May 8,
2017
GOVERNMENT SERVICES COMMITTEE
Pursuant to Standing Order 68, Scott Reid, MHA for St. George's – Humber,
substitutes for Betty Parsley, MHA for Harbour Main.
The
Committee met at approximately 6:09 p.m. in the Assembly Chamber.
CHAIR (Edmunds):
Okay, let's get
started here to go through the Estimates for Finance. I'll first ask the Members
of the Government Services Committee to introduce yourselves, starting with the
front row.
MR. HUTCHINGS:
Good evening, Keith
Hutchings, MHA, District of Ferryland.
MS. DRODGE:
Megan Drodge, Researcher with the Official Opposition caucus.
MR. FINN:
John Finn, District of
Stephenville – Port au Port.
MS. MICHAEL:
Lorraine Michael, St. John's
East – Quidi Vidi.
MR. MORGAN:
Ivan Morgan, Researcher, NDP caucus.
MR. REID:
Scott Reid, St. George's –
Humber.
MR. KING:
Neil King, District of
Bonavista.
MS. HALEY:
Carol Anne Haley, Burin –
Grand Bank.
CHAIR:
Okay, thank you.
I'd
like to point out that the Member for St. George's – Humber is replacing the
Member for Harbour Main in these Estimates.
Okay,
without further ado, I call for the first heading.
CLERK (Proudfoot):
(Inaudible) minutes for
the last meeting?
CHAIR:
I call for a motion to
approve the minutes from the last meeting.
MS. MICHAEL:
I was present but my name is
not here, and I have a number of witnesses who say, yes, I definitely was
present.
CHAIR:
Okay, we'll make that
correction to the minutes.
Do we
have an approver for the minutes, pending changes?
MS. HALEY:
So moved.
CHAIR:
Okay, moved.
Seconder?
Seconded.
All
those in favour, 'aye.'
Carried.
On
motion, minutes adopted as circulated.
CHAIR:
Okay. I call for the first
heading on the Office of the Chief Information Officer which is the first
section that we will be doing.
CLERK:
Subheads 4.1.01 to 4.1.05.
CHAIR:
Shall subheads 4.1.01 to
4.1.05 carry?
MS. C. BENNETT:
Mr. Chair, with permission
of the Members of the Committee, it might help if I make some initial comments.
The department has seen some transition and in order to help facilitate the
questions as we go through the headings, it might make sense for me to do some
opening comments, depending on if the Committee is okay with that.
CHAIR:
Yes, I'll call for the
minister's opening remarks now with the introduction of your staff.
MS. MICHAEL:
I have a question, Mr.
Chair, with regard to the headings that were called.
Could
it be repeated? We have 1.1.01, then we have 1.2.01, there is no 1.5.
CLERK:
4.1.05.
CHAIR:
4.1.01 to 4.1.05.
MS. MICHAEL:
Okay. Thank you.
I didn't get the four.
CHAIR:
Okay, Minister, can you start off by introducing your departmental staff? Then
we'll give you ample time to have a few opening remarks, then we'll go back to
the Committee for opening remarks. Then what we'll do is alternative
approximately 10 minutes between responders from the Government Services
Committee.
Minister.
MS. C. BENNETT:
Sure. I'm going to turn it to Ellen MacDonald and let the team introduce
themselves so they can make sure that their mics are aligned with where they're
sitting.
This is Ellen MacDonald, Chief Information Officer responsible for OCIO and
deputy minister.
MR. HARDING:
Craig Harding, Executive Director for Corporate Services and Projects Branch.
MR. MOULAND:
Randy Mouland, Executive Director of Operations and Security.
MR. GELLATELY:
Bruce Gellately, Director of Corporate Services.
MS. MUNDON:
Tansy Mundon, Director of Communications.
MS. TRICKETT:
Wanda Trickett, Departmental Controller.
MS. C. BENNETT:
I want to say welcome to everybody as we do the Estimates for the Office of the
Chief Information Officer, OCIO.
As you would know, OCIO supports all the information technology, IT, and
information management, IM, functions of core government and certain agencies,
boards, commissions and entities such as the Royal Newfoundland Constabulary,
the Provincial and Supreme Courts, and the Research & Development Corporation,
among others.
These activities include provisioning and supportive backend technology
infrastructure, client computer support, backup and protection of over 450
terabits of government data, and support of 500-plus existing departmental
systems. In case you ever wondered, to print one terabit of data on paper would
require approximately 50,000 trees, just to give you a sense of the depth of
information that OCIO is responsible for.
OCIO has 294 employees, and that would include both permanent and temporary, and
51 vacancies.
In the recent Flatter, Leaner Management exercise, the OCIO reduced its
management layer by 16 per cent. Eliminating nine positions, of which four were
terminations, four were vacancies and one was the elimination of a management
position which resulted in the incumbent moving back to their permanent
non-management position. This resulted in salary savings of $750,000 annually.
In addition, a total of $276,000
has been eliminated as part
of the overall salary changes in the last number of years.
OCIO
has not eliminated any services as a result of these changes. Resources have
been reallocated, and the work has been reprioritized to ensure that all
critical work items are dealt with in a timely manner.
OCIO
only uses consultants to augment staffing for two main purposes. That would be
for specific time-bound project work, and to fill some vacancies that are
classified as hard to fill due to lack of skills in the local marketplace, or
intense competition for people qualified to fill these positions. Multiple
attempts at recruitment for these hard to fill positions may not have been
successful and OCIO has seen a reduction of 29 per cent since 2015-16 in
Professional Services and has significantly reduced its reliance on contractors
over the past several years.
On an
annual basis the OCIO processes in excess of 155,000 requests for service, which
range from password resets to changes to existing systems, and managing a
portfolio of 40-plus active projects at any given point in time.
The
Estimates structure for OCIO has changed since last fiscal year, and this change
was a result of a resignation from an executive director last November and the
subsequent abolishment of that position. This required a realignment of
responsibilities across the three remaining OCIO directors in order to balance
workload. This was in addition to the Flatter, Leaner Management changes noted
above.
OCIO
has gone from four branches to three branches, each with a distinct set of
responsibilities. You may note that there are five unique activities in
Estimates, but two of them are for capital allocations.
We have
Corporate Services and Projects, both current and capital. This area would be
responsible for all new project work for the departments and agencies and for
Corporate Services.
The
second one is Application and Information Management Services, and this would be
responsible for support and maintenance of the existing 500-plus applications
and databases in use today.
Operations and Security, both current and capital; this area is responsible for
technology infrastructure, security of desktops, laptops, servers, wide area
networks, email systems, mobility management, support services, and backup and
recovery of all government data.
In
addition to the structural changes noted, OCIO performed a bottom-up build as
part of the zero-based budgeting exercise and noted where savings could be
achieved, but also reallocated funds to the appropriate areas to better
represent where the spending actually occurs.
For
example, spending in Professional Services related to the support for the LaMPSS
system, a system that manages the labour market program, was reallocated from
4.1.01 to 4.1.02 where the services are actually procured. These changes
impacted all branches and are the rationale for some of the year-over-year
changes. Variances that you will see when we go through each activity are mostly
recorded as zero-based budgeting entries; however, in some instances they are a
combination of annualization of prior-year decisions and new reductions for
'17-'18.
It is
also worth noting that OCIO has some differences from the rest of government in
terms of what is funded under certain accounts. OCIO activity 4.1.03, the
Supplies budget, covers software purchases, software maintenance renewals and
small hardware purchases. In this fiscal year, there are 159 different software
renewals in the Operations and Security's current budget, as well as an
estimated increase for new software.
Another
key difference is in Purchased Services, activity 4.1.03. Purchased Services is
primarily to cover the cost of the data centre and the service management
contract with Bell.
When
you look at Corporate Services and Projects and the current account, which is
4.1.01, and the Capital, 4.1.04, these accounts capture the funding required to
implement new projects. Some of these projects involve multi-year funding that
must be allocated between current and capital accounts, depending on what phase
of the project you're in.
This is
a complex budgeting area. While best efforts are made to budget funding into
each spending envelope at the onset 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. We do have a handout here that
explains the various phases of each project, and whether the project is in a
capital phase or is in a current phase, that we'll be happy to share with the
Committee.
Predicting the timeline of projects is another challenge. A project can be
delayed at any point for a variety of reasons, changes in the department, a
delay or a change in procurement or implementation of technology platform, along
with expected contract negotiations, et cetera.
For
example, the OCIO budgeted the start of a project to put the Land Use Atlas
online early last fiscal but project start-up was delayed until October. OCIO
dropped some of the funds for this project last fiscal and is now projecting
them for fiscal '17-'18.
As you
will see in headings 4.1.01 and 4.1.04, most envelopes involve transfers of
funding depending on the projects for the next year. The integrated management
system implementation for Education and Early Childhood Development, and
Children, Seniors and Social Development is the largest ongoing project and it's
being implemented over multiple years.
OCIO
projected completing the project in the last fiscal year within the allocated
budget, noting that the build was 50 per cent complete at the time of that
projection. This is a very large, complex project with 45 work streams resulting
in 247 individual screens. The project ran into challenges early in the fiscal
due to many factors, one being incremental and unplanned scope changes.
A
ministerial committee was created that provided guidance, re-scope management,
resources and resources were redeployed while detailed scope refinement was
underway, which enabled the project to remain within budget but spread the work
out a little longer. Due to this delay, the Operating Accounts, both the Capital
and Current, show a smaller spend in last fiscal, and all related to the change
in the schedule.
The
budget for this fiscal show the carry forward of funding not utilized in last
fiscal. In terms of overall status of the project, the online build is now 100
per cent completed and the functional testing has started, as has the data
conversion. The user acceptance testing is due to start in June, which will be
followed by training, and the implementation for EECD is scheduled for the
November-December time frame with the final implementation set for March of 2018
for CSSD. The project remains within the approved budget.
The
majority of changes in 2016-17 in headings 4.1.01 and 4.1.04, an increased spend
in '17-'18 is driven by timing changes of the ISM project and a total of $4.1
million was carried forward. Other smaller project portfolio changes are also
reflected here. You will note that irrespective of the salary reductions noted
above due to Flatter, Leaner Management and to other salary changes, that the
salary budget for both 4.1.01 and 4.1.04 have actually increased in 2017-18 over
the actual spend in '16-'17. As I said, this is due to the carry forward of
funds not spent in last fiscal but required to complete projects this year.
Again, this is all within the approved budget.
With
that, I'll ask one of the staff on this side to pass you out the System
Development Life Cycle and if there are questions going forward, we can refer to
the chart.
I'll
turn it over to the Chair for questions.
Thank
you.
CHAIR:
Okay. I'll ask for an
opening response from the Member for Ferryland and then we'll alternate 10
minute intervals between the Government Services Committee Members.
MR. HUTCHINGS:
Thank you, Mr. Chair.
Minister, I just had a couple of questions in regard to some of your outline
that you gave. The 51 vacancies, did they become vacant in current year or were
they in the prior year as well?
MS. C. BENNETT:
My understanding is some of
the vacancies have been long-term vacancies and some would be driven from staff
turnover in the last fiscal year.
MR. HUTCHINGS:
Okay. You mentioned there
were those 51, you broke them down in terms of positions and I think you
mentioned it was $750,000 annualized, that was the saving. Is that correct?
MS. C. BENNETT:
No, the $750,000 was related
to the Flatter, Leaner Management.
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
And the changes the
department and the office went through as a result of Flatter, Leaner
Management.
MR. HUTCHINGS:
Would they intertwine, the
51 vacancies and the Flatter, Leaner Management approach? Do they cross paths
anywhere or is it two separate exercises?
MS. MACDONALD:
The flatter, leaner was done before March 31, and those numbers of the positions
and vacancies were as of March 31.
MR. HUTCHINGS:
Okay.
You
also indicated, Minister, because of the positions you went through there were
no services affected. Is that correct?
MS. C. BENNETT:
Yes.
MR. HUTCHINGS:
Okay.
You
also made reference to consultants and in the past few years a decrease in
consultants by OCIO. So based on what was just articulated in regard to leaner,
flatter and those positions, there's been no change in the use of consultants?
You wouldn't see an increase in consultants because of that? You'll accommodate
it inside, is that correct?
MS. C. BENNETT:
Right.
MR. HUTCHINGS:
Okay.
You
mentioned the Land Use Atlas project, and I think in your remarks, I'm not sure
if it flowed into – I think you used the acronym CCSD. What is CCSD again?
MS. MACDONALD:
EECD –
MR. HUTCHINGS:
Oh, sorry.
MS. MACDONALD:
– and CSSD. Education and Early Childhood Development –
MR. HUTCHINGS:
Okay.
MS. MACDONALD:
– are supposed to go live
with their new case management system at the end of this year and Children,
Seniors and Social Development are supposed to go live in March. The Land Use
Atlas is a different project.
MR. HUTCHINGS:
Okay.
The
child, youth, that one, how long has that been a project? When was that started?
It sounds familiar.
MS. MACDONALD:
It is. It's two, three years
ago or maybe even longer.
MR. HUTCHINGS:
Okay.
Was
that the one that was adopted from another Atlantic province? No.
MS. MACDONALD:
No. Well, the system, the bones of it I guess, a small part of it is in
operation in some places in Ontario.
MR. HUTCHINGS:
Okay, maybe that was it.
MS. MACDONALD:
Yes.
MR. HUTCHINGS:
Okay.
Just to
get back to the Land Use Atlas; I think, Minister, you indicated there were
attempts to move that through and complete the project in the past fiscal year
but, for whatever reason, I guess you couldn't meet what you needed to meet so
it's been pushed out to this fiscal year. Is that correct?
MS. C. BENNETT:
Yes. Some of the decisions
around where OCIO would have been focusing their attention based on priorities
would have shifted.
MR. HUTCHINGS:
Yes.
MS. C. BENNETT:
Certainly the project that
relates to the Department of Children, Seniors and Social Development, as well
as the one for education and early learning, was a priority for the department.
So the LaMPSS program, as an example, LaMPSS work would have been pushed based
on priority setting in the department.
MR. HUTCHINGS:
Okay.
The
Land Use Atlas, that's a service for Crown Lands, I think, is it? Correct?
MS. C. BENNETT:
Yes. Correct.
MR. HUTCHINGS:
With the move of Crown Lands
to Corner Brook, does that change anything in regard to that project or where it
will be operated from, the service or anything like that?
MS. C. BENNETT:
No. No change.
MR. HUTCHINGS:
Okay.
CHAIR:
Before you continue there,
Minister, I ask all staff to identify themselves before they – so it helps the
Broadcast Centre out.
MS. C. BENNETT:
Okay.
MR. HUTCHINGS:
We don't have to start over,
do we?
CHAIR:
No, go ahead.
Carry
on.
MR. HUTCHINGS:
Thank you.
Okay.
I'll go through a couple of line items, Minister, please, if I could; 4.1.01,
Corporate Services and Projects, when we look at Salaries there we can see there
was, I think, $836,600 saved on Salaries, and this year Salaries are being
reduced from what was originally estimated last year. Could we get some feedback
on that and what exactly those would be?
MS. MACDONALD:
The changes related to this are related to changes in the management structure,
some annualization of prior-year decisions and some of the carry forward of the
ISM project. We carried forward funds from last year to this year.
MR. HUTCHINGS:
Okay. Could you just list
those again please, because there's a lot going on there?
MS. MACDONALD:
Okay, sorry.
There
was $621,700 in changes to management structure –
MR. HUTCHINGS:
Okay.
MS. MACDONALD:
– which would be Flatter, Leaner; $544,500 for annualization of prior-year
decisions and $620,800 new funding approved in the budget.
MR. HUTCHINGS:
Okay. So the new funding
would be related to what?
MS. MACDONALD:
To the project carry forward. The money we did not spend last year, it carried
forward to this year.
MR. HUTCHINGS:
Okay. That project
carry-forward money would be for the same projects or different projects?
MS. MACDONALD:
The carry forward was all related to this big ISM project.
MR. HUTCHINGS:
Okay.
MS. MACDONALD:
Yes.
MS. C. BENNETT:
If I might, one of the
decisions we made last year as part of the budget process was that when there
were these carry forwards, because OCIO spends money that could be capital at
any given time or current, we felt it was appropriate that if money carried over
it would have to be approved as part of new decisions.
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
So that's why Ellen's
referring to it as new spending because it would have been part of new decisions
that would have said, yes, let the project continue. It's important the project
continue, rather than letting it carry forward through multiply years with any
visibility in Treasury Board; Treasury Board (inaudible).
MR. HUTCHINGS:
So it would be a
continuation of those projects, yes.
MS. C. BENNETT:
Yes.
MR. HUTCHINGS:
Okay, thank you.
I just
wanted to reference, last year – and it's about annualized savings – there was
reference to, as part of the Government Renewal Initiative, that there were
changes to the project delivery model, and I guess that's some of the things
you've talked about to this point.
There
were savings of $411,000 in 2016-2017; $2.9 million annualized savings when the
new project delivery model was implemented. There was also reference of changes
in technology support models and savings of $1.3 million in '16-'17 and $1.6
million in annualized savings when fully implemented. Has that been done? Have
those been realized?
MS. MACDONALD:
Yes, that's been done.
MR. HUTCHINGS:
Okay. So you've had your
one-time savings and then it's annualized. So it's –
MS. MACDONALD:
Correct.
MR. HUTCHINGS:
Okay.
If we
go to 4.1.01, we've got Professional Services listed there. There was a
shortfall from what was budgeted last year to what the actual expenditures were.
Could you just give me an idea of what that would have been? And this year the
estimate is down from what it was, the original estimate last year.
MS. MACDONALD:
That, again, relates to the ISM project. We didn't spend as much of the
Professional Services that we needed to spend because we delayed some of the
activities, but we have to pick them up again this year in order to complete the
project.
MR. HUTCHINGS:
Okay.
So
those Professional Services, would that number there pretty well include all
consultants' fees or would there be anything else in there?
MS. MACDONALD:
It would pretty well be consultants fees related to projects, yes.
MR. HUTCHINGS:
Okay.
In the
other headings, there's also some that would have the reference to Professional
Services. So throughout the headings, the Professional Services, with each
heading there would be a component of consultant attached to that heading. Is
that correct?
MS. MACDONALD:
Yes, that's correct. Some of it is for contract professional services that we
have for long-term support of certain applications and others are for project
work, new project work that we'll pick up and then they'll go away when the
project is done.
MR. HUTCHINGS:
Okay.
Mr.
Chair, that's all I have on that section if you wanted to move on to Ms.
Michael, or I can go to the next section. It's up to you.
CHAIR:
You still have five minutes
if you want to move on, or we can move it on to the Member for ….
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
Mr. Chair, if I might, with
permission of Members of the Committee. I'd just like to remind the Committee
that OCIO has seen a reduction of 29 per cent since '15-'16 in Professional
Services, and that's been due to significant reduction and reliance on
contractors. So because of the unique technical nature of some of the
applications that OCIO works on, it does make sense periodically to look at
using contractors to support that, but a 29 per cent reduction I think is
progress in the right direction.
MR. HUTCHINGS:
Just on that note; Minister,
29 per cent, is that from one year to the next or just over the past couple of
years?
MS. C. BENNETT:
That would have been a
reduction since fiscal '15-'16, just over two years.
MR. HUTCHINGS:
Okay. Thank you.
4.1.02,
Application and Information Management Services; again on the Salaries line,
what was budgeted in 2016-17, there was a shortfall of approximately $300,000
and then the budget has been readjusted again for this year, compared to last
year's estimate. I'm just wondering if I can get some explanation on that.
MS. MACDONALD:
The '16-'17 monies reflect savings related to some hard to fill vacancies. We
tried to recruit and couldn't find anybody locally.
MR. HUTCHINGS:
Okay.
MS. MACDONALD:
The increase in '17-'18 – no, it's a decrease – reflects savings of $412,900,
which is annualization of prior-year decisions, and $50,900 due to changes to
the management structure.
MR. HUTCHINGS:
Okay, thank you.
Just in
terms of some of the hard to fill positions, what would some of those technical
positions be that were challenging?
MS. MACDONALD:
We have several different layers of hard to fill positions. We have a lot of our
big systems, our MCP and our MRD system runs on a mainframe.
MR. HUTCHINGS:
Yes.
MS. MACDONALD:
That requires a certain skill level that nobody's trained in anymore. People are
ready to retire. We can't hire them, so we use consultants.
MR. HUTCHINGS:
Okay.
MS. MACDONALD:
We also have PeopleSoft skills. We can't recruit them because we don't pay the
salary those people need and they can demand in the open market. So we end up
stuck using some consultants for some of those jobs.
MR. HUTCHINGS:
Sure.
A lot
of the consultants hired, are they local, local firms, or –?
MS. MACDONALD:
Yes, the majority of them are local.
MR. HUTCHINGS:
Okay.
Have
you seen a difference in the past couple of years in terms of the availability
of those unique skills, I guess because it's old mainframes, that type of
knowledge and expertise, people are probably leaving the industry and they're
not there anymore. Is that the biggest challenge, as you said?
MS. MACDONALD:
It's a challenge for a lot
of people. The banks, there's a lot of industries that are very reliant on
mainframe skills. So it's a bit of what you'd almost call a hot skill, even
though it's an old skill. It's very difficult to recruit them. We find it in
several areas that we're having trouble.
MR. HUTCHINGS:
Okay, thank you.
Profession Services in 4.1.02; again, it's a large number but that's based to
consultants, and as you just described, it's sometimes hard to get those
services in-house, so you need that amount to basically meet your needs.
MS. MACDONALD:
The mainframe skills sit in this group, and so that would be some of the skills
we need. It's also some contractual work for some systems that we did not build.
So we're contractually linked to somebody to provide that support and it comes
out of Professional Services.
MR. HUTCHINGS:
Sure. Okay, thank you.
4.1.03,
Operations and Security; again, I'll just ask you about the salary component.
There's a small reduction there, or about $300,000. That's again related to some
restructuring, what you're doing?
MS. MACDONALD:
Yes, it's $140,000 related to annualization of prior-year decisions and $80,500
for changes to the management structure.
MR. HUTCHINGS:
Okay. And that will be
related to some of the numbers we talked about earlier, right?
MS. MACDONALD:
Yes.
MR. HUTCHINGS:
Okay, thank you.
That's
good for me, Mr. Chair.
CHAIR:
Okay, we'll go to the Member
for St. John's East – Quidi Vidi for approximately 10 minutes of questioning on
the Estimates.
MS. MICHAEL:
Thank you very much, Mr.
Chair.
I'm
sure the minister and her staff appreciate how confusing this is because we
haven't seen any of this before. So I hope I'm not going to be asking questions
that sound very simple to you, but I do want to get a handle.
So if
we can just come back to 4.1.01 again. Mr. Hutchings covered the Professional
Services, but I'm interested in the Supplies, and it seems to me that the only
way to understand 4.1.01 is to also look at 4.1.04. Is that correct or can we
understand one without the other?
MS. MACDONALD:
They're essentially, in very many ways, the same thing. It's just different
phases of projects. One of them is current dollars operating and one is capital.
MS. MICHAEL:
Okay, so that's the main
difference.
MS. MACDONALD:
Yeah.
MS. MICHAEL:
Okay.
So if
we come back then to 4.1.01, could I have an explanation of the Supplies line
because the Supplies line again, maybe it's because of projects being finished,
but it's down by $341,600 from last year's budget. And maybe it's carried over
because last year the revision was down by $402,400.
MS. C. BENNETT:
Sorry, Ms. Michael, I missed
the heading number that you said.
MS. MICHAEL:
4.1.01, I'm looking at the
Supplies line. And in the Supplies line – it's connected, I guess, to something
else that you've said earlier – $402,400 was not spent last year but this year
the estimate is $156,900 which is down also $341,600 from last year's budget. So
could I have a full explanation of that line, please?
MS. MACDONALD:
Supplies in the OCIO world is not regular supplies. These are actually software
purchases.
MS. MICHAEL:
Right.
MS. MACDONALD:
So depending on the project that we're doing and the stage it is, we may have to
buy new software and we may not.
MS. MICHAEL:
Yes.
MS. MACDONALD:
So every year we have our list of projects that we're doing and the stage it is,
we may have to buy new software and we may not.
MS. MICHAEL:
Yes.
MS. MACDONALD:
So every year we have our list of projects and we estimate what we're going to
need to purchase that year, that's why that number varies so much. So last year,
we thought we were going to need to spend $500,498, we only spent $96,000 and
this year we're estimating we're going to need to spend around $157,000.
MS. MICHAEL:
Did that have anything to do
with the changes that have been made, et cetera? I'm really trying to get a
handle on this.
MS. MACDONALD:
No, it's just really about
the projects that we're delivering now.
MS. MICHAEL:
Okay, all right. Thank you
very much.
I think
Keith covered the rest, so I'll move on. I'll just go straight to 4.1.03. Could
we have a breakdown of the salary line there, please, because it's down $220,800
from last year's budget?
Oh, did
you do that, Keith?
MR. HUTCHINGS:
Is that 4.1.03?
MS. MICHAEL:
You did 4.1. Yes, you did
that, sorry.
See
what I mean by being confused. Okay, I don't repeat what somebody else has
asked. So now I just move over to the Capital, 4.1.04. I would like to breakdown
of this salary line, please, because it's down $209,600 from last year's budget.
MS. MACDONALD:
This again is related to our
project load and the number of projects we're doing. It's a couple of numbers.
It's actually the net effect of $1.7 million reduction in annualizing prior-year
decisions and $1.5 million increase for the projects.
MS. MICHAEL:
Yes.
MS. MACDONALD:
So again this would be money that we were due to spend last year and it's now
moved forward to this fiscal.
MS. MICHAEL:
Okay, thank you very much.
So
there are no changes in personnel or anything, it's just –?
MS. MACDONALD:
No.
MS. MICHAEL:
Yeah, okay. Thank you very
much.
MS. C. BENNETT:
Ms. Michael, one of the
challenges with OCIO is when they're working on a project, depending on what
phase they're in, the dollars have to be properly allocated to either a Capital
expense or a Current expense and when the budgets are done in the beginning of
the year and the project timeline changes, sometimes the allocation of those
dollars, whether it's Current or Capital, has to change. And that's what you see
oftentimes in these line items is that dollars will shift because they are
moving from one phase, either a Capital or Current, because the project timeline
shifted in the year.
MS. MICHAEL:
Right. Thank you.
Would
that then be the explanation for the Supplies line?
MS. MACDONALD:
Yes, it is. We have a lot of expenditures expected this year for Apprenticeship
Harmonization; it's a project we're running across the Atlantic region and we
have to spend money in this year, so that's why we have moved money into this.
MS. MICHAEL:
Okay. And did that start
last year because last year you spent almost $652,000 more than had been
budgeted? So that began –
MS. MACDONALD:
That's another project that started up that we didn't think was going to start
up then, so it's always a movement of the funds back and forth.
MS. MICHAEL:
Right. Okay, thank you very
much.
Now,
under Professional Services, last year it was just slightly over $4 million that
wasn't expended and then this year it's almost $2.5 million down from last
year's budget. So could we have an explanation there?
MS. MACDONALD:
Again, this is the ISM project, primarily.
MS. MICHAEL:
Okay.
MS. MACDONALD:
This is the large project that we delayed and we moved it out – we didn't spend
as much last year but we have to spend to complete the project this year.
MS. MICHAEL:
Okay, but it's still less
than – well, I guess maybe it has to be with the phase that you're in.
MS. MACDONALD:
Yes.
MS. MICHAEL:
Okay. Thank you very much.
Under
Property, Furnishings and Equipment, I presume that a major expenditure there.
It must have something to do with ISM too, does it?
MS. MACDONALD:
Yes, $400,000 of that is directly related to the ISM project. The other $900,000
relates to an upgrade that we have to do to really – we have a major server
refresh. We have so many new projects that are coming on that we're running out
of horsepower. So we have to do an upgrade this year to enable the systems to
run optimally.
MS. MICHAEL:
Right. Thank you very much.
Under
Operations and Security, 4.1.05, the Supplies line was $138,000. Last year, you
spent almost $120,000 more than budgeted and this year up another $100,000. I'm
sorry, not another, up $100,000 from last year's budget.
MS. MACDONALD:
This activity is to buy hardware and software. This is our infrastructure
backend; our technology. Some years we need to buy more software than hardware
and other years we buy more hardware than software. That's what the two buckets
really are all about. So we look at our technology investment plan and say: What
do we have to upgrade? And that's where we allocate the funding.
MS. MICHAEL:
Okay, thank you.
Under
Property, Furnishing and Equipment, if I could have an explanation of that line,
please.
MS. MACDONALD:
That relates to the hardware that we have to purchase similar to the software
which is the line item above.
MS. MICHAEL:
Okay.
I think
that's all the questions I have, Mr. Chair.
CHAIR:
Okay.
Mr.
Hutchings.
MR. HUTCHINGS:
Minister, it's a huge
system, obviously, the province has in terms of data. Who provides backup or is
there a data warehouse service that is contracted? How does that work?
MS. MACDONALD:
We have backup sites away from – we're situated in 40 Higgins Line and so we
have other alternate sites.
MR. HUTCHINGS:
Is that the province's site
or do you lease from somebody else?
MS. MACDONALD:
We're using province sites.
MR. HUTCHINGS:
Okay.
So you
don't lease any space from anybody else for that purpose?
MS. MACDONALD:
We do not.
MR. HUTCHINGS:
Okay.
I'm
good.
CHAIR:
Okay.
Call
the headings.
CLERK:
4.1.01 to 4.1.05 inclusive.
CHAIR:
Shall 4.1.01 to 4.1.05
inclusive carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 4.1.01 through 4.1.05 carried.
CLERK:
The totals.
CHAIR:
Shall the total carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, Office of the Chief Information Officer, total heads, carried.
CHAIR:
Okay, that concludes the
Estimates for Office of the Chief Information Officer.
MS. C. BENNETT:
Mr. Chair, as minister, if I
might, I just want to take a minute to thank the officials who prepared for the
Estimates tonight on behalf of the Committee. I also wanted to recognize the
work that this team does in OCIO is some of the more challenging work in the
context of they must serve many masters and many departments and many entities
who they have to serve in addition to those of us who are elected in the House
of Assembly to provide answers to the questions.
They
are responsible for a tremendous amount of things that I think many of us wish
we didn't have to understand but we need to understand. So I do want to say
thank you to them for all their hard work. There's been a tremendous amount of
effort put in this year, particularly on the ISM project. They've done some
incredible work in getting that project back on budget and also in a timeline
that will deliver it to the front-line individuals who need to use it.
Thank
you.
MR. HUTCHINGS:
Thank you.
Recess
CHAIR:
Okay.
CLERK:
Subheads 1.1.01 to 2.2.02.
CHAIR:
Shall subheads 1.1.01 to
2.2.02 carry?
We'll
go with opening remarks by the minister upon introduction of her staff and then
we'll go to Ms. Michael to lead off on the response.
Minister.
MS. C. BENNETT:
Okay, I'll turn it over to
Donna Brewer, the Deputy Minister of Finance, to introduce the team.
MS. BREWER:
Donna Brewer, Deputy Minister of Finance.
With me
is Maureen McCarthy. Do you want to tell them your new title?
MS. MCCARTHY:
Director of Pensions and Debt Management.
MS. BREWER:
Behind us we have Wanda Trickett, our Controller, and Tansy Mundon is the
Director of Communications.
CHAIR:
Okay.
MS. C. BENNETT:
With that, I'll make a
couple of opening comments with the permission of the Committee.
The
Consolidated Fund Services or CFS gross expenditures of just over $1 billion
represents the cost of servicing and managing the direct debt of the province
and the funding of the pension plans for employees of government and its
agencies.
CFS
expenditures are primarily statutory; expenditures of $524 million related to
debt servicing are provided under the authority of the
Financial Administration Act, while
expenditures of $437 million relate to employee retirement arrangements and are
provided for the most part under the
Pensions Funding Act.
Three
subdivisions of expenditures totalling just over $48 million are non-statutory
and have to be voted. These include: 1.3.01 relating to payments into sinking
funds established in 1993 for the lease purchase of health facilities in Burgeo,
Port Saunders and St. Lawrence; 1.4.01 relating to collections of loans and
guarantees; and 2.1.02 for special retirement salary and employer-related
payments as approved by Treasury Board.
Related
revenues, the Current account plus the Capital account, is estimated at about
$23 million in 2017-18. Major components of this are interest revenues of $14.4
million from the investment of cash balances and $7.1 million from Newfoundland
Hydro guarantee fees.
New
borrowings of $400 million are planned during fiscal '17-'18 and estimated
provincial borrowing rates as of March 31, 2017 are for 91-day Treasury bills,
0.6 per cent; five-year bonds, 1.87 per cent; 10-year bonds, 2.8 per cent; and
30-year bonds, 3.7 per cent.
Budgeted exchange rates for the US dollar in '17-'18 is at 1.3109 and a 0.01
change impacts debt servicing cost by approximately $1 million.
When we
took office in 2016-17, the borrowing requirements had increased from a budget
estimate of $2 billion to $2.4 billion, and only $400 million had been borrowed
through new bond issuances. Government of the day had to rely on a special
T-bill cash management program, and the extent of short-term borrowing of this
nature peaked on February 26, 2016, at $2.6 billion outstanding. Cash management
bills were fully repaid as of August 17, 2016. For 2017-18, we are planning for
our normal weekly $60 million T-bill program, bringing the maximum amount
outstanding to $780 million.
Since
December of 2015, the province has completed 11 issues in the Canada domestic
market totalling $4.9 billion. The details of these issues are on our investor
relations website on the Department of Finance website.
The
province has been working hard to execute its borrowing strategy. We've
partnered with Nalcor to get our collective story out to those who trade our
bonds and investors who buy the bonds. We launched an investor relations website
and conducted several investor relations road trips in Canada and in New York
that have been well-received.
I meet,
as the Minister of Finance, on a periodic basis with bank economists, our
banking syndicate and bond-rating agencies to ensure they have the facts as they
communicate our story to their clients.
We
continue to work on our first non-Canadian bond issue since 1993. We are working
hard to improve the timelines of the release of the financial statements, and we
have committed through legislation to having public accounts released before
November 1 each year.
Last
week, I was pleased to advise that Newfoundland and Labrador has been
acknowledged for improvements in a C.D. Howe financial report card that assesses
the quality of various government financial information and their success or
failure in achieving budgetary goals. The Government of Newfoundland and
Labrador scored a B grade in 2017 – up from an E grade in 2016 and a D grade in
2015. The report looks at the relevance, accessibility, timeliness and
reliability of government's financial reports across the country.
C.D.
Howe stated in the report that Newfoundland and Labrador has improved markedly,
and particularly with the quality and timeliness of its budget and its public
accounts documents. The report assesses whether individuals can get valid,
timely and readily understood figures for total revenue and spending in the
budget each government presents at the beginning of the year, as well as in
Public Accounts at the end of the fiscal year.
Mr.
Chair, these are just a few highlights of the activities impacting the head of
expenditure of Consolidated Fund Services.
With
that, I'll turn it over to the Committee for questions.
CHAIR:
Okay.
The
Member for St. John's East – Quidi Vidi.
MS. MICHAEL:
Thank you very much, Mr.
Chair.
I'm
just going to proceed with line items at the moment. I just want to get things
straight here.
If we
could look at 1.2.01, Executive Support, we had a jump last year – excuse me.
MR. MORGAN:
This is Finance. We're doing Consolidated Services and we have no questions.
MS. C. BENNETT:
That's okay.
MS. MICHAEL:
I have no questions, too.
MS. C. BENNETT:
That's okay.
MR. MORGAN:
It's been a long day.
MS. MICHAEL:
I have no questions.
CHAIR:
Okay.
MR. HUTCHINGS:
Thank you.
Minister, 1.1.01, Temporary Borrowings; if I remember correctly there was a line
of credit set at $200 million. Is that still at $200 million?
MS. C. BENNETT:
Yes.
MR. HUTCHINGS:
Okay.
I'm not
sure, the interest rate for short-term borrowing on the line of credit, what
would that be? Did you mention it already here?
MS. C. BENNETT:
We'd have to check that and
get back to you. I don't have that information here, but we can get it and let
you know.
MR. HUTCHINGS:
Okay. I think last year it
was prime plus one-half cent. I think you mentioned in the discussion we had.
So we
look at Temporary Borrowings, how much was the credit line used last year?
MS. BREWER:
There was very little. We try to manage the cash balances as best we can to
avoid going into overdraft. The overdraft is there in the banking agreement just
as added protection.
MR. HUTCHINGS:
Okay. In terms of looking at this year in terms of the line of credit, Minister,
as a need basis, I guess you don't really know as you go forward.
MS. C. BENNETT:
A line of credit is
typically designed for when you have cash flow peaks and valleys to smooth it
out. Certainly, avoiding using the line of credit means you're avoiding
incurring extra costs by not managing your cash.
MR. HUTCHINGS:
Yes.
MS. C. BENNETT:
And that's, I think, what
the deputy just referred to is that the officials are working very hard to
manage the cash on hand to make sure we have the right amount and that we
restrict and reduce and eliminate the use of a line of credit, but you need it
there when you have a rolling payroll, for example, the size that we have in the
provincial government. It's prudent to have a line of credit, but not prudent to
use it.
MR. HUTCHINGS:
Okay, thank you.
1.1.02,
Treasury Bills, the current interest rate on the T-bill program now, do you have
that? I think it was 0.67 per cent last year I think we discussed.
MS. C. BENNETT:
Yeah, as of the end of March
2017, T-bills were 0.6 per cent.
MR. HUTCHINGS:
Okay.
I think
the program last year was $780 million. What's the current size and balance of
the program?
MS. BREWER:
We're planning for the same level of borrowing. It's a weekly auction of $60
million a week.
MR. HUTCHINGS:
Okay, that's what you
mentioned earlier.
MS. BREWER:
So the maximum outstanding would be $780 million.
MR. HUTCHINGS:
Okay, thank you.
1.1.05,
Temporary Investments, I think this shows money that the province generates in
interest earnings. This year's estimate is $14.4 million. I think it was $3
million that was generated last year. So how come it's $14.4 million?
MS. BREWER:
You may recall that last year we had a borrowing program of $3.4 million and we
actually borrowed $2.95 million. So we're actually ahead. We actually have more
cash in the bank available to us than was available in previous years.
MR. HUTCHINGS:
What did you say it was $3.4
million?
MS. BREWER:
$3.4 million was the target.
MR. HUTCHINGS:
Okay.
MS. BREWER:
We actually borrowed $2.925 million, but the actual requirements ended up to be
less than that. We had completed our borrowing program in December, so we pretty
much pre-borrowed, in a sense, for the following fiscal year.
MR. HUTCHINGS:
Okay, thank you.
1.1.06,
Recoveries on Loans and Advances; last year I think there was some discussion,
and we talked about this, there was – contained the interest that the province
was receiving for student loans. I think the Student Loan Corp. was ending; the
final payments I think would be in '16-'17. Is that correct?
MS. BREWER:
That's correct, yes.
MR. HUTCHINGS:
Okay.
1.2.01,
Recoveries on Loans, Advances and Investments, that's in Capital. So that was
the same thing, it was related to the Student Loan Corp.? Is there any update on
that?
MS. BREWER:
It has been fully repaid.
MR. HUTCHINGS:
Fully?
MS. BREWER:
Yes.
MR. HUTCHINGS:
Okay, thank you.
1.4.01,
Guarantee Fees – Non-Statutory,
there's a thousand dollars required for '16-'17. What was that about?
MS. BREWER:
That was just a placeholder.
MR. HUTCHINGS:
Okay.
MS. BREWER:
At the time the Estimates were cut off for projected revised, they just left a
small balance there.
MR. HUTCHINGS:
Okay.
Who
were the organizations that were charged for guarantees in '16-'17, and what
would the type of organizations be?
MS. BREWER:
Newfoundland Hydro was the largest, and the Fogo Island Cooperative Society.
MR. HUTCHINGS:
Okay. So how much would be
charged to each?
MS. BREWER:
For '17-'18 the estimate for Fogo Island Cooperative is $15,000, and for
Newfoundland Hydro the estimate is $7.1 million.
MR. HUTCHINGS:
In 1.4.01, Guarantee Fees,
when you look at the revenue line there's a significant increase there. I'm just
wondering if you could explain that.
MS. BREWER:
The increase relates to Newfoundland Hydro. The budget was $4.5 million and
collected $4.125 million, and they're projecting $7.1 million for '17-'18.
There's more borrowing planned, more borrowing required for Newfoundland and
Labrador in '17-'18.
MR. HUTCHINGS:
Okay.
1.4.02,
Issues Under Guarantee, what would they represent, the Issues Under Guarantee
we're talking about here?
MS. BREWER:
Pretty much there, again, that's a placeholder. When we issue loan guarantees,
the Comptroller General sets it up as a contingent liability. It's only when
those guarantees are called then the payment would flow through here.
MR. HUTCHINGS:
So you just keep that open
for when that actually occurs, obviously.
MS. BREWER:
Yes. It's statutory; it's not an area that has to be voted.
MR. HUTCHINGS:
Okay. Thank you.
We'll
move to 1.5.01, Debt Management Expenses – Statutory. I think you mentioned just
earlier, Minister, last year in Estimates we talked a lot about debt expenses
related to the US market. You mentioned earlier, I think, just about getting
close to – I don't think you're into the US markets now, but can you give us an
update on that?
MS. C. BENNETT:
Sure.
The
work we did with investor relations was to ascertain whether or not there would
be investors outside of the domestic market that would be interested. We also
did a significant amount of research on a variety of options that would allow us
to enter the US market, but also potentially look at other markets.
MR. HUTCHINGS:
Yeah.
MS. C. BENNETT:
Whether it was European
markets, et cetera.
We also
did work around discussing making sure that we can mitigate the FX risk. As part
of the work to borrow outside you want to mitigate any exchange risk.
MR. HUTCHINGS:
Uh-huh.
MS. C. BENNETT:
So that was one of the
reasons we wanted to, yes, go outside the domestic market, but also want to do
it in a responsible way that we don't end up in a situation where we have
unintended consequences. The officials in the department are continuing to
assess options for us.
We feel
strongly that moving outside of the domestic market will help us lower the rates
on our bonds going forward. And when we have the right opportunity and we know
we can do it at the least amount of cost possible, with the best interest rate
we can, that's when we'll do it.
MR. HUTCHINGS:
Okay. So you foresee that in
the coming year or …?
MS. C. BENNETT:
I would anticipate that in
this fiscal year; however, when we undertook the analysis, we certainly were
planning, based on the borrowing requirements of last year's budget. Through the
work of government last year and certainly the budget for this year, we've been
able to lower the borrowing needs.
MR. HUTCHINGS:
Uh-huh.
MS. C. BENNETT:
We will have to continue to
work to make sure that when we do it, we're doing it, as I said earlier, in the
best interests of the people of the province and the Treasury, but we would hope
to do it this year.
CHAIR:
Okay, we'll go back to the
Member for St. John's East – Quidi Vidi.
MS. MICHAEL:
I have no questions in this
section.
CHAIR:
Okay, do you have any
questions on CFS?
MS. MICHAEL:
No, no questions on CFS.
CHAIR:
No, okay.
We'll
go back to the Member for Ferryland.
MR. HUTCHINGS:
Thank you.
1.5.01,
there was $19 million spent there. There was none related to US borrowing,
right, because we're not there yet. This number is going to drop to $3.5 million
this year. Can you just give us some understanding of that?
MS. BREWER:
Okay, a number of the issues that were issued during 2016-17 were actually
issued at a discount. That accounts for a significant portion of the $19
million. When we budget for '17-'18 we don't know necessarily if we're going to
be issuing at a discount or a premium at a par. But this particular one, there
was one done late in the fiscal year that was at a significant discount. The
other part of the $19 million would include any of the commissions that we have
to pay the people who underwrite our bonds.
MR. HUTCHINGS:
Okay.
What
percentage would that underwriting be? Would that be a percentage or …?
MS. BREWER:
It varies depending on whether you're the lead or a co-lead or a manager, and it
varies by the size of the issue.
MR. HUTCHINGS:
Okay. Thank you.
The
1.5.02, when you look at these line items here, a number of these Operating
Accounts are decreasing this year. I'm just wondering if you can give some
insight into that.
MS. BREWER:
This is the area where there was anticipated to be significant expenses incurred
relating to the US issuance –
MR. HUTCHINGS:
Okay.
MS. BREWER:
– that as the minister
indicated, we continue to watch that market. We're being opportunistic; we'll go
when the time is right and if the time is right.
MR. HUTCHINGS:
Yeah.
MS. BREWER:
Sorry, I made a mistake
there, Mr. Hutchings. This is the area where the banking agency commission fees
are paid under Professional Services.
MR. HUTCHINGS:
Oh, 1.5.02?
MS. BREWER:
1.5.02, yeah.
MR. HUTCHINGS:
Okay.
So the
fees and services are expected to be far less this …?
MS. BREWER:
Well, the borrowing program is far less, yeah.
MR. HUTCHINGS:
With the borrowing. Okay,
sure.
MS. C. BENNETT:
Just for the Committee, we
borrowed last fiscal 10 times the amount of money we're going to borrow this
fiscal.
MR. HUTCHINGS:
Yes, your servicing fees,
obviously, are –
MS. C. BENNETT:
Right.
MR. HUTCHINGS:
– reflective of that.
Okay.
Thank you.
Yeah,
the other questions I had I think we covered them moving through, so that's good
for me.
CHAIR:
Okay.
I call
for the head.
CLERK:
1.1.01 to 2.2.02.
CHAIR:
Shall subheads 1.1.01 to
2.2.02 carry?
All in
favour?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 1.1.01 through 2.2.02 carried.
CLERK:
The total.
CHAIR:
Shall the total carry?
All in
favour?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, Consolidated Fund Services, total heads, carried.
CHAIR:
Okay, moving right along.
Minister, do you require time to switch out?
MS. C. BENNETT:
I just have to swap one
person out and we'll be good to go.
CHAIR:
Okay.
CLERK:
Do you want me to call it
again?
CHAIR:
No, we've already called it.
Okay,
Minister, we'll go to your department and opening remarks.
MS. C. BENNETT:
Thank you, Mr. Chair.
I'll
turn it over to Donna Brewer, the deputy, so she can introduce the officials
that are with us.
MS. BREWER:
Donna Brewer, Deputy Minister of Finance.
To my
left, Wanda Trickett.
MS. TRICKETT:
Wanda Trickett, Departmental Comptroller.
MS. MUNDON:
Tansy Mundon, Director of Communications.
MS. MILLER:
Ann Marie Miller, Comptroller General of Finance.
MR. MARTIN:
Craig Martin, Assistant Deputy Minister of Finance.
CHAIR:
Okay, carry on.
MS. C. BENNETT:
Thanks.
So with
the Committee's indulgence a couple of opening comments. The Department of
Finance is mandated to provide strategic leadership across government in the
development of fiscal, financial, statistical and economic policy. These
responsibilities are primarily achieved through the provision of timely analysis
and advice to government departments and agencies, Cabinet and Committees of
Cabinet, particularly Treasury Board for which I serve as the president.
The
department is also mandated to oversee the management and control of the
province's finances to ensure appropriate use of public funds and to provide
centralized and corporate shared services to other government departments in the
areas of such things as economic and project-specific analysis, statistical
services, internal audit, centralization of select accounts receivable and
collections, and the administration of such things as invoice payment processing
and support and maintenance of government's financial management systems.
Additionally, each year the department spends a considerable amount of time and
effort to prepare government's public accounts, the consolidated budget, the
supplementary cash estimates book, the Economy, the fall fiscal update and the
economic review. This mandate is delivered through the following lines of
business. We have revenue and expenditure policy and planning, federal fiscal
relations, Treasury management, economic and project analysis, statistical
research analysis and data development, comptrollership responsibilities,
supports to Cabinet and Committees of Cabinet, as well as tax administration.
The
total current and capital account gross expenditures for the Department of
Finance are about $118 million. This includes the salary and operating costs of
the Department of Finance, as well as blocked funds held on behalf of other
government departments. These blocks total $94 million, and are under subhead
1.3.01 for the payment of government's share of employee benefits for employees
and retirees.
Funding
is also included for compensation and contract adjustments that may be approved
from time to time by Treasury Board, and 2.1.05 and 2.1.06 for financial
assistance to support Corner Brook Pulp and Paper and various government
initiatives such as collective bargaining, Muskrat Falls oversight,
implementation of The Way Forward
actions and pension reform.
The
budget of the Department of Finance therefore is $23.6 million, down from
'16-'17 restated budget of $26.1 million. This is a $2.5 million reduction and
it represents a 9.5 per cent drop. This was achieved through a combination of
zero-based approach to budgeting and changes to the executive and management
structure.
I can
highlight some of the areas where we have identified savings through zero based.
We will reduce travel wherever possible using conference and video calls when
these modes are appropriate. We have limited travel to conferences, as well as
the number of officials attending per conference. I will continue my practice of
scheduling investor relations meetings around other work related trips such as
federal-provincial-territorial meetings.
We have
reviewed and, where feasible, removed phone lines. We have reviewed and reduced
printing requirements, relying on website communications wherever possible. We
have consolidated within one administrative area the budget for ergonomic
assessments and purchases of furnishings and equipment. We have assigned a
per-head budget for general office supplies.
We
continue to work with the Department of Transportation and Works to reduce our
lease square footprint through better allocation of space within Confederation
Building and Mews Place. The department has also continued its work with
Deloitte on the indirect taxation review. This work was completed over three
phases and identified almost $23 million in tax recoveries for government,
Newfoundland and Labrador Housing and government's group insurance plan.
I'll
now ask the Deputy Minister, Donna Brewer, to briefly outline the changes to the
Department of Finance structure and then, Mr. Chair, we'll be pleased to answer
questions from the Committee.
MS. BREWER:
The department has consolidated from four down to three branches resulting in
the reduction of one assistant deputy minister and the one ADM secretary. The
former Economic and Statistics Branch and the Fiscal and Economic Policy Branch
were combined into the fiscal and economic branch. This allows the ADM there,
Craig Martin, to take advantage of similar skill sets to create some
redundancies and to reassign resources to critical areas such as revenue
modelling and economic forecasting.
The
division of Debt Management was moved to the Financial Planning and Benefits
Administration Branch, while Tax Administration was transferred to the Office of
the Comptroller General.
Synergies can be achieved, we feel, by combining the functions of accounts
receivable and collections. That provides a first step in moving forward with
The Way Forward action to centralize
collections.
As
reflected in the Estimates, the Financial Planning and Benefits Administration
Branch includes the Treasury Board and budgeting operations, the general
insurance and financial analysis and Pensions and Debt Management. There was a
reduction in one director position through the consolidation of the Pensions and
Debt Management Divisions. There were also reductions at the manager level
within Debt Management due to vacancies and combinations of duties among some
managers.
A
number of pension staff have transitioned to Provident10 – that's the
corporation that now oversees the administration of the Public Service Pension
Plan – while a few others will be moving to the Teachers' Pension Plan
Corporation.
The new
branch, the Fiscal and Economic Branch, now has three directors versus the
previous two branches had a combined five directors. Next year's Estimates, the
subheads 2.2.01 Tax Policy, 2.2.02 Fiscal Policy, 2.2.03 Project Analysis, and
2.2.04 Economics and Statistics, will be consolidated.
The
Office of the Comptroller General had a reduction of one director and was able
to reduce various management analyst positions though the reassignment of work
to existing directors and managers/analysts.
We went
through a review and we feel right now all the programs currently delivered by
the department are core to its mandate, and for the most part are required under
provincial legislation, such as the
Financial Administration Act, the
Statistics Agency Act and the Revenue
Administration Act.
There
are various initiatives currently underway across government that would have
been outlined in The Way Forward
document that once developed may have impacts on the department structure going
forward, such as the shared services review, the reduction in agencies, boards
and commissions, and more effective business financing.
With
that, I'll turn it back to the Committee.
MS. C. BENNETT:
Mr. Chair, we'll turn it
over for questions.
CHAIR:
The hon. the Member for St.
John's East – Quidi Vidi.
MS. MICHAEL:
Thank you very much, Mr.
Chair.
Okay,
looking at line items, then, in the Department of Finance, I will go to 1.1.01,
it's not a lot, but the Estimates for this year is $42,900 lower than last year.
So I presume that may be a position, or not?
MS. C. BENNETT:
No.
I'm
sorry, Ms. Michael, can you –
MS. MICHAEL:
1.1.01, the Salaries line –
MS. C. BENNETT:
Yes,
MS. MICHAEL:
– this year's estimate is $42,900 less than last year's budget.
MS. C. BENNETT:
Right. In '16-'17 there was
a decrease because the executive assistant wasn't at the top of the salary scale
and there was no temporary assistance required and for '17-'18 there's a
reduction. Requirements are less as per the zero-based budgeting in the
departmental submission.
MS. MICHAEL:
Okay. Thank you very much.
1.2.01,
here the budget last year was $1,276,600 and in actual fact the revision was
$629,800 more than the budget. If I could have an explanation of that first,
please.
MS. C. BENNETT:
Sure.
That
increase was due to termination costs for retiring employees and the reduction
of an executive position. I think the deputy minister mentioned there was a
reduction in the ADM.
MS. MICHAEL:
That's what happened here?
MS. C. BENNETT:
And that would have been
reflected here.
MS. MICHAEL:
Okay.
Would
that have included the ADM secretary there as well?
MS. BREWER:
The ADM secretary actually
ended up to be a retirement.
MS. MICHAEL:
Oh, okay.
MS. BREWER:
There was at least one other
retirement there as well.
MS. MICHAEL:
But the ADM was not a
retirement?
MS. BREWER:
The ADM, yeah, was an
abolishment there.
MS. MICHAEL:
Okay.
Is that
person still in the government system or …?
MS. BREWER:
He is now on pensioner
payroll.
MS. MICHAEL:
Okay.
MS. BREWER:
But he is providing some
continuity free of charge to the government – to the department.
MS. MICHAEL:
Okay. Thank you.
MS. C. BENNETT:
If I might, in fairness to
the individual, he's a long-serving employee. Very passionate about the work he
did and was very much wanting to be able to support residents of the province.
I'm really pleased with the leadership in the department to figure out a way to
make that happen.
MS. MICHAEL:
Okay. Thank you very much.
Then,
Minister, when we look at the Estimate for this year, it is $110,700 less than
the Estimate last year.
MS. C. BENNETT:
That would have been a
reduction as related to – requirements are less so that as per the zero-based
budgeting, the departmental submission was less.
MS. MICHAEL:
Okay. And of course we have
one less ADM as well.
MS. C. BENNETT:
Yes.
MS. MICHAEL:
Okay. Thank you.
Going
to 1.2.02, nothing major but under the Employee Benefits, it was $18,600 more
spent than was budgeted.
MS. C. BENNETT:
That increase relates to
additional workers' compensation costs as injury-on-duty costs increased in the
fiscal year. November 2016 claim had prior period out-of-province treatments
that were not approved but were awarded upon appeal. This one month was $19,500.
MS. MICHAEL:
Okay. Thank you.
Under
Property, Furnishings and Equipment is there something in particular that you
know you're going to purchase, $28,100? There was nothing budgeted last year.
MS. C. BENNETT:
Yeah, this would have been
the area in the preamble where I referenced that we've consolidated things for
the department. So this is an increase that the zero-based budgeting
departmental submission centralized all Property, Furnishings and Equipment
requirements for 2017-18 in this account.
MS. MICHAEL:
Yes.
MS. C. BENNETT:
So you'll see it all in this
one.
MS. MICHAEL:
Okay. Thank you very much.
1.3.01,
here the budget was $8,980,700 and was underspent by $7,169,200; an explanation
for that.
MS. C. BENNETT:
Sorry, can I just confirm
that the head was 1.3.01?
MS. MICHAEL:
1.3.01, yes.
MS. C. BENNETT:
And your question is around
the Salaries?
MS. MICHAEL:
Around the Salaries, yes.
MS. C. BENNETT:
Right.
This
particular activity is government-wide funding. So this would be government's
share of Employee Benefits for current and retired government employees such as
the Canadian pension plan, Employment Insurance, Group Medical and Group Life,
Health and Post Secondary Education Tax and anticipated compensation and
contract adjustments for contracts that are negotiated or in process of being
negotiated.
The
decrease you would have seen in '16-'17; expenditures would allow for salary
adjustments throughout government. If any salary adjustment is required in the
year, the funding is transferred to the applicable department and the
expenditure will be reflected in the department's applicable activity.
Therefore, no expenditures are ever recorded under this particular activity in
the Department of Finance, it always looks this way. I'll ask the deputy to add
any other comments.
MS. BREWER:
The minister is correct with
one exception; there's an amount there of $1,811,500. That was a payment that
was made in relation to a settlement that is in process relating to the closure
of the transportation depots many years ago. As a result of that, that was a
payment that had to be made.
Wanda,
was it for EI overpayments or something? That payment was the only one that was
actually – the cheque was cut and was actually flowed through there. But the
minister is correct, the balance of that, like any funding that was there for
the Job Evaluation System, the JES funding, when that was determined that would
have been transferred to the applicable department. I believe there was some
money there in budget '16-'17 where they made to minimum wage changes. Those
amounts would have gone to the applicable departments.
MS. MICHAEL:
I'm just curious as to why
the budget would have been – what would have been the basis for having almost $9
million for the budget?
MS. BREWER:
The director of Budgeting or
the ADM for the budget would have had a discussion primarily with the Human
Resource Secretariat. We knew a possibility of minimum wage increases, we knew
the Job Evaluation System was being implemented and Labrador benefits contracts
were under negotiations. She would check with him and based on that, there would
be blocks set aside.
MS. MICHAEL:
And yet slightly over $7
million wasn't spent.
MS. BREWER:
Not necessarily, Ms.
Michael, that it wasn't spent; it wasn't spent in Finance. The way these votes
are set up, if you look in the Supply bill, it allows for funds to be
transferred to the applicable department, once the amount is known and the
amount is approved then by Treasury Board to be transferred.
MS. C. BENNETT:
These amounts wouldn't have
been expensed, as the deputy said, inside the Department of Finance, but they
would be expensed in other departments when they were transferred out from us
into their departments at their request. That happens on a normal basis.
MS. MICHAEL:
Right. I guess I'm not a
budget person, a finance person, but it shows up as budgeted what may be
transferred out. But when the transfer out happens, it doesn't show up as having
been transferred out.
MS. C. BENNETT:
Yeah, it does –
MS. MICHAEL:
That's how I read it when I
look at it.
MS. C. BENNETT:
And that's exactly how I
read it as well, until officials were able to demonstrate that those funds would
have been transferred to other departments. So other departments that would have
come in to Estimates would have seen increases in their salary lines related to
last year's spending.
MS. MICHAEL:
Right.
MS. C. BENNETT:
And it will be picked up in
Public Accounts, as well, as expenses incurred by the departments. I don't know
if the Comptroller General wants to add any texture to this.
MS. MICHAEL:
No, I'm –
MS. C. BENNETT:
Have I missed anything, Anne
Marie?
MS. MILLER:
No, that's correct. There is
an allowance. As long as the Supply bill contemplates the transfers in the
Supply bill that you actually show that you're going to transfer out to other
departments, that's allowable under the
Financial Administration Act.
MS. MICHAEL:
Okay.
MS. MILLER:
At the beginning of the
year, you don't know where the expenditure is going to be incurred, but for
Public Accounts purposes, you're actually showing the funding where it's
expensed which is the way it should be.
MS. MICHAEL:
Right, understood.
On what
would you have based, then, the decision for this year to estimate $5.8 million?
MS. C. BENNETT:
There is a breakdown that
Donna referenced that the budgeting team would have gathered information from
the HR team. It would have related to things like the continuation of the
Transportation and Works depot settlement.
There
are some monies there related to salaries around financial capacity that we
budgeted for, monies related to the Labrador Benefits Agreement that's in place,
the RCMP collective agreement and additional funding related to any collective
bargaining pressures from existing agreements.
MS. MICHAEL:
Okay.
MS. C. BENNETT:
That's what's in that salary
block.
MS. MICHAEL:
Okay. Thank you very much.
I see
my time is up, yes.
CHAIR:
Okay, we'll go back to Mr.
Hutchings.
MR. HUTCHINGS:
Thank you.
Minister, I just had a couple of general questions. I'm back to 1.2.01,
Executive Support. Treasury Board is mentioned there.
In our
briefing with your officials last week, there was discussion about the
zero-based budgeting process, building from the bottom up and transfer of funds
from, I guess, within departments and across department lines. There was some
discussion about the fact that you've – I don't know if you made new rules or
been very cognizant of future transfer of funds with your zero-based budgeting.
It can never be definitive, but a good shot based on past experiences of what
you expect you're going to have to spend.
My
question is: Is there a change to the ability to transfer funds within
departments or across departments and is there is any change reflective of that
in Treasury Board?
MS. C. BENNETT:
Treasury Board ministers
have provided feedback to the departments and strongly advise that if they come
in to Treasury Board looking for approval for transferring funds, that Treasury
Board will be asking: Why does that have to happen, based on the fact that
zero-based budgeting was supposed to be done and their budgets were built up.
So the
practice of transferring funds inside a department at the discretion of either
officials or a minister is one that we are working hard to provide additional
oversight to because the spending really must be reflective of the priorities of
government. While, undoubtedly, ministers and deputies would have great insight
into their departments and certainly can provide leadership, we feel strongly
that the decisions must be made collectively so that if there are savings in one
particular area of government, that may not necessarily be spent in that
department, they may have to be used in another department in next year's
budget.
Certainly, we're not expecting a transfer interdepartmentally this year, that
wouldn't be appropriate, nor is it allowed. But we certainly are working very
hard to make sure that ministers and deputies are making sure that their budgets
they presented this year are based on what they actually need. If they do have
some reason why they don't spend all their allocated money that's budgeted, that
they don't feel that it's a blank – pardon the choice of language, but a blank
cheque to make decisions inside their own department, that they have to have
some additional oversight and Treasury Board can support them in that.
MR. HUTCHINGS:
Okay. Thank you.
You
indicated in your opening remarks, Minister, about $23 million tax recovery. Can
you just give me some details on that, please?
MS. C. BENNETT:
Yeah. For the second year in
a row – second year, I think it is?
OFFICIAL:
Third?
MS. C. BENNETT:
Second or third, Deloitte
has been permitted to review government's expenditures and look for reclaims on
HST remittances that government shouldn't be spending. Over the last number of
years, that's proven to provide some much-needed funds that taxpayers of the
province should not be paying.
I'll
turn it over to the Comptroller General to add any additional texture.
MS. MILLER:
Yeah, there was roughly, in
the three phases, recoveries of about $23 million. Deloitte would claim a fee
associated with those total recoveries. So we roughly paid about $3.2 million
for the $23 million in recoveries.
MR. HUTCHINGS:
That would be remittances on
someone or companies in the province for the HST rebate and it was determined
that they weren't actually entitled to it?
MS. C. BENNETT:
This would be monies that
Gov.NL has paid in response to an invoice and we haven't claimed our portion of
HST. So as –
MR. HUTCHINGS:
(Inaudible) employer.
MS. C. BENNETT:
– our tax exemption.
MR. HUTCHINGS:
Yeah, okay.
MS. C. BENNETT:
There's no payment to
Deloitte in advance. They only get their finder's fee, so to speak, when they
actually find a savings that we can actually put in the bank. As an entity that
pays bills, we are entitled to certain credits and we haven't been claiming
those. Government as a whole hasn't been claiming those. Deloitte is working
through that to make sure we capture every single penny so we don't pay money
that we shouldn't pay.
MR. HUTCHINGS:
Is there a statute of
limitations on that, how far back you can go? I'm just curious if it hadn't been
done.
Deloitte would look at what? Look at the past 24 months or 12 months or
something? Is that how they do it?
MS. MILLER:
Yeah.
MR. HUTCHINGS:
Yeah.
MS. MILLER:
Yes, they've gone back roughly each period that they do. It's a two- to
three-year time frame of review they would go back.
MR. HUTCHINGS:
Okay.
As
well, Minister, you referenced in your commentary the lease per square foot.
You're looking at a reduction or have achieved reduction in that. Could you
describe that as well?
MS. C. BENNETT:
We're still working on the
reduction with Transportation and Works. We're looking at continuing to
consolidate staff into one area.
As I
think Members of the House would know, Finance is on the first floor here. We
actually had the Pensions division in with us. As the pension corporation became
live and active on April 1 that freed up some space.
We also
have some space that the Department of Finance has been responsible for paying
the lease on outside of government. We are working hard with Transportation and
Works to make sure that space is optimized. As the minister responsible for this
department, it comes off the departmental expenditures, so we can reduce the
overall footprint of the department, as all departments are supposed to be
undergoing.
MR. HUTCHINGS:
Okay.
Last
year you had an initiative, I think, with TW in regard to the sale of provincial
assets in regard to buildings and those types of things. I think there was a
target of $60 million that was predicted. How did that go in terms of achieving
that target?
MS. C. BENNETT:
That's a question for
Transportation and Works. They are responsible for that program.
Inside
Finance, we'd be responsible for the leases inside Finance. As Treasury Board
President we would have – through Treasury Board – done work to support
Transportation and Works on leases.
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
But the sale of government
properties would be Transportation and Works. They would lead that.
MR. HUTCHINGS:
Okay. Thank you.
1.3.01;
we had some discussion earlier in regard to Government Personnel Costs and
what's involved there. This is the entity – that's what's described there in the
heading and I think it's understood that provides that throughout government as
a whole. We had some discussion, Ms. Michael spoke, in regard to Salaries and
what was estimated, what the revision was and what the estimate was for this
year.
First
off, I've seen this before in some of the Estimates we've done. It's probably
about the reconfiguration and some of the things that are done within the
department. We've seen where the estimate for last year has changed when you
compare it to the estimate that's in this year's budget document. We've seen it
with this line for Salaries.
I think
last year the estimate in the Estimates
book for last year was a little over $11 million. This year it's restated here
as $8.9 million. Can you just give us some understanding of that?
MS. C. BENNETT:
Can we check that and then
we'll get back to you?
MR. HUTCHINGS:
Yeah, sure.
MS. C. BENNETT:
Wanda is looking here in her
book. If she gets the answer before we finish tonight, we'll let you know.
MR. HUTCHINGS:
Fair enough. Yeah.
MS. BREWER:
Sorry, I have it here. It
was folded over.
It was
money restated; $1,311,400 was restated to the Department of Health relating to
the interns and residents contract and $854,400 was re-charged out to the
applicable departments relating to the Labrador Benefits Agreement. So it's
$2,165,800 that was reallocated to other departments and we did a restatement.
MR. HUTCHINGS:
Okay, so I'm just wondering
– that would have been last year in the document, it would have been an
estimate.
MS. BREWER:
Yeah.
MR. HUTCHINGS:
And at that point it would
have been included in the department. But would that mean that for some reason
it's no longer part of Finance or it's just a transfer out?
MS. BREWER:
Well, once the money was
transferred out they restated the original budget for comparative purposes.
MR. HUTCHINGS:
Okay.
CHAIR:
Okay, we'll go back to Ms.
Michael.
MS. MICHAEL:
Thank you, Mr. Chair.
I'll be
moving on to 2.1.01, the next subhead. First of all, I'm looking at Salaries. I
don't often question or I often do not have questions around re-profiling, but
there was a major re-profiling in the Salaries line. The budget had been
approximately $803,000 I think and it was re-profiled by almost $1.4 million up
to $2,241,000. So what was that re-profiling about because it's been maintained,
although there's a drop, but it's certainly up from where it had been.
MS. BREWER:
There was a decision made last year as a pre-curser for transitioning the
pension administration work to the pension corporations that the Pensions
Administration would move from the Human Resources Secretariat back to the
Department of Finance. So you would have seen, when you did the Estimates for
Human Resources Secretariat, you should have seen a similar reduction in one of
their activities.
MS. MICHAEL:
Right.
MS. BREWER:
So all the Pensions people came together within Finance and then we worked with
the pension corporations to lead the transition to the corporations.
MS. MICHAEL:
Okay, thank you.
So then
let's continue along the line. That was the budget; the revision was $1.9
million, approximately, but this year, now in this budget, it is down by
$491,000.
MS. BREWER:
So what we did there, Ms. Michael, is we estimated the number of staff who would
be transitioning to the corporation and because that's not a government entity,
they essentially were resigning their positions. So we had to estimate whatever
termination costs they were entitled to, whether it was severance or overtime
they might have had on the books or leave provisions, things of that nature. So
we estimated that. As well, there is still a smaller number of staff that we
have to provide salary for, as well.
So the
combination of that, plus there was some vacancies that we didn't fill and those
got removed as well. So the net result was a lower requirement required as when
we did the zero-based budget build up for '17-'18.
MS. MICHAEL:
Okay, thank you very much.
MS. BREWER:
And that may change again in '18-'19 once we finish the transition.
MS. MICHAEL:
Right, okay. Thank you, Ms.
Brewer.
Under
the Professional Services, the budget last year was $307,000 and then the
revision added $30,000 and this year it is up again. So if we could have an
explanation of what's entailed in the Professional Services here.
MS. C. BENNETT:
The increase in Professional
Services of $30,000 in '16-'17 was related to greater actuarial requirements
than had been anticipated and the budget in '17-'18 is increased as part of the
zero-based budgeting. It was identified through the departmental submission that
there were additional requirements for actuaries and we wanted to make sure it
was in the right line item and that's what's reflected here.
MS. MICHAEL:
Okay, thank you.
2.1.02,
just a minor question, but under Professional Services there was $25,000
budgeted and nothing spent and now nothing budgeted this year either. What were
the professional services that one thought might happen in that line?
MS. C. BENNETT:
The decrease in '16-'17 was
budget extracts by actuaries were not required in this particular one. In the
'17-'18 reduction, during the zero-based budgeting the departmental submission
centralized all actuary requirements for the Department of Finance in 2.3.01 for
the finance of the Comptroller General under Professional Services.
MS. MICHAEL:
Okay, thank you.
When
you say centralized, Minister, can you give an explanation of what prior
decentralizing was?
MS. C. BENNETT:
Yeah.
MS. MILLER:
Previously, a number of
different areas in Finance who needed to use actuarial information, they all
budgeted for the actuaries in their own activities. But it was felt that it was
better placed in one area so that one area was dealing with the actuaries in all
of the requirements for the department.
Where
the Office of the Comptroller General is responsible for the financial
statements of the province, it was deemed that was the most appropriate place
for it to be, so it was transferred to us.
MS. MICHAEL:
Okay. Thank you very much. I
appreciate that.
2.1.03,
General Insurance and Financial Analysis; again, looking at the salary line
first, the budget was approximately $271,000, but the budget for this year has
gone up by almost $310,000. Could we have an explanation of that?
MS. BREWER:
You may have heard in the
preamble that one of the blocks there was an initiative for financial capacity.
So as a result of that there was money reallocated to this division. There are
two positions to support some Treasury Board initiatives. There needs to be a
review of financial policies. There's probably a list as long as your arm of
different requests that Treasury Board has asked, so we need some dedicated
staff to resource that.
Last
year, there were two people assigned through the Office of the Comptroller
General, but they were actually funded by the Human Resource Secretariat. It was
a major initiative that the department, through the Office of the Comptroller
General, undertook to provide online, some courses, to help any manager
understand the Financial Administration
Act, preparation of Public Accounts, preparation of budgets and just some
basic financial capacity initiatives.
That
worked so well, but because it's not in the training environment – we're moving
on to policy development and policy documentation – that money is now being
budgeted under this activity which is General Insurance as well as Financial
Analysis.
As
well, we put some money in place there. The ADM there, Denise Hanrahan,
Financial Planning and Benefits Administration, really felt that area needed a
director, at least in the short term, because there are certain projects that
have to be looked at such as the Vehicle Fleet Management Policy. Looking at
trying to identify ways we can save money through how we procure insurance and
things of that nature.
There
was a combination of some three contractual positions put in place to help
support some of the financial capacity and other work the Department of Finance
has to lead with respect to The Way
Forward actions.
MS. MICHAEL:
And do I understand
correctly that the director position is also contractual?
MS. BREWER:
It is, yes.
MS. MICHAEL:
All right.
Coming
down in the same subhead, down to Purchased Services, last year there was
nothing budgeted but $7,800 was the revision and this year $8,700. What are the
services that would be purchased here?
MS. C. BENNETT:
In fiscal '16-'17, there was
a requirement for an optic risk claims system and compulsory risk management
courses. So this would be to support efforts to manage insurance, manage
insurance costs and insurance claims, property insurance and the like.
In
'17-'18, the requirement – as part of the zero-based budgeting it was recognized
that an allocation needed to be provided for the optic risk claims system as
well as the continuation of compulsory risk management courses for those
individuals that are working in this unit.
MS. MICHAEL:
Okay. Thank you very much.
2.1.04
– I must be getting tired – again, the salary line here began last year in the
budget estimate as $743,300. It went down in the revision and this year it is
down again by $298,800 from what was budgeted last year.
MS. BREWER:
There were some delays in filling some positions that were provided for in
'16-'17, so that's part of the savings from '16-'17 revised. As well, this is an
area that has gone through extensive changes as a result of changes in
management structure. There was a director position that was eliminated there,
as well as, there was a combination of a couple of manager positions that saw
another manager position eliminated. There was also a vacant manager position
that we are not filling.
MS. MICHAEL:
Okay.
Did
those eliminated positions result in individuals losing positions? Well,
certainly one was empty so that didn't …
MS. BREWER:
Yeah, there was a director
and a manager. But then there was somebody who was also redeployed who would
have been impacted in another branch in another division. That individual was
able to obtain employment at a manager level.
MS. MICHAEL:
Okay.
MS. BREWER:
Then there was a retirement.
We're taking a couple of positions and combining and we'll be filling so,
overall, it's still a reduction.
MS. MICHAEL:
Okay and –
CHAIR:
Okay, we'll go back to Mr.
Hutchings.
MS. MICHAEL:
Could I just ask one
follow-up question?
CHAIR:
Okay, Mr. Hutchings, any
problem or ...?
MR. HUTCHINGS:
Sure.
MS. MICHAEL:
Yeah, it's just directly to
what Ms. Brewer just said.
CHAIR:
Right.
MS. MICHAEL:
I just want to get it
straight. Were there people who actually lost jobs that are no longer in the
system?
MS. BREWER:
Yes.
MS. MICHAEL:
Okay. And was that three?
MS. BREWER:
There were two.
MS. MICHAEL:
Two. Okay, I got it
straight.
Thank
you very much.
CHAIR:
Okay, Mr. Hutchings.
MR. HUTCHINGS:
Thank you, Mr. Chair.
I want
to go back to 1.3.01, the revision for Salaries, $1.8 million. I think,
Minister, yourself or your staff indicated that was due to a settlement or
issues related to maybe a benefit related to an issue with the closure of depots
with Transportation and Works.
Just
tell me again what that was. It was something to do with Transportation and
Works and some other element you indicated reflected the number.
MS. BREWER:
Anne Marie, can you speak
here? Were you involved in the payout of the $1.8 million?
MS. MILLER:
I know it had to do with the
HRS. I'm not sure if it was, maybe, EI related. It was paid directly from
Finance, yeah.
I don't
remember a lot of the details. I know it was just after – it was in January
month that we initiated the payment.
MR. HUTCHINGS:
Maybe if we could get just a
list of what it is and any trend.
MS. MILLER:
Yeah.
MR. HUTCHINGS:
So just explain to me as
well, the initial budget Estimate was $8.9 million, $1.811 million was paid out
by Finance and was used by Finance, but there could have been other transfers
that would have been done by other departments? You would have transferred the
money to them for certain needs, but that's not reflected here, is that correct?
MS. BREWER:
Yes, ordinarily, you would see zero there under revised for Finance, right?
MR. HUTCHINGS:
Yeah.
MS. BREWER:
Because if Finance was using something for its own purpose, it would be
reflected in the particular activity or division.
MR. HUTCHINGS:
Sure.
MS. BREWER:
It's just this particular one, like the transportation depots, you may recall,
was the government of the day closed a number of depots.
MR. HUTCHINGS:
Yes.
MS. BREWER:
And that was challenged by the union and grieved and went to arbitration and
they were award.
Basically, the government – then there's a negotiation process because they're
basically saying people lost their jobs, they shouldn't have lost their job and
there are all kinds of mitigations that has to happen. Some people might have
gotten re-employed elsewhere and things like that.
So
there was a fair bit of time, as I understand it, trying to determine what the
actual settlement was per person for that. This has something to do with the EI
because people would have been entitled to EI payments. So there was some sort
of one payment that was made and there was no ability to charge it off to
individual divisions so they left it. It was one cheque that was cut and
therefore was left in this particular vote.
MR. HUTCHINGS:
Okay.
MS. BREWER:
But I'm a bit hazy on the – because I wasn't directly involved in the actual
payment, but –
MR. HUTCHINGS:
No, fair enough. Maybe we'll
get just an explanation at some point afterwards (inaudible).
MS. BREWER:
Right, yeah.
MR. HUTCHINGS:
Okay.
So this
here, this wouldn't include, Minister, anything – and whether you include it or
not I don't know – anything included for future contract negotiations with –
would it?
MS. C. BENNETT:
No, there is no assumption
in any regard with regard to future collective bargaining and future contracts.
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
The dollars here that you'd
see in '17-'18, I listed earlier, where those assumptions are coming from, based
on discussions between budgeting and HR. They had been related to Transportation
and Works depot settlement, ferry captains, Labrador Benefits agreements, RCMP
collective agreements and any additional funding from existing collective
agreements that are in place.
MR. HUTCHINGS:
Okay, fair enough.
Anything related to JES, this would be referred out to applicable departments to
meet those needs? Would that be correct?
MS. BREWER:
The majority of the JES has been implemented and rolled out, but there is the
odd appeal that might happen. There would be –
MR. HUTCHINGS:
(Inaudible) there are over
400 appeals still existing, right?
MS. BREWER:
Four hundred appeals.
MR. HUTCHINGS:
So if there were any
implications of those appeals, it would flow out of here?
MS. BREWER:
We would look to the department first to see if they could find those.
MR. HUTCHINGS:
Okay, yeah.
MS. BREWER:
But if not, then that would be an area that if they came to Treasury Board and
Treasury Board agreed, we could transfer the money from there.
MR. HUTCHINGS:
Okay, fair enough. Could we
–
MS. C. BENNETT:
Sorry, if I could. Mr.
Hutchings, earlier you asked about Treasury Board. This would be a good example
of where Treasury Board is working hard with the departments to make sure that
if they're able to cover the costs of something that is unexpected or maybe that
they haven't anticipated, that they can actually work to cover those expenses in
the department before they come to Treasury Board.
MR. HUTCHINGS:
Okay. Thank you.
Could I
get the list of transfers, what was transferred out of this? Would that be
possible to get, as well?
Thank
you.
2.1.01,
Pensions Administration, there was just a conversation earlier, Ms. Michael
indicated, in regard to, I think it's Professional Services actuary
requirements. Under Professional Services in 2.1.01 there was an increase. Would
that be actuarial requirements related to something specific or is it just that
you feel that this year it will be a little bit more?
MS. BREWER:
I don't have the (inaudible)
with me, but the valuations of the various plans tend to happen on a triannual
cycle.
MR. HUTCHINGS:
Yeah.
MS. BREWER:
So it depends on when the
particular plans are due and –
MR. HUTCHINGS:
And you'd make the
projections on that, obviously.
MS. BREWER:
Yes.
MR. HUTCHINGS:
Yeah.
Okay.
Thank you.
There's
a line there, Revenue – Provincial. What exactly is that?
MS. BREWER:
Sorry, are you on 2.1.01,
Pensions Administration?
MR. HUTCHINGS:
Yes.
MS. BREWER:
All activities relating to
the administration of the pension plan are actually funded by the pension plan.
That would be a recovery to leave to the various plans.
MR. HUTCHINGS:
Of the cost and just pull it
out; the various plans would cover it.
MS. BREWER:
Right.
MR. HUTCHINGS:
Okay. Thank you.
I'm
just trying to work my way through here. I don't want to repeat things that Ms.
Michael has asked so I'm just trying to follow my notes. My writing is not very
good.
If I go
to 2.1.05, Financial Assistance, this particular heading is defined as promoting
business opportunity and financial support for departments and Crown agencies.
Relevant funding would be transferred to departments during the year as
required.
First
of all, can you just explain to me if there were transfers through the year and
what they were under the Grants and Subsidies of 2.1.05?
MS. C. BENNETT:
Okay, so that's with
reference to the $4.7 million?
MR. HUTCHINGS:
Yes.
MS. C. BENNETT:
Okay.
MS. BREWER:
There was $236,400 transferred relating to collective bargaining and there was
$2,041,000 transferred to Executive Council relating to their Government Renewal
Initiative and the Muskrat Falls-Lower Churchill project committee. A total of
$2,277,400 was transferred.
MR. HUTCHINGS:
You said $236,400 and $2
million?
MS. BREWER:
$2,041,000.
MR. HUTCHINGS:
And the total transfer was …?
MS. BREWER:
$2,277,400.
MR. HUTCHINGS:
Did you say collective
bargaining?
MS. BREWER:
Collective bargaining was $236,400.
MR. HUTCHINGS:
Okay, so what would that be
collective bargaining? What would those monies be for?
MS. C. BENNETT:
That would be related to
expenses that we would have incurred in departments that had expenses that would
have supported the work that government is undertaking for collective
bargaining. Justice may have incurred some expenses, and this would have been
where the transfer would have been from.
MR. HUTCHINGS:
Okay, so would you charge
off an hourly rate for their employers? Would it be for travel or something like
that or all of the above?
MS. C. BENNETT:
I think in the HRS
Estimates, Mr. Hutchings, you asked in HRS where the expenses related to McInnes
Cooper may have been?
MR. HUTCHINGS:
Oh, yes. Okay.
MS. C. BENNETT:
At the time my answer – and
just for clarity for the Members of the Committee I had said that the invoices
for McInnes Cooper would have been generated and invoiced to Justice. This would
be an example of one of the items that could be covering this transfer.
MR. HUTCHINGS:
I guess, Minister, just a
question in regard to McInnes Cooper. Would that be a law firm that's basically
retained by the Department of Justice; therefore, the easiest thing would be if
you wanted assistance, that it's with the Department of Justice and they would
bill it out and then you just …
MS. C. BENNETT:
Yeah, so specifically
related to McInnes Cooper's involvement in collective bargaining, they would
have a contract that would be in place and that contract would be for a certain
hourly amount. That hourly amount would be billed.
When
it's billed, the bill would go to Justice. Justice would cover the bill, or
monies would be transferred from this line item as we had said last year in
Estimates it would be.
MR. HUTCHINGS:
Okay, but I guess my
question is Justice would retain McInnes Cooper. The contract would be with
Justice.
MS. C. BENNETT:
Any contracts for law firms
would be held through Justice.
MR. HUTCHINGS:
Okay, yeah.
Thank
you.
CHAIR:
Okay, before we convene
again, we're going to take a short break to give Don in the Broadcast Centre a
short break.
Recess
CHAIR:
Okay, we'll reconvene and
hopefully clue up on this stretch.
We'll
go to Ms. Michael.
MS. MICHAEL:
Thank you very much, Mr.
Chair.
Minister, I'll pick up at 2.1.05 where Mr. Hutchings was before the break. The
$236,400, that is a cost attributed to costs of collective bargaining. Could you
tell us how much of that has been invoiced and paid to McInnes Cooper?
MS. C. BENNETT:
I don't have that
information here tonight, but I can provide that to you.
MS. MICHAEL:
Okay. Thank you very much.
Staying
in that line and going into this year's budget where the budget for this year is
$11,351,300, what is that about? Is that about the collective bargaining? Is
that anticipating? No.
MS. C. BENNETT:
No, there's no increase in
the amount that we are budgeting for collective bargaining over last year. This
amount and this increase are specific to the various government initiatives to
be transferred to the Department of Finance, such as things like Salaries and
Operating Accounts.
It
relates to work that has to happen on the enhanced federal loan guarantee,
Muskrat Falls oversight and Way Forward-led
initiatives that have to led by Finance, including things like shared services
and centralized collections. It also includes initiatives to support Treasury
Board financial capacity.
There's
also a contingency – and this is new and this would explain the difference from
last year to this year – related to pension reform. That's the primary reason
for this increase over last year.
MS. MICHAEL:
How much is that
contingency?
MS. C. BENNETT:
That contingency is over $6
million.
MS. MICHAEL:
Okay. Thank you.
And, of
course, all of that is in the briefing book? Yes.
Thank
you.
I'd
like to come back to 2.1.04 and if we could have an explanation of the Revenue –
Provincial, 02.
MS. C. BENNETT:
Sure.
The
decrease in '16-'17 was due to recoverable positions being vacant. The
recoverable amount from Newfoundland and Labrador Municipal Financing
Corporation and the sinking funds will be less than anticipated. So this
recovery was less for the (inaudible) market licence paid for by the sinking
funds.
Then,
in '17-'18, the reduction is related to the recoverable expenditures for the
division from the Newfoundland and Labrador Municipal Financial Corporation. The
sinking funds have declined further.
MS. MICHAEL:
Okay. Thank you very much.
Going
forward, then, to 2.1.06, Financial Assistance, Loans, Advances and Investments;
the budget last year was $10,731,400 and down this year. Well, first of all, it
looks like only $2,566,300 went out. This year the estimate is $8,165,100. So I
guess two things: the reasons for the big difference between budget and revision
last year and what exactly is covered in this line right now?
MS. BREWER:
The Loans, Advances and Investments: the budget is the remaining amount owing to
Corner Brook Pulp and Paper on the $110 million loan.
MS. MICHAEL:
Yes.
MS. BREWER:
You may recall there was $25 million available but it's for capital advances.
They submit a capital advance request when they're ready to implement some
capital expenditures. The amount of capital expenditures, the requests were less
than had been anticipated. When we asked, from a cash flow perspective, they had
indicated to budget the balance in '17-'18.
MS. MICHAEL:
Okay. I thought it was the
Corner Brook Pulp and Paper, but just verifying.
Again,
in the same subhead, 2.1.06, the provincial revenue, could you explain that
line, please?
MS. BREWER:
That would be the interest payments that are owed from –
MS. MICHAEL:
The interest payments.
MS. BREWER:
– paid from Corner Brook Pulp and Paper on the loan that's been issued to date.
MS. MICHAEL:
Right.
Okay.
Thank you very much.
What is
the interest on that loan?
MS. BREWER:
I think currently it's around close to 4 per cent, if I recall. If I'm wrong,
I'll get that to you.
MS. MICHAEL:
Okay. Thank you.
2.2.01,
Tax Policy and here, Professional Services – there's a big drop in the
Professional Services line. Last year, the revision actually went up by
$873,000. Then, this year, the budget is almost $237,000 less than last year's
budget. There's quite an up and down there, if we could have an explanation.
MS. BREWER:
Primarily, the increase in projected revised is relating to the commission that
was paid to Deloitte for the indirect taxation review that Ann Marie Miller had
mentioned. The provision next year is money there to commence the comprehensive
taxation review that was announced.
MS. MICHAEL:
Okay. Being done by
Deloitte?
MS. BREWER:
No, we haven't decided yet
in terms of how we're engaging outside expertise for that.
MS. MICHAEL:
Okay. Thank you very much.
MS. C. BENNETT:
Ms. Michael, I just want to
make sure that we're clear. The $236,000, the Professional Services amount for
'17-'18 – I wasn't sure that you heard and I just wanted to double check –
that's related to the tax review.
MS. MICHAEL:
Yes, I did hear that.
MS. C. BENNETT:
Okay.
MS. MICHAEL:
Yeah, thank you very much.
MS. C. BENNETT:
The HST work that Deloitte
would have done, the Professional Services line there in fiscal '16-'17 would
reflect what was paid to them. But if you look down at the bottom under
provincial revenues –
MS. MICHAEL:
Yes.
MS. C. BENNETT:
– you would have seen
revenues anticipated at $8.7 million. That would have been tax recovery.
MS. MICHAEL:
Where are you, Minister?
MS. C. BENNETT:
If you look down under
'17-'18 –
MS. MICHAEL:
Yes.
MS. C. BENNETT:
See where it says related
revenues provincial, the $9.9 million?
MS. MICHAEL:
Yeah, $9.9 million, right.
MS. C. BENNETT:
So that would be the revenue
coming from the work that Deloitte had done on the HST.
MS. MICHAEL:
Okay.
MS. C. BENNETT:
Or we anticipate coming from
the work that Deloitte has done on HST.
MS. MICHAEL:
Okay. I was coming down to
that.
MS. C. BENNETT:
Sorry.
MS. MICHAEL:
Okay. That's all right.
MS. C. BENNETT:
I'm always excited when I
get revenue from somewhere we don't expect to.
MS. MICHAEL:
Okay, very good.
Well
then, I have no more questions in that subhead because that would have been my
next question.
Coming
down to Fiscal Policy, again, just an explanation of the salary line there
because it's a fair bit below what was budgeted last year, over $100,000, I
think.
MS. BREWER:
Okay, Ms. Michael, this is
one of the areas where we indicated there was a consolidation. This division is
now part of the new economic and fiscal policy branch.
MS. MICHAEL:
Okay.
MS. BREWER:
So there was a reduction
there in the director position.
MS. MICHAEL:
Right. Okay, thank you very
much.
I think
what I'll do is just turn it over to Mr. Hutchings at this point.
CHAIR:
Okay.
Mr.
Hutchings.
MR. HUTCHINGS:
Okay, thank you.
I just
had a quick question. I want to go back to 2.1.04, Debt Management. There's
reference to loan guarantees. I'm just wondering the Fisheries Loan Guarantee
Program; would that be part of that, in terms of – because the province would
guarantee.
MS. BREWER:
Well, the minister signs off
on all guarantees, but the actual program is through –
MR. HUTCHINGS:
But a program like that
would fall under something like this, I guess, under this heading?
MS. BREWER:
Well, there's actually a
committee, I believe, through the Tourism, Culture, the department –
MS. C. BENNETT:
TCII.
MR. HUTCHINGS:
Yeah.
MS. BREWER:
TCII. But once a decision is
made to provide the guarantee, then the administration of that guarantee would
follow.
MR. HUTCHINGS:
It wouldn't happen here.
Okay.
Thank you.
If I
could just go to 2.1.05, the Financial Assistance piece there. I know you listed
what was included in 2.1.05 in the Grants and Subsidies. In the top it says
promoting business opportunities. Could you just explain how that relates to the
Grants and Subsidies?
MS. C. BENNETT:
Yeah.
Included in that $11,351,000 is money that the Finance Department will hold to
cover costs associated with things like
The Way Forward, I mentioned earlier the shared services and centralized
collections.
This
heading is not just about promoting business opportunities and financial
supports; it's also about government's objectives, where we need to keep monies
available to be able to implement activities such as shared services. It would
also be – as I mentioned in Ms. Michael's question, there's also a contingency
amount in here relating to pension reform.
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
That amount is over $6
million. I want to be clear because this is a significant increase in this line
item. I want to be transparent about what that is.
MR. HUTCHINGS:
Okay.
2.1.06,
Financial Assistance; it talks about here, one of the lines there, entities to
leverage federal funding initiatives. What federal funding initiatives have we
been successful with that would fall under this?
MS. BREWER:
Last year, if you look at
last year's Estimates, I believe that original budget, Wanda, was closer to $20
million. You may recall the federal government budget was late last year, so we
did not have a lot of information on how the federal government was going to
allocate, particularly to, I believe, it was social infrastructure.
During
the year there were initiatives approved, both from Memorial University and the
college. Some of that money was actually transferred then to the Advanced
Education. You'll probably have a discussion with them tomorrow if they're in
Estimates Committee tomorrow.
So this
year with the Canada Infrastructure Fund and the New Building Canada Fund, that
money is actually voted in the applicable departments.
MR. HUTCHINGS:
Okay, to leverage those
federal dollars to various departments, okay.
MS. BREWER:
Yes.
MR. HUTCHINGS:
I don't know, Minister, if
this is the right spot to ask, but I know with monies that were allocated for
the new science centre, there were monies from Voisey's Bay, I think, there were
monies allocated initially but then I think you reported or government reported
that was backfilled by federal dollars. Has there been a decision made on that,
or does that sit in Finance or –?
MS. BREWER:
That particular project, at the end of the day the government applied to the
federal government for federal assistance. So the money was then used for the
federal – I think it was $99 million approved, just under $100 million was –
MR. HUTCHINGS:
But from the feds?
MS. BREWER:
It was from the feds.
MR. HUTCHINGS:
Okay.
MS. C. BENNETT:
Mr. Hutchings, just to let
you know, that money would be flowing directly from the feds to the university,
that $99 million. So your question was around monies from Voisey's Bay that the
former administration had –
MR. HUTCHINGS:
Had allocated; a part of
that was allocated for the science centre, but I guess with the federal dollars
coming in that frees up that money.
MS. BREWER:
I'm not sure if it was Voisey's Bay or Hebron. I'd have to check.
MR. HUTCHINGS:
Oh, I'm sorry. Yes, you're
right. It was the Hebron Project. I'm sorry, it wasn't Voisey's Bay. It was in
regard to a building of one of the components. Bull Arm and Marystown were full.
They couldn't do it here. They wanted to get moving, so we negotiated that they
build it in Korea. I think it was $150 million, and part of that was $100
million to go to the science centre. But I guess my point is the feds have
backfilled that.
MS. BREWER:
If the feds have stepped in, then the money then became available as general
revenues used to fund government's share, the leveraging that's required for
other federal infrastructure projects.
MR. HUTCHINGS:
Okay, thank you.
Could I
just go to 2.2.01, Tax Policy? Under Grants and Subsidies, there's an amount
there; $23,600 was estimated – was paid last year and it's in again. Is that
related to paying for the harness racing, the Maritime racing commission.
OFFICIAL:
Yes.
MR. HUTCHINGS:
Okay. So we're still paying
basically to be a member of the Maritime harness racing association, I think
it's called.
MR. MARTIN:
Yes, we're still a member at
this point in time.
MR. HUTCHINGS:
Okay.
MR. MARTIN:
But we have been speaking
with IGA at looking at our membership in terms of methodology, given that the
racetrack is currently closed.
MR. HUTCHINGS:
Yes, unfortunately.
2.2.03;
the Salaries for what was estimated and what was revised and then the Estimates
for this year have been readjusted. I'm just wondering about those changes and
the reduction. I guess that's related to positions or …?
MS. BREWER:
The reduction from budget to
revised was there was a senior policy analyst who was on unpaid leave for a
period of four months and there was an analyst position that was vacant for the
entire year. Then, there are changes as a result of changes to management
structure. There was actually a manager position that was eliminated there.
MR. HUTCHINGS:
The senior policy and the
analyst; were they positions that just were vacant and they're going to be
filled at a later point or …?
MR. MARTIN:
There was one position that
was eliminated through the process.
MR. HUTCHINGS:
Okay.
MR. MARTIN:
There was another position
that was vacant for most of last year, that has since been backfilled, but since
it was backfilled at a lower scale, it's budgeted at a lower salary scale as
well.
MR. HUTCHINGS:
Okay.
MR. MARTIN:
So it's a combination of the
two.
MR. HUTCHINGS:
Okay. Thank you.
We'll
go down to Economics and Statistics, 2.2.04. I wonder under Salaries there as
well, if we could just get some explanation in regard to what was budgeted last
year, the revision and again the estimate for this fiscal year.
MS. BREWER:
The reduction is due to vacancies and recruitments were longer than anticipated.
As well, there's some contractual work. It depends on the volume of the survey.
There was some survey unit work that had been delayed. So that accounts for the
majority of the savings from budget to revised.
Then,
as well, going into next year the money is up because part of the work here is
some contract work that the division does for other jurisdictions. As a result
of that, there were some contractual resources that were supplemented. As well,
there were also some reductions in positions due to changes in the management
structure.
MR. HUTCHINGS:
Okay, so contract work with
other jurisdictions would be related to sharing of statistics and …?
MS. BREWER:
It could be the City of St. John's helping with some economic projections.
MR. HUTCHINGS:
Okay.
MS. BREWER:
One of the projects that the former ADM, I know, has particular passion in is
some work they're doing with the Irish – there's a professor who they're
documenting a lot of the work, from a census perceptive, that he has with
respect to the Irish immigration.
MR. HUTCHINGS:
Yeah.
MS. BREWER:
It varies and it fluctuates from year to year. You can see the revenue line
would be higher as well.
MR. HUTCHINGS:
Okay, yeah.
MS. BREWER:
Because we actually bill for
this work.
MR. HUTCHINGS:
Most of the revenue would be
tied to the activity you just described, basically.
MS. BREWER:
Right, yeah.
MR. HUTCHINGS:
Okay, Mr. Chair, my time is
up I think.
CHAIR:
Okay.
Ms.
Michael.
MS. MICHAEL:
Thank you, Mr. Chair.
Minister, I'd just like to come back to 2.2.01 for a minute. I'm just curious
why we're still paying the harness racing fee if we no longer have harness
racing happening in the province. I know it's not a lot but …
MR. MARTIN:
It was last year when the actual racetrack closed; it's currently for sale at
this point in time. We still have an obligation to be in a regulatory part.
However, given the fact that they are closed, we have been discussing right now
with Intergovernmental Affairs – this is an interprovincial harness racing
association – to discuss with them the opportunity for us to, rather than
strictly withdraw, whether or not we can put either our piece of the (inaudible)
or at some reduced fee amount, recognizing the fact that it's not currently
operating.
MS. MICHAEL:
Okay. Hoping that something
might operate again?
MR. MARTIN:
Obviously, while it's sitting there we do have a regulatory authority.
MS. MICHAEL:
Right.
MR. MARTIN:
It could impact the business
as well.
MS. MICHAEL:
Okay. Thank you very much.
With
regard to the tax review, is that report done? Would it be available?
MS. C. BENNETT:
The tax review for the HST
or the tax review that we're going to do around personal and corporate tax?
MS. MICHAEL:
For the HST. You haven't
started the other one yet. You're waiting on the federal government, aren't you?
MS. C. BENNETT:
No.
MS. MICHAEL:
No.
MS. C. BENNETT:
With the tax review –
actually, let me correct. The federal government had done their tax review in
two phases.
MS. MICHAEL:
Yes.
MS. C. BENNETT:
They had originally
announced they were going to do it in one phase. They have since said they're
going to do it in two. They have the first one done.
We're
going to start ours this fiscal year with the hopes of concluding it before next
year. I have ministerial meetings in June and I'm hoping to get an update on
phase two of where the federal government is with regard to theirs, so that we
can link it into ours so that there will only be one tax change happening at the
same time.
MS. MICHAEL:
Right. Okay.
What
about the HST?
MS. C. BENNETT:
Sorry, I misunderstood your
question. I thought you were asking about the work that Deloitte was doing on
HST recovery.
MS. MICHAEL:
Yes, right – oh, no, that
wasn't what I was talking about.
MS. C. BENNETT:
My apologies.
MS. MICHAEL:
Okay. Thank you very much.
Okay,
then moving forward. Keith was at 2.2.04, right, and he asked about Salaries.
2.2.04;
if we could have an explanation of the Supplies line. What exactly are the
supplies here? It's gone up by almost $19,000 in this year's budget.
MS. C. BENNETT:
The increase in the Supplies
line; when the department did the zero-based budgeting review and looked at what
their expenses were going to be from the ground up, they noted there was going
to be a one-time funding of $15,000 to purchase census data. That's primarily
the reason for the increase this year.
MS. MICHAEL:
Okay. Thank you very much.
Minister, what is the source of the Revenue – Provincial in this subhead? Last
year the budget for that was $86,400, but it looks like $288,000 more actually
came in and then this year it's actually up by $335,000.
MS. C. BENNETT:
There was a variety of
recoveries made in '16-'17: Newfoundland and Labrador Housing, the City of St.
John's, Newfoundland Hydro, Eastern Health, workers' comp and MUN. In this
coming year, this '17-'18, we're anticipating revenues coming in from the
Northern Policy Institute, Memorial University, Newfoundland Hydro, the City of
St. John's, WorkplaceNL and the Irish Project that Ms. Brewer spoke about
earlier. In your Estimates book,
these line items are detailed out with actual dollar amounts.
MS. MICHAEL:
Right.
MS. C. BENNETT:
So you'll be able to see
those revenue line items.
MS. MICHAEL:
Okay. So this is sort of
paying for the services to the department.
MS. C. BENNETT:
That's correct.
MS. MICHAEL:
Okay. Thank you very much.
Guess
what? We're down to the last subhead, I think, 2.3.01, Office of the
Comptroller.
Just an
explanation of the salary line here; it's down by about – how much, $1,000, is
it? Yes.
MS. BREWER:
The reduction there is –
again, significant changes occurred there through our changes to the management
structure. As I indicated earlier, there was a director position that was
eliminated there, various manager positions, as well as management analyst
positions.
MS. MICHAEL:
I guess the book probably
has all that detail does it, the briefing book? Not necessarily.
MS. BREWER:
I think as a separate
exercise you're going to be releasing – it might not – the positions throughout
government?
MS. C. BENNETT:
Yes. As I said, in HRS,
within the next day or so we'll be able to table in the House the final numbers
related to the management changes.
MS. MICHAEL:
Right, because it's $1.03
million. So it's a fair bit.
MS. C. BENNETT:
Yeah. But, Ms. Michael, that
$1 million is built from a number of items. It's built not only from the
management structure, but also savings from zero-based budgeting and the
annualization of last year's decisions. There are a number of items that are
contributing to that, and the dollar figures will be in the book.
MS. MICHAEL:
Okay. Thank you very much.
Professional Services has gone up considerably from the budget last year. It
went up in the revision and now gone up by $126,000, give or take, above last
year's budget for this year.
MS. BREWER:
You may recall, Ms. Michael,
the earlier discussion where Ann Marie mentioned that it was decided to
consolidate into her area –
MS. MICHAEL:
Oh, right. Yes.
MS. BREWER:
– to better manage the actuarial contracts. As well, based on discussions with
the Auditor General, there are evaluations that will need to be done in the
future with respect to sick leave.
Ann
Marie, what was the other one, severance? No, it was just sick leave.
MS. MILLER:
Just mostly.
MS. BREWER:
Mostly sick leave.
MS. MICHAEL:
Okay. Thank you.
Then,
under Purchased Services, this has dropped by approximately $164,000. Could we
have an explanation of that?
MS. BREWER:
As the minister indicated,
we're working hard with Transportation and Works to try to shrink our lease
footprint. This is an area out on Topsail Road where our payment processing is,
and there was some excess space there that we managed to work with
Transportation and Works. I believe it's being sublet to one of the units
belonging to Eastern Health, if I recall. So they're going to take over some of
that space and some of that rent.
MS. MICHAEL:
Thank you very much.
Finally, the revenue line, Revenue – Provincial, what is that about?
MS. C. BENNETT:
That would have been related
to international fuel tax agreement fees. In '17-'18 we expect the same, that
there'll be changes in the international fuel tax agreement registration and
decal fees, and this is also zero-based budgeting related.
MS. MICHAEL:
Okay, thank you.
That's
the end of my questions at the moment. A question may come up again, but at the
moment I'm finished.
CHAIR:
Okay, thank you.
Mr.
Hutchings.
MR. HUTCHINGS:
Thank you, Mr. Chair.
Minister, I just want to go back and clarify something earlier, 2.2.01, just so
I'm clear on the Professional Services. It was $1.2 million, and I think that
was tied, you said, to Deloitte and some of the work they've done on HST and I
think directed down to $9.9 million in terms of the revenue.
The
expenditure in Professional Services equates to what the return was back to the
province in what they found in regard to HST?
MS. C. BENNETT:
The $873,000 that you would have seen in '16 – sorry. In '16-'17, the $1.2
million, $873,000 of that is to reimburse or repay Deloitte as part of the
identified significant tax recovery opportunity in
Budget 2016.
In the
revenue line, that would have been revenues that we anticipate getting from
their review. The review was completed in '16-'17, but the revenue won't be
received until '17-'18.
MR. HUTCHINGS:
That's the $9.9 million, is
that the number that you're –?
MS. C. BENNETT:
Of the $9.9 million, $8.7
million is related to the Deloitte work, and $1.2 million is annualization of
prior year decisions.
MR. HUTCHINGS:
Okay. So you've submitted
them to the federal government and waiting to hear back, but in the interim the
calculation was done, Deloitte was paid $873,000.
MS. C. BENNETT:
Yes.
MR. HUTCHINGS:
Okay, thank you.
I just
had a couple of general questions, Minister, and then clue up here.
In
February of 2017, there was an issue with an overpayment in regard to HST from
the federal government; I think it was somewhere in the range of $140 million.
Can you just give me an update on where that is in regard to paying that off, or
a payment arrangement or status (inaudible)?
MS. C. BENNETT:
The HST overpayment, there's
been a request made of the federal government to, instead of requiring that
payment in one year or in the years that it was due, if they can stretch the
payment.
I don't
have the information here tonight.
MR. MARTIN:
I believe it's five years. We'd have to confirm, but I believe it's paid back
over a five-year period.
MS. C. BENNETT:
They've agreed to that,
obviously?
MR. MARTIN:
They've agreed to that, yes.
MS. C. BENNETT:
So I'll confirm that for
you, but when the original information came in, there was a payment structure we
thought was too tight so we asked them to give us more time and they've since
come back and provided us with more time. And as the assistant deputy minister
just mentioned, we believe it's five years but we'll confirm that for you.
MR. HUTCHINGS:
Okay, thank you.
Last
year, we talked about the use of, I think, P-Card programming that was
implemented and the initiative was to lower the cost of government.
Do we
have any assessment done of the success of that to date and what the return has
been back to government for savings?
MS. C. BENNETT:
I'm going to ask Ann Marie
Miller, the Comptroller General, to provide you an update on the information she
might have.
MS. MILLER:
We're still rolling out the P-Card program. Last year, it was piloted in a few
departments and each department was asked to identify people as P-Card holders.
MR. HUTCHINGS:
Okay.
MS. MILLER:
So I can try and get you some information. I don't know if there's been an
assessment done of the overall savings at this point, but I can certainly
discuss and go to GPA because they're the ones who are actually administering
the P-Card program.
MR. HUTCHINGS:
Okay. So the program was
piloted and it hasn't gone full blown yet across the government, has it?
MS. MILLER:
No, it's still continuing to –
MR. HUTCHINGS:
Okay.
MS. MILLER:
But the goal would be that the more P-Card holders, the less administrative
costs because you don't have the cost associated with processing purchase orders
and invoices.
MR. HUTCHINGS:
Yeah.
Okay,
that's good for me for now, Mr. Chair.
CHAIR:
Thank you.
Ms.
Michael.
Okay,
we'll call the heading.
CLERK:
Subheads 1.1.01 to 2.3.01
inclusive.
CHAIR:
Shall 1.1.01 to 2.3.01
inclusive carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 1.1.01 through 2.3.01 carried.
CHAIR:
Shall the total carry?
All
those in favour, 'aye.'
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?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, Estimates of the Department of Finance, Consolidated Fund Services and
Office of the Chief Information Officer carried without amendment.
CHAIR:
Okay, we've already accepted
the minutes of the previous meeting. The time and date of the next meeting will
be tomorrow, May 9, at 6 p.m. in the same location.
Ms.
Michael.
MS. MICHAEL:
Just concluding comments to
thank the minister and her officials. This was a very good session tonight and
thank you very much for all the work you do, not just tonight. We understand how
much work you have a on your plates.
Thank
you very much, Minister, and your officials.
MS. C. BENNETT:
Thank you.
Mr.
Chair, I just want to take a minute and thank the team that sat here. As I'm
sure Members of this House would appreciate, this team does a tremendous amount
of work, not only in its own department but across government to help prepare
the budget. I have to tell you, I've never seen a bunch of CAs work as hard as
these individuals. So I want to say thank you and congratulations to them on
serving the people of the province with dignity, integrity and competency.
Thank
you.
CHAIR:
Okay, a motion to adjourn.
MS. HALEY:
So moved.
CHAIR:
Adjourned.
On
motion, the Committee adjourned.