Executive Council Office - continued

Chair: We will move on to Bill No. 6, entitled First Appropriation Act, 1993-94. We will be discussing Executive Council Office. Is there any general debate?

Mr. Penikett: Before we move into line-by-line debate, I wonder if the government would be prepared to use this occasion to elaborate in greater detail than has been done in Question Period and by way of a ministerial statement on the dealings between the government, Curragh Inc., and the potential Asian investors in that mine.

The Government Leader has told us that the question of arrangements for Grum stripping were the subject of some discussion, as was the desire of the company to have competitive power rates, and that the $50 million that the Asians propose to invest is conditional upon satisfactory arrangements being made on those matters and other matters, including, which I think Mr. Frame’s press release referred to as “the fundamentals” of the company’s operations.

I note that the Government Leader has said that their position in respect to arrangements with the Grum stripping has not changed. I note also that the Government Leader has indicated that the Asians have requested a particular industrial power rate, but he has not felt free to share that information with us. Could I ask him, as a general question, whether there was any other information pertaining to the discussions that took place in Seoul, or the negotiations that may take place in the first week in June in this town. Is there any additional information about those matters that he may be able to give the House now?

Hon. Mr. Ostashek: I will try to share with the Members opposite as much information as I possibly can, being bound by the fact that some documents I know are not public information yet. I would not feel very comfortable discussing those details. I would hope that those documents will be public in the near future, so we could have a better debate on some of the issues. As I stated, there was an agreement reached between Curragh officials and Korean Zinc and Samsung, and I just want to state for the record that I was not part of those negotiations. I did not sit in on those meetings. They were direct negotiations between the principals in the agreement.

I had a private meeting with the chief executive officer of Korean Zinc. There was a very nice dinner that was put on by the Canada Council on my behalf. They invited about a dozen very high profile business people in the Korean community. I had the opportunity to meet some very high officials in Hyundai, Lucky Goldstar, and Mitsubishi. Several different companies were represented.

My understanding is that Korean Zinc officials will be in Whitehorse sometime within the next 10 days, around the first week in June, to do a due-diligence study on the Curragh operation in the Yukon.

I do not know how long they will be here. However, as I stated to the Members opposite in my ministerial statement, I believe that the schedule that is being put forward by Curragh is very optimistic.

I was not aware, until I got to Korea, that the company or investors were going to be looking for concessions on power rates. I know Mr. Frame has always had great difficulty with the power rates that were being charged to the Faro operation. At no point was I told that they were going to be looking for concessions on that, until I was informed of it in Korea.

The Grum stripping is something that is outstanding, and it is an issue that Mr. Frame and I will be addressing when he comes to Whitehorse. However, as I said in my ministerial statement, there are other issues that I believe the company must resolve before we get to the stage of the Grum stripping, and that is to get the cooperation of their note holders, of the Bank of Nova Scotia and of the creditors, in order to restructure the outstanding debt of the company.

I think that is a major hurdle facing the company. Those are issues that are going to have to be dealt with before there is any light at the end of the tunnel for the company.

I hope that the positive response of the stock market to the possible $50 million of equity by foreign investors will continue, and that the company will be successful in raising the additional equity that they feel they are going to need to restructure their debt.

I think a major issue facing the company, before we can get into discussions about Grum stripping, is being able to obtain the consent of note holders, creditors and banks to restructure the debt of the company.

Mr. Penikett:   I thank the Government Leader for his answer. I would like to comment that I am puzzled by his observation on power rates, since power rates were mentioned before he left for Korea. I do not remember who first raised the matter and, unless my memory has completely failed me, I recall asking the Government Leader a question about whether he had a mandate to negotiate power rates before he left for Korea - someone had indicated that power rates were an issue.

Let me ask the Government Leader a two-part question: in the meetings that will be taking place in June - at which we understand Mr. Frame will be present, and I gather from the Government Leader’s statement a moment ago, they may include Korean officials, who are here to look at Curragh’s property - who will be representing the people of the Yukon in discussions about power rates and arrangements to strip the Grum ore body?

Hon. Mr. Ostashek: As I said in the House yesterday, these are issues I will be dealing with when I meet with Mr. Frame. Mr. Frame and I will be meeting ourselves - and perhaps with Cabinet, as well - to set some parameters out for negotiations on the Grum stripping and to see what issues can be resolved.

As to who will be doing the actual negotiations on the Grum stripping, once we get to that stage, I cannot say at this time. I believe that Mr. Frame has indicated to me that they are first going to talk to the Yukon Energy Corporation in order to see what they could accomplish at that level. The Member knows the mandates of the Yukon Energy Corporation and how restrictive they are, and I have no doubt that we will have to deal with it at a higher level than that.

Mr. Penikett: Again, I thank the Government Leader for his answer on that question. Today, I got the impression in Question Period that, in fact, the questions on energy were going to be Cabinet decisions. They may inevitably have to be so, even if early negotiations went on with the Yukon Energy Corporation. We would all be interested in knowing who will actually be dealing with Curragh and the Koreans on that question.

Can I ask the Government Leader this question: in respect to the Grum stripping and the restructuring, are we likely to be represented by Burns Fry or, at this stage, are we more likely to be having discussions among principals or policy makers regarding decisions that are necessary to restart the Grum stripping and reopen the mines at Faro and Watson Lake?

Hon. Mr. Ostashek: As I indicated to the Member opposite, the first meetings will be between me and the principals of Curragh Inc. As I said, the Koreans are coming to the Yukon to do their due-diligence study. I am not aware that they are going to be part of the negotiations for the Grum stripping. I have not been led to believe that, at this point.

Once we and the Curragh officials have met and when it gets down to getting the legal text of the agreement and everything established, I am not sure whether Burns Fry will be retained to see to it or some legal firm.

Mr. Penikett: Clearly, the Koreans have stated an interest in the arrangements for the Grum stripping and, indeed, they have made their investment, I gather, contingent on some successful arrangements being worked out, so we will obviously be very interested in the progress of those negotiations and the question of who is representing our interests. In a number of statements, not just in the last couple of days but also previously, the Government Leader has indicated that the collective agreement at Faro - or at least the question of industrial peace at Faro - has been a subject of concern to the Koreans and, indeed, to this government.

Could I ask the Government Leader if he will assure the House that if discussions affecting the union and their collective agreement with the company are commenced, that the union will be brought to the table to represent their own interests.

Hon. Mr. Ostashek: I believe that the questions about the collective bargaining agreement between the unions and Curragh is an issue that will be dealt with between the unions and Curragh, not at the bargaining table with the territorial government. I expect that they will have their own vehicle and format for looking after those negotiations.

Mr. Penikett: I appreciate that. It recognizes the obvious point that a collective agreement has two parties: the management party and the employee party. In the past, some statements about the union’s contribution to a solution have been made without involving the union in the discussions. I know of the smelter company’s concerns about the security of supply; I understand that very well. We do have a different cultural and legal context for labour relations in this country than they do in Japan or Korea. I would only want to express the hope that nobody other than the elected leadership, the legitimate representatives of the union, are presuming to make arrangements or decisions for the employees without fully involving them in those decisions.

Hon. Mr. Ostashek: It is certainly not my nor this government’s intention to do that. I was just stating one of the issues that was raised by the chief executive officer of Korean Zinc when I met with him. This was a concern of theirs.

I have not entered into any agreement to be involved in that part of the negotiations. That is an issue that will have to be settled directly between the company and the union.

Mr. Penikett: It may well be that the senior executives of Korea Zinc, most of whom are educated in the United States, may have a better appreciation of the collective bargaining environment in North America than some Japanese executives who are usually educated in Japan, and have an entirely different tradition in their country.

May I ask the Government Leader if he has any appetite for a public meeting, either in Whitehorse or in Faro, with or without Mr. Frame, as a way of satisfying some of the public hunger for information about the negotiations and about the prospects for the reopening of the mines at Faro and Watson Lake and, more immediately, the potential for having the Grum stripping underway again?

Hon. Mr. Ostashek: I certainly would entertain that thought if we felt that it would be of some benefit to the players involved. I do not know what good it would be to have a public meeting unless the Curragh officials were prepared to participate.

They are the ones who are in the process of restructuring the company and have all the information at their fingertips that would be required at such a public forum. It is something that would have to be discussed with officials from Curragh Inc.

Mr. Penikett: Some unkind things have been said about Curragh Inc. and its officers. Indeed, it may facilitate some progress toward successful negotiations were that company to hold some public information sessions. That is obviously not a decision for us. However, I would like to ask the Government Leader, should the company indicate some willingness to participate in such sessions, would the government be part of them?

Hon. Mr. Ostashek: I would certainly have no hesitation in being a part of such a forum. If the company was willing to appear in public and answer questions, I am sure that we would, as a government, be represented there.

Mr. Harding: The Government Leader stated today that there have been some major hurdles in the path of getting the mines reopened under the auspices of Curragh Inc. He said that it would take the cooperation of the note holders, the banks and the creditors. We have never disagreed with that statement. We have always known that YTG was one part of the equation. However, they are certainly a major part, as indicated by the press statement released by Curragh. I believe we are starting to see some indication, at least to some degree, from the ministerial statement, that the Government Leader also sees that, when he made reference to negotiating with Curragh for the continued support of the Grum stripping. This is quite different from his ministerial statement of April 5 or 6 - the day before or after the court protection - where the loan guarantee discussions were not related to this latest announcement.

I believe, and I know our caucus believes, that they are, because it is becoming more and more apparent that there are a number of factors and pieces of the puzzle that have to fit together. Recognizing that the note holders, the banks, creditors, YTG and, possibly, the federal government are going to have to come onside, are there any plans for anything other than unilateral talks with Curragh on this? Are there any plans of the government to try and facilitate some kind of forum for the players to come together in - not just for an air clearing, but to work toward some common problem-solving approach to this.

Hon. Mr. Ostashek: I wish that I had the influence that the Member opposite seems to think that I have as the leader of the territorial government. We are a pretty small player in this game. There is a lot of money out there - a couple hundred million dollars worth. We do not have the resources to be a major player in it, and we have stated that over and over again. To this day, we do not know who the note holders are. We have no idea what their addresses or phone numbers are. Curragh has chosen to deal with each one of these entities on a one-to-one basis, not in a group.

If the Member opposite is asking me if I would be adverse to an arrangement such as that, I certainly would not, but I do not think I have the ability to put together that kind of forum, when I do not even now who all the players are. That is why we are represented at each one of the court hearings that are in Toronto, so that we know what is going on. The only approach that I see we have to facilitate this agreement now is through the CCAA. We are going to continue to be one of the players, at the table, at any CCAA hearings that go on.

Mr. Harding: The Government Leader knows - well, maybe he does not know who the note holders are - who the bank is, he knows who some of the major creditors are, he knows who the federal government is and these have all been identified by the Government Leader as major players, so I would just like to ask the Government Leader this: he says he does not have much influence and that he is just a small player, but has he made requests of any of these groups, other than the federal government, which basically said no in the past to this situation, for some kind of a way to facilitate discussion with these people? He has said that he does not think it would happen, but has he asked?

Hon. Mr. Ostashek: No, we have not asked because I do not think we are in any position to ask for that kind of a forum. The fact remains that, as I say, this is under the jurisdiction of the courts now and anything that transpires will be settled by courts. No matter what happens with the company now, they need approval of the courts and, when they go back to the courts on June 2, one of the issues the company has to deal with is to get approval for operating capital for the month of June. We will be represented at that court hearing on June 2, but we get our information about what is going on through Burns Fry, who, along with Fraser & Beatty in Toronto, represents us at the hearings. Until all the players are ready to put together a package to rescue Curragh, that cannot happen.

Chair: Order please. The time being 5:30, we will recess until 7:30 this evening.

Recess

Chair: I will now call the House to order.

We are dealing with Bill No. 6. Is there any further debate on Executive Council Office?

Mr. Harding: I hope the Member for Riverdale North will permit me to engage in some questioning.

Before the recess, I was asking the Government Leader about his plans to facilitate some kind of a forum for the major players in this situation to have an exchange. There was some regret expressed by the Government Leader. He did not feel that they had enough stroke to pull this off, even if they wanted to. Also, the Government Leader said that he had not asked for it, but did not think that was possible, seeing that things were in the hands of the courts. They were represented in CCAA hearings, as a creditor, I assume, for the $5 million loan in Toronto by Fraser & Beatty and Burns Fry.

Could the Government Leader share with us some of the advice that these organizations have provided to the government, or some indication as to what is on the minds of the banks and the creditors who show up at those meetings? What is the Government Leader’s feeling regarding obtaining some kind of a positive reaction from the stakeholders at the June 2 meeting, and what would give them enough positive signals to want to see the mines continue to operate, in the hope that they would regain their investment?

Hon. Mr. Ostashek:  The Member opposite is asking me to speculate and it is very difficult for me to do that. The company is under CCAA, during which they have the ability and the time to restructure their debt to the satisfaction of the note holders, the banks and the creditors. Alternatively, they can be petitioned into bankruptcy.

It is basically in the hands of the creditors, the banks and the note holders.

Mr. Harding: Surely, the people that the government has working for them, Burns Fry and Fraser & Beatty, have made some representations to the government. I am not asking the Government Leader to speculate, I am asking what indication they may have given the Government Leader regarding the feeling of those players I would assume that they all had representatives at the CCAA meetings last month and probably will this month.

Hon. Mr. Ostashek: There is no doubt that they all have representatives at the meeting, but most of those representatives are lawyers. That is why we do not know who the note holders are at this point. Everyone is trying to protect their own interests while waiting for Curragh to come up with a restructuring plan so that they can come to some decision.

Mr. Harding: Would the Government Leader agree that the $50 million equity injection is at least a major part of a positive signal that would allow the creditors, note holders and the bank, who are creditors, to be on side and continue the process of restructuring?

Hon. Mr. Ostashek: As I said, I guess we will know that on June 2, when they present this to the courts. The Member is fully aware that they have an agreement for a $50 million equity investment in the company. The fact remains that that only covers about 25 percent of their debt.

Mr. Harding: Let us talk a little bit about that debt. When he was in Korea, were there some discussions with Korean investors about the debt load? What is Curragh’s current asset value?

Hon. Mr. Ostashek: I do not have that figure in my head. I am not sure that I know exactly, but I could probably find out for the Member opposite and give him a best guesstimate of what people think the asset value is. I believe, from the tone of the press release that was put out by the Curragh officials, that restructuring is part of the terms and conditions attached to the $50 million equity.

Mr. Harding: The Government Leader can see, then, that, while it is one thing to talk about the debt load, it is also important to compare the relative asset value of the corporation. In terms of whether or not they are going to be solvent or insolvent, when one talks about debt load it makes a big difference what their asset value is.

Hon. Mr. Ostashek: There is no doubt, but I am sure the Member opposite is fully aware that their asset value is nowhere near the debt load.

Mr. Harding: That is one of my concerns. I am trying to understand the exact value of their assets because it does make a big difference.

Have there been any discussions with the Korean people or with Curragh that the Minister could make us aware of regarding the worry that the sale of the Stronsay project may have a severe impact on the asset value that Curragh Inc. has? To me, it would seem that one of the reasons they would be hanging on to that asset as long as possible would be to keep their asset value up, which, if they did not, could probably push them closer to an insolvency situation.

Hon. Mr. Ostashek: I have no idea on that. The Member is fully aware that the asset value of an ore body is something that is open to question. As to how much value there is in an ore body, different figures are put on it by different people.

Mr. Harding: Correct me if I am wrong, but I think I can remember at one time the government making a statement regarding their value or their perceived value, their best guess, on the Stronsay project. Could he tell us what that value is?

Hon. Mr. Ostashek: I do not believe we have ever quoted what we feel it is. We have repeated what we have been told different individuals say they would be able to get for it - it runs anywhere, I believe, from $10 million to $75 million.

Mr. Harding: I am looking at the ministerial statement where he mentions negotiating with Curragh and at the press release. I get the impression from the government that they feel they are a small player. There was a metals analyst interviewed on the radio today who discussed the feeling within the industry regarding the situation affecting Curragh as a result of yesterday’s release. He seemed to feel that the Yukon government’s participation was critical in resolving this, both for restructuring the company and getting other parties on side, such as banks, note holders and creditors. How important do they feel, having been in Korea, government support is for power rates and Grum stripping? What is the priority in terms of the conditions laid down by the Korean company?

Hon. Mr. Ostashek: I have no idea what the priority is.

Mr. Harding: How could the Government Leader, who went over and met with these officials and issued a press release on it, say that he did not discuss these conditions with the Korean company? Did he not discuss with the company about the power rates or the level of support for the Grum stripping?

Hon. Mr. Ostashek: I have been repeating myself time and time again on the Curragh issue. We are now on the Executive Council debate and we are talking about a matter that is under CCAA protection and the Member is asking me to speculate. I am not in a position to do that. We have covered all the bases and I do not know what more the Member wants me to say about Curragh as it pertains to the Executive Council Office.

Mr. Harding: How was the trip to Korea financed? From what department was it funded?

Hon. Mr. Ostashek: If we want to talk about the financing of the trip, we can certainly talk about that.

Mr. Harding: Was the Korean trip funded by the Executive Council? If so, I think that we have every right to ask questions about the purpose, the results, what was learned, what position the government took, and was it a worthwhile expenditure - I think those are fair questions.

Hon. Mr. Ostashek: I made a report to the Legislature. Let us get going.

Mr. Harding: My goodness. I am asking questions because our time in this Legislature -

Some Hon. Member: (Inaudible)

Chair: Order please.

Mr. Harding: I am really sorry I am getting under the skin of the Government Leader and the Government House Leader, the Member for Klondike and Members opposite. It is really unfortunate that the government does not feel that an expenditure for a trip of this nature, paid for by this department, does not deserve some questioning. These are not the same questions. I am asking them in relation to the expenditure made for the trip to Korea.

I just asked the Government Leader if, in his discussions with the Koreans on the trip he took, paid for through the Executive Council Office funding, there were no discussions with the Koreans regarding the Grum stripping or the power rates. Is that what he is saying to me?

Hon. Mr. Ostashek: I have reported on my trip to Korea to this House. The Member keeps asking the same questions, over and over again. I said the discussions that were entered into in Korea were of a very general nature. There were no negotiations going on in Korea.

Mr. Harding: Of a general nature, what priority does the Government Leader feel the Grum stripping conditions and the powerage conditions have to the successful conclusion of securing an equity injection?

Hon. Mr. Ostashek: I believe there are other issues that are of a far higher priority.

Mr. Harding: I know, from the government’s action so far - their inaction, fumbling, bumbling and messing up of this entire situation - that a 16.4 percent unemployment rate in a community that has been devastated, and a territory that is taking an unprecedented kicking is not that important. I know the Government Leader obviously does not feel it is that important, otherwise he would not mind answering some questions. Our time in this Legislature is running out. When we get a chance to ask these questions before we adjourn for a long summer, we, on this side of the House, in our caucus, want to have a clear feeling that we are leaving this problem in the hands of people who are committed to seeing it through and getting a deal, if there is a deal to be done. So far, I cannot speak for this entire side, but for our caucus, we really question that that is the case.

I do not think the Government Leader is being fair or reasonable by saying there are other more important issues to be dealt with.

It is certainly a serious issue with this side. This expenditure and trip to Korea was something that we felt was a very positive step. We applauded the action. We thought it was good of the government to make this trip. We were a little worried about the position they took. We did not mind the expense because we thought it was worthwhile if it would be productive in getting the mines open again.

Now we would like to ask a few questions about it, and we go into another one of these evenings where the Government Leader will not answer the question, so then I will get up and I will ask it again, and then the Government Leader will stand up and he will not answer the question, and I will get up and ask it again. I will, because I am just trying to find the answers. I will not be bullied. I am here; I was elected by my constituents to ask questions. This is a Korean trip paid for by the Executive Council Office. I want to know what went on. I am asking questions about it, and I will continue to do so. If the Government Leader chooses not to answer, that will be his prerogative, but this will be a long evening.

I would like to ask the Government Leader which questions were put to him, or what representations were made to him, regarding the priority of the power rates - “competitive” was the word that was used - and what priority was given, in some respect, to the Grum stripping by the Koreans as a condition of their $50 million equity injection.

Hon. Mr. Ostashek: I already answered the question. They did not priorize them for me.

Mr. Harding: Based on his feeling of the discussions, what was his feeling of the priority that was attached to them?

Hon. Mr. Ostashek: That is a hypothetical question. I have already answered it. I said that I felt that there were more important issues than power and Grum stripping at this point.

Mr. Harding: Can the Government Leader tell me what those are?

Hon. Mr. Ostashek: If I have said it once in this House, I have said it 100 times - it is the CCAA.

Mr. Harding: Specifically, with regard to the CCAA, what does he feel are the more important issues to overcome?

Hon. Mr. Ostashek: The Member is asking me to speculate and I am not about to do that.

Mr. Harding: That is ridiculous. He just made the statement, but he is not prepared to back it up. When he gets into those situations, he says that it is hypothetical. Perhaps the Minister should grab a dictionary and look up what “hypothetical” and “speculation” mean. He obviously does not know.

Some Hon. Member: (Inaudible)

Mr. Harding: The Member for Riverdale North says that he is going to leave because he does not want to sit here and listen to this. That is really too bad, Mr. Chair, I will miss him.

With regard to the discussions that took place with the Koreans, was there any discussion between the Government Leader and the Koreans about stripping of the Grum deposit or a timetable?

Hon. Mr. Ostashek: No, there was not.

Mr. Harding: There were some issues raised today during Question Period that caused me major concern. They were regarding the fact that the government had made a commitment that the people who live in Faro and who have worked hard in building up the mine possibly may not be working on the Grum stripping project. Could the Government Leader tell us his position on that?

Before the Government Leader answers that question, I would ask him to consider that there are some people in Faro who have been laid off for six months, and if people from outside of Faro come first and foremost, while Faroites who live in the community are still laid off and have no jobs, I would ask him to consider the effect on the community. What is his position on that at this time?

Hon. Mr. Ostashek: That is an issue that will be worked out between Curragh Inc., the union and the contractors.

Mr. Harding: Does the Minister understand the feelings that would create in the community? Is the Minister aware that situation would create a tremendous amount of tension and probably would not be a very good situation, and would lead to severe, high emotions?

There are hundreds of people, even considering the number of people who have left Faro, who are really hoping to work on the Grum stripping project. If people from outside of the community come in and go to work, it would create a lot of torment within the community.

I know that the Government Leader has told me that will be worked out among the union, the contractors and the company, but does the government not feel that should be an area that they should consider when they negotiate with Curragh?

Hon. Mr. Ostashek: It may be. We will look at it when we are negotiating with Curragh.

Mr. Harding: I have made those representations to the government. They do not appear to be overly fond of the union local in Faro, but there is more to it than that. There are families and people there who are off work. They are used to working for months and months. I would like to make the representation to the government that they consider that in their negotiations.

They said today that they would encourage the hiring of Faroites, but it will be an explosive situation if, first of all, the employees are not doing the work and, secondly, if there are people brought in from outside Faro first, while there are still people on layoff. Certainly, no one minds other Yukoners working at the Faro mine, but when there are still people in the direct community not recalled when there is work, it will present a very volatile situation.

There were some comments made in Question Period by the Government Leader, as well as on the radio this morning, regarding the labour union in Faro and the Korean companies worrying that they would really loathe the thought of investing in a company that would be hit by a labour dispute. Could the Government Leader tell me a bit more about the context of the discussion that went on, and exactly what the feelings of the Koreans and the government are on that?

Hon. Mr. Ostashek: That is another one of their concerns.

Mr. Harding: What exactly concerns them about it? Do they feel that Curragh has a very poor labour relations record? Do they blame it all on the workers? What is the context of the discussion that went on? It is fine to say that it is one of their concerns, but what are they looking for? Are they looking for long-term stability in the labour force? Did they indicate what length of a collective agreement they might like?

Could the Government Leader be a little bit more specific?

Hon. Mr. Ostashek: As I have told the House, I was not party to the negotiations between Curragh and the investors. It was an issue that was made known to me in a private meeting with the chief executive officer.

Mr. Harding: The CEO of Curragh or Korea Zinc? Did the Government Leader sound out concerns about prioritizing or ask about concerns about prioritizing  what conditions are important? The Government Leader has told me that he could not tell me what priority the Grum stripping and the power rates are other than to say that he felt there were other, higher priorities, like the CCAA. Was there any indication as to what priority this corporation would give long-term labour stability?

Hon. Mr. Ostashek: It was a major concern of theirs.

Mr. Harding: He has just characterized this as a major concern. Would he characterize the request for power rates and some kind of financial support for the Grum stripping from YTG as a major concern?

Hon. Mr. Ostashek: I think all their concerns are of equal weight and value.

Mr. Harding: That is interesting. I do have a major concern about that. Some negotiations went on between the company and the union prior to the March 4 announcement to extend the loan guarantee. They were quite combative. It did not work out very well. Things were moving toward an agreement and going fairly well, but they kind of broke down abruptly. I stayed in close communication with the company and representatives of the local union, trying to facilitate, as best I could - on thin ice basically - some kind of an agreement. I was not particularly successful because there were strong feelings on both sides about issues such as job security, contracting out and, not so much wages, but job security and protection from layoffs and that type of thing.

I feel there was a bit of a lesson to be learned there and, if we all want the same thing and the Government Leader feels there it is a major concern of these investors to have some long-term labour stability, I suggest we take a look, collectively, as government and as a union and as a company, at the way the last situation went and try to come up with a solution to that problem.

I would suggest to the government that one of the reasons the last attempt at an agreement failed was because there was a lot of unilateral discussion. As the Minister is well aware - and he said this of his own volition - Curragh has chosen to negotiate unilaterally with the different parties. He said today that he did not feel the union would be privy to any of the discussions surrounding the loan guarantee.

I would suggest that, as the government would be concerned about their loan guarantee, they would want to know what the note holders are going to put up, what the banks would put up and what the other creditors would put up, and the union would want to know what the government was doing, what Curragh was doing, and what everybody else was doing.

Has there been any further thought given to that by the government as a way of looking at a situation where we could have some helpful impact on the outcome of a more stable labour force, with a lack of labour disruption in Faro?

Hon. Mr. Ostashek: At this point, no, there has not.

Mr. Harding: Let me just say, by way of a representation to the government, that I find the hostility I face with this questioning very disappointing. I do not think it is justified. I am trying to make some representations. I know I am a young upstart and whipper-snapper and do not know what I am talking about, but I am trying to say a few things to the government. I hope they are listening and not just being so hostile that they do not even pay any mind to it.

I think it is really important. If it is a major concern of the Koreans, it is a major concern of mine. If it is a major concern of the government, it is a major concern of mine. If there is a way I could help to try to facilitate this, I would be more than glad to do it, but if I do not get any cooperation from the government, or if they have no respect for any of my views, it does not make it possible to have any input. I do have a fairly good working relationship with both the company and the union, and I think I could be of some use there. It is a tough problem. That is what I am trying to tell the government.

When we first started this situation, way back when, I can remember the Government Leader asking me if I had any connections within the union that could possibly lead to helping to come up with an agreement there. Another Minister also asked me. I had the Member for Riverside ask me. I said, yes, I do, and I have talked to them and I have tried to be a facilitator.

The Member for Riverdale North is accusing me of filibustering. Why on earth would I be filibustering? It is 24 degrees out there. There are a lot of places that I would rather be than here in this Legislature tonight. Unfortunately, I have a duty to my constituents and to the Yukon. Fortunately, I have the opportunity to ask questions on their behalf. I will continue to do that. The Members can accuse me of filibustering all they want, but I do not think it is. I will stand here, and I will ask these questions. I would rather be on my verandah enjoying a barbecue right now, and perhaps a couple of ales, but I am not there, because I am in here asking questions, because I think that it is my job.

Some Hon. Member: Try and ask something about the ECO, because that is what we are on.

Mr. Harding: I am asking questions about the Executive Council Office. I am asking about the problems that we are having with the deliberations made by the government regarding its return from the trip to Korea and trying to sort out the pieces. It has certainly been a fairly difficult task. This is the first opportunity that we have had in the ECO to really explore it, other than in Question Period. Question Period is not really a good forum for getting to the bottom of things, because you only have a limited amount of time to do it. You get a set of three questions, and it is quite difficult at times to explore the depths and the annals of the thinking of the government. Today, we -

Some Hon. Member: (Inaudible)

Mr. Harding: It may be August, if the Member for Riverdale North keeps interrupting my train of thought.

I can assure the Member for Riverdale North that, whether or not I had constituents in the gallery or not, I would be asking these questions, because it is my job as the elected representative of Faro.

Some Hon. Member: (Inaudible)

Mr. Harding:  I do not know about nausea. Sometimes I get nausea when I hear the Member for Riverdale North speak, but that is another subject.

The Government Leader does not seem too fond of discussing the subject of unions with me, and the relationship with the workers in Faro. He does not seem interested in talking about the contracting-out situation in Faro. Also, since he does not seem too interested in telling me about what happened in discussions with the Korean group, I will move onto this subject.

The ministerial statement said that, “Toward this end, the company will be attempting to raise an additional $25 million in new equity. At the same time, the company will be continuing to work with its creditors and note holders, with the federal government,” and so on.

Could the Minister tell me something more about the $25 million? He said foreign companies. I read today in the paper that it was perhaps an American company. Can the Minister tell us who told him about this $25 million, and where it would be coming from?

Hon. Mr. Ostashek: The Member opposite seems to be a little perturbed in saying that Members on this side of the House are not paying attention to him. If the Member had anything new to offer to the debate, after three months of the same repetitive questions that he is asking again tonight, maybe we would pay a little more attention to what he has to say. We have heard everything that he has had to say before - time and time again - and he has added nothing new to the debate. The Member is filibustering; that is all he is doing.

The Member knows as much about the $25 million as I do.

Mr. Harding: I am not even going to respond to the filibustering accusation; we have gone back and forth on that subject in the supplementaries, the main budget and in everything else that we have tried to do.

It seems funny, whenever we ask questions of this government, they accuse us of filibustering. You know what happens when we ask questions of this government - we find big problems in what they have said; we find big problems in their policy - whether it is a lack of policy, too much of it, or the wrong policy - so we will continue to ask questions.

It is not filibustering; I have nothing to gain by what is commonly referred to as “filibustering”.

I am sorry that I do not have a lot of new questions for the Government Leader. I wish to God that I did; I really do. I wish to God that I was asking whether there was going to be new mine opening in the Yukon along with Faro and Sa Dena Hes, and I wish I could ask questions about mineral development and exploration. I wish I could ask about renewable resources and all kinds of other questions, but unfortunately I cannot because I have not received any new answers. When I do not get any new answers, then I have to keep asking the same questions again. I do not think they are the same questions; basically, they are the same questions with a new twist to them - there is a new twist because we have new information.

The Government Leader has jaunted off to Korea and spent some time with some wealthy investors and spent some time in discussions with Curragh Inc. - high-level discussions about the future of the mines in the territory.

I think that it is imperative that we seek answers, given the new information. It is unfortunate that questions have to be the same sometimes, but as I said before, no new answers means no new questions.

The same problems still exist, the mines are still shut down, my community is still devastated and tormented. There is no real hope and it is imperative for the people who do have some hope, as a result of the announcement yesterday, that we engage in some good exchange and find out some of the thinking and reasons behind the trip and what went on during the trip.

That is an important aspect of what we are doing here tonight.

The Minister has said that I know no more than he does about the $25 million, yet he has made the statement that the $25 million is from foreign investors, which could present a problem with the federal government. He has also indicated a problem with the Free Trade Agreement. Could he go into a little bit of detail as to what the reasons are? I do not know that there was a $25 million investment from foreign investors. Could he tell us how he knows it comes from foreign investors? Is it Korean, American or from some other Asian country? Also, how is the Free Trade Agreement going to impact the situation between Curragh and YTG? Could he give us a rundown on that situation?

Hon. Mr. Ostashek: The Member opposite said that he read the paper tonight and saw it there. It states that the CEO of Curragh said that he was looking for $25 million in the United States.

Mr. Harding: I thank the Member for his detailed answer on that.

Since he did not see fit to answer my last question, could he tell us exactly how he feels that the Free Trade Agreement could impact on this problem? I did not read that in the paper today.

Hon. Mr. Ostashek: I have already stated in this House - and the Member opposite should be aware of it - that any investment of over 50-percent control has to go through the Foreign Investment Review Agency.

Mr. Harding: There have been two problems outlined: one on foreign investment and one on the Free Trade Agreement. Are the concerns there one and the same, or are they two separate concerns? If so, could he tell us how they differentiate?

Hon. Mr. Ostashek: If there is foreign investment by the United States, it would have to do with the Free Trade Agreement.

Mr. Harding: Perhaps the Government Leader could explain that. It is my understanding that the Free Trade Agreement allows for the free flow of capital between countries. Is that not the Government Leader’s understanding of this aspect of the Free Trade Agreement?

Hon. Mr. Ostashek: The Member is right and I am sure that the Member opposite is also fully aware that if a company is subsidized there could be countervailing duties on ore going to the United States; it would cause a problem.

Mr. Harding: This is a different can of worms than capital investment and the Foreign Investment Review Agency. This is a discussion on subsidies, which is something quite different. I can see clearly now how it would probably have some impact on the Free Trade Agreement. Could the Minister elaborate on which subsidy he is referring to? Would it be some sort of government assistance for the Grum stripping, a power rate subsidy or would it be a combination of both?

Hon. Mr. Ostashek: Both.

Mr. Harding: Has the Minister sought out any advice as to whether or not we have the potential for a doable deal and, if he has received advice on it, could he tell us what that advice was?

Hon. Mr. Ostashek: No, I have not.

Mr. Harding: I can appreciate that the government has said that they plan to wait until June 2 before they do anything but - I certainly feel they have been waiting a long time to do a lot of the things that need to be done - in the meantime, regarding subsidies and foreign investment, is the Government Leader saying now that they will not be doing anything to seek the potential to proceed with arrangements until after the court dates? Is that what he is saying?

Hon. Mr. Ostashek: The Member is putting forward a hypothetical question again.

Mr. Harding: It is only hypothetical in the sense that I am asking the government what they plan to do. Certainly, in light of the evidence and in terms of the action they have put forward, that could very well be a hypothetical question but in this case I do not believe it is. We want to explore what the plan of the government is about this, in light of the trip to Korea and the new information that has been brought forward. We are extremely interested in the planning process that is underway right now upstairs as the brain trust devises their strategy and their game plan and get around the chalkboard and decide what is going to be done next in this situation. Will the government be having any discussions with the federal government regarding this foreign investment, and will they be having any discussions with the federal government regarding potential violations of the Free Trade Agreement if indeed this Grum stripping assistance comes through?

Hon. Mr. Ostashek: If and when the situation arises, we will deal with it.

Chair: Order please. I am getting signals from both sides of the House that we should take a brief recess at this time. Are you agreed?

Some Hon. Members: Agreed.

Chair: We will take a brief recess.

Recess

Chair: I now call Committee of the Whole back to order. We are on the Executive Council Office.

Mr. Harding: I have a couple of questions for the Government Leader regarding the trip to Korea.

Since Question Period today, he has had some time to think about some of the questions asked by the Member for Riverdale South, which I thought were very good questions regarding planning if there is an extension granted on June 2. I also think it probably would be interesting to note what the government’s planning is for a worst case scenario if there is no favourable extension given on June 2. What is the government planning specifically with regard to the power rates situation in either scenario - whether an extension is given or is not given?

Hon. Mr. Ostashek: That is up to the Public Utilities Board.

Mr. Harding: I find that interesting, after the government said today it was going to be a decision of Cabinet. Is the Government Leader now saying the decision will not be made by Cabinet?

Hon. Mr. Ostashek: We will deal with that issue when we are approached.

Mr. Harding: Approached by whom? It is my understanding that the Korean company made some representation to the Government Leader. Is that not true?

Hon. Mr. Ostashek: No, that is not true. They just said it was a concern of theirs.

Mr. Harding: Correct me if I am wrong, but the Government Leader said they identified a specific number for what would be considered competitive. Is that not true?

Hon. Mr. Ostashek: The number has been talked about between Curragh and Korean Zinc.

Mr. Harding: I have the benefit of having a couple of copies of the Watson Lake News in front of me, and a couple of articles by the MLA for Watson Lake regarding the Curragh situation. One is an attack on the NDP Opposition for questioning the conditions and first charge on security, which I would dearly love to go through, item by item. Depending on what I hear from the government, I will make the decision on whether or not I do that.

Regarding first charge on security, what went on in Korea in discussions with the Korean companies and the comments by the Government Leader that he felt that they were not a major player in this or, at least, that there were other more important priorities by the Koreans than their support on the power rates and Grum stripping, could he tell us how the government feels? If they are not that important to the situation, could he tell us why they would be likely to receive a first charge on security?

Hon. Mr. Ostashek: We will deal with those issues when we are negotiating with Curragh.

Mr. Harding: Since we are not getting anywhere this evening, it is tough for me to resist the temptation to go through each of these on a one-by-one basis. I may have to do it at some later point in this session - in July, or something. I will forego my questioning this evening. The hostility I face from the government is disconcerting. I hope they will see their way through the fog and come to some resolution on this issue.

I have no more questions on general debate.

Mr. Penikett: I am not particularly well-connected in these quarters, but I believe that the Member for Faro’s place in heaven is assured by the fact that he has resisted temptation.

Can I just say to the Government Leader that I am grateful for the detailed responses that he has tabled to the questions that I asked on May 17. For the record, I want to say that I do not agree with all the answers, but I am grateful for them. Having said that, I would like to move that the line-by-line debate on the Executive Council Office be deemed to be read.

Chair: Is there unanimous consent?

All Hon. Members: Agreed.

On Executive Council Office line items

On Federal Relations Office

Amendment proposed

Hon. Mr. Ostashek: We have an amendment to the line by line. We have one amendment to the operation and maintenance estimates and that is:

“THAT the estimates pertaining to Bill No. 6, entitled First Appropriation Act, 1993-94, be amended in Vote 02, Executive Council Office, by reducing the line item Federal Relations Office, on page 26 in the operations and maintenance estimates by $31,000; and

THAT the clauses and schedules of the bill be amended accordingly.

Amendment agreed to

Federal Relations Office in the amount of $131,000 agreed to as amended

Chair: It is my understanding that Members have agreed to carry all lines, sub-totals and totals in Executive Council Office capital estimates, operation and maintenance estimates.

Executive Council Office agreed to as amended

Department of Finance

Chair: We will continue with general debate on finance.

Mr. McDonald: There are probably a fair number of things that I would like to discuss in Finance, although I will limit myself to a few topics.

What I would dearly love to talk about are some of the questions respecting the financial position that the Minister tabled today regarding last year; of course, that is not in order at this point. However, I will not let this session pass without asking a lot of questions about that.

There are a number of questions that were outstanding from the previous discussions that we have had in Finance.

I would like to ask the Minister a number of questions about the calculation of the operating grant for 1993-94. I regret that I was unable to have a meeting with the deputy minister but I do have questions about it. I will ask the Minister now, on the record, what his thoughts are.

First of all, could the Minister indicate why, in the calculation of the operating grant, the worst case and best case scenarios listed in the handout the Minister has tabled in the past - or as were provided by the deputy minister - why the main estimate projections do not rank in between the best and worst case scenario? For example, for the income tax revenues and for revenues and recoveries under unadjusted revenues, why do these calculations not rank between the best and worst case scenarios?

Hon. Mr. Ostashek: I will try to clarify that. Is the Member opposite asking why the main estimates do not rank between the worst case and best case scenario in the paper that was handed out? Is that the question?

Mr. McDonald: That is correct.

Hon. Mr. Ostashek: I do not know if I am referring to the same paper as the Member opposite, but the one I have shows worst case main estimates and best case - the main estimates being at $278,401,000, the worst case being at $256,299,000 and the best case being $339,401,000. The mains seem to fall in between the worst case and best case.

Mr. McDonald: I would ask the Minister to let his eyes glide up the paper; when they reach income tax revenues, for example, which is about mid-way up, the Minister will see that the worst case scenario is $30,538,000, the best case is $26,838,000 and the main estimates show a projection of $31,898,000.

Hon. Mr. Ostashek: My understanding is that it is because of the way the formula works. The best case would show a lower income tax revenue. The less income tax we make, the more we get in transfer payments from Ottawa, is my understanding.

Mr. McDonald: No, I understand that. Even though it is not perfectly consistent with the Conservative ideology, I understand why one might characterize that as the best case. What I do not understand is why the main estimates do not fall within the worst and best case.

If one looks at the income tax revenue as the worst case, it is $30,538,000. Presumably that is the worst case, because the more money we get, the less we get in terms of the transfer payment. The best case is the less money we get, the more we get in terms of the transfer payment.

Why is the main estimates figure not between the worst and best case?

Hon. Mr. Ostashek: It is because the best case is being calculated on the total grant, not just the individual revenues.

Mr. McDonald: That does not clarify anything for me. I do not understand what the Minister is saying. Could he please explain it a little more clearly?

Hon. Mr. Ostashek: Perhaps I can explain it to the Member this way. The document that he is referring to shows the best case and the worst case based upon the grant. It has nothing to do with the individual figures in between.

Mr. McDonald: I am sorry, that does not help me. I understand what the worst case and best case scenario refer to. I understand why they are calculated in a particular way. Presumably, when one refers to worst and best case, they make it clear that that is the spread of possibilities. On a number of the projections in the main estimates, the figure does not fall within the spread between worst and best case.

What the Minister has indicated to me does not explain anything. I really regret that I did not have the meeting with the deputy minister. I will ask a couple more questions, but we may have to fall back on the meeting with the deputy minister. Could the Minister give it another shot, please?

Hon. Mr. Ostashek: We will try one more time. The reason that they do not match is because, in the main estimates, we have the taxes calculated with the new rate increases we put in in the Yukon. Where they are not in this figure they were doing the grant adjustment for, it shows you where the total grant fell in between the best case and worst case scenario.

If that is not clear to the Member opposite, perhaps we can ask him to meet with the deputy minister and, at the same time, he may be able to answer questions on the paper that was issued this afternoon. I am certain he would be happy to answer any questions that the Member opposite would have on that paper.

Mr. McDonald: I do have an fair number of questions on that paper, and I will certainly put those questions to the deputy minister. I have a whole series of questions and, rather than go down the list, as I do not think it will be a particularly productive expenditure of time, I will just ask about a couple of things.

Firstly, the census and undercount adjustment for September 1993 shows a projection of $5.9 million - this is the bottom line, just above the grant calculations. The worst case scenario shows a reduction of $3.3 million, and the best case scenario shows an increase of $21 million. The deputy minister, during the Public Accounts Committee hearings on Consulting and Audit Canada, suggested that we could expect something between $7 million and $15 million in this fiscal year. This appears to be a fairly pessimistic projection of the grant calculation. Can the Minister indicate what the rationale is for the pessimism on this line item?

Hon. Mr. Ostashek: Once again, this is a technical question that the Member opposite has asked me. My understanding is that it is because of the way that the undercounts will be calculated. Apparently in 1986, they did not have an undercount. There is some leeway in how they are going to address it. That is why there is the wide discrepancy in the range of figures.

Mr. McDonald: I think that I do understand, to an extent, the discrepancy in the way that people count population here. I understand that what matters is not how many people are actually here, but the changes in the numbers as they were calculated a number of years ago, and how they are calculated now. As long as the methodology is the same, it is the change that counts.

I am just wondering, given that reality, why the fluctuation runs in the neighbourhood of around $23 million, and why we are particularly pessimistic on that point. If the Minister cannot answer that, I will reserve the question for later.

There is a line item just above that called “Budget Adjustments”. This has been fondly referred to in negotiating years as the negotiating reserve, meaning if you do not get what you think you can get through negotiations, you reserve a little bit of money in order to account for failure to live up to your expectations through negotiations. Given that this is not a negotiating year, what is the rationale for an almost $5 million reserve?

Hon. Mr. Ostashek: It has nothing to do with negotiations. It is just money that is held back in case the escalators vary. The Member is right; it is just a little reserve to cover ourselves in that instance.

Mr. McDonald: I know that it is not a negotiating year, but I am aware that this figure is a very subjective figure. I am wondering why it is this high. I will ask the question later.

I will get into something that is probably a little more general. That will allow us to participate a little more on a politician-to-politician level. Can the Minister indicate what happened to the amount of money that was booked to pay for hospital charges that the federal government was levying on the Yukon, which were held in abeyance pending the final approval of the hospital transfer negotiations. The Minister of Health and Social Services indicated that at one point he thought that it would be written off. Can the Minister indicate what his understanding of the situation is?

Hon. Mr. Ostashek: I understand that it is still sitting on our books as a liability.

I just want to add, for the Member’s interest, that the $4.5 million reserve that the Member sees as excessive has already been used up because of the tax effort factor.

Mr. McDonald: I was going to ask about the tax effort factor, as a matter of fact, because I see that the worst case scenario for the tax effort shows it at 1.48; the main estimates show it at 1.48; we have just raised taxes and there is no change, so I am wondering what the rationale for that is.

Hon. Mr. Ostashek: My understanding is that, when we raise taxes, it does not affect the tax effort factor because that is on a provincial basis.

Mr. McDonald: I do not understand the answer. I will have to ask the deputy minister.

Mr. Cable: I just have a few questions. The Public Sector Compensation Restraint Act we passed this afternoon, with the $800,000 - is that found somewhere in these estimates?

Hon. Mr. Ostashek: That will not show up as one figure. It will be what was budgeted in each department.

Mr. Cable: But the budget did, in fact, reflect the savings that were contemplated by the Public Sector Compensation Restraint Act, is that not correct?

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

Mr. Cable: The Government Leader was good enough to provide me with a series of calculations relating to best case and worst case scenarios that were referred to by the previous Member who spoke; they relate to revenues. Over the course of the last six or eight or 10 or 12 or 14 weeks, whatever it has been, we have talked about a number of lapses and changes in the budget on the expenditure side. Has the Government Leader, with his Finance Minister’s hat on - along with his department officials - worked up a best case and worst case scenario on the expenditure side?

Hon. Mr. Ostashek: My understanding is that there have been some done, but only in relation to the mine at Faro closing.

Mr. Cable: There have been a number of questions asked over the last few weeks about changes in the budget. I have not seen a consolidated figure that reflects all of what I assume are the admitted changes or admitted lapses. I think we have had some admissions to the effect that there will be very substantial changes in the Community and Transportation Services budget, for example. Have those been compiled somewhere, so that they can be tabulated and released to the Members for review?

Hon. Mr. Ostashek: If I understand the question correctly, that would pertain to the supplementaries. They will be wrapped up in the document that I tabled in the Legislature this afternoon. All the lapses that have come back in have been calculated and accounted for. They would have been in the document I tabled this afternoon during debate.

Mr. Cable: These, with respect, were changes that have come out of debate and relate to the current fiscal year. I think there have been some changes. The hospital is one. That, of course, zeroed itself out. However, I think some changes have arisen as a result of questions that were put to the Community and Transportation Services Minister on, for example, subdivision development.

Hon. Mr. Ostashek: None of those have been taken out of the main estimates. They are still there. I am not sure what figures the Member opposite is referring to. The only changes to the main estimates will be the amendments that we are bringing forward during the line-by-line debate to offset the phasing in of the new taxes.

Mr. Cable: Perhaps I am ploughing some pretty difficult ground, but it is my recollection - and, oh, to have a photographic memory, I suppose - that there have been anticipated lapses admitted to by the Minister of Community and Transportation Services, for example.

Hon. Mr. Fisher: I believe what the Member opposite is referring to is the land development budget, where there is something like $21 million budgeted for land development. On the other side of the budget will be the same amount of money budgeted as a recovery.

We have talked about reducing the amount of land development that we need to do. In fact, it may be that at the end of the year we will have only completed, for instance, $10 million. As a result, the recovery will also show $10 million.

Unfortunately, in the land development budget, there are huge lapses every year. However, it does not actually show up as surplus monies or anything else, because it is on both the expenditure side and the recoveries side.

Whatever we expend in lands, we also put in as a recovery.

Mr. Cable: Perhaps it is no more serious than the 911 number, which we have addressed fairly extensively. I thought there were a number of those items, similar to the 911 budget item, that did not have an entry on both sides of the statement.

Let me ask the question: are these unbalanced changes - those are changes that do not have a corresponding recovery item - minor in nature, or are they fairly significant?

Hon. Mr. Fisher: There are two that we are aware of at this time in Community and Transportation Services budgets, one being the 911 number, where there will likely be some expenditure this year. There will also be some monies carried forward, so I am not sure if we are going to be short there or not. There was supposed to be $200,000 budgeted, and that was missed in the main estimates.

The other major one is the Dawson City water and sewer. That was budgeted as $1.00 and, after negotiations, it looks like we are going to have to come up with $1.8 million. That will show up in the supplementary budget as new money.

Mr. Cable: I would like to go over this document, which was given to the House this afternoon, on last year’s financial statements, not with a view of revisiting the supplementary estimates, but with a view to determining our opening balance sheet for the present year. That opening balance would tell us how much surplus is available to dig into, in lieu of tax increases, or how much has to be made up at some juncture in the future.

On the first page, the bottom paragraph starts by saying that the projected deficit currently on our books of account is subject to change for a number of reasons, and it outlines five reasons.

I wonder if the Government Leader could indicate a range of numbers, best case and worse case scenarios, that would play on that $20 million shown as the balance sheet deficit, and indicate whether or not that $20 million is close to the worst case scenario or the best case scenario.

Hon. Mr. Ostashek: I believe the Member has the document that has “draft” stamped all over it. These are based on the best figures we have available to us today. That is why these qualifiers were put on the bottom.

My understanding is that this could change somewhat, but we do not expect that it will get down to the $57,895,000 deficit that we projected in the supplementaries. We expect that the best case scenario would probably be somewhere around $61 million, which would put our accumulated deficit in the $11 million to $12 million range. This would be the best case scenario that we perceive at this time.

Mr. Cable: Shooting these five reasons through the deputy minister’s computer, what is the worst case scenario? I take it $71 million is the best guess at the present time. What is the worst case scenario?

Hon. Mr. Ostashek: Based on the raw data we have now, the $20 million accumulated deficit, as of March 31, would be the worst case scenario right now. We expect some recoveries there yet. The only outstanding issue that is not accounted for here is if the Auditor General was to make us write off the Curragh debt.

Mr. McDonald: I did not think we were going to be able to get into this document tonight. Since we are there, we may as well continue.

The Minister indicated this was the worst case scenario, but he has also shown the extended care facility as being fully booked in this particular year. Can the Minister explain the financing arrangements? I noticed in the legislative return he tabled that he indicated there may be some questions about whether this extended care facility should be a 1993-94 entry.

Can the Minister explain the financing arrangements and indicate why there was not an attempt to amortize the cost over a number of years?

Hon. Mr. Ostashek: I was talking to my assistant, and I missed the last part of the question. I will answer the first part, and the Member may want to ask the second part again.

I do not think, at any point, we indicated that any of the extended care would be written off in 1993-94. We just talked about the loan amortization on it. The facility itself had to be written off in the 1992-93 year.

Mr. McDonald: I do not understand the answer, I guess. The full cost is shown as being expended, as I understand it, in 1992-93. Is that not the case?

Hon. Mr. Ostashek: Yes, that is the case, but my understanding is that it has nothing to do with the loan transactions.

Mr. McDonald: In terms of an expenditure by the government for the extended care facility, perhaps the Minister could just simply explain it so that I will not have to fumble here, because I do not understand the financing arrangement. The government seems to have made the decision. Perhaps the Minister could explain the decision to me.

Hon. Mr. Ostashek: I will try to explain it to the Member opposite but, no matter what the financing arrangement is, it will have no impact on the surplus or deficit. It has to be written off this way. The only thing that will be different is that we would loan the money to Yukon Housing; Yukon Housing would loan the money back to Health and Social Services; Health and Social Services would make the payments on it.

Mr. McDonald: In the schedule of expenditures for the year ending March 31, 1993, it shows $11.2 million as an expenditure in capital for the Yukon Housing Corporation. That is calculated into what is shown as the actual capital expenditures for that particular year and in turn is factored into the cover sheets that project a $20 million deficit. I am still not clear on what the Minister is saying. Is he saying that there is no impact on the surplus deficit, because there are a series of loan transactions between corporations and departments? Yet, it appears very much that it is indeed written as an expenditure and calculated into the accumulated deficit for this particular year.

Hon. Mr. Ostashek: Maybe I can clarify it for the Member. It has to be put into the deficit for that year. No matter what the financing arrangements are, it will not impact on the deficit.

Mr. McDonald: I think the agenda with the deputy minister is getting longer.

Is there anything else the Minister would like to say to supplement that answer? I really do not understand the answer.

Hon. Mr. Ostashek: The only thing I can add to it is that if one were to use one’s own money, or borrowed money, it would not have an impact on the deficit. That is basically what we are talking about here.

Mr. McDonald: It is not booked at zero when lending oneself money and spending it. It is booked as an expenditure and calculated into the accumulated deficit for that particular year. It is all part of the calculations.

I do not understand the Minister’s explanation.

Hon. Mr. Ostashek: Whether we were to borrow money or not, we would still have to bill it there. That is where it has to be accounted for.

Mr. McDonald: The Minister indicated that it would not have an impact on the surplus deficit. I just do not understand what the Minister is saying to me.

Hon. Mr. Ostashek: What I said is that the financing of it does not impact upon the deficit. It is calculated in the 1992-93 year and that is where it has to be accounted for. No matter how it is financed, it still has to be accounted for there.

Mr. McDonald: I will have to ask some questions of the deputy minister. Perhaps the Minister could indicate why the option to book it into the 1992-93 year and not amortize it over a number of years was made?

Hon. Mr. Ostashek: I guess the question is how can we amortize it over a number of years when the money is already spent and gone?

Mr. McDonald: My understanding was that one of the financing options was that the funding would be booked over a number of years in order to secure CMHC participation in the principal payments. Can the Minister clarify this for me?

Hon. Mr. Ostashek: That is exactly why we are making the loan, and we will be taking advantage of that amount of money through CMHC. That is the reason for the loan situation, back and forth, as to how it is cost shared and paid back. The fact remains that it had to be booked into the 1992-93 year.

Mr. McDonald: I am still not convinced of it, and perhaps I will be asking some more questions later.

There appears to be in the statement a very significant collapse of territorial revenues. Could the Minister explain what the revenue is, because he did not give us Schedule A, and he did not tell us why, how or where?

Can the Minister indicate where the expected collapse is coming from?

Hon. Mr. Ostashek: If the Member would look at his copy there, it is on the grant. He has the figures voted to date in the amount of $244,317,000 actual; $233 million, $378 million, and $276 million, with a variance of almost $11 million.

Mr. McDonald: Would the Minister mind pointing that out to me in the document?

Hon. Mr. Ostashek: On about the fourth page, where it is titled “Schedule of Revenues for the Year Ended March 31, 1993, Schedule A”. Are you missing a copy?

Mr. McDonald: I have a document that is five pages in total, including the two cover pages.

Hon. Mr. Ostashek: I am sorry, we will get a copy of this for you.

Mr. McDonald: That would be very helpful, particularly since the big changes do not seem to be on the expenditure side, but seem to be on the revenue recovery side.

The Minister indicated that there was a reduction in the federal transfer. Can the Minister indicate why that reduction is?

Hon. Mr. Ostashek: It is my understanding that it is because the keep-up factor has been changed for the three years.

Mr. McDonald: Is the Minister saying that, between the time they calculated the supplementary estimate - the keep-up factor and now - they have determined that the provincial tax rates have increased by that much to cause a reduction in the federal transfer by this amount of money?

Hon. Mr. Ostashek: Yes, I am afraid that is correct. My understanding is that we have been notified by telephone of that, but have not got it yet in writing from the federal government. That is one of the qualifiers, but it seems to be that that is what has happened.

Mr. McDonald: The reduction in the keep-up factor accounts for the $8.3 million, is that right?

Hon. Mr. Ostashek: Yes, that is right, but it is actually an increase in the keep-up factor and it is also why the $4.5 million we have in reserve for 1993-94, as I indicated to Members, is used up already.

Mr. McDonald: I do not understand that. I was talking about two different fiscal years. I understand that what we are talking about here is the 1992-93 fiscal year, and I was asking a question about the operating reserve for 1993-94. Can the Minister explain what he is talking about?

Hon. Mr. Ostashek: Unfortunately, it also flows forward to this year’s calculations.

Mr. McDonald: I do not quite understand the answer, but I will ask the deputy.

The Minister has indicated that their knowledge of the change in the keep-up factor took place when, precisely?

Hon. Mr. Ostashek: That took place last week in Ottawa. The deputy has informed me that we do have written confirmation of it.

Mr. McDonald: This position by the federal government is not under dispute by the Yukon government. Is that right?

Hon. Mr. Ostashek: No, it is not under dispute. It is not a position, it is a calculation.

Mr. McDonald: Does the Yukon government agree with the calculation?

Hon. Mr. Ostashek: Yes, I am afraid that we do.

Mr. McDonald: The recoveries also show a very significant reduction beyond what was calculated in the first supplementary for 1992-93. Can the Minister explain that?

Hon. Mr. Ostashek: A large part of it is because the Yukon Housing Corporation is netted out. That is one of the main reasons for it. I think the Member opposite is aware of that. I understand that it was during their administration that they changed the way that they calculated the recoveries on the Yukon Housing Corporation.

Mr. McDonald: I am not quite sure that I understand the answer. In the schedule of recoveries, which we did get, the Yukon Housing Corporation is not even listed in either the operations or capital recoveries.

Hon. Mr. Ostashek: Our recoveries are down, because our expenditures were down in recoverable programs.

Mr. McDonald: The Minister is indicating that the expenditures are down in recoverable programs to the tune of $12 million.

Was there no monitoring to try to expend funds in those particular areas? Was the government aware of it? Were the Ministers taking care to make expenditures in those areas? What was the reason for this fairly significant reduction?

Hon. Mr. Ostashek: We just took a beating in here for projecting high expenditures in land development. I do not know how we are supposed to deal with this issue.

Mr. McDonald: When the Government of Canada agrees to cost share programs or provide expenditures for programs - for example, in Education there is a $340,000 variance on a $2.5 million expected recovery - that is a very significant event. As Minister of Education, I would have known about it. That is the reason why I asked the question.

I see that there are fairly significant ones throughout. Is there any pattern to the changes? This seems to be a fairly significant variance, in that this is better than 10 percent.

Is there any other rationale for this being the case, other than what the Minister has provided already?

Hon. Mr. Ostashek: I am told that, while we do not know for sure right now - but we can it get it from the Minister - we believe this to be about average.

Mr. McDonald: I would like confirmation of that. The MLA pension plan shows a shortfall. Is the Minister convinced that there is no shortfall?

Hon. Mr. Ostashek: We have a material evaluation that says we are short this amount of money, and we may have to get another opinion on it. I am not sure at this point.

Mr. Chair, I move that you report progress on Bill No. 6.

Motion agreed to

Hon. Mr. Phillips: I move that the Speaker 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 of the Whole has considered Bill No. 9, entitled Interim Supply Appropriation Act, 1993-94 (No. 3), Bill No. 89, entitled An Act to Amend the Fuel Oil Tax Act, and Bill No. 29, entitled An Act to Amend the Tobacco Tax Act, and directed me to report them without amendment.

Further, the Committee of the Whole has considered Bill No. 56, entitled Public Sector Compensation Restraint Act and directed me to report the bill with amendment.

Further, the Committee of the Whole has considered Bill No. 6, entitled First Appropriation Act, 1993-94, and directed me to report progress on it.

Speaker: You have heard the report from the chair of the 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 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 9:30 p.m.

The following Sessional Papers were tabled May 26, 1993:

93-1-61

Protocol Agreement between the Departments of Education, Health and Social Services, and Justice re interdepartmental information exchange on children and their families (Phillips)

93-1-62

Notes to draft unconsolidated Financial Statements dated May 26, 1993 (Ostashek)

The following Legislative Returns were tabled May 26, 1993:

93-1-86

Managerial wage cuts: two months’ notice given (Ostashek)

Oral, Hansard, p. 954

93-1-87

MLAs and Cabinet staff wage restraint measures (Ostashek)

Discussion, Hansard, p. 953

93-1-88

Purchase price and appraised value of property purchased for Two Mile Hill reconstruction (Fisher)

Oral, Hansard, p. 689

93-1-89

Whitehorse sewage system: job creation generated for 1993-94 (Fisher)

Discussion, Hansard, p. 853