Whitehorse, Yukon

Thursday, April 3, 1997 - 1:30 p.m.

Speaker: I will now call the House to order, and we will proceed at this time with prayers.



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


Introduction of visitors.


Hon. Ms. Moorcroft: Thank you, Mr. Speaker. I am pleased to rise this afternoon to introduce Monsieur Gilles Bédard and the grade 7 French immersion class from Whitehorse Elementary School. I hope they enjoy their visit to the Legislature this afternoon. Bienvenue à nos invités.

Speaker: Are there any returns or documents for tabling?

Are there any reports of committees?


Are there any bills to be introduced?

Are there any notices of motion?


Mr. Ostashek: Thank you, Mr. Speaker.

I do give notice of the following motion:

THAT it is the opinion of this House that

  1. the Yukon government should reconsider the agreement in principle reached between Yukon Energy Corporation and Alberta Power Ltd. which includes the sale of $4 million worth of YEC assets in contravention of a long-standing commitment by the Yukon New Democratic Party to oppose the sale of such assets to southern interests;
  2. the agreement through such provisions as a 20-year franchise for the Yukon Electrical Company Ltd. for residential and commercial customers will seriously impede the government's ability to use energy as a tool for economic development; and
  3. the agreement will lead to the increased use of expensive and environmentally harmful diesel for energy generation and will do nothing to reduce the high energy costs to Yukon's electrical consumers.

Speaker: Are there further notices of motion?

Are there any statements by ministers?


Northwestel rate rebalancing application

Hon. Mr. Keenan: Thank you, Mr. Speaker. I rise today to speak to my government's policy and Northwestel's application to the Canadian Radio-Television Telecommunications Commission for a $4.00 monthly increase to local telephone rates in the territory.

If the CRTC approved Northwestel's application, the result would be an average increase of about 35 percent for Yukon residential customers, and about 14 percent for business customers.

Since this is a "rate rebalancing" application, which Northwestel considers "revenue neutral", the company proposes to reduce some long-distance charges by an amount equal to the revenue that would be gained by the increase.

Northwestel plans a 15-percent reduction for calls to Alberta and B.C., and a 4.25-percent reduction for calls throughout the rest of Canada. It does not propose to reduce long-distance rates within its own operating area.

Mr. Speaker, we want Northwestel to make substantial reductions in long-distance rates, both within its operating area and across Canada, beyond the reduction proposed in its application.

In our submission to the CRTC, we point out that Northwestel simply is not meeting its current stated objective of meeting customer demands for lower long-distance rates. Neither is Northwestel meeting its earlier goal that would ultimately see Yukon people paying about 55 cents per minute, or 15 percent more than the "Stentor" rates for a trans-Canada call.

The Yukon government submission asks the CRTC to direct Northwestel to apply any savings made in downsizing, or operational efficiency improvements, toward aligning its long-distance rate structure with long-distance rate structures across Canada.

We also request the CRTC to direct Northwestel to bring long-distance rates in its western operating area to the same level as rates in its eastern operating area. For example, a call from Old Crow to Whitehorse is .53 per minute, and a call from Iqaluit to a community the same distance away is only .36 per minute.

Mr. Speaker, our government also feels that Northwestel, as the monopoly provider of telephone service in the Yukon, must address its overall service throughout the Yukon in conjunction with rate rebalancing.

The extension of service to unserviced areas continues to be the Yukon government's first priority, and we stress that Northwestel must apply increased revenues from local access rates toward a program to extend service as part of its monopoly base. We believe it also must take into account the additional long-distance revenue resulting from service extension when it analyzes requests for service extension.

At present - and I must add, not limited to - areas such as Mendenhall, the Klondike River Valley, the Takhini River, Marsh Lake, Lake Laberge, Squanga Lake, California Beach at Tagish and the cottage lots at Teslin have either no service at all or only very expensive service options.

In southern Canada, the penetration rate for telephone service is 98.5 percent. By contrast, Northwestel's penetration rate is only about 87 percent. At least three Yukon communities have penetration rates that range from 25 percent to 29 percent. This means that three-quarters of the people in Old Crow, Ross River and more than two-thirds of the people in Pelly Crossing do not have the option of making telephone calls from their own homes, even in cases of dire emergency. This is absolutely unacceptable. Yukon people deserve reliable, affordable basic telephone service. They also deserve the opportunity to participate in the information highway and have access to the Internet in the same way as their southern counterparts.

The Yukon government's submission maintains that Northwestel must also undertake and continue improvements to the quality of service it offers as a monopoly service provider. While we recognize that Northwestel has acted on a number of complaints by improving its billing service and improving access to its 811 call centre, we believe there is room for further improvement. We want Yukon people to be treated the same as other Canadians. The Yukon government is therefore also urging the CRTC to monitor Northwestel's quality-of-service indicators closely to ensure a continued improvement of service in areas such as providing cost-effective options, timely installations and timely and effective repairs, to name just a few.

Thank you, Mr. Speaker.

Mr. Jenkins: Thank you, Mr. Speaker. When this government was in government, any increase in the basic phone charges proposed by Northwestel were opposed. The rate rebalancing impacts were just too horrendous on Yukoners, especially those Yukoners on low incomes and fixed incomes who hardly used long-distance service.

Mr. Speaker, at the present time Northwestel is and continues to be the highest priced telephone service provider in Canada - indeed in North America - and probably provides the worse service in North America.

It's very interesting to note, Mr. Speaker, the members of the government opposite have repeatedly bashed the banks for their profits - their massive profits. The yardstick by which a business is judged to be successful is its return on its investment. In Canada the utility industry has the highest return on investment of any business. Judging by the opinions of the members opposite with respect to banks, if the banks were to even come close to achieving the same return on investment as the utility industry, we'd probably have a revolution on our hands.

Why does this and utilities have the highest return on investment? Because they operate in a regulated monopoly. They have one product, and profit is a direct charge to the consumer.

With respect to the Yukon, we again have a clear demonstration of Troy - Whitehorse and the rest of Yukon - with respect to the level of service provided by Northwestel. In rural Yukon, the dissatisfaction level is very, very high with Northwestel. We have to be capable of receiving accessible, affordable and quality telephone service. Northwestel provides service using outdated and impractical and, in some cases, obsolete equipment. Look to the west and see what Alascom charges. Look to the south and see what B.C. Tel and Alberta government telephone are charging. Why are these neighbouring telephone companies able to provide modern telephone innovation and installation at a lower cost with a greater investment per customer than Northwestel? I guess you just phone 811, or wait-1-1, and ask.

Mr. Speaker, the Minister of C&TS has a window of opportunity to intervene in these CRTC hearings and ensure that the best interest of Yukoners is clearly spelled out, and that the Northwestel application is denied and, furthermore, long-distance competition is allowed in the Northwestel 403 area code. We need the 403 area code deregulated.

The minister owes this one to the people of the Yukon, Mr. Speaker.


Mr. Cable: Mr. Speaker, the minister, in his ministerial statement, refers three times to the monopoly status of Northwestel and it would be useful for the minister to tell this House what this government's position is on the monopoly status of Northwestel and whether, in the application, they have asked the CRTC to open up the long-distance business to competition.

Hon. Mr. Keenan: Thank you very much for the enlightening direction, if I might classify it as such. It completely mystifies me that, when you do something which is absolutely right and honourable and which is absolutely following a process which is laid out by the Canadian government, you can be criticized so severely. I mean, to speak about TROY - the rest of Yukon - for gosh sakes, let's quit flip-flopping around and see what it is exactly. Did I not mention in there "Klondike Valley?" Let's get a geographical map out and let's have a little look at it and have a geography lesson, because I really think that is what is needed here. And then we might be able to get some intelligent feedback, and I think that's exactly what I'm looking for.

To compare the bank's situation with Northwestel's situation is completely mystifying, as TROY is mystifying, as flip-flop is mystifying, but I'm certainly encouraged by my colleagues and the direction that we are going in because, when I was on the campaign trail, probably the number one issue that came about was to get improved services and to make sure that those services are provided.

Well, Mr. Speaker, that is exactly what we are doing. We are taking this window of opportunity and we are utilizing it so that we might be able to provide better services to the people of the Yukon.

As to the CRTC being open for competition and what we are going to be doing with them with regard to the member opposite's question, this will be released later this afternoon and I will make sure that the member opposite has got a copy of it. If he has any questions he may certainly come and ask those questions. If he needs a briefing or anything like as such, I will be certainly available to give him them in a complete briefing if he wishes. Thank you.

Speaker: This then brings us to Question Period.


Question re: Land claims, confidential document removal

Mr. Phillips: Thank you, Mr. Speaker. My question is for the Government Leader. Earlier this week I asked the Government Leader some questions about an incident that took place on January 23rd at the devolution meeting between CYI and the federal officials. One of the officials at the meeting removed some confidential documents from the federal representative's briefcase - a very unethical and untrustworthy act.

The Government Leader, in my view, Mr. Speaker, tried everything to dodge the question and simply didn't answer my question, so I'm going to pursue this a little further. The Government Leader admitted that he was made aware of the incident and of the individual who allegedly, in front of witnesses, removed the documents. I'd like to ask the Government Leader if the reason he's avoiding the question is because the individual who allegedly removed the documents and created this incident is a former deputy minister of his government, whom he has defended publicly in court, and is an advisor and a friend and, in fact, the individual is Mr. Shakir Alwarid. Is that not true?

Hon. Mr. McDonald: Mr. Speaker, I didn't avoid the question at all. In fact, I answered it directly. I indicated to all members and to the public that the Government of Yukon was not involved, in any way, in the alleged incident. The Government of Yukon officials had no part to play in the incident whatsoever. The Government of Yukon officials, for which I am responsible, have acted honourably, with integrity and in good faith, and in no way has this hurt the public agenda - either the alleged incident or the incident if it occurred - with respect to the devolution talks that are underway. In fact, those devolution talks are proceeding at pace.

Mr. Phillips: Thank you, Mr. Speaker.

Well obviously, the individual that I named is the individual that allegedly took the documents and the Government Leader knows that.

Now, Mr. Speaker, I'll go on to the second part of my question that I asked the other day, and I didn't get an answer for. The Government Leader says he has the highest ethical standards, and his officials within the department will maintain the highest ethical standards. Some First Nation bands are refusing to use this individual for any more work because of the action that he took. As well, the federal government is taking a strong stand on the individual.

I want to know if this Government Leader, who has used this individual for advice - Mr. Alwarid for advice - from time to time, has defended him publicly in court, has defended his actions when there was an incident with an airline a few years ago, if he will now say "three strikes and you're out," and that this Government Leader will say that our government officials will not meet with any individual or group where Mr. Alwarid is present in the room.

Hon. Mr. McDonald: Mr. Speaker, you are going to have to pardon me, because I have to be very cautious when the Yukon Party goes on a head-hunting trip. I have been a victim myself of the Yukon Party's head hunting, and when they were in government, not only was it scary to be a victim of them, but it also costed the taxpayers $80,000. So, for me to participate in yet another head-hunting trip sponsored by the Yukon Party is something I'm not prepared to do.

Now, the member opposite has now got a new law. He's decided that he's passed a new law on his mind, after having a trial in his own mind on this subject. He's got a new law that says that when you commit three offences that he considers serious, you're out and you should never work in the territory again. He indicated a couple of days ago that just one offence was sufficient to deny a person's right to work again. He did reference the incident in the airline, which was demonstrated, as far as I'm aware, to be the fault of the airline, not the fault of the individual. But, I guess the member has convicted him on that incident as well.

I can't trade with him that kind of behaviour, Mr. Speaker. It's not appropriate. It's not professional. It doesn't speak of a government that would act with integrity. And what I can tell him is that even though I do not involve myself in public hiring, in any case, anybody who applies to work with this government will be given a fair shot at the work. When it comes to due process for determining whether or not somebody should be penalized or punished, I believe in due process - not the kangaroo courts sponsored by the Yukon Party on the floor of this Legislature, but the real process with real judges and real juries and real prosecutors.

Mr. Phillips: Thank you, Mr. Speaker. Well, I think it must be very clear now to Yukoners why the Government of the Yukon wants to take no action on this particular incident - because the individual involved is a former deputy minister of the Government Leader, a good friend of the Government Leader, who was seen hugging him on election night in a picture in one of the local newspapers, and is a senior advisor who calls him from time to time. Talk about ethics, Mr. Speaker, and integrity, when the government will continue to receive advice from individuals who conduct themselves in this manner at extremely high-level talks. The people that are in those rooms are supposed to be trusted and supposed to be ethical, and the Government Leader's refusing to do anything about it.

I would ask the Government Leader if he plans to subject any of his employees to any meetings with this individual in the future in devolution or any land claims talks. Will he subject his employees to meeting with this individual in closed-door meetings? What will he do to protect their confidential documents that are there with them in the meetings?

Hon. Mr. McDonald: In my job, I speak for Yukon government employees. I am responsible for their behaviour at public meetings. I'm responsible for the positions they take. That is where it ends. If there are people out there on the street who I might read in the newspaper have done something that somebody alleges to have been wrong, or if I hear about something that happens up at Northwestel - some concern about some way somebody behaved - I'm not going to insert myself into this equation, identify the person, and say that person - because I've held my own trial in my head - will never work for the Yukon government. I will not do that. That's wrong.

Now the member is obviously going on this line of questioning because he's hoping, now that he's done his best to completely tarnish somebody's reputation, to tarnish the government's reputation by association. Well, I can't accept that, Mr. Speaker, because the Yukon government has always acted with integrity. The people who speak for us and act for us have acted with integrity, and they know the standards of behaviour that are expected of them. They will go into negotiations with First Nations, and they do go into negotiations with First Nations even today. Those negotiations have included the individual that the member has mentioned and the talks have been productive.

So, if the member wants me to now phone up those two First Nations that he speaks for and tell them that their negotiator's not acceptable, even though the talks have been productive and, as far as I'm aware, civil, then I can't do that either. So I guess it's strike three.

Question re: Yukon Energy Corporation, financial position

Mr. Ostashek: Thank you, Mr. Speaker.

It is quite amusing to hear the Government Leader say he doesn't involve himself in public hirings in the Public Service Commission after his actions at the Land Claims Secretariat.

My question is for the minister responsible for the Energy Corporation. I am very, very concerned. In some of the replies he gave in Question Period yesterday, when he called the Member for Riverside an alarmist because the member indicated that the YEC was on verge of a financial crisis, yet we hear today from the president of the corporation that the minister is responsible for coming out and asking for a rate increase - a third rate increase since this government has been in power.

My question to the minister is this: when we left office, the Development Corporation had about $10 million which was to be utilized for energy-related projects, for infrastructure and that. My concern is that the minister yesterday seemed to indicate that, because of the precarious financial position of the Energy Corporation, he was prepared to use that money to bail out the Energy Corporation.

I want to ask the minister for assurances here today that he will not use that $10 million to cover additional costs such as the political decision not to draw down the last two feet of the Aishihik licence, which I understand is costing consumers a substantial amount of money.

Can the minister give us the House and Yukoners that assurance?

Hon. Mr. Harding: Well, Mr. Speaker, I am not exactly sure what the former Government Leader is asking. What he is referring to with regard to comments that I made yesterday is a concern that I had about the questions from the Member for Riverside referring to the insolvency of the Energy Corporation, and I felt that the use of those words at that point was alarmist. It looks as if the board is obviously concerned about the loss of their major customer. This, of course, was a board appointed by the Yukon Party, chaired by Mr. Ernewein, appointed by the member opposite in the Official Opposition. So they obviously feel that there is a concern about the loss of the major customer.

Mr. Speaker, we are going to be asking the Yukon Energy Corporation to consult with intervenors prior to making any application. We will be making that request of the board, and we also will be very aggressively helping YEC collect the arrears of some $3.5 million that Anvil Range has accumulated, which would certainly go a long way to helping Yukon Energy Corporation alleviate its concerns.

Mr. Ostashek: Thank you, Mr. Speaker. We've heard a whole lot more weasel words from the minister, and he failed to answer the question.

The reality of it is...

Speaker's ruling

Speaker: Order. I'm going to have to ask the member not use phrases that belittle members opposite, in that kind of way. Please use parliamentary language.

Mr. Ostashek: Well, Mr. Speaker, the minister has avoided answering the question. He's done everything but answer the question. And, the reality of it is - despite the assurances that he has given this House, that we have control of the situation - the situation is out of control, as indicated by the president on the 12:30 news, that this government doesn't know what the answers are.

I want to ask the minister again: will he assure Yukoners that the $10 million of Yukon Development Corporation money that was intended to be used to develop energy infrastructure, such as grid extensions, will not be used to subsidize the poor decision making of that government, in their decision not to draw down Aishihik Lake at a cost of some $4.7 million to ratepayers in the Yukon?

Hon. Mr. Harding: Mr. Speaker, first of all, the situation is hardly out of control. I take issue with that statement.

We've obviously lost the major customer on the system. The rates that were approved by the Utilities Board were based on the assertion that Anvil Range mine would be in continued operation. Unfortunately, I can't report to the House today that that is indeed the case. So, Mr. Speaker, that is why there is a concern about the level of revenues in the Energy Corporation; it's pretty simple.

With regard to Yukon Development Corporation and the decision based on the recommendation of the technical advisory group on Aishihik Lake, I will remind the member opposite that in 1992 they promised to stop the environmental devastation of Aishihik Lake in their four-year plan, in those exact words, "to stop it". They did nothing.

The member beside the former Government Leader asked a former NDP Cabinet minister to be thrown in jail for environmentally devastating Aishihik Lake.

Mr. Speaker, we put in our election campaign a promise to help the mitigate the impact on Aishihik Lake, and we're proud of our decision to help with the situation on Aishihik Lake and to wait until appropriate studies are completed and to try and develop a plan to take the pressure off that beautiful lake for Yukoners.

So, Mr. Speaker, as I say with regard to any talk about rate increases on behalf of the board and the president, we're going to ask them to consult with intervenors prior to any application, and we're also going to try and help them collect the arrears from Anvil Range.

Speaker: Order. I'm just going to make a couple of remarks prior to the final supplementary.

Speaker's statement

Speaker: I notice that, today and yesterday, the questions in Question Period are often becoming speeches and so are the answers. I would draw members' attention on both sides of the House that a brief preamble is allowed prior to the question and that ministers are to get to the point in answering the questions. I would ask for your attention to that.

Final supplementary.

Mr. Ostashek: So, the minister refuses to give assurances to this House that the $10 million will not be used to bail out the Yukon Energy Corporation. I think it is a sad day for Yukoners, as I said the other day.

Mr. Speaker, I am going to ask him once more: will he ensure that the $10 million in infrastructure money will not be used for the losses suffered by the Energy Corporation as a result of a decision by Anvil Range not to pay their power bill?

Hon. Mr. Harding: I can only assume that the Leader of the Official Opposition is advocating for a massive rate increase to Yukon ratepayers. That is a concern to me that the Leader of the Official Opposition would be asking us to raise rates in the Yukon.

Certainly, we are taking a very cautious approach to this. We know that the situation has certainly been affected by the Anvil Range mine closure. We are going to be reviewing the situation and taking the action that I outlined in Question Period to ask the Energy Corporation to consult with intervenors prior to any application and also to help them collect Anvil Range arrears.

Question re: Yukon Housing Corporation, seniors housing

Mrs. Edelman: Mr. Speaker, my question is for the minister responsible for Yukon Housing.

Mr. Minister, according to the corporate profile for Yukon Housing Corporation, the role of the corporation is to help Yukon residents obtain appropriate accommodation, cooperate with the housing industry in meeting the housing needs of Yukoners and to foster community participation in the design, development and delivery of housing programs.

Mr. Minister, can you please tell me how the Yukon Housing Corporation is helping seniors obtain appropriate accommodation and how the Housing Corporation is cooperating with the housing industry in meeting the housing needs of Yukon seniors?

Hon. Mr. Fairclough: Thank you very much, Mr. Speaker. The Yukon Housing Corporation is in the business of social housing. In the past, there has not been a difference between social housing and seniors housing. Seniors have always been put in the position of paying the same rates as every other person that is out there, with the 25 percent of their income, although we do have a program that can address this; it is a joint venture program. Anyone in the private sector that is out there can access this program and it can be used for seniors housing.

At this point, we have, in the past, funded several seniors housing, including the Thomson Centre, Gateway, Closeleigh and Cyr's Place. At this point, that is where it stands with Yukon Housing.

Mrs. Edelman: Mr. Speaker, the demographics are shifting. Seniors are the fastest growing segment of the country, and this is reflecting the Yukon population statistics. Seniors are also staying in the Yukon longer, moving to the Yukon for lifestyle or health care reasons, and moving from the communities to Whitehorse to take advantage of available services.

Mr. Speaker, there has not been a Yukon housing needs assessment for over 10 years, despite the dramatic change in population demographics. Is an assessment anticipated at some point in the near future?

Hon. Mr. Fairclough: Thank you, Mr. Speaker. This is obviously an issue that's growing, and the Yukon Housing Corporation is going to be looking into the matter. We are going to ask the senior housing advisory group to get together again - that group hasn't met for a good long time - to get direction from this group and take that under consideration and make some decisions.

Mrs. Edelman: Mr. Speaker, planning for change is not happening in the Yukon. The housing consultation process, and the subsequent housing conference, which took place in 1993, identified a number of seniors' issues and recommended approaches to their solutions, and none of these recommendations have been acted on in the areas of seniors housing. If the stated role of Yukon Housing is to foster community participation in the design, development and delivery of housing programs, then where is the planning for the development of seniors housing programs?

Hon. Mr. Sloan: If I might, perhaps I can shed some light on the member's questions.

The Department of Health and Social Services, in conjunction with Yukon Housing, has been exploring the feasibility of a seniors complex to address some of these gaps in services that we see. The review was expanded to consider future needs of seniors in areas of day programming and attendant living units for higher functioning level one and two clients. We are expecting a preliminary report to be ready early this month. We have identified two major gaps, one being the supported living environment for seniors who are not ready for an institutional setting, but require more care than home care, and the second one was actually in terms of day programming for seniors.

Question re: Environmental spill report line

Ms. Duncan: Thank you, Mr. Speaker. My question's for the Minister of Renewable Resources. In December, in a ministerial statement, this House was advised that the government had formally adopted regulations under the Environment Act to manage contaminated sites, regulate the safe storage of chemicals and provide for the reporting of spills.

With respect to the spill reporting regulations, as I understand these regulations - say, for example, if several visitors were to stop by the side of the road in a gravel quarry and decide to change their oil and, subsequently, dump it, which is not that far-fetched an example, a law-abiding Yukoner would want to report that as a spill.

Under the regulations, they would call the Yukon spill report line. Would the minister advise who answers that spill report line, and what the policy and procedures are for dealing with a spill once it has been reported?

Hon. Mr. Fairclough: Thank you, Mr. Speaker.

The regulations that have been passed by this government apply to Commissioner's land. It doesn't apply to Crown land, and it doesn't apply to highways. The spills that happen on highways are handled by Community and Transportation Services.

Ms. Duncan: My question was: who answers the Yukon spill report line. I understand it's answered 24 hours a day, seven days a week, by qualified, paid staff, paid for by the federal government, to enforce these Yukon regulations.

Does the minister intend in the future to dedicate the territorial resources necessary to enforce the regulations he passed?

Hon. Mr. Fairclough: Yes, we do intend to put resources to enforce those regulations. Since we passed the regulations, we have had staff in our department go on training courses so that they can best handle the situations of spills and contaminated sites, and, at this time, they are presently continuing to take courses to deal with this matter.

Ms. Duncan: I thank the minister for that reassurance that there is training going on in the renewable resources department.

Given that it seems that it's someone from community and transportation services who is generally called first from the Yukon spill report line, would he indicate that this training is going to be extended across the Government of Yukon employees where necessary, and that he would undertake a public education program such as the TIPS program?

Hon. Mr. Fairclough: Well, Mr. Speaker, the spills that are on Crown land are reported to the federal government, and they are the ones that handled it, and we are trying to work in conjunction with them so that these reports that do come in across the Yukon are reported to one place, and we could act on it as one and not have two units going out.

Question re: South Campbell Highway, trucking permits

Mr. Jenkins: Thank you very much, Mr. Speaker. My question today is for the Minister of Community and Transportation Services.

Mr. Speaker, two months ago, community and transportation services officials introduced a policy that required the permitting of any legal axle weight, double-trailer combination, operating on the South Campbell Highway. As a direct result of that policy, truckers are experiencing delays. The delays are created because truckers must wait while weight loads and axle configurations are faxed from the weigh station to Community and Transportation Services engineering. Engineering then evaluates each case individually before notifying the chief of weigh stations and enforcements of a "yes", "no" or "conditional" determination. This response can take up to several days.

This policy does not apply to any other highway within the territory. Can the minister tell this House under what authority this policy was drafted?

Hon. Mr. Keenan: Thank you very much, Mr. Speaker. As we know, this is an ongoing occurrence every year and my department is working with due diligence to protect all highways within the Yukon within our jurisdiction. What more can I say to that? I can only say to the question that we will always be striving to work with due diligence and to ensure that the industry is not hurt in any situation, and certainly we'll agree to check it out and to make sure that we get back to him.

Mr. Jenkins: Well, thank you, Mr. Speaker, but I'm sorry that does not answer the question. It has nothing to do with road bans. It's separate and distinct from road bans and from normal overweighting permits or any other regulations that the Department of Highways has in place.

Given that all of these requests have to be dealt with by Community and Transportation Services engineering, can the minister tell me if the chief of weigh stations and enforcement and the appropriate engineering staff will be available during the hours that the scales are open so truckers will not be delayed?

Hon. Mr. Keenan: Again, I can only reiterate, Mr. Speaker, that again my department will be working with due diligence to ensure that people are not delayed and that life does go on. Again, I offer to get back to the speaker on a thorough briefing and I'm sure my department is listening now and doing just such a thing. So, I do believe that we'll be working with him on that regard.

Mr. Jenkins: Thank you, Mr. Speaker, but what I hear the minister telling the House is the minister is not aware of this very important change in his department's policy. I understand that the minister's going to get back to us with an answer, but it is very, very critical at this juncture to ensure that there is a procedure in place that allows for these truckers to get an immediate approval or a prior approval, based on their axle loads and configurations that conform to legal axle loadings. Upgrading of the highways is continuing.

The other question, Mr. Speaker, that I have for the minister is: how long will these regulations remain in effect for these legal weighted axle loaded trucks? How long will this policy remain in place?

Hon. Mr. Keenan: I did, and again I offer and I encourage the member opposite to listen, Mr. Speaker. I will get back to the member opposite with complete information.

As to the second part of his question, seasons change from year to year and of course there are regulations as to the monitoring. If the member will read the paper from last evening, he will see that we are looking to protect our highways and our beds at this point in time. We have put truckers on notice and we are going to continue with that. For how long these restrictions will last, well, it is only up to Mother Nature.

Question re: Environment, CO2 emission

Ms. Duncan: Thank you, Mr. Speaker. My question's for the Minister of Renewable Resources with respect to our environment.

I learned that there was a climate change workshop recently held in B.C. and some of the interesting points at that conference were that Canadian and international scientists have told us we are running an uncontrolled experiment with our environment. We have increased the level of CO2 in the atmosphere by 25 percent in this century and we are well on our way to doubling that. These greenhouse gases, as they are called, are causing climate changes at a speed and extent that has never been experienced in human history.

Although several Yukoners attended and the B.C. government helped to organize this conference, the Government of Yukon was notably absent. Can the minister advise this House why we did not attend this important forum?

Hon. Mr. Fairclough: It's a pretty hard one to say why we didn't attend this. We are quite aware of the situation that is up here. We are looking at taking some measures to control some air emissions. We're looking at bringing in air emission regs soon, and that would be directed to industrial burning, and so on. So, we are looking into the matter. We haven't had anybody go to the meeting, and I can't really tell you why other than our department is very busy right now.

Ms. Duncan: Thank you, Mr. Speaker. I appreciate the minister has said that there has been some work done in the department. At the workshop, it was stated that the Canadian Arctic has experienced a warming trend of 1.5 degrees Celsius in this century, and there is evidence that this has lowered lake levels and thawed permafrost. Between the diesel generators and the lower Aishihik Lake levels, can the Minister of Renewable Resources commit to this House that, for the work that's being undertaken by renewable resources officials, they will be in contact with Yukon Energy staff with regard to the air emission standards and that, in effect, the Minister of Renewable Resources will clean up his own backyard first?

Hon. Mr. Fairclough: Well, thank you, Mr. Speaker.

Certainly, we will be involving many of the departments in putting these regulations together. It will go out to the public for comments, and I would think that these regulations should be in place some time in January of 1998, at the latest.

Ms. Duncan: The minister, in his ministerial statement, indicated in December that we would have air emission standards in '97. I now hear him saying 1998. Would the minister advise this House if a renewable resources staff member has been assigned to the task of specifically developing air emission standards, and when we will see them?

Hon. Mr. Fairclough: Yes. Thank you, Mr. Speaker.

We've had our department working on this matter for quite awhile. It has been worked on for several years now. There are several people who have been working on it, and I would say that most of the work is done right now. It's ready to go to Cabinet for review and it's ready to go out to the public for comments. I would say that January 1st would be the very latest. I would think that in this year the air emission regulations would come out.

Speaker: The time for Question Period has now elapsed and we will proceed to Orders of the Day.


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

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

Motion agreed to

Speaker leaves the Chair


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

Some Hon. Members: Agreed.

Chair: We will take a brief recess.


Chair: I will now call Committee of the Whole to order. We're dealing with the budget.

Bill No. 4 - First Appropriation Act, 1997-98 - continued

Chair: Is there any further general debate?

Hon. Mr. McDonald: Mr. Chair, I answered a number of questions yesterday that members had asked in general debate. I'm certain I didn't answer them all, but if members want to rephrase them for the record, so that we have some fluidity to this debate, I'd be more than happy to answer them as we go.

Mr. Ostashek: Mr. Chair, I thank the minister for some of his comments during general debate, anyhow, in his budget reply speech. I believe the minister said that he would be very open with information to try to convince us that his budget is a budget that has vision and is a budget that is going to create jobs for Yukoners. I hope that he and his ministers will be forthcoming with information to help facilitate Committee debate in this Legislature.

We know the government has only been in power six months. We know this is their first budget, but we also know what was said by the party during the campaign. We know the criticism that was heaped upon us when we were in government. I see the Minister of Health and Social Services shaking his head, as if they didn't criticize us, but the fact remains that there was severe criticism and some very long, long sessions in this Legislature, probably longer than were necessary.

Before I get into the details of the budget, I have some direct, specific questions to the budget figures and priorities.

I think it is important that we go back and try to clarify some of the statements that have been made on both sides of this Legislature and try to get some semblance of where we are starting from and see if we can have any agreement on where we are starting from.

Last night, the Member for Ross River-Southern Lakes made a very impassioned speech in this Legislature and basically accused the Opposition of twisting things around. I say to the Member for Ross River-Southern Lakes that some of his colleagues on the government benches are masters of that. I think it is important that we point out some of these things before we get into this budget debate so that we can have a full and informed debate and Yukoners can understand where this government is going.

I can't go back through all of the members' statements, and I don't intend to. I want to respond mostly to what the Minister of Finance had to say in his closing arguments on his budget prior to the vote, Mr. Speaker.

I guess, when I look at the diversity, we need only look at the press releases from the different caucuses this morning on the budget, and I'm sure that Yukoners would think that we are looking at two different budgets for sure, and possibly three different budgets. So, you know, there's a vast difference in the interpretation of what's in the budget and what's good about the budget and what's not good about the budget.

And I want to say for the record, Mr. Speaker, that some of the areas, after four years of debate in this House with the now Minister for Finance, who was the critic for that department in the Opposition, on how a budget is prepared, he and I are not that far apart on a lot of principles in budgeting. We are very, very far apart on what the priorities should be. That's the politics of this Legislature.

But, I think in order to be able to have a good, informed debate in this Legislature, we need to clarify some of the rhetoric that has been touted, and the minister made his accusations and allegations yesterday on his feet. I'm going to respond with some of the issues that I'd like him to clear up before we get into great debate on the budget.

I just want to put him on notice of some of the questions that I'm going to be looking for answers for.

He made a statement last night in the Legislature that the situation and the circumstances are much different in Faro - the shutdown now, compared to what they were during the last Faro shutdown. I hope that at some time he will expand on that, or I will try to remember to ask him again.

He says that land claims are a top priority and self-government agreements are a top priority, as well as devolution. I'm going to have a lot of questions in that area, to see what his timetable looks like and ask him to justify that his actions to date have, in fact, speeded up the land claims process.

The member made one statement in the Legislature that I do have to correct for the record. He said that we left a $35 million debt last year. I'm sure that he meant to say a deficit, but for the record I want to clarify that, because there was no debt last year; it was a deficit.

The member opposite has gone on at great length about overspending by our administration, and it could not be sustained. Again, I would suggest to the minister that while a $35 million deficit at the end of the year, when one was not forecast in the main estimates, may seem like a lot of money, I think you have to put everything into perspective Mr. Chair; that is what I'm saying.

If you are taking a $35 million deficit and projecting that against an accumulated surplus of $60 million, it is sustainable. That's basically what we did, so it is sustainable. If you don't have that kind of a surplus, it certainly isn't sustainable, so I think we're on the same wavelength on that.

The minister said that I was urging him to project the lapses and use them. Quite the contrary, and if the member will go back to December, in fact, I asked him that very question as to what philosophy he was going to use in this budget. Was he going to use the posted, accumulated surplus? Or, was he going to try to project the lapses out?

I agree with the approach that the minister has taken; you can't do that. And, I agree that if you find, as the year ends, that you have excess lapses and you have extra money, you certainly can come back with a supplementary budget.

We don't differ on that at all, none whatsoever, but I do have some difficulty with him saying that a $35 million deficit against a $60 million surplus is not sustainable.

I guess one of the real difficulties I have, and this again is a twisting of words, I said in this Legislature yesterday in the debate on a motion on federal cutbacks that 60 percent of our budget was spent on the social side of the ledger. And I said it was a tough nut to crack. I didn't in any instance - and if the member opposite thinks I did, I apologize for it - say that we should cut social spending. But the minister, when he replied last night, twisted it around to where he said that's, in fact, what I was saying, that we should be cutting social spending. I didn't say that at all. It is a tough nut to crack when 60 percent of your budget goes to the social side of the ledger. You have to be careful of all your spending so you can maintain those services that you have to deliver to Yukoners. That's what I said. I didn't say that we should cut spending. So, I want to correct the record because we do play fast and loose with words in this Legislature and we're not the only ones who are guilty of it. The members opposite are just as guilty as we are.

Another statement that was made in the member's reply last night was that "the operation and maintenance budget itself this year, factoring out devolution, is less than the operation and maintenance budget the Yukon Party left us with." Well, I take some exceptions to that, and I want to tell the minister why.

The minister says, and I believe the Member for Ross River-Southern Lakes says, that we can't really mean that operation and maintenance should be maintained at the same levels when in fact devolution is incorporated. But I do want to draw to the members' attention a couple of things that I think are being missed here, maybe intentionally, maybe unintentionally. If the member says his budgets are less than ours, he ought to say his projected budget is less than our projected budget, because the last final figures you have from the Yukon Party government is 1995-96. That's the last audited figures that you have. Those for 1996-97 are forecasts. Their own budget for 1997-98 are forecasts. So, because we forecast that amount in 1996-97, we don't know that's going to be the final figure and even now, if it is, it's a figure that's combined between two different governments, just the same as 1993-94 was.

So I believe the figures that we have to look at for comparison are the last full year of the Yukon Party government and the 1997-98 year, which will be the first full year of an NDP government, on which the jury will be out until the Auditor General's report comes in in the fall of 1998. That's when we can compare apples to apples and oranges to oranges.

But I want to draw to the members' attention that they are saying that they are controlling operation and maintenance inovernment and I disagree. I believe operation and maintenance in government is growing, and I want to draw the members' attention back to our first budget of 1993-94, which was our first full Yukon Party budget. It was not a combined budget of two different governments.

We had, on April 1 of that year, the first phase of the health transfer to Yukoners - $17.4 million - I believe the figure was $17.4 million when I look back in the books. We absorbed that $17.4 million and, when we look at the operation and maintenance of government, 1993-94 was the highest. It was on an upward trend from 1988-89. In 1994-95, it started coming back down again. It went up a little bit in 1995-96 - just about to the level it was in 1993-94 - and it was projected to come back down again in 1996-97. We absorbed the transfer - the devolution - and we did not increase the maintenance of government. In fact, we lowered it.

We heard criticism from the members opposite that we had left them with $20 million worth of obligations, with increased O&M on buildings and expenses - CAP program. Well, Mr. Chair, I would like to remind the Minister of Finance that, when they left government, they left us with an extended care facility that was not staffed. We staffed that facility. We provided the O&M for that facility. We expanded the beds at Macaulay Lodge. We put in the Teslin jail. We didn't put the jail in, but we put the people in it; there was none in the budget of the previous administration. We started providing the services there.

We did all that and did not increase the operation and maintenance costs of government. There is a dramatic difference between this budget and Yukon Party budgets on the operation and maintenance side. We were able to absorb them and not increase the overall costs of government. I have the information here, so if the member opposite would like, I will certainly see that he gets it. I don't have a graph on this, but if we look at the historical comparisons of main estimates from 1991-92, 1992-93, which was the mixed government of both administrations: Yukon Party and New Democrats, it is $314,752,000 in 1992-93. That jumped in 1993-94 to $352,485,000. In 1994-95, it came back to $346,210,000 after all of the things that I just said that we did, which were left to us by the previous administration.

I think it is unfair criticism to say to us now that we have left you with $20 million worth of obligations that you have to fulfill, because we had those obligations on a change of government also.

In 1994-95, it dropped to $346,210,000; in 1995-96, which I say are the last audited figures we have for the Yukon Party government, the operation and maintenance cost to government dropped to $343,725,000 - definitely on a downward trend.

So I do take exception to those statements. Mr. Chair, while we were doing all this, we also - I have another chart here somewhere; I will find it - were able to draw down the actual pay-out costs on social assistance, while still increasing payments to child support and single moms and the child abuse centre. But we see the graph from 1986-97, to where social assistance payments peaked in 1993-94 and were on a dramatically downward trend since then, even with the closure of the Faro mine. Pointing out that, or the simple fact that in 1990-91, 1991-92, 1992-93, the NDP was saying those were boom years in the Yukon. While those boom years were going on, social assistance payments were climbing dramatically. That didn't happen during this last up-turn in the economy. Social assistance payments were still going down in 1995-96 and were projected to go down further in 1996-97.

So we're able to do that. So you can do those things, and you can have more money to create jobs in communities. And that's where I differ with the member opposite.

The member opposite also made statements yesterday that the Faro mine's now shut down, and we have huge unemployment - what did we do to diversify the economy? Well, those statements are really not backed up by fact, because if we do look at the unemployment rate and the number of people working in the Yukon over the years, you will find that when we came to office I believe there were something like a little over 13,000 people employed, and when we left office, some four years later, there were over 15,000 people employed, and the unemployment rate was lower than when we came into office.

Yes, it did go up to 17 percent the first winter, and yes, we did work very hard to diversify the economy and get other jobs going, other than the Faro mine, to be able to absorb some of those people.

Were we lucky? Yeah, we had some luck. There was some luck involved but a lot of hard work, too. So, I think the comparisons are unfair and unjustified in that respect.

The member opposite also spoke of the new visitor reception centre down here and says we are now saddled with more operation and maintenance costs. Well, again, I question the rationale behind that, because let's look at what we did do. We built a new visitor reception centre downtown that was not just Yukon Party-wanted. We did it at the persuasion of many, many people in the tourism industry, the City of Whitehorse, the Association of Yukon Communities and other groups who were not satisfied with the visitor reception centre on the highway - not so much because of the design, but because statistics were showing us that tourists were bypassing Whitehorse. That's what the stats were showing - that they weren't coming down into Whitehorse.

So, yes, we did move it down. Yes, it was an expense to the government, but I don't call it an expense. I call it an investment, because we now have a visitor information centre that is open 12 months of the year. We have the Department of Tourism staff that is housed in it, and I think if the Minister of Finance would just stop and think for a minute of the cost of office rental space for that minister's Department of Tourism staff that are now housed in their own building - they were in three different buildings before - and they're able to keep the visitor reception centre open with no additional costs to the taxpayer, and increase the number of tourists that are visiting Whitehorse. I think those are all pluses.

The other thing is that I see the visitor reception centre as an anchor for the waterfront development some time in the future. We had a vacant lot there that was doing nothing.

And yes, we created the Beringia Centre that we believe will prove to be something that is going to be very, very beneficial for Yukoners in the long run. We didn't just leave an empty building sitting up there.

But, Mr. Chair, I think it's unfair to categorize that as extra expenses that we've left this administration, I really do. I see in this budget that the government of the day has cancelled the historic resource centre that was supposed to go alongside the Beringia Centre, which I think is very short sighted, because this is going to add to the operational cost of the Beringia Centre. We were going to use the same philosophy that we used with the visitor information centre. The historic resources branch would have been up there. They would have been able to keep the facility open 12 months of the year. We built the facility now so that it can be open 12 months of the year and would have been a big plus for tourism. So yes, the costs are going to go up for the Beringia Centre now, because the government has decided to postpone the historic resource centre, because that would have decreased the operation and maintenance costs of the facility.

So there are many, many differences in that respect as to what the member has said, and what we believe to be fact.

Now, the member opposite said he's recreating the community development fund. He knows that we're not a fan of it and that's fine; he's the government and it's he that will have to answer for these programs that they start.

He also said that I said we shouldn't be misleading people in small communities. Again, I think he's broadened that statement. There will always be a Watson Lake, there will always be a Dawson, there will always be Mayo and there will probably always be a Pelly. I'm talking about areas like Destruction Bay, which has never been a community; it was a highway camp. Areas like Swift River are highway camps and they will disappear.

I've been in the territory for 25 years. The population, even in a community like Burwash, is half of what it was when I came here. And, unless there's an economic base - that's the point I was trying to make with the minister - those communities are going to die a slow death. The young people are going to eventually migrate from there; they may come back for a few months, b

ut the reality of it is that I believe the community development fund and anything that is going to be done with that could have been done through C&TS budget. You don't need the community development fund to do it. Just some planning and it could be done. I think we built the skating rink in Old Crow without a community development fund.

I criticized the members opposite - no, it didn't come out of the community development fund, it came out of the C&TS budget and I think if the member checks he will find that, but I criticize the investment for a curling rink, I believe in '89 or '90, in Destruction Bay. It hasn't had ice in it since 1991-92. Is that a wise investment of taxpayers' dollars in this day and age?

Those are the points I'm trying to make with the member. The member highlighted, in his budget speech, a community centre for Burwash Landing. I pointed out to the member that, whether it was funded under the community development fund or under the community programs in C&TS, they just were given $300,000 in the '89-90 budget for a community centre.

Now, if they've decided to use that for something else, is the minister saying to me today that they're entitled to another grant for a community centre? Is that his philosophy? Is every community in the Yukon entitled to another community centre every five or six years, because that's what he's saying to me, by highlighting this in his budget speech, and I'm going to stand in this House and say that I believe it's wrong. I don't believe that we have the luxury of spending money that way any more. If it's a wise investment, I will support it. But you know, we've got to be realistic about what we can do.

Mr. Chair, I spoke of the Beringia Centre already.

Mr. Chair, the member talks about us having the luxury of having the Shakwak project and the hospital project. Yes, we did; no doubt about it, but I do want to draw to the minister's attention that because of the financial situation in the government when we took office - which he never agreed with, doesn't agree with to this day, no matter what the Auditor General said - we, I believe, had to reduce our discretionary capital to somewhere down around $40 million. So, it was nice to have the Shakwak project and the hospital to take up some of that slack, but we were able, by what we believe to be prudent fiscal management, to increase that discretionary capital to up over $60 million this year.

The minister's budget has $55 million in it and probably in a normal year that would be more than sufficient, but the reality of it is, Mr. Chair, we have a very high unemployment rate in the territory today. While the minister, I do not believe, has anything specific in this budget that's going to help alleviate that, I want to encourage him that if he should find, when his lapsed funds are all calculated in total, that he has an extra $10 million or $15 million there, he use it to either advance some projects that they have on the book - not just to spend indiscriminately, but advance us some projects that they have on the books, or advance us some highway infrastructure or something to put some Yukoners to work until such time that we can get the economy in the Yukon going again.

Chair: The member has about two minutes remaining.

Mr. Ostashek: Well, I want to hit on one other point: the commissions.

Some Hon. Member: (Inaudible)

Mr. Ostashek: Okay. Well, I'm just about done anyway. I just want to touch on the commissions. We disagree with the commissions. The minister believes that they are the proper way to go. So be it; so be it. But, I do believe that it is important ... The minister says that this is a cost-effective way. Then I would ask the minister that he be very open with all of the costs of the commissions, not just what is in the Executive Council budget, because we know he has seconded people from other departments. I asked back in December; I wrote a letter to the minister in his capacity of Government Leader, asking him for an organizational chart about commissions. I never received it. I would like to have the total costs before we are done the Executive Council debate of each commission - organizational charts, the people who are seconded from other departments, the cost of replacing people who were seconded from other departments - so that Yukoners can know what the exact costs of these commissions are and make a judgement if in fact they are cost-effective or not.

Mr. Chair, I'm probably running out of time here, but I would urge him to be very open and forthcoming with the costs of them - the total costs - so that people can judge for themselves if, in fact, they are a cost-effective way of developing policy.

If I could just finish, Mr. Chair, the minister said he would give me some latitude and I just have a couple of other things I want to put on the record before we get into Executive Council debate.

I wrote two other letters to the minister asking for travel costs of ministers and a number of people on the delegations. That letter is on his file somewhere. I also asked for the costs of his Watson Lake retreat. If the minister could see that we get this before we get into Executive Council debate, it would help to facilitate the debate.

Thank you, Mr. Chair.

Hon. Mr. McDonald: That's a lot to talk about, Mr. Chair. Let me just start from the beginning here. I'd be pleased to respond to a lot of his comments.

First of all, the member brought up the need to have ministers respond in the House to questions put by Opposition members, and they will be more than happy to respond. If there is any technical detail they don't have, on their feet, they will make every effort to get it, if not the same day, the next day. Of course, briefings are available to members and if they choose to take them up then I believe that there is an offer on the record through House Leaders that they should simply request a technical briefing and then a briefing will be made available, as per the old agreement. So there is no doubt about our desire to get information out as much as possible.

The member then went on to talk about the press releases issued this morning regarding our various interpretations of our budget - the government's budget - and the reasons why the Yukon Party and the Liberals voted together to reject the budget and why the NDP supports the budget. I think we've well documented our positions on this point.

I know that the members opposite believe that there is not enough capital spending and I am going to explore this with them. If they wish to provide some advice, I invite them to give that advice, because I know at least some of them have offered to work with us and to be constructive and to make suggestions, and I am going to hold them to that.

Today or the next day I'm going to be asking for those suggestions, because clearly, from my perspective, if there is a desire for more capital spending, which presumably in some members' minds is the only mechanism to create jobs, if there is a desire for more capital spending than that which is allocated in this budget, then it either has to come from O&M spending or it has to come from a drawdown of the surplus even further or it has to be done through some borrowed money, from debt,

one or the other. One of those three options has to be accepted.

If there are suggestions for cutting operations spending, I want to hear those suggestions and I would encourage members to be as specific as possible. There will be some interesting discussion on that point. We feel that the priorities that we have established are good ones.

The member says that $55 million, under normal circumstances, would be sufficient, but we have a high unemployment rate. Well, we did everything we thought we could to direct money toward job creation while maintaining services. That was another campaign commitment. It may not have been everybody's campaign commitment, but it was ours and we felt we had to live up to it. When it came to maintaining services and showing respect for non-government organizations that received funding from us and even government organizations, such as the municipalities, that receive funding from us, we did not feel that it would be appropriate that we deduct from their apportionments out of this budget in order to support increased capital works.

I would like the member to expand on his theory about capital works and about the sustainability of these expenditures and how they create a real economy, because I think it would be difficult to sustain the argument that simply the reconstruction of even the Shakwak project - a laudable project, which we negotiated ourselves - to suggest that that project brings with it some notion of sustainable expenditures or sustainable economy is difficult to support. It doesn't change the transportation economics of this territory at all. It improves the highway, but it doesn't change the transportation economics.

Clearly, those kinds of expenditures come and go. We will not always have a Shakwak project, even if the Government of Yukon now were able to secure a renewal of the Shakwak agreement. That renewal will come to an end at some point. At some point, we will either be looking for some other kind of sugar daddy, either the U.S. Congress or the federal government, or we will be left to our own devices. Perhaps I am not getting a fair hearing from members opposite, but over their heads to the general public I am saying we don't have the money to simply spend more on capital works because we felt that we needed to maintain basic services and we felt that, with that commitment - respect for NGOs, no layoffs and those kinds of things - we had secured as much money as we possibly could for the capital program.

In the absence of the big, recoverable projects, we have to spend as smartly as we can. In that respect, we did very consciously identify expenditures that are typically directed at internal government operations.

Those expenditures include such things as cars, office equipment, renovations, furniture, et cetera, and made it very clear that we wanted significant reductions in those areas, not because all those expenditures are inherently bad, but because they bring less value-added benefit to the territory than other expenditures might include and do. So that was a very conscious effort, and in that particular cost centre alone we freed up $2 million for other works - it could be road building, CDF, et cetera.

So I do invite members to suggest other ways. I know that they'll target the commissions first, because they don't agree with the commissions, and perhaps they'll target the CDF second, because they don't believe in the CDF, but all those together wouldn't be more than $3 million at the highest end.

Now, first of all, if one targets the commissions and says that that is something that they think is not worthwhile doing, then one has to remember that the policy work for this government in those four areas is being done exclusively by the commissions. So if you do not do it, you also have to suggest ways where we can reinstate some policy work, obviously at some expense, in at least the areas that you agree with. If you don't agree with the local hire policy, you don't have to suggest that. That is something we'll agree to disagree on. But if you think that there should be policy work done in forestry, say so.

As I mentioned in the December sitting, we identified a number of people in different departments working on forestry policy.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Yes. My colleague says four or five people were working on forestry policy in this government, and they were dedicated full time to that task. Now we've got a couple of people working with the deputy commissioner - three people - and the Member for Watson Lake working on forestry policy. That is our core policy group.

So if a member is saying that to do away with the three people in the commission - the three paid employees on the commission - then presumably he'll want us to reinstate the four or five people that he had identified as necessary to work on forest policy development. Now if he can demonstrate that that's a cost saving, then let him try. Perhaps he can do the same for energy.

Now he thinks that that work was already done. I can only tell him, quite honestly, and I would appeal to him to go even to the Chamber of Mines and ask them whether or not they think that that work was done from their perspective, from the citizens' perspective.

Now those folks, amongst many others, said, "For heaven's sake, if you've done some work on that, stop it. We think that we want to be in on the ground floor. We want the citizens involved in the policy making, so please don't even say that you've got that legislation developed."

So then we decided that we would be working in that particular area, and we would be dedicating time and personnel to that area. And, we dedicated people. We acknowledged that the previous government had dedicated people and they were working on DAP. So we simply rearranged personnel and have them reporting to a private member.

Now, what's wrong with the notion? I mean, the only really significant difference here, other than the fact that there's interdepartmental working groups who are permanently working together on a particular project, is that they report to a private member. I think that that's a good innovation; it puts elected people to work.

We go to the hustings all the time, every four years, and when the voter elects somebody they expect that person to have influence and to participate. So what we are saying is that we are heightening the participation of members; we're not lessening the participation; we're not allowing some members to languish and other members to make all the decisions.

So, I think it's a good innovation. We have real talent in our private members; we want to use it, and I don't think this innovation is a bad thing at all, and it's not even new to the country. We call them commissioners; some others call them parliamentary secretaries; call them what you will.

I will remind the member that parliamentary secretaries have staff and public servants too, but this is not startling. For gosh sakes. I realize that this Legislature has been around since 1905 or something and that we haven't done this before. It doesn't mean that it is scary, it just means that we're putting elected people to work and I think that's good and I also think it's a cost-effective means.

Now the member wants information. Absolutely, he's entitled to every bit of information that we have with respect to this initiative, as with all initiatives. So he will get it; he will get the information. I don't expect that it will convince him. I'm certain that if we provide him with a financial figure and he can find something particularly alarmist or startling, I'm sure he'll use it, because I don't think it will convince him that it's a good initiative.

Even if we say that it's less than the policy work that the previous government was doing in the same areas, it still won't be effective, because I know what the Opposition is going to do, but it doesn't bother me at all. I feel comfortable with what we are doing.

Now the member went on to talk about the Faro shutdown and the reasons for the difference. We should have a good discussion about that, because I do believe that there is significant difference between the Faro mine shutdown in 1993 and the Faro mine shutdown today. The only things that they have in common is that they involve the open pit mine at Faro, but there the similarities cease. They are two different companies. The

company today has no debt; the company today has backers that are many times larger than the Yukon government. The company today has a workforce sitting in Faro. For the most part, if they can get operating soon they won't lose them all. The zinc price is 57 cents. So clearly this is a situation that calls out for a private sector solution.

And so, I would argue very much that this company can resurrect itself. Now, can the government play a role? Absolutely. The government can play a role, but the first role we wanted to play was to account for the hardships that people felt when they were laid off and to show them that we cared. We didn't make jokes about them. We didn't challenge their status as Yukoners. We didn't challenge their IQ. We embraced them, and we said to them, "Look, you people are out of work. You are living in a Yukon community. You're Yukoners, and we want to support you." So, we went to that community, and we treated it like a community - with respect - and consequently, people responded to that gesture, and they have not been screaming at the Yukon government for insensitivity. They have been suggesting that the government's response was correct. So, I think that is one way that the government can support that community.

Another way, I think, is to invest in the people. I don't believe that training programs are anything more than an investment, and they will pay dividends at some point in the future. So, clearly, we should make a financial commitment to people, to people's training and to people's education. That can only make the community stronger, make the territory stronger. So I believe that that's another way that the territorial government can respond, and we are.

There have been initiatives taken - the Opposition says it's six months; we say it's five months. They are trying to say we've been in here a long time. We're trying to say we've only been in here a short time - five and a half months, whatever it is. We've been in here not very long, and we're already doing these things. So, I think that we have responded well in that particular circumstance, but I do think that the circumstances between 1993 and today are different.

Well, what about what the member had to say, that it was all about history. He is fighting the 1992 campaign. It's still fresh in his mind. That's fair ball for him. I'm trying to be as forward-looking as possible. I'm not trying to fight the 1985 campaign. That's still pretty fresh in my mind, too, and I think that I had a few campaigns in between. The situation right now-

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: The Member for Klondike will have his chance. He doesn't have to interrupt. He will be able to speak. The rules allow that.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Yes, they do.

Now, the member goes on to talk about land claims. When we get to the Executive Council Office, I would encourage the debate to take place there, frankly, because I think there is probably lots to talk about, and they will want to know a number of things, and it's all quite legit.

So, those are my comments to that point then.

The member then went on to refer to the annual deficit/debt issue. He's quite right. If I did say "debt", I misspoke; it was deficit. An annual deficit was clearly the case. I don't know if I did but, if I did, I was wrong; it should've been "deficit".

The point I was making is that a $35 million deficit, while it is affordable - meaning that the bank account is much larger and consequently, it will still leave a surplus - I would probably take issue with the notion of "sustainable", because when I'm referring to sustainability in this budget, I'm referring to the ability to project a deficit and recoup that deficit through lapses.

Now, we know historically, roughly, what lapses there are typically in any given year. It's been anywhere from $7 million or $8 million to over $20 million. We're showing actually a voted deficit of $5 million. I'm saying we'll probably need another $5 million for a projected deficit of $10 million, but we'll recoup that through lapses in the year we just left.

So, that's why I say there's a notion of sustainability because the deficit that we're projecting to spend - if we don't overspend - will be recouped. Now, I'll be out by a few million bucks, perhaps, one way or another. We could lapse $13 million or $15 million. We could lapse $7 million or $8 million, but I'm saying in general terms, the level of spending at $452 million - well, I shouldn't refer to gross estimates - in net terms on the operation and maintenance side and the capital side, this level of spending is generally sustainable. That's what I'm referring to.

Now, the member opposite made a big deal, because I'm sure he's worried that I was going to pull the same stunt with him that he pulled with us in 1992-93 and that we were going to claim that the situation was bleak. The very first time that I said that this level of annual deficit is not sustainable, he blew his lid. He blew his lid because he thought that I was going to do what he did, which was what? To say that the government was broke; that we'd been left in a sorry financial mess. The point I was making and the point I'm making now is that a $35 million annual deficit is not sustainable.

Mr. Chair, ask them for the members' attention for a moment.

Thirty-five million dollars overspent every year is not sustainable. That's the point I made then and that's the point I make now, and it's completely true because we are not going to be lapsing that kind of money every year. Maybe the difference between us lies in the definition of "sustainability". I think we probably disagree with our friends in the Liberal Party here who have clearly advocated that there should be no drawing out of the surplus at all and that the bank account, when we lapse money every year - and we always have - should just get bigger and bigger until finally the federal government says, "You don't need the money, we'll cut the grant." Based on the discussion that we heard during motion debate the other day, that may be their objective, but I don't think that it makes much sense, from a public expenditure point of view, to take or hold that theory, and I think on that point the member across the floor and I agree.

Now, the member talked about O&M and he went on and on about historic comparisons and all that sort of thing in terms of whether or not O&M was growing or whether it was declining and whether or not devolution was factored in, et cetera. All I can say is, I don't have the figures yet. I may take the trouble to draw them out, but I'm going to be defending this budget and this budget says that, from the forecasts from last year to the main estimates this year, factoring out devolution, the O&M has dropped, not gone up. Now, if the members opposite are saying, and they tried to make this case I know during the supplementary estimates, that this government is sharing in the big supplementary that was passed, I absolutely reject that. I know that 99.9 percent of this budget is not our responsibility in terms of trying to defend budget estimates in this House. All these O&M and capital costs, all the big expenditures in the supplementary from last December, were proposed by departments and the needs were created by our predecessors, not us. So I don't accept that notion at all.

The member says that, when they came into office in 1993, they had some obligations that they had to bear that were the result of decisions by the previous government. I agree. They did. I'm not saying, "Oh, woe is me; boy, we've got the toughest budget ever." I've been through a lot tougher budgets than this in terms of budget preparation.

But I am pointing out to the new and uninitiated that it is not an easy thing for us simply to say, "Well, you have promised to spend some money in your four-year term in this area and that area and you didn't do it." I am pointing out that there are a number of things we agreed to do. One of them was to maintain services: no layoffs, no tax increases, no cuts to NGOs - stable funding, not cut and then stabilize, as has been done with the CBC, but stabilize right off the bat. And, we said we were going to meet commitments from our predecessors. We could have said, "No, we won't meet those commitments. We are going to do our own thing and do other things", but I don't think that would be a responsible thing to do.

The other thing I would point out to the brand-new participants in the Legislature is that you do not get elected in November and decide that you're going to build a brand-new whatever the next summer. Even if you wanted to, you can't. At some point, someone is going to have to design this project, prepare tender documents, et cetera, et cetera. There is no possible way of doing it. I am merely explaining that we do have obligations. I am honestly explaining these obligations.

The members already know where I have trouble with some of the Yukon Party projects. Some of the projects I have no trouble with. They are all commitments and they are a class of expenditures which we are meeting because it is the right thing to do.

The Member made a comment about employment - I didn't quite catch it all - being up or down or something. The employment statistics in this territory are an interesting feature of this debate. A lot has been made of the fact that there is a 15-percent unemployment rate. It certainly is very high. I admit for a fact that any government should, within its means, do what it can. I would admit that absolutely. But to suggest that it is a result of job loss beyond Anvil Range is not fair, because we have seen that from January to January, the number of people who have joined the workforce is up.

People are coming into the territory. I remember there was a jobless figure of something like 800. Jobs had gone down 200 with 600 more participants in the economy from January to January. I realize that is a very narrow, thin snapshot and that there are all kinds of variables here, but one thing that it does suggest is that there are more people participating and more people coming in thinking that there are opportunities at the same time when the major employer in the territory is closing its doors, at least temporarily. Certainly, that puts various strains and pressures on the territorial economy; there is no doubt about it.

And to the extent that the government can respond, the government should respond. Now the member clearly took some exception to some remarks I made last night regarding the VRC. Now I remember when the decision was made to move the VRC downtown. It was done by ridiculing the decision to put it up on the highway. I don't remember hearing the argument that visitor statistics had indicated that they were bypassing this VRC that wasn't even yet finished. I point that out to the member. When they had an opportunity - it was just recently finished when they came to office; I mean, I think it was opened just a month or two before the Yukon Party took office and the landscaping of that project was never even done. I mean, people didn't even see it. The signage was terrible. People didn't even see it. They thought it was a hangar on some old cruddy field.

So to suggest that, first of all, the location was wrong may not be fair. It may not be fair to the petitioners and the Member for Riverdale North, the people who submitted the petition and demanded the VRC be on the highway. It may not be fair to them, either. I know I took a couple of tours of the VRC over that four-year period, and I asked the staff, "Do visitors dislike this place?" No, the comments were all good, they thought it was very intriguing, blah, blah, blah.

I understood that the reason for the placement on the highway was so that you would capture tourists on the highway so they would go downtown. The thinking was that if you put the VRC downtown, they'll bypass you on the highway without even knowing there was a VRC to go to.

So whatever one's feelings are about the theories behind the location of the VRC, the fact remains that the member's government decided to move a VRC downtown and decided to do something else with the visitor reception centre on the hill. It was patently obvious that the decision to move the VRC downtown was made before a decision was made to do something with the old VRC on the highway.

That was made very clear by the fact that the planning information for the Beringia Centre was not complete, and the estimates for usage and everything else were wildly overstated.

Now the member can't say that the Minister of Tourism at the time didn't predict that the receipts from the Beringia Centre would pay for the capital and operations cost within three years; he did say that. How can that be? We know that to be wrong, and of all the revenue figures in this budget today, the one that I think is least reliable are the receipts for the Beringia Centre.

The members opposite are going to say that I felt that there was poor planning on the Beringia, that I felt it was poorly conceived, and...

Chair: Order please. The member has spoken for 30 minutes, which is the time limit set under the Standing Orders. Shall the member be permitted to continue, or does any other member wish to speak?

Some Hon. Members: (Inaudible)

Hon. Mr. McDonald: I'll just finish the VRC portion and then I'll come back to all of the other items here.

The members opposite suggest that I had little faith in how the Beringia Centre concept was pursued. That's a matter of public record. It has been on the public record many times. Many times we have had the debate - many times. But, just as I believe in the need to maintain commitments from my predecessors, I believe that it is important for the government to try to make it work, not to deny the old VRC on the highway the proper landscaping, not to try to strangle the project, but to try to make it work, because that's an obligation that I think we now have collectively. I'm not going to ignore that obligation or treat it in a mean-spirited way.

Now, the whole notion that the historic resources centre not being built is going to change the economics of this thing, I don't accept. I mean it was a good try, but that is as far-fetched as the original projections for the Beringia receipts were in the first place. I mean that just doesn't wash, Mr. Chair.

I can't accept that at all, but I want to point out to the member that the historic resources centre has not been cancelled. It's been postponed and, year after year, when we balance out our priorities, we will decide when that project can proceed.

Mr. Ostashek: Thank you, Mr. Chair. I'm just going to make a few comments in brief because I know my colleagues have some questions here, but there are a few things that I just want to clarify with the minister.

I just want to hit on the VRC while it's fresh in my mind, and then I'll go back to the start again. The point I was trying to make with the minister was that I thought it was unfair for him to categorize that we left him with additional O&M expenses for the VRC downtown when, in fact, if you cost in the rental of office space for the Department of Tourism and the O&M that would have been there for rented buildings, I don't think you're going to find much difference in the O&M costs, and we have the added benefit of having a VRC that's open 12 months of the year. That's the point I was trying to make, aside from all of the other issues that the member said there.

I just want to go back briefly over some of this stuff. I'll try not to go too long on this, Mr. Chair, so that my colleagues can get some words in here.

Capital spending does create jobs. If the member were to ask any economist, and I think we went through this debate when we were in government, there are far more jobs out of capital than there are out of O&M dollars. I am not sure whether the member opposite had the economist look at his budget for the number of jobs that are going to be created. He certainly doesn't have a number in there on the number of jobs.

We're not very far apart on the deficit. There's a difference here as to what's sustainable and what's not sustainable. I did say in my remarks, but the member may have missed them so I'll say them again, that I urge him, when the lapsed funds are all in from this year, and if he should find that he has an extra $10 million or $15 million, to consider advancing some projects that he's going to be doing next year anyhow, to help alleviate this huge unemployment that we have right now - not on frivolous projects, but on projects that are going to have some lasting benefits to Yukoners.

Now, the member opposite wanted our input as to what we see for capital works and why we felt that it's important that they're not just short-term jobs. Mr. Chair, every business in this territory and in every other jurisdiction will tell you the things they need to be competitive is a good transportation system, an economical power system and good telecommunications.

Well, if this government is to focus their capital dollars in those three areas, they are not going to go very far wrong. It's not just the jobs its created by building the infrastructure. It is lowering the costs to businesses so they can be competitive in world markets.

Now, I really cannot agree with the member opposite that the Shakwak project has no lasting benefit to the territory. I cannot follow that rationale at all. What the Shakwak project, when it's completed, is going to do - not only does it create all those nice jobs for us in the meantime - is have a better road for our tourists. We're going to have tourists that have a lot better feeling as they're travelling up this highway, and will want to stop to spend some time instead of repairing their RVs and everything else after going over all the frost heaves and everything else. It's going to lower transportation costs in the territory. I've watched, in the 25 years that I've been here. If you look in real dollars, the cost of freight has gone down in the territory. It's one of the things that has gone down.

Some Hon. Member: (Inaudible)

Mr. Ostashek: I can't hear the Member for Watson Lake kibitzing in the background, but the reality of it is that it's cheaper to haul stuff to the Yukon now than it was 25 years ago when I came here. Why? Because we have a better highway system - more efficient. So, I believe that any government that concentrates their expenditures - their capital expenditures - in those areas can't go very far wrong, because they are going to have a lasting effect on the Yukon and on economic development in the Yukon.

Nobody in this House said the government ought not maintain basic services, and that is where we have the difference of opinion with the members opposite. I pointed out that to the member. He says he may go back to review it, he may not. That's entirely up to him. It's on the public record. It's in the books that we were able to absorb the devolution from Ottawa and still not increase operation and maintenance spending. That's a fact.

The member here is saying he hasn't increased operation and maintenance spending if he excludes devolution. We didn't exclude devolution; we were able to maintain the operation and maintenance costs of government.

Mr. Chair, I said it in debate, and I say it again. There is no government in Canada today that has the luxury of an increase in operation and maintenance costs of government, and if this government is going to do it, it will eventually catch up with them. It won't catch up with them in this first budget. It may not in the second, but before the end of their mandate, they will find out that it's catching up with them.

So, I'm just putting that on the record. The minister can do what he wants. They're the government. They have their priorities and four years from now - three-and-a-half years from now - we'll find out. The people of the Yukon will tell us whether they believe the government was right or wrong.

The member said he's cut back in office equipment and renovations. Those are areas that we go through in every budget. We've got to cut somewhere. Departments do have wish lists. But, I do also caution the member we can get away with that for a while. We can get away with not upgrading our computers. We had an analysis done on computers that said we weren't spending too much money on them for an organization this size. It's going to drive the Government Leader and the Minister of Finance crazy. I know it drove me nuts and I know it drove his predecessor nuts. Yet, when you bring in a consulting firm, one of the biggest in the world, and they tell you that your expenses aren't out of line, who are you supposed to believe?

The departments have undertaken some massive new programs. I believe in the Public Service Commission there are hundreds of thousands of dollars for a program that's underway. I haven't looked at the estimates for the PSC to see if it's there. I know finance needs to upgrade their computers at some point. All of these things can be delayed and they have to be delayed. That's a budgetary decision, but they're going to come back. They're not going to go away.

On the commissions - I'm not going to go on and on about the commissions. I've just asked the Government Leader to give us all the costs. He's going ahead with the commissions; we accept them, and I have no problem with him appointing one of his backbenchers to head up a commission. Where my concern comes in is that the Government Leader hired four more deputy commissioners. I don't believe they were required. Now, if he can prove to me that it's not costing him any more to develop policy than it was in the other method where policy was being developed in departments - if in fact, he can prove he's getting ... Well, we'll see when the policy is developed how much it costs, but I'm not going to sit here and harp the rest of this session on the commissions. We've stated how we feel about the commissions. We've stated our reservations about them. I just want the figures from the Government Leader now so that we can compare them with what it was costing to develop policy before. That's all I want so that we can make an informed judgment as to whether or not the policy development is right.

DAP - we did a lot of work on DAP. We were doing a lot of work on DAP. This government is going to do a lot of work on DAP. The reality of it is that the DAP process is a federal process. I don't know how much influence this government's going to have no matter how much money they spend on the federal government accepting DAP.

That's the part that I don't know, and I hope maybe the minister can give us some clarification, if he has convinced the Minister of DIAND to accept what he's doing. I know it was one of the obstacles that we ran into, and we tried to stay in touch with the communities. We told them what was happening with DAP. We were waiting for the paper to come out, to go back to the businesses. You know, if the member can prove to us that this is a better way and a cheaper way, I don't have any problems with it. But I see it as an added expense, mainly in the cost of four deputy commissioners. That's a half a million dollars in itself, plus the extra office space and everything else that's involved. I don't know about the secretarial staff, and that's why we've asked for organization charts.

I'm not going to go on forever about the Faro situation, but I do think it's important to get it on the public record. The minister says it's totally different now than in 1992. Yet when they were in Opposition, his Member for Faro, himself, his Government Leader at the time, were beating on us to give an insolvent company $29 million. Yet this time, when the Faro mine shut down, the MLA for Faro is on the public record advising his constituents to leave. That is the difference that I see. Not stay, not say, "I'm going to lobby my Cabinet colleagues for a bail-out; I'm not going to do this." He advised them if they got another job they should leave. That's what he said, and it's on the public record.

Well, read it. I'll table it in the Legislature for the member opposite.

Mr. Chair, I just want to say that to the finance minister, because that's his capacity today. I'm not fighting past campaigns; I'm just pointing out some differences in how we budgeted and how this budget compares to that. That's all. I'm not fighting past campaigns. There'll be another campaign to fight down the road, and the public will decide who's right or wrong.

I do have some difficulty with the finance minister saying now that he is not accepting any responsibility for the supplementary budget last year, that that's all ours. Fine. So be it. But that certainly was not his position in 1992, that the supplementary budget was the responsibility of the outgoing government. He blamed us for it. So there's a real difference in how he's changed positions on the same situation.

So with that, I'm going to just sit down and let the minister respond, if he likes, and let some of my colleagues get into the debate.

Hon. Mr. McDonald: I thought I just spent a half an hour trying to clear the decks of some of these issues, and now I think I've got about another hour's worth of commentary. But we've got lots of time, Mr. Chair. We should get everything on the record.

I will join in with the member not fighting past campaigns. I think the old war-horses get pretty boring after awhile, talking about how the NDP had surplus budgets for seven years - I mean what a yawn. But they did. The war-horses should leave it alone. This is 1997, we've got things to do now and the fact remains that, in our view, this budget is a fiscally responsible one.

It is true that I do not accept the supplementary budget estimates that we passed in December 1996. I brought them into the House, but maybe $2 million worth of expenditures were generated through our overt actions. And, some of those expenditures included severance pay for our predecessors, and office renovations for our predecessors as well.

Now whether or not that's the case, the issues the member has raised - I'll refer to them first, and if I have time, I'll continue on with the other list.

The member is trying to make a case that the VRC itself is not going to cost any more - after the capital work is presumably done - and we won't factor in the cost of capital or anything like that. After you make the capital investment, the O&M costs are no more than they were to rent space previously. I don't think that is true, but I'll have it checked, because the member has made the bold assertion and we should just wait until we actually get the numbers.

The member indicated that capital jobs obviously have more of an impact on the economy than any jobs created by O&M spending. What I think he is meaning to say is that capital expenditures have more of an impact on the private sector, in terms of great job creation in the private sector, than operation spending.

But, even though I wouldn't argue that we should hire lots of public servants, I would suggest that, in terms of impact on the private sector itself, right now, O&M spending can have a very significant impact on the private sector as it currently exists. Yukon's private sector is, in large part, a service sector.

Now, in 1986, we did an econometric model of government expenditures and - irony of ironies - it projected that the biggest bang for the buck was to have the government spend money on low-wage public servants. Because, the cost per jobs in highways was, I think, something like $120,000 per job. The cost per job in building construction was something like $160,000 per job, but if you want to have the biggest bang for the buck, given the private sector economy that you are working with, low-wage public servants were the best way to go.

Now, of course, nobody is going to advocate hiring a lot more public servants in order to make the service sector even stronger. But, I would not agree with the member, just as a general proposition, that spending on one side of the ledger is inherently more valuable than spending on the other side of the ledger. I think that there are needs in this community that have to be addressed. I think we have to acknowledge that the government has a tremendous overall impact - $450 million has a tremendous impact on the overall economy. We should be doing what we can to bring as much value-added to the economy as we can. I think we've struck an appropriate balance with the estimates before us.

The member asked that if we do get more lapsed funding than we expect, should we pursue more capital projects. That is something that we will take into consideration. I would like to ensure that we do, at the end of the year, have approximately $25 million to start out the new year with, so that at least this level of spending that we are undertaking this year can be, at least by our definition, sustainable.

There may not be a lot of point to talking about the future of the Shakwak project or the benefits of the Shakwak project, but I did not say that there would be no benefit from the Shakwak project. I did not say there would be no benefit; there is some benefit from the Shakwak project, and the Shakwak project itself does bring some benefit to the communities and tourists alike. There is some benefit to the Shakwak project for people travelling up the Alaska Highway. They know there's not a rough section of road. There is some benefit for the communities, for however long they last in the member's mind, for the communities en route, for local or domestic traffic. Certainly safety is a consideration, as well. If somebody is going to give us the money to build those roads, then we should build those roads.

I don't have an objection to those various features of that expenditure, but to try to make the case that this ballooning expenditure that's finite is going to change the transportation economics of the territory is a stretch. A lot of the transportation economics of this territory changed as a result of the gross vehicle weights that were permitted on the highways south. That made the current private sector in our territory more competitive and allowed for a lower cost of goods and services in the territory.

Even that change did not come because roads were paved, but because the base was improved. But the base was improved a long time ago. We have mining companies who talk to us, and I have been talking to them for years and years and years - long before 1992.

And they would say, "The road as it stands right now is fine. Don't upgrade it. If you upgrade it, then you're going to put all kinds of extra restrictions on it to protect the surface. We want to be able to haul goods as efficiently as possible." That's what they said. That's what the transportation companies said, because it makes sense for their purposes. As an argument from somebody using the infrastructure for economic purpose, you can't fault them for it even though you may not agree.

We've had the discussion in the past about what constitutes infrastructure and what constitutes work that a government can do to improve the economic prosperity of the territory. The members opposite have tried to make some hay out of the fact that they think this budget doesn't offer anything. I beg to differ, and I am completely stumped by why some members, particularly the Liberals, have said that this offers nothing for job creation.

The Member for Porter Creek North, the Leader of the Official Opposition, says that if you just promote transportation, telecommunications and energy, that's all you need to develop an economy. Well, I can't agree that that's all you need. I don't agree. I remember when that argument was first made. I had just finished representing Mayo for a long time and I thought to myself, "My gosh. There's a paved road right into Mayo. They've got a fresh new Internet link into Mayo, and they've got hydro power. What is wrong?" By the government's definition, things should just be bubbling and happening, and nothing's happening. So, it's not as simple as to promote basic infrastructure to ultimately lead to a healthier economy.

One might argue that a well-trained, well-educated workforce helps. One might suggest that a forest policy that allows for the appropriate use of wood products in an efficient way would help. One might suggest that even the development assessment process, if properly constructed as a one-window approach, might help by bringing certainty to the whole environmental and socio-economic review of new developments. One might suggest that a trade and investment strategy that encourages businesses in the Yukon to consider markets outside the territorial boundaries and that matches private sector people from the territory with private sector people outside the territory would help.

One might think that the continuing support for the mining industry by a whole variety of means might help, and I would point out that all the programs that the Yukon Party had supporting the mining industry were programs that were created by their predecessors.

There I go again: the dinosaur talking about the past. The point is that we are supporting the geoscience office. We are supporting the mining industry. We've been talking to the mines about infrastructure and everything else.

One might argue that the public port access in Skagway would help, in terms of improving the transportation economics of this territory. All these things are being done. One might argue that more information for small business through the small business information centre would be a help in order to get them information faster and more efficiently so they can make decisions more quickly and in a more informed way. That would help.

One might argue that appropriate regulator code of conduct so that people who are affected by decisions about regulations should be involved in that decision making. That would help.

One might thing that training trust funds might help. One might even think that a training trust fund for youth, managed by youth, might be an interesting innovation. All these things are being done. All these things are part of the budget, and all these things have been discussed by my friends on the other side of the House as not being worthy of their support, but they are all part of this budget, and I would say that all of these elements can contribute to a healthier economy - better targetted spending by government would help.

I would argue the community development fund does help. It's not the only answer. There are many answers. There are many suggestions. There are many ideas, and perhaps, we might even hear a couple of good ideas offered freely by our friends opposite.

Now, I've just made reference to the fact that we have targeted our spending better, and we haven't spent as much on computing systems. I think the member and I are going to have to agree that we are always going to be befuddled by whether or not certain expenditures on computing systems are absolutely essential and are best and perfectly targeted to meet the needs of the Yukon today. I can't claim to be totally comfortable myself.

I am certainly always impressed by the enthusiasm of the project proponents who would tell us that we will move further, faster, right into mid-space in terms of the next century if only we would invest a million or two in this particular systems development. The unfortunate thing for me is that, as a kind of long-time member, I have seen these projects come and go, and I've even seen them replaced by other projects.

I've even heard the project that was once considered the thing that was going to lead us into the year 2000 described by the year 1989 as already obsolete and needing a replacement. I've been around that long already, so I'm a cynic, but I don't doubt that there are some necessary systems projects that should be undertaken to ensure that we operate efficiently internally.

The member's right. Some of those can be delayed; some of those are delayed. Maybe we'll wait for the next generation of equipment or systems. There are some systems development projects in here that, in my view, can't be delayed, and some of them relate to the need to deal with the so-called year 2000 problem facing computing systems, where for some reason or other, the futurists who were developing computing systems didn't take into account that the century ends in the year 1999, and then it clicks the year 2000, and not the year 1900.

So we have all these horror stories about all our fancy systems that are so futuristic collapsing because somebody didn't consider that little problem at some point. So we are trying to address those issues, and there are some unfortunately significant expenditures in this budget that are directed at addressing that and, to the member's credit, I believe that they were starting to address that problem themselves.

The member went on about Faro. I'll leave that perhaps for another time. We talked about commissions. Perhaps we could leave commissions to the Executive Council Office, and then I can explain how the DAP Commission can be influenced by the Yukon government, et cetera, and how they are influencing it.

I do have a list of other issues that the member raised, though, everything from various CDF projects. Perhaps if the member wants to say a few words - if other members want to say something - I think we should obviously give them a chance.

Mr. Cable: Thanks, Mr. Chair. I have some questions on the financial reports that the government has been providing to me, and I assume to some of the other members. As was discussed in the supplementary debate in December, the previous administration had started to provide periodic financial statements.

And the Government Leader, as the Minister of Finance, has followed along with that procedure and most recently has sent me a letter dated March 17, 1997 with an update on the status of the annual deficit for the immediately past fiscal year and the status of the accumulated surplus. The last time we talked about this, I believe the Government Leader indicated that the computers are just about up and running and we should be able to receive periodic statements fairly soon. Could he give us an update on that?

Hon. Mr. McDonald: There should be a rough or reasonable but rough estimate of the lapses at year-end in a couple of weeks and I can provide that information at that time. Is that what the member is asking? The member, I recall, had asked for financial variance reports or some sort of a status of the finances for the government. We've committed to providing that. If the member wants certain kinds of information, in a certain way or if he feels it could be better expressed or feels he wants new or different information, if he could just identify it then we'll see if we can provide that. I'm certain we can do a lot.

Mr. Cable: Yes, the minister anticipated the next question, but the first question I'd like to get off the table is: are we in a position now to provide, say, monthly statements to the members? Is a computer set up to provide that sort of information?

Hon. Mr. McDonald: Mr. Chair, up until recently, the variance reports we have been doing have been undertaken quarterly. The Management Board is going to be requesting variance reports, I think, in the coming year from six to eight times and we can provide information to members from those variance reports when we receive them, I think, and catalogue them.

Mr. Cable: Just out of curiosity, most businesses actually produce monthly statements. Does this pose some problems for the finance department? What's the reason for these eight variance reports, or whatever they are, instead of monthly statements?

Hon. Mr. McDonald: Well, I'm told that the computers do record some statement at month-end, but it's not consolidated by the finance department and taken to Management Board, except as I've indicated. Up until now, quarterly; we were going to pursue between six and eight times in the coming year.

Mr. Cable: Okay. I think we agreed in the last go around that there would be some exchange of what sort of information would be useful, and we can do that once we see the next report.

In the letter that the minister sent to me, the update of March 17, 1997 - I'll just read it, it's short: "There have been no significant changes identified by the departments in either our projected annual deficit for the year, $34,540,000, or the anticipated March 31, 1997, accumulated surplus, $25,264,000. However, I think it is fair to say that there will be some lapses in both capital and O&M spending when the final accounts for the year are tallied. Capital lapses will simply be revoted and are therefore a wash as far as surplus is concerned, but any O&M lapses will result in a net gain for our accumulated surplus position."

Now we've talked back and forth in the House on just where we're going, what we intend to see at the end of the year. This is a starting point, and I acknowledge that the minister had just said that the reliable tally will not be ready for a couple of weeks, I believe he said.

But, does he have some idea, at this present time, some rough ballpark figure, for the O&M lapses? Like, is it something in the order of half a million or $5 million or $10 million?

Hon. Mr. McDonald: Well, Mr. Chair, in terms of year-end lapses, the best we can do is judge it by experience and all those year-end lapses are recorded over time.

I know there even have been times when governments have tried to tighten things up and think that everything's really tight and then, bazooey, there is money found. The reality is that there are always going to be lapses. In my view, the departments are not reporting year-end lapses until the year-end, so a lot of departments will say, "We have been allotted so much money. We are projecting that there'll be no lapsed funding." A couple of months, three months, four months before year-end, right up until near the year-end, they're still not reporting any lapsed funding because they want to be safe. They don't want to overspend. So they don't turn it back until they have to, at year-end, and that's why you don't get, I think, reliable information until year-end as to what actually will lapse. All we have to work with, or all that I have to work with, is the practice and the experience of what we have historically lapsed and that's what I'm assuming and that's what I indicated in the letter to the member - that there will be some lapses, if history is a judge, that will probably average about so much money. There will be lapses in capital but, in all likelihood, most of that capital will be revoted so it won't be available for new expenditures in new areas. It'll be still targeted to the same project that it was originally identified for in the first place.

Mr. Cable: Just to confirm, I believe the minister has indicated that there will be some reasonable guesstimate of the lapses in a couple of weeks. Is that what he said? The minister is nodding, "Yes".

Okay, let me go on to the present budget. Now, it's my reading of a couple of snippets of comment that the minister made that some of the forecasts are fairly conservative in nature. The second indication of that was a comment I think he made during the interim supply debate when he indicated that - and he didn't use these words exactly but the sense of it was that the estimates were conservative and that he was doing his forecasting based on Faro being down. Did I hear him correctly?

Hon. Mr. McDonald: Mr. Chair, I would prefer it if the member used the terminology "cautious" rather than "conservative", just so there be no mistake made as to what we're trying to do here. We're not trying to be conservative. We're trying to be cautious in estimating our revenues, and we want to be sure that we have not understated our expenditures when it comes to the expenditure side. So we're being cautious, I believe, and for budgetary purposes - as much as we want Faro to open and believe that it can open, that it is a good property - just for safety's sake, we developed this budget on the assumption that Faro would not be open.

Mr. Cable: Okay, I'll remove the word "conservative" from the lexicon. I'd like to draw the minister's attention to page 5 of the budget speech. Does he have it there with him?

In the third to last paragraph, and the last paragraph, "With anticipated year-end lapses - in other words, money budgeted but not spent - I believe the budget proposals in the 1997-98 main estimates represent a reasonable and responsible level of spending." He goes on to say, in the last paragraph, "A $10 million deficit level can be sustained, given the historic level of year-end lapses."

Now, I read that as a very cautious approach and based on what I would assume is a cautious forecast. Am I reading that correctly, that the minister, in fact, suspects that the budget will be balanced at the end of the year, but he's just playing it safe?

Hon. Mr. McDonald: Essentially, yes, I am.

Mr. Cable: I asked the previous administration, when they first started out about four years ago, what sort of forecasting they did, and whether they did it like a range of scenarios, and I think they came back to me with, if I remember correctly, best case scenarios, worst case scenarios and the most likely scenario. Does this minister anticipate doing that type of projection and that type of forecasting?

Hon. Mr. McDonald: The member will recall that we did a forecast based on a three-month period of closure, a six-month period of closure and a 12-month period of closure. For the purposes of this budget, we've assumed a 12-month period of closure.

Mr. Cable: Yeah, okay, I was going to ask that. That's based on the Faro projections, but there's more than Faro in the variable pot. Does the minister actually do a range of projections when he is forecasting what's going to happen over the course of the budget year, or is it just like a fixed point that he focuses on?

Hon. Mr. McDonald: Because of the time that we had to put the budget together, Mr. Chair, the government, in terms of estimating its revenues for the year, did not do an analysis of best or worse case scenarios with respect to the forecasts for the revenue that we would get from the federal government. We took the forecast promoted by the conference board as being our target.

Mr. Cable: Okay, I think the minister indicated though that they had looked at various closure periods for Faro and, I assume, the revenue flows that would result in each of those scenarios. Is he prepared to make those figures available to the House so we can see just how the situation might improve if the mine, as is suspected, comes back on stream in the near future?

Hon. Mr. McDonald: I thought, Mr. Chair, that we had made those figures known - what we thought would be the impact of the Faro mine closure. I can check that for the member, but those numbers were the numbers we used in developing these budget estimates.

Mr. Cable: Yes, the minister did provide a handout. I assume what he's saying is that's the total picture. Am I correct in that assumption? The total financial picture with respect to various time periods for the closure?

Hon. Mr. McDonald: Inasmuch as we were doing an analysis of the Faro mine closure, and the impacts of the Faro mine closure, we developed our estimates with those numbers that we identified for a 12-month closure as part of this budget development process.

Is that what the member is asking?

Mr. Cable: I think what I'll do is go over the paper that he provided to us and, during the finance department debate, perhaps we can continue the questions.

Now the member will remember the interesting debate we had here yesterday on the federal government's role in our lives, and there's various interpretations of what the federal government provides to us. Now, anything can be done with statistics, so what I'd like to do is take a few moments and go through the transfers and money that comes from Ottawa to make sure we're all working from the same facts. We may interpret the facts differently, but it'd be useful to make sure that we're on the same wavelength.

Now, the Canada health and social transfer in the minister's estimates for 1997-98 is $16,731,000, and the forecast for the just-finished fiscal year is $19 million. Now, that $19 million started out last year in the 1996-97 estimates as $17,579,000.

What actually took place between the original estimates and the now-1996-97 forecast, the difference being about $1.5 million?

Hon. Mr. McDonald: Well, Mr. Chair, if the member is asking first of all what happened to move the original estimate of $17 million plus to $19 million, I can get the precise information to the member because I don't have it with me. The suspicion is that there were prior year adjustments to the established program financing and the Canada assistance plan payments that were the precursors to this particular one-block payment and that's what would have drawn the expenditure up, presumably, last year. If the member wants a really detailed answer as to what is happening from one year to the next, I'll have to go and get a more detailed response for him.

Mr. Cable: No, where I'm coming from, and I guess it's obvious, is that there was a lot of, "Yes, the feds have cut our transfer payments; no, they haven't cut our transfer payments" sort of debate going on in the House yesterday and I'd like to find out whether in fact they really have. Has the transfer payment, the $1.5 million reduction - was that reduction a one-time reduction and not really the sort of reduction that we would anticipate again for the present fiscal year?

Hon. Mr. McDonald: I'm not entirely certain what the member's referring to in terms of the $1.5 million figure. Is the member saying that he's not certain that the transfer payment to the Yukon government was cut by the seven percent - was not cut, the $20 million? Is he looking for proof that that was the case?

Chair: The time being 4:30 p.m., is it the members' wish to take a break? We will take a 10-minute break.


Chair: I will now call the House to order. We are dealing with the budget. Is there any further general debate?

Mr. Cable: I was asking some questions of the Government Leader and finance minister on the Canada health and social transfer, and the reason I'm asking the questions is that there's been a lot of commentary about the federal government's slashing the social programs. So I want to see how that plays out in the numbers.

I mentioned to the Government Leader that the Canada health and social transfer line item last year had started out as $17.5 million, and now it looks to be about $19 million. I think, if I heard him right, he said that the change between the mains and the forecast was due to some one-time items. Did I in fact hear him correctly?

Hon. Mr. McDonald: Mr. Chair, there are a number of things to point out. First of all, the changes can occur resulting from a number of things. These are all determined by estimates given to us by Canada, in the first instance, so any changes or updating, or anything like that, are determined by estimates given to us by Canada.

That's the first point. The second point is that, when it comes to the changes for the Canada health and social transfer, if they go down, then the grant goes up. If they go up, then the grant goes down. So all the income items you see here on this sheet, on page S-2, are essentially one, other than recoveries, and the one-time payments, in terms of health phase 2. These are essentially one payment. If our revenues go down, then according to the formula agreement, the transfer goes up. If our revenues go up, the payment goes down.

That's always been the case, and it's the case here. The reason, I presume, that some funding comes through the Canada health and social transfer is so that the federal government can keep its hand in the way Yukon government programs are structured when it comes to our social programs, or programs funded typically by the Canada health and social transfer.

Now, having said that, it is the case - and if the member wants some proof he just has to tell us how we can prove it - it is the case that the transfer payment from Canada was reduced. If he wants some demonstration or proof that the federal government cut back funding to YES or to Signpost Seniors, or funding to aboriginal language services, or any of these other items that have been identified, or French Language Services, we can identify that for him if he wants the proof that yes, indeed, these programs were cut back, or if there were cuts to victim services or cuts to First Nation justice programs, or any of these things that were identified either over the course of the debate yesterday or prior to that. Tell us what kind of proof he would like us to provide and we'll try to give it to him.

Mr. Cable: I want to get into the global numbers, because I think we could waste each other's time for the full 35 days dealing with every expenditure.

The Government Leader went part way last night in describing two expenditures that I assume raised the transfer payment. There was the airport and there was one other expenditure, and I think he mentioned something like $13 million. That would explain, in part, the increase in the line item called the transfer payment. Have I understood him correctly?

Hon. Mr. McDonald: Yes, the airport is one and the health transfer, phase 2, is another. I will read a little note for the member regarding the transfer payment from Canada. A little over $9 million of the increase is due to an increase in our base under formula financing as a result of the airports and phase 2 health transfers. About $1.5 million in adjustments to the base for revenues, subject to the buy-out calculation for the incentive provisions, offset the $9 million I've just mentioned. The grant is further decreased by approximately $1.1 million due to current year revenue changes that are factored into the formula calculation. Offsetting this is an increase of $2.4 million, which results from a decrease in the Canada health and social transfer and some recoveries. As members will know, such decreases are failsafed under the formula. In other words, as those transfers change, so does the formula grant, but in the opposite direction.

Finally, the 1996-97 forecast contained some $7.8 million in negative adjustments to the grant for changes in prior years' revenues, principally income taxes and tax effort factors. Expected prior years adjustments contained in the 1997-98 calculation total only about $800,000 in a positive direction. This change, therefore, increases the grant by some $8.6 million. The net result of all these changes is an increase of a little over $17 million. These figures are, of course, all approximate at this point.

For the information, I would like to point out that, as a result of expenditure restraint in the provinces, our formula financing gross expenditure base is unchanged from last year. In other words, where there are no prior years adjustment in the formula calculation and no grant changes due to revenue recovery changes and devolution, the grant would have been unchanged from 1996 to 1997. I have no exact figures, but I think it's fair to say that this lack of natural growth in the formula offsets the gain we experience from tax rate decreases in the provinces, which is an issue raised by another member.

Mr. Cable: That sounds like something one would sit down and read out of Hansard in detail, but just let me put this proposition to the minister and he could tell me where I am wrong, because I think he disagrees with me. It will be part of my education this afternoon.

The transfer payment, if you extract the $13 million we talked about last night, plus or minus whatever it was, will come down about $272 million. You add that on to the Canada health and social transfer of $16,731,000 and those two line items don't appear to be materially changed in total. I think he indicated a few moments ago that there is some trading between those two line items.

So wherein lies the proposition that the federal government is axing our social programs? I can't see how the numbers work.

Hon. Mr. McDonald: There are two things to take into consideration.

First of all, the reference was made already, on the first item, to the cut that had already been applied the previous year. So, yes indeed, that would have incorporated cuts to everything we do, including, presumably, social programs.

That's not the point that was being made yesterday in the debate at all. The point that was being made was that the federal government had, beyond what they do with us, inserted themselves into our lives in the community, rightfully, in terms of funding YES, funding aboriginal services programs, funding aboriginal language programs, funding Signpost Seniors, funding a variety of agencies, and when these agencies had their program funds cut, the assumption was that they should come to us and, presumably, following the member's logic yesterday, because of his reading of the Yukon Act, we would have an obligation to pick up these expenditures.

The point that I was making, at least in the debate, was that we have obligations with our budget to support a certain level of social service, but the federal government also has some obligation to some members of our community to provide some service, because they have historically done that, not just through transfers to the Yukon government, which the previous year they cut, but through expenditures that they were making in the community, throughout the community.

Now, presumably they thought they had an obligation to provide these funds at some point, because they provided these funds at some point. Whether it's literacy training or whether it's funding for, as I have mentioned, the Signpost Seniors, or whether it's the YES program - any number of these services - this community had come to expect they would continue to be supported.

There was a concern by the Minister of Health and Social Services that the anti-smoking program that had been funded by the federal government was being cut and consequently the expectation was that they would come to this government for $300,000.

Now, what we found particularly disturbing, and what I find particularly disturbing, is that there is an assumption, not just by people who are uninitiated but by the members of this House, that this government has an obligation within its set budget to pick up those expenditures automatically.

There was even an argument made yesterday - or attempted to be made yesterday - that we have a legal obligation to pick up those expenditures.

I don't buy that, but that was the point that was being made, because the programs that we were citing that were being cut were programs that the federal government, outside of our expenditures, were funding but cutting. We don't have YES as part of our budget, but they cut it. Now there's an expectation from some members - I presume it's now unanimous in the Opposition benches - that we have to pick this up, and what we're indicating is that there's got to be some limit to this. From time to time, the territorial government has picked up some bits and pieces of programs, but there's a flood of these programs being cut.

There was a whole conference of provincial, territorial and aboriginal leaders in this country last year that I attended, which expressed a serious concern that the federal government was cutting its expenditures to aboriginal peoples and expecting the provincial and territorial governments to pick up those expenditures, so if they weren't providing the services on reserve, or if they weren't providing the services through DIAND directly to the First Nations in the territory - they were cutting back those services - those same citizens would be coming to the provincial and territorial governments as citizens of the provinces and territories, looking to take up provincial and territorial programs.

And so, there's this concern that the fiduciary responsibility - to aboriginal peoples in this case - was not being respected, and some provincial governments had to face very hefty increases. We've calculated the bill for the Yukon government right now to be close to $20 million and growing. So, do we say because we get some monies from the federal government, and because the Yukon Act says that we're responsible for legislating in health and social services, do we say, therefore, that we have an obligation to pick up whatever the federal government drops off?

I would submit that - I guess this is where we disagree - that's wrong, that we should not be automatically expecting that we do pick up these programs and services, and if we disagree - if we as a group, or some of us as a group - disagree with the expenditure cuts or the priorities that are being undertaken by the federal government - based on its impact at home here in the territory - then I would say that it's a legitimate thing to object to that. If we agree with those cuts, then we can say so. If we don't, that's fine, but the concern I have is that, on the one hand, some members can say the federal government needs to do this, and this is a priority, and other things - bank profits - aren't, that this is a priority, and then come to this government, which hasn't historically funded these programs, and say, you have an obligation, if you really cared, to fund these programs.

I don't buy that, and I said it yesterday.

Mr. Cable: The point being made yesterday is not that there's any legal obligation, but there's a power under the Yukon Act to pick the obligations up and it's a matter of prioritization, and therein lies the argument. It's clear that federal government is in trouble, in deep trouble, and that's the only point being made. I certainly read the motion yesterday as more than just a yes motion. It appears to be a bashing of the federal government for offloading and reducing social programs generally. If that wasn't anticipated or intended, it certainly came out that way, anyway.

Rather than rehash the motion, I'd like to go over the last area where the federal government supplies money and that's on the recoveries. The anticipated recoveries from the Government of Canada are shown as $39,138,000, as opposed to the forecast for the just previously fiscal year, 1996-97, of $94,885,000. I think there's general agreement that the main element to the change are the two items: the completion of the hospital and the running down of the Alaska Highway construction programs. Am I reading the budget correctly?

Hon. Mr. McDonald: Yes, Mr. Chair, the member is.

Just to return briefly to the question of what the Yukon government can and can't fund, I've not tried to make the argument that the Yukon government is not empowered to fund or not legally entitled to fund certain things that are the federal government's responsibility. I'm certain that if we decided to change the vote objectives here in this budget to say that we would fund all the self-government provisions for First Nations, I don't think the federal government would object. And if we started funding those self-government obligations, I don't think anybody would object. I don't know of any legal argument that would prevent us from doing that. The question is: should we do that? I would argue that there are certain federal responsibilities that should be respected. There are agreements struck, there are responsibilities, and I think that, in that particular case, the federal government should fund those programs.

The concern that I made clear yesterday is that I believe that the federal government has some responsibility in the social arena. So do they, because they have been in there. Even the member, yesterday, in his amendment that didn't get anywhere because it was ruled out of order, acknowledged that the federal government has some responsibility in those areas. Maybe he was interpreting that responsibility as only coming through a transfer payment to the Yukon government but, no, we were talking about the other things. I wasn't whining about meeting our commitments. I was saying, in the budget address, that we are meeting our commitments.

The thing that bothered me and has been bothering me is this in-and-out approach to funding things that has been practised by the federal government. They come and say, "We think that there should be support for kids at risk, and we are going to put some money into, say, a teen centre."

A teen centre gets up and running, and then what happens? They say, "Fiscal restraint." Meanwhile, I've got another minister who's come to me and said, "We believe that the federal government has an obligation to provide some funds to support new Canadians to the Yukon who might need some ESL training."

Now, we'll take him up on that, but what will happen now? What I suspect will happen is that the Yukon government, typically, will talk to the Literacy Council, and talk to others, church organizations and others, who embrace people who are new Canadians to the territory. They may suggest that there'll be some need for a literacy trainer to focus on new Canadians and set up programming. Somebody will set up a desk, a person will be hired, they will get a support base, they will make friends, they'll become movers and shakers, and then, in two years, it'll be cut for fiscal restraint or because somebody said well, "New Canadians were last year's priorities; now it's poor Canadians, poor children. We're going to put the money into this particular area. We're going to put the money into flags for existing Canadians," or something else. And where does that leave this government?

If people automatically accepted that this is a federal government decision - it's either good or bad, let's leave it at that - that would be one thing. But that's not what's happening. What is happening is people are saying, "The federal government needed to make that decision," or whatever. "They're too far away; we can't really fight Ottawa anyway. We'll run to the Yukon government and say, 'If you really care about new Canadians, you'll maintain this program. If you really care about Canadians who smoke, you'll maintain this program. If you really care about kids, you'll maintain this program.'"

All I'm saying is that this puts tremendous burden on this government to maintain its existing commitments and do things like make available maximum amounts of money for capital. We fund NGOs, too. We fund municipalities. It's all right here. There's no magic. It's in the budget documents. We fund these people.

They provide good service, and we're trying to be consistent and predictable. And our responsibilities, I believe, we're meeting in this budget. We can't make maximum capital available and do all these other things and still take in all these other responsibilities. At some point, somebody's going to have to say, "It doesn't compute." And that's all we're saying.

I was assuming, frankly, that our friends in the Yukon Party would agree.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Even when they disagree, they sound like this. Even when they agree, they sound like they disagree. Maybe they did, because last year the Yukon Party government had undertaken a study to try to quantify the full effect of what was happening in this territory, not just in terms of the class of programs I just mentioned, but also in terms of the cost recoverable programs that are funded through us to meet a particular need. So French language services were being cut back; aboriginal language services were being cut back. All these things, when they are cut back, people go to the first line government - what is it? It's a very accessible Yukon government. Any reasonable person who's in charge of the government budgeting would consider this to be a concern that ought to be addressed. That's all we are trying to state.

I would also like to point out this one point, too, Mr. Chair, because I think it's often forgotten. We have a tendency in this territory to believe, when we calculate these budgets, that the Yukon taxpayer provides 70 percent of the budget and, somehow, that's the sum total of the Yukon taxpayers' contribution to government.

It's interesting, just to put on the record, that the Yukon taxpayer also pays $75 million to the federal government. On top of that, there is corporate income tax, there's the GST and all the various other duties and things like that that Canadian citizens pay. My argument has been in the past that we, as taxpayers, pay our fair share. And I also believe that we, as taxpayers, pay as much as we should be paying to contribute not only to this government, but to contribute to the federal government. I think it's an unfair calculation to expect the Yukon taxpayer to pay the full cost of this government, any more than you would expect a highway worker, working at the Ogilvie camp, to pay in taxes as much as is required for him and his colleagues to run the Ogilvie camp.

This is a small, caretaker population with big responsibilities. Is it natural for us to maintain the Dempster Highway at great expense or the Alaska Highway? It's all part of our budget, it's all considered to be part of the burden of the Yukon government, but should that necessarily be calculated as part of the burden of the Yukon taxpayer?

I think we should wrap our minds around that issue, because otherwise we are going to fret ourselves to death thinking that we're not paying our fair share, when in fact, as taxpayers, we are. And, we're fulfilling, in some cases, national obligations that have been long-standing in this country.

So, someone has a dream to build a Dempster Highway. The Dempster Highway is built, it's funded by the federal government; maintained by the federal government. Then they say, well, probably if the local government actually maintained this highway, they could do it more cost effectively.

But, does that then mean that the local government, who has essentially contracted this service - that that local government ought to therefore then look to its own support base, its own tax base and say, "if we really feel we're paying our fair share, we should take on and pay for this contract of services ourselves, from our own tax base." I don't think that that's right.

So, I think that it is fair. I don't feel that it is inherently wrong for us to be receiving this particular transfer payment, because I do believe we're paying our fair share to the national and to the local governments. And I do believe that what we're spending money on - protecting the environment, on our own behalf and on behalf of Canada, maintaining roads to other jurisdictions, long stretches of roads, doing all these things is a useful service and I think we're doing it fairly efficiently. It could always be done more efficiently, but I think we're doing it reasonably efficiently. So, I'd make that point, too.

Mr. Cable: Well, let's just agree that the provincial rights debate is ongoing and the interference of the federal government with provincial rights is something that's probably going to be resolved fairly quickly in Canada.

I would like to get the Government Leader on the record, though, on one point and that is: that stripped of the airport and health entries into the transfer payment and stripping the recoveries the Alaska Highway and Whitehorse hospital construction that took place last year, is it fair to say that there is no significant change in the amount of money coming from Ottawa?

Hon. Mr. McDonald: Well, I'm going to have to check the numbers for the member. I can't make the calculation, as he would define it, on my feet, so I will take the proposition and check it with the budget figures themselves.

Mr. Cable: I have some other questions. Is the Leader of the Opposition finished?

I'd like to go over the government's platform. We have a missing government platform here. Now, we started into the platform in the supplementary debate in December, as the member will recollect, and I think he confirmed his party's promise to freeze taxes and his government's promise that there'd be no sales tax or medicare premiums, as I recollect. Does that commitment extend to fees other than straight taxes?

Hon. Mr. McDonald: Well, Mr. Chair, I have to report solemnly that we have not been able to keep our promise to freeze taxes. We have found ourselves lowering taxes. The property tax rates, as an instance, in the Whitehorse periphery area, we decided a few weeks ago that we would be lowering in order to ensure that the assessment increase in that particular area would not net any increased revenue to the government. Now, I know that the members in the Opposition - the Liberal Opposition, particularly - feel that their one question was sufficient to turn the government's mind on this question, but I can report that the budget was put together some weeks ago, and the revenues of the government do not include any revenues associated with tax assessment increases in the Whitehorse periphery area. So, as much as I think that they would like to take credit, unfortunately, they can't. Nevertheless, we have not been able to freeze tax rates. In one case, we've had to lower them a bit.

With respect to fee increases, I am not aware of any fee increases proposed by the government. I can get that matter checked. If there is a fee increase or a licence increase or something like that that is being contemplated by a department, I don't know about it, and it's not calculated into the budget revenue estimates.

Mr. Cable: Yes, the Government Leader confirmed his commitment on freezing of taxes in December. I was asking questions on fees. If the Government Leader wants credit for solving the Marsh Lake problem, I'm sure we can agree on that, but I'll get back to him on that just to make sure I have my colleagues' support.

Now, A Better Way, page 24, I just want to go over -

Some Hon. Member: (Inaudible)

Mr. Cable: - the Member for Faro is saying "great" something - I can't hear him - "a great document". Well, over the next four years, we'll find out how great it is.

Under the fiscal responsibility entry on page 24, we just dealt with item (a) at the top. Item (b) is "develop a pay-as-you-go budget and maintain a savings account". Maintaining a savings account, of course, is maintaining an accumulated surplus. Just what did the Government Leader mean when he said develop a pay-as-you-go budget?

Hon. Mr. McDonald: Well, two things, a number of things. Before I say that, I'd just like to acknowledge formally - it's late in the long week but I'd just like to acknowledge - the member's attempts to be nice, and I want to be nice back. It doesn't happen often, presumably, but I wish it could happen more.

Once he gets clearance from his colleagues to give the government some credit for doing the right thing in the Marsh Lake area, I'd be happy to hear it from him, on or off the record, whatever he can get away with once he seeks that approval.

There are a couple of things meant by that.

First of all, the member will recall a press release - or may recall it,; we all seem to keep each other's press releases in various binders and everything else - that the New Democrats put out a press release last year on the subject of balanced budgets. The one point in the press release was that when we felt that it was necessary, we would draw down from the accumulated surplus.

Now, the concept that we have instituted here is a sustainable use of that pay down of the surplus by recouping it through lapses. So that allows you to pay as you go. I think the member has already asked me if I suspect that these budget estimates prove accurate. Do I expect there to be a balancing? Yes, I do. Do I expect this level of spending to be sustainable? Yes, I do, overall.

Now the difference between O&M and capital may change a little bit but, overall, the net expenditures will remain the same. If our revenue projections are accurate, which I believe they are, and they should be for the period of the formula financing agreement.

But, I was also making reference to the notion of the need to avoid debt financing. There was a lot of talk in this campaign about debt financing capital projects and how this was somehow a new innovation - a new way of doing things. We could get all kinds of works going on if we just took on some debt.

Perhaps it's because I've just been around too long and am entrenched in the ways of the Legislature, I resist that notion, and so I was trying to also refer to the fact that we would try to avoid debt financing capital works. That's what I meant; that's, in part, what I meant. So, it's a couple of things. I think that we have a sustainable spending level, on a year-to-year basis, and we should also try to avoid debt financing capital works that we own. That was what was meant by pay as you go.

Maintaining a savings account, as the member mentions, is maintaining a savings account, and I think that we're accomplishing that. The question has always been whether or not the savings account is the right size. Is $7 million the right size, so that we can write a cheque for $7 million at the end? Is that the right size? Or is it $50 million, or $30 million? We're saying, under the circumstances that $15 million is our target. If members disagree and say it should be more or less than that, let's have that conversation.

Mr. Cable: What I hear the Government Leader saying is: pay as you go means that there can be a deficit, but it has to be fed by the accumulated surplus and there can be no debt. Is that basically what he is saying?

Hon. Mr. McDonald: Yes and, ideally, should be recovered through lapses.

Mr. Cable: The next item under the heading fiscal responsibility in the government's platform is item (c). We've touched on this in the last couple of days, I believe: with each annual budget, present a five-year financial plan so Yukon people know which direction the government is moving.

The Government Leader was quoted in the newspaper as saying that that could not be done in this instance because of the short time period. Let's accept that for the moment. When does the Government Leader think the first five-year financial plan will be presented to the people of the Yukon?

Hon. Mr. McDonald: I am going to do my best to provide some form of a financial plan with the next budget that we table in the Legislature. How detailed that financial plan may be, I'm not certain at this point. Ideally, as it is refined, it'll become more detailed, perhaps, and as accurate as we could possibly make it. That's what I would like to be able to do.

Having said that, I would point out, just so that we don't think that every commitment in A Better Way will all be developed in the first year of our mandate and completed - this is a four-year mandate, not a one-year mandate. While I will do our best to meet this particular item next time around it may not be true of all the commitments here in this book.

Mr. Cable: Well, this commitment certainly doesn't have a four-year chronology on it. It says with each annual budget - and, you know, continuing on with being nice this afternoon, I can appreciate the Government Leader's time constraints and not having one out with this budget.

One would think, in view of the way this is presented, that a plan to the Yukon people was contemplated fairly early in the mandate, and what I hear the Government Leader now saying is that we won't see this five-year financial plan until maybe next March, which is March of 1998.

Is that what I'm hearing him say?

Hon. Mr. McDonald: Well, Mr. Chair, there's very little in this A Better Way that says it commands the new government, or commits a new government, to do anything in year 1, 2, 3 or 4. We are doing a whole lot in this budget that is in this A Better Way. And so I regard, even as nicely as it may have been stated, it' a bit of a cheap shot that suggests that we should be presenting this five-year financial plan immediately, and that's what this document states. I don't buy that.

Mr. Chair, the government will try to put forward a financial plan with the budget estimates where it belongs - with the estimates. It will be as accurate as I think we can reasonably present. I think it will be an improvement in terms of projecting where we are going. I'm hoping it will be.

The member suggests that it is something that the New Democrats said would happen immediately, or somehow that we indicated we were going to do it right away. I've not been able to commit. I didn't commit in December to be able to do it right away, either. So I think the member, being the fair-minded person that he is, given that this is a brand-new way of doing budgeting and given that it has implications for many different groups in this territory who are, in turn, funded by this government, that it is going to take some time to change the way we think in this Legislature and in this government in terms of long-range projections. He has to appreciate that the government has worked essentially on the O&M side on a year-by-year basis for as long as I can remember, with the exception of the capital plan. And the capital plan, for its part, as anybody who does know capital planning, is, by year three or four, a complete fantasy.

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

Motion agreed to

Hon. Mr. Harding: 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 the Committee of the Whole?

Mr. McRobb: Mr. Speaker, Committee of the Whole has considered Bill No. 4, entitled First Appropriation Act, 1997-98, and directed me to report progress on it.

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

Some Hon. Members: Agreed.

Speaker: I declare the report carried.

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

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

Motion agreed to

Speaker: This House stands adjourned until 1:30 p.m. next Monday.

The House adjourned at 5:29 p.m.