Pursuant to Standing Order 68, Kevin Aylward, MHA for St. George's-Stephenville East replaces Lloyd Matthews, MHA for St. John's North.

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

CHAIR (Aylward): Good morning, folks. Welcome to the Committee, to the minister and his staff.

If we could have the Committee members introduce themselves at the microphone for the record, I would appreciate that to start off.

MR. J. BYRNE: Jack Byrne, MHA for Cape St. Francis.

MR. FRENCH: Terry French, MHA for Conception Bay South.

MS KELLY: Sandra Kelly, MHA for Gander district.

MR. McLEAN: Ernie McLean, MHA for Lake Melville.

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

CHAIR: For the record, Kevin Aylward replacing Lloyd Matthews as Chairman this morning for the Committee.

Mr. Minister, if you would like to introduce your staff.

MR. WALSH: Let me begin by saying it is a pleasure to be here. I am going to ask the staff if they would introduce themselves. It is fine for me to say this is John Baker, Don Osmond, and Cluney is there. I will get them to introduce themselves and we can begin from there.

Jim Walsh, minister.

MR. OSMOND: Don Osmond, Deputy Minister of Works, Services and Transportation.

MR. MERCER: Cluney Mercer, Executive Director for Roads.

MR. BAKER: John Baker, Executive Director for Marine Services.

MR. HEALEY: Keith Healey, Assistant Deputy Minister for Strategic and Corporate Services.

MS HANRAHAN: Denise Hanrahan, Director of Financial Operations.

MR. BYRNE: John Byrne, Manager of Budgeting.

MR. MOORES: Weldon Moores, Assistant Deputy Minister of Works.

MS EVANS: Lynn Evans, Director of Communications.

CHAIR: Thank you very much.

Normally what we do is keep the discussions open back and forth with the microphones. I will have the minister make an opening statement, then we will have the Opposition critic, or designated critic, make their appropriate statements. Then we will go to questions after. When you speak into your microphone, could you identify yourself starting off so that the person upstairs, who is monitoring, will be able to ensure that we have the right accreditation for when you speak. It would be appreciated.

Mr. Minister, if you would like to start, sir, and a welcome to you.

MR. WALSH: I am not going to go with a long opening statement, but let me say what a pleasure it is to be here.

For the sake of Hansard, I want to say that, as you know, I have been on sabbatical from these meetings for at least ten years, but it is a pleasure to be back this morning. I will admit readily for Hansard as well, that being new to the department I may not have all the answers, ergo this morning a strong contingent have come along with me to assist in areas where I may not have the kind of detail that the committee would like to have. I will tell you right upfront that I am going to be delighted on some questions to defer to my staff, along with assure you, if they say it I am saying it as well.

I guess we could look at some of the things that we have tried to accomplish this year in the budget process but we will get into that, I am sure, during the questions itself. There are a couple of areas that I am very pleased with of course, and they are more personal then they would be departmental. One would be the fact that we are looking to move forward with the Vessel Replacement Program for the ferry service here in the Province. That affects my own district, not in terms of simply a new vessel for the Bell Island service, but a new swing vessel which is imperative not only for Bell Island but indeed for the entire Province in communities that we are trying to service.

One of the things that we identified readily, and was identified before I arrived, was that it was time for the Hamilton Sound to go. The vessel should come out of service within the next twelve to eighteen months. I am delighted that a new swing vessel will go in that will not only meet Bell Island's needs but also other areas. In most of my discussions with the people of Bell Island they feel and believe that we have - well we do have the two newest vessels in service at this point in time. By having a new swing vessel they will have the backup that they need, but also recognizing as an island people that there are others throughout the Province with similar needs.

There are other areas, of course, as well. We were able to increase our roads budget by about $1 million over last year. That is still going to be less than we spent in the last few years, bearing in mind that the Roads for Rail Agreement is fast coming to an end.

I will just close by saying that I never realized, I guess, until I got here and wanted to find out what the department was about - I went into the Web page because I figured I could get all the briefings I wanted, that the Web page would at least have everything that would be covered by the department. As someone said to me this morning, I have enough staff here that I probably should have brought the kitchen sink with me, and I understand that in the actual departmental structure we are responsible for kitchen sinks as well, so that is part of it.

There are 2,300 employees in the department, of which 1,500 are permanent and the remainder, of course, are seasonal who come with us especially during the wintertime and other times during the year when they are required. As I said, we can cover a lot of that as we go this morning.

I want to thank the Committee for making themselves available this morning, especially under the circumstances of knowing that the House of Assembly will not be open this afternoon. I appreciate even more so the effort of the members being here this morning.

Mr. Chair, with that I will pass it back to you.

CHAIR: Thank you, Mr. Minister.

I appreciate that. Before we go to the opening statement of the opposition, we will open the subhead of 1.1.01. for the Minister's Office, if that is okay with the members of the Committee.

Is it going to be Mr. Byrne or Mr. French?

Mr. Byrne? Okay, Sir.

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

First of all, I would like to publicly congratulate the minister on his recent appointment as Minister of Works, Services and Transportation. I have been the critic for some time now and it is good to see that you do not have all the answers, because you have brought your staff with you. The previous minister seemed to have all the answers, so maybe we will get some answers today.

I have a number of issues that I want to bring up before I actually get into the Estimates. You touched on a couple of them already. I will just ask you for some updates and stuff, I suppose.

One, of course, has been a pretty hot topic over the past few months, and the Premier is in Ottawa today, or going to Ottawa, concerning, I suppose, the relationship between Ottawa and the Province. To be more specific, I want to talk about the federal-provincial roads agreements. Can you give us an update on that, where we are? Is there going to be such a creature in the near future? Because, in the Province, especially with the roads around and the condition of roads, we really need an agreement soon. Can you give us an update on that?

CHAIR: Mr. Minister.

MR. WALSH: Do you want to go through your statement first?

MR. J. BYRNE: No, I am just going right into it now.

MR. WALSH: There are a number of areas in which we are trying to pursue ongoing agreements with Ottawa, and roads are definitely one of them.

I, too, am very concerned over the past number of months about what I could only call the deterioration in the relationship between Ottawa and this government. I do not mean with this government in Ottawa, but Ottawa and the Province. I am very concerned about it.

We have seen some examples of events that have taken place over the last three months - without going back to further ones - but Gander is an example of an absolute disregard and unwillingness to listen in terms of the needs that we have in this Province. To simply take some fifteen jobs out of Gander and transfer them to Montreal with the stroke of a pen is not only ludicrous, there is not only absolutely no sense in it at all, it is just one more example of where Ottawa looks and wants to move unilateral, in a unilateral way.

We also saw an example of that in Port Harmon, where we gave the federal government every opportunity to back away from agreements that they were about to enter into, to the point that we actually made the offer of: one, taking the port; two, accepting the funds; and three, in a very short period of time of maybe sixty to ninety days, turning control of the port and the funds over to a publicly based organization there. Not only were we ignored, but they cut the cheque and it is now in the hands of a private group.

I think you know that we are about to go before the courts. I feel good about the fact that my sources in Ottawa tell me that the federal government have gone and hired what they believe is the best possible legal firm in Canada to assist them with their case. They did not just go out and look for someone. They did the research and found what they felt - I cannot remember the name of the firm - was the best firm in Canada for this kind of a case, to represent them. It says to me that they may be wondering if what they have done is correct. It is just one more example.

We also have, as you know, some $24 million left in a fund yet to be spent in the Province, being controlled by the federal government, in particular through the office of the regional minister. We would all like to see some of those funds come forward. I would like to see some of those funds, if at all possible, be used again not just here on the Island but a proportionate amount of whatever we are going to spend, spent in Labrador as well. That fund is in limbo while we dicker back and forth about what the priorities should be, and we are still waiting to find out whether that money is going to be spent on municipal infrastructure, highway infrastructure or anything else.

In the interim, I think, most of our agreements, Cluney, are about to come to an end. We still have a couple that are kicking around - the one for overpasses and bridges and things like that. Perhaps you could touch on where we are with the funding that we still have to dispense, and some of the agreements that we currently have.

MR. MERCER: The Roads for Rail program was an agreement signed fifteen years ago, and it is going to clue up this year. There is $9 million of work left to be completed in 2003-2004, primarily on the Outer Ring Road and the completion of the Conception Bay North bypass.

There is a new agreement that was signed in September of last year, called the Ship Agreement, and I think that was what the minister was referring to with respect to roads and bridges. That is a $23 million program cost-shared evenly by the Province and the federal government. This year, 2003-2004, we will be expending $15 million of that $23 million, and we expect over the next year to two years to complete that agreement.

The CSIF agreement, the Canada Strategic Infrastructure Fund, and that is the $24 million the minister referred to, right now is sort of in limbo. The agreement has not been signed yet. The priorities, though, have been, I guess, confirmed. Having said that, from my involvement on the national level, I know all the provinces are lobbying the federal government for a national highway policy that would be specifically for highways and not necessarily for infrastructure. That is something that has been ongoing for quite a time now, for a number of years. There is some reluctance by the federal government to enter into an agreement such as on highways at this time.

MR. J. BYRNE: Thank you.

With respect to these agreements, you are looking at a strategic agreement of $24 million and $23 million. They are pretty small compared to the Roads for Rail Agreement type of thing that we had, with $800 million. Even that I had problems with, by the way. I did not think that was sufficient enough.

In the meantime, I noticed lately that the previous Minister of Works, Services and Transportation, before he was reassigned, made a few announcements in his own district with respect to, I think it was overpasses out of the Ship Agreement, and went out around Arnold's Cove, I believe, and a couple of others.

I have an issue in my district, and I have been bringing it up in the House a number of times of course, and that is the Torbay bypass. Torbay Road now has somewhere, I would think, when the study was last done, 12,000 vehicles a day going over Torbay Road. I would say that is probably up to 15,000 now, when you look at the extra traffic out around Stavanger and these areas. I am just wondering. The previous minister had said that when we get a new roads agreement with the feds, that is priority number one. It did not really answer my question. It was: When do you expect to have an agreement with the feds, a substantial roads agreement with the federal government for this Province? Is it going to be a month, six months, six years? What is realistic?

MR. WALSH: Jack, to answer your question the only way I can, and that is with what I believe the reality is, until the current Prime Minister decides that it really is time to go and not simply tour the world to say goodbye, until some of the existing ministers decide that they plan on doing something else with their lives because the leadership is over, I can say to you that I truly believe that any significant agreement, not just for this Province but for any province, whether it is with transportation or other issues, are out by as much as maybe even a year, because I do not see the spirit of co-operation existing. I only wish that I could actually point to what I believe the Prime Minister wants for his legacy. If I could find that, you could try to work around it. It is almost like a shotgun approach. It is now Monday, and I might have a new idea in my mind of what I want to leave behind today.

That is what we are facing. That may be fairly brutal and blunt, but that is the reality of it. We have a Prime Minister who intends to be around until at least the fall when his successor is picked, and then intends to stay for a month or so afterwards. What we have to do is to make sure that the priorities we have for this Province, not just in transportation but in every other area, are expressed, loudly and also quietly, to the three individuals who wish to lead the Liberal Party, and in so doing being automatically the Prime Minister. We have to work on those, Jack, to see the kind of monies that you are talking about.

When you talk about the bypass road - I never told you this before, but I will tell you now. I have gone down on two separate mornings and parked by the -

MR. J. BYRNE: School?

MR. WALSH: No, by the entrance going into the old airport, just parked on the side of the road there and watched what was coming over. It is a good spot to see it because that is when people start jockeying for the two lanes. I have to tell you, if someone were to just drop me there and I didn't know where I was, I could just as easily be on the access road coming into the city and watching the traffic. There is no doubt. I did it on two occasions just in case one of the mornings might have been a bit flukish. I didn't tell you that but I actually went down one morning, and I don't drink coffee but I had a cup of hot chocolate and a low fat muffin and sat there for about an hour and a half. I have to tell you it was pretty interesting.

MR. J. BYRNE: The next time - and I will go with you - go down by Holy Trinity School, by the church there, and have a look at that area. It is too late now. It is too bad you weren't down there in, say, February month, to have a look and see the situation that is down there. It is a major, major safety issue on that, let me tell you. It is worse now, on Torbay Road, that Topsail Road was before they widened it.

MR. WALSH: And it is worse there than it was on Kenmount Road which I used to come over myself, many times, from Mount Pearl.

Jack, I didn't tell you that, but I sympathize greatly with the people in that area and I truly believe that is has to be a priority in any new agreement that we have with Ottawa that a bypass road is a must. I totally support that cause.

MR. J. BYRNE: There are actually two things that should be happening, in my mind. I talked this over with the council. The four-lane highway should be extended from where it is now, in the old Torbay airport access, right through to probably Gallows Cove Pond, and the Torbay bypass besides. We will get working on that one.

MR. WALSH: I totally support it. I would say to you, that if I am sitting here as minister when we are in a position to negotiate something new with Ottawa, I truly believe that the growth which has taken place in that area, the desire for - of course, having attachments to that Outer Cove-Torbay area myself, I know that it is still an area where the grandfather is still giving free land to the grandchildren. That is keeping them in the neighborhoods and it is causing the communities to grow even that much more; but I fully support your position. I would be delighted some morning, when school is open, give me a call and we could meet and do the same thing.

MR. J. BYRNE: Not to belabour it, but now the traffic is actually coming over to Marine Drive and coming up Logy Bay Road to get away from it.

Okay, I have a couple of other issues. If all my questions are going to take this length of time we are here for awhile.

MR. WALSH: I will cut my answers down.

MR. J. BYRNE: You mentioned Vessel Replacement Policy in your opening remarks. Actually, I have a note here to ask you for an update on that, exactly where we are on the Vessel Replacement Policy, because you only really announced one vessel. It is not really a true Vessel Replacement Policy. (Inaudible) long-term vessel replacement policy where, in my view, they should be constructing them here in the Province - and which we are looking at basically the cost-benefit analysis of these versus buying them outside the Province; building them here in the Province. It may cost a few bucks more, a few million maybe, but in the long term it is probably more beneficial to the Province.

When you are addressing that - the boys behind me mentioned that I should come up with a new word for the Hull 100 instead of the rustbucket. I think it is a suitable word so I will continue to use it. Can you actually give us a date when that vessel will be in the system and the final amount, the total amount, that will be spent on her? Transport Canada, I would imagine, will be doing inspections on her all the time. Will, in fact, Transport Canada eventually licence that vessel?

MR. WALSH: Jack, let me begin by disagreeing with you totally on the Vessel Replacement Program. We were very matter of fact about the Vessel Replacement Program. We said that the Hamilton Sound would be the first one and that would take place with a call this year. Then we would move all the way through to replacing, in 2005 and 2006, the Sound of Islay - that will go. The Green Bay Transport will be replaced in 2004-2005, and the plan is there. We have said it publicly and we stand by it. That was, in actual fact, not only said but it was in a press release that went out from myself on March 27, very matter of fact, in saying this is exactly what we intend to do. In that mix, of course, was also the bringing in of the Hull 100 and we are very, very firm on that.

I will say to you - and by putting it on the record I may cause myself and the government and the department some problems in a future date. We have been a little soft in the way we have been wording what we want to do with the Hamilton Sound, for example. Everything in my bones says that I want it built in this Province. I want the replacement to take place in this Province. Of course, as you know, we have agreements with other provinces whereby if a significant job is taking place here other shipyards could build on it. By calling for an EIS we can lay out exactly what it is we are looking for, an expression of interest. Then out of that mix we can probably narrow ourselves down so that we can place ourselves in a proper way for a request for a proposal.

I see this as another Triple P vessel, but in the sense that it would be designed, billed and financed. Because the ship is replacing the Hamilton Sound, which is an existing vessel within our fleet, the contracts that exists for the Hamilton Sound would automatically transfer to this one. Contracts for ships, as you can appreciate, for employees are a little different maybe than for other things we might want to look at. The mix is very difficult. You cannot change the mix. You have to have a captain, you have to have a mate, you have to have, and so on. The number of people moving to the new vessel would not decrease. It would probably be exactly the same with the potential - depending where the vessel was operating - possibly even increasing. The Vessel Replacement Program is there and it is sound.

With respect to the Hull 100, for this morning and also in response to some meetings that were held before, I have some information here that I can go through in great detail but I am going to provide it to you, or give it to you. I am going to tell you this morning that I believe the final number on the vessel will be $8.8 million. So I will allow myself a little leeway there. An additional $1.7 million will have to be spent. That will cover CSI regulatory requirements. Some of the specification and design omissions, that is a small amount but it still has to be done. The asbestos removal, additional has to be required. Some switchboarding and a contingency of about $200,000 as well.

MR. J. BYRNE: Excuse me. Is that included in the $8.8 million or over and above?

MR. WALSH: No, the total number. The final number for that vessel will be $8.8 million. Even though when you look at it, you say to yourself, well, that is up higher than it should be. A new vessel would have still cost us somewhere in the neighbourhood of $16 million to $18 million. I think you have to look at where the money is being spent. It is being spent on a vessel in Newfoundland. There is the dockyard in Clarenville who are employing all Newfoundlanders. The work that is being carried out, even in asbestos removal and everything else, it is all Newfoundlanders who are working there. At the end of the day, I will accept the fact that we have an older vessel but we will have a vessel that is totally refurbished, and a vessel that will serve the communities well where it arrives. I am quite confident that for the amount in question we will have a vessel that is going to give us the same life that a new vessel would and it is going to give it to us for at least half the cost.

Being a boater and a person who probably spends more time studying boats and vessels than I do anything else, I believe that to be an accurate statement. Time will tell whether one of us is right or wrong but I will tell you that ten years from now, I would be delighted to get on that boat and go wherever it wants to go.

MR. J. BYRNE: I have been told that the normal lifespan of a vessel of that nature is twenty-five years; twenty-five or thirty years. So twenty-five years down the road we may not be here to know for sure. If you look at from the reports of the department, in that steel plates have been cut out and when they go to weld them back in, there is nothing to weld it to, type of thing, to say that the lifespan would be the same as a new one, I think you are stretching it, personally.

MR. WALSH: Again, let me say to you that if anything has been cut out and put back, I can assure you it was put back to steel that was adequate and able to absorb. I will say to you, that any replacement that has taken place has been done under the strictest supervision of CSI. I am delighted they are out there to make sure that the vessel is.

You asked one other question: Do I have any concerns that the vessel will not be certified? No concerns at all, because we are doing everything they have asked us to do. That is why in some cases the amount that we are running - we are meeting not only the old CSI regulations that were in place, but we are also meeting everything new that they have created. We are probably the fist vessel being refurbished anywhere in Canada that is now meeting every piece of the regulations that they have ever put in place, new and old. We will have a good boat when it is all finished.

By the way, I have that information if you would like to have that.

MR. J. BYRNE: I will take both sheets.

MR. WALSH: Yes, I know you would, but I will give you one. I only quoted from one.

MR. J. BYRNE: The one on the vessels, the ferries: Back to the Apollo.

The first question is -

MR. WALSH: The Apollo?

MR. J. BYRNE: The Apollo. Has all the asbestos now been removed? We have heard it on at least five to six occasions, that the asbestos has all been removed, but the date keeps changing and we find more of it. It has been ongoing now for some time. Has all the asbestos been removed from that vessel?

MR. WALSH: It is a question that I don't know the answer to, so I am going to defer and see if I can get a better update from John.

MR. J. BYRNE: Further to that question: Are there sections of that vessel still closed off to the public?

MR. BAKER: To answer your first question, I can't guarantee you that 100 per cent of the asbestos has been removed, but I can assure you that the regulatory body will make sure, before they receive a certificate, that what asbestos is not removed is contained. That being the case, yes, she is still legal to operate.

On your second question with regard to sections being closed off, if you are referring to the cabins or the berths on the vessel, yes, they do not sell cabins or berths on the vessel to the travelling public.

MR. J. BYRNE: Are they closed off because of the asbestos?

MR. BAKER: No, they are closed off because they have no intention of selling to the travelling public. The reason why they closed it off and made it such an issue is because the local hotels and motels in the area were very concerned, so the vessel owners wanted to make sure that it was public knowledge that those berths were not for sale and not available.

MR. J. BYRNE: Another question - I brought this up but I really was not satisfied with the answer last year so I will ask it again - is on the vessel itself, the length of the vessel. Is that because - I am trying to get this now so I can get it clear - that vessel, the Apollo, is on that run, and when it was first tendered it was a certain length, and for this vessel the tender was given out, and because the vessel is a certain length - once it goes over a certain length there were more staff required to operate that vessel. Is that the case? Are we paying more for that vessel because she is over the length and we have more staff on that vessel? Because I have been told quite clearly that we are, the Province is.

MR. WALSH: Jack, in terms of the length, I will project here today that in five years we will need a vessel that is even larger. The traffic that vessel is now carrying went up by, I think, something in the neighbourhood of 40 per cent the first year, and the number of tourists expected to go into that zone this year will probably be up by another 30 per cent or 40 per cent. It is at capacity virtually on every crossing.

MR. J. BYRNE: When you say at capacity, do you mean capacity for the vehicles or capacity for the actual passengers (inaudible)?

MR. WALSH: The unique thing about it is, there are certain times that you will have a mix that varies. For example, going to Bell Island is no different than going across The Straits. There are days when we have more tractor trailers on board than we have passengers, but we still have the crew on board because on the next run there might be no tractor trailers and all passengers.

You just cannot bump somebody off and bring them on. You try to keep the crew as consistent as you can, looking at the mix that you have had over a period of time. The vehicular passengers - you might only have one tractor trailer and two tour buses. Well, on that particular day you need to be at maximum in terms of crew.

I can assure you that, under that contract, there is no surplus of people working the vessel, but at the same time there is no person on board less than is required. So, if they are on the boat, we need them. You won't need them for every crossing but you will need them. There are times when there are eight or ten buses waiting to cross over there, with seventy or eighty people on a bus. I can tell you, you have to have enough crew on board to meet those needs as well.

MR. J. BYRNE: I think you are missing the drift of my question. When the tender was awarded, there was a certain length of vessel required. The specs were changed, the vessel was increased in length, to award it to that company. Once it went over a certain length, a certain amount of extra staff had to be on that vessel because the vessel was over a certain length, according to Transport Canada standards. Is that the case? That is all I am asking, yes or no.

MR. WALSH: To answer the question that simplistic, I cannot do it because it does not necessarily mean - for example, the length of the Hamilton Sound or the length of the Flanders only has a certain - I can run the Flanders with probably five crew, if I am not carrying any passengers. The moment that I decide to start carrying passengers, I have to start adding crew. So, when the length of your vessel is increased, yes, but you are actually moving that many more people. The more people you are moving, the more crew you need.

You could probably take that vessel and sail it to England with no one on board, in terms of passengers. You might be able to do it with seven crew members. You may need twenty when you start hauling passengers.

I am delighted that we have the length of the vessel that we have so that we can move the number of people that we are. That will increase even more now that we are, of course, using Cartwright come June as the jump-off point for the Northern Peninsula. I would say they are probably going to need a larger vessel in years to come.

MR. J. BYRNE: So the answer is yes.

MR. WALSH: That answer is not yes. The answer is, you have to have a crew to meet the needs of the passengers that you are carrying, and that is CSI Standards.

MR. J. BYRNE: In my opinion, the answer is yes.

Further to the ferries, Coastal Labrador has just recently awarded a contract, for a five-year contract for the Coastal Labrador ferry, with a five-year renewable clause in that. That could be a ten year contract. My question is - no one knows the future, what may happen. This Administration is in the last months of its mandate. It may be re-elected, it may not be re-elected. They put out a five-year contract with a five-year renewable clause, and I am just wondering if that is - it is legally correct, but is it morally correct to be doing those types of things?

MR. WALSH: Yes, it is. It is not only legally correct but it is morally correct as well because, for the amount of money in a public tender that took place, a tender process that allowed many companies to apply - and a number of them did - the lowest tender was the one that we accepted.

It is morally correct as well because if we had decided to go with a one-year contract, I can assure you that the cost per year to the taxpayers may have added, instead of a $6 million contract, for one year it might have been $9 million, and maybe even $10 million, but certainly $9 million. The reason is, the infrastructure that you have to put in place in order to operate for a season, once it is in place, it is then there for the next five, six or seven years, but definitely for the next five years, so your cost recovery can be spread over that five-year period.

I would say that, if we had gone with one year, morally we would have been wrong because we would have spent probably another $4 million of the taxpayers' money for a one-year deal. I look at it and say, we are now going to get two years for the price of one by the mere fact that we have gone with a five-year contract.

Legally, we had the right. Morally, I am not spending my own money, I am pretty tight about that, and I am a lot tighter when I am spending the taxpayers' money.

MR. J. BYRNE: I have a number of questions. I know there are a number of people who want to be asking questions, so at any time if you want to -

MR. WALSH: Jack, I just want to say that the option years are only an annual option. It does not mean that it will be renewed. The contract could be renewed for five years but, morally, knowing that someone else might come along, they might not want to renew it, or, two, they might only want to renew it year by year.

MR. J. BYRNE: I have a question again with the vessels. I am trying to do this from memory, now, because it has been a little while ago. Probably Mr. Baker might be able to answer this one. It is concerning the vessels out of Lewisporte, and the change there, and the refitting.

I am told, when they come in for refitting now, the captains would normally oversee the refitting, or be on the vessel. Now, whatever months they may be in for refitting, the captains who would normally have been there - there is some other person who is not even associated with the vessel, who is called in to oversee the refitting.

MR. WALSH: What we tend to do with refit - I just want to say, you do not necessarily have to have a captain on board all the time. At other times, the chief engineer can cover most of work, but a chief engineer would usually be on board for the refit.

It depends on what you are doing as well, depending on who you need, but we would have, during what I call the off-year refit - that is the one where the refit will take place while the vessels stays in the water; because, as you know, every other year the vessel has to come out so the hull is inspected - for those years, I can assure you that the department, as in the past - it will be no different in the future, whether it is Lewisporte or anywhere else - will have on board the required individual to manage the aspect of the work that is taking place. We would not necessarily need a captain, a chief engineer, if we are planning on doing some painting above deck during that particular year. We would have on board, as we would anywhere else, exactly the individual who is required to manage that portion of the work.

MR. J. BYRNE: The impression I had was that - and I think it was the chief engineer, to be correct, not the captain.

MR. WALSH: We have had captains on board, as well, in some cases.

MR. J. BYRNE: Oh, yes, but the complaint at the time was that the chief engineer who would normally be overseeing this would not be brought back while she was down for refitting, but they would bring in someone completely not associated with or outside the system. Basically, the accusation was made to me that there would be, I am not sure, favoritism or political involvement, friends being called in to do the work rather than the (inaudible).

MR. BAKER: Looking at refits, we kind of break it up into two responsibilities. When we look what we call the safety issue, which is above deck, the lifeboats, the navigational system and everything else, we normally bring back either a captain or a chief mate to take the lead on that one, with some more assistance for them. When we go below deck, we have the engineering crew.

To answer your question, the chief engineer on board for that season is requested to put together a refit list, during the season, on the survey items, from the regulatory body, and he will have that ready for when the ship goes into the designated refit period.

Yes, we would love to have the chief engineer back, because he is operating that vessel all season. We have never, on either the Bond or the Ranger, that are contracted out, suggested that the chief engineer not return for the refit period. We have had them there and we do have them there now.

In addition to that, as a project manager for the short-term of the refit, we put a person on board there who is very familiar with either the Sir Robert Bond or the Northern Ranger, and have worked on it for years and years and years. They know some of the things, and in many cases they can assist the chief engineer who may have only been on there for the last four or five years, hired by the contractor to operate the vessel.

No, we have never said we do not want the chief engineer back; and, yes, we have always made sure the chief engineer had some good assistance while the refit was carried out.

MR. J. BYRNE: Thank you.

I will change gears a bit here now.

MR. WALSH: Jack, before you change gears, I want to just say to you, the information that I said I am going to give you this morning, I may have to make you wait for that for another day or so. The only reason for that is, we made a protocol, we made a commitment, that we would give it to the Public Accounts Committee, and we also said we would give it to them first in the last session. We are going to make arrangements for that to be given to them, if not later today then tomorrow, so in the matter of a couple of days I will be able to pass one across the House to you. I just want to correct that. I want to honour the protocol and commitment that was made.

MR. J. BYRNE: Thank you.

With respect again to Port Harmon, and the issue there, you have taken the federal government to court, basically. You mentioned that earlier. Can you give us some idea what the time frame might be on this, and the court costs, and what you can expect? If the Province wins, would they actually have to cancel that contract and go some other route? What is the objective, the end result, the cost and the time frame?

MR. WALSH: I cannot tell you what the costs are going to be. I can tell you, as I said earlier, I know the federal government has gone out and hired the best possible lawyers that they have available to them. We are both in the process of seeking a court date. Should we win, yes, indeed, that contract would be cancelled. Then, if one were to follow logic, I guess somebody else might have a court case against the federal government at that time. That is for the future to see.

I believe that our case is very strong in the sense that the federal government have bypassed not just the regulations we have here, but they have bypassed their own national policy with respect to wharfs. They have bypassed Ottawa's Treasury Board direction within terms of ports. There are a couple of other acts that we believe they have also violated. We believe that we have a strong enough case.

We also had to wait - and it was a little awkward in the House of Assembly in terms of dealing with it, and our approach and so on - actually, until March 31 to find out whether or not they were going to close the deal with the other people. We were slowly getting ourselves ready, yes. They had said publicly it had to be done by year end and I had made the offer to the minister, of what we were willing to do. He told me he did not think that he would go forward. I told him that he should take a few days to really think about what he was going to do. Anyway, they signed off on the deal, I understand, even earlier and gave the cheque even earlier. Then they officially notified us. They did the deal, they notified us days afterwards, so that is where the time lapse was.

We were ready within the first two or three days of April to notify them of what our decision was, and I did that here in the House of Assembly. They proceeded, and then advised us afterwards of what they had already done.

I believe our case is strong. I believe that it is regrettable that we had to do it. I wish I could speak for the courts in terms of time frame, but I am just unable to do that.

MR. J. BYRNE: I thought you might have had some advice from the Department of Justice on when you could expect it to be -

MR. WALSH: No, I am sorry, I cannot give you a time frame.

MR. J. BYRNE: Another one is - I do not have any; I meant to bring them with me - the exemptions to the Public Tender Act presented in the House here. I have noticed for some time now that in those there are quite a few properties leased on a month-to-month basis, and it has been going on for some time.

One of the most used reasons for the exemptions is to see, basically, how much space is going to be required. These might be areas that have been leased for years, and it is going on month to month. I am just curious as to why that is. Is that going to be a procedural policy that is going to be ended in the near future?

MR. WALSH: Again, for me, it is a dollars and cents factor as well. As you know, we manage the space for all departments. A line department would come to us and say: Look, we are here and we would like to stay here. Can we renew a lease?

Let's say a lease expired a year ago, or even last fall. It may have been in place for five years. The renewal takes place at the exact same amount that the lease was negotiated for five years ago. So, if it is month to month, and let's say we renew one for another year, we are getting the same rate that we got in 2003 that we negotiated back in 1998, and if that had been put in place in 1993, we are getting 1993 rates. So we are getting rates that are a minimum of five years old.

MR. J. BYRNE: On all occasions?

MR. WALSH: I do not think I have signed anything that had an increase in it. It was a renewal always at the old rate. I cannot speak before my time, but I can speak during my time, and it is usually a renewal at the exact same rate that existed before, and that is where the savings come in for government as well. Inflation has taken place, all costs have gone up. The fact that we are staying put, I guess the landlord has decided that he would rather have us there.

I am going to ask - I am on the record - have I renewed any leases that would have had an increase in cost?

WITNESS: No, not to my knowledge.

MR. J. BYRNE: Previous ministers?

MR. WALSH: No, the policy would not have changed simply because I have arrived. It is usually renewed at the exact same amount that existed prior to -

MR. J. BYRNE: If that is the case, what is the logic behind it? I mean, a month-to-month lease renewal, if you could get it, why wouldn't you do it, sign a year or two or three? Being cynical - I have been in politics and have seen some of the things that have happened over the past ten years since I have been here - to me, I think what might be happening is that somewhere down the road when you get closer to an election you might sign a five-year lease instead of a two-year lease. This is the type of thing that I am thinking might be happening.

MR. WALSH: No, any lease that is signed from month to month is good for a minimum of twelve months. I am pretty sure -

WITNESS: If it is month to month, you can cancel at any time.

MR. WALSH: So can the other party, so it works both ways. In some cases where this is done we also might be looking at an area where we might want to do some consolidation. For example, over in Corner Brook, we just renewed a month to month back in January or February of last fall for space for wildlife. I just renewed it again, month to month, for another couple of months, knowing full well the brand new building is about to open and the exact date of them being able to move, I am not sure. Some of those leases we have renewed on a month to month basis. Other places, we have been happy enough to do it because the people want to stay there and we can get the same rate we received five years ago. It was a good deal for us and a good deal for everybody else.

MR. J. BYRNE: Very good.

With respect to leasing, can you give us an update on the leasing of the premises in Gander for the hangar, the air services? I have been told that they moved from Torbay airport to Gander, yet Torbay airport is still doing some work that they should be doing in Gander. Can you just give us an update on the cost of this facility and the rentals of it?

MR. WALSH: I may need help on this one, because it is a new file.

MR. OSMOND: Yes. The numbers on that one I cannot quote chapter and verse, but there was a ten-year deal that we entered into for the hangar space in Gander. The air ambulance service, however, remained behind here in St. John's to meet the needs of the Department of Health. However, the residual space that is left in Hangar #3 in St. John's-Torbay airport is, in fact, going through a process to be sublet to a third party and then the government could, in fact, receive some revenues from that surplus space.

I don't know if there any other specific kinds of questions I can address for you, but that is a general update. The matter had been pretty well put to bed some time ago.

MR. J. BYRNE: I was thinking something to do with computers and computer work. Is that a possibility, done here versus Gander?

MR. OSMOND: I am sorry, Mr. Byrne, I am not aware of that problem, if there is one.

MR. J. BYRNE: There may have been some misinformation there.

While I am on Torbay airport, I think the Minister of Tourism put out a release some time ago. They are looking at Triple-P for the Torbay Rec Centre. I would imagine the construction of something like that would come under the Department of Works, Services and Transportation. Anything new on that end?

MR. WALSH: I cannot give you any update on that, other than the fact that I know that is one of the directions the minister is looking in. Indeed, if there is any Triple-P project taking place, there are automatic partners in the process, along with Treasury Board, the Minister of Finance, and whatever the line department is. The two catalysts that would be driving this project would be Finance and Works, Services and Transportation, with that line department.

I cannot give you any further update, other than the fact that the department has said publicly what it would like to do. I am not sure if we have any people assigned to the project as of yet.

MR. MOORES: We have had one of our staff meet with tourism and give them some advise, but there is nothing beyond that.

MR. WALSH: We have assigned some people to give them advise, but it has not moved forward further than that.

MR. J. BYRNE: Government vehicles: Does the government lease any vehicles now? Some time ago the Auditor General mentioned that there were vehicles insured and re-insured and other vehicles insured that we didn't have. Has all that been addressed now, and can you give us any idea how many of these vehicles we do have?

MR. WALSH: I am not sure about the comment with respect to the Auditor General, in terms of the leasing and insurance and so on. Is there anybody who might be able to -

MR. MERCER: I cannot give you detail, but there are some vehicles that the department does lease, or have lease-purchased. In the last few years we have lease-purchased vehicles for construction work in the summertime. At the end of the construction season, then we would purchase them for our maintenance fleet.

Regarding the issue of insurance, I cannot provide you with any information on that, I am sorry. We can certainly get the information for you.

MR. J. BYRNE: What I am getting at, of course, is - I don't think it was the last report, but probably the one before, or maybe the one before that - where they had a number of vehicles insured and they could not track down those vehicles. So we were paying money out for insurance on vehicles, cars, we never even had.

MR. WALSH: In terms of the leases, I am somewhat familiar with how the leasing companies work. They would require us, for example, to maintain additional insurance because of their companies.

I can tell you, finding leased vehicles reminds me of the same comments that the Auditor General made about the paintings, that when she did her initial audit she could not find 10 per cent of the art work that government was supposed to have, and by the time the review took place and her document was printed, I think we had found all of them; but her document, in the past, has always seemed to get out before the final numbers got to her. I am not going to question her motives on anything she did. When she did them, I am sure she did them as the Auditor General, not looking to the future.

MR. J. BYRNE: Are you questioning her integrity?

MR. WALSH: Absolutely not. I know the lady and, in all the dealings I have had with her, she had been a very honourable individual. I am sure that anything she put to paper, she would have scrutinized to the point that what she wrote that day she believed to be correct. The only difference is, five days later we might have been able to answer the questions a little more clearly.

MR. J. BYRNE: Mr. Chair, I have three more issues here.

CHAIR: Certainly, keep going.

MR. J. BYRNE: This is going to have to come from the engineering department, I would think, and I mentioned this to you already.

I have to say, it just boggles my mind and I kind of know what the answer is going to be. With respect to the new pavement that is being put down - for example, the section of the Outer Ring Road from Torbay Road to Logy Bay Road was opened up last November and one of the lanes had to be closed down this winter because of the pavement breaking up. On other parts of that section, large potholes developed. I know there was only one layer put down and there is going to be a second layer this summer, or whatever the case may be, but there has to be - and I notice this with new pavement a lot, all over the place - has there been some kind of a change in the formula or the mixture or whatever with respect to the new pavement going down? Is it not as thick as it normally was going down, say, ten, fifteen, or twenty years ago? The pavement that is being laid today is not lasting, I would say, one-quarter of the time of the pavement that was put down thirty years ago. We had pavement put down thirty years ago and it still holding up, but now they are putting it down and within a year it is breaking up. What is going on?

MR. WALSH: I cannot answer it from an engineering point of view but I will divert to someone who can. As you talk about the Outer Ring Road and so on, and some of the areas where it is starting to break up, I do not know if it is a blessing to have it break up with the first layer so that you know where your trouble spots are going to be and you can fix them.

MR. J. BYRNE: That is the way it is designed now, is it?

MR. WALSH: No, I am not saying that. I am just saying that I am not sure if it is a blessing, when you look at the length of that highway and the few places we do have problems.

In terms of the mixture, I know the traffic has increased greatly but perhaps engineering could tell us about formulas.

MR. MERCER: I guess, Jack, you are not the only one to have made that comment in the last five years or so, and not only in this Province but other provinces as well. I guess what is believed in the industry is that, prior to ten years ago, most of the liquid asphalt was a natural liquid asphalt. It came from Venezuela; it was mined out of the ground. The liquid asphalt that we are getting today is a refined liquid asphalt. They come from the refinery process whereby the oil companies, I guess, are taking off the high-end volatile products and the residue that is left, although it is required to meet certain specifications, is not the same quality as what I guess, we were getting ten, fifteen, twenty years ago from the natural deposits that were in Venezuela.

I know, starting last year, this has been a big issue in the industry and what has happened recently is that the specification for liquid asphalt now has been really tightened up. Liquid asphalt is now actually produced as a product, not a by-product any more at a refinery, whereby it is designed to meet certain temperature load requirements, those sorts of things.

I think there is a recognition in the industry that, yes, for a while we were getting some product that was not quite like what we used to get. It was a lot more brittle, it broke easier.

MR. J. BYRNE: (Inaudible).

MR. MERCER: Well, the wheel rutting part of it, that is the characteristic of the mix itself. That would be the matrix of the mixture made up of the stone and the liquid asphalt that contributes to rutting. It has really little to do with the liquid asphalt. The liquid asphalt makes it a little bit more pliable, a little bit more elastic, and a little bit more durable. When the high-end volatile is taken off, the liquid really becomes brittle, cracks easy, and, of course, under our climate, when it cracks easy, it leads to premature deterioration pretty quickly.

MR. J. BYRNE: So the user, which would be the government or whatever the case may be, could set specs for the mixture? How much more would that cost?

MR. MERCER: Well, that has actually happened. Canada, as a whole, adopted the same process last year, although I believe most of the liquid that we had received last year, because our liquid comes in primarily in two shipments, the liquid that we were using for most of our construction season last year actually came in the year before. So this year we will actually be getting a new liquid to the same specification as the rest of the country is using.

MR. J. BYRNE: In actual fact, any roads that were built within the Province over the past ten years, you can expect them to deteriorate a lot quicker than the ones from here on?

MR. MERCER: We have seen some signs of that, but it is not something that is specific to the Province. The whole industry is experiencing the same problems. I think we are certainly on the right course to correcting it.

MR. J. BYRNE: I knew there had to be a problem. I just knew it. It just made sense to me that there was something wrong going on with the roads. There had to be.

MR. WALSH: What is good to know is that the national standards that have been set out now for the entire country will see an asphalt being delivered to Canada and to this Province that hopefully will get us a little closer to that of thirty years ago. That was enlightening. I never knew we actually mined asphalt anywhere. Hopefully they will be better.

MR. J. BYRNE: I was in the media a fair bit, and so was the previous minister, concerning the condition of the roads and snow clearing and maintenance. The minister was saying that on the Northeast Avalon there were thirty new pieces of equipment, or whatever the case may be, but it was not in the system. It was still down parked, and all that, and there was a question with respect to it.

The leader of NAPE was out and confirmed this, after having a meeting with the previous minister with respect to the cutbacks within the department on staffing, on overtime to repair equipment, which was confirmed by the previous minister to the leader of NAPE, Mr. Hanlon. What are your plans for next year? I know the first thing back is going to be, well, it was an unusual winter. So be it, to a certain extent, but the condition of the roads this year, as far as I could see, the sanders, the truck operators - and it was no fault of theirs; it obviously had to be the administration from on high - were getting out later. They were spending shorter amounts of time there. There was one point on the Northeast Avalon, down in my district, where there were supposed to be something like five or six pieces of equipment and I think there were two. Vehicles were over in the garage, over in the White Hills, months, with the motors gone. Is this going to be addressed? Are we going to get back to some kind of a proper and safe situation next winter, if we have another winter like this one?

MR. WALSH: Jack, there is no doubt that people, in their minds, perceived that things were not getting done last year as fast as they should be.

MR. J. BYRNE: It wasn't in their minds, Minister.

MR. WALSH: I think we also have to accept it was probably the second-worst winter we have had in 100 years. Although there was no cutback in overtime, our crews did not start later or end earlier. They started the normal times that they would, and a lot of them went until - I remember talking to some of the crews and saying: Fellows, look, when you feel tired, for God's sake go home. Do not push it. I know I talked to some of those crews on the Northern Peninsula when they were totally buried in.

Although we spent, I think, $3.5 million to purchase some nineteen pieces of equipment, one of the problems that I see is almost the same as if we were going to try to upgrade our roads across the Province. At that rate it will take forever. One of the things that I talked very briefly about but have not had a chance to get into real detail on with the staff is, I want to look at what it would take if we were to go out - and they tell me that it might not be possible because of the nature of what the use is on the equipment. Could we lease, for example, fifty new pieces of equipment? I will just pick fifty as an example, and throw them into the field. Normally, heavy equipment, with the kind of use and abuse that they get in terms of what we are using them for, a lot of leasing companies are not pleased to lease in that situation. I have to believe, though, that they would be willing to take a look at a package for a government who says: Here is the guaranteed amount that you will receive every month for the life of the lease, and at the end of the lease the vehicles will be ours.

I know that sounds a little crazy, but perhaps we could get, for $3.5 million that we had to go out and spend, perhaps for that same $3.5 million we might have been able to get fifty pieces of equipment even though we have to pay it for the next four or five years. If we do not start renewing the fleet faster - and the only way I know to do it cheaper, instead of having to write the big cheque for maybe $50 million or $40 million, perhaps for the same $3.5 million or $15 million right up front, the same $3.5 million over that period of time, we could have all the vehicles now and we could start replacing some of the older fleet. It is an area that I would really like to take a look at. It is something that takes a lot of exploring in terms of companies being willing to do it, Treasury Board agreeing to it, and the actual finances in place.

I think we can get more now than if we just try to throw $3.5 million at it again next year and hopefully get another nineteen pieces. I would rather have fifty to a hundred new pieces now, lease them and own them at the end, and hopefully pay the same amount on an equal payment. There are problems with it, but it is an area that I personally would like to look at.

MR. J. BYRNE: I think a big part of the problem this year, there is no doubt in my mind, what I hear, was equipment breakdown. I know an individual who left here and went to Clarenville and saw three pieces of equipment broken down - three pieces - at the one time on that drive.

MR. WALSH: The most sensitive pieces that we had this year were the snow blowers, which are probably the most temperamental pieces of equipment that we own for highways. They were being pushed that hard this year that we did have more than the normal breakdowns, but we had more than a normal winter. The same with the other trucks as well. We pushed them pretty hard in pretty extreme conditions. There have not been a lot of years that we can all look back and realize that the Trans-Canada Highway from here to Whitbourne has been closed. I think in the last twenty years it may have happened two or three times, and that has all taken place in the last couple of years.

Fortunately for us, we had an alternate route, that you could take the lower road and find your way through. It is not the same in places like the Northern Peninsula. Last year, we were even jockeying equipment around the Province to try to help troubled areas.

I know in Labrador, with all the problems we had with the new road and that great new experiment we are into there, there were times last year that we actually signed off and leased equipment from contractors in Blanc-Sablon to help us open up some of those roads. Harsh winter, very tough, but the fleet - I totally agree with you - has to be replaced, and I would rather try to get it all now and go forward from there by doing some kind of a lease package. I do not know if it is possible, but it is one that I intend to pursue.

MR. J. BYRNE: With respect to your answer concerning the overtime, and not going on later or leaving earlier, whatever the case may be, I have to tell you that I have been getting it from the front line workers. I have been talking to people in the middle of storms in my area, in certain areas, and they were told 9:00 or 9:30 in the night, go home. They were told, and these people are not lying to me. They have no reason to lie, so there is something going on here.

MR. WALSH: No, they are not.

MR. J. BYRNE: What you are telling me and what the workers are telling me are two different things.

MR. WALSH: Then let me try to clarify it a little further when you take a specific case like that. I will tell you this: The management we have in place have a couple of responsibilities. The first responsibility is to their own employees. That is their first responsibility. We had a tragedy that took place last year because someone was out there, and I spent five days with the media defending why that person was out there, and the five days before that trying to defend to the media why the person was not out there.

I said to a reporter in Corner Brook: Well, do you think under those conditions they should have been out there? I said that only the CBC would go that low to try to use a death that took place, by one of our employees, to try to push that kind of an issue when last week you, or someone from your station, were giving me the gears because we were not out there.

Let me say that safety is uppermost in our minds. When somebody starts at 6:30 and 7:00 in the morning and they are running through a full day, or even if they change shifts mid-afternoon, depending on the storm that we are having, there are times it does not make sense to have our people out there. You open the road, and it takes two hours when you leave from point A to circle back and get to that same point. That is usually the mix that we have for our drivers. I will tell you that by the time you get five miles up from where you just left, everything behind you has filled in. That is a judgement call that is made by our officials.

In terms of overtime last year, I can tell you that certainly pushing better than $500,000 in overtime was spent this year, and probably higher. Besides that, I think we had a contingency built in of about $3 million. Was that blown in overtime or in just everything?

WITNESS: Five million dollars more in winter maintenance.

MR. WALSH: Five million dollars more in winter maintenance this year than we would have in the previous year. That is a combination of overtime, hired equipment, and anything else that we needed to try to keep our highways open.

I tell you this: People can complain to me, as long as I am here, as much as they want, and they can get nasty and they can get upset, but I do not intend to have anybody out there who should not be out there based on the conditions, because I am just as concerned about their safety as I am about the people trying to get from point A to point B.

MR. J. BYRNE: I agree with you on the safety issue, but I have been told it was not a safety issue - this was not - it was a financial situation. They were told, no overtime beyond a certain period, that is it, and letters and memos sent to them on that issue.

MR. WALSH: Jack, you cannot go $3 million over in your budget and still say that argument is valid. You might find one occasion during the year. I know here at the building, for example, one day we closed the building because the storm was so bad in the morning. We reopened the building because the storm cleared up, and at 1:30 or 2:00 that afternoon none of us knew how we were going to get home because the storm turned around again. At times like that, decisions are made and you hope you make the right one. I do not ever want to err on the side of somebody getting injured, either in a vehicle, working for us or not.

I would invite anyone on the Committee who would like to, to ride next winter with one of those drivers and see what they do. You would understand why, after eight or ten hours, maybe it is time to send them home. Those kind of management decisions I am going to adhere to and accept.

MR. J. BYRNE: The safety issue comes back to staffing. If someone is going to be out there for sixteen hours, maybe they should not be out there. There should be another person out there in his or her place.

MR. WALSH: I agree with you, but then the guy who would normally get that ten or twelve hours would argue with you that you have now cut 25 per cent of his salary.

MR. J. BYRNE: But we are talking safety, aren't we?

MR. WALSH: We are trying to mix both.

MR. J. BYRNE: You were pushing safety here.

MR. WALSH: We are, and I believe that we have to be concerned for our drivers.

MR. J. BYRNE: There is another one. I am not sure how you feel on this one - and I have had some discussions with Cluney on this - and that is contractors, big contractors, all different types and sizes with respect to roadwork. Last summer there was a bit of work done in my district - a bit - and we were months trying to get the contractor down to start the work. People bidding on work, taking the work, and - not that they are not qualified to do the work - they are not set up with the equipment and personnel and the size of company to do the work.

Have you given any thought to companies being pre-qualified to do certain volumes of work? Because I think that is where things are going to have to go when it comes to doing roadwork in the Province. When you have money to be spent and it is not been spent in a given year, in any district within the Province, and you have time frames to get certain work started, whatever the case may be - in my area last year, Piper Stock Hill was a prime example. Now, it was late being awarded but there was lots of time to have that work done. I have had discussions, as I have mentioned, that there has to be something put in place where these companies have to be pre-qualified to bid on the work and to have the work awarded to them - certain volumes.

MR. WALSH: Jack, I think you are right. There are times when the volume of work bid on by certain contractors, it takes time to get to it.

I will tell you what happens. We tend to try to cluster our contracts, if we can, so that in a given region or within a certain distance we try to get a contract out to cover all of that work, again looking for the best possible price. Now, the best possible price does not necessarily mean the best time on a calender date either, so that does happen.

I have to tell you, though, that this year, I think, will be the exception to the rule. I think this year you will find there is a certain amount of carry-over from last year, but I think this year you will find that the volumes of work we are tendering, based on the amount of work that was existing last year - we all know it is down, based on what just happened to us in Labrador, in terms of that project now being delayed because of the EIS. I think you are going to find a lot more people looking for the bit of work that is here in the Province, and I think in the clusters that we are doing we may find that we will, one, get a better price, and hopefully we will get to the work faster.

I found the same thing in my own district last year, work announced, waiting and waiting and waiting, and the fall moving in on us very quickly and not getting to it. Again, it is trying to match price and timing.

I guess, if we were to build a clause in that says it has to be done at a certain time, we would pay a lot more for it. At least the people know it is coming. It may not arrive as fast as we would like it to, but we know it is.

I guess we have a certain amount that is carried over from last year as well. I know you are saying that maybe we should be grouping them in smaller groups.

MR. J. BYRNE: There has got to be a penalty clause put in here.

MR. OSMOND: Just as a supplement to what the minister is saying: We did a couple of years ago, actually, commence using what we call contractor performance evaluations. We started out slowly with it on the Works side and we moved it into the roads side. Those evaluations, basically, will determine whether or not a contractor has performed satisfactorily. If a contractor has not performed satisfactorily, then we get into a system of assigning, I won't call it penalties, but status for bidding on future work. If you end up having, I think, a series of three evaluations that are deemed to be unsatisfactory, then we would have the ability to freeze you out for a period of time from bidding on future work, until your performance is judged to be more adequate.

We also have begun putting in liquidated damages clauses. Liquidated damages clauses are a standard form of most contracts in any event, but aligning those towards completion time frames for the contracts has also become a part of the way we have been trying to do our business. It is an evolving thing and the industry itself, the contractors and the associations representing the contractors, of course, are very keen on ensuring that whatever we do along these lines is fair and is not going to unduly penalize their members.

MR. J. BYRNE: I would imagine you will address this somehow or other, but games can be played with this stuff. You could have a company that has had three bad evaluations and then all of the sudden close that down and start up a new company over here, and that is a separate entity under the law, drop it in and say: Well, that is a different company. Can that be addressed?

MR. OSMOND: I agree, Mr. Byrne, that there are games that can be played. We will just do our best to ensure that those things are averted as much as we can.

When companies do things like that, of course, it sort of suggests a lot more about the company than just simply the little problem that we might be having with them. There are, I guess, other entities that will be watching their activities as well. They will have, undoubtedly, their own financial and fiscal arrangements that have to be all reconfigured. It is not just simply a matter of going in and forming a new company for $300. You are going to have to change so much of how you do business. It is not a small undertaking for a larger business. There may be some fly-by-nighters.

MR. J. BYRNE: I am not talking about the larger ones now. In the meantime, we will see a significant improvement this year in the times and the work being done quicker and on a timely basis?

WITNESS: Please God.

MR. J. BYRNE: Other than my Estimates notes, I have addressed most of the concerns I have here. Someone else might want to take over for awhile.

CHAIR: I think we are waiting on a coffee machine. It should be here in a few minutes, probably. How about we go another five minutes of questions and stuff?

Terry?

MR. FRENCH: I noticed in your preamble you talked about the completion of the Conception Bay North bypass. Conception Bay South, as you know, if not the fasting growing area in Newfoundland and Labrador, is probably one of the fastest in Atlantic Canada. The $9.6 million was to complete the Conception Bay North bypass. What about the CBS bypass? Is there any monies allotted, or plans to complete that?

MR. WALSH: No funds this year?

WITNESS: (Inaudible). No.

MR. WALSH: There is no allocation towards that project this year, but it still remains high on government's priority list. It still remains one of the ones that we want to get to; but, Terry, no funding this year.

MR. FRENCH: The $9.6 million, is that money that is left from the Roads for Rail or is that just provincial money?

MR. WALSH: No. The $9.6 million, Roads for Rails, is what is left. Virtually all of that money has been allocated - and I will give you an example - to the point where there is not even enough left to complete some of the work that is being called for under the Roads for Rails agreement. One of the hardest decisions I had to make, I guess, in terms of roads, when I first arrived, was an overpass on Kenmount Rd. There was supposed to be an overpass there. There was a company that had pre-qualified that would have built that based on the conversations that agreements that were about to be entered into. I had to cancel the overpass because the overpass was really connecting to nowhere and going nowhere and just would have sat there. If we had done that, there would not have been enough money left in the Roads for Rails agreement to actually pave the roads that were going to connect to it. The choice had to be made, do we pave the roads or build the overpass. I went with the concept of paving the roads and reconstructing the intersection on Kenmount Rd. so that we could hopefully solve the problem that way.

That money, what is left, that $9.6 million, is pretty well all earmarked. A lot of those contracts are carryovers from last year as well that will eat up that money. In actual fact, not only is the money gone but we cannot even finish some of the areas that we have already designated, and that overpass is an example.

MR. FRENCH:Are there any other roads that are not being done under the Roads for Rail, or is it just the CBS bypass? I know we talked about an overpass, that is one item, but are there any other roads -

MR. WALSH: That is a major section of road. That overpass would have taken you, if you were travelling out Kenmount Road, into the left side of Kenmount Road. It was to take you up over into Pennywell Road, hook on to a piece of land that we have probably had frozen since the 1980s and not paid for yet in some cases - there are actually people who own that land, cannot use it because we have it frozen - and that would have taken the road then right on out to connect to the Harbour Arterial. It would have taken you right through there, but that entire section is being left out as well.

MR. FRENCH: There are a number of roads, are there?

MR. WALSH: Oh, yes.

MR. FRENCH: Is it possible to get a list of the roads that are still left, that were supposed to be done under the Roads for Rail?

MR. WALSH: What we will do is give you at least a tentative list of what we had hoped to have been done, because that might be a little broader than even those. Yes, we can make that available to you in the coming days.

MR. FRENCH: Do you have any idea of the cost to finish the CBS bypass?

WITNESS: Seven million.

MR. WALSH: Seven million dollars.

MR. FRENCH: That was my understanding.

MR. WALSH: And this year, with $23 million for the entire Province -

MR. FRENCH: You could spend that on Route 60.

MR. WALSH: Even to throw $500,000 at it, it would not have mattered, when there were so many districts that could have used some of that as well. It was just not feasible to take it further at this point in time.

MR. FRENCH: Is there a list currently of the places that have not been done under the Roads for Rail, and each one has a priority number? Is that real, or do you pick them every year? Is the CBS bypass number one, the next to be done, when the money becomes available?

MR. WALSH: If we had the money in the Roads for Rail, where would we start first?

WITNESS: We would obviously start with priorities that were identified under the Roads for Rail that were not completed.

MR. WALSH: So anything under Roads for Rail that was identified, we would just start there and say, let's go at it.

The best thing, Terry, is for us to give you a copy of those and perhaps a question in another forum might be a better place. I just do not have the information available now in terms of the exact roads, how many, and how much more money would be required. I do not have that at my fingertips. It is still a priority, though.

MR. FRENCH: The other thing is the Foxtrap Access Road. I think it was probably two years ago we were promised a set of lights there - at least two years. What is the current status of that? I have had a number of varying items on it.

MR. WALSH: We are doing that, aren't we? I am saving the good news for myself, Cluney. We are doing that this year.

MR. FRENCH: Are you sure?

MR. WALSH: Yes.

MR. FRENCH: Like, soon, in the next number of months?

MR. WALSH: Cluney, when are we starting that?

MR. MERCER: Early to mid-June.

MR. WALSH: Early to mid-June you will have the lights.

MR. FRENCH: Alright.

CHAIR: On that good news, we are going to have a coffee.

How is that, Mr. French?

MR. FRENCH: It is good with me.

CHAIR: We will come right back to you after that.

CHAIR: I bring this meeting back to order.

Terry was out with us, so he is due back in.

Mr. Byrne, you can go ahead, Sir. Welcome back.

MR. J. BYRNE: The Torbay bypass, again, what is the cost? Does anybody have any figures done up on that, what this is going to cost? Because the route is done.

WITNESS: Eleven million.

MR. WALSH: Eleven million dollars.

MR. J. BYRNE: That is all? That should be in this year's budget, shouldn't it?

MR. WALSH: I can probably find $500,000 this year to put to it, if you give me the go-ahead.

MR. J. BYRNE: Oh, yes. Give me $5 million and I will say yes.

MR. WALSH: No.

MR. J. BYRNE: Another issue, too, and the previous minister agreed to this -

MR. WALSH: I have agreed to very little that the previous minister agreed to, but go ahead.

MR. J. BYRNE: Some of the stuff I can understand why, but this is legitimate.

Again, there is a situation on Torbay Road and Marine Drive by Holy Trinity School. You have Holy Trinity Elementary and you have Holy Trinity High School, and there is a misalignment there of Marine Drive and Convent Lane on Torbay Road. There was some work done there the year before last to widen it, and whatever the case, but, for some reason or other, they felt a light is required there. I do not know if that would be a help or a hindrance but he had committed that it would go there, a traffic light. Cluney, have you looked at that item?

MR. MERCER: Actually, yes, our people did look at it and our assessment was that the left lane turning movements did not warrant a traffic light at this point in time.

MR. J. BYRNE: The problem is, though, getting up out of Marine Drive on to Torbay Road, and out of Convent Lane on to Torbay Road, even with the right flow. Because, I am telling you, the traffic that goes through that area in the mornings is unreal. People could be lined up - on the Pine Line, further out on Torbay Road, the Pine Line and Torbay Road intersection, you could be there five or ten minutes, easy, trying to get out through there, and then take a chance to get out. The minister felt that a light was needed there.

MR. WALSH: Jack, I tell you what. We will commit to taking a look at it in terms of maybe a second review. I know one has been done, but maybe we can take a review in terms of the side roads being driver activated. If a car parks, the light will come on; if not, one tends to stay green, one tends to stay red.

MR. J. BYRNE: Something needs to be done.

MR. WALSH: Let's take another look at it and see what we are into.

MR. J. BYRNE: Something needs to be done.

I will pass it back to Terry.

MR. FRENCH: (Inaudible).

CHAIR: Mr. McLean.

MR. McLEAN: Jim, you mentioned earlier about the EIS on Phase III. I have to publicly say that I am extremely disappointed with the decision that was made to delay that. I guess one of the things is that we worked so hard to try and see that particular project start this year and I thought we were on the right track. I do not know where it went wrong.

These EIS things - I know it is not your department and perhaps I am barking up the wrong tree - I just want to express the fact that this is a down year for construction. We finished a lot of the major construction, and I think this would have been an excellent year to get another big year in terms of work in highway construction.

These EIS things can take from two months to ten years, and I hope this does not be one of those issue where, in five years' time, we are still talking about EIS, because there are all kinds of things that you can stop projects with but it is very difficult to get them going. I just wanted to express that. That is not my question.

My question is: We have just signed off on the new airstrip maintenance agreement with the federal government. I think we based it on the existing airstrips. I just wanted to ask the question: We are going to be closing down, I think, four airstrips probably within the next year to do one regional strip in Port Hope. Will any of this money that is allocated for the airstrips that will be closing be able to be used to upgrade the Port Hope Simpson airstrip to accommodate the services that are going to be required because of the other four closing down? I just wanted to ask that question for clarification.

MR. WALSH: I am going to give a short answer on your first preamble and I will give some detail on the second part.

I have to tell you that no one was more disappointed than I was in terms of the dilemma we found ourselves in with respect to Phase III. To give you an idea of our approach - I must say that our own Department of Environment worked fairly closely with us on this - we tried to find a way of splitting the project. In other words, building that bridge that would give us some future access to the timber that was there. We also looked at a way of splitting the project so that we could start on both ends and get some work done, which would still take us a couple of years to get to what I call the decision line where we either have to go left or right some additional thirty-one kilometres and $7 million in cost.

I was told that regardless of what we did with the some twenty-plus groups involved, one would definitely challenge the splitting which is against federal law and also it kind of breaks some of our own rules and regulations, that we would not be able to move forward. My big fear then was, if I wanted to take a chance and gamble - but you know what I am like sometimes, a bull in a china shop, and I said, let's do it anyway. The only down side was, if they did apply and they would receive a court order, all the contracts would have been in place and then there would have been penalties on us for now not moving forward. It just didn't make sense to do it.

We will be spending some $4.5 million there this year. We will be doing some work in particular on some bridging. Pinware is an example of where we will be doing some work. Beyond that, we will be able to at least do some survey lines. We are going to begin that process. Apparently that is allowed within the EIS.

We are extremely disappointed, government is disappointed, but it is a situation where I know that the people of Labrador are no different than anywhere else on the Island, but with a much stronger fervor, the need to touch and feel something.

The only thing I can say, as I said there on Saturday and also in some interviews this morning, is: Allow the record to stand for itself. For the last four or five years we have moved forward at every possibility. This year I hope to be able to do some work, for example, although we are not moving from Cartwright further, on allowing Williams Harbour to be opened up. The economic study is being done now to get - I don't know the exact term but there is an economic cost benefits analysis being done, and I would like to be able to have that out of the way and to let a contract for an EIS to begin there so that people will see that we are moving forward.

I guess enough on that for now, because that was your preamble and I will allow that to be mine.

In terms of the $5 million announced by the federal government for maintenance, sometimes the devil really is in the detail. When you look at that $5 million, in the announcement it looks wonderful. When you dig down a little deeper, you find out that if we want to replace light bulbs we can use some of that $5 million. If the wind sock at the end of the runway is damaged or torn, we are allowed to replace that; but, in terms of taking that $5 million and being able to utilize it for the kinds of things that we would like to, that is not what it is allocated for. It is maintenance kind of money.

With respect to Port Hope Simpson, I intend - and the officials may get up and walk out here - for us to move very quickly on Port Hope Simpson. I would like for us to have a design team in place so that we can put an adequate facility there that meets two important needs: One, the needs of the passengers, who will now be of much larger groups because the airlines will now be using Port Hope Simpson so they are going to need a much larger space to gather. I am going to ensure that it is an airport that, in terms of passenger facilities, we will all be proud of. Second, we need to have storage facilities attached to it as well for the sake of the cargo that will start moving through there as well. We are going to do that.

Also, having had a chance to look at it first-hand myself over the weekend, I am going to ask the department to look at a new entrance and possibly that new building coming to the highway side so that we can have a much shorter access and, I guess, egress to and from the airport. It might mean that, if I was facing the runway, as the road goes into a dip, the topography drops a lot, it would probably end up on what I would call facing the runway, the left-hand side of the runway towards the road, which appears to me to be the best entrance.

That was this weekend, that trip, so I have not had a chance to even sit with the officials, so they are hearing this first-hand this morning, as you are, but I intend to see a Call for Proposals and I intend to see having an engineering firm in place. The one that I may have some difficulty with, but I believe that this is absolutely necessary as well, is that we not only have to look at going with an extension to the runway to handle the larger planes that may be - I cannot look yet at what we are doing this year. I have to look at what is going to happen over the next five, ten, twenty years, looking at an extension. I also intend to put a proposal together for government with respect to blacktopping it as well, which will probably cost about $6 million.

I am not sure where we can find that money, whether it is available or accessible to us under the Labrador fund. I do not know, but I believe all of that has to be done for Port Hope Simpson and I serve notice on the staff now that I hope to be back in Port Hope Simpson some time in June to tell them who the engineering firm is that is going to be doing that work for us.

I have just made a lot of friends in Labrador. I have made a lot of enemies, though, sitting to my left, my right, and those behind me. That is the plan that I was going to explain to them later today, but I guess, Ernie, by explaining it to you they now know what my intentions are.

MR. McLEAN: Some of those people have already heard it from me previous to this, but I would caution one thing: that we do not authorize the closing of those four strips until we at least do something with Port Hope Simpson, because what we will run into then is that we will have a strip there that is not capable of handling the requirements but still we require them to do it because we have authorized Transport Canada to shut down those four strips.

MR. WALSH: Ernie, you are right, but I tend to be very proactive so here is my solution: Those four strips will close. They will close on the date that we said they are going to, and it is my intention to have Port Hope Simpson ready for those closures.

MR. McLEAN: The only other question I have is: Are you fellows capable of taking care of ice conditions? We asked you to do a lot of other things. Because the ice conditions are rather tough up there this year, I guess, the ferry is not running yet across The Straits. I guess the Labrador service, by the looks of it, if we do not see much movement in the next short while, it will probably be July before we get it started.

MR. WALSH: I was extremely surprised to see that the Terry Fox icebreaker was trapped in ice and yet another one coming to help it out. I had a chance to fly over it again the weekend, to have a look at how bad the ice conditions are, and what is regrettable for me is that we are unable to start the service early this year. There is not much we can do about that because of the ice conditions, but there it is.

Look, I have heard every suggestion over the weekend, including trying to blast The Straits side in order to open up the harbour. We have a real problem down there, and I agree with you. May 1 is virtually upon us and I do not see that service starting unless we get very favourable winds. I do not see that in the long-range forecast. We could be a week or two late starting, which is going to cause us a lot of problems, but -

MR. McLEAN: I was there a week ago when the boat came in.

MR. WALSH: We probably could take the entire House of Assembly down there and hold some deliberations right there on the wharf. God knows what we would generate in terms of hot air and everything else that might help out, but, barring that, I do not know what the solution is. We are trapped, and I regret that, but I do not know what to do.

MR. McLEAN: Okay.

Thank you.

CHAIR: Thank you, Mr. McLean.

Mr. French, do you have any further comments?

MR. FRENCH: No.

CHAIR: We will we go through the Estimates, if that is appropriate.

MR. WALSH: Are we going to move the Estimates now, or were there questions?

CHAIR: I think Mr. Byrne has a few comments on the Estimates.

Go ahead, Sir.

MR. J. BYRNE: Thank you.

Under Executive Support, 1.2.01., you had budgeted $476,000 and you spent $505,000 and it is up to $581,000 this year.

MR. WALSH: Are you looking at the whole number or a particular heading?

MR. J. BYRNE: Under .01., Salaries.

MR. WALSH: Under .01., Salaries, Executive Support.

MR. J. BYRNE: You went from $476,000 to $581,000. That is $105, 000, so you have either one or two new positions there, I suppose.

MR. WALSH: Actually, the salaries are revised and the 2003-2004 budget is up due to the addition of a new executive person, and that is in Strategic and Corporate Services as well.

MR. J. BYRNE: When you say new executive person, what is -

MR. WALSH: He has joined us here today, and he appreciates that increase.

MR. J. BYRNE: Seeing who he is.

MR. WALSH: We felt that we needed to get a much stronger handle, the department did, in terms of that particular area, to give it a little more strength. I will say to you that Keith comes to the division with a lot of expertise from other departments. I have had the privilege of working with him for a number of years in my position as Legislative Advisor in Finance and Treasury Board. He brings a lot of strength to that particular job and we are delighted to have him there.

MR. J. BYRNE: I have known him a long while.

MR. WALSH: (Inaudible) high school. He doesn't look that old.

MR. J. BYRNE: You just prolonged it by about five hours.

CHAIR: Scratch that comment, please, off the record.

MR. J. BYRNE: Under 1.2.02., Administrative Support, 12., Information Technology, $721,000 and you spent $854,000. That is a substantial increase. Why would that be?

MR. WALSH: The real reason, or the basic reason, I guess, for it is - there is always a real reason, but the basic reason - that is revised up mainly due to transfers from other divisions for required hardware and software purchases, and also for the additional development cost for something called PARTS project, and that ran about $75,000. I always like what things really are, but if somebody wants to tell me what PARTS is, that was our major contributor as well. It is not spare parts, but what does PARTS stand for?

MR. OSMOND: PARTS stands for, Minister, Project Accounting Reporting and Tracking System. It is basically a project management system of our capital accounting.

MR. WALSH: I knew that, I just wanted to be sure that other people did.

MR. J. BYRNE: Is there any way to track all your vehicles?

MR. WALSH: Actually, when it comes to vehicles, I saw an unsolicited plan presented to the department some time ago that I thought was an excellent vehicle management system. The department never accepted it, it was an unsolicited proposal. It is used by virtually anyone who operates a massive fleet like we do. I know there have been some refinements made to the system that is currently in place, but it is one of the areas that I intend to take a very close look at this summer in terms of not just management but in terms of where they are.

I have a real problem - I guess it goes back to my business days - that we have vehicles assigned specifically to any one group. I have always thought that if we had a central allocation part, that perhaps all the vehicles we have - in certain areas there is a quota, I think, that would have to be required. For example, certain divisions would have to have a certain amount.

I drive by here too many times during the day, and other sites we have, and we have vehicles that are parked, that are not in use. If we were to operate them almost like a rent-a-car company would - if somebody needs a vehicle on Monday, it might be a passenger car or it might be a light pickup or a van, perhaps the Department of Tourism may have one sitting idle that day and we are finding ourselves going out and leasing something because we need it in another department that day. I am not sure if it can work.

MR. J. BYRNE: Yes. There could be a problem with logistics there.

MR. WALSH: There might very well be. Logistics could be a problem. We might only be able to do it in certain areas. I think it is one that warrants looking at because it might be a chance to save money as well. In other word, vehicles would be assigned - I am not sure it can work so maybe I should not talk about it - to government, a certain number assigned to each department, and the rest would be in a pool, logistically or logically possible, so that others could draw upon them. It might make no sense, it might just be me and a business background trying to find a way to get further with the taxpayers' dollar.

MR. J. BYRNE: You should not be setting yourself up like that. I had to bite my tongue that time.

MR. WALSH: No, I am willing to be set up. I just want to look at ways to save money for the people.

MR. J. BYRNE: Under 2.1.01., Administration and Support Services, 01., Salaries, you had budgeted $5,995,000 and you went to $6,246,000. Can anybody explain that one?

MR. WALSH: Yes, partly in the salaries area, that is revised up and it is due mainly to a lot of severance payments to retiring staff, and some extra assistance that was provided. In the 2003-2004 budget, it increased for collective agreement increases and funding provided for a marine asset management system which was about $25,000 as well.

MR. J. BYRNE: So there is no new staff there?

MR. WALSH: I am sorry?

MR. J. BYRNE: No new staff?

MR. WALSH: I am not aware of any new staff being in that number, no.

MR. J. BYRNE: Thank you.

Under 2.1.03., Maintenance and Repairs, 04., Supplies, you had $2,224,000 budgeted, you spent $1.6 million, and you are back up to $2.2 million. What is going on there now?

MR. WALSH: I am sorry, under 05., 06.?

MR. J. BYRNE: Under 05., 04., Supplies.

MR. WALSH: Supplies, 04., yes.

I know that some of it was, we were able to revise it downward in terms of the actual 2002-2003 budget. We were able to see it come downward because it was revised due to transfers to fuel accounts and equipment rentals. We are going back up because we cannot be sure of what next year is going to bring, so we thought we would try to hold the line on what the number was last year so that we could stay in line.

If there is an expanded reason, I will take it from the staff. If next year is as bad as it was this year, we will need that.

MR. J. BYRNE: The next subhead there, 06., Purchased Services, you budgeted $1.2 million and you spent $1.6 million almost.

MR. WALSH: That was revised up due to emergency repairs, in particular, some washouts and things like that, that we had. In the 2003-2004 increase, it was for additional maintenance on the Trans-Labrador Highway, and in particular $250,000 in the Charlottetown-Cartwright area.

MR. J. BYRNE: Thank you.

The next one, Snow and Ice Control, 2.1.04., subhead 06., Purchased Services, you budgeted $5.3 million, you spent $4.8 million, and you are back up to $5.5 million.

MR. WALSH: I am trying to hold the line this year, but in particular 2003-2004 it has increased for additional cost of maintaining roads throughout Gros Morne National Park. There is about $210,000 allocated for that. In the previous year, of course, it was revised down due to the reduced hiring of equipment from outside sources. Some work being done in the National Park area will add about $210,000 to it.

MR. J. BYRNE: With respect to the park, Gros Morne, doesn't the federal government transfer a certain amount of funds for the park itself? How much is it, and is it actually being spent in the park? Because I have had complaints about that.

MR. WALSH: An excellent question for Cluney.

MR. MERCER: Yes, the federal government does pay us to provide that service, and we collect that as revenue.

MR. J. BYRNE: How much?

MS HANRAHAN: Eight hundred and eighty-five was last year's figure.

MR. MERCER: Thousand.

MR. J. BYRNE: Per year.

MR. MERCER: Per year.

MR. J. BYRNE: To do what?

MR. MERCER: That is to provide snow clearing services.

MR. J. BYRNE: Does it take all of that?

MR. MERCER: Yes.

MR. J. BYRNE: I was also told that there was money made available for Gros Morne and Terra Nova too, I would imagine, X amount of dollars for maintenance, upgrading and whatever the case may be, and it is not usually being spent in the park.

MR. MERCER: The only thing we do in Terra Nova Park is, we do the line painting for them. Other than that, they do their own winter maintenance and snow clearing.

MR. J. BYRNE: How much is Gros Morne, then?

MR. MERCER: In Gros Morne?

MR. J. BYRNE: Other than snow clearing. Do you have any funds for other than snow clearing from the feds?

MR. WALSH: Do they give us any more money?

MR. MERCER: No, just for snow clearing in Gros Morne. The figure I just quoted, that is it.

MR. J. BYRNE: You spend $885,000 on Gros Morne?

MR. MERCER: Yes, and more.

MR. J. BYRNE: Thank you.

Under Administration, 2.2.01.01., Salaries, there was $3.6 million budgeted, you spent $4,051,000 and this year it is back to $3.8 million. It was really bumped up and you are back somewhat but not to where it was.

MR. WALSH: Again, as before, it is up due to severance payments and additional staff due to some expanded programming that we are doing.

MR. J. BYRNE: I was under the impression, for some reason or other, that government had a freeze on hiring. I brought this up at the last meeting. It seems that people are being hired all the time, because the allocations certainly indicate that. Is there a freeze on hiring? What is the story?

MR. WALSH: There is a freeze on hiring but there are times when there are positions that absolutely need to be filled and we will go to Treasury Board and present our case for that individual or individuals, and if we can plead a strong enough case we would. A good example is here at the desk today. Keith White, who was our Director for Highways, left to pursue interests in another area. Well, what do you do? So you move somebody up into that position and then you create a trickle down effect and somewhere four or five positions down do you now make a permanent replacement or do you not?

That will happen from time to time but, in terms of the freeze, we have to fight literally for every new position that we have and put together a pretty strong case to acquire that individual or individuals. If we cannot, we will not get them. We saw that, actually, in the budget process where we were looking for an allocation of funding where we were hoping to get additional people for a region of the Province that would have cost about $250,000. Again, it was one of the disappointments for me that we were unable to get those individuals through the system.

If there is some other part of it, maybe, Don, you might want to cover.

MR. OSMOND: I would like to make one point, if I may, just in a general way for the minister and for members, that when you are looking at these salary lines, salary accounts, you are going to see a bump up all the time on the revised numbers. The reason for that is because we are not budgeted for any severance payouts that we have to make during the year; so what you will see is, routinely, every one of these salary accounts you are going to see them higher on the revised column because we are putting money in there to take care of severance payouts. They should settle back then the following year; however, they do go up a percentage in accordance with the collective agreements.

MR. J. BYRNE: I know that.

MR. WALSH: Of course, needless to say, we are very proud of the collective agreements we have in place, and our desire to try to take care of the employees, and no different than anybody else would do, by the way. It is just that they have been suffering for a long time, so a lot of the increases you will see will be reflective of us trying to get them back on track as well.

MR. J. BYRNE: Under Technical Support Services, 2.2.02.06., Purchased Services, you budgeted $544,000, spent $532,000 and this year it is up to almost double.

MR. WALSH: The Purchased Services there that had the greatest impact in 2003-2004 is due to increased building insurance costs as per direction from the Insurance Division of Treasury Board. They are requiring each department to actually allocate a greater amount of funds for insurance on buildings. We would probably be hit, needless to say, the largest, because we are responsible for them all. That is as per direction from the Insurance Division of Treasury Board.

MR. J. BYRNE: Under 2.2.03., Building Utilities and Maintenance, 01., Salaries, $6.7 million budgeted, you spent $6.1. It went down, and it is up to $7 million.

MR. WALSH: Again, it is due to vacant positions that were not filled, and also it was used to offset some of the actual costs that occurred in 2.2.01., which again related to severance.

MR. J. BYRNE: It seems in every subhead here, I have Salaries highlighted. Under 2.3.02., Maintenance of Equipment, the one before that also, you had budgeted $7 million and it went up to $7.3 million this year, $300,000 more. The other one on that subhead, too, by the way is .04., Supplies. You had budgeted $7.7 million -

MR. WALSH: In 2.2.03?

MR. J. BYRNE: Under 2.3.02., Maintenance of Equipment, .01., Salaries and .04., Supplies.

MR. WALSH: Maintenance of Equipment, yes, Salaries. Again, a lot of it was due to severance payments to retiring employees, in Salaries.

MR. J. BYRNE: No new staff there? Because it has gone up by $300,000.

MR. WALSH: There is, regrettably - and I know you do not want us to spend the money on this, but some of it is overtime. I am only joking. There is overtime built in there too, Jack. I say that tongue-in-cheek, but that is one of the examples of where overtime actually exists.

MR. J. BYRNE: What about 04., Supplies, $7.7 million up to $9.3 million?

MR. WALSH: Under 2.3.02.?

MR. J. BYRNE: Yes, .04.

MR. WALSH: Revised up due to fuel and parts that we purchased for the heavy equipment. Of course, that is due to the continuous operations in what was a heavier than normal winter. We found ourselves in a heavier maintenance mode there as well.

MR. J. BYRNE: Under 3.2.03.03., Improvement and Construction - Provincial Roads, Transportation and Communications, you had $175,000 budgeted, you spent $340,000. It is double what you had budgeted.

MR. WALSH: I am going to look for a little help.

MR. MERCER: Initially when we set up a travel and communications budget for our provincial capital roads program we base it on historic numbers, and we do that. It is done in the fall of the year before projects on the capital program are known.

Last year, the majority of our projects were outside of our regional headquarters area and, because of the collective agreement, they are into a travel status zone whereby overnight travel is required, and that was more prevalent last year than the historic numbers would have shown. Basically, that would be your primary reason for the travel costs to be higher.

MR. J. BYRNE: Under 04., Supplies, you budgeted $115,00 and you spent $285,000.

MR. WALSH: Which number?

MR. J. BYRNE: The same subhead, 04., Supplies.

MR. WALSH: I need help on that one.

MR. MERCER: Basically, the minister alluded to earlier that some of our maintenance supplies were up because of some washouts that we had. Well, we also had several washouts last fall whereby we had roads that were closed and we had temporary diversions in and traffic down to one lane, and we had some fairly large pipes that we had to replace. So, in order to expedite the process, what we did is, we actually purchased the pipe ourselves, while the project was gone to tender to be awarded to a contractor, so as soon as the contract was awarded we had a pipe to install. Otherwise, if we had to put the pipe in the contract, then a pipe supplier would not start making that pipe until we actually awarded the contract. So we actually purchased pipe ourselves to make them available to the contractor the day he was ready to go to work.

MR. J. BYRNE: Thank you.

Under 3.2.05., Regional Roads - Transportation Initiative, 03., Transportation and Communications there, you had budgeted $75,000, you spent $295,000. Then, under 06., Purchased Services, you had budgeted $10 million, spent $9 million, and now you are down to $3.4 million. I am interested in the two of those.

MR. MERCER: The 03., Transportation and Communications, the majority of the money spent on our regional trunk road component of the Roads for Rail program last year was spent on the CBN bypass. There were three fairly large projects down there. All of them were outside of the regional headquarters area, with the regional headquarters being here in St. John's. All of our employees who were down there were on full travel, on overnight travel. In addition, some of those projects took longer to complete than we had initially envisioned.

MR. J. BYRNE: Can I ask a question to that? Knowing that work was going to be done the following year, wouldn't that have been budgeted for, those people being out of their area?

MR. MERCER: Well, you can budget it to some degree. You look at how long you figure contracts are going to take to be completed, and if they get completed faster, or if a contractor schedules his work a little differently, then we may very well need two crews instead of one crew, so then you end up with additional staff on a project.

WITNESS: I guess it is more important that we are actually monitoring as closely as we can what we are doing. If the monitoring is there, the cost will go up.

Those projects that we were chasing last year, was that the Conception Bay North bypass?

MR. WALSH: Yes, and also a couple of others there as well, the Doyle's Road extension and the Gould's bypass. There was almost $3 million worth of work that were carry overs. We were dealing with that and carry overs again.

MR. MERCER: I guess just to answer the second part of the question on 06, the reason for Purchased Services being down: Of course, everyone is aware that 2002-2003 was the last year under the Roads for Rails program that we were able to tender and award contracts. The agreement stated that all the contracts had to be awarded before the end of March. In order to meet the Financial Administration Act, Treasury Board gave us all the budget in 2002-2003 so that contracts could be signed, knowing full well that we would not spend all the money in 2002-2003.

MR. J. BYRNE: The Trans Labrador Highway, 3.2.06, under section 03, Transportation and Communications, $550,000 budgeted, spent $1,067,000. Under 05, Professional Services, budgeted $900,000, spent, $900,000 and you have $300,000 this year.

MR. MERCER: The Travel and Communications budget was up due to about $7,000 or $8,000 spent on helicopter time, used on the Pinsent Arm project, which is a part of Phase II of the Trans Labrador Highway. It was a component of Phase II of the Trans Labrador Highway. In addition to that, I guess in anticipation that Phase III would go ahead in 2003-2004, we had also used helicopters to establish about thirty kilometres of road alignment on each end of Phase III across the Churchill River and then on the southern section from Paradise River area going north. We did incur a lot of helicopter time there, and that is primarily the reason for the increase.

Professional Services, the $900,000 budget was associated with the EIS study on Phase III and we have spent all of that budget.

MR. J. BYRNE: Thank you.

Under 3.2.07., Strategic Highway Infrastructure Program, is there any way that the Torbay bypass would qualify under that?

MR. MERCER: Unfortunately not, Jack. The Ship Agreement specifically indicates that projects that qualify are a part of the National Highway System, and the National Highway System in Newfoundland and Labrador consists of the Trans-Canada plus the Argentia Access. It does not meet the criteria at all, and that is one of the challenges, I guess, we are going to face as we get future federal programs, that, if they are going to be restricted to the National Highway System then it is going to be a fight to get priorities like the CBS bypass and the Torbay bypass.

MR. OSMOND: If I may add a supplementary to that, we are hosting a Council of Transportation Ministers and Deputy Ministers in St. John's in September, and one of the items on the agenda, in fact, for the ministers is to make revisions to the National Highway System so that we can, in fact, move beyond just the Trans-Canada Highway corridor.

MR. J. BYRNE: We are going to have to.

I am almost finished. Under 4.1.03., Airstrips, 06., Purchased Services, you had budgeted $460,000, you spent $585,000, and this year you have $938,000 budgeted.

MR. MERCER: Purchased Services, that was a part of the previous airstrip agreement. There was some reference earlier to a new agreement being signed, $5 million over the next five years. This was, I guess, to clue up, or the cleanup year for the previous five-year agreement. In our original budget, which was put together in the fall, I guess it was envisioned that some of the work would get completed. It was not, so we actually spent more money this year with all of that being claimed under the agreement. The reason why the budget has increased this year, of course, reflects the new $1 million that will come forth for airstrip rehabilitation under the new five-year perpetual agreement.

MR. J. BYRNE: Thank you.

Under 4.2.02., Ferry Operations, again back to 01., Salaries, you budgeted $8.4 million, you spent $9 million, and now this year it is up to $9.2 million. You went up $600,000 or $800,000 in salaries for ferry operations. Why?

MR. WALSH: Subhead 4.2.02., Ferry Operations?

MR. J. BYRNE: Yes. Salaries has gone from $8.4 million up to $9.2 million - $800,000.

MR. WALSH: In 2003-2004, the salaries are up due to a base adjustment of roughly $75,000 allocation to the swing vessels. Also, the salaries that are assigned to the Hull 100 were about $370,000 as well.

MR. J. BYRNE: You really believe she is going to be in operation this year, do you?

MR. WALSH: Oh, yes. You and I will go for run on that, I would say, in September.

WITNESS: (Inaudible).

MR. WALSH: Yes, he will. He will make that trip. We will take some sandwiches with us, and -

WITNESS: A life jacket.

MR. WALSH: They are on board, actually.

MR. J. BYRNE: Make sure there are lots of life jackets on it, in the meantime..

Under 4.2.02.04, Supplies, you went from $3 million up to $3.4 million spent, $400,000.

MR. WALSH: Revised up again due to increase in fuel costs and replacement parts. In the 2003-2004 budget it is up due to the base adjustment, again, of $135,000 to the allocation of the swing vessels and also funds for the Hull 100 of $290,000. That was in Supplies.

MR. J. BYRNE: Under 4.2.03., Coastal Labrador Ferry Operations, 06., Purchased Services, you had budgeted $13.8 million, up to $15.5 million revised, and back to $13.8 million, so $1.7 million.

MR. WALSH: Purchases Services last year, that was revised up due to the early start and the extended season for the Apollo, and the additional expense for the refits for the Sir Robert Bond and the Northern Ranger, which was about $1 million as well, but we started the ferry service early last year and we went a little later than we normally would.

Was it two weeks early last year?

WITNESS: Two weeks early and one week late.

MR. WALSH: And one week late so, that would have added to those costs as well. This year we are probably going to be in the reverse. We are probably not going to start until late and I do not know if we are going to end later, but that is what happened last year.

MR. J. BYRNE: Under 4.2.05., Ferry Vessels, again, 11., Debt Expenses, $1.19 million, down to $1.3 million this year. Can you give me some detail as to what is going on with that?

MR. WALSH: Yes, John would be delighted.

MR. BAKER: Those are the payments on the Beaumont Hamel and the Gallipoli. Those are on the principal side.

MR. J. BYRNE: Where were they built?

MR. BAKER: Excuse me?

MR. J. BYRNE: Where were they built, those two vessels, the Beaumont and the Gallipoli.

MR. WALSH: One vessel was built in the 1980s - that was the Beaumont Hamel - in 1985, 1986.

MR. J. BYRNE: Where?

MR. WALSH: In Newfoundland.

The Flanders was built in 1991, and I must say that I am delighted with that contract because I had the opportunity to attach my own signature to the contract as a witness. There were rumours in 1989 that somebody was going to build one, but the contract that I signed sat on someone's desk all during that period and I was delighted to be able to sign it myself afterwards.

MR. J. BYRNE: Whose desk would that have been on?

MR. WALSH: I have no idea who that was, but I know it was there for a very long period of time, being promised, and I was delighted to actually sign the contract.

WITNESS: As the member.

MR. J. BYRNE: I think I should almost end on that, but I will not.

Under 4.3.02., Government-Operated Aircraft, 06., Purchased Services, $1.67 million budgeted, revised to $1.4 million and now it is up to $2.15 million. What is going on there?

MR. WALSH: The services were revised down due to the reduced repairs by outside sources, so Purchased Services went down there, but in 2003-2004 the budget increased to provide for a water bomber engine overhaul of $125,000 and the inspection on the King Air which cost $340,000.

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

Thank you.

CHAIR: Thank you.

We will move subheads 1.1.01 to 5.1.04. We need a motion for those, the vote.

On motion, subheads 1.1.01 through 5.1.04 carried.

On motion, Department of Works, Services and Transportation, total heads, carried.

CHAIR: That will conclude these Estimates for Works, Services and Transportation.

I want to thank the members of the Committee for their diligence this morning in asking the questions, and also, Mr. Minister, you and your officials for your excellent co-operation this morning, and excellent answers.

MR. J. BYRNE: I would like to thank the minister also for his time here, and his staff, for the answers given here today. I appreciate the time.

CHAIR: Before the Committee adjourns, we would like to move a motion also to adopt the minutes of the April 1 Government Services Committee meeting.

On motion, minutes adopted as circulated.

CHAIR: Good morning, folks, and have a good day.

Thank you.

MR. WALSH: Mr. Chair, before you close, I just want to say thank you to the Committee for the time they gave us this morning. I want to publicly acknowledge the work carried out by the department in getting ready for those meetings but also, once again, to publicly commend those who are part of the 2,300 people who work for us during the year, to thank them for their diligence, and in particularly this past winter. In getting ready for this morning, I want to extend a special thank you to the people here with me and their staff as well for helping me get ready to meet with this Committee.

Thank you so much.

CHAIR: The Chair recognizes that they had a task over in that department, to get the minister ready, absolutely.

Thank you very much.

On motion, the Committee adjourned.