Whitehorse, Yukon

Wednesday, January 11, 1995 - 1:30 p.m.

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


Recognition of Anglican Church lay readers

Mr. Abel: I would like to ask all Members of the House to join me in recognizing two Old Crow residents who are today being licensed as lay readers in the Anglican Church.

As part of his last official duties in Old Crow before leaving for Ontario, Bishop Ron Ferris will license my sister, Marion Schafer, and my cousin, Roy Moses, as lay readers, which will enable them to lead the services of our congregation.

I offer our congratulations to Marion and Roy and wish them well in their new responsibilities. I am very proud of these two individuals.


Speaker: We will proceed at this time with the Order Paper.

Introduction of Visitors.

Are there any Returns or Documents for tabling?


Hon. Mr. Brewster: I have three legislative returns for tabling.

Speaker: Are there any Reports of Committees?

Are there any Petitions?

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 the Question Period.


Question re: Commodity taxes owing

Mr. Penikett: Yesterday in Committee the Government Leader admitted that the Yukon government is not collecting all the commodity taxes owing to us and that, because of the perversity factor in the formula financing with the federal government, it is not to our advantage to aggressively collect 100 percent of the fuel and tobacco taxes owing.

Does the Government Leader agree that allowing some companies to get away with not paying their taxes puts an unfair burden on the citizens who do?

Hon. Mr. Ostashek: I thought I clarified that in the debate yesterday. I said there may be some people who are avoiding it, but we do not know of any. We do spot audits, and if information comes forward that someone is trying to beat the system, we follow up on it.

I would suggest to the Leader of the Official Opposition that he has a duty, the same as does any other citizen in the Yukon, if in fact he has some specific case that he wants us to follow up on, to make us aware of it so the officials can deal with it.

Mr. Penikett: The record will clearly show that the Government Leader said that the Department of Finance was not collecting 100 percent of the fuel taxes owing and that the method of collection was passive. In addition to the concern for other taxpayers, who do voluntarily pay their taxes, does he not appreciate that the Canadian government, which provides most of our revenue, might certainly take a dim view of the territorial government's failure to make every serious effort to collect locally generated revenue?

Hon. Mr. Ostashek: Again, I answered that question during debate yesterday. I said yes. I also said that we would not knowingly allow businesses to avoid paying their taxes. I also said that we were living up to the terms of the act and the regulations. I said further that the Auditor General had never raised the point that we were not living up to the terms of the act and the regulations.

Mr. Penikett: If the government is not collecting 100 percent of the taxes owing, it is not living up to the legislation. Two years ago, the government raised fuel taxes dramatically, and many homeowners and highway users objected. The obvious question is why does the Government Leader now sanction the policy of non-collection of those taxes payable from the suppliers of those commodities to this community?

Hon. Mr. Ostashek: First of all, I want to clear the record because the Member has done it again. The increase in fuel taxes did not affect home owners, and the Leader of the Opposition is fully aware of that. We are collecting the taxes. We said quite clearly that there could be some slipping through the cracks, but we do not figure it is that significant. There are spot audits done. We have offered to bring the information as to the historic levels of wholesale fuel imports into the territory for the perusal of the Leader of the Official Opposition.

Question re: Commodity taxes owing

Mr. Penikett: Yesterday, the Government Leader told us three things: he said they were not collecting 100 percent of the taxes; he did not know how much they were failing to collect; and, that they were not aggressively trying to collect it. Apart from the reasons that the Government Leader gave, which is that it is to our advantage under the formula financing agreement not to aggressively seek this money, is there any other government policy reason for the current collection practices in respect to commodity taxes?

Hon. Mr. Ostashek: It is a question of logistics. If we thought there was a real problem, we would aggressively be going after it. We do not believe that there is a significant problem. We said that there is a possibility that some people are, but I also said that the biggest part of the operators in the Yukon are fairly large operators, they keep good books, and they are very easy to audit. If there were any concerns being raised, we would certainly do it. As I said, there are spot audits, but it is a matter similar to internal revenue. Does one chase the nickels and let the hundreds of thousands of dollars get away, or do you take a realistic approach to it?

Mr. Penikett: The Government Leader did not say yesterday that there was a possibility. I asked him specifically if the government was collecting 100 percent of the taxes that are owed it, and he said: "No, we do not have the bodies on the ground to be able to monitor efficiently enough to make sure we are getting it all." This is not a question of logistics; it is a question of fairness and law. If someone owes taxes to the federal government, they face audits and aggressive collections from Revenue Canada. Why is it not the same for all taxpayers, including people who owe taxes to YTG?

Hon. Mr. Ostashek: Quite clearly the case is the same. I have said that yesterday and I have said it here. I said that if we suspected that somebody was not paying their taxes, we would certainly be doing an audit on them. There have been several audits carried out in recent years on several different operations in the Yukon to make sure that they were not trying to beat the system.

Mr. Penikett: Yesterday the Government Leader did not tell us that he "suspected". He said that he knows that we are not collecting 100 percent. The Government Leader also told the Committee yesterday that it is government policy to charge interest on overdue taxes but it has not been the practice to collect this interest. Could the Government Leader tell us why not?

Hon. Mr. Ostashek: I believe what I said in Committee was that, if we know that the money is owing or if there is an account receivable, interest is applied to that account if it is not paid on time. The debate was proceeding as if we did not know that the money was owed. If we do not know it is owed, how can we collect interest on it? I am sure that if an audit turned up the money was owing, there would be penalties and interest attached to it.

Question re: Consultation with employee union

Mr. Cable: I have some questions for the Minister responsible for the Public Service Commission. This morning, various Members of the Opposition, the Minister and I received a copy of a letter from the Public Service Alliance, or the Yukon Employees Union, relating to the document entitled "General Administration Manual, Volume 3 - Human Resource Policies." The gist of the letter is that the volume was put out without consultation with the union.

Going back over the Auditor General's report on human resource development - the report on the study of human resource management in the Yukon territorial government, dated 1993 - there is an entry at paragraph 343 in the recommendations, which says "Human resource policies are developed and approved by Cabinet." This recommendation is prefaced with the statement, "There is a need for the Executive Council Office to set up mechanisms to ensure that human resource policies are developed and approved by Cabinet...

Speaker: Order. Would the Member please get to the question.

Mr. Cable: I just have to finish this sentence and I will get right to it, Mr. Speaker.

...after taking into consideration the needs and priorities of departments, as well as those of the Public Service Commission and other stakeholders in a joint and genuinely interactive manner." Does the Public Service Commission and the Minister support that recommendation?

Hon. Mr. Phillips: With respect to the copy of the letter that the Member received, I received a similar copy about an hour ago. I had officials look into the matter, and I found out that there are no substantive changes to the manual. There are some 35 human resource policies, and 22 of these have been reformatted with no change whatsoever. There are 13 policies that incorporated minor revisions, minor editorial wording changes, gender neutral language, and that type of thing. It incorporates requirements for the Public Service Act; if there is a change in the act, it is reflected in that manual. According to the agreement we have with the union, there will be consultation before the changes are made. However, there are no substantive changes in the policies. The policy was put in one manual for easy access by employees, so that, in the future, they need access only one manual. I think that the letter is a bit of an overreaction to the production of the manual.

Mr. Cable: Whether it was an overreaction or not, it was still a reaction. I want to get back to the question that I asked the Minister: does he subscribe to the recommendation of the Auditor General that I read into the record a moment ago, that is consultation with the various stakeholders, one of which would, of course, be the employees union?

Hon. Mr. Phillips: We agree with consulting the union as we are required to do, about areas in which there are substantive changes to these policies. We will continue to do that.

Mr. Cable: I take it the Minister is saying that the issue was not put to the consultation committee that is set up under the collective agreement, simply because he thought that there was nothing of substance in the changes. Is that correct?

Hon. Mr. Phillips: There were no changes whatsoever in 22 of the policies. They were reformatted, but there were no changes. Some of them were eliminated; for example, the policy health care premiums that were under the employee benfit plan before have been removed because we no longer collect the health care premiums. I do not think that we needed to consult the union to have those kinds of clauses removed, because the law has been changed. That is why they were not consulted.

Question re: Consultation with employee union

Ms. Moorcroft: I, too, have some questions for the Public Service Commission regarding the administration manual, Human Resource Policies, and the changes that have been made to it. The government has not engaged in consultation with the union on a willing basis, as has been done in the past, notwithstanding the contractual obligation to do so. I would like to start out by asking the Minister why the government is now deciding what requires joint consultation and what does not.

Hon. Mr. Phillips: The areas that require consultation are spelled out in the agreement, and in those areas we consult with the union. If a policy is being reformatted, and not changed whatsoever, I do not see why the union would have to be consulted. If a policy is being changed to reflect changes in legislation, there is not much we can do about that, either. We, on this side, have changed the legislation and those changes are reflected in the policy. So, we have agreed to consult with the union, and are consulting with the union, on areas in which we are required to consult.

I will point out that the union called us about on Monday to point out that there appeared to be an error and it was corrected on Tuesday. In fact, letters correcting it have gone out today to all the individuals who received the policy. If there are other areas that the union feels are of concern, we would be more than happy to try to clear them up if they are pointed out to us.

Speaker: Order. Before the Member sits down, I would like to remind him that the answer in reply to a question should be as brief as possible.

Ms. Moorcroft: There are other areas of concern that have been raised, such as the government not consulting with the union and instead making unilateral changes to policy. Will the government rescind its unilateral action and hold off on policy changes until it resolves the concerns of the employees' official bargaining agent, regardless of its own views of the legitimacy of a bargaining agent?

Hon. Mr. Phillips: I guess the Member opposite was not listening or did not hear what I said earlier. I said yes, in areas in which we are required to consult the union as per the agreement, we will certainly consult it. On areas that have to do with reformatting and other areas having to do with changes to legislation - that is, areas that we are not required to consult the union on - those are the areas we will make changes to, as we are required to do. We will, however, consult with the union in the areas in which we are required to consult.

Ms. Moorcroft: I guess the Minister did not get a very full briefing on the changes to the policy manual. I would like to know why they are deleting joint consultation from the policy manuals. We have seen that they do not support negotiation and they do not support conciliation; now they do not even seem to support talking to their employees. Why not?

Hon. Mr. Phillips: Again, the Member is not listening. A few moments ago, I said there was one area in which there was a problem. It was a clerical error on joint consultation. It was pointed out by the union on Monday. It was corrected on Tuesday, the letters have gone out today, and the union president is aware of it. It was clearly a typo, where the computer ran on at the bottom of a page and did not print something on the next page. That has been corrected and we will be asking the union president to make us aware of any other areas like that where he feels there is a problem. We are going over the policies again ourselves, but if he finds some errors, we would be more than happy to sit down with him and discuss those areas where he has concerns.

Question re: Tax rates

Mr. McDonald: I have a question for the Minister of Finance. The Minister said yesterday, in fact, that in the context of the free trade agreement our tax rates should be competitive with other jurisdictions with whom we are trading. Can the Minister tell us, when other jurisdictions have higher tax rates, does that mean we should raise ours?

Hon. Mr. Ostashek: No. The point I was trying to make to the Member opposite, and I thought I had made it very clearly, was that if we are going to be competitive in a free trade environment, we have to be competitive in all aspects of it, and that includes taxes. We have to have a competitive tax rate. That does not necessarily mean it is the same level of taxes, but it has to be a competitive tax rate.

Mr. McDonald: I thought I understood the answers to my questions very clearly, because the Minister made it seem as if the tax rates should have the same burden on corporate interests who are operating in any of the countries - meaning that it should be as high or as low as they are here. I am asking the Minister this: if they are higher elsewhere, should we raise ours, and if they are lower elsewhere, should we lower ours? Is that what the Minister meant by being competitive?

Hon. Mr. Ostashek: I think I made it quite clear to the Member. I do not think we would necessarily have to raise ours, as we are the highest taxed in the G-7 countries now, according to all the information I have seen. I said quite clearly that we should have a competitive tax rate, and that is what businesses have said in Canada. Not only I have said it; businesses in Canada have said it.

Mr. McDonald: I think it is debatable about our tax rates and their relationship with the G-7 countries. The important point is that the free trade zones do not incorporate only G-7 countries, they incorporate other countries as well. If we are forced to lower our tax rates to meet the policy that the Minister has identified, our basic program support for those most in need might be jeopardized, or probably would be jeopardized. Does the Minister not agree that this is a logical outcome of such a policy, and does the Minister agree with it?

Hon. Mr. Ostashek: No, not at all. We have some very good things in our system in Canada, especially the universal health care and social care for people who need it. I have quite clearly said that we must be competitive if we want to compete in markets. That is all I said. There is nothing hidden in that agenda. We just have to be competitive.

Question re: Tax rates

Mr. McDonald: I have to ask the obvious question: what does competitive mean in the context of tax policy as it relates to other jurisdictions? Does it mean that the taxes should be raised or lowered? What can the Minister possibly mean? When businesses are talking about being competitive, they usually mean that they are going to provide a product more efficiently or at a lower price. When we are talking in the context of tax policy, what does the Minister mean by being competitive?

Hon. Mr. Ostashek: Surely the Member opposite must be aware that taxes are part of the cost of the product. You cannot separate them any differently than you can from anything else. They are a cost of doing business and they all go into the final product that is produced. That is basically what I have said and that is what businesses are saying.

We are doing it on the issue of the environment. We are trying to get Mexico to increase its environmental laws. We are trying to get it to increase its wages. We are doing all these things under the free trade agreement. I just said that we must be competitive in all aspects of the agreement.

Mr. McDonald: Is the Minister saying by this policy that, if we have higher tax rates than those countries with whom we trade, such as Mexico and perhaps Chile soon, the policy of the government and the policy that he will be transmitting to the federal government is that we should be aggressively pursuing those countries to have them raise their tax rates to match ours? Is that what he is saying, then?

Hon. Mr. Ostashek: First of all, let me clarify the areas of responsibility in NAFTA. It is a federal issue, not a Yukon territorial issue. We have some minor input into it. What we are clearly saying - and I am amazed that the Member opposite is having trouble understanding this - is that we have to be competitive.

Mr. McDonald: I am having no difficulty in understanding what the Government Leader is saying. The government is trying to fudgify its answers. The consequences of what it is promoting can be quite significant to this and other jurisdictions.

I wish to point out to the Minister that when they make the argument for going to national conferences to speak on the Yukon's position, they will presumably be saying things that have national implications. I would ask the Minister this very simple question: if being competitive means that we have the same tax rates as other countries, and if the tax rates in those countries are lower than ours in order to attract business, are we then not saying, by logical extension, that we will lower ours and take in less revenue and, consequently, leave our programming in jeopardy?

Hon. Mr. Ostashek: On the national scene, this is the party that was against free trade and the same party that talked of job creation in Canada, that we are driving all the jobs out because of free trade. Why are we driving them out? Because we are not being competitive. That is why.

Question re: Industrial support policy, YukonNet

Ms. Moorcroft: I would like to follow up with questions to the Minister of Economic Development relating to the industrial support policy and government support of a knowledge-based economy, which is a challenge.

The Internet provides access to the information highway. In the 1970s, the Internet was largely used by academic and research functions but, throughout the 1980s and 1990s, it has become of more use in the business and commercial arena. Just to understand its complexity, there are presently 5,000 networks in 154 countries with 30 million users, and the growth rate is about 10 percent per month.

YukonNet is a non-profit organization dedicated to getting the Yukon connected to the world information highway by tying into already-existing telephone, satellite, radio and television networks and specialized business research and community networks.

Speaker: Order please. Question, please.

Ms. Moorcroft: My question for the Minister of Economic Development is why has the Department of Economic Development not supported this venture to date?

Hon. Mr. Fisher: My understanding is that the Government of Yukon has supported the Yukon Internet system.

Ms. Moorcroft: It would certainly be a lot less frustrating for us if the Ministers knew what was happening in their own departments.

YukonNet wants to develop an equitable and affordable Internet access for all Yukoners and for all Yukon communities. Presently, the Government of Yukon is contributing to a portion of their overall business plan, which shows a need for $420,000 in the first year of operation. The YukonNet has not received any support from Economic Development.

I would like the Minister, who has received correspondence from my colleague, the Member for McIntyre-Takhini on this, to tell the House whether or not his department is prepared to support the YukonNet with shortfall financing.

Hon. Mr. Fisher: I have not seen the application for whatever the Member is talking about. If YukonNet wants to apply to Economic Development for funding, they certainly should.

Ms. Moorcroft: This is just pathetic. The Minister signed a letter, on December 7, about the YukonNet operating society's new application that, he understands, will be reviewed in January. Why have a Department of Economic Development if they are only going to mouth hollow words?

The industrial support policy claims to want to encourage a knowledge-based economy, but not if that is going to mean any financial support. Now we hear that the Minister knows nothing about what is going on.

Does this government intend to continue having a Department of Economic Development when it does not support local business opportunities?

Hon. Mr. Fisher: That is one of those questions like, "When did you stop beating your wife?"

That is a very difficult question to answer. We do support business; we always have. We will continue to do so.

Question re: Yukon Energy Corporation payment to Mr. Boylan

Mrs. Firth: I have a question for the Government Leader.

Last week I asked the Government Leader about an order-in-council that was signed on July 20, 1994, to transfer $60,000 from the Yukon Development Corporation to the general revenues of the government to cover the contract costs of Mr. Boylan. I would like to ask the Government Leader who was present when the decision was made to transfer this money.

Hon. Mr. Ostashek: I believe the OIC to transfer that money goes through Management Board or Cabinet.

Mrs. Firth: I would like to ask the Government Leader who was present when the original decision was made. Who made the decision to do this?

Hon. Mr. Ostashek: I believe it was made at Cabinet.

Mrs. Firth: The Government Leader is fairly unclear about who made the decision. I know Cabinet signed the order-in-council. I want to know who made the decision about the transfer of the money. Who made the decision that the money would be transferred. If it is the Cabinet, like the Government Leader says, I would like to know why the board of the YDC was not involved in that decision making.

Hon. Mr. Ostashek: I can get a full briefing for the Member, but the OIC was signed by Cabinet. It is a Cabinet responsibility and Cabinet made the decision.

Question re: Yukon Energy Corporation payment to Mr. Boylan

Mrs. Firth: I want to follow up with the same Minister regarding the same matter. Obviously, the board of the YDC/YEC was not consulted in this matter. They did not make the decision. I think the board should have made the decision. I think it is political interference for a government that claims to be keeping the board of the YDC/YEC at arm's length for the Cabinet to then go around making decisions with respect to expenditures of the YDC/YEC. I think that is wrong. I would like to ask the Government Leader to tell us, then, since it was Cabinet that made this decision, why they made the decision to do this?

Hon. Mr. Ostashek: Quite clearly, the board of the Development Corporation and YEC operate separately from government, even though sometimes we are accused of political interference like we are right now. The president of the corporation was certainly aware of what was happening, and my understanding is that the president takes his instructions from the board.

Mrs. Firth: Why then is the Government Leader not standing up and telling us this afternoon that the board made the decision? Did the board make the decision, or did Cabinet make the decision?

Hon. Mr. Ostashek: I just said that we consulted with the president. I do not ask the president whether he gets everything approved by the board. It is an independent body and we talk to the president. I do not talk directly to the board, or very, very seldom.

Mrs. Firth: Maybe we can get an answer to the question if I ask it this way: whose idea was it to do this and why?

Hon. Mr. Ostashek: It was quite a while ago that that decision was made, but I believe we were talking about divesting some of the shares of the Energy Corporation to the First Nations - devolving them to the First Nations - and we felt the Energy Corporation should pay for that. It was funnelled through the Executive Council Office because the Executive Council Office was the one that was responsible for hiring Mr. Boylan because he was giving advice to Cabinet.

Question re: White Pass railway

Mr. Cable: I have some questions for the Minister of Economic Development on White Pass. Last month, I asked the Government Leader some questions relating to White Pass and White Pass's sale of assets. He indicated that White Pass had been very good in keeping the government informed about what it was doing.

Last fall in the media there were reports that the petroleum division of White Pass was up for sale to a joint venture of two American corporations. From the grapevine, I understand that this sale is imminent. Is this the Minister's understanding?

Hon. Mr. Fisher: I have no more information than the Member opposite - just what I have read in the newspaper.

Mr. Cable: We are very dependent upon White Pass for our petroleum supply. Has the Minister instructed his officials to look at what effect the sale of the petroleum division of White Pass to two American-based corporations would have on petroleum pricing and supply in the Yukon?

Hon. Mr. Fisher: I have not given that type of instruction to the department.

Mr. Cable: There are many Yukoners employed by the petroleum division of White Pass. Has the Minister given his officials instructions to look at whether these employees would be retained by whomever takes over the petroleum division?

Hon. Mr. Fisher: No, I have given no such instructions.

Question re: YukonNet

Ms. Moorcroft: I would like to go back to the Minister of Economic Development, who stood there and said he did not know anything about the YukonNet application for a grant. On December 12, he signed a letter that, among other things, said "I agree that access to the information highway is important for Yukon businesses and can assure you that we will facilitate the project to the extent possible."

Why does the Minister know nothing about the application today in Question Period?

Hon. Mr. Fisher: I am sure the Member opposite knows - or she should know - that the Minister does not accept the applications himself from various societies and groups.

Ms. Moorcroft: It seems that the Minister has no memory for any significant information. He has signed letters, but he can remember nothing of their content.

Can the Minister tell me whether the Department of Economic Development will consider supporting this venture? Will Economic Development consider providing the funding needed - the shortfall of $30,000 - to the YukonNet society?

Hon. Mr. Fisher: The department will certainly review the application and consider the request.

Ms. Moorcroft: YukonNet has the hardware in hand, the agreements in place, and a pilot project in the works to connect Yukon communities. Does the Department of Economic Development support access to the Internet for rural Yukon communities?

Hon. Mr. Fisher: Yes, we do support the interconnection.

Question re: Winter employment project plan

Mr. McDonald: I have a question for the Government Leader. Yesterday, the government released the details of its winter employment project plan that it has requested funding for in the supplementary estimates. They have listed the projects in both capital and operations funds by department, for all of us to peruse. I would like to ask the Minister whether or not they did any analysis at all of how many jobs might be involved in the projects, prior to calling these projects "winter employment projects"?

Hon. Mr. Ostashek: As Mr. Speaker may recall, a hot and vivid debate went on in this House regarding the accuracy of the reported numbers of jobs that were created in one of our previous winter works projects. I do not know if each department has done a specific analysis. They may have done something, and the Member may want to ask individual Ministers about that, but I never asked for figures regarding the number of jobs that would be created by this project. In quite a few instances, this is an extension of work for casuals who are seasonal employees. We can extend their employment by doing some work that we know we will have to do the next spring or some other time. I do not have a specific figure for the Member opposite.

Mr. McDonald: There must be some reason for characterizing all of these projects as winter employment projects. I would like to ask the Minister of Government Services this question: can he tell us how many jobs are created by the expenditure of $280,000 for motor vehicles?

Hon. Mr. Nordling: No, I cannot tell the Minister how many jobs will be created by the purchase of motor vehicles. The Member knows that vehicles are purchased for our fleet on an ongoing basis. It is a part of a program that has been in place for many, many years. The motor vehicle fleet is a necessary service for the Government of Yukon.

Mr. McDonald: I am certain that the Minister is quite right in saying that it is important to purchase motor vehicles, but to call it a winter employment project is something else. Perhaps the Government Leader could tell us whether or not it is being called a winter employment project and whether or not they are living up to their statistical analysis of jobs created in the north or creating jobs in the south. Are they just ensuring that $280,000 spent in the Yukon will create one job in purchasing the vehicles and perhaps five jobs in the south building them?

Hon. Mr. Ostashek: I noticed General Motors was talking about putting on a third shift in Oshawa, so maybe that has something to do with the order from Government Services.

Question re: Gun registration legislation

Ms. Commodore: My question is for the Minister of Justice.

On December 14, we debated a motion in this House that was introduced by the Member for Vuntut Gwitchin. He urged the federal Minister not to proceed with the firearms amendment until such time as the needs of northern Canadians were met. He made a very rational speech, in which he spoke about the lifestyles and needs of northernYukoners. There are many Yukoners who share those very same views as the Member for Vuntut Gwitchin.

Yesterday, however, the Minister of Justice said that the government's position was a condensed version of what he, the Minister, said in his speech on that motion. I would like to ask him if only the views he had expressed in his speech were the official views of the government's position, or will he consider some of the other views and comments made by other Members of the House during that debate? Will he also consider their views?

Hon. Mr. Phillips: I will be relaying to the federal Minister of Justice the views reflected by all Members of this Legislature. In fact, a copy of the debate was sent to the Minister of Justice. I am hopeful that he will have had an opportunity to read it before I speak to him.

Ms. Commodore: The Minister will be attending a Justice Ministers meeting some time this month. I understand that gun control legislation is on the agenda and that the Minister will be speaking about the Government of Yukon's position. I would like to ask him if, prior to that meeting, he would release to the public the government's official position on gun control legislation, so that other Yukoners, besides those in this House, will know exactly what he will be proposing as the government's position.

Hon. Mr. Phillips: Yesterday, the Member for Riverdale South, I think, asked me the very same question - would I be prepared to table the government's position prior to going, and I said yes, I would. So the answer today is the same as it was yesterday: yes, I will.

Ms. Commodore: My question today was whether, prior to the meeting, he would be doing it.

Also, the Minister indicated in Question Period yesterday that he may follow in the footsteps of the Alberta government and simply refuse to implement any legislative changes. As the Minister of Justice, is he recommending that law-abiding citizens of the Yukon who own guns deliberately break the law by not complying with federal legislation? That is what he said.

Hon. Mr. Phillips: I am disappointed in the Member opposite, because she used to be a Minister of Justice, and she should read what I said yesterday. Yesterday, I said that there are concerns about what Alberta is doing and whether the Yukon can do exactly the same thing. I did not recommend that anyone break the law and I will not recommend that anyone break the law. What I did suggest was that I would have the department look at what our options are, and if there are some strong options that we could enter into in conjunction with Alberta and other provinces, we would certainly try to do that. I want it made perfectly clear that I did not recommend that anybody break the law, and the Member is wrong to insinuate that.

Speaker: The time for Question Period has now elapsed.

Hon. Mr. Brewster: I would like to correct a answer that I gave to the Member for Mount Lorne about the fire siren in Ross River. I said there would be one pull. I was wrong on that. There will be five. They are going to try four more. I must apologize for that.

Speaker: We will now proceed to Orders of the Day.


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

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

Motion agreed to

Speaker leaves the Chair


Chair: I will now call Committee of the Whole to order. Is it the wish of the Committee to take a brief recess at this time?

Some Hon. Members: Agreed.

Chair: We will take a brief recess.


Chair: I will now call Committee of the Whole to order. We are dealing with Bill No. 3, Third Appropriation Act, 1994-95.

Bill No. 3 - Third Appropriation Act, 1994-95 - continued

Chair: Is there any further general debate?

Mrs. Firth: I have expressed some concerns in a general sense about the way financial decisions are made by this government, particularly because I do not feel comfortable with the government's recognition of what its authority is and what it should not be doing, where it should be stepping in and making financial decisions and perhaps where it should not.

Just this afternoon in Question Period, I was asking the Government Leader about a decision that his Cabinet made regarding an expenditure of money, and obviously the Cabinet made this decision on behalf of the Yukon Development Corporation and the Energy Corporation. I am very concerned that the board was not involved in this decision making because, if we have a board, and the government is supposed to be at arm's length from the board, the board should be making those decisions with respect to expenditure of monies.

I would like to just start out by asking the Minister of Finance, at what level was the board involved? When did it get involved in this whole process of the transfer of monies from the corporation to general revenues to cover the cost of Mr. Boylan's contract? Was it involved at the very beginning when the discussion or the decision was made to tender for this specific investigation?

Hon. Mr. Ostashek: I am trying to find a briefing note about that in the books and I will look a bit further. First of all, let me point out to the Member that as a government we do not deal with the board. That would be political interference. The board is there to carry out the mandate of the Yukon Development Corporation and the Yukon Energy Corporation. We deal with the president of the Yukon Energy Corporation.

The decision to fund the consultation on the proposed sale of thirty percent to the First Nations was made at the very start, before this contract. I think that the first contract was handled out of the Yukon Development Corporation budget. I do not believe that there was any change from the first one to the second one. That was the process that was in place. As we are speaking, I will see if I can find a briefing note in order to give the Member more information, but I do not talk to the board.

Mrs. Firth: That is not the point here. The point is that the board is supposed to be making the financial decisions. That is the board's purpose. They are the ones that are supposed to be consulted with respect to money. Usually, when there are contracts issued for energy investigative issues, the board tenders those contracts itself. It gives direction to the president, by the way; the president does not give direction to the board. I guess that the Cabinet Ministers did not ask the president if this had been initiated by the board.

I am trying to find out who initiated this specific transaction, and why the board was not involved in the initiating of that transaction. I want to know why the board was not involved in the process right from the beginning - right from the tendering of the contract - because the Government Leader has already indicated to us that he hired Mr. Boylan, that he contracted with him, and that it was originally sole-sourced. It is obvious that the board was not involved at that time. Perhaps he could tell us if the board ever got involved in this.

Hon. Mr. Ostashek: I quite clearly said that I do not know whether or not the board is involved. That is between the president and the board, not between me and the board. I deal with the president of the corporation.

Mrs. Firth: Did the Government Leader not ask the president if the board had recommended this or was in favour of it? I see the Government Leader shaking his head no. I think he should have. The Cabinet should not have proceeded with this initiative unless the board was fully apprised of it and said it thought that was where Yukon Development Corporation and Yukon Energy Corporation money should be spent. Otherwise, if it does not have the sanction, approval and authority of the board, it looks like the Cabinet is telling the president and the board what to do.

That is my concern, and I would like to hear what the Minister says with respect to whether or not he asked the president if this was an initiative the board wanted.

Hon. Mr. Ostashek: First of all, I told the Member opposite this was something that was done before I took over as Minister. My understanding is that this was done when the first contract was issued.

I did not speak to the president about the funding of it. It was already in place when I took over as the Minister responsible for the Yukon Energy Corporation. I took over in July, and the contract was issued prior to that.

I did not directly ask the president, and I do not know that I should have. The president knows what his responsibilities are and whether he has to consult with the board or not.

Mrs. Firth: The Government Leader issued the original contract; that is what we were told in the House. He issued the original contract to Mr. Boylan. Obviously, at that time the decision had not been made to transfer money to pay for the contract. That did not happen until July 20, when the order-in-council was signed. By that time, the February contract had been issued, the March contract had been issued and the June contract had been issued. There was a total of $70,000 worth of contracts by then.

I would say - and I think it would be fair - that it is irresponsible for the Cabinet to sign a transfer of funds from the Yukon Development Corporation and Yukon Energy Corporation to general revenues without the board having any knowledge of it.

The official who is with the Government Leader is on that board. Perhaps he can assist the Government Leader in saying whether or not the board was involved in that decision in any way and, if so, when?

Hon. Mr. Ostashek: I do not know what the Member is getting at. The reason it was done through the Executive Council Office is because it was advice to Cabinet.

I will get a fully detailed account of what transpired. I cannot give that to the Member at this time.

Certainly, we do not ask that question when it comes forward to Cabinet. The decisions as to how the funding is handled are made at the official level. The direction is given by Cabinet and the details are worked out at the officials level.

If the Member wants more detailed information, however, I will see what I can bring back. I do not have that information at my fingertips.

Mrs. Firth: The Finance official who is here with the Government Leader is a member of the YDC/YEC board. He sits on that board - I am now told he no longer sits on the board.

The Minister of Finance tells me he cannot give me any more information about this. I do not think I am prepared to accept that right now because this Minister issued the original contract. Obviously, the decision had not been made to have YEC/YDC pay for the contract at the time of the original contract. When was the decision made that YEC/YDC would pay for the contracted services?

Hon. Mr. Ostashek: I have told the Member that I cannot give her that information right now. I will have to get the information for her. She cannot expect me to have all of that in my head.

Mrs. Firth: I do not think I am asking the Minister for any details. With all the controversy that is surrounding this particular contract, if I were the Government Leader I would be inclined to have every detail at my fingertips about how the contract proceeded.

Perhaps we could have the Minister of Finance give us some reassurance. Does he not think it is wrong that the board was not involved in this decision? If the board is there to advise government and make decisions with respect to the expenditure of the money in the YDC/YEC, does he not think it is wrong that they were not consulted in this instance?

Hon. Mr. Ostashek: I have said quite clearly that I cannot say whether the board was or was not consulted at this point. I do not deal directly with the board. I deal with the president of the corporation, who deals with the board.

Mrs. Firth: The Minister never asked the president of the corporation whether the board was aware of this or approved of this decision. Who asked for this to be done?

Hon. Mr. Ostashek: I will have to get the information back to the Member. I do not have it here with me.

Mrs. Firth: Did the president ask for it? The Minister is saying he does not know. The Cabinet signed an order-in-council to transfer $60,000 from the Development Corporation to general revenues, and the Minister of Finance is standing up here and telling me he does not know why they did that.

I think he should know why they did it, and I would like an answer.

Hon. Mr. Ostashek: Quite clearly she said why it was. It was to pay for Mr. Boylan's consulting fees. When the decision was made or how it was made, I do not have that information. Many, many OICs go through and I do not have the specific details of each one of them right here while I am on my feet.

Mrs. Firth: The Minister of Finance still has not been able to give us an explanation of why they did this, and we would like to know why they did it.

Hon. Mr. Ostashek: I have told the Member I will bring her back a full briefing on it but, again, I do not have it here with me. I said the reason it was handled through the Executive Council Office is because it was advice to Cabinet.

Mrs. Firth: "Because it was advice to Cabinet" is really not an answer. Surely the Minister can understand and appreciate the concerns we have. He stood up here and said there was no political interference; he does not politically interfere, but it looks like a clear case of political interference if the board was not involved in this matter. If the Minister did not even ask about whether the board was aware of this, it indicates to us that they just went ahead and did something without taking into consideration all the people and all the concerns they should have taken into consideration. I do not think that is right, because it makes it look like the board has no purpose for being there. And this is a government that has always maintained that it is keeping at arm's length politically from the YDC/YEC. Does the Government Leader just think that this is not an issue? Is he not concerned about this? Does he even take the matter seriously - that perhaps they went ahead and did this without the approval of the board?

Hon. Mr. Ostashek: The Member is quite obviously making assumptions. She is assuming a lot of things there and she is asking me to verify and substantiate whether they are right or wrong; she is asking me to make the same sort of assumptions she is making. I am not prepared to do that. I will get the information for the Member opposite so that she will know what transpired.

Mrs. Firth: I am not making any assumptions. I am going strictly by the information that the Minister of Finance has given us. During Question Period this afternoon, he told us that it was a Cabinet decision, made on the advice of the president of the Yukon Development Corporation. He then indicated to us that whether the board was involved or not was not even taken into consideration.

We come into the House and ask the Ministers to respond to questions. They do not know the answer and say that they will request a briefing. The briefing note is always written in the best interests of, and to protect, the Minister. Everyone in the public knows that. We are told it is their job to do that. When my questions to the Ministers in this House are answered spontaneously, I always hope I am going to get the truth.

Obviously, the Minister is refusing to answer the question. He says he does not know the answer, so I suppose I will have to wait for a briefing note. I just want to express the concern that it was brought to my attention, and it was suggested that I follow this line of questioning. There are some concerns out there about the way in which the government is dealing with boards and whether or not there is even a perceived use for boards, especially if they are not advising the Ministers or following the proper procedures for what the boards of the government are supposed to be doing.

Hon. Mr. Ostashek: It is quite clear that the Member does not understand how the corporation operates or she would not be asking those kinds of questions and expect me to answer on my feet. We deal with the president of the corporation. I trust that he knows what he is and is not responsible for doing. As the Member opposite is fully aware, the president of the corporation will be appearing here in Committee. I said that would happen, and that would be the proper time to be asking those questions.

Mrs. Firth: Let me put it this way: if I were in the Minister's shoes, and the president came to me and said they wanted the corporation to pay for this contract - which is what the Minister said happened, although I find it strange that the president asked to have the Yukon Development Corporation and the Yukon Energy Corporation pay for this contract, because I do not know why a corporation would volunteer to pay for a $60,000 contract if another government department is prepared to pay for it. The Executive Council Office was quite prepared to pay for it, in this instance, because that was the department that tendered the contracts - my first question would have been why the corporation was volunteering, and I would ask if that was something the board wanted to do. The president takes his direction from the board, so I would ask if that was something the board had directed the president to do. The Minister of Finance has just told me he did not ask those questions.

I would expect that it would be my responsibility to stand up in the House and have knowledge of that process, when it involves an extremely controversial contract that made the government look extremely bad, so that I could defend my actions and what had transpired. At least I would be able to stand up in the House, without briefing notes, and tell people why it was done.

The Minister of Finance has not been able to do any of that, which raises a lot of questions in my mind, as I am sure it does in the public's mind, with respect to the way this government does its financial business.

I do not think the Cabinet has the right to sign orders-in-council or transfer money, in any circumstances, at the request of a president of a Crown corporation.

I am putting that concern very clearly on the record. I would like some commitment from the Minister of Finance on when he will bring us back an answer to this issue. Will it be tomorrow?

Hon. Mr. Ostashek: I can probably get it back tomorrow; however, I would say to the Member, if she wanted that information, she should have asked for it at the proper time. We already said the president of the board will be here. She can ask him what transpired.

However, I will try to get that information for the Member for tomorrow.

Mrs. Firth: I hate to belabour this, but any time is the proper time to discuss financial matters. This Cabinet signed the order-in-council and it does not even know why it did it.

Some Hon. Member: (Inaudible)

Mrs. Firth: The Minister is saying that he told us why he did it. I would beg to differ with him; he has not told us why it was done, and he does not know what process led up to it being done. I do not buy the argument that this is not the correct time to ask these questions or that I should be asking somebody else. I am asking the Minister of Finance, and he obviously cannot answer the questions.

Mr. Penikett: I do not want to extend this debate unnecessarily, but I want to make a comment, because what I have heard concerns me a great deal. I have a different background than the Government Leader; I studied government and political science in university. The Government Leader's understanding of the way a Crown corporation operates is entirely different from everything that I know about public policy and precedence in Canada. It is assumed in government that there is a chain of accountability. The chain of accountability with respect to Crown corporations works like this: it goes from Cabinet to Minister to chair of the board of the Crown coporation to the president - that is the chain of command. The president does not take instructions from the Minister. In fact, on matters of policy, it is understood in Canada that the Minister of the Cabinet should be directing the board, if that is what it does, and it directs the board in writing. There are, in Crown corporations, particularly at the federal level - and there is a lot of literature on this - different classes of Crown corporations. There are those that are at arm's length, there are those in very close relationships with the government, and there are those that are almost completely independent, except to the extent that they are governed by an act of the Legislature, which created them.

What bothers anybody who has ever studied government at all is that, for example in the case of Mr. Boylan, if you read his contract, it is quite clear that he was hired to investigate the privatization of the Yukon Development Corporation. Now, the government may say that it is calling it devolvement to First Nations, which is fine, but if one reads the small print, one of the options is also to privatize it, or parts of it, to the Alberta Power Company.

The key point here is that privatization of the Yukon Development Corporation and the Yukon Energy Corporation is not within the legal mandate of the Yukon Development Corporation or the Yukon Energy Corporation. I would argue that they have no right to hire someone to dismantle themselves, because that is not within their mandate.

The Cabinet has that right. The Cabinet can pursue whatever right-wing policies it wants in respect to public utilities, if it has a mandate from the people to do so - I do not think that it has, but it could argue that it has. I would argue that simply having a Cabinet order that transfers the cost of a contract from ECO, which retained this lawyer in the first place - I guess he was not a lawyer, but a Conservative Party insider - to pursue this privatization thing, is clearly a relationship between the Cabinet and the Vancouver lawyer involved, undertaking work on behalf of a political agenda of the government, and not the utility business of the public utility.

Even on the question of the appropriateness of a contract, the cost of a contract being transferred to the Yukon Energy Corporation is problematic. A larger question, and I say this with respect to the Government Leader, is a serious misunderstanding on his part in terms of what the law and traditions in this country are regarding the relationship between Crown corporations and governments, between Ministers and Crown corporations, and between Ministers and the office of the Crown corporation. Of course, the Minister responsible for the Crown corporation should talk to the president. If the Minister is giving policy direction, the chair should presumably be there. If it becomes a problem, the way to avoid it is to make the president the chair.

There are situations, such as the Workers' Compensation Board, where the chair of the board is essentially playing the role of chief executive officer, and perhaps the chief administrative officer role, but the president is a public employee. In the case of this Crown corporation, the president reports to the Minister, I would argue, through the board and through the chair. The relationship as described by the Government Leader, from my point of view, shows a misunderstanding of the proper relationship between Cabinet and the Crown corporation.

Hon. Mr. Ostashek: I thank the Member opposite for that. I have heard him, and I will get back to him with the details of what happened in this incidence.

Mr. Cable: I have some questions for the Government Leader about the handout he gave us yesterday, which was an encapsulation of what he read into the record. It is this document of eight pages on comments regarding formula grant calculations.

As I read the document, there are quite a number of variables, and I refer the Finance Minister to pages 4 through 7. There are 12 paragraphs, some of which are comments more than variables.

Would the Government Leader indicate for the record how many variables are involved in the formula grant calculation? I am not asking him to describe the universe, but there are a set number of variables in the contract that bear on the calculation.

Hon. Mr. Ostashek: That can be very difficult to do. Finance tells me that there are hundreds of variables that have to be taken into consideration. I do not have an entire list - I do not even think Finance has one - indicating that if this happens, this is the result of that change. It ties into tax bases and rates across Canada. There are many variables. It is a very complex process.

Mr. Cable: I do not want a list of the hundreds of variables, but could the Minister indicate how many major variables there are that bear on the grant calculations?

Hon. Mr. Ostashek: Five.

Mr. Cable: On page 2 of the Minister's handout, he indicates that the actual grant number varied by more than two percent from the grant estimated in the mid-year supplementaries: "

In the nine closed years since formula financing has been in effect, in no year has a final actual grant number varied more than two percent from the grant estimated in the mid-year supplementaries. In only three of those years has the figure varied by more than three percent from the projection in the main estimates."

What has been the maximum variation between the actual and the main estimates, on a percentage basis?

Hon. Mr. Ostashek: I understand that the Member has a copy of that. It was given to him in the lockup about one year ago. He may not have it with him, but I do have one here.

It appears that in 1991 there was a variable of eight percent. In 1989-90, there was a variable of minus two percent. That is about the range.

Mr. Cable: That would be an extreme outer limit of about 10 percent then.

Does the Minister have a similar projection for the variations in the other sources of revenue, such as the locally raised revenues? Is there a variance percentage that is handy in the deputy's notes?

Hon. Mr. Ostashek: That is not something we have handy, and it would take a substantial amount of work to get it. The department said they would try to get it if it was important to the Member. It is not something that we keep track of all of the time. Regarding the eight percent, Finance officials have advised me that there was a program transfer that year.

Mr. Cable: No, I do not want to put the Minister's staff to a lot of work. I want to find out what the range of variations is. Could the deputy estimate, off the top of his head, what the range of variations is in the non-formula financing grant revenues that go into the budget?

Hon. Mr. Ostashek: It is not possible for us to estimate it; we would have to do the calculation.

While I am on my feet - if the Member opposite does not mind - I have a note that was given to me in reply to the question from the Leader of the Opposition on the Yukon Development Corporation. It clearly says it was a policy decision, which is the prerogative of Cabinet to decide under the Yukon Development Corporation Act, pursuant to section 40. The Executive Council Office administered the contract on behalf of Cabinet for Mr. Boylan to enter into negotiations with the federal government and First Nations. It was done under this section.

Mr. Cable: Last year, there was a request of the Minister and his deputy to produce worst case and best case scenarios on revenue streams. Is that done as a matter of course?

Hon. Mr. Ostashek: Yes. In the debate I had with the Member for McIntyre-Takhini yesterday, we were talking about the revenue side because the budgetary process starts in mid-summer. Some time in August, we have to start taking a first look at projected revenues from all sources as well as our best estimate calculations of what the grant will be, based on the Statistics Canada figures we have available, along with our gut instinct of what is happening in the economy. It is something that is updated on a continuous basis right up until the last possible moment of the budget going to print. We try to keep it as accurate as we can, because early in the budgetary process we try to estimate our operation and maintenance costs. We will be in the ballpark, and that will give us an idea of how much money will be available for capital.

Mr. Cable: Just looking ahead, I should indicate to the Minister that I will ask him to table those for the budget. There was a calculation provided last year and it would be useful for the Opposition to see the range of potential revenues, whether it is one percent or two percent, particularly in relation to the surplus that appears to be building.

When the call goes out to the departments at year-end - I do not have the benefit of having been a Finance Minister -is it a single figure call or does the Minister ask for best case and worst case scenarios?

Hon. Mr. Ostashek: While we calculate the O&M, we do not tell the departments what we have calculated, and the first call that goes out to the departments just asks for the capital budget request. As the Member for McIntyre-Takhini, and probably even the Leader of the Official Opposition, as former Finance Ministers, can say as well as I can, what comes back are the wish lists from the departments - what they would like to see built in. I can tell the Member opposite that what is finally arrived at for the figure that we go into capital with is quite different from the first list that comes back from the departments. It sometimes goes back two or three times before we get down to a final figure and Cabinet has a chance to deal with it and set its priorities, because most departments are working on five-year capital plans and they try to advance their projects and try to get their share of capital budget.

Mr. Cable: From comments the Minister made yesterday, there seem to be more variables at play here in the territory than there would be in the provinces, and that our Finance officials may have a more difficult task dealing with them.

We have a surplus being created, and it appears to be growing. It has different names for different segments. When the Finance Minister goes about constructing his budget, does he give a signal to his deputy that there is to be a certain surplus or does he just take all of the expenditures and all the revenues and total them all up and subtract them from one another. Is that the way the surplus happens?

Hon. Mr. Ostashek: Quite clearly, what the officials give us is what is available to us. The priorities are those that are set by Cabinet. There are no instructions given to come in with a surplus, or a deficit, or to do whatever. Basically, that is something that is a political decision based on what we are facing in the territory at the time, such as how the economy is doing, how much money we as a government feel we should be putting into the system, and where we should be putting it into the system. Those are all political decisions. The Department of Finance tells us what monies are available.

I would like to enter into a bit of a debate with the Member opposite on surpluses because he appears to be of the opinion that surpluses are building. I have great difficulty calling what we have now available, or even projected, a surplus. I believe the Member opposite brought up the fact, during second reading debate - at least, somewhere during the debate - that we do not have any other funding available in the case of an emergency, and that it might be nice to have a little reserve for an emergency or downturn in the economy. We certainly do not have that at this point.

The amount of surpluses being projected for the year-end of March 31, 1995, even taking into consideration the contingency in the 1995-96 budget, are not that dramatic. They are a very small percentage of the entire budget and could disappear very quickly. Or, in fact, as the Member for McIntyre-Takhini stated, it could grow. I feel that I would like to at least have some comfort that we are able to pay our bills without having to finance them. Those small amounts of money that are available can certainly be incorporated into the next annual budget.

Mr. Cable: I am not criticizing the creation of a surplus. I would like to know how it happens. It would seem that there are several million dollars, anyway. Is that, in any way, related to the historic variances that occurred under the formula financing grant calculation, or does the surplus just, poof, happen - the expenditures are totaled and then, under some tax regime, all of the revenues are calculated and what is left over is a surplus.

Hon. Mr. Ostashek: This goes back to my previous answer that this figure is fluid. Even when we put the budget together, it is with the best estimates we have at that time. Depending on the character of the Cabinet and Finance Minister, it is what kind of a cushion they want for themselves that determines how much risk they are prepared to take as to whether we have a little surplus or spend every nickel we have and hope the revenue projections are accurate.

There is a possibility that the revenue projections, for one reason or another, may have been too conservative for that year, in which case there is a surplus. It is also just as conceivable, if you are not careful and the revenue estimates are far too optimistic, there would be a deficit position.

I can stand in this House and debate this with anyone, any time. I do not believe we have the ability to take too many chances, and would have to start financing the operations of the government. I saw something by the C.D. Howe Institute, by one of the forecasters who are always making financial statements, that this has been an historical problem with the federal government, over many years, and now has us in the deficit and debt position we are in today. This has been analyzed over a period of years and, for the most part, the federal government has been far too optimistic on its revenues, and far too conservative on its expenditures. The result is the financial predicament Canada is in today.

Mr. Cable: The federal Finance Minister has some targets on deficits and deficit reduction. Is there some rule of thumb the Finance Minister uses for surpluses? I know he has talked in the past about rainy-day funds, and that we should not be too close to the edge of the cliff, or verbiage like that. Is there some rule of thumb related to the worst case scenarios we talked about, which would be used to instruct Finance officials for building a surplus?

Hon. Mr. Ostashek: I do not instruct the Finance officials to build in a surplus, to spend it all or to build a deficit. It is a Cabinet decision as to how the money is spent or what is spent. I think what the Member opposite is asking is what level of comfort I would like to see. Finance has always said it wants to see a one-month surplus, but that is getting to be a substantial amount of money. It is somewhere in the neighbourhood of $40 million to $41 million. That might be nice, but I personally do not feel that much is required. I would be quite happy to have a $15 million to $20 million surplus that we could call on in case of an emergency. I think that would be adequate for us in the Yukon at this time.

I do not think it is something we can do immediately. There are many, many demands on our dollars. All of them are very legitimate demands; we are not saying otherwise. It is a matter of priorities: how they are funded and how the money is spent.

We have taken the approach that we believe Canadians feel that government is too big. We want to be able to put a lid on the growth in government. We still need a lot of capital infrastructure in the Yukon if we are ever going to get into a position where we can be more self-sufficient.

Mr. Cable: The surplus in previous years had been fairly large and I think the previous administration recognized the up and down nature of this territory and its finances. Has this Minister, at any juncture, reviewed the level of working capital that is needed and the level of desirable surpluses? I think he has indicated that Finance officials think one month's revenue would be a desirable level of working capital, but the Minister indicated that he did not agree with that. Where are we? We are talking about a lot of zeros. It seems that this fairly basic concept is hanging in the air.

Hon. Mr. Ostashek: I am sorry, I believe the Member misheard me. I said $15 million to $20 million would be fine with me as a working capital.

We have a constant cash flow. We have not been short of cash coming in and out. That is reflected in the supplementaries, where we do not have to pay the interest on the overdrafts that we had even one year ago. We have been able to build that back up to where the cashflow in the bank is covering our operations and we are not running short of cash when we have big payments to make. We have been able to maintain our balances and, as a result, that lowers our banking costs.

Mr. Cable: Perhaps working capital was not the right term: I meant the rainy-day fund.

I want to get on to another topic, that of the winter works program. I gather that this winter works program came up at the retreat that was referred to by the Member for Riverdale South. When was that retreat held?

Hon. Mr. Ostashek: My deputy just advised me, and he is quite correct, that we were talking about it at Management Board long before the retreat. The retreat was held toward the end of September, I think. We were talking about it in Management Board prior to that, but it was brought up at the retreat and discussed with the deputies at that time.

Mr. Cable: When were the Management Board discussions initiated on this winter works program?

Hon. Mr. Ostashek: I could not say exactly. It was one of those things that we discussed during the summer as we were going through issues and trying to think ahead. We thought if we did not have any of the mines going then, and if we had any funds available, we should see about putting them to work over the winter to keep as many people as possible employed. Even during good times in the Yukon, unemployment figures rise over the winter months. I think it is far more crucial now, when we have no hardrock mines in operation, to keep as many Yukoners as possible working.

Mr. Cable: Perhaps the Minister could indicate, by way of a legislative return, when the discussions were initiated.

I would also like to find out when the engineering work was first done for the Alaska Highway construction work, as per this entry on page 2 of the winter work employment project summary - a gross capital expenditure of $2,545,000. Is it possible to get the information of when the engineering instruction was first given?

Hon. Mr. Ostashek: Yes, I can possibly supply that. I think that would probably be best left until we get to the highways budget, but I will try and get it for the Member if he wants it earlier.

Mr. Cable: I can wait for that, if the Minister would simply pass that along to his colleague.

Mr. McDonald: I do not want to leave the winter works subject that quickly.

The Minister has indicated that the goal of the Cabinet, when they were discussing winter employment, was to increase the opportunities for Yukoners to work over the course of the winter. He indicated that it was a worthwhile project, because much of the summer activity that generally goes on in the mining industry, particularly, falls off in the cold weather. He also indicated, in previous questioning, that the projects that were anticipated would be undertaken, in any case, were always in the capital plan in some fashion. Can the Minister tell us what role the need for employment played in the discussion? How much emphasis was applied to the need to provide work for Yukoners who are out of work?

We both know that many communities around the territory have very high unemployment rates in the winter. Obviously, they are always interested in winter employment programs. What role did the need to increase employment play in these discussions?

Hon. Mr. Ostashek: That is what it was all about. It was to keep more people working during the winter than if we had not gone ahead with these projects.

The Member is right; they are projects that would have to be done anyway, whether they were done then or the next summer. While we had the money available, we felt it was important to spend it on keeping Yukoners working.

Something that might help this discussion, as well as the previous one, is that we first considered the possibility of having people working during the winter last March. Management Board first entered into those those discussions last March. We discussed if a program was needed and whether or not money was available. We discussed the matter again in July and then again in August at subsequent Management Board meetings.

The key, for the most part, was deciding what money was available. We decided to use that money to try and keep Yukoners working.

Mr. McDonald: Obviously, at some point in the year, the government found out that there was going to be an extra $14 million available. Consequently, that could have easily assisted in the discussions about the special employment project.

At this point, I am not seeking the evolution of the decision making but essentially why the decision was made and whether or not the government thinks that it achieved the objectives.

The list of projects that the government sent to us is only a partial list of the projects that are identified in the supplementaries. Some projects were characterized as employment projects and some were not.

The Alaska Highway was not considered to be, for the most part, a major portion of the winter works project because as far as the supplementary is concerned, and most of the supplementary that deals with the Alaska Highway is not incorporated into the winter works program, some judgment was made about what should be in the list and what should not.

This afternoon, before we went into Committee, I asked a question that was actually quite serious about the nature of some of the projects on the list. I have a number of other examples here, but one of the concerns I have is one item that I raised with respect to the acquisition of motor vehicles, which I believe is something that the government should justify as a winter employment project.

Perhaps the Minister has had an opportunity between Question Period and now to get some more information about this particular line item. I would ask him why things such as the acquisition of motor vehicles, insurance planning or the purchase of sundry equipment - which really does add up to a lot of money; those three alone add up to better than $500,000 - would be characterized as employment projects on the special list of winter employment projects, and why they would not simply be line items in the supplementary? There may be some justification. We will take the issue up with the Minister of Government Services as to whether or not he is buying enough cars or he is buying too many.

Nobody disputes that cars should be bought, or that sundry equipment for transportation facilities should be purchased. We may dispute whether they are purchased, how they are purchased, whether enough has been purchased or too little has. I think the point of the matter here is whether or not they are actually employment projects. I know that there are - as the Minister knows, having had some experience with rural Yukon - many people out there who are unemployed, who can work and who want to work. These people may take the dim view of a winter works project that quite obviously creates very little winter work, and even if it did, it would not be available to people who are typically unemployed in the wintertime.

The consulting industry is seldom unemployed. Good consultants are seldom unemployed, but there are a lot of people who work seasonally in the summertime who are unemployed. Obviously, these particular items are not opportunities for them.

On a serious note, can the Minister respond to that concern?

Hon. Mr. Ostashek: I will respond to it quite clearly. The Member is absolutely right. I do not know why it was included on the list. This list was put together pursuant to a request from the Member opposite. At the break, I did ask the Minister of Government Services why that was included on the list because, quite clearly, it is not winter works and should not be on the list. The only thing I can say with respect to the winter works is that it is not something created simply to put people to work. Each of the projects was going to go ahead, anyway. This money should not have been put on the list to be tabled in this House. I did not check the list. I simply asked the departments to put a list together of what projects they had proposed for winter works.

Mr. McDonald: Perhaps the Minister could ask, maybe for the main estimates general debate, for a list that does better characterize what are winter works and what are not. I have mentioned a couple of other line items here that refer to the purchase of sundry equipment, et cetera, in the Department of Community and Transportation Services, which, quite clearly, apart from purchasing agents, do not create winter work. They should probably also be purged from the list. However, I would like to have that information.

I want to point out to the Minister of Government Services that the supplementary budget does not include a line item of $280,000 for the purchase of motor vehicle equipment in any case. It is obviously in the main budget, so that really adds another confusing signal. If the Minister could ask that the list be reworked, I would appreciate it, because I am interested in winter employment, programs, projects and that sort of thing.

I wish to ask the Minister the following with respect to winter employment because I know that it is a big issue in rural Yukon: does the government consult with municipal governments or band governments to seek projects that thay consider to be worthwhile and would create employment during the winter, so that if there is available capital, such as this, that the Government of Yukon is not only considering its own needs, but is considering the needs of other governments that depend, to a large extent, on the Government of Yukon? Is there a process in place for that to occur, so that when the Government of Yukon, for example, faces a fairly remarkable increase in a particular year from a transfer payment the wealth can be shared? Is there a way for some of the needs of other legitimate governments, which depend on the Government of Yukon, to be respected?

Hon. Mr. Ostashek: If the Member recalls, we took that route last year. We had a group of people from the private sector who made recommendations to Cabinet as to which projects should go ahead. We did not do that this year. We saw that the unemployment numbers were down quite dramatically from a year ago, but we still wanted to create as much employment as possible.

I want to point out again that we used projects that were going to go ahead anyhow. We were not looking for new projects. In fact, we did not identify this as a winter works project by making a big announcement. We had the revenues available and thought that we could put people to work - be it on renovations to government buildings or slashing brush along the highway for a road that is to be built next year - and we were prepared to do that. We did not consult with other governments in this instance because we were not looking at taking on any new projects.

Mr. McDonald: I would like to briefly explain my representation to the Minister. I would recommend to the government that it consult with other governments for the provision of winter works, but not necessarily through a blue-ribbon committee. That may be a supplementary mechanism to use. Other governments feel they have a certain legitimacy to their constituents that cannot be replaced by special advisory groups the government might construct from time to time.

The Minister may not be aware but, historically in this Legislature, there has been a longstanding argument that when the Yukon government benefits from increased revenues, other governments benefit from increased revenues. There was a fairly significant discussion taking place about the health and wealth of municipal governments, which depend upon us very dearly for significant amounts of their revenue.

The argument put forward by the Opposition benches, and adopted in the Municipal and Communities Infrastructure Grants Act, was that when government revenues grow, municipal government revenues grow, so there is some wealth sharing. That principle applies when we have a fairly sizable and unexpected increase in the grant. Everybody has winter works ideas, and other governments also have needs. We should be mindful of their needs, and it might be worthwhile to consult with them as to what small share of these resources may be applied to their priorities. I am certain that the City of Whitehorse could make very good use of the funds, or Mayo and Teslin, et cetera.

The argument may have been made that these governments are very close to the people. They have a very clear sense of community needs, which are not often addressed in this forum, because we are always looking at the big picture.

We tend to look at the big picture rather than the small, nuts-and-bolts picture, and that is one of the reasons why, despite its demise, the community development fund was a fairly popular program with communities and with interests because they were close to the needs. It funded groups that were closest to acknowledging, recognizing and providing for the needs of citizens. I just make the point that, if we face this in the future and if the government wants to undertake winter works again next year, they may want to consult with other legitimate governments, including First Nations governments, because he will find he will get a pretty good bang for his buck through their projects. Given that they have administrative expenses covered already, they do not have to fund those and it might be worthwhile for the government to consider their requests as well.

Hon. Mr. Ostashek: I will certainly take that representation, and the Member is right. When we do our capital budgets, we certainly do look to see how they are balanced out over the Yukon. That always involves some difficult decisions. When we did the winter works project last winter, we did exactly that - we tried to balance it out as much as we could into other jurisdictions. Again, I just want to say that this was not specifically a winter works project, identified as winter works, and we were not looking for projects to do; we were looking for projects that we could advance and keep some people working. I will take the Member's representation and consider it.

Mr. McDonald: I will change direction here. This is a postscript to that discussion. I will just mention quite clearly that it is my view that, while the government certainly has its needs, it is very important that we recognize the legitimacy of the opinions of governments themselves. It is not only that the governments represent regional areas and that we try to spread the work around to their areas. They must recognize that they have an opinion as to what the priorities should be and we should at least be respecting that opinion to some degree, ultimately letting them make the decision in some instances about what the priorities for funding ought to be in their districts. I will just make that point.

With respect to the discussion this afternoon in Question Period about wanting our tax rates to be competitive with other jurisdictions, I want to explore this a bit because I am no wiser from Question Period as to what the Minister meant by being competitive. He beat around the bush. There were no conclusions drawn as to whether or not the Minister was talking about wanting to match tax rates overall, the weighted tax burden on corporations, between countries. There is no sense that the Minister was considering doing that.

Can the Minister explain what impact this policy of having competitive tax rates would have on our tax rates? Can he elaborate a bit?

Hon. Mr. Ostashek: The Member opposite has to be aware that for years now corporations throughout Canada have been making this pitch to the federal government. We are one of the highest taxed jurisdictions in the world, and if our rates were competitive, I do not know what effect it would have on the Yukon. It certainly would not increase our rates, I am sure of that, because we are one of the highest taxed jurisdictions in the world now. It is a purely hypothetical question that the Member is asking, when he asks whether the rates would go up or down. I am just stating that when you consider asking companies to operate in an open-market society, taxes are one of the considerations included in the cost of the product, as to whether your companies can be competitive or not - that is all I am saying.

Mr. McDonald: All that I am saying is that there are greater implications in what the Minister is saying than he is admitting to. I am sure that companies have talked about competitive tax rates for years. They have probably talked about competitive environmental laws, competitive labour rates, and they have probably argued quite often for all sorts of laws and operating conditions to be the same, or at least to be improved, by their standards, in the countries in which they operate.

What I am asking the Minister is this: what does that mean? Surely the Minister would not advocate a position without knowing what the consequences are. Obviously there are going to be consequences to it. Obviously he is suggesting that there be a change in the status quo; otherwise there is no point in advocating a position. What is the impact of what he is saying? I do not understand what he is saying. He refuses to say that the taxes will either be raised or lowered, but says only that they should be competitive, and he makes the argument that they should be. Leaving aside the question of whether or not they should be, all I am asking him is what the impact will be and what the results will be from the policy that he is advocating.

Hon. Mr. Ostashek: I guess that if the Member opposite would have read yesterday's Globe and Mail or listened to the news last night, he would have seen quite clearly what the impact would be. There are 900 employees from across Canada moving to New Brunswick, because that province has a cheaper work force, a better communications system and a lower tax rate. They are moving from British Columbia, Manitoba, Ontario, and other jurisdictions, and incorporating their head office in New Brunswick. I do not know that moving jobs from one place to another is good for Canada, but the same thing has happened with some of our corporations under the free trade agreement. They have been re-established in the northern United States in order to get better tax advantages. One of the ramifications of that is that companies will become more competitive, and that is all that I am saying.

Mr. McDonald: That is precisely the point. We can argue whether or not it is appropriate for the tax rates to be lowered or raised but, clearly, what the Minister is saying is that they will either be lowered or raised. That is obvious. I thank the Minister for acknowledging that reality.

I think an important feature of this debate, particularly in the case the Minister just mentioned, is that one of the reasons why premiers in both Ontario and British Columbia - and other currently "have" provinces - may be objecting to this transfer to New Brunswick is that New Brunswick benefits from the wealth currently generated by Ontario and B.C., and is using that subsidization to be able to promote attractive tax rates, meaning lower tax rates, in order to attract the investment. So, there will be an interesting national debate about that, I am sure.

The Minister seems to be saying that the tax rates should be competitive. He has already mentioned, as well, that he believes the tax rates in Canada are higher than they are in the G-7 countries. Presumably, they would be higher than they are, as well, in countries that are not members of the G-7, especially including the countries we are trading with through the North American Free Trade Agreement and may be trading with through extensions to that agreement. Presumably he is acknowledging that tax rates in this country should go down, in order for us to keep business activity in this country - tax rates and, perhaps, other conditions of work. Is he acknowledging that to be the consequence of what he is saying? Is that what he means when he says that our tax rates should be more competitive?

Hon. Mr. Ostashek: I do not know how long the Member wants to continue with this. Basically, what I said is that tax rates are part of the cost of the product and they certainly have to be calculated into that cost. The party of the Members opposite condemned the free trade deal because it was going to take jobs away from Canada. If we are going to have jobs in Canada, we have got to be competitive, and taxes are one of the components that make up the price of a product. That is all I said. Now, if the Member wants to go on forever, we can - I could not care less.

Mr. McDonald: I care a whole lot more than the Minister cares, and the reason why I care is that I know there is going to be an impact as a result of the situation the Minister is advocating, and I want to know whether or not the Minister understands all the implications to his position. If he is suggesting that we be more competitive, if he is suggesting that the situation is as simple as equalizing tax rates or equalizing the tax burden on all corporate citizens, then obviously there are going to be very serious implications for us. If the Minister is in government long enough, there is going to be something debated in this Legislature about it. When the tax rates go down, tax revenue goes down; and when tax revenue goes down, suddenly we start talking about whether or not we can afford basic things around here, basic services - services, incidentally, that some of our trading partners pay for through the private sector.

If that is what the Minister is saying, I want to know why he is saying it in national forums. We know it is going to have a very distinct impact on this country; it is going to lead to the Americanization of this country, if nothing else, and perhaps may lead to a much lower standard of living.

If he is understanding all those consequences and is prepared to accept them, then that is different. We will simply just have to disagree on that point.

Hon. Mr. Ostashek: Clearly, that is that Member's opinion. It is not my opinion. My opinion is that we would probably create more jobs in Canada and have more tax revenues. That is my opinion of it.

Some Hon. Member: (Inaudible)

Mr. McDonald: The Minister of Tourism says, "Get on with something that makes sense." This does make sense. This whole issue is extremely important to a lot of people, and the Government Leader has taken a position on this matter. We are talking about tax policy, and this is the line item in the budget where we do talk about these things. The Minister is saying, "Stupid, stupid, stupid," but if he is going to engage in self-criticism he should leave the Legislature and do it someplace else.

This is a very important issue. I believe the Minister does not understand all the implications of what he is referring to, and I believe the Minister is probably advocating, along with other first ministers, a position that is going to do extreme damage to this country and is going to reduce our level of decision making, because when we assume there is only one agenda - not a people agenda but perhaps a corporate agenda - that we must respect, we might as well transfer a lot of the decision making in this room to Toronto and ultimately to New York and perhaps to Mexico City.

The Minister, who has a track record of making statements for which he has no knowledge of the consequences, and could care less, should be careful about making statements when he is going to be making them in meetings of national ministers. We have to think seriously about whether we want to pair with this Minister to go to make these statements. Is that what we are agreeing to do here?

At the same time, we think the government has a general policy to extract as much as it can. It is raising tax rates, and this is a government that has actually raised tax rates in the last decade. It is raising tax rates and is advocating the dismantling of this country and the political power that we currently think the people hold through their elected officials. I think it is very serious. I do not care whether the Minister thinks it is important or not, but I want to let the Minister know that I do.

Hon. Mr. Ostashek: I hear the Member, and it is important. What the Member asked me for yesterday was an opinion. It is not a position I said I was taking, advocating, or playing the lead role in. This is a philosophical argument, because they do not believe that comparable, competitive tax rates create jobs. My philosophical belief is that it does, and that it gives you more revenue. That is a philosophical argument.

Mr. Penikett: I will do the House a service and not enter this debate on this point, because I have a lot to say on it. It is trickle-down economics, which was in evidence when I listened to Mr. Iacocca, when he was with Chrysler, talking about the fact that the American auto companies had to purchase health insurance for their employees worth $600 or $700 a car. The fact that we finance a much more efficient health care system through our taxpayer system made good social and economic sense.

Lest I get drawn into that discussion for several hours, I will change gears.

Yesterday afternoon, when we broke, I was asking the Government Leader some questions on commodity taxation. He kindly agreed to come back with some information on the collection procedures and the actual dollar figures and volumes of commodities.

I received a letter this morning from the Insurance Bureau of Canada, which makes me want to ask about another item under the revenue line, that of insurance. This letter I received this morning indicates the level of tax receipts from insurance companies in British Columbia is in the neighbourhood of $190 million a year.

I look at the actual in the public accounts for last year, the year ending March 31, 1994, which comes to $565,000. I immediately wondered how our taxes on insurance premiums compared between jurisdictions. I looked at the budget address, which contains the provincial comparisons on income tax, corporate tax and commodity tax and there is no comparison on the insurance tax rates.

The last time I can recall us dealing with the question of insurance premium rates was probably in 1979 or 1980 - anyway, it was quite a long time ago - in this House. British Columbia is about 100 times the size of the Yukon. What that means is that if one considered the $565,000 that we collect, B.C. should have revenues of about $56 million or $57 million. In fact, they say they have revenues of $190 million. This suggests that our taxation on insurance premiums is at a much lower rate than it is in British Columbia. Is that, in fact, correct? I am sure the deputy minister knows.

Hon. Mr. Ostashek: We do not have the information on the different rates right now, but we will get back to the Member. We have not paid that much attention to it.

Mr. Penikett: It may be a technical question, but it seems to me that it is potentially important revenue. The Government Leader can take notice of these questions. The letter from the insurance bureau, which is actually about general economic policy as opposed to insurance rates, happens to mention that their revenues are about $190 million in B.C. If one multiplies the revenue from our insurance premium tax, B.C.'s comes to about $56.5 million - in next year's budget, the calculation would be $63 million. This is still a lot less than $190 million. This suggests that it is a lower rate.

I am not advocating a higher rate. It occurs to me that I would be surprised if national insurance companies, when establishing insurance rates for customers in the Yukon, have a separate Yukon rate. I would imagine that if I am buying life insurance from London Life or auto insurance from one of the national companies, they are actuarially making estimates on the basis of some large categories of insured persons. If that is the case - I do not know if that is the case; perhaps the Deputy Minister of Finance would be able to find that out quickly - it seems to me that there is a possibility that rates are being charged in the Yukon on the basis of an assumption of provincial rates of taxation on insurance premiums, rather than the rates we are actually charging.

It may be that there is a revenue opportunity, or imputed revenue, which is being captured by insurance companies rather than the government, if my assumption is correct that rates are based on the taxation levels south of 60, rather than on the rates here. That may or may not be the case. The Department of Finance can find out, and I would be extremely interested in knowing if that is the case.

Hon. Mr. Ostashek: We will certainly check on that for the Member opposite. I do not know about life insurance, but I do believe vehicle insurance is calculated on the basis of vehicles being in the Yukon.

Mr. McDonald: I would like to ask a couple of questions about internal trade and the internal trade agreement. Ministers have stated from time to time that, as signatories to the agreement, they have been seeking an exemption to the agreement for the Yukon, given the nature of the Yukon's fledgling economy. Is that exemption still necessary? Was the exemption achieved in the policy? If it has been, could he table the exemption clause in that agreement?

Hon. Mr. Ostashek: Yes, we did get exemptions. I believe there are two programs that we asked for the exemption on. I do not quite recall the names of the programs, but there is an exemption clause in there for us and for the Northwest Territories. I would be happy to table them for the Member opposite.

Mr. McDonald: Is the Government Leader also saying that there is a need for having the exemption clause, that the conditions in the Yukon justify this exemption clause?

Hon. Mr. Ostashek: Most certainly, in the small communities, I think they do, and there is a threshold level where this kicks in, and it is fairly high. For the most part, it does not have an effect. I am not sure. I cannot recall, because it was over a year ago. We signed it last July, but it was negotiated prior to that. I will get that information.

Yes, I still do believe that it is required in some instances in the Yukon. The way the wording is, we were not looking for blanket exemptions from the internal free trade. For the most part, we want to cooperate with other jurisdictions, but there are some instances where we felt exemptions were necessary.

Mr. McDonald: When the Minister is tabling the relevant clauses, can he also table for us a list of all the times that the exemption has been applied under the internal trade agreement?

Hon. Mr. Ostashek: Yes, I will see if I can get that information for the Member opposite. Under one program, we subsidize the people at Hire Yukon. These are Yukon workers, working under a business incentive policy. That is one of the programs that would qualify here.

Mr. Penikett: I do not know whether the Government Leader wants to take a break now or later, but I would like to open up a whole new issue. I do not care whether it is before or after the break, but I would like to get into devolution claims and the financial implications surrounding them.

Chair: Is it the wish of the Members to have a brief recess at this time?

Some Hon. Member: Agreed.

Chair: We will have a brief recess.


Chair: I will now call Committee of the Whole to order. Is there further general debate on Bill No. 3?

Mr. Penikett: The Government Leader is, no doubt, expecting us to have a thorough debate on the devolution policy when we get to the Executive Council Office, but I wonder if I could just open up some of the general issues. As all Members know, there has been some news coverage on the issue during the last 24 hours.

We note from the government announcements that there is a single person responsible for coordinating policy and activities in land claims and devolution. In recent years, there has been a line item for land claims negotiations in the Executive Council Office budget even though there are expenditures on land claims through a number of departments - Renewable Resources, Community and Transportation Services and others. It is not easy to define the total expenditures of devolution because the focus of the activity may shift from time to time. Indeed, I do not doubt that much of the expenditure of late has been in Renewable Resources where some of the potential devolution projects are underway.

I want to ask the Government Leader a little bit about what is actually happening with the forestry devolution talks since, to read the media, it seems that suggestions are going back and forth between the parties as to who is responsible for what and who is responsible for the breakdown of talks. I want to begin by asking if I could explore with the Government Leader in a little more detail than Question Period permits the question of the relative priority of devolution and land claims.

I will preface my first question by explaining that for all the years I have been in this House, whatever the political stripe of the government, land claims and devolution have seemed to be parallel activities but, until recently, it has been a shared view in this House that land claims was the first priority and that, for historical reasons, we would not want to repeat the experience of British Columbia or other jurisdictions that completed the devolution process before they completed claims because that creates a whole ton of problems for the jurisdiction. Also, as a question of simple justice, we really ought to, in a jurisdiction like this if we are going to have a partnership between First Nations and the settler population, complete land claims before we complete the steps toward, if not provincial status, then what Mr. Irwin recently called "all the provincial powers".

I am not quite sure what Mr. Irwin meant, since many of the powers of a province are now embedded in the Canadian Constitution. They include the power to veto changes in the Constitution, and so forth, and none of those powers are, I think, going to be available to the Yukon in the very near future, unless I am very wrong.

I will get to the specifics of the forestry transfer in a minute or two. Right now, I am interested to know how and why the Government Leader has now come to the view he recently expressed, which is that not only should devolution of land claims be a parallel process, but he has even indicated that devolution should take higher priority than land claims. Perhaps that is premised on the notion that we now have the legislation passed in Ottawa, but only four of 14 final agreements have been completed, so there is still a lot of work to do. Indeed, there are issues, such as forestry, that are very sensitive matters and of extreme importance to the future of First Nations, such as the Kaska. Indeed, I think that much of their interest in economic development on the lands that they claim is probably tied up in the potential for forestry. Firstly, I would like to know something about the Government Leader's thinking as to how devolution overtook land claims as a priority and why he thinks that way. I will get into some of the other supplementary questions later.

Hon. Mr. Ostashek: Land claims have been, and will continue to be, a priority in the Yukon. I believe that we have been negotiating land claims for some 22 years, and we now have the basics of the land claims agreements finalized. They are just waiting to be given assent and it is my understanding now that that is supposed to happen some time early next month. There is no doubt that land selections have not been made in some areas where bands have yet to finalize their agreements. The Member opposite is fully aware of the problems involved in trying to get the Kaska to the table. The federal Minister does not believe that this should hold up devolution. He wants the First Nations involved, as we do, and we have had discussions about that with the First Nations. We are setting up a process where they will be fully involved. We believe it is compatible to move ahead in trying to finalize the forestry transfer, and to move ahead on land, water and resources, as the Minister has indicated is his desire. We have said quite clearly that we do not believe that we can move ahead with the transfer of lands from the federal government to the territorial government in areas where land claims are not completed. The lands are going to have to be identified first. The Member opposite is also cognizant of the fact that a great portion of Yukon lands have already been selected. There is no reason why the rest of the land in those areas could not be transferred to territorial jurisdiction at this time, if there was an agreement as to how that was going to take place.

Mr. Penikett: I would like to deal with the last point first. I am sure the Government Leader will know that there is a very important letter on file that constitutes an agreement between Mr. Siddon, the former Minister of Indian and Northern Affairs, and me, to the effect that, as we completed final agreements in areas of the Yukon, we would deal with substantial land claims in the wake of that, region by region. I do not remember the exact date, but that was negotiated in the wake of the very unfortunate experience with the Tetlit Gwitchin. There was a change made to the umbrella final agreement, which I am sure that the Government Leader knows about, because the Kaska have objected to it. There has also been, for a long time, a clear understanding about the land transfers, but the previous federal and territorial governments were clear that we had to finalize claims first, for all sorts of legal and moral reasons.

The Government Leader began his response to my question by saying that there is no doubt that land claims is "a" priority. I hope that there is no dispute about that.

The view on both sides of the House until now has been that, for historical reasons and for the reason that it touches on every dimension of life, it was "the" priority. That does not seem to be the case any more.

Why is this a problem? We have not concluded any final agreements with any First Nations for the last two years. I am not trying to be negative by saying this, but it is quite possible that, at the rate we are going, we will not wrap up all of the final agreements in the next three or four years. Nonetheless, I believe that Mr. Irwin said in the House of Commons not so long ago that he saw the devolution of normal provincial-type administrative powers in the Yukon being complete in three or four years.

I will go on the record by saying that if we complete those devolutions, over the objections of the First Nations that have interests in those devolution matters - such as forestry - we would create the kind of situation that would be unfortunate in terms of the relations between this government, the federal government and First Nations.

That indeed might have the extremely unfortunate effect of making it impossible to complete the final land claims negotiations with all the First Nations, something that we all desire. I would ask the Government Leader if he is not concerned about that possibility?

Hon. Mr. Ostashek: Certainly we are concerned.

I believe that we are talking in different terms now than we were talking even two years ago. We have four First Nations that will have finalized their agreements.

At this point, the model umbrella final agreement and the model self-government agreement, for all intents and purposes, have been accepted by all the bands except the Kaska. The Minister is quite right; the Kaska has filed an objection to it. The federal Minister believes that this is the time to move ahead with devolution. We believe that we have to move ahead also. However, we believe that First Nations have to be fully involved - both the Minister and I believe that. There is an ongoing process to try to get a devolution table started. About one and one-half years ago, it sort of went by the wayside, as we were trying to finalize the last of the claims. The federal Minister set aside the forestry transfer until such a time as it was done.

We are now back in the process of trying to set up the devolution table, so that all parties can participate in the devolution process. It is in the best interests of the First Nations, as well as ourselves, to try to devolve these areas of responsibility from the federal government, and to try to make decisions closer to home.

Mr. Penikett: I do not think that anyone on this side has any objections to bringing decisions closer to home. However, we began to talk about the need for a devolution table a long time ago.

It was apparent from the beginning of the discussions we had - about one and one-half years ago - that there were large differences of opinion on this question between First Nations and the territorial government. Clearly, what the Government Leader is saying is that there is not yet a devolution agreement between YTG and First Nations. Let me ask him how close the government is to an agreement and what the outstanding issues are.

Hon. Mr. Ostashek: As I said to the Member opposite, everything was put on hold for the land claims. We are just beginning that process again. Mr. McTiernan, who will be responsible for land claims and devolution, is going, I believe, to a meeting this weekend with an ADM from the DIAND office. They will be discussing this issue in Vancouver.

We will see what transpires from that and where we go from there. Quite clearly, we want to put a devolution process in place. It must be, otherwise there is going to be some very negative feelings on all sides unless we can resolve how this can transpire. That is what we are striving for.

Mr. Penikett: May I ask the Government Leader what the outstanding issues were and if he could give us some sense of where we are? I assume, from things that the Government Leader said in the past, that he is opposed to First Nations having a veto over the devolution agreements, or bilateral agreement between the federal and territorial governments. In my opinion, the umbrella final agreement guarantees First Nations something more than consultation but something less than a veto. Can the Government Leader tell us how close he is to an agreement with Ms. Gingell on this question?

Hon. Mr. Ostashek: I told the Member opposite earlier, we have not dealt with the issue because the land claims negotiations are going on. We are just starting to deal with these issues. The issues outstanding are still the same. We proposed to the First Nations, some time ago, a process based on the hospital transfer, that we were prepared to entertain and work under those auspices, and we have yet to get a reply from the First Nations on that very issue. We do want to have a process put in place that is more than just consultation and something less than a veto.

Mr. Penikett: It seems to me that the policy challenges are to define exactly what that is and it is some regret to me that our government did not succeed in doing that when we were in office. Since the Government Leader is indicating that there has not really been any progress on this question for some months, I would like to know how, as a purely practical, political question, given what is at stake with the land claims agreement that we have finalized with the First Nations, how can he possibly contemplate concluding a forestry devolution agreement in the face of opposition from First Nations?

Hon. Mr. Ostashek: At one point, almost a year ago, a forestry agreement was negotiated and the Minister put it on hold until after land claims. Now the Minister is giving us signals that he wants to proceed with it, and he is discussing how we are going to proceed with the First Nations.

Mr. Penikett: With respect, that did not answer the question. I will make a statement, then. I believe if the government puts at risk a final agreement with the Kaska, which is something that is of historic importance, for the sake of an administrative transfer, it would be a big mistake.

Since the Government Leader is well known as a poker player, would he be prepared to risk a final land claims agreement with the Kaska First Nation for the sake of a forestry transfer?

Hon. Mr. Ostashek: At this point, that is a purely hypothetical question. We are trying to involve the Kaska. The federal government has bent over backwards for them. It has even provided funding for a special negotiator to take a look at what could be done to reconcile the problems with the Kaska. I will continue to work with the federal government to try to resolve the issue.

Mr. Penikett: Would it be fair to say that the Government Leader is proceeding with this issue on the basis that it is a bilateral negotiation, rather than a trilateral one?

Hon. Mr. Ostashek: The forestry agreement was basically a bilateral negotiation, because the First Nations refused to participate in it. It was a process that was started by the Member opposite, when he was the Government Leader. We did not start the process.

Mr. Penikett: It may surprise the Government Leader, but I am actually aware of that. I hope it will not surprise him to hear that, for myself, we would never have been happy about concluding an agreement without the First Nations being a party to it in some way.

If you witnessed the hospital agreement, we heard concerns about that from the First Nations at the end. Although it started off as a bilateral negotiation, it ended up being a series of agreements among the three parties that were involved. That was done while we were still in office.

Does the Government Leader recognize, as a matter of policy, that the Kaska First Nation has legitimate interests in the question of forestry devolution between the federal government and the Yukon territorial government?

Hon. Mr. Ostashek: Certainly. Every First Nation has an interest in forestry in its traditional areas, as does the Kaska. I recognize that.

Mr. Penikett: I take it, then, that the Government Leader would agree that it would be desirable to have the First Nations as party to a devolution agreement on forestry.

Hon. Mr. Ostashek: I can stress that again. Yes. I said so before.

Mr. Penikett: Let me ask the Government Leader about another group that has been quite concerned about the forestry transfer and the behaviour of both the federal and the territorial governments, and that is the employees.

It will not surprise the Government Leader to know that, in the last few months, we have, several times, been briefed by the employees, who were very upset about the way they were treated in the devolution discussions, when their interests were being addressed. I am sure that the Government Leader will not mind us reminding him of his unfortunate statements on the radio, one day, to the effect that he saw the transfers as an opportunity for the territorial government to profit. Indeed, he raised the spectre of the programs being gutted upon transfer. The employees, many of them long-serving and loyal employees of the forestry service feared losing their job security and their benefits.

We saw the documents, prepared by Renewable Resources, in which the terms of their employment were going to be so radically altered as to, in our opinion, raise questions about the level of fire protection and the kind of watch that was going to be going on in the fire towers.

Can I ask the Government Leader if the territorial government has changed its policy or its approach in terms of its dealings with the employees? Does the Government Leader still see the transfer as an opportunity to make money for the territory, or have the discussions, whether formal or informal, between this government and the employee representatives progressed to the point where the Government Leader is satisfied that the employees will willingly and happily come to work for this government, once the transfer is complete?

Hon. Mr. Ostashek: I do not believe I said at any point that we were going to gut the program. I may not have made the radio statement in proper terms, but the fact remains that we are going to need qualified employees to manage our forests. I do not see any layoffs in the forestry transfer for the immediate or future term. In fact, I see more employees further down the road. There may be different job descriptions, but the employees will still be working. We will have to see what administrative changes can be made when we take over, how we can streamline the service, and how we can provide the best service we can to the people of the Yukon. I do not see a reduction in the number of employees.

Mr. Penikett: The current employees have made it quite clear to us that they are not willing to work for YTG if job security and career prospects, in which they have a lifetime of work experience invested in, are at risk, either because of reduced hours, reduced arrangements, or reduced staffing. There are a number of examples where YTG has been able to operate programs more efficiently, once they came to the territorial government, but I know of no successful devolution in either of the two territories where a party to the negotiations has indicated through the media, or any other forum, that there would be cuts to the program. What then happens is people who are employed within that program seek alternate arrangements, rather than be part of the transfer.

There are two other problems. The previous federal government made a commitment to us to the effect that there would be no cuts during the negotiations. In other words, we understood exactly the nature of the resources, the level of the program and the level of dollars. I am sure Mr. Sanderson will tell the Government Leader that the promise from the federal government was not worth very much because, as the Government Leader's friend, Karl Marx, would say, it was a withering-away of the state in respect to the program.

There is another problem now. Federal people complain to us that what is happening when people leave positions - for one reason or another, seeking employment elsewhere or retiring - the federal government is not filling those positions. If the federal government takes the view, as it has in other devolution negotiations, that what you see is what you get - not the administrative costs in Ottawa, not the central agency costs, and not some of the other hidden costs - we could end up having an inadequate program transferred to us. As the Government Leader knows, I think there were some rude shocks waiting for those in the Northwest Territories in the first couple of seasons when they had to face the firefighting costs and came to the realization that enough money may not have been transferred to them. Now, that may have been just chance that they hit a couple of bad years or one bad year following the transfer. I seem to recall, however, that it was a source of considerable concern to that government. Can the Government Leader give us the benefit of his views on that question?

Hon. Mr. Ostashek: I think that the Leader of the Official Opposition has summed it up quite nicely. That is exactly what has been happening. It is so frustrating to deal with the federal government in negotiations because it does not live up to commitments it made in a lot of instances. Yes, it is a concern of ours, and one that will have to be addressed before we agree to take it over.

Mr. Penikett: The first time I heard the Government Leader use the word "frustration" in public was in the news report on CHON this morning. Up until now, both Mr. Irwin and the Member opposite have implied that there was almost a love affair going on between them; they were such of one mind on all of these questions. Clearly, there are some substantial differences of opinion. Perhaps the Government Leader could tell us what it is about the federal position right now that has caused him frustration. What was the reason for the breakdown of negotiations that was reported in the news?

Hon. Mr. Ostashek: I believe I said yesterday in the House that the federal government appears to have two agendas - one at the political level and one at the officials level. I hope the Member opposite will forgive me, because I do not want to get into the details of what caused the breakdown. I have not had an opportunity to talk to the Minister yet. I am hoping to talk to him tomorrow by telephone, and I may better be able to answer the questions after that. I would, however, like to give him the opportunity to respond before I begin publicly airing the details of the breakdown.

Mr. Penikett: Since there are already accusations going back and forth at the officials level, some of which have been heard in our office, I should probably point out to him that the fact that there is a different view at the bureaucratic level than the political view has been the case from the beginning of time on some issues. Can the Government Leader, without betraying any confidences about the nature of the negotiations, at least tell us which areas of policy are in dispute?

Hon. Mr. Ostashek: Let me put it in these terms for the Member opposite. We had an agreement that was basically approved and was ready to be signed by myself and the Minister. Now it appears that they are asking for changes to that agreement that we are not prepared to accept. We accepted some minor changes that we felt were reasonable, but there are some being floated now that we are not prepared to accept, and that is why I am getting very frustrated.

Mr. Penikett: From time to time over the last few months, there have been rumours to the effect that the level of some First Nations frustration at being frozen out of devolution talks that affect their interests was so high as for them to contemplate a court challenge to the devolution process. Can I ask the territorial government's view on that, and ask if there is any evidence that such reports may have affected the federal position at the table?

Hon. Mr. Ostashek: The Member is right. Those statements have been made, and there have been threats made to the effect that this could end up in the courts. However, that is not what is affecting the negotiations between ourselves and the federal government at this time.

Mr. Penikett: Let me ask the Government Leader one more policy question, as other Members may want to get into this, because it is obviously a big issue. This government has wanted to transfer the forestry program for some time. I believe that it has taken a very different position from the one taken by the previous government in one respect, and that is the sequencing of events. I believe it was the view of our Cabinet that, whatever happened in the negotiations, the ideal arrangement was for us to provide a firm policy foundation for the transfer by bringing in forestry legislation prior to the completion of the transfer.

This government seems to be suggesting that it should complete the transfer first, operate, essentially, the federal program, and deal with policy and legislation later. Could the Government Leader explain his thinking on that subject?

Hon. Mr. Ostashek: Members opposite negotiated the Northern Accord. I signed the agreement. What we are doing with the forestry agreement is exactly the same as was negotiated under the Northern Accord. There was a signing and, within a certain period of time - 18 months later - the federal government was to introduce a piece of legislation to rescind their legislation, and we would introduce ours. Those are the parameters given to me.

Under the forestry agreement, there was a certain amount of money that was negotiated for policy and legislation development. Again, my understanding is that it would be in the same manner as that for the Northern Accord. It would be signed on a certain date, and there would be a period of time - six months or a year - that the program would continue to operate under federal policy, although this Legislature would be the decision maker and give the direction on what we wanted done.

It is my understanding that it would be under the same principles that were instituted in the Northern Accord.

Mr. Penikett: I will leave the discussion of the Northern Accord to another time. I may be wrong, but my guess is that developing oil and gas legislation for this jurisdiction, where there are no exact precedents anywhere else in the country for the kind of regime one would have to operate, would be a little more difficult than developing the forestry legislation, where we have neighbouring jurisdictions that have useful experience in this area. The problem is that, at least in Canada, oil and gas north of 60 has been totally under the control of the federal government for a long time.

Since the Government Leader seems very keen about completing a forestry transfer, does this government, as far as he knows, have an operational plan for the forestry transfer? Does it have budgets established for the operation of a forestry branch? Does it have staffing levels established, and so on?

Hon. Mr. Ostashek: I do not believe we have progressed to the point where we have a budgetary plan or staffing levels. The Member might ask the Minister of Renewable Resources when we get to his budget.

I believe there has been some work done, but it was all put on hold when the forestry transfer was put on hold, which was almost one year ago.

Mr. Penikett: I would like to ask the Minister of Renewable Resources to take that question as notice so that we can return to it without much delay when we get to that department.

The Government Leader earlier indicated a desire to have all of the land-based programs transferred: lands, forests, minerals, et cetera. I asked him to give something in the way of a progress report to the House, and perhaps even what he thinks might be a tentative schedule for those negotiations.

Hon. Mr. Ostashek: While the federal Minister has made the statement and I have said that we would do everything we could to comply with his time lines, we have not yet begun discussions on that part of the devolution. We have been trying to deal with the forestry issue first. For the Member's information, a memorandum of understanding was negotiated by the previous minister and me that did have some time lines in it, and what I have been proposing to the federal Minister is that we pull out that memorandum of understanding, look at it, see if it is still applicable and move the time lines ahead for the dates of transfer.

Mr. Penikett: I would be interested in knowing what the Government Leader's view is about the usefulness of such arrangements. Our government signed one of those with a guy named David Crombie a long time ago and it was done with good intentions on both sides, but two plain facts became evident right from the beginning. One was that the Minister of Indian and Northern Affairs did not control the pace at which other departments in the federal government were willing to do business. Two, even when he had some influence, events had a way of taking care of themselves, so that something we might not have had at the top of the list - B and C airports may have been one - suddenly turned out to be a fairly easy thing to negotiate with the federal government - actually it was not central agencies that did it; it was C&TS who did it with the feds - whereas something that did not involve very much money or very many person years, such as freshwater fishery, proved to be much more difficult than it should have been because we were dealing with a different agency and they were not prepared to offer the kind of dollars we thought it would take to complete the program properly.

What I am saying to the Government Leader is that the master agreement about devolution can become fiction quite quickly, not for any fault on either side but just because neither of the ministers who sign it have much control over the events. The health transfer was an interesting one, because it affects the previous government, and I can say this without offence. The response we got from the National Health and Welfare people, after we had put that in our agreement, was that it was all very well for Mr. Crombie to sign the agreement but it was nothing to do with them and they would proceed with it according to their own agenda.

Mr. Penikett: It so happened that, in the middle of the negotiations at one point, the federal government had a very radical change in policy about the nature of the agreements, which, in that case, caused delays that the Minister of Indian and Northern Affairs was in no position to do anything about. May I ask the Government Leader how he thinks - I confess I signed one myself, so this is not a trick or a nasty question - such a master agreement can be useful?

Hon. Mr. Ostashek: I believe you must have some sort of a road map and some time lines in place. The Member is quite right, they can slip. In my opinion, at this point there is a different attitude in Ottawa about devolution compared to what there was during the time that the Member opposite was negotiating it. I do not think it was a very high priority with them. The Liberal government in Ottawa seems to have made it a high priority, so high that I believe it is even in their red book. They would devolve these responsibilities to the north during their first term of office, they say.

I think there is probably a deeper desire on the part of the federal government to move on with devolution at this point. I, for one, would not stand here and say that when we sit down and sign a memorandum of understanding the time lines are carved in stone and will not move, because quite clearly they could move. I think the desire is better now than it once was.

Mr. Penikett: That is an interesting perspective, because it is not what I would have expected. Traditionally, in this country, the Liberals have been much more centralists on that score than the Progressive Conservatives. Obviously, I am the worst person in the world to be a defender of the Progressive Conservatives and of the Mulroney government, but, in fairness to them, at least some of the federal ministers had a genuine desire to see devolution happen. I think Mr. Crombie and Bill McKnight were both keen to devolve programs. Some of the other federal ministers we had - we had many in Northern Affairs during that time - were not so eager; they had other agendas. The fact that we got a northern oil and gas agreement is due in part to the happy accident that the negotiations began with Mr. McKnight and that he happened to be in Energy, Mines and Resources at the time we were concluding.

There was another minister during that time, a famous Quebec Nationalist, who was in Energy, Mines and Resources, who had no enthusiasm whatsoever about transferring control of anything north of 60. It is not a question of the difference between Liberal and conservative policy. The problem was that the devolution policy of the federal government has always been schizophrenic. There have been federal ministers who quite genuinely wanted to devolve provincial type programs to the territorial government. They also had other agendas, and that was deficit cutting. Since they were always trying to cut deficits in devolution at our expense, it made concluding agreements quite difficult.

Would the Government Leader not agree that that, in fact, is the real problem, and not the difference between the federal parties?

Hon. Mr. Ostashek: The Member opposite is quite correct, and I think the problem is probably greater now than it was then, in view of the level of federal debt that we have. I am not sure what instructions departments have received from the Finance Minister, or what kind of cuts they have been instructed to make, but it is only human nature that the base would be protected as much as possible by devolving these programs with as little cost to the department as possible. That is going to be an ongoing problem in negotiations.

Mr. Penikett: Let me ask a devolution question about one more area, and then I will sit down and see if there are other Members who have questions on the same subject.

Every Minister of Justice in this territorial government, and each one I have met from the Northwest Territories government has, at some point in their ministerial career, beat their breast about the desirability - even the immanence - of the Attorney General function.

In my previous capacity, I certainly spent many hours with federal Ministers of Justice on this question, including Minister Hnatyshyn, who seemed to be quite sympathetic, as many of the federal ministers are, but I would say that there seems to be not passive, but active, powerful, enthusiastic resistance in the bureaucracy - not just within the federal Department of Justice, but maybe even in terms of the Justice system. From time to time, if the former Minister of justice will permit me to say so, I got the impression that elements in the judiciary were not even keen about this. In the bureaucracy in Ottawa, there was a sense that the territories have not reached the level of political maturity, or that the question of the independence of the prosecutorial function could not be assured, or that somehow we were a bit unwashed and not ready for this kind of real authority.

Even though I know my colleagues in our government and the Minister of Justice both advanced proposals about one of the Atlantic provinces - I think it was Prince Edward Island - having the function of an independent public prosecutor - in other words, a public prosecutor function that is very independent of the political control of the minister - it did not seem to impress anybody.

There are people in the federal government who allege to me, from time to time, the fact that the federal government would operate the Crown office in the territories and send young lawyers up to practice, get some experience, and then move them out again, and that this was somehow a very important little empire for federal Justice and was something they would not surrender quickly.

I will just say that in my experience, while they were federal politicians like David Crombie, and maybe one or two others, who seemed to be not unfriendly - even Kim Campbell did not seem to be totally hostile to the idea - the problem was we never got to first base on this question. We never had a Minister who was prepared to push and shove the department and make it happen.

Can I ask the Government Leader if this has been the subject of any discussions he has had with Mr. Chretien? Is it something that is imminent or likely in the near future?

Hon. Mr. Ostashek: I have not brought it up in any meetings that I have had with the Prime Minister, but I do know that the discussion is ongoing. What the Leader of the Official Opposition has just laid out here is probably absolutely correct. The desire to get on with the job may be there at the political level, but it is not there at the lower level. I know that the former Minister of Justice was dealing with it, and now this Minister of Justice is dealing with it.

Mr. Penikett: I think that this subject has been ongoing and frustrating for a series of administrations north of 60, and so I would like to request of the Government Leader that he make a formal communication to the Prime Minister, a statement in writing on this subject that could be tabled in this House - a definitive policy statement about the federal willingness, or not, to negotiate this transfer. To make this an economic question, I think that we have expended considerable effort and considerable dollars over the years to try to achieve this. The truth may be that, for the time being, the powers that be in Ottawa are just not willing to do it now. There may be a new attitude in Ottawa.

I do not know if there is a new Deputy Minister of Justice, but I know that there is a new Minister. Maybe Mr. Rock, given that he has blotted his copy book quite seriously on gun control north of 60 - at least his manner of consultation has been quite scandalous - may wish to do something that would be politically profitable north of 60 by seriously negotiating this transfer, about which I do not think there is a lot of money involved. It is a very significant small "c" constitutional issue for me, and I think that it is an important one in terms of the political and constitutional development of these territories.

Hon. Mr. Ostashek: I thank the Member for that advice; I will discuss it with my Justice Minister in the near future and see if this is a time when I should be writing a letter to the Prime Minister. I do not have any difficulty in doing that, to see if we cannot expedite this. I agree with the Member opposite. It is more of a constitutional issue than a financial issue.

Ms. Moorcroft: A question was just raised about staffing levels and the organization of a future forestry branch in the Yukon Public Service. The Minister indicated that all of that work has been put on hold. Could I ask why all of that work has been put on hold?

Hon. Mr. Ostashek: It was put on hold, I believe, last February when the federal minister indicated to us that he was not prepared to go ahead with the transfer until such time as land claims was through the House of Commons.

Ms. Moorcroft: The land claims legislation will soon be through the House of Commons, and I am sure the Government Leader would consider it prudent to have some plans in place to take effect when the Yukon government does have control of forestry. Are they going to consider developing some plans for how they are going to organize their forestry branch?

Hon. Mr. Ostashek: Certainly, that will take place in due time. As I said right now, we still do not have a signed agreement. We do not have a tentative transfer date. We have a tentative one that I think has already gone by the target because my understanding is that they are supposed to give their employees six months' notice, and I do not believe that notice has been given yet.

Ms. Moorcroft: Is the Government Leader continuing to lobby the federal government on other really contentious forestry issues, such as increasing the stumpage fees? While devolution is on hold, there are a number of serious concerns being raised about the lumber that is being taken out of the territory, and a big part of that problem is the very low stumpage fees we have here. What is the Minister doing about that?

Hon. Mr. Ostashek: I do not know if I have stated it in this House before, but I have stated it publicly. About the time the forestry transfer was put on hold, I asked the federal Minister in two face-to-face meetings - and I believe in some correspondence - to put in an interim stumpage fee because the forestry transfer was being delayed. I do not want the federal government setting the stumpage fees for the Yukon after we take over the responsibility from forestry, but I think that they should be doing something to protect the resource in the interim. So I asked them for this almost a year ago, but they have not yet followed through with an interim stumpage rate.

Ms. Moorcroft: Since it has been over one year since that initial representation was made, has the Minister followed up with further correspondence on it? Does he plan to discuss that with the Minister when he gets in touch with him?

Hon. Mr. Ostashek: Yes, I discussed it with the Minister in our meeting in November in Ottawa. I will be discussing it with him again when I speak with him on the phone.

Ms. Moorcroft: In another area, I have a question regarding the effects of wage restraint on the overall public sector compensation costs.

We have heard rumours that management will be getting a full percentage of their pay raise. I would like to ask what has happened to staff pay? What is the overall increase for managers?

Hon. Mr. Ostashek: The managers have taken another one-percent cut as of January 1. They will be getting back the performance pay. That will be reinstated, as will the merit pay for employees. We are trying to maintain a level playing field; however, the managers did take another one-percent cut in their salaries.

Ms. Moorcroft: Could I ask the Minister then to get for me, if he cannot tell me now, what the average pay increase for managers would be, including the merit pay, for each department?

Hon. Mr. Ostashek: We will bring that information back.

Ms. Moorcroft: Is the pay policy evenly applied among and inside departments?

Hon. Mr. Ostashek: I do not know if I quite understand what the Member is asking in that question. Perhaps she could elaborate a little bit?

Ms. Moorcroft: We would like to know the overall increase or decrease - whichever it is - in compensation, as a result of the payroll cuts, to non-managers for each year and, as well, what the overall decrease is in compensation, due to payroll cuts, for each bargaining unit. If there is a merit pay applied, then is the result a wage increase? If so, what is the average increase?

Hon. Mr. Ostashek: My understanding of the merit pay is that it only goes to employees who have not reached the top of their pay scale. So, all employees would not be getting merit pay increases. It varies up to a maximum of four percent. It would be different for each employee.

Ms. Moorcroft: I have a note from the Leader of the Opposition that some departments give across-the-board performance increases because it is easy. Can I ask the Minister to either take it as notice or to bring it back in public service debate whether they will provide the overall public sector compensation costs. I would like to know what the decrease in compensation is due to payroll cuts to non-managers for each year and for each bargaining unit, as well as for managers.

Hon. Mr. Ostashek: We will read the questions from the Blues and we will try to give you an answer, as best we can. I am sure that we will be able to give the Member a global figure of what the pay increases will do to the overall payroll.

Mr. McDonald: I recommend we recess until 7:30 p.m., as I was going to raise the issue of banking, and that is going to take more than two minutes.

Chair: Are Members agreed?

Some Hon. Members: Agreed.

Chair: We will recess until 7:30 p.m.


Chair: I will now call Committee of the Whole to order for further general debate on Bill No. 3.

Ms. Moorcroft: I would like to attempt to clarify things for the Government Leader. The questions that I was asking before the break regarding the public sector compensation, and the effects of wage restraint on the budget, are equity issues and it is an issue of fairness between members of the bargaining unit, who are now living with a legislated two-percent wage cut, and the management employees who are outside the bargaining unit.

The information I am looking for is this: what are the performance increase numbers? These numbers for management can vary between two percent and four percent depending on the supervisor's assessment of their work. I would like to have a breakdown by department, obviously not identifying individual employees, of the overall percentage increases in the managerial pay.

Hon. Mr. Ostashek: As I said before the break, we will get that information for the Member.

Mr. McDonald: I have one brief question on the subject of the surplus, and then I will move on to the banking contract.

This afternoon the Minister said he believed that an appropriate surplus level would be $15 million to $20 million. He made it sound as though it might alternately be a good rainy-day account, but certainly would not be acknowledged or recognized by the federal government as being something that was too significant. Can I ask the Minister what he will do in the event that the surplus goes higher than that?

In some respects, it may be considered a bit of a hypothetical question, but we understand that the lapses in this year will be fairly significant if they are added on to the projected surplus, which the government is already acknowledging will be something more than $15 million or $20 million. Is the Minister preparing, temporarily, to run a deficit budget in the coming year in order to ensure that the surplus remains around $15 million to $20 million, or are we going to let circumstances continue as they are, and probably run up a $50 million surplus by March 31, 1996?

Hon. Mr. Ostashek: I think the Member is again asking me a hypothetical question. We probably have a fairly broad difference of opinion as to what the overall surplus will be at the end of the year. The Member opposite seems to think that there will be huge lapses. I do not believe that there will be. No, I do not believe that the federal government is going to condemn any government if there is a little larger surplus one year. We have another budget coming up, as the Member opposite is fully aware. There are five-year capital plans in every department. Some projects have had to be delayed because of priorities, but there is always a place to make good use of the money. As I said, there are a lot of legitimate demands on the government for money. All of the demands, for the most part, are legitimate. It is a matter of setting priorities. So, that is not a great concern of mine at this point.

Mr. McDonald: I understand that the federal government may not have expressed itself on what an appropriate size of surplus might be; however, if one expects the surplus may be higher than $15 million to $20 million, which, on this trajectory, it is currently running - it is very likely that it will be much higher than $15 million to $20 million. Clearly, to draw down the surplus means that one has to run a deficit for a year, does it not? It means that the expenditures are going to be higher than the revenues. In terms of budget policy, is it the government's intention that, irrespective of the surpluses that are generated, it would keep the surplus level in the $15 million to $20 million range?

Hon. Mr. Ostashek: Clearly, the answer to that is no. That would be an optimum that I would feel comfortable with, but it is not always going to be possible. I do not see anything wrong - if the hypothetical case should present itself - with running a small deficit in one year if we knew it could be compensated for in the next year. I do not believe in deficit financing - and we have stated that it is not our philosophy - but if we are talking about something that is going to be offset at the end of the year, it is not a big problem. I do not see this as big a problem as the Member opposite might.

Mr. McDonald: I do not think the Minister understands the question I am asking. I will restate it better, perhaps.

If the government runs a surplus in the neighbourhood of $30 million, $40 million or $50 million, which is not out of line with what has happened in the past, in order to spend down that surplus, technically, when one spends money out of one's bank account, one runs a deficit, not an accumulated deficit, but a deficit for the year. This is what is done in order to draw down the surplus. In terms of budget policy, is it the government's intention to maintain a $15 million to $20 million accumulated surplus, and is it prepared to run an annual deficit? That does not mean it has go into debt, and that does not mean it has to make it up in the following year. That just means it has to draw it out of its bank account. Is it prepared to run that short-term deficit in that year in order to ensure that the surplus does remain in the $15 million to $20 million range?

Hon. Mr. Ostashek: Again, the question is of a hypothetical nature, but I do not see any problem with running an annual deficit to draw down an accumulated surplus, as long as the project is worthwhile. We are not going to spend money for the sake of spending money. As the Member opposite is aware now, the Minister of Education has announced that a couple of schools are going ahead and, as he is also aware, some projects can be bumped up a little bit if money is available.

Mr. McDonald: I am glad to hear that, because I do not necessarily believe there is anything wrong with that kind of budgeting, and I do not believe there is necessarily anything wrong with that kind of deficit. When one accumulates a large surplus and there are good investments to be made in terms of expenditures in the territory, then they should consider making those expenditures. I do not see anything wrong with that, and I am glad to hear the Government Leader say he does not see anything wrong with it either because, from time to time, one gets the notion that because a deficit has been run in the past and it draws downs a surplus that that somehow is inherently bad. I am glad to hear that we agree once again. It has been quite disorienting to be agreeing on so many of the budget policy matters.

Nevertheless, it is an important point and I will probably remind the Minister at key moments in debates about that point.

Now, on the banking contract, can the Minister tell us in general terms what the fallout has been with the banking contract change, what the benefits have been, what problems have been identified, and what the government is doing about it?

Hon. Mr. Ostashek: For the most part, the changeover in the bank system from CIBC to Toronto Dominion has gone fairly smoothly. I have not heard of a lot of problems. There was a lot of concern when we announced that we were transferring the contract to the TD because there was a fear of the unknown, as there always is. For the most part, we were quite pleased with the way the transfer has taken place. There have been considerable savings to the government as was announced at the time of the change of the contract.

In fact, there have been even greater savings than we had anticipated, because we formerly paid the CIBC to operate branches in various communities - about seven of them. After we transferred the banking contract to the Toronto Dominion, the CIBC decided it was a worthwhile venture to keep those agencies in those communities and pay for them themselves. That has resulted in additional savings we had not even anticipated when we awarded the contract.

Mr. McDonald: The Minister is indicating that, because they do not have to pay the TD bank to provide the agencies, whatever monies they were anticipating having to pay the TD bank are no longer being paid. Is that how the savings are being realized?

Hon. Mr. Ostashek: Yes, that is correct. For each one of the agencies, there was a fee paid by the territorial government to have the banking facilities in those communities. I am not exactly sure what, but it was fairly substantial. Once we changed banks, the CIBC decided to keep seven out of nine agencies.

Mr. McDonald: How much is that particular saving?

Hon. Mr. Ostashek: I am informed that we were paying about $275,000 a year to the CIBC for those seven agencies. So, that is a saving we had not anticipated.

Mr. McDonald: That is how much it would have cost the Government of Yukon to have the CIBC provide the service and, because the TD is now providing that service, we are saving $275,000 in additional monies.

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

Mr. McDonald: Are those real savings to the Government of the Yukon, in the sense that, now that there is a bank account in place, the expenditures are not being borne through interest payments that are not received by the Government of Yukon but, instead, are essentially paid for by the federal government?

Hon. Mr. Ostashek: As long as we have enough money in the bank to keep a compensating balance, the savings flow to the federal government.

Mr. McDonald: What is the total savings then, including the $275,000 a year, that the Toronto Dominion Bank bid is providing the Government of the Yukon?

Hon. Mr. Ostashek: I believe that the savings we were anticipating on the contract were about $1 million over the five-year period, about $200,000 a year when we awarded the contract. That was based on various different mechanics of the contract where TD's costs were substantially less than we were paying CIBC. Overall, we were anticipating about $200,000 a year in savings. On top of that, we have the $275,000 a year, because we do not have to pay for those other agencies.

Mr. McDonald: The Minister is saying that the savings are about $475,000 a year; is that correct? What is the overall cost, then, to the government for the contract to the TD?

Hon. Mr. Ostashek: The total contract is about $556,000 a year, plus any interest that we would have to pay on overdrafts or monies we borrow from them.

Mr. McDonald: Is it the policy of the government that, should CIBC exit a community for which we would have once provided agency service, it will ask the TD bank to provide that agency service? Is the TD bank obligated to provide the service that is requested by the government?

Hon. Mr. Ostashek: Yes, most definitely.

Mr. McDonald: Obviously, CIBC was not present in every community. What plans does the Government of Yukon have to expand agency service to communities that are not currently serviced by CIBC?

Hon. Mr. Ostashek: There is nothing in the works right now for more agencies, but we will be, as requests come in from committees, looking at them and seeing if we can provide services to some of them, now that we have savings.

Mr. McDonald: One of the problems that was identified to me when the news broke about the change in banking contractor, was that people had concerns about transferring bank accounts from one bank to another. If CIBC maintains its agencies and services in all the existing communities, then that is a concern that need not be borne out in reality. The people in rural communities can remain with the CIBC. I would like to ask a general policy question about this matter, because a number of people have expressed some concerns that once they develop a relationship with a bank, loans officer, et cetera, they do not like to see sharp changes being made. What is the government's plan with respect to providing those services in the future? Are they going to continue to contract for services on a five-year cycle, or are they going to make it more long term than that, so that people could have more security? What are they going to do?

Hon. Mr. Ostashek: When we decided to go out for tender on this, to be quite truthful, I thought the CIBC would be the winner of the contract. In my opinion, they had an inside track. They had a history of the communities. They had a history of what their costs would be. I thought that they could have been competitive in their bid. I guess I was surprised that only two banks bid on it: the TD and the CIBC. That led me to believe that the other banks thought:, "What is the use? The CIBC is going to get the contract anyhow." It would be our intention, if we are the government in power five years from now, to retender this. I suspect that we will again see savings in our banking costs in the Yukon. It is a competitive world out there. All of the major banks provide basically the same services, and I think that it is appropriate for government to tender their contracts to the open bidding process wherever possible.

Mr. McDonald: The government understands that there are two elements in this. They are the ones who have encouraged the banks to enter into an agency service in the communities. People develop a relationship with the bank. Part of the socio-economic objective of proceeding with agency service was to provide a service to people, who are citizens and voters. It was not only to fulfill the basic internal needs of government that these arrangements were constructed. There are other people to think about.

There is potential collateral damage done if changes are made. People develop relationships with a bank. I had at least one dozen phone calls from people, saying that they were worried about what this would mean in terms of changing loans officers at the bank. They may have had $20,000, $30,000, $40,000, $50,000 or even $100,000 worth of loans through a single bank. People and businesses would have developed a relationship with a bank, and they would wonder if they would have to either bank by long distance or develop a relationship with a new bank, if that bank was no longer in that community. It is difficult to bank by long distance, in terms of dealing with the regional office. That is the reason for asking the question. It is something that was not always borne in mind. It was not always a prime consideration. Does the government not agree that there is some consideration that that might be the case?

Hon. Mr. Ostashek: Again, I agree that there might be some consideration for that, but I also think that it is not the prime consideration. We are talking about taxpayers' dollars. I see that, in this instance here, we have been able to save the taxpayers about $2 million a year in five years. I think that is a substantial amount of money. We are still providing banking services to the communities.

In this instance, after CIBC had been there for many years - I do not know how many - and taxpayers' dollars had been paying for them to be there, suddenly, when they no longer had the contract, they decided that seven of these agencies are profitable enough that they can maintain the service there without being paid by the government to do so. If we were talking about nickels and dimes in terms of the contract, that would be taken into consideration, as well. However, there is a substantial amount of savings to be had. It is important for government to act in a responsible manner and save the taxpayers some money, while still providing the service.

Mr. McDonald: There is more than one way to skin a cat. If one were living in rural Yukon and faced with the problems of changing bankers, then one would be exerting some creative energy into determining how the blow might be cushioned for those people who may have to change banking agencies as a result of a change in the contractual arrangement between a bank and the Government of the Yukon. People suggested to me over the phone a number of ways how that might be accomplished, even to the point of providing notice that the banking contract was up for bid, so that people might take that into consideration when they are opening accounts or developing relationships with loan officers. Perhaps in a year they might not be dealing with the same person.

The only consideration does not have to be a black-and-white situation, where we only consider whether we are saving $2 million over five years or nothing. It may be that we may want to put it up for tender every five years, but we may want to give notice, broadly speaking, to the public in ways that are not currently the practice, in order to warn people that the bidding may effect a change in banking services. There may be other things that could creatively be done to cushion any blow, if there is such a blow.

Does the Government Leader not believe that that might be something worth considering? There may be some consultation that the Department of Finance might want to undertake, for example, with municipalities that represent a lot of rural people, obviously in order to ascertain how the bidding process and a change-over might be structured in the future to cushion possible blows. Is that not a reasonable suggestion to make?

Hon. Mr. Ostashek: I think it is quite reasonable to give communities and the public a year's notice that the banking contract will be tendered. I do not think there is any difficulty whatsoever with that. In fact, it is probably a good suggestion and one that we will keep in mind.

I just want to put on the record that my understanding is that the Department of Finance had asked the previous Management Board for permission to do this, as it did of us. They felt at that time that it would be unfair that a bank, having once received the government contract business, would have it forever without having to prove that its services were competitive. We agreed with that approach, so followed through and did put it out to tender.

Mr. Penikett: I would like to make a point. We originally put the contract out for tender, not because we were unhappy with CIBC, but I had attended a meeting with the Canadian Bankers Association where they told us that it was the policy of the six major Canadian banks to vacate any community with less than 500 people. They were no longer going to operate branches there. That meant there was a real possibility at that point that only Whitehorse would have banks. It was that situation we responded to rather than our own banking needs, and we naively, I think, thought, because we were a big client, we could lever the contract and get services into the small communities. As it turned out, our experience was that only one bank bid - the Bank of Commerce. They even had doubts about bidding. In fact, there were bids from the phone company, from a supplier of automatic banking machines, and companies like that.

There was some nervousness about the fact that there had been a long association between this government and the Bank of Commerce - because that is where Robert Service had worked - and there was some feeling, for symbolic reasons, that it was important to keep that association. If the original contract has been improved, that is good. The idea behind the way the original contract was structured was to get banking services to the communities, although some were not perfectly happy in every case - particularly Faro. We were able to get and keep banking services in some communities - Dawson and Watson Lake still have them - and we were able to get banking services into communities that did not have them.

When it was renegotiated - or there was a second stage - under my colleague, the Member for McIntyre-Takhini, we discovered, in communities where there was a one-day or two-day service, some of the communities actually preferred the agency system to the branch banking arrangement. The agency system meant that you had your accounts in a Whitehorse branch and you had some local business person willing to offer the service. That worked in Ross River as well as in some other places. If I recall correctly, that was a pretty novel arrangement. Mr. Sanderson would know this, but I think there was some problem with insuring it originally because it was unprecedented. Nobody had ever done it this way in Canada before. It was considered quite innovative.

I do not have any difficulty with improving the arrangements, nor with insisting that the bank provide quality services to the Government of Yukon, and if it can better services, so be it. I think it should not be forgotten the original reason we did this was the concern about the lack of services in rural Yukon.

Hon. Mr. Ostashek: I am certainly not criticizing the Members opposite for what they did. In fact, I think it is a good move and I want to put on the record right now that I believe CIBC provided a very good service to us here and to the communities through its agencies, but the reality of the situation was, when we put it out for bid, that there was a substantial difference in the amount of money that was going to have to be paid, so that is why the change was made.

Mr. McDonald: The Minister has, I believe, indicated that to give notice to communities would be a good idea in advance of the tender going out. Is he prepared to even do a mild form of consultation with communities, asking municipal governments what they think the problems associated with the transfer are and how they think they might be resolved, given that, obviously, in this particular case the government can point to a fairly substantial savings through a bidding arrangement such as this - something that cannot be ignored - and how any future tendering process might be structured to ensure that the disruption is minimized?

Hon. Mr. Ostashek: That is a good suggestion and I do not have any difficulty with doing that. It may be a useful exercise to consult with the communities and municipalities to see if they have had any problems with the system that has been in place and what they would like to see included in a new tender.

Mr. McDonald: I would like to ask a couple of quick, general questions. Are the services that the Toronto Dominion Bank is providing to the government precisely the same as the services that the CIBC offered?

Hon. Mr. Ostashek: Yes, they are.

Mr. McDonald: It was mentioned just after the bids were made public and the Management Board had tentatively approved the TD bid, the TD was expected to provide some extras that were not anticipated. What are those extras and did the TD Bank come across?

Hon. Mr. Ostashek: I think the TD offered to provide some electronic banking for the communities and they are still looking at that. They fully intend to do it and I think they are dealing with Northwestel on it as well. They want to introduce it. So I suspect that the services may be enhanced somewhat in the communities because the TD is moving ahead quite quickly with it. The technology is there for it and that is what they want to do. It is basically electronic banking for the communities.

Mr. McDonald: Will that electronic banking come at extra cost to the Government of Yukon or is it an extra that is expected to be borne by the TD Bank itself?

Hon. Mr. Ostashek: We will have to pay for it, but the cost is nominal.

Mr. McDonald: When we say nominal, we are talking about what? I am not sure what "nominal" means in these circumstances.

Hon. Mr. Ostashek: From what I understand, it would be less than $25,000.

Mr. McDonald: Is that per terminal, or is that $25,000 total? Could the Minister also tell us where these terminals are expected to be placed?

Hon. Mr. Ostashek: That $25,000 would be all-inclusive. No, I cannot say for sure where the terminals will be. As soon as I have that information, I will get back to the Member.

Mrs. Firth: I have a couple of questions on this particular issue. When I first read in the newspaper the difference in the contracts, it was astonishing. Over the five-year period, it amounts to a sizable amount of money. I found it interesting that there would be such a gap. I do not know if the Minister has any idea why, but it would be interesting to know why the bids were so far apart. With most government contracts and projects that are far in excess of the value of this particular contract, bids for millions of dollars worth of work usually come in quite a bit closer.

Is there any explanation the government has been given, has speculated, or tried to analyze with respect to this contract and why there should be such a huge discrepancy between the two bids?

Hon. Mr. Ostashek: As I said earlier, we did not expect that kind of saving when we put the contract out, to be truthful.

In a nutshell, the principal reason is that, in the contract with the TD bank, there is no fixed agency fee charged. A calculation of the interest contributed to compensating balances is higher under the TD proposal than it was under CIBC.

Mrs. Firth: The fixed agency fee to the CIBC would have been a considerable amount of money, and the TD bank did not charge a fee at all - is that what the Minister is saying?

Hon. Mr. Ostashek: Yes. The TD incorporated the fee into the whole contract price. The CIBC was charging us so much a month for each agency. I do not have the exact figure; it was something like $1,500 or $1,600 a month. Banking has become very competitive. As the Member opposite is probably aware, the banks are always competing for business, and the TD bank was looking at the government account.

It is a very substantial account for any bank, and that is why I was very surprised that the other chartered banks did not bid on it. Due to the fact that it is such a large account - it is the largest one in the Yukon and would be considered a major one in any part of Canada - it was quite a thing for the TD bank to be able to get the account on a competitive bid. As a result, the taxpayers are going to realize a substantial savings.

Mrs. Firth: With respect to the transition for the individuals who are involved, the Minister said that things went very smoothly, except for a few problems. Can he indicate to us what some of the problems were? Were there any clients that were dropped, for example, because the TD bank did not assume all of the clients, or did they assume them all? Was the transition relatively smooth?

Hon. Mr. Ostashek: I do not think that they dropped any clients. I think that what probably made it go more smoothly was that the CIBC retained seven of the agencies, so the transition was fairly painless. It was only Beaver Creek and Faro that were dropped by the CIBC. As a result of that, it was a fairly painless transition.

I was not involved in the details, but I do know that, shortly after they received the contract, they sent up a transition team from Vancouver, I believe, that visited every community in the Yukon. The team talked to the people and listened to their concerns. This made quite an impression on the people in the communities.

Mrs. Firth: Could the Minister tell us when the contract is up for renewal - just the month and the year?

Hon. Mr. Ostashek: It will be up on December 1, 2000.

Mr. Cable: The Minister talked about a tender call. Was it a tender call or a proposal call that went out to the various banks?

Hon. Mr. Ostashek: The proper terminology is that it went out for proposals.

Mr. Cable: Were there any amendments from the original proposal call to what was finally acted on by the banks?

Hon. Mr. Ostashek: Yes. Again, an amendment went out after the call went out. Finance overlooked incorporating into the requirement that whoever won the contract would have to maintain services in Dawson City and Watson Lake.

Mr. Cable: It would probably be useful for the debate of the mains to do with the Department of Finance if we could get the proposal calls tabled. Would that pose a problem?

Hon. Mr. Ostashek: No, we can have them here by the time we get to the Department of Finance in the mains.

Mr. Cable: Could we get the banking contract tabled at the same time?

Hon. Mr. Ostashek: Most certainly.

Mr. Cable: At that time, could the Minister advise what, if any, transition costs occurred, such as reprogramming computers, new cheques that had to be printed, training costs for staff and that sort of thing?

Hon. Mr. Ostashek: Yes, we will bring those costs, as well.

Mr. McDonald: I would like to ask a general question of the Government Leader. We touched on it very briefly previously. It is with regard to the situation that happens at year end, when we talk about budget policy and what we will do to ensure that there is not going to be ballooning spending in the final months of the year.

Normally, we have a fairly spirited debate about that in the Legislature, somewhere around March or April. Due to the manner in which the sitting is now structured, it looks as though we may not be here when the year-end comes. I would like to ask the Minister precisely what the government is doing, in this year, to monitor the situation, and ensure that there will not be the kind of buying frenzy that people sometimes talk about in this Legislature.

Hon. Mr. Ostashek: For the last two years, I have sent a memo around to the department heads in which I have raised my concerns. I asked them to act in an appropriate manner. I will probably do the same again this year. I believe that the managers in the departments have received the message, and that they are trying to manage in a responsible manner.

I think that the Member opposite is also aware that some departments, by their very nature, believe that they have budgeted very tightly, even if sometimes we do not think they have. They delay making some purchases until later in the year, rather than at the beginning of the year, in the event that they should run short of funds.

I have developed quite a bit of confidence in the financial managers we have in the departments now, having worked with them for two years. However, I will be sending a memo around again to remind them that we would like them to act in a prudent manner.

Mrs. Firth: I have a particular interest in this area, because I know how competitive departments are for money. I know that when information was tabled in the House with respect to the money that was allocated for the job creation projects, there was a lot of scrutiny and done by the departments right away to see how much other departments had received. I have already heard some comments about that.

We have, in the past, asked the Minister of Finance to provide us with expenditures for the last period - the last three months of spending in a fiscal year. I know we asked for that information with respect to computers - the numbers of computers that were purchased and for which departments. The last three months of the 1994-95 budget is the time period in which I would be interested. I would also like that information with respect to the purchase of new vehicles.

There is a revolving fund for highways equipment, and I would be very interested to receive an update with respect to that revolving fund, because some concerns have been raised by some Yukoners who have observed what they referred to as a whole fleet of new dump trucks, trailers and other equipment, lined up at the highway maintenance facilities in the various communities. If the Minister would be prepared to provide that information for us, I think it would be helpful for us to analyze the whole concept of year-end spending.

It does not seem to matter how many memos are sent out or what the direction is. I think there is still some of that behavior happening; I am sure that the Minister of Finance would agree with that. The government does not know where every cent is being spent. Would the Minister be prepared to bring that information in for us, so that we can make some well-informed analysis with respect to the spending patterns?

Hon. Mr. Ostashek: Is the Member asking for the last fiscal year or this fiscal year? The 1994-95 year is finished. Does the Member want numbers for that year?

Mrs. Firth: Yes, for the 1994-95 year, the last three months, which would bring us to the end of the fiscal year: January, February and March. So it would be from January 1 to March 31 of the 1994-95 fiscal year.

Hon. Mr. Ostashek: I do not have a problem with providing those for the Member as soon as we can after the end of the fiscal year.

I have one other comment to make on the budgetary process, which may give some comfort to the Members opposite, and then, it may not. I have made it very clear to our managers that their next year's budget is not dependent on how much money they spend this year. We did, in the last budgetary process, use the previous year's expenditures as a base from which to start. That does not mean that they were going to get that kind of money just because they spent that much last year.

We have explored other options, such as having a couple of departments do zero-based budgeting. Doing zero-based budgeting for the whole government would be a very long and tedious process, but we may, from time to time, ask one or two departments to do a zero-based budget. I think it would be a good exercise for some of the departments as it would give them a better understanding of where their money is going, rather than just basing each budget on the previous budget.

Mrs. Firth: The indication that the Minister of Finance gave departments regarding their next year's budget not being dependent on the last year's spending - did this communication go in the form of a verbal communication, or was there a written directive sent to the managers?

Hon. Mr. Ostashek: I am not sure if I sent them a written directive, but I do know that I told the deputy ministers that when I met with them. The call letters for the budgets go out from the department and I am not sure if I put that in writing or not.

Mrs. Firth: If the Minister has it, I would like to have a copy of the directive, or if he could provide us with a copy of the call letter, it would be very helpful in understanding exactly what direction the Minister of Finance is giving the department heads with respect to financial management.

I will wait for the Minister to answer that and then I have some questions about zero-based budgeting.

Hon. Mr. Ostashek: I will certainly provide the Member with a copy of the call letter, and whatever else we can.

Mrs. Firth: Can the Minister tell us which departments have been through the zero-base budgeting process?

Hon. Mr. Ostashek: None yet, but that is something we have been exploring. We may try it in a department or two in the next fiscal budget year.

Mrs. Firth: Can the Minister tell us which departments he plans to begin with?

Hon. Mr. Ostashek: No, I cannot, because this is just in the discussion stage at this point. We talked about it last year but did not do it. We tried a different approach from what was carried out in the past, where departments used the previous year's estimates on which to base their budget. That seemed to be the process that was in place, and we decided to change that to use their previous year's actuals on which to base their budget. We thought that was more realistic.

I did talk with Finance about doing some zero-base budgeting, but we did not do it during the last budgetary process. I am thinking of possibly doing it in the next budget cycle.

Mrs. Firth: I would particularly like to see that done and would be supportive of that exercise. I have been through that exercise myself, and it is not as onerous as some of the departments would like to make out it could be. It is a good exercise if done properly. It is a time for an impeccable scrutiny of the budget, and a time to make some tough decisions.

I hope the Minister of Finance will keep me informed about the progress of this particular initiative and will let me know when they make a decision with respect to which departments are going to have zero-based budgets done. I would appreciate that, and I will be waiting to hear from him. No doubt, I will have to follow up by writing letters periodically, asking whether or not it has been done. I will wait to see what departments he is going to start with.

If the Minister wants my advice about which departments he should start with, I am certainly prepared to help him out.

Mr. Cable: I know the subject of zero-based budgeting was brought up early in the Minister's tenure. He did a certain amount of hee-hawing and indicating it was an inappropriate concept. Just out of curiosity, when did the Minister reach this conversion to the value of zero-based budgeting?

Hon. Mr. Ostashek: As I said, I am not convinced that it would be appropriate to do clean across government in one budget cycle. I do not think I could agree with the Member for Riverdale South that it is not an onerous task. When one gets into some of the departments, like Health and Social Services or highways, it is a substantial task. There are a lot of different departments, with a lot of different programs, and to go back and justify each and every dollar we are spending takes a substantial amount of work. However, I do think it is probably a good exercise to do in one or two departments. I will be talking more with Management Board about it to see if we should not try it.

Mr. Cable: Is this being done with a view to seeing how it works, or is this like a rolling spot-check of two departments this year, and two departments next year, that sort of approach?

Hon. Mr. Ostashek: Yes, that is right. That is something we have thought about - a couple of different departments each year. It can be a good exercise. In fact, if the departments are sincere about it, it also gives them a chance to justify where they are spending their money and whether it is being well spent.

Chair: Is there any further general debate?

Mr. Penikett: This is not a question so much as a comment. I was listening to the debate earlier between Mrs. Firth and Mr. Ostashek about the Boylan contract, and I must say, if I can footnote my previous comments, my attention was drawn to the final paragraph of the letter to Mrs. Firth from Mr. Ostashek, which says, "With respect to your request to obtain copies of any report provided by Mr. Boylan to the government, the release of the information you are seeking is considered to be advice to Cabinet and, as such, falls outside the purview of what is considered accessible to the public."

I do not want to provoke debate, but it would seem to some people that, since it is advice for Cabinet, it probably should have been a contract provided under the Executive Council Office, not under the Yukon Development Corporation or the Yukon Energy Corporation.

Chair: Is there further general debate?

We will move on to Schedule A of Bill No. 3.

Hon. Mr. Ostashek: I move you report progress on Bill No. 3.

Motion agreed to

Chair: Do Members wish a break before beginning Bill No. 4?

Some Hon. Members: Agreed.

Chair: We will take a brief recess at this time.


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

Bill No. 4 - First Appropriation Act, 1995-96

Chair: We will move on to Bill No. 4, entitled First Appropriation Act, 1995-96. Is there any general debate?

Hon. Mr. Ostashek: Before I start into debate, it is ironic that the more things change how much they remain the same. I happened to get this little tidbit the other day, called Cicero's advice. Forty-three years before the birth of Christ, the Roman statesman Cicero addressed the Senate of Rome and gave advice might be useful to the Canadian government more than 2000 years later. He said: "The budget should be balanced; public debt should be reduced; the arrogance of officialdom should be tempered and controlled; and assistance to foreign lands should be curtailed lest Rome become bankrupt." He went on to say, "The mob should be made to work and not depend on government for substance."

His advice was ignored, and we all know what happened. I think we have some of the same problems facing us in Canada today.

I spoke quite extensively on these estimates in the budget address, so I will keep my remarks this evening quite brief.

We are requesting budgetary expenditure authority for the 1995-96 fiscal year for over $489 million. Of this total, $344 million is for operation and maintenance purposes and $145 million is for capital.

When compared to the forecast expenditures for the current fiscal year, this is an increase of approximately two percent. The increase occurs almost entirely in the capital vote, which is increased some five percent over the 1994-95 forecast.

While part of the increase in capital is due to an increase in recoverable projects, some of it is due to an increase in discretionary capital spending. For the past several years, our discretionary capital has been lower than in the years previous but with the current year we will see a return to more or less historic levels of discretionary capital spending.

Operation and maintenance funding is, in total, increasing by less than one-third of one percent. Total revenue inflow for the year is projected to be $497,780,000, for an increase of two percent over the forecast in the 1994-95 budget.

Since our formula financing grant is frozen at the 1994-95 level, this increase is accounted for, principally, by a nine-percent increase in revenues, of which an increase in income tax yields us the most significant component.

Revenues are anticipated to exceed budgeted expenditures by $8.3 million, which monies we are currently showing as being available for contingencies. Should no such events arise, these funds will flow to our accumulated surplus and will be available for future years' projects and emergencies.

As noted in my budget address, there are many new and interesting initiatives being taken by our government in this budget and the various Ministers will be speaking to those at some length in their presentations in departmental debate. I therefore will not now be speaking to those matters. However, if Members have questions of a general nature, I would be happy to respond.

Mr. Penikett: I am going to take advantage of this occasion during general debate on the budget to say a few words that I did not have an opportunity to say during the debate at second reading. Lest the government fear that I will rant on for 40 minutes, let me disabuse everyone of that notion. I intend to speak quite briefly.

I will begin by pointing out that Cicero, whom the Government Leader just quoted - if my colleague, the Member for Whitehorse Centre, is correct - is the author of the statement "better late than never", which is, of course, very apt because I think one could argue that Newt Gingrich, the new Speaker of the United States House of Representatives, just got elected on Cicero's platform, and I am reasonably certain it will be proved not to work again.

The other thing I would say to the Government Leader, who has just reintroduced us to his $489 million budget - which, according to the government press release, was $488 million, but which is, in fact, by the time the contingency is added, something like $499 million, which is half a billion dollars - which means that the fiscally responsible Conservatives on the other side will be spending $2 billion in four years. I would like to quote another famous Conservative of my youth, Senator Everett Dirksen, of Illinois, who was the Republican leader in the United States Senate for many years. He said, "A billion here, a billion there, it all adds up and pretty soon you are talking real money."

I think it is true that we are talking about real money here.

I am not going to ask the Government Leader necessarily respond to these questions, but I want to make a few general points here. I am not going to make them in a way that is intended to be seen as partisan comment or to invite partisan response. I am going to try and make some comments that are seriously felt by me, and I hope they will be seriously heard by Members opposite. There is a lot that I could say, and had I spoken at length in the debate, I would have reiterated many of the things that were said by my colleagues.

I want to say, as I have said before, that I fear at times that this government says one thing and does another. It does this, in spite of the fact that, in this government, the Government Leader and the Minister of Finance are the same guy - unless, of course, he has an evil twin, which I do not think is the case. I think that there is some evidence of cognitive dissonance between the throne speech and the budget.

I will not go on at length, as I would have done if I was speaking at second reading. However, I would invite the Government Leader to take a look at the six priorities in the throne speech to see how many of them have funding commitments attached to them, and how many of the words in the throne speech are turned into financial action or given life by financial commitments in this budget. I would say that some of the alleged priorities in the throne speech have no financial muscle behind them at all. I looked at the first one, for example, which is balancing economic development, a department which is having less and less of a role all the time and seems to be shrinking in terms of the scope of its activities, such as balancing economic development with environmental protection. A cynic might say that if you are doing nothing in either area, that is balanced. The fact of the matter is that there is nothing in the budget that is a specific expenditure in terms of environmental protection. In fact, there is really nothing new at all in terms of any real demonstration to that commitment.

I could go on in terms of some of the other throne speech commitments, but the point I am making is that there is evidence that, at least in my mind, as was the case when we were in government, the budget gets written by Finance and the throne speech gets written by ECO, and the kind of integration, which I think that the Cabinet and the Government Leader has to provide, is some weaving of the two into some kind of coherent statement of government intentions. I believe that this is wanting, in this instance.

I think the way that works best, obviously, is if the Cabinet has clearly established an agenda ahead of time and if both the authors of the throne speech and the authors of the budget are clearly instructed to follow the Cabinet's lead.

I might make a suggestion to the Members opposite, or to potential future Government Leaders on this side, after thinking about it for some time, one possible answer to this problem - which, I am sure, exists elsewhere - is that it may be advantageous to have the budget unit located in the Executive Council Office, rather than the Department of Finance. I do not think it is absolutely necessary to have it located in Finance, although I understand why it has been there.

I will not go on at length about that, but I would say that, had I had the opportunity, I would have responded with enthusiasm to the invitation from the Minister of Health and Social Services to define the themes in the Opposition's critique. I must say, when Mr. Phelps intervened in that way, that I was reminded of a professor of mine in university who wanted to know from our class what the theme of the three little pigs was. I remember that there was one student in the class who thought that the theme was that bricks are better building materials. Another thought the theme was how to kill the big bad wolf. However, the answer that the professor apparently wanted was that the theme of the three little pigs was education. That is interesting, because I do not think that is a theme of this throne speech or this budget.

I will keep the professor of Carcross happy by not going on at length on that theme. Suffice it to say that this is a record budget, as were the last two introduced by this government. This is made more significant by the claims of fiscal prudence and conservatism. It is interesting when it is married to the claim that, even though they are spending more on a whole range of areas that, in fact, spending is down. I believe that the Minister of Health and Social Services talked about health insurance and social assistance being down.

Since our population is down and employment is supposed to be up, one would still hope that the social assistance number and the health insurance number would both be down, but it is hard to walk and chew gum at the same time - for the Members opposite, to brag about cuts and to be spending more and more at the same time. I think somebody who was looking for a theme here would argue that rather than doing more with less, the government is doing less with more, because they are spending more money but they are not introducing many new programs or many new initiatives for the benefit of people. In fact, someone on the street said to me the other day - and the Government Leader will not mind this as an ex-Albertan - "The interesting thing about these guys is that they talk like Ralph Klein but they actually spend like Pierre Trudeau", which I thought was an interesting contradiction.

There are a couple of things I want to talk about. I want to say to the Government Leader now that I am making representations here. I will want to discuss these things later in the budget but I am serving notice now that they are concerns of mine.

One of them is the whole curious situation we have of major announcements being made sometimes before the House sits, sometimes at the outset of the sitting - tantalizing suggestions of major projects, for which there is no financial evidence of a commitment by the government. I am thinking, for example, of a number of schools, the coal project, the waterfront casino, the Beringia Interpretive Centre, and so forth. All those things will be the subject of further discussion, but when I watch what is happening with the Beringia Centre, I have to tell the Government Leader that I am certainly not convinced that this is an example of "commonsense government", "careful planning" or "fiscal responsibility", virtues that are claimed by Members opposite.

Even though the government insists it is not a government project, the waterfront casino, according to a letter I have seen from the Government Leader to a local resident, does seem to be a government political commitment.

There are many people in this community who feel that it is a political commitment going back to before they began consultation on it. I want to tell the Members opposite that, from the point of view of my constituents, this is a real pie-in-the-sky project. It is a classic case driven by notions of easy money or get-rich schemes. It is as much a fantasy-driven idea as the railroad to Carmacks or the Watson Lake pipeline for the reason that was put very clearly to me today by a constituent, who said:,"Every sensible person knows the only people who really get rich from gambling are gangsters and governments.''

When it comes to gambling, governments are like heroin addicts; they get hooked on the revenue and they cannot give it up, and they have to have more and more. I freely admit that there are NDP governments who got heavily involved in gambling, but I am also pleased to see that some of them are having serious second thoughts. One of the reasons they are having second thoughts is because there is a realization, by some people, that gambling revenue is an illusion. Whatever money gambling brings in - the quick bucks it brings in - are slowly killed by the social costs that accumulate, over time, from the abuses of gambling.

The social costs associated with gambling are very rarely put into the budget at the beginning. I think that, one week or so ago, there was an interesting piece in the Globe and Mail about British Columbia's decision not to proceed with the $700 million waterfront gambling proposal that had been suggested for the city. The columnist in the Globe and Mail said, quote, "The economics of gambling are distilled in two pithy quotes that capture the reason why the $700 million project was shelved. In the words of one casino security chief, who watched the downtown core of Biloxy being gutted by gambling, quote: "There ain't nothing grows in the shadow of a casino but pawn shops.'' The other is a quote from the US congressman, disturbed by government reliance on gambling money, who said, quote, "If we build a roulette table big enough,'' he asked, "do you think we could wipe out the deficit?''

What about democracy? I do not know exactly what the government's consultation showed to them, or what reading they got from the Yukon Council on the Economy and Environment's assessment of public opinion. As I said before, a lot of my constituents thought the government had made up its mind on this issue before the period of consultation had started.

I want to say to the Members opposite, public opinion in this town on this issue is fairly clear. According to the survey that my caucus colleagues and I did, two-thirds of the people we sampled are opposed to more gambling in this town. They are not opposed if the government does it, not opposed if it is for tourists, not opposed if people do it nicely, but two-thirds of the population is simply opposed to more gambling.

The government says that this is a casino for tourists. Whenever I hear that something is for tourists, I am always reminded of another Government Leader of some years ago who used to tell this Legislature - he did not do it only once, he did it several times - that it was not Yukoners who drank more than other people, it was the tourists. It was interesting that that Government Leader never could explain why the liquor consumption figures were so high in the winter when the tourists were not here. It was an article of faith with him that the heavy alcohol consumption here was all done by tourists.

The difficulty I have with the notion of tourist gambling - even though I understand its cultural, historical, and even financially importance to Dawson City - is that I guess everybody knows that there is now gambling available to people in almost every corner of the continent, and not just casinos, but gamblings of all kinds: video lotteries, bingos, giant bingos, poker games, roulette wheels, government lotteries - a variety of ways for people to gamble their money. For that reason, I think it is extremely difficult to demonstrate that we are going to have millions and millions of people flocking north in order to have a little flutter on the Whitehorse waterfront. I am just not persuaded that that would be the case.

The people we surveyed said that if there had to be gambling, the majority thought that non-profit groups should run it. If we have to have gambling - which I think is debatable - my reading of public opinion is that they do not want the government running it, and they do not even want the government taking all the money. They want it run by non-profit organizations. If that is public opinion, and the government does this for financial reasons, they will be flying in the face of what the people of this community want.

I want to say something about Beringia. The Minister who has been talking the most about this has said some curious things. I do not want to sound totally negative, because he is talking about a project that, in his mind, at least, is destined for my constituency. Even though it is destined for my constituency, and some people might want to argue that it is a benefit, I want to put on the record now, before we get too far into this budget, how dubious a project I think this is.

Ever since the debate on heritage legislation in this House a few years ago, there have been serious and grave doubts about the Yukon Party's attitude toward heritage issues, cultures and traditions of the Yukon - preservation issues.

Personally, I do not know the Minister of Tourism well, and I do not know if he has ever been to Europe, at his own expense, on holiday, or spent a lot of time in museums. A lot of us on this side of the House have been commenting on what seemed to be quite peculiar ideas that he picked up and brought back with him. Even more surprising, he seems to have quickly persuaded the Cabinet.

As someone said, since the Minister of Tourism came back from his secret mission over there, he reminds us of the old song, "How Ya Gonna Keep 'Em Down on the Farm After They've Seen Paree", because something about the experience seems to have disoriented him.

I understand the Minister's hostility toward the visitor reception centre. He has not hidden that since it was built, even though I understand he was originally a supporter of that general location; his somewhat arbitrary decision to relocate it surprises no one.

I should mention in the debate that almost any thoughtful person I have talked to on the question, including some downtown businesspeople, think that the prudent thing for us to do would be to have two visitor reception centres, one near the airport, carrying out something like the function that this one now addresses, which, ideally, introduces large numbers of visitors at a time to the territory and to its attractions, allowing them the option of perhaps planning their stay here; and another one downtown, which might be a joint Tourism Industry Association/Chamber of Commerce/Government of Yukon operation, which may not have to be a big facility, but it would be centrally located and could carry out some of the functions that, presumably, the government has in mind for it.

The suitability of the visitor reception centre, as it is now constituted, as a world-class museum is regarded by almost everybody I have talked to as an absurd proposition because the quite specifically built, summer only, information facility is, according to anyone I have talked to, absolutely unsuited, either as a facility or a site, for a world-class museum, which the Minister has promised us. In fact, one academic in the field, with whom I discussed this over Christmas, described this whole idea as a profoundly ill-considered notion. I say this to the Government Leader: the local museum people - every one of them I have talked to - have told me that the research and storage component of this proposal - the part of the project that the NDP had in the capital plan - should be located at the college where it is accessible to students and to researchers. It is quite evident that students and researchers, and particularly researchers in the field, have not been consulted about this project. None of the people here, who are acknowledged experts, appear to have had any involvement, except for one.

This project, which we hear is a multi-million dollar proposal, is not in the budget. It has been announced already and, in fact, the Minister put out a press release the other day announcing there was going to be a conference held at it. There is no money in the budget yet; it has not been planned, and it has not been built, yet already there is a conference booked. There is no money for a casino, either, but perhaps the government is planning another amendment or two in the budget, and it is interesting that that is happening at this stage.

The previous government had a storage facility to protect and preserve valuable archeological and anthropological treasures in the five-year capital plan.

We did not plan a government museum. Why not? I think the main reason is because all the other museums - the privately-run and the community museums - objected. They all objected. All of them pointed out that they had very little money, that they were just getting by, and that government funding was tight. They also pointed out that, for a very small population of only 30,000 people, we had quite a few museums already. Some even argued that we had too many.

The Minister has indicated, of course, that his museum is going to be different. It is going to be a "world-clas"s museum. I do not want to be mean about this, but if you think about that concept for even a minute, you will see how silly it is. I cannot see any evidence at all that the Cabinet has thought this through.

What is a "world-class" museum? What the dickens does the Minister mean by that? What could he possibly have in mind? To me, by definition, "world class" obviously refers to a small number of supremely excellent facilities - the kind that exist in a few of the great capitals of the world. If I use the term world class, I think of museums like the Museum of Modern Art in New York City, which is a fabulous place, and I admit that.

I think of the Guggenheim, the Smithsonian in Washington, the Louvre in Paris, the British Museum - some of those institutions. To use the expression "world class" and have the word mean anything at all in describing those institutions implies what is obvious about them: that these institutions took decades, even centuries, and millions, in some cases billions, of dollars, and the careers of dozens and dozens of specialists, curators, historians, anthropologists, preservationists, restorers and other arts and cultural specialists to make them world-class facilities.

Such world-class facilities - and this is to speak to the Minister's point about their being business attractions - do attract millions of visitors because of the exhibits that took decades to gather and the skills of many, many specialists to mount. The government could risk making itself look ridiculous by suggesting that it can create a world-class museum out of a department that had two, count them - two - anthropologists, and the Minister laid off one of them. The Minister keeps talking about museums as tourist attractions, as commercial ventures. I am no expert in this, but I doubt if there are very many people who go to Paris solely to see the Louvre. I think the truth is they go to see the Louvre because they are in Paris. Museums are not commercial institutions, but like a commercial operation, location is everything. I do not understand how, unless the Minister is prepared to spend a huge fraction of the entire budget of the Yukon Territory, he could build a world-class museum here within the normal meaning of the expression.

It seems to me that the most basic thing about museums is that they are not, almost anywhere, commercially profitable institutions. They are heavily subsidized, they have patrons, and they were built from the gifts of millionaires and billionaires, or people who left huge endowments to create them. Even where that is the case, they have to be subsidized massively by governments. Usually, only national governments can afford to support world-class museums, and only national governments of major nations.

Museums are not usually businesses. They are not usually profitable, and they are not usually commercial institutions. They exist to preserve, protect and promote arts and cultures, or heritage. They mount, in an attractive way, displays that give access to visitors, students, and others.

I am proud to say that I count myself as a supporter of the museums in the Yukon. However, if you add up all the receipts of all the museums in the Yukon, it only comes to a few thousand dollars a year. Even the best of the museums, the MacBride, for example, cannot generate enough money to pay for its own fire insurance on a wooden building. Yet we have a proposal, seriously mounted, I take it, where the Minister suggests that he can build a world-class museum, which implies an annual budget in the tens of millions of dollars - or a major capital budget and an annual operating budget in the millions - something which only a few national museums in Ottawa have, and those museums cost tens of millions of dollars and have staff in the hundreds.

If you look at the revenues of all of the museums, and you look at the costs, and if you are seriously talking about a world-class museum, you have to realize one thing right off: this government would have no money left to support any other museum, much less a whole bunch of other things - if we are talking seriously about "world class" museums.

The Minister says Holland America supports it. Well, that is interesting, because I had a chance to talk to some people last night, and it is quite clear that Holland America is not going to subsidize a government museum. From my discussions with their people, I think it is completely out of the question. In fact, I bet if we took a look at all the tax receipts from all the bus tours coming here every year, and put it into a separate operating fund, we still would not come close to supporting the cost of operating even a national-class museum here.

There are a lot of questions here. What about the highway? If the highway is not good enough for a visitor reception centre, if the waterfront is the place one has to be, why not a waterfront museum? Why are we not working with the MacBride to make it a better museum, rather than going off on our own? This is sad, because it could be a serious project, but there has been no planning, no consultation, no feasibility study. There has been only an announcement - and worse, an announcement now that there is going to be a conference, at something that has not even been planned.

I do not know whether the Minister knows it, but there is a lively debate going on in academic circles about Beringia. Not even in the Yukon do all the scholars working in this field believe, for example, that First Nations came across a land bridge from Asia. In fact, some people here are very quick to tell me that, in the aboriginal mythology of this place, the land bridge has no part. It is not part of their own sense of themselves.

If the Minister is talking about having a place to house the frozen horse and other such finds, that is fine, but we are not necessarily talking about a "world-class" museum. Frankly, I do not think that the Minister can raise very much money just by flogging that dead horse.

No Member of this Assembly is qualified to participate in the debate about Beringia theories. But I plead with the Government Leader, at least: if the Beringia Interpretive Centre is a good idea and if it is sound as a proposal - since we are talking about something that is based on events that happened thousands of years ago - surely we could take a few weeks or a few months to see if the idea survives the test of extensive discussions with First Nations, the heritage community, anthropologists, archeologists and other serious students. I seriously beg the government to get a second opinion on this, get a third, get a fourth. Do not depend on the advice from one source or one Minister. I think the government is in real danger with this one of making itself look ridiculous.

When I go to Ottawa or Toronto, or talk to people in the heritage business, I do not want to be defending something that is ridiculous.

I have more that I would like to say, but I will save some of it for another occasion. I want to return to Cicero before we leave him forever.

I want to refer the Government Leader to a very interesting report that came out of the John Deutsch Institute at Queen's University a few months ago, on the problems of capital budgeting in the public sector. I have raised concerns before about the present system being flawed, in part, because it fails to differentiate between investment and expenditure between the relative value of dollars for welfare or job creation, and my concern that government bookkeeping places no value on investments in schools or roads or health facilities.

I know that some Conservatives argue that schools are debt creation and not wealth creation, even though my view is that probably the opposite is true, because in most jurisdictions the borrowing to finance school construction shows up in the books, but the asset itself does not. That is not true here, of course, because, as we do not even have to borrow to build schools - at least not yet - it seems to me that it is even more absurd to argue that they are debt creation.

But let me say that the longer I am in the Legislature and the older I get, the more and more Alice in Wonderland this kind of accounting seems to me to be. I think it is fair to say that it is an ideologically loaded form of accounting that, in my view, misrepresents government's financial positions and devalues the territory's economic strengths. I think, at worst, it is deaf to the voices of women, for example, and is as blind to environmental considerations as the national economic accounts, as Marilyn Waring so effectively critiqued. Indeed, I think this is one way in which the budget is unbalanced, in addition to the ways that have been described by my colleagues here.

I thank Members for their patience.

I regret that I was not able to explore some of those themes at greater length in second reading because I was not feeling up to it, but I now have those concerns off my chest.

Hon. Mr. Ostashek: It being the time, Mr. Chair, I move you report progress on Bill No. 4.

Motion agreed to

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

Motion agreed to

Speaker resumes the Chair

Speaker: I will now call the House to order.

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

Mr. Abel: The Committee of the Whole has considered Bill No. 3, entitled Third Appropriation Act, 1994-95, and Bill No. 4, entitled First Appropriation Act, 1995-96, and directed me to report progress on them.

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

Some Hon. Members: Agreed.

Speaker: I declare the report carried.

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

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

Motion agreed to

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

The House adjourned at 9:27 p.m.

The following Legislative Returns were tabled January 11, 1995:


Frontage road near McCrae: design, cost, maintenance of (Brewster)

Oral, Hansard, p. 236


McLean Lake development plan: amendment to designate as "urban residential" approved by Minister in April 1993; no development planned for area at this time (Brewster)

Oral, Hansard, p. 295


Faro homes: option-to-purchase agreements qualify owners for home owners grant (Brewster)

Oral, Hansard, p. 297