Whitehorse, Yukon

Wednesday, March 31, 1993 - 1:30 p.m.

Speaker: I will now call the House to order. We will begin with Prayers.



Speaker: We will proceed with the Order Paper.

Aboriginal Languages Day in Canada

Mr. Abel: I would like to acknowledge this day as being Aboriginal Language Day in Canada and I would like to say a few words to the House in my own language, if the Members will give me that privilege. After I do that, I will translate my comments to the House in my second language, which is the English language.

(Address in Vuntut Gwich’in)

Having said that, thank you to the Members in this House, who have given me this privilege to speak in my own language today.

I would like to take this opportunity to acknowledge today Aboriginal Languages Day in Canada. On March 31 for the last five years, aboriginal languages have been recognized as an important part of native peoples’ culture that needs to be preserved. The aboriginal language program has been in place in the Yukon for a long time, for which I thank the Yukon government.

I also would like to ask that the Government of Yukon continue to give support for aboriginal languages services in the Yukon.

I would especially like to thank this House for giving me the opportunity to speak today in my own language, my first language of Vuntut Gwich’in. The Vuntut Gwich’in language is spoken to me by my elders in Old Crow, and to them I am grateful for helping me to understand and preserve my culture. I hope that we can continue to do this for the next 50,000 years or so.

When I am at home in Old Crow, I always make a concentrated effort to speak to my two-year old grandson, Troy, in his own language. At his young age he is picking the language up quickly and easily, and will someday pass on the Vuntut language to his children.

Now I would like to ask that the government make continued efforts toward preserving our languages and to support the Native Language Services in the Yukon.

Mr. Joe: What I want to do is speak straight to Hansard using my own language.

[The following English translation was provided]

It is an honour to speak in my language in this House today. I am proud of my language. It is the language of my parents, and their parents before them. I am talking through them today - their language is my language. To use one’s own language is a way to identify yourself. This is how we know who we are; how we know our own people.

First Nations  people from all over Canada should take pride in their language; they should come together with the rest of the First Nations on this day to celebrate their own language. It is for our children. They must learn how to talk with their elders so that they will learn their ways. This is our culture, our ways.

I would like to thank the previous government for their support of the aboriginal languages program, for getting the interpreters in the communities and for putting our languages into the education system. It is important to have our language and our culture taught in our schools. Schools need to teach both languages. This way they will learn the things they need to know in two ways - one in English and one in their own language. We must never be embarrassed about our language. We must be proud of the language that we have been given.

Mr. Speaker, I want to tell you a little story about the arrival of the first white man to the Yukon. It was at this time that we gave you a name. We called you K’uch’an; it means a different nation all together and different looking people - different eyes, different hair, different colour - good-looking people.

We gave you a good name. You should appreciate that. You should not turn around and call us an Indian who came over from India. We gave you a really good name. Thank you again for letting me speak my language.

Ms. Joe: I would just like to say that I am one of those unfortunate people who never learned to speak my own language, which is the Halq’emeylem language that the people in the larger part of the Fraser Valley speak. Here is just a brief history of why that happened. My grandmother died 18 years ago at the age of 96, and she was the last person, in my family at least, who was able to speak her own language. She was also a victim of the residential school system and therefore was taught that speaking your aboriginal language was not something that you were supposed to do.

My father, who is now 86 years old, could understand the language, but was never permitted to speak it, because of the kinds of things that were passed down from my grandmother. Fortunately, quite a number of years ago, when my grandmother was still alive, there was a linguist who came up from California, learned the language from older people, and it is now being taught again in that area; a lot of younger people are speaking it.

I stand here today and acknowledge Aboriginal Languages Day in Canada. It is my hope that the languages will not die. They say that if we are lucky, there will only be three languages that will remain. I hope, as a result of the efforts across Canada by governments that are working toward reviving languages, that we will be able to speak as many languages 10 years from now as we are able to speak today.

Mr. Penikett: I cannot let this day pass, in noting this event, without giving thanks to my teachers: Dihinjik Trinlay, Nay Sha, Thee Del Tho, Ngl Nah, Hah Jal Nii, Hahbeen, Tahmoh, Lahlil, Yahsan, Zzungee, Gwinis Chees.


Speaker: Introduction of visitors.


Mr. Harding: I am pleased to rise to ask the Members of the Legislature to help me in welcoming a special guest who is here in the gallery from Faro, Mr. Bob Gault.

Bob is the Mayor of Faro, and he has been heavily involved in the Curragh process we have been going through in the last few months. I wish him welcome.

Speaker: Are there any Returns or Documents for tabling?


Hon. Mr. Brewster: I have a legislative return to a written question on March 24, from the Member for Faro.

I also have a game farming policy and the proposed regulations.

Speaker: Are there any Reports of Committees?


Introduction of Bills.

Notices of Motion for the Productions of Papers.

Notices of Motion.

Statements by Ministers.


Curragh Inc. negotiations

Hon. Mr. Devries: I rise today to make a ministerial statement on the issue of Curragh Resources.

As the House knows, the reason for my recent trip to Toronto was to meet with mines Ministers from across Canada to discuss the Whitehorse mining initiative and to attend the Prospectors and Developers Association conference.

I can report progress to this House on issues related to both the initiative and the Prospectors and Developers Association conference at a later date.

On the subject of Curragh Inc., I can report that, while in Toronto, I and the Deputy Minister of Economic Development met with Burns Fry Limited, the company we have hired to negotiate on behalf of the Yukon with Curragh Inc. They provided me with an update on the negotiations.

As this House knows, the company is currently undertaking a major equity issue to raise new operating capital. In order to ensure the success of this issue, they have asked us not to discuss publicly the details of our negotiations. As I think every Member of this House wants the negotiations and the company to succeed, we have, as everyone knows, agreed to honour this request.

However, I want this House and the people of the Yukon to know that some progress has been made in our negotiations; but, as is the case with any negotiations, and especially in this case where we are negotiating the terms and conditions of a $34 million loan guarantee, we still have some distance to go. Negotiations are ongoing and we will continue every effort in pursuing a successful conclusion.

I know the people of Faro are looking forward to having this matter resolved. I know their lives are on hold. I would love to be able to give them and the rest of Yukon an in-depth explanation of the negotiating process but, if we are to be successful, according to the traditions of negotiating and the advice provided to us by Burns Fry, the best way for us to reach an agreement will be at the negotiating table.

Mr. Harding: I rise today to respond to the ministerial statement by the Minister of Economic Development. Certainly, we in the NDP caucus would support the work on the Whitehorse mining initiative that was started largely by the former Minister of Economic Development, Mr. Maurice Byblow. We think that that kind of work is helpful to economic development in the territory.

But I would like to turn quickly to the primary issue that was talked about in the ministerial statement and that is, of course, Curragh Inc., and the discussions between the territorial government and their agent, Burns Fry, and Curragh Inc. regarding the $29 million loan guarantee request and the subsequent offer of a $34 million loan guarantee by the territorial government.

I would like to point out to the Member opposite that the problem that we are hearing is being experienced with regard to the equity offering that Curragh is trying to float is that there has been no positive announcement on the loan guarantee. I am sure that Curragh Inc. would have absolutely no difficulty if a positive announcement would be made on the loan guarantee, because that would create a very positive feeling in the market for investors and that would increase the opportunity and the chances of any equity offering being successful.

I would like to impress upon the government the tremendous urgency of the situation in my community and, I might add, the rest of the Yukon. The situation currently facing Curragh Inc. has an effect on many, many Yukoners, not only the people in Faro or Watson Lake.

There are contractors leaving the site in Faro, because they are afraid. They perceive the offer the government has extended to Curragh to be unachievable, and the contractors are taking their equipment and leaving the site.

The suppliers for Curragh Inc. are accepting only cash, no credit, because they are afraid of the same thing. The suppliers are afraid of a mine closure.

People in my community are hurting. I speak to them every day. There are people who are suffering as they await this long, drawn-out process. They also perceive the government offer to be unmeetable. We do not know what is happening in the negotiations.

People are trying to make a living in Faro. Most of them love living in the Yukon, and would stay here for the rest of their life, as long as they had a reasonable expectation of being able to make a reasonable living. I do not think that is unreasonable.

Yukon Alaska Transport owner/operators are also being told the service of their rigs is no longer required. That is a significant amount of income being lost to this territory.

I plead with the government opposite to cut to the quick in the negotiations with Curragh, get to the bottom line, see where the offer is reasonable and that the conditions can be met by Curragh, and let the chips fall where they may on that basis.

I also plead for a release from this - as far as I am concerned - insane blackout on matters that are so important to all Yukoners, especially in light of the politicizing and the announcement that resulted in the 14 conditions. There are many conditions in that offer that people in the territory do not know can be met by Curragh. It is important that Yukoners know whether those conditions are still on the negotiating table or not. I do not see how that would hurt the negotiation process in any way, shape or form, unless the conditions are unprecedented and unreasonable.

I make those pleas to the government. I hope they are listening, and I hope they will respond.

Mr. Cable: I am pleased to see that what was perceived to be the deadline has been extended; that the door is not closed.

I would also like to suggest to the Government Leader and the Minister that the communication strategy not be completely driven by Burns Fry. There are people who have to make decisions on their lives, on whether they move their children out of Faro or put them into school, and whether or not they should obtain other jobs.

As the issues are taken off the table - and I am sure the issues will be dealt with one at a time - perhaps the people of the Yukon can be advised on the status of those issues so they can make decisions in their personal lives.

Hon. Mr. Devries: I appreciate the comments of the Members opposite, and I am certain that the Members of the Opposition know that my riding is also seriously affected by this situation. I am also under pressure to see a quick outcome to these negotiations.

Again, I stress that I firmly believe that at this point the blackout is in the best interest of Faroites, Watson Lakers and all Yukoners.

Game farming: revised policy and regulation proposals

Hon. Mr. Brewster: I am pleased to table today the Yukon government’s revised policy on game farming and proposals for game farming regulations. These documents will now be distributed to the public and interested groups for comment prior to formal consideration by the Yukon Fish and Wildlife Management Board and the Agriculture Planning and Advisory Committee. After this review process is completed, Cabinet will give final consideration to this matter.

The regulation proposals were based on a review of existing practices, in consultation with the industry and other stakeholders and a review and analysis of regulations in other jurisdictions. This review began last year, with the release of a discussion paper called “Regulating the Yukon game farming industry”.

Under the revised policy, game farming would continue to be managed as an agricultural activity, although game farming regulations would be passed and enforced under the Wildlife Act. The regulation proposals are intended to ensure that development of this industry proceeds in a manner that safeguards public safety and protects our wildlife populations.

The proposals are designed to cover all aspects of game farming, from licensing game farmers to the sale of meat or other animal products.

There are six operating game farms in the Yukon, and all of them are in the Whitehorse area. The game farming policy recognizes that game farming is controversial and may not be supported elsewhere in the Yukon. It therefore requires that new licensing areas be developed only with the support of local residents and with the approval of First Nations, as set out under land claims agreements.

As an interim policy, new game farm operations will not be permitted in areas where there is potential competition with wildlife species for critical habitat.

Until the policy regulations are finalized, the current moratorium on new licences will be maintained, with the possible exception of a new licence to assist us in dealing with our problem bison. The terms of such a licence would require compliance with the draft game farming regulations.

Once finalized, the game farming policy and regulations will help us meet our commitment to the Yukon Conservation Strategy and the Yukon agriculture policy.

I believe that all Yukoners would agree that current game farm operators should be congratulated on their record of responsible management to date and their cooperative participation in the policy review and regulation development process.

Through the efforts of all these people who have contributed to this process, we believe we have developed proposals that will provide the framework necessary to support the industry’s development while protecting our environment and wildlife populations.

We would encourage all Yukoners interested in this industry to obtain the documents and to provide their comments on them. Renewable Resources officials will be available to answer questions at any time.

Thank you.

Mr. Harding: I am pleased today to be able to rise to respond to the ministerial statement made by the Renewable Resources Minister.

I certainly am glad to have the opportunity to speak in response to this somewhat controversial issue of game farming. It has a major impact on the territory. There are a lot of opinions in the debate regarding the merits of game farming. They range from people who are philosophically opposed to ranching and the domestication of our wildlife, to those who are just worried about the potential for escape of domesticated animals and the potential for cross-breeding of the escaped animals with our indigenous wildlife here in the territory.

Some people also have concerns about the potential spread of disease of farmed animals to our precious wildlife resource here in the territory. Incidentally, this has forced other jurisdictions in the country to make certain changes with regard to their direction and their policies on game farming. I am pleased today to see the government make a more firm announcement of exactly what direction they are going to be taking with this industry, so that the people of the Yukon can be consulted and have some input into the direction, and also start to formulate a bit of a discussion around the issue.

The third range of opinion is the opinions of the game farmers, game ranchers, veterinarians and others who have an economic stake in the industry. To them, it provides, substantially, their livelihoods. You cannot overlook that. It is a major factor in this equation. I think those people believe very strongly that it is a viable and safe industry. I think that there is also an important range of opinion in this equation.

I believe that the consultation and the regulations are an important step in the right direction toward coming to some consensus on this controversial issue.

I would strongly urge that the First Nations people of the territory be consulted and given all the information they need in order to make an informed and educated opinion on the issue. They certainly have concerns and I believe that the protection of indigenous wildlife is a major priority of First Nations people in this territory.

We are concerned that the moratorium on the bison issue was not honoured by the government. Bison are only considered domesticated at birth, and all through their life they are inside the realm of being domesticated - that is when they are not considered farmed animals. That is not the case of the bison in the territory; they came from the wilds. We believe the government would have been better to have held off a little and complete the consultative process over the bison issue and the game regulations in general.

I think the taxpayers would have been willing to bear the burden of the animals just a little while longer to allow this process to unfold.

The NDP applauds all groups and all citizens who have participated, and will participate, in this process; we look forward to the outcome.

Mr. Cable: I have had a chance to talk with game growers, First Nations people, the Fish and Game Association people and environmentalists. While there are some absolutist views in relation to game farming and game ranching, I think there are a large number of people who do not hold absolutist views. These views may be reconcilable, but I think the first thing that is necessary is for there to be some common information base on the issue of disease transmission. I would hope that the Minister, before he gets too far down the road, would encourage some sort of consensus to be built around the issue of disease transmission so we do not get into an argument such as, “Our experts are more important and their opinions are more important that your experts”.

Hon. Mr. Brewster: I would like to thank the Member for Faro for his comments. I agree with a great number of them. There are problems on both sides of the fence, although I do realize that he has not had a chance to read this yet.

Game ranching is a different subject and I am not prepared to get into it at this time, although I could point out that technically the former government got into game ranching when they turned buffalo and elk loose. I guess when the government is game ranching, it is a little different from other people game ranching. Surprisingly, some First Nations are interested, some are not. This is why we had the public review. I expect that they will all be there and I hope that they all bring their problems up and that we find a satisfactory resolution. I agree with the Member for Riverside. In fact, he and I sat at the meeting and he knows how volatile this situation is.

Some Hon. Members:   (Inaudible)

Hon. Mr. Brewster: The previous government was notified of that when things were a little hot and heavy and we really do not have a problem with that. We try to do what we think is right for most people.

The only other thing I would say is that the remarks about my problem buffalo - and I have almost got them all named; I have been at this so long with them - is that the only time they were not behind a fence was the few years they ran here before we started locking them up. They came from Elk Island, which is behind a fence, and they were completely looked after. We will not get into an argument here, but this was an extinct species - it was protected immediately and locked away from other animals because it is an endangered species.

Speaker: This, then, brings us to the Question Period.


Question re: Curragh Inc, finanancial assistance

Mr. Harding: I am quite anxious today, after hearing that ministerial statement. I have a question for the Minister of Economic Development.

The community of Faro, which is the riding I represent, is incredibly anxious to hear what is happening with the government’s negotiations with Curragh. People in my community are extremely worried that the government has placed impossible conditions on Curragh and that the deal is impossible to do. Today we heard the ministerial statement from the Minister, which did not tell us much. Could the Minister of Economic Development provide this House with an update and an explanation as to why the progress on negotiations cannot be relayed to the public and to the Members of this House?

Hon. Mr. Devries: I would like to thank the Member for Faro for his question. As the Member for Faro very well knows, once we start discussing the content of the negotiations it could create problems for Curragh Inc. in selling their equity issue. This is the reason they asked for the blackout. They want to be given a reasonable chance to sell the equity issue and this is what they have asked for. It is in the best interest of everyone at this point not to try and get into the nitty gritties of negotiations.

Mr. Harding: The only damaging impact that would affect the equity issue would be if the results of the negotiations were very negative. I would like to ask the Minister: when are the people in Faro and the rest of the territory going to know what the outcome of the negotiations will be? What is the time line for a conclusion to this long and painful process?

Hon. Mr. Devries: For the last few weeks, it seems that the Member for Faro has been complaining about the fact that there was a time line; now he wants us to establish a time line. It cannot be both ways. We are doing our best. We want to see a quick resolution to this problem, and that is all I can say.

Mr. Harding: I have never complained about a time line, but I have complained about the time line that the government has been using in these negotiations. It has been incredibly excessive and tough on my community.

The condition that has been described as the first charge on security has been determined by many experts within the mining industry to be unprecedented - except, perhaps, for the Minister of Economic Development’s dealing with the cattle ranch in Penticton.

Can the Minister please tell this House what progress has been made with the banks and the note holders on these negotiations?

Hon. Mr. Devries: I am not prepared to comment on that. I have agreed to a blackout of any comments on the negotiations, and I will stand by that agreement.

Question re: Curragh Inc., financial assistance

Mr. Harding: How can the government - when they went to such great pains to publicize, politicize, take out full-page ads and go on radio phone-in shows with regard to the conditions they set - now say that they are not prepared to talk about these important conditions, which affect all Yukoners, when the government has gone to great lengths to publicize them? Also, why do they obey a request from Curragh not to talk about the conditions when it is not in the best interests of all Yukoners?

Hon. Mr. Devries: I think the Member for Riverside hit the nail on the head, and that is the fact that negotiations are proceeding. That means there is some progress. Basically, the one established deadline has passed. Since negotiations are ongoing, obviously there is some progress. That is all that I can say.

Mr. Harding: I would like to ask the Minister of Economic Development a very serious question. Many people have reported to me that the Minister of Economic Development is somewhat of a comedian. I have been told the Minister has been telling an insulting joke, in Watson Lake, about my community. The joke is that the best way to raise the Yukon’s IQ 30 percent is to shut Faro down. Can the Minister confirm or deny if this is true?

Hon. Mr. Devries: I have heard that joke from other sources.

Mr. Harding: He will not deny it, so I can assume he has been the one spreading it.

Is the 1993-94 budget based on the assumption that the Faro and Watson Lake mines are open, operating and contributing to the territorial economy?

Hon. Mr. Devries: Yes, that is the case.

Question re: Child Care Act regulations

Mr. Cable: The current Child Care Act regulations were under review in the fall of 1992 to remedy a number of flaws. Is it the intention of the Minister for Health and Social Services to have this process completed in the near future?

Hon. Mr. Phelps: The Member is quite right. The regulations are still under review, and I am not exactly sure when that review will be completed.

Mr. Cable: Can the Minister give his assurance that all stakeholders will be consulted prior to the regulations being amended?

Hon. Mr. Phelps: That is our intention.

Mr. Cable: The Yukon Child Care Board is perhaps the most important group to be involved in child care regulations, yet I am advised that it is not functioning because there are four vacant positions on the board. Can the Minister say when he will make the necessary appointments to the board and will he ensure that these positions are filled prior to the establishment of the new regulations?

Hon. Mr. Phelps: Names have been put forward to Cabinet with respect to filling those vacancies, and the board will be consulted in the review with regard to the regulations.

Question re: Forestry transfer

Ms. Joe: I am following up on a question from yesterday that was asked by the Member for Riverside to the Minister responsible for Renewable Resources.

Yesterday, the Minister agreed with the Member for Riverside that an agreement has been signed by the negotiators on the transfer of forestry from the federal government to the Yukon. On the radio this morning, the Mayor of Watson Lake said they had, in his words, an indication that they will relocate some of his staff there.

Can the Minister tell us if he has a relocation agreement with the Mayor of Watson Lake? If he has, how many person years are we looking at?

Hon. Mr. Brewster: We not only do not have one, but I have never talked to the mayor about this subject.

Ms. Joe: Therefore, the mayor had no indication from this government that they were going to do any relocation.

Since negotiations have been going on regarding the forestry transfer, can the Minister tell us if the Council for Yukon Indians was involved in the negotiations?

Hon. Mr. Brewster: They were not involved. I wrote two letters to them requesting that they be involved, but they never answered either letter, nor have they returned my phone calls.

Ms. Joe: With respect to negotiations with the Mayor of Watson Lake with regard to any relocation of person years, if that should occur as a result of a transfer, whenever it does take place, would the Minister ensure that the First Nations group in that area will be involved in the relocation of those jobs?

Hon. Mr. Brewster: Yes, I cannot only assure that, but I am also trying desperately to get the Council for Yukon Indians to talk with me about this. I would like to sit down and talk and see what our differences are and see if we cannot get together on them. I am very sincere about this. I have done everything I could, including, when they were here on Monday, asking them for an appointment. They are busy, and I understand that. I am slightly busy, and we just did not get around to it. There have been two letters, and I am doing my best to get everybody involved. I would hope that they will come and talk with us now, as we go from here to try and finalize this agreement.

Question re: Government layoffs

Ms. Moorcroft: On a local open-line show this morning, the Government Leader stated, “We cannot reduce the size of government without massive layoffs.” Why has the Government Leader been lulling the government workers into a false sense of security about the future of their jobs, when he is really intending to conduct massive layoffs?

Hon. Mr. Ostashek: I think the statements are being taken a little bit out of context. I have said, time and time again that, if we were going to reduce the size of government immediately, it would mean layoffs. We have said that we are going to reduce the size of government by attrition. It seems the Members opposite have trouble understanding that. I have said this time and time again in this House.

Ms. Moorcroft: On the open-line show this morning, I heard the Government Leader talking about layoffs. Working people in the Yukon want to know if their jobs are secure, so they can pay their mortgages and feed their families. Why cannot the Government Leader be clear about the Yukon Party’s real agenda?

Hon. Mr. Ostashek: If the Member opposite will assure me that she will vote for the budget, so that we have the money to do it, I can assure her there will be no layoffs.

Ms. Moorcroft: The Government Leader cannot have it both ways - either he is committed to maintaining current levels of employment, or he is in favour of massive layoffs in the public service. Again, I ask, is he going to further contribute to a growing unemployment rate in the Yukon by massive layoffs in the public sector?

Hon. Mr. Ostashek: Again, I have no problem saying this again: we have made a commitment to downsize government. We have made no secret of that. We have also made a commitment that it will be accomplished by attrition and that there will not be massive layoffs in the civil service.

Question re: Curragh Inc., financial asistance

Mr. Penikett: I have a question for the Government Leader about the Curragh negotiations, without intruding on the blackout.

I wonder if I could ask the Government Leader if he would admit now that making the principal condition of the Curragh loan guarantee negotiations non-negotiable was a mistake.

Hon. Mr. Ostashek: I do not believe we made a statement that the conditions were non-negotiable. There are certain conditions that are non-negotiable. At no point have I ever said that all 14 conditions were not negotiable.

Mr. Penikett: It is the first condition, the most important condition and the one the Government Leader is quoted in the Watson Lake newspaper as saying is non-negotiable.

Given that public negotiations began with a YTG press release on the 14 conditions, which have now been followed conveniently with a blackout, would the Government Leader not agree that having a blackout now, after beginning the negotiations in public, heightens the anxiety of the interested people in Watson Lake and Faro?

Hon. Mr. Ostashek: I would say to the Member opposite that the public negotiations did not start with the territorial government releasing the terms and conditions to the public. They started long before that with an intense public lobby by the proponents of Curragh Inc. to put tremendous political pressure on this government to abide by their wishes.

I ask the Member opposite: does he believe that we should give Curragh a $34 million loan, unsecured?

Mr. Penikett: Nobody anywhere that I know of has suggested that Curragh should be given a $34 million loan guarantee, unsecured. However, we do believe that negotiations should have begun in December and January and not March - which is when they did.

Let me ask the Government Leader this: given what is at stake for our whole economy here, would he now concede that it was a major mistake to carry out negotiations in Toronto between two Toronto companies dealing with the fate of the Yukon economy, without a single Yukoner at the negotiating table?

Hon. Mr. Ostashek: Before answering the Member’s question, I would like to say that negotiations should not have started in December, 1992, they should have started in December, 1991, when that Member over there knew Curragh Inc. was in trouble and could not survive with a $5 million loan.

No, I do not think that it is a mistake to be negotiating in Toronto rather than in Whitehorse.

Question re: Curragh Inc., financial assistance

Mr. Penikett: Could the Government Leader explain to the House how negotiations for a $34 million loan guarantee should have begun in December 1991, when, to my knowledge, Curragh did not even ask for a loan guarantee for $34 million from this government until at least a year later?

Hon. Mr. Ostashek: It is my understanding that Curragh came to this government, hat in hand, in December 1991, which resulted in negotiations between the Leader of the Official Opposition, the federal government and Curragh Inc. The Leader of the Official Opposition is on record that the Yukon territorial government could not, by itself, afford to give this type of a loan to Curragh Inc. That is when the problem came to light and was not dealt with responsibly by the Members opposite.

Mr. Penikett: After dithering with this matter for several months, it is not only true that we cannot afford to make this loan guarantee, but it is also now true that we cannot afford not to.

Given that the company involved came to both the federal government and the Yukon government last year for a loan guarantee, but asked the Yukon government only for a minor share of the total loan guarantee, and the federal government was continually at the negotiating table, at least until the Westray disaster, by which time there was already a $5 million loan guarantee resolution, a legal instrument before this House, based on what information does the Government Leader believe that Curragh ever asked this government for a $34 million loan guarantee prior to the Westray disaster?

Hon. Mr. Ostashek: The Member opposite knows full well - and I will refresh his memory, if he does not remember - that negotiations were ongoing during the winter of 1991 with this government, and the federal government, for a portion of it, just the same as they were this last winter, from 1992 to March of 1993. The federal government was involved in it until the Burns Fry report came out.

Mr. Penikett: It is also a matter of record that, unlike the present government, the former government developed a negotiating mandate to deal with Curragh within a very short time after it was aware of the problem.

Again, since the fate of the Yukon economy may depend on this, does the Government Leader not agree that having the first and most important of his 14 conditions non-negotiable, as a matter of his stated policy, makes it extremely difficult, if not impossible, for third parties - namely Burns Fry, a group that, as far as I know, includes no Yukoners - to negotiate effectively on our behalf? Does he not agree with that?

Hon. Mr. Ostashek: With respect to the Member’s preamble, I believe it was irresponsible for the Member opposite to advance Curragh $5 million and let the federal government off the hook. That is what they did.

I did not vote for it; I was not in this House.

I do not think the terms and conditions that have been put on are irresponsible, and I am sure this can be resolved. We made two specific conditions: that we have security for the loan, and Curragh be able to raise some equity on their own, and they are trying very diligently to do that.

Question re: Education review

Mrs. Firth: I have a question for the Minister of Education.

On February 16, I wrote a letter to the Minister asking for details of the education review he had announced five days earlier. One month later I received a letter telling me he would soon be presenting a ministerial statement to the House, yet we have had no such statement.

It is interesting; I have just received, from an anonymous source, a document entitled Education Review, Focus Proposal Mandate. I would like to ask the Minister why he has kept this information from me and other Members of the Opposition?

Hon. Mr. Phillips: I will ask my officials to deliver the document that the Member already has, to her, as soon as possible. I apologize to the Member for not sending her the document at the same time the document was sent to the stakeholders. I will deliver that document forthwith; it will be delivered to her office today.

Mrs. Firth: I guess the Minister has said that the stakeholders have all received this document.

I would like to ask the Minister some specific questions about the document, which asks for a full task force review on education to be done at a cost of $40,000 and to take until early 1994 to complete. Is this the direction that the Minister has indicated publicly that he is taking, or has he indicated publicly that it was going to be a minor review?

Hon. Mr. Phillips: I do not know what document the Member is talking about. I do not recall, when the document was sent to the stakeholders, that there was a $40,000 figure contained in the document.

Mrs. Firth: The figure is in the Minister’s budget - $40,000 - there will be another apology coming up.

I would like to ask the Minister this question very carefully, because I think there is general support for the concept of having the impact of the new Education Act upon the quality of education examined. What the Minister is asking for is a complete task force, to take over a year, at a cost of $40,000.

Is that impression not different than the public impression he gave people about a very small review that was to take place?

Hon. Mr. Phillips: No, not at all.

To answer the Member’s first question: when I get into the budget debate on education, there is a misprint in that line item. I believe that line item should read “school councils” instead of “education review”. The education review is involved in other areas of the budget. It is a misprint in the budget. I have this in my briefing notes. The $40,000 is not an expenditure for that line item.

The review is simply that: a review of the education system. I gave the review committee a time line of one year, because there was some concern expressed by the stakeholders about how long the review would take. Many of the stakeholders felt the review could not take place over the summer because many people were away, like teachers and parents. The outcome was that much of the work would be done this fall, with a report coming out sometime in the spring of 1994.

Question re: Government entertainment

Mr. McDonald: Much as I would like to continue on with this discussion, I would like to direct a question to the Government Leader.

The Yukon Party government has been entertaining a lot recently when wanting to influence select groups of Whitehorse residents about the benefits of such things as the Yukon conditions on the Curragh loan and the main estimates budget for this coming year. Given that the government has been inviting select groups to be entertained and briefed on the government’s version of political events, can the Government Leader indicate what the government’s entertainment policy is under these circumstances?

Hon. Mr. Ostashek: I do not call this entertainment. I call it very serious business. We are briefing different people within the communities as to what the government is doing. That is part of being an open, accountable government.

Mr. McDonald: In some people’s minds, horror movies are also considered entertainment, and I would class these events in the same category.

How many meetings have been held, and who has been invited to these meetings, over the course of the last month? Would the Minister be prepared to provide that information?

Hon. Mr. Ostashek: A lot of members of the public call this Legislature entertainment also, in that light, but I have no problem getting that information for the Member opposite.

Mr. McDonald: I would agree that, at times, the entertainment value of the Legislature is also like a horror movie.

Can the Minister also indicate to us whether or not the government has rented hotel space in town to provide this information service and what the cost of these briefings has been to the taxpayer?

Hon. Mr. Ostashek: Yes. I will have no problem at all in getting that information for the Member opposite.

Question re: Yukon Alaska Transport

Mr. Cable: I have been approached, as I believe the Minister has, by people who own trucks under contract with Yukon Alaska Transport, an American corporation. Seven of these lessee owners have recently been given rather abrupt notices of termination of their contracts. As I understand it, these lessee owners own the tractors that pull the Curragh trailers and concentrate pots, and many of these people have substantial investments in their tractors and have homes in this city, but they are being left high and dry. Can the Minister of Community and Transportation Services advise the House as to the status of what he is doing on their behalf?

Hon. Mr. Fisher: I have written a letter to Lynden Transport expressing my dismay at Lynden’s actions after being led to believe there would be a continuation of lease operators on the Curragh haul. I have made it very clear that this is a breach of a verbal commitment that was made to me back in January that the lease operators would remain on the Curragh haul.

Mr. Cable: The trailers and pots are owned by Curragh, as I understand it. They have a contract with Yukon Alaska Transport, which I gather is a subsidiary of Lynden Transport. Would the Minister undertake to contact Curragh and have them put some pressure on Lynden Transport, with a view to maintaining those contracts and not abruptly terminating the arrangement with these local people?

Hon. Mr. Fisher: The letter going to Lynden Transport is carboned to Curragh. I will go along with the Member opposite’s suggestion and contact Curragh directly and have them also put some pressure on Lynden Transport.

Question re: Aishihik Lake, possible ecological damage

Mr. McDonald: I have a question for the Minister responsible for the environment. During the last election campaign, the Yukon Party made a promise to stop, and I quote, “Stop the environmental devastation of Aishihik Lake.” The Yukon Energy Corporation now says they want to lower the level of the lake by eight feet next spring. That is only one foot above the minimum allowed. Does the Minister of Renewable Resources think this will cause environmental devastation?

Hon. Mr. Brewster: There are several committees studying this now and I am certainly not the great expert. I certainly think that if they take that much water, there will be problems. The committees that are looking at this will make the decision on that.

Mr. McDonald: This is the first time we have heard about committees deciding whether or not the reduction of water levels at Aishihik Lake will cause any environmental devastation. The Yukon Public Utilities Board has agreed to a reduction in the water flow over Otter Falls. Given the Member’s previous statements regarding the protection of that historic landmark, what will the Minister responsible for the environment do about this particular situation?

Hon. Mr. Brewster: This is another project that involves three or four departments and we will be working together to try to come up with the best solution.

Mr. McDonald: The tone of the Member’s response is nothing like what we heard only a year or two ago, when we heard expressions of tremendous outrage and anger about the lowering of the water levels at Aishihik Lake and the water flows over Otter Falls. We were given to believe that, if we had suggested that a committee study this problem the last time the questions were put by the Members opposite, it would have been the cause of some ridicule.

As a final supplementary, will the government encourage the Yukon Council on the Economy and the Environment to develop a consensus recommendation about the use of Aishihik Lake and the need to protect the environment of the area?

Hon. Mr. Brewster: I will take the question under advisement and get back to the Member.

Question re: Carcross Road dump site

Ms. Moorcroft: My question is regarding the Mile 9 dump on the Carcross Road. The Minister of Community and Transportation Services has received representations from the hamlet council regarding the establishment of a transfer station to replace the dump. Can the Minister indicate how the government is assessing this request and when he believes a decision will be made on this matter?

Hon. Mr. Fisher: The transfer station in place of the landfill dump at Mile 9 is being reviewed by the department at this point in time. I hope that we would have some sort of a positive response within the next few weeks.

Ms. Moorcroft: Does the Minister support, as a policy, the concept embraced by the local residents that establishing transfer stations is better than new or bigger trench and burn dumps, and that we should encourage conservation or recycling of resources?

Hon. Mr. Fisher: I certainly agree with the concept. However, we have to look at a reception area for the refuse. Until we address that, I am not sure that we can deal with just transfer stations.

Ms. Moorcroft: Because the Mount Lorne residents, as well as residents in other parts of the territory, do not want PCBs and other toxic wastes dumped at the Mile 9 dump or other local dumps, because there is no proper facility, can the Minister assure the House he will be making an early decision on a safe and secure storage site and facility for hazardous wastes for all Yukoners?

Hon. Mr. Fisher: Yes.

Question re: Yukon Alaska Transport

Mrs. Firth: I want to follow up on a question that was raised regarding the lease operators who have just received their layoff notices and termination of leases.

Could the Minister of Community and Transportation Services tell us exactly what he meant by verbal commitment? What was it, and who did he receive it from?

Hon. Mr. Fisher: I could not remember the gentleman’s name from Lynden, so I was just looking at a card in my pocket. It was Jim Jansen from Lynden who gave me the verbal commitment.

Mrs. Firth: I asked him what the comittment was and now I am having to lose a supplementary because of it. What was the commitment?

Hon. Mr. Fisher: I asked for confirmation from Yukon Alaska that they maintain a minimum of the 10 lease operators who are currently on the haul. Mr. Jansen said that he saw no problem with maintaining those 10 lease operators.

Mrs. Firth: Is the Minister aware that it was part of the original agreement that they were to maintain 50 percent Canadian content and that this is the last remaining Canadian content in that particular arrangement?

Hon. Mr. Fisher: I was also under that impression when I became Minister of Community and Transportation Services; however, I can find no record of that being in any written agreement - that in fact there be 50 percent Canadian operators. I was under that same impression and I have had the department look at previous agreements. So far we have not come up with a written agreement.

Question re: Yukon Alaska Transport layoffs

Mrs. Firth: I will follow up, if no one else has any questions. I would like to ask the Minister in regard to this matter what he is going to do regarding the Canadians losing the remaining portion of the contract. If the verbal commitment was made, is he going to challenge the individual who made that commitment and ask why they have chosen to remove the last seven Canadian operators?

Hon. Mr. Fisher: As I indicated to the Member for Riverside, I have written a letter to Lynden and expressed my dismay with their move. I do not know if we are in any position to insist, or have any legal means to force Curragh Yukon Alaska to reinstate the lease operators.

Mrs. Firth: I guess I have to ask the Minister then why he was prepared to accept only a verbal commitment on behalf of these people and these jobs. Why did he not do the responsible thing and get something that was more binding so these people and their jobs could more protected?

Hon. Mr. Fisher: Actually, I have asked the department to look at including that particular point in the bulk-haul agreement we have with Yukon Alaska, and they are exploring that possibility at this point.

Mrs. Firth: What happens to these individuals and their families and their mortgage payments and their truck payments in the interim?

Hon. Mr. Fisher: As I said before, we have no legal means of forcing Yukon Alaska to take these people back. There have been some moves by Yukon Alaska to try and get them on another truck haul - or some of them at least. I believe three of them are remaining until something like the early part of April.

Question re: Yukon Alaska Transport layoffs

Mr. Harding: I would like to follow up on this questioning about the owner/operators. The Minister is giving confusing messages to the Legislature; on the one hand he is saying that a verbal commitment was given to him and that, in and of itself, forms a contract. Could the Minister tell us why there is no ability to mount any kind of legal challenge on behalf of these Canadian owner/operators who are now going to be in very serious financial trouble?

Hon. Mr. Fisher: I am not able to comment on whether that verbal commitment given to me is actually legally binding.

Mr. Harding: I am not asking the Minister for comments. I am asking the Minister for action on this issue, and there is a big difference. The Minister has stated to the Legislature that he has a verbal commitment. Will the Minister then at least commit to investigate the potential for formulating some kind of a challenge to ensure that these operators, who are in financial trouble, get their rigs back on the road and back to work?

Hon. Mr. Fisher: Certainly I can give that commitment.

Mr. Harding: I am glad the Minister has made that commitment and that he will undertake to try and mount some kind of a challenge to this policy that has put these people into tough financial straits. Could the Minister give me a commitment as to the time when he will undertake to do this?

Hon. Mr. Fisher: As I have stated twice before, I have written a letter to them and I said I would also check into what legal means we have of forcing Yukon Alaska into putting these people back on. Until I get some information back, I cannot give a firm date as to when I will be able to give an answer.

Speaker: The time for Question Period has now elapsed.

We will proceed now with Orders of the Day.


Speaker: Opposition and Private Members’ Business; Motions Other Than Government Motions.



Clerk: Motion No. 32, standing in the name of the Hon. Mr. Penikett.

Motion No. 32

Speaker: It has been moved by the Leader of the Official Opposition

THAT it is the opinion of this House that the tax increases contained in the 1993-94 budget will kill jobs.

Mr. Penikett: I welcome the opportunity to begin the debate today on this proposition. Since during the robust and entertaining intervention of the Member for Ross River-Southern Lakes yesterday, we were challenged to make the case that would be supported by any first-year economics student - that tax increases kill jobs.

I know that Members opposite have recently come under the malignant influence of the British Columbia Social Credit Party, who have different economic theories. I never can remember if it is A + B = something else or if it is just A = B. The Clerk will advise me later if I need to speak a second time on that particular exotic economic theory, attributed to a gentleman by the name of Major Douglas.

The proposition before us and the reason for this motion is that we think that the Yukon economy is in very serious trouble. We think that the budget presented by the Members opposite is entirely the wrong remedy. Indeed, the worst prescription of all for what ails us is a tax increase.

Let me just briefly sketch the economic environment for Members in this House. Let us begin with the situation of the largest private sector employer in the territory: Curragh Inc.

This company is in serious trouble; no one disputes that issue. Most of us here in this House agree that the economics of the ore bodies in that company’s control - the lead-zinc properties at Faro and Watson Lake - have considerable potential, but through no fault of the people in the Yukon, the company has financial problems.

It is a matter of record that last year the former government loaned Curragh $5 million, which was matched by another $5 million from Curragh, in order to start the stripping program on the Grum deposit, which was designed to remove the overburden from a new ore body, so that the company could get at that ore, maintain their operations, have a flow of cash that would enable them to maintain employment and economic activity in this territory’s mining sector, transportation sector, service sector and - not the least important reason - to continue to provide this territory with important tax revenue.

On a number of occasions, the Government Leader has misinformed this House on certain facts in respect to this matter, particularly in relation to the activities of the former government. I am going to take a moment to correct the record, because I think it is important to do so.

The Government Leader has alleged that Curragh Inc. came to the former government a year ago and asked for a $34 million loan or a loan guarantee. I am here to say for the record, and I will swear it, and I will state on my word: no such thing occurred.

Curragh Inc. went to the federal government for a $34 million loan guarantee, asked us to help - initially, on the proposition that we might make the same kind of sharing of responsibility - in the way that occurred when we acted to help open the mine in the first place; in other words, an 85/15 percent sharing of cost.

Early discussions with the federal government indicated that they prefer a sharing on the kind of basis that we had under the recent Economic Development Agreements - in other words, 70/30 - and discussions, at least at the officials level, proceeded on that point.

It is a matter of fact that while the federal government was unenthusiastic, especially since free trade, when this kind of support could be deemed a subsidy by competitors, they were, nonetheless, talking to Curragh. We moved to match Curragh’s $5 million, by way of a loan in this House. At that time it seemed agreed by both sides that this was a wise course, in order to prevent an ore gap; in other words, a long shut-down. Both sides of the House seemed to agree at the time; we are on record in this House as saying that that was necessary. We all agreed it might not be sufficient, but we all agreed it was necessary to begin removing the overburden and get at the ore in order to keep the mine working and keep the Yukon economy going.

It is a matter or record that we had made that decision and brought that legislation to this House. It was being debated and supported on both sides of the House, on the assumption that discussions were continuing with the federal government. While they had not concluded, they were continuing. It is also a matter of fact that once the Westray disaster happened, Curragh was essentially an unwelcome visitor in Ottawa. Nobody wanted to have much to do with them.

That only became finally apparent to Curragh, from conversations I have had, last December. It was obvious to many other people, but I think, from the conversations that I had with the officials of the company, they still believed there was some hope of federal action late last fall and early this winter.

My reason for mentioning this is that I want to correct the record in terms of the assertions made by the Government Leader, but also to point out how ridiculous the position is that he presented to the House today, namely that the Yukon government should have done nothing and that we let the feds off the hook. That was the proposition that he made today; not the proposition, I hasten to add, made by his party when they were the Opposition. We are used to this kind of contradiction.

He made the proposition today that we should have not done anything; we should not have gotten the stripping program started. What we should have done was to keep negotiating with the feds.

It is an interesting argument. It would have been an interesting argument if it had been made last May and June. This is an argument that is made now, after the Westray disaster, when we know for a certain fact that the federal government is not prepared to do anything. He is arguing that knowing what we know now - that the federal government was prepared to do nothing, especially since Westray - we too should have done nothing. What would have been the result of that? The result of that would have been very much like the situation now. Curragh would have been on the ropes. There would be hundreds and hundreds of people in a state of high anxiety about their jobs, their homes, their children’s future and their prospects for a living and a life. Nothing would have happened at the Grum ore body. Nothing would have been stripped. No overburden would have been removed at all. The mine may well have shut permanently by now, and what would the Government Leader, the leader of the Yukon Party, be saying? You have guessed it. He would be doing what the Member for Faro calls the blame game.

He would be saying it was the NDP’s fault, and that is a constant theme of the Members opposite. Whatever we would have done, the results are our fault and even when we did what they recommended, what they agreed to, it was a mistake and the consequences were our fault.

Let us look at the Yukon economy. Curragh Inc. has been in a state of absolute crisis for several months. The Government of Yukon did not start negotiating in earnest with this company until March, even though they knew about the problem, knew how serious the problem was and how urgent it was back in December.

Taga Ku is dead. The biggest aboriginal enterprise ever started in Canada was slain by the hands of the Members opposite. Garrotted. Snuffed. Crushed. Destroyed in the most cavalier manner - after, I am told, the impression being created, in meetings with the Members opposite, that the government was all in favour of the project; but the chop did not come until, ironically, shortly after the private financing was in place and the project was ready to proceed. Only then did the government opposite cut them off.

Since this government has come into office, we have heard nothing but gloom and doom, pessimism, despair and totally preposterous assertions that the territorial government was broke.

One of my constituents said that the Government Leader reminded him of a man with a big, new mansion and a brand-new Cadillac, and some homeless person stopped him in the street and asked him for a dollar for something to eat; the Government Leader opened his wallet and said, “Sorry, I’m broke. I’ve got nothing. I can’t afford anything.”

That is a new definition of “broke”. It is the kind of broke that we think many Conservatives aspire to because, even though they may not have a deficit, there is a strong sense everywhere in the country that Tories particularly yearn for a deficit so that they can have an excuse not to do some of the things that need doing.

Adding to the depressed state of the public mood around here have, of course, been Mr. Miller’s musings about how we were all just wastrels and welfare bums and how we should be contributing more from our pocketbooks to the running of government and how we should be contemplating big increases in things like fuel taxes and even considering sales taxes - something to which I know for a certain fact the vast majority of Yukoners are opposed.

What do we have now? We have a situation where the territory is clearly sliding inexorably into a recession.

We now have a 14-plus percentage point unemployment rate, which is higher than last year’s. Everywhere in this territory, we have deep anxiety, great frustration and considerable nervousness about what is going to happen to us and the economy.

A condition like that is not one that cries out for taxes as a response. As I said the other day, in classic theories of public finance, there are two good reasons why a government will make tax increases, especially a half-dozen tax increases all at once, such as this government has done. The first is to cool off an overheated economy, and there have been places in the world, in the last couple of decades, where one can observe that there was full employment, factories operating at near 100-percent capacity, people who had previously been marginally attached to the workforce being drawn into jobs, sometimes for which they were not well qualified and sometimes there was runaway inflation.

It is quite appropriate, in those circumstances, for a government to bring in temporary tax measures as a means of cooling off the economy. One of the problems of tax measures is that they are almost never temporary. In fact, the income tax in Canada was introduced during the First World War as a temporary measure. As far as I know, we still have it, and I do not think there is much likelihood of it going away.

The second reason for bringing in big tax increases would be if the jurisdiction had a big debt. In his speeches, the Government Leader has made selective reference to the experience of other jurisdictions. There is no doubt, if you were Premier Rae of Ontario, coming into office with something like an $8-billion deficit, and a recession, on the heels of free trade, which cost Ontario something like 400,000 manufacturing jobs, you would have to do something about your revenues if you were going to maintain basic services - not frills - basic services such as health, education and transportation; or if you were inheriting the administration of British Columbia, after the beknighted leadership of Premier Vander Zalm, who was a great promoter of that province, but left it billions of dollars in debt.

Worse, if he were poor Roy Romanow coming to power in Saskatchewan, he would discover that the previous Conservative premier - a man whom I sat across from at conference tables and heard give fiscal-conservative speeches over and over again - had left Saskatchewan $15 billion in debt.

It so happens that the bond rating agencies in New York did not do anything to Mr. Devine but, as soon as Mr. Romanow took over and had to deal with Mr. Devine’s debt, they lowered the credit rating of the province. That is a funny thing.

The new premier then found himself in a position where he could not even borrow enough to close the gap between their expenditures and their revenues, even if he wanted to. He was absolutely forced to raise taxes, which was no choice.

What is the situation in the Yukon? Do we have an accumulated deficit? No. If you look at the cute, little budget book - I do not have one right in front of me, but I am referring to the tiny, little one, the pricey one. There may be one on the Clerk’s table - there are some very interesting communications arts demonstrated in this one. In the small print on page 3, where it talks about Yukon government accumulated surplus/deficit. Even though we do not know what the position will be for 1992-93 yet, they have little bars showing a deficit in 1993-94. In tiny, tiny print, which my grandmother could never read, it says, 1985-1992 are actuals from public accounts; 1993 and 1994 are forecasts. We all know what to do with forecasts, since we spent time with the Consulting and Audit Canada document and its many errors.

We have established from the Government Leader that, since we began the year with a $92 million accumulated surplus in consolidated terms - or, if he prefers, $60 million sum in cash - and since he has now said that he is going to lapse at least $15 million, there is not a deficit. Even he conceded the other day that there is probably going to be a $7 million or $8 million surplus. Yes, he did, on the record in this House. I know he is a new Member, but those of us who have been here for a while take those statements seriously. We know that the Government Leader would not want to mislead the House.

What we are arguing about is not whether or not we have a deficit. We are arguing about the size of the surplus.

We are not talking about the condition the Tory leader of Saskatchewan left that province in, or the condition the Social Credit premier left B.C. in. We are arguing about the size of the surplus in the Yukon.

It turns out that is a moot point. The Government Leader has made it quite clear that the tax increases are not really to balance the budget, which may not be balanced anyway.

The tax increases are not to make sure that we still have a surplus. The tax increases are symbolic. Why do we have new taxes? We have them because, as the Government Leader has explained to us, Mr. Siddon made him do it. We have tax increases because the federal Conservative bureaucrats were right and the Yukon Department of Finance, for these last many years, was wrong. When it came to the debate about the efficacy and the legitimacy of the perversity element versus the level of taxation in the Yukon Territory, all of us who sat in this Legislature from 1985 to 1992 were wrong. He and the federal Tories and bureaucrats, were right.

The argument has been about whether the perversity element - which was not negotiated into an agreement, but was imposed on us, without us even being at the table - punishes us for not raising taxes the way the federal Conservatives have done since they came to office in 1984, or whether we were right to argue, as we did, that the tax burden of Yukoners was already at or above the national levels. I have tabled plenty of documents over the last few years in this House from the Department of Finance of the Yukon government - and they still have the same people there; they have not fired anyone there yet, as far as I know - making that case convincingly. No one in this House or in the Yukon Party ever challenged them. No one ever asked questions about them. No one in the Yukon Party ever suggested there was anything wrong with those arguments, until now.

The federal government was trying to force the Yukon government to do something that we believe was wrong. They were trying to force the Yukon government to raise the tax burden of Yukoners, which was already at or above the national level, even higher. What they did was criticize us for not making what they called a sufficient tax effort. They looked at a long list of taxes and compared those tax levels from some of the poor Atlantic provinces to the relatively wealthy western provinces, and they argued that this territory - which did not yet have the full range of services provided in all those jurisdictions, or, indeed, even yet have the responsibility for providing all those services - should have a tax burden even higher than them.

What was the response of the government of the day? The NDP government said no, thank you, sir. We were very polite, but we said no. Every time they tried to tell us to raise taxes, we said no. The Government Leader was wrong. It was not because the perversity element was not, in some sense, costing us money, but because it was a matter of principle. The federal government was wrong, and we were right, and we were going to insist on our position.

The reason our tax burden was high, even though the rates were low, was because the cost of living is higher here. The cost of almost everything is higher here. As a consequence, people were paid a little bit more in order to compensate and that put them into higher tax brackets. And, once you have consumption taxes like the GST, added onto a higher cost of living, that too adds to the tax burden of Yukoners. Someone has estimated that it is in fact in the hundreds of dollars more that northerners have to pay as a result of the GST, on top of our higher cost of living, than southerners pay.

The tax burden problem became worse after the GST, an insidious Tory tax that is opposed to, even today, some years later, by the vast majority of people in Canada. I suspect it is opposed to by a similar number here.

When the federal government was trying to force us to raise taxes and the Yukon NDP government was saying, “no, no, no”, what was the position of the Yukon Party? Mr. Speaker, you can search the Hansard record and you will not find a single incidence of Yukon Party Members - the Member for Kluane or the Member for Riverdale North - standing on their feet and saying, “you should raise taxes, it is unfair to the federal government if we do not raise taxes; we must be kind to the federal Tories because they are very decent chaps and it is not fair that we are not raising taxes when they are”. You will not find that, Mr. Speaker. What you will find is incredibly visceral, powerful, aggressive criticism of the NDP government when it even increased fees slightly - campground fees, or any other fees.

We were absolute scallywags, bounders, cads, drunken sailors or what have you for raising fees even slightly.

What was the position of the Yukon Party during the last election campaign? The position of the Yukon Party, heard by the dozens of people who listened to CBC radio during the debate was that to increase taxes, given how much money we were getting from the federal government, would be obscene.

What is the argument made by the Government Leader now that we should raise taxes? So we can get more money from the federal government. What this budget before us shows, which we will be debating tonight and tomorrow and until the end of time, is that they are getting $31 million more from the federal government in this budget, but we have to raise taxes on Yukoners by another $8.8 million.

When they were in Opposition, they were opposed to tax increases. During the election, they were opposed. In fact, they said they would be obscene. Now, it is Tory all the way; let us tax, tax, tax, tax, tax, tax. There are six tax increases, plus liquor price increases.

I am sorry he is not here to hear everything I say when I say it. Yesterday, the Member for Ross River-Southern Lakes gave a wonderfully entertaining speech, full of the kind of flim-flam rhetoric that we have come to enjoy over the years from that Member. He quoted Egyptian royalty, as I recall, in saying that the NDP was “prone to agree” with the federal government. Those were his words. Let me say now that the Member for Ross River-Southern Lakes, the Member for Porter Creek, the Government Leader, the Member for Kluane and the Member for Riverdale North are not prone, they are supine.

In his negotiations with Mr. Siddon, the Government Leader has laid back and said, “tickle my tummy, Tom, make me happy.” He gave up. He is not prone, he is supine.

Just look at what we have in the record of the relationship between the Conservative government nationally and the people of the Yukon. I am mindful of the wonderful bombast from the Member for Ross River-Southern Lakes who, once again, wanted to do his Whitewater Willy speech about the tough guys going toe-to-toe and duking it out. Look at the record and pattern of betrayals from the national government in the last few years. Look at how those folks on the other side of the House have responded.

There was the famous Shamrock Summit, where Mr. Mulroney and Mr. Reagan sang “When Irish Eyes are Smiling” together and, at the last minute, amended the Pacific salmon treaty to exclude the Yukon River from it, a treaty that would have given Yukoners half of the salmon in the river and, instead, left us upstream with less than 10 percent or less than five percent, a tiny fraction of the catch, of salmon in the river.

I do not recall, even though we listened carefully, that there was a peep of protest from the Members opposite. There was not even a peep, not a pip, not a squeak, not even a little murmur, not even a little muttering behind their hands. Yet, the people who have depended on that salmon fishery for thousands of years suffered a grievous injury at the hands of the national Conservative government.

My colleagues and I protested. We went to bat and appeared before parliamentary committees. A former colleague, the former Member for Watson Lake, David Porter, went toe-to-toe with the feds about it, but it was too late. Once the President of the United States and the Prime Minister had done a deal, we were shafted, and not a whisper of protest came from the Members opposite.

Look at the next betrayal, the one we were talking about involving Mr. Wilson and the perversity element. Now the Government Leader seemed to imply yesterday that somehow, when Mr. Wilson, without us even being in the room, announces, a fait accompli, an ultimatum, a deal - not a negotiated deal, but an arrangement - that he is going to impose on the two territories. At that time, remember that the leader of the Northwest Territories’ government, I think, was a Conservative; there was going to be a deal, a take-it-or-leave-it ultimatum on formula; sign it or you do not get the cash. He is seriously saying that the NDP should have put everything in this territory at total risk by saying no, we will not sign it; we will not take the cash. We will depend on our own local revenues. You would have to be certifiably psychotic to have taken that position. Only an absolute megalomaniac, of the order of magnitude of Mr. Qadaffi in Libya or that strange megalomaniac who used to run Albania, the Ceausescu family, to take a position that you were going to force such incredible suffering on the people of your territory to make that point.

The hypocrisy of that is made even more absurd because, while the Government Leader is saying now that we should have done that, there was not even a hint from him, or from any of his colleagues, that that is the position that we should have taken then. My colleague, the Member for Mount Lorne, read into the record yesterday the news reports about what happened. How did we find out that the deal had been made or imposed on us from Ottawa? We got a news report. This was done in the same way Mr. Mulroney  handled the Yukon River salmon. Mr. Wilson did it, again not with us at the table, not looking us in the eye and saying, “Tony, I am going to shaft you.”

It was not done like that. What happened with Mr. Siddon and the Tetlit Gwich’in was done behind our backs.

The Member for Ross River-Southern Lakes suggests that, somehow, we should have organized an army and gone to war, found the contemporary equivalent of Colonel Black, organized a battalion and gone to war over the thing. I do not know where we would have marched it to; up the Dempster Highway, I suppose, to reoccupy the land.

Unlike the party opposite, in another case he mentioned, we supported the aboriginal rights of the people there. What we objected to - once again, behind our backs; not at the negotiating table, but when we were not there - was the federal government making a deal in Ottawa with the other party without us even being there.

He implies that, somehow, we went off quietly into the good night. Quite the opposite: we did something that has not been done for several decades in this country. We called an emergency session of the Legislature and passed a resolution of censure against the federal Minister. Tell me where else, anywhere in the country, any other Legislature has done that in recent years, and tell me what stronger message could be sent.

The Member for Riverdale North, a strong and devout Tory - or perhaps he is a Reform Party member, I do not know; one of the two - as far as I know, did absolutely nothing. Did he write the Prime Minister? Did he do anything other than giving a speech? I know we did. I also know what we did effectively, which he did not do. We went back to the negotiating table and got an agreement on the UFA - which you will find, because you have just passed it here in this House - which makes sure it cannot happen again.

Ah, the horse was out of the barn. It was not our barn and it was not our horse but, somehow, it was our fault: the classic theme of the Yukon Tory. Whatever happened, whatever the federal government did to us, whatever the federal Tories did to us, it was the NDP’s fault. Whatever the federal Tories did to us, the Yukon taxpayers have to pay. Is that not classically Tory? Blame the victim. You find somebody in the ditch, covered in blood, and there is a man standing over him with a club, and it is the fault of the person in the ditch.

What did the Members opposite do in response to Mr. Siddon and the Tetlit Gwich’in? What did the brave Tory champions do? I will tell you what they did. They ran and hid. They went off and changed their names. They said, we are going to show you, Tom Siddon. We are going to change our name so we will not be associated with you any more - at least not in public. We are not going to call ourselves Conservatives anymore. While we may be Conservatives in our heads and in our hearts, we are going to change our hats so people will not know. We do not want to be seen on the same street as you, Mr. Siddon, so there. That will show them.

I know from talking about the subject in a frank and comradely way with senior federal Ministers that the reaction of local Tories, including those like the Member for Kluane, who was expressing enthusiasm a few months ago for the Reform Party, was regarded as a bit of a joke, because the effectiveness of their response to what Siddon did to us was like being attacked by a dead sheep.

The fact of the matter is that, on the debate between the perversity element and the tax burden of the Yukon people, I still believe that Yukoners are right. I still believe that the Yukon Department of Finance was right. I still believe that Members of this House were right, and I believe that the federal government was wrong. I believe that Mr. Wilson was wrong. I believe that Mr. Siddon is wrong and, with respect, I say that Mr. Ostashek is wrong.

Let us have a look at the new taxes, which the Member for Ross River-Southern Lakes - a man of no modest means, as I understand - suggests to us are modest. There is a great line by Winston Churchill about Clement Attlee. Someone once told Mr. Churchill that Clement Attlee, the great post-war British Labour Prime Minister, was a very modest man. Mr. Churchill said that he had a great deal about which to be modest. That was an unkind cut from Mr. Churchill. I want to say to the Members opposite that, in my book, these are not modest tax increases. They are not modest in terms of the pocketbooks of many of my constituents. They are not modest, coming as they do after the several years that we held the line against the federal demands that we raise taxes and said no, no, no, it is not fair, we will not knuckle under, we will not collapse, and we will not surrender.

What is most appalling about the Government Leader’s surrender on this is that we got nothing for it. In most peace treaties, one gets reparation payments, or something. We got nothing. In fact, I do not know what share of the perversity element is being removed, but I would be willing to bet another $100 with the Government Leader that it is not 100 percent of it. In fact, I would be willing to bet it is not even 50 percent of it.

Given that he has already collapsed and surrendered, the only way that the federal government will remove 100 percent of the perversity element - I predict - is if we do one of two things, or both: one, that we continue to raise taxes, not only this year, but the next year and the year after. Or, that we agree to take less and less money under the Formula Financing Agreement next year and the year after. Or both. Either way, the ordinary working people of this territory are diddled by their own Government Leader, the guy they elected to go to bat for them at the big tables in Ottawa.

Look at the new taxes: the corporate tax rate is up 50 percent; the income tax rate I think is up 11 percent; the small business tax is up 20 percent; some of the fuel tax is 38 percent; gas tax is 47 percent; aviation fuel tax is 57 percent; tobacco tax is 156 percent and liquor tax - taxes are not up, but prices are up, because those prices are administered by the territorial government.

One, two, three, four, five, six, seven, eight - seven or eight tax or price increases, and all this coming in a year when the city property taxes have gone up, power rates under the command of the Member for Ross River-Southern Lakes are going up. This is on top of the GST, which people are still groaning about, from the government’s kissing cousins in Ottawa, the federal Tories.

If you take a look at the total, added tax burden, it is a considerable burden on the average family. City taxes are up; YTG income taxes increase; there are electrical-rate increases, fuel tax increases, and if you add the fuel tax impact into prices for food and other services, along with the GST, there are hundreds and hundreds of dollars. For some people, many people in my constituency, the tax increases are tough, very tough.

The Government Leader and the Member for Ross River-Southern Lakes - he who is infatuated with the rhetoric of the Egyptian queen - thinks it is modest. Well, for a man of a certain age, certain affluence, certain prominence such as himself, it may be modest, it may be insignificant, it is a mere bagatelle, almost nothing. For someone who is a single-parent, who lives in Lobird Trailer Court, or in an apartment or duplex in Hillcrest, it is not only the month’s rent; the cumulative effect is a major proportion of their annual income.

Let us look at what these taxes do. They increase the cost of everything. They increase the cost to individuals. They increase the cost of doing business. They are going to increase costs for the mining sector, which is having a tough time. The Minister of Economic Development has told us what wonderful, magical things he has done by wandering around a hospitality suite with a badge saying, “Hi, I’m John, I’m open for business.” These tax increases are going to do a lot more harm than -

Some Hon. Member: (Inaudible)

Mr. Penikett: The Member says I am jealous. Well, we will see if he ever achieves anything of any consequence. I do not know what I could be jealous of. I suppose I could be jealous of the Member’s chutzpah for making I.Q. jokes in his own constituency about something which is not very funny at all. We are going to have reduced purchasing power for every individual taxpayer here. That reduced purchasing power is going to affect every Main Street merchant and every supplier of services. That is going to impact on their ability to hire people, not only for the tourism season but on into the fall. It is going to have the effect, in a narrowly based economy like ours, where the public sector is so large relative to the private sector - and thanks to the activities of the Members opposite has grown larger, relative to the private sector - of shrinking the private sector even further.

This really gets my goat; the worst impact is the thing they do not understand. They talk about our lower tax rates - and that is true, we have the lowest tax rates in Canada on some things - but given that the cost of almost everything in this territory is higher than almost anywhere else in the country, except the Northwest Territories, the only competitive advantage we had in all sorts of areas was a lower tax rate.

The Government Leader is shaking his head. I would like him to argue in this House how a lower tax rate is not a competitive advantage for us and how it is good for business to have higher taxes. I doubt that even with an entirely friendly crowd he could get a resolution like that passed - even at the Chamber of Commerce.

Just take a look at one of the taxes, the fossil fuel taxes. Look at the Yukon reality. We are a small population with great distances between our communities, great distances from our few producing mines - now, unfortunately, shut, thanks to the efforts of the Member for Watson Lake - and in a cold climate. The importance of fossil fuels, in terms of the total cost structure of this economy, are immense. It is not just tens of millions of dollars, but probably the import costs here are over $100 million.

Fuels are involved in heating our homes, providing us transportation and operating most of our industry. If you raise those costs you hurt the businesses and you hurt the ability of those businesses to hire people. I remember that one of the first things the NDP government did - the Member from Klondike was shaking his head as if he had not heard this or did not believe it - was to reduce off-road fuel taxes for farmers, trappers and placer miners to zero.

Why did we do that? We did it as an incentive to economic activity. In those days, under the ennobled leadership of the Member for Ross River-Southern Lakes - as he now is, but then was leader of the Yukon Party - he was, I believe, in favour of it too. They were in favour of it then, when we were just coming out of a recession. Now, as we are just going into one, they want to do the opposite: raise the taxes on those same industries and on those same people.

Hardly anybody operating in any of those sectors operates exclusively off-road. They have to use the highway system. We will increase their costs if we increase these taxes. At a time when we are going into a recession - a recession created entirely, I believe, by the government opposite - it makes marginal, small businesses even more marginal. We create the risk of putting them under. Remember, this is the only jurisdiction in Canada that had no businesses bankruptcies last year - none.

Mr. Speaker, I would be willing to bet you, in a friendly sort of way, $1.00 that it will not be long, under this new government, before we start to have small business bankruptcies here as a result of a number of the steps they have made, not the least of which includes these tax increases.

These tax increases are going to hurt low-income people. It is going to hurt their purchasing power. I do not claim that it creates many jobs, but I am told that the fact that we have had a lower corporate tax rate has meant there has been a significant number of companies registering here.

Some Hon. Member: (Inaudible)

Mr. Penikett: The Government Leader says it was costing us money. That is interesting. The Government Leader is going to say that having these companies registered here was in fact costing us money and he is going to solve that problem by raising taxes.

That is of course not the reason he is raising taxes. He is raising taxes to make his federal friends happy.

The Member for Riverdale North is shaking his head. There is no way in the world that these taxes help people here; these taxes hurt people here. That should be obvious.

Let me talk about a typical constituent in my riding. For example, let me talk about someone who works in the hotel industry - perhaps a cleaner. They live in the Lobird Mobile Home Park or a duplex in Hillcrest or, perhaps, an apartment in Granger. They earn minimum wage or perhaps a bit above it. Their annual earnings are about $12,000 a year. They might have a small, older car that they drive to work. Perhaps they smoke a pack of cigarettes a day. Perhaps their one form of recreation is that they go out to bingo once in a while or to a movie and restaurant once a week.

As a result of the efforts of Mr. Mulroney, Mayor Weigand, the Minister responsible for the Yukon Energy Corporation and the Government Leader in this House, that person may be paying as much as $1,000, or more, to the various levels of government and the power corporation out of their very small income.

That kind of cut in their real income puts them well below the poverty line, to the point where they have to really consider whether or not it makes sense for them to continue in the work force - whether they can afford to work any more, or whether they might be better off - and this is a ludicrous form of economic development - to be on the social assistance rolls of the Minister of Health and Social Services.

Just consider, if you would, the impact on a small business of this person, who does not have much purchasing power, let us admit. I worked in the hotel and restaurant business for a while. If this constituent of mine went out on a Friday night and went to a movie and for a bite to eat, even if they only had a $10 meal, probably 30 percent of the cost, in the restaurant business, is for labour. Of the $10 he or she paid for the meal, perhaps $3 was going into wages. If one multiplies the effect of reducing the purchasing power of people like my constituent hundreds of times, because they cannot afford to go to the restaurant any more and cannot afford the kind of recreation they had before, there will be fewer sales, a smaller payroll and a reduction in jobs - dozens and dozens of jobs.

If you add the cost of electricity and new taxes on to the small business, unless they can pass them on to the customer, who also a lower real income now, the consequences for the small business and the economy are very serious.

It is axiomatic that more taxes means fewer jobs and less economic activity in the private sector.

In a very confused way, in the last few days, we have had an extraordinarily puzzling statement from the Government Leader - that is, compared to, I think he implied, Governor Hickel and the late John Diefenbaker, we in the NDP had no vision; we, who brought people together to create things like the Yukon Economic Strategy, the Education Act, the home care initiative, the Conservation Strategy and the numerous other pieces of legislation, which were widely supported in this territory and which represented, as I said, the shared vision of thousands and thousands of Yukoners, were lacking in vision because we supported this democratically developed world view and put it into legislation, dealing with the concerns of people here and now, and that we were somehow less visionary than the Government Leader and a few of his friends who put together his Toward Self-Sufficiency in the 21st Century document - a century that is only seven years away - and which concluded things like railways to Carmacks, pipelines from Watson Lake to Whitehorse, and convention centres.

We are still waiting to hear who is sponsoring this railroad. We still want to know when, in the next seven years, this railroad is going to be commenced; but at least we know now from the Minister of Economic Development that it is not going to happen unless the feds do it - the feds, who have not built a railroad in several decades, might build this railroad and if the feds do it, then somehow, miraculously, we become less dependent and more self-sufficient.

It is likewise with the pipeline project. I do not know how one can make an economic argument to move gas from Watson Lake 300 miles to Whitehorse to what is, in terms of the gas market, a relatively small market and make money, but I do know that if one could do it profitably, surely Foothills Pipe Lines would have done it long before now. In fact, the Foothills pipe line - where they were talking about moving gas from Alaska to the Yukon - was a multi-billion dollar project and there is no way in the world, except as a tax collector, the Government of Yukon was ever going to have any role in that beyond being a regulator and a tax collector. It certainly was not going to be a financier of it.

We all know how fragile those projects are. I remember that back in 1975 a lot of people thought it was imminent. Now here we are, 18 years later, and we cannot even see any dust on the horizon in regard to that project.

Then there is the convention centre - another one of those projects. We had the potential for a convention centre. It was called the Taga Ku project. That was one of the projects listed in their dream schemes in Toward Self-Sufficiency in the 21st Century, but when it was here and now and within reach and attainable, and it just required a couple of sensible decisions from the Government of Yukon, what did they do? It killed it dead; it slaughtered it; it smashed the hopes and dreams of the Champagne/Aishihik First Nation.

We still do not know whether or not they did it for political reasons, or as they said, they were opposed to the hotel portion. They were opposed to the hotel portion when they were in Opposition, but they said they did not want the convention centre to go ahead, because the convention centre did not now have the hotel portion. We never did figure out the logic of that decision.

Their Toward Self-Sufficiency in the 21st Century, which I thought originally meant we were going to be self-sufficient in seven years, I now understand from answers given by the Minister of Economic Development, that we are talking about self-sufficiency by the year 2199 or 2200. Perhaps, the Minister thinks that is the beginning of the 21st century, I am not sure.

In any case, it is quite clear that, while there may be some mines on the horizon, some mining projects coming to fruition, with some jobs down the road, all of which is well and good - the fact of the matter is that we have two mines in the territory, Sa Dena Hes and the mine at Faro, which are fighting for their lives here and now - not in the 21st century, not in the 22nd century, and not at some vague point in the future, but here and now.

As I pointed out in Question Period today, Curragh Inc. did not ask for $34 million a year ago, despite what the Government Leader says, and they were talking to me not to him. What they did was ask the federal government for $34 million and ask us to pay a share.

We were prepared to share the burden with the federal government on something like that, but I think it became painfully apparent to all of us by December that the federal government was not going to do anything. I told the Government Leader that I would have been willing to go to Ottawa to try and persuade the federal government otherwise. I was pretty sure, based on what federal Ministers told me after the Westray incident, they were not going to touch them. That put the buck back in the territory; the buck stopped right here.

Given the federal reluctance to assist in maintaining the largest private sector company in the Yukon, the cornerstone of our economy, given their refusal to do what was reasonable and fair on that score, for that reason alone I would have refused the federal demand that we raise taxes. I would not have knuckled under to Tom Siddon’s request.

There is no doubt of the result of taxes, taxes of the kind that we are talking about, when our economy is in a recession, perhaps teetering on the verge of something worse, when there has been so much gloom and doom spread by the government, when the purchasing power of ordinary working families in this territory is going to be reduced, when the operating costs of businesses are going to be increased, all of which is going to have a negative effect on unemployment. The Member for Ross River-Southern Lakes is, no doubt, going to come in and say, “But, Mr. Speaker, as Queen Cleopatra might say, ‘This is the biggest capital budget ever’”. Is it really?

I am only going to make this comment in connection with the tax motion here, but I want to say to the Members, that given - as we pointed out before - that Community and Transportation Services has never spent its land budget, and given that they are proposing to do so much development in my constituency, which is nice, I am forced to remind them of what happened when we did develop Granger in anticipation of the Foothills pipeline - the land sat there for years and years.

I think it is good that the government is trying to keep ahead of the demand. If you keep the supply a little bit ahead of the demand, that is smart, but if you get so far ahead of the demand that you end up holding the land for a long time, carrying costs do accumulate. I do not think that is smart.

If the $20 million is just parked there so they will have some money to use for things like the Dawson sewer and water system, according to the negotiated arrangement with Mr. Jenkins - which we have been told is a commitment of $5 million - then of course the whole impact of the $20 million is different. When it is in the land budget, it is shown as a recoverable item. If you move it out of that line and move it into some other capital expenditure, it is not recoverable. That changes the bottom line in your budget. You would not, just on that account alone, be able to call it balanced any more. We know that unless the Member for Ross River-Southern Lakes has not only become, in the last 24 hours, a physician, and a woman, but indeed something of a witch doctor, there is no way in the world he is going to spend $14 million on the hospital project in the coming fiscal year.

Some Hon. Member: (Inaudible)

Mr. Penikett: I want to see it, because I do not believe it. We have not had the announcement about Treasury Board today, which he indicated might come. Mr. Speaker, if you are not going to spend the $20 million on land, and you are not going to spend the $14 million on the hospital, you do not have the biggest capital budget ever.

That is interesting because the great virtue of the capital budget is that it is a provider of jobs, but we are going to be asking more and more questions about where those jobs are, as we get into the debate on that. That is going to be more and more of a complex problem for Conservatives and for supporters of free trade because one of the things that we know, and it is happening in the Northwest Territories as much as here, is, whether we like or not, more and more contracts are going to go to southern companies and southern employees as a result of free trade agreements that they support.

I have always found it ironic that we can have people like the Minister of Tourism who want to bring tourists here but close the door to outsiders, except when they are outsiders of their own political persuasion, of course. The fact of the matter is, you cannot have free trade only in one direction, even though I am someone who believes the really successful economies in the world, especially the six dragons of Asia, are countries that do not have free trade. What they have is very aggressive import substitution and very powerful export-based economies, not that I am suggesting that we could duplicate that here for a second. I remember when the Member for Ross River-Southern Lakes was singing the praises of Singapore some time ago, which is a country that has been discarded as having a capitalist economy under a Leninist government or a one-party state, which was highly authoritarian, and that was necessary for that kind of growth.

The fact of the matter is that, if the government opposite is bragging about the big capital budget, I find this argument ironic. Is that not what they, for the last several years, have been attacking the NDP for? Has it not been their argument that, because we had big capital budgets, we were overspending, and that big capital budgets were inevitably going to cause us to have tax increases? I think some form of that argument has been made by Members opposite in recent years. I am here to argue that it is the tax increases that kill some of the jobs they create in the capital budget.

Of course, many expenditures in the capital budget will not create jobs. I mentioned the hundreds of thousands of dollars - perhaps almost $1 million - in the total budget for computers. That will not create many jobs locally.

I want to say something about the O&M budget. This O&M budget is the biggest ever, yet some of the big cost centres in it remain untouched. The Member for Ross River-Southern Lakes said yesterday, when he was comparing some of the low estimates of some of the expenditures with some of the high forecasts from last year, that it was not the biggest O&M budget. It is funny, because he says we should not take federal transfers or devolved programs into account when we are comparing O&M budgets. Funnily enough, I sat through six or seven years of him making the argument that, just because the feds transferred a program and the operating money to us, we should be taking that into account when we are talking about our dependency and that this was evidence of a greater dependency on the federal government.

My colleague and I were amusing ourselves one night, comparing the number of times he had made that totally fallacious argument. If he was allowed to exercise that kind of bumptiousness when he was in Opposition, I think we should, too. I do not want to do it myself, but I should probably reserve the option for the Member for McIntyre-Takhini, the Member for Faro, the Member for Mount Lorne and the Member for Whitehorse Centre, if they choose to make that argument, because what is good for the goose is good for the gander. We should all get our turn there.

The fact of the matter is that this is a very big spending operating budget. Some of the biggest cost centres have not been touched. I would predict, when they are making the claim of being balanced, that some of the areas of high cost overruns in previous years are likely to be a problem for them, too.

In fact, they will be coming back to the House, if they have the chance, as soon as possible, with supplementaries, for more money in those areas. Let us say the interdepartmental committee that the NDP created comes forward with some recommendations that propose some-long term solutions to the social assistance cost balloon, based on the analysis of what other jurisdictions have been doing. It may turn out that the $3 million extra that the Member from Ross River-Southern Lakes has put in his budget for that item this year is not going to be enough.

Some of those big cost items are not job creating and unless this government starts to recognize, as most governments in the western world have had to do in terms of income support payments, and unless an increasing percentage of them is used for direct job creation or for the training and retraining of people, rather than income support, we are going to continue to have not only the expenditure problem, but the economically depressing effect of having a large number of citizens unprotected.

Let me concede that, of course, in terms of the face lift that the government has done on some of the departmental expenditures, there has been a nip and tuck here and there, and a little bit of rouge put on some of the numbers, but there are many hidden costs. I look forward, when we get to discussing this with the Government Leader, to discuss some items like the land claims estimate - and I have had to put an estimate on what we are going to spend on that for years - where there is not much control that can be exercized over it. If negotiations go quickly and well, they will have to be fully staffed up and the budget will probably go over what we have estimated. The same is true of other items here, such as money for personnel costs. There is a whole set of negotiations that may determine what the outcome is there.

The fact is that the O&M budget was written, in the Government Leader’s own admission, in order to reduce jobs in the public sector - not massive layoffs, he says, but fewer managers here, fewer people there, winding up jobs there, tightening and trimming.

I think my colleague, the Member for McIntyre-Takhini, has made a convincing case that this probably is not a balanced budget. We have not had the real analysis of programs, the real hard look at whether some programs should continue on. We have not had a real tough look at some of the standard objects. We talked about travel freezes in this past year, but we have not talked about some of these standard objects among the expenditures, in terms of bringing the budget into balance.

I argue that the restraint budget, supposedly on the O&M side, which has given us the biggest O&M budget ever, and the capital budget, the big projects of which are all either NDP initiatives or 100 percent funded by the federal government, or both, are not, either of them, designed to deal with the problem of the recessionary situation that we now have. When you add taxes on top of that, you are going to create a further cooling effect on the economy.

We needed that. What we should have done in this situation is have a jobs budget. There is a perfectly adequate, economic computer model around. I know the Member for Kluane does not like computers.

Some Hon. Member: (Inaudible)

Mr. Penikett: The Members keep wanting to transport us to another place where they would feel more comfortable and do not have to deal with the here and now of reality. It is either the 21st century or some other province. Let us deal with the here and now.

The here and now is that we needed a jobs budget. We needed to analyze every single expenditure in the Yukon government, not in terms of the number of jobs that were cut, or in terms of the possibilities for tax increases, but in terms of the impact on the private sector in terms of job creation.

When we were still in a recessionary period in 1985, the NDP government-of-the-day did that. We went through every single expenditure in the budget to look at the job creation impacts on the private sector of every line and every expenditure. Not only did we get Faro up and running, but we also made a conscious decision back then - which was not the decision of the previous government - to put the formula money we got from the federal government into the capital budget - because it was not immutable, or there forever.

Therefore, for the last several years, in percentage terms, we had the highest capital budgets of any jurisdiction in Canada.

I know some of the Members opposite did not like all the capital projects. Let me tell them a secret: neither did I. I did not like the way some of the capital projects were handled or managed, but I am not alone in that respect. I will tell you, Mr. Speaker, that the total impact, gross and net, of the capital budgets we spent was to create hundreds and hundreds of jobs in the last few years. The best of those expenditures created jobs not just for a season, but employment that continues today.

The total effect of the government’s budget we have here is for fewer jobs in the public sector and fewer jobs in the private sector, because the capital budget, in real dollar terms, is probably smaller than the last one of the NDP government, for which we were attacked by the Members opposite for it being too large and adding to the deficit, or creating a deficit, or something.

The unkindest cut of all, when you look at items in the budget and consider the lower personnel dollars - we will wait and see what the actuals are at the end of the year - and you look at the removal, or decentralization, program and what that does for rural economies, rural gas stations, rural restaurants and rural employment; you look at how the non-government organizations have been cut, which employ people at much lower wages than YTG, and what that will do to employment, you will understand that this budget is negative. It has a depressing effect on the local economy, but the biggest job-killer of all is the tax grab.

I want to conclude by saying that, in my view, this is all part of what the Member for Ross River-Southern Lakes used to call the government’s hidden agenda. I never did understand why he kept going on and on about the hidden agenda because, unfortunately, I think our government was quite transparent. Not only did we promise to do certain things, but we did them. We did what we promised, and we were probably criticized for doing that. I know that the Member opposite did not like a lot of what we promised.

It now becomes plain that one of the reasons he was obsessed with hidden agenda questions is that he had always had one. While he never told us this when he was leader of the government, or of the Opposition, part of the Tory hidden agenda, here in the Yukon, as in Ottawa, was to raise taxes on ordinary people. I do not think it is only spiteful, but it is part of the Protestant, puritanical approach that it is good for people to suffer; poverty builds character; if workers are earning a little less, maybe they will work a little harder.

Who was it? Don Blenkarn, the Chair of the Conservative Finance Committee, when explaining the new Conservative theme of competitiveness, said, “What competitiveness means is that, if Canadian workers want to have jobs, they better learn they are going to have to work for less.” One of Mr. Reagan’s champions said that, if workers in North America want to have jobs, they better understand they are going to have start competing with Mexican, Korean and Japanese robots.

Much has been said about the Government Leader’s implied promise during the election not to raise taxes, about how he said that would be obscene, and about how I believe these tax increases are pornographic.

Let me remind the Member opposite what we said during the election: We said we were not going to raise taxes, but we also said that money was tight. We could, at best, offer a platform, and we suffered for it. It would perhaps have involved $2 million worth of new expenditures. We also said that we would have to shave other expenditures in order to meet them. We were not like the Members opposite, who offered tens of millions of new promises, ridiculous promises, like pipelines and railroads, things that will never happen during their lifetime.

Whether they are visionary or not, whether they have tunnel vision or a drug-induced vision, it is not going to happen. I am proud to say that we kept our promises. We kept our promises not to raise taxes. I want to say that the Government Leader is going to have to politically live to account for breaking his promise and for breaking his word.

No, the Yukon Party seduced that 37 percent of the population that supported them. Now, they have abandoned them again, after getting back in bed with the Mulroney gang. They spread gloom and doom. They precipitated a recession here. There has been a complete lack of economic leadership. The taxes that are proposed in the budget are not there to create jobs in a capital program. These taxes are here as an act of contrition, as a gift offering to the federal Conservatives and as a peace offering to the federal bureaucracy. They raised costs and cut the purchasing power of every citizen and every business in this territory. They take money out of the economy, and they are going to take money out of the economy for years to come. Worst of all, in the current state of our economy, they are going to kill jobs.

Speaker: I would like to remind Members that it has been sanctioned by usage that a Member, while speaking, must not refer to the presence or absence of specific Members. The previous speaker slipped up at one point and I would remind other Members to be careful of that prohibition.

Mr. Penikett: I willingly and enthusiastically apologize for my error. I know the Member I mentioned was here in spirit and perhaps even within earshot.

Hon. Mr. Ostashek: It gives me great pleasure to rise and speak on this motion in front of us today. We have heard statements from the Leader of the Official Opposition. There is no doubt that some points he made are valid points. Raising taxes, not done with caution, can cost jobs in the community, in the private sector. It can cost jobs. It is one of the challenges that faces a government when they have to make those decisions.

I get somewhat bewildered here by the allegations and charges made by the side opposite that we enjoy raising taxes. We are a minority government; we know we are a minority government; we know we have not been in power very long after sitting on the Opposition benches for many years. I ask the Members opposite: do they think we want to go back to the Opposition side of this House? That this is a staged plan to go back to Opposition? We, as a government, could have taken the easy route. I do not know what the condemnations from the other side would have been then, but I am sure they still would have been there. No matter what we did, it would not have been done right. There is no doubt of that, as far as the Members opposite are concerned. But we, as a government, weighed all the options open to us and thought very, very hard about decisions we were taking, knowing full well that when one has to raise taxes, it is not a popular decision.

It is especially not a decision that a minority government would want to make, unless they were really forced into the position where they had to make that decision. We decided to take what we feel is the most fiscally responsible route when putting this budget together.

I disagree with the Leader of the Official Opposition when he says that this budget will not create jobs. I believe this is a job-creating budget. I truly believe that, and I will touch on some of the reasons in debate today, as well as when we move into debate on the budget.

Before I get into that, I just have a few comments I would like to make on some of the remarks made in debate yesterday by Members opposite. Also, I want to speak a little bit to the accusation by Members opposite that I am putting out doom-and-gloom messages. If there is anyone who is putting out doom-and-gloom messages, it is the Members opposite. They are the ones who are crying that we are going to kill jobs in the Yukon. They are the ones saying this is not a balanced budget. They are the ones who claim we are misleading people and have no commitment to creating jobs in the Yukon and no commitment to Curragh Resources.

I think the Members opposite should be a little more careful about some of the statements they make in this House. I can see by some of the statements that were made yesterday by the Member for Faro - who has said in this House, several times, that he is a commerce graduate - that the Leader of the Official Opposition must have seen that he was issued with his socialist calculator when he assumed a seat on the side opposite.

I want to refer to a couple of the statements made by the Member for Faro, and I will quote from Hansard on March 30. He said, “The budget was announced in British Columbia today and, yes, there were some tax increases. They amounted to about $60 million. I am not sure that the Minister opposite realizes that British Columbia has 1,000 times the population of the Yukon.”

If you were to put $60 million on the same relative base as the Yukon, it would represent $60,000 in tax increases in Yukon, not $9 million. That had to come out of the socialist calculator.

First of all, I am sure that Members opposite, as well as you, Mr. Speaker, and other Members in this House, have had a chance to listen to the budget in British Columbia. In fact, there is going to be over $600 million in increases in the first year. When the first full year comes around, it will be over $800 million, not $60 million. A thousand times the population of the Yukon is the population of British Columbia? I suggest to you, Mr. Speaker, that it is closer to 100 times the population of the Yukon. The Member for Faro went on with some other misleading statements in the House yesterday. He implied that there was going to be a heating oil tax. There is no heating oil tax in the budget. He also went on to say that aviation fuel costs were going to be taxed at an additional four cents a litre. That is not true. Those statements are very misleading. He went on to say that there is one thing the public will not tolerate, and that is misleading them. This will come back to haunt politicians time and time again. The Member opposite was absolutely right in making that statement.

I want to go on and talk a little bit about leadership and the accusations made by the Members opposite, that this side lacks economic leadership and we are selling out the Yukon.

It was the Members opposite who were in power when the perversity factor was put in. They said they did not have a chance to negotiate it, that it was imposed on them. They accepted it and they did nothing in the remaining term of office to try and have it removed except to bury their head in the sand and say, “No, we will not accept it; no, we will not tax Yukoners; no, we are going to show the federal government that they cannot tell us what to do.”

That reminds me a lot of a child who is ready to leave home, wants to go out on his own and be responsible for his own actions and not have to have his parents make any decisions for him any more. He wants to take full responsibility for his own decisions, but he still wants his parents to keep paying the greatest portion of his rent and his car expenses and everything else. If we want the responsibility to look after ourselves, then we best accept that responsibility and act in a responsible manner.

I truly believe that when the Members opposite were in power they did not realize what an enormous burden the perversity factor was going to put on Yukoners over the long term. I really think they would have fought harder or tried to negotiate with the federal government to have it removed. In Hansard yesterday, the Member for Faro gave some quotes that the Member for McIntyre-Takhini made at the time that amounted to about $4 million. While I do not have the articles in front of me, I can remember the discussion at that time saying, yes, it was going to hurt Yukoners, but it was only a matter of $4 or $5 million.

The perversity factor has now grown, as I stated in this House earlier, to where it has cost Yukoners $60 million in the last three years, and it will cost Yukoners another $60 million in the last two years in the life of this present agreement. Along with the gross domestic product cap - for which I did not blame the Members opposite at all; it was something imposed by the federal government, and it is being very unfairly imposed upon Yukoners, because it is based on economic activity in southern Canada and the gross domestic product - it will cost us about another $80 million.

No matter how this is cut, $200 million is a lot of money to the Yukon. It is a lot of money that we could do things with in the Yukon. It is incumbent upon whomever is in power to try to get rid of that perversity factor. It will not do any good to beat our head against a wall and say no, we are not going to raise taxes; no, we are not going to cave in to the federal government; we do not care if it is costing taxpayers of the Yukon $120 million in five years, we are not going to give in. I think that is a very irresponsible approach to take.

In his debate today, the Leader of the Official Opposition went on about Curragh, and I would just like to touch a little on Curragh to, as he put it, correct the record. He says Curragh did not ask them for $34 million. When Curragh first came to us, they did not ask us for $34 million, either. They asked us for cooperation, the same as they did the Members opposite, to go to the federal government and try to resolve this problem. They were still trying to get federal funding. We worked in that direction, on the same basis as did the previous administration. We were prepared to pay a percentage, quite willing, even up to what they negotiated, which I believe was $17.5 million that they would guarantee a loan for.

Go back in Hansard to May of last year, during the debate on the $5 million loan to Curragh. The Member opposite now says we were fully in favour of it. Go back and look at the debate, I say to him, and see what the Leader of the Official Opposition was saying then. He was very concerned that the $5 million was not going to solve the problem, and it would just leave the door open for Curragh to come back, hat in hand, to the government again. He brought that up in this House over and over again. I sat in that gallery, and I listened to the debate.

On top of that, the Leader of the Official Opposition - the then-Government Leader, said, “No way, no way could Yukoners afford to foot this bail-out on their own. No way could they do it. They could not possibly do it.” Yet, for political expediency, when this party gets into power they hammer on us that we should have done it immediately, with no security, but to get that operation going.

This administration acted in a very responsible manner. We want to see that operation continue. We want to see it continue for the long term. Members opposite know the $34 million is not enough to save Curragh in today’s depressed metal markets. They know that they have to raise equity from somewhere else. This government has given its commitment that we are prepared to become involved. This should give some assurances to the investment community if they are at all interested in buying the equity issue that is being sold now.

I do not believe that the government has to advance the money first. The government’s commitment that they are prepared to go ahead with the loan guarantee for the stripping of the Grum deposit should give comfort to the investment community. However, the fact remains that there is a very, very depressed metals market. How long is it going to stay depressed? I do not know; Members opposite do not know.

If we were to act irresponsibly and advance another $29 million of taxpayers’ money, in a time when we are under very tight financial constraints, and we were to lose that money, I can hear the wrath that would be coming from the other side of the House. They would be saying how irresponsibly we acted in taking no precautions to protect the taxpayers’ dollars.

My colleagues and I want to see Curragh operating, but we have to take some precautions with the taxpayers’ money. We cannot afford to just put out another $29 million, which will not keep Curragh going for long, even when the stripping of the Grum deposit is completed. Without equity from other sources, the company has financial difficulties and they are continuing to try to resolve them.

The Member went on about Taga Ku and how we killed that project. It was not this administration that killed it. We agreed to live by the commitments made by the former administration. That is what we did, even though we knew we did not need the office space and that there was a sweetheart deal made for office space at $26 per square foot, triple net - higher than anywhere else. This is about $10 per square foot higher than one can get it for in the Yukon today. We knew we did not need the office space, but we were prepared to live by the commitments made by the former administration.

The Member opposite talked about our tax increases costing jobs in the community. I do not believe that is at all correct. The tax increases we put forward are less than 1.5 percent of the total budget, but they do account for some 200 jobs.

Some of the Members opposite said that we could have trimmed. Yes, we could have trimmed. We could have trimmed O&M costs and laid people off. On the capital side, we did not have much room to trim. Most of the capital, thank goodness, is monies coming from other governments this year, because we do not have that much money out of our budget going to capital. It is going for is for projects that were committed to by the previous administration; some were required, such as additions to some schools. It would have been very hard to cut any of that. If we did cut out of it, that would have meant job loss in the private sector.

I hear the Member opposite hollering about computers. I shudder every time I see the price of computers that go into departments. I hope that, someday, we can find the right answer for that; however, when we are told by the departments that they need new computer programs to run a more efficient government, we have to listen to that as well.

The previous government spent millions on computers, and the problem is still not resolved. I do not think we are alone in that one.

As I said earlier, the Member for Faro must have had a socialist calculator to come up with the figures that he quoted in Hansard yesterday. I would suggest that the Leader of the Official Opposition should go back to school for a history and geography lesson when he states in the House, today, that Ceausescu was the dictator of Albania. I suggest to the Leader of the Official Opposition, instead of trying to prove what a great intellect he is, he should perhaps go to school and check his geography and history. It is my understanding that Ceausescu was the dictator of Romania, not of Albany, or wherever. It certainly was not Albania.

This side believes that the Yukon is at a crossroads. We could have taken the easy route, knowing full well that the administration over there ran a $13 million deficit in 1991-92 and a $58 million deficit in 1992-93. We could have ignored that and taken the easy route by not bringing in any tax increases, by not trying to curtail the costs of government, and by not taking any of the political heat for it, but that is what other governments have done in the past, and it has not worked.

They condemn us for comparing ourselves to the provinces that have huge deficits, are having their credit ratings lowered, and having to make massive cuts to programs, such as the governments of Manitoba and Saskatchewan had to do. They condemn us for making comparisons with them, but we were on the verge of going down that path, had we not addressed the fact that, for two years, we had an administration that spent $70 million more than they took in. We had to change that direction.

We can argue here, for months on end, whether we are going to have a $5 million surplus, or whether we are going to have a $5 million deficit. That is not the issue. The issue is that the direction was wrong. We were spending more money than we were taking in. We had to change the direction, and that is what this budget does. This budget changes that direction, and I believe it is a budget that is going to create a lot of jobs.

The Leader of the Official Opposition says there are two reasons you raise taxes: to cool off an overheated economy - that may be a valid reason - or if you have big debt. We have just seen what British Columbia had to do with their budget - over $600 million in increases for the remainder of this year, and $850 million plus for the next fiscal year. However, they did nothing to attack the cost of their government. They are not downsizing government. That is what I call a tax-and-spend budget. They are going to deal with part of the deficit, but they are doing nothing to control the cost of government.

We brought these tax increases in now, so that we do not get into those situations. With these tax increases, which I will get into in a minute as to what effect they are going to have on the economy and on the people of the Yukon, we felt this was the least painful way that we could address the fiscal crisis we have in the Yukon today.

The Members opposite have said that the economy is in a precarious position. There was 14 percent unemployment out there in February. Without the tax increases, or even if you want to go and cut another $10 million out of the budget, either way, it was going to cost jobs. More layoffs is something that the economy of the Yukon does not need right now.

Let us look at what this budget does. With those minor tax increases - and they are minor when you look at them in reality - what does this do? What did the government do? We knew when we were putting this budget together that we could never sell this budget to the people of the Yukon with higher taxes if we were going to have a higher cost of government.

I believe we have addressed that with this budget. Again, the cost of government cannot come down overnight - not without layoffs. Eight departments have come in with reduced O&M costs; they have come in with estimates that I believe are reasonable. It has been pointed out by Members opposite that this is not a balanced budget. It is not a balanced budget because of some $1.00 line items - smoke and mirrors, they call it. I stated in this House the other day, I do not like $1.00 line items in the budget and the sooner I can do away with them, the better I will like it. But these same $1.00 line items that the Official Opposition is complaining about - there are seven of them in our budget, and there were seven in their main estimates last year. Certainly, we have $1.00 in there for the Dawson sewer and water; we know it is going to cost more than $1.00, but the agreement is not negotiated yet. Even though I do not like them, in places there may be some merit for $1.00 line items.

We have reduced the cost of government. We only have to look at the overall expenditures - where they went, why we have the increases that we have, and what are the reasons? On the O&M side, the overall costs have gone up by about $24.9 million. Let us look at where that $24.9 million has gone. The extended care facility is going to cost us $3.2 million in O&M in this upcoming year. The building is sitting there empty; we have been condemned by the side opposite for not having it up and running. We budgeted for it; it will be operational. Health care services, including the additional cost of the hospital transfer from the federal government, which is very expensive - setting up the board and getting everything in place: $9.9 million. As well, with the economy perched like ours is now, with not knowing the outcome of the Curragh operation, one cannot be making cuts to social programs in that sort of an environment. So there is an additional 2.5 million for social services.

Family and children’s services, virtually all legislated, is $1 million. The fish and wildlife enhancement trust fund, related to land claims, which we have to honour and commit to, comes to $270,000. Banking services and interest on borrowed money comes to $400,000.

Let us just talk about that for a moment. The Members opposite say that we are just making noise over here and are trying to fool the public. The fact remains that this is the first time in the history of the Yukon that the Government of the Yukon has ever had to pay bank charges and costs for rural banking because we cannot maintain a balance in the bank to provide for those services; it is an additional cost to the taxpayers of the Yukon.

Due to the legislation that was passed through this House one year ago, the government has to pay the full workers’ compensation premium, which is $858,000. It is nothing we have any control over.

The cost of operating the new Teslin correctional centre - another new facility that will create new jobs in the community - is $700,000.

There is one full year of costs for the teachers who were hired last September to fill the school teaching complement and teach the children, which is $3.8 million. Those 10 items alone total $24.9 million. I do not see anything that we could cut out of there. Yet, the total overall O&M costs in this budget only went up by $19 million. We are controlling the cost of government with this budget.

Look at the capital budget for one moment. This is a huge capital budget. Members opposite are correct about that. Thank goodness it is there; it is $129 million, most of which is recoverable. All we have control over is $34 million.

The Shakwak project is $16 million, paid for by the United States government. The Alaska Highway improvement is $11 million and is fully recoverable.

The first phase of the new hospital is the one that we are not going to spend money on this year, the Leader of the Official Opposition said. We are going to try and spend that money this year and keep Yukoners working. We know that we need those jobs in the community, and we are going to get that project up and going and see that that money is spent in this fiscal year.

Yukon Housing projects total $15 million. This capital budget will create some 720 construction jobs. The spin-off benefits to the service sector, I am sure, will create some more jobs. This is a job creation budget; there is no doubt about it.

I want to speak a little at this point about the tax increases. Numbers can be interpreted in many ways, but I think we have to boil it down to dollars, not percentages. Let us look at the reality of how the taxes that have come in with this budget will affect Yukoners. Let us take a single-income family of four, earning $30,000 per year. Under the old tax rate they would have paid $857 per year in taxes. With the 5-percent increase they will pay an additional $95. There will be no surcharge - no matter whether it is 11 percent or not, it is $95 more that they are going to pay, and no surcharge. The surcharge does not affect them.

Look at a single-income family of four earning $65,000 per year. Under the old rate tax rate they would have paid $4,729 per year. With the new tax at 50 percent, that would be a $525 increase, and no surcharge.

Look at a two-income family of four earning $65,000 per year. Their tax load would be $2,340 under the old tax rate. With the effect of the five-percent increase, they will pay an additional $371 in tax. There is no effect from the surcharge.

Let us take a two-income family of four earning $100,000 per year. Under the old tax rate they would have paid $7,391 per year. With the five-percent increase, they will pay an additional $821 and the high income surtax will cost them another $111; the total additional tax will amount to $932.

We looked at raising the personal income tax only after we had analyzed the costs of medicare premiums, because we were going to re-implement medicare premiums to help with our health costs, and I think that was a responsible move to make. However, if we look at instituting health care premiums, we must look at where the burden is really placed with health care premiums. First of all, I understand that for government employees, in their collective bargaining arrangement, the employer would pay 90 percent of those costs. My understanding is that, with most unionized jobs, they have similar agreements, where the employer picks up the majority of the costs.

Then, if we look at the self-employed people in the Yukon, they would have to bear the full cost of the medicare premiums on their own. If we look at the persons employed in non-unionized jobs, they would probably end up paying for their own health care premiums. On top of that, we were informed by the bureaucrats that it would take another six person years and about $1.5 million a year to collect this tax.

By bringing in a five-percent increase in the personal income tax, we raised about the same amount of money as we would have raised through health care premiums, but we did not have the additional cost of collecting them, and we did not have the inequity in the system where non-unionized and self-employed people would be paying their own costs, and unionized people and government employees would have most of their costs picked up by their employers. That was the reason for the five percent increase in personal income tax.

I want to speak a little bit now about the impact of the fuel taxes. There has been much made about the great percentages and the cost of fuel. There is no doubt that the cost of fuel is going to make an increase in everything. It is in trucking and the hauling of groceries, but two cents a litre is not a great impact on the Yukon today. If we look at the average family in the Yukon, which purchases about 2,300 plus litres of gas a year for their vehicles, that is an additional cost of about $46 a year.

Granted, there are some people who live in rural Yukon and they are going to bear a little higher cost. I believe the Member for Watson Lake costed out what it would cost him to come to Whitehorse from Watson Lake and he has calculated it at $1.50 extra for a one-way trip. So, the costs are not that burdensome. There is no doubt that all tax increases do put a heavier burden on the people. I would be the last one to deny that, but when we are trying to find that balance, we have to take all these things into consideration.

The tobacco tax - increasing it by five cents a cigarette is going to be a heavy blow to smokers. There is no doubt about that, but, our tobacco taxes, prior to the increase, were the lowest in Canada; even with the increase, they are still just below the national average. We want to discourage people from smoking. It adds to our health costs. As for our teenagers in school - it has been proven in other jurisdictions that, when there is a substantial increase in tobacco taxes, there is generally about a 25-percent reduction in the number of smokers shortly thereafter.

I will not deny it is a very heavy burden on smokers, especially if they smoke a pack a day, but, compared to other jurisdictions - when we look at British Columbia who just brought in another $1.00 per carton in their budget this time - the taxes are still substantially higher than they are here in the Yukon.

Alcohol taxes: we, on this side of the House, are accused of being drinkers and not smokers because we did not raise alcohol taxes. The price of alcoholic beverages in the Yukon today is 10 to 15 percent higher than in other jurisdictions. Along with that, there are some increases coming in. Licence fees have been raised by 20 percent this year and they will be raised another 20 percent next year. Those costs will be passed on to the consumer, I have no doubt. Liquor taxes are based on dollar value, as opposed to the quantity consumed. That is the big difference in the Yukon.

As the wholesale costs go up, we also raise our costs here, so there are going to be increases in the prices of alcoholic beverages in the Yukon. We felt that this was one area where we were higher than other jurisdictions, so we took that into consideration.

I want to speak about one other area that the Leader of the Official Opposition started on. As soon as we started heckling a bit, he dropped it like a hot potato: the corporate tax rate increase. The Yukon, because of its low tax rates, has become the Switzerland of North America. At our 10-percent corporate rate, many companies were utilizing the Yukon for their head office. Their lawyers’ offices in Whitehorse were their head offices and they did their banking in Whitehorse. That is all they contributed to the economy of the Yukon. It is my understanding that there are millions of dollars sitting in Yukon banks, belonging to corporations that have their head offices in their lawyers’ offices in the Yukon. Because of that rate, as the former Minister of Finance knows full well, for every dollar they pay in taxes, it costs us $1.45 because of the perversity factor. That money was not doing Yukoners any good. In fact, it was costing Yukoners money.

We have raised it up 15 percent. I believe that the Member for Riverdale South asked yesterday if we thought it would discourage Northwestel from staying here and that they may move their head office to Yellowknife. I do not think so. Because Northwestel is a utility, their rates and profits are set on the rate base. It is controlled in that manner. Further to that, they do not pay all of their taxes in the Yukon, but just on the portion of the income they earn here. On top of that, while our corporate tax rate is now one or two percentage points higher than the Northwest Territories, we know that there is a payroll tax being introduced in the budget presently being debated in the Northwest Territories. If there was ever a disincentive tax, it is a payroll tax. That is a tax that hurts corporations, and unfairly so.

Let us look at the rate increases on the small business tax, which went up by one percent.

Mr. Harding: Let the record show that the Member for Faro concedes that it is not a four cent increase in aviation fuel tax, but a 57-percent increase.

Deputy Speaker: There is no point of order. It is just a dispute between Members.

Hon. Mr. Ostashek: Let us look at the effect of the one-percent increase on the small business sector of the Yukon, which the Leader of the Official Opposition said was going to cause such a dramatic impact on small businesses in the Yukon.

At a taxable income level of $50,000, which small business falls under, the rate under the old tax system would have been $2,500 in taxes they would have had to pay. With the one percent increase, they will pay an addition $500. If they were not eligible for the small business rate and had to pay under the affected corporate rate, they would have paid $5,000 in taxes under the old rate and, under the new rate, they will pay $7,500 in taxes. That is on $50,000.

Overall, in my opinion, the tax increases will affect the economy of the Yukon, but it will not affect it to the extent where it is going to cost jobs. I do not believe that for a minute. What it has done, in fact, is allowed us to be able to maintain full employment, without layoffs, and the economy of the Yukon will benefit from the extra 200 paychecks that are out there, rather than our laying 200 people off.

I think that it is only fair to say that this is a job creation budget, not a budget that is going to cost jobs in the Yukon.

I spoke a little bit about the perversity factor before and I am not going to go into great detail on it now, except to say that I believe that the previous administration acted irresponsibly when they would not deal with the issue, but instead just took a bull-headed stand with the federal government and said “we are not going to raise taxes, we are not going to tax Yukoners, we are not going to pay our fair share and you can do what you want with the perversity factor”. Well, they did, and it is costing us $120 million. I think that is the wrong approach and I am going to work very, very hard in the next few months to try to get some relief on, or get rid of, the perversity factor.

Let us go back to talk about why we even have a perversity factor. Here we had a government that was elected in 1985, with a $41 million surplus sitting there waiting for them. I wish I would have been in that position when I took over office from them. On top of that, we had a government that falls into a very lucrative Formula Financing Agreement that was negotiated by our MP at the time, and who was one of the architects behind it, to provide Yukoners with additional funding so that they could develop an infrastructure so that in future years they would not be so dependent on the federal purse. That is what that money was negotiated for, and that is the money that that administration spent irresponsibly.

They called infrastructure putting up nice, beautiful buildings. I love beautiful buildings. I do not think there is anybody in this Legislature or in the Yukon who does not. But putting up beautiful buildings is not wealth creation; that is debt creation. The money would have been better spent on infrastructure so we could have broadened our tax base, and then we could have built the buildings with the monies that we received from that broadened tax base. They put the cart in front of the horse. We are trying to get it back in the right place. That is why we have the perversity factor today, because they misspent the money that was negotiated and the federal government was no longer going to put up with it after 1989. If they were going to be that reckless with the money, then they were going to pay the price.

We are going to do our very best to negotiate ourselves out of the perversity factor, and no, we did not lay down and die, but we are not being pig-headed either. We are prepared to negotiate with the federal government to see what we can do about that perversity factor.

If anybody laid down and died, it was the Leader of the Official Opposition. Let us look at his record at defending the interests of Yukoners. Let us go back to the COPE agreement, to the first motion that was put before this House that he voted against. He was prepared to give away the whole northern tip of the Yukon, without fighting for it or taking a stand. If it had not been for the Conservative administration that was in the House at the time, making some hard-nose stands and negotiations, we would not have the northern tip of the Yukon now. It would have been given away.

It is the same tough stand that he took when the Tetlit Gwich’in were given 660 square miles of the Yukon. Yes, he called the Members back - at great expense to the taxpayer - for a session in July. He brought the Member for Riverdale North from a hunting camp in the Northwest Territories. He flew him out on a charter. The Speaker of the House at the time was on holidays in Vancouver; he flew him up. He brought them all back into session, in the middle of the summer, for a great show of pomp and pageantry, smoke and mirrors, fire and brimstone and fury; we were going to show those feds. Then they passed a resolution in this House and what happened? He laid down and died. That was the end of it. That was the big show. That is how he stood up for Yukoners. The track record of the Leader of the Official Opposition, as a great defender of the Yukon, when he was the Government Leader, is dismal to say the least.

This is not a tax-and-spend budget. This is a budget that is going to create jobs in the Yukon; it is going to keep people employed. I hope we can get Curragh back to work and the economy will turn around without falling into a recession or the doom and gloom the Members opposite are spreading.

Let us look at what happened in British Columbia - and this is the path we were on. They brought in a surtax increase of 30 percent on incomes in excess of $5,300 - 30 percent on incomes in excess of $5,300 - and then they brought in a 20 percent tax on incomes in excess of $9,000, effective January 1, 1994. We are bringing in five percent. The general corporate income tax rate is being increased to 16.5 percent from 16 percent. The sales tax is going up one percent and being expanded to labour services. Then we have Members complaining that we are overtaxed in the Yukon because we have a little higher cost of living here. I agree we have a higher cost of living, but each and every one of us gets a $5,000 tax credit for living in the north. Take that northern allowance and add it into the equation, and see where we are at. We are one of three jurisdictions left in Canada without a retail sales tax - and maybe only one of two in the very near future. When I listened to the radio and television yesterday morning, serious consideration is being given by the Province of Alberta to bringing in a sales tax.

We do not want to get into the shape these other provinces have got into; we do not want to go down that road. We want to take the high road and we intend to do that.

At this point, I would like to propose an amendment to the motion:

Amendment proposed

Hon. Mr. Ostashek: THAT Motion No. 32 be amended by deleting the words “will kill jobs” and substituting for them the following: “are fiscally responsible and will kill jobs in British Columbia and other jurisdictions.”

Speaker: It has been moved by the Hon. Government Leader

THAT Motion No. 32 be amended by deleting the words “will kill jobs” and substituting for them the following: “are fiscally responsible and will kill jobs in British Columbia and other jurisdictions.”

We do not have copies of this amendment for every Member at the moment, but we will send it out and provide copies in a moment.

Hon. Mr. Ostashek: We are not making jokes. We are serious. Our budget will create jobs in the Yukon and attract people here. After all is said and done with the tax increases and all the furor from the other side of the House about what a devastating budget we have, I believe that every other jurisdiction in Canada, including the Northwest Territories, which also brought in a balanced budget, would like to have a budget like we have and create the jobs we are going to create.

This budget will create jobs in the Yukon. It will keep the Yukon from going into debt. As I said earlier, we are still in a very precarious position. There is not a lot of surplus estimated in our budget - I believe it is $400,000, or something like that.

It brought it very close to the line. We hope that, with this budget, we can turn the economy of the Yukon around so it will start to pay dividends to all Yukoners, and we will be able to come in with the balanced budget we are predicting.

When I say that the budget will create jobs in the Yukon, and jobs will be killed in other jurisdictions, we only have to analyze the budget that just came down in British Columbia and the tremendous tax burden that is on those people there already. They are now going to be saddled with another estimated $636.5 million in this fiscal year, for the remainder of 1993-94, and $803 million for a full year. That is a tremendous increase. It has to make mining companies that are operating in British Columbia really think about whether they want to continue exploring there or move to a more friendly climate, such as they will encounter in the Yukon. That message has been given out loud and clear by the Minister of Economic Development, when he said that the Yukon is open for business again. Mr. Speaker, the Yukon is open for business again.

I think we have to really look at what has happened in other jurisdictions. The Members opposite are saying that Yukon does not have to worry about other jurisdictions. We can just sit here and keep taking the handouts from Ottawa and asking the rest of Canada to keep supporting us, just like the child who has left home and wants his own apartment and wants to make all his own decisions. “Dad, do not stop the cheques because it would be terrible if I had to earn all my own money. It would be terrible.” That is what the Members opposite are saying. “Keep your nose our of our business, federal government, but just keep sending the cheque.” That is not an approach that this government will use at all. We will stand up and defend the Yukon and fight for what is best for Yukon. Right now, I believe it is best for Yukon to get rid of that perversity factor. That is what is best for Yukoners.

Let us just look at the government debt as a percentage of the gross provincial product - government debts across Canada: British Columbia - 14 percent; Alberta - 18 percent; Saskatchewan - 39 percent; Manitoba - 22 percent; Newfoundland-49 percent.

Let us compare what the people of Newfoundland, who have a 49-percent debt load, get from the federal government per capita to that received by Yukoners.

The monies that we get from Ottawa will be used to develop an infrastructure that will make Yukoners more self-sufficient, broaden the tax base, stop us from forever living on handouts from Ottawa and put an end to the Taj Mahals all over the Yukon that have passed as infrastructure - I am referring to the almost $12 million extended care facility as one. Does the Member for McIntyre-Takhini look every day, when he drives to work, at the beautiful monument that his party put up for themselves that is going to cost the taxpayers of the Yukon over $7 million in O&M when it is fully operational? Where is the money going to come? “We will just go to Ottawa and get another bucket full”.

I wonder why Member opposite were so adamant during the debate in this House last year that they were going to get their hands on that $85 million Worker’s Compensation Fund? I guess they knew then that they had over spent their last year’s budget by $58 million. They spent $70 million more in two years than they took in. They would not take any responsibility for it, none whatsoever. It is always someone else’s fault.

Let us talk about election promises for a little bit, let us visit that subject that is so dear to the Members opposite.

We went into an election campaign with a projected surplus at the end of the year - an unaccumulated surplus, not a consolidated surplus, but an unaccumulated surplus of $30 million. That is what the previous administration was telling Yukon voters and taxpayers. They said they were great financiers; “we know how to balance budgets, we have had a balanced budget every year”. In 1991-92, they ran a $13 million deficit and called it a balanced budget.

The Members opposite keep referring to a statement that I made about taxes in the Yukon, a statement that was made while believing what the Members opposite were saying: that there was a $30 million surplus.

They went to the public of the Yukon. They asked for a new mandate from the public of the Yukon, without putting out a budget, and without putting out an economic statement. They tried to use their smoke and mirrors again to fool the electorate of the Yukon, but it was not successful. If we, upon taking over office, found out that they had robbed the piggy bank, spent all the money, that there was no more surplus, and it was all gone - a $13 million deficit one year, and a $58 million deficit the next year - had we not addressed that issue, then we would not have been acting in a very responsible manner. It was the Members opposite who fooled the public into thinking that everything was all well and good.

Every jurisdiction in Canada, because of politicians not wanting to make tough decisions, has taken the easy road, a road that would have been very easy for a minority government in the Yukon to take. Perhaps a lot of people felt that, because we were a minority government, we would take that easy road. However, we campaigned as being a fiscally responsible government, we will act in a fiscally responsible manner, and we have proved that by bringing this budget in when we are in a minority situation in this House. It is a budget I have no problem defending in public - none whatsoever.

Even after the tax increases, we still have some of the lowest rates of taxes in Canada. We can talk about tax burden, the high cost of living in the north and the high cost of transportation, but the Members opposite know very well that if you live in northeastern Alberta, there are high trucking costs. If you live in northeastern Alberta or British Columbia or the interior of British Columbia, there are high trucking costs. We need only to drive down the highway to Fort Nelson and look at the gas prices on the pumps there.

Yukoners do have a higher cost of living, but Yukoners also have a beautiful country to live in and they are prepared to pay a little extra to live here. That is why they do not complain about that little extra cost of living we have here.

We do get some benefits. The northern tax allowance helps balance it out. Wages in the Yukon are the highest of anywhere in Canada, based on the average weekly wage. I know there is a great disparity between government employees and people in the private sector.

Point of Order

Ms. Moorcroft: A point of order, Mr. Speaker.

Speaker: A point of order to the Member for Mount Lorne.

Ms. Moorcroft: I am frankly puzzled by this amendment to the motion that is before us. It is my understanding that an amendment to a motion not change the intent of the main motion.

Speaker: The Government Leader House Leader on the point of order.

Hon. Mr. Phillips: The amendment to the motion does not change the intent of the motion. In fact, the motion reads “that it is the opinion of this House that the tax increases contained in the 1993-94 budget will kill jobs.”

The amendment that we have before us talks about the 1993-94 budget in all the provinces of Canada and does not change the intent of this motion at all, the way the motion is written.

Speaker: On the point of order, I would refer to Beauchesne with respect to amendments. The object of an amendment may be either to modify a question in such a way as to increase its acceptability, or to present to the House a different proposition as an alternative to the original question.

I find that this motion falls within the category of providing a different proposition as an alternative to the original question. Although I agree with the Member for Mount Lorne that it does substantially alter the meaning and the intent of the original motion, I will find that it is in order and allow the Member to proceed with his amendment.

Hon. Mr. Ostashek: I do not think that we have any intention of amending our own budget. I think that we have a very good budget without any amendments.

Again, as I was saying, even with the tax increases that we have introduced, in relation to the other provinces, we are still among the lowest in Canada. Even with our increase of five percentage points in the territorial tax rate, we are still among the three least taxed areas in the country. With the fuel tax increases, we are still the lowest in the country.

The Leader of the Official Opposition has made some valid points on tax increases.

Some Hon. Member: Oh, he did?

Hon. Mr. Ostashek: Yes, he did. If tax increases are too excessive, they will dampen the economy; there is no doubt about that. Mr. Speaker, when you are faced with the type of challenges that this administration was faced with, a government that was headed in the wrong direction for two years, the deficits -

Some Hon. Member: (Inaudible)

Hon. Mr. Ostashek: If it would have been in reverse, we could have better accepted the situation.

If we had had a $58 million deficit in 1991-92 and if the 1992-93 deficit had come in at $13 million, that would have shed a whole different light on it. That would have meant that we were starting to get it under control, but when one has a 1991-92 budget with a $13 million deficit and then the next year you come in with a $58 million deficit, that cannot be allowed to continue.

We just had to get it under control and we had to do it without causing layoffs. We had to do it. We had to increase the taxes a small amount, a marginal amount, and I do not believe we have hurt the single mother in the hon. Leader of the Official Opposition’s riding because if, as she says, she is making $12,000 a year, she is not paying much in taxes anyway and the increases certainly would not amount to anything. The cigarette tax is going to hurt smokers, but we have tremendous health costs and we have to get out of...

One Hon. Member: (Inaudible)

Hon. Mr. Ostashek: Out of touch? What does the Member mean “out of touch”? I know a lot of people who make $12,000 a year.

We could have continued on the slippery path that the previous administration started us down. We could have continued on that. We could have taken the easy route. We did not cave in to any bureaucrats.

It is the Members opposite who caved in to the bureaucrats. We saw how they stood up for Yukoners. We have their track record of how to get the economy going in the Yukon and how to invest $16 million dollars in a sawmill in my colleague’s riding, which is really bringing great benefits to the Yukon today.

They stand over there and condemn the Minister responsible for the Yukon Energy Corporation for higher power rates. Let us look back at why we have those higher power rates: the Watson Lake sawmill and the renovation of the old Yukon College. This is a great book from whom these people put next to God - the Auditor General. The Government of Yukon report on other matters for March 31, 1993, is a very interesting book.

Speaker: Order please. The time being 5:30 p.m., this House will now recess until 7:30 p.m.


Speaker: I will now call the House to order.

Point of Order.

Hon. Mr. Phelps: I want to rise to speak on a point of order to make the formal announcement, for the record, that the hospital transfer and the money for the new hospital was approved today by Treasury Board.

Unfortunately, I was unable to tell the Hon. Leader of the Official Opposition, before he gave his speech - it might have changed slightly.

I have asked that press packages be given to each of the Members on the side opposite. I will be making a formal statement tomorrow; the usual non-political statement that you can expect from this Minister.

Speaker: Leader of the Official Opposition on the point of order.

Mr. Penikett: On the point of order, serious as it may be, I would like to thank the Minister for his announcement.

In passing, may I say that he showed amazing skills in completing these negotiations, but I hope that he will not mind - after all we have been at the table, one way or another, since 1970-something on this question - if I pay tribute to some of the other people who have been at the table. I would like to pay tribute to our ex-colleague Joyce Hayden, who did so much work to conclude these negotiations, as well as the staff at the Department of Health and Social Services, the Council for Yukon Indians and the federal government people who all laboured mightily and long to reach this conclusion.

Hon. Mr. Phillips: I move that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.

Speaker: It has been moved by the Hon. Government House Leader that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.

Motion agreed to

Speaker leaves the Chair


Chair: I will now call Committee of the Whole to order.

Bill No. 4 - Second Appropriation Act, 1992-93 - continued

Chair: Committee will be dealing with Bill No. 4. Is there any further general debate on Bill No. 4?

Mr. McDonald: I was thinking of giving a little homily about tax policy to start off this evening, but I realize it is not necessarily consistent with the line of questioning I want to pursue - which is more to do with the efficiencies that the Government Leader says were effected in the period since the government took office in November 1992. I will save my tax remarks for a later time. I know we will have lots of time. The Government Leader was so entertaining this afternoon that I think there will be plenty of material there to keep us going for a while in supplementary debate.

My colleague here would like me to formally congratulate the Government Leader on his first semi-successful filibuster to avoid a vote on taxes.

I will remind the Government Leader that he will have to vote, at some point, on the question and will ultimately have to face the music with the appropriateness of his budgetary measures.

I would like to begin the discussion on the efficiencies the Government Leader has said are saving the taxpayer a lot of money. I wonder if the Government Leader could, first of all, describe the efficiencies he has effected, besides the travel restrictions, which we have heard something about and I will ask some more questions about later, and besides the hiring freeze, which we have talked about before and will talk about a bit more this evening. I wonder if he could describe the other efficiencies that have saved the government all sorts of money and should now make us feel comfortable that a stern hand is on the tiller, going in the right direction, steering away from the reef and whatever else the Member for Ross River-Southern Lakes said.

If the Government Leader could describe these, it would perhaps give us a sense of precisely how much money was saved in all this good work.

Hon. Mr. Ostashek: As the Member opposite said, we will have some time to get into debate on our position on taxation in the Yukon and the lack of responsibility shown by the previous administration in some other forum.

The question the Member is asking me now is a fairly broad and complex question. It is one of those that is very hard to put a figure on for the five months we have been in office and what the actual savings are. I do know that some of the savings are pertaining to the Executive Council Office, but I believe that where the biggest savings will come in will be in the restructuring of the various departments as they progress with their cost-saving measures and streamlining. They will be able to provide a quality service to the Yukon at less cost to the taxpayers.

I cannot put an overall figure on the exact amount of savings that was incurred. We did give some percentages on the amount of travel that was reduced. I do have some figures on that, if he is interested, for the Executive Council Office, or we can wait until we get to the ECO supplementaries - whichever he likes.

Overall, I think better results would be obtained by asking each Minister directly when we get to his various department in the supplementaries.

Mr. McDonald: The answer is a little bit disappointing, because we have been told on a number of occasions that the savings, in a flight of rhetoric, amounted to millions of dollars. All I simply wanted to do was break down that figure. Firstly, we have to tie down the overall figure, as I know that $3 million or $4 million has been bandied around as a savings that has been managed by the careful and efficient management of the new administration in office. What I wanted to do was to analyze that a bit and get a sense of precisely how that was broken down.

If we are going to make statements about cost savings, then we owe people the opportunity to analyze the savings to determine whether or not they are there or just a flight of rhetoric or hyperbole.

I would like to focus in on more of the things that the Government Leader has done and see if we get a better sense of precisely what money has been saved. The Government Leader has indicated that travel bookings are down 45 percent from the main estimates of last year. We know from the main estimates of last year that there was a conscious effort, in fact there was a decision made by the government at the time that they were going to reduce their travel budgets by 25 percent. That was in the main estimates for the year that we are talking about. Is the Government Leader factoring in that 25 percent in their calculations for a 45-percent reduction in the number of bookings?

Hon. Mr. Ostashek: I do have to correct the Member opposite on one point. The 45-percent savings on travel was not from what was in the main estimates. The 45-percent reduction in airline tickets was determined by comparing the 1991-92 year to the 1992-93 year. That is where the 45-percent figure came in. As I said, overall figures are really hard to put together. We do have some figures together. I think I will give the Member opposite an example of what the travel freeze did for the Executive Council Office over a comparable period. Travel from November 9, 1992, to March of 1993, cost a total of $21,500 - $4,000 of that was for travel inside the Yukon, $17,500 was for travel outside the Yukon. For the same period of time the year previously, from November 1991 to March 1992, the total travel was $46,400 - $2,600 of that was for travel within the Yukon - $43,800 was for travel outside the Yukon. That sort of gives an idea of the magnitude of the savings made in the Executive Council Office. How that relates to total figures throughout the government, I am not sure.

For the period November 1, 1991, to January 31, 1992, the outside travel was $329,360. From November 1, 1992, to January 31, 1993, total outside travel was $156,614, for a total savings of $172,746, approximately 52 percent.

Mr. McDonald: Then the Government Leader acknowledges the point that I made, with respect to accepting the 25-percent budgeted reduction in travel for the current year in which we are operating. The Government Leader has just indicated that the period he is comparing it with was the previous fiscal year, not the current fiscal year. In the main estimates debate for this fiscal year, which was debated in November of 1991, there was an announcement of a 25-percent reduction in travel government-wide, from all travel budgets, for the period April 1, 1992 through to March 31, 1993. That 25-percent budgeted reduction is included in the Government Leader’s figures as part of the travel freeze - is that not correct?

Hon. Mr. Ostashek: I presume you could say that would be correct. It would be included in there, if that was the case.

Mr. McDonald: These figures had been tossed around in the second reading debate. I thought for a moment that, when I made mention that the 25-percent reduction was incorporated into any savings that would have been factored in for this year, I got the impression I was probably wrong and the Members across the floor were ridiculing that suggestion. However, we now know the suggestion was not in error at all.

In terms of the savings that were effected with respect to the hiring freeze, could the Government Leader give us some sense of how they calculated savings in the hiring freeze and how much total dollar value those savings were?

Hon. Mr. Ostashek: The method that was used to come up with that was the number of reduced hires times an average salary.

Mr. McDonald: There is something missing from the equation. The number of reduced hires compared to what?

Some Hon. Member: (Inaudible)

Mr. McDonald: It is compared to the same period of the year before. So, whatever was happening for a two-month period the year before, they calculated the same number of hirings for this year and decided that that two-month period was a representative sample of a normal year? Is that right? They just arbitrarily decided that?

Hon. Mr. Ostashek: We took the period one year previous, compared it to the same period in 1992-93 and calculated the reduction in the number of hirings during that period of time, not through the entire year.

Mr. McDonald: That two-month period was the two month stretch over Christmas and into January.

Hon. Mr. Ostashek: I believe that is correct. It was two months, three at the most.

Mr. McDonald: Was the decision made that this was a representative sample and no further analysis had to be done?

Hon. Mr. Ostashek: It certainly was a representative sample of a comparable period of time. I think it gave us a pretty good understanding of what was transpiring.

Mr. McDonald: That is one interpretation, at least.

Can the government indicate to us what they calculated the savings to be, given this calculation?

Hon. Mr. Ostashek: The amount that was calculated out of that exercise would have run about $233,000 a month.

Mr. McDonald: Can the Government Leader tell us how many people were hired during that period? I realize that they talk about hiring and travel freezes, which sounded so brutal and so severe, and were in fact thought out pretty quickly, and there was travel and hiring taking place, in fact. I would just like to get a sense of how many people might have been brought on for, presumably, good reason.

Hon. Mr. Ostashek: I may be able to get that for you in a while. If we cannot get it today, we will certainly bring it back for you.

Ms. Moorcroft: Could I ask you to repeat the formula you used to calculate that again - you took the number of reduced hirings times the average salary?

Hon. Mr. Ostashek: Yes, I believe that is correct.

Ms. Moorcroft: How did you calculate the average salary?

Hon. Mr. Ostashek: The Public Service Commission supplied the numbers.

Ms. Moorcroft: What were those figures based on? Did you use the actual salary range, the bottom of the range or the top of the range of each position?

Hon. Mr. Ostashek: As I said earlier, it was based on the average wage.

Ms. Moorcroft: The average wage still does not indicate exactly what you based the figures on.

Hon. Mr. Ostashek: It would have been averaged out over the number of employees. You add them all together and divide them by the number of employees we are talking about to get an average.

Ms. Moorcroft: Did that include benefits or was it simply the salaries?

Hon. Mr. Ostashek: Yes, that would have included benefits.

Mr. Harding: With respect to the averaging that was done, I would like to ask the Government Leader if the average was taken using a weighted average of all of the employees in the government, or if they added up all those employees on the top end and divided by the number of employees.

Hon. Mr. Ostashek: It would have been done using ordinary averaging procedures.

Mr. Harding: If that is the case, an ordinary averaging would have included all of the people who worked for the government who are at the very top end, making $70,000 to $80,000 per year. Would there not be any weight put on the number of employees in each classification?

Hon. Mr. Ostashek: No, there would be no weight placed on the number of employees in each category; it was an ordinary average.

Mr. Harding: The assumption was made that because there were a certain number of employees hired the year before - for whatever reason, people retiring, people leaving the civil service - and because there were a number of employees who left the civil service the year before, you extrapolated and said that same number would leave in each month in this fiscal year. Is that correct?

Chair: Order please. May I remind Members to address their comments to the Chair.

Hon. Mr. Ostashek: I believe if we consider a three-month period from one year to the next, the number of hires would be fairly consistent. One thing I can tell you is that there certainly were not any managerial positions filled during the three months that we were considering - except that there were some outside hires - so a high wage would not come into the figures.

I think it is a very comparable average used.

Mr. Harding: Could the Government Leader produce the numbers for hiring during the fiscal year prior to this one?

Hon. Mr. Ostashek: I believe that is the same question the Hon. Member for McIntyre-Takhini asked, and we are trying to find that figure.

Mrs. Firth: I have a general question about budgetary matters for the Minister of Finance. Of all the things that were not done correctly, or the mistakes that were made by the previous government, that this supplementary budget reflects and the Minister discovered upon taking over the government, can he tell me which areas they identified and, particularly, which ones they chose as priorities to correct for their new operation and maintenance budget?

Hon. Mr. Ostashek: Basically, when we started looking for cost savings, we were looking in every nook and cranny to try to come up with all the savings we could, faced with the reality of what we had seen of the large deficit we were going to be faced with in the fiscal year that ends tonight. We looked at all areas, and we had to look especially hard in areas where there was a dramatic increase in the operation and maintenance costs. As the supplementaries point out, one of those areas is Health and Social Services, which is also one of the areas, as we and Members opposite know, that you cannot correct overnight.

Mrs. Firth: Obviously, they did not correct the Health and Social Services one, because the budget has gone up by 31 percent.

Do I understand, from what the Minister is saying, that all they did was look for areas where they could cut costs? They did not really identify any management deficiencies that needed correcting. I have heard the Members on the side opposite criticize the previous government for its management deficiencies and management style. I have myself made some observations. I would first like to find out whether the government identified any of those kinds of operational, maintenance and management deficiencies, whether they priorized them and which ones they corrected in their own budget.

Hon. Mr. Phelps: The Hon. Member has referred to Health and Social Services as one area that she is particularly interested in. For the first time in several years the mains reflect the best estimate of the department. If one goes back several years, one will see that the previous forecasts were much higher than next year’s mains for several years running. This has been changed and we are in the process of reviewing each and every program in social assistance and in health, and we know some of the efficiencies that can be brought about as a result of that process and the implementation of some of the things we are going to be doing. Some of those are factored in. Others are yet to be addressed to the level of detail where we can make the type of forecast that the hon. Member is alluding to. All I can say is that during the course of this year those efficiencies and changes in policy will be put into place. Next year’s O&M will see a more accurate estimate of the results that will emanate from the management and policy review and program changes.

Mrs. Firth: Just for the Minister’s information, I did not raise the Health and Social Services; the Minister of Finance cited that as an example, although I am very interested in that area, and I will discuss it in further detail when we get to particular departments.

The Minister has given me an interesting piece of information and more specific than what I have received from the Minister of Finance. What the new government identified as a management deficiency was that the previous government was underestimating when they brought their budgets in, so the Minister for Health and Social Services has told me that his department has identified and addressed that in the new budget. Can the Minister of Finance tell me if that applies to all of the other departments across the board - the concept that the departments have been traditionally underestimating and now the new budget will be reflecting more accurate estimates?

Hon. Mr. Ostashek: Maybe the Member for McIntyre-Takhini wants to mark this in his book in case I am wrong when we come up for supplementaries next fall.

The Member is absolutely correct. It has been taken into account in all departments. We told all departments, in putting budgets together, that we did not want them just throwing a dart at a program and saying it was going to cost X number of dollars, and then to come back in the fall requesting a huge supplement to get them through the year.

If one looks at the budget in its entirety, takes the main estimates from last year, takes the supplementaries we are debating in the House tonight, and gets the total cost - one will see that our budget is what we feel is a more realistic estimate of what each department will spend. Instructions to the departments are that they are to stay within that budget and not be looking for huge supplementaries to finish out the year. As one can see from the budget we have tabled in this House, there is not a lot of room to manoeuvre.

Mrs. Firth: One area that has been identified, then, is that the estimates will now be more accurate estimates. Were there any other areas of management deficiency the government identified in doing the supplementaries, and that they have set as a priority and corrected in their budget?

Chair: Order please. May I remind Members that the Committee is discussing the supplementaries and not the mains.

Mrs. Firth: I am doing the supplementaries.

Hon. Mr. Ostashek: I apologize if I got into the mains, but I was trying to relate to the question asked by the Member for Riverdale South about deficiencies that we addressed. We are sort of caught in the middle of trying to debate the supplementaries while the mains are sitting there in front of everybody. Maybe some Members are more interested in getting into those than they are in debating the supplementaries. I am not quite certain.

But, to answer the Member’s question, even relating to the supplementary estimates: some of the other areas we identified and are looking to correct - some have been corrected now and some will be corrected during the next year - are program overlaps between departments. I perceived a breakdown in communications between departments and that may have caused some of the overlaps. As the Member opposite knows, when my colleagues were sitting on the opposite side of the House as was she, there was a lot of criticism about the layers of management in government. That is another one of the areas we are addressing in every department; we are trying to take a layer of management out of government - a layer that we do not think is essential. That is what has happened in some of the departments so far; we have combined some of the positions and got rid of quite a few managers, especially in ECO to start with.

Mrs. Firth: Could the Minister of Finance be specific for me and tell me what departments in the supplementaries reflected that particular problem that brought it to his attention? Which departments had program overlaps and too many layers of management in the supplementary budget when they compiled it that caused them to identify that as a concern?

Hon. Mr. Ostashek: There are still areas that we are working on. They are not all addressed in the supplementaries. We have only been in government for five months. Some of these changes will not be made overnight. One of the areas in which we noticed a lot of overlap was in communications, and we have tried to address that. Basically, that came out of our analysis of not only the supplementaries, but the operation of government as a whole.

Mrs. Firth: The Minister of Finance made a comment about managers staying within their budget limits. I have asked him this in the House before and I did not get an answer to it. I know that we have another bill, which I will not discuss because you will call me to order for talking about a different bill, that is an illegal expenditure. I would like to ask the Minister of Finance what they are going to do to ensure that managers stay within their budget limitations and what happens if they do not stay within their limitations and they do come back and ask for more money than they have been given?

Hon. Mr. Ostashek: The Member has spoken of a serious problem. Money is not supposed to be spent without approval of the Legislature. When it is, the law has been broken. I think the Member for McIntyre-Takhini addressed that when we tabled that and identified the seriousness of the problem. To get down to how we are going to try to address it is, first of all, I believe we will not bring in the operation and maintenance budget in until the spring of the year. That will give the people another six months to work on it. It will be a lot closer to the period that they are going to be spending the money in, and will not have to guess 18 months in advance. That is one way to eliminate some of those problems. The Member opposite has to remember that it is not every program and every department that can hit it right on the nose. When you are asking departments to be really realistic in their costs and not to overestimate their costs so that there are huge surpluses at the end of the year, or not to underestimate them so that they have to come back for huge supplementaries, it makes it a much more difficult exercise. But it is something that we are going to continue to work on. By trying to come up with more realistic estimates in the mains, we will alleviate a lot of that.

Mrs. Firth: Does the Minister of Finance have any more areas, other than the two he has mentioned, that were identified and addressed? The two that have been mentioned are the underestimating and the program overlap. Has there been anything else?

Hon. Mr. Ostashek: There are, as I said earlier, many areas we are working on for the more efficient delivery of services. I am sure that each Minister, as we get into line-by-line debate, will have more to say on it. We were looking to streamline government and provide a good, responsible service to the public at a lower cost. We will continue to keep looking for areas of overspending and those that are not providing quality service at a reasonable cost.

Mrs. Firth: One area I have identified is just a general inability of some departments to properly estimate capital costs and tender projects. I have to look at one department in particular, the Department of Education, where cost overruns were extremely excessive.

Has this been identified as a concern? The reason I raise this is because I think there is a shortfall within the government generally in their ability to award accurate contracts because estimating what the project is going to cost is not accurate. This has been an ongoing problem with both previous governments. It has been a problem for many years, and it has done nothing but increase costs for us.

Is the government going to be addressing that particular concern? As I said, the reason I am raising it is because I understand that the Department of Government Services is going through some kind of restructuring process. It is my understanding that, through that process, Government Services may be taking a more centralized approach when it comes to helping some of the departments tender projects. Perhaps we can get some more accurate tenders out there and save the taxpayer a bit of money on some of the capital projects.

Hon. Mr. Ostashek: The Member opposite is correct. Another area we are looking at is the cost overruns that have occurred on some buildings in the past, to see what we can do to rectify that. The other area she is talking about - the closer work between Government Services and the departments that are requesting the work - is one of communications, where we have identified there are some weaknesses. We are working on that.

The Department of Government Services will be going through a complete revamping and analysis as to how to be able to bring projects in on schedule and under budget. We will be working very diligently in that department to see if we can solve that problem, also.

Mrs. Firth: I guess we will have to wait and see. I have also identified some other areas. There is one I would like to ask the Minister of Finance about specifically.

The government traditionally has a habit of spending the last of their budgets as the fiscal year is ending. I am sure the Minister of Finance has heard some of the local suppliers say that they know when the year-end is coming for government budgets because all of a sudden everyone in government starts buying up small supplies to spend their budgets. This has traditionally been a problem, and I understand it is also going on today.

Did the Minister of Finance identify that as a concern? What direction was given to the departments? Can he give the House the assurance that these kinds of year-end spending sprees are not going on?

Before he gives us a complete assurance that they are not, I have some examples to indicate that they are. Perhaps he could be cautious with his answer.

Hon. Mr. Ostashek: I will not be cautious with my answer at all. I know that instructions were given to the departments and, if I find that the departments have not been abiding by those instructions, they will then be dealt with accordingly.

I sent several memos out in January and February, specifically instructing departments, because of the tight financial constraints that the government was under, not to be carrying on the procedure of excessive spending by departments during the month of March to get spending in under the current fiscal year.

I have not reason to be cautious in my answer. If the Member opposite can give me examples, I can tell you that the departments will be dealt with and be asked to explain why it occurred.

I want to add that the current system that was in place when we took over government, and are working to change, is a system that basically rewards overspenders, not the underspenders. We want to change that system. I made every effort as the Minister of Finance this winter to make sure we did not have that year-end excessive spending. I am surprised to hear the Member opposite say she has examples of it.

Mrs. Firth: I do have examples of it. Not wanting to get any particular department into trouble because I do not understand the Minister of Finance’s words when he says “dealt with accordingly” - if I had a clear explanation of what that meant - I am now a bit intimidated to give the information out on behalf of the people who have presented it to me.

There are examples of people working long hours on contracts so they can spend the money before April 1, as there are no hours for them after April 1.

Those are also examples of purchases being made and that were being made as far back as November, just after this government came into office. There were threats of spending freezes that initiated mad flurries of spending. That is why I cautioned the Minister not to be so definite that everyone was doing exactly what he had ordered them to do.

I will leave that to the Minister of Finance to look into, and he can go on his own mission finding out where these breaches are occurring, that he is going to “deal with accordingly”. Perhaps, as Members of the Legislature, he could tell us what “being dealt with accordingly” means. I will probably have another question for him.

Hon. Mr. Ostashek: I did not mean to be that hard, or that cold, but I will certainly be going to the departments and asking them to explain if there was an excessive amount of spending going on.

I am not saying that all purchases had to stop, because there are some purchases that are very legitimate, and these purchases have to be made on an ongoing basis. I would certainly investigate any expenditures that I felt were excessive, if that is the answer the Member is looking for. The departments would be given the chance to explain their reasons for the expenditures.

Mrs. Firth: I guess it would depend on the Minister of Finance’s acceptance of the explanation as to what “being dealt with” meant. Perhaps he would like to elaborate on that sometime.

I am interested in pursuing another comment the Minister of Finance continues to make. I have heard the comment at least three or four times, but I have never been able to get a specific answer from the Minister as to exactly what he means when he makes the comment.

He made the comment tonight that, “Managers who under spend will be rewarded.” I guess I would like to know how many deputy ministers have come forward to the Minister of Finance and said, “Here, take $5 million or $10 million out of my budget”. I do not think one deputy minister would be prepared to make that statement. That is not the way they do their budgets.

However, I would like an explanation of exactly what the Minister of Finance means, when he says he will reward those managers who are more efficient, who turn back funds; I do not know. What is the criteria for getting this reward, and what is the reward?

Hon. Mr. Ostashek: I believe I told the Member in Question Period a few days ago, or last week, that we are working now on a procedure and a method and system to reward the managers within the departments who are doing efficient work. Some of it will come out of the merit pay money they are not going to get this year clean across the board - some of that merit pay money will be used to reward the managers who are doing a good job of managing their departments.

I have to comment on some of the preamble the Member opposite made. Her comments are that no managers or deputy ministers would give up $5 million or $10 million. I found quite the opposite. I have had deputy ministers - not one or two, but a good number - come to me and say, “Here is where you can save some money in the department. Here is where you can get rid of some managers. Here is what you can do to save money in the department.” I believe they are very professional people and I believe that, if they are given the opportunity and the tools to work with to provide good quality service in a more cost-effective manner, they are fully prepared to do it and are looking forward to doing it.

Mr. Penikett: I have a couple of questions I would like to ask the Government Leader. The Government Leader said earlier that one of the economies he was going to achieve was to remove a layer of managers from the system. I would like to hear more about this because, of course, at least when we were in government, the Cabinet and the Government Leader and the Ministers did not actually hire managers. We might have created the person years but, since the Government Leader is also the Minister responsible for the Public Service Commission as well as the Minister of Finance, he is moving to a full-time equivalency system rather than a person-year system, which will remove the power from Cabinet and Management Board to make decisions about person years - whether to add them or delete them. They will simply have the expenditure control mechanism of the personnel dollars and, according to statements I have heard him make in the last few days, he intends to have Ministers and, ultimately, deputies, I guess, make decisions about the staffing levels in the department.

He said he is going to the full-time equivalency system. I wonder if he is aware of studies which indicate that, in systems like that - large organizations, more particularly public bureaucracies, but this also applies in private bureaucracies - one of the things that inevitably happens in a time of restraint is that it is lower level employees who lose their job security and benefits. Managers almost never get rid of fellow managers. They may get rid of people below them, but they rather tend to get rid of people who are some distance from them. They do not have to look them in the eye and say good-bye. They tend to cut a broad swathe through the bureaucracy and reduce the jobs of lower income people.

The best example of that in our region is the case of British Columbia, where Mr. Bill Bennett, the younger, set about to reduce the size of the public service. The vast majority of people who ended up losing their jobs were clerks, stenos and lower ranking people and, in fact, proportionately, managers did not lose their jobs at all. I am not making this an anti-manager point, because I generally subscribe to the view of letting managers manage. I am really asking a question here of the Government Leader about the self-interest of managers versus other employees.

Hon. Mr. Ostashek: The Member opposite raises a very valid point, and it is one that we have concerns about. It is probably one of the main reasons that we are going very slowly on reducing the size of government. We are not opting for layoffs, but we are opting to do it through attrition. That is what we have done in several departments. Where managers have been vacant, we have gotten rid of the positions.

There is a down side to the system; there is to any system. I believe there is far more potential for a greater up side than there is a down side, as long as there is a monitoring process in place to monitor what the managers are doing, while giving them the ability to manage.

If we are going to keep complete control in the Cabinet office, then we really do not need these $100,000-per-year managers, we can do it with people for half that price if we are going to take all the control away from them. I believe these people have a lot of pride in the job they are doing and want to do an efficient job. I believe that most of them are fair-minded people and will look for the proper balance.

Mr. Penikett: Let me make this observation: I was in government long enough to recognize where one highly skilled person was often able to give you much more value for money than three semi-skilled or relatively less well-skilled people and it is not always a question of numbers. I would comment to the Government Leader that in my view it is potentially dangerous to evaluate managers simply on whether they underspend or overspend budgets because he may be seeing only the short-term effects or consequences of certain management decisions.

It is my view that the preferred method of evaluating managers is to find some objective way, if you can, of measuring the outcomes. By outcomes I mean the extent that a manager, deputy, ADM or director has effectively achieved goals that are set out for them in the estimates or by government policy. Having said that, though, I recognize that it is extraordinarily difficult to do.

Many years ago, there was a Minister of Justice in this House who assured the Legislature at that time that he saw an absolutely critical performance indicator for the Department of Justice as lowering the recidivism rate in the Yukon. He was somewhat embarrassed one year later, two years later and three years later to find that nothing he, his deputy or anyone else in the department did succeeded. The request to evaluate the department on that basis was quite a reasonable one, because the principal objective of the department, at that time, was to lower the rate of crime in the territory. In other words, they had set themselves up an objective and claimed to be spending money toward that objective, but could demonstrate no progress.

The only point I want to make here is that one has to be very clear about what one’s objectives are. If one’s objectives are simply to save money, it would be very easy to do so in government - just cancel all sorts of big spending projects. The trouble is that there would be a great deal of pain in the public. While I may have a different view about what government is supposed to do than the Government Leader, I think it is worth taking some time - and, clearly, from the Government Leader’s comments, we are going to have to in each of the departmental estimates - to try to get from him a clear statement of what he thinks the objectives of the departments and agencies of government are, and not just the ones that are stated in the budget book. In too few cases are they changed from the days when we were in office. I assume, since there is a philosophical difference between us, there will be a different direction, so there should be a different method of evaluating the performance of not only the departments and the deputies, but also the Ministers and, ultimately, the Cabinet.

Now to my question: Mrs. Firth is not the only Member of this House who has observed a year-end spending spree.

It is not the only one. I actually encountered a cynical public servant - that is a rare thing, and is probably the only one in the entire public service - who actually believed the purpose of the year-end spending spree was to absolutely make sure that the Government Leader’s prediction of a deficit was fulfilled. The only way they could guarantee this would happen was to have a year-end spending spree.

I know the Government Leader is going to assure me that is not the case, but my colleague, the Member for McIntyre-Takhini, the Member for Whitehorse Centre and I are now composing some written questions to make sure we have the facts we want to get from departments to establish exactly what the pattern of expenditures were, month by month, in various departments and agencies.

I do not think the Government Leader ought to be surprised if he finds a little balloon of expenditures right around March in a number of departments and agencies.

Hon. Mr. Ostashek: I will speak a little bit to the Member’s preamble, first on the objectives of this government on the reorganization of departments, and what we are looking for in them. We are seeking to cut the cost of government, but we are also looking to provide a good quality of service to people. I have stated that in the House before, and that is one of our objectives.

We are looking to cut out overlaps in departments. If there are too many managers in the system, then we want to eliminate some of those. We will have a monitoring system in place to see that people on the bottom end of the scale are not being abused during that exercise. It is going to be an ongoing exercise. It is not going to be something that will happen for a couple of weeks, and then quit. It will be a continuing evaluation of the departments and how they are fulfilling their role.

I really believe, in this time of restraint - not only here, but all over Canada - that managers are extremely aware of the limitations there are on government to fund programs nowadays. I think that most of them, if not all of them, are professional enough to try to save taxpayers’ money and be able to provide a high quality of service.

I feel that will make their jobs more rewarding; I really do.

To move on to the comment of balloon spending at year-end, I will be following up on spending with each of the Ministers to see what has transpired. No matter what the Members opposite think, I tried very, very hard; I did send a memorandum out in January to all of the departments about year-end spending. I sent another memorandum out in February. I impressed upon the deputy ministers that we did not want to see that practice continue and I will be taking that matter up with my colleagues. I will be trying to get to the bottom of it to see what happened, how much spending did occur and if it was excessive.

Chair: Before we continue, is it the wish of the Committee to take a brief recess?

Mr. Penikett: I have one short question; perhaps I could finish the sequence.

Some Hon. Member: We are going for a coffee break, thank you.

Mr. Penikett: I will defer to my House Leader absolutely; far be it from me to test or damage my relationship with him. I will sit down.


Chair: I will call Committee to order.

Mr. Cable: I have a number of questions that relate to the gathering of financial information. I wonder if the Government Leader would indicate if there are any monthly computerized statements taken off that show, among other things, gross budgetary expenditures.

Hon. Mr. Ostashek: Yes, there are monthly statements taken off that show that.

Mr. Cable: How soon after the end of the month would these statements become available?

Hon. Mr. Ostashek: On the average, seven to 10 days.

Mr. Cable: Aside from gross budgetary expenditures, what other items would be shown in these monthly computerized statements?

Hon. Mr. Ostashek: Aside from expenditures, it shows the budgetary side up to that point and the free balance that is left.

Mr. Cable: I will have to confess my ignorance, could the Government Leader explain the term, “budgetary side”?

Hon. Mr. Ostashek: What it shows is the budget and the actual expenditures. So you have what the commitments are in there as well.

Mr. Cable: I would take it then that the statements for the 11 months ended February 28 would now be available. Is that correct?

Hon. Mr. Ostashek: Yes, that is correct.

Mr. Cable: Is there any significant variation showing up from those computerized statements with the numbers shown in the supplementary estimates?

Hon. Mr. Ostashek: It is impossible to tell until the period 12 results at the end of March are in.

Mr. Cable: And that, according to what you indicated a few moments ago, will be ready in one week’s time. Is that correct?

Hon. Mr. Ostashek: Yes, that is correct; they will be ready in a week to 10 days.

Mr. Cable: Would that then permit your chief financial officer or officers to draw a bead on the supplementary estimates as to whether they are reasonably accurate? I know that is a vague term but will the statements be able to show if there is any significant variation from the supplementary estimates, as presented?

Hon. Mr. Ostashek: No, we would have to wait a few more weeks after that till we have all the accruals to see what commitments were not spent.

Mr. Cable: Are those the accounts payable or the amounts accruing due under contracts? What would those be?

Hon. Mr. Ostashek: Yes, that would be the accounts payable.

Mr. Cable: There would be one key element, though, that flowed through the Consulting and Audit Canada report and these supplementary estimates: the gross budgetary expenditures. That number will be available in approximately seven days’ time - am I correct?

Hon. Mr. Ostashek: No, that is not correct. We would have to wait for two or three weeks until we had the accounts payable.

Mr. Penikett: I just want to finish off the line of enquiry I was pursuing before the break. I wonder if the Government Leader could tell us what exactly is contemplated in the monitoring system he described half-an-hour ago, which would ensure that the interests of lower level employees would not suffer when managers were managing in the interests of reducing expenditures.

Hon. Mr. Ostashek: The Public Service Commission, on a regular basis, will be providing to Management Board and Cabinet the full-time equivalents and the breakdown of managers and people working in the departments.

Mr. Penikett: But given that Cabinet and Management Board have essentially delegated the authority to make those decisions to the deputies, what will Management Board and Cabinet be able to do if, in the interests of economy, deputies have replaced permanent employees with casuals or part-time people, or if skilled people have been replaced by less skilled people or lower wage people - the negative effects of which might not show up for months or perhaps even years but the remedy for which, if there was a problem, would involve Management Board and Cabinet having to make decisions in matters for which they had only just delegated responsibility.

Hon. Mr. Ostashek: The Member is absolutely correct. In the system of monitoring we put in place, the employment figures would be broken down into various categories so they can be followed. As I said, this is a new system. Any time we have new systems put in place there are some concerns. Again, if we are looking to streamline government and to have a more cost-effective government, we have to go to some new systems.

I refer back to what I believe was a recommendation of the Auditor General, that person years should no longer be used to track employees.

Mr. Penikett: This is probably my last question in this area. We did agree, earlier on, that the government was not monomaniacal - it had more than one interest. It was not just interested in economy and efficiency, but it was also interested in fairness and civilized behaviour toward its own employees, especially the lower paid and lower ranking employees.

Given that one of the advantages that some management gurus recommend for something like the FTE system is that it effectively weakens bargaining units and unions any places it is adopted, would the Government Leader agree that, notwithstanding that secondary purpose of FTE systems, the bargaining unit is still the best agent to protect the interests of those lower ranking employees?

Hon. Mr. Ostashek: I have to agree with the Member opposite that that is what unions are all about. They are there to protect the interests of their Members, and that is their job.

I want to point out to the Member opposite that, while the managers have some free rein here, when we said no layoffs, they cannot make a wholesale change by getting rid of permanent employees and going to term or indeterminate employees. There may be managers who may decide not to fill a position with a permanent employee when a position is vacated by attrition, if it is in the best interests of the department.

Mr. Penikett: This will be my last question, and I will begin it by way of a comment.

The Government Leader may not know this yet, but one of the terms of endearment that permanent employees of the public service use for us in this particular Chamber, especially those of us who are in Cabinet positions, is “the temporary employees” - a nice reminder that they are the permanent employees, not us.

The Government Leader may already be aware that even under the person year system - which is fairly rigorous, in terms of its controls, because you have not only the financial control mechanism, but the person year control mechanism - it does not take a particularly brilliant public servant, through the use of something like the staff establishment directive, to take a vacant position - which may have been created by Management Board and the Cabinet for some express purpose, or to deal with Management Board priorities - and use that person year and the dollars associated with the position to do something that is a priority of the manager.

I would not be telling a secret if I said that happened once or twice during our seven years in government.

The ability of senior managers to do that under the full-time equivalency system increases exponentially, and I can only say to the Government Leader - this is not a question - it may take him some time to become aware that staffing is being done, not always according to his priorities, but perhaps to the priorities of senior management.

The Government Leader may wish to consult with Mr. Fisher; I am sure, from an insider’s point of view, he would have some expert knowledge of the way these things are done, especially in a large department.

Hon. Mr. Ostashek: While the Member opposite did not ask a direct question, I feel I have to respond. Having had the years of experience that the Member opposite has had on this side of the House, he knows what was happening with the person year system. There were person years being banked, person years being set aside, and if they did not have enough person years to do the job, the departments used a service contract at great expense to the taxpayers.

This is a new system. As I stated earlier, I believe we have to have some faith in our professional people to operate in a responsible manner. There will be a monitoring system put into place, and I have told our managers, the deputy ministers, that they will be given the ability to manage their departments, but with that ability to manage comes responsibility and accountability. I believe we have to give these people the chance and the tools to do their job.

Ms. Joe: I have a couple of questions for the Minister. He mentioned the double layering of managers and how they were looking at reorganizing so only the people who are necessary stayed in the department.

The Minister also mentioned getting rid of some people in the Executive Council Office, because some of those person years were not needed. If that is what the Minister was saying, I would like to know what happened to those people who were moved out of the Executive Council Office. Were they given other jobs in the department? Were they term positions? Can the Minister tell us what happened?

Hon. Mr. Ostashek: I am not sure if the Member opposite is aware of this, but there were many vacant positions and four or five resignations from Public Affairs shortly after we took over government. In the reorganization, there was no one laid off. A lot of the positions that were eliminated were vacant or people were moved around within the department into positions that were acceptable to them in the reorganization. Nobody was laid off.

Ms. Joe: I guess what he is saying is that he got rid of the positions, but not the people.

I have another question and I want to know where it fits into this supplementary. There were four deputy ministers who were fired by the Government Leader. They were let go without good reason. These people were assured that they were doing a good job and there was nothing the matter with their work, but they were told they were not wanted any more. I am told that, in the case of one deputy minister, she was given severance pay of almost $250,000, even though she had not even worked here for two years. That is very disturbing.

We listened for a couple of days about how the government cut back on everything and froze hiring and travel. I am a little curious about where the saving was. If one gives a large severance package to someone, it has to come from somewhere. I know he is going to stand up and say it is our fault because of the contracts that were signed with them but, in this case, if he was letting them go for good reason, he would not have had to give them a severance package. If they were let go, and they were all doing a very good job, but he just did not want them around, I would call that very irresponsible. I do not believe there is any way he can blame firing them on the contracts that were signed with them.

Where does that expenditure fit in this supplementary? Is it under Executive Council Office or the respective departments those deputy ministers were responsible for?

Hon. Mr. Ostashek: The Member asked me a question, and then half answered it for me. I have to go on record with this one because, first of all, the Member opposite said they were fired. I have never said they were fired. I said four deputy ministers left the service of government. I want that on the record.

She says we cannot blame the previous administration, but I think, when we start talking about individual severance contracts with deputy ministers, we can blame the previous administration. I have made the public statement that I felt that some of those severance packages were overly generous and that we were reviewing the whole issue of severance packages for deputy ministers. We are doing that, and we are going to bring in a system that will be applied equitably to all deputy ministers, not on a case specific basis and, in some cases, even after the fact.

There is no doubt that, when governments change, deputy ministers change. It happened when the previous administration took over, it happened when our administration took over, and I have no doubt that, when we are replaced, it will happen again. What is wrong with that system is that these deputy ministers are professional people. They serve at pleasure, and there is no need for special, overly generous and lucrative severance contracts on an individual basis. I do not believe there is, and we are going to try and rectify that. It shows up in the supplementaries in the relevant departments.

Ms. Joe: Taxpayers always refer to money that is being spent by governments as taxpayers’ money. What taxpayers are asking me, and asking other people, is that, if they did not have to go, why did they let them go and give them these elaborate severance packages?

The Member, once again, stood up and blamed that on the former government. It is beginning to sound like a double broken record, because it is being said more and more, and everybody else gets blamed for the things that this government does.

In which areas of the different departments are these included in? I know that we will not get a specific line that says, for instance, the deputy minister responsible for Community and Transportation Services was given this kind of a severance package when she left. I am a little bit curious to find out where exactly it is included and what line item it is in in each of the different departments.

Hon. Mr. Ostashek: If the Member opposite is trying to find an exact figure, she should perhaps ask her Leader of the Official Opposition; he would have a better idea of what the figure is. It will not show up as an exact figure in the departments. It will show up in the line wherever the deputy minister was paid, or it may be that the department had savings within the department and were able to cover the severance package.

Mr. Penikett: I have a very quick question of the Government Leader. If a deputy minister quit, would they have to pay them out the money on a contract?

Hon. Mr. Ostashek: I would have to go back and look at the contracts to be exactly sure of that, but there certainly would be some pay out on them.

Mr. Penikett: The basic answer is no.

If a deputy minister is fired for cause, would they have to pay out a contract?

Hon. Mr. Ostashek: No. If they were fired for cause, the contract would not have to be paid out.

Mr. Penikett: The only time a contract would have to be paid out would be if they were fired without cause. That is now established as a fact in respect of the recent dismissals.

I will ask the Government Leader one last question on this subject: is he aware that most provinces now make contracts with deputy ministers, even allowing for the fact that they are hired at pleasure. I recognize that most qualified deputies who come from outside the public service leave well established careers in other occupations with other employers and know that they do so with some risk, but in order to attract such people to the public service they have to be given some guarantee that they are not going to be fired on a whim by a government leader since they are constitutionally serving at pleasure.

Hon. Mr. Ostashek: Because it is done in other jurisdictions does not mean it is right, for one thing. The other point I want to make for the Member opposite is that he took over the government here and deputy ministers were let go at that time, too, without cause. This is not something that has never happened in the history of the Yukon.

Mr. Penikett: Just for the record, because he has repeated that statement several times, it is not correct. The two deputies who were fired when we came into office were both fired for cause. They violated provisions of the Public Service Act in appearing at the Tory convention as delegates, which is against the law and against conventions of public service in this country, a view that was recently reconfirmed by the Supreme Court of Canada.

Hon. Mr. Ostashek: The question is supposed to be coming from the other side, but I will ask a question of the Member opposite. Is he trying to say that there was no severance packages paid in those two instances?

Mr. Penikett: No, I am not saying that. What I am saying is that they were fired for cause. I am also saying there were severance packages, but the Member opposite has made the argument that these people were not fired, or tried to claim that they were not fired.

Ms. Joe: I have one short question. When we get to the respective departments these deputy ministers were in charge of, I would like the Minister to let me know under what line item that amount of money appears.

Hon. Mr. Ostashek: The Member will have the opportunity to ask each of the Ministers as they are going into line-by-line on their departments.

Mr. McDonald: I was following a line of questioning about one and one-half hours ago, and I did not finish it. I am going to have to get used to having a line of questioning broken by some interesting discussion.

I had a lot of comments here about various things that were said over the last one and one-half hours, but I do not want to get too sidetracked. There are one or two questions I would like to put before the evening closes.

The Government Leader, in his letter of February 15 to many different people, talked about how the government had the financial situation under control. In various speeches in the past, he has indicated that the government, through its good works, had saved, I believe, $4 million.

Earlier tonight, we established that the government, who in terms of its savings, had saved 20 percent of 45 percent in the travel freeze - whatever the figure was, minus the budgeted 25 percent cut. The total there was 170, so it was probably about $70,000. We might have established, depending on one’s view of the methodology in determining the figure, that $233,000 or something were saved per month in a travel freeze. These were the two first items that were listed in the letter the government had sent to all and sundry as being two of the main steps, as they called them, that the government has taken to save money in this budget.

Fourth out of the six steps included the following item: effective April 1, salaries of politicians and political support staff will go down five percent. This is to save $800,000 per year, but of course that would not show up in the budget, because the budget was only prepared to March 31. We cannot look to that as being one of the management actions.

The next thing the government was going to do was implement a new and effective incentive policy to better manage government expenditures. We know that is not yet in place, so that should not be considered part of this budget.

There is a review being carried out to streamline government operations, including such things as policies covering government purchases and recruitment of personnel. We have not received any results yet on these policy reviews, so we cannot look to them as being part of management action.

The final step was going to be a mechanism developed to ensure new government buildings are constructed in a cost-effective way. Of course, the Members opposite not having had a chance to manage a building construction project, or to undertake to construct a building, except in their previous life between 1982 to 1985 - on the slightest hint, I will be happy to resurrect some of the history that took place then. Clearly, most of the Members opposite cannot take responsibility for the 1982 to 1985 period, but in any case they have not been managing any projects so far.

Clearly, we cannot look to that by itself to result in any cost savings in this supplementary budget.

These were listed as the main steps. We have not heard any of the others yet. These are the main steps that the government took, in terms of its management actions, to reduce the costs of government. Now, we have some $500,000 worth of savings that we have been able to cost and identify, but we have a claim that there is about $4 million worth of savings. I am still looking for the other money - the $3.5 million in the conscious actions by the Members opposite. They dealt with the main ones here in their letter. This is what they said have caused them to take an over-inflated figure and make it less inflated. Still, in our view, they are over-inflated.

If the Minister could indicate more of the actions they have taken as a government, I would like to pursue a line of questioning as to precisely what kind of cost savings they would realize in other areas.

Hon. Mr. Ostashek: Maybe I can refresh the Member opposite’s memory. I have said it in this debate, not tonight, but on previous nights. I also said it in the second reading debate. It is very difficult to try and get a real figure on the savings because of the changes you implement. I know that is not the answer the Member opposite is looking for.

However, the fact remains that the whole attitude of government changed with the restraints being put in. The Members opposite are trying to say there was a big spending spree here in March. I have yet to see that in detail, to see whether that is true or not. I will have to go back to the best barometer that I can put my hands on, which is that, upon taking over government, in my first meeting with the Finance department, the projected deficit for this year was $61,079,000.

That was the figure I was given at my first meeting with Finance.

We were able to come in with the period 8 supplementaries at $57,895,000. The Member opposite can use all kinds of arguments he likes, but I think that is a barometer of about $3.5 million - something like that - and I believe it was just because of the nature of the directions given by this government regarding the the restraint policy we wanted to see carried out throughout government. So, there was a tightening up of expenditures throughout government.

Mr. McDonald: With all due respect, this answer is just not good enough. We have a situation here where the government has, over the course of the last four or five months, said that they have, through their marvellous new, efficient system of management, saved millions of dollars; but we have spent most of this evening trying to determine precisely where these management actions have taken us and we have come up with perhaps $500,000 worth of savings - yet they claim that millions of dollars have been saved.

We have taken great exception to this claim that there was a $61 million overrun in this year’s budget and we are taking great exception to the claim that there is a $57 million overrun. But if we cannot get a handle on the precise figures, and if the government is going to be claiming that they have taken precise management actions that have saved a certain amount of money, then they should be prepared to identify precisely where it is they saved the money.

A letter was sent around to, as I understand it, hundreds and maybe thousands of Yukoners, which laid out the management actions.

I was taking this as a truthful document. I was going through the steps, as laid out by the Members opposite. They listed six of them, called them the main steps for saving money, but we have only been able to find a small sum, which is still in dispute until the Government Leader provides us with more information on the calculation regarding the hiring freeze.

What I would like to know is when the government is going to be prepared to take responsibility for the ton of rhetoric that comes out of the communications offices upstairs, whether it is through The Sluice Box, which we talked about the other night, or the Consulting and Audit Canada report that the Members opposite do not want to talk about any more, or through communications and speeches. This is serious business. I am only trying to understand precisely what the government is saying and judge the government by its own standards.

The government has indicated that they have made some savings. They have taken some management action. They are trying to sell the idea to the public that they have, through conscious effort, saved money. They have identified the figure as being $4 million. It is the difference between $61 and $57 million - two ridiculously inflated figures.

Yet when we try to do something as simple as identify how that $4 million savings was effected, all we get is more rhetoric and an explanation as to how it would be too difficult to get into that kind of detail.

The Member for Riverdale South has already asked what other actions the government has taken that could have caused this saving to occur. We have the Government Leader saying things like, “Well there is improvement in the Executive Council Office. We did not hire people for positions that were vacant. A vacant position is not spending money either. Simply not hiring someone does not necessarily reflect the fact that there was a savings.

If we are simply going to have to live with this rhetorical claim that somewhere in the departments they have dug into that corner or this corner and each Minister can tell us that they have saved a little bit of money here or there, then that is not going to cut it, because the expenditures go up and down in everybody’s department, every year that a budget is presented in this Legislature. If there is an expenditure that has gone down, then they certainly will be taking some credit for a particular expenditure going down. If one goes through the supplementaries in any particular year, you will see variances that are up and down.

I am looking for overt, conscious, management decisions that will save money. If we cannot find that, with the greatest respect, there is nothing that the Minister of Finance has indicated to give us any sense of confidence that his government has done anything to reach that magic $4 million figure, which they say is a result of their actions. The only thing that is front and centre on the press releases,in these political communications and in The Sluice Box, are things like the travel freeze and the hiring freeze.

If you want to be crude about it, the only thing that we have got so far is hiring freezes and travelling freezes, which were really not freezes, that were clearly and easily offset by the payments to fired deputy ministers.

What I would like to ask the Government Leader, if he would not mind, is to indicate what conscious decisions were made. There has to be something supplementary to this, as obviously this is not enough. We have four of the six that do not show any savings in this fiscal year. Two of the six we have already costed.

Are there any other conscious efforts by Management Board that we could identify and hone in on to try to determine whether or not there are savings we could use and to actually cost these management savings and feel more confident that we knew there was a conscious decision by the government that led to this so-called reduction from $61 million to $57 million?

The next time we deal with this, I would like to ask the Government Leader, for the record, if he would come back with information that would help satisfy some of our needs.

Mr. Chairman, I move that you report progress on this bill.

Motion agreed to

Hon. Mr. Phillips: I move that the Speaker do now resume the Chair.

Motion agreed to

Speaker resumes the Chair

Speaker: I will now call the House to order.

May the House have a report from the Chair of Committee of the Whole?

Mr. Abel: The Committee has considered Bill No. 4, entitled Second Appropriation Act, 1992-93, and directed me to report progress on same.

Speaker: You have heard the report of the Chair of Committee of the Whole. Are you agreed?

Some Hon. Members: Agreed.

Speaker: I declare the report carried.

Hon. Mr. Phillips: I move that the House do now adjourn.

Speaker: It has been moved by the Hon. Government House Leader that the House do now adjourn.

Motion agreed to

Speaker: This House now stands adjourned until 1:30 p.m. tomorrow.

The House adjourned at 9:29 p.m.

The following Sessional Paper was tabled March 31, 1993:


Game Farming Policy (Proposed) (Brewster)

The following Legislative Return was tabled March 31, 1993:


Charges relating to counselling use of poison for purposes of hunting wildlife; any relationship to poisoning incidents in Kluane riding in 1982 and 1983? (Brewster)

Response to Written Question #4 dated March 24, 1993