Whitehorse, Yukon

Tuesday, May 31, 1994 - 1:30 p.m.

Page Number 2779

Speaker:

I will now call the House to order. At this time, we will proceed with Prayers.

Prayers

Tabling of land claim legislation in Parliament

Hon. Mr. Ostashek:

Today is a significant day in Yukon history. It marks the completion of an enormous bridge across the 21 years of negotiations that have taken Yukon First Nations from their claims document, Together Today for Our Children Tomorrow, to federal legislation that will give the force of law to Yukon land claims and self-government agreements.

The Yukon government congratulates Yukon First Nations, the executive of the Council for Yukon Indians, the elders - those who are still with us and those who have passed away - who have provided guidance to the negotiations, the CYI and the First Nations negotiators for their determination, dedication, and accomplishments.

We look forward to the quick passage of settlement and self-government legislation, and we welcome the challenge before all of us to implement the agreements in the spirit in which they were negotiated, and to complete the negotiations of the remaining 10 First Nation final and self-government agreements.

Today is a day for all of us to support the celebrations of the First Nations. Congratulations, once again, to Ms. Gingell, chair of CYI, to Chiefs Birckel, Bruce, Hager, and Keenan, and to the entire Yukon First Nation leadership.

Our next step, as members of the Yukon Legislature, is to prepare for an all-party delegation to Ottawa to make a common representation before the standing committee in full support of the agreements, and full support of the speedy passage of this federal legislation. I invite the Leader of the Official Opposition and the acting Leader of the Liberal Party to join me in that delegation.

Ms. Commodore:

We would also like to congratulate the Council for Yukon Indians for the landmark that occurred today. I think it is probably the most important piece of legislation that will affect Yukoners - not only aboriginal Yukoners, but other Yukoners as well.

We personally know, and I personally have worked with, many of the individuals who have worked so hard and put so much of their time and dedication into making this possible. I would also, at this time, like to pay tribute to the Leader of the Official Opposition. It was one of his top priorities and we know that it was because of his efforts as the Government Leader and Premier at that time that made it possible.

I would like to thank the Government Leader for taking seriously our suggestion that an all-party delegation travel to Ottawa to help with the process of getting this through the House of Commons.

DAILY ROUTINE

Speaker:

We will proceed at this time with the Order Paper.

Introduction of Visitors.

Are there any Returns or Documents for tabling?

TABLING RETURNS AND DOCUMENTS

Hon. Mr. Phelps:

I have for tabling a legislative return.

Hon. Mr. Phillips:

I have two legislative returns.

Speaker:

Are there any Reports of Committees?

Are there any Petitions to be presented?

Reports on Petitions?

PETITIONS

Petition No. 10 - not received

Clerk:

Mr. Speaker and hon. Members of the Assembly. I have had the honour to review a petition, being Petition No. 10 of the First Session of the Twenty-Eighth Legislative Assembly, as presented by the Hon. Member for Mount Lorne on May 30, 1994. The rules and practices of the Assembly require that petitions must be addressed to the Legislative Assembly and that they must ask the Assembly to take some particular action. The model petition shown in Appendix 2 to the Standing Orders of the Legislative Assembly illustrates this point.

Petition No. 10 does not meet these requirements as to form because, although it is addressed to the Assembly, its request for action is directed to an individual Member rather than to the Legislative Assembly as a whole.

Speaker:

Petition No. 10 accordingly cannot be received.

Petition No. 11 - received

Clerk:

I have also had the honour to review a petition, being Petition No. 11, of the First Session of the Twenty-Eighth Legislative Assembly, as presented by the Hon. Member for McIntyre-Takhini on May 30, 1994. This petition meets the requirements as to form of the Standing Orders of the Yukon Legislative Assembly.

Speaker:

Petition No. 11 accordingly is deemed to be read and received.

Are there any Bills to be introduced?

Are there any Notices of Motion for the Production of Papers?

Are there any Notices of Motion?

Are there any Statements by Ministers?

This then brings us to Question Period.

QUESTION PERIOD

Question re: Devolution, Government Leader's comments

Mr. Penikett:

Yesterday, the Government Leader made some remarkable comments outside the House, telling CBC Radio that he hopes to turn a profit from devolution of federal programs such as community health, mining, forestry and land management, and cut back services once Ottawa hands over the cash.

Why does the Government Leader think that the federal government would agree to give the Yukon more money to run such programs than the Government Leader of the territory thinks it should cost to run them?

Hon. Mr. Ostashek:

Some of the statements made were not exactly related to the reporter in that way; they were taken slightly out of context. The fact remains that we have always been of the opinion that we had to devolve these programs while they were still fairly rich programs. They are certainly not going to give us any extra money for taking them, but these programs, as the Member opposite is aware and will agree, are fairly rich to some extent. If we can take them over at the cost it is costing federal government to deliver them today, we believe they can be streamlined, made more efficient, and there would be some cost savings in the process.

Mr. Penikett:

I have the quote attributed to the Government Leader, and it seems to be quite clear what he said. I want to suggest that the Government Leader is playing a reckless game by showing his hand to the dealer and in saying that he wants to profit from the transfers and then cut back the programs.

Page Number 2780

Can the Government Leader tell us exactly what he hopes to achieve by openly admitting that he wants to take the federal government and future employees to the cleaners?

Hon. Mr. Ostashek:

That simply is not the case. It is costing the federal government X dollars to deliver those programs today. We expect that if those programs were to be delivered today, those dollars would come with those programs; that is simply what I am saying.

Mr. Penikett:

Perhaps the Government Leader is not aware that every breath he makes, every step he takes and every move by his Ministers is eagerly watched by the federal government's eyes and ears in territory and communicated to Ottawa.

I want to ask him is he is not concerned, given his extraordinary public statement yesterday, that the federal negotiators will be sharpening their knives, waiting to skin him alive, and, in other words, that his public statements may have cost Yukon dearly in future negotiations with Ottawa?

Hon. Mr. Ostashek:

It seems I heard this debate before, and we were the ones who were saying that the federal government listened to everything the Members opposite were saying, and they were ridiculing us. When we were in the Alaska Highway debate last winter in the Legislature, it seems to me the comments were the same, only they were from the opposite side of the House.

Question re: Devolution, Government Leader's comments

Mr. Penikett:

Well, let us talk about the Alaska Highway. This is the same Minister who repeatedly insisted that the federal money for projects like the Alaska Highway could not possibly be spent for anything else, yet now he seems to be suggesting that he can skim the cream off the devolution money and use it as he sees fit.

Could the Government Leader tell us what has changed since the last sitting of the Legislature that would give Yukon even more discretion in how it spends earmarked, federal money?

Hon. Mr. Ostashek:

There is a substantial difference between this and the Alaska Highway, where certain funds were devolved specifically for the purpose of reconstructing the highway.

Mr. Penikett:

Does the Government Leader not think that the federal government is going to earmark funds for community health, forestry and for everything else?

Perhaps, since the Government Leader claims that there is fat in the federal programs and that he can scale them down, using the savings to deliver other programs, can the Government Leader tell the House why a forestry worker, for example, would choose to go to work for YTG rather than for the federal government if it means that the forestry program is going to be downgraded, the hours of work reduced and possibly job chopped? Why would a federal employee ever come to work for us under those conditions?

Hon. Mr. Ostashek:

It is my understanding that the federal government, now that the transfer has not taken place, is doing exactly that.

Mr. Penikett:

The difference is that probably the federal workers may go somewhere else, but they have not lost their job completely, which would be the case here.

I want to pursue the Government Leader's claim that there is fat in these federal programs before he has even entered into serious negotiations about them.

For the benefit of Yukoners who live outside of Whitehorse, could the Government Leader tell us where the fat is, for example, in rural health services, where he would make the cuts, how many health positions would be cut, how many nurses would be laid off, how many nursing stations closed? Where is the fat, and where is the Government Leader going to find the extra money?

Hon. Mr. Ostashek:

I simply said that these programs are funded to a level of so many dollars now, and that they should be devolved at those dollars, rather than waiting until the federal government downscales them and, then, devolves them, when there is not enough money to operate the programs.

Question re: Electrical rate freeze

Mr. Cable:

I have a question for the Government Leader on the rate relief and freeze he announced on October 28, 1993, in relation to the energy rates to be charged by the two distributors in the territory. He indicated there was going to be $3.5 million in rate relief, beginning November 1, 1993, and energy rates would then be frozen for two years.

Could he indicate when that two-year period was due to expire?

Hon. Mr. Phelps:

It was from the time the new rates came into effect. I forget the exact date, whether it was January 1, or November 1. In order to be accurate, I would have to go back and look at the actual implementation of those rates by order of the Yukon Public Utilities Board.

Mr. Cable:

It would appear the rate freeze was operating prospectively into the future, which would be some time in 1995. How does the Minister propose this rate freeze will be effected? Is he going to issue an order to the Public Utilities Board for the upcoming year, 1995? What regulatory framework is he operating under?

Hon. Mr. Phelps:

We made it very clear at the time that we did not anticipate the utility companies coming forward with any kind of application for a major rate increase. Should the unexpected occur, and things change, and some applications made, our relief would operate in such a way as to cover any variance, either more, if the rates went up, or less, if the rates went down, as a result of such application. The plan did not contemplate our preventing the Public Utilities Board, in any way, from operating in its normal way.

Mr. Cable:

I take it then, from what the Minister is saying, that he is not anticipating any regulatory direction; he is not anticipating economic assistance to the two corporations. If that is the case, what is the anticipated breakdown of the $3.5 million that he was talking about in the press release of October 28, 1993? How much is going to come out of the corporation's profits, and how much is going to be given by the government, by way of rate relief?

Hon. Mr. Phelps:

It is our expectation that all of the $3.5 million will come from the profits of the Yukon Energy Corporation. Should additional funds be required, we said in our announcement that government would back stop the need, and would be prepared to supplement that funding. However, we are quite comfortable with the idea that the Yukon Development Corporation will be able to ensure that the relief is met from normal profits.

Question re: Devolution, Government Leader's comments

Mr. Penikett:

Moments ago, the Government Leader seemed to claim that the statement attributed to him by CBC Radio yesterday was taken out of context. Could I ask the Government Leader, for the record, did he indicate in his interview yesterday that there is room for the territory to make some money out of each of the deals, by taking over services and then cutting them back? Did he say that, or not?

Hon. Mr. Ostashek:

I said that we had to take these programs over while there is adequate funding in place. With that, we believe that we can streamline some of the programs, and there will be some savings.

Mr. Penikett:

If there is only adequate funding now, and the

Page Number 2781

Government Leader cuts it, obviously there will be less than adequate funding, and a downgrade in services. Can I ask the Government Leader, since this is a quote attributed to him, did he say, "And when we take it over from them, it will be downscaled." Did he say that, in respect to future federal programs?

Hon. Mr. Ostashek:

I cannot really recall if those were the exact words that I used.

Mr. Penikett:

Since the Minister has now said that the federal programs are adequately funded, but moments ago he said "there is still some fat in the programs" and that we can really make some money out of them, which is the Government Leader's actual view? Is it that these programs are adequately funded, or that there is fat in the program and that we can make a profit? Or is it the Government Leader's view that he will cut the programs back anyway?

Hon. Mr. Ostashek:

It is like other government programs that we are delivering in the Yukon. We have been constantly trying to streamline programs to deliver better services for fewer dollars. That is what we have been trying to do and we are going to consistently try to do that.

With the devolved forestry rolled into the Department of Renewable Resources, there have to be some economies of scale.

Question re: Devolution, Government Leader's comments

Mr. Penikett:

The Government Leader and his acolytes on the other side have made much of the fact that they are going to take away the collective bargaining rights, the democratic rights of government employees here, in order to avoid layoffs. Yet, it seems that the Government Leader's approach on devolution will almost automatically involve a cutback of services and indeed that federal employees who come to work for us face fairly immediate layoff. Could the Government Leader explain the contradiction in these two positions? Are layoffs a part of this government's strategy or not?

Hon. Mr. Ostashek:

No, it certainly is not the goal we are aiming at, with layoffs as the end result. No matter what programs we deliver now, or in the future, we want to deliver them in a cost-effective, cost-efficient manner.

Mr. Penikett:

Is the Government Leader denying, or not, that part of his plan for devolved federal programs is to reduce the cost, reduce the work force and reduce the number of jobs, which will have the effect of meaning that people who get transferred from the federal government to YTG face the prospect of losing their jobs - in other words, that they will be laid-off?

Hon. Mr. Ostashek:

Not necessarily.

Mr. Penikett:

So the position of the government is: layoffs if necessary, but not necessarily layoffs.

Could I ask the Government Leader if he could define the difference in his position in that they are taking away collective bargaining rights to employees to avoid layoffs, but they are prepared to lay off recently transferred federal workers.

Can the Government Leader justify or explain why he is prepared to lay off people who have recently been transferred from the federal government, but claims that is not what he is going to do with the permanent civil service establishment here?

Hon. Mr. Ostashek:

It is the Leader of the Official Opposition who is saying we are going to lay off people, not I.

We can accomplish those things by attrition, like we are doing it now. We can streamline services and we will continue to streamline services and find deficiencies wherever we can. That does not necessarily mean layoffs; it can be accomplished through attrition.

Question re: Devolution, Government Leader's comments

Mr. Harding:

I have a follow-up question for the Government Leader. Maybe I can settle this just by reading the quote that the Government Leader made. What he said was, "That is why I have been pushing, saying that we have to devolve this stuff now while there is still some fact in the programs."

That is what he said: "some fat". I want to ask the Government Leader - because I am very, very concerned about this comment because a lot of these services are in the community I represent - how does he know about this fat and what specific fat that he has identified is he talking about?

Hon. Mr. Ostashek:

We still have fat in our own system that we are identifying. We are streamlining services, and with that will come substantial savings. That is the route we are going to continue to go in, be they devolved programs or our own programs. We are going to continue to streamline them. We Iare going to continue to deliver them in a more efficient manner, and with that will come some cost savings.

Mr. Harding:

The Yukon Party is spending more than the previous government and it is delivering less in the way of services - it is going backward, not forward.

Is the Minister talking about cuts in rural health services? Does he consider these to be fat? I am talking about community nursing stations like we have in Faro, Ross River and Dawson.

Hon. Mr. Phelps:

What the Member is saying is absolute balderdash. Certainly, in the field of health services, social services and justice there has been an improvement in the level of services. We are working with each of the communities to try to help them help themselves and take ownership of their health services, social services or social programs. We are talking about communities that got virtually nothing from the previous administration and that now are actually working in partnership with this government to plan their future to take control of their lives. I think that is a fact that ought to be remembered.

Mr. Harding:

I agree with the Minister. What that Member and the Government Leader are saying is absolute balderdash - absolute balderdash.

We have shown time and time again that services are being reduced by this government and it is spending more money. Everything is going in a backward direction with this government.

When the Government Leader makes a statement that there is fat in these programs that affect so many Yukoners, one would hope that he could stand on his feet and enunciate what he is talking about in the way of fat. Will he tell us, more specifically, what fat he is going to trim? He is the Member who said it.

Hon. Mr. Phelps:

The fact is that those people got thrown out of office in the Yukon because they did precious little for any of the rural communities throughout the Yukon. There was no economic diversification. Many of the small communities were totally ignored by the people opposite and they got tossed out in the last election because of it.

Question re: Devolution, Government Leader's comments

Mr. Harding:

The government believes the destruction of the economy is the same as diversification. They have taken this economy down to where it is an embarrassment to the rest of the country, where our GDP has shrunk to the point to where we have become a laughingstock - all as a result of the archaic policies of the government opposite.

Let me ask the Government Leader - not the Yukon Party lawyer, not the Perry Mason wannabe, but the Government Leader - where is the fat that he has identified in the statement he made on the radio yesterday?

Page Number 2782

Hon. Mr. Ostashek:

The Member opposite - never mind. I cannot use that; it is not parliamentary.

The fact remains that we are consistently streamlining programs and we are going to continue to consistently streamline programs. We are going to continue to reduce the O&M of this government. The previous administration just let the O&M go right through the ceiling, did not care how much O&M cost, and in fact in the debate last night, they said that we should continue to do that.

Mr. Harding:

After the budget debates, the Members opposite have made such feeble attempts to demonstrate that they have some idea of what is going on with their own budgets. They have no idea of what is going on and still they stand up and make these grandiose claims. Their record of the last week in defending what they have in their budgets is absolutely abysmal, and they are still standing up on top of them and spouting off.

Can the Minister give me a simple answer to a simple question? Yesterday, on the radio, he said that there was a lot of fat in the federal services being provided, and this has major ramifications for ridings like mine, which are very serious about their health services and other areas that have been transferred from the federal government. What is the fat about which he is talking?

Hon. Mr. Ostashek:

The Minister of Health just told him what he is doing in Health and Social Services, and he certainly did not talk about any cuts.

Mr. Harding:

The Government Leader talked about cuts yesterday. Last session, when we were talking about spending a little bit less on the Alaska Highway and building schools with some of that money, the Minister said that every penny that was earmarked by the federal government, just the same as these programs, had to be spent on those particular areas. Now he is saying that he can change his mind and spend it wherever he wants. When did he make a change in his decision on this issue?

Hon. Mr. Ostashek:

That is not what I said at all. I said that a certain amount of money came with these programs, and that money could be used to further enhance those programs, not necessarily spending it on the operation and maintenance of the programs, but by being efficient in the delivery of those services, and having some money to do other things, possibly in the same field.

Question re: Deputy minister pay range

Mrs. Firth:

I think CBC should play the Government Leader's quotes every morning, just so he can remember what he said on the radio, and all Yukoners would be able to hear it and remember it, too.

I have a question for the Minister of Finance about a cost-saving measure. I asked this government about an initiative they undertook to put the deputy ministers in one pay range of $78,000 to $120,000, instead of four. The Minister of Finance stood in this House and said they had done that as a cost-saving measure.

I got a letter from the Minister responsible for the Public Service Commission in response to the request I had made on how much money had been saved. Guess what? The letter says, "The introduction of the single pay range has not resulted in immediate cost savings."

Could I ask the Minister of Finance, who was responsible for making this decision, how much were they predicting they would save? Was there really any prediction of cost saving, other than for him to state that as a reason?

Hon. Mr. Ostashek:

The Member opposite appears to be looking for instant results. This took place just a few months ago. The only time you will see savings is when there are actual transfers of deputy ministers between portfolios. I believe that, over the long term, there will be a substantial saving to government in dealing with those transfers when we have one pay scale.

Mrs. Firth:

How so? There has obviously been no savings demonstrated. The Minister has not been able to support his theory with any facts, other than to just stand up and state it is going to produce cost savings. I want him to back that up with some fact.

Hon. Mr. Ostashek:

If the Member will give the program some time to work, we will be able to have those facts for her. The fact remains that if there is a deputy minister who earns, say, $90,000 per year and is transferred to a department where, before, he would have been paid $98,000 per year, we no longer have to do that. They will be paid on their merit.

Mrs. Firth:

The Minister did not have to do that before. Look at the rest of this letter. This is the concern that we have, that all Yukoners have: this Minister just stands up and says anything, absolutely anything that comes into his head.

Look at the second point in the letter. I asked how they were going to decide what they are going to pay a deputy minister. Point 2 states: "The guidelines used for placement of a deputy minister within the range are: one, experience; two, education; and, three, the current salary of the individual at the time of appointment.

Can the Minister not see what a bunch of nonsense this is, how he is being sold a bill of goods? This was a bad idea. It was a bad idea -

Speaker:

Order. Does the Member have a question?

Mrs. Firth:

I am getting right to my question. It was a bad idea, and I would like to ask the Minister of Finance if he will reverse this bad decision and bad idea. Will he do that? It is a stupid idea.

Hon. Mr. Ostashek:

It is a stupid question. That is what it is. If the Member will give this program some time to work, we will demonstrate some savings for her.

Question re: Devolution, Government Leader's comments

Mr. Penikett:

Lest we get too heated up here, I just want to go back to the stream-of-consciousness statement made by the Government Leader yesterday on the radio.

I would like the Government Leader to explain this to us: if he is arguing that there is fat in the federal programs and that there is, indeed, more money in the federal programs than is needed by the territory to run them, why would the federal government give us the actual dollars for the program, given that the person they have to negotiate with has essentially said in public that he does not need them?

Hon. Mr. Ostashek:

It is costing the federal government X dollars to run the program now. I am certain that if they devolve them at this stage we will get those dollars. If we wait for four or five years, until they have downgraded the program, those are the dollars we will get with the program then.

Mr. Penikett:

Perhaps the Government Leader is a much more brilliant negotiator than we ever were, but I still do not understand why, if he is convinced - he who is trying to obtain these resources from the federal government - that there is fat in the programs - that there is more money in the programs than is needed to maintain them - why would the federal government not take the money rather than give it to him?

Hon. Mr. Ostashek:

The fact remains that it is costing the federal government more and more money each year to run the programs. The Prime Minister has said that he wants to devolve as much as he can during his mandate. Certainly, we want to get them while there is still something in the programs so that we can run good programs. As we know, there is very little silviculture in the federal forestry program, yet we have to have the money to do that. By streamlining the program - and some money has been negotiated for it - we will be able to do that, and do a better job

Page Number 2783

of managing the forests.

Mr. Penikett:

I am sorry, but I am confused. Why would the federal government not continue to just cut and cut the programs because, contrary to what the Government Leader said in a recent letter begging the federal government not to cut because it would be bad for business confidence, not only is he cutting here, but he is essentially recommending to the feds that they cut further, by saying that there is too much money in the program, that there is more money than is necessary. He is the one who said that the programs are fat, inefficient and larded with extra money. Given the size of the federal deficit, why would they not take the money, rather than giving it to us. It seems to me that is not a very bright negotiating strategy - I do not understand it.

Hon. Mr. Ostashek:

I do not know how many more times I can say it this afternoon. There is X number of dollars in those programs today. If they were devolved today, that is the amount of money we would get with them.

Question re: Whitehorse General Hospital reconstruction

Mr. Cable:

I have some questions for the Minister of Health and Social Services on the hospital reconstruction. One of the members of the hospital staff has expressed a concern to me that crowding in the new maternity ward, which is composed partly of some hallways, does not meet the requirements of the fire marshall. Has the Minister been made aware of that concern?

Hon. Mr. Phelps:

No, but I would expect that the appropriate body would be the hospital board.

Mr. Cable:

I think we established, after many questions, that the reconstruction was the Minister's responsibility, and the subsequent operation was the responsibility of the hospital board. Is the Minister prepared to take up the concern of that member of the staff, and find out whether the crowding in the corridors meets the requirements of the fire marshall?

Hon. Mr. Phelps:

The hospital is managed by the Hospital Corporation, and there are procedures in place through which employees can go to make their complaint known. Employees are well aware of the procedures over there, and they should go through the appropriate steps to bring their concerns to the attention of the appropriate committee, and then to the hospital board.

Mr. Cable:

On another tack, the Minister indicated a couple of weeks ago that he would table for the Members of the House contracts that had been let to date, indicating the amounts, to whom they were let and for what. Has the Minister been able to get that contract list together to table in the House?

Hon. Mr. Phelps:

I have not received that documentation yet, but I am sure that it is being prepared.

Question re: Devolution, Government Leader's comments

Mr. Penikett:

I am sorry that I cannot leave this topic, but I now have a better understanding of why this government did not want to negotiate with its own employees.

The Government Leader has given away his bottom line in the negotiations with the federal government before the negotiations have really gotten under way.

I want to ask him - perhaps there is something fiendishly clever here that I do not get - if the Minister is saying that there are X dollars in the program and he expects the feds to negotiate on the basis that they will give those X dollars to the territorial government, could he tell us why the federal government would do that when the Government Leader has just told the whole world that the programs can get by with less than X?

Hon. Mr. Ostashek:

I have just said that the federal government wants to devolve these programs to the territorial governments and we want to take them over. The reason the federal government wants to devolve them is because it believes we can provide services in a far more efficient manner than it can from Ottawa.

Mr. Penikett:

Anyone who cared to watch the federal government knew they always had two objectives in devolution. One was a genuine wish to devolve programs and secondly, they wanted to cut the federal deficit.

I would like the Government Leader to tell me what advantage there is for the territory in doing a "Nordling", essentially to say, "We want to help the federal government with its deficit" by offering - because that is what the Government Leader has done - to take less money than there is in the programs because he has told the federal government there is fat in them. The programs can be run with less. Why does he think that is a useful, or even helpful or even reasonable, negotiating position?

Hon. Mr. Ostashek:

I do not call it a negotiation position, but the fact remains, as I said, that the federal government wants to devolve itself of these programs because it is costing more and more every year to run them.

We do not have to take them if we do not get the financing with them that we want.

Mr. Penikett:

The Government Leader earlier told us that the federal government was cutting and cutting and cutting - that was a problem - rather than it was costing them more and more. Both statements cannot be true.

Let me ask the Government Leader this directly: why does he think the federal government, with a massive federal debt, would be willing to have the territorial government make a huge profit on devolutions, and worse than that, not only make a profit, but actually downgrade the service after it gets into our hands?

Hon. Mr. Ostashek:

Nobody is talking about making a huge profit. Nobody is talking about downgrading the service.

Some Hon. Member:

(Inaudible)

Hon. Mr. Ostashek:

We are talking about streamlining the service; there is quite a difference. The Members opposite do not understand that though - they were never capable of it.

Question re: Devolution, Government Leader's comments

Mr. Penikett:

He is not talking about cutting - he is talking about streamlining.

Let me ask the Government Leader this: did he say these words yesterday to CBC, "And when we take it over from them, it will be downscaled." Did he say those words?

Hon. Mr. Ostashek:

I may have said those words, but what I meant was "streamlining".

Some Hon. Member:

(Inaudible)

Speaker:

Order.

Mr. Penikett:

I always have to be careful when the Government Leader uses words like "streamlining", because we want to be clear that we know what he actually means by it.

The federal government has been cutting and, no doubt, calling it "streamlining", for years. What reason does the Government Leader have to believe there is enough fat in these programs for him to make a profit and still provide the kind of service that Yukoners expect as a result of these negotiations?

Hon. Mr. Ostashek:

I said it earlier. I guess the Members opposite do not have any other questions today, so they have to stay on this topic. I said there are some economies of scale we can apply to some programs, and that that will result in some savings.

Mr. Penikett:

Let us just use one example. We know, for a fact, that YTG, in discussing the forestry devolution, was talking about downgrading the program - fewer hours for the forestry workers, requiring the employees to take their time off out of the

Page Number 2784

forestry towers, and that the service would operate for fewer months in the year; in other words, we would have a vastly reduced service and, probably, fewer jobs - is that what the Government Leader meant by streamlining?

Hon. Mr. Ostashek:

We never did get forestry, and we never had a chance to deal with the policy development and the regulation development for forestry. The Member opposite is stating alarms that were being raised by union workers who were afraid they were going to lose their jobs.

Question re: Minimum wage

Mrs. Firth:

I should be asking the Government Leader to table his dictionary of definitions, so we know what he really means when he says things.

I want to ask the Government Leader a question that has been outstanding for some time now - about six months. The Minister of Justice said he had asked the board to look at raising the minimum wage. There have been consultations with the Chamber of Commerce respecting this issue, and no one has heard back from the government.

Could the Government Leader, or the Minister, tell us what the government's position is with respect to increasing the minimum wage?

Hon. Mr. Phelps:

We have not received the report from the board yet. Once we receive it, we will be looking at the recommendations. If they call for an increase, as we suspect they will, then we would be looking at the implementation of an increase, but not until the tourist season is over.

Mrs. Firth:

That is interesting. I remember asking the Minister of Tourism what his opinion was about increasing the minimum wage. He stood up and gave us some story about how there were businesses claiming that they did not think they paid enough to their employees and wanted the minimum wage increased.

The Minister of Justice says they are going to be increasing the minimum wage - I can read it out for the Minister if he wants - but not until after the tourism season. Could he give us some indication of what this government is prepared to increase the minimum wage to?

Hon. Mr. Phelps:

That will depend entirely on the report we will receive from the board, and we are not here to second-guess what the report may contain, so we will wait until we receive that report before we answer such a question.

Mrs. Firth:

Perhaps the Minister could answer this: when is this minimum wage increase going to come into effect? What does he mean by "after the tourism season", so that all Yukoners will know when they are going to have to do this?

Hon. Mr. Phelps:

Once again, the timing will be based on, among other things, the report we get from the board. Clearly, the policy of this government is to try to place seasonal industries in a position where they can plan for the upcoming season and hire on the basis of some sound factors. I would be very surprised if Cabinet were willing to change the ground rules in midstream of the tourist season and construction season.

Question re: Devolution, memorandum of understanding

Ms. Commodore:

My question is for the Government Leader regarding devolution. Last Thursday, the Government Leader told this House that he thought CYI was aware of a memorandum of understanding that was on the Minister of Indian Affair's desk. This concerns devolution of land, water, minerals and mining in the Yukon. He stopped short of saying that CYI had been consulted about this issue.

Will the Government Leader tell us how CYI became aware of the memorandum of understanding and in what way were they informed that he had signed off this memo and that it was now before the federal Minister?

Hon. Mr. Ostashek:

First of all, the memorandum of understanding was on a timetable for the devolution; it was not for the devolution itself. There was a time line set out, I believe up to 1996, for the finalization of that. That is all that pertained to the memorandum of understanding. I can bring a return back to the Member opposite for the chronological order of events and how CYI was made aware of it. I do not have that information at my fingertips.

Ms. Commodore:

The Government Leader said that the memo had - and these were his words - "no particular devolution attached to it", that it was a time frame covering specific dates when things would take place, and he just said it again.

Why does the Government Leader think that the timing of the devolution of these items is of no interest to First Nations? Why does he think that it is not important to them?

Hon. Mr. Ostashek:

I believe it is of great interest to First Nations. I truly do believe that it is. If I remember correctly, we entered into this agreement - and I will get that information for the Member opposite - at the request of the federal government.

Ms. Commodore:

If he thinks it was of great importance to them, I wonder why he did not consult with them. They did not know about the memorandum of understanding until they read it in Hansard. I would like to ask the Minister if he would provide them with a copy of the memorandum of understanding so that they will know exactly what he has been doing?

Hon. Mr. Ostashek:

I will check on that and, if they have not got a copy, I certainly will see that they do get a copy. I was under the impression that they had a copy of it.

Speaker:

The time for Question Period has now elapsed.

Notice of Opposition Private Members' Business

Mr. Cable:

Pursuant to Standing Order 14.2(3), I would like to inform the House that I do not wish to identify any item to be called on Wednesday, June 1, 1994, under the heading Opposition Private Members' Business.

Mr. McDonald:

Ditto for the NDP caucus.

Speaker:

We will proceed to Orders of the Day.

ORDERS OF THE DAY

Speaker:

Government Bills.

GOVERNMENT BILLS

Bill No. 26: Third Reading

Clerk:

Third reading, Bill No. 26, standing in the name of the Hon. Mr. Nordling.

Hon. Mr. Nordling:

I move that Bill No. 26, entitled An Act to Amend the Public Printing Act, be now read a third time and do pass.

Speaker:

It has been moved by the Hon. Minister of Government Services that Bill No. 26, entitled An Act to Amend the Public Printing Act, be now read a third time and do pass.

Motion for third reading of Bill No. 26 agreed to

Speaker:

I declare that Bill No. 26 has passed this House.

Bill No. 60: Third Reading

Clerk:

Third reading, Bill No. 60, standing in the name of the Hon. Mr. Phelps.

Hon. Mr. Phelps:

I move that Bill No. 60, entitled Miscellaneous Statute Law Amendment Act, 1994, be now read a third

Page Number 2785

time and do pass.

Speaker:

It has been moved by the Hon. Minister of Justice that Bill No. 60, entitled Miscellaneous Statute Law Amendment Act, 1994, be now a read a third time and do pass.

Motion for third reading of Bill No. 60 agreed to

Speaker:

I declare that Bill No. 60 has passed this House.

Bill No. 75: Third Reading

Clerk:

Third reading, Bill No. 75, standing in the name of the Hon. Mr. Phelps.

Hon. Mr. Phelps:

I move that Bill No. 75, entitled An Act to Amend the Coroners Act, be now read a third time and do pass.

Speaker:

It has been moved by the Hon. Minister of Justice that Bill No. 75, entitled An Act to Amend the Coroners Act, be now read a third time and do pass.

Motion for third reading of Bill No. 75 agreed to

Speaker:

I declare the motion carried and that Bill No. 75 has passed this House.

Bill No. 80: Third Reading

Clerk:

Third reading, Bill No. 80, standing in the name of the Hon. Mr. Phelps.

Hon. Mr. Phelps:

I move that Bill No. 80, entitled An Act to Amend the Pharmacists Act, be now read a third time and do pass.

Speaker:

It has been moved by the Hon. Minister of Justice that Bill No. 80, entitled An Act to Amend the Pharmacists Act, be now read a third time and do pass.

Motion for third reading of Bill No. 80 agreed to

Speaker:

I declare the motion carried and that Bill No. 80 has passed this House.

Bill No. 50: Third Reading

Clerk:

Third reading, Bill No. 50, standing in the name of the Hon. Mr. Fisher.

Hon. Mr. Fisher:

I move that Bill No. 50, entitled An Act to Amend the Municipal Act (No. 2), be now read a third time and do pass.

Speaker:

It has been moved by the Hon. Minister of Community and Transportation Services that Bill No. 50, entitled An Act to Amend the Municipal Act (No. 2), be now read a third time and do pass.

Motion for third reading of Bill No. 50 agreed to

Speaker:

I declare the motion carried and that Bill No. 50 has passed this House.

Bill No. 18: Third Reading

Clerk:

Third reading, Bill No. 18, standing in the name of the Hon. Mr. Ostashek.

Hon. Mr. Ostashek:

I move that Bill No. 18, entitled Interim Supply Appropriation Act, 1994-95 (No. 3), be now read a third time and do pass.

Speaker:

It has been moved by the Hon. Government Leader that Bill No. 18, entitled Interim Supply Appropriation Act, 1994-95 (No. 3), be now read a third time and do pass.

Motion for third reading of Bill No. 18 agreed to

Speaker:

I declare the motion carried and that Bill No. 18 has passed this House.

Bill No. 53: Third Reading

Clerk:

Third reading, Bill No. 53, standing in the name of the Hon. Mr. Phelps.

Hon. Mr. Phelps:

I move that Bill No. 53, entitled An Act to Amend the Social Assistance Act, be now read a third time and do pass.

Speaker:

It has been moved by the Hon. Minister of Health and Social Services that Bill No. 53, entitled An Act to Amend the Social Assistance Act, be now read a third time and do pass.

Motion for third reading of Bill No. 53 agreed to

Speaker:

I declare the motion carried and that Bill No. 53 has passed this House.

Hon. Mr. Phillips:

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

Speaker:

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

Motion agreed to

COMMITTEE OF THE WHOLE

Chair:

I will now call Committee of the Whole to order. Is it the wish of the Members to take a brief recess?

Some Hon. Members:

Agreed.

Chair:

We will take a brief recess.

Recess

Chair:

I will now call Committee of the Whole to order.

Bill No. 15 - Second Appropriation Act, 1994-95 - continued

Chair:

Is there further general debate on Finance?

Department of Finance - continued

Mr. McDonald:

Yes, there is a little more debate. First of all, I cannot help but make some remarks about some of the offhand comments that were made in Question Period today. The first is that the Government Leader seemed to be under the impression that, because we were objecting to the government's vision of their lapses, that somehow that translated into the NDP wanting the operations and maintenance budget to go up. This convoluted logic suggests that, because we are concerned about the government's financial projections, because we are concerned about the claims they have made that they are not going to have any significant lapses, it translates into us wanting there to be no lapses, and consequently into us wanting the operations spending to go up. That is completely ridiculous.

Some time ago, and the Minister will remember this, we projected that, if there were going to be lapses, they would probably fall into the $10 million to $25 million range for gross spending for the 1993-94 year, because that was the historic level of lapses that we had experienced over many years. We merely stated the obvious fact that precision in budgeting, to the extent that the Yukon Party government was claiming would be the case, because they simply believed on faith alone that they were brilliant managers - precision budgeting that meant they were not going to lapse any money was completely ridiculous.

That has been borne out by experience. The experience is, of course, that the government is lapsing a gross of $30 million - for a net of $19.2 million, or something. So, what the government is doing is precisely what has happened all along.

What we have been saying is that if one is going to make some grand statements about how one is going to keep one's budget tight, it requires more than some edict to departments to just be better managers. Ministers have to be better managers themselves, if they are going to make the claim and make it legitimately.

We have not said that there were not going to be lapses. Of course there were going to be lapses, because in a very large budget there are bound to be, particularly considering the Financial Administration Act - and the Minister and I have discussed this before - which insists that deputy ministers will not overspend their budget and causes deputy ministers to have a tendency to be conservative in their spending and to be liberal when it comes to

Page Number 2786

their budget estimates - to inflate their budget estimates and to try to come in under budget so that they will not end up breaking the law. That factor alone helps to encourage the existence of lapses.

All we are doing here is to respond specifically to the government's previous claim that this budget was tighter than a drum, with no room for manoeuvre, and they had things so well under control that there was going to be very little by way of lapses - to the extent that the Minister himself had indicated on a number of occasions that they are looking specifically at gross lapses in the neighbourhood of $8 million to $10 million, which would have been very much on the low side and quite contrary to past practice. I want to make that clear to the Minister.

I think it would be helpful, under the circumstances, given that we are going to be debating a supplementary for last year and to close a chapter on our discussions on last year's spending, to ask the Minister to provide us with some detail, in written form, of lapses from last year, both on the operations and maintenance side and on the capital side. He does not have to provide it for the Department of Health and Social Services because that has been provided - at least in operations. We would like to know the gross lapses and the net lapses - gross lapses meaning the net and the recoverable spending, and the net lapses for 1993-94, by department. Also, now that we have some figures with respect to the accumulated surplus for March 31, 1994 - and that projected for March 31, 1995, we do not need - I would like specifically some detail about some of the items in the departments, and I will give the Minister notice of a couple of items right now. The first is the lapses with respect to the Alaska Highway funding. I asked the Minister last night and he may have that information now. If he does, I will be more than interested in hearing it. Secondly, if any other Members have any particular details they would like for the supplementaries to supplement the information I have requested, they should ask for it specifically.

Hon. Mr. Ostashek:

I will be fairly brief. We have had extensive debate already, but I want to make it clear to the Member opposite that when I am talking about Members opposite not appearing to want us to be cutting operation and maintenance, it is not because of lapses, but every time we say on this side of the House that it is important to cut operation and maintenance so we can have money for capital projects, it does not seem to sit very well with the Members opposite. I believe that the Member opposite has to agree with me that if we are going to free up money for capital, it has to come from somewhere. That is what I was referring to in that statement.

The Member has raised a valid point that I have discussed with him and I hope I can get together with him this summer and discuss it again. We do want to have tight budgeting, and I am sure the Member opposite would like to see the government be able to do tight budgeting, and the Financial Administration Act is an obstacle in the road. If I am to go to my departments and say, "Look I do not care if you go over your budget as long as it is legitimate, it is not too far over; I want tight budgeting," they are still going to be concerned about the questioning that is going to be coming from the Opposition Members.

As I see it, the simplest way to address this is to make a simple change in the Financial Administration Act to encourage tighter budgeting. I want tight budgeting and I am sure that the critic wants tight budgeting. It would be easier on all of us in this Legislature if we had a better understanding of where the monies were and how they were being spent on an ongoing basis, rather than having to get into these big debates once or twice a year.

I want to draw the Members' attention to the fact that, for most of the departments, this time around, their budgeting was fairly tight, with the exception of Health and Social Services. That is the department that threw the budget out of whack, and the Minister has already explained the reasoning for that, so I am not going to get into it again.

I will be approaching the Member some time over the summer to see if we cannot come to some agreement to make some changes to the Financial Administration Act to make all of our lives a little bit simpler. I will be happy to get whatever written information the Member requires before we get into supplementary debate.

Mr. McDonald:

I thank the Minister for the information. As we are trying to explain right now why we might from time to time have anxiety about each other's positions, I would like to explain to the Minister that part of our anxiety comes when the debate does not revolve around whether or not the government is trying to amend the spending priorities of government, or whether or not they are trying to direct money into tourism or education, and away from something else. Up until now, the debate has primarily evolved around whether or not we are in a financial crisis, and that has been used to justify changing priorities.

I do not think the Minister would disagree that there is probably no single government in North America that would not want to inherit the so-called financial crisis the Yukon government is in right now, instead of their own. When we are sitting in a financial situation, such as we have here, I cannot think of any other government in North America that is in as good a position. Does the Minister know of one?

If we are talking about changing priorities, that is an honest debate. If the Minister wants to put more money into road building, and some Member of the Opposition wants to put more money into school construction, or transition home O&M, or that sort of thing, that is a legitimate, honest debate, and we can have that debate over priorities.

However, to claim there is some fiscal crisis is something we have a great deal of trouble with, particularly given the situation this territory is facing. If the Minister wants to put more money into capital, that is fine. From his perspective, I am sure it is a priority, and he will want to support that, and he should just simply say so. Then, we would not be dealing with all the rest of the baggage surrounding these debates as we have been.

The other issue is that, when we are talking about cuts, quite often what we see as cuts in the programs are characterized by the government simply as reforms.

It is suggested that the word "reform" is somehow a more benevolent interpretation of what is essentially a cut in service. So, if the Members want to cut services because they do not think a certain service is as important as something else, that is a legitimate and honest position to take. There may be disagreement in the Legislature, but it is certainly something we can understand, and using some euphemism about it is not helpful. That is what elevates the temperature of the debate, in our view.

I would like to ask the Minister - to see if I can close a chapter on something else here - about the comment that has been made in the papers and in the media about the lapses being permanent savings. Last evening, we touched on the subject, but we certainly did not bring closure to it in any way.

One government Minister indicated that, based on the information that they had received from officials respecting the unspent money from last year, they were able to characterize at least a portion of that as the result of increased efficiency, and that that saving, as they referred to it, was something that would be permanent in nature. Then they put a dollar value on the savings - being $8 million - that over the period of the restraint program they could turn back to employees.

Now, if they have gone to the trouble to identify these things as savings due to efficiency - permanent in nature - and worth $8 million over four years, surely they have then been able to

Page Number 2787

identify - unless they were just ballparking it - what the efficiencies are, and be able to tell us, with at least some measure of precision, where this $8 million over four years is going to be found. Can the Minister do that? Does the Minister have any information that would be able to identify those efficiency savings?

Hon. Mr. Ostashek:

Before I answer that question, I just want to say - the Member opposite says that if we simply want to spend more money on capital, say so. I have said time and time again in this House that our priority is to control the costs of the operation and maintenance of government so that we would have more money for discretionary capital projects. I make no apologies for that. That is our philosophical belief. The Members opposite do not agree, and I understand that. It is good for healthy debate.

In some places, savings have been substantial. I do not have the exact dollar value, although we could drag some figures out for the Member opposite. There have been substantial savings in out-of-territory travel. We have had substantial savings in overtime costs. We have had fairly healthy savings in consultant fees. Those are three areas, off the top of my head, I know we have streamlined and have been able to identify some savings.

The travel costs, the overtime and the consultant fees, as long as we are diligent, will continue, year after year, to be at a lower level than they were before. It could change, but we feel fairly confident now that we have put some controls on them and have been able to reduce some costs. There have been some different reasons for it. I do not believe that the Yukon has suffered because of these savings. We have not missed a lot of conferences; we simply did not send so many people to them. I do know that in the last year of the Members' opposite mandate, there were a lot of constitutional hearings that took a lot of travel. We have streamlined and saved some money there. There have been dramatic savings in overtime costs, but in a year of heavy snowfall, that may escalate somewhat.

I do not feel comfortable debating each one of these departments and talking about savings, but I do remember the Minister saying that they had a 20-percent cut in administration costs in Community and Transportation Services - in part of the department anyway. These are ongoing savings.

As to a total dollar figure, I do not know if we can come up with anything that is exactly accurate, but we could certainly come up with a ball-park figure for the Member opposite.

While I am on my feet, I was just going through Hansard and the debate on the wage restraint legislation. A comment was made by the Leader of the Official Opposition, but I have not seen it anywhere and I would just ask if he would share with me where he received that information. I do not recall ever seeing it anywhere. He said, "The Members on the side opposite keep talking about the Auditor General. I remember the Auditor General saying that, from their perspective, the expenditures were on track with the budget that year, up to period 9." I believe he was talking about the year of the election. I wonder if the Member could just share with me where that is written so that I could get a copy of it.

Mr. McDonald:

First of all, I think it is important to point out here that, when it comes to capital spending priorities of the government, I will just remind the Government Leader that our primary concerns with the government's capital spending plans have been the way they have promoted spending, and the priorities within the capital budget. In our opinion, and this is no surprise to the Minister, they have put a lot of money into upgrading existing roads, including discretionary funds that are available to them, and have done little by way of new construction for such necessary things that I think we all agree are good projects, including some schools. Clearly, we have differed with the Government Leader in that particular respect. I hope we do not have to disagree with the Government Leader again in the next capital budget with respect to spending priorities.

The savings that I am talking about, and the savings that were referred to by Ministers, in the comments made on the radio, were savings that were characterized as being unexpected. They were savings that were characterized as the lapsed funding from last year - the unexpected lapses. I am not referring to the decline in planned spending in the departments that shows up in the operation and maintenance estimates. I am talking about the unexpected savings. What I want to know is this: was the Minister who claimed that these unexpected savings were permanent in nature overstating the case? Did he know what he was talking about? Were they savings that he, or the government, could identify? Was he just trying to make a case, and bootleg the claim that there is increased efficiency in his government, in order to justify what was always a normal occurrence with respect to lapses? What, precisely, is the justification?

If it was just loose talk, there is plenty of that going around. Maybe the Minister could just characterize it as that. However, if it is not loose talk, I think that I am owed some precision, in terms of an answer. I think it is necessary to tell us precisely where the $8 million came from, because the government has come forward with an $8 million spending plan. We can spend an hour in this Legislature talking about whether $20,000 or $30,000 is enough for a particular program. Yet, the government can come forward and say that they are going to save $8 million - they have been able to determine just off the top of their heads - as a result of these unexpected savings. They say that these unexpected savings are the result of increased efficiency, and it all makes sense to them. The Minister is going to have to understand that somebody, some time, is going to say, "Show us where the savings are."

Why did the Minister think that they could save $8 million over four years based on the information that I got from Finance with respect to the lapsing funds? Why was it not $10 million? Why not $14,000,000? Why not $6,000,000? Why not $4 million? What is the justification? We cannot just throw numbers around of such a size without some sense of precision.

I reiterate that the savings I am referring to are not the savings that are budgeted for in the main estimates, because clearly there are some changes in terms of administration costs in some departments in the main estimates. Those changes are already contained in there and I know that, but I am talking about the unexpected savings: the difference between what they expected in the $4 million to $5 million range, but ended up being a $19 million net surplus, which was characterized as increased efficiencies, permanent in nature - or, a portion of them were - and which the Minister has costed out at $8 million over four years. Can the Minister tell us if that is just loose talk or is there something solid that we can put our hands on? If it is something solid, I want to pursue that with the Minister.

Hon. Mr. Ostashek:

Clearly, the Member opposite has to agree that our opening position for April 1, 1994, is much better than what we have anticipated, basically because of the dramatic lapse in Health and Social Services. Therefore, we felt we could forego the $8 million and make it up somewhere over the life of the contract in other areas in operation and maintenance and government. Basically, we said that we do not expect employees to absorb all of our operation and maintenance reductions. We just want their fair contribution to it.

Because our opening position is better - at least $10 million better than we figured; at least that much and maybe a few million more than that - we felt that it would be a good move to not pursue the merit freeze, the experience freeze and the Christmas closure, because our financial picture was much better than we had

Page Number 2788

anticipated.

Basically, the Member opposite has to agree. If one looks through the budget, the lapses were mostly on the operation and maintenance side. There was quite a dramatic increase in the operation and maintenance lapse, compared to other years when they were $5 million to $6 million. As a result of that, there are some savings, because they are in operation and maintenance.

The Minister may want to answer this for himself, but as far as I can see it was because we had a better opening situation and clearly there were some savings there.

I am not attributing all of the savings to this. Some of them are lapsed funds, but in operation and maintenance, health costs were not as high as were expected. The Minister has given you some reasons for that and why he has faith in his projections for next year.

I do not know what more I can add to the debate on that topic.

Mr. McDonald:

I suppose I can agree with everything the Minister has said, in the sense that it is true that, because of lapsed funds, the starting position for this year is better than anticipated. There is no question about that. If the government is changing priorities with respect to its funding, and is wanting to put more money into capital from the operation and maintenance costs the government cuts, shaves, trims or holds the line on, the employees should not be the sole target for those cuts, shaves or trims.

The Minister's language made me a little nervous for a moment, because he mentioned it in the context that he did not want the employees to solve the problems associated with the realigning of budget priorities. The reason I am concerned with the language he used - which was to solve a problem - was that it suggests there is a financial problem we have to address. It is not a financial problem; there is a change in priorities. That is what is at stake here. We are not talking about spending less. We are talking about spending more, but we are talking about changing priorities. If he is saying that he does not expect employees to bear the brunt of shaving operation and maintenance costs, then I would agree with him that, in all fairness, they should not.

Perhaps I should just express the concern about wanting Ministers to be precise when they speak to the media. They have to know that - particularly when it is recorded and there is a transcript made of it, and particularly when they know they are going to come into the Legislature - they will have to answer for those comments. The moment a Minister thinks he can make some headway by suggesting these lapses are the result of increased efficiency, then all Ministers are going to have to know - and this Minister will have to tell the other Ministers - that they have to come in and answer to that.

When we are talking about this amount of money - $8 million - and when a Minister has characterized this as a result of permanent savings, then they have to expect that someone will ask them how that happened. It is a lot of money to save through increased efficiency. We spent a lot of time just talking about what the efficiency swat team in the Executive Council Office was going to do. We talked about the expenditure of $480,000, and the 60 suggestions for improving efficiency, and all that sort of thing. That has taken up a fair amount of time in the Legislature.

Then, somebody pops off in the media saying they found $8 million worth of efficiencies over four years. There will be no questions about that?

Well, of course there is going to be. All I am pleading with the Minister to do, in the interests of good government, is realize that if Ministers are going to be saying things in the media, then they are going to have to speak with precision. It is really, really important, in my opinion.

I have a couple of questions. There is one question I would like to ask, because it has been bothering me since this editorial was written in the Whitehorse Star - an editorial titled "Look what the skipper pulled from the hold". I will just read out the first couple of paragraphs. This paper is not well known for being a strong partisan supporter - nor is its legislative reporter - of the Opposition benches.

The editor who crafted this editorial wrote, "Shortly after the Yukon Party formed a minority government in November 1992, a key member was heard to tell confidants that the long-term game plan was to persuade Yukoners that the public finances left by the arch-enemy New Democrats were a horrible mess. Next would come considerable program hacking, complemented by hints of public service layoffs and a consistent economic doom-and-gloom message from the leader. Finally, at the eleventh hour, Ministers would gallop onto the stage on white steeds proclaiming that their efficient management had meant the territory's finances were not so bleak after all."

Is that the Yukon Party strategy?

Hon. Mr. Ostashek:

I have not read that editorial. I very seldom read editorials, because they are only one person's opinion. They are only one person's opinion, so I do not bother reading editorials too often.

No, certainly, that is not the strategy.

But, I do, while I am on my feet, want to say to the Member opposite that we not only want to pare O&M costs to have more money for capital, which is a priority of ours, we want to get the discretionary capital back up to the level that it was at one time. We are substantially below what it has been over the years. That is one of the rationales that we use for trying to control the O&M costs of government.

I have read the figures into the record time and time again. In changing the figures into constant dollars, we are still $9 million below what we were spending in 1985-86 in discretionary capital. So, we do have to control the cost of government so we can get discretionary capital back up to a level that is acceptable to Yukoners.

Mr. Penikett:

I have been listening patiently for quite a long time to this explanation about why we have to bash our employees and take away their collective bargaining rights - something they won after many, many years in this territory and which most civilized countries respect but which are clearly under attack. Throughout the debate, the government has justified its removal of collective bargaining rights and its decision to impose wage settlements between now and the end of the century on the basis of the fact that, even though the government did not know it had $20 million on hand last week, it knows three years from now it will have a deficit of $1 million or $2 million - a bit of forecasting that fascinates me. The Government Leader indicated in last night's debate that a $6 million surplus - five point something - is not enough to allow the free collective bargaining to continue in the territory. Could I ask him, as a matter of policy, how large a surplus would we have to have before this government would be prepared to respect the rights of its employees to collectively bargain for wages and working conditions?

Hon. Mr. Ostashek:

I do not know if that would have any effect on it. The fact remains, as I said yesterday in the debate, that we can look at projections and we can argue about the numbers, but if we are going to be honest with ourselves, based on the revenues we have and the size of revenues compared to the expenditures we have - if both are changed by two percent or three percent, we will end up with the same scenario. We will end up with ever-increasing costs. The new formula financing agreement is coming, and the federal government has already told us not to expect any more money than we are getting today - and possibly less. As I said, we can stick our heads in the sand, we can wait until we have to do something next year or the year after, or

Page Number 2789

we can take some very small actions now, and hope that we can get this back on course, control the costs of government and be able to have money for those capital projects.

The Northwest Territories have run surpluses for two years, yet they have the same feeling as I do about what is coming down the pipe from Ottawa and they are asking their employees for a five-percent rollback.

Some Hon. Member:

(Inaudible)

Hon. Mr. Ostashek:

We did last year, and they are trying it this year. The Northwest Territories are asking for a five-percent rollback, because they foresee, just the same as I and my officials see, what is coming from Ottawa and they are preparing for it.

Mr. Penikett:

Fortunately, this is not Question Period and I can keep pursuing this matter until I get an answer. Let me review what we have heard.

We know that the surplus on March 31, 1995, is predicated to be $6 million, plus whatever will occur in lapses. We know that the lapses average $6 million in operation and maintenance and $12 million in capital.

The question that I want to ask the Minister - and I have not complained about this as much as I should have done; I have probably been far too statesman-like, friendly and positive - but the behaviour in the government of writing off everything that it possibly could to make its financial position look as bad as it possibly can is quite obvious, even to the editor of the Whitehorse Star, a newspaper not notorious for being friendly to us.

Many people out there believe that this government is trying to make its financial position look bad. Since it has justified its removal of a basic, democratic right on the basis of this phantom deficit, or fabricated financial position, I want to ask the Government Leader what the price of democracy is. Forget what the projections are, forget whether we were right about lapses or that he was wrong about his perfect, drum-tight budget last year. All I want to know is how much of a surplus do we have to have in the territory, before employees will have returned to them the basic democratic right that they won many years ago in this territory. I say to the Government Leader that he was not honest with them and did not tell them he was going to take it away from them during the last election campaign, and he certainly would not have been elected had he said that.

I want to know how much of a surplus we will have to have before the employees will be able to have their democratic rights back.

Hon. Mr. Ostashek:

I do not have that answer for the Member opposite. The wage freeze is being brought in for three years. At the end of that time it will be removed.

Mr. Penikett:

If the Government Leader cannot answer the question, then we have to worry, not only about the integrity of the government's position, but about what might happen at the end of the freeze.

The Government Leader and his colleagues must have discussed this in Cabinet. When you take away someone's democratic rights, you are taking a very, very serious step, a very retrograde step. You are going back in history, rolling back progress and undoing reform that was hard won.

The government justified the announcement of a wage freeze when they issued a statement back in March saying that they were not going to collectively bargain at all on the basis of financial need.

This is the only government in the country probably with no debt, and at this moment with a real surplus, notwithstanding the fact that they wrote off the extended care facility, which I know some financial people thought was quite immoral, and the peculiar conversion yesterday of the Yukon Energy Corporation loan to equity, all to make the situation look bad.

I want to know from the Government Leader this: is his position that if there is a deficit there should be no collective bargaining?

Or, to state it another way, is it his position that if there is a substantial surplus at the end of next year or the year afterward, they will go back to the bargaining table with the employees and treat them with respect, and bargain with them as citizens and as equals, or will they just impose or continue the dictatorial process of laying down the wage package?

Hon. Mr. Ostashek:

The Member opposite is right; it is not an easy decision to make when you do this. We know that it is not a popular decision, but we felt that it was needed. I can assure the Member opposite that if, in time, we feel it is no longer needed, we will remove it.

Mr. Penikett:

When the Minister made the decision, he did not know that he had the $20 million that he discovered the other day. Can I ask him if the discovery of that $20 million changed anything at all in his assessment of the need to take away democratic rights from employees of the Government of the Yukon?

Hon. Mr. Ostashek:

The Member opposite is fully aware that it did change, because we did not come in with the wage restraint package we intended to come in with.

Some Hon. Member:

(Inaudible)

Hon. Mr. Ostashek:

The Member for Riverdale is kibitzing from the back benches again.

I have stated to the Member opposite that we did change the wage restraint package based on the financial condition of the government. The wage restraint legislation is coming in for a period of three years. I would be the first to say that if our financial position changes to the point where we feel confident in projections for two or three years, and that we are not going to be in serious financial difficulties, we will certainly consider removing the wage restraint legislation.

Mr. Penikett:

Most places where they have suspended the right to collectively bargain at least tried to negotiate first. Before they even began to negotiate, they went to some real effort to demonstrate a real financial need or a real financial crisis. Obviously, no crises operate here, and no need has been justified here.

The Government Leader just said that if the financial position changes, they would reconsider whether to kindly grant, in a fit of noblesse oblige, the right to bargain again.

Let me ask the Government Leader this: if we have the average lapses that we normally have - say $18 million - plus the $6 million that may be in surplus now - a surplus of in excess of $20 million - would that be a sufficiently healthy position from which to allow collective bargaining to be restored in the Yukon Territory?

Hon. Mr. Ostashek:

I am not about to speculate on that, at this point. The Member opposite is fully aware that we need more discretionary capital. We have said that time and time again. We have to control the costs of O&M, and wages make up a big portion of the O&M cost of government.

Mr. Penikett:

That is no response at all. The fact that the Government Leader wants to have more discretionary capital does not constitute a financial crisis. We still have not had demonstrated to us anything in terms of financial evidence that would justify the taking away of a democratic right. It is very serious business.

Why was the Government Leader so lacking in self-confidence and in his ability to negotiate that he was not prepared to do what other governments in this country do - including governments in much worse financial shape - which is to sit down and negotiate with the employees?

Hon. Mr. Ostashek:

It seems to me that I recall governments all over Canada bringing in wage restraint legislation, including the federal government, which has had a freeze on since 1990, and

Page Number 2790

has now extended it to 1997. I did not see much collective bargaining on that issue.

Clearly, the Members opposite are not going to agree with us that we need wage restraint legislation. Clearly, they are not going to agree with us that we should impose it, and that is their right.

Mr. Penikett:

That is not news. I think we have made that point before. The difference between the federal government, which has a $500 billion debt, and this government, which has none, is huge. To make the copycat argument that other Conservative governments are taking away bargaining rights does not convince me, especially when even Ralph Klein went to the bargaining table. Even Roy Romanow, with a $15 billion debt, negotiated.

I want to understand from this government what the price of democracy is. There is no debt; there is no deficit. How much of a surplus do we have to have before the democratic right of free collective bargaining is returned? Can the Government Leader tell us? Is it a surplus of $20 million, of $50 million, of $100 million? What is it?

Hon. Mr. Ostashek:

No, I cannot.

Mr. Penikett:

Let me ask the Government Leader this question, if he will not answer that question. It is amazing - just staggering - that they made the decision to take a democratic right away without even having thought that question through. It begs the question of whether there really was any financial background to this decision at all, which is what a lot of people suspect. It had nothing to do with money and everything to do with ideology.

Let me ask the Government Leader a very simple question: what was the financial justification today - given that we know that they cannot competently predict the financial position one month from now, much less six months from now or one year or two years from now - for taking away the democratic right to collective bargaining with its own employees?

Hon. Mr. Ostashek:

That issue has been debated time and time again. Our reasons are on the record. I am not about to be putting them on the record again.

I just want to add for the record that I believe our budgeting process is a lot tighter than that of the previous administration.

Mr. Penikett:

The Government Leader would have a hard time proving that, since the people doing the real work in the budgeting process are exactly the same people as when we were around; the only difference is the politicians and what has changed is the rhetoric. I would think the rhetoric was a little more believable before, than it has been recently.

Let me just ask the Government Leader again: he justified the wage restraint legislation - the decision to remove the collective bargaining rights of employees - on the basis of the fact that this government had debt and a deficit. Since he has neither a debt nor a deficit, and since his financial forecast for the future has proven completely incredible, can the Government Leader again tell us, what was the financial justification for taking away the collective bargaining rights from its employees?

Hon. Mr. Ostashek:

I said that we have stated our case; we have stated our reasons, and I do not have much to add to that.

One thing I do have to add: we had average lapses in 1992-93, but we still had a $64 million deficit. When we can see balanced budgets in the reasonable future and some discretionary capital spending available to us, then I am sure we will not need the wage restraint legislation.

Mr. Penikett:

That is interesting, because the ability to have balanced budgets is entirely in the hands of Cabinet. They could have a balanced budget any day they liked - if they knew what they were doing and if they took into account the probable surpluses and lapses and so forth.

Is that a statement of policy from this government?

Sorry, I do not want to cut into the Minister of Education's quality time with the Government Leader, but can I ask the Government Leader if this is a statement of government policy - that when the territorial government achieves a balanced budget, it will be willing to restore the collective bargaining rights of employees. Is that a policy statement?

Hon. Mr. Ostashek:

The Leader of the Official Opposition is having very selective hearing again. I said that when we have a balanced budget for the reasonable future and some adequate discretionary capital spending funds, I do not believe we will need wage restraint legislation.

Mr. Penikett:

I suspect, notwithstanding the chart he has tabled here, the Government Leader has a lot more discretionary capital than he will admit. Today he was arguing in Question Period that he had all sorts of discretion to use devolved funds the way he liked, which is completely contrary to the position he took on the Alaska Highway, and of course balanced budgets within sight.

He said a moment ago that balanced budgets were the mark. It is now balanced budgets plus sufficient discretionary capital. Could he indicate to us what would be an adequate level of discretionary capital funds, given that most provinces spend between four and six percent of the budget in capital. What would be an adequate level of discretionary capital from this Government Leader's point of view?

Hon. Mr. Ostashek:

That is purely hypothetical at this point and I am not going to get into that debate. I am not getting into the numbers game on what we need in capital and what we do not need. It changes from year to year. I just want to reiterate that we could go the route that the Members opposite want us to go - just keep on spending, not worry about the costs to government - and it would not be long before we would be in the same position as other jurisdictions, because we do not have the ability to borrow the money and service the debt. So we would be making the cuts to the programs anyway to service the debt, and the Members opposite are fully aware of that. With our small tax base, it would be very foolhardy to go that route.

Mr. Penikett:

Would the Government Leader agree, then, that if collective bargaining is dependent on the level of discretionary capital and the discretionary capital is a hypothetical target for him, the only conclusion we could make is that collective bargaining is now hypothetical in the Yukon Territory. Is that correct?

Hon. Mr. Ostashek:

The Member opposite can make any conclusion he likes.

Mrs. Firth:

I have some questions for the Minister of Finance regarding the Yukon Development Corporation and Yukon Energy Corporation debt. Last night the Minister of Finance reported that one of the ways he intended to reduce the surplus from the 1993-94 budget was by giving the Yukon Development Corporation a grant of $12 million by forgiving a non-interest bearing debt, which Yukon Development Corporation owes to the Yukon government.

As this money has, in turn, been loaned by the Yukon Development Corporation, to its wholly owned subsidiary, the Yukon Energy Corporation is the Minister planning to ensure that the $12 million of this debt is also to be forgiven?

Hon. Mr. Ostashek:

The Member lost me somewhere along the road. The loan is to the Yukon Development Corporation, not the Yukon Energy Corporation.

Mrs. Firth:

The money has, in turn, been loaned by the Yukon Development Corporation to the wholly owned subsidiary, the Yukon Energy Corporation. That is correct. The advisor to the Minister is a member of the board, so I am sure he can help the

Page Number 2791

Minister out with answers to this question.

Is that debt also to be forgiven?

Hon. Mr. Ostashek:

We were not talking about forgiving any debt. We talked about doing something that has not been done, and that is why we show a $19 million surplus. That is what we are working with.

What we are planning on doing is consistent with what has been done in the past. When the corporation was set up, the government of the day made a $29.5 million equity investment in the Yukon Development Corporation. In the normal manner, this grant was deducted from government surpluses. It is a bookkeeping figure, as we debated last night.

The loan of $14.3 million was also made to the Yukon Development Corporation for working capital purposes. It was a non-interest bearing loan and had no fixed terms of repayment. Why it was done as a loan instead of as an equity grant, I do not know.

The loan now stands at $12 million, as the transfer of the Taga Ku loan from the Yukon Development Corporation to the government reduced the outstanding balance. We thought about it, but we have not done it and, for that reason, we are using the $19 million figure for the surplus for this year.

Mrs. Firth:

Can the Minister answer this: can he tell us what impact the change in the debt-to-equity ratio of the Yukon Energy Corporation will have on the electrical rates?

Hon. Mr. Ostashek:

From my understanding, there would be no change in the debt-to-equity ratio. It is just a bookkeeping entry from one side of the ledger to the other. It is still $12 million. It is just a matter of whether you call it a loan from the government, or whether you call it an equity investment of government.

Mrs. Firth:

It is my understanding that the Public Utilities Board is currently allowing the Yukon Energy Corporation a rate of return on equity of 10.5 percent. If this equity increases, the profit of the Yukon Energy Corporation may increase.

Has the Minister done any economic analysis of the conversion of the debt to equity and its impact on the electrical rates and the ratepayers?

Hon. Mr. Ostashek:

Yes, we have. This is to Yukon Development Corporation, not to Yukon Energy Corporation. The rate of return is on Yukon Energy Corporation assests, so this has no impact on the electrical rates.

Mrs. Firth:

Can the Minister tell us when they did the economic analysis of the conversion of debt to equity?

Hon. Mr. Ostashek:

We have talked about that since we took over office. It is a very touchy subject, just as it is now, and that is why we have not shown it as being done. If we would have done it last year, with a $64 million deficit, I can just hear the roar that would be coming from the Opposition benches. Even now it is a touchy situation, and that is why we are working with a $19 million surplus figure.

Mrs. Firth:

Will the Minister provide us with the economic analysis that has been done?

Hon. Mr. Ostashek:

It simply does not require an economic analysis, because it has no effect on the Yukon Energy Corporation. This is a loan to the Yukon Development Corporation, which is a separate entity from the Energy Corporation.

Mrs. Firth:

Maybe about two minutes ago, the Minister stood up and said that they did an economic analysis; now he says that they did not need to do one.

Has there been an economic analysis of the conversion of debt to equity and its impact on electrical rates and ratepayers? If this has been done, as the Minister has said it has, would he provide us with a copy of that economic analysis so that we can all have a look at it?

Hon. Mr. Ostashek:

There has not been an in-depth economic analysis done, because it is not required. It will not have an impact on the power rates. It is not going to the Energy Corporation, it is going to the Development Corporation. If it did, we certainly would not even consider it.

Mrs. Firth:

Why did the Minister stand up and say that they have done an economic analysis if they had not?

Hon. Mr. Ostashek:

It was an economic analysis, inasmuch as we discussed it in the economic sense. I can assure the Member opposite that if it were to mean an increase in power rates, we certainly would not be considering it.

Mrs. Firth:

If they did an economic analysis, perhaps the Minister could explain to us what information they found out on the economic analysis. Why was it touchy? What did it show?

Hon. Mr. Ostashek:

It is not touchy at all. I will table the notes that were drawn up by the department on the conversion if it were to go ahead. That may better explain what we are talking about.

Mrs. Firth:

I will take the notes, but now we find out it is not an economic analysis that has been done, it is actually just some notes. My recommendation to the Minister is that perhaps when he gets up and says things he had better know what he is saying because he is going to be challenged by me, personally, as a Member of the House. Every time he gets up and says something, I am going to want him to substantiate it or back it up with the facts. I will have a look at what the Minister has provided and I may have some more questions after that.

Hon. Mr. Ostashek:

We will get a clean copy for tabling. But, simply, for the Member opposite: conversion of debt to equity of our loan to Yukon Development Corporation does not impact on Yukon Energy Corporation at all. There is absolutely no impact on it. Yukon Development Corporation's equity in Yukon Energy Corporation remains unchanged.

Mrs. Firth:

So, what the Minister is saying, then, is that there is absolutely no impact on the electrical rates and what the ratepayers are going to have to pay.

Hon. Mr. Ostashek:

Yes, that is correct.

Mrs. Firth:

Will the notes that the Minister is providing me explain that, or can he explain how that can be to us this afternoon?

Hon. Mr. Ostashek:

They are two different corporations and it does not change the equity in the Yukon Energy Corporation; therefore, it would not have any impact on the power rates.

Mr. Cable:

I have got a number of questions, some of which relate to the Yukon Energy Corporation conversion.

Last night, we asked the Minister what the rationale was for the conversion and it was not immediately apparent from his answers. Could the Minister indicate what started the thinking toward recapitalizing the company by way of equity rather than debt?

Hon. Mr. Ostashek:

I do not think we are recapitalizing the company. We are just being honest with ourselves and being honest with the taxpayers of the Yukon. When you say there is a $12 million asset on the books - and it is known that it will never be collected - you are saying that the territorial government has $12 million more available to it than it actually has. With the change in the mandate of the Energy Corporation stating has that will spend any profits it has on energy-related facilities or on rate relief, it would be virtually impossible for the Development Corporation to pay that loan back. Why would the Member opposite continue to carry a loan on his books that he was not going to collect?

Mr. Cable:

The question I am asking is this: what difference does it make? We know that we are not going to get that money back, so why not just leave the status quo? How are we improving the financial situation of the Yukon Development Corporation or the financial situation, for that matter, of the Yukon government?

Hon. Mr. Ostashek:

By not converting it, we are saying that the Yukon government has $12 million more than it actually has.

Page Number 2792

That is why it would impact on the accumulated surplus deficit and change the $5.6 million surplus to a deficit. It would do that because it is money that we do not have. All we are doing is fooling ourselves and fooling the people of the Yukon by saying that we have $12 million more than what we actually have.

Mr. Cable:

Of course, this could have been done some time ago. It still has not sunk in what we are promoting here and what the rationale for it is.

In Question Period, I asked the Minister responsible for the Yukon Energy Corporation what was going on with respect to the fixing of the rates for the next couple of years, I believe it was. I think we determined that this was going to be handled by way of some economic transactions, rather than by legal transactions - there was not going to be any direction given to the Public Utilities Board.

Of that $3.7 million that is referred to in the initial press release - just to confirm - is it the government's position that no taxpayers' money is going to go into that portion of the rate relief, and that it is all going to come out of the Energy Corporation's equity?

Hon. Mr. Ostashek:

I believe that was what the Minister said today, and I know it was the intention, when the rate relief was announced, that it would come out of the profits of the Energy Corporation. If, for some reason, there were not enough profits in the Energy Corporation to cover all of the rate relief, then there would be a bill brought to this Legislature to top it up. We are back stopping the corporation on this one, so that ratepayers could be assured that there would not be a rate increase in the next two years.

Mr. Cable:

I read the rate-relief program as having two segments to it. There was $3.7 million, initially, and a freeze. I gather, from what the Minister just said that there is nothing in this budget anywhere, in all of these numbers, that relates to the present year rate relief, the $3.7 million. In the last portion of this budget, which goes into 1995, there is no indication anywhere in the budget that there will be further funds for the rate-freeze portion of the rate-relief program. Is that what we are saying? Are we saying that there is nothing in this budget for either element of that rate-relief program?

Hon. Mr. Ostashek:

It will come out of the profits of the corporation each year. We believe there is enough money in the corporation this year to cover it and we hope there will be next year. What we have done is to say that, if the corporation cannot pay it, we will back stop it. My understanding is that the corporation also has the ability to borrow money, if necessary, so we hope that the corporation will be able to handle it on its own. Should we come to the point in time when it cannot, then we will be bringing a bill to this Legislature to make up the difference.

Mr. Cable:

The rates have gone up and down like a yo-yo over the last couple of years. I think an order was given just a week or so ago as to what the rates would be. Has the Government Leader any projections about what the rates will be for 1995 - the rate-freeze portion of his program? Is it anticipated that there will be a requirement for money to be removed from the corporation or for money to be provided by way of the government?

Hon. Mr. Ostashek:

It is certainly not our intention to remove any money from the corporation. If the corporation does not need the money, then we will not be transferring any to it. The questions on rates would be better directed to the Minister responsible for energy. I am not familiar with that.

The only item in this budget that relates to energy at all is the income tax transfer in the Department of Finance. This is a standard item every year.

Mr. Cable:

Let me get to another issue. The Government Leader last year provided me with an encapsulation of monthly expenditures, which showed, to nobody's surprise, that there were balloon expenditures in March. Was there a repetition of that for 1994?

Hon. Mr. Ostashek:

I believe Government Services is going to table that at some point in this session. I do not have the figures. I could not even begin to speculate about what they were.

Mr. Cable:

Last year, we talked at length about the numbers that were given to me and how they could be explained by the chronology of when the transactions are booked, but I think, when all the smoke had cleared, we had reached the conclusion that there was a small element of that balloon that could be attributable to year-end forced spending. If I recall correctly, the Minister was going to look into that problem. I think that was one of his bete noirs - the public service running around spending money at the end of the year.

Has there been any thought given to how that can be controlled? Have the Minister and his deputy discussed that matter at all?

Hon. Mr. Ostashek:

I believe there are several ways in which it can be addressed. One I discussed with the critic earlier was amending the Financial Administration Act. Another is that in the budgetary process we could allow the departments to keep a certain portion of what they lapse. We have not entered into those kinds of discussions yet.

I do agree with the Member opposite, and it is a concern of ours. Again, this year, I sent a letter to all the departments in late January, early February, encouraging them not to go on a year-end spending spree. I feel fairly confident that that did not happen, but I will not know for sure until I see the documents from Government Services.

The reason we get the year-end spending spree is not only that departments are trying to get rid of their money. A lot of departments, in their budgeting process, wait until toward the end of the year to see if they have the money left to do certain things they want to do, so it is spent toward the end of the year, instead of in the early part of the year.

There are many factors involved in it, rather than just departments indiscriminately going out and spending what is left of their budgets.

Mr. Cable:

I have the impression, from the comments the Minister had made early on in this administration's regime, that that was a major concern of this Minister. Has there been any formal structure set up to deal with that particular issue? If it is a major concern, why has the government not actually addressed the issue sooner?

Hon. Mr. Ostashek:

As I told the Member, I have addressed the issue. I have had discussions with the deputy ministers on that issue. I told them I did not want to see that happening. I will wait for the returns to be filed with Government Services to see if my directions have been followed or not.

If they have not been followed, then we will have to explore different avenues as to how we can curtail that. It is a concern of mine, but I feel fairly confident that the departments have been prudent in their year-end spending this year.

Mr. Cable:

The Government Leader had provided me with a copy. It was a handwritten document, which I assume was done by the deputy minister, on the expenditures of the last three months of the previous two years of the term, starting in November 1992, when this administration took over, up to March of 1993 - it should be November of 1991 to March of 1992. Will the figures that the Government Leader is talking about - those he expects to receive from Government Services - be available in the immediate future before the House rises so that we could see how the successful the Government Leader has been in his efforts?

Hon. Mr. Ostashek:

I believe that is a written question on the Order Paper. The Minister assures me that it will be tabled

Page Number 2793

before the sitting is complete.

Mr. Cable:

I just have another small matter. I had received what I suppose one could call a complaint from a public servant, who had been out on the road. She thought the rates that were paid to public servants were encouraging them to travel. I know, from the earlier comments that the Minister made, that this was part of his three point program to make government more efficient. I was looking through the meal and incidental rates charts and it appears that the rate given for private vehicles is 40 cents a kilometre. I think, through the collective agreement, the government is obliged to provide the same as the federal government. It appears the federal government has a graduated scale starting at 40 cents for the first 6,500 kilometres and then it goes down as the number of kilometres goes up. I was wondering why that has not been adopted; that would appear to be what the collective agreement has for the unionized employees anyway.

Hon. Mr. Ostashek:

First of all, I would be surprised if there are many employees who travel more than 6,500 kilometres a year in their own vehicle - it could be possible. Why do we not have a graduated scale in place? I do not know, but I will certainly find out for the Member opposite, and I thank him for raising that issue.

Mr. Cable:

Do not tell any of the public servants, of course.

What is the overall amount of money that is spent on travel using private vehicles, providing for meals in the outlying areas and incidental expenses?

Hon. Mr. Ostashek:

I do not have that figure handy, but I will get it for the Member opposite. I just want to draw to the Member opposite's attention that this administration, since we came into office, has discouraged the use of private vehicles, whether it be for Ministers or those working in the public sector, and encourages the use of government vehicles because it is far more cost effective.

Mr. Cable:

The woman who discussed this matter with me was of the view that the food allowance was too high. I was wondering, without trying to promote a great argument here, why the federal rates are adopted, holus bolus, other than the contractual provisions that deal with the unionized employees.

Hon. Mr. Ostashek:

Maybe the Member opposite could help me. If he makes a motion on his motion day that we reduce it by 50 percent, I will certainly support it.

It is my understanding that through the collective bargaining process we are locked into the federal rate, and we have no discretion. That is my understanding at this time. If the Member needs more information, I will see what I can get for him.

Chair:

Is there any further general debate?

Mr. McDonald:

Whenever I hear the Minister of Education trying to rush things along artificially by saying "clear", I feel compelled to speak some more, so I thought I might bring up a few more topics.

First of all, I would like some basic information to add to the information that the Minister has already promised to give us, and that revolves around the question of revotes. The Minister has indicated already that the net revotes he is going to be requesting will be about $2.4 million. I take it that the Minister will correct me if I am wrong, and that they have not yet made the decision in Management Board about revotes. Has the government made a decision about revotes yet?

Hon. Mr. Ostashek:

The Member is right; we have not made a decision. It is my understanding that it is on the agenda for Management Board this week.

Mr. McDonald:

What is the request for gross revotes? I would presume that the $2,400,000 refers to net revotes; approximately, what are the gross revotes?

Hon. Mr. Ostashek:

I have not yet had an opportunity to review my documents from Management Board, but my official tells me it is within $100,000 of the $2,400,000.

Mr. McDonald:

The $2,400,000 being requested for revote is net capital. I take it that there are no recoverable funds being requested for revotes.

Hon. Mr. Ostashek:

It is my understanding that there is very little - possibly $100,000.

Mr. McDonald:

Can the Minister give us some precise information about that as soon as Management Board has made the decision?

Hon. Mr. Ostashek:

Yes, I can. In fact, I may be able to read something into the record here shortly.

Mr. McDonald:

Can the Minister tell us a little more about the Taga Ku write-off? Have they made the decision to write off the Taga Ku loan to the Champagne Aishihik Band?

Hon. Mr. Ostashek:

Again, it is not a write-off. We have made a provision for it - we have accounted for it. That decision has been made.

Mr. McDonald:

So they have no expectation whatsoever that the funds will be recouped - is that the Minister's position?

Hon. Mr. Ostashek:

I think the Member opposite will have to agree with me that it would be highly politically sensitive to try to recoup land claims money that was put up for security for that loan. It would be a very politically sensitive approach if we were to embark on that. We have certainly not made a decision to pursue that. I guess there is always the possibility that they will come in and make some payments on it, but in the meantime we have made provisions for it.

Mr. McDonald:

I know that there is some sensitivity attached to it. Presumably, the Champagne/Aishihik Band did make the commitment in good faith. Can I ask the Minister this, then: has the government made any attempts, or talked to the band in any way, about the settlement of this old debt? Obviously, the Champagne/Aishihik Band is not only seeking a court settlement that would result in their not having to pay back this debt, but would also see the government having to pay them a lot of money, but has the government made an effort, or taken any steps at all, to test the waters with the Champagne/Aishihik Band on this point?

Hon. Mr. Ostashek:

No, I do not believe we have. We are waiting for the outcome of what happens between the lawyers on the charges that have to be dealt with on that issue. I believe they are coming up this fall.

Mr. McDonald:

Has the government attempted to communicate this initiative to the Champagne/Aishihik Band in any way? Have they sent a letter to them, or communicated with them? Have they made their intentions clear?

Hon. Mr. Ostashek:

I would have to get back to the Member. If Finance has not, perhaps the lawyers have. I do not know.

The Minister of Justice may know more about it than I do. I do know that it is in the hands of the legal people, and it is going through the normal process. At some point, there will be a decision made on it.

Mr. McDonald:

I would like to know precisely how the decision has been communicated, if it has been, to the Champagne/Aishihik Band or to the proponents of Taga Ku. It would be interesting information for me. If the Minister could provide that, it would be fine.

With respect to write-offs they have pursued over the course of the last 18 months - the allowance for bad debts and write-offs - can the Minister tell us whether or not they all conform to the terms of the Management Board directive on debt write-offs?

Hon. Mr. Ostashek:

Yes, I can tell the Member that they do.

Mr. McDonald:

I will get back into that when we get into the supplementary estimates and deal with the specific write-offs the Minister is pursuing in that budget. I would like to test the

Page Number 2794

waters with the Minister on whether or not they are sure that what he just claimed, that they conform to the Management Board directives, is true.

I do not have any more questions in general debate. If others do, they can ask them. Otherwise, we can get into line-by-line debate.

Hon. Mr. Ostashek:

I am prepared to move into line-by-line debate, but I have one comment for the Member opposite. They are not write-offs, at this point. They are provisions for write-offs. There is a difference in how you talk about them. A write-off is to clean a debt off the books. Provisions are made for those on which it appears we will not collect, so we have made a provision for bad debts.

On Treasury

Hon. Mr. Ostashek:

I have a few brief comments before we get into the actual lines. I have an executive summary of the department. The Department of Finance is vested by the Financial Administration Act, with the responsibility to oversee the manner in which the monies collected by the Government of the Yukon are administered. The department is responsible for four taxation acts: the Fuel Tax Act, the Insurance Premium Tax Act, the Tobacco Tax Act and the Income Tax Act.

Finance's activities encompass carrying out the government's centralized accounting functions, preparing payrolls, collecting taxes, managing the agency banking system, investing surplus funds, preparing main and supplementary budgets, analyzing Management Board and Cabinet submissions for financial impact, and negotiating the formula financing agreement.

The Department of Finance has a complement of 48 full-time equivalents to carry out the above functions. These FTEs are organized in three branches: administration, which consists of a deputy minister, departmental administrator and administrative assistant. Financial operations and revenue services carry out the accounting functions of the government, with a staff of 32. Management Board Secretariat and Fiscal Relations have 13 staff and is responsible for the preparation of budgets, analysis of Management Board and Cabinet submissions, and the negotiation of fiscal arrangements with the federal government.

The department's budget totals $5,043,000 allocated to operation and maintenance purposes. The bulk of these funds are for personnel costs, but several special activities are also carried out that are voted in Finance for the purpose of convenience.

The public utilities income tax transfer of $771,000 provides monies to lower power rates. The Workers' Compensation supplementary benefits program of $374,000 brings benefits paid by private insurers to the level it would be paid by the current compensation board had injuries been incurred after the formation of the board.

The major clients of the Finance department are other government departments, for whom Finance provides a central accounting system, and Management Board and Cabinet, for whom the department analyzes submissions and at whose request special projects are carried out. The department also issues all supplier cheques and has frequent contact with the public in carrying out this function. Collection of taxes also involves frequent contact with portions of the public, principally truckers and tobacco wholesalers. The collection of accounts receivable also results in contact with the public.

Major issues facing the department tend to be limited in number but are of fundamental importance. At present, it could be said that there are four such issues: status of rural banking, status of formula financing, land claims and self-government funding, and devolution funding.

And I would be happy to answer any other questions the Members opposite may have.

Chair:

Is there further debate on Treasury?

Mr. McDonald:

Can the Minister tell us whether or not they have any anticipated changes in the staff complement and staff organization in the department over the coming year, and whether or not it has changed at all from last year; and can he tell us whether or not they are anticipating any mandate changes for the department?

Hon. Mr. Ostashek:

No, there have been no changes and we do not expect any changes in the mandate of the department. This is a year we are renegotiating the formula financing and that is about all we are doing.

Mr. McDonald:

A good conservative department like the Department of Finance seldom sees changes; I know that.

What is the plan of the department with respect to having a permanent finance officer in the Ottawa office - the gentleman who may or may not be with us from year to year and who is part time?

Hon. Mr. Ostashek:

If the Member opposite has the same high regard for that person that I have, I know we would love to keep him there. As the Member said, he is always on edge as to how long he is going to be there. I think it is important to keep that office staffed with a financial person. I am, right now, contemplating filling the other vacant position in that office that has been vacant since we took over government.

Mr. McDonald:

There has been a lot of discussion in the media about the issue of tobacco smuggling and the avoidance of tobacco taxes. Can the Minister tell us what the department is doing, how it is monitoring the situation locally and whether or not it anticipates any problem? Has it been able to identify problems? How is it ensuring that cigarettes sold to people in the Yukon have taxes paid to our treasury?

Hon. Mr. Ostashek:

We do not believe it is a big problem yet in the Yukon, but having said that, there could be cigarettes coming through the mail. We are working right now with the western Premiers and the Northwest Territories trying to stop - we will collect double the taxation from him, seeing how he volunteered that information - it at the Manitoba border. The western Premiers have also asked for changes in federal legislation with regard to mailing tobacco products through the mail, so we are trying to encourage the support of the federal government to act as quickly in the western provinces as it did in Quebec, with the problem there.

Manitoba feels quite confident. They put extra resources on at the border. In fact, they put some officers over on the Ontario side and, in a few places, they have clamped down on truckloads of cigarettes that were headed west and have been able to stop them.

Saskatchewan and Alberta do not believe that they have a problem yet. In fact, they say that their tobacco tax income has gone up.

British Columbia has several concerns and they, also, have said that their tobacco taxes had gone up in the last couple of months. We are monitoring it very closely and we are encouraging the federal government to work with us, so we can stop smuggling without having to lower the taxes, which would result in more people smoking and our health care costs going up. We certainly do not want to have more young people smoking.

Since Canada had high cigarette prices and taxes, it did discourage young people from starting to smoke. There are indications in Quebec and Ontario, and those provinces where they have gone along with the federal government and lowered the taxes, there is indeed a substantial increase in tobacco sales.

We are working with the western provinces to make it short and we are going to continue to do that. We have not seen a decline in our own tobacco tax revenue at this point.

Mr. McDonald:

I would invite the Member for Community

Page Number 2795

and Transportation Services to go to see his priest, enter the confessional and talk to him about the evils of tobacco smuggling.

Perhaps I can move on to another issue here, the issue of rural banking. The Minister has made some noises in the last year about the costs of rural banking, because there is not as much investment income as they expected from the cash position of the government.

Could the Minister first of all tell us what the services are gong to be for the coming year in rural banking, whether they are going to have agencies, whether they will upgrade or downgrade services, and can he also explain, ultimately, how the financing for banking services is expected to be undertaken?

Hon. Mr. Ostashek:

We have opened two new rural banking facilities. One is in Pelly, which is opening tommorrow, and one is in Teslin. There are no plans to open any more this year and we hope to pay for most of these services through compensating balances in the bank. As long as interest rates remain higher than what they were last year, there will be a reduction in the amount of money that we have to keep in the bank to offset those costs.

Mr. McDonald:

Perhaps I will ask a few more questions about banking services under the other line item. The investment income is not listed anywhere in the information provided by the department in the main estimates. Is there any expectation of investment income?

Hon. Mr. Ostashek:

My understanding is that we will not have any income from investments of surplus money this year, with the exception of trust accounts, which is not our money and is not reflected in the budget.

Mr. McDonald:

What is the reason for there being no income at all?

Hon. Mr. Ostashek:

I would say the biggest reason is the inability to keep compensating balances in the bank. We are in a deficit position quite often during the year, and what compensating balances we had were very low, and interest rates were low.

Mr. McDonald:

The Minister just told us that some of the banking services are going to be paid through compensating balances. In order for there to be a compensating balance, there has to be some investment income, does there not?

Hon. Mr. Ostashek:

My understanding is that we do not get any income on the compensating balance, and that is one of the ways that we pay for those banking services. It is a transaction right in the bank; we do not get any income from it. That is part of the negotiated contract with the bank.

Mr. McDonald:

I notice that there has been a line item in the past for investment income in the budgets. The Minister is then saying that, even with the considerable lapses from last year, they do not expect to see any investment income at all. Is that correct?

Hon. Mr. Ostashek:

When we did the budget, which was several months ago now, we were not expecting these lapses. Also, since then, interest rates have gone up, so we may have to address it with a supplementary in the fall. We were not expecting it when we put the budget together, based on last year, when I believe there was in excess of $300,000 in bank charges, because we could not keep the compensating balances in there.

Mr. McDonald:

Can the Minister tell us how much of a compensating balance is required to eliminate the need for any expenditure for banking services?

Hon. Mr. Ostashek:

If I can just give my deputy minister a minute on that one, we will try to calculate it for the Member.

Mr. McDonald:

While the deputy is working on that, can the Minister just turn to page 121 of the budget book for a moment, and give us some explanation as to what is happening with the corporate taxation revenue? On page 121, taxation revenue, the line entitled "Corporate Income Tax" - second line - shows an estimate of $9,114,000 expected from corporate income tax. That is a fairly hefty increase of about $2 million over the 1993-94 forecast, which is about $2 million more than the estimate for 1993-94, which is about $2 million more than the forecast for 1992-93.

Can the Minister tell us what is happening? I was under the impression that we would not be seeing these rather dramatic increases in corporate income tax as a result of the tax rate changes last year. Do I have some misinterpretation that suggests we will still continue to receive large amounts of corporate tax revenue?

Hon. Mr. Ostashek:

I have a note that may explain it for the Member opposite. As he is aware, the federal government collects income taxes on our behalf, as they do for all the provinces and territories, except for Quebec. Estimates for collections of the current and the two previous years are provided by Finance Canada several times a year. The figures in our main estimates are from February 11, 1994, which are the Finance Canada estimates of income taxes for 1994-95. Provincial finance ministers have expressed a concern with the federal estimating methodology, and the matter is being examined with federal, provincial and territorial officials.

The problem of the fluctuating estimates becomes relatively worse, the smaller the jurisdiction, because the estimates are based on a relative share of the national tax receipts. That is why we have the big fluctuations with our small tax base.

At one time, Yukon Finance made estimates of income tax revenues for budget purposes. These estimates were probably as accurate as the federal government estimates and, for a period, may have been even better. However, there was apparently some concern expressed in the Legislature about not using official estimates of the tax collection agency, Revenue Canada, and it was decided to base future projections on official federal data - it must have been the Conservative Opposition raising the question at the time; anyway, we have to live with it now.

The current increase is largely in corporate income tax, but there are also some increases in personal tax. Some of this will be due to the phasing in of the tax increases. We believe a part of the increase in corporate tax is due to past volume increases, resulting from the investment corporations taking up residence in the Yukon. That was one of our concerns and reasons for raising that corporate tax rate. As the Member opposite knows, with the volume increase, we are dramatically affected by the perversity factor.

The results for the 1994 tax entitlements will not be known for two years hence, in the case of personal tax, and three years hence, for the corporate tax.

Chair:

At this time, we will take a brief recess.

Recess

Chair:

I will now call Committee of the Whole to order. Is there any further debate on Treasury?

Hon. Mr. Ostashek:

Before the break, the Member opposite asked me what the compensating balance would have to be in the bank to not incur bank costs.

Based on the interest rates that we have now, it would be in the neighbourhood of $20 million.

Mr. McDonald:

With respect to the issue of corporate income tax, the Minister has indicated that the federal government provides information with respect to the corporate income tax we can expect. Could the Minister tell us whether or not he or the department understands if the corporate income tax will be increasing or decreasing? Are they following these numbers simply because these are the numbers the federal government provides to us, or do they honestly believe we are going to be facing a $2 million increase over last year, given the increase in tax rates?

Page Number 2796

Hon. Mr. Ostashek:

It is because of the fact that Finance figures corporate tax might go down a little bit this year but, because we have taken two previous years, it is three years down the road before all of the figures are worked in. This Department of Finance uses federal government figures to prepare the budget, even though they figure taxes may be a bit lower than that this year, but we will not know until the figures are adjusted two years hence.

Mr. McDonald:

I was certainly under the impression from the media reports that the corporate players were leaving the territory in some sort of a mass exodus as a result of this tax rate change, and that we were going to be expecting a major drop in income. I understand how these are calculated but, in terms of the actual estimate for this year, irrespective of the numbers that are placed in this book, I wanted to know if the Minister feels that they are going to be receiving more or less than last year.

Based on the information that we have, at least anectdotally through the media, I thought it would have been not more, but probably less. Can the Minister tell us whether or not the federal formula grant to the territory is based on the understanding, in part at least, that the corporate income tax estimates will increase by a couple of million dollars in this current year?

Hon. Mr. Ostashek:

The grant is based on the numbers in the budget. The Member's preamble said that these corporations were leaving the territory. We have also heard that. However, I have also talked to bankers who have said they are not leaving that quickly, but it is just that there are not any more coming in - it has sort of stabilized - and, over the next few years, they will leave.

The reason we expect more money this year is because of the adjustments from the two previous years. This year's will be a decrease, but we will see that a couple of years down the road in the actual money we get for this year.

On Activities

On Administration

Mr. McDonald:

Can the Minister explain the six-percent increase? It seems to be bucking a trend in the rest of the branch.

Hon. Mr. Ostashek:

Administration activities are up $24,000 from the 1993-94 forecast. This is due to budgeting for a full personnel complement, net of savings due to wage restraint.

Administration in the amount of $414,000 agreed to

On Financial Operations and Revenue Services

Hon. Mr. Ostashek:

Spending for this year is projected to be $73,000 less than the forecast in 1993-94. Some of the saving is due to wage restraint, and the remainder is due to assumed vacancies occurring during the course of the year.

Financial Operations and Revenue Services in the amount of $1,834,000 agreed to

On Fiscal Relations and Management Board Secretariat

Hon. Mr. Ostashek:

The spending on this line item should be increased by $39,000 from the 1993-94 forecast. There were several extended vacancies in the branch in 1993-94 that we do not anticipate will occur in 1994-95. This increase is offset somewhat by wage restraint savings.

Mr. Penikett:

I have one question about fiscal relations. At one time, the senior fiscal relations officer had estimated that, as a result of the population factor in the formula, we might, in the final adjustments get as much as $40 million more under this contract than we had previously expected.

What is the latest estimate?

Hon. Mr. Ostashek:

My deputy minister will see if he can dig it out. He may not have it with him at this time but he will look for it.

Mr. Penikett:

I am wondering particularly if that estimate may have been reduced as a result of the plateauing or reduction in the population that has gone on, obviously in the last year or two of the formula.

Hon. Mr. Ostashek:

The Member is correct. It has been reduced somewhat. We will try and find out what the figure is.

Mr. Penikett:

The Government Leader fascinated us all yesterday with his comments on the radio. I want to ask him this: in respect to the financial negotiations around devolution, is it still the practice and the policy of this government to negotiate, or hold consultations even, with the affected employees prior to the transfer?

Hon. Mr. Ostashek:

Yes, I believe that is correct.

Mr. Penikett:

In the case of the hospital transfer, the previous government negotiated what was something akin to a collective agreement. Of course, it was not a collective agreement, because you can only make such a thing with your own employees. Has this government been in that kind of detailed discussion with any prospective group of territorial employees and, as a result, have they been able to precisely and very closely predict what the actual personnel costs of running what were former federal programs will be - for example, in the case of forestry, or community health services or any programs like that?

Hon. Mr. Ostashek:

I would not have those figures here with me. I do know that there were extensive talks with personnel involved in forestry and community health. I do not know where they are at with it. The Minister may be able to answer that at some point.

Mr. Penikett:

I take it, from the Government Leader's comments today, and from comments made by his colleague, the Deputy Government Leader some months ago, that the government was trying to reduce the personnel costs of, say, the forestry program, once it came under YTG management. Is that correct?

Hon. Mr. Ostashek:

I do not think the matter is just basically about reducing personnel costs. It is a matter of delivering services in an efficient manner. If we pick up some personnel savings in the process, that is fine. We are not on a mission to just reduce personnel costs.

Mr. Penikett:

Let the Government Leader not misunderstand me; I do not want to presume the Public Service Commission debate, which will follow. I hope the Government Leader understands why we were curious about his remarks on the radio. I want to say that I understand that sometimes people in public life can misspeak themselves - I know that sometimes one can even be misquoted; I know it does not happen with the Yukon media, but sometimes it happens elsewhere. I know that a different interpretation can be put on one's remarks than what was intended by the speaker. However, can the Government Leader tell me what he thought, or how he thinks, the federal government would respond to his statement that he is looking to transfer the programs, make some money in the exchange and, to use his words, streamline the service after the transfer.

A good negotiator will always anticipate the other party's reaction to a proposal, a statement or a proposition. Can he tell me how he thinks the federal government would respond to that statement?

Hon. Mr. Ostashek:

I have no idea how they will respond to it.

Mr. Penikett:

So, the Government Leader did not think about the response of the negotiating partner, or adversary, prior to making the statement. Can I ask him how he thought it would be profitable for us to go public with such a statement, prior to negotiating these items?

Hon. Mr. Ostashek:

We are not in negotiations of any kind right now - none whatsoever on any devolution, at this point. We do not know when we will be back to the table.

Mr. Penikett:

The forestry negotiations went a long way,

Page Number 2797

and then stumbled on the problem of First Nation consultation. I understand that breakdown was aggravated by some unhappiness among the employees. We were reminded earlier today that the Minister has a timetable of devolution tentatively agreed to with the federal government - although, if I may say in passing, I find those timetables to be fiction pretty quickly, not because they are a bad idea, but just because some negotiations go more quickly than others, and it is impossible to predict that in advance of the negotiations.

Does the Government Leader have a financial strategy - a consciously worked-out financial targets or objectives - in the devolution program? I ask that knowing, as I am sure the Government Leader knows, as I mentioned today, that the federal government has two objectives: one, to devolve programs, and two, also to cut their costs. There are optimum arrangements that can be achieved that can benefit us and the federal government. There are other arrangements, such as the inland fishery, where they were actually costly to us, but where we decided to proceed anyway, because we thought it was in the public interest.

Is there a worked-out or articulated strategy for the next round of negotiations, whether they are in forestry, mining, or anything else?

Hon. Mr. Ostashek:

The Member opposite is wrong. We do not have any kind of agreement with this government. The memorandum of understanding was with the previous government and the previous Minister of DIAND, and the present Minister has not acted on it.

The strategies will be dealt with on a case-by-case basis as we did with forestry. We set some targets that we felt we had to achieve in order to be able to conduct the area of forestry in a proper manner in the Yukon, and that is what will happen on the other devolution talks. When we enter into those talks, we will be looking at all of the financial implications and we will be instructing our negotiators with a certain figure in mind and we will see where we go from there.

Mr. Penikett:

I apologize for being wrong about the timetable. I think at one point I had a timetable worked out with a gentleman by the name of David Crombie but, of course, the schedule we had agreed to became irrelevant as soon as we started quickly negotiating items at the bottom of the list, as opposed to items at the top of the list. Actually, the timetable could have become a problem if we had followed it too closely.

Can I take it that the Government Leader's position on financing, in seeking agreement in devolution, is that they want all of the money that is now being spent on a program that is to be devolved? In other words, whatever is there now they want from the federal government. Is that the YTG position?

Hon. Mr. Ostashek:

Certainly, when negotiating, we are going to try to get adequate financing and, if we can get a good financial arrangement, we will have money available to do things within the programs. When negotiators go into the negotiations at some stage, prior to getting down to details in negotiations, the departments will cost everything out based on what the federal government is now providing and based on what we feel they are not providing.

This is very similar to what the Members opposite did on the Alaska Highway transfer when they received some extraordinary funding for reconstruction of the highway, because the federal government had not been doing it for a few years prior to that time. Those things will all be taken into consideration.

In answer to the census question the Member opposite had, the benefit of the population factor that was introduced with the new formula is plus $66 million for five years under the new formula.

Our financial person in Ottawa, Raghu, estimated plus $40 million as the census adjustment. We believe that is what it was, but we did not gain that much on the census. We do not have that figure here with us, but we know that it was not that much.

Mr. Penikett:

Just let me say I am sure my colleague, the Member for McIntyre-Takhini, would be extremely interested in that figure as soon as it becomes available.

Can I ask the Government Leader if it is still the position of YTG to try to get a portion of head office administrative costs in devolved programs? Obviously, the total cost of the program is not just assigned to the line or to the field or the region. There are often head office costs.

The Government Leader used the example of the Alaska Highway. It is true that we were able to negotiate some of that extraordinary capital money but it is also true that that was not the initial position of the federal government. I am suggesting that there is, in fact, some capacity to negotiate considerably on these agreements. All I was trying to do was to establish the financial strategy of the Members opposite.

Hon. Mr. Ostashek:

We do try to get some head office costs. The Member opposite is quite correct - there is a certain amount of negotiation that goes into this.

Mr. Penikett:

Let me just ask the Government Leader this, and then I will leave it alone: given the questions that have been asked today and the concern expressed in this House, would he have any reason at all to reconsider the wisdom of the kind of statement he made on the radio yesterday, which would seem to prejudice our position at the bargaining table?

Hon. Mr. Ostashek:

In hindsight, it is probably a statement I should not have made. It was one I did not think was going to be reported. It was one of those off-the-cuff statements made after the interview was over. Having said that, I do not think it is going to have any dramatic effect on our negotiating position.

Fiscal Relations and Management Board Secretariat in the amount of $1,043,000 agreed to

On Banking Services

Hon. Mr. Ostashek:

The reduction of $60,000 reflects our improved cash position. The opening of two new agencies adds some cost to this line. Were it not for this fact, the cost would have been less than $500,000 for the year.

Banking Services in the amount of $540,000 agreed to

On Public Utilities Income Tax Transfer

Hon. Mr. Ostashek:

A decrease of seven percent - $55,000 - is projected for the new year. This item is again based on federal estimates, and is an amalgam of estimates of the current year's public utility income taxes and any adjustments that may occur in the previous two years.

Public Utilities Income Tax Transfer in the amount of $771,000 agreed to

Treasury in the amount of $4,602,000 agreed to

On Workers Compensation Supplementary Benefits

On Activity

On Supplementary Pensions

Hon. Mr. Ostashek:

We have no reason to believe that there will be any change in spending for this program. As Members know, the program tops up compensation benefits to individuals covered by private plans that were in effect prior to the establishment of the Yukon board. The top-up brings the benefits to the same level as would be paid by the current board, had these individuals been injured subsequent to our board coming into existence.

Mr. McDonald:

I know the reason for this line item. I would just like to ask the Minister whether or not they have done any analysis of the spending trajectory here. I guess it will obviously go down as people - bless their souls - pass on. What does the department expect will be the spending trajectory over the next 10 or 20 years?

Page Number 2798

Hon. Mr. Ostashek:

The Member is correct. Over a period of years, it will disappear completely.

Mr. McDonald:

Yes, we agree. I want to know how fast - that is the point. For example, in five years, what does the Minister expect the annual appropriation to be?

Hon. Mr. Ostashek:

My deputy indicates it would be about $300,000.

Supplementary Pensions in the amount of $374,000 agreed to

Workers Compensation Supplementary Benefits in the amount of $374,000 agreed to

On Allowances for Bad Debts

On Activity

On Allowance for Bad Debts

Hon. Mr. Ostashek:

If the extraordinary items incurred as a result of the Curragh collapse were factored out of the 1993-94 forecast, Members would see no change in this figure from that forecast.

At best, the $67,000 is a guess, but it has been more than adequate in prior years when no extraordinary events occurred. The actual figure cannot be known until year-end and is a calculation based upon a formula that takes into account our aged accounts receivable listings at year-end.

Mr. McDonald:

I am not sure we want to give this government any vote authority for allowance for bad debts. Clearly, the extraordinary events that we have experienced in the last couple of years appear to be more ordinary than the Government Leader might make out. We have to budget around anywhere between $5 million and $5.2 million for this line item, given the proclivity of the government to want to write off items, or recategorize them, so to speak.

I asked the Minister yesterday if he could give us a list of outstanding debts owed to the government. I asked that half rhetorically yesterday, but I am serious about it. I am not certain that I know where all the debt obligations are. Can the Minister provide us a list of all debts owing to the government from all sources?

Hon. Mr. Ostashek:

Yes, we can provide that list for the Member opposite.

Allowance for Bad Debts in the amount of $67,000 agreed to

On Prior Period Adjustments

Hon. Mr. Ostashek:

We only seek a line item authority here. By definition, it is impossible to predict any sum, since it is meant to cover unanticipated corrections to prior years' expenditures or revenues.

On Activity

On Prior Period Adjustments

Prior Period Adjustments in the amount of $1.00 agreed to

Department of Finance agreed to

Hon. Mr. Ostashek:

Would Members opposite care to deal with the loan capital and loan amortization at this point? Loan Capital and Loan Amortization

On Loan Capital

Hon. Mr. Ostashek:

My official is trying to find to find a briefing note on that line item. While he is looking for it, the Member may have some questions we can answer.

Mr. McDonald:

Perhaps I could give the Minister notice. I have just asked for a list of all outstanding debts to government. This is technically a debt to government but, as it has been characterized in the past, it is a wash through the government from some other lending institution, to primarily municipalities.

It has been considered a bit of an issue in the past on how much municipalities are borrowing. Could the Minister provide us with a list of all debts owing that have been washed through the government and are owed by municipalities? Can he tell us what, if any, policy he has with respect to providing this particular service? Does he anticipate any change in this area?

Hon. Mr. Ostashek:

I would be happy to provide the Member with a list. As for the policy, we do not anticipate any change in this area at the present time, or in the foreseeable future.

Mr. McDonald:

The Member for Porter Creek East, in the last Legislature, expressed considerable concern on a number of occasions about the growing debt of the City of Whitehorse, in particular, and the City of Dawson and the Town of Faro, which also have outstanding debt obligations. Does the Minister share any concerns about the size of that debt? Does he feel it is the place of the Yukon government to pass judgment on the size of that debt? Does he feel, as has been the case in the past, that this is a decision for the municipalities to make alone?

Hon. Mr. Fisher:

Perhaps I can shed a bit of light on this. The Municipal Act provides a cap on the amount of money a municipality may borrow in any one year, as well as the aggregate amount a municipality may owe at any given time.

We have not actually discussed it at a Cabinet level, but at this point in time, none of the municipalities have exceeded or come to that limit - although I do not know the exact numbers off the top of my head.

Mr. McDonald:

So, the Minister of Community and Transportation Services does not feel, even in his own mind, that the debt obligations by municipalities is becoming excessive, as did at least one Member of the Legislature before - is that right?

Hon. Mr. Fisher:

The Municipal Act bases debt on the assessment base for the municipality for that exact reason. There could be an argument that the amount that is based on assessment could be reduced somewhat. I think it is two percent of the total assessment. I have not seen any abuse of that ability, to this point in time.

Mr. McDonald:

Before we clear that item, could the Minister tell us if he regards the debt obligations of municipalities as excessive, or not?

Hon. Mr. Fisher:

No, I do not.

Mr. McDonald:

I believe there are three municipalities that owe money to the Yukon government; there may be more, but, historically, I remember it being three municipalities. Could the Minister bring back the calculation of the amount of accumulated debt that these municipalities have, as a percentage of their annual expenditures? Could the Minister do that?

Hon. Mr. Ostashek:

I will get those calculations for the Member. I do have the debt figures here now.

As of March 31, 1994, the City of Whitehorse owed $8,474,150 at rates varying from 6.78 percent to 11.38 percent. The City of Dawson, with rates varying from 8.25 to 11.38 percent, owed the government $694,712. The Town of Faro, with rates varying from 7.6875 to 13.14, owed a total of $1,456,156. These figures total $10,625,018.

Mr. McDonald:

Could the Minister tell us what calls on the $4.58 million there may be in the coming year? They must already have some notice from the municipalities about what they are expecting will be required. Are we only looking at loans to muncipalities here? Are they exclusively to municipalities?

Hon. Mr. Ostashek:

In the $4.5 million we are voting for 1994-95 is the City of Whitehorse.

Mr. McDonald:

The entire amount is going to sewage for the city; is that right? The Minister is nodding in the affirmative.

Hon. Mr. Ostashek:

I would just maybe read the notes for the loan amortization into the record for the Members opposite.

The purpose of this vote it to appropriate monies to reloan, largely to municipalities, and to cover the cost of servicing debt to third parties, which the territorial government owes. Based on

Page Number 2799

a survey of municipalities by the Department of Community and Transportation Services, it is possible those municipalities may wish to borrow up to $4.5 million in the coming year. This item appears under the heading "loan capital".

We show an accompanying recovery of $4.5 million to indicate that the loans we make are shown as an asset on our balance sheet and do not impact on our surplus or deficit position. Loan amortization expenditures of $1,550,000 is the sum of both principal and interest that we must repay on loans that YTG has taken out to reloan to municipalities. These loans are from the Canada Pension Plan fund, the Government of Canada and several open-market lenders.

The recovery of $2.8 million is comprised of payments to YTG from municipalities for loans made by the government to those municipalities. The recovery from the municipalities is larger than the payments YTG makes on its loans for several reasons: many of the old loan schedules and rates for YTG debt to the federal government do not match the schedules and rates of municipal debt owing to YTG. We do not know why this difference exists. YTG has financed many loans to municipalities and did not seek outside financing.

I will try to answer whatever questions the Member may have.

Mr. Cable:

The Minister may have answered some of the questions I had. The general question is this: is there any markup on the funds that are borrowed from third parties and lent to municipalities?

Hon. Mr. Ostashek:

I believe that we mark it up to the nearest one-half of a percent.

Mr. Cable:

I am sorry, I do not understand that. Do you mean that if it is borrowed at ten and one-quarter percent, for example, then it is marked up to ten and one-half precent? Is that what the Minister is saying?

Hon. Mr. Ostashek:

That is correct.

Mr. Cable:

Does that markup recapture the administration costs associated with the borrowing and re-lending?

Hon. Mr. Ostashek:

Yes, it does.

Loan Capital in the amount of $4,500,000 agreed to

On Loan Amortization

Loan Amortization in the amount of $1,550,000 agreed to

Hon. Mr. Ostashek:

Mr. Chair, I move you report progress.

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. 15, entitled Second Appropriation Act, 1994-95, and directed me to report progress on it.

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.

We are now prepared to receive the Commissioner, acting in his capacity as Lieutenant Governor, to grant assent to the bills passed by this House.

Commissioner enters the Chamber, announced by the Sergeant-at-Arms

ASSENT TO BILLS

Commissioner:

Good afternoon. Please be seated.

Speaker:

Mr. Commissioner, the Assembly has, at its present session, passed certain bills to which, in the name of and on behalf of the Assembly, I respectfully request your assent.

Clerk:

An Act to Amend the Public Printing Act; Miscellaneous Statute Law Amendment Act, 1994; An Act to Amend the Coroners Act; An Act to Amend the Pharmacists Act; An Act to Amend the Municipal Act (No. 2); Interim Supply Appropriation Act, 1994-95 (No. 3); An Act to Amend the Social Assistance Act.

Commissioner:

Thank you, Mr. Clerk.

Mr. Speaker, Members of the Legislature, I am pleased to assent to the bills as enumerated by the Clerk.

Commissioner leaves the Chamber

Speaker:

I will now call the House to order.

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 5:25 p.m.

The following Legislative Returns were tabled May 31, 1994:

94-1-356

Victim surcharge fund: total monies in federal and territorial surcharge funds (Phelps)

Oral, Hansard, p. 2676

94-1-357

Yukon Teachers Association collective agreement: explanation of formula used to calculate full-time equivalent reductions as a result of prep-time cuts (Phillips)

Oral, Hansard, p. 2464

94-1-358

Department of Education locally developed curriculum: explanation of projects (Phillips)

Oral, Hansard, p. 2471