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May 10, 2016                                                                      GOVERNMENT SERVICES COMMITTEE

Pursuant to Standing Order 68, Derrick Bragg, MHA for Fogo Island – Cape Freels, substitutes for John Finn, MHA for Stephenville – Port au Port.

The Committee met at approximately 9 a.m. in the Assembly Chamber.

CHAIR (Edmunds): Welcome everyone to the third and final session for the Government Services Committee. Today we'll be doing OCIO and Finance.

First of all, I'd like to call for adopting the minutes of the last meeting.

MR. HUTCHINGS: So moved.

CHAIR: Move to adopt the minutes of the last –  

MR. HUTCHINGS: Yes, moved.

CHAIR: Okay.

All those in favour, 'aye.'

SOME HON. MEMBERS: Aye.

CHAIR: Carried. 

On motion, minutes adopted as circulated.

CHAIR: First of all, I'm going to ask the Government Services Committee to introduce themselves and then I'll ask the minister to introduce her staff. Then we'll go on with the line by lines on OCIO followed by Finance. Given that this session has been delayed already once and we only have a certain allotted time to get the Estimates done, we will finish by 12 o'clock.

I would just like to point out that Mr. Bragg is substituting for Mr. Finn on the Government Services Committee.

I ask the Government Services Committee to introduce themselves.

MR. HUTCHINGS: Keith Hutchings, MHA, District of Ferryland.

MS. DRODGE: Megan Drodge, researcher, Official Opposition caucus.

MS. MICHAEL: Lorraine Michael, MHA, St. John's East – Quidi Vidi.

MR. MORGAN: Ivan Morgan, researcher, NDP caucus.

MS. PARSLEY: Betty Parsley, MHA, Harbour Main.

MR. KING: Neil King, MHA, historic District of Bonavista.

MS. HALEY: Carol Anne Haley, MHA, Burin – Grand Bank.

MR. BRAGG: Derrick Bragg, MHA, Fogo Island – Cape Freels.

CHAIR: Okay, thank you very much.

I ask the minister if she could introduce her staff. I'd like to point out that if staff, other than yourself, are speaking that they clearly introduce themselves before carrying on.

MS. C. BENNETT: All right. I'm Cathy Bennett, MHA for Windsor Lake and the Minister Responsible for OCIO, and I'll turn towards the deputy.

MS. MACDONALD: Ellen MacDonald, Chief Information Officer from the OCIO.

MS. MOORE: Julie Moore, Executive Director, Corporate and Information Management Services, OCIO.

MS. TRICKETT: Wanda Trickett, Departmental Controller.

MR. MOULAND: Randy Mouland, Executive Director of Operations, OCIO.

MS. TEMPLEMAN: Natalie Templeman, Executive Director of Solutions Delivery, OCIO.

MS. C. BENNETT: And that's everybody for OCIO.

CHAIR: Okay.

What we'll do is we'll get started here. I'll call for the subheads, and then I'll ask for some opening remarks. Then we'll turn it over to either line by line or probing questions.

CLERK (Ms. Murphy): 4.1.01.

CHAIR: Shall 4.1.01 carry?

MS. C. BENNETT: I just want to say good morning to everyone, and good morning to colleagues as we review the Estimates of the Office of the Chief Information Officer.

I just have a few points to make before we get into the actual Estimates. I just want to make sure that from the Chair's perspective I have time to talk for maybe about two or three minutes.

Mr. Chair, is that okay?

CHAIR: (Inaudible.)

MS. C. BENNETT: Okay. I just want to make sure I was okay on the clock.

I have a couple of opening comments to make. I just wanted to make sure that from my time perspective I was okay to make them now.

CHAIR: (Inaudible.)

MS. C. BENNETT: Awesome.

Just for the members of the Committee, to give you a little background on OCIO. The OCIO supports all the information technology and the information management functions of government, including things like government's technology infrastructure. It includes addressing some 150,000 requests annually over 310 government offices across the province.

It manages over 10,000-plus laptops and desktops, 1,500 servers and 1,600 Blackberries. It also manages providing email services and data storage, and managing licensing and maintenance of software and hardware assets. It also is responsible for protecting government assets and data from cyber-attacks. It also supports 500-plus applications that are used by departments and agencies and building and deploying new IT solutions for government departments and agencies.

The Estimates structure we're going to walk through this morning, OCIO, includes four branches and each have a distinct set of responsibilities.

There's the Corporate and Information Management Services or the CIMS. That's responsible for policy vendor and contract management, RFP development and the management of OCIO corporate-wide activities, management of office space, supplies, et cetera.

Under Solution Delivery, and that would include both current and capital monies, they're responsible for all new project work for departments and agencies.

Under Application Services, they would be responsible for the support and maintenance of the existing 500-plus applications that are used by departments and agencies. Typically, in any given year, it would handle about 2,800 requests to update current systems.

Operations – both current and, again, capital – has the responsibility for technology infrastructure, desktops, laptops, servers, wide-area networks, email systems, backup and recovery of all government data, et cetera. Typically, it handles in any given year over 119,000 requests.

The budget overall, and the budget allocations for OCIO, in 2016-17 the OCIO will see a $7.4 million or an 11 per cent budget reduction as part of the Government Renewal Initiative and line-by-line reductions. Further to this, the OCIO has absorbed another $4 million in pressures as part of its base budget, bringing the total savings to just over $11 million for 2016-17.

In terms of the Government Renewal Initiative, as we work through the Estimates document you will see the OCIO's initiatives including changes to the project delivery model, which will see savings of $411,000 for 2016-17 and over $2.9 million in annualized savings when fully implemented. You'll also see changes in technology support models which will see savings of over $1.3 million in '16-'17 and over $1.6 million in annualized savings when fully implemented. You'll also see the introduction of the managed service provider model, which will see savings of $50,000 in '16-'17, and $297,500 in annualized savings when fully implemented. And you'll see additional operating savings of $13,800. Further to this, as part of the line-by-line review of operational line items, the OCIO saved an additional $2,066,300.

When we look at salaries, the OCIO in '15-'16 projected revised shows savings of just over $1.2 million, resulting from lower requirements for projects due to timing of activities such as the project for CYFS, as well as planned vacancies to manage within the budget and to save related to government's spending reduction measures. The OCIO manages salaries at the overall corporate level versus by branch, so you will see some branches show a deficit in salaries while others show a surplus. The OCIO manages within its overall salary budget.

A total of $287,600 has been eliminated into 2015-16 as part of government's attrition plan and OCIO has reduced four positions during 2015-16.

Some specific areas that we'll focus on as we walk through the Estimates I'm sure will be Corporate and Information Management Services. While Salaries for 2015-16 were higher than anticipated, savings were managed in other branches to accommodate this. Salary savings were attained overall.

Salaries for '16-'17 are reduced to reflect attrition targets and a total of a half million dollars in Professional Services allocation is normally used for federal-provincial projects, with an offset of a $500,000 revenue item for a net of zero. This funding was not used in '15-'16 and has not been used in a few years. As a result, both the expenditure and the revenue were removed in the '16-'17 budget.

There was some spending in this account related to information, protection and security. Spending under Purchased Services was higher than was budgeted in '15-'16 due to a flood at the Provincial Records Centre, which caused unplanned remediation costs. And GRI and line-by-line savings in these activities included line-by-line reductions of $42,300.

When we move to Solution Delivery and Solution Delivery capital, these accounts capture the work required to implement new projects. Some of these projects involve multi-year funding that must be allocated between current and capital accounts. When the project starts and nears completion, funding is generally considered current while the build phase is considered capital.

This is a complex budgeting area and while best efforts are made to budget funding into each spending envelope at the outset of each project, there are often adjustments to the envelopes for the out-years and as projects progress. Budgets become more refined depending on the progress of the project. As you will see in activities 4.1.02 and 4.1.05 most envelopes involve transfers of funds depending on the projects for the next year.

Child, Youth and Family Services system implementation is the largest ongoing project and is being implemented over multiple years. Much of the reduced expenditure in '15-'16 is driven by timing changes for the CYFS project as well as managed reductions and delayed implementation to manage spending.

GRI and line-by-line savings in these activities in these two Estimate pages include GRI savings of just over $469,000 related to changes to technology support models and changes to the project delivery model, introduction of the managed service provider model and line-by-line reductions of over $2 million.

As just indicted, the Solution Delivery area as part of the GRI is undertaking changes to its method of delivery of IT solutions. In particular, there will be a reallocation of internal staff to this branch, reducing the number of contractors. It is anticipated that the equivalent of up to 13 contractor positions will be eliminated over time as this initiative is implemented. This is reflected in the long-term reduction in Professional Services funding.

Under the Application Services which is 4.1.03, GRI and line-by-line savings in these activities included line-by-line reductions of $16,800.

The last two headings would be Information Technology Operations, current and capital, 4.1.04 and 4.1.06. This activity includes significant IT and infrastructure purchasing that you do not normally see in other spending envelopes in government. For instance, Transportation and Communications, this will include spending for a multi-million dollar contract for wide area network, or WAN, services across government. This allows connections to the Internet for over 300 government offices.

It would include Supplies, which includes spending for millions of dollars in annual software licences, maintenance and support agreements for the use of government-wide software products. Purchased Services will include spending for annual hardware maintenance costs for the use of government-wide hardware products. And under Property, Furnishings and Equipment it includes spending for hardware and equipment purchases, for example desktop and laptop computers for government. In the capital account, spending in this area is for large-scale infrastructure and security. Examples would be firewalls, servers and networking equipment.

GRI and line-by-line savings in these activities included GRI savings of $1.37 million related to changes to technology support models and line-by-line reductions of $19,200.

I now ask that officials here today who've already introduced themselves be prepared for the questions that the Members opposite are going to ask. 

Thank you, Mr. Chair.

CHAIR: Thank you, Minister.

Before I turn it over to the Government Services Committee, I'd like to point out that we'll allocate 15 minutes beginning with Mr. Hutchings and then Ms. Michael.

MR. HUTCHINGS: Ms. Michael can go first.

CHAIR: Okay. I'm glad you made the decision amongst yourselves.

And then we'll open up to any other Government Services Committee member.

With that, we'll hand it over to Ms. Michael.

MS. MICHAEL: Thank you very much, Mr. Chair.

Thank you very much, Minister, and thank you to all of your staff for being here and just to say, I guess, as a person who lives in this establishment for a lot of my time, probably the one department that we interact with a lot is OCIO simply because OCIO services us in a very special way. We don't often get the opportunity to do this, so I want to thank, Minister, the staff very much for the good service that we've always received as MHAs, and continue to. We really appreciate it. Thank you so much.

Minister, that was a lot of information at one time so if I am asking a question about something that you've already referred to, you'll forgive me for it because what I'll be looking for now will be the details, I guess, of what you sort of gave the overview of.

In 4.1.01 – I think you did give an overview of this – the one line that I'm interested in is the detail with regard to the Professional Services that were in that line at $520,000 that which are now obviously needed. Some detail on that, please.

MS. C. BENNETT: The change from the $520,000 that was the original budget, down to $19,500 reflects the line-by-line reduction as we went through line items and items that the OCIO identified would not be required as part of their planning for fiscal '16-'17.

MS. MICHAEL: But $500,000 is a large amount. I'm wondering is the $500,000 a basic drop up there related to the $500,000 that was revenue, or was budgeted as revenue, from the federal government.

MS. C. BENNETT: That's correct. Those two items I mentioned in the preamble were related. We dropped both of those this year.

MS. MICHAEL: Okay.

This is what I mean. It's hard getting the information ahead of time and relating it.

Thank you very much.

Coming down to 4.1.02, Solution Delivery, could we have the details with regard to the Salaries line because it's going up by $409,700. I know you did talk about movements of staff, but if you could give us the details in the Salaries line in this area, please.

MS. C. BENNETT: Sure.

I'll start off with the projected revised budget of '15-'16, the $3.2 million. That reflects savings due to vacancies. There was a director position, two delivery managers, an enterprise architect position, as well as delayed recruitment on projects, for example, delayed recruitment on the CYFS project of $226,000. Under the $4,333,900, the changes there relate to a net increase for project-related salaries and carry forwards from prior years of about $313,000 specifically for the CYFS project.

It also reflects an increase based on the GRI activities and the project delivery and the long-term support model. The deputy may want to add some additional texture there. That will see a scheduled internal transfer of resources over multiple years. The salary transfers will be $89,800.

MS. MICHAEL: Thank you very much.

If I may, Minister and the Chair, we've always established at the beginning, so far, throughout the Estimates that the briefing notes for the Estimates itself would be made available to us afterwards. So just confirming that will happen.

Great, thank you very much. And then we know we don't have to get every single piece of detail down.

Thanks

Minister, under Professional Services in the same subhead; I know you've made reference to this in your opening, but could you just give us, one again, the details on the drop of $1.5 million from last year's budget line in Professional Services.

MS. C. BENNETT: Sure. I'll walk through the projected revised budget for 2015-16 first, that's the $4,341,300.

MS. MICHAEL: That was the revision, right?

MS. C. BENNETT: That's correct.

That reflects savings in an effort to reduce spending under government's direction. This line item is related to externally provided Professional Services for project delivery. Some projects did not proceed as projected. This provided additional savings for government. Savings included: from the CYFS, $226,000; Advanced HR was $154,000; and AQMS was $345,000, et cetera.

The original budget for '16-'17 that we're discussing today, the $3,778,100 reflects a net decrease over the prior year of $987,700. That's based on the re-profiling of funds for projects and other project delivery accounts. As I mentioned in the opening, this occurs each year as, initially, funds are allocated to the Professional Services account for future years when approved.

This particular line item reflects $446,400 for the GRI project delivery and long-term support model, which is the reduction of equivalent funding. It would have been seen in the professional services contract resources. This represents year one of a multi-year approach.

Also reflected here is $50,000 for GRI for managed service provider model, which is the reduction in contractor costs and the initial first-year estimate of that. It also reflects $7,800 for GRI; five, part of the changes in technology support models, which again is about reducing contractor costs for the support that we use inside OCIO.

MS. MICHAEL: Okay. Thank you.

When you talk about the revision in 2015-16, some projects that – were they put on hold? Or was it that whatever was planned didn't happen or will be happening this year? You mentioned some projects being put on hold.

MS. MACDONALD: The projects here were – it was a timing issue more than anything else. So rather than start them, we just delayed them to a later start date.

MS. MICHAEL: Okay. Thank you very much.

Do you want to start, Keith?

MR. HUTCHINGS: Yes, sure.

Minister, I just wanted to touch on a couple of items Ms. Michael spoke to. Just to go back to 4.1.01, Professional Services; $520,000, reduced down.

Could you just give me an example of what that would have been? My understanding is there was funding from the feds and that's no longer there, so you've stopped that program. Just some idea of what that would have been?

MS. MACDONALD: This funding was an offset. So it's really an opportunity – if the federal government wanted us to do some work for them, we would need to have an ability to collect their revenue and this is the offsetting expenditure. So it's not that we didn't get the federal funds, it's that they've never asked us to do some work. This was a placeholder, if you like, for that kind of work.

MR. HUTCHINGS: Oh, okay. Thank you.

MS. C. BENNETT: So just to be clear – because I know that in the Member opposite's question, I want to make sure there's no confusion – this would not have been federal funding that wasn't received. This would have been a placeholder for work that would potentially be done by OCIO as part of work we could do for the federal government that we could bill out. There was no ask for us to do that work, so I just wanted to make sure we're clear.

MR. HUTCHINGS: Okay. It was never utilized.

MS. C. BENNETT: We weren't asked by the federal government to do it. This was a placeholder that's been in place for a number of years.

MS. MACDONALD: Yes.

MR. HUTCHINGS: Okay. Thank you.

If we go to 4.1.02, down to the line Transportation and Communications, there's been a significant increase in this year's Estimate of $603,000. I'm just wondering if I can get some information on that one.

MS. C. BENNETT: Yes. Just for clarity, is the Member speaking to the $603,000?

MR. HUTCHINGS: Yes.

MS. C. BENNETT: Okay.

That reflects the increases for project-related costs that are carried forward from prior years, specifically for the CYFS project. This introduces the training for 700-plus CYFS staff and their travel costs. This increase is net of a $900 line-by-line review reduction. So that money is budgeted for the training associated with a new CYFS program that OCIO is currently working on.

MR. HUTCHINGS: Could I just get an update on the status of the CYFS program, that project, where it's to?

MS. MACDONALD: Certainly. The project is, I would say, in the build phase. We're working with the vendor, who's providing us a solution, and we are modifying it for our legislative requirements so that the folks can do their jobs in a better way, really, and it includes conversion activities which have started, it includes planning for training. So I'd say it's two-thirds of the way through the build.

There's a huge effort still ongoing. We have to go through a full conversion and a full testing and training. So it's not going to complete this fiscal. It will be next fiscal.

MR. HUTCHINGS: Okay. So the two-thirds build, was that build originated from OCIO or was adopted from somewhere else, some jurisdiction?

MS. MACDONALD: The system that was selected was the system that's in place in several SYFS-type units in Ontario. We are essentially modifying it for some of the different ways that – I shouldn't say modify, we're configuring the solution for how the social work legislation works here, and the broader scope that our CYFS has than other jurisdictions. So we're working with a vendor. 

MR. HUTCHINGS: Okay.

Just my final question with regard to that; some of this funding is related to training for staff as the system, I guess, becomes operationalized. I think you said you're two-thirds through but you wouldn't complete it this year. Will training begin before the actual project is completed?

MS. C. BENNETT: Training for the tools will happen when the tools are available for the social workers to use, would be the answer.

MR. HUTCHINGS: Okay. So it could start this year, the training. That's why the money is there.

OFFICIAL: Yes, the training should start this year.

MR. HUTCHINGS: Okay. Thank you. 

In that same heading, 4.1.02 – Ms. Michael again asked about Professional Services – we've seen a reduction there. I think you indicated there were issues in regard to projects may be getting completed and they weren't. I'm not sure on that one again. Could you just give me a review of that one, Professional Services?

MS. C. BENNETT: Sure. Maybe the information that we can share with you around the project delivery and the long-term support model might help clarify, because a portion of the money that I referenced earlier when I spoke to the $3,778,000 is reflective of that change.

Maybe I'll ask the deputy if she can provide a very high-level overview of the project delivery and long-term support model.

MS. MACDONALD: Certainly.

Our intent is that we're going to move some resources from other areas in OCIO into the branch that delivers projects. We'll have to do some retraining of them and essentially lessen our requirement on contractual resources. The equivalent of 13 contractors we should be able to eliminate.

MR. HUTCHINGS: Okay.

So this would be the envelope that looks after consultants that do –

MS. MACDONALD: Yes.

MR. HUTCHINGS: – project delivery and those types of things.

Minister, when you mentioned there was – what was the number, 13 contractors that were coming out. That would come out of this envelope here?

MS. C. BENNETT: Yes.

MR. HUTCHINGS: Okay.

What would be a rough average of the amount of consultants that would be used reflective of this?

MS. C. BENNETT: Inside OCIO?

MR. HUTCHINGS: Yeah.

MS. C. BENNETT: Well, I can report to the committee that when I took over as minister and spoke to the deputy, some of the consulting work that had been ongoing for almost a decade with an individual contract being valued at almost a million dollars was still in place, and we have since rectified that.

MR. HUTCHINGS: What would roughly be the amount of consultants that would be used, average, yearly, and has that changed?

MS. C. BENNETT: The plan is we are continuing to reduce the number of contractors inside of OCIO. That's what we speak about when we talk about the project delivery and long-term support model is providing the opportunity for staff inside OCIO to provide that work and using contractors for very specialized activities that are not repetitive and ongoing for multiple years, as was the practice under the prior administration.

MR. HUTCHINGS: Okay.

I'm good, Mr. Chair, for that section.

CHAIR: Ms. Michael.

MS. MICHAEL: 4.1.03; Minister, if we could – again, you referred in general with regard to positions and salaries but could we have the breakdown which leads to this year's salary estimate being $202,800 less than last year.

MS. C. BENNETT: The $8,476,000 reflects the attrition target of $113,000 for '16-'17. It also reflects the project delivery and long-term support model loss of AS salaries of $89,000 for year.

As the deputy mentioned earlier, there's some reallocation of positions from one area to another, and that would be that position at $89,000 for year one. This initiative will reflect movement, as I said earlier, of internal resources to the SD branch over multiple years.

MS. MICHAEL: Is there a position gone because of attrition or are the positions all moved into another area?

MS. MOORE: Four positions will be lost during attrition.

MS. MICHAEL: Will be lost?

MS. MOORE: Yes. We haven't established yet which branch those will come through, but every branch will bear a component of what that attrition is.

MS. MICHAEL: Okay. Thank you very much.

My other question is the Professional Services, if we could have an explanation of the Processional Services here.

MS. C. BENNETT: The Professional Services of $865,000, that's a drop from last year. The drop reflects the line-by-line reduction. The actual Professional Services would be related to applications and mainframes there (inaudible), I think it is.

OFFICIAL: Yes.

MS. MICHAEL: What is it again, I didn't –

MS. C. BENNETT: The $865,000 would be related to the external supports that's needed for program applications. So those would be contracts for software licences, other licences; technology licences.

MS. MICHAEL: Are these multiple contracts under this line?

MS. C. BENNETT: There are 500 applications that government supports, and many of those applications would have their own unique licences that would be maintained and you'd see those –

MS. MICHAEL: Okay. So it's the licences, mainly.

MS. MACDONALD: It's a support line for these different technologies that we can't support ourselves. We don't have the skills in-house.

MS. MICHAEL: Right. That's understandable.

Thank you very much.

I always find this fascinating, so I'm going to ask here. Under Revenue, the provincial revenue line, what would that source of revenue be? It's $102,700, and last year the revision was only $70,000. Then this year it's $102,700 again. What is that source of revenue on a provincial level? Why last year was it only $70,000? Why do you anticipate being able to get that amount of money?

MS. C. BENNETT: The Revenue has been projected to be lower than anticipated given timing issues related to receiving the funding after the end of each quarter and based on anticipated receipt, which are based on service delivery. For example, actual hours worked rather than a set contract. The revenue that this specifically references would be received from areas like pensions, NMFC or Legal Aid where OCIO does work and then would bill out that work.

MS. MICHAEL: Okay.

MS. C. BENNETT: With permission, just for the Member opposite, the question that you asked with regard to the attrition, I just want to be clear that it's salaries that are coming out. The positions have not been – there are no individuals other than those that are retiring or positions that have been vacant. So I just want to make sure to be clear.

MS. MICHAEL: That's what I understand by attrition that they are going to be retirees.

MS. C. BENNETT: Yeah.

MS. MICHAEL: I wanted to know how many, so that's four.

MS. C. BENNETT: Or the attrition target could have also been met by having a position that's vacant and not filling it as well.

MS. MICHAEL: I understand that. Thank you very much. Thanks for the clarification.

Coming down to 4.1.04, a few questions here, mainly under Supplies; there's a big drop of $3.5 million. I assume you can sustain that or you wouldn't have allowed that to happen. Could we have an explanation?

MS. C. BENNETT: Sorry, I just wanted to catch up. Which –

MS. MICHAEL: 4.1.04 the next subhead, Information Technology Operations, the subhead of Supplies. There's a decrease of $3.5 million from last year's budget line to this year. I guess I'm interested in knowing is there going to be an impact because of that drop or will that be sustained adequately?

MS. C. BENNETT: The $6,738,400, the difference reflects a net decrease consisting of the following: there's $3.17 million net impact of a permanent decrease for the Microsoft buyout initiative which was $1.8 million, and the removal of one-time funding for the buyout from prior year which was $1.3 million. There was an amount in the prior budget that wouldn't have been carried forward on an annual basis of $1.3 million.

Additionally, there was $551,400 which is a permanent transfer in from other accounts to provide for appropriate SW funding and $244,000 which was an increase for the HW, SW budget pressure. The last one there, the large one is a $1.113 million decrease related to GRI II changes to technology support models. Those are some of the reasons why there was such a significant difference from the prior year to this year.

MS. MICHAEL: Okay. Thank you very much.

Under Purchased Services, what would be the nature of the services that are purchased? There's a decrease of $189,500, an explanation of the decrease.

MS. C. BENNETT: Under Purchased Services.

MS. MICHAEL: In the same subhead.

MS. C. BENNETT: Yes.

The Purchased Services of $4,826,100, the difference there reflects a net decrease consisting of the following: there was a $30,000 removal of the one-time increase for the Microsoft buyout initiative; there was a $51,500 Way Forward savings initiative from a prior year; there was a $264,000 decrease related to the GRI III, which were the changes, as I mentioned earlier, to the technology support models; and then there was a $156,000 increase for budget pressures there. That makes up the difference.

MS. MICHAEL: Okay.

And obviously all of these services are, with regard to IT, things that you don't have in-house. There's a continual use of outside services.

MS. MACDONALD: This is our data centre contract. We have a contract with Bell for a provision of data services for about $4 million every year and for other hardware maintenance services.

MS. MICHAEL: Okay. Thank you very much.

The Revenue, 02, under the Operating Accounts, the revenue provincially; what is the source of that revenue, Minister?

MS. C. BENNETT: That reflects anticipated additional one-time revenue related to a court case in which vendors are providing a rebate for purchased computers. So it was a class action and as a result, we are one of many consumers – the Government of Newfoundland and Labrador is one of many consumers – who made a purchase. And as a result of a court challenge, the vendor has been directed to award money back to those customers. As a result, this is the anticipated revenue we expect to get from that outcome.

MS. MICHAEL: Okay.

And all three lines, like last year's budget and the revision and this year, are all related to that class case?

MS. C. BENNETT: No.

MS. MICHAEL: No?

MS. C. BENNETT: The line item $462,000 under the original budget; that was the information I just shared with you. The $475,000 from the projected revised, that would reflect receipt of additional revenue from the prior year that wasn't actually received until the fiscal year, so, again, timing issues.

This revenue offsets the support costs provided to external agencies like Legal Aid, the Research & Development Corporation, Municipal Assessments, Newfoundland and Labrador Centre for Health Information, Bell, their data centre, as well as remote service access for NLCHI, MUN, the City of St. John's, Atlantic, MUNN and AXA Insurance. That $475,000 is related to those actual revenue items from that list I just read out.

MS. MICHAEL: Okay. Thank you.

I think it's your turn, Keith.

CHAIR: Okay. Thank you.

We'll go to Mr. Hutchings.

MR. HUTCHINGS: Thank you, Mr. Chair.

Minister, just to clarify on positions, I think you said there were four positions will be coming out of OCIO and they would be through attrition, right?

MS. C. BENNETT: Well, in that particular heading, yes.

MR. HUTCHINGS: What about across the board in OCIO? Are there positions going to be lost under the full-time equivalents that were announced in the budget, 650? Maybe you could just give me a breakdown of full-time positions, attrition, basically any positions in the next fiscal year.

MS. C. BENNETT: Yes, as I mentioned in the opening comments, there's a total of $287,600 that was eliminated as part of the attrition plan. The total staff complement inside OCIO right now, Joanne?

MS. MOORE: Julie.

MS. C. BENNETT: Julie, sorry.

MS. MOORE: The current number of positions is 356. The number of staff is 306. So there are a number of vacancies.

MR. HUTCHINGS: Okay. Yes, so there are 50 vacancies, basically.

I know in the past there were challenges in regard to network design architects for OCIO. Is that still a challenge? Would some of these positions be reflective of that, that are vacant?

MS. MACDONALD: Yes, we actually have several different kinds of hard-to-fill positions that we tried to recruit several times for things like network architecture, for security, for PeopleSoft support, and so we end up using some of our Professional Services to augment that.

MR. HUTCHINGS: Okay.

MS. MACDONALD: Because we can't recruit them.

MR. HUTCHINGS: Sure. Thank you.

Just a follow-up as well; there was reference in 4.1.04, I'm not sure if it was under Supplies or Professional Services. Minister, you mentioned a Microsoft buyout initiative. Just have a couple of details on that, what that is and what it encompasses.

MS. MACDONALD: Yes, we traditionally cover the licensing for Microsoft that sits on all the government desktops and laptops, and we used to lease that. Last year, or two or three years ago, we proposed an option to buy them outright and that would save a whole bunch of money going forward. Last year we got extra money to buy it out and this year our annual costs, obviously, decreased and that one-time increase was taken away. So we own all the products now.

MR. HUTCHINGS: Yes, okay. Thank you. 

That's good.

CHAIR: You still have allocated time. Would you like to carry on to the next subhead?

MR. HUTCHINGS: Yes. So we'll move to the next subheading.

4.1.05, Solution Delivery, I'm just wondering under the Salaries component there, there's a significant reduction. Is that related to I guess what we've talked about in regard to positions?

MS. C. BENNETT: Yes, that would relate to salary savings from unanticipated delays in projects, for example delays in the CYFS project resulting in about $200,000 worth of savings. This account is used for project-related salaries only.

I just want to make sure that I clarify – you asked a question earlier about the completion for the CYFS project. It's just over the 50 per cent completion in the current phase. So I just want to make sure that we clarify that information for you. 

MR. HUTCHINGS: Yes, thank you.

I'm not sure in your opening remarks, Minister, if you addressed this, but I'll ask: 4.1.05 again, we go down to Supplies and there's a significant reduction in what was budgeted, then obviously the revised was way down, and then this year we're down again. I'm just wondering what that's related to.

MS. C. BENNETT: You can take that, Ellen.

MS. MACDONALD: The projected revised is related to unanticipated delays. It's a timing issue with some of the projects and overall savings. We saved money on our R12 project that we didn't require further. And the Supplies went down because there was a removal for some one-time funding. We had funding that moved forward again. This is just for project work, so we didn't need as much as we needed for R12. So some of that funding is reduced for R12 reporting, for cyber security and then the add in back of some money for CYFS.

MR. HUTCHINGS: Okay, thank you. That's good for me.

Ms. Michael.

MS. MICHAEL: The Property, Furnishings and Equipment, there's been a big drop there, again, 4.1.05.

MS. MACDONALD: Again, that's related to project timing.

MS. MICHAEL: The project timing, okay.

MS. MACDONALD: We would need some things in earlier phases of a project, so we wouldn't need it now.

MS. MICHAEL: Right, thank you.

And I have no more questions for that subhead, but under 4.1.06, $560,000 was budgeted, $80,000 was the projected revision and we're back up. Was that timing as well?

MS. C. BENNETT: Well, this is the IT Operations capital. So it's responsible for supporting the general IT infrastructure. This particular change, the $480,000 decrease, is for IT hardware that are capital nature, some of which related to security, as the deputy mentioned already, and government's infrastructure and key investments to support disaster recovery for example. Most of the funding is allocated to replace old equipment on an annual basis, and these savings were related to delays or deferring purchases in an effort to reduce government spending. The critical purchases that were needed were made and when we looked at the historical needs, it was felt that the estimate needed to go back up to the amount of $558,000.

MS. MICHAEL: Okay, thank you.

That's all for me, Mr. Chair.

MR. HUTCHINGS: Just a couple of general questions, Minister.

The Department of Municipal Affairs, they've indicated OCIO is going to work to put the land use atlas online that arose out of the Crown Lands review last year. Is the money for that project in this year's budget?

MS. MACDONALD: I'm going to pass that to Natalie.

MS. TEMPLEMAN: The project is identified from an analysis phase. It has been identified in the list from the department.

MR. HUTCHINGS: Okay, so I am just wondering about execution. So does that mean it will actually happen in this fiscal year?

MS. TEMPLEMAN: It will depend on the availability of funding.

MR. HUTCHINGS: Okay. But is funding in the budget to do it, I guess that's my question?

MS. MACDONALD: Yes, the funding's in place.

MR. HUTCHINGS: Okay.

MS. MACDONALD: The first step we take is for the analysis stage to see what kind of solution, are we're going to build it from scratch, what are we going to do.

MR. HUTCHINGS: Okay, great. Thanks very much.

MS. C. BENNETT: So just for clarity. We have to analyze what's the best method of providing what they want, and then determine which of those options are the best to purchase and how we can best support them. Because when we buy the technology it's not just about the best use also for the department, but it's also about the ability to be able to support it.

So there's an analysis that's done on the technology to make sure that it's the tool that's going to provide the user with the flexibility they need, but also allow us to provide the support service through OCIO, if that's the option or what the cost might be of supporting that software through a vendor.

That analysis has to be done before a decision is made. You can't scope the total cost of what the end-dollar amount might be until you know that you've analyzed the variety of options.

MR. HUTCHINGS: Okay, thanks very much.

CHAIR: Any more questions or statements?

Okay, we'll call the subheads.

CLERK: 4.1.01 to 4.1.06 inclusive.

CHAIR: Shall 4.1.01 to 4.1.06 inclusive carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subheads 4.1.01 through 4.1.06 carried.

CLERK: The total.

CHAIR: Shall the total carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, Office of the Chief Information Officer, total heads, carried.

CHAIR: Shall I report the Estimates of the Office of the Chief Information Officer carried without amendment?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, Estimates of the Office of the Chief Information Officer carried without amendment.

CHAIR: Okay, we're going to take a five-minute break to give the broadcast booth a break and to allow the minister time to switch out department heads.

Recess

CHAIR: Okay, we're going to resume the Government Services Committee on Estimates for the Department of Finance, and call for the subheads.

CLERK: 1.1.01.

CHAIR: Shall 1.1.01 carry?

We'll go to the minister. Again, I ask that if you go to your department heads that they identify themselves. We will go with 15 minutes to start, beginning with Ms. Michael.

I turn it over to the minister for comments.

MS. C. BENNETT: I'll turn it to Donna Brewer. Donna is the Deputy Minister for the Department of Finance, and let her and the officials introduce them by name as they go through so we can check the mic.

MS. BREWER: Donna Brewer, Deputy Minister of Finance.

MS. TRICKETT: Wanda Trickett, Departmental Controller.

MR. MARTIN: Craig Martin, Assistant Deputy Minister, Taxation and Fiscal Policy.

MS. MILLER: Ann Marie Miller, Comptroller General of Finance.

MR. HOLLETT: Alton Hollett, Assistant Deputy Minister of Economics and Statistics.

MS. CLARKE: Lesley Clarke, Communications Manager.

MS. BOLAND: Gail Boland, Director of Policy, Planning, Accountability and Information Management.

MS. C. BENNETT: I just want to welcome colleagues again. I know there are a number of subheadings in the Finance Estimates. Certainly, to provide members opposite the most amount of time to answer the questions, we'd like to move on to the subheadings. I understand there's lots of information here and we want to provide the members opposite the time they need to answer the questions.

CHAIR: Okay. I think we'll go through each subhead this time and give the Government Services Committee opportune time to ask questions. Once we're finished, we'll move on to the next subhead.

MS. MICHAEL: Okay, thank you very much.

Could we hear again the subheads that have been called? Was it 1.1.01 to an ending, or just the first subhead that was called?

CHAIR: Just 1.1.01.

MS. MICHAEL: Okay, thank you very much.

Thank you, Minister, and thank your staff from Finance for being here.

Under 1.1.01, I think I just have one question actually and it's under Purchased Services. Last year the budget was $4,000, the projected revision was $700 and this year we're down to $600.

MS. C. BENNETT: And the question, I'm sorry?

MS. MICHAEL: The explanation for the large drop and the lack of need for having the higher amount of money for Purchased Services.

MS. C. BENNETT: Sure.

I can't explain the $4,000 need from last year. I can explain the $600 budget for this year, and that's based on analysis we did on what we think the purchased services will be through the Minister's Office.

MS. MICHAEL: What would be the purchased services, Minister?

MS. C. BENNETT: It would include items – Wanda, do you want to provide some insight there?

MS. TRICKETT: It would include items such as printing costs, shredding services, those types of general office-based expenditures.

MS. MICHAEL: Okay. Thank you.

Under Transportation and Communications, again, the budget was $51,300, the projected revision at $11,700 and this year the estimate is $24,900. Again, an explanation of those variations, please.

MS. C. BENNETT: Sure.

I can't explain the $51,000 that the former minister had budgeted on travel. I can explain the $11,700 would have been costs associated with ministerial travel that would have taken place though the full calendar year. Only essential travel is travel that was undertaken past December 14.

The budget for '16-'17 reflects what we feel is a more appropriate number for the travel. It's also, I guess, worth noting that even though I have multiple portfolios – for example, when we did Women's Policy Office, there was a very small amount of travel in there. We tried to consolidate any ministerial travel for me, in particular, into that line item. So it would include fed/prov/territorial meetings, of which there are two this year.

MS. MICHAEL: Right. Thank you very much.

It was only 1.1.01 that was called.

Do you have any –

MR. HUTCHINGS: No, I'm good.

MS. MICHAEL: Okay.

CHAIR: Okay.

CLERK: 1.1.01.

CHAIR: Shall 1.1.01 carry?

MS. MICHAEL: Yes.

CHAIR: Carried.

On motion, subhead 1.1.01 carried.

CLERK: 1.2.01.

CHAIR: Shall 1.2.01 carry?

MS. MICHAEL: Well, 1.2.01, I think it's your turn, Keith. My time seems to be –

MR. HUTCHINGS: I don't have anything on that heading. I'm fine.

MS. MICHAEL: I do; 1.2.01 under Professional Services, the budget last year was $7,000, the revised or projected revision was $122,500, and then this year we're back to $6,900. I'm assuming there was a one-off expenditure there?

MS. C. BENNETT: Yes. There was $115,500 increase in the projected revised, and those were additional costs associated with the actuaries with respect to the pension reform initiative. And those were the actuaries on the project which would have included Morneau Shepell and Eckler as it relates to the pension reform initiative.

MS. MICHAEL: Okay, thank you very much.

Will I just move on, Chair, or –?

CHAIR: Just a second now.

Shall 1.2.01 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 1.2.01 carried.

CLERK: 1.2.02.

CHAIR: Shall 1.2.02 carry?

MS. MICHAEL: 1.2.02; I have a question, do you?

MR. HUTCHINGS: You can go right ahead.

MS. MICHAEL: Okay.

Under 1.2.02, Salaries, it looks like maybe a position is gone. Minister, if we could have an explanation, please?

MS. C. BENNETT: Actually, the change from the $115,000 in the original budget to $88,500 was savings resulting from fewer than anticipated summer students being employed. And the $74,400 was a decrease in the line-by-line review based on what the department had been spending over the last number of years.

MS. MICHAEL: So the $74,400, is that a permanent position?

MS. C. BENNETT: It would be for students.

MS. MICHAEL: That'd be for students.

MS. C. BENNETT: Yes.

MS. MICHAEL: Okay. So that was all students there.

Okay, thank you very much.

Coming down to the Revenue line, the Provincial – Revenue, there's an anticipation of $150,000. What would that be based on?

MS. C. BENNETT: Well, the projected revised over the original budget saw an increase of $50,000. That was a recovery from the pension fund for mail costs, which were higher due to cost increases of mail from Canada Post. So then $150,000 under the budget is a $70,000 increase from the original budget last year, and that's anticipated recovery from the pension fund for mailing costs which, again, will be higher based on mail costs from Canada Post. The pension fund has regular mailings to pension and employees, and those mailings are paid for by Finance but are billed back to the pension fund corporation.

MS. MICHAEL: Okay, thank you.

Again, under the same subhead, Transportation and Communications, that's a large expenditure. Could you just explain to us what that line is about.

MS. C. BENNETT: Sure.

Transportation and Communications, you'd see a $5,000 difference from the original budget last year of $390,000 down to $385,000. The savings came from mail costs for the department which were lower as Electronic Funds Transfers or EFTs were used, primarily, as a payment vehicle for vendors and suppliers. So these would be the costs associated with EFTs or electronic payments, mail payments, et cetera.

The change then from the $389,500 was just to rightsize the budget, based on what we anticipate we're going to need this year.

MS. MICHAEL: Okay. Thank you.

I might as well do 1.2.03.

AN HON. MEMBER: Yes.

MS. MICHAEL: Okay.

1.2.03, it's a bit of a strange –

CHAIR: Excuse me.

We wanted to go through subhead by subhead.

MS. MICHAEL: Yes, is that okay?

Well, Keith may have questions on 1.2.02, then.

MR. HUTCHINGS: No, I'm good. You covered them.

MS. MICHAEL: I covered them all. Okay.

MS. C. BENNETT: Mr. Chair, if I might. I just want to make sure we're clear that the Member opposite understands that under Transportation and Communications it is mailing costs and electronic costs.

MS. MICHAEL: Yes, I got that.

Thank you very much.

MS. C. BENNETT: Okay, I just wanted to make sure you understood that.

MS. MICHAEL: Yes.

CHAIR: Okay.

Call the subhead.

CLERK: 1.2.02.

CHAIR: Shall 1.2.02 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 1.2.02 carried.

CLERK: 1.2.03.

CHAIR: Shall 1.2.03 carry?

MS. MICHAEL: As I was starting to say, this is a strange little section here. Minister, could you explain it, please?

MS. C. BENNETT: Well, under Government Personnel Costs, this is the activity that provides for government-wide funding.

We're at 1.3 –?

MS. MICHAEL: No, it's 1.2.03.

MS. C. BENNETT: One page too far, my apologizes.

MS. MICHAEL: Okay, $15,000 was budgeted and that wasn't spent. Then this year it's $100 under Property, Furnishings and Equipment. It says: Appropriations provide for the purchase of tangible capital assets. Just an explanation on that subhead.

MS. BREWER: That's just a general vote that was in the department in case we have to do any kind of furniture and equipment replacements. We didn't spend anything in that vote last year. We cut it back due to restraint, but the $100 there is just to keep the vote open.

If I happen to have an employee who has an injury or has to have any kind of ergonomic assessment and needs some sort of accommodation, we'll look to take money from elsewhere within the department's operating and seek Treasury Board approval to transfer it in.

MS. MICHAEL: Okay. Thank you very much.

That's fine for me.

CHAIR: Shall 1.2.03 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 1.2.03 carried.

CLERK: 1.3.01.

CHAIR: Shall 1.3.01 carry?

MR. HUTCHINGS: Thank you, Mr. Chair.

1.3.01 in Salaries, the amount budgeted there, nothing in the revised and now we're at $11 million. Could you give some explanation on that one, please?

MS. C. BENNETT: Sure.

As I was (inaudible) earlier, albeit prematurely, this particular heading, this activity provides for government-wide funding. It includes government's share of employee benefits for current and retired government employees such as CPP, employment insurance, group medical and group life, health and post-secondary education tax and anticipated compensation or contract adjustments for contracts that are negotiated or in the final stages of being finalized.

This is a placeholder in Finance that allows for an amount of money to be voted on that can then be – is the place where expenses related to the employer contributions to CPP, group insurance, group medical insurance, the health and education tax and unemployment insurance are all captured here and the cost associated with any anticipated monies that would need to be spent from contracts that would have been in progress, for example, that haven't necessarily been finalized.

MR. HUTCHINGS: So the benefits component you referenced for current employees and maybe retired employees, there was $10 million budgeted last fiscal year but in the revised there is nothing there. I'm just trying to understand –

MS. MICHAEL: Under Salaries.

MR. HUTCHINGS: Under Salaries, yes.

MS. BREWER: The $10 million was the block that would have been there, as the minister indicated, for some anticipated contracts that were going to happen during the year.

If you checked last year's Estimates that amount would have been a lot higher. Then what happens is when the contract is signed, we go out then and we talk to the departments, we talk to the entities and identify whose incurring extra costs as a result of the signing of those contracts or there could be some major reclassifications have occurred. Then that money gets transferred from here over to the applicable department or the applicable entity. Then, for comparative reasons, as indicated in the preamble to the Estimates, the original budget gets restated.

So there's actually nothing spent directly in this vote for Finance, but I could have been the recipient, depending if it was – I forget the name, it's not general service anymore – the common grid. If there were any adjustments relating to that then that would have been falling out and transferred into the applicable salary votes within the Department of Finance, but the majority of money would be outside of Finance.

MS. C. BENNETT: An example for the Members opposite would be Transportation and Works. There was a grievance a number of years ago, I think it was some 10 years ago, that would have resulted in a large number of employees asking for the grievance which actually was in the favour of the employees. The grievance dollars would need to be settled and that would be an example of the monies that would be then transferred out to Transportation and Works.

Another example would be ferry captains. There was an amount of money that, based on past employment terms and conditions, would have needed to be paid out to ferry captains over a period of time.

So that's what that block is. It allows for monies that departments, agencies, boards and commissions may need because there maybe things that have been grieved or have been changed that result in employees, rightly so, being needed to be provided more remuneration.

MR. HUTCHINGS: Just so I understand. Of that amount, that wouldn't be reflective of benefits that are paid out to current employees. It would be for grievances, future contract negotiations, that money then would be directed out to department to execute what was agreed to, basically.

MS. C. BENNETT: Yes, and just for clarity, I probably jumped ahead of myself and confused things. The employee benefits, the $71 million, would be –

MR. HUTCHINGS: Okay, fair enough.

MS. C. BENNETT: Right?

MR. HUTCHINGS: Yes.

MS. C. BENNETT: I was speaking to the entire number.

MR. HUTCHINGS: Yes.

MS. C. BENNETT: The $11 million would be the monies that we have kind of put in a block for any monies that would be for contracts that would have negotiated over the last couple of years that are just getting finalized now, or grievances or other things that would have happened, historically, that we would need to have some money because we don't understand yet what the full implications of those changes might be.

MR. HUTCHINGS: Sure.

Obviously, we're under some negotiations now in regard to upcoming contracts, so this block would represent any agreements made with unions in the near future and this would allow this money to flow out based on what your labour negotiations would include?

MS. C. BENNETT: No, this would not include any monies related to upcoming collective bargaining which has yet to start.

MR. HUTCHINGS: Okay.

MS. C. BENNETT: This would be for things that have happened in the past, or were in progress last year or the year before, that are just getting resolved now.

MR. HUTCHINGS: Okay.

MS. C. BENNETT: This would not be a line item for collective bargaining, as we are and our employees are preparing for now. It's not related to that.

MR. HUTCHINGS: So could I ask, further on, is there a block of money that's been identified in the budget for potential results of labour negotiations in the future for this fiscal year?

MS. C. BENNETT: Typically, my understanding – and certainly the deputy can add some texture– is that amount of money or expense potential that would incur from collective bargaining would not be reflected until you actually finished the bargaining.

So at this stage – Donna, I don't know if you want to add anything.

MS. BREWER: Yeah, that's correct. We wouldn't put in the budget anything unless negotiations were at a certain point, like the last set of negotiations, the template was known. Once the template was known, the 0 per cent, 0 per cent, 2 per cent and 3 per cent, then we start picking up the Estimates for the salary increases.

If we knew which ones then we would budget in the department, but in a lot of cases we wouldn't necessarily know so that's when the block would go in.

MS. C. BENNETT: The block that's there now would have been, for example, like I said, the Transportation and Works grievances, the ferry captains, contracts or grievances that are already in play or in process of being implemented or executed on.

MR. HUTCHINGS: Okay. Just so I'm clear, halfway through this fiscal year, if you were to conclude contract negotiations with a particular union, if there were increases in salaries for compensation to those members, where would that money come from to execute that new collective agreement?

MS. C. BENNETT: It would happen in the same process that it's happened for decades. When the collective bargaining is finalized then you would budget based on the information that we have. We don't have information right now on where we will be at the end of collective bargaining, so it would be premature for us to include in the Estimates a number at this stage.

MR. HUTCHINGS: Okay, thank you.

Minister, if I could, I know when I go through Estimates I ask, and maybe we'll just go through it in terms of positions in your department.

Right here we're talking about, in terms of attrition, how many positions are coming out? Maybe just give me an idea of what's happening in that regard.

MS. C. BENNETT: Sure, maybe what we can do is when we get to the actual department heads on those, because that wouldn't be included in this – and I'm happy to answer the question –

MR. HUTCHINGS: Yes.

MS. C. BENNETT: – but this particular heading is not related to staffing –

MR. HUTCHINGS: Yes, okay; fair enough.

MS. C. BENNETT: – in the Department of Finance.

MR. HUTCHINGS: Okay, that's good for me.

Ms. Michael.

MS. MICHAEL: Okay, just for clarification, Minister – I think I've got it right – so the Employee Benefits, I do understand that line. So for example would that also cover employees in the caucus offices as well? Because I know in our budget we have to worry about the salary, but the benefits are covered elsewhere, and I'm assuming that would be covered under this line as well.

MS. C. BENNETT: Yes, my understanding is that it would include all benefits through core government.

MS. MICHAEL: Yes, okay. Thank you.

And under –

MS. C. BENNETT: Sorry to interrupt, Ms. Michael. Any employee who's being paid, regardless of where they're being paid, this would be where we'd pick up the CPP and the EI.

MS. MICHAEL: Right, thank you.

Under the provincial revenue, what is the source of that revenue? I'm assuming it's money that's coming back from some of the departments to the Department of Finance, but just to get the specifics from you.

MS. C. BENNETT: So these would be government-wide recoveries for employee benefit costs, like EI, CPP, group health and life, and HAP SET from other agencies.

MS. MICHAEL: Oh, okay.

MS. C. BENNETT: And these recoveries would be a result of annual billing recoveries and secondments where salaries may have been used in an ABC, but government needs to recover the costs associated with that, including the benefits costs.

MS. MICHAEL: Right, thank you very much.

That's all I have for that subhead.

CHAIR: So does 1.3.01 carry?

All those in favour, 'aye.'

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 1.3.01 carried.

CLERK: 2.1.01.

CHAIR: Shall 2.1.01 carry?

MS. MICHAEL: Okay, I'll start off, I guess, since I still have time on the clock. I don't have a lot of questions for the first one. I really don't have any questions for 2.1.01. Keith, do you?

MR. HUTCHINGS: Just to maybe on the Salaries piece, what was budgeted and then what was executed and the revised in 2015-2016 was down, and then it's a little higher from what was budgeted last year.

MS. C. BENNETT: So the $644,800 was $145,900 of savings, and that was resulting from a vacancy related to a management position and a clerk III position. The increase under the budget for this year, '16-'17, to $803,200 is an increase for the allowance of JES and the annualization of JES for qualifying JES positions.

MR. HUTCHINGS: Okay.

That just reminds me, the JES, any appeals that there has to be payouts in regard to a successful appeal, would that be in the prior form we just talked about?

MS. C. BENNETT: That would also be included as one of the potential numbers there.

MR. HUTCHINGS: Okay, thank you.

Regarding 2.1.01, we come down to Professional Services. Obviously, that would be consultants, maybe actuaries, those types of things. What would that be?

MS. BREWER: The Professional Services, there's a combination of things. They use Buck Consultants for a system they use within pensions. They use actuaries. They have to get actuarial evaluations done. That will fluctuate, depending on the timing of the evaluations. They also have to use actuaries to help with when employees request computed value calculations and things of that nature.

MR. HUTCHINGS: Okay, thank you.

When we come down to the Revenue – Provincial, there seems to be a change there from what was budgeted and up to this year's estimate. What would that be related to?

MS. C. BENNETT: The projected revised of $1,053,200, that's a $224,000 decrease. As Members of this House may be aware, and this might be new information for some of the government Members on the Committee, all expenditures for pension administration are 100 per cent recoverable from the pension fund. The expenditures were reduced through discretionary spending, hence the revenue was less.

The $1,501,000 is an increase of $223,800. As I mentioned earlier, all expenditures for pension administration are 100 per cent recoverable from the pension fund and the budget for these expenditures was increased, hence the revenue was increased.

We will also be now charging the pension fund – and they are concurring, obviously, with this – for office space of $200,000 which wasn't included as part of last year but the pension corporation has obviously seem the value of the space that they have currently.

MR. HUTCHINGS: And that's up and running, the pension corporation?

MS. C. BENNETT: Yes.

MR. HUTCHINGS: Any update on that in terms of how things are going?

MS. C. BENNETT: We're meeting with them Tuesday or Wednesday of next week, so I'll provide you some information when I get to meet with Loyola then.

MR. HUTCHINGS: Thank you. 

CHAIR: Shall 2.1.01 carry?

SOME HON. MEMBERS: Aye.

Carried.

On motion, subhead 2.1.01 carried.

MS. C. BENNETT: Mr. Chair, sorry, if I might, just for the Member opposite too, it would also be worthwhile for me to share that the manager of pensions has also met with Treasury Board to provide an update with Treasury Board. All indications are from the pension corporation that they are continuing to proceed with their work plan and their business plan. The directors that are in place for the government representation, we will be meeting with next week, and certainly they have a combined board meeting next week where they are continuing to work through the plans for the pension corporation.

And we'll continue to do what we can to support them as they transition in this year to being a stand-alone entity outside of government. I would expect that next year in Estimates you'll see a very different reflection in the Estimates book as it relates to that once the transition is fully implemented.

MR. HUTCHINGS: Okay.

The Teachers' Pension Plan too, there's legislation I think that has to come to the House.

MS. C. BENNETT: That's correct.

MR. HUTCHINGS: That will be coming, I guess, this session to deal with that.

MS. C. BENNETT: That's correct.

MR. HUTCHINGS: Okay, thank you. 

MS. C. BENNETT: Oh, just for clarity, I think the Member opposite said that the legislation would be coming into the House this session. I'm not the House Leader, so I'm not familiar with exactly when the legislation is, but I know that the legislation is progressing and we've had joint discussions with the teachers' union and that's progressing as normal.

MR. HUTCHINGS: Okay, thank you.

CHAIR: Shall 2.1.02 carry?

SOME HON. MEMBERS: Aye.

MS. MICHAEL: No, I have some questions. You said 02, right?

CHAIR: Yes.

MR. HUTCHINGS: We are at 2.1.01, right?

MS. MICHAEL: We already voted on 2.1.01, right?

CHAIR: Yes, starting at 2.1.02.

MS. MICHAEL: Okay. So now we're on 2.1.02.

MR. HUTCHINGS: We have to vote on 2.1.01.

MS. MICHAEL: We voted on 2.1.01.

MS. C. BENNETT: We did vote. I interrupted after, I think, sorry.

MS. MICHAEL: I was getting really confused here.

CHAIR: I'm just assuming that you're working together on the time frames here.

MS. MICHAEL: We are.

Okay, 2.1.02 has been called, right?

CHAIR: Yes.

MS. MICHAEL: Okay.

I do have questions here. First of all, Minister, if you could explain a bit, originally this head just said budgeting and now the head has been changed to Treasury Board and Budgeting Operations. Maybe that's a reflection of what's coming in the future.

I notice that the “Appropriations provide for the effective and efficient operation of the Treasury Board Committee of Cabinet including the provision of analysis and advice on various matters placed before the Treasury Board ….” Has money for the Committee of Cabinet been here before? It hasn't been here in terms of explained in the subheads, so is this new money being provided for the Treasury Board Committee of Cabinet?

MS. BREWER: It used to be two separate activities within the Department of Finance; one was called Treasury Board support and the other one was called budgeting. This year, the assistant deputy minister, Denise Hanrahan, came to me. In order to better manage the workload, particularly with the Government Renewal Initiative coming up, she recommended to me, and we agreed and brought it forward to Treasury Board, to actually combine the funding. It allows her to move positions from one area to another, depending on where the peak workload is.

For example, the current Director of Budgeting was transferred over on a temporary assignment, so she assumed the position of Director of Treasury Board Support. As well, one of the budget Cabinet officers moved over to Treasury Board Support to provide more substantial analysis to the Treasury Board Committee of Cabinet, particularly with regard to some of the Government Renewal Initiatives.

It also allows her to move resources during the budget time, the peak time where a lot of overtime is occurring. It allows her to better manage her resources. But there was no decline in the number of positions. In actual fact, I think she actually increased some resources on a temporary basis to manage through the budget process.

MS. MICHAEL: The Treasury Board Committee of Cabinet, how does that operate and how much work does it actually do as a committee?

MS. C. BENNETT: Well I can't speak to Treasury Boards before December 14. I can tell you that there are two functions as Treasury Board President I've seen since January; one is the kind of weekly meetings that we have as Treasury Board to review any requests from departments that would be around funding changes, changes that they might have, questions they might have about policy as it relates to how money is spent throughout the year.

The other project and expectation that we had at Treasury Board this year was that they would complete a line-by-line review with every single department, as well as agencies, boards and commissions, where we brought those entities into Treasury Board to review their historical spending as well as the budgets that they were proposing, and went through line by line the items.

Treasury Board will be used this year as well, in this fiscal year, to support the work of the zero-based budgeting, which will allow for a more fulsome visibility into the budgeting for agencies, boards and commissions, which we believe will continue to support the efforts of making sure we are spending money on critical services and not allowing for any waste or slippage in very sparse public money.

MS. MICHAEL: Right.

I'm trying to get a handle on the – so the Treasury Board Committee of Cabinet, I assume, is made up of ministers?

MS. C. BENNETT: Yes.

MS. MICHAEL: Okay and they give advice to the Treasury Board. When you say we did the line by line, was that the committee that did that, or was that the Treasury Board that did that?

MS. C. BENNETT: The committee is Cabinet Members.

MS. MICHAEL: Yes.

MS. C. BENNETT: And the Cabinet Members on the committee sat through with every single department and a large number of agencies, boards and commissions – certainly the ones with higher revenue and expense lines – and reviewed their financial performance and reviewed financial questions.

MS. MICHAEL: Is that a Committee of the Whole or is it just some of the Cabinet who are on that committee?

MS. C. BENNETT: It's seven Members. My understanding and maybe officials can speak to it more clearly, but this is a standing committee of Cabinet and has been in place – I would have assumed other administrations would have had Treasury Board. There are specific legislative requirements that Treasury Board is supposed to execute.

There's been an orientation for the Treasury Board ministers to make sure they understand their responsibilities and their accountability. The committee is responsible for the day-to-day financial operations of government. It doesn't provide policy advice in the same context as the Economic Policy Committee or the Social Policy Committee, but it would have, during the line-by-line review, any recommendations that we would have made would have been filtered into the Cabinet process, budget process.

MS. MICHAEL: Okay. Thank you.

Well then, related to all of that, if we could look at the Salaries line, 2.1.02. Under Salaries, the projected revision last year was $1,532,800. This year the budget line is $1,412,700, so about $100,000 less. Could we have an explanation of that, please?

MS. C. BENNETT: Sure.

Just to make sure, I want to re-emphasize what Donna said earlier, this Salaries line would include the individuals that work in the Budgeting Division as well as the few employees that are also there to support Treasury Board. Just so that we're clear, this is a combination of both those responsibilities.

The increase from the original budget of $1.419 million to the projected revised of $1,532,800; that was an increase for additional costs as a result of a payment to a retiring employee and incremental costs relating to the organizational change that Donna spoke about. The budget for this year, the $1,412,700; that came about – the $6,900 worth of savings was a result of the line-by-line review reductions. The assistant deputy minister had made some reorganization there and was able to come up with some savings.

MS. MICHAEL: Okay.

Does that staff line or the Salaries line – is there staff support there for the Cabinet Committee? When you say the Treasury Board, does that include the Cabinet Committee as well?

MS. C. BENNETT: Yes, that would include the historical support for Treasury Board. There's always been – my understanding – support for Treasury Board, no different now as there always has been because the Treasury Board will be responsible for certain functions. They would capture requests for TBAs, Treasury Board actions, as part of the legislation under the Financial Administration Act.

There are certain things that departments are allowed to do and much more that they're not allowed to do when it comes to financial decisions. Treasury Board is supposed to make those decisions, so there is support staff there that has been in place for many, many years to support the Treasury Board's efforts.

MS. MICHAEL: Okay.

And that includes the Cabinet Committee? I'm just wondering because its two different bodies, right, the Treasury Board and the Cabinet Committee. Are they considered part of the Treasury Board?

MS. C. BENNETT: No, the Treasury Board is the Cabinet Committee. It's not two separate things.

MS. MICHAEL: Okay. That's what I've been trying to get at.

MS. C. BENNETT: Sorry, I misunderstood, Ms. Michael.

MS. MICHAEL: Yes, okay.

MS. C. BENNETT: Treasury Board is the Cabinet committee. There is no second committee. Treasury Board, under the Financial Administration Act, has always been in place and that's the – I don't know if the officials want to add anything.

MS. MICHAEL: Because the way it's written here as the explanation under the subhead, it sounds like two different groups. The Treasury Board committee of Cabinet gives advice on various matters placed before the Treasury Board. It's written in a way that makes it sound like it's two different bodies. I've been trying to get – I have the clarification then.

Thank you.

MS. C. BENNETT: Do officials want to add anything for clarity?

MS. BREWER: I just wanted to add that the Treasury Board support is the group, almost like a secretary to Treasury Board. They receive the submissions. They set the agendas. They sit. They review. They take the minutes. They do the follow-up with departments.

MS. MICHAEL: Yes.

MR. BREWER: I mean in reality, the Office of the Comptroller General, all of the Department of Finance, is there to support, depending on the particular agenda item, as well as our colleagues in the Human Resource Secretariat.

MS. MICHAEL: Thank you very much.

MR. HUTCHINGS: I'm good there.

CHAIR: Okay.

CLERK: 2.1.02.

CHAIR: Shall 2.1.02 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.1.02 carried.

CLERK: 2.1.03.

CHAIR: Shall 2.1.03 carry?

MR. HUTCHINGS: Just a general question, Minister, in this heading. This would be for issues of insurance claim or that kind of thing in government that Finance – this would be the administration to oversee it.

MS. BREWER: Yes, this is the property-type insurance. It's not the group insurance. The group insurance still is part of the Human Resource Secretariat.

This would be coverage for vehicle accidents, slips and falls. We would negotiate and put in place insurance for the schools, for the ferries, various government assets.

MR. HUTCHINGS: If someone was to make a claim, this is where it would be reviewed by staff, correct?

MS. BREWER: Yes. We have an insurance adjuster and he then would work with the particular insurance carrier.

MR. HUTCHINGS: Right. So the payout for that, that wouldn't come out of this envelope. Where would that come from?

MS. BREWER: Depending on the particular insurance; like if it's ferries, there's money over within the Department of Transportation and Works.

With all claims there's a deductible, and once you hit your deductible then you would make a claim under the insurance from the insurance company.

MR. HUTCHINGS: Okay. Thank you.

I'm good.

CHAIR: Okay.

CLERK: 2.1.03.

CHAIR: Shall 2.1.03 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.1.03 carried.

CLERK: 2.1.04.

CHAIR: Shall 2.1.04 carry?

MS. MICHAEL: Minister, this is 2.1.04, Financial Assistance, “Appropriations provide for promoting business opportunities and financial support for departments and Crown agencies for initiatives consistent with government's objectives ….”

Last year the budget line was $1,684,200, the projected revision was $256,800 and this year we have a major jump of $3,054,000 in this line of Grants and Subsidies. Could we have an explanation of what the plan is for that line, please?

MS. C. BENNETT: Sure.

The increases over last year are made up of five different areas. They would include the pension reform initiative, so dollars that would be associated to provide legal and actuarial and other consulting services as may be required to support pension reform, and particularly transitioning the pension investments and the administration from a single trustee to a joint trustee corporation. Those would be the government expenses as opposed to the pension corps expenses related to that.

This would also be where the dollars that would need to be transferred to Cabinet Secretariat to cover the costs associated with the Muskrat Falls oversight committee would be held and then transferred to Cabinet Secretariat when they are requested. Those costs would, for the Muskrat Falls oversight, include the costs of staff resources that the Cabinet Secretariat would require, as well as resources relating to the enhanced oversight, as well as professional services associated with the oversight of Muskrat Falls.

It would also include the allocation of monies that we may need to use or expect to use related to support for collective bargaining. That would include those things that would offset the department expenditures, that the department may incur, Human Resource Secretariat may incur. Items that would be Professional Services: backfilling of positions that would need to be added to continue the collective bargaining and bring it to a successful conclusion for employees and for government. It would also include things like room rentals and logistical costs associated with collective bargaining.

This area would also include the money that we would anticipate for the office of the Seniors' Advocate, the setup of the Seniors' Advocate, and that would be transferred to the Legislature once the legislation enabling the office is approved and the office is established. It would also include the monies associated with the anticipated spending around the Government Renewal Initiative, which would again be transferred to Cabinet Secretariat, and that would be used to cover the salary costs associated with the secretariat for Government Renewal Initiative, as well as the operational and professional service costs of the GRI secretariat.

I think Members opposite would have – certainly the Oppositions Members, it might be new for the government Members – some historical context around other secretariats that have been established over the years. I think former Finance Minister, Ross Wiseman, actually chaired one years ago. Certainly, the Government Renewal Initiative as a secretariat, the costs associated with that would need to be budgeted for, and as Cabinet Secretariat determines how they spend that money, that would be allocated to Cabinet Secretariat.

MS. MICHAEL: You mentioned the collective bargaining. Would the announcement that government made last week with regard to hiring legal support for collective bargaining, would that cost be included in this $4.7 million?

MS. C. BENNETT: Yes, any costs associated with collective bargaining as a whole, and that might include additional support. As we've discussed in the House, collective bargaining – which will be undertaken shortly – will be for some 23 government departments, agencies and boards. We have some 35 collective and service agreements.

In 2004, the public sector had 11 dedicated resources to the provision of labour relations and bargaining services. Again, in 2008 there were 11; and currently, as we approach collective bargaining, there are seven negotiators for the entire public sector. So some of those costs would be associated with collective bargaining, but they would also be cost associated, as I said earlier, with the Muskrat Falls oversight, the pension reform initiatives and the entire setup for the Government Renewal Secretariat, which has been operational now since January.

MS. MICHAEL: And will your briefing notes show the breakdown of how much money for each of those five areas?

MS. C. BENNETT: Well, we don't know for sure how much each is. This is a block of money that needs to be requested from Cabinet Secretariat and requested from the Human Resource Secretariat, so this amount of money is based on what we think would be kind of the total.

Certainly, as we determine what those costs will be, it will become clearer. This amount of money is a block for those five items. And if there is another item that is unrelated to these five that in the best interest of the people of the province it means us taking a look at whether or not these funds should be spent in this way, we'd obviously have to make those decisions, and those decisions would have to go into Treasury Board and through the Treasury Board process.

MS. MICHAEL: Right.

Could we receive the breakdown of what was spent last year in 2015-16 under this subhead?

MS. C. BENNETT: You're referring to the $1.6 million.

MS. MICHAEL: Well, $1.6 million wasn't spent; $256,800 was the revision.

MS. C. BENNETT: My apologizes, the $256,000 I will certainly –

MS. MICHAEL: If you don't have it there in your notes, could we receive it separate from your notes, please? Unless you have it there, but if you don't, if we could receive it separately.

MS. C. BENNETT: So the $256,800 would have been for a contract that the former government had in place with Ernst & Young under the transformative change initiative. It was an initiative that was to analyze why Newfoundland spends so much per capita to provide an initial indication of opportunities to realize savings across government. So that was the monies from the former administration.

MS. MICHAEL: Okay, thank you very much. 

I don't know if Keith has any other questions on that.

MR. HUTCHINGS: Yes, just a couple of questions.

Minister, you mentioned the Oversight Committee and supporting the Oversight Committee. The Minister of Natural Resources, I guess, government, has initiated a further review by Ernst & Young for $1 million. They've done a supplementary report and there's another expected $700,000 to complete that work. Does funding for that come out of this or is it coming out of Natural Resources?

MS. C. BENNETT: It would be coming all from this block.

MR. HUTCHINGS: Okay, so any future – whether it's $1.7 million or that increases, this would be the fund to basically pay for that report.

MS. C. BENNETT: Yes. The Cabinet Secretariat would have the accountability for paying for the work that you referenced the Minister of Natural Resources has spoken about. That work includes the re-baselining of the project and there are a number of reports we anticipate over the coming weeks. Two that I understand will be available, according to the minister's comments, by the end of May and another one in further June. The monies associated with the Oversight Committee certainly will help to provide further clarity on the costs associated with the project.

It's critical for us to understand that, particularly in light of the fact that the province has to borrow for the equity and we need to make sure that we have clarity on what those costs might be.

MR. HUTCHINGS: Okay, thank you.

The other question I had is with regard to the collective bargaining and assistance related to McInnes Cooper. You referenced, I think, there were 11 negotiators at one point and now it's down to seven. Was there some analysis done as opposed to increasing that capacity internally in regard to human resources as opposed to what may be spent through the contract with McInnes Cooper? Because I think to date, the indication was you couldn't quantify what the expenditure would be with McInnes Cooper. Is there any analysis done on what would be more efficient from a government perspective?

MS. C. BENNETT: To date, as of – I want to say – the 28th of March, the amount that has been spent is about $14,000. Certainly, the sense was that having an outside support to the collective bargaining, at this time when we have peak activity, made sense. We certainly have a large number of contracts that we intend to bargain in good faith and need to bargain in good faith, want to bargain in good faith, and having the resources to be able to do that is important.

The process that we're undertaking in providing some additional outside support is not different. Quite frankly, it has been used by the former administration, as you would be aware, as part of the pension reform activity.

MR. HUTCHINGS: Yes.

MS. C. BENNETT: It was also something that, when the pension reform was undertaken, both government and labour had provided external counsel at that time. Based on the fact that there is a need to work through this process this year, it was felt that this was a reasonable solution for the peak period of activity that would be undertaken in the next number of months.

MR. HUTCHINGS: Okay, thank you.

CHAIR: Shall 2.1.04 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.1.04 carried.

CLERK: 2.1.05.

CHAIR: Shall 2.1.05 carry?

MS. MICHAEL: This 2.1.05, Financial Assistance, I guess two questions; the first one under Loans, Advances and Investments, could we have some details on that, Minister, in terms of who these loans, advances and investments are made with? Last year the budget was $9.7 million. The projected revision was $4.3 million, but we're up to $10.7 million this year.

MS. C. BENNETT: I'll let the deputy answer those questions for you, Ms. Michael.

MS. BREWER: The $10,731,400 is the balance that is owing on, you may recall, the $110 million loan to Corner Brook Pulp and Paper. So the balance is what we call capital advances. As they complete the work and they submit that they've committed to doing capital work in accordance with their sustainability plan, then we would advance them money. We anticipated $9.7 million roughly in '15-'16 and the actual capital demands were only the $4.3 million. So basically it's a carryover of the difference there, plus the balance owing on that money.

MS. MICHAEL: Okay.

I didn't get that at the very beginning because your mic wasn't on.

MS. BREWER: Oh, sorry.

MS. MICHAEL: Is that all this is covering?

MS. BREWER: Yes.

MS. MICHAEL: It is?

MS. BREWER: Yes.

MS. MICHAEL: Okay, thank you.

Then under Grants and Subsidies this $20 million, there was nothing in this line last year. Could we have an explanation of what's anticipated with regard to this $20 million, please?

MS. C. BENNETT: Absolutely. In the interest of keeping the Question Period emotion in Question Period, I won't refer to this by the name it has been referred to by the Members of the Third Party, but I will share the information that I did share in the House of Assembly. I understand, in fairness to Ms. Michael, she wasn't here the day that I tabled it.

The $20 million for Grants and Subsidies was put in there to leverage federal infrastructure initiatives. It will be used to ensure that Newfoundland and Labrador has the ability to access new federal funding, such as the social infrastructure programs that were announced as part of the federal budget '16-'17.

Program details are now being provided by the federal government in several areas, such as the new federal program for post-secondary infrastructure through the new federal strategic infrastructure fund, and details of the new clean water and waste water program.

Departments are determining the projects that will be required to assess these funds for consideration. As those projects are approved, through the federal and the provincial processes, the applicable cash flows, as regards to'16-'17, will be transferred out to the applicable department.

I can provide Ms. Michael with the notes that I tabled in the House for that amount of money.

MS. MICHAEL: I received those notes. I did request those from the Clerk's table and did receive those notes.

MS. C. BENNETT: Okay.

MS. MICHAEL: I was hoping for more detail –

MS. C. BENNETT: Yes.

MS. MICHAEL: – now in Estimates.

MS. C. BENNETT: The projects that are being looked, each of the departments have provided some indication of the projects. The federal government is providing clarity. When our budget completed and the federal budget was completed, there was an expectation that we would be able to take advantage of the federal infrastructure spending. We needed to have a block of money put aside. The prioritization of the projects has to happen in a way that leverages the guidelines that the federal government announced in their infrastructure program. The social infrastructure program was one of the ones that we had the information most recently.

Donna, would you like to provide any additional commentary?

MS. BREWER: The only additional commentary I would add is that there actually have been guidelines now released by the federal government for the post-secondary education. So both the college and Memorial are looking at those criteria now. They'll be submitting projects – once the government approves them – to the federal government.

So it's not a fixed amount going to Newfoundland and Labrador. It's application based. So once they make the application, then the federal government will advise whether or not any of the projects have been successful.

MS. MICHAEL: Under the clean water –

MS. BREWER: But it's 50-cent dollars –

MS. MICHAEL: Sorry. You go ahead.

MS. BREWER: I'm sorry.

It's 50-cent dollars so we have to prepare – either Memorial will identify a source for us, 50 cents, or the department will come on behalf of Memorial and apply to this fund and seek Treasury Board approval for the funding and the same with the college. So it is really dependent on what applications actually get screened and approved through the federal process.

MS. MICHAEL: Minister, you mentioned projects that had been prioritized, would we be able to have a list of the projects that have been prioritized? I'm assuming that's under the waste water.

MS. C. BENNETT: The projects are in the process of being prioritized, based on what the guidelines are from the federal government. We're waiting for clarity from some the agencies, boards and commissions that would be considering some of their infrastructure projects as part of this.

At this stage, the final list of applications that will be provided, as part of this federal infrastructure, has not been fully finalized.

MS. MICHAEL: Thank you very much.

That's all I have for that subhead.

MR. HUTCHINGS: Minister, you referenced waste water and post-secondary as components of the new federal infrastructure. Are they the only two components or is there more outside of that that this money would look at supporting?

MS. C. BENNETT: Donna, do you want to speak to that?

MS. BREWER: There were a number of initiatives that the federal government announced. One has to do with public transit. Right now, the criteria hasn't been finalized, but there's potential that it could go towards ferry operations.

There was money under – I want to call it Arts and Culture, but I'm not sure of the correct name – Culture and Heritage. There were several blocks of money within the federal budget that was announced, I think it was March 22, that, to me, there wasn't clarity on (a) necessarily the amount for Newfoundland and Labrador or the criteria. So we felt it was prudent to put the block in. As I indicated, right now, the one that is getting a lot clearer and application guidelines are out and the deadlines have been set is the post-secondary one.

MR. HUTCHINGS: Okay.

MS. BREWER: But there are, as well, others under the Newfoundland Housing Corporation, social housing initiatives. Again, once they get the criteria and know the amount, they may have the ability to finance it within their own resources. If not, they have the ability to come and apply.

MR. HUTCHINGS: Yes, there are Aboriginal communities too that were a component of it as well. Would that be part of it as well?

MS. BREWER: It could be; I just don't recall offhand.

MR. HUTCHINGS: Okay. I think the federal government said it's 50-50 application based. So we're not talking here of per capita. This is no guaranteed funding. It's based on applications and whether it's approved.

MS. BREWER: I know, Mr. Hutchings, the post-secondary is not guaranteed per capita allocation. I can't say yet whether some of the others will or won't.

MR. HUTCHINGS: Okay, fair enough.

This money is allocated here, and obviously in other departments, Municipal Affairs, TW, AES, there's funding in their Estimates, no doubt, for various projects that they may pursue to leverage federal dollars which would be normal practice, probably, within those departments anyway.

Is this in any way restricting what they do or is this additional money that you would look at based on the federal government and increasing the infrastructure program?

MS. C. BENNETT: The departments who would've had clarity on the federal infrastructure spending would have proceeded to include approved projects inside their spending envelope.

MR. HUTCHINGS: Okay.

MS. C. BENNETT: This particular amount of money was related to the fact that there were pieces of the federal infrastructure program, that at the time of the budget we still didn't have 100 per cent clarity on the regulations and the rules, so the funding was put in a block.

Maybe I could ask the deputy to speak to the rigour around how the projects would be approved so that there is no confusion that this would be something that a minister, for example, would decide on their own because in order for the money to be allocated – Donna, maybe you can walk through that process.

MS. BREWER: Sure.

There is a deputy minister's committee of infrastructure so the individual departments would receive the criteria. In this particular case, the one that has come forward most recently was the post-secondary education. There were criteria that were established by the federal government. Both Memorial and the college, with the assistance of Advanced Education and Skills, looked at that criteria and identified projects that they felt would fit the federal criteria.

So they came forward to the committee, the committee met with the officials and we made recommendations to the ministerial infrastructure committee. Once the ministerial infrastructure committee reviewed them, they then sanctioned them and would have brought them – I guess, Minister – through to Cabinet for final consideration.

MS. C. BENNETT: These would have been projects that, for example, Memorial or the College of the North Atlantic would have had as a priority in their own entity. However, due to funding they would have been unable to proceed or to funding limitations, the timing of when those projects might happen, would be slower.

When the actual money is moved out of Finance, though, it does need to go out through a Treasury Board process, as is the norm, if you're going to reallocate something from one area to a department. So that would mean there would need to be Treasury Board approval. Once the federal funding was in place, the department would have to come back and ask for Treasury Board approval to move the money out into their purview for spending.

MR. HUTCHINGS: And, no doubt, at that particular time you'd probably announce what the infrastructure project would be and you're supporting it and that kind of thing.

MS. C. BENNETT: Certainly, when the decisions are made and you get through to that position you'd certainly be making it very clear as to what the spending was for.

MR. HUTCHINGS: Okay.

MS. C. BENNETT: To not have the money in the budget in this form would have meant that we would have been unable to leverage the federal infrastructure spending, and we felt it was prudent to have an amount of money blocked, as opposed to missing the opportunity to be able to leverage infrastructure money – which has been done in the other departments based on the information they had.

MR. HUTCHINGS: Sure.

Is there a timeline on this envelope of federal infrastructure?

MS. BREWER: The post-secondary, one of the criteria was what they'd call shovel ready. So they're trying to get the money out and the money spent over this year and next year.

MR. HUTCHINGS: The other comment was –

MS. BREWER: You may recall the old Building Canada Fund; it was like on a ten-year horizon.

MR. HUTCHINGS: Yes, that's right, yes. That's why I asked.

MS. BREWER: So that was also the impetus to actually put the money in, because ordinarily with a federal announcement you can do your legwork, get your plans in place and then put the money in the budget once you know the projects. But because we knew they were expediting and wanting to get the money flowed as quickly as possible, we opted with this block funding, as the minister had indicated.

MR. HUTCHINGS: Okay.

Thank you.

CLERK: 2.1.05.

CHAIR: Shall 2.1.05 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.1.05 carried.

CLERK: 2.2.01.

CHAIR: Shall 2.2.01 carry?

MS. MICHAEL: Will I start?

MR. HUTCHINGS: You go ahead, yes.

MS. MICHAEL: Not a lot of questions for here, but under Professional Services, Minister, the anticipated revision last year was $1,829,500 and this year all that's allowed in Professional Services, the estimate is $340,000. So why the big drop in this area?

MS. C. BENNETT: Sure.

The change of $453,000 from the original budget last year to the actual projected revised was an increase. This was as a result of an indirect tax recovery audit which was done on HST.

The requirements were higher than anticipated; however, they also resulted in an anticipated HST recovery from the federal government of $11.4 million. The additional $453,000 that was spent on the audit, the audit in its entirety yielded additional revenue for the province of $11.4 million.

MS. MICHAEL: Okay, got it. I got that.

MS. C. BENNETT: So the decrease would be that's not happening anymore.

MS. MICHAEL: That's not happening. Yes, got that.

Thank you very much.

Under Purchased Services, what are the services that are covered under there?

MS. BREWER: The majority of that would be administrative fees that we pay, primarily, to Canada Revenue Agency for administrating a lot of our taxes like the HST, personal income tax and corporate income tax. As well, there'd be charges there for photocopiers, shredding services, just like most other divisions within the department.

MS. MICHAEL: Okay. Thank you very much.

Under the provincial revenue, what is the source of that revenue on the provincial level?

MS. C. BENNETT: The amount of $1.2 million?

MS. MICHAEL: Yes.

MS. C. BENNETT: That is the anticipated revenue in '16-'17 for the indirect HST tax review. That's where we pick up the revenue.

MS. MICHAEL: That's where you pick it up, okay.

MS. C. BENNETT: Yes, of $1.2 million.

MS. MICHAEL: Minister, I asked this question in AES but I was told by the minister you're probably the one who could answer the question more accurately for me.

Under the new tax on books, will post-secondary students have to pay tax on their textbooks?

MS. C. BENNETT: Craig, do you want to take that one?

MR. MARTIN: Yes, post-secondary textbooks purchased by students will be taxed.

MS. MICHAEL: Thank you very much.

That's all I have for that one.

MR. HUTCHINGS: Grants and Subsidies, could you give me an understanding what that is and what it's used for?

MS. C. BENNETT: Yes, this would have been – the Member may actually remember this one. The $104,600 would have been – I'm sorry, just for clarity, is it the $23,000 or the $104,000 that you want some details on?

MR. HUTCHINGS: Yes, just give what $104,600 represents and we've got $23,600. Again, what would that be used for?

MS. C. BENNETT: Yes, so the revised budget for '15-'16; there was a grant of $80,000 that the former administration approved for the department of economics under the CARE program. Also, there was an amount of money that was required for transitional expenses related to the province's membership in the Maritime Provinces Harness Racing Commission. So the $23,600 now is – the $6,400 decrease from the original budget is the allocation of the provincial membership to the Maritime Provinces Harness Racing Commission which is estimated at $23,600 this year.

MR. HUTCHINGS: That's an annual fee, I think, is it?

Yes, correct.

MS. C. BENNETT: To my understanding it's annually, right?

MS. BREWER: Yes, there's a budget (inaudible) that's set by the commission and then each of the four Atlantic – it's now the Atlantic Provinces Harness Racing Commission. Each of the four Atlantic provinces would share in that budget.

MR. HUTCHINGS: Okay. Thank you.

CLERK: 2.2.01.

CHAIR: Shall 2.2.01 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.2.01 carried.

CLERK: 2.2.02.

CHAIR: Shall 2.2.02 carry?

MS. MICHAEL: I don't have anything for 2.2.02 personally.

MR. HUTCHINGS: No, I'm good.

CHAIR: Shall 2.2.02 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried. 

On motion, subhead 2.2.02 carried.

CLERK: 2.2.03.

CHAIR: Shall 2.2.03 carry?

MS. MICHAEL: I have no questions.

MR. HUTCHINGS: No, that's fine. I'm good.

CLERK: 2.2.03.

CHAIR: Shall 2.2.03 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.2.03 carried.

CLERK: 2.2.04.

CHAIR: Shall 2.2.04 carry?

MR. HUTCHINGS: Okay, 2.2.04.

Just on the Salaries piece, Minister, the budgeted last year, the revised was down. As well, this year is very similar. Is that positions related or what exactly, or not filled?

MS. C. BENNETT: The change for projected revised would have been savings as a result of reductions in projections primarily attributed to vacancy savings and recruitment delays.

MR. HUTCHINGS: Okay.

MS. C. BENNETT: And the changes in the original budget would have been primarily due to the removal of salaries associated with the Home Heating and the Parental Benefits rebate programs. This was primarily offset by the increase in JES, annualized for qualifying JES positions.

MR. HUTCHINGS: Okay. So they would be the positions in Grand Falls, I think it is, the office there?

Okay. Professional Services there under the heading; $152,000 was budgeted, $225,000 and that's taken out now. I'm just wondering what's –

MS. C. BENNETT: So the projected revised, the $225,100 was actually an increase related to additional legal costs associated with a tax proceeding. As I'm sure the Members here would understand, we can't discuss the specifics of the tax proceedings, but those would have been legal fees associated with that.

MR. HUTCHINGS: Okay. That's good.

Lorraine, do you have anything?

MS. MICHAEL: I have one question. We were told in previous Estimates over the, well, past two years, I guess, Minister, that the specific was the Vale transfer pricing audit. And when that audit is done – can you say whether or not it's been done? There's no money allotted for this year, I'm assuming that it's come to an end.

MS. C. BENNETT: I can't comment on –

MS. MICHAEL: You can't comment.

MS. C. BENNETT: I can't comment.

MS. MICHAEL: Would that ever be made public?

MS. C. BENNETT: I can't comment on that now.

MS. MICHAEL: You can't comment at all. Okay, thank you very much.

MS. C. BENNETT: I don't have the information to answer the question.

MS. MICHAEL: Okay. Is there any way to get information just to those? They're fairly neutral questions.

MS. C. BENNETT: If I can provide the information, I will.

MS. MICHAEL: Okay. Thank you.

That's all I have for that?

CLERK: 2.2.04.

CHAIR: Shall 2.2.04 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.2.04 carried.

CHAIR: At the request of the Deputy Chair we're going to take a five-minute break and come back and clue up.

Recess

CHAIR: Okay, we'll resume with the final part of the Estimates on Finance.

CLERK: 2.2.05.

CHAIR: Shall 2.2.05 carry?

MS. MICHAEL: I just have one question and it has to do with the Salaries line. The Salaries line has gone up $147,600 over the projected revision. If I could have an explanation, Minister, please.

MS. C. BENNETT: Sure.

The savings or the lower than anticipated spending in the revised budget of '15-'16, bringing it down to $494,000, that savings was from a manager of capital markets, which is a borrowing position that was unfilled for '15-'16.

OFFICIAL: (Inaudible.)

MS. MICHAEL: Do you have any other questions that are urgent?

MS. C. BENNETT: If I can continue, the original budget for '16-'17 with Salaries at $743,300, that represents an increase of $147,600. That increase is a result of adding an additional two resources for the borrowing program that would also include resources that would help with succession planning.

The two positions: number one would be a new position for a manager that would provide support for the entry into the US markets for the province. Number two would be for a registrar, which is a new position. Again, that would be to support the entry of the province into US markets.

MS. MICHAEL: Maybe I could ask the minister for an explanation of the need for a new manager for that. Is it because of different expertise or more work?

MS. C. BENNETT: I'll ask the assistant deputy minister to speak to that.

MR. MARTIN: It's a combination of both, really. It's a level of expertise, but a lot of it is also additional workload.

Essentially, the Debt Management Division was primarily in caretaker mode for the last seven or eight years, where the province hadn't been substantively borrowing, and borrowing started again this past March. So this is to add additional resources in order to support the new borrowing programs.

MS. MICHAEL: Thank you very much.

That's all I have for there.

MS. C. BENNETT: Mr. Chair, if I could add that specifically the entry into the US markets requires that we have different technical advice to be able to do that. There are significant regulatory requirements that the province must undertake as part of that effort.

The move to include the US market as part of our borrowing plan would be for two reasons. That would be our continued concern about our capacity to borrow, as well as ensuring we can access the best rates we can to keep our borrowing costs as low as we can.

MS. MICHAEL: Thank you.

MR. HUTCHINGS: I'm fine.

Thank you.

CHAIR: Okay.

CLERK: 2.2.05.

CHAIR: Shall 2.2.05 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.2.05 carried.

CLERK: 2.3.01.

CHAIR: Shall 2.3.01 carry?

MR. HUTCHINGS: Minister, if I could get some information in regard to the 2.3.01, Salaries, what was budgeted in 2015-16 and what was executed in the revised. Then there's a further reduction this year, I guess, comparatively in the Estimate to last year's budget; some information on those numbers.

MS. C. BENNETT: Sure.

The $3,846,600 under projected revised is a $546,600 savings primarily from reduction in projections attributed to vacancies and recruitment delays. Also, there was a lower requirement for temporary assistance relating to miscellaneous projects that would arise during the fiscal year in the Economics and Statistics Branch.

The budget for '16-'17 is decreased over last year's budget by $344,600. That decrease is due to the results of the line-by-line review reduction, and this was partially offset by an increase for JES anualization for qualifying JES positions.

MR. HUTCHINGS: Okay.

Purchased Services, could you give me an idea of what that would be under this division, what it would represent?

MS. C. BENNETT: I can let Wanda or Alton speak to it, but my understanding is this would be purchases for, for example, data from Stats Can that we would purchase, and rent as well for the Economics and Statistics Branch.

MR. HUTCHINGS: Okay.

When we get down to Revenue – Provincial, we have a revised figure there of $249,600. Could you explain why that was up so high compared to what was budgeted?

MS. C. BENNETT: Sure.

The increase of $214,000 was additional revenues that were due to revenues from '14-'15 being received in '15-'16, as well as additional project revenue recoveries in '15-'16.

MR. HUTCHINGS: Project recovery, you had done project work for somebody and had – what do you mean by that?

MS. C. BENNETT: The Economics and Statistics Branch would occasionally do work for – they might do it for the City of St. John's, for example, or others.

MR. HUTCHINGS: Okay.

MS. C. BENNETT: Alton, do you want to add anything else?

MR. HOLLETT: The work that was carried over, basically, last year was work that was billed towards the end of the year, and it was the City of St. John's, Goss Gilroy, Newfoundland Housing, Memorial University and ACOA.

MR. HUTCHINGS: Okay.

MR. HOLLETT: We billed them and received them after the books were closed off.

MR. HUTCHINGS: Okay, thank you.

That's good for me.

MS. MICHAEL: I don't have (inaudible) the same questions.

CHAIR: Okay.

CLERK: 2.3.01.

CHAIR: Shall 2.3.01 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.3.01 carried.

CLERK: 2.4.01.

CHAIR: Shall 2.4.01 carry?

MS. MICHAEL: Okay, I'll start off then.

A similar question with regard to the salary line here, Minister; just an explanation, please, of the drop.

MS. C. BENNETT: Sure.

The reduction in Salaries from last year's budget to the projected revised was $468,200. That reduction is primarily attributed to vacancy savings and recruitment delays. The reduction from the original budget of last year to this year's proposed budget is just over $257,000 in savings. That came from the line-by-line review that the Office of the Comptroller went through.

MS. MICHAEL: With regard to Salaries, the line-by-line review, how could it go down so much without a loss of a salary unit?

MS. C. BENNETT: It could be positions that weren't filled that we will no longer budget for.

MS. MICHAEL: Okay and you don't have the details on that.

MS. C. BENNETT: Ann Marie, do you want to provide some details.

MS. MILLER: Some of it would have been in our Corporate Services Division. That's the invoice processing that we do for government. We've had some vacancies in that area.

We found some efficiencies, better ways to do business. Vendors can now send their invoices electronically to us so it allows us to be more efficient and thus save positions as a result. But those positions would have been vacant.

MS. MICHAEL: Do you have the number of vacancies?

MS. MILLER: We can certainly provide some information.

MS. MICHAEL: Please. Thank you.

Under Purchased Services, the budgeted item last year went down in the revision. We're slightly up from the revision, but it's still down $86,500 from the budget last year.

Can I get an explanation of that?

MS. C. BENNETT: Sure.

The $91,200 savings from last year's budget was a result of savings attributed through discretionary spending. The changes from last year's budget to this year's budget, resulting in a difference of $86,500, would have come from the line-by-line review based on what the office felt they could save and contribute to the overall cost reductions that we were undertaking.

MS. MICHAEL: Thank you very much. That's all I have there.

MR. HUTCHINGS: Just a couple of questions before I clue up, Minister.

In regard to overpayments, there was an issue that came up and you dealt with in regard to overpayments. Under the legislation I think it's a requirement to keep the pension fund whole.

Are there monies allocated in the budget to offset any overpayments that may have been written off in the future? How do you propose to proceed with that?

MS. C. BENNETT: Are you speaking specifically about pension overpayments, just for clarity?

MR. HUTCHINGS: I'm sorry, pension overpayments, yes.

MS. C. BENNETT: Okay.

Yes, there is a commitment that any pension overpayments that would not, we wouldn't expect – we've publicly said we're not expecting seniors to pay back, that government would be accountable to making the pension plan whole. I'll ask Donna to provide you some clarity on where that would show up.

MS. BREWER: It wouldn't show up in the Department of Finance. Pension payments are covered off by the Consolidated Fund Services.

MR. HUTCHINGS: Okay.

MS. BREWER: I'll confirm, but I believe we did that before the March 31 year-end. So it would have been a payment made in (inaudible).

MR. HUTCHINGS: So obviously, Minister, that was for a block of pensioners that a particular circumstance we made a determination on it. So in future, similar cases when pensioners, seniors would have something occur, is that an automatic now that it would be again cancelled and picked up by government?

MS. C. BENNETT: My understanding, since the pensioners were informed in December, 16 more pensioners have been identified and the dollar amount is, I believe, $160,000. We've been communicating with those pensioners that we would be handling those situations with the same compassion that we handled the other seniors.

MR. HUTCHINGS: Okay, and as your officials said, at the end of the year you would reconcile that, I guess, in terms of what had transpired during the fiscal year. Okay.

The other question I had, we had discussions in the House in regard to discretionary travel and some savings that were met leading up to the budget. There was information that, at budget time, we would get access to that. I think your figure was $25 million. Can we have or can you list for us now what that $25 million was in terms of discretionary savings and where it was to?

MS. C. BENNETT: Sorry, I'm not sure I understand the question.

MR. HUTCHINGS: Okay, so in the House of Assembly we had asked – I think you had indicated that there was $100 million that was discretionary travel leading up to the budget that you were able to identify. Further discussion on that indicated that was annualized, but in fact there was $25 million at that point in time that was recognized.

At discussions in the House you indicated that would be available at budget time. I'm just wondering if we have clarity on what that $25 million discretionary savings actually was.

MS. C. BENNETT: The amount of money that I referenced would have been savings from discretionary and salary savings, Estimates review and proper cash management. The total amount was $113.2 million. We can certainly provide you, Mr. Hutchings, with a detailed explanation of that.

But it relates to $11.3 million that was saved as a result of salary savings, $29.9 million that was saved as a result of stopping discretionary spending; $31.8 million savings that we achieved through the Estimates review; and $40.2 million that we were able to provide savings from proper cash management, which provided an opportunity for savings.

MR. HUTCHINGS: Okay. I look forward to that breakdown.

Thank you.

MS. C. BENNETT: You had also asked a question earlier about attrition and we didn't get back to it.

MR. HUTCHINGS: Oh, I'm sorry, yes.

MS. C. BENNETT: I want to make sure we leave you with no questions unanswered.

Donna, would you provide the information.

MS. BREWER: Our five-year attrition number was 15 positions. For '15-'16, the target was three positions and salary money was removed from the Department of Finance, $196,600.

We reported to Treasury Board that we've identified four positions that became vacant that we were able to eliminate. The savings we achieved in '15-'16 was $265,715.

MR. HUTCHINGS: Okay.

So the first number three was attrition, the second number four is –?

MS. BREWER: The target of three was the target we were given and we've managed to achieve, in '15-'16, four.

MR. HUTCHINGS: Okay, and that's through attrition.

MS. BREWER: The actual savings was $265,700.

MR. HUTCHINGS: Okay, through attrition. So four of those positions won't be filled?

MS. BREWER: Right.

MR. HUTCHINGS: Okay.

Minister, in regard to your 650 full-time equivalents, do these positions relate to that number at all?

MS. C. BENNETT: No.

MR. HUTCHINGS: No.

MS. C. BENNETT: The numbers – Donna can speak to – with reference to the changes are in the home heating and the parental.

MR. HUTCHINGS: Yes.

MS. C. BENNETT: Donna, you can speak to those, specifically, for Finance.

MS. BREWER: Sure.

There were 21 positions. Eight would involve some sort of layoff action; 13 were vacant positions at the time. Five of those are permanent positions, and one of which was in St. John's, the rest would have been Grand Falls-Windsor. The other 16 were seasonal positions.

MR. HUTCHINGS: For seasonal, what type of activity would they be involved with, a seasonal position like that?

MS BREWER: Well, primarily both the Home Heating Rebate and Parental Benefits.

MR. HUTCHINGS: Okay.

MS. BREWER: It's not a constant. So there's a peak and as the volume decreases then people cease their seasonal employment.

MR. HUTCHINGS: Okay. Thank you.

That's good.

CHAIR: Okay.

CLERK: 2.4.01.

CHAIR: Shall 2.4.01 carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subhead 2.4.01 carried.

CLERK: 1.1.01 to 2.4.01 inclusive.

CHAIR: Shall 1.1.01 to 2.4.01 inclusive carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, subheads 1.1.01 through 2.4.01 carried.

CHAIR: Shall the total carry?

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

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

CHAIR: Shall I report the Estimates of the Department of Finance carried without amendment?

All those in favour, 'aye.'

SOME HON. MEMBERS: Aye.

CHAIR: Carried.

On motion, Estimates of the Department of Finance carried without amendment.

CHAIR: I'd like to thank the minister and her staff for giving a very thorough Estimates review, and I'd like to thank the Government Services Committee for their participation over the last two weeks.

Before I move to adjourn, I'd just like to say that the next meeting of the Government Services Committee will be at the call of the Chair.

Motion to adjourn.

MS. MICHAEL: (Inaudible.)

MR. HUTCHINGS: I agree, yes.

Thank you very much.

CHAIR: Okay.

Motion to adjourn.

MR. HUTCHINGS: So moved.

CHAIR: Carried.

On motion, the Committee adjourned sine die.