June 1, 1993                                GOVERNMENT SERVICES ESTIMATES COMMITTEE


Pursuant to Standing Order 87, Mr. Rick Woodford, M.H.A. (Humber Valley) substitutes for Mr. Roger Fitzgerald, M.H.A. (Bonavista South).

The Committee met at 7:00 p.m. in the Legislative Chamber of the Colonial Building.

MR. CHAIRMAN (Oldford): Order, please!

We are about ready to start. My name is Doug Oldford and I am the Chairman of the Government Services Committee. We are here tonight to review the estimates of the Department of Municipal and Provincial Affairs, and the Newfoundland and Labrador Housing Corporation. I welcome the minister and his officials, members of the Committee, our clerk for the evening along with our recorder. Our Vice-Chair, Roger Fitzgerald is out doing some constituency work and could not be here so we have Mr. Rick Woodford, the Member for Humber Valley who is going to serve as Vice-Chair. He is substituting for Mr. Fitzgerald. I will introduce the members of the Committee. We have Mr. Lloyd Matthews the Member for St. John's North, Mr. John Crane the Member for Harbour Grace, Mr. Walter Noel the Member for Pleasantville, and Mr. Jack Byrne the Member for St. John's East Extern.

There are a few rules that we are living by this evening. This meeting tonight will be scheduled from 7:00 to 10:00 and if at 10:00 o'clock we feel that we have not done an adequate job in reviewing the estimates we will have to make a decision at that time whether we adjourn, carry on, or whatever. We are going to give the minister fifteen minutes to introduce his staff and have an opening statement. We will then give the Vice-Chair fifteen minutes to either respond to the opening statement or ask questions. We go from there to the government side and we will alternate from there giving each member of the Committee ten minutes to either address his concerns or ask questions of the minister and his staff. We will do that until everyone has had a turn to speak and we have reached 10:00 o'clock. For recording purposes I would like for everyone to identify themselves before they ask a question or before the minister or staff responds. That is important. Other than that I think we can get on with the meeting and ask the minister to introduce his staff and present his opening remarks.

Mr. Minister.

MR. REID: Good evening, ladies and gentlemen. First of all let me identify myself. I am Art Reid the minister responsible for housing under Municipal and Provincial Affairs. To my immediate right is Robert Noseworthy chairman and chief executive office of the Housing Corporation. To my left is Peter Honeygold and Peter is vice-president of Business Development and Corporate Affairs, and Edward Heath is our vice-president of Finance and Executive Services.

Gentleman, my staff has prepared for me an opening statement and you will have to bear with me, especially my former colleagues from the House, who realize that taking on such a massive job I am not 100 per cent, I guess, versed on the matters of either one of the departments I represent, or agencies, and if I have to, throughout the night, divert your attention or your questions to one of my staff I am certainly sure they will be able to provide answers to you.

I would like to take this opportunity to review the estimates of Newfoundland and Labrador Housing Corporation and provide an overview of the activity proposed for 1993-94, however with some of the members on the Committee being first time MHAs before looking at these areas I would like to provide a brief overview of the mandate and activities of the corporation. Newfoundland and Labrador Housing is the housing arm of the provincial government which strives to ensure that suitable and affordable housing is available to all residents with the priority to provide such housing to those most in need. In these activities NLHC works in corporation with the federal government, municipalities, and community organizations. To assist in the Province's economy development NLHC plans and develops residential and industrial land assemblies in areas of actual and potential growth. The corporation's prime responsibility is the delivery of social housing programs to low income families, senior citizens and special needs groups. These social housing projects which are cost shared on a 75/25 federal/provincial basis with Canada Mortgage and Housing Corporation are delivered and administered by NLHC.

As well as some social housing, NLHC administers market rental housing, develops residential and land assemblies and develops and administers provincially owned industrial parks. I would like to note that as a result of a comprehensive review of the corporations mandate, the strategic plan of the corporation has been adopted by government. This plan confirms the role of NLHC in each of these categories and that is the continued active involvement in the provision of social housing, privatization of its market rental housing portfolio, the continued banking and development of residential land and the continued planning, development and marketing of industrial properties. With regard to the scope of NLHC activities, the corporation presently manages a portfolio of over 7700 social housing units and 700 market rental units. As well, the corporation administers a portfolio of some 8200 mortgages and home repair loans valued in excess of $130 million.

In the area of land development, the corporation has developed close to 6400 residential building lots of which 5700 have been sold to date. Over 2,000 acres of industrial land has also been developed and/or transferred to the corporation, of which close to 600 acres have been sold. In excess of 7,000 acres of undeveloped residential and industrial lands remain in the corporations land bank.

Gross expenditures for the corporation for the upcoming fiscal year is estimated to be $162 million, representing current account expenditures of $120 million and capital account expenditures of $42 million.

It is important to note that the provincial grant of $16.48 million referred to in the estimate represents only the provincial share or 10 per cent of the total expenditures of the corporation. I think that point in particular should be noted especially by the new members, the fact that the government itself only puts in approximately 10 per cent of the expenditures of the corporation. The rest of the money is generated either through federal government transfers and/or grants and what we generate ourselves.

The total expenditures anticipated for `93-94; 52 per cent which is $83.8 million will be generated by the corporation from its various housing, loans and land programs, 36 per cent which is $57.8 million will be provided by the federal government, 2 per cent, 4.0 or $4 million will be financed independently by the corporation through bank loans. While the net current account request of $16.8 million contained in the Budget represents an increase of nearly $2.2 million over the `92-93 revised Budget, it should be noted that the majority of the increase is due to the reduction of some $2 million in funding available from prior years surplus. Actual program costs will only increase by $213,000 or slightly more than 1 per cent this year despite the fact that the number of social housing units being subsidised will increase by some 286 units. As well, new subsidised RRAP commitments will exceed 700 in the new year. Capital programs of the corporation, which will generate some $42 million of expenditure, will require no capital funding from government.

Highlights of the `93-94 budget include the provision of ongoing assistance to some 17,000 families throughout the Province by means of subsidized rentals, mortgages and repair loans. These programs will cost the federal and provincial governments a total of $75 million in 1993-94. The provision of some 144 new social housing units throughout the Province to serve families, seniors, natives, non-elderly singles and the disabled. Some 125 of these units will be newly constructed at the cost of $9.1 million while the remaining nineteen units represent new rent supplements which will assist needy clients living in private rental accommodations. All programs will provide financial assistance based on the tenants annual income and their ability to pay. Also, the provision of some $7 million in new federal/provincial home repair funding to over 700 eligible recipients.

This funding provides grants and loans to low income home owners including natives and the disabled to upgrade their existing homes. Rehabilitation represents the greatest housing need in this Province and will continue to be the major focus of the corporation for years to come. The provision of some $6.5 million to fund residential land development that will see an additional 230 residential building lots developed, and the provision of some $1.5 million to continue a three year modernization plan for the 210 unit Buckmaster's Circle project in St. John's. The total cost over the three year period is expected to exceed $5 million. Major renovations to other social housing projects in the Province will cost a further $3 million.

The provision of some $700,000 to industrial land development in Clarenville - the Chairman will be glad to hear that - this is in addition to the recent announcement concerning the Stephenville industrial area which will see a start made on the comprehensive plan for this development to allow for upgrading of existing streets and services to open up new properties for industrial and commercial infill.

The continued privatization of the corporation's market rental units. This year's Budget provides for the ongoing sale of projects throughout the Province as well as several large projects in the city of St. John's. In addition to the Elizabeth Towers and the Churchill Square projects we are currently on the market, both the Linden Court and Arnold's Loop apartment complexes in St. John's will be offered for sale later this year. I am not sure if you are all familiar with that but a number of our properties throughout the Province, like Elizabeth Towers, we have been trying to unload - is that the right word?... to privatize, to sell. Unload is not the right word. We are having some difficulty with some but others are gobbled up pretty quickly and as fast as we can we are putting the other units on the market for sale and hopefully this year we will have some success with some others. The introduction of a new self-build housing initiative providing the construction of six units in coastal Labrador for native families. This program provides for home ownership while enabling builders to gain sweat equity and develop skills during the construction period.

In closing, Mr. Chairman, I feel the 1993-94 budget of the corporation represents an excellent balance in recognizing the continuing need for social housing in the Province while considering the fiscal realities facing government. In total the social housing needs of some 850 additional households in the Province will be addressed through the Budget in the coming year. As well expenditures of the corporation in the order of $162 million will provide employment for some 1300 persons throughout the Province. I must, however, express my very serious concern to my colleagues around this table over the federal government cutbacks in new social housing expenditures which will see new unit and repair loan production reduced by some 50 per cent in 1993-94. Furthermore, in its recent Budget the federal government announced that no funding will be provided for new social housing units beyond 1993-94. This effectively means the termination of existing federal/provincial cost shared agreements for the annual provision of new social housing. Current agreements or similar arrangements have existed in this Province since Confederation and indeed elsewhere in the country, well before our involvement.

This withdrawal is occurring at a time when there exists a continuing need for social housing assistance in Newfoundland and Labrador and effectively eliminates an important part of the social safety net which has existed in Canada for decades. Attempts are being made by the Provinces to have this decision reversed, and I can say here, I think, quite honestly that every province in Canada are lobbying strongly at the present time with the federal government to change their minds on this particular decision. This will be one of my major focuses as I become more familiar with the housing portfolio and I will have more to say about this in the House of Assembly once I am better able to wrestle with the issue.

The residential construction industry remains a promising part of our economy for the year ahead. Total housing starts in the Province will advance this year by 5.7 per cent to approximately 2,400 units in 1993. Sustained growth in economic and labour market conditions is projected to boost housing starts to 2,600 units in 1994. A gradual improvement in consumer confidence, due in part to the resolution of the financial agreements in the Hibernia project and the continuation of federal government initiatives, reducing the down payment requirements, will support the gains in new housing construction. These same factors combined with low mortgage rates will contribute to a rebound of activity on the re-sale market in 1993. Additionally, a slight increase in spending is expected in the renovation market. As minister responsible for Newfoundland and Labrador Housing Corporation I am looking forward to an improved outlook for the home building industry in Newfoundland and Labrador in the coming year.

May I just make one comment to the Committee? I think the most serious thing that I've faced since coming into the portfolio, and the little bit of time that I've had to spend in the housing portfolio, in the housing area, the one thing that disturbs me more than anything else - I don't know if you realize what impact the federal government pulling out of social housing will have on the Province of Newfoundland. That particular issue in itself is probably the most important one that I'm going to have to deal with as the minister in the next couple of years.

You'll see the discontinuation of RRAP programs. John and I are really familiar with that out in our area. Not so much I suppose in St. John's, but I'm sure us rural members are familiar with RRAP. Any new expansion to social housing will be stopped immediately. Seniors' housing will definitely suffer. In layman's terms, if the federal government backs out on us, if this happens, if they do what they propose to do, the legs will be cut right out from under Newfoundland and Labrador Housing next year. I really don't think that we as a province can afford that. We've been doing very well in the last few years and it's too bad that those programs can't continue, because there's still a great need in the Province for that type of assistance.

With that said, gentlemen, I have to make one correction. I haven't got your estimate books, but... is this the letter, would that be in theirs?

MR. NOSEWORTHY: That's what's contained in the estimates (inaudible).

MR. REID: This is what's here.

MR. NOSEWORTHY: The first two pages.

MR. REID: First two pages, the one from Newfoundland and Labrador Housing, Hon. Bill Hogan. I need to change some figures. The bottom figure of Net Expenditure (Current) on the bottom of the page, I think on your page it says $16,792,000. The actual is $16,770,000. The figure that you see there was a misprint. It was the 1992-1993 figure. So that's the only change that I have. Am I correct?

MR. NOSEWORTHY: Under the line here, the Gross Expenditure is changed.

MR. REID: I'm sorry, yes. The Gross Expenditure is changed too. That's three lines up. From $18,470,000. Then the Less: Related Revenue Current is 1,700,000, which would give you a bottom figure of $16,770,000. Okay?

MR. NOSEWORTHY: This relates to the fiscal year 1993-1994.

MR. REID: Yes. 1992-1993, it says there in your Summary of Expenditure and Related Revenue Fiscal Year. It should be 1993-1994 on that page. Those are the only changes. Am I correct?

MR. CHAIRMAN: Thank you, Mr. Minister. We now move to Mr. Woodford, who will either make a statement or start the questioning? Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman. First question to the minister is based on the section of his statement outlining the expenditure of Newfoundland and Labrador Housing, the gross expenditure, the current account expenditure and capital account expenditure.

You mentioned the fact that the provincial share would be 10 per cent, which would be the same as last year I take it, but the total expenditures anticipated for '91-'92 would be $83.8 million, which would be generated by the corporation from its various housing loans and land programs representing 52 per cent. How could $83.8 million representing 52 per cent, yet, 52 per cent last year, represented $91.4 million without the budget changing?

The total generated by the corporation last year was $91.4 million representing 52 per cent of total expenditure; this year, and the minister, just in his statement now, said it was 83.8 per cent but yet the budget is pretty well the same, $16.8 million.

MR. NOSEWORTHY: I do not have the figures exactly here as to the reasons, and I can speculate some of the reasons certainly would be the fact that land sales are down this year, revenues are down in relation to land sales. I would anticipate that a large portion of the revenue that we are able to generate comes from individuals paying rent geared to income, in certain instances particularly in rural areas, with the economy being the way it is, a lot of those rents would be lower than they were last year for example, and that would be one of the reasons for a lower revenue component. I do not know - Ed, are there any other particular aspects that might contribute to that?

MR. WOODFORD: Yes, I understand -

MR. NOSEWORTHY: Basically, it would be land sales and rent.

MR. WOODFORD: Yes, I can understand it is down, it is down approximately $6.6 million of your total expenditure that is generated by the corporation, but I cannot get it from the estimates because there is no breakdown and, how come that same figure $91.4 million last year versus $83.8 million this year, unless I have it wrong, that is what the minister read out as I was just listening to, represented 52 per cent last year and represents 52 per cent this year.

MR. NOSEWORTHY: Well, I would imagine that it represents 52 of the total budget, so it really does not matter what happens here, right?

MR. WOODFORD: It does matter in the total.

MR. NOSEWORTHY: The expenditures, but the expenditures this year as of - I do not know exactly what they were last year, but what we are suggesting is that the expenditures this year, in total, are lower than what they were last year, so this revenue represents the same percentage of the lower total expenditure. I would think that could be the only explanation and the reason for the lower revenues would be, primarily in relation to rents and sales of land and properties by the corporation.

MR. WOODFORD: Did the minister read out $16.8 million in the estimates, in that particular section or maybe I got that wrong?

MR. REID: Yes, $16.8 million is the provincial grant, but that -

MR. WOODFORD: Yes, that is what I am basing it on, but I can understand where the Chairman is coming from because if it is based on $16.8 million from the minister's statement and when you look at the estimates, it is $16.7 -

MR. NOSEWORTHY: $16.770 (inaudible) -

MR. WOODFORD: You might get the variation there, but he read out $16.8, and that would change the rest of them too. That would change the -

MR. NOSEWORTHY: That is just a matter of lower expenditures, lower total this year -

MR. WOODFORD: - the federal government on the one hand, the -

MR. NOSEWORTHY: - because certainly, our social housing expenditures are down considerably because of the withdrawal of the federal government terms of RRAP and social housing, so it is just that this represents, by sheer coincidence the same proportion of the lower budget figure.

MR. WOODFORD: I see that the corporation called for the disposal of Churchill Square apartments, and I think your closing date was April 15 and there was another one, one section there in Churchill Square, the commercial section at the bottom and the residential section on top -

MR. NOSEWORTHY: That is correct.

MR. WOODFORD: - and I think there was another one, or was that just the one? Deadline was April 15th?

MR. NOSEWORTHY: No. Essentially it was just that building, on the east of the square -

MR. WOODFORD: Oh no, the other one was Elizabeth Towers, sorry.

MR. NOSEWORTHY: The other ones are referred to as Allandale. Linden Court is behind that building and that will be for sale this year

MR. WOODFORD: But that was not called, that was not tendered for?

MR. NOSEWORTHY: No, it was simply -

MR. WOODFORD: So it was just the Churchill Square and the Elizabeth Towers. On the Churchill Square sale, why was there no action taken on that after the three or four bidders came in? One bidder was pretty well dead on. Was it because there was some correspondence from the Co-op movement?

MR. REID: From the Co-op movement?

MR. WOODFORD: Yes. I saw some correspondence from the - I did'nt take it with me tonight.

MR. REID: Not on the Churchill Square.... I don't think there was any mention of the Co-op on the Churchill Square one, was there?

MR. WOODFORD: Yes, there was.

MR. NOSEWORTHY: They did indicate that if there weren't any successful bidders in terms of Churchill Square they would be interested in negotiating a co-op arrangement in relation to that property, yes.

MR. REID: We had four bids on the Churchill Square apartment ones. The highest bid in this particular case, the highest tender, was in excess of $800,000 under what we appraised the building to be. We're still now in the process of negotiating with....

MR. NOSEWORTHY: The second bidder.

MR. REID: With the second bidder. As well as we haven't made a decision yet on what we're going to do with the Co-op group as well. So that's still up in the aid Rick. We couldn't at the time accept that - no, in fact, the top bidder has withdrawn, if I'm correct.

MR. NOSEWORTHY: That's correct.

MR. REID: The top bidder who was $859,000 short has withdrawn their bid at this particular point in time. That's why we have to go back and I suppose communicate with Community Cable.

MR. WOODFORD: That's not the numbered company. The numbered company was the second one.

MR. REID: No, the numbered company was the first one.

MR. WOODFORD: Okay. And the second one was way below (inaudible).

MR. REID: Community Cable was $1.3 million.

MR. WOODFORD: Right. It was $3.5 million, wasn't it, or $2.5 million that you had on the...?

MR. NOSEWORTHY: Roughly $3.4 million.

MR. REID: Three point four million.

MR. WOODFORD: Three point four million. But I saw correspondence - I could have taken it down with me tonight - from this Co-op movement. I just forget the name of it. That offered something, saying that they would have paid $500,000 more than what the top bidder bid, and also asking for a government guarantee to finance the whole project if they took it over. Isn't that right?

MR. NOSEWORTHY: There was a piece of correspondence that they did send into the corporation which indicated that if we didn't receive any successful bids that they would be interested in negotiating an arrangement on that. There was some reference made in there to a bid. I don't recall exactly what it was, but it was certainly higher than one of the top bids we would have received for the property. There were no performance bonds, there were no securities, there was no bonding in place for that. Quite frankly, we have been dealing with a property in Pleasantville from this same Co-op group which dates back to 1991 where they would have made an offer in respect of that property which would have actually exceeded the market value of the property.

Previously there has been a co-op program in place through Canada Mortgage and Housing which was cancelled two years go, but this particular Co-op wanted to fund this through a particular mortgage arrangement that they had with the bank which would require government guaranteeing the property up front to the tune of about 120 per cent of what the property was worth, and being prepared to accept a possible write-off in the order of about $320,000 or something like that if indeed the Co-op ran into difficulty.

That clearly causes certainly the corporation some concern. While we were attempting to negotiate that down to something which would equate to 100 per cent there has been no way we're able to do that. This particular co-op has absolutely no equity and can offer no security and wasn't able to compete on the same basis which we called this tender. It's the same type of deal that they were looking at as we've been trying to hammer out with them for eighteen months in Pleasantville.

MR. WOODFORD: I got the impression out of the correspondence that I read that it seemed like they put this in after the fact. They saw in the media somewhere the actual assessed value of the properties. It seemed to me like an intimating thing, especially where the one copy went to the tenants in Churchill Square. I do not know if you read that part or not but that is what I read into it.

MR. REID: Mr. Woodford, we are in the process right now of evaluating that whole proposal and there has not been a decision made on it yet. I am not in a position or my staff are not in a position as of yet, to really make any comment on it. I would not want - this meeting is open and I would not want to leave any impression with anyone that we are either going to turn this offer down or accept it, at this particular point in time.

MR. WOODFORD: But the bottom line is that you are going to try to divest yourself of that particular piece of property and more besides that in the coming year?

MR. REID: The problem we have, Mr. Woodford, with a lot of our properties is that we owe so much money on the properties ourselves. We are trying to gain enough money in return for the sale of the property to at least pay off some of the debts. In some instances our debt load is much higher than some of the offers that have been made to us. So, of course we have no choice but to take second looks at offers when they come in.

MR. NOSEWORTHY: In some of the properties that is true. The other approach, from our perspective, is the fact that we have assets here that we have appraised at a certain market value and certainly I think in terms of a public asset, the corporation is obliged to try and realize a fair return on that public asset. We are not prepared to accept bids that are clearly not in keeping with full market value for those public assets.

MR. WOODFORD: That is fair enough. I do not know how long ago it was, a couple of years I guess or many more, that they switched the maintenance part of social services, put it over to Newfoundland and Labrador Housing? The maintenance sector?

MR. REID: Last year.

MR. WOODFORD: Last year, yes. How is that working out? Are you getting many complaints about it or is everything working okay? What is your feeling on that or would you care to make a frank comment, an honest comment?

MR. REID: May I say -

MR. WOODFORD: - you can say what you like.

MR. REID: - the only way that I could make a comment would be based on my experience as a backbencher in this government and certainly not as the minister. Maybe Bob can make some comment on it.

I know that there are some problems with it. It is only a year old and you have to remember too that this money that we administer comes back to us from social services. This is not in our budget. Basically what we do is do the maintenance work for social services. Social services informs us that they need a certain house done, repaired or whatever, and all we do is send out our people to evaluate it and then have the contract completed as quickly as we can.

MR. NOSEWORTHY: I think, as the minister points out, last year was the first year we have had experience with the program. Mr. Crane, you may wish to comment on it and the minister as far as that goes, in terms of MHA's specific problems that were encountered. There is no question about it, I think in relation to defining what an emergency situation was - it was necessary to come to some sort of an arrangement with Social Services in the way that the program was formerly administered. I think, to some degree, the program was somewhat more flexible than it was last year. It was necessary to define exactly what an emergency service was, what an emergency repair was and come to an agreement on what basis the Department of Social Services were prepared to pay for that emergency.

When we have our inspectors go out, determine and inspect the unit, it can only be assessed in relation to the criteria that we have agreed upon. There is not always agreement that what we would categorize as a non-emergency, I am sure the home owner would probably categorize as an emergency. So I think there were some problems in terms of getting the program up and operating last year, there is no question about that. We have had some discussions and we are having some discussions with the Department of Social Services. We did do some monitoring of the program last year and we're hoping to overcome some of those deficiencies certainly this year.

MR. WOODFORD: Will there be any increase in funding for that particular program this year from Social Services to Newfoundland and Labrador Housing?

MR. REID: I don't think so.

MR. NOSEWORTHY: The monies come from the Department of Social Services budget and I'm not aware of any increases that have been made to that budget, nor am I aware of any decreases either. It's something that you'd have to probably ask the Minister of Social Services.

MR. WOODFORD: Yes I never went through the estimates there on that particular program. I found it alright, I must be honest about it. On the end of it I find, in the last few months of the fiscal year, that's when I found it the worst to deal with. I suppose that's probably natural. They're watching their budgets a little tighter, and it would really have to be deemed an emergency.

MR. NOSEWORTHY: I think in the last portion of the year there's no question about it, the funds had to some degree been exhausted. There's only a small percentage of the funds left. Really I think at that point in time the process involved actually the regional director of the Department of Social Services and the regional manager of Newfoundland and Labrador Housing Corporation sitting down and making an assessment on particular applications. I think the criteria, quite frankly, became even more stringent than it was throughout the year. So I recognize there were probably some difficulties associated with that.

MR. WOODFORD: Are there any new housing units scheduled for the Deer Lake area this year? Like something similar to the ones you put there a couple of years ago, last year. Low rental.

SOME HON. MEMBERS: (Inaudible).

MR. REID: None for Deer Lake specifically, Mr. Woodford. There are some for St. Anthony, seven units. Twelve units for Corner Brook and eight units for Roddickton. That's all we've got on the West Coast this year for a total of $489,267.

MR. WOODFORD: I'd like to commend Newfoundland and Labrador Housing on the job they did with those last units in Deer Lake, no question. Because that was always the complaint from the municipalities: we don't want a Newfoundland and Labrador Housing unit there or we don't want it here, because it takes away from the other houses in the area. But those particular units I must say are a real plus and a real addition to any town.

MR. REID: That's a standard type of unit that we're putting all over the Province now. From my experience, Mr. Woodford, everywhere you go those houses are an addition to a community.

MR. WOODFORD: Yes. In fact, I got complaints - funny how things happen. Before that I used to always get complaints about: my, what did they do it like that for? Why didn't they put another few dollars in it and make it look like - but now I'm getting the other. The other way. Why'd they put such an expensive roof on that for? So you know - you're dealing with the public, you know. Anyway, having said that, the units are a real addition to any community or any town, no question.

MR. REID: Just for information's sake, the average cost of one of those units in rural Newfoundland is $74,000.

MR. CHAIRMAN: Thank you Mr. Woodford, and thank you Mr. Minister. Mr. Matthews.

MR. L. MATTHEWS: Thank you, Mr. Chairman. I've got a number of questions that I can't say I extracted from the information that was contained in the budget, or have them come as a result of observations of what's here. But some of them have their genesis in my first and only political campaign in the district. I haven't gotten around to address them to the corporation or to the appropriate people in the corporation yet, so I'll take advantage of the time that I have tonight to get some general answers.

What I should say is that St. John's North, the area that I'm in, seems to have an inordinately high number of public housing units in it. That's just an observation. I don't know whether that's factual or not, or if you're aware of the boundaries that make up St. John's North, but there seems to be a lot of public housing, NLHC apartment-funded properties there. Some of them have been there for quite a while.

I'll be very specific. In the Wigmore Court area - I believe that's an area where you have some interest as a corporation? - I was asked a question by a constituent, and so I'll ask it to you, because I didn't know the answer. They said that there hadn't been any maintenance done on that particular building, Wigmore Manor, for twelve, thirteen years, and it was in dire need of paint and window repairs and that sort of thing. I couldn't say yes or no to it. I'm just wondering: what is the schedule of maintenance on that type of property as a rule, as a normal thing with the corporation? Is it on an as-needs basis or is it on a cyclical basis of every year, every three years, every five years, or as the needs come to your attention?

SOME HON. MEMBERS: (Inaudible).

MR. REID: We can only respond to you in specific general terms. Maybe if you wanted more direct answers with statistics and so on you can -

MR. L. MATTHEWS: No, that's not necessary. I was just thinking of general policy and how maintenance is carried out on those types of Housing owned units.

MR. NOSEWORTHY: I think there's probably two issues in terms of our maintenance. One is the fact that we do spend millions of dollars each year in just ongoing maintenance, and that would be in terms of painting, normal painting of windows, interior painting, and general upkeep of the property, That occurs in Wigmore Court and all other properties that we own, although admittedly funding has been tight as you can appreciate, and has been frozen at current levels for the past couple of years.

The other major effort that we try and undertake in terms of our maintenance budget is what we would call major modernization and repairs. That's where we would focus in and isolate a particular project. The minister referred to Buckmaster's Circle, for example. I think you may be aware of major upgrading that would have taken place a few years ago on Cashin Avenue, Empire Avenue, certainly Dunfield Park in Corner Brook. That would have been major refurbishment and upgrading and we target specific properties for that, depending on their condition and depending on inspections and what have you that we carry out. Wigmore Court has not undergone that type of major modernization and upgrading. I am not aware of anything specifically that we have planned for the next -

MR. REID: There's some drainage money I think, about $50,000 they're spending there this year, is that right Peter?

MR. HONEYGOLD: Pardon?

MR. NOSEWORTHY: Three or four years that preventative maintenance schedule would have been done up for?

MR. HONEYGOLD: Well, we do it up to a ten year, but I don't have all of that information but we do it. But it's done, it's a three-year one that we do through CMHC primarily, yes.

MR. NOSEWORTHY: Again, it's a matter of trying to allocate resources to the worst properties around and allocate them on the basis of the specific needs of particular properties. Buckmaster's Circle would certainly be in greater need vis-à-vis Wigmore Court. To be frank with you, the next major area that we would hope to target, in St. John's in particular, would be down behind the City Hall on Livingstone Street. That certainly hasn't had any major repairs or renovations for some - I think they're probably twenty-five years old or twenty-seven years old. So there's nothing immediate to be frank with you, other than the regular ongoing maintenance and repair plan for Wigmore Court.

MR. L. MATTHEWS: Mr. Chairman, thank you. Would the corporation respond to an individual apartment owner, say in a Wigmore Court Manor unit, for specific repairs, outside of a program that would be planned as a more general, all-inclusive one for that type of a facility?

MR. NOSEWORTHY: If there were specific requirements in terms of that apartment - and that could relate to an upgrading of a bathroom, tiles on the floor, et cetera - we would certainly respond to individual requests on that basis. We can do that, if you would pass that information along to us, we can certainly send somebody out and have an inspection done and see what we can do for the individual.

MR. L. MATTHEWS: I noticed, going through the - and I think that area is representative of probably the city in the Province, where, some very well kept and very old properties that I thought were in really good shape, you know the Anderson Avenue, that area, Mitchell's, Copperwhite, Keegan, I know they are thirty-odd years old because I have lived in the city all my life, and yet there are some properties, town houses in the Empire Avenue West area I would say that are much, much newer in terms of age, but their conditions are deplorable and I do not know whether that relates to the original construction, specifications or the crowd who lives there, I do not know, but, do you have an observation on that?

MR. NOSEWORTHY: Where, specifically would you be referring to?

MR. L. MATTHEWS: Well, as I said, the Anderson Avenue and that area, all of these units for my money, are in good shape you know.

MR. NOSEWORTHY: When you talk about the west end of -

MR. L. MATTHEWS: I am thinking of Empire Avenue West, but east of Jensen Camp Road, that area.

MR. NOSEWORTHY: We would own some units there, but there is a large number of units there which are owned by the private sector and would have been built years ago under various AHOP programs of CMHC and probably would have been, and are still being operated by the private sector or would have been sold a number of times and we would not have necessarily any interest in those properties.

MR. L. MATTHEWS: So they may not be yours?

MR. NOSEWORTHY: They may not be ours. We get blamed I think, to some degree for a lot of properties that are around probably and owned by the private sector that we have no involvement in.

MR. L. MATTHEWS: I will certainly not allege any blame. I was just looking for information. Probably I should search the registry and see who owns the properties then I will talk to you.

MR. REID: Mr. Chairman, if any of the members have anything about their districts or anything like that, I am available and I will make anyone from the department or the corporation, available to sit down and talk with you, whenever. If you have anything personal about your own districts, just ask me and I will provide the opportunity for you to meet either me personally or my officials, without any problems.

MR. CHAIRMAN: Mr. Jack Byrne.

MR. J. BYRNE: Mr. Minister, in your opening remarks, you mentioned that there was land developments now for Newfoundland and Labrador Housing of 6,400 lots you have done, would that include rural lots outside say the City of St. John's, this total? If someone made an application and had his piece of land or whatever the case may be and put a house on it, with subsidizing from Newfoundland and Labrador Housing, to be paid back according to your salary? There used to be a program in place like that, is that still in effect? Do you follow me?

MR. NOSEWORTHY: No.

MR. J. BYRNE: If a person had a piece of land, he could apply to Housing and get a mortgage through Housing and then he pays it back according to his salary.

MR. NOSEWORTHY: That program is not available. The 6,400 lots I think refer to residential building lots where we would have developed the land assemblies and that could certainly be rural or urban areas.

MR. J. BYRNE: Okay, further to that, you say that in the industrial parks we had 2,000 acres, 600 acres sold, residential lands, you have thousands of acres, I think you mentioned over 6,000 acres?

MR. NOSEWORTHY: Yes.

MR. J. BYRNE: Okay, banked. I am just curious, although I know that Newfoundland and Labrador Housing probably should be involved in subsidized housing and are probably doing a good job type of thing, but I am curious as to the minister's view with respect to having all this land and actually competing with private industry?

MR. REID: That is a good question. I asked the same question yesterday when we were going through this, and my question to my staff was: How does having so much undeveloped industrial land sit with the Economic Recovery Commission, for example? Basically, his answer was that it sits quite well, because we have industrial lands spread right throughout the Province and from the reports that I am getting or from what I have been told, we are not competing to any great degree with any private concern in most areas of the Province. Bob, am I correct in saying that?

MR. NOSEWORTHY: There are industrial land developments in some eighteen communities throughout the Province. Not all of that would be land acquired and developed by the corporation, some of it would have been transferred and relates to some of the larger military properties, former US defence installation, Argentia for example, Goose Bay, Stephenville and those areas. There would be a number of land developments which would have been funded a number of years ago through various DRIE and DREE agreements and what have you in some of the smaller rural areas in the Province but also in urban areas where there would not be any substantial industrial land development.

MR. J. BYRNE: I am not concerned with respect to the industrial lands but actually the subdivision lands, private residential, like Cowan Heights, these areas and this type of thing. There are developer's around who would certainly love to have their hands on that land, I am sure but from that perspective - competing with private industry in that light. Would you want to address that with respect to the residential lots rather than industrial?

MR. NOSEWORTHY: Okay, I guess in terms of the residential lots, certainly we would have gone to government a couple of years ago with the strategic plan which would have addressed our role in residential land development. There are a number of points that I would probably like to make here, certainly the corporation does not get involved in developing small residential developments which would compete directly with small residential developments of the private sector. What we do is become involved in large comprehensive land developments such as Mount Pearl and Cowan Heights. You will see other examples in Corner Brook, Gander and a number of areas throughout the Province. Those comprehensive development areas provide for - with Cowan Heights you would have probably seen 1700 lots developed there, several thousand lots developed in Mount Pearl and other areas. What we do is provide the infrastructure, the main trunk servicing infrastructure, underground infrastructure, transportation infrastructure in those areas which would not be provided or could not be provided through the private sector.

MR. J. BYRNE: Why could it not be provided by the private sector? If Newfoundland and Labrador Housing can do it, why could not the private sector do it?

MR. NOSEWORTHY: What I am referring to is not necessarily just the distribution services in the land assemblies themselves but the major trunk servicing that you would see. The major water and sewer trunk servicing that would go into for example - to be brought to develop Mount Pearl would have either had to be paid for by government and then to allow the private sector to develop that or provided within the development by the housing corporation. There would be about, for example in Mount Pearl, about $17 million worth of infrastructure that would have been facilitated in that development as a result of our involvement.

Another point that we raised is the fact that - when you talk about competing with the private sector, apart from the fact that there are maybe ten or twelve people in the corporation involved in our land development, everything that we do involves the private sector. The contractors are involved in the private development, we engage surveyors and engineers to plan the development. I think you will find that close to 100 per cent of any development that we become involved in, indeed engages the work of the private sector to involve that. We do feel that the role of the housing corporation, in that broad scale basis, impacts directly on the affordability of housing. We feel that it has served to keep land costs down. I think if you, while there is no direct information, if you look at land cost in this Province versus land cost through many, many areas of the country that you will see that - we feel in any event, that public sector land development has indeed reduced the cost or provided for an affordable housing environment, if you will, in the Province as well.

MR. J. BYRNE: I have to interrupt because I think you have answered my question. I do not need to go on at length with this but I know where you are coming from. My time is almost up, so I want to get one more question in to the minister. Is the minister aware of any plans or have any talks been going on within housing or the department with respect to taking in an area, say as an industrial park, maybe Gander or somewhere like that, just pull out a parameter and say, this is what we want, here are the specifications and you do it for us.

MR. REID: Well, certainly not for me, my friend. I have only been here a week and a half and I do not know if it has happened in the past. You means in terms of actually developing?

MR. J. BYRNE: The whole kit and caboodle. Housing owns the land, here is the property, you develop it.

MR. REID: What are you talking about, putting the infrastructure in there?

MR. J. BYRNE: Whatever is required to develop it for the private sector to sell it and that sort of thing.

MR. REID: We have done it in Gander and Corner Brook for residential.

MR. J. BYRNE: Well, I am thinking industrial but possibly residential.

MR. NOSEWORTHY: We have parcelled out land to private sector developers in Corner Brook and in Gander.

MR. J. BYRNE: And how does that fair out with respect to doing it yourselves, with respect to monies into subsidized housing?

MR. REID: I think it has varied. It has worked in Gander very well. There is a private sector that has developed in Gander. In Corner Brook, for example, I know the private developers came back and wanted to sell some of the land back to us, quite frankly, so it has gotten mixed reviews, I think.

MR. J. BYRNE: It depends on the market at the time, I suppose.

MR. REID: Yes.

MR. CHAIRMAN: Mr. Crane.

MR. CRANE: About this repair program in social services housing. I was not saying you were not doing a good job. I think you did a good job but you did not have enough money to do the job you were doing. During the first six months of last year we found it great and the last six months were terrible. I think you were so good during the first six months that you spend all the money. There is one question I would like to ask you about the RRAP program. Listening to the figures you were reading off there it looks like the RRAP program is going to go down by 50 per cent. Is that right?

MR. REID: Well, it is down 50 per cent this year.

MR. CRANE: Over last year?

MR. REID: Oh, yes.

MR. CRANE: That seems kind of strange because it was only last week when I was in the RRAP offices in Carbonear and they were saying, well, we are not going to get any money this year, just $20,000. Well, I said, when I see Mr. Noseworthy I will tell him to close up the office. Why are you going to keep an office out here for $20,000? They can bring that out in their pocket after work. Is it that bad?

MR. NOSEWORTHY: It is not that bad. There would certainly be more than $20,000 at the Carbonear office.

MR. CRANE: That would not pay the light bill.

MR. NOSEWORTHY: In the Avalon there was roughly $500,000. That is forgiveness dollars and that may gross up to about $1 million.

MR. CRANE: Where?

MR. NOSEWORTHY: Throughout the Avalon with the exception of St. John's. I could get the precise figure but I can assure you it is well above $20,000.

MR. CRANE: I know that by listening to the figures there, but you would have to be dead to only have $20,000 there. The program would be gone.

AN HON. MEMBER: (Inaudible)

MR. CRANE: It is not enough for cigarettes even though you were cutting them out. I will go back to those fellows and bug them for the rest of the year until I get some money from them.

MR. NOSEWORTHY: I can get you the specific figure tomorrow but we are down by roughly 50 per cent, but next year it will be eliminated entirely.

MR. CRANE: That is going to be bad in the meantime but in the meantime I knew there was something wrong with that figure when you gave it to me.

MR. REID: There is. Here are the figures John. Last year we did 1600 and this year we are doing 700 so it is 60 per cent.

MR. CRANE: The buddy who was talking to me was talking about doing 20.

MR. REID: In your district?

MR. CRANE: No, in the whole area, the office area.

MR. NOSEWORTHY: There is something wrong with that.

MR. CHAIRMAN: Thank you, Mr. Crane.

At this time I should welcome Mr. Fabian Manning who was not here at the beginning of the meeting. He is the Member for St. Mary's - The Capes. I call on Mr. Manning if he has any questions.

MR. MANNING: Thank you, Mr. Chairman.

I apologize for being late. It is my first trip to the Colonial Building.

I would like to ask the minister or one of his officials, I was not here for the introduction so I am not sure who takes care of exactly what, but senior citizens housing apartments, that is a joint federal/provincial agreement, to what extent percentage wise, is housing involved?

MR. NOSEWORTHY: The cost share is 75/25, 75 per cent from the federal government and 25 per cent from the Province.

MR. MANNING: Okay. Is there a certain amount of funding for that this year?

MR. NOSEWORTHY: We will be doing about 125 new units this year, some of which will be seniors, will be housing for seniors.

MR. MANNING: What is that?

MR. NOSEWORTHY: Some of which will be housing for seniors. Of the 125 units, some of those will be housing for seniors. I do not have the precise figure with me but -

MR. MANNING: What would the other units consist of?

MR. NOSEWORTHY: Well, they would be for family housing for example, housing for the disabled, housing for natives -

MR. MANNING: So, that is 125 total that you are planning on doing this year. Do you know how many you did for seniors last year? Approximately, I know you cannot give the numbers off the top of your head.

MR. NOSEWORTHY: We would have done about 252, something like that last year, and I would suggest there would have probably been 200 of those for seniors.

MR. MANNING: Yes. So, really there is a reduction of 50 per cent in the total number of units this year?

MR. NOSEWORTHY: Yes, that is what the minister referred to, exactly.

MR. REID: That is directly because of the cutback in federal government funding.

MR. MANNING: Yes, okay. I know out in my area, we worked on a senior citizens housing project for three years. In the second year of our application, I will call it, we were told that we were the first on the waiting list. In the third year we became the first to be approved and we received a fourteen unit complex. Is there a waiting list now? I ask for the simple reason that I have another area of my district that is interested in senior citizens housing. I am just wondering how far down the road, in regards to applications that you have, could we expect word?

MR. REID: You are certainly not on this year's list because I think you would probably know by now.

MR. MANNING: No, we are not on this year's list.

MR. REID: Well, I am sorry to inform you that there will not be a list after this year because there will not be any social housing of that type next year at all. That is the funding that I am talking about that is disappearing from the federal government.

MR. MANNING: So, this agreement that we received our housing complex under is kaput as of next year?

MR. REID: That is right. All those seniors and especially that type of one that you were talking about, I had one in Carbonear as well, that is gone. If that happens - and for all intents and purposes it is going to happen.

MR. MANNING: Is it a final decision from the federal government in regards to this program or are there still negotiations?

MR. REID: No, I would have to say that from what I have heard from my staff and what I have read, it is a fait accompli. The only way that it could be changed would be that the new Prime Minister may wish or the new government, whatever happens I guess, may wish to get back into social housing but it is there in the Budget, the decrease is there and every minister, every housing minister in the country is screaming blue murder and we are not being listened to at the present time. There are more important things I suppose with the transition and the change of government.

MR. MANNING: I realize to some I guess, there are more important items.

MR. REID: It is deficit reduction, the same situation as we are in here in the Province because that is what it boils down to.

MR. MANNING: Yes, but I have seen this type of complex in my own community and just talking to seniors alone, I think it is one of the best things that ever came our way.

MR. REID: Definitely.

MR. MANNING: For a couple of reasons, for seniors themselves and for the community as a whole, it is too bad. That is my own opinion.

MR. REID: Well, let us hope that they change their minds; let us hope that the ten of us can convince them to come back with a new agreement. Maybe next year.

MR. CHAIRMAN: Mr. Noel.

MR. NOEL: How much money will that take out of our economy next year?

MR. REID: Well, under the federal government expenditures last year -

AN HON. MEMBER: Seventeen.

MR. REID: Seventeen, this year?

MR. NOSEWORTHY: That is 50 per cent decrease over last year. If you look in 1991, we would have spent about $20 million in RRAP and roughly about another $30 million so it would have been about $50 million which is down to $17 million now and it would be eliminated next year.

MR. NOEL: So that is total, that $17 million is 75 per cent federal and 25 per cent provincial. Is the Province or the corporation planning to carry on a program like that on its own if the feds back out?

MR. REID: I really cannot say Walter. I guess it will be based on budgetary restraints and I will say that we have talked about this and the Premier has talked to me about it as well, and he is as concerned if not more about the federal government pulling out because there is no plan in place, not yet, to compensate for that federal government loss.

MR. NOEL: Okay. Churchill Square, did you say that you had an appraised value of $3.4 million or something.

MR. REID: Yes.

MR. NOEL: And an offer of $1.6 or something in that area?

MR. REID: $1.3 million, I think it was.

MR. NOEL: $1.3. How does the corporation decide whether it would be justifiable to sell at a particular price, like your appraised value, that would be market value but would the income approach be much of a factor in that? I mean it seems to me that the basic way for government to decide how much a property is worth to government, is on the basis of just what it is bringing in. You know, it is a very difficult time I guess to put values, to appraise values of real estate in this city and other places in the country, so in order to determine whether it is worth it for government to sell something, I think you have to look at it from the point of view of how much money it is bringing in.

MR. NOSEWORTHY: I can comment on that. In terms of our appraised value, we have our own professional appraisers do that and there are certain - I am not a professional appraiser myself - but they use a number of alternatives in arriving at that appraised value and certainly the income approach is one of those that they use, so that $3.4 million is established quite frankly, on the basis of at least one alternative being the income approach to what that property is deriving on an income basis both from it's commercial and residential tenants, so it should comply reasonably well with what a private company would arrive at or would reach from a private appraisal firm that it is using as well.

MR. NOEL: You see, I do not see any point to privatization if it means that we are going to be selling something for less than its income value to the Province, all right? I think we are better off keeping it.

MR. REID: That is the approach that the Housing Corporation is taking right now. They are trying to secure the best dollar they possibly can for any unit, that is why, these bids for example, have been basically turned down, because they are not close.

MR. NOEL: But these days you can get quite a difference between an appraised market value and an income value sort of thing. If I were to support privatizing government property I would have to look primarily at the income values of the property. But within that context, I think if you're able to get that price for it you're just as well selling it off. I don't see any reason for government to be in real estate if you can sell it off for that value today.

MR. NOSEWORTHY: Our approach to these things has been that really from a policy point of view there's no reason for us to be in it, unlike residential land development, where we feel we do have a role there for public policy reasons. We do not have the same role in terms of market development. We don't own sufficient, for example, number of units in the market to influence market rents, nor should that be an objective in any event. Really there's no public policy reason for the Corporation to be involved, from our perspective in any event, in market rental housing. Then it becomes a financial issue of whether you should dispose of a property or not, and what's in the best interest of the Province. In that regard you're exactly right. That's the way we approach it.

MR. NOEL: There's no point in giving it away cheap, it's better to keep it as an investment for the Province -

MR. NOSEWORTHY: Exactly, (inaudible).

MR. NOEL: - then to let it be a good investment for some private developer.

MR. REID: And it is. The Churchill Square in particular is a good investment. We owe very little money on it and it's a good investment. I really don't think we're going to let it go for much less than what the appraised value is.

MR. NOEL: That was another question I was going to ask. You said now you have pretty high debt levels on a lot of these properties.

MR. REID: Some of them we do and some we don't.

MR. NOEL: Like Churchill Square, that wouldn't apply?

MR. REID: No. I think the mortgage on that is around $800,000, I think.

MR. NOEL: So you haven't used the better properties like - you haven't remortgaged the better properties like that in order to provide capital for doing other things over the years?

MR. REID: No.

MR. NOEL: The housing down in the Newfoundland Court area, in particular, in my district. I think that area is entirely owned by you people. It hasn't gotten very much maintenance in recent years and some of it is in really bad shape, to the point where it seems to me....

AN HON. MEMBER: Newfoundland Court (inaudible).

AN HON. MEMBER: That's Kenna's Hill, isn't it?

MR. NOEL: Where?

AN HON. MEMBER: Kenna's Hill?

MR. NOEL: No, no. The Newfoundland Court, down off Newfoundland Drive. Virginia Park area. This is a particular section of the Virginia Park. I've gotten a lot of complaints from that particular area. They say that they haven't had very much substantial maintenance for a long time. It seems like you have a good investment there which is being allowed to deteriorate because of a lack of adequate maintenance. I know that you have a problem with funding maintenance but at the same time you're doing more substantial maintenance and renovations in other areas. It's very difficult I guess to make a choice about what to do, but you're spending a lot on one area and you're not doing basic stuff in another area, it seems to me. You might be able to reason that out to make good sense, and that wouldn't surprise me. I'd ask you in particular to have a look at Newfoundland Court to see if there's a....

MR. NOSEWORTHY: We can certainly do that. I guess in terms of regular ongoing maintenance we try and do what we can there, but in terms of the major renovation and repairs we are restricted, there's no question about it, to money. We try to target areas because you can't do major renovation to sort of half a project, if you see what I mean, and then do major renovation to another half a project. This is why it's necessary to target it in on the basis of some criteria that we would use in terms of looking at where the greatest need is.

There's no doubt about it, and it doesn't necessarily only apply here, but in many other provinces as well. The whole issue of regeneration of the public housing stock in this country, and that involves putting money back into it for major refurbishments, is a fiscal problem. That's what we're encountering with Newfoundland Court and others.

MR. NOEL: Like in another area of my district, Brophy Place, you've done quite a good job. But then the people down in Virginia Park say: look at the great job they're doing for those people up there, why won't they do the simplest things for us? Obviously it's complicated.

That's all, thanks.

MR. CHAIRMAN: If there are no further questions I'd ask the Clerk to call the subheads.

MR. WOODFORD: I would just like to make a comment. It's not very often you get the opportunity to do it when the officials are here.

I think the minister mentioned that if we needed any information at any time get in touch with him and he would tell the staff. Well, I have yet to, I have to say, call Newfoundland and Labrador Housing without getting information within their jurisdiction, whatever they are able to tell me. You always get an answer. Mr. Noseworthy and two of his staff are here so I have to say that as a member of the Opposition, I always get the best of service.

MR. REID: Well, I can assure you, Sir, that as the new minister I guarantee you as good a service, if not better, while I am around.

MR. WOODFORD: I do not think you will have any problems with your staff. If you are going to have any problems it will be with yourself.

MR. CRANE: We should not have any problem if there are no problems with your staff and if the minister is going to do a better job.

Total Heads for Newfoundland and Labrador Housing, carried, without amendment.

I want to thank the officials and thank you, Mr. Minister.

MR. REID: Thank you, very much.

MR. CHAIRMAN: Your officials can now leave but you have to stay.

MR. REID: Can I suggest that we take ten minutes, Mr. Chairman?

MR. CHAIRMAN: I was just going to suggest that, that we take a ten minute break to cool down.

RECESS

MR. CHAIRMAN: We will get back to the Estimates for Municipal and Provincial Affairs using the same format as we used before. I call on the minister to introduce his staff and make an opening statement and then we will follow on as before.

MR. REID: Mr. Chairman, my opening remarks at the beginning of my presentation for Housing would basically apply to this department as well.

MR. CHAIRMAN: Excuse me. Mr. Minister could you introduce your staff?

MR. REID: My name is Art Reid and I am the Minister responsible for Municipal and Provincial Affairs. On my immediate left is Don Peckham, Assistant Deputy Minister of Finance, Planning and Administration. On my right is Art Colbourne, Assistant Deputy Minister of Municipal Support Services, Recreation and Fitness. Also Mr. Winston Hiscock, Director of Administration, Mr. Felix Croke, Manager of Financial Operations, and Gary Callahan is the Director of Public Relations with my department.

I began my opening statement on the housing question and I do not claim to know a lot about what is going on in the housing department other than what I have learned in the last week or two, but in that period of time I have had a fair number of meetings with departmental officials and done a tremendous amount of reading. When you find yourself in a Cabinet position sometimes reading on the weekend and late in the night time is probably the best way of getting to know the department. I have been trying my best in the past week and a half to wrap myself around municipal affairs and provincial affairs and that in itself is a tremendous amount of responsibility as you will see as we go through the estimates tonight for emergency measures, for example, sports, recreation and fitness, municipal affairs and all the things that go with that, the fire commissioner's office, so I will need a fair amount of assistance from both assistant deputy ministers. I apologize for the deputy minister. The deputy minister went on holidays some time ago, about two weeks ago, and he is due back in the office next week. He is probably the luckiest one of us all. He was up for holidays and he took three weeks. He flew the coop.

Mr. Chairman, I will commence by highlighting the major items in the estimates for the Department of Municipal and Provincial Affairs. The total estimates for this department this year is $139,653,400 gross expenditure. Now, do not confuse this amount with the housing. It is separate entirely. This is just strictly this department. There are revenues in both current and capital accounts totalling $10,873,000 leaving a net expenditure of $128,780,000.

There are 231 permanent positions in the department operating all divisions. Mr. Chairman, the department is comprised of two main branches and its delivery service embodies a number of regional offices to ensure best delivery of services to the municipalities and sports and recreation commissions in the most effective or efficient manner possible.

The Department of Municipal and Provincial Affairs is responsible for matters relating to local government, municipal financing, real property assessment, urban and rural planning, development control, engineering for water and sewage, road construction and reconstruction, coordination of emergency planning to municipalities. It is also responsible for the office of the fire commissioner which is responsible for fire protection, suppression and training throughout the Province. The department is responsible for amateur sports and fitness and recreation activities as well. I don't know if there is another department in government with so much responsibility or with so many arms. I do not think there is. I think municipal affairs has to be one of the largest departments that we have in government now in relation to its responsibilities. The activities of the department are broken down in the following categories;

Executive and support services: this activity mainly provides the funding for the operation of the executive, administrative, accounting and other financial support services for the whole department.

Service to the municipalities: funding in the area totalling $13,246,000 covers the provision of engineering services for water and sewage installation, street reconstruction and paving programs, the provision of town planning for municipalities, provision of assessment services to municipalities with real property tax, the provision of development control services to areas on protected roads and within municipalities and the maintenance and operation of the industrial water systems. Funding is also provided to support the Newfoundland and Labrador Federation of Municipalities and the Newfoundland and Labrador Association of Municipal Administrators.

I would like to provide some details of some of the services, firstly, my department has regional offices established in the following areas; Labrador, on the West Coast, Central Newfoundland and in the Eastern part of the Province. The idea of these offices is to have the delivery of services provided in the areas more close to the communities and groups served by my department. It also provides for better liaison between the department and municipalities and will provide for a more timely and meaningful response to municipalities and organizations, as departmental employees in the regions can get to know the municipal needs of towns and cities, local service districts, sports and recreation facilities, etcetera, in their region more intimately than could be done directly through the head office in St. John's only. These regional offices have been given a considerable amount of authority and latitude to manage the responsibilities within their jurisdiction.

The real property assessment division operates under a separate act and has responsibility for the assessment of real property in all municipalities with a real property tax except, the City of St. John's. At present some 221 communities have adopted a real property tax and the division has assessed approximately 165,000 properties throughout this Province. The division must continuously conduct reassessment of these municipalities on a rotation basis. To assist the division in its ever growing task my department has purchased and just recently completed the installation of a computerized mass appraisal system which has automated the assessment process. Using this new system my department will be able to catch up with the backlog of reassessments and the new assessments required to be done.

Now, over time the reassessments, which are now conducted every six or seven years, will be able to be conducted more frequently, probably every three years. This will be a tremendous benefit to the municipalities as they will be able to be much more current in their assessed values and it will eliminate the need for major increases in taxation value of properties which occurs every six, sometimes seven years, due to the large amount of inflation which normally occurs during such long intervals. It will also have the advantage of allowing the municipalities to earn more revenue through the adoption of an earlier reassessment cycle without having to necessarily increase the mil rate. The new system can also provide information to the private sector which can be sold to them and therefore produce some revenue to reduce government's operating costs of the new system.

Within the services of other municipality grouping is a municipal inspection division. The small staff of nine inspectors is available on a continuous basis to all municipalities to undertake internal audits when there are financial problems within the municipality, and to offer them advice, where they require it, for financial planning or to advise them on general municipal procedure. This service is especially helpful to new councils when they are not familiar with the procedures and operations of council.

There is a development control section within the urban and rural planning division which is responsible for the establishment and monitoring of policies for the control of the Province's main highways and other areas which are placed under this control. This ensures that proper planning is adhered to in areas which are not incorporated but which may be near municipalities or in other areas where growth activity is taking place.

There is a local government division with a staff of three people. This group provides general support to the municipal operations section of the department and provides advice to the regional managers on matters of departmental programs and policy.

There is also an urban and rural planning division. This division is staffed by professional town planners and supported by planning technicians and other administrative staff. The role of this division is to provide town planning advice, to prepare municipal plans for municipalities, and to advise them on various planning policies and regulations which may be used within individual municipalities. The department also occasionally hires town planning firms to supplement the work of the urban and rural planning division and cost-shares the development of town plans with some municipalities through this process.

There is an engineering service division of the department. This division is responsible for administering the municipal water and sewerage, and street reconstruction and paving programs. Within this division also is the planning and design section of the industrial water services section. Any of you who don't live in rural Newfoundland or live on the East Coast, you wouldn't know what the water service is, I wouldn't imagine. We can get into that later on, industrial water service.

The planning and design group is responsible to review the plans and specifications of water and sewerage projects which are approved for municipalities through the year. The industrial water services division is responsible for the operation and maintenance of government owned industrial water systems which have been installed to service certain industrial enterprises throughout the Province and some municipalities - for example, Marystown.

Grant funding is also provided for community water services. This is separate from the other capital, water and sewerage installations. It is designed to provide domestic water and sewerage services to local service districts and is comprised of smaller types of systems. Funding is also provided to assist municipalities with the development of solid waste management facilities and this year some $3 million has been provided for the development of water and sewerage facilities pursuant to the federal-provincial cost-shared agreement for the communities of Northern and Coastal Labrador.

Assistance and infrastructure support. This section provides funding for the water and sewerage program. The amount provided in the estimates is the amount required to meet the repayment of the debt which is financed through the municipal financing corporation once the projects have been completed. Some $65 million is available to cover the debt - both principle and interest payment for road construction and paving programs and water and sewerage subsidies, $65 million.

Provision is also made for special assistance to municipalities. This $1,138,000 is provided to enable my department to respond to requests of the municipalities for special assistance when they are in dire need. It covers such items as special assistance to meet administrative and operational overheads where there is insignificant revenues generated within a town during the year. The fund is managed by a Department of Finance committee which reviews all the requests for this kind of assistance and recommends whether or not funding should be made available, and the amount.

A considerable amount of funding is also provided for the statutory grants to municipalities. This year some $42,500,000 will be granted to municipalities under the municipal operating grants and adjustment program.

Cost-shared funding of $4.5 million is provided for environmental improvement projects currently ongoing in the Province. The cost of these projects is shared equally between the federal, provincial, and municipal governments. Municipal protection services; funding in this section covers emergency measures, planning, response funding to municipalities under the joint emergency preparedness program which is cost shared with the Government of Canada. It also provides funding for fire protection services and the operation of the fire commissioner's office. Funding is also provided to assist municipalities with the acquisition of fire fighting vehicles and apparatus. Recreation services and facilities: this program provides for the encouragement and financial support of recreation, fitness, and amateur sport for all ages throughout the Province. Support services are provided to municipalities and sports and recreation organizations by the department, and as well grant funding is made available directly to these organizations to support in the development of approved activities. Major activities of this service sector include support to community groups in the amount of $1.774,000 and community sports facilities of $1,038,000.

Mr. Chairman, this concludes my opening statement and I trust that the details will be of assistance to the committee, and if I do not have the answers to some of the questions some of you may pose to me I am certainly sure that my staff will be only too happy to help me provide the answers.

Thank you, very much.

MR. CHAIRMAN: Thank you, Mr. Minister.

Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

I would like to ask the minister a few direct questions. The new municipal operating grant which has been in the department for awhile and your familiar with it, more than likely before you got into it. What kind of feedback are you getting from municipalities pertaining to that? Not only the change in the MOG but the change in the formula for repayment on capital debt.

MR. REID: You are asking me a personal question, I would assume, are you?

MR. WOODFORD: Yes, in a way, but I would say you are in long enough now to say really whether you really agree with that new policy or not. You do not have to answer that.

MR. REID: Mr. Chairman, I have discussed the MOG somewhat with the assistant deputy ministers and there are questions, of course. As a former mayor of a town there are questions that I have had as it relates to the structure of the MOG and so on. I have found this year that there may not be as much of an adjustment in this coming year than there was last year. We are into our third year of that plan and things seem to be settling down somewhat. I can honestly say that since I have come to office I have not had one - you are the first person, to mention the letters MOG to me other than what I have asked myself. I have not seen any correspondence relating to it and I have not spoken to anyone about it. I am certainly sure, Mr. Woodford, that there are a lot of people out there waiting to get after me about the municipal operating grants. I am sure I will see it but I really cannot say anything other than that at the present time.

MR. WOODFORD: I am getting it all the time and I tell you, to be honest with you, that a lot of municipalities in the Province today, especially smaller municipalities - larger centres are no problem because really councillors in larger centres have staff who are doing most of the work for them, but in smaller municipalities in the Province it is all volunteer work. They are working all day long. They are open every day of the week. They come in to try to run a municipality in the nighttime, sit down and look over that - even today, after two years, under that new component system, gone is the roads component pretty well, gone is the social assistance per capita component and gone is the population component and the forty-five cents on every dollar that is collected under the old system, this is the equalization component, the local revenue component, the household component and then you have the other one, the new formula for the repayment on capital debt.

Just look at the equalization component and the local revenue component alone, for someone who is not familiar with it, that in itself as far as I am concerned is a chore. To try to figure that out and figure out where they are going and where they are coming from - all this was brought in in `89 by Mr. Gullage at that time, after the budgets were down. How can you expect municipalities to adjust mid-term? The road component was changed again in the Summer of `90, again in the Summer of `91 and lo and behold, to add insult to injury, I get word this evening that it is changed again. The road component, as of today, is changed again from eighty-nine down to thirty-nine dollars from a figure of $2,000 per kilometre four years ago.

I have one municipality in my area that has been notified this evening that their road component is cut to thirty-nine dollars and their local revenue component is cut by another $350. Now, that does not sound like much but that is only the smallest municipality in my area, wait until it hits the rest of them. So to me something is radically wrong. It is obvious from the estimates in the budget that the grants this year are down again. What was budgeted last year was not used, to me that is sinful, $650,000 allocated for grants went - there was $650,000 less than what was budgeted, put out, now it is down to $42,500,000 this year. In municipalities, I said it before and I will say it again, that you are soon not going to get people to run in those smaller councils, there is no way in the world.

I know you cannot answer for the sins of the past, although you were there as a backbencher, and I understand the system that you worked under, I worked under it for four years, I know what it is all about but something has to be done with regard to the total grant in itself, especially the roads component. There has to be some flexibility. You have municipalities in this Province that if they put their mill rate to fifty mills tomorrow morning they will not collect the same amount of money that they got under the old component system, no way. The infrastructure is not there. They have properties that are tax exempt, there is no way in the world to get it. The properties in the small municipalities - what I do not understand is that the officials in the department do not know where they are coming from on this one. The provincial average that you use under your equalization component is $48,000. The provincial average in Jackson's Arm for instance, is $28,000. Now they only get paid to the difference of the deficiency, that is all they get paid. Can you imagine an average household in St. John's, $28,000 and compare that with Jackson's Arm?

Now come on, you do not have to be a mathematician to compare the taxable - what you are allowed - what kind of a tax return you will get in Jackson's Arm versus St. John's, Gander, Grand Falls or anywhere like that. There has to be some flexibility. One community out there, I do not mind saying this, Cormack again, 28 kilometres of by-roads, Hampden is not so bad, Jackson's Arm a little bit worse. How can they keep 30 kilometres of by-roads, a population of 750 people with no infrastructure? The property value is $42,000, there has to be something done about that. I know where the problem is coming from, it is coming from ministers who are in urban centres who just do not understand what is going on outside.

So I would suggest, Mr. Minister, that you are going to have to have a look at that. Nobody has told me yet, I asked the officials last year how they arrived at the provincial average in getting their equalization component, how they arrived at the provincial average to get their deficiency. How did they do it? I asked the minister in the House, he could not tell me. I asked the officials here last year, they could not tell me. Can you tell me tonight?

MR. REID: It is done by Stats Canada, the total number of houses in the Province.

MR. WOODFORD: But even Stats Canada cannot tell me what they used. I can understand how they arrived at that to get the deficiency thing, what they pay on the deficiency. But how can you rationalize leaving out - I take it they left out the cities of St. John's and Corner Brook, and Grand Falls and Gander, when they came up with a provincial average and apply that to rural Newfoundland. How can they justifiably say that equalization component is right? Anybody who understands it, I mean, it's a glaring....

MR. REID: They left out the two cities and averaged everybody else.

MR. WOODFORD: They left out St. John's and Corner Brook?

MR. REID: That's right. And averaged everybody else.

MR. WOODFORD: So what they did, they took the total households in the Province, got the total property values.... So what they did then they must have taken the total households in the Province, except for St. John's and Corner Brook, taken the total property values, divided that by the households, and came up with a provincial average.

MR. REID: Provincial average. And that's a fair system.

MR. WOODFORD: Pardon?

MR. REID: Isn't that a fair system?

MR. WOODFORD: But when you look at that component and what happens as you go down through it, as the households increase or as your property values increase, your equalization component goes down. How many communities outside of St. John's and Corner Brook are going to have their property values increased and their households increased?

SOME HON. MEMBERS: (Inaudible).

MR. WOODFORD: I know it's a very complicated formula, the two of them, especially when you get down to the local revenue incentive one, I mean what you use on that. Took the total revenue per household and the total revenue collected in that municipality and again used the households. In order to come to the 40 per cent to get your maximums, a municipality, if you go through it, it lends to the larger centres in the Province. Every one of the components favours the larger urban centres in the Province.

MR. REID: That's not correct.

MR. WOODFORD: If you want proof of it I can go down through it step by step.

MR. REID: Look at the overall picture though, Rick, last year and what communities lost and what gained and so on, if you go down through, and the average and so on. I can't see where you can say that it's geared towards the larger rural community. When I say the larger I don't mean St. John's. Harbour Grace and Carbonear, for example, would you consider those larger communities? Would you consider Victoria, Carbonear, a larger community? It lost $32,000, $33,000. I think maybe you might be wrong with your facts there.

MR. WOODFORD: If you want me to ask pointed questions I can ask them.

MR. REID: In my district of Carbonear the one incorporated community that gained under this system was Small Point and Adams Cove, which is the smallest community in my district.

MR. WOODFORD: Yes.

MR. REID: Which was basically, I suppose - that's what it was set up to do.

MR. WOODFORD: Yes, but see, it depends on the area, it depends on the property values. All depends on property values and your local revenue and your infrastructure. Harbour Grace and Carbonear have fairly good infrastructure, You don't have to tell me about the property tax value of those places. You don't have to tell me about the property tax value in some other places. That's what it all comes down to. There's no way in the world that some of those municipalities are going to survive. I mean I'm telling you, there's - pointedly, if you go down through each one of those in point form it's a....

MR. REID: Mr. Woodford, you're right in some of your assumptions, but since I guess the new plan came in, the MOG came in, and I've had the opportunity, I suppose, to be involved somewhat over the years in municipalities, when you see what some of these smaller municipalities in the Province are charging for property tax for example, or mil rates, in comparison to - and basically getting practically the same services. If a community has a property tax most likely that community is supplied with water and sewerage and street lighting, garbage collection, the basics, and fire protection. If you look at the average in this Province with regards to the mil rate it's just beyond being unreasonable.

I'm still dealing with towns - and now as the minister - in my district that have 4, 5 mils in a community and think it's a terrible thing to raise the taxes by half a mil or a mil a year. I'm also dealing with communities basically in the same area, the same size, with mil rates as high as 11 and 12.

AN HON. MEMBER: (Inaudible).

MR. REID: And the property value basically, yes. I think the answer to it all, Rick, is that there has to be sort of a coming together. Because of the financial restraints that the Province is in at the present time, there has to be some cooperation by the people in the Province. The cooperation is going to have to come, I suppose, ultimately, in higher taxes. Taking some of the responsibility from the Province and shifting that responsibility to some of the taxpayers as it relates to municipalities.

MR. WOODFORD: Yes.

MR. REID: Because you know and I know that somebody charging a 4 mil rate in a community, and next door is someone charging a 12, that's certainly not a fair and equitable arrangement.

MR. WOODFORD: But you also have municipalities, which, like I said, if they put it up to 50 mils tomorrow, would get frig all out off it. A lot of the municipalities you're talking about now have no bearing on this with regards to when you come down to the repayment on capital debt. A lot of municipalities that come under those component structures have no capital debt, absolutely none, and getting absolutely nothing from the Department of Municipal Affairs except what they get under the components. Not a copper.

So that's what I'm talking about. I've got a number of them and there's a number around the Province, and that's where there's no flexibility. They have no chance. The average is so low, how can they possibly get up to where they - under the old system at least they collected forty-five cents on every dollar. So if they got an extra $50,000 a year in revenue they picked up another $20,000 from the provincial government without incurring any capital debt.

MR. REID: Rick, you have to agree with what I said a few minutes ago. Maybe some of these new MHAs don't understand what we're actually talking about here. I don't know if they do or not. The MOG is a pretty complicated thing. Maybe for their own benefit they should take the time to go to the office and find out.

To be honest, and I think to be straightforward with what he's trying to say, and what I'm trying to say too, I believe that the member is sincere, but I also know that Cormack has probably one of the lowest mil rates in the Province. Am I correct?

MR. WOODFORD: (Inaudible).

MR. REID: That's the area that he represents. What is it, 4?

MR. WOODFORD: Yes. But it's not only Cormack.

AN HON. MEMBER: Three.

MR. REID: Three. Is it 3?

MR. WOODFORD: Yes.

MR. REID: I'm not picking on Cormack. The point I'm trying to make is that there is a large number of communities out in this Province which pay little or any taxes. Next door, there are communities that pay sizeable amounts of taxes. Now, as a government, and as a minister, and I'll be quite honest and I'll make this comment publicly, that those communities which do not wish to tax their residents and are not being, I suppose, fair to their fellow Newfoundlanders by keeping their tax rates as low as they are, I personally feel that those people who are out there with high tax rates and trying to support the communities in which they live, by having proper tax rates set at proper time, those are the people who I would be more encouraged to lean towards and helping with municipal grants and funding from our department.

I would have to say that. You know that's true, Woodford, because you've gone through the same basic thing in the Federation of Municipalities and being mayor of your own town and everything else. You know that's the system. Until we can bring up the smaller towns, or the towns, in the Province - and not necessarily the smaller towns, because Victoria, Carbonear, is a prime example. That's not a small town. I mean, that's in excess of 2,000 people. Until we bring them up to a mil rate in this Province that is average or above average we're going to have problems with these grants.

MR. WOODFORD: But you see, what I'm saying is that if you brought it up what you'd have to do is increase your poll tax. What do you get out of it? Under this you get nothing. That's what I'm saying about the inequities in this. If you have a community that has no infrastructure, nothing to increase their property values, how can they increase it under either one of those components? You can't do it. You can put Cormack up to 50 mils. That's one of the ones I'm talking about. What are you going to get? The property value out there, you'll get three or four people. That's all it'd hit. Three or four people who have -

MR. REID: Hit you.

MR. WOODFORD: That's right. That's all you'd get. The rest are there, they're in the certain average, and that's it.

I know when you talk about mil rates you can get taken aback by that, too, especially municipalities who do not understand it. Most municipalities have some capital funding, they have capital debt, and that is where they were hit bloody hard, and do not forget that. We have municipalities in this Province with the mil rates good and high that cannot take advantage of capital projects. With mil rates of 7.5 and a population of 300 in a community you cannot take advantage of a capital project and with no way in the world to increase the infrastructure. There is absolutely no business in the community. In the community of Reidville there is no business and you cannot get anything, one kilometre from Deer Lake. They cannot increase their mil rate. That is the type of thing I am talking about. As far as I am concerned it should be looked at. I do not want to take up members' time on it but it is something that bothers me.

MR. CHAIRMAN: Thank you, Mr. Woodford.

Mr. Matthews.

MR. L. MATTHEWS: Thank you, Mr. Chairman.

I am not as well informed about the intricacies of municipal governments in the Province as my hon. friend over here.

MR. REID: We are only pretending we know something, that is all.

MR. L. MATTHEWS: Mr. Minister, I am sure if it were one on one you could debate with Rick all night and I am not sure who would come out the winner. You both put on a very good showing. I do not know too much about municipal government but I do know a little bit about business principles in terms of running business, and to a large degree, I believe, municipalities and governments have to be operated somewhat along the lines of sound business practices and principles. From the beginning of its announcement the last government made when it was going to get into this amalgamation thing I thought it was the right direction to go in as a government. I know I told your predecessor, Eric, who is an old friend of mine as well as an old school colleague, I congratulated him on the initiative. The only thing I regretted was that he did not go far enough with the process. I would state as an observation that amalgamation, I think, is a good thing and I think is part of the answer to some of the problems that exist in financing municipalities. Mr. Woodford just referred to Reidsville as a small place a mile away from Deer Lake who cannot get any business and cannot do this and cannot do that. I do not know if they are amalgamated yet with Deer Lake or if they are under the microscope of being amalgamated.

AN HON. MEMBER: No.

MR. L. MATTHEWS: The question I wanted to ask is where is amalgamation going? To me it is the right way to go. I think we are grossly over governed in terms of school boards, in terms of municipalities, and probably in terms of MHAs in the House of Assembly as far as that is concerned. I think we are over governed and I think part of the answer to some of the problems that Rick is alluding to is a further streamlining of municipal boundaries within the Province. I would suggest that amalgamation should not stop and should be further pursued, and should be carried forward for the greater good, I would say, of the people in the municipalities and the Province in general. If that is a preamble, I guess, my question is, are we going to get on with some more amalgamation initiatives?

MR. REID: Well, prior to me taking over as minister, there are a number of groupings that have been recommended by a number of commissions, and in a number of instances communities have agreed with the amalgamation process so I do not see any problems with that per se. There are others we are having some trouble with and it is a question of me having to find the time, read reports, meet with the commissioners and so on, and talk about exactly what we are going to do in relationship to amalgamation. I am not really giving you an answer because I cannot give you an answer Mr. Matthews at this particular point in time. I have a series of meetings arranged with my deputy minister and my two deputy ministers coming up in two weeks time. I figure it's going to take me maybe two or three days to handle the amalgamation question, because it's a serious question, as you know.

I will say this to you. Of course, this is pure speculation on my part, but I think it's going to happen. I think anyone who lives in rural Newfoundland and is affected by the cod moratorium and the downturn in the fishery, what you're going to see in this Province as far as I'm concerned in the next few years is not amalgamation, but forced resettlement. Not forced by the government, per se, but forced by circumstances.

The question of whether or not we as rural Newfoundlanders can survive in small communities, especially in the Northeast Coast of Newfoundland, is going to be a question that's going to be on the minds of a lot of people. Because in 1994, if the fish moratorium is not ended - and it certainly doesn't look like it's going to end - I don't know what's going to happen to a lot of small communities on the Northeast coast of Newfoundland. As Minister of Municipal and Provincial Affairs, I'm going to have to deal with that. Maybe, just maybe, the whole question of amalgamation will become easier. It may become easier. It may be a question of people wanting to move out of the smaller areas, especially in the Bonavista - Trinity Bay - Notre Dame Bay area, and up the coast further.

So give me a couple of weeks. There's a Judge Wicks who's doing a fair amount of work for us right now as a commissioner with a number of groupings. I've got an appointment set up with him for next week and he's going to come in and give me some recommendations on a couple of more groupings. There are some areas - Mr. Woodford, for example, has some problems that he spoke to me about recently in his area. There are a number of other MHAs who've spoken to me privately about amalgamations in their particular area. I'm taking all that into consideration.

In the end hopefully the question of amalgamation - because the principle I believe in. I'm not sure - and this is no reflection on any previous minister, or even the staff today - that we went about it in the right way. I think it could have been done in a little different way. I suppose every minister sort of puts his own version or emphasis on different things, but I think we could have handled it in a little better way than we did in the past few years. I hope to be able to do something with that.

MR. CHAIRMAN: Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. This is my third estimates meeting, and I'd like to commend the minister at the beginning. Because the past two ministers, and I looked at their minister's office - appropriations to provide operating costs, salaries - each minister was the same or had increased. Yours actually decreased. Not quite as per the 4.5 per cent decrease, but close. I commend you on that one.

I have some concerns with respect to the timing tonight. We only have an hour left. There's no way I can see us getting through this. That's the comment I make up front. I have a number of concerns, but the first comment I'm going to make is what I said three or four years ago, which is that the Premier's plan is working. You just stated it here yourself tonight. I said three or four years ago when the amalgamation was brought in that the minister or the Premier is going to force amalgamation through the finances, through the cutting of the grants, the municipal operating grants and the increased debt retirement to the municipalities. I had a note here: that's forced amalgamation and forced resettlement.

I think in some of the smaller communities where probably there's only one employer as a fish plant or something like that, and if that fish plant goes out of business and we have mil rates up to 8 and 9 or 10 per cent in those municipalities, you certainly will see ghost towns develop pretty quickly.

I would like to remind the minister that the previous minister, Mr. Hogan, when it comes to the road component, we had a meeting this past Spring down at the Radisson. He stood up and he guaranteed and made a promise that the figures that were sent out to the municipalities with respect to the preparing of this year's budget, would not be decreased. So I would expect or hope that the minister would stick to that, although he did not make that promise but the government of the day certainly made the promise. I do not know if you can address any of those points but that is some food for thought.

I have a number of concerns. I have them all highlighted here but I will have to just skim through them because I only have ten minutes or a few minutes left, six now. The emergency response program, the 911 program: it is now under the regional fire fighting authority which was brought in under the amalgamation, is there any plan to have this Province wide? I believe there is and there are changes to the service recommended recently with respect to the response itself. Apparently if 911 is dialed, it will go into the regional fire authority who in turn will contact the General Hospital who will make a decision as to who should respond depending upon the geographic location and traffic, whatever the case may be. What are the ministers views on that with respect to the emergency response vehicle or the General Hospital responding and what are the costs going to be involved in that?

MR. REID: The 911 service that you are referring to is in the St. John's area and has nothing to do with the provincial government whatsoever. We are at present looking at studying the possibility of expanding that beyond St. John's but that is all we are doing right now. Anything in regards to response or emergency vehicles in St. John's, that respond to 911, is solely the responsibility of city council.

MR. J. BYRNE: With respect to that, the city - well, not the city council as such, it should be the regional authority. Would it not?

MR. REID: Regional committee? Yes, I am sorry.

MR. J. BYRNE: That now is going to be the - namely municipalities around the Northeast Avalon are actually being charged for that service now. So indirectly, it probably does fall under the authority of the municipal affairs with respect to the cost involved.

MR. REID: No, I do not think that you are correct there. If it falls within the regional authority I cannot see us having any - none whatsoever, no. We do not have any authority under the act to interfere or to regulate under 911, we do not have that, sorry.

MR. J. BYRNE: Municipal assessments: I noticed that in the comments there, in the beginning you said that you have another system in place where possibly every three years we will have reassessments done. Presently towns out our way were supposed to have assessments done back in `91, they were promised for `92 and again promised for `93. Some of the towns have gone for seven years and it looks like we may not get them for `94 and of course that causes problems - that will be almost eight or nine years without an assessment. So, when the reassessments are done and completed some of the towns will be after increasing their mil rates to compensate in the meantime and then when we bring in the reassessments it is going to be an awful substantial jump in what the people are going to have to pay in any given year. I have to ask the question, this program that they have in place now, is this really going to make that much difference?

MR. REID: The new computer system?

MR. J. BYRNE: Yes.

MR. REID: First of all let me go back and tell you why sometimes some of the communities are not - this is for the benefit of all members - why some of the communities are not done like others are done. You will find that some of the communities that you referred to in your district and to other districts, do not have water and sewage services and there is no massive amount of debt there. What we try to do in the department is, we try to accommodate those towns who have secured or accumulated debt because of water and sewage services and capital works debt over a period of years. By doing the reassessment it gives the towns a better chance to pick up more money which in the end would pay more towards their debt. If there is a town which has not been done in seven years there is a good possibility that that particular town probably does not have any debt at all as it relates to capital services. No one has gone longer than seven, by the way.

To answer the question of whether the mass system will work or not, I think it will, from what I am told it will work. Even though some of the notes that I read tonight said within a three year turn around, I am thinking that maybe in the first couple of tries it will probably be more like four years than three but even at that, that will be a heck of a lot better than what we have right now. Of course the bottom line with it all in past years is that we just never had the money to employ the people, the assessors that we needed to go out and do the reassessments.

MR. J. BYRNE: That leads me right into my next question which has been addressed a number of times before but I was never satisfied with the answer. That was with respect to assessors for the municipalities, why could the municipalities themselves not subcontract out that work to private industry? The answer that is normally given is for consistency and whatever the case may be but we see inconsistencies within the individual municipalities, so that is not a legitimate answer in my mind. So, has the department given any consideration or will they give consideration to allow the towns to contract out?

MR. REID: I am smiling because it was only this afternoon that we were talking about the same thing.

MR. J. BYRNE: We must have the same train of thought on a lot of items.

MR. REID: Well, you have to remember where I came from, okay, it is hard sometimes to blank out what happened to you in eight years. I always felt the same thing. I always felt that maybe there were people out there - qualified people that could do it and maybe there are but I found out today that there are not very many. Outside of the government there are not very many qualified assessors in this Province. In fact, we have hardly any at all. I think there are one or two companies in the Province that can do it and that is the extent of it.

MR. J. BYRNE: A whole new industry.

MR. REID: Yes, and uniformity is the problem of course. Now, I suggested today and it was only a suggestion, that maybe we should try to encourage our university or Cabot Institute or somewhere like that to introduce a registered course.

AN HON. MEMBER: There is a program in (inaudible)

MR. REID: We have one now? We cannot get enough. Have we graduated anyone there?

MR. PECKHAM: We have graduated about three or four a year.

MR. REID: Three or four a year and where do they go?

MR. PECKHAM: We hire them or the city.

MR. J. BYRNE: If that be the case, that we are taking everything that is produced in the schools here in Newfoundland, would that not be even more of a reason to put it out to private industry instead of government hiring them? Why is it necessary for the government to be doing it in the first place?

MR. REID: Uniformity.

MR. J. BYRNE: That is a pat answer.

MR. REID: (Inaudible).

MR. J. BYRNE: Well you are leading the way - Newfoundland is leading the way here, are we?

MR. PECKHAM: No, my observation is that every single province in Canada is now gone to a centralized system. Many of them have been gone to centralizing in and out and decentralized systems and every single one are back to a centralized one now. The problems with a decentralized system in assessment in municipalities within a provincial territory is that, the question of uniformity is a big one in the courts. An easy example I will take is, if you had all the Irving service stations scattered around the Province and each municipality doing their own assessments and they used somewhat different criteria and different levels in established varying values for what are comparable kinds of properties with the only difference being the economic climate in that location then they open themselves to challenges in the court. Throughout the whole of Canada now, there have been a lot of court cases lost on that basis. They found that going through the provincial system at least you maintain that kind of uniformity and you just make adjustments only for the market in the area itself.

MR. J. BYRNE: With respect to that, we do have appeal systems to handle that very problem. If there is a person that feels that he is not being treated fairly he can appeal it, he/she or a business can appeal it. With respect to uniformity well, throw that out the window, in my mind but I am not prepared to argue. So it is just a point.

On regional services development control and monitoring, it says appropriation for the monitoring of zoning and development regulations. It mentioned the commercial signage along the Provinces highways. I was watching the news last night and there was a person they were interviewing with respect to signs and the link to tourism and he was having problems apparently with respect to certain types of signs that had to be put up by Transportation or whatever the case may be, is there something we can do along those lines to alleviate that type of problem?

MR. REID: I think in the next little while you will see a new signage by-law or act policy introduced to the House of Assembly. My department as well as the Department of Public Works and Transportation has been working on a new policy relating to highway signage for the past while and that particular report is ready now to go to Cabinet.

AN HON. MEMBER: To Cabinet and not the House.

MR. REID: Right on. You hit the nail on the head.

MR. CRANE: I have to go along with Jack Byrne on one thing and that is the assessments. It does cause a lot of problems to the communities. We had one community last year which was back about five years and they jacked the mil rate, then got reassessed and it went up about 30 per cent and 30 per cent in any area certainly does not do anybody any good. I talked to you last year Mr. Peckham and the new system was going to be okay to go this year, so are you up to par with it yet?

MR. PECKHAM: Well, we have every single municipality in the Province on the new system as of January but we still have about 245,000 properties that we are using old data for because they have not been reassessed and we have not converted to new data. It will take us about another two years to get everybody converted to modern data, but all communities, as they are done now, are converted at the same time. Once done they will be real easy to maintain and do afterwards.

MR. CRANE: What about new communities applying for assessments? How long will they have to wait?

MR. PECKHAM: Well, we are giving a preference to those at the moment and trying to get them done, those one with capital debt. If it is a small municipality without capital debt then we give them a lower priority, but if they are of reasonable size and have some capital debt that they want to raise taxes for right now we are giving them a priority to do so they should not have to wait many years. If they are on now we are looking at trying to do them this year.

MR. CRANE: Many years - I like that one.

Amalgamation in our area is cluing itself up for awhile but we do have one group to go together and they are all ready to go. The only complaint I got from any group, for the minister, I got a letter today from the volunteer fire brigade. I had to smile when I got the letter because I am sure there are other things they could have complained about. The annual banquet for the volunteer fire association, their annual banquet that was usually paid for by you people, has been cancelled. I know you are tight for money and all that but by the Lord dying, I mean, when you have to hit the fire departments for one banquet a year, the volunteer department - I was amazed when I read that, Mr. Minister.

MR. REID: Well, that is not all we pay for.

MR. CRANE: We are looking for fire trucks and everything, I know.

That was sent in from a volunteer fire brigade who wanted to ask the minister to reconsider that one.

MR. REID: Mr. Crane, we cut back our funding this year to the Federation of Municipalities, to the Federation of Administrators, and to the Provincial Fire Association.

MR. CRANE: Mr. Minister, there is a difference, I think, in the other two you mentioned. Most of the councillors in any kind of a sizable town right now are getting some remuneration, most of them are. Maybe not in your town because you fellows are paying three mils down there but I am talking about people who want to pay their way, right.

MR. REID: You are talking about the real (inaudible). In the meantime most of the administrators are getting paid anyway and most of the town councillors get some remuneration but we do have fire brigades working all sorts of hours, taking all sorts of chances, and they are not getting anything. If they go out after a fire and have half a dozen beer everybody in the community is talking about them, what a bunch of so and so's they are, and here we are cutting back on one banquet a year. The maximum it could cost is $4000 or $5000.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: That's only about $1,000, $1,500.

AN HON. MEMBER: He's talking about the whole Province.

SOME HON. MEMBERS: The whole Province?

MR. CRANE: Yes. No, I'm talking about the annual one (inaudible).

MR. REID: Mr. Crane, it's not a question of finding $4,000 or $5,000 for the fire department. Last year the dinner at the Federation of Municipalities cost... $36,000.

AN HON. MEMBER: For a dinner?

MR. REID: A dinner.

MR. CRANE: Yes, but see, Mr. Minister -

MR. REID: For the Association of Administrators it was $4,500. For the fire department it was $15,000.

MR. CRANE: Yes, well, okay, $15,000. The other fellows see, Mr, Minister, the difference in those people, the fellow who's a councillor in the community, he's not paying for it anyway. He's only taking it out of the till. But I mean, he's getting his money from the council to go to the annual meeting. So if he pays twenty-five dollars for a meal it's coming from the council, ninety-nine times out of 100. But these fire fighters, they got nothing like that. They're getting nothing. They get no remuneration whatsoever. Fifteen thousand dollars.

MR. REID: I don't mean to answer your question with a question, Mr. Crane, but then if that be the case, and appreciation should be shown to those people, why doesn't the town council show the appreciation?

MR. CRANE: Now, sir, come on now. There's a lot of councils like in Mr. Woodford's area that can't even pay their way, and now you're talking about sending the fire brigade and paying for a banquet. We're talking about the government now, and $15,000. I'm as much in favour of restraints as anybody in this room. But now I think we're going outside of restraints when we're talking about cutting out $15,000 from the Newfoundland volunteer fire brigade.

AN HON. MEMBER: (Inaudible).

MR. CRANE: Pardon?

AN HON. MEMBER: (Inaudible).

MR. REID: I could suggest to you, Mr. Crane, that the $22,000 that the provincial government provides the fire fighters in the Province for administrative support, which is a secretary or whatever, that they could take that $22,000 and put towards their fire department banquet. Or they could -

MR. CRANE: I can't even believe I'm hearing, Mr. Minister, what you're saying.

MR. REID: Or they could - each year the Province of Newfoundland pays $210,000 for every volunteer fire department in this Province.

MR. CRANE: For insurance.

MR. REID: For insurance and workers' compensation.

MR. CRANE: Why wouldn't they?

MR. REID: This year -

MR. CRANE: Why wouldn't they?

MR. REID: Where does the responsibility of the community come in here? Right? It's a volunteer system for the community. Where does the responsibility from the community come from? Where is it?

MR. CRANE: (Inaudible).

MR. REID: Where is it? I can't agree -

MR. CRANE: If you go and buy a fire truck today -

MR. REID: - in a time when this Province is financially strapped, and I'm talking about cutting grants to seniors and cutting grants to the handicapped in this Province, for this government to spend $36,000 -

MR. CRANE: No, no.

MR. REID: - for a dinner for the municipalities -

MR. CRANE: No.

MR. REID: - $45,000 for administrators, giving administrative support to the tune of $22,000 to the fire department, paying for insurance for fire fighters across the Province, I really can't see where any fireman or any fire department in this Province would be terribly upset. If we had to cut back and decide -

MR. CRANE: I can't believe it.

MR. REID: - where we were going to put our money I think that they'd prefer that we took our money and put it somewhere else other than a banquet.

MR. CHAIRMAN: Mr. Crane, your ten minutes are up.

MR. CRANE: Yes, I'm glad it is.

SOME HON. MEMBERS: (Inaudible).

MR. REID: To finish off, we're the only province in Canada that cost-shares fire fighting equipment, 75-25.

MR. CHAIRMAN: Mr. Manning.

MR. MANNING: I'm the volunteer fire chief for St. Bride's, Mr. Minister, and I'm amazed now. To tell you the truth, now, I can buy my own dinner, but there are a lot of people on my fire department can't.

MR. REID: How are they going to manage to get to Gander?

MR. MANNING: To tell you the truth, we never even managed to get to Gander yet. Because we have a brand new fire truck that we're trying to pay off, a new fire hall that we're trying to pay off -

MR. REID: I congratulate you.

MR. MANNING: - and much equipment that we're trying to pay off.

MR. REID: I congratulate you.

MR. CRANE: Everybody's doing that.

MR. MANNING: When I look through this budget - and like I say, I'm only a rookie, but time will tell - when I look through that budget there's a lot of places you can come up with $15,000. A lot of places, Mr. Minister.

Anyway, to get back to a couple of - if I go on talking about the fire department I'll be here all night. I'd go back to one of your comments earlier when you talked about forced resettlement. You check Hansard the other day, I called this Budget, not the 1993 Budget but the 1993 resettlement program but there was nobody listening to me only buddy over on the wall in the picture in the House. So, I said I will say it here because someone might hear it. I would like to ask a couple of questions -

AN HON. MEMBER: (Inaudible).

MR. MANNING: Yes, they are the only crowd who will listen in the House.

AN HON. MEMBER: Those on the wall.

MR. MANNING: They are the only crowd who will listen in the House. I looked around and nobody listened so I sat back down and said shag it. In order, Mr. Minister, for a community to receive any water and sewer funding, do they have to have property tax? That is a must is it?

MR. REID: Or agree to implement it.

MR. MANNING: Or agree to implement it. Is there a certain mil rate that they would have to implement? A minimum amount or -

MR. REID: There is no set mil rate right now.

MR. MANNING: Okay. On page 305 of the estimates, Firefighting Vehicles and Apparatus: there was $1 million budgeted last year and $1 million spent and $1 million budgeted again for this year. On the application side of that, I know there has to be a level anyway but do you have a dollar value on what applications you have for that million dollars? I would just like to know how much need is there versus what is actually there.

MR. REID: Are you referring to the price of the equipment or are you referring to -

MR. MANNING: Grants and Subsidies. There is $1 million, I guess that is under 75/25 is it? Each one relates to 75/25?

MR. REID: Yes.

MR. MANNING: You have $1 million but in -

MR. REID: How much has been asked for, is that what you are asking?

MR. MANNING: Yes.

MR. REID: How much overall has been asked for?

MR. MANNING: Yes.

MR. REID: $6 million.

MR. MANNING: I know of several instances where many fire departments are way below what they should have in order to provide proper protection so I was just wondering about that.

Community recreation, sport and fitness, community sports facilities: I see that last year we went from $1.531 million down to this years Budget - we had $1.531 million budgeted last year, we spent $1.671 million. This year we are down to $1.038 million, page 307, which is a cut of $633,000. Part of that cut is the elimination of electrical power subsidies for recreation facilities. Myself and Mr. Reid are after discussing this already in the House but I am just wondering, is that totally finished, electrical subsidies or is there a certain amount - some facilities in my area received up to $10,000, is it possible to receive any funding or is that -

MR. REID: Not under electrical subsidy.

MR. MANNING: Not on electrical subsidy, that is gone altogether?

In regards to the recreational grant funding, it is reduced by $1,206,500 compared to the 1993 department requirement, is that - again, is there still room there for some funding? Under recreation -

MR. REID: Yes. You are talking about grants to disabled persons, for example, recreation committee's and things like that, are you?

MR. MANNING: Yes.

MR. REID: Yes, there is a possibility.

MR. MANNING: There is still a possibility?

MR. REID: When you are talking about the electrical subsidy - I do not know if you were or not but you asked if there were other ways of picking them up, there is still the possibility of leadership grants to be gotten and there are still ways of -

MR. MANNING: - of working around that in order to get some.

MR. REID: - well I do not know about working around it but there are still monies available for recreation.

AN HON. MEMBER: Less total money.

MR. REID: Yes, less total money but not necessarily offset the electrical subsidy but provide leadership grants and different other types of grants to, let us say stadiums and this sort of thing.

MR. MANNING: It could save dollars in other ways that would feed back in. Okay. I know you are not responsible for the minister who went before you, but the previous minister guaranteed no changes in what was projected for the local roads, maybe you have a different name on it.

AN HON. MEMBER: (Inaudible).

MR. MANNING: What's that?

AN HON. MEMBER: The quotes that were sent out (inaudible).

MR. MANNING: The quotes that were sent out, he guaranteed that eighty-nine dollars would be the - roads component, okay. Local roads, we call them. Anyway, roads component of eighty-nine dollars, he guaranteed that it wouldn't change for this year's budget that's coming up. Now with councils having their budgets prepared by December for the next year, now you come out in the last of May, June. Is the road component going to change this year?

MR. REID: Yes, definitely.

AN HON. MEMBER: (Inaudible).

MR. REID: Yes, it's already done. I can't answer for what Mr. Hogan said.

MR. MANNING: Oh no, no. Mr. Hogan has a job to answer for himself.

MR. REID: I'm sure that if the deputy minister was here -

MR. MANNING: Right? You know, right? I'm just wondering about -

MR. REID: It's common knowledge that the road component would disappear this year, basically. This'll be the last year. That is the program. Every council in the Province has been notified that this is the last year basically of the roads component. Am I right, Mr. Woodford?

MR. MANNING: Yes. I spent a couple of terms, Mr. Minister, on my community council. I wasn't the mayor, I was just a councillor. The department asks that you submit your budget by the end of December for the following year. But then the fiscal year really doesn't end till the last of March and you bring in a new budget in April and May. We experienced - I'm sure other municipalities have across the Province - that you're thrown off track then. Here you are in December planning for - we'll call it 1993 - and then the Budget comes down in April and May and things are cut and slashed sort of, or whatever, and then you're all off in the wilderness again. Then you can't get to bring your Budget in track. Is there any way that the department could fix it? To put it bluntly.

MR. REID: The only thing that I can say to you is that I tend to agree that we are - we have been in the past three years - really confusing town councils when it comes to the budgetary process. That's one thing that I'm going to address with my department officials. We just can't continue to expect to get budgets in by December 31 and then in January, February, March or April make changes that will affect budgets, because I know the nightmare it creates for councils in the Province and I'm certainly sure (inaudible).

MR. MANNING: I know with us, Mr. Minister, and I'm sure most municipalities in rural Newfoundland, it's whoever the five members who you can get to make up that community council sometimes, and you're there and you're just struggling. Because a lot of the people are not familiar with budgets. It's a whole different ball game. I stress that if at all possible that you - and I welcome the news - that you're going to look into it and try to fix it.

SOME HON. MEMBERS: (Inaudible).

MR. CHAIRMAN: Mr. Noel.

MR. NOEL: What's your view of the amalgamation initiative in the St. John's region?

MR. REID: In particular, Mr. Noel. When you say the St. John's region -

MR. NOEL: What do you feel about what has been done, and do you anticipate any changes in the near future? Do you think that what has been done is working reasonably well?

MR. REID: We've got some serious discrepancies in the area in regards to taxation. We're trying to deal with that problem right now, but we've got areas that have been amalgamated with St. John's that are paying taxes equivalent to St. John's. We've got sections that have been taken into the city council that are in desperate need of some serious, immediate water and sewerage services and changes and corrections and everything else.

I am not in a position, as of yet, to turn around and state an opinion one way or the other but I have a couple of meetings planned with city council. I have one councillor from the Goulds who has been calling me almost on a regular basis since I have been elected, and you know who I am talking about. Those particular problems are going to have to be addressed as soon as possible. I am the type of person who believes that if you encourage people to try to work together and you can bring them together and somebody can sit in consultation with each other you can work out some sort of a solution. I really cannot say much more than that at this particular point in time because I have not met with city council yet and I do not know what direction they are going to take or going to advise me, or I am going to advise them, I suppose, as it relates to some of the problems we have. It is not a healthy situation as far as I am concerned right now, at the present time. There are problems that have to be addressed and how we do it I am not sure at this particular point in time.

MR. NOEL: Does the department feel that this regional services board has a real problem?

MR. REID: Whether the department feels it or not Walter I tend to believe there are questions that have to be answered there. Like I said until I am versed on what exactly is going on and what the reasons behind the problems are I am not in a position to really make a comment.

MR. NOEL: Thanks, Mr. Chairman.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Based on what Mr. Manning just said, Mr. Minister, I think it is very serious and I have been preaching that now for three years, that municipalities should not be left holding the bag in mid-term. This is the third year in a row now, starting in 1990, the fourth year, that it has been changed. Not only that they have other problems as well, not counting any changes to the municipal operating grant. If that particular grant was capped, and it seems to me that when you start coming down the first one you hit is the road component, what are you going to hit next?

MR. REID: That is a good question.

MR. WOODFORD: You only have $39 left in it. What are you going to hit next when it comes to the cut in municipal operating grants? It is obvious that is starting to come down.

MR. PECKHAM: Mr. Woodford if the (inaudible) were capped at where it is now, or reduced, either way, and as municipalities earn more income under the MOG, the formula itself would have to be changed so you would have to make a reduction in one other component, and nobody has looked at it yet to say where it would be because it has not happened. The only way you could deal with it is to either reduce the equalization component or reduce some other component, one of the parts of the formula, to make up one of these components.

MR. WOODFORD: That is right, so eventually if that keeps happening municipalities - based on the last four years it is not unreal, it is a logical assumption.

MR. PECKHAM: Well, there was a planned reduction over a three year period and this is the last of the three years so we really do not know what might happen next year at this stage.

MR. WOODFORD: Anyway, Mr. Minister, make sure that cut does not take place in mid-year like it did before. The implementation of property tax in areas like local service districts and so on where they have no property tax, taken under the formula, it is $40.00 per household. Is that right? Is that what they get paid under the new components? In an area where there is no property tax instituted all they get is $40.00 per capita, or per household is that right?

MR. REID: Per household.

MR. WOODFORD: Per household, that is under the equalization component.

MR. PECKHAM: That is the flat rate.

MR. WOODFORD: And there is $85.00 for anywhere where there is property tax further down the component. The committee water services budget, when will that be out, Mr. Minister? Do you have any idea when that will be out?

MR. REID: Well, we cannot announce that until our Budget is approved.

MR. WOODFORD: But you have $950,000 into it, $50,000 less than last year.

MR. REID: All the areas have been identified but I am not at liberty to say anything other than I have to wait.

MR. WOODFORD: This is something else that never made sense to me, usually the capital funding is all announced and tenders called, and yet - that does not make sense.

MR. REID: You are talking about capital and current?

MR. WOODFORD: Capital and current, I know, but if that is the case this stuff comes out late Summer and you have communities around late Fall, October or November, trying to put in these little water lines and it is a bloody mess. Why do we not change that so we can get out and get a bit of work done in the Summertime?

MR. REID: See, if you went the other way you would have to go through the guaranteed loan process. I do not know what other way, how else could you handle it?

MR. WOODFORD: I suppose the bottom line on it would be to get the budgets out. Even if it were know, for instance, in another couple of weeks if the Budget was passed in June, if it was out right away then, communities could get it before the end of June.

MR. REID: If this goes through the House in the next couple of weeks you are only looking at the middle of June. You can do work in September and October with no problem.

MR. WOODFORD: But a lot of it sometimes does not come in until late. I do not know why.

MR. PECKHAM: It gets late because the Budget gets late every now and then.

MR. REID: All the information is in the department.

MR. WOODFORD: How many are now waiting for assessments, first assessments?

MR. PECKHAM: Not very many right now. We probably have about twelve municipalities now in line for first time assessments, and virtually none in the West Coast or the central area, maybe one or two, but there are about ten or a dozen in the eastern part of the Province waiting for first time assessments.

MR. WOODFORD: And I suppose there are quite a few to be reassessed?

MR. PECKHAM: We have hundreds due reassessment because the cycle keeps repeating itself every year. We have been behind in that and have not caught up yet so there are quite a lot to be reassessed.

MR. WOODFORD: On the amalgamation, I suppose I would be remiss if I did not mention that, I always said ever since the first time I remember Mr. Colbourne was the commissioner or the municipal representative that time when you had the meeting at the high school in Deer Lake. I said then and I say now, that the concept was a good one but the approach was diabolically wrong. It has been proven with some of the groupings that have been done so far, and the minister mentioned one of them tonight, you have trouble, you are going to have trouble, and you are going to continue to have trouble until that is addressed because you are dealing with large populations, especially in an urban centre. You are going to have it in my area.

The problem with it all is the transition. If government puts some money up front for the transition process with amalgamation in some of those areas so that the people who are getting amalgamated, going to join, and streamline things as other members have said, they would see something in year one, some kind of a plan, year one, year two, year three, year four, year five, right now they see nothing. They go from a local service district or an non-incorporated area of the Province into a municipality paying eight, nine, or ten mils and they are getting nothing, and they are not going to get anything. You have to be honest about it. For instance in Spillway, Nicholsville, and Deer Lake - Nicholsville and Spillway can whistle for the next five or six years before they ever see a nickel from the town of Deer Lake because of all the infrastructure that would have to be put in place in Deer Lake to service the other two areas. That is where the problem lies. I venture to bet that if I went into Nicholsville or Spillway tonight, or any other community, and said in 1994 you are going to get a phase of water and sewer, and in 1995 you will get garbage collection or something, a plan, I would say if it was necessary each one of them would sign it because it would increase their property values for one thing, and they could see what they are paying their money for but now they cannot see anything.

That is one of the ways the minister and his department could overcome a lot of those problems they have with amalgamation, if something like that was addressed.

MR. REID: Mr. Woodford I am not making any commitments to you at all but that is exactly what we are doing right now in that area. We have instructed our people to go into the communities and ask exactly what the communities are looking for, but whether we are going to be able to deliver, I cannot answer that, but at the present time they are in that area asking.

MR. COLBOURNE: The transition team is set up as you are aware -

MR. WOODFORD: Yes.

MR. COLBOURNE: - and they are very soon going to present the package, the request from the transition team to government as to how they feel the thing will work and how government should help if the needs are there.

They have also asked for $25,000 to go towards a study to look into infrastructure in that area there, and we are looking at that right now, to have an engineering study done to look at exactly what infrastructure is needed and so on, but it will depend on government's decision when the package is put forward by the transition team to say if we are to be amalgamated, and if we have to be, this is what we desire. It does not necessarily mean you will get it all, but at least the transition team will be giving us a package, or the minister a package, as to how they see it will work and what is required.

MR. WOODFORD: Because -

MR. REID: Maybe some commitments can be made, but Rick you know the approach this government has taken since 1989 basically - no money up front. That is the role, and I believe in that role. I believe in that approach. Now that does not say that one of these communities in your particular area that we are talking about, that the committee might recommend that in 1994 or whatever that the amalgamated community should look at the possibility of providing services to certain areas. There is nothing wrong with that, and that the department would certainly look at it and take it under consideration. So in a roundabout way the answer to your question could be what you suggested yourself. Maybe there is something that we could offer them down the road.

MR. WOODFORD: I honestly think that you could save money in the long run. If you look at it in the long term you could save money; the department could save money.

MR. CHAIRMAN: Thank you. Mr. Byrne.

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

There were some comments made earlier with respect to neighbouring municipalities - one that a municipality would have three or four mils and another municipality have eight, nine, ten or twelve, whatever the case might be. I would venture to guess that some of the reasons for that difference would be that they may not have the same services. Some may have water and sewer; some may not. Some may have a fire department; some may not. Again, a lot of that would depend, in my estimation, upon the volunteers.

For example, down in our town versus Torbay, Torbay's mil rate is 7.5 mils, ours is 5.5 mils, but for the first three or four years that we incorporated, myself, as Mayor, was putting in thirty or forty hours a week doing the work that you had employees doing, and a lot of the municipalities are doing that type of thing, so that is a major factor that should be considered when you are thinking about these types of things.

I want to get back also to the fire fighters, with respect to the banquets being paid for by municipal affairs and that being cut. The minister made a comment with respect to why not have that be the responsibility of the municipality involved type of thing.

In a lot of cases what I am finding is that a lot of people are forgetting that the taxpayers in those towns are also paying provincial taxes, paying federal taxes. How far are we going to keep cutting these people and causing them to pay taxes and cutting the services that are... I mean, some of the revenues that are being taken in by the provincial government from these taxpayers should go back into the town. I know they go into health care and roads, or whatever the case may be, but that is a factor that has not been considered, and I was surprised when the minister made that statement.

To clarify what Fabian was saying earlier with respect to the roads component, what we had been promised by the previous minister was that what was passed out to the municipalities would not be changed. It was written in stone. No matter what, it would not be changed. Now, midstream, it has gone from $80-something down to $39, or whatever the case may be. I only found this out since I came here tonight, and I think Mr. Peckham stated - I am not sure now if it was Mr. Peckham or the minister - that it was previously stated or known that the roads component was going to be cut out eventually. It was never ever stated or known, or accepted or whatever the case may be, that would happen, or the municipal operating grants that would be cut out. What is happening though is that the towns that are being cut $40 per household, I think Rick mentioned, for the houses that do not have property taxes, when you take some of the municipalities now, it is getting to the point where there is no point in having property tax because if they have 600 or 700 homes and they do have a property tax, they are getting such a little amount - it is being cut like 80 per cent, the municipal operating grants over the past few years - why bring in property tax? Just take the $40 a year per household from municipal affairs because they are not getting anything else out of it. It has been cut to the point where - it is coming to an even point where, if you are getting 600 homes times forty dollars or getting 600 homes times the mil rate or whatever the case may be, it is not convenient to anybody's benefit to have the mil rate in place anyway. Do you want to address that Mr. Colbourne?

MR. COLBOURNE: No, I was just going to say that the main problem with the road component if you understand the MOG, municipal operating grant, road component is more or less just a pot of what is left over between the other three components. What is happening is two things, certainly the cap has been dropping one-third, one-third, one-third to get down to your $41 million. The other thing is of course, that as revenues increase in municipalities to pick up, as you were saying, to pick up the difference, than there is less in the pot and the pot keeps reducing down. (Inaudible) correct we are in a position right now, and as Mr. Peckham just pointed out a few minutes ago, that we are going to have to take a look at it and see what will happen now if the pot is not changed, than what happens with the other components? That is what is making it drop.

Now in the meantime, we asked municipalities to give us the estimate around August or September and October, of what the expected final estimates of revenue is going to be for the year so that we will have that figure so we can calculate what the grant will be at that time, as early as we possibly can, to let the municipalities know very quickly what the road component will be and so on but a lot of municipalities are slow in that. As you can imagine when you have 285 municipalities, if one municipality comes in late and the whole thing goes into the computer, everybody is changed. This is what is causing us the hardship to come up and say definitely what that figure is going to be -

MR. J. BYRNE: When this system was brought in a few years ago myself and some of the other mayors in the municipalities that looked at the package itself with respect to municipal operating grants, we assumed at the time and we projected that down the road, yes, the roads component was going to be gone, out the window, forget it. We assumed that but we were told that would not be the case but of course it is the case.

The minister made a statement earlier that begs this question and I never had it before I came here tonight but I wrote it down, is the department considering actually a fixed mil rate, as per the utilities rate that was set at 2.5 mils Province wide for all municipalities, is that being considered?

MR. REID: You heard the comment, it was basically a personal comment, I have not even discussed the question of a fixed mil rate and I do not believe we can do it anyway.

MR. COLBOURNE: Well I suppose you could do it, government could do it but 3 mils on nothing is nothing as regards to assessed values. Three mils in St. John's is quite a revenue. Three mils probably in Trout River or somewhere -

MR. J. BYRNE: I am not saying I am for or against this, I am asking a question.

MR. COLBOURNE: So, the situation would be - I could not see the department establishing a set mil rate. A set minimum tax might be something or something like that - I cannot see the mil rate working.

MR. REID: There would have to be too many exemptions if there was a set mil rate? There would have to be too many exemptions in the Province for -

MR. J. BYRNE: Well what could be looked at, from your point of view, would be a set mil rate for a city, a rural town that does not have water and sewer versus a rural town that just has certain services.

AN HON. MEMBER: (Inaudible).

MR. J. BYRNE: Whatever.

MR. REID: A rural town that had an economic base - you could go on and on and on, there would be no point.

MR. J. BYRNE: - but you are the people who planted that in my mind tonight, okay?

MR. REID: Well, Mr. Woodford planted it in my mind. We have been talking about that for years.

MR. J. BYRNE: Well, I am not making any excuses for that. I have a question with respect to the Urban and Rural Planning, on page 295, I did not get into the figures yet on any of this. So in the middle of the page, Urban and Rural Planning, "the preparation of municipal and other plans...." I'm wondering what the minister's views are on the municipalities themselves having more input into the municipal plan itself. I know what the answers are going to be from the assistant deputy ministers, because I've asked that before. But it's a new minister, I'd like to get his views on that. Because historically, from my perspective, a lot of the municipalities have been given a plan and been told: here, like it or lump it, this is what's going to be passed. You may have some input into it in the beginning but the end result is: this is what's good for you, take it, like it. The municipalities are the people up front who have to enforce those regulations or whatever the case may be.

MR. REID: I'm really surprised you'd say that, because I can't imagine a town having a town plan done and having little input into it. Within the regulations, first of all, there has to be public meetings or public hearings. That's under law, there has to be public hearings. I can remember when we did the one in Carbonear some years ago. We spent hours on top of hours sitting down talking to the planner and having input. Basically the answer to your question is that if there's a municipality out there that thinks that their town plan is being forced down their throat, don't accept it.

MR. J. BYRNE: Well, you see, this -

MR. REID: As a motion of council. There ends the problem.

MR. J. BYRNE: That's all well and good coming from yourself from that perspective, but that leads into another question, where this one's coming from, and with respect to regulations. A couple of years ago we had regulations forced upon the municipalities with no input whatsoever with respect to subdivision regulations in the Northeast Avalon. We were a year and a half fighting to have those regulations changed back. I'm just wondering where the minister is with respect to that. Will he be coming from that perspective or will he be actually having input from the towns when any major regulations are going to be changed?

MR. REID: They were regional regulations, weren't they?

MR. J. BYRNE: St. John's urban region subdivision regulations.

MR. REID: St. John's urban regional planning.

MR. J. BYRNE: But they had major impact upon the municipalities. You know?

MR. REID: But there were public hearings, weren't there?

MR. J. BYRNE: Not that I'm aware of. Nobody informed me of them. They were done.

MR. REID: I would think so.

AN HON. MEMBER: No, it wasn't done for the regulations, no.

MR. REID: No, none for the regulations?

MR. WOODFORD: (Inaudible).

MR. REID: So you're right, you're absolutely right. Yes.

MR. J. BYRNE: There was a major change. So I would expect that that won't happen in the future with you there as minister?

MR. CHAIRMAN: Thank you, Mr. Byrne.

MR. REID: I'll have to address that particular question. I promise you I won't forget it.

MR. CHAIRMAN: Thank you, Mr. Minister.

Mr. Manning.

MR. MANNING: Mr. Minister, Special Assistance funding for the municipalities has been reduced by $500,000. Would you elaborate on exactly what the Special Assistance funding is for?

MR. REID: What number is that?

MR. MANNING: This is in the highlights. It's in the budget itself.

MR. WOODFORD: (Inaudible).

MR. MANNING: The resettlement program.

MR. REID: That's for towns in financial difficulties. Is that what you're talking about?

MR. MANNING: Yes. Just Special Assistance funding for municipalities has been reduced by $500,000, right? I'm just wondering what falls under Special Assistance funding.

SOME HON. MEMBERS: (Inaudible).

MR. REID: The answer to it is that there is a number of communities in the Province each year that run into financial difficulties.

AN HON. MEMBER: (Inaudible).

MR. REID: Under the new grant system. We had the $1.5 million in there last year and we don't anticipate that amount of major difficulty this year. That's why it's reduced back by $1 million.

MR. MANNING: Reduced back.

MR. REID: But I think you'll find it somewhere else, though. I think we took the $1 million dollars and put it in -

AN HON. MEMBER: It's $1 million plus $500,000. The $500,000 was a general Special Assistance fund.

MR. REID: That's always there.

MR. MANNING: It was always there.

AN HON. MEMBER: There was $1 million put in to try to help municipalities for special assistance which had extreme problems with the transition and with the -

MR. REID: With the MOG.

AN HON. MEMBER: - and we did not have to use it all last year so we reduced it this year.

MR. REID: The Aquarena was in there too, wasn't it? That was in (inaudible).

SOME HON. MEMBERS: (Inaudible).

MR. MANNING: Mr. Minister, a major problem that municipalities face - the ones that I'm familiar with anyway - is the collection of taxes. What jurisdiction if any does the department have, not so much I guess in the collection of taxes, but when it comes time for the MOG. Does the collection of the taxes play a part in that?

MR. REID: I don't understand your question.

MR. MANNING: Okay. The municipality collects so many dollars, or is supposed to collect so many dollars, per year. Say there is 51 per cent of the population in that community pays their taxes. Now when it comes time for their MOG, is that taken -

MR. COLBOURNE: It would affect their revenue component, surely.

MR. MANNING: Yes.

AN HON. MEMBER: (Inaudible).

MR. COLBOURNE: Sure.

MR. MANNING: But the department itself has no jurisdiction over, like, trying to threaten the collection of taxes or....

MR. COLBOURNE: No. The only place the department gets involved is if they're looking for special assistance or another form. We look at the books and councils haven't collected the taxes which are due on their levy, you know? Then the department certainly (inaudible) come up with special assistance when the revenues are out there to be got for arrears in taxes.

MR. MANNING: No. I know it's hard times, not only on government, but it's on everybody, to say to increase your taxes. I know to increase them in the communities I'm familiar with is what we call codding yourself. Because you're not collecting half of them now anyway. So it's hard for municipalities to - with the reduction in the MOGs and the trouble with collecting taxes they're having a job just to keep afloat. So they're just a -

MR. REID: That's understandable, with the economy the way it is and so on. It's all taken into consideration, sure it is. I can appreciate -

AN HON. MEMBER: (Inaudible).

MR. MANNING: I'd just like to finish up with a comment back to, if I could, to talk about the volunteer fire departments again. Mr. Minister. There are over 6,000 volunteer fire fighters in Newfoundland and Labrador, over 300 volunteer fire departments, that put a lot of their own time and money, I know, into their fire departments. I believe that this is money that is - any assistance that government gives to those departments is well invested in the future and in the saving of property and the education of our young people.

So I would ask the minister as he walks into his new department if possible to have a look around and maybe you could, at the end of a year of volunteer service to our communities, those volunteer fire fighters who can afford to make it to Gander, that you may be able to help them out with that final banquet. I think it's a slap on the back to a lot of people who put a lot of time and effort into their communities. I would ask that you have a look around, maybe through all these estimates. You may find those few dollars.

MR. REID: We are assuming here then that you consider the fire fighter in the town to be of much greater importance than the municipal councillor.

MR. MANNING: Run that at me again, now. What's that, Mr. Minister?

MR. CRANE: Anyway, sir, I tell you, I'd like to be able to sit down with you some time and we'll talk about that. I can't explain it to you, the difference.

MR. MANNING: (Inaudible).

MR. REID: The problem that I have with your request is that I had to this year cut certain amounts of money from the budget. We had to find ways of eliminating areas. Now if you take the whole budget in the context of the whole budget, and you look at some of the areas and some of the other people who we have to subsidize, I agree with you. How hard do you think it's going to be for me as a past president of the Federation of Municipalities and not going to be able to go to the annual meeting in Gander in October, because we cut $36,000 from the budget. How hard do you think it is for me to do that?

I appreciate the services that the volunteer firemen do in this Province. But when it comes down to it, and I have to take money away from something to give it to somebody else, there are other things in this budget that are more important than providing a meal for a volunteer fireman in Gander. I have to say that, and I think you agree with me.

MR. MANNING: I agree there is -

MR. REID: There is $111 million delivered directly to municipalities in this Province by this government - $111 million - so it is not right for anyone to say that we should be treating one group with a little bit more sincerity than some other group, because I am sure out there every single group that is going to be affected by this budget will say the same thing.

MR. MANNING: I agree to a certain extent, Mr. Minister, and I reiterate what I said before. Many fire departments cannot even afford to get to Gander, and I am sure next year's convention that they have, the cost of attending that convention is going to skyrocket just in order to have the full complement of the weekend that they have there.

Like I said before, I have not attended those conferences myself but of any conference that I do attend I do learn something, whether it is a rural development conference or whatever, there is always a learning experience and it is too bad - I realize it is hard times, but like I said, I am not telling you what to do. I am asking you.

MR. REID: I will look and see if I can find... I promise you, I will look.

MR. MANNING: And in the same vein, if you could come up with $10,000 for Trepassey stadium, I would be delighted.

MR. REID: There you are.

MR. CHAIRMAN: I think Mr. Woodford would like to ask a short question.

MR. WOODFORD: On the planning - you mentioned the planning - there are a lot of communities in the Province now up for review - their plans are up for review - and I understand there is not enough funding - correct me if I am wrong - to continue with those plans this year. Is that true?

MR. REID: That is true. The planning budget is cut almost in half.

MR. WOODFORD: So what happens now? They cannot do it in-house. That is the only other way for it to be done. Other than that it has to be tendered out.

MR. REID: We are plodding along. We have the staff but we are scaling down.

MR. WOODFORD: So communities will just have to go along with their same...

MR. REID: Some will go.

MR. WOODFORD: But as long as they deal with the amendments, if there is a request for amendments, as long as the department can deal with the amendments now it will not be so bad, unless there is - I know some municipalities would require major changes, but even if they can deal with the amendments it would be a plus for the municipalities.

MR. REID: Mr. Peckham informs me that is the approach the department is now taking, to concentrate on the amendments only.

On motion, subheads 1.1.01 through to 5.1.04 inclusive, carried.

On motion, minutes of last meeting adopted as circulated.

On motion, committee adjourned.