Tuesday, March 26, 1996 - 1:30 p.m.
Speaker: I will now call the House to order. We will proceed at this time with silent prayers.
Speaker: We will proceed at this time with the Order Paper.
Are there any introduction of visitors?
INTRODUCTION OF VISITORS
Mr. Sloan: It gives me great pleasure today to introduce the grade 2 class from the Elijah Smith Elementary School and their teacher, Mrs. Erika Petricko. During the most recent by-election in Whitehorse West, the grade 2 class actually conducted their own election. They went through the whole process of nominations, speeches and actually had students and parents on the voters list. Parents had to dutifully come in and sign. Representatives were elected to conduct meetings in their class about some issues that bothered them. I think this is an excellent exercise in democracy, and I would like to welcome them to the Legislature today.
Speaker: Are there any returns or documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Mr. Ostashek: I have a legislative return.
Hon. Mr. Fisher: I have a document for tabling.
Hon. Mr. Brewster: I have a legislative return regarding the cost of the Yukon bridge design and another legislative return and booklet regarding the Klondike Valley squatters policy.
Speaker: Are there any reports of committees?
Are there any petitions?
Petition No. 8 - response
Hon. Mr. Ostashek: I rise today to respond to Petition No. 8, tabled on March 12, 1996, by the Member for Faro.
I want to commend those Yukoners who put their interests forward, in support of Tombstone Mountain and Blackstone Uplands protection, as well as many other Yukoners who have a strong commitment to the environment.
I believe there are three issues that all Members of this House and all Yukoners must consider in responding to this petition. First, we must remember that the Yukon government remains committed to and continues to have an interest in protection of the Tombstone Mountain area. Nothing has changed in that respect since this government took office in 1992.
Second, we have to set the record straight regarding the confusion surrounding various park boundary proposals.
Third, we have to reaffirm the long-established process that can be used for designating and establishing new territorial parks under this government's parks policy.
There are many Yukoners - including the Yukon government and individuals - who signed the petition, who recognize the Tombstone area as a rare and beautiful part of our heritage.
Tombstone Mountain's unique and valued features have long been considered for park protection. The Yukon government, 22 years ago, expressed its concerns to the federal government when it requested a park location in 1974. However, it was not until 1987 that the federal government reserved a 295 square kilometre area for park purposes. Between 1992 and 1994, the Yukon government conducted a variety of resource assessments in a 2,000 square kilometre area in and around the Tombstone area, but it should be remembered that this study area was much larger than any suggested park boundary, and this larger area was surveyed so that the government could identify the most appropriate boundaries for the park.
Throughout the resource assessment process, the Yukon government actively engaged the Dawson First Nation in park-boundary discussions; information was freely exchanged in the negotiation process to allow all parties to consider options to reach agreement.
Following this exchange of information, the Dawson First Nation tabled a park proposal involving 1,000 square kilometres.
Neither the federal nor the territorial government has agreed to this proposal. All of the information gathered between 1992 and 1994 has been carefully reviewed and considered by a number of government departments, and the Yukon government's interests have been expressed during negotiations with the Dawson First Nation.
Let us step back a moment to 1991, when the Dawson First Nation first proposed a land selection in this area. It originally suggested 155 square kilometres of the Tombstone area as settlement lands. Its original interest in this area was to protect the prominent landmark, Tombstone Mountain, and the associated viewscape. In consideration of the First Nation's interests, the Yukon government then agreed to a 388 square kilometre park boundary, more than double that requested by the Dawson First Nation.
I can say with complete confidence that there has never been an agreement by any Yukon government to any park boundary other than this boundary of 388 square kilometres. It should also be noted that any park boundary created through the land claims process must be acceptable to all three parties at the table. In the case of Tombstone, the Yukon government's interest in a natural environment park would require a federal withdrawal of mines and minerals. The Government of Canada has made it clear that it is not supportive of carrying out this withdrawal through the land claims process, beyond the withdrawal of the current park boundary.
However, there is another important element in this park planning process for the Tombstone area. It comes from the mining sector.
Much of what we have been looking at would not have been possible had Archer Cathro not voluntarily withdrawn its claims in the area considered most important for the park.
People who are concerned about protecting special landscapes, habitats or wildlife populations should also be aware that there are other ways and means of bringing in protective measures besides simply designating the area as a territorial park.
Within the umbrella final agreement there is a chapter on special management areas. That chapter of the umbrella final agreement allows for the protection of areas in the public interest where the First Nation and one or both governments have a strong interest in ownership and management.
Negotiation for special management areas must not be confused with the government's interest in establishing a territorial protected-area system and the public process for planning and management in protected areas.
While the land claims process allows for more important landscape features to be designated as special management areas, it does not allow for public discussion and consultation on the areas. It is for this reason that I believe the land claims process is not the appropriate place for creating territorial parks or implementing the Endangered Spaces 2000 program. It the Government of Yukon's objective to provide for the protection of a representative ecosystem through the implementation of a full territorial wide system of parks and protected areas, and respond to the endangered-spaces campaign.
It is through these processes that further consideration will be given to provide protective options to address the other attributes not currently included in the indentified Tombstone park boundary proposal. It should also be remembered that any park management planning and discussions outside of the land claims process could result in the redefinition of the park boundaries.
There are other mechanisms already in place to provide protection for wildlife populations and habitat. There is a regulatory process to provide for harvest restrictions or to designate areas for habitat protection through the Wildlife Act. We can also use the environmental screening and assessment processes for development projects with the potential to adversely impact on wildlife. With all of that considered, it is this government's view that the parks policy, as it applies to the Tombstone area, can be fully implemented following completion of the Dawson First Nation final agreement.
The Yukon government wants to complete a fair and balanced land claims agreement with the Dawson First Nation. Once this is accomplished, the Yukon government will need to respond to the public demand for a territorial park that accommodates other interests. There could then be a public process in which other interests could emerge and be addressed, and other solutions could be found to provide the appropriate level of protection to other resources that are in and around the Tombstone area.
I have repeatedly been said that this government is committed to completing all First Nation final agreements by February 1997. This is one of the highest priorities of this government.
I have mentioned to this Assembly that I have met with the chief of the Dawson First Nation and good progress has been made toward concluding its final agreement. I believe that progress toward completion of its final agreement should not be impaired by misinformation and inaccurate statements, and I assure all Yukoners that this government remains committed to representing all interests in the process for establishing territorial parks.
Speaker: Are there any bills to be introduced?
Are there any notices of motion?
Are there any ministerial statements?
This then brings us to the Oral Question Period.
Question re: Hunting licence, eligibility
Mr. Harding: I have a question for the Minister of Renewable Resources. Last spring, I received a call from an angry outfitter complaining that the infamous Mr. Fritz Mayr-Melnhof had been granted a Yukon resident hunting licence. According to a longstanding section of the Wildlife Act, which is our law, a landed immigrant must live continuously in the Yukon for three years prior to being eligible for a resident hunting licence. I would like to ask the Minister why Mr. Mayr-Melnhof was granted a resident hunting licence by this government when he does not live up to the rules of residency in the law.
Hon. Mr. Fisher: Mr. Melnhof was provided with a licence two years ago based on an affidavit he signed swearing that he had in fact resided in Yukon for the required period of time.
Mr. Harding: I fail to see how that is possible. The law is clear about habitual and continuous residency, and it is clear from the issue surrounding the ownership of outfitting concessions that the government did not accept that he was indeed an habitual resident of the Yukon.
At the time that I raised this matter, both CBC and the Official Opposition asked for the residency affidavit signed by Mr. Mayr-Melnhof on June 30, 1995, under the Access to Information Act. We were refused it.
I would like to ask the Minister why both the Official Opposition and the CBC were refused this information, which should be public, and will the Minister produce it for us tomorrow?
Hon. Mr. Fisher: There is personal information on the affidavit, which I suspect is the reason it was refused under the access to information application. I could not supply it to the House for that reason.
Mr. Harding: These issues are very serious. The right of resident hunting is a privilege that Yukoners cherish. This issue has been raised as a concern by many Yukoners. The government has just stood up and defended giving a hunting licence to someone whom I consider to be a non-resident of the Yukon. The media and the Official Opposition have asked for a copy of the affidavit. I again ask the Minister this: will he provide us with a copy of that affidavit tomorrow?
Hon. Mr. Fisher: I have already responded to that question, Mr. Speaker.
Question re: Hunting licence, eligibility
Mr. Harding: The government is stonewalling on this matter, and it is covering it up. The residency law is clear.
We now see that behind closed doors, this government has changed the wildlife synopsis by dropping the three-year requirement for immigrants to one year in order to give Mr. Mayr-Melnhof a break. This was done by this government after I raised the matter this spring. It was announced to no one.
I would like to ask this Minister the following question: when other Yukoners have to obey the law, why does this former business associate of the Government Leader get the rules changed for him?
Hon. Mr. Fisher: The department conducted a very thorough investigation of Mr. Mayr-Melnhof to try to determine if the allegations that the Member opposite has been making in this Legislature are in fact true. The last I heard, which was some time last fall, the department was unable to prove that Mr. Mayr-Melnhof was not exactly as he has claimed to be - a resident of the Yukon Territory.
Mr. Harding: I have heard of this Minister talking about thorough investigations before. For a year and a half in the Legislature, I raised the issue of outfitting concession ownership. At one time, this Minister stood up to say that there was a witch-hunt being conducted in the Yukon. In a quote, he said that "we live in Salem." It turned out at the end of the day, after a year and a half, that this government realized that something was wrong. This government has ignored the law in the Wildlife Act and has changed the definition of a Yukon resident without coming to the Legislature or speaking to anyone in the public.
I would like to know why this friend of the government gets special treatment.
Hon. Mr. Fisher: I find that kind of interesting. I have never personally met Mr. Mayr-Melnhof in my life, so he may be a friend of someone on this side, but I am not sure of whom.
As far as his residency is concerned, he has been in the territory for a great number of years. He has sworn out an affidavit that he is in fact a resident of the Yukon Territory. After an investigation, the department was unable to determine that he was not exactly as he said he was; namely, a resident of the territory.
I do not see where this Member is coming from.
Mr. Harding: This is the man with whom the Government Leader did a million-dollar sales transaction, with the sale of his outfitting territory. He is presently - or at least in the near future - in business with the Government Leader's son-in-law. Obviously, if the Minister does not know him, someone on that side of the House does.
I want to ask this Minister why they changed the residency requirements in the synopsis, ignoring the law and the Wildlife Act and why they did not put this change to the synopsis in the summary, entitled "important changes" in the synopsis. This is an issue that is very near and dear to Yukoners when one is talking about Yukon residency and hunting.
Hon. Mr. Fisher: I was not aware that it had been changed. The residency requirement under the Wildlife Act is what would prevail, regardless of what was in the synopsis. I was not aware that there had been a change.
Question re: Ibex Valley zoning
Mr. Cable: I have some questions for the Minister of Community and Transportation Services regarding the Ibex Valley zoning.
The government has provided $50,000 to the Hamlet of Ibex Valley for preparation of a local area plan for the area. When is it anticipated that the plan and the appropriate zoning regulations will be in place?
Hon. Mr. Brewster: We had conversations this morning with the chair of the Ibex council. They are now preparing to get a person to do the study, using the recommendations of the committee, and put together zoning regulations.
Mr. Cable: There have been a number of rural residential land applications made in the area. These have been refused by the Land Application Review Committee as being ineligible. What is the reason for this ineligibility? Is it a zoning matter or is it due to a freeze on that type of application?
Hon. Mr. Brewster: No, there is no freeze. I believe that three or four were refused because they did not fit the area zoning, and Mr. King withdrew so that he could talk to the council before he went before the Land Application Review Committee again.
Mr. Cable: There were a number of applications for commercial uses in that area. I gather that at least one of them had, in fact, been turned over to the Ibex Valley planning steering committee for review on a priority basis. Is it the government's intention to consider spot rezoning in the area for commercial purposes prior to the development of the area plan?
Hon. Mr. Brewster: No, it is not.
Question re: Hunting licence, eligibility
Mr. Harding: I would like to follow up on the issue that I was discussing with the Minister of Renewable Resources.
This is a very serious matter. The government had an issue identified to it regarding the granting of a Yukon resident hunting licence to Mr. Mayr-Melnhof. At the time I raised it, the government said that it would be investigating the matter. Subsequent to that, the government made changes to the wildlife synopsis that ignored the Wildlife Act, trying to give Mr. Mayr-Melnhof a break in order to allow him to have a Yukon resident hunting licence.
After commenting on that question in June, the Minister said today that he did not know anything about it, even though his picture is front and centre, and he signed the wildlife synopsis.
I would like to ask the Minister why he made the change for special treatment for a friend of this government.
Hon. Mr. Fisher: That is a stupid, wild accusation.
Speaker: Order. "Stupid" is an unparliamentary comment.
Hon. Mr. Fisher: I did not call the Member stupid. I am sorry. I said it was a ridiculous accusation. Regardless of what it says in the synopsis - I have not seen what it says in the synopsis - what is in the Wildlife Act will prevail.
This particular person, who the Member keeps making allegations about, has had a licence for two years and has been a resident of the Yukon for about eight years. Besides that, the person has been investigated by the department to determine if what he has stated on an affidavit is correct.
Mr. Harding: I am used to the Minister saying that ridiculous allegations are being made. It happened with the ownership of outfitting concessions. He was right in there with the two outfitters who eventually had their concession licences revoked. I think the Yukon people remember that. So, I am going to keep on asking these questions.
The Minister has just said that it does not matter what is in the synopsis, and that what is in the law will prevail. Well, what is in the law says that this person should not have a resident hunting licence.
What is the threshold for residency? Is it the law, which says that a person must habitually and continuously live in the Yukon for three years, or is it the law according to this government: that one can fly into the Yukon, own a business here, and be here for two or three months every summer, and that is good enough to qualify for residency.
Hon. Mr. Fisher: As I have said numerous times, in the investigation conducted by the Department of Renewable Resources it was determined that Mr. Mayr-Melnhof did meet the requirements for residency in the Yukon Territory.
Mr. Harding: I am sure that this thorough investigation probably consisted of a couple of phone calls to key Cabinet Ministers.
I want to ask this Minister why a person who has recently been charged with two violations under the Wildlife Act - one of which he plead guilty to; the second charge is still being contested - would be granted Yukon residency when he does not even live in this territory, just because he is a special friend of the Yukon Party and the Government Leader.
Hon. Mr. Fisher: Perhaps the Member protests too loudly because the NDP government granted the outfitter's licence in the first place.
Question re: Yukon Party constituency meeting
Mr. McDonald: I would like to change the subject a little bit and address a question to the Government Leader. I notice that Yukon Party activists have been aggressively preparing for the next election. The Lake Laberge Constituency Association apparently held a meeting last month with the Minister of Renewable Resources in attendance. I have been sent what is titled the minutes of the meeting, which suggest that the activists want the Yukon Party government to adopt a softer approach when dealing with the public. Does the Government Leader agree that this pre-election makeover is necessary?
Hon. Mr. Ostashek: I am rather stuck for words. That has come right out of left field. I was not at the meeting and I have not seen a copy of the minutes.
Mr. McDonald: His benchmate, with whom he has been conferring all Question Period, was at the meeting. According to the minutes, there appears to be general agreement that the government needed to "deal pretty quickly with the number of bureaucrats and their attitudes". The writers apparently came to the conclusion that "It might be difficult this close to the end of the mandate." Can I ask the Government Leader if the government is contemplating some sort of tune-up of the public service before or after the next election?
Hon. Mr. Ostashek: I do not have any idea what the Leader of the Official Opposition is talking about.
Mr. McDonald: Well, the Minister just spent all of Question Period talking to his colleague. He can lean over a few inches and get a refresher course about what is happening. I would like to point out that this is reminiscent of what the Liberal Party has indicated in its land claims policy about the need to review the performance of public servants who deal with First Nations.
Could the Minister tell me what reassurance he can give to public servants that they will not be the scapegoats for the failure of any political leadership in government to clearly communicate its direction?
Hon. Mr. Ostashek: This government has been in place for a little more than three years. We have not hired any hit men in government, and no one has alleged that we have made statements that the "end justifies the means".
Question re: Yukon Party constituency meeting
Mrs. Firth: I have a question for the Minister of Renewable Resources and the Government House Leader about the minutes from a general meeting of the Yukon Party Lake Laberge Constituency Association held at the Hidden Valley School on February 29, 1996.
Speaker: Order please. As much as I allowed the previous questioner to try and pursue what this matter was about, I question whether or not this type of questioning conforms to the guidelines, which state that a question must adhere to government-related policy, et cetera. I question whether or not party matters are government policy.
Mrs. Firth: Mr. Speaker, you have not even heard my question yet. The question that I have relates to the minutes that refer to Mr. Cable, me and legislation. I would like to ask the government a question about its policy.
Mrs. Firth: The minutes, which were mailed out, relate to Mr. Cable and me in item 10, which reads, "MF" - who I am assuming is Mickey Fisher, the Minister responsible for Renewable Resources - "explained the philosophy behind the newly introduced Taxpayer Protection Act. He also indicated that because House rules dictate, the Speaker cannot vote to pass new legislation. Jack Cable or Bea Firth will have to be convinced to vote for the passage of the bill. Mr. Cable is considering the idea and may wish to propose amendments." I would like to ask the Minister what he was talking about when he made this statement at the meeting.
Hon. Mr. Fisher: These were just passed to me a few minutes ago. The Member has the minutes of the meeting. She read out item 10, and I think it is self-explanatory.
Mrs. Firth: That was my concern. When the Minister says that the House rules dictate that the Speaker cannot vote to pass new legislation, the Minister is just dead wrong. In fact, the Speaker can and has voted to pass new legislation, and I am sure this Speaker is prepared to vote in the event that it is necessary.
I would like to ask the Minister why he would stand up at a meeting and tell people something that is absolutely wrong. Why would he stand up and give wrong information to people attending that meeting?
Hon. Mr. Fisher: I do not know what is wrong with it except that maybe the Member opposite does not like to be put on the spot a little bit. Other than that, I cannot see anything too wrong with it. It was a constituency meeting, and they asked about the passing of the taxpayer bill. I said that I hoped either Bea or Jack would support it because the Speaker, unless it is a motion of confidence, cannot vote to pass new legislation.
Mrs. Firth: This is the guy who stands up - he has joined the chorus and the chant of the Members opposite about false accusations and not being able to substantiate it and allegations and blah, blah, blah - yet he stands up and we know that, half of the time - or most of the time - he does not know what he is talking about.
Point of order
Speaker: Order. Minister of Renewable Resources, on a point of order.
Hon. Mr. Fisher: That Member continuously makes these allegations, which she cannot substantiate, and I am tired of listening to them. I am tired of listening to her make this type of personal attack.
Speaker: Does the Member for Riverdale South have a comment on the point of order?
Mrs. Firth: There is no point of order. I have the minutes to substantiate what the Minister said. There is no point of order.
Speaker: The Chair is not in a position to determine that. Perhaps the Chair could rule on a matter of personal attack, but I am not in a position to rule on whether or not that is an allegation. I would ask the Member to carry on with her question. There is no point of order. It is an argument between two Members.
Mrs. Firth: Thank you, Mr. Speaker.
This Minister said this at the meeting. It is wrong information. He is accusing other Members of the House of making allegations. There is nothing here about votes of confidence or anything. It says here that House rules dictate that the Speaker cannot vote to pass new legislation, so if Jack Cable or Bea Firth do not come across, then it is all their fault.
That is what the Minister is saying with that comment. I want to know what this Minister is going to do, particularly in light of the fact that he is the Government House Leader and he is supposed to know what the rules are. What is he going to do to give the correct answer to people in his constituency? When is he going to give them the right information, instead of the wrong information?
Hon. Mr. Fisher: I did not write the minutes of the meeting. I do not really see what the Member is talking about. It says "M. F. explained the philosophy behind the newly introduced Taxpayer Protection Act. He also indicated that, because House rules dictate that the Speaker cannot vote to pass new legislation, Jack Cable or Bea Firth will have to be convinced to vote for the passing of the bill."
Possibly Mrs. Firth or Mr. Cable do not like to be put on the spot. Perhaps some of these people asked them to vote for the bill. I do not see anything wrong.
Perhaps it should say that the Government Leader could call for a confidence vote on this kind of a bill. Perhaps I should have said that. I do not see what the Member's problem is.
Question re: Yukon Party constituency meeting
Mr. McDonald: I am pleased to be able to offer the service of providing minutes of the Members' opposite meetings.
The straightforward minutes of the meeting report that a partisan letter-writing campaign is being engineered at the Cabinet offices, presumably in order to give the Yukon Party a sense of momentum, however artificial. Is such a campaign underway?
I ask the Government Leader if it is true, and we have seen a number of letters in the newspaper already that virtually repeat, word for word, partisan comments made by Ministers.
This is the same question. They are all so nonplussed; no one seems to want to answer it. I will ask the Government Leader whether or not there is a partisan letter-writing campaign, as identified in the minutes. Is such a campaign going on?
Hon. Mr. Ostashek: We know that the Leader of the Official Opposition is very sensitive. That is a question that would be better put to the party, not to the Government Leader.
Mr. McDonald: The minutes of the meeting report that the Cabinet offices and officials are being used to ghost write letters for Members to send to the newspapers in order to create a sense of momentum.
I am asking the Government Leader if he knows about or condones such an activity, that being the drafting of Yukon Party propaganda on public time.
Hon. Mr. Ostashek: We have been through this before. No, we do not condone it, and we do not do it. Anything like that is done in the party office.
Mr. McDonald: Maybe the Government Leader can tell us this: we have heard once already that the government has been very critical of the Liberal Party Leader using his telephone number at his public place of work to transact party business. It now appears that the executive assistant is listing his government telephone number in the Yukon Party minutes in order to transact Yukon Party business. Is this appropriate behaviour?
Hon. Mr. Ostashek: I have not seen the minutes. I do not know what the purpose of the phone number was. If it was for constituency business, it was certainly appropriate.
Question re: Yukon Party constituency meeting
Mr. McDonald: The minutes of the meeting are fairly clear. The Minister was just looking at them. His seatmate was just quoting from them. I will help the Minister along.
An assistant to the Minister of Renewable Resources indicated that he was more than willing to ghost write if there were Yukon Party supporters willing to sign letters and take them to the papers. The minutes go on to indicate that this executive assistant could be reached at his work number that is listed in the minutes. Could the Government Leader tell me whether or not he believes this to be appropriate behaviour?
Hon. Mr. Ostashek: The Member is quoting from minutes that were written by somebody at a meeting. If the Member wishes to make an allegation than he should do so and I will deal with it accordingly.
Mr. McDonald: I am asking the Government Leader a fairly straightforward question here. The Minister of Renewable Resources did indicate that the minutes spoke for themselves, so I am asking for a straightforward explanation.
As a matter of policy, is it appropriate for executive assistants, or people who work in public offices, to list their numbers at work and to conduct party business during office hours?
Hon. Mr. Ostashek: This was a constituency meeting for the Minister of that riding. If a telephone number was listed for the purposes of looking after constituents in the area, then it would be appropriate. I was not at the meeting, I did not hear the discussion, I have not had an opportunity to review the minutes and I do not know if the minutes are factual.
Mr. McDonald: This was a party meeting - not a constituency meeting - and the Minister of Renewable Resources indicated that he was not only present at the meeting, but that the minutes of the meeting were straightforward. In the minutes of the meeting, it is stated that party members ought to be creating a sense of momentum and writing letters. The executive assistant to the Minister indicated that he would be prepared to ghost write them and, if people wanted to contact him further on this matter, they could reach him at his place of work.
Can I ask the Minister if he understands this to be appropriate behaviour?
Some Hon. Members: (Inaudible)
Hon. Mr. Ostashek: The executive assistant works for the Minister on constituency matters. As I say, I was not at the meeting and did not follow the discussion. I am not accepting these minutes as fact at this time. Simply because the Members opposite raised them certainly does not make them factual. We have seen all kinds of stuff come from the other side of the House.
Speaker: The time for Question Period has now elapsed. We will proceed to Orders of the Day.
ORDERS OF THE DAY
Notice of Government Private Members' Business
Hon. Mr. Fisher: Pursuant to Standing Order 14.2(7), I would like to identify the item standing in the name of government private Members to be called on Wednesday, March 27, 1996: Motion No. 104, standing in the name of the Member for Ross River-Southern Lakes.
Bill No. 11: Second Reading
Clerk: Second reading, Bill No. 11, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 11, Interim Supply Appropriation Act, 1996-97, be now read a second time.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 11, Interim Supply Appropriation Act, 1996-97, be now read a second time.
Hon. Mr. Ostashek: It must have been that tantalizing Question Period that has us confused. This bill is necessary if the government's operations are to continue during the month of April, prior to passage of the 1996-97 main estimates. In other words, this piece of legislation appropriates funds for the month of April in the absence of any other spending authority for the month.
The sum being requested for the month is, as usual, far in excess of a mere one-twelfth of the total estimates for the year. This occurs for several reasons: first of all many of the expenses of the government, especially transfer payments, are paid or committed in an upfront manner. Examples of this are the municipal grants in the Department of Community and Transportation Services, the college contribution agreement in Education and the health contribution in Health and Social Services.
The items just mentioned are for operations and maintenance purposes, but a similar situation prevails in capital where contractual commitments require appropriation authority be signed in April for the entire year. Monies being appropriated here will of course be subsumed by the main estimates once they are approved by this House.
Mr. McDonald: As is routinely the case, the Official Opposition considers this to be a routine matter and we will provide for a speedy passage of the interim supply. I do have a few questions that I will give the Minister notice of. If he can answer them in second reading debate then that would be even more helpful.
First of all, I would like to know whether or not there is sufficient cashflow in the government accounts to make these expenditures or if the government will be at least temporarily assuming some debt obligations in order to meet their spending plans. I did note, too, that one-third of the expenditures for the year appears to be very high. I had understood the expenditure proposals for interim supply had typically, in the past, been one-quarter, but now we are dealing with approximately one-third of the expenditure for the year, and I am wondering if there are any changes in policy respecting the government's plans to provide for interim funding for the month of April.
I will have a few questions about the upfront granting policy of the government to various organizations, but they are essentially follow-up questions to questions that were put in general debate on other bills that we have already debated.
Mrs. Firth: I share some of the same concerns that were raised by the previous speaker, namely those about the cashflow and debt obligations, and also the observation regarding the very high expenditures. I notice that the capital budget for the Department of Health and Social Services is $20 million; almost all of that amount is asked for; I am assuming it has something to do with the construction of the hospital.
I want to raise one outstanding issue about it. The previous Minister of Health and Social Services had, I believe, made a commitment to table the annual report of the Hospital Corporation last Monday but we did not receive it. I would certainly like to have that report before we move into debate of this appropriation because I think this large block of money that is being transferred is being administered by the Hospital Corporation.
We have not yet received an annual report from the Yukon Hospital Corporation and there have been millions and millions of dollars spent in that area, so if the Minister could provide that information for us it would help expedite the debate.
Speaker: If the Member now speaks, he will close debate. Does any other Member wish to be heard?
Hon. Mr. Ostashek: I will be brief in trying to answer the questions; if I cannot answer now, I will get back to the Members on Thursday when we get into Committee on this bill.
I believe there is sufficient cash in the bank but I am not absolutely certain. I will check on it.
As for the difference between one-quarter and the one-third, there has been no change in policy. This is money that we feel will be required for the month of April so that the main budget estimates can be passed. I would suspect, and I will check on it, that the $20 million to the hospital is a big chunk of it. It is larger this year than in other years, but I will check.
The annual report was tabled in the Legislature today, so it is available to the Member now.
I believe that is the question that was asked, but I will provide further details about that during Committee of the Whole.
Motion agreed to
Hon. Mr. Fisher: I move that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Speaker: It has been moved by the Hon. Government House Leader that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Motion agreed to
COMMITTEE OF THE WHOLE
Chair: I will now call Committee of the Whole to order. Is it the wish of the Committee to take a brief recess?
Some Hon. Members: Agreed.
Chair: We will take a brief recess.
Chair: I will now call Committee of the Whole to order. We will be dealing with Bill No. 10. We are on Economic Development, starting on page 4-10. We are dealing with any general debate on industry, trade and investment.
Bill No. 10 - First Appropriation Act, 1996-97 - continued
Department of Economic Development - continued
On Industry, Trade and Investment
Mr. Harding: I want to ask the Minister about the context of the $799,000 expenditure, which is reduced from the 1994-95 actual of $966,000 and from the 1995-96 actual of $871,000. Given that there are continued personnel reductions, how does the government see that it is going to be actively out there in a more agressive sense than it used to be in the Yukon? I think we were pretty agressive in government. How does the Minister anticipate the government promoting in a more agressive fashion, given that there has been a reduction here? Does he foresee more ministerial- and political-level involvement as opposed to department officials? Is that what the government is talking about?
Hon. Mr. Fisher: There is a bit of a change in focus. With the ending of the economic development agreements and the business development fund, there will be less actual need for these types of positions in the communities but more of a need for the encouragement and facilitating of investment into the Yukon. That is what we are more or less addressing in this budget.
Mr. Harding: Again, I wonder if this is a change. A government of any political stripe wants to increase investment. That is what the Yukon 2000 strategy and other strategies utilized by the Conservatives before 1985 were all about.
The government is saying that the focus is not just internal investment and money coming in from outside, but also involves the development of the value-added concept. The third program objective is to increase the export of Yukon goods and services, as well as encourage development. I assume that means the development of value-added goods and services in the Yukon.
What particular new initiatives are underway in this category?
Hon. Mr. Fisher: I believe I mentioned this yesterday, but over the next several months in this area an action plan will be created. That action plan will look more at marketing and encouraging investment in the Yukon.
Chair: Are Members prepared to proceed with line-by-line debate?
On Industry, Trade and Investment
Hon. Mr. Fisher: In personnel, there is the director of economic programs; trade and investment facilitator; secretary; capital assistance program assistant; manager of business and community services; business and community services officers; for a total of nine full-time equivalents and a total personnel cost of $652,000. Other expenditures include travel within the territory for $29,000; travel outside to intra-provincial Alaska economic development conferences and trade shows, $8,000; contract services, data base development, input and training audits, $15,000; postage and courier services, $2,000; advertising centennial programs and services, $10,000; information booklets, science and promotional materials, $13,000; communications, telephone and fax, $25,000; non-consumable assets, equipment and furniture - less than $1,000 each - $2,000; corporate memberships, Yukon Chamber of Commerce, Visitors' Association conference fees, $3,000; computer software and miscellaneous hardware, $2,000; miscellaneous expenditures, $2,000; for a subtotal of $111,000. There are transfer payments and a fee-for-service contribution to Yukon Chamber of Commerce, $36,000. The overall total is $799,000.
Mr. Harding: The Minister has a new portfolio now - he is the Minister of Health and Social Services, as well as the Minister of Economic Development. Listening to the travel budget numbers for this very important department, I believe he said $29,000 for internal Yukon travel and $8,000 for travel outside the territory.
Within his department now, some of his officials are engaging in economic development initiatives - even though they are wearing a social services hat - and are dealing with travel budgets in the vicinity of $30,000 in a given year. I believe it was some $15,000 last year, and I am not sure about the year before the $30,000 year. Would the Minister like to see the level of travel expanded, wearing his other hat for social services, in terms of an economic development function in the community, given the comparatively low numbers this important department has to deal with for travel?
Hon. Mr. Fisher: I do not fully understand the question. Is the Member opposite comparing travel inside the Yukon to travel outside the Yukon? Is he comparing travel in the Economic Development budget to the Health and Social Services budget? I am just not sure and will need clarification in order to answer the question.
Mr. Harding: The Minister is the Minister of Health and Social Services. The previous Minister had a project underway in one community, where someone from Social Services was undertaking - this was in Ross River - a role as a person who, although from Social Services, had substantial travel resources. I believe it was over $45,000 over the last two years, and I am not sure about the year before that. The budget for this very important department is, in total, $37,000, so I wonder if the Minister would like to see more travel money for investment and travel for this particular department so that they can engage in some of the important functions that obviously this government has identified as a priority.
Hon. Mr. Fisher: I do not really know what to compare it to, but I firmly believe that if people from the department are required, for whatever reason - if it is for a centennial anniversaries project, or whatever it is - to deal with the people in a community, then I think it is incumbent upon them to get out into the communities and deal with those people. I am supportive of the budget amount that the deputy minister and the various directors put in for travel within the territory, because they are the best ones to know when it is needed. I do not really know what the Member is getting at here, but I am generally supportive of the numbers for travel within the territory.
Chair: Before we carry the total, are there any questions on the statistics?
Industry, Trade and Investment in the amount of $799,000 agreed to
Operation and Maintenance Expenditures for the Department of Economic Development in the amount of $3,763,000 agreed to
Chair: We will now move on to capital expenditures.
Chair: Is there any general debate?
As there is no general debate, we will go line by line.
On Departmental Equipment, Furniture and Office Space
Hon. Mr. Fisher: There are a laptop personal computer for $4,000; a new Optra printer for $4,000; two mainframe printer connection cards for $5,000; a buyout of an economic development agreement computer for $4,000; three personal computers to replace mainframe terminals for $13,000; for a total of $30,000.
Departmental Equipment, Furniture and Office Space in the amount of $30,000 agreed to
Administration in the amount of $30,000 agreed to
On Mines and Resource Development
Chair: There being no general debate, we will go line by line at this time.
On Parks Mineral Assessments
Hon. Mr. Fisher: This is to conduct preliminary assessments of the potential for mineral resource development to assist in the selection of areas for territorial parks.
Mr. Harding: Does the Minister have a number, off the top of his head, for what kind of expenditure is being made by the Renewable Resources department on this for mineral assessment? Is much being dedicated? Of course, the budget here will show part of it. I do not necessarily need a dollar figure. Let me ask him this: is there much work being done in support of mineral assessment in Renewable Resources?
Hon. Mr. Fisher: Apparently, Renewable Resources funded $100,000 this year. Economic Development is funding the whole thing. What actually happens is that the Department of Renewable Resources will, through its parks planning, identify a general area where it would like to create a park that is a representation of a specific ecoregion.
They will then come to Economic Development and ask about the general mineral potential in that particular area. I will use an example. To start with, it may be a hundred miles by a hundred miles, and Economic Development will respond to the effect that there are some claims in that particular area, or there are no claims in the area, or there is general knowledge about minerals of the area. At this time, Renewable Resources will identify a smaller area within that area, and Economic Development will then go in, do an actual assessment and look at mapping and activity that has been there in the past.
Mr. Harding: Is that done internally or are consultants hired? What role does Economic Development play in that? Obviously, the department people do not go out with their little hammers and poke some rocks - or do they?
Hon. Mr. Fisher: Yes, they do.
Mr. Harding: So the department gets a call from Renewable Resources and says, "We want to protect this endangered space in accordance with the terms of reference of -
Some Hon. Member: (Inaudible)
Mr. Harding: That is right, because the MLA for Faro says so.
They get the call from Renewable Resources and want to protect this space as a unique ecoregion. Are they geologists employed by the department?
Hon. Mr. Fisher: Yes, they are actually people out of our geoscience office. I think there are about six people in the office. Four of them are travelling quite steadily. In fact, two or three are in a camp somewhere for most of the summer.
Mr. Harding: Is part of this team funded by the shared commitment through geological surveys that we have with the federal government? The amount of $150,000 is not going to pay for four people to be out travelling around all summer. How else are they funded?
Hon. Mr. Fisher: Under the geological surveys, most of the funding comes from the $1,360,000 further down the page. Various work is charged to various programs. Some of the work that the people would be doing in the parks and mineral assessments would be charged to parks and mineral assessment. Some of it would be done in the geological surveys area.
Mr. Harding: I think there is a large priority for mineral assessment, especially in the context of park creation.
I see it as a good initiative. We participated in the geoscience function and in its funding. If it is a priority and the government has, as we know, committed itself to the Endangered Spaces 2000 and other habitat protection initiatives, it is important that we get a handle on what minerals are where in the Yukon as quickly as possible so that decisions can be made in an expeditious fashion, knowing with what, precisely, we are dealing. That way, we can weigh the equations about what areas are the most productive for minerals and on the areas for which we can make calculated decisions regarding giving up mineral interests in the attempt to provide habitat protection and park creation.
I realize that that is also a policy question, given the Yukon Party's position on allowing mining in parks. It does not seem like a lot of money to me, quite frankly, for this large task. Should there be more money involved in terms of making it a priority, or does the Minister think there is a lot of work already done and that we are almost at the stage where we know the mineral potential in many of these areas of the Yukon?
Hon. Mr. Fisher: In Renewable Resources we have people who are putting the parks plan together. As these regions are fully determined, Economic Development people will assist in conducting the actual mineral assessments.
Right now, the main one is for the Eagle Plains region. The Eagle Plains and the Richardson Mountain region is the first region being considered for establishment of a territorial park through the park system plan. This government has made a commitment to conduct assessments of the mineral fuel resource potential of all potential parks prior to the withdrawal of any such area from staking.
I would expect that as the park system plan is developed further this year and next year there will be more of a requirement on Economic Development, because it will be a catch-up situation. When the parks people have all of their information in order, they will be expecting mineral assessments to be conducted by Economic Development. In that line item of the budget, there may very well be a larger number than we see right now.
Parks Mineral Assessments in the amount of $150,000 agreed to
On Energy Infrastructure Loans for Resource Development
Energy Infrastructure Loans for Resource Development in the amount of $1.00 agreed to
On Yukon Mining Incentives Program (YMIP)
Hon. Mr. Fisher: That expenditure is for personnel, including a mining development geologist, $63,000; travel advertising and communications, $50,000; a contribution to the Yukon Chamber of Mines, $15,000; contributions for prospectors and target evaluation, $463,000; for a total of $591,000.
Mr. Harding: This is a program that was introduced by the New Democrats. This program has been, in my view, reduced fairly substantially - although the actuals for 1994-95 are $742,000 and in 1995-96 they were somewhat higher. This estimate certainly reflects a reduced amount.
What was the problem with the program? Was there not enough being accomplished as a result of this funding? What is the government doing to see that there is some value for the money that is expended?
Hon. Mr. Fisher: We did a review of the mining incentive program, which I will circulate for everyone. Graham and Associates conducted the review. There have been some abuses of the program but, generally speaking, it is a good program.
Some of the major discoveries right now are as a result of that program. I am going by memory, but I believe that for last year, the uptake was the full amount and the actual expenditure was somewhat less because they have to apply for the money and then they have to provide reports, and so on, after the program is completed. However, some of them failed to do that, so there was a lapse in funds - not very much, but a bit. Generally, it is oversubscribed.
I would like to see a little bit more money put into it. However, we are having to fund the geological surveys because that was previously funded on a 70/30 basis by the federal government, and it is now on a 50/50 basis. Because of that, we had to find money within, and we took a little bit from the mining incentive program. Generally, it is a good program, and I will continue to support it. Depending on the availability of funds, if more are available, I will try to bring it up somewhat - it does not need to be much larger, but around the 700 mark is probably sufficient.
Mr. Harding: I would like to ask the Minister why the review was not done internally by the department and what the outside study cost?
Hon. Mr. Fisher: The amount was $14,900. The main reason for the review to be conducted by someone other than an internal reviewer is because the people who work within the program are very close to it. We wanted it to be completely objective, and that may not have happened by using our own people.
Mr. Harding: We introduced this program and we knew what it was all about, in terms of what we were trying to do to, and that was to encourage people to get involved in prospecting and exploration, looking for new mineral deposits and extending existing known deposits.
I have a question for the Minister. Members of his party have made statements that they are pretty much against grants and that this is consistent with their conservative ideology and it is listed as one of the principles in their business plan. They are against grants and loans to businesses and individuals. How do they reconcile that with this particular program? How do they reconcile that philosophy?
Hon. Mr. Fisher: We are really buying a service, if you want to look at it that way.
These people do go out and do a lot of exploration. Following that exploration, they have to provide us with a report. I believe that we have to keep the report confidential for two years in case they want to option the property or do some work themselves. After this time, the report is made available to the public. We find that the large companies are quite interested in picking up the reports that are prepared by the prospectors.
Mr. Harding: Why would a conservative government be in the business of what is essentially private sector matters such as exploration? Why would a conservative government be in that business? How does it reconcile that? According to the government, should the private sector not be handling it?
Hon. Mr. Fisher: That was one of the reasons for the evaluation. I do remember the program. This was not something new introduced by the NDP. It has been around the territory for 30 years that I know about.
Some Hon. Member: (Inaudible)
Hon. Mr. Fisher: It could have been introduced by the federal government. There were more programs under other governments. It has been around for a long time, in one form or another.
There have been lots and lots of abuses of it. The abuse of it is one of the things that concerned us quite a lot when we started looking at various programs. Is it just a place to go to get some money to spend a couple of weekends out in the bush? Or, is it a program from which we can extract information? As it turned out, through the evaluation and by speaking to many of the larger companies that have optioned some of the findings, we determined that it was a worthwhile program and we actually get value for our dollar.
Mr. Harding: I appreciate that, because that is why we picked up the program after the federal government and others dumped it. As a government, we made a cognizant decision that there was some value in encouraging this practice.
I would say, without submitting everyone to a long debate in this Legislature about this philosophical point of view, that it is thematically inconsistent, to say the least, with some of the rhetoric surrounding it. Even the business plan's principles are inconsistent. While the Members opposite can support it, I would say that the government has a tough job to philosophically defend it. Nevertheless, the government seems prepared to continue to encourage mining through the Yukon mining incentive program. I guess that I will leave it at that for now.
Yukon Mining Incentives Program (YMIP) in the amount of $591,000 agreed to
On Geological Surveys
Hon. Mr. Fisher: I think I explained this yesterday. There will be a recovery of half of that, which should be about $680,000, from the federal government. It is a 50/50 cost-shared contribution agreement.
Geological Surveys in the amount of $1,360,000 agreed to
On Oil and Gas Resources
Hon. Mr. Fisher: That is to purchase a personal computer and digitize the topographical maps.
Oil and Gas Resources in the amount of $35,000 agreed to
On Yukon Industrial Support Policy (Loki Gold)
Hon. Mr. Fisher: That is carryover from 1995-96, a vote of $1.24 million. There is $640,000 to be spent in 1995-96.
Mr. Harding: I brought up this issue in the supplementary debate. Has there been any change whatsoever to the status of this particular initiative in the industrial support policy since then?
Hon. Mr. Fisher: No. There has not been any change. I will just read out the payment schedule and the estimated cashflow and budget. The Yukon is to pay 50 percent of the eligible project costs to a maximum of $1,239,500 in the fiscal year 1995-96 or 1996-97, and the remaining 50 percent in equal annual payments is calculated by dividing the balance of the unreimbursed project costs for the number of years of the amortization term of the loan negotiated by Loki with its primary bankers. In any event, it is for no less than three years.
The Second Appropriation Act, 1995-96 authorizes the expenditure of $1,239,500 for the payment to Loki Gold. Loki Gold was not able to finish the project in the first year and the project has now been carried over to the summer of 1996. The department therefore requested to adjust the 1995-96 budget from $1,239,500 to $639,500 by the first supplementary and submitted a 1996-97 budget requirement of $600,000.
Mr. Harding: Yesterday I raised the issue of the Government Leader's comments last year regarding support for rate easement under the industrial support policy for a company like Anvil Range or other industrial companies once the Utilities Board sets the rate. I would assume that there was an opportunity for the department to research the statements made by the Minister and the Government Leader in the last legislative sitting, so I wonder if he could comment today about whether there have been any discussions. Is the policy consistent with regard to rate easement, after the Utilities Board sets the rate, under the industrial support policy?
Hon. Mr. Fisher: I asked the department people to look for it but they were not able to come up with that statement by the Government Leader.
Mr. Harding: Did the Minister ask the department where they looked? Yesterday, I told him it was Question Period under the industrial support policy in the last session of the Legislature. If one looks in the Hansard index one will find industrial support policy; if one pulled up those questions, we should find the Government Leader's comments. Also, I sent the Hansard over to the Government Leader last week in Question Period when I was asking about this, so the Minister should have an answer for me today. I am trying to clear these estimates and he is not being very forward in terms of discussion.
I just want to know if it still stands that the government will consider rate easement, as it said last year, under the context of the industrial support policy if Anvil Range approached the government.
Hon. Mr. Ostashek: The Member did send over that page of Hansard and he is right. That statement was made and could be interpreted in that context. If Anvil Range approached us for assistance, we would have to consider it, but we are not out there flogging it and saying that we are going to provide rate subsidies under this policy.
Mr. Harding: I can appreciate both the politics and the economics of that, but I just wanted to know. The issue of electrical rates and the price industrial customers pay is a key issue. I have just been mailed a second copy of submissions to the Yukon Utilities Board surrounding the concerns that Anvil Range has. As general policy questions for economic development, these are issues that we have to come to grips with. We do not want to see residential consumers being smacked with higher rates by any means, but I also believe that we have to look to the issues that are faced by people in the mining industry when we are trying to encourage some development in the territory and more private sector investment.
Perhaps rate easement is not the best approach, considering that the government is already paying such a high level for its service as it is, but I would say that it is a major policy question. It is my hope that it is addressed by this government. It is my hope that Anvil Range pursues the government on it because, as the Government Leader said, the government is not out there flogging it. I can appreciate that but I would also like to see this addressed as a policy question. We had to deal with it when we were in government with the Curragh situation and it was not always easy; it is not a relationship that is one that leads to good consistent policy making, particularly when we only have one large mine operating in the territory at this point.
I look forward to more comprehensive statements about this from the Minister and the department, and perhaps the Government Leader as the Minister responsible for energy. As tough as they are, I think we have to deal with these questions.
Mrs. Firth: I asked the Minister some questions about the energy requirements for Loki Gold on March 11, 1996. Today, I had a memo hand delivered to me from the Minister essentially stating that the Yukon Energy Corporation had provided the answers and that there had been some discussions about power supply in 1994 and that an onsite diesel co-generation proposal was submitted to the engineers in February of 1995. There were several follow-up discussions about the proposal and alternative options. In June of 1995, the purchase/contract for a power plant was put on hold by the engineers. The fourth point stated that in November 1995, Yukon Energy Corporation was verbally informed by Loki Gold's project manager that they had decided to install and operate their diesel co-generation plants, because they had the capital and it allowed them more flexibility to make changes.
Could the Minister answer some questions for me about the June 1995 comment with regard to the purchase/contract for a power plant was put on hold by the engineers? Why did that happen and what engineers is the Minister talking about?
Hon. Mr. Fisher: It is my understanding that it was engineers from Loki Gold.
Mrs. Firth: Was the discussion centered around Loki Gold getting assistance through the industrial support policy for the provision of power?
Hon. Mr. Fisher: Yes, at one point in time Loki Gold actually approached the government to look at the industrial support policy with regard to the provision of electrical infrastructure.
Mrs. Firth: What happened with that examination?
Hon. Mr. Fisher: For whatever reasons, Loki Gold decided not to deal with the Yukon government. If I remember it correctly, Loki Gold also talked to the Yukon Energy Corporation. It since decided to go on its own because, I believe, it is going to use the waste heat from the generator as a drying unit for the raw gravel.
Mrs. Firth: After asking questions about this, the conclusion I have come to is that Loki Gold entered into some discussions about energy but that the industrial support policy managers were not receptive to the idea, so Loki Gold pursued its own options or alternatives. Is that what happened?
Hon. Mr. Fisher: I do not think it was that our people were not receptive. The discussions were very, very preliminary, and Loki felt that it could put in a plant and operate it more cheaply than have the Yukon Energy Corporation deal with it. Co-generation is mentioned in that letter; they were going to use the waste heat, if I remember correctly.
Mrs. Firth: That is what co-generation means, I believe.
I do not have a problem with Loki Gold providing its own power. In fact, that is probably the preferred route I would choose. It does bring into question, however, the whole industrial support policy. Certainly infrastructure and energy are supposed to be components of that policy.
Is Loki Gold the only company to come forward with a request to even examine preliminary discussions on the option of using the industrial support policy for providing power?
Hon. Mr. Fisher: We have had some preliminary questions about power under the Yukon industrial support policy from Western Copper. They actually inquired, but there are no letters of application at this time.
Mrs. Firth: I would like to get back to these letters of application. With whom were the preliminary discussions?
Hon. Mr. Fisher: I do not have that list. Our mining facilitator is talking to mining companies almost on a daily basis. I could bring a list of those companies that have talked to the mining facilitator about power and roads. Those are two infrastructure possibilities. I could bring that to the Member opposite in the next day or two.
Mrs. Firth: I would really like to have a copy of that list. Do I understand now that if mining companies or businesses are interested in participating in the industrial support policy that the mining facilitator is the first person that they approach regarding that policy?
Hon. Mr. Fisher: Yes, generally speaking, the mining facilitator is talking to them about all aspects of the industry and about their project. Naturally, he is usually the person whom they first approach.
Yukon Industrial Support Policy (Loki Gold) in the amount of $600,000 agreed to
On Allowance for Bad Debts
Allowance for Bad Debts in the amount of $1.00 agreed to
Mines and Resource Development in the amount of $2,736,000 agreed to
On Industry, Trade and Investment
On Economic Development Agreement
Hon. Mr. Fisher: That is the tourism subagreement, Industry Canada, for $780,000; the small business sports subagreement, Industry Canada, for $407,000; for a total of $1,187,000.
Mr. Harding: Does the Minister anticipate that this will be a zero total in the next fiscal year? Is this going to be the last hurrah for this, period?
Hon. Mr. Fisher: Yes. These is not carryovers, but generally projects that were approved in previous years. The tourism one for $780,000 apparently is fully committed and the small business support for $407,000 is almost fully committed. This will be the last year that these will show up in our budget.
Mr. McDonald: I have a seemingly simple question, but it does have some consequences. Does the government support the economic development agreement? Does it agree with the agreement and support it? I know it tried to get renewals back when there was a chance it could be renewed, until that was obviously no longer an option.
Can the Minister give us a clear statement on that question?
Hon. Mr. Fisher: If these types of programs are available across Canada, we would certainly take advantage of them. When they did an evaluation under several of these agreements, some very good projects were completed. There were some that were not so good, but some were very good. If Canada is providing funding to the provinces and it is available, we would certainly take advantage of it.
Mr. McDonald: Is this the kind of program that the Minister was referring to in his speech when talking about the NDP-created, artificial economy?
Hon. Mr. Fisher: I was not necessarily talking about this particular program. As I said, there have been some very good projects out of these programs, and some that are not so good. My colleague just said that there have been some very bad ones. That is true.
I do not think that I referred specifically to these ones, because these were Canada/Yukon agreements of which Canada paid 70 percent.
Mr. McDonald: I guess that I am mildly interested in this - not that I should pick any one particular element of the Minister's speech to critique. There is probably a lot of food for further discussion.
I am trying to get a clearer statement about what the government was referring to when it talked about the NDP creating an artificial economy. The Yukon Party was parting from that approach.
Can the Minister just elaborate briefly? I do not want to carry it on all afternoon. I just want to see if I can get a clear policy statement from the Minister.
Hon. Mr. Fisher: I believe that there are a lot of programs that were created by the NDP government when it was in power. I do not think the business development fund program was considered - well, I am not sure; I guess it depends on who looks at it whether or not it was considered a success. There were a lot of losses. Some very bad loans were made under that program. There was a steady increase in the civil service, which I did not necessarily agree with, so I do not think it was any one program - but it could be considered a combination - that sparked those types of comments.
Mr. McDonald: I find the subject rather fascinating. The Minister is quite correct that some bad loans were given out under the business development fund, as there were under the economic development agreement and as there were under the initial loan program that was struck by the Progressive Conservative government between 1982 and 1985.
Irrespective of the fact that there were bad loans, I am interested in the general policy direction itself that the Minister is stating here. He is indicating that, because there were a few bad loans under the business development fund, it creates an artificial economy. Is he saying, therefore, that any loan program or any government involvement in this particular area in terms of ensuring access to capital is creating an artificial economy? Is that what the Minister is saying?
In terms of the public servants and the growth in the operations budget of the government, obviously the operations budget has climbed since 1992, so he is making a backhanded criticism of his own government there.
I am just trying to find things out. If there is no more to this than that, then I will drop the subject; but if the Minister has something more, I would be interested in hearing about it.
Hon. Mr. Fisher: As I said before, it was a combination of many programs, many activities and many initiatives that sparked the comments.
Economic Development Agreement in the amount of $1,187,000 agreed to
On Centennial Anniversaries Program
Mr. Harding: I have some questions about this program, which is bolstering the artificial economy in the Yukon.
Yesterday, or the day before - it seems like weeks now since we were discussing this, but it was only yesterday during Question Period - we were discussing the costs associated with this program and we also raised this during debate in the supplementary estimates. I asked the Minister about commercial activity associated with the project, and the Minister stated that the government was not going to allow commercial interests to be associated with these projects. It is my understanding that there are still residents in Carcross and some First Nations who want to conduct commercial activity out of their capital assistance program facilities. Could I get a consistent policy statement from this government surrounding this issue?
Hon. Mr. Fisher: One of the criteria of the program is that it does not compete with existing private sector business. This government has made this very clear to the proponents of the projects.
The phase 1 proposal submitted by Carcross had many commercial aspects to it and the department said no.
What the government has agreed to - and some further community involvement is required - and would consider quite favourably would be an arts and crafts manufacturing place where the artisans would come and produce their arts and crafts to be sold on site. No one had any problem with that concept. However, we said no to any proposals containing restaurants, gift shops and those types of businesses.
Mr. Harding: How does the government determine what the level of competition is in the areas of centennial anniversary projects? What is the government's criteria? How does the government determine the level of competition and what is or is not acceptable? What is the criteria there?
Hon. Mr. Fisher: The main thing is that it is a community project. Community residents are the ones who determine the project that will be carried out. To have an eligible project: "The projects must be well planned and researched. The proposal must thoroughly describe the project, provide details and step 1 components and identify how the project will impact on other tourism stakeholders and residents." If there is an organization, such as the Chamber of Commerce, or if a business group or such has determined that a project will actually hurt their businesses, and it has been discussed around the community, then we would not fund that project.
Mr. Harding: We understand that this community project and the sense of community has not worked very well in Carcross. There seems to be more than just community-based decision making there. I think that the Minister said the key words, when I asked about the criteria, "It is the community. It is the community that decides this." Earlier, he said that the government said no when initiatives were put forward for some commercial interests. Is it the community that drives this, or is it, in fact, the government? What happens in the process?
Hon. Mr. Fisher: As I think I have said before, the project needs broad community support. That does not mean 100 percent of the people in the community, but it does mean a good majority. If, in fact, a majority of people do not support a project, then we also would not support it.
Mr. Harding: The Minister is aware that the Government Leader made statements to the effect that he did not know how much longer he could continue to keep block funding levels at the existing amounts, given what he considered to be pressure from Ottawa regarding reductions in the spending formula. I suppose the question then becomes - in both municipalities and in unincorporated communities where there is not, for example, a First Nation that is prepared to cover all of the O&M costs - how are the societies the Minister is proposing going to raise the necessary revenues to cover the O&M costs? We have calculated that, in the rural communities alone, it is probably going to be in the vicinity of $1.3 million per year.
Hon. Mr. Fisher: If one looks at what is an eligible project under the program, in both step 1 and step 2 there is a requirement for the proponents of the project to address the operation and maintenance question. There are various means of doing that and I cannot say how each project is dealing with the operation and maintenance, but our project people have been dealing with the proponents and have determined that any that have received phase 2 approval have looked at the operation and maintenance question and are able to cope with the costs.
Mr. Harding: This question came up in Question Period yesterday. Could the Minister provide me with a breakdown of each project, how the proponents of each are going to pay the operation and maintenance costs and how much they feel they can recover, based on their estimates, in a given year? Can he provide me with that information within the next week or so?
Hon. Mr. Fisher: I do not know. I think that one of the projects is to the point where we could provide that type of detail, but I do not know if any of the other projects are at that point yet. I will provide the information that I do have for the Member.
Mr. Harding: This then begs an interesting question. The Minister just told me that the requirements in phase 1 and phase 2 indicate that the proponents have to indicate and address the question of how they are going to cover operation and maintenance costs. Some of these projects, as I look through the list provided by the Minister, have dates scheduled for phase 2 application; they have commitments of money already; they have phase 1 approval and they have construction end dates.
Obviously, there should be some estimation in that document now - if the Minister is true to his own words. There should be a solid handle on how operation and maintenance is going to be provided. Could I get a complete list of how the proposed operation and maintenance is going to be paid on each of the projects in the centennial anniversaries program?
Hon. Mr. Fisher: In phase 1 approval it says that it must describe in general terms how the project will get broad community support, focus on the centennial and how it will be maintained and operated. In phase 2, it says that operations, maintenance and marketing costs are not eligible, but the proposal must identify what they are, how much they will cost, who will pay for them and how they will be carried out. Only two projects have received phase 2 approval. As I said, I can provide the Member with those two project details.
If the Member wants to sit down with one of our people and go over all of the details of each project, how it developed, and so on, that would be quite legitimate.
Mr. Harding: I am not opposed to that, but I also think it is legitimate for the Minister to provide me with a list, considering what he said in Question Period yesterday, of how far along we are in terms of getting a commitment on the coverage of O&M costs. This government has taken a build-and-run policy approach. It is not going to assist with the O&M costs of these projects.
I have the list of the projects that the Minister gave me last week. It shows that phase 2 applications are expected in June, February, March, May, June, June and April. Approval already has been given to Pelly Crossing. There is another phase 2 application in June and one in February 1996, which is already passed. Given that the phase 1 application form asks for a general sense of how the O&M is going to be paid, before the government gives phase 2 approval, there should be a pretty definitive and clear understanding of how the O&M is going to be handled to avoid problems in the future.
Can the Minister provide that to me? If they are not asking for an O&M plan before approving phase 2, he should tell me that, because it is an issue.
Hon. Mr. Fisher: As it says in the criteria, under step 1, phase 1, it must describe in general terms how the project will be maintained and operated. I will provide that and the detailed stuff for the projects that have received phase 2 approval. It will take a bit of time, but I will provide it for the Member.
Mr. McDonald: I have a few questions about the project in Whitehorse. I understand that there were some difficulties among various organizations in coming together with a particular project, namely, the project that ended up being listed in the government's summary of centennial anniversary program projects.
Can the Minister give us a brief history of this project and an account of the problems as he understands them?
Hon. Mr. Fisher: I have a note that gives a bit of the background.
The City of Whitehorse submitted the original application for centennial anniversaries program funding, but has withdrawn its proposal due to several factors. Firstly, there were unresolved ownership concerns. The city was not prepared to accept the liabilities connected to a project if it was not in control of the ownership and administration. In a letter of November 15, the city withdrew its project and provided support to the Kwanlin Dun First Nation. The Chamber of Commerce submitted a phase 1 application on behalf of its steering committee representing the chamber, the Downtown Community Association and Kwanlin Dun. The City of Whitehorse and the Miles Canyon Historical Railway Society have both withdrawn from the committee, but the group is trying to maintain its involvement. The application is to determine if a cultural community centre can feasibly be built and maintained, given the budget of $1.5 million. A location must also be established, which will require the consultant to evaluate site options. That report is expected to be completed in April 1996. The amount of $20,000 has been approved for the feasibility study, and the future workplan must be submitted to Economic Development. The consultant team is Florian Maurer Architect Ltd.
Mr. McDonald: The Minister made reference to the city throwing its support behind Kwanlin Dun. Then he went on to say that another consortium had presented a proposal. Can the Minister indicate what happened to Kwanlin Dun's proposal?
Hon. Mr. Fisher: Kwanlin Dun is still involved with the Chamber of Commerce and the Downtown Community Association on this project. The City of Whitehorse and the Miles Canyon Historical Railway Society have both withdrawn from the committee, but I believe that they are still on the committee - but whether or not as working members, I do not know. I know the city is on it to help with advice on zoning and planning and those types of things.
Mr. McDonald: To the Minister's knowledge, then, there was never any other proposal presented to government by Kwanlin Dun or anybody else?
Hon. Mr. Fisher: Initially, I think a proposal came in from the city, which it subsequently asked to have withdrawn. So there were actually two proposals on the table at one time, I believe; then the city asked to withdraw its proposal.
Mr. McDonald: Has the government given any measure of support to, or indicated any support for, the Miles Canyon Historical Railway Society project?
Hon. Mr. Fisher: I do not believe that particular project got as far as us. It ended up joining with the other groups. If I remember correctly, and I am going mostly by the newspaper, I do not believe we ever received an application or a proposal from the society as a stand-alone project, but then at some point in time it joined with the other groups.
Mr. McDonald: In the context of the centennial anniversaries program, or outside of the context of the program, has the government given support to the historic train proposal or provided any commitments of any sort, to funding this proposal, in any way?
Hon. Mr. Ostashek:
We had a briefing by the proponents of the Canyon City Historical Railway Society a couple of years ago. We gave moral support and an agreement in principle at that time, but it was in the very preliminary stages. As far as I am aware, there never was a request for funding for the proposal. If I remember correctly, they were dealing with White Pass for the right to run on its railbed, which they were unable to achieve. They were also talking - this comes from what I was told and what was publised in the local media - about revitalizing the old engine at the MacBride Museum, which was not feasible. This resulted in the project being dropped.
Mr. McDonald: I thank the Minister for that information. As I understand from the media reports, a proposal that is in the phase 1 approval stage is to be located on the waterfront. Does the Minister know precisely where on the waterfront? I know that the Minister indicated that it was not located on private or public lands and he made some comment during Question Period about its location. Could the Minister elaborate further on that?
Hon. Mr. Fisher: I do not know where they want to have the project located, but that is one of the things that the feasibility study is going to look at - where the actual location will or could possibly be.
Mr. McDonald: The Minister's answer has caught my attention. If I am wrong, the Minister can correct me, but I think he mentioned that the land that was being requested for the project was not available to the Yukon government. I recall that the land was the 20/20 site, which, of course, is Yukon government land.
If the Minister does not know where the project is to be situated at all, we can leave it there and follow up later.
Centennial Anniversaries Program in the amount of $2,900,000 agreed to
On Centennial Events Program
Hon. Mr. Fisher: This is the second year of a five-year $600,000 program.
Centennial Events Program in the amount of $200,000 agreed to
On Loan Guarantee Reserve
Hon. Mr. Fisher: The loan guarantee reserve is for $658,000 to provide for existing loan guarantees. When a loan guarantee is called, a direct loan is made and budget funds must be in place to make the direct loan.
Previously, any loans issued as a result of a loan guarantee call were made from existing funds within the business development fund.
Mrs. Firth: What exactly is this reserve going to be used for?
Hon. Mr. Fisher: The 1996-97 budget is based on the existing loan guarantees that had been provided under the business assistance loans and loan guarantee regulations. The $658,000 exists to provide for the guarantees that may be called.
A called loan guarantee becomes a direct loan by the government. An offsetting recovery is also budgeted at $500,000. The amount to provide for a possible loss on loan guarantees called is $158,000. The total is $658,000.
Mrs. Firth: Can the Minister provide us with any detailed information about which loan guarantees have already been called and have become direct loans? Can we be provided with a list of individuals who would be in that category? I know there is a list of outstanding loans, and so on, but I do not think it deals specifically with this loan guarantee reserve.
Hon. Mr. Fisher: There is actually nothing under the $500,000. There is an offsetting recovery, which is also budgeted at $500,000. That is there in the event that one of the grarantees is called. The $158,000 is similar. The total outstanding guarantee at the time the budget was prepared was $1,583,500. A loan loss rate has been estimated at 10 percent, which comes to $158,350. The total comes to $658,000.
Mrs. Firth: I am sure that other Members want to ask some questions about it. Can the Minister just explain that again? My records indicate that there was $1.1 million committed in loan guarantees, according to the business development fund. Now, the Minister is saying that it is some $1.5 million. Could he explain that for us again?
Hon. Mr. Fisher: I see where the Member has obtained the $1.1 million figure. That is on a line item in the budget, but here are probably other ones that are in there also. I will just run over this again: $500,000 of the total is a loan guarantee. If that is called, that is potentially how much we could be out. There is also a recovery for the same amount of money on the other side of the budget. To provide for a loss on those, they have taken 10 percent of the total outstanding guarantees at the time the budget was prepared, which was $1,583,000, which is comprised of an amount of $1,187,000 plus a bit more.
Mrs. Firth: Is 10 percent not a fairly high percentage of loss? What was it for the business development fund and what is it with the banks?
Hon. Mr. Fisher: I think that is for budget purposes only. I think it is high. I agree. I do not know in percentages what the banks' loss ratios are. This is a high percentage, but this is strictly for budgetary purposes and it is sort of estimating a worst case scenario.
Mr. Cable: Let us see if we can get our heads around this. The $658,000 is composed of two elements, one of which is $158,000 and the other is $500,000. The $500,000 amount is in a loan guarantee reserve. Is the $158,000 amount called "guarantees", or is that some bad-debt allowance? If so, how does it differ from the $500,000 amount?
Hon. Mr. Ostashek: The Finance Minister can try to explain it. What I gather from the debate is that there is $500,000 in outstanding loan guarantees.
The department is setting aside half of the budget in case some of these are called. They are not called at this point. The loans are up to date and there is no call on them. However, there is the potential for loss. The department is setting aside $158,000 - I believe that is the figure - for potential losses that might be called during the 1996-97 fiscal year.
As the Minister said, it is a budgetary figure. It is money set aside in the event that some of these loans fail, and we are called on to pay them. The department does not expect a loss of any more than that. There will probably not be that much. I know that government officials always make sure that they have a little breathing room when they set these figures aside.
Mr. Cable: As I understand the Government Leader, the $158,000 is the potential bad-debt allowance. What is the loan guarantee reserve? Is that something over and above that? Is that an extra precaution?
Hon. Mr. Ostashek: My understanding is that we have to have money in case these loans are called. The reserve is $158,000 for this fiscal year. It is dealt with one year at a time. The department does not expect that, out of the $500,000 in loan guarantees, there will be any more than $158,000 called against it this year. That is what it is budgeted for.
Mr. Cable: The $500,000 is not an actual expenditure of money. It is a creation of a new fund, is it not? The money has to go somewhere if it is voted for.
Hon. Mr. Ostashek: There is also an offsetting asset for the $500,000, because, as these loans are paid off, that figure will come down. The department has a liability of $500,000 as well as an asset of $500,000. However, the potential loss, which the department does not know about in the 14 or 15 months before putting the budget together, is projected to be not more than $158,000, as of March 31, 1997.
Mr. McDonald: This must be part of the artificial economy that the Minister was referring to when he talked about providing loans to businesses and made reference to all of the bad loans that were experienced with the business development fund under the NDP regime. Clearly, with this new program, there are some assumptions being made about the artificial economy that the government has every intention - by its definition - of continuing. The Minister is saying "No." I want him to explain that. I want him to also explain why it is 10 percent.
I remember being asked in the Legislature some years ago about the loan/loss ratio for the business development fund and for the banks. I believe that they were both less than five percent. The banks were actually fairly competitive with the business development fund. They were slightly lower than the business development fund, because they were more cautious, and the business development fund was the lender of last resort. However, I am interested in this particular loan/loss ratio.
Can the Minister give us some precise numbers on the loan/loss ratio for the business development fund and can he also give us some information about the loan/loss ratio for the banks, which is obviously of greater interest to us now that the government is partnering with the banks to provide financial assistance to the private sector?
Hon. Mr. Fisher: Yes, there are a couple of points. First, this is not for the new venture loan program that we have been talking about; it is for existing loans and loan guarantees under the business assistance loans and under the loan guarantee regulations.
As to the actual amounts, the business development fund's historic percentage of loan principal from 1984-85 to 1988-89 averaged 21 percent; 1989-90 went down to 16 percent; 1990-91 was 13 percent; in 1991-92, it went up to 28 percent; for some reason, in 1992-93 it went almost to zero; in 1993-94 it was nine percent; and in 1994-95, eight percent. The average over that period was 14 percent, where the principal was written off or an allowance established.
Mr. McDonald: I find that rather startling because the information I received from the department was substantially different from the information the Minister seems to be sending us as loan/loss details. I think he is referring to the loan/loss ratio - is that right? I will ask him to double-check the figures because I find it startling, to say the least.
Under the venture loan guarantee program, I was under the impression that the government would be voting monies at some point, and that there was a promise of a transparent process. Where in the budget do we see those monies?
Hon. Mr. Fisher: There is no money in this budget year for a couple of reasons. The venture loan program was not completed, and still is not. We hope to have it in place fairly soon. Second, in the first year of the program, there should not be any actual losses. If we had the program established, we would probably have it in for a one dollar amount, but because the program was not established when the budget was put together, we have no number.
Mr. McDonald: What does the government mean by a transparent program, then? Is it only going to be budgeting losses or will there be some other opportunity for Members of the Legislature to actually make some decisions about the loans themselves?
Hon. Mr. Fisher: There will be a ceiling on how much the government will guarantee. Perhaps that ceiling would be $2 million. We would have a maximum risk on each individual loan. That could be $200,000, or even $100,000. I do not know what the numbers are yet. That information will be available to all Members of the House.
Mr. McDonald: What is the Minister saying with respect to the transparency of this program? Is he saying that there is going to be anything qualitatively different from the business development fund in terms of the visibility of the loans? Is he saying that there will be basic guidelines that we will see simply after the fact and after the loans are made?
The comfort that legislators will have is that governments will not exceed the guidelines, and presumably, at some point, there will be some notation during estimates debate about what loans have actually been guaranteed and what the exposure of the government is.
What opportunity will there be for the Legislature to limit the amount of the exposure that the government might want to accept from time to time?
Hon. Mr. Fisher: Cabinet will determine the ceiling that is implemented. The Member mentioned the Legislature and is correct, as the Legislature would become involved when a loan goes bad. I think that is what the Member is getting at.
Cabinet would determine the ceiling of the risk that the Yukon government would allow itself to get into, similar to the business development fund loans. There would be an amount in the budget for the estimated write-offs or losses that the government would have in each fiscal year.
Mr. McDonald: Traditionally, under the loan programs - including the business development fund and all of its precursors right through to the late 1970s and early 1980s - there was an amount voted that the Executive Council had to respect when providing loan funding.
Obviously, by program guidelines, the government could not lend more than $500,000, but in total it could not lend more than the $3 million or $4 million that was budgeted in the main estimates or in the estimates themselves.
Through what mechanism is the government proposing to provide the Legislature with authority to limit the total exposure of the loans? I am not referring to the program guidelines, which will establish guarantee limits; I am referring to the total amount to which the government may want to expose itself in terms of liability over the course of a year.
Hon. Mr. Fisher: I gave the Member some information that is not entirely correct. What we would do is have a line item in the budget for the maximum amount of the loan guarantees for each given year - whether it is $2 million, $3 million or $4 million, or whatever the case may be. In any event, the maximum amount that could be lent out in any particular year would be a line item in the Department of Economic Development's budget, with an offsetting recovery.
Mr. McDonald: For budgeting purposes, the loan guarantee program will essentially be shown and defined precisely the way the old loan programs were defined for budget approval - is that correct?
Hon. Mr. Fisher: Yes.
Mr. McDonald: Is the Minister saying that the details are not as yet decided, and that the total exposure on a single loan is not yet decided, and since the program will not be in place this year there is no need to vote a total limit for this program?
Hon. Mr. Fisher: The Member is correct. We have not determined exactly what the maximum will be. The program will be in effect, more than likely, in April or early May, at the latest.
Mrs. Firth: I would like to have a couple of things clarified. The Minister has said that the loan guarantee reserve is entirely different from the loan venture capital program that the government is talking about participating in jointly with the banks - is that correct?
Hon. Mr. Fisher: That is correct.
Mrs. Firth: So, there is nothing in this budget that identifies any money for the loan venture capital program. Is that the correct title of that program?
Hon. Mr. Fisher: It is a venture loan program.
Mrs. Firth: The Minister did not answer my question though. Is there anything in this budget for this program right now? There is not even a line item in this budget for that program.
Hon. Mr. Fisher: The same line, the loan guarantee reserve, could be used. That is the line that will be used in future budgets, but that amount is not based on the venture loan program.
Mrs. Firth: I do not like that. We have been through this with this Minister with respect to the industrial support policy and the Old Ditch Road, or something like that. I think I remember there was a line in the budget that said one thing but meant another thing. Now the Minister is telling me that that is the case here again; the loan guarantee reserve, which is a new line in the budget - it has never appeared in the Economic Development budget before - for $6.58 million is one day going to become the venture loan program.
I distinctly remember seeing a press release that said that this program was going to be announced probably on April 4, when all the details were to be finalized. I do not know how the government can enter into a program and spend money - or even guarantee loans under that program - if we do not have a line item in the budget for it. I would like to know why there is not a line item somewhere here that says, "venture loan program," to give us at least some idea of what the government is prepared to commit under this program.
Hon. Mr. Fisher: We do not know yet. I think I made that clear before. The program has not been finalized. It has not come to Cabinet. If we can get it completed before the session is over, I would be happy to provide the details of it to the Members. Right now, we do not have a program. I think that I would be challenged even more strenuously if we had money in the budget for a program that did not exist.
Mrs. Firth: The government is intending to spend money on the program that, as far as we are concerned, does not exist. I am being asked to approve an expenditure of money in some line the Minister vaguely refers to as becoming the loan guarantee reserve program one day. That is my concern.
I do not know anything about the program. The Minister has not given us any details about it. He said he has no program and that it is not finalized, but he has said that this loan guarantee reserve is going to become the venture loan program. I have a great deal of difficulty supporting that principle or concept when we have absolutely no idea how much the government is planning to commit in the form of loan guarantees.
Hon. Mr. Ostashek: Let me take a crack at this. I can bring the details back to the Members opposite in the Finance debate, but I think what the Member was trying to relate is that this is a loan guarantee program. It could come under the same line and the numbers be adjusted as a loan guarantee program.
The difference with this program is that it will be administered by the banks. We are not going to have administrative staff in the department for it. It will still be identified in the budget, probably in the same line item but with different wording, as it is still a loan guarantee program. It will have a set figure, as the Leader of the Official Opposition said, because there has to be a limit to what the government is going to use, and it has to be approved by this Legislature. It will be offset by a recovery. Then, in the same way as the $158,000 is set aside in this budget, there will be a certain amount set aside for projected losses in each fiscal year.
I can bring all those details back in the Finance debate to give some comfort to the Members opposite.
Mrs. Firth: I have a couple of points with regard to what the Government Leader has just said.
Just because the money is going to be lent by the banks and the government is going to guarantee it, this does not mean that the government is not being put at risk. If the guarantee is called in, the government has to pay the money, so the public purse is still being put at risk here.
I want to know how much they are prepared to be put at risk. I think that is a fair question to ask. This information does not give us any idea, nor does it even clearly explain that the venture loan program comes under the loan guarantee reserve line. If there were some brackets or something saying that that line was going to serve a dual role, it might be a different story.
The other concern I have is with respect to the Minister's comment about the loan being offset by a recovery. Is he talking about the venture loan program, where the loan is being paid to the bank and not to the government? The government is just a guarantor. I am not sure what he is saying about the loan being offset by a recovery.
Hon. Mr. Ostashek: It is the same as the loan guarantee program in place now. This money is loaned by the banks under the loan guarantee program and the government is limited in how much it can loan by the amount set by the Legislature. I believe there is $500,000 in this program; however, I am not absolutely certain because I am not familiar with the program. I understand that there is $500,000 for loan guarantees. Maybe it is involved in the whole loan program of the business development fund, which totals $1 million in loans and loan guarantees. This would be the same sort of vehicle that is used. The Member stated that there is no recovery, but there is, because as the loans are paid off at the bank, the risk to the government decreases. There is an offset.
Some Hon. Member: (Inaudible)
Hon. Mr. Ostashek: It is, because as the loan is paid down - we cannot loan over that amount - to the bank, the government is not at risk for as much money.
Mr. McDonald: I would like to ask the Minister a couple of questions. I am afraid that I am no longer clear about what the program involves and I am not sure where the appropriation is actually made. Also, I am not sure where, in a guarantee system, an expenditure is actually made in order to receive a recovery. Perhaps the Minister could, at some point in time, explain that to me. The issue on which I want to focus is the issue of the transparency of the program.
The Minister indicated to us that there would be certain limitations set through a budgeted amount so that whatever the guidelines state - the Cabinet can approve, vary or change guidelines at any time - there will be a total amount that Cabinet will not be able to exceed and expose the government to a debt obligation.
The question is this: what is that amount going to be? If the program is going ahead next month, and there is no total amount listed anywhere, the Legislature is not limiting anything. The program simply goes ahead. How is the Minister reconciling the problem of providing a limit in the budget and at the same time indicating to the public that it is going to proceed with the program?
Hon. Mr. Ostashek: As I said, I will bring that all back from the Department of Finance. However, I think the Member is absolutely right. At some point, we are going to have to get budgetary approval for the total amount. I will talk to my Finance officials to see how that is going to be handled. I will bring that information back to the Member.
The program that we are talking about bringing in is not new. It is used in other jurisdictions in Canada, and we are basically copying it with adjustments to suit Yukon conditions.
Mr. Cable: I think I have asked this question in earlier debates. Is it intended that there will be a charge for the guarantee, or is this going to be a freebie for the applicant?
Hon. Mr. Fisher: There would be a charge to the applicant - it is not a freebie - but I do not know how much it will be at this point in time.
Mr. Cable: Is it intended that the program be self-financing out of the charges? Would the charges be roughly equivalent to the loan losses, or is it the taxpayer who is going to bite the dust on this?
Hon. Mr. Fisher: I do not see that kind of a charge. I would expect the charge to be minimal. We would like to see it as being a last resort, because we would prefer not to be in that type of business at all. It is there, however, in case people need it. The small charge would be over and above the bank rate.
Mr. Cable: If a loan guarantee is needed, assumedly the banks are not prepared to lend on the credit of the borrower herself or himself. What sort of terms of reference are we using? Is there some public good that the taxpayers are being exposed to for this?
Hon. Mr. Ostashek: I will try to encapsulate it. We want it to be the bank of last resort. We do not want people to come to us when they can get a loan from the Business Development Bank, Dana Naye Ventures or one of the banks. The interest rate would probably be higher than the going rate at the bank.
These loans will not be given without personal guarantees being taken from the borrowers. It has to be the bank of last resort. In the Yukon, there are situations where people who are willing to give personal guarantees and do the other things are still not able to get money from the bank to start a business.
I do not believe the loan is going to be to finance a line of credit for supplies inventory. This would not be a loan for that. They can get cheaper financing for that. This is strictly startup money for new businesses. It has to be the bank of last resort.
Mr. Cable: What is the statutory framework under which we are doing this? Is it under the Business Development Loan Act? Where are we coming from? Are we going to enact a statute that will set out the goals for this program, like job creation or technology or whatever it is? How are we going to find out what the goals of this program are and if the program goals are being met?
Hon. Mr. Ostashek: That will all be laid out when we have the program finalized, and it will be available to the Members.
Mrs. Firth: If I might just make a suggestion, I am not prepared to vote for this $658,000 line item until I know exactly what it means. I have some outstanding questions about the venture loan program. I agree with the previous questioner that there are outstanding questions about the whole program, and I think we are going to have to stand this item aside until we can get some clarification so that we know exactly what we are talking about.
Hon. Mr. Fisher: I have no problem with standing the line aside, but I need to know what the Member opposite wants to know. The line item for $658,000 has nothing to do with the venture loan program the Government Leader and I were referring to earlier. If the Member opposite will give me the specific questions that need to be answered under loan guarantee reserve, I will make sure that she has those answers.
Mrs. Firth: The Minister stood up and said that this line could become the venture loan program line. The Government Leader said that it is not right now. If, for example, under its venture loan program, the government decided that it would allow the government to be put at risk for $2 million, that line will then become $2,658,000. That is what my concern is.
Perhaps other Members want to register their concerns or put some questions forward, but I think that we need to have quite a bit more information brought forward about that particular item in the budget before I am prepared to agree to it. I think we should stand it aside.
Chair: Does the Committee wish to have a break?
We will have a brief recess.
Chair: I will now call Committee of the Whole to order. We are dealing with Bill No. 10, Economic Development, and we are on the line item loan guarantee reserve.
Hon. Mr. Ostashek: Perhaps I can clear this up for the Members opposite now. Under the Financial Administration Act, we need an act to be able to make loan guarantees and that is done under the Economic Development Act. We do not need an appropriation for the venture capital program. The limits and the parameters for the program would be set in regulations under the Economic Development Act.
An example of this, which may help to clear the picture, or may make it worse - I do not know - is that if we had guaranteed the $29 million loan to Curragh Resources, there would not have been an appropriation for it. The only time an appropriation is made is when we must pay out money under the loan guarantee. It will be done under the parameters of the Economic Development Act and the parameters for the program will be set out in regulations under that act.
Mrs. Firth: That is exactly my concern. There will not be an expenditure. It will just be an expenditure when the loans were called in. We will not know how much of the Yukon taxpayers' money the government has risked at all. That gives me a lot of concern.
I have to put this on the record. I have to express my concern about the way the government is keeping its books. We talked about big issues like the Beringia Interpretive Centre, the visitor reception centre and the industrial support policy. We touched on them in the budget. None of them had line items in the budget when we debated the budget.
A special warrant was then entered into to spend money on these big ticket items and this supplementary budget. I see the Government Leader shaking his head, indicating "no", but that is what happened. We touched on these issues, but there was no dollar allotment for them in the budget. To me, that circumvents the whole legislative and budgetary process. I do not know whose idea this is, but I have a concern about it because there is no real debate about the expenditures.
We end up being asked to rubber stamp them with a special warrant or a supplementary budget after the fact. I do not think that is ensuring public debate on decisions about big-money expenditures this government is making. To me, this whole program seems to be another of those big-ticket items.
I have a great deal of concern that we will not know, in a financial sense, what volume of loans have been guaranteed, so we will not know what the risk is to the taxpayer. This has the potential of having a cumulative effect if the loan guarantee program goes on for two, three or four years and the government continues to guarantee loans. I think the taxpayer could be put at a great deal of risk after a long period of time. If there is no line item in the budget about it, when do we get to debate the expenditures that Yukoners could be expected to pick up the tab for?
Hon. Mr. Ostashek: I will respond to the Member's question so that we can return to the Economic Development debate. First of all, the limits will be set through regulations and those regulations will be available to the public. There will be plenty of time for debate on that topic. All loan guarantees are handled under the Economic Development Act.
I want to go back and discuss the Beringia Interpretive Centre. It was a line item in the last budget. There was money appropriated for the start of the project and all that this government did through the special warrant was to advance the project by one year, so there was plenty of time for debate on that topic.
With regard to the industrial support policy, we debated that policy in this Legislature last April or May. At that time there was a one dollar line item allocated to it, because we did not know the amount of money that would be required. I made the commitment to bring that to the Legislature for debate, which we did before the session adjourned.
I believe that there is accountability. I know that the Member would like to see this as a line item in the budget, but my Finance officials tell me that this item is not handled in this way and that there is no appropriation for this until it actually costs the government money. That does not mean that there will be no limits set; there will be limits set through regulation.
Mrs. Firth: No one has an opportunity to debate the program. The government says we will have the venture loan program. It says "Trust us; there will be limits and regulations," and that is all the input one has. I do not think that is enough. I believe my constituents expect me to find out all the details of the program, what kind of risk they are being exposed to by the government, and I have a responsibility to ask those questions to find out what is going on, to be very basic about it. We will not be able to do that until the government has established regulations and made them public. There will be absolutely no input into the program.
Mr. McDonald: I understand what the Minister is saying and I do share some of the concerns of the Member for Riverdale South on this matter. I will get to that in a minute, but I would like to follow up a little on what the Government Leader said and try to make sense of it, as it has been described this afternoon.
The Minister of Economic Development said that this line item - the loan guarantee reserve line item, which we are discussing now - would be the line item used for the venture loan program, and that there would be an expenditure and a recovery identified at some point in the future, and that that would show the limit we would vote in the Legislature on an annual basis.
Can the Minister tell us how those two positions jibe? If the government provides limits through regulation, what about this program will involve the expenditure and the recovery, and what about this program will involve using this line item if there is no expenditure and the guarantees are identified only under the Economic Development Act?
Hon. Mr. Fisher: During the break, we checked with some of the officials from the department and from Finance. I was wrong about having the line item in the budget. As the Government Leader said, there would be a regulation created under the Economic Development Act that would have the limits of the actual loans and the limits of the annual top of the loan guarantees agreed to.
Mr. McDonald: I would like to talk about the venture loan program and the proving of the limits overall in a minute. With respect to the loan guarantee reserve, the Minister has identified $158,000 as the loan loss. I will pick up on something that the Member for Riverside asked. Is it not policy that the loan loss is covered through the loan fund itself and interest rates charged? Is that not a principle? Is that not going to be a principle in this particular area?
Hon. Mr. Fisher: Apparently that is the way it has been done. Because the business development fund will expire on April 1, there is no actual fund any more. That is why it is created in this budget.
Mr. McDonald: Is there a revenue at some point where loan interest is achieved to offset the loan losses?
Hon. Mr. Fisher: For the $500,000, there is an offsetting $500,000 in recoveries. The $158,350 is what is estimated to be the loss for the year, to total the figure of $658,000.
Mr. McDonald: I understand that. The point I am making is this: as I understood it, the business development fund, for example, like the loan funds prior to that, charged an interest rate that covered for losses so that there was no net loss to government as a result of losses from bad loans.
In this particular case, what appears to be the situation is that the government is anticipating a loan/loss of $158,000, making the appropriation, but is not showing any revenue on interest income from the loans it has outstanding. Is there a line item that shows interest income on these loans, which would offset the loan loss?
Hon. Mr. Fisher: There is no recovery for the interest on loans. My understanding is that it just goes into general revenues.
Mr. McDonald: I do not know how that is calculated. I am trying to wrap my mind around this thing. First of all, I do not understand the whole concept of expenditure for a loan guarantee reserve and a recovery. I do not understand the $500,000 out and $500,000 in. I understood loan guarantees to be the Yukon government guaranteeing someone else who spends the money, and we guarantee a portion of that fund - we do not actually make an expenditure. I do not understand, however, why the money is going out and why money is coming in.
I also do not understand how the government is calculating a loan/loss and not recovering some funds. When the government makes a loan guarantee, does it receive no benefit for that guarantee? Does the government not anticipate a charge against the private citizen making a loan that would pay for the service of providing this guarantee, in some way, so that we could cover our losses? Or will this whole project end up being a net cost to the taxpayer?
Hon. Mr. Fisher: The government collects a guarantee fee equal to 1.5 percent of the full amount of the guarantee per year while the guarantee is outstanding. The $500,000 amount is actually for instances where, if the guarantee is called, we have to pick up the loan and pay out the bank. In this particular case, it is estimated that $500,000 may be called because the loan recipients are not keeping up their payments, or for whatever reason. That is why there is $500,000 in the budget, as well as an additional $158,000 amount that is actually estimated to be written off against defaulted loans.
Mr. McDonald: My first question is this: where does the 1.5 percent guarantee fee show up in the budget?
Hon. Mr. Ostashek: If the Member turns to page 4-12, under revenues and economic development, there is a line item under industry, trade and investment for business loan interest. It shows revenues of $292,000 for the fiscal year 1996-97. I suspect that that is where the loan interest will show up. It also includes loan guarantee fees of $12,000.
Mr. McDonald: Are the expenditures on the capital side and the revenue to be received on the operations side? Can we check that so we can see what is actually happening?
With respect to the loan guarantee reserve - the $500,000 - the Minister explained it by saying that there had to be some identification of the potential risk of loss in the budget, and the mechanism that it is going to use is this $500,000 out and $500,000 in. I am not sure how, in respect to the $500,000 out, we are giving the government approval to actually expend it. Perhaps the Minister can explain what happens to that $500,000 and how it goes out.
With respect to the matter of the loan guarantee, under the Economic Development Act, as the Minister has just pointed out, the government can provide a loan guarantee by regulation. Why are we doing it this way for the loan guarantee reserve, while the government is proposing to do it differently for the venture loan program?
Hon. Mr. Fisher: I will have to have some notes made from officials from both our department and the Department of Finance for the Members. If Members would like, we can stand over this line for the time being.
Mr. McDonald: I appreciate that information. Perhaps when the Minister is off checking for this information, he could think of a way to tell us how the government is going to establish a limit for the venture loan program that would be scrutinized by the Legislature. If it is approved under the Economic Development Act, then there is not necessarily a vehicle for the Legislature to set the limit; it would be done through regulations.
Some Hon. Member: (Inaudible)
Mr. McDonald: That is right, and essentially one would know what the guarantee receipt would be and what one was allowing for in terms of the bad debt. That raises the question for the next line item, which is allowance for bad debts, and why there is a line item for bad debts under the loan guarantee reserve and only $1.00 in the actual line item.
If this is going to be done through regulation, what mechanism does the government want to use to establish a limit that the Legislature will know the government will not exceed in terms of exposing itself to total liability for loan guarantees? Could the Minister provide us with that information?
Hon. Mr. Fisher: Yes, I will endeavour to bring back all that information.
Mr. Cable: Additional information that would be useful would be what led up to this program, who was actually asking for a lender of last resort and what considerations went into determining that this is a necessary element in the lending market.
The Economic Development Act sets out that the regulation should establish the objective of the program, so it would be useful to get information on what the objective is, as well as the need. Is it aimed at job creation or at innovation? Why is the government bringing this in?
Hon. Mr. Fisher: With the economic development agreements expiring and the termination of the actual business development fund, we wanted to get totally out of the direct loan business. We consulted with businesses, chambers of commerce, municipalities, and so on. It appears that even though, with the Dana Naye Ventures program and with the Business Development Bank and with the banks - the surveys and questionnaires were interesting in that the banks actually treat people here the same as they do in Vancouver but there is a lack of up-front capital for someone who is starting a business but has not enough collateral to fully secure the maximum loan they need. It was determined that there was a problem in that area, hence the start of the investigation of a venture loan program.
This would be for people who are starting some sort of a business and can get money from the banks but cannot get the total amount needed. They would have a certain amount of collateral. For example, if a person needed $200,000, and the bank is willing to give them $150,000 because of their house, car or other assets, but they are short $50,000 to start this venture, in that case we would provide a guarantee in for $50,000. However, we have gone a little further by making an agreement with the banks so that as the people pay off their full $200,000 loan, the $50,000 and the $150,000 will be retired proportionately. That is how we anticipate the program working.
Mr. Cable: Is there a document or consultant's report showing that this program is really needed, particularly when the $50,000 in the Minister's example follows all the way down to zero? It strikes me a little strange. If the bank is prepared to advance $150,000, why would the $50,000 come off the top?
Hon. Mr. Fisher: This was essentially on our insistence.
We were willing to share some risk with the banks. However, we do not want to carry the whole risk. It would be easy if we did not insist on the principal amounts being retired together, because the bank would just lend a person a little less money than it normally would and the rest would be under guarantee. We would be totally at risk. That is why we wanted the two to come down together. It is a risk-sharing initiative with the banks.
Mr. Cable: I gather from one of the comments made by the Government Leader that this is a job-creation program. Is that the objective? Can we firm that up before we get into the debate?
Hon. Mr. Fisher: Yes, it will create employment, but it was mostly to help people, primarily in the rural areas, who want to get into some sort of business.
Mr. Cable: What is the return to the taxpayer for this exposure? Surely, there has to be some public benefit and it is not merely a Christmas present program for people who want to be entrepreneurs, but cannot borrow from the banks.
Hon. Mr. Fisher: I believe that what the Member is getting at is: what benefit is it to the territory? I would hope that it would increase the economic opportunities and the whole economy of the territory.
Mr. McDonald: The Minister indicated that, in the development of this program, the government had struck an agreement with the banks that it would be jointly funded. Is this a written agreement?
Hon. Mr. Fisher: No. Cabinet will be looking at the program in about 10 days. At that time, the banks will be consulted to find out how many are willing to buy in. We have had several meetings with the banks and they have indicated that this is the type of program they would be definitely interested in and will take part in. We do not have any written agreements with any of the banks up to this point.
Mr. McDonald: Did the Minister just say that the program will be approved before the government knows whether or not the banks are going to buy in?
Hon. Mr. Fisher: The banks have all agreed in principle. What I was saying is that there are no written agreements with any banks at this point. Once Cabinet has approved the establishment of the program, we will get written agreements with the various banks.
Mr. McDonald: Is the Minister referring to all the banks in the Yukon?
Hon. Mr. Fisher: We have talked to all the banks. I believe they are all interested in participating.
Mr. McDonald: With regard to the agreements that the Minister is hoping to sign with the banks, will they be public documents and will he make them available to us?
Hon. Mr. Fisher: I do not know. We will certainly check with the banks. If they have no specific problem with it being made public, I do not see why we would.
Mr. McDonald: We have copies of the banking agreement from the bank the government does business with. We are not asking for information with respect to individual loans. I would trust that the Minister could give us a commitment to provide the financial arrangement that the banks are going to strike with the government. Is that not possible?
Hon. Mr. Fisher: It is pretty likely. I do not know what objections the banks would have. Unless there is something I am not aware of, we would certainly be willing to make it available to the Members.
Mr. McDonald: We will follow this up in 10 days or so, or whenever the government finishes the design of the program, and ask more specific questions. When we come to this later, it will be one of the questions about which we will ask the government to provide us with further information.
The Minister indicated that there was a need in the community. Has the government conducted any consultations with the Chamber of Commerce and, if so, is it satisfied that the program will meet the need as identified in its survey of Members that identified access to capital as a major problem?
Hon. Mr. Fisher: We have definitely talked to the chamber. I believe that the survey was a combined effort between the department and the Yukon Chamber of Commerce, if we are talking about the same one. There was an identified need established.
We have talked to the Chamber of Commerce and I have not heard any negative comments about it.
Mr. McDonald: So the Chamber of Commerce is aware of the preliminary guidelines for this program. Is it satisfied?
Hon. Mr. Fisher: Yes, it is.
Mr. McDonald: If the chamber is aware of the preliminary guidelines, can the Minister also provide us with the preliminary guidelines?
Hon. Mr. Fisher: I have the general characteristics of the venture loan financing. Given the time, I would pass this over to the Member opposite, and he can share it with the other Members, if he wishes.
Mr. McDonald: Mr. Chair, I move that you report progress on this bill.
Motion agreed to
Hon. Mr. Fisher: I move that the Speaker do now resume the Chair.
Motion agreed to
Speaker resumes the Chair
Speaker: I will now call the House to order.
May the House have a report from the Chair of Committee of the Whole?
Mr. Millar: The Committee of the Whole has considered Bill No. 10, First Appropriation Act, 1996-97, and directed me to report progress on it.
Speaker: You have heard the report from the Chair of Committee of the Whole. Are you agreed?
Some Hon. Members: Agreed.
Speaker: I declare the report carried.
Hon. Mr. Fisher: I move that the House do now adjourn.
Speaker: It has been moved by the Hon. Government House Leader that the House do now adjourn.
Motion agreed to
Speaker: This House now stands adjourned until 1:30 p.m. tomorrow.
The House adjourned at 5:26 p.m.
The following Sessional Papers were tabled March 26, 1996:
Yukon Hospital Corporation Annual Report 1994-95 (Fisher)
Yukon Housing Corporation: financial statements as at March 31 for years 1992, 1993, 1994 and 1995 (Fisher)
Klondike Valley Placer-Occupant Review Policy (published by Indian Affairs and Northern Development) (Brewster)
The following Legislative Returns were tabled March 26, 1996:
Delivering Good Government Committee: role and terms of reference; Service Improvement Program: approved and implemented suggestions (Ostashek)
Oral, Hansard, p. 2405-2406
Dawson City bridge: cost of studies (Brewster)
Oral, Hansard, p. 2418
Klondike Valley placer claim holders: application review policy re surface tenure (Brewster)
Oral, Hansard, p. 2455