.M. AYLWARD: Yes, except for the special. That is right.

MR. SULLIVAN: The $68 million was deferred in the $112,200,000.

MS J.M. AYLWARD: That is deferred, yes.

MR. SULLIVAN: I know it is all lumped in the one area, but out of the $68 million that was deferred, what was the breakdown of regular versus special? It is probably not a highly relevant thing, but is it broken down to that extent?

MS J.M. AYLWARD: We haven't taken any of our special at all.

MR. SULLIVAN: You have taken no special?

MS J.M. AYLWARD: We have taken no special.

MR. SULLIVAN: So, all of your special in this budget has always been rolled over to the next year, deferred?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: Under subhead, 2.1.03, Crown Agencies - Recoveries, I am assuming then there are no other fees there? Any fees we get on the debt, the guarantees are under the guaranteed fees non-statutory that is in the Consolidated Revenue Fund. That would be correct?

MS J.M. AYLWARD: That is correct.

MR. SULLIVAN: This is strictly those areas?

MS J.M. AYLWARD: Right.

MR. SULLIVAN: Next, under subhead 2.1.04., Industrial Assistance, 10., Grants and Subsidies: What accounts for an estimate of $400,000 as opposed to $171,500 last year?

MS J.M. AYLWARD: What this actually reflects is what is required to maintain operations. What we have found is that the $171,500 has been inadequate every year and they come back with an inadequate amount of money to maintain operations. This is just a more reflective view of what they require to maintain operations out in the West Coast as it relates to the jobs and the operation and, you know, the whole piece associated with it.

MR. SULLIVAN: Okay, you are talking about 2.1.04., Industrial Assistance?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: You spent $171,500 and budgeted that, so where is the extra $228,500 going specifically? Has this been the historical level? In the one seventies and so on, probably it has been progressing at a more historical level, has it?

MS J.M. AYLWARD: I think it was probably more historically was it?

MR. SULLIVAN: I did not go back in previous years, now, just to see.

MS J.M. AYLWARD: It was a lot more historically than it is now.

MR. SULLIVAN: Was it?

MS J.M. AYLWARD: Yes. What we have found is, the grant was $171,500 and, despite the fact that in some cases we have had excellent ski conditions, the $171,500 hasn't been enough to maintain it.

MR. SULLIVAN: So, where has the $400,000 all gone? Is it more than one area?

MS J.M. AYLWARD: No, it is Marble Mountain.

MR. SULLIVAN: Strictly all Marble Mountain, in that area?

MS J.M. AYLWARD: Yes, it is Marble Mountain and it has seventy-five employees.

MR. SULLIVAN: Okay.

My next question is under 2.2.02., Fiscal Policy. Just one particular question on section 05., Professional Services.

MS J.M. AYLWARD: I am sorry, Loyola. What was the heading again?

MR. SULLIVAN: Subhead 2.2.02.

MS J.M. AYLWARD: Subhead 2.2.02?

MR. SULLIVAN: Under 2.2.02.05., Professional Services, there was a budget of $4,500 and an expenditure of $31,500. It is back to the same level again in the Budget for this year. Why was it $31,500 this year? Where was the expenditure made this past year in that particular area?

MS J.M. AYLWARD: We made a payment of $30,000 to the Atlantic Provinces Economic Council, and this is a two-year commitment, part of all of the other three Atlantic Provinces, for strengthening the Canadian economic union project. It was a commitment that each of the provinces made for that.

MR. SULLIVAN: So, you only had $1,500 besides that spent? Did you say there was -

MS J.M. AYLWARD: No, that was $30,000. That was the $30,000.

MR. SULLIVAN: Yes, so there was only $1,500 expended besides that in the last fiscal year?

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: Was that a new commitment or just a one-shot -

MS J.M. AYLWARD: It was a one-time commitment, a two-year commitment.

MR. SULLIVAN: Where it is not budgeted there or followed through.

MS J.M. AYLWARD: No, that is right. It is a two-year commitment, one time.

MR. SULLIVAN: What was the commitment? What particular endeavour were they looking at?

MS J.M. AYLWARD: I think this is a carry-over from the Frank McKenna initiative that was started a number of years ago with the Atlantic Premiers, to try to grow the Atlantic economy - most of us are functioning at about 69 per cent GDP of the rest of the country - to attract business and to try to just work together as a group. You know, there has been a fairly strong alliance. Western Premiers have always had it and Atlantic have not. This is part of that initiative to strengthen that union.

MR. SULLIVAN: Is part of it to go towards staffing or some other resources?

MS J.M. AYLWARD: There is a staffing component, because I think a lot of it is around marketing and communications and trying to attract groups and things like that; but it is more of an initiative to try to strengthen positions like the Atlantic initiative that we are working on.

MR. SULLIVAN: Regional.

MS J.M. AYLWARD: Regional.

MR. SULLIVAN: Was that an equal input or sort of based on a population factor for all four Atlantic Provinces? Are you familiar with that?

MS J.M. AYLWARD: As far as I know it is equal, but I am not sure. I would have to check with the rest to verify it. Is that right?

WITNESS: Yes.

MS J.M. AYLWARD: Yes, it is equal.

MR. SULLIVAN: That is fine.

Under 2.2.03., Project Analysis, 01., Salaries, last year there was just about $100,000 less spent and we are back up to the level. Were there positions unfilled, or was there a particular reason for that?

MS J.M. AYLWARD: That relates to some temporary assignments and secondments that we had, and now they are gone back to their original positions. That is why the salary is reduced.

MR. SULLIVAN: The costs were picked up, where they were seconded.

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: Under 2.2.04., Tax Administration, a similar question again on 03., Transportation and Communication. There was $40,000 less expended there and it was back up to the regular budget amount last year. Was that a particular position there?

MS J.M. AYLWARD: I asked the same question. Do you know what that it? It is the cost of the dye that they put into the gasoline to identify whether it is taxable or not taxable. We bought a lump sum amount which we store, and that is one of the reasons why.

MR. SULLIVAN: You did not have as much last year?

MS J.M. AYLWARD: No, because we used what we had.

MR. SULLIVAN: I guess it is factored in when it is purchased, not when it is utilized. I guess that is the only way to control it.

MS J.M. AYLWARD: That is right. We store it and use it as we need it.

MR. SULLIVAN: You carry a sufficient store to carry it over.

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: Okay, that makes sense.

Under 2.2.04.04., Supplies, there is a significant difference there, $100,000 extra. What would that be?

MS J.M. AYLWARD: Hang on. I have it mixed up. That is what the cost of the supplies are. The $40,000 -

MR. SULLIVAN: That was the dye.

MS J.M. AYLWARD: That was the dye.

MR. SULLIVAN: Okay, so we have $100,000 worth of dye.

MS J.M. AYLWARD: No, we do not have $100,000 worth of dye. You want to go back to the -

MR. SULLIVAN: Supplies were not dye only. There were other things besides the dye?

MS J.M. AYLWARD: Yes, gas for the vehicles and office supplies, routine.

MR. SULLIVAN: Yes, I would think that would be a lot of dye.

MS J.M. AYLWARD: No, it is not all dye. There is the shipment of the dye and there are other expenses associated with it.

MR. SULLIVAN: That is 04., right?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: What about 03. now?

MS J.M. AYLWARD: Under 03., Transportation and Communications, basically it is in two components: the travel expenses to perform the audits - they do regular checks to make sure you have the right color gasoline that you are selling, attending conferences - and the other piece of it is telephone and telecommunications. We have a 1-800 line that we use for the filing of tax returns, and we have several modems that we have in use for that. Basically, that is it.

MR. SULLIVAN: The monitoring of the use of fuels, does that come out of this budget?

MS J.M. AYLWARD: Yes. The auditing, we call it.

MR. SULLIVAN: The auditing part. What about the monitoring on site? The checks, inspection, and so on, does that come under government services? Who does that?

MS J.M. AYLWARD: No, the audits are all done through this department.

MR. SULLIVAN: I do get the occasional call, saying: There is no enforcement out there. I am doing trucking, and I know people who are using fuel without it, who are competing against me. How can I compete?

MS J.M. AYLWARD: Tell them to call the 1-800 line.

MR. SULLIVAN: We have fallen down on that aspect and I am getting out-competed. No one likes to squeal on somebody else. They would rather have enforcement where they would not have to do it.

MS J.M. AYLWARD: As you can imagine, you do not check every tank. You do spot checks and that is what makes it reasonable. There is a 1-800 line that you can use.

MR. SULLIVAN: Yes, but what about in terms of the personnel carrying out that function? Has there been a change in the last few years in the number of people employed in that area?

MS J.M. AYLWARD: That is a good question. You would have to go back over to Salaries, I guess, because it looks at all of the group in there. The funding is provided for sixty permanent positions and I know that we have not reduced positions, as best I know. I do not know if we have increased.

MR. PADDON: I can speak to that, if you want. When we harmonized our provincial sale tax, we sort of got out of the sales tax business. At the time, a lot of the effort in our tax administration branch was devoted towards cleaning up the sales tax accounts. That is largely done now. What we have done is divert the people who were on the sales tax back into gas tax, so really this was our first year getting back into that on a full-time basis. I think you will see probably, a renewed effort next year towards gas tax, which is our biggest tax in terms of administration right now.

MR. SULLIVAN: Okay, I guess the people were just retained there. The numbers were mostly to clear up accounts that were already outstanding, because it no longer necessitated a staff in that area, I guess, once it phased out -

MR. PADDON: That is right.

MR. SULLIVAN: - but there will be no reduction overall as a result? The personnel have been re-utilized?

MR. PADDON: A lot of our staff went to the federal government when we harmonized, but the ones we had left - which is roughly about forty-five audit staff, plus fifteen or twenty administrative staff - are still here and they have shifted now from cleaning up the retail sales tax to gasoline tax and, to a lesser extent, payroll tax.

MR. SULLIVAN: When they went to the federal government, did they move -

MR. PADDON: Yes, they physically -

MR. SULLIVAN: - out of Province, went to P.E.I.?

MR. PADDON: No.

MR. SULLIVAN: They stayed here?

MR. PADDON: For the most part, they stayed here.

MR. SULLIVAN: But in the administration of the HST?

MR. PADDON: In the HST, that is right.

MR. SULLIVAN: Paid by federal, basically?

MR. PADDON: Yes.

MR. SULLIVAN: The next one, subhead 2.3.01.06., Economics and Statistics, Purchased Services, there is just one last question that I have. You budgeted $9,200, spent $48,500, and we are back to $9,200. What would be the extraordinary expenditure?

MS J.M. AYLWARD: Which one are you on, subhead 2.3.01.?

MR. SULLIVAN: Yes, subhead 2.3.01., the last section there, Economics and Statistics.

MS J.M. AYLWARD: Number 06., is it?

MR. SULLIVAN: Yes, subhead 2.3.01.06., Purchased Services.

MS J.M. AYLWARD: That significant amount, moving from $9,200 to $48,500, was for the installation of a security system that is required by Stats Canada. That is what that was for.

MR. SULLIVAN: Okay, so that was the bulk of the cost, was it?

MS J.M. AYLWARD: Yes, we also had maintenance agreements and -

MR. SULLIVAN: The $9,200 generally covered these other ones?

MS J.M. AYLWARD: These other ones, yes.

MR. SULLIVAN: So there was an expenditure in the $30-some thousand range, was there, basically for that?

MS J.M. AYLWARD: That is right, for the security system which was required of us because, obviously, of security reasons from Stats Canada.

MR. SULLIVAN: Okay, Mr. Chairman, those are my questions on Finance.

CHAIR: Thank you, Mr. Sullivan.

Mr. Osborne.

MR. T. OSBORNE: Thank you.

Generally my colleague is not very thorough. He asked just about every question that I had, but I have a couple. I have three questions, I think, remaining. The only reason he didn't ask those is because he didn't cover those sections.

Under subhead, 1.2.01., Executive Support, 03., Transportation and Communications, there is some fluctuation there in the amount budgeted last year, the actual amount expended, and then the amount budgeted this year. I am just wondering if, Minister, you can explain.

MS J.M. AYLWARD: Sure. This is a travel section mostly, travel and communications. There was a significant amount of travel associated with the Federal-Provincial Tax Committee, the HST policy committee; related to income tax, the tax review consultations and tobacco smuggling. There was a Finance Ministers' meeting, meeting with fiscal agents, and a number of other meetings associated with the public service reform. All of that added to the cost of the travel. I guess this year we anticipate, with the increased cost in travel - we have all experienced it - that it has increased significantly, but we do not anticipate it will be as high as this year past.

MR. T. OSBORNE: Thank you.

Under 1.2.02.06., Purchased Services, there is some $33,100 additional from what was budgeted last year and what was actually expended.

MS J.M. AYLWARD: Where is it, under 1.2.02.?

MR. T. OSBORNE: Purchased Services.

MS J.M. AYLWARD: This increase was due mostly to advertising for pre-Budget consultations, taking out advertisements in the papers and various sources of media, and also advertising that we associated on the home heating fuel rebate.

MR. T. OSBORNE: Okay.

The only other question that has not already been covered by Loyola is under Property, Furnishings and Equipment. There was an increase there from $6,000 to $51,900.

MS J.M. AYLWARD: That is 1.2.02.07.?

MR. T. OSBORNE: Yes.

MS J.M. AYLWARD: This covered the cost for refurbishing the Finance boardroom, replacement of office furniture for Economics and Statistics Division, and also the purchase of a mid-size pickup truck for the Taxation Division at a cost of $30,000.

MR. T. OSBORNE: Okay.

Thank you, Minister.

MS J.M. AYLWARD: You're welcome.

CHAIR: Thank you.

Mr. Collins.

MR. COLLINS: Anything with a 10 per cent variation between Budget, Revised and Estimates has already been covered.

CHAIR: Okay, thank you.

Are there any more questions?

WITNESS: No questions.

CHAIR: We will call the subheads.

On motion, subheads 1.1.01. through 2.3.01., carried.

On motion, Department of Finance, total heads, carried.

CHAIR: We will go to page 67, Public Service Commission.

I will call subhead 1.1.01.

Mr. Sullivan.

MR. SULLIVAN: Thank you, Mr. Chair.

I have a couple of hundred questions for the Public Service Commission. Actually, it is only one page.

MS J.M. AYLWARD: If I could, for just a moment, I would like to take the opportunity to thank my officials from Finance who were here with me this evening, and to introduce Alphonsus Faour, Chairperson of the Public Service Commission, and Sheila Devine, Commissioner of the Public Service Commission.

Basically, I would just like to make a couple of opening comments about the Public Service Commission in terms of its mandate, and I will not be long. I think the mandate is something that we are all familiar with, although it has changed over the last number of years, to provide an effective oversight of the merit principle in the recruiting process to deliver confidential and credible services to employees, and to provide conceptual leadership in innovation in the public administration.

The vision, really, is to try to ensure that we are the employer of choice and that our service is the best that it can be. The core mandate of the Commission is to ensure the application of the merit principle, which provides for the identification, appointment and promotion of employees based on principles of fairness, equity and transparency.

There has been a changing environment in the human resources field in response to a lot of changes, many of which are demographic and others of which are around human resources, not only in this Province but in the country, and we are all experiencing skill shortages in many particular areas, and certainly Newfoundland is no different.

We do, as a government, have a renewed commitment to the public service, and the Commission has undertaken, through reform and other organizational development initiatives, to provide leadership in innovation and thought as well as planning and management of the public service.

There are 43,000 employees covered in the public service. It is quite a large group and it is very difficult, I think, to have a hands-on approach, and it is certainly not the intention of the Public Service Commission; but there have been some very new and innovative programs that have been started, many of which are along the lines of the EAP that we are all familiar with, Employee Assistance Programs, and particularly the Respectful Workplace and Wellness Program, as well as the Graduate Recruitment Program, I think, which has been critical to try to attract our own graduates and educate them in the public service and hopefully encourage and entice them to stay on and work with us over that period of time.

We have also tried to improve communications and I think the last couple of Public Service Weeks, over the last couple of years, have been very positive, and I think they are an important part to recognizing the value of our public sector and our public service.

So, without any further ado, I would like to turn it over to you. I notice you are chomping at the bit to ask a few questions there, so carry on. I do want to acknowledge the Chairperson and the Commissioner here as well this evening.

CHAIR: Mr. Sullivan.

MR. SULLIVAN: Thank you, Mr. Chairman.

Before I get into some of those items there, just generally, I notice that it has been the recent trend, in filling positions, that people are getting, in a lot of cases - first of all, a lot of responsibilities are delegated to certain departments in hiring and people get put into temporary positions for a certain time period, and obviously then they move into particular positions after. That, I suppose, gives them a leg up.

What percentage of hirings generally goes directly, deals completely, out of departmental control, through the Public Service Commission?

MR. FAOUR: Thank you, Minister.

Thank you, Mr. Chairman.

In terms of permanent hirings, the vast majority are administered within departments now with our oversight. The Commission has retained custody, I guess, of recruitments for HR directors, administrative staff, directors of administration generally. Apart from that, our role essentially is to oversee that process in departments and to provide assistance to departments when they request it, provide training to departments to do it, and to do an audit after the fact to ensure that our policies and procedures have been adhered to.

Temporary appointments are not within our jurisdiction so we don't count them. We do not have jurisdiction to go in and do that. We have a sense that they are increasing. At this stage, I guess the fact that they are increasing reflects the minister's comments that there is a change in environment in the public service, there is a need to develop people, there is a need to respond to changing circumstances. I will use this as an opportunity, I guess, to make the comment: Frankly, our traditional recruitment processes have been somewhat rigid. We are trying to respond to that. One of the things that I hope members will appreciate over the coming months is the introduction of a new approach to staffing in the public service because we think that, in responding to demographic change and in responding to competitive labor markets around the Province and around the country, there is a real need for innovative approaches to recruitment that still maintain the merit principle.

I don't know if that answers your question, but it is an introduction.

MR. SULLIVAN: I will probably just ask another question on it. It is my understanding - and I haven't been around a long time, since 1992 - historically, then, and initially, a lot of the hirings went directly to the Public Service Commission. The delegation to the departments has been a more recent thing.

MR. FAOUR: Yes.

MS J.M. AYLWARD: That was a result of program review, for the most part.

MR. SULLIVAN: Yes, that is right.

MS J.M. AYLWARD: The public service was reduced in size and a lot of HR - in fact, many of the departments are doubling up in their work and they serve two or three departments in their HR.

MR. SULLIVAN: When you move it within departments you have a tendency to raise, I guess, in the public forum and so on, the merit principle of whether - certainly if there is a suspicion, it takes away from the merit principle.

I didn't mean to imply that temporary ones come under your jurisdiction. I didn't mean that. I meant that temporary ones are getting hired within the departments and they are the most likely ones, if they were hired by the department, of which department has control, then they are more likely to move into that permanent position because they filled the role. There is a greater chance, if you have been in that capacity, that you are going to be retained in that capacity. Therefore, that circumvents the process of being able to put someone in on a permanent basis on day one and go look for a permanent, rather than fill it temporarily and then come back and fill it permanently.

Over the last number of years, I have gotten a lot of calls from people complaining that we are losing the impartiality of hiring by going through an abuse of the temporary system.

I don't know if you have any statistics to show what percentage of permanent positions now being filled were occupied by temporary people prior to that.

MS J.M. AYLWARD: We do know, too, that it works the other way. A lot of times people who are hired in a temporary capacity do not get permanent positions, because it can work in the opposite as well -

MR. SULLIVAN: Sure.

MS J.M. AYLWARD: - against an individual as well as for an individual. I don't think we do that kind of tracking in terms of - you have to look at the mandate in terms of numbers. What we do is: when every permanent position is placed, we actually audit that to ensure, based on the Auditor General's report, that the merit principle has been applied and that we do try to follow the basics that have been outlined in fairness, merit and promotion.

MR. SULLIVAN: If I was a minister and I wanted to see if someone got in on a temporary basis, I probably could exert some influence, if so desired, over that process.

MS J.M. AYLWARD: It depends, now. Remember, if it is a bargaining unit position, which is not covered here, you can only do that if it is a short-term, temporary position. Other than that, it has to go through the normal posting process.

MR. SULLIVAN: Yes.

MS J.M. AYLWARD: This is different, as it relates to the public service.

MR. SULLIVAN: I know, but still, initially, when the foot is in the door, I guess, sometimes it is looked at as better than not having a foot there at all. That has been used. I know I have had numerous instances there. I am just wondering if there are any - and I gather there are none - statistics to show how many people are in those positions and end up in the position?

MS J.M. AYLWARD: No, because they move through the system as well. They often go from one position to another; so, no, there isn't.

MR. FAOUR: If I may, Mr. Chairman, I guess there are two factors that I will just draw to your attention. One is that, before delegation and post-delegation, there has been no real change in the impact of that issue. A person who is temporarily assigned, in some cases, is going to have an advantage in a competition; not in all cases.

Secondly, I guess, when a particular staffing action is seen to be unfair, we often get complaints. Now, the number of complaints hasn't been increasing. What we are looking at is to see, when all the circumstances are considered in a staffing transaction, whether there was some effort to bypass the system. Now, our audit is not perfect, but these are the kinds of things that we are going to look for in a process like that. I just draw that to your attention as well. We have not seen any change in recent years in the incidents of complaints arising from this kind of circumstance.

MR. SULLIVAN: Okay.

The next question: How many positions might have been filled, say, in the last fiscal year now within the public service?

MR. FAOUR: I cannot tell you. We are just beginning our review of the fiscal year just ending.

MR. SULLIVAN: Or the previous, for example.

MR. FAOUR: In the fiscal year ending March, 2000, there were about 250 permanent positions filled, and in the year ending March 1999, there were about 335 positions. Historically it has fluctuated between 300 and 400, generally, in that range.

MR. SULLIVAN: How many of these might have been newly created positions as opposed to filling a position that is already there? Because, I guess, with changing times there are certain positions might be needed that were not traditionally needed within the public service. Is there any breakdown of how many are newly created?

MR. FAOUR: I am sorry, I cannot tell you that. I do not know.

MR. SULLIVAN: Okay.

I will just move on to 1.1.01.01., Salaries. How many people are employed there under the Public Service Commission? How many employees?

MS J.M. AYLWARD: They have nineteen permanent positions, temporary assistants, and overtime is covered, plus the funding for the thirty graduate recruits.

MR. SULLIVAN: Okay, you have nineteen referenced in the Departmental Salary Details. That amounts to almost $1 million and there is $2.154 million listed here. What accounts for the difference between the listed positions here, the nineteen, and the amounts there?

MS J.M. AYLWARD: The graduate?

MR. SULLIVAN: Are you talking about this new program?

MS J.M. AYLWARD: The graduate recruits.

MR. SULLIVAN: The Graduate Recruitment Program now?

MS J.M. AYLWARD: Yes, that is it.

MR. SULLIVAN: That is into what, its second year now, is it?

MS J.M. AYLWARD: Yes.

MR. SULLIVAN: The second year, I believe. How many are employed right now in that program?

MS J.M. AYLWARD: Right now?

MR. FAOUR: Mr. Chairman, we have twenty-one in the program right now. We are funded for thirty, and we are currently in the process of recruitment and selection of an additional nine, to round out our complement for this year.

MR. SULLIVAN: The difference in salaries between the nineteen regular employees and the total budget here would be the graduate employment?

MR. FAOUR: Yes.

MR. SULLIVAN: That would account for the sole difference? There are no other salary allocations there?

MS J.M. AYLWARD: There is some overtime there.

MR. SULLIVAN: Yes, considering overtime.

MS J.M. AYLWARD: But in terms of bodies, that is it.

MR. SULLIVAN: Employee benefits increased. I guess that is because that has to do with the program, the Graduate Recruitment Program.

MS J.M. AYLWARD: There is membership and conference registration fees included in that.

MR. SULLIVAN: It did double from last year, from budget to projected to actual.

MS J.M. AYLWARD: There is attendance at conferences and seminars, and also the membership and registration fees. That is was that accounts for.

MR. SULLIVAN: Under 04., Supplies, there was an increase from $26,000 to $49,500 and this year projecting $40,000. Why would it have been almost doubled what was budgeted there? What would be the reason for that?

MS J.M. AYLWARD: As I mentioned briefly in the opening remarks, the public service reform initiative has really been activated over the last year; plus, we have the Graduate Recruitment Program, which is another program which requires it, and the Classifications Appeal Board. These all account for those amounts.

MR. SULLIVAN: Under 05., Professional Services, there is an extra $67,000 there.

MS J.M. AYLWARD: This particularly relates to the increased cost of the Employee Assistance Program associated with regionalization. Also, there was a political staff employment study and an engineering study on office space.

MR. SULLIVAN: It is going to go back to where it was, basically -

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: - or just a little higher. That is a one-time expenditure, I guess, on some of these items?

MS J.M. AYLWARD: That is right.

MR. SULLIVAN: The next item, Purchased Services, is in the ballpark. It is actually a little under there.

Subheads 1.1.01.10 and 1.1.01.12 were just two expenditures, I guess, last year. With Grants and Subsidies, who might the Grants and Subsidies be to? With Information Technology, I guess that is an updating, a one-shot thing, in that area?

MS J.M. AYLWARD: Yes. The Grants and Subsidies relates to the payment of The Conference Board of Canada, for networking services specifically. Number .12, IT, relates to upgrading of the computer hardware and the software. Also, funding provided under the IT budget was inadequate to do what needed to be done so that was why the extra expenditure was there.

MR. SULLIVAN: The Grants and Subsidies thing, that is just a one-shot thing? There is no follow-up each year? Payment is not budgeted for -

MS J.M. AYLWARD: That is right. There was no heading, so it came from within other sources. That is why it is not identified again for next year.

MR. SULLIVAN: Okay.

Those are all the questions, Mr. Chairman.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: I think Mr. Sullivan has covered everything sufficiently there.

MR. SULLIVAN: I left three for him the last time.

CHAIR: First of all, Minister and staff, thank you very much for your time and patience with us.

On motion, subhead 1.1.01., carried.

On motion, Public Service Commission, total heads, carried.

On motion, the Committee adjourned.