Whitehorse, Yukon

Monday, February 28, 2000 - 1:30 p.m.

Speaker: I will now call the House to order.

We will proceed at this time with prayers.



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



In recognition of Joseph and Annie Henry

Mr. Jenkins: One hundred years ago, adventure seekers from all over the world stampeded to the Klondike to fulfill their dreams of striking it rich, of finding gold. The names Bonanza and Eldorado are symbolic of that quest.

Mr. Speaker, today I'm pleased to pay tribute to two lifelong Yukoners who have managed to strike gold over the last 78 years.

On behalf of the Yukon Party caucus, I am pleased to take this opportunity to pay tribute to two elders, Joseph Henry and Annie Jarvis, upon their recent introduction into the Guinness World Book of Records for having the longest marriage currently held by any couple still alive. Indeed, this is a remarkable accomplishment and one that they can be very proud of.

Annie was born along the Peel River in October of 1904, and Joe was born along the Ogilvie River in the summer of 1889. When Annie was about 14 years of age, Joe's uncle Julius told her that she and Joe were to get married. And so it was that on July 15, 1921 they were married at Moosehide by the Reverend Julius Kendi. As spoken by one of their sons a few years back, Joe and Annie had some pretty tough times, as Joe spent years trapping the Blackstone area, and Annie had nine of their 12 children in the bush.

Despite the difficult times, their marriage has prevailed, and their commitment to one another remains true. One could say that they have given birth to their own community, as they now boast over 100 direct descendants; that is, children, great-grandchildren and great-great grandchildren, most of whom still reside in the Dawson area.

Indeed, these remarkable Yukoners have seen many people come and go over the years. They have witnessed innumerable changes around them, and they have watched their families and friends grow in that time. At 101 years of age and still going strong, Joe Henry has the ability to say he has lived in three different centuries. On the last occasion I spoke with Joe, he was looking forward to harnessing up his team of dogs and going out on his trapline. I also had occasion recently to speak with Annie Henry, who was in attendance at the Klondike Centennial Ball earlier this month, still going very strong.

Joe and Annie have earned the distinction as the longest married couple in the world. They have been married for longer than the Government of Canada tells us that males are going to live.

As two very special Yukoners with hearts of gold, it is fitting that we pay tribute to Joe and Annie Henry today.

Thank you very much.

In remembrance of Frank Friesen

Mr. Phillips: Mr. Speaker, I rise to pay tribute today, on behalf of all members of the House, to a Yukoner and a friend of many, Mr. Frank Friesen.

Frank was born in Nipawin, Saskatchewan, in January 1930, where he spent his childhood years. At the age of 16 he left school and began his working career in a number of different areas, including harvest excursions, butchering, grain elevator painting, oil rigs, restaurant management, and mostly in the Yukon, construction.

He later moved north to work in the Yukon, where he served as a foreman for General Enterprises for 17 years, until 1980.

For many, Frank will long be remembered for his generosity toward others and his active involvement in numerous community organizations.

As a long-time, serving member of the Lions Club in Whitehorse, Frank played an integral role in seeing the completion of the roof being constructed over the Lions Pool and, more recently, helped with the creation of skating shelters throughout the city.

He was president of the Grand Lodge of the Yukon Order of Pioneers and an active member in the Whitehorse United Church.

Frank also did a tremendous amount of work in the past, in helping with the Braeburn Lake Christian Camp. In fact, Mr. Speaker, his contributions to the camp over the years were much cherished by all, and, in appreciation of those efforts, a building, the Friesen Building, which is the crafts building at the camp, was named after him.

Looking around the city, many of our long-standing buildings were constructed by Frank, including the old Whitehorse General Hospital that served us for many years, and the Yukon government building that we are working in today.

Through his work and his involvement in the community, Frank became a familiar face around town, and was well-respected by all of us who knew him. He was incredibly supportive of our community, and yet you seldom heard much from Frank, and he never took any credit for the hard work he did.

Frank was a good person, with a heart of gold, and he'll be missed by his family and remembered fondly by all of us. As a long-time Yukoner, and a very special man, it's appropriate that we pay tribute to Frank Friesen here today.

Thank you, Mr. Speaker.

Ms. Buckway: Mr. Speaker, I rise today on behalf of all members of the Yukon Legislature to pay tribute to a Yukoner who is gaining recognition through his new CD, which promotes our territory. Les McLaughlin is the last person you'd expect to rival Shania Twain for CD sales, but he's doing just that, and being a fantastic tourism ambassador for us.

Les grew up in the Yukon and was fascinated by the legendary people and unique place described in the poems of Robert W. Service. He became a broadcaster and spread his love of things Yukon over the CBC radio waves. Les produced many full-length documentaries about the Yukon and its people. As the CBC's northern service producer in Ottawa, he was responsible for launching the international careers of Susan Aglukark and of one of the members of Kashtin. He has given dozens of northern musicians the encouragement and support to take their first steps into a music career.

In 1993, Les received the CBC President's Award for his musical productions featuring Yukon entertainers. Now Les McLaughlin has done something he always wanted to do. With the help of Juno Award winner Randall Prescott and Canadian Country Music Hall of Fame recipient Tracy Brown, Les is the star of a new CD, The Songs of Robert Service.

It's the poetry of Robert Service set to music. With the headline, "Sam McGee Rises From The Ashes Once Again", the CD was launched in January. Mr. Speaker, it's incredibly popular. In Ottawa alone last week it was number 2 in the top 40 of the CD warehouses hit parade. It's listed in the top 10 at all HMV, Music World and Sam the Record Man stores in the Ottawa region. It's spreading west and south and north. The CD has been getting a lot of attention from the media all over Canada and in the U.S. At every opportunity, Les talks about the Yukon.

Recently, in Ottawa, the Yukon Member of Parliament, the Yukon Senator, the Member for McIntyre-Takhini, and the Member for Porter Creek South met with Les McLaughlin and talked about the CD. Every time Les does a media interview, every time he responds to someone with a comment on the message board on the Web site www.rwservice.com he is promoting the Yukon.

That CD is available here in Whitehorse right now, Mr. Speaker.

Les McLaughlin is a wonderful ambassador for the territory. We should be recognizing that fact.

Thank you, Mr. Speaker.

Speaker: Introduction of visitors.

Are there any returns or documents for tabling?


Hon. Ms. Moorcroft:I have for tabling the Yukon College financial statements to June 30, 1999. I also have the Yukon College annual report for 1998-99, which includes the College Board of Governors' new ends statements.

Speaker: Are there any reports of committees?

Are there any petitions?

Are there any bills to be introduced?

Are there any notices of motions?


Mr. Ostashek: Mr. Speaker, I give notice of the following motion:

THAT it is the opinion of this House that the United States and Canada should engage in a cooperative feasibility study to examine the costs and benefits of constructing a rail connection to link Alaska and the Yukon Territory via northern British Columbia with the existing North American railway system;

THAT this House urges that a bilateral commission representing local governments, business interests and aboriginal stakeholders be created to define the goals and objectives for the cooperative feasibility study, and to report the results of the study to the appropriate governmental entities of Canada and the United States; and

THAT this House recommends that funding for operation of the bilateral commission and for conducting the cooperative feasibility study should be considered a priority by the federal, state, provincial, territorial and First Nation governments.

Mr. Jenkins: Mr. Speaker, I give notice of the following motion:

THAT it is the opinion of this House that the Connect Yukon initiative as proposed is not clear as to which rural residents will receive telephone and high-speed Internet service; and

THAT this House urges the Minister of Government Services to publish a schedule outlining the rural communities and regions that will be eligible to receive the Connect Yukon service, when they will receive the service, and at what cost.

Speaker: Are there any statements by ministers?

This then brings us to Question Period.


Question re: Fuel prices

Mr. Cable: I have some questions for the Minister of Economic Development on fuel prices.

The minister wrote to the federal Industry minister last week, asking to have a meeting with the provincial, territorial and federal governments to talk about fuel prices. The letter that he filed in this House, Mr. Speaker, was pretty vague. Other than having a meeting, what are the minister's ideas on the high cost of fuel? If he meets with his counterparts, if this meeting comes about, what is he going to offer to the meeting by way of ideas about how to control Yukon fuel prices?

Hon. Mr. Harding: First of all, Mr. Speaker, one of the serious issues that we face is the issue of competition. The member will know that that falls within the purview of the hon. Minister Manley in the federal cabinet. We would certainly like to have him as a participant in such a meeting; that way we could address the issues of competition, the allegations that have oft been made, which I think we need to get to the bottom of in terms of collusion by big oil in terms of controlling some of the pricing questions. As well, I think Canada has a natural role to play in terms of OPEC and the production levels of crude oil, and I think we should have a formal discussion - as territorial/provincial ministers and the federal minister - on that particular issue, because that has a crucial effect.

As well, there are studies that have been completed that I think we have to do more work on. For example, we participated financially in a federal study on competition issues, but the results of that were found to be somewhat questionable, because, as independent retailers across the country said, they did not participate and they would like to participate in an independent review. We think that that independent review has to come off. We have committed to the federal government that we would help participate in the funding of such a review by independent retailers to determine some of the effects on the price of gasoline. We think it is going to take a cooperative effort to really address this problem.

Mr. Cable: Okay, let's follow up on a few things that the minister just said. Let's be a little more specific.

The OPEC oil suppliers have tightened the supply of oil, and crude prices have shot up, as I think the minister mentioned.

Have the minister and his department done any analyses on the run-up of crude prices? Is there any reason - or is that the only reason for the run-up in crude prices in the Yukon - why the prices have shot up, or is he of the opinion that something else is driving up prices?

Hon. Mr. Harding: Well, Mr. Speaker, we've done lots of analyses on this question. One of the things the Yukon has as an advantage is that we have the lowest gasoline taxes in the country. I think we're at six cents a litre. The next closest is Alberta, at, I believe, nine or 10 cents a litre. So that's why our prices here in the Yukon are cheaper than they are in the Northwest Territories, for example, where they are really feeling the effects of this increased, sustained price.

The other issues that affect the Yukon differently from other parts of Canada, particularly urban Canada, are the fact that the volumes here don't compare well so you don't get the bulk buying. That has a larger factor here than, perhaps, even sometimes the price of crude oil, because the price of crude - and the estimates vary - make up between 20 to 30 percent of the actual overall cost at the pump.

So, there are a number of reasons why the situation in northern and rural Canada is different from what it is in urban centres, and the problem is exacerbated here. That's why we need to - and not just from a territorial perspective but I know that there are northern development ministers across this country in some of the provinces and northern Saskatchewan and Manitoba who also see this as a pretty significant issue. One of the provinces, Prince Edward Island, tried capping prices. However, the results of that have been questionable, given they have the highest prices in Canada, next to the Northwest Territories, ourselves and Nunavut.

Mr. Cable: Okay. let's explore something else that the minister said in answer to the first question.

The fuel price issue was raised in this House last year and what we got from the minister was a visit by a couple of oil company representatives. We asked for a fuel price inquiry, and what we got was a public relations exercise and some comment from the minister that he had raised the matter with the federal minister in terms of competition issues. I think these are his words.

Is the minister of the view that there is a lack of competition in the Yukon, or is there some collusion or price fixing going on at some level? Just what work has been done on this problem, and what's his solution?

Hon. Mr. Harding: Well, Mr. Speaker, our position has been clear. We have performed some educational service for the public of the Yukon in terms of gas pricing. We've been posting a series of prices, including average price, on the Web, so that customers know the answers to those issues for when they go to fill up at the pumps.

With regard to inquiries, there's an inquiry underway right now in Ontario. Ironically, the opposition there dubbed it a public relations exercise when it was put forward by the government. I think there's one underway in B.C. and perhaps one or two other provinces all on the same issue. I think what we need is a concerted effort by the federal government to bring everyone together. We're prepared to come to the table. We've participated in the funding of competitive pricing analysis and studies. We've brought industry people here to have a dialogue with Yukoners about the issues, whether they agree or disagree. We're prepared to look at an independent retailer analysis of the factors that are seriously affecting the pricing issue. We want an action plan that is going to be led by the federal government, which has got to deal with the OPEC issues, and they've got to deal with the competition issues. Those do not fall within the jurisdiction of the provinces or the territories. So, we're prepared to go to the table. It's not good enough for the federal government to say, "That's a provincial or territorial problem."

Question re: Argus Properties, mall development, subsidization by government

Mr. Cable:I have some questions for the same minister, on the Argus Properties handout. Three-quarters of a million dollars was pulled out of the City of Whitehorse waterfront development envelope and allocated to building sewer and water lines to run up to the Argus Properties' proposed mall. Now, one of the rationales for this public investment was that it would reduce a leakage of money from the Yukon. We'd have a better selection of socks and underwear, so we'd buy local. Now, I asked the minister last November to support this leakage argument, and I got no answer in Question Period. I then asked his colleague, the Minister of Government Services, when we got to the supplemental budget debate, and he said, "Well, shucks, I don't know. I'll ask my colleague the Minister of Economic Development to answer the question." But I got no answer, so I wrote to the minister on February 14, asking him to produce studies relating to leakage. There was no answer. And just the other day, the minister was asked again in this House about leakage reduction and he said, "I don't have it at my fingertips."

So, the question I have for the minister - to be clear - prior to the making of this public investment of $750,000, were there any studies done on the amount of leakage reduction that Yukoners could expect because of this use of taxpayers' money?

Hon. Mr. Harding: Well, first of all, Mr. Speaker, I don't know what the member is talking about. The Yukon government hasn't given Argus Properties or anyone else a handout. What we have done is to commit to providing some offsite infrastructure for water and sewer. The city is leading the developing of that particular parcel of land, that area. We think it is going to be good for the future development of the waterfront, as it extends further in that direction. We think there is more developable land there, frankly.

Secondly, Mr. Speaker, the Yukon government doesn't control what businesses choose to invest in this territory. If any particular business wants to come in and invest $35 million in private sector financing in the territory, they can do so.

A number of the initiatives we have undertaken have been good, in terms of ensuring business gets all the local business opportunities - or as much as possible, given competitive factors. For example, under our Yukon hire implementation, the number of business contracts have increased from 59 percent under the Yukon Party administration to somewhere around 89 percent under a New Democratic administration. So, we have made some significant changes to that effect. As well, a lot of the initiatives that we have undertaken through the trade investment fund and the tourism marketing fund have been excellent, in terms of developing local business and improving the local market.

There are a whole bunch of initiatives that this government has taken on that question.

Mr. Cable: So these outside developers come to town, and they ask for some free sewer and water, and this money that is coming out of this government has nothing to do with the mall development; it's simply infrastructure.

Well, the minister can believe that if he wants, and I note that he did not answer the question on leakage, and I think we have to assume that there were no leakage studies.

On another related issue, we heard from the mall developers that the mall just could not go ahead without this freebie, this handout. They were wringing their hands, Uriah Heep-like; they just needed the taxpayers to cough up some money.

Now, it appears from the media reports that both levels of government bought into this malarkey. I went through the same drill with this issue as with the leakage issue. I asked the minister the question in November in Question Period. I asked the minister's colleague about it during the supplemental debate, and I got a referral back to this minister. Then I wrote this minister on February 14 - and nothing.

Are there any financial analyses that would indicate that this private investment just couldn't happen without this public investment?

Hon. Mr. Harding: Well, Mr. Speaker, the member opposite, for political purposes, can chastise anyone who wants to invest in this territory, as he hisses "these outside developers" - one might even call them private sector investors, if they were to be a little bit more kind. The members opposite are often talking about investment in the territory. This is someone who has some confidence in the territory to the tune of a $35-million investment.

In terms of the precedents that have been set, one might look at what is likely to happen with Trans North, a local company, and Northwestel, in terms of similar infrastructure arrangements. One might look at the over $1-million on Main Street, that were non-charged back development costs for businesses in that area.

One might look at the improvements to the White Pass Building in the downtown core area, or the purchase of the Taylor House as another important attraction for, in particular, the walking tours and tourists who are interested in historic sites in the territory in the downtown area.

One might look at the purchase of the trolley car that this government has been involved in, in working with the city to try to improve the number of attractions in the downtown area, and the waterfront.

So, Mr. Speaker, the member opposite obviously is opposed to the investment of $35 million in the private sector economy here in this territory. If that's the Liberal position - and it's very clear that it is - then I must seriously say to them that I'm surprised that they're trying to have it both ways, in terms of this economy.

Mr. Cable: Again, Mr. Speaker, no answer to the question. This is the fourth time around. Why should we be using public money, if this is such a great investment?

And I might say to the minister that if he thinks Trans North got the same arrangement, he might want to call up Trans North. After they found out what the minister had to say, they burned up the fax lines, telling us their view of the so-called break they got.

Now, one of the other rationales I've heard for this public investment is that this is a job-creation exercise. The retail pie is going to get bigger, because of the leakage reduction, you know - blah blah blah.

Have there been any studies done, prior to the making of this public investment, to define the number of net jobs - not the number of gross jobs, but the number of net jobs - that would be created by this public investment?

Hon. Mr. Harding: Well, Mr. Speaker, I am answering the question. The member can blurt out as many times as he wants that I'm not. I certainly am answering the question. The member opposite has said that he doesn't agree. He calls the whole idea of a $35-million investment in the economy malarkey.

With regard to the Range Road project, the investment of this government in that infrastructure, over two years, will be $1.5 million, not to mention the millions of dollars that have been put into improving the valuation, business-wise, of the Main Street and the downtown core area. This government has participated to try to encourage private sector investment business activity in a number of ways. The Liberal Party obviously feels that the infrastructure investments in the waterfront, in water and sewer, are not worthy of this government's attention. Well, we believe in a long-term vision of the territory that includes a lot of developable land on the waterfront, and we think that infrastructure is going to further extend down in that direction. This is an off-site infrastructure investment. The precedents have been set in the past. We're just doing what we've done to try to encourage economic activity as we have done in the past, and I think we'll do in the future.

Question re: Land claim settlements, taxation and repayment of loans

Mr. Ostashek: The Government Leader has previously made comments laying the full blame for the lack of progress on land claim settlements at the feet of the federal government, while several Yukon First Nation chiefs have stated publicly that that isn't the case - that the territorial government still has some outstanding issues as well. I'd like to address the two, so-called federal issues blocking progress; namely, the repayment of loans taken out against land claim settlements and the taxation of Yukon First Nations. In his meeting with the Minister of DIAND this weekend, can the Government Leader advise the House what position the Yukon government took in relationship to these two issues?

Hon. Mr. McDonald: Well, Mr. Speaker, I would like to first point out that there has been progress at the land claims table, and to suggest that there has been no progress would be a mistake. Of course, there has been substantial progress. However, there are two issues that are outstanding that would prevent the closure of at least three agreements, and those are, as the member has pointed out, the issue of the rolling implementation of section 87, tax measures, and secondly, the loan repayment.

With respect to the section 87 taxation measures, Mr. Speaker, our position is that, if Revenue Canada can find a way to make it fair for all First Nations so that they have the same benefits as the first four received when they signed on, then we would be in favour of such an arrangement.

On the question of the loan repayment issue, Mr. Speaker, the situation right now is that the First Nations that are negotiating their claim are forced to now be in a situation where they must pay back approximately 60 percent of their compensation in the claim against negotiating loans. That compares with about 25 percent for the first four.

So, we acknowledge and agree that that creates an unfair or unlevel playing field and believe that the federal government should consider their request for some forgiveness, and that's the position we have taken as well.

Mr. Ostashek: Mr. Speaker, I've always maintained the government has a mediator role to play at the land claims table in order to help the parties reach agreement. But, from what the Government Leader has told us here today, the First Nations that are finalizing claims now are paying a bigger percentage of their final settlement in loans back to the federal government than what the previous first four were.

But I draw the Government Leader's attention - if my memory serves me right - that if the federal government was to do something for these bands that haven't settled land claims yet, the first four would also have a claim against negotiating loans. Am I not correct?

Hon. Mr. McDonald: Well, under the strict rules of engagement at this point, no one has any claim, other than to pay back the negotiating loans. But what the First Nations, who are late in the game, are saying is that they have been either monitoring the first four, the first seven, or they are negotiating their agreements themselves. In any case, it has taken more time to negotiate their agreements, so consequently they are forced to pay a larger percent of their compensation toward negotiations. And they're saying that their situation is separate from that which exists for those who went earlier, so this apparently is supported by all First Nations in the territory, and my understanding is that the federal government is going to give consideration to going some distance in assisting those First Nations who come later.

Mr. Ostashek: According to media reports this morning, the minister has basically said no to both issues. That is what was reported in the media. So I find it difficult to see how progress is going to be made if the federal government doesn't change their position on these two very major issues. And perhaps that's the reason that the First Nations are reported to have asked for a longer extension in the federal negotiating mandate than what the minister was prepared to offer, which was two years.

My question to the Government Leader: which of the extensions does the territorial government support? The two-year extension or the longer extension requested by Yukon First Nations?

Hon. Mr. McDonald: I was at the meeting and, at that meeting, the federal minister did indicate some willingness to go some distance to providing some support for the First Nations who have been forced to pay a larger percent of their compensation for negotiations. Now, what form that support will be, is to be negotiated. It may be some forgiveness of interest, or it may be some other investment in the First Nations involved; that has to be negotiated. That is not clear to me at this point. With respect to the length of the negotiating period, there is a general recognition that four claims can be settled almost immediately with respect to whether these two issues are resolved.

The Kwanlin Dun claim and the two Kaska claims should be able to be resolved in a two-year period. In that respect I would agree with the federal minister. However, there are some difficult issues that have to be addressed, particularly in the transboundary claim for the Kaskas, and, if they're not addressed, then two years will certainly not be enough.

Question re: Fishing Branch and Tombstone Park, mining claims and boundaries

Mr. Ostashek: Mr. Speaker, my question is again for the Government Leader, and this time it's on another issue that was raised by the Minister of DIAND, and that's the two proposed territorial parks in Fishing Branch and Tombstone.

Mr. Speaker, these proposed parks have mining claims within the boundaries - as a consequence of this NDP government's failure to follow the protected areas strategy, which is based on the concept of multiple use and comprehensive mineral assessments being done prior to park boundaries being established.

I would ask the Government Leader this: did he discuss with the minister the proposed boundaries of the two parks, and what position did the Government of Yukon take in relationship to the Rusty Springs and the Canadian United Minerals mining claims within those boundaries?

Hon. Mr. McDonald: Mr. Speaker, the issue was not raised at the bilateral meeting with the federal minister. We did not discuss the matter in the context of the discussions we had with the First Nations.

The position the Yukon government has taken with respect to all these matters remains the same as it was last fall. With respect to the mining claims inside Tombstone Park, their status is acknowledged, recognized in the Tr'ondëk final agreement, and they should be treated accordingly.

With respect to the mining claims at Rusty Springs for the Fishing Branch, we've already made clear that the Rusty Springs claims are excluded from the Fishing Branch protected area, and I as well have asked that the planning committee for the Fishing Branch take into consideration the transportation requirements for any possible development at that site. That was our position last fall, that's our position now, and it's certainly a matter of public record.

Mr. Ostashek: Well, Mr. Speaker, the Yukon Liberal leader is on the public record as an advocate for what could be called the Windy Craggy solution to these mining claims, and that's to expropriate them, to buy them out, get rid of them, get them out of here.

It would appear that the Minister of DIAND has been listening to the Liberal leader because, in the media interview this morning, he appeared to be leaning in that direction.

I would like to ask the Government Leader, does he believe that these mining claims should be expropriated?

Hon. Mr. McDonald: Well, Mr. Speaker, I can speak only for the Yukon government. I can't speak for the Liberal leader in this Legislature, nor will I speak for Mr. Nault. I have indicated to anyone who asks that we are in no position to be expropriating third-party interests in any protected area. In the future, there will have to be clear consideration given to third-party interests wherever a park or a protected area is established, and in the cases of both Tombstone and Fishing Branch we have recognized those interests.

Mr. Ostashek: Well, Mr. Speaker, the NDP government's Windy Craggy expropriation in British Columbia effectively killed exploration in British Columbia, and we have heard this government's Minister of Renewable Resources say, in this Legislature, that they could go ahead and explore but they couldn't mine. That's a very bad signal to be sending to the investment community out there on mining claims.

So, Mr. Speaker, when can the people of the Yukon expect this government to make a clear and concise statement on the protected areas strategy, and how would it be used in future park allocations in the Yukon? When are we going to have a clear and concise statement that mineral assessments are going to be done and that we're going to look at the concept of multi-use?

Hon. Mr. McDonald: Well, Mr. Speaker, the first question the member asked had me answering for the Liberal leader and for the federal minister. Now the member wants me answering for the B.C. government. We made a clear statement with respect to this matter last November. In terms of any updates, reviews or refinements to the protected areas strategy, based on our experience in order to improve the situation - because we are committed to the protected areas strategy - that will take place over the course of this spring.

Question re: Takhini Bluffs mobile home development

Ms. Buckway: I'm glad the Minister of Economic Development mentioned that mobile home condo park on Range Road a few minutes ago. I have some questions for the Government Leader about that project, which is in his riding. We took a little drive up to Takhini Bluffs this morning. Takhini Bluffs is the mobile home project that the NDP spent $1.9 million building. It was supposed to provide options for people with older mobile homes. Some option, Mr. Speaker, because the NDP forgot about one thing: the high cost of these new lots. Two years after this project was announced, there are four mobile homes in the park. One is occupied. Two, moved there by the government, feature attractive "For Sale" signs. One is the model home to show off the area to prospective buyers. This is the end of February. Can the Government Leader confirm that there is just one occupied plot in this $1.9-million NDP fiasco. That's a lot of taxpayers' money, Mr. Speaker.

Hon. Mr. McDonald: Mr. Speaker, I'll answer for the minister responsible for the Yukon Housing Corporation at this moment. First of all, I want to make the statement clearly. The member opposite does not believe in this park; she calls the park a "fiasco". The Yukon Party suggests exactly the same thing, that the option for people who are stuck in mobile home parks should not exist. The Liberals have made that very clear; the Yukon Party has made that very clear. I want to make it clear to them that I will campaign in the mobile home parks throughout Whitehorse and champion the fact that this option exists for people who would otherwise have no option. The Liberals do not want an option for these folks. The Yukon Party does not want an option for these folks. The NDP is committed to providing an option for those people. We care deeply about their ability to move from a rental situation, over which they have no control, to an ownership situation, over which they do have control. So, we're fundamentally opposed to the position of the Liberals on this question. With respect to the numbers of people in the trailer park, I'll point out to the members that we did not encourage them to move in the fall because it was getting very close to freeze-up, and consequently there will be more people moving into that particular area.

Mr. Speaker, let there be no mistake. What the Liberals call a fiasco, we call an option for people who otherwise have no option, and we're proud of it.

Ms. Buckway: In Hansard, on April 13, 1995, I find this statement: "Given that the minister and his government are in charge of the agenda, my job here is also to discover precisely what that agenda involves, which is what I am doing.

"I will not be put off by someone who says that asking any questions about it indicates I am against it." That was the current Government Leader speaking when he was in opposition. I find it curious that the Government Leader now has wholeheartedly adopted the same position he railed against.

Mr. Speaker, everyone knows that the NDP can't manage money and this is just another example. They're making life harder for people with older mobile homes and people with not very much money. More and more Yukoners can't make ends meet, thanks to this government.

And here we have a $2-million trailer park with one of 66 lots occupied. That's one vote, Mr. Speaker. At this rate, it will take until the year 2065 to fill up the park.

In November 1999, the minister responsible for the Yukon Housing Corporation said there had been 22 applications; four have been approved, and I believe one will be moving in soon. One has moved in.

Mr. Speaker, what's the status of the other 18 applications? Have there been any further applications?

Hon. Mr. McDonald: Well, forgive me, Mr. Speaker, if the member thinks that I might have misinterpreted her claim that the whole mobile home park was a fiasco for her being opposed to it. If she calls it "a fiasco", if she votes against the budget, I should be forgiven for drawing the obvious conclusion that she's opposed to it.

Mr. Speaker, I will not be put off either from the spin-doctoring on the Liberal side. It is clear that they are opposed to it. It is obvious to all comers that they are opposed to it.

The Yukon Party is opposed to it. I can understand why they would be opposed to it, because they have an alliance with the owners of the parks.

But, Mr. Speaker, the NDP cares deeply about the residents of the mobile home parks, and wants to make sure that they have an option that includes home ownership and land ownership, and we have done it in an affordable way.

Mr. Speaker, according to our land regulations, we charge back the cost of development to the owners. We believe that these lots are in fact affordable for many people and that many people will take advantage of them.

Now, they can't move in until the thaw, because the park was finished later than was expected, but it remains an option for people who right now only can rent, and so I would say that that's something worth supporting and, clearly, if it weren't for the New Democrats in this Legislature, there would be no option for mobile home renters, because they certainly wouldn't get any support from the Liberals or the Yukon Party.

Ms. Buckway: It's curious that the two mobile homes that are for sale in that park haven't been snapped up by the eager public. We have a massive clear-cut on Range Road because the government forgot to tell the contractor not to cut all the trees down. It's a $2-million mobile home condo that nobody wants to live in. Is the government planning to market this project more effectively this summer, Mr. Speaker? Are they planning to discount the lots so people can afford to move in? Or are Yukon taxpayers going to be stuck with yet another example of NDP financial mismanagement?

Hon. Mr. McDonald: They haven't identified one example - one real example - of NDP fiscal mismanagement. All they can do is promise that they'll never spend any surplus, which is a completely ludicrous notion in the first instance.

Mr. Speaker, there are hundreds of lots for sale in Copper Ridge, right now - and not a single question. It may be that there is not a single question about those lots because those are for the upper-income people, who the members opposite obviously feel some sort of alignment. But for the lower-income people, they seem to be highly critical of this one option - one option - in the City of Whitehorse through which they can break away from a rental situation and move into real home ownership. The NDP will stand for all people, including lower-income people, and over the objections of the Liberals.

Speaker: The time for Question Period has now elapsed. We will now proceed with Orders of the Day.



Bill No. 99: Second Reading - adjourned debate

Clerk: Second reading, Bill No. 99, standing in the name of the hon. Mr. McDonald.

Hon. Mr. McDonald: I'd like to thank all members who participated in the debate on the main estimates. It was a pleasure to hear the considered thoughts of so many members who had looked over the budget papers and decided for themselves as to whether or not the features of the budget were supportable. I take note that the government side of the House has decided that they will be voting for the main estimates; the Liberals and the Yukon Party have indicated that they will be opposed to the main estimates.

Mr. Speaker, one might ask the obvious question: if opposition parties vote against the budget, is that strange or different, or shall we always expect opposition parties just to vote against the budget on principle? Well, if that were the case, Mr. Speaker, that does not explain why the Liberals in opposition to the Yukon Party voted with Yukon Party budgets, but when they are in opposition to the NDP, they vote against NDP budgets.

Mr. Speaker, the criticism levelled by the Liberals and the criticism levelled by the Yukon Party are typical and expected. We don't hear a lot of resounding criticism outside this Legislature of this budget and of these estimates. We hear a great deal of support, in fact, for the estimates, for the proposals, and we hear a dismissive and arrogant attack by the Liberals and the Yukon Party against these estimates simply because they think that this is what they refer to as an election budget. That's what the Liberals called last year's budget. It was also an election budget. And one might be forgiven for thinking that was a compliment, Mr. Speaker, because obviously it meant that there was obviously something there that one would want to take to an election, would want to champion before the people of the territory on their doorsteps. And this, too, is considered by the opposition an election budget, but it is highly dismissive. They say the New Democrats have taken some trouble to respond to a wide variety of needs and they have dismissed their needs as being the needs of their friends and special interests.

But, Mr. Speaker, my thought, when the official opposition leader concluded her remarks - I could not believe that she, in her conclusion, reflected my thoughts to the T. After hearing all this vacuous criticism about the budget, the Liberal leader said that the budget failed to inspire confidence in the Liberal caucus.

Her remarks do fail to inspire confidence in the Liberal caucus, and about that I do agree.

Now, Mr. Speaker, as I've pointed out, the Liberals and the Yukon Party vote together whether the NDP is in opposition or in government. When the Yukon Party puts forward budgets that have high-spending practices, high-taxing practices, cutting public servants' wages, the Liberals are there to support them.

When the NDP has investments in infrastructure around this territory, responding to broad community needs, tax cuts and increases to public servants' wages, the Liberals vote again with the Yukon Party and against the NDP. Mr. Speaker, one might be forgiven to think that, when one slices through all the rhetoric and all the spin-doctoring out there and when it comes to the final crunch, the Liberals and the Yukon Party think the same and act the same. But the New Democrats have a new way, a better way.

Mr. Speaker, the Liberal leader said that she disagreed with any deficit at all and that there should be no spending out of savings accounts. Then she made some reference to the rainy day fund, as if somehow that must be the technical auditor's term for something - the rainy day fund.

Well, Mr. Speaker, what happens is that if you have a large savings account, and you expect your revenues are going to go down, and you want to maintain stable spending practices, you're allowed to invest your savings account to provide for stability in the economy, to ensure that people have access to jobs on the capital side, and be assured that their services on the operations side are protected - like health care, like education, the basic social services in our community. And, Mr. Speaker, with careful planning we have, in fact, done exactly that. We committed to doing that three years ago, and we've done exactly that. But the Liberals wouldn't have us do it. The Liberals would simply have us racking larger and larger savings accounts - what they call "rainy day funds" - waiting for something.

But, Mr. Speaker, we committed to stability in terms of providing services and to enhancing key services and to providing strategic investments in infrastructure around this territory, and we're doing it.

Now, one might be tempted to believe that the Liberals view excessive spending on the part of the NDP as being a problem, that they think we're spending too much. One also might be thinking that we're not spending enough, because they say both things on the same day. Every single day in this Legislature - or hardly a day goes by - when members in opposition in the Liberal caucus don't ask for more spending. Hardly a single day goes by. And the only program that they've criticized and suggested that there could be savings or realignment is that they are opposed to the community development fund. The Liberals have said over and over again that they oppose this community development fund; they don't like it. This is a program that responds to community needs, but they've chosen to target the one thing the communities want most as something that they wouldn't want, and just ask us to spend more and more in each budget.

Now, that is what one might think is an irresponsible position from people who otherwise would call themselves a government in waiting.

Well, Mr. Speaker, when the first opportunity comes for reducing taxes to all, the Liberals' response is dismissive, doesn't amount to much. I'd love to see what they have to say about Paul Martin's tax cuts, which are roughly equivalent in terms of size. And the timing is almost identical. I couldn't have done it differently. I'd like to see what they have to say about that, because their gut reaction, every time there is any criticism of the federal government, is to defend the federal Liberals. That's their first gut reaction. Whenever they're challenged, their instinct is to defend the federal Liberals.

For their information, and for the information of the Yukon Party, this is not the first year that tax cuts have been brought in by this government into this Legislature. Last year we were reducing taxes in this Legislature. Last year we implemented the low-income family tax credit. Last year we invested in a child benefit, but it didn't receive much play from the members opposite because they don't particularly care very much about that. No one in this Legislature, for all the spending demands and requests that come forward every day, ever asked that we provide some tax relief for low-income people. When it does happen, there's virtually no mention of it, and then when we introduce tax relief for people generally, they refer to it as the first tax relief ever. So anybody who is out there now who might be trying to understand what the Liberals and the Yukon Party care about - obviously low-income people's needs do not rank very high. Not only do they not ask questions or make comment about it but, when it happens, they dismiss it.

What reasons do the Liberals say they have for not wanting to support this budget? Well, they say that it all amounts to what they refer to as uncertainty. When they talk about uncertainty, they always talk about it in the context of land tenure, because presumably they have been told by someone that uncertainty in the mining sector is a disincentive for investment. And so, what issues do they raise to support their claim of uncertainty? They raise issues that affect land tenure and resource management, such as land claims, the development assessment process. They claim the Yukon protected areas strategy, and nothing else. So clearly, they're talking about land tenure.

They're talking about resource management, and they're trying to make the case in this Legislature that it is the NDP's responsibility - the NDP government's responsibility, which does not have responsibility for resource management, not yet - and that we should take responsibility for an uncertain situation. The Liberals have tried to make the case that the land claims negotiations have been held up by the NDP government, when the reality at the table is that, when we all talk about the issues - the big issues that are separating us - there are two issues separating us, and those issues can only be resolved by the federal government. But it may have something to do with the Liberal's desire to turn people's attentions away from their counterparts in Ottawa and to the Yukon NDP government.

They raised the issue of DAP - the development assessment process, a piece of federal legislation pursued through the land claim agreement - and claim that because the New Democrats held back DAP from proceeding, somehow it would have been better if we'd simply let it go. The Yukon Party has tried to make the same case. The Yukon Party leader indicated that DAP was done and that somehow the NDP, by holding it back and preventing it from taking its natural course, has created an uncertain environment.

Mr. Speaker, the reason why the government put a check on the development assessment process was because citizens of the Yukon had no hand in designing it. The general public did not know what was in it and, when they found out, didn't like it. And so their representatives - the people on this side of the House - decided that it needed review and thorough public consultation, over the objections of the Yukon Party, and through a constant barrage of criticism by the Yukon Liberals.

But it was the Yukon New Democrats who, over the opposition's objections, tried to improve the development assessment process, bring some public consultation to the process, and make it work for Yukon for all time.

So, in this netherworld land that the Liberals inhabit, they try to give the impression to the general public, in the context of a response to this budget, by saying that the Yukon government - the Yukon NDP government - is responsible for closure of the land claims and responsible for a federal DAP act that did not meet the needs of Yukon people. What hogwash.

Mr. Speaker, the Liberal leader goes on to talk about the protected areas strategy. You know, Mr. Speaker, despite the fact that the Yukon Party did sign us on to the protected areas strategy, despite the fact that the Yukon Party government made the national commitments to get us involved in the protected areas strategy, it has only been the New Democrats who have brought the strategy forward and tried to make it work.

I know that the Yukon Party said they were going to have all 23 ecoregions represented, full park status by the year 2000. Well, that's obviously fantasy. But you can tell from the tenor and the tone of the questions put forward by both parties that they'd just as soon see the entire protected areas strategy disappear into the ether.

And yet, Mr. Speaker, we clearly have indicated support for the protected areas strategy, to try to make it work. It's a national program, it's happening in every province and territory in this country, and we have an obligation to try to make it work, and we are making it work, and we're seeing progress - on- the-ground progress.

But, Mr. Speaker, we cannot be put off by the Liberals and the Yukon Party.

Mr. Speaker, we believe that the approach that we're taking to protected areas, to land claims, to the development assessment process, to the economy generally, is what the vast majority of Yukon people see as the appropriate, balanced agenda.

Now, the members opposite say that the Yukon NDP has a bad attitude about business - a bad attitude. It must be because we have a partnership with business. It must be because we have struck ongoing relationships with business on trade, in taxation, in tourism and the resource sector; that we have overt support from the business community, they have drawn the conclusion that we have a bad attitude about business.

Well, Mr. Speaker, I would argue that the Liberals and the Yukon Party have a very bad attitude about business. And that is because whenever there's any suggestion made by anybody in this Legislature that government and business should work together to explore new markets, try new things, sell beer to Ontario, sell fish eggs to China, sell log homes to Alaska, whenever these accomplishments are cited in this Legislature, they're completely dismissed in an arrogant, offhand way. The Liberal leader has referred to the businesses and the people who are engaged in this activity as "losers".

Mr. Speaker, they're not losers. They're winners. They are people who are accomplishing things. They are people with a can-do attitude. They're not part of the gloom-and-doom atmosphere that is pervasive in the opposition ranks in this Legislature.

They were certainly prepared to have us all debate at great length economic forecasts in the past, which suggested that the full impact of the Faro mine was having its impact on the Yukon economy with people leaving the territory and problems with business profits, and all that sort of thing. We were going to explore every detail of the after-shock of the closure of the Faro mine.

But, Mr. Speaker, when the indicators from the same people suggest that things are improving, they dismiss it as propaganda. When they embraced the same economists a couple of years ago and said that the NDP should listen to everything they're saying, they're prepared to chop those people right off at the neck the moment they report something that's positive in the economy. They're prepared to sacrifice those public servants in a heartbeat whenever the news is good, because it doesn't suit their narrow political agenda, which is gloom, doom and negativity.

Mr. Speaker, the NDP government has chosen a path to encourage partnership, not only with the business community, municipalities, non-government organizations, citizens generally. It has chosen a path to work with people to improve our economic, social and environmental state of affairs, and that's a reflection of the fact that a lot of people support the budget and vocally support the budget, even when they don't have to support the budget publicly, even when they have to shout down the voices of the opposition - the Liberals and the Yukon Party. The Liberals, who care nothing about the work that is being done with the business community and labour community on taxation measures, care nothing about the trade and investment partnerships that we have constructed to really diversify our economy. They nit-pick around the edges of every initiative that this government brings forward, whether it be telecommunications, or energy subsidies, or new energy infrastructure. It doesn't matter. They nibble around the edges, try to pick holes. Presumably their hope is that, somehow, through this ankle biting, the conclusion will be that somehow something is wrong. The reality, Mr. Speaker, is, of course, something quite different, and the public knows it.

The Liberal leader said that the budget wasn't balanced in terms of its basic agenda. She said that there's $500,000 for protected areas, but there's zero for the mineral strategy. All that tells me is that she has not read the mineral strategy or even the draft mineral strategy. One feature of the mineral strategy is a whopping exploration tax credit worth over $2 million bucks. That's part of the mineral strategy. So, she is content to leave the criticism at the superficial level, do no homework, listen to a few Liberal advisors, and think that that constitutes careful, considered criticism, and that will elevate her to the status of government leader in waiting. What a pathetic sight.

There is half a million dollars for parks and protected areas in this budget. There is also half a million in this budget for mineral assessments, not only for the protected areas but also for other activities around this territory. And when it comes to the geoscience program, the NDP government made a commitment to protect it. It's being protected in this budget, and even though there is a decline in the federal commitment toward this program in the coming year, the NDP remains and stands committed to the geoscience program.

The members opposite say that there is $750,000 for off-site work for the Argus Corporation, but, holy smokes, there is only $125,000 for legal aid. Well, Mr. Speaker, there is $750,000 for off-site work in this budget for water and sewer services at the north end of the waterfront. There is also $1.5 million over two years, starting in this budget, for off-site work in other parts of the City of Whitehorse, which provides benefit to other businesses.

That will be one of the impacts, and we're happy to do it. And when the member takes a shot at our legal aid commitment, we have put new money into legal aid every year since we've been in office, and we're putting a whopping amount of increase in here again, without any suggestion that the federal government's going to keep up its end of the bargain.

Is this just another part of the knee-jerk reaction to defend the federal government by attacking the Yukon government, which has been keeping up its end of the bargain? So if the federal government makes no commitments to new funding, allows the program to languish, the NDP government adds every year, not only do we get criticized for doing what we're doing, but we're getting criticized for not holding up the federal end, too.

Well, Mr. Speaker, there are many things in this budget that the Liberals didn't ask for that are there anyway. I don't remember - despite all the rhetoric - I don't remember a request or demand for social assistance rate increases. I don't remember that. There was no request. We did it anyway - why? Because it was the right thing. And what's the Liberal response? "You should have done it sooner. Should be more." They've said that about virtually everything we have done. Anything that's popular, we should have done it sooner, and we should have done more of it.

Well, Mr. Speaker, this budget responds to a broad, wide variety of needs in our community. This budget is not the sum total of what the Liberals dismissively call, "pet projects for interest groups." Is new tourism marketing a pet project for the Tourism Industry Association special interest group? Is Yukon-wide recycling a pet project for a Raven Recycling special interest group? Is building a facility for the Franco-Yukonnais a pet project for l'Association des Franco-Yukonnais?

Why do the Liberals insist that every community organization - whether it be the anti-poverty activists, or whether it be the Disabilities Association, or the Yukon Livestock and Agricultural Association - they're all dismissed by the Liberals as special interests.

All the expenditures in key areas are referred to as "pet projects". They're all arrogantly dismissed as being electioneering, but I can tell the members that new tourism marketing is considered very important for the future economy of this territory. Recycling is important to many people in this territory who are interested in conservation and reducing waste, improving waste management, and it was raised not only by what the Liberals refer to as a "special interest" - dismissively refer to as a "special interest", namely Raven Recycling - it was also raised by municipalities and others around this territory, the financial support being given to the municipalities themselves.

A major investment in this budget is a recognition of the needs of municipal governments. Money provided to the hot lunch program for kids in our school system is not a pet project for a special interest group. If we improve the hours for the Handy Bus in Whitehorse, that's not a pet project for a special interest group. If we provide some film equipment for the film industry in this territory, that's an investment in encouraging more filming, more economic activity in this territory. If we invest in the Mayo Road fire hall, what dismissive reaction will the Liberals give to that project - this pet project for a special interest group.

If we invest money into a CAT scan at the hospital - I want to point out that that special interest group that the Liberals dismissively refer to includes all the people of this territory. It's a very large group of people; it is the citizens of this territory. The list of people that the Liberals have dismissed is very long.

But I would choose to characterize the expenditures differently, that these expenditures are an investment in our future - our economic future, our social future, our environmental future. It's an investment in ensuring that people have opportunities to grow and thrive in this territory.

Now, the Liberal leader said there was nothing in this budget for Watson Lake except for a bridge on the Nahanni Range Road. She said, "I can only imagine the reasoning for this, as I'm sure others can." Well, that was the request from the mayor and council of Watson Lake, Mr. Speaker. And, like the mayor and council in Watson Lake, or the mayor and council in Haines Junction or Dawson or Carmacks or Mayo, we listen carefully to the people of this territory. We have a dialogue with them. We listen carefully to their priorities. We encourage priority setting, and we try to work with communities - not only municipalities but all communities around this territory - and people throughout this territory who are trying to make the lives of the Yukon better.

Mr. Speaker, far from people being unhappy, of course, people are pleased, obviously pleased, generally, with the estimates before us.

Mr. Speaker, the criticism of the Yukon Party is perhaps the weakest and most limp performance that they have put forward in this Legislature. They're still swimming around and drowning in the good old days, but the Yukon Party economic agenda will not be repeated. The Yukon Party made an attempt to inflict their agenda on the people, and the people rejected it. No matter how many times the leader of the Yukon Party in this Legislature encourages us to follow his example, we will not put the people of this territory through that pain and suffering again. People deserve better government than that.

When the Yukon Party was responding to the closure of the Faro mine back in 1993, their response, supported by the Liberals, was a big tax-increasing budget and cutting public servants' wages. They didn't even need to do that, but they did it anyway because it was idealogically driven. It was not driven by necessity; it was idealogically driven. They wanted to do it. And what was their response to the general economy? A couple of limp programs, like the Yukon industrial support policy and that venture capital guarantee or whatever it was called, which was ballyhooed as a new policy initiative, new innovations. That was the sum total of accomplishments over four years. Apart from that, it was hands off, and let's build a road. That was the Yukon Party's economic policy.

Mr. Speaker, throughout that entire period and even into this Legislature, the Yukon Party comes back over and over again saying that O&M is bad, capital is good - the same old mantra that drove their thinking in the past. Presumably when the Yukon government puts hundreds of thousands of dollars into tourism marketing through the O&M budget, the Yukon Party would reject that. But whether it be a kids lunch program or tourism marketing, we will improve the situation for people around this territory over the obvious objections of the Yukon Party.

You know, Mr. Speaker, the one thing that really must grate on the Yukon Party more than anything else is probably the wage increases for public servants, because they figure that they had a good excuse to cut the wages for public servants. They figured that they probably were going to manage to blame that on the NDP too - the previous NDP government. They figure they had it made.

They went ahead and didn't even bother bargaining with anybody. They went ahead, made it clear they were going to cut wages, and even on the day that they tabled the legislation in this House saying that they were going to cut wages for public servants, they announced a $20-million surplus.

So, clearly, Mr. Speaker, their drive to cut public servants' wages rings through time and again, no matter what, in rain or shine, storm or sunny day, the Yukon Party is consistent. They don't like public servants and they don't like public servants' wages.

Mr. Speaker, one thing I've yet to figure out, however, is exactly what their position is on taxes. The only time they've ever had any chance to do anything about the tax system, the only time they ever actually had the levers of government at their fingertips, and even when they were facing the shutdown of the Faro mine and the greatest drop in GDP in Yukon's history, their response was the most massive, comprehensive tax increase that this territory has faced in the last quarter-century. That was their response then.

And when the Yukon Party is in opposition and the Yukon NDP lower taxes, all they can say is that it's an insult. Maybe what John Ostashek means is that it is obscene. He has used that word before. But, Mr. Speaker, the tax reductions that we have made both for low-income people starting last year, and for people generally this year, will have a very real impact on the income of families and individuals throughout this territory.

And it is not only a good start, it is a good initiative in and of itself.

Now, the Yukon Party of course will go on and on about how the NDP government was responsible for the collapse of world metal prices and that gold prices - they even decided gold prices were going down while the NDP is in office - presumably he draws comparisons that the NDP is in office in Yukon and consequently the world gold price drops. Well, the actions that the government has taken on fronts throughout the territory, in every community, reflect a faith in our future. This budget contains major investments in telecommunications, it contains investments in new infrastructure at the Whitehorse Airport. It contains investments in marketing for more airlines, and charter airlines, to come to the territory. It contains investments in capital works for virtually every community of this territory.

There are new investments in other areas in the tax field that have been requested and suggested by the tax round table - the community round table that has been investigating our tax system. This budget contains investment in roads, in new services, in new infrastructure at the hospital. This budget is a people's budget that recognizes the broad need of people throughout this territory and helps to balance those needs.

We have had a little criticism from some editorial writers who have laboured at the fact that government just doesn't provide enough controversy to keep them selling papers.

There is just not enough there to keep the papers flowing. I've even had people shout out of their car windows that the man from bland is back. Mr. Speaker -

Speaker: Order please. The Government Leader has two minutes to conclude.

Hon. Mr. McDonald: Mr. Speaker, this government is doing exciting things in a competent way. For the first time ever, we're developing infrastructure around this territory that will help everyone. We're making investments in ports to secure our long-term future. We're investing in high-tech infrastructure. We are investing in people in every community. We are investing in lower-income people. We are investing in business opportunities throughout the territory. We are investing in new activities in oil and gas. We have supported new activity in the forest industry.

Mr. Speaker, we have new investments in education. We have new investments in technology and in virtually every sphere of activity. We are doing exciting things throughout this territory, and I will do my darndest to make it as exciting as possible for the editorial commentators. But, Mr. Speaker, we will do it competently, we will do it carefully, and we will do it in consultation with people throughout this territory, because that is what the people want, that is what the people deserve, and that is what we'll deliver.

Speaker: Are you prepared for the question?

Some Hon. Members: Division.


Speaker: Division has been called.


Speaker: Mr. Clerk, would you poll the House.

Hon. Mr. McDonald: Agree.

Hon. Mr. Harding: Agree.

Hon. Ms. Moorcroft: Agree.

Hon. Mr. Keenan: Agree.

Hon. Mr. Sloan: Agree.

Hon. Mr. Fairclough: Agree.

Mr. McRobb: Agree.

Mr. Fentie: Agree.

Mr. Hardy: Agree.

Ms. Duncan:Disagree.

Mr. Cable: Disagree.

Mrs. Edelman: Disagree.

Ms. Buckway: Disagree.

Mr. Ostashek: Disagree.

Mr. Phillips: Disagree.

Clerk: Mr. Speaker, the results are nine yea, six nay.

Speaker: The nays have it. I declare the motion carried.

Motion for second reading of Bill No. 99 agreed to

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

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

Motion agreed to

Speaker leaves the Chair


Chair: I will now call Committee of the Whole to order. Do members wish to recess?

Some Hon. Members: Agreed.

Chair: Fifteen minutes.


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

Bill No. 99 - First Appropriation Act, 2000-01

Chair: Committee will be dealing with Bill No. 99, the main estimates. Is there any general debate?

Ms. Duncan: Mr. Chair, I'd like to begin the discussion this afternoon by focusing again, as I did in my response to the budget, on the larger issues facing the territory, issues that are unresolved and that are indeed impacted by this budget.

For years and years and years, in every election campaign consistently in the Legislature, the top priority of everyone and every party has been the settlement of land claims. We have discussed these in this Legislature - indeed in this session - in this calendar year, and the Government Leader has indicated that there are two key federal issues - section 87 and the loan repayment. We've had a lengthy discussion about them. There was a principals meeting this weekend.

There are, however, issues that are unresolved between the Government of Yukon and First Nations. That is abundantly clear from the public comments from First Nation chiefs with respect to this government, indicating that there are Government of Yukon issues that are unresolved at the table.

What does the Government Leader see happening in this regard? The Government Leader has said today that he anticipates seeing at least four of the outstanding First Nations' claims resolved relatively quickly. Is the Government Leader saying there are no Government of Yukon issues left to be dealt with at those tables? Exactly what are the outstanding Government of Yukon issues at the First Nations' land claims negotiating tables?

Hon. Mr. McDonald: Well, the issues, as the member has quite rightly identified, are issues that I wouldn't recall being federal issues. I would call them being issues that could be resolved by the federal government. The rolling implementation of section 87 of the tax provisions and the loan repayment are issues that are only within the purview of the federal government to resolve.

My understanding is that the issues of the loan repayment and the features of the agreements that dealt with how the First Nations were going to pay back the negotiating loans did not even include Yukon government negotiators in the past.

Because this is clearly an issue that is the responsibility of the federal government, in that they are the ones providing the financial compensation pursuant to the claim. So, there's no doubt that these issues are large. They have national implications, and there is an interest on the part of the federal minister, I understand, to resolve those, as long as he's not being asked to create national precedents, which would not be supportable - financially supportable. As long as he's not being asked to do something he can't do, he'll try his best to find a way through this. And, as I indicated in Question Period, it might not be just the forgiveness of some of the negotiating loans. It might be, in fact, some other way to direct some resources to the First Nations that are on the cusp of signing.

Now, with respect to the outstanding claims, the White River claim has of course been negotiated. The leadership has indicated that they feel uncomfortable taking it to ratification until such time as these two outstanding issues are addressed.

There are no other issues - federal, territorial or any sort that I know of. In terms of coming down the north Alaska Highway, there are basically three issues in the Kluane claim. The first two are the section 87 - rolling implementation - the loan repayment and, as well, a specific claim to lands in the national park. This remains outstanding but could possibly be referred to a specific claims process, and the feeling is that we can settle this claim too, once the other two big outstanding issues are addressed.

In coming down the highway farther, the Ta'an claim has the outstanding issue with the federal government with respect to funding. I understand it has been resolved, and the Ta'an expect to go to ratification this summer, so that agreement will proceed.

With respect to Carcross, the two big issues remain the two big issues, but there are small land issues like lot swapping and land selections near the new sewage lagoon - small issues, important for individuals involved, but issues that I would suspect can be resolved very quickly once we've got the big issues settled.

With respect to Kwanlin Dun, there has been some work in terms of the Whitehorse waterfront. There have been some discussions about self-government and about lands. There is a recognition that it is going to take some time to resolve all of these issues. The claim is not that advanced, and it was for that reason that the Chief of the Kwanlin Dun asked for a mandate that was greater than two years. Nevertheless, I think that - given that it's one of the final claims - in my opinion, if we can't settle the claim, we can put a very big bite into it over the next two years. I think we can settle it if we get these big issues out of the way.

In terms of the Kaska claims, we have not had much discussion about the Liard claim, other than there are a few issues. They have identified more lands for interim protection than is due, and for the purposes of interim protection, that has to be culled down. But in terms of the basic claim itself, it has been negotiated. The Ross River claim, I would suspect, is 60 to 70 percent negotiated. Both claims, in order to provide some notion of certainty, have to resolve the transboundary issues, because the federal government has formally recognized the Liard traditional territory as 100 percent the traditional territory as well of the Lower Post Kaska. That means that to settle with Liard, we have to settle with the Kaska broadly, in order to bring certainty to the area.

That means a transboundary claim. The difficulty we have with the transboundary claim is that, right now, there is no table. There is no table for any of it, because the Kaska renewed a court action with the federal government, claiming that, over the many, many years, there has not been negotiation in good faith, and the federal government's response is that they will not negotiate while there is litigation underway. So, that table closed, and we do not have a negotiating table to address any issues or to advance anything. So we have to get past that hurdle first.

Once we're past that hurdle, we also have to deal with the fact that the mandate in British Columbia has to be identified, and the difficulty everyone faces, of course, is that the mandate in British Columbia is not as good as the mandate in the Yukon. So this causes lots of collateral damage to our tables in the Yukon.

But nevertheless, we believe that, if we get a negotiating table underway for the Kaska claim, we can make some inroads into advancing the Kaska claim and maybe even bring it to conclusion, but we're going to have to bring it to conclusion with the Kaska broadly, and not just the Liard and Ross River Kaska.

I think I've covered all the First Nations.

Ms. Duncan: Mr. Chair, I'd like to go back to some of the points that the Government Leader has raised in his response.

The Government Leader's response would indicate that, for White River and Kluane, there is nothing at this point that the Government of the Yukon negotiators can be working on to bring those to resolution. The comment from the Government Leader about Carcross was that, once we've got the big issues, the federal issues, settled - is the Government Leader saying, with respect to Carcross, then, that these - he used the term - small land issues will not be dealt with until the federal government has resolved their two issues re: the extension of the loan repayment and section 87?

My understanding is that section 87 has now gone to the courts. What's the expected date for the response from the courts on that?

Also, with respect to Liard and Ross River, is there any sort of a time frame with respect to these transboundary issues and so on that the Government Leader can attach to that?

Hon. Mr. McDonald: With respect to land issues, they are obviously of interest to the First Nation. We have settled most land issues - the R-blocks and the community lands and that sort of thing. They're done. The issues are around individual selections - swapping lots in one subdivision for another, and those kinds of issues. They can be resolved. In the experience of negotiators, these can be resolved fairly quickly if you're really at the end gate. It's harder to resolve all those issues if you're not at the end gate, because they keep cropping up. These are normal issues that crop up between governments constantly.

In terms of section 87, there's going to have to be a determination as to whether or not the court case does continue. The agreement among First Nation leaders and the federal minister on the weekend was that, in the first instance, there would be an attempt to get a meeting with Mr. Martin, the federal Finance minister, to try to see whether or not there was any willingness at the political level to seek a change, to allow for the gradual implementation of these provisions.

Depending on the outcome of that search for a meeting, the court case may well continue, and, if it does, I can't really say when it would be concluded, but hopefully it will be as soon as possible. We're not a party to the court case.

In terms of the transboundary claims with the Kaska, that is a very difficult thing to answer. First of all, we need to get a negotiating table. We have to get a sense of the expectations from the B.C.-based Kaska as to their interest in the Yukon, and the extent to which the Yukon Kaska have an interest in B.C., and how elastic the B.C. mandate is to deal with it.

I would hope that we can move quickly once we get a table settled, and certainly the Liard claim has been a very high priority for us. There was a point where we thought we had essentially settled the Liard claim, and that we were going to move to ratification. Elections in Liard changed a lot of that, and recognition that there would be a Kaska nation approach to the Kaska claim, and the realization of a transboundary overlap in traditional territories made it fairly obvious that we're going to be in a longer, more protracted discussion.

But in terms of the negotiation of the domestic claim, it was hugely advanced, and I thought that we were - actually, I thought we were in a position to get the Liard claim before White River.

Ms. Duncan: Mr. Chair, I'd like to ask the Government Leader to give a sense of the calendar, if you will, for the balance of this year, with regard to the land claims and the negotiation process.

Now, there are clearly - as, again, has been restated - the federal issues that are outstanding. My understanding is that the federal minister is going to take perhaps some time to renew the mandate, or to receive that commitment from his federal colleagues, and that there has been talk of a second meeting - a principals meeting, as the Government Leader refers to them.

Could we have a sense from the Government Leader of the calendar, if you will, with regard to the negotiation process for the next six months?

Hon. Mr. McDonald: Well, firstly, in the near term, there will be attempts to continue working on these two outstanding issues; that's a given. The federal minister has indicated that he's prepared to defend an extension to the mandate of two years, and he's going to do his best to try to get that extension to happen by the end of March. He's given notice however that, realistically, in the federal system that may be optimistic, and there may be a hiatus in terms of paid negotiations at the end of March into April, and that may affect things. He's not empowered, according to Treasury Board rules, to flow money for negotiations even if he had it, unless he's got a mandate, so that's true for the funding of negotiators for both the federal, in-house negotiators as well as the First Nation negotiations.

So, there may be a bit of a window where they won't be at the table; nevertheless, we have resolved that we'll have a meeting - what is referred to as a principals meeting - on May 19, and at that time, there will be an attempt to close on the large issues at the meeting, as well as close the negotiations for Kluane and Carcross at the meeting. And presumably, if the big issues are resolved, White River will go to ratification, as will Ta'an, and that will deal effectively with the four claims. Kwanlin Dun First Nation negotiations will continue, and the negotiations for the Kaska will continue if there is resolution to the issue of the big court case and whether or not the table will be opened to actually deal with the negotiations. We need to have, as I say, the venue to actually negotiate.

I don't know what the situation is there. That was not resolved, other than that we would continue talking about it.

Ms. Duncan: Mr. Chair, the development assessment process, clearly part of the umbrella final agreement - when the government first took office in 1996, it tried to take control of this issue. It tried to set up a commission, tried to move the issue forward, tried to engage the public on this. Now we have a sense with this budget of a distancing of this government from the development assessment process issue. There appears to be a change in the game plan, so to speak. There is still funding in the budget for the secretariat, although it's not the full-fledged commission that was originally begun.

What is the current plan by the government for moving this issue forward or working on this issue? And perhaps, while he's responding, the Government Leader could indicate where his government stands with respect to the Water Board and their commitment, or not, to its continued existence and use through the development assessment process legislation.

Hon. Mr. McDonald: Just to deal with the last question first, the Water Board is recognized in the land claims agreement itself. It's not going anywhere, not unless there's a change to the UFA and the final agreements. It's going to be there basically indefinitely, like everything else that's recognized in the land claim agreement.

With respect to the development assessment process itself, it's still very much on the front burner. We're working with an advisory group of citizens from the development and the conservation communities who meet regularly to discuss various iterations from the federal government. We have indicated that once the federal government is prepared to release another version of the legislation, based on what has been told to them by Yukoners, we will have another public session where we will go through it in a workshop atmosphere to try to get good comments and facilitate a discussion among the drafters and citizens about various features of the proposed process.

Our working group continues to meet. We are, as I say, going to have a forum when we get a new draft of the legislation, and our commitment to continue this process and to not sign off until it's right. I must say that, certainly, recently the Government of Canada and CYFN negotiators have participated as well in our process. We're not trying to embarrass anybody. We're just trying to get a good process. So, we will continue with the public consultation, and we will continue until we feel that we've got some general consensus around a new assessment model in the territory.

Ms. Duncan: Mr. Chair, the Government Leader's exact quote at the Cordilleran - because I listened to it at the time with regard to the development assessment process - was that the Government of Yukon was going to hold the pen until they get it right. That's essentially what the Government Leader has said again today.

What time frame - I recognize that it's a three-party process and that the Government Leader has stated that the Government of Canada and CYFN are still participating in this. Is there any idea of how long this might continue? There's a certain weariness of the endless stalling or lack of movement on this particular issue. It doesn't seem to be going forward. There's a weariness developing among the public. There's the clear desire on the part of the government to get the legislation right. What time frame are we looking at, and what is the envisioned date for this public workshop?

Hon. Mr. McDonald: Well, at this point it may be - when I say we'll hold the pen, I mean we will hold the hand that holds the pen, so we're not actually drafting the legislation itself.

What we're doing now is that we're going through continued policy negotiations, working with our working group on our corner of the tripartite table, and we're continuing on, based on the comments that have been made in the past about various features of the process. That will continue this spring. We would expect that there will probably be a period of a month or two when we will not have direct discussions with the federal government, as they do go through their drafting process. They insist on a process that has negotiations, and then their lawyers just sort of work on it. And we hope that what happens between the time we finish discussions and the lawyers finish working on it is that we actually have something that has advanced a lot. But it won't be until we have gone through this process this spring - and then with the lawyers working on the next draft - that we'll see a draft. And at that point, of course, we've indicated that we will have a workshop based on that draft.

Ms. Duncan: Mr. Chair, I didn't hear the Government Leader give me an actual date for that, although I had sensed that there wasn't one available at this point in time.

The development assessment process, discussions around the blue book, issues that surfaced, as they have surfaced every winter for the last number of years, around forestry - all of them are part of the bigger picture, also of devolution, and I would like to ask the Government Leader to provide for the House an update on the devolution process. What's next? What's the plan? What's the outline for discussions on the Yukon Act? How are the negotiators working along the devolution agreements? Are there any outstanding issues with regard to the human resource transfer? How are the devolution discussions going?

Hon. Mr. McDonald: Well, briefly on the subject of DAP, of course, while DAP legislation is being drafted, the CEAA legislation continues to be the law of the land, and that would continue until DAP is in place, unless devolution happens first and, in that particular case, the Yukon equivalent of CEAA - which members have in their hands, which I tabled last fall - that legislation would take precedent.

So there will always be environmental assessment legislation, but when DAP actually happens is still to be determined and, as I say, we continue with the policy discussions with the help of our own focus group, and I would suspect that will continue in the spring. Then there'll be a period of time when the federal government will draft legislation and then, after that, we will see it. When we see it, we will hold a workshop.

I presume, if people get it right, and it's seen to be good, then I would suspect the federal government would put it on their fall legislative calendar - that would be their plan - and we'll make a decision at that point as to whether or not we feel we agree that it's right and, at that point, whether we'll support it or not, and see where we go.

In any case, we are trying to make it work. We're not passive in this process, and we are trying to bring people together to ensure that they know and are aware of the discussions as they go.

With respect to devolution, the negotiations continue. The target is to get a completed transfer agreement for the federal minister's purposes in terms of taking it through the federal Cabinet process by the summer - July probably.

We would hope to be able to have some discussions about what might be in the Yukon Act and finalize those discussions next fall, probably September or Octoberish, I would imagine. We would hope that the federal government will have it on their agenda for September-October - I think it's October when they open - third week in October - and at that point we will hopefully get their support, and it will pass through Parliament with an implementation date of April 1, 2001. That's basically our plan at this point.

There are some issues - I'm told by negotiators they're not awesome issues. They are resolvable issues in the environmental chapter, and all that is being attempted at this point is to try to translate into the transfer agreement that which was agreed to in principle in the agreement in principle.

Nobody is disputing the basic principle that the federal government will be responsible for environmental liability prior to transfer, and the Yukon government will be responsible for liability post-transfer. It's just that putting that into law, working out how that would actually work, is the subject of discussions and those discussions are going along all right. I understand the human resource issues have been addressed and a lot of the technical elements of the transfer - buildings and that sort of thing - has all been taken care of.

So, we're getting down very close, of course, to the final transfer and the final agreement. We will probably be in a position to have closure on that in July.

Ms. Duncan: I have a few follow-up questions with respect to this overall devolution issue for the Government Leader.

I was interested in having the Government Leader outline what further discussions with Yukoners are anticipated on the Yukon Act. The Government Leader has also committed in the past in this Legislature to having the ability for non-government organizations to avail themselves of funding to examine the mirror legislation. What has been the uptake on that offer and where does that currently sit? And the commitment to devolution - it's my understanding that the federal government is committed to devolution proceeding and that, should we be still negotiating land claims - which we will be - that that will not hold up the devolution process. Is that the Government Leader's commitment as well?

Hon. Mr. McDonald: I think I may have missed the first question but if it was - the first question dealt with mirror legislation?

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Oh, the process, in terms of the Yukon Act - as I have done before, I would still like to work with members opposite to work on trying to overcome differences between us with respect to some features of the legislation. My sense of things - I may be wrong - is that there's a genuine desire to try to deal with these issues and to deal with them in a nonpartisan way. I will continue with that approach, unless it appears impossible to continue. But nevertheless, I think that this is an important enough project that it would be highly desirable to get all-party agreement - at least, all parties in this Legislature's agreement to the legislation.

I have as well - of course - worked with other parties outside the Legislature, particularly the Reform Party, being one in the territory, as well as keeping people informed as to what's going on with a view to try to build as broad a consensus as possible for all the provisions of the legislation.

I do have some ideas on how to do that, but I will reserve those ideas for members opposite, and if they want to sit down in the next little bit and talk about where we go from here, I'd be happy to do so.

With respect to the mirror legislation, we have had positive response from both the conservation community and the development community for some funding. We will provide sufficient funding to do a reasonable job. The initial proposal was to provide a few thousand dollars and have a review of the legislation done, to walk through the legislation with the government legislative drafters. Some have made a credible case that a few thousand dollars won't be enough, and they may well be right. We will provide sufficient resources to complete this task. Our view is to have legislation that all can support. We will not be making policy changes in the context of passing mirror legislation. Unless there is complete unanimity with no problems at all, simply correcting typos, then that might be possible. But anything that people regard as possibly being a policy change, we will put off until some other time when a future Legislature decides it wants to deal with this legislation as a priority.

In terms of devolution as a project, the Yukon government's position has always been that we can see progress both at the land claims table and at the devolution table. We signed an accord in 1997 to that effect with all First Nation leaders in the territory, saying that there would be no bleeding of issues from one table to the other. Now, having said that, legitimate issues that First Nations have with respect to devolution should be resolved in the context of devolution negotiations. As I mentioned, there are a couple of environmental issues that are, of course, of interest to First Nation negotiators.

In that case, that is an appropriate issue to be addressed at the devolution table, but our position is that, when a land claim is finished, then it gets passed; when devolution is finished, it gets passed; and we'll deal honourably with each other on all fronts.

So, in that respect, our position is the same as the federal minister's.

Ms. Duncan: Forestry has not been separated from the overall devolution discussions, and that point has been made before in this Legislature; nevertheless, there are some real problems with forestry currently in the territory. The members of the government bench have said it's all those federal Liberals and we have nothing to do with it. Well, it's certainly part of an ongoing issue that we have to resolve, and we need to move this issue forward.

I recognize the Government of Yukon hasn't separated it out of the devolution discussions, but was there any progress made on the weekend on this issue? Has there been any movement forward on the part of the territorial government with regard to forestry management and the permitting and logging and silviculture within the territory?

Hon. Mr. McDonald: The Yukon government's position with respect to forestry has been to try to provide some influence on events and to try to encourage good practices by regulators of the industry, recognizing that there are some very difficult problems that the regulators have to face. It was only five years ago that we went from an industry that basically was cut firewood to an industry now that supports three mills, and more cutting besides.

So, there is a recognition that there are some big issues to address, and we have been trying to play a constructive role between our governments at the political level and at the administrative level to try to provide some influence in events as they occur. Our difficulty, of course, is that we're not always that successful, but, nevertheless, we continue to try.

The federal minister made some encouraging comments this last weekend. He said that he would like to see more involvement of the Yukon government in discussions around a forest policy in the future, and a resource management policy generally, as we get closer to devolution itself. He did indicate that he would like to resolve some long-standing issues before the transfer so that the transfer of these resources will have gone through the necessary policy discussions and he transfers a working, vibrant industry to the territory to manage. I'm hoping we can. The forest commissioner in the Legislature here has, in a very deliberate and conscientious way, been trying to encourage good practices on the ground, not only in Watson Lake but elsewhere. So, we want to play with that constructive role as much as we can.

But we will not be in a position to take full responsibility and to actually call the shots, so to speak, until the transfer of the resource management responsibilities next spring.

Ms. Duncan: Mr. Chair, the Government Leader made reference for more involvement, and the federal minister's suggesting, or discussing, methods for this to take place. How is it intended that the territorial government can be more involved in this, specifically in the issue of forest policy?

What are the mechanics of it? Is the Government Leader making reference to a table being set up, some kind of a policy unit? How is this greater involvement to happen, and where and how do First Nations fit in with that?

Hon. Mr. McDonald: Well, what we have been trying to do on a number of fronts is to take more interest - direct interest, constructive interest - in the way resources are managed. The blue-book process for the mining industry is an example of that. The blue-book process is being financed largely by the Yukon government.

We are trying to resolve regulatory, non-legislative policy, framework that guides a lot of what happens on the ground for that industry. We have, in the past, had more meetings with the federal officials. I would suspect, in time, it'll take the tack where we actually have joint management meetings, perhaps later on. That would be a wise thing to do, where we have actual managers, many of whom will be transferred with the resource to the Yukon government, who will work with existing managers in the Yukon government to try to resolve issues and to deal with things in a more integrated way. We're not there yet, but that might be wise.

We've also traded personnel. The current RDG was a Yukon government employee. He's a permanent member of the federal public service now, but he's also on leave from Yukon government.

The Department of Economic Development has taken on a senior manager of local northern affairs to provide good insight into the issues that that person has experience with. So we're consciously trying to secure a smooth transfer. The reason for that, obviously, is that citizens will be best served if the transition is as smooth as possible. Clearly, whether it be policy work or through joint meetings or through traded personnel, there are a number of ways that we can achieve that end.

Ms. Duncan: I appreciate that what the Government Leader has outlined is the efforts to secure a smooth transfer, and I am fully aware and appreciate the trading of personnel and the efforts to work together. The problem is that forestry and forest management in the territory are a flash point for devolution. It's an issue that lands on every member's desk every January. It's an area that is anticipated to be part of the transfer of authority, and it's an area that clearly needs a great deal of work. The Government Leader made reference to the blue book. Well, the blue book is about administrative processes. It's about making them smoother, making them work. How are we going to take that one issue; how are we going to make forestry work in the Yukon? The forestry commissioner has spent some time and he has done a report. First Nations have not bought into that. They didn't sign on to that report. Clearly, this is an area that needs a lot of work. My question is, how, in devolution, are we going to make this work?

Hon. Mr. McDonald: I'm going to invite the forest commissioner into the discussion, because I think he has a fair amount to say on the subject. But I'll simply say this: the basic objectives of both governments is to do two things. Number one is to see a smooth transfer of responsibilities from one government to the other so that there's no unnecessary hiccup or problem resulting from the fact of the transfer. The second is to improve the processes between the governments. We're not waiting for devolution before we actually start doing that, whether it's in mining or in forestry. We're actively trying to encourage the federal authorities, first of all, to consult a little more thoroughly to understand better the people who are affected, and to follow the forest strategy, which is a comprehensive approach to managing the forest industry. That requires good process, good science, adequate resources, and it wouldn't be unfair to say that we're not there on a whole series of fronts, that we're not doing enough.

So, the challenge for the federal managers, of course, has been to try and see a change and to work on the ground to resolve conflicts and to see an industry proceed. We think that we can provide some good advice. We've got some good people in our government, both at the political level and at the administrative level, who can make things even better and help to avoid some of the problems that we've clearly come up against, even in the last few weeks. In those cases, we've facilitated discussions; we've tried to provide some assistance to citizens as well as offer advice to the regulatory authorities. Our view is to try to make it all work, and the challenge will be there for both the regulation of the mining industry as well as the regulation of forestry.

I'll ask the forest commissioner to add a few thoughts as well, because I think he probably has more detail he could provide.

Mr. Fentie: I'd like to begin, Mr. Chair, by pointing out to the leader of the official opposition a phrase she uses in this House that, to know where we're going, we have to know where we've been. Where we've come from in forestry is quite a distance. It wasn't that long ago when we were faced with a situation and a Yukon government that refused to do anything and basically pointed a finger at the federal government and said, "There's nothing we can do, it's a federal problem." That is not what we on this side of the House have done.

The first thing we set out to accomplish was to work with DIAND, the federal government, First Nations and Yukoners to develop a policy, which has been done - the Yukon forest strategy. That is the policy. Hundreds of Yukoners, many Yukoners, participated in that, including First Nations. The federal government has committed to use that strategy as its guide, as its framework for forest management in this territory. However, that doesn't preclude the fact that there are daily issues that they, as the managers, must deal with. And even in those, we participate and try and help out.

The First Nations as governments did not have to accept that as their own policy. They have the right to develop the policy that they would like to see applied to their lands. However, they did participate. The member has asked many times, "Where are the First Nations in forestry?" Well, I'll tell you where they are. They're investing their money in the development of a forest industry in this territory. That's where they are right now. They're also negotiating with the federal government, not in spite of the Yukon government, but because of the Yukon government, agreements on how to proceed in areas in this territory with forest management.

Let's look at what we've accomplished to date, thanks to our efforts and policy development.

In this territory we've decreased the harvest ceiling by close to 100,000 cubic metres. That's a significant fact. We've decreased raw-log export to a mere trickle. It wasn't that long ago that virtually every log cut was shipped out of this territory with minimal benefit to Yukoners. We've decreased that to a mere trickle.

The increase in manufacture in this territory through investment, government policy and effort - and trying to establish an environment where this industry can begin to grow and flourish - has increased by 400-some percent in terms of export of lumber from this territory. It's the leading export product or material out of the Yukon today. That translates into jobs - many of them - and a dramatic increase in benefit for Yukoners.

This government has also taken steps into areas that the federal government maintains jurisdiction over. The fire smart program - part of policy, I mean, dealing with wildfire in forest management is one of the biggest ticket items. We developed the fire smart program, whereby through our financial contribution, communities in this territory are now actively working on lessening fire risk and, at the same time, providing jobs for Yukoners in the short term, while the federal government continues to work on an overall plan for wildfire in this territory.

Let's look at silviculture that the member brought up. Through policy, when the monies that have been directed toward the Elijah Smith reforestation fund, close to one million seedlings were planted in the Yukon last year, including site preparations for further reforestation. That's a huge improvement from where we were, under the Yukon Party government.

Through the Yukon forest strategy and government policy, we have provided financial contribution to prove up candidate areas for longer term access, for better forest management planning, so that we can move from where we're at today, while the issues lie - because the federal government continues to manage on a year-by-year basis - into a longer term. So, instead of mitigating problems after the fact, we deal with those problems up front. Yes, there are issues in forestry and, quite frankly, forest management here in this territory and anywhere in the world will always be an evolving initiative. We're confident, Mr. Chair, that the direction we have taken and the work done to date is improving the situation. We have better forest management in this territory, and it can only get better if we continue down the path that we have set out.

Ms. Duncan: I'd like to thank the forest commissioner for that infomercial on government policy. The point that I was making, and that has been made repeatedly in this House, is that the forest strategy policy - as the forest commissioner refers to it - there were a number who participated, but CYFN did not sign on that final document. The forest commissioner stands in the House and says that First Nations are dealing with forest management on their lands. Well, you can't examine everything in isolation. We're talking about an overall forest policy, forest strategy, that CYFN did not sign on with. My question, again, is how is that matter - the matter of First Nation support for, or work with, this policy - being dealt with?

Mr. Fentie: Sorry, Mr. Chair. I would point out again to the member that First Nations participated fully in the development of the Yukon forest strategy. The federal government has committed to use it as their guide for forest management. First Nations now, along with the Yukon government, are negotiating agreements and proceeding with forest management in regions of this territory related to each First Nation that resides or has that territory as their traditional territory. That is how forest management is proceeding with the First Nations.

Further, with the policies that are in place, the First Nations have seen their way clear to invest in this industry, to help create jobs and benefit for Yukoners, and to participate in policy and in forest management in this territory. I think it's very clear what the First Nations are doing, and I see no reason why the member seems to be having a problem with the fact that they didn't sign on. They participated in and they have choices to make as governments.

Ms. Duncan: Mr. Chair, the forestry issues are but one part of the issues with respect to devolution, and I will be reviewing the forest commissioner's comments in some detail and will come back to them at a later point in time in this session.

The devolution, forestry, DAP, land claims - these are all issues that we, as a caucus, have pointed out as leading to uncertainty and questions in Yukoners' minds as to where we're going in the future. Another area is the protected areas strategy. The Government Leader has made reference to the protected areas strategy in his budget speech. There have been differing messages coming out of the government with respect to the protected areas strategy. The Government Leader has said it will be fixed, the Minister of Economic Development has admitted that mistakes were made, and the Minister of Renewable Resources seems to think that everything is wonderful.

Everything clearly is not wonderful. There are some real issues with respect to the government following the strategy that was put in place and was agreed upon by Yukoners. How does the Government Leader, through the budget commitment that's been made in the speech, intend to fix - deal with - the problems with the protected areas strategy?

Hon. Mr. McDonald: Well, the member is trying to make a case that any uncertainty associated with land claims, the development assessment process, as well as the YPAS, fall squarely on the shoulders of the NDP government. That was the theory, the underpinning of her budget speech, and of course I can't disagree with her more when it comes to the actions the NDP government has taken to try to bring closure to the land claims, and to pursue devolution, and to pursue a development assessment process that works. These are critically important issues for the future of this territory, and we want to get them right, and we want to ensure that the public has a chance to understand and to work through the implications. So consequently, we apologize not at all for the actions we've taken and, in fact, feel that we are contributing to the long-term certainty of this territory by taking responsible actions on these fronts now.

With respect to the protected areas strategy, we are committed to the protected areas strategy. We are committed to ensuring that it is done properly. There is not a single example in this country where there's been a completely trouble-free process, as we try to sort out the various issues with respect to resource conflicts and deal with some very differing visions of what should happen in our countryside - so to speak.

This is not only going to be true for assessing and addressing protected areas and their management plans but also true for land use planning, which is beginning to warm up as a project pursuant to the land claim agreement.

So, clearly we've acknowledged that we need to think through our experience and to refine it as we go, to overcome any problems or hurdles that we may encounter. In so doing, I have, along with my colleagues, spoken to people in the public about wanting to set up a process that will address, in a fair way, the issues that have been raised with us about our experience to date. I'll point out that Tombstone, of course, is not a protected areas process but it's a similar kind of process and, based on our experiences in this particular arena, we would like to see some improvements made to our initiatives and hopefully get things started again with the next candidate areas, with an improved process. The review of the protected areas strategy - or refinements to it - will be discussed with all parties to the original protected areas discussions, and I would hope that we could have that refinement concluded by May-June of this year and get on with things.

Ms. Duncan: Mr. Chair, the problem with the protected areas strategy is that the public committee - the 18-member committee - agreed upon a process and agreed upon how protected areas would be set up. The problem is that the process wasn't followed. In the Government Leader's own words, "Mistakes were made."

The difficulty that the public has is, what recourse does it have when governments do not do what they say they'll do?

The Government Leader said that they're reviewing the protected areas strategy, that members of the government have spoken with people who have expressed their concern with regard to the first experience with setting up a protected area in the Yukon, and that improvements will be made. The question I and many other Yukoners have is, how? Has the Government Leader commissioned some kind of a report? Is the committee going to be resummoned? Is there some method that the Government Leader can envision that is going to restore the public faith in this process that is so badly shattered by a government that has not done what they said they'd do? How does the Government Leader intend to restore that faith?

Hon. Mr. McDonald: Well, first of all, the editorial comment about public faith being badly shattered is a comment from an opponent to the protected areas strategy, and we should be very, very clear about that right up front and anybody who is listening should know that right up front.

At no time during the process did the Liberals ever express support for protected areas. At no time did they endorse this initiative. It was always through veiled criticism and opposition that we did anything, and that was true for the Yukon Party as well. It was complete opposition throughout.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Mr. Chair, Mr. Ostashek says that the Liberals supported the protected areas strategy. Well, Mr. Chair, you can count on this: if there is no criticism coming from any quarter, and the government seems to be plodding along, then they will give passive approval to something, and the protected areas strategy is no exception.

But, Mr. Chair, at the first hint or sign of any challenges, the Liberals bug out in a hurry.

So, Mr. Speaker, I don't have any faith that the Liberals would have any jam to try to fix or to make the protected areas strategy work at all.

With respect to the issues to be addressed, there is not a single government in this country that has not had to face challenges in how their own protected areas strategy will work. This government is no exception. We are trying to work through the various challenges and difficulties. One of the challenges has to do with when there will be interim protection for a particular protected area candidate, which is unique to the north. That is something we are trying to address. That can be addressed through legislation. That is not anything to do with an acceleration of the process, which was the case in the Fishing Branch example, where the process was accelerated in order to accommodate - and I have indicated this clearly - the very clear, expressed wishes of the people of Old Crow to accelerate the process because they felt there was a land claims agreement that had not been met. So clearly, we did, and in that respect there was a divergence from the protected areas strategy itself. But in order to do that, we were also trying to accommodate oil and gas industries in the north of Yukon, and trying to bring a conclusion to a number of different issues.

In that respect there were divergences from the protected areas strategy, but that's not what people have been talking about as the sole problems that they associate with protected areas. The conservation community says that a significant problem is interim protection and when that's going to take place. There are other issues that the development community has suggested are issues and that they would like to be addressed, including what constitutes appropriate resource assessments and what constitutes the minimum required size to identify a study area.

These have nothing to do with the acceleration of the Fishing Branch at all, but they are issues that have been raised in the context of Fishing Branch, and they're issues that we've committed to reviewing with a view to refining them and making a better protected areas strategy, which we are committed to.

Ms. Duncan: Well, Mr. Chair, I'd like to take issue with many of the Government Leader's comments, and I would challenge him to go back and review the Hansard where I have stood on my feet in this House and repeatedly stated that the Liberal caucus supports the protected areas strategy. We are most of all in support of Yukoners making those decisions.

The problem that I and many Yukoners have is that part of that protected areas strategy was an agreement that certain conditions and certain studies would be done before an area was protected. What the Government Leader has admitted is that the development industry is saying what constitutes an appropriate assessment. The problem is that, although the government committed to it in the strategy, they weren't done, and that's the problem. What we've asked over and over again in this House is, how does the government intend to deal with these issues? There's a strategy agreed upon by this 18-member committee that said, "This is how we're going to make these decisions. This is how we, as Yukoners, are going to roll up our sleeves and make some tough decisions."

The problem is that there were ways to make that decision, and the ways in this particular instance weren't followed. The Government Leader has said that there have been some mistakes made. We keep asking how those mistakes are going to be fixed, and that's the answer I'm looking for. There is money allocated in this budget. How is the protected areas strategy and the mistakes the Government Leader has admitted this government made going to be fixed?

Hon. Mr. McDonald: Well, the only time that I think we can count on Liberal support for virtually anything is when there is absolutely no criticism from any quarter by any person inside the territory or outside it. The moment there is any criticism at all, the Liberals hide in the weeds. That is the history of the Liberal Party. That is the way it works and I'm well used to that particular modus operandi around here. Now the issue here is not that there has to be resource assessments but the level of resource assessment; that is the issue. Can you do a superficial review of the geology of an area or do you have to drill a core hole every 10 feet through the earth's core to determine what's there? That level of assessment has to be agreed to. When you want to assess wildlife populations, do you have to count every single animal and bird or can you live with and accept a lesser standard for determining what the level of resources is in that particular area? Those standards have to be addressed and agreed to. That's what's at issue and that's what we are intending to try and resolve for the next round.

There will be a review. The Minister of Renewable Resources has been communicating with people in the community. They intend to have a three-person review process outside of government, from people who are not members of government, not members of the public service - basically chair a resource community representative, and a conservation community representative to do a review, assess the issues that have been identified, and speak to the public and report back.

Chair: Do members wish to recess?

Some Hon. Members: Agreed.

Chair: Ten minutes.


Chair: I will now call Committee of the Whole to order. We are on general debate.

Ms. Duncan: Mr. Chair, before the break, we were addressing the protected areas strategy and the government's commitment to it. The Government Leader said, at the Geoscience Forum in November of this past year, that the government was aware of industry's concern. He also said that the Yukon protected areas strategy in Fishing Branch was, "...not followed exactly as was envisaged." He said today the process was fast-tracked to accommodate Old Crow. He is also fond of saying that the government has a balanced agenda and that we can overcome these issues. Repeatedly, we have heard that the government is planning to make a number of changes to the protected areas strategy. Some of these proposed changes, we have heard, are the promise to review an evaluation of the planning process that took place for Fishing Branch, a review of the setting out of terms of reference for local planning teams, the setting of standards for mineral and economic assessments. The Government Leader spoke of those today, and setting out what is an appropriate level of assessment, a cap for land quantum. Draft legislation for protected areas has been bandied about and a review of the process for interim withdrawal of land. All these points have been mentioned.

What we haven't heard is how and when. How will these changes take place? The Government Leader made reference to a three-person review panel. Who is going to appoint them, who will they be, what will be their terms of reference, when will they report? The government has been talking about a review of the Yukon protected areas strategy for months. What's taking so long? Will the minister commit that the review will be tabled, that we'll see some actual work on fixing, dealing with the issues that have been raised by the public, before the end of this session? Will that happen?

Hon. Mr. McDonald: Mr. Chair, there's also the internal review of how departments interrelate. That will also be going on, but the answer is that we are going to be asking, as I mentioned, people appointed by the government, of course, to do a review of the protected areas strategy. There will be at least one person from the conservation community and one person from the development community, who will be asked to receive input from various stakeholders and will ensure that they address the issues that we have identified should be addressed, based on representations that people have made to us.

So clearly we're going to do a review. We want to give people sufficient time to do a review before we go to the next candidate area. We will do a review and make improvements before the next candidate area is considered, and we will be seeking some response by, I believe, May - I'll check that date - and hopefully people will be able to think it through and try to work through the various issues that we have identified and, if they have others, they can feel free to raise them.

Ms. Duncan: Mr. Chair, the Government Leader has indicated that the three-person review panel will, of course, be appointed by the government. Will the government be seeking nominations for that three-person review panel, and when does the Government Leader anticipate announcing that they are in place? What will be their terms of reference, and what will be their time frame for reporting?

Hon. Mr. McDonald: Well, Mr. Chair, because I'm not the Minister of Renewable Resources, I don't have a lot of these details in front of me, so I'm going to have to take notice of these questions. I'll be happy to come back and answer the questions, but I really do need to have - we're getting to a great deal of specificity in general debate, and so, if the member wants to raise the issues in the context of general debate, she'll have to give me the opportunity to get more precise information, which I intend to do.

Ms. Duncan: Mr. Chair, I will be looking for that precise information. If the Government Leader wishes me to seek it from the Minister of Renewable Resources, I will do so and provide him with notice that we'll be doing that sooner rather than later. That precise information is important to the Yukon public as a whole, and I know there are many, many Yukoners who are interested in what the government is going to do - when they've been speaking about it for months - and what the plan is.

The protected areas strategy, of course, along with devolution, the blue-book process - these major issues were raised at length by virtually every member of the mining community who I met with in January at Cordilleran. There is some positive news coming from the mining industry. A large property has been purchased by Atna Resources, and Atna is committed to exploring the Marg property, and it's an example of a deposit in an unexplored area.

Although this particular project is not likely to see production soon, the need for infrastructure development will be necessary if any project in their particular area of interest is to succeed. Expatriate has also made recent announcements regarding the initiation of a pre-feasibility study to provide initial capital and operating cost estimates for the development and operation of the Wolverine deposit in the Finlayson Lake area. Again, this points to the need for infrastructure and issues around the Robert Campbell Highway. Government plans for the highway could very well affect the outcome of the pre-feasibility study.

While we have begun our budget discussions and talking in general terms about these larger issues, this budget debate, particularly in Committee, is about these details and details around issues like infrastructure. And the Government Leader has indicated that, in his view, the budget is about people and about the infrastructure in the territory, yet, in particular with the Robert Campbell Highway, we don't see that commitment. All Yukoners benefit from basic infrastructure improvements - basic infrastructure - like highways, like water and sewer systems, like telecommunications; areas where we haven't seen the details, where we're going to be discussing these details over the next number of weeks. I'd like the Government Leader, in his response, to address these basic areas of infrastructure. We don't see the commitment. The capital budget is in fact an area that poses some concern - more than just some - a great deal of concern, particularly on these basic issues.

There are a number of questions for the Government Leader with respect to them: the commitment to the basic infrastructure - the federal minister has today announced an increase in the infrastructure program for communities - and the government's plans. I would like to hear from the Government Leader about long-range plans, not just in discussions with recreational facilities throughout the community, which are important throughout Yukon, but I'd like to hear what long-term planning is taking place for the water and sewer infrastructure throughout the territory.

Hon. Mr. McDonald: Well, that's an interesting statement, Mr. Chair. I'll just point out before the member gets herself in trouble in Question Period tomorrow that we're spending more on the Campbell Highway than we will get from the government's announced infrastructure programs, as of a couple of hours ago, for the full three years for the Yukon. Just so she doesn't champion the feds in a knee-jerk reaction - whatever the feds are doing, they support. I'll just point out that there is more money going into the Campbell Highway this year, which she says we're not showing any interest in, than we will get from the entire infrastructure program from the federal government over a three-year period. That was just a little assistance for the member.

With respect to the Robert Campbell Highway, it wasn't long ago when our investments of a million dollars were seen as being unnecessary. We made a commitment for a million dollars a year in terms of improvements, and people were saying that was unnecessary and we shouldn't be doing it. We're trying to invest some funds into the Campbell Highway, realizing it's going to be a long-term project. If there's any desire for a very quick upgrade, then, clearly, a million dollars a year is not going to accomplish that task. But we feel, on balance, given all the rest of the items that the member has mentioned - and water/sewer is one, facilities in the communities is another, airport upgrading is another, and there's money in here for telecom projects, and there are lots of various forms of infrastructure being developed in this budget and through the support of this budget.

We felt that the million-dollar expenditure at this time, with what we knew would be happening in the future on the Robert Campbell, was as much as we could secure. Now, I have already raised the matter with both Cominco - three years in a row now. I have raised it with the federal minister, both the previous one and the current one, to indicate that if they want to provide any support for northern economies, the Robert Campbell Highway would be a good opportunity for them to consider providing some infrastructure support.

So, on the one hand, I have been trying to ascertain, clearly, what the chances are of major mining companies needing to use this particular corridor for industrial road traffic, and asking that they give us as much notice as possible up front. In the meantime, we have been investing a million dollars a year into upgrading the road, and, at the same time, I have been indicating to the federal minister that, if there's any room at all in their budgets to provide some support for northern economies, this would be a good candidate.

I note that in the budget speech so far, we haven't gotten any information about the northern economic development strategy. It may be hidden someplace, but we haven't received it yet. But the estimate to upgrade the Robert Campbell Highway is about $75 million, I understand. So, we will chew away at it, but we will also be seeking some support from others if we're expected to do it in a real hurry. In the meantime, we'll try to get some indication as to when people may want to undertake some major industrial activity on that road.

The member is quite right that there were some very positive things stated at the Cordilleran Roundup. I didn't detect any hint of that in her second reading remarks, but there were in fact some positive things. I had meetings with mining companies, some which said that they were in the advanced exploration stages, and they were going through a process of trying to secure investment. I received lots of expressions of support for the things we're doing.

I had a meeting with Minto, who said that they thought they could possibly make a production decision very soon, and we had some discussions about what help they were interested in receiving from the Yukon government, the Yukon people, and that has been identified in our budgets as support.

But, yes, there were some positive things being stated. People do agree in the mining community that base metals are starting to climb, that there will be a rise in commodity prices and that they expect to see that translate into some real action on the ground in mining.

So, they were encouraged and they told me so.

With respect to infrastructure, it's not that hard to suss out where the infrastructure investment is. There's lots of it here in this capital budget. I know that people like to gloss over the fact that the Shakwak project is one project, but the fact remains that the government lobbied hard to get it and, whether it comes from the federal government or whether it comes from the U.S. federal government, that's going to be real construction on the ground that we have worked to secure. And that will be an improvement to infrastructure in one corner of the territory.

As I say, there is work planned in sewage treatment. There's a major commitment to the City of Dawson, when they finally work out whatever issues they have with the Water Board and the federal minister.

There are commitments here, of course, for some projects this current year that will see some work in Carcross and in Burwash. There is some water-sewer work in the City of Whitehorse, major line improvements up on Range Road between Two Mile Hill and the airport and Hillcrest - some major improvements. There'll also be some work in the Hamilton Boulevard area, as well, in terms of water and sewer works.

There will be work for people who are in that business, for sure, and we're happy to be in a position to support it.

Ms. Duncan: Mr. Chair, one of the other items of discussion at the Cordilleran was the mining tax incentive program that is designed to encourage mineral exploration companies to explore in Yukon over other jurisdictions. The idea is that it's going to enhance our competitive advantage.

The members of the mining community I spoke with suggest that the greatest benefit of this program is funding the smaller prospectors. That's what they felt the program should be directed to, and they suggested that that was the program's strength, and it's important now when sources of funding for prospectors are at an all time low.

I'd like to know from the Government Leader about the uptake of the mining tax incentive program, and if there's any thought about the suggestion from members of the mining community to change the focus or slightly alter the focus more toward the individual prospector, if that is a suggestion that the Government Leader took to heart, and if there are technically other ways to increase the ability of the Yukon prospectors to succeed in discovering Yukon's mineral resources.

Hon. Mr. McDonald: Well, Mr. Chair, I'm not certain of the point of the question, but maybe she can explain a little more thoroughly what she's after.

The tax credit itself - we will not know until after the end of the fiscal year what take-up there has been on this credit. We have reports of a lot of inquiries by various companies into the credit. There have been and there are continuing to be lots of inquiries about how to make use of it, so I would expect that there will be a fairly good take-up, particularly in the second year as people are getting used to it.

I think that the tax credit certainly has been cited on many occasions by many different people at the Cordilleran Roundup and the Geoscience Forum as being of assistance to people in an industry that has been beleaguered, not just here but elsewhere, and we were in a position to help. In terms of the other questions, perhaps she could define the question better and I'll see if I can answer it.

Ms. Duncan: The best way I can describe the comment was an early review of the Government of Yukon's program was that it was positive. There was the suggestion from the mining industry itself that programs like this are better programs if they're targeted to the smaller prospector - that small individual who is out there spending their time and energy looking for Yukon's mineral resources. That is what the mining industry said to me.

My question is, is that also what was heard and understood by the Government Leader and, if so, are there any changes contemplated to this program as a result of that early review of the program?

Hon. Mr. McDonald: Well, this is the first I've heard of this. If there are legitimate exploration expenses that people have, if they pay tax then this will be a benefit - big, small and otherwise. We do have a direct spending program - a mining incentive program - which does provide direct expenditures to help prospectors and small companies. The people whom I spoke to were junior and larger mining companies, and mining companies, including those the size of Viceroy, were saying that this was a good program for them.

So the people who are actually in the business of funding and undertaking various programs felt that this would be a good initiative that would help expand their programs if they had the money, and help them secure financing if they didn't. So those aren't sort of individual prospectors, but then we have a direct grant program for individual prospectors, and I understand that the Chamber of Mines would like to see that continued.

Ms. Duncan: The Chamber of Mines is not the only body or individual or company to express support for the program to which the Government Leader just referred.

Does the Government Leader have any information on the uptake of the other tax incentives that are mentioned in the budget speech, and the other tax initiatives that we dealt with last year? Is there any detailed information on the - for lack of a better word - results of those programs?

Hon. Mr. McDonald: Well, because of the way the programs are designed for the low-income family tax credit and the child benefit, there will be a 100-percent expenditure in those areas. So, whatever we indicated last year - it was $1 million total - that will be spent in the current fiscal year and will continue to be spent in future fiscal years, because that is ongoing.

With respect to the mining exploration tax credit, as I have indicated, we don't know the take-up, and we won't until returns are filed.

With respect to the small business, I'll have to defer on that question to the Minister of Economic Development, who can provide the information in his estimates with respect to the take-up of that program.

With respect to the heritage property tax credit, we don't have, as yet, any designated heritage properties in the taxing authority of the Yukon government, but, when we do, there will be an impact. And now that there is such a commitment, there will probably be desires to see some designations take place, which, I would suppose, would then see an increase in the potential impact on our estimates. But, in any case, it'll be fairly minor.

With respect to the initiatives we have just taken, of course, our estimates for expenditures on the personal income tax side are $750,000 a point, so for this calendar year, there will be a $750,000 change in revenue, and there will be, inside this budget, a further three points for the first three months in the new calendar year, at the end of this fiscal year, which are also factored into this particular budget. In terms of the research and development tax credit, we expect that it will probably be in the neighbourhood of $100,000 in terms of impact, because we'll be matching the federal R-and-D grant. We'll be providing 15-percent credit, which we estimate to cost in that neighbourhood, and that's also factored in. Any potential change in our revenues has been factored into our revenue calculations. So those are some of the estimates at this point.

Ms. Duncan: Mr. Chair, the Government Leader didn't mention the Fireweed Fund and the incentives for investment in that particular fund, which was certainly supported by this portion of this side of the House, and its establishment. That wasn't addressed. And another issue with respect to the Fireweed Fund that has not been addressed is the start-up, initial investment for the Fireweed Fund. This is of concern, and I know, as all members of the Legislature are aware, that the board was interested in lobbying the federal government for an initial investment, and, certainly, we've supported their efforts, as best we are able. Has the Government Leader any additional information or a sense of what the interest will be by the public, in terms of an investment, and the initial start-up for this fund?

Hon. Mr. McDonald: Well, Mr. Chair, we calculate, based on our tax initiative, that the fully implemented cost of the labour-sponsored venture capital corporation, or the Fireweed Fund, would be approximately $400,000 if it's being fully implemented. We have calculated that it won't be fully implemented, so we have deducted $100,000 in revenue to accommodate a late start.

The Fireweed Fund is seeking $15 million in equity to start its operations, and the equity can come from a number of different sources. It can come in the form of a loan or a grant to the organization. They have initiated discussions. We have provided the resources for them to do so with the federal government, Industry Canada, to seek a $15-million, interest-free loan to support the Fireweed Fund operations, and they believe that that would make it a self-sustaining operation. The interest earned on their basic equity fund would pay for the ongoing operations and pay for any losses they may incur over time.

The issue of the Fireweed Fund has been raised, as I say, with Industry Canada but has also been raised with the federal Minister of Northern Affairs as a good opportunity for the federal government to provide some assistance to encourage them contributing to the access to venture capital in the north. The Fireweed Fund is but one of many labour-sponsored venture capital corporations who provide a good source of venture capital to the private sector around the country. This is our incarnation of this particular project. We've obviously got the legislative framework now.

I would expect, and we're hoping, that it would be developed and up and running for the final quarter of this year. It would probably, certainly, take that long to secure a federal commitment, one way or another. So, that's where we are right now, and I'm eager to see it proceed.

Ms. Duncan: The Government Leader made reference to an estimated cost of $400,000 - and that was the optimum amount - and indicated that there was somewhat less - as I heard him in the Legislature - somewhat less for this year, somewhat less than that budgeted.

The question I have is - I appreciate the review of the efforts by the Fireweed Fund to secure this amount of initial investment from the federal coffers in the absence of a federal commitment, or a less-than $15 million commitment. Is there any anticipation of Government of Yukon initial investment?

Hon. Mr. McDonald: Well, at this point, we've committed to the initial investment of getting the project started and, so far, we've paid for the development of the proposal, the legislation, the business plan, and have committed to a tax credit that could incur as much as - if it's fully active and the issues are up for sale - $400,000 or more. As I indicated, I expect that the actual costs for this year, if it gets up and running, realistically would be around $100,000.

In securing federal support for this project, we've also paid the proponents for all lobbying efforts; so we've shown a lot of commitment to this particular fund, and any support from the Yukon government beyond that is hypothetical at this point. We do believe that the federal government, in the form of a no-interest loan, can quite comfortably make a real contribution to access to capital in the north and, if the fund is healthy and solvent, it may not cost them anything over time.

So, we're keen to see it get up and running, and we've anted up a substantial amount already.

Ms. Duncan: Mr. Chair, before we digressed on the issue of tax incentives and this area, we were talking about the capital projects anticipated by the government for the forthcoming budget year.

Can the Government Leader provide an assessment of the job creation figures that might be optimistically attached to the capital budget table?

Hon. Mr. McDonald: I can get the information for the member tomorrow.

Ms. Duncan: The size of the O&M budget and whether or not this constitutes a growth in government, and so on, has been a discussion in previous sessions in this Legislature.

Is there a forecast by the Department of Finance with respect to the employment by this increased O&M budget? Is there a figure attached to that? And does that figure include the change in status, or anticipated change in status, of dealing with the auxiliary employees, which was outlined with the terms of the agreement, with the agreement recently reached with Yukon's public servants?

The terms - as I saw them - indicated that the auxiliary positions were to be dealt with within 60 days, and where there was a failure to reach agreement, it would be dealt with by the Public Service Commission. This brings to mind issues such as, will these auxiliary positions, and will this whole issue, languish as reclassification did? But that's not the question for right now.

The question for right now is, with the increased O&M, is this an increased number of employees and, if so, by how much, or by how many?

Hon. Mr. McDonald: Mr. Chair, there will be some increases to the employee complement. Obviously the O&M associated with a CAT scan will involve employees, but there are other increases to the budget that are things like tourism marketing funding, which does not necessarily lead to direct government employment. There is money for municipalities, which may lead to government-related employment if the recipients of those funds put it into public service employment for municipalities.

There are such things as social assistance rate increases, training allowance rate increases, granting tuition fees for social assistance recipients who are taking part-time courses at the college. These, of course, won't lead to increased employment.

To the extent that we can determine what the increased employment might be, I will try to provide some figures, but, for the most part, these are transfers to others.

Ms. Duncan: I would appreciate receiving that information from the Government Leader.

There have been discussions in the past about O&M versus capital, and accounting policies of the government. Have there been any significant accounting changes that have taken place over the last year that are reflected in this budget?

Hon. Mr. McDonald: The answer is no, Mr. Chair. There are no accounting changes employed here.

I'm informed that the Auditor General is looking to see us capitalize assets the way the private sector does. I'm not certain of the utility of that initiative. I'm not sure why we'd want to do it. We're not going to sell them, so I don't know what it would do. It would probably be an impressive amount of assets that the government owns, but I don't know what the point would be. There certainly would be a lot of people out there counting stuff and evaluating stuff.

But we'd slap our wrists if we don't, so we'll have to make a decision at some point in the future as to whether or not we do it. But I'm inclined not to want to.

Ms. Duncan: I believe the Minister of Government Services and I have had discussions about the accounting for assets in the past, the IBIS system, and how many buildings we have and how much they're valued at and so on. That's a discussion for another day. What about the accounting for the environmental liability? Is the Government Leader still of the mind that that is not something that we are going to venture into at this point in time?

Hon. Mr. McDonald: Maybe the member could just expand a little bit. We have done some accounting for environmental liabilities associated with the devolution of resource management responsibilities, in order to ascertain the true cost of some clean-ups. But, as a general proposition, that is a hugely esoteric exercise, and I am certain it would be very subjective. I'm sure it would be a fascinating project for people to work on. However, we would have to understand the utility of doing that and what it would actually mean in terms of impact on people.

Certainly, in the context of resource management transfers from the federal government, they have taken the opportunity to assess some environmental liabilities in the territory, and it is that revelation that has caused so much shock. They have always had the responsibility, but it wasn't until they started assessing what it might actually mean that the financial analysts in Ottawa really took notice and suddenly realized what kind of bill they might be faced with.

So, that's all we have done so far. If the member has something specific, like some specific environmental concern and wants to raise it, then I can respond.

Ms. Duncan: In the context of general debate, it was a general question with respect to the Government of Yukon's intentions in terms of accounting for this. It also was raised by the Auditor General some time ago.

One of the difficulties that our caucus has in terms of the training trusts is the accounting for them and how these are dealt with by the government. There are a number of them mentioned in this budget. There have been some mentioned in the past. They have been used by this government. The Government Leader refers to them as an investment in people.

How are these training trusts evaluated? For example, the training trust that's noted for Minto Explorations in the budget - will this be a training module that can be transferred to other projects? How will it be evaluated by government? How will we assess the success of this particular initiative?

Hon. Mr. McDonald: Just briefly, touching back on the Auditor General's dreamscape of accounting for everything perfectly and having a balance sheet, all I can say is that, while I have absolute respect for their desire to have the full picture completely accounted for, there should be some notion of reasonableness in this whole attack. I know there have been requests before that we have accounts receivable and payables checked by I don't know how many people in order to ensure with absolute security that we're covering all the bases.

The Auditor General has an interest in having us count everything. I think we have to determine whether or not it's useful to do that, in my general political perspective, and in terms of allocation resources whether or not we want to count the esoteric field of environmental liabilities, or whether we want to try to account for the cost or the value of all the road surfaces in the territory.

There has to be some good objective reason for wanting to do that, before we would hire an army of people to do it. And I haven't heard that reason yet, so I guess the discussion continues.

With respect to the training trust funds, there will be agreements struck between proponents and the Yukon government. There generally aren't only agreements, but there are also accounting procedures that have to be followed. There is generally, as I understand it, some oversight committee that reviews the decisions - or that reviews progress and makes decisions - and that includes representation, in some cases at least, from our own government.

In terms of how the mechanism actually works, I'll have to brief up on that, because it has been some time since I was actually involved in those details. But I do know that they're expected to sign agreements and to account for the funds in appropriate ways.

Mr. Ostashek: The leader of the official opposition covered off a lot of areas - land claims, staff, devolution and those areas - I'm going to leave those until we get into the Executive Council Office. I would like to talk more about the budget in general and this government's vision of the future of the Yukon, which budgets are supposed to lay out for Yukoners as to where this Finance minister sees the Yukon, as we move down the road into the 21st century.

But, before I get into that, I would like to ask the Finance minister if he could give us, in a preliminary way, the ramifications of the federal budget that was delivered this afternoon, and I know that he's not going to have all the details of it - I wouldn't expect him to have all the details of it. But, in my listening to it, there are a couple of areas that I believe are very crucial to the Yukon, and one of them is $2.5 billion in increases to post-secondary education and health and social services transfer. My understanding is it's spread over four years. Does the government have any idea what share of that will be coming to the Yukon?

There was also the infrastructure program, and the Finance minister alluded to it a little bit in discussions with the leader of the official opposition that there would be a very small pittance - from the way he was explaining it - that was coming to the Yukon over a period of three years.

I would just like to know if the Finance minister has had a preliminary briefing from his Finance officials as to the ramifications of the federal budget on the territory in this next fiscal year, the one that we're discussing today.

Hon. Mr. McDonald: Well, the figures that we have so far received from the Ottawa office show some changes to the situation in the territory. First, with respect to the CHST changes, I guess the federal Finance minister's proposal is that there will a budget increase of about $2.5 million over - let's see, from 2000-01, 2001-02, 2002-03, 2003-04, the changes are about $2.5 billion, total.

The impact on the 2000-01 budget would be $971,000 to the positive for the Yukon. The next year, it drops down to $473,000, and then it drops down to $463,000, then $453,000 in the following three years. These are one-time transfers. It's not $971,000 and then another $400,000 and another $400,000 and another $400,000. It's just $971,000 one time. The next year it is $473,000 one time. The next year it is $463,000 one time, and the next year it's $453,000 one time.

Chair: Order please. The time being 5:30, Committee will recess until 7:30 p.m.


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

We will continue with general debate on the estimates.

Hon. Mr. McDonald: Mr. Chair, at the break, the Member for Porter Creek North asked some questions about our initial understandings of the federal budget, tabled today in Parliament. I was explaining, in the first instance, the situation respecting health care and the funding that the federal government was planning to put into the CHST. The funding that is being proposed, as I mentioned briefly, is that our calculation of their estimates, in terms of the impact on Yukon, show that there will be about $2.3 million over four years to the Yukon, of which approximately $970,000 will be available in year one, meaning the year for which we are debating the estimates, and then $470,000, $460,000 and then $450,000 for the following three years.

So, it will be a larger payment and then smaller payments in the following three years. These are all characterized as one time, and so they're not, in any sense, I guess, a base adjustment. So that is one element.

The initial impact on Yukon from the taxation measures is about $1.8 million for the year 2001, in terms of lost revenue - or sorry, let's put it this way: the impact on Yukon revenues will be a loss, as a result of the lower tax rate, of approximately $900,000 for 2000, and $1.8 million for 2001. Of course, these will be compensated for by the formula grant, but that does estimate the approximate reduction in federal taxes collected, so consequently the same amount would be available, in the community as a whole, for people to spend - so obviously a positive measure.

I did have some information on infrastructure. Preliminary indications are that the infrastructure for the year 2000-01 infrastructure program, Canada-wide, is about $100 million, for the next year it's $350 million, and for the following year it's $550 million. This right now appears to be allocated - or we're given to understand it will be allocated - on a per capita basis, so we can probably expect approximately $100,000 next year, about $350,000 the year after, and about $550,000 the year after that, in terms of infrastructure support that would be in some sort of form of program to upgrade infrastructure.

I'm just checking my notes here, Mr. Chair. There are a number of other programs that the federal government is pursuing, which may have some impact on us depending on, you know, applications made and that sort of thing. But those are the major items that will have an impact on us as a territory.

There is no reference, at this point, to any northern economic development strategy or funding for economic development that we've detected.

Mr. Ostashek: I just want to go into a little more detail and get my head wrapped around it a little better.

We have $2.5 billion that was balanced for health and secondary education - as the Finance minister says, one time only. That's the way I heard the announcement in the budget today.

I want to go back to the whole issue of the federal share of health costs in Canada, because my recollection from the time when I was on the side opposite and the Finance minister is that there was much more deducted from the provinces and territories than the $2.5 billion that's being given back now.

What percentage does the federal government contribute now? If you have the figure with you, I'd appreciate it. If you don't, maybe your official there does. What percentage of the health care costs is being funded by the federal government? I know that it started out years ago and was supposed to be 50:50, but I know that has been diminished quite dramatically on the federal government side to where it's no longer anywhere close to 50:50. Does the Finance minister have the percentage figures?

Hon. Mr. McDonald: We have, for Canada, a figure that shows there is approximately 13 percent of health care costs down from previous amounts, so it's still very low and consequently, as the member knows, there is some anxiety about where the future costs are going to be met. In most cases, when the federal government cut back on the CHST, the provinces and territories made up the difference through their own revenues and I don't know of any province or territory that actually reduced its expenditures in health care. I think they simply made up the difference.

Now, having said that, that's not to say the provinces and territories can easily meet the new challenges ahead. Consequently, there has been a request that the funding of the CHST, or the restoration of the CHST, be realized, in part because the costs are growing dramatically and all of us would like to see a greater participation by the federal government and, secondly, the CHST is meant to cover more than simply health care. It's also for post-secondary education and some social services.

So, we still are seeking a larger proportion of the system to be covered by the federal government.

I would point out that what is obvious here is that one-time expenditures are not going to breathe a lot of stability in the system. If there are one-time shots in the arm into the health care system in this country, one can presume that, given the rising costs and the ongoing costs associated with health care, a one-time shot in the arm may do nothing more than some capital works and will not meet the ongoing needs of this country.

So obviously, I would suspect that people are not satisfied with this budget commitment. In fact, Brian Tobin of Newfoundland has indicated, in his words, that the increase that was tabled today is "not the basis for a stable health care system."

Mr. Ostashek: Mr. Chair, a few weeks ago, there was a meeting in Quebec of, I believe, the premiers and government leaders across Canada in relation to health care. I don't believe that the Government Leader from the Yukon attended as an official there, but was not the demand from them for a permanent increase by the federal government to their share of the CHST transfer? What was the figure they were asking for?

Hon. Mr. McDonald: What was being requested, Mr. Chair, first of all, was an increase. What all provinces and territories are saying is that we would like the full restoration of the CHST with an escalator. At a minimum, we seek from the federal government a commitment that they will go there, in time, even if they don't go there in the first year. What there is resistance to are the one-time increases that only get us past a single year. This is not helpful in encouraging the public to have confidence in the health care system in the long term, so that is what the Government of Yukon is expressing as well, and that is what I indicated to the federal Finance minister should be done.

The federal government, by the way, is contributing approximately $2.8 billion per year less in CHST cash than they did in 1995-96, and this is despite the fact that there have been rising costs. There has been a growing population, et cetera, which should have increased that contribution as well. Obviously, this is a major issue for jurisdictions across the country, and many jurisdictions are forced to look at other ways of dealing with the problem. They have, depending on their perspective, different ways of doing it, but there is no doubt that the genesis of this discussion began with a drop in the federal contribution toward health care.

Even a few years ago, when I first attended western premiers conferences, the Premier of Alberta was not thinking of making any major structural changes to the health care system at that time, but was increasingly angered by the fact that the federal government was still attempting to call the shots in designing health care systems but was not prepared to pay the freight. So consequently, they started their own process for reviewing the health care system.

I don't agree with their approach, but I can't fault them for wanting them to address rising costs without a federal partner.

Mr. Ostashek: I'm sure the debate will continue, with the federal government wanting to call the shots on health care and not contributing a fair share of the total costs of the system.

I want to get back to the $2-billion infrastructure program, because the figures that the member opposite read off to me - at least, I didn't catch them adding up to anywhere near $2 billion. If the member doesn't have them now, he can bring them back tomorrow or the next day. But it seems to me that the figures that were rattled off by the Finance minister were somewhere in the neighbourhood of a billion dollars. I'm just wondering if I heard him wrong, or if, in fact, there's more to come on that.

Hon. Mr. McDonald: The announced program shows a commitment of $100 million this year, $350 million in the following year, and $550 million per year for the next four years. So in the first three years, it's about a billion, and then there will be more in the future.

Of course, as I mentioned, the Yukon contribution will not be significant. However, we will be arguing, of course - as we have in the past - that a per capita contribution is insignificant, it brings insignificant results for the Yukon, and so, consequently, there may be some people listening, and there may be some interest in divvying up the resources in a way that better reflects the realities of large territories and small populations.

Mr. Ostashek: I just want to spend a few minutes on the tax reductions of $58 billion in tax cuts announced by the federal Finance minister today. And our Finance minister just said a few minutes ago that Yukoners will stand to benefit from this reduction in taxes, and it'll be money in our system. But at the same time, while revenues will be reduced because our percentage is smaller than the federal government, that will be offset by the failsafe of the formula financing agreement. Did I interpret him right? We really, actually won't be out any money in transfers to the territorial government from the federal government under the formula?

Hon. Mr. McDonald: Yes, that's right. I'll just be precise here, based on some information I've been provided. The federal tax reduction will show a decrease in federal taxes payable in the Yukon of $1.8 million for the year 2000-01. The reduction to YTG taxes, because of the reduction to federal taxes, is estimated at approximately $900,000 as well. So the total impact on Yukon would be $2.7 million in terms of less taxes paid by Yukoners and $750,000 for a total of about $3.5 million less taxes paid in this year.

Mr. Ostashek: And, just for clarification, what is the perversity factor now, and will these tax changes have any impact on the perversity?

Hon. Mr. McDonald: The information is that the changes shouldn't see a change in the perversity. The perversity right now is $1.02.

Mr. Ostashek: Mr. Chair, I want to thank the Finance minister for that. I know this budget just came down this afternoon and officials all over Canada will be digesting it in the days to come, but I thank him for enlightening the House with what information he has had.

I want to go back now to the debate at hand, and that's the general debate on our budget. This government, over the course of their mandate, have only brought in one throne speech and that was in their first year in office, and they've used the budget as a way of giving direction to Yukoners. I would believe that the budget is supposed to give some insight to Yukoners as to where this Finance minister and this government see the Yukon going five or 10 years down the road.

I didn't find much of that in the budget, outside of some clichés that have been said in almost every budget, and I don't really see the NDP's vision for the Yukon five to 10 years down the road related in this budget. So I would just like to ask the Finance minister if he could maybe enlighten Yukoners and enlighten me, as this is going to be an election year, as to what he foresees in the Yukon five years from now, and what does he foresee 10 years from now? And what is the objective of his government? What are the goals? Does the Finance minister and his party see the Yukon, at some point, being a net contributor to Confederation, or are we going to be satisfied to continually sit here and redistribute transfer payments from Ottawa? I would hope that the Finance minister could give us a short overview of where he sees the Yukon going.

Hon. Mr. McDonald: Well, Mr. Chair, I actually do see a fair amount of vision in the budget, and I don't think we need to have throne speeches to do that. I know the throne speech is a tradition in parliaments, and certainly if I were intending that the government should be changing direction, a throne speech would be required. Nevertheless, budget speeches do, in many respects, account for a government's priorities and demonstrate our commitment in various key areas.

As a general proposition, it shouldn't be a surprise to the member that I see the territory becoming more self-sustaining in future years. I see a gradual growth in key sectors. There may be some significant growth in some, in terms of economic growth. I see a much more diversified economy. I see an economy that has greater strengths and is less susceptible to single trends in areas that have caused us to see a boom-bust cycle. I see a society that is more self-sustaining in time. That is a laudable, long-term objective of this community, and there may be an opportunity to make some great inroads in that particular area, particularly as a result of such things as oil and gas activity and better use of our resources.

With respect to society itself, I see a caring society that protects basic services that people have come to expect. I see a government that is increasingly more efficient and more connected to the people it serves. I see a community in the territory that is more worldly-wise and familiar with the world in which it operates, embraces the challenges and takes advantage of opportunities in a way that we never have before.

There are many elements of that vision in this budget and in previous budgets. Those are some elements of the vision that we see as being important for the future of this territory.

Mr. Ostashek: I would just like to carry that a little further. Where does the Finance minister see the Yukon five years from now in relation to where we are now, and how little of our own way we are paying. Where does he see us five years from now?

Hon. Mr. McDonald: Well, as I say, I see us being more self-sufficient than we were before. I see an economy more diversified than it is today. I see us better managing our resources in a sustainable but more effective way than we have to date. I see healthier forestry and oil and gas industries. I would expect that, if world trends continue the way they have over the past quarter of a century, we will see a resurgence in mining activity and more resource development than before.

I see a different economy in some respects, in that it will be more diversified. We will be seeing new industries begin and new industries - particularly in the information technology side of things - becoming more prominent as they are in some other parts of the world. I see, in five years, our dependence on any single source of revenue, including the federal government, being diminished. I see a caring and active society that protects services and counts them as a high priority to sustain. It will be one hell of a good place to live.

Mr. Ostashek: Well, Mr. Chair, I guess we've got a long ways to go. When we look at what has happened in the last four years in the territory, what we've seen is a dramatic increase in the operations and maintenance costs of government. That's one thing we've seen and that's fact; that's from the minister's own budget book - from $343 million in 1995-96 to the projected $392.8 million this year, not taking into the calculations for the collective bargaining agreements, which we were told in the budget debate were not included in that $392-million figure. There's a substantial contingency set aside in the budget, some $5.9 million.

When we look at the census figures and the population estimates that were given to us by Finance during the lock-up, they show that the population of the Yukon is going to remain flat until the year 2005. So, all of the indicators that we see, regardless of the glowing words that are put around it by the government, certainly don't bear out the fact that we are moving very quickly down the road to self-sufficiency and are going to be able to be contributing more and taking less from the rest of Canada.

We hear the government - and I heard it several times again today - about all the great things that are happening in diversifying the economy. And there is some diversification in the economy. But there has also been a real setback in exports from the territory from what they were a few years ago. And I know the government says, "Well, if you exclude lead and zinc..." Well, if I exclude the income taxes that I pay every month out of my paycheque, my net pay would look a lot better, too. And we've heard the figure tossed around by this government - about a 400-percent increase in lumber exports from Canada.

Yet in the Yukon Employment by Industry and Occupation Summary, October 1999, a government publication by the Government Leader's Bureau of Statistics, it shows quite clearly that when you look at the GDP in 1987 - now this is going back 13 years - logging and forestry industries accounted for .4 percent of the GDP. In 1997, they accounted for .3 percent of the GDP. So we haven't gained at all in those areas. We might have some short-term gain year over year, but in the long-range projections and the graphs that come back in this thing, it shows that the biggest growth is in government and government services. Yet we have a population that's flat and shrinking, and we have government growing. So I guess my question to the Finance Minister is this: how long does he think this trend can continue?

Hon. Mr. McDonald: Well, we get into this discussion virtually in every budget passed, Mr. Chair. The Yukon Party thinks that O&M is bad and that capital is good, and that the only expenditures of value are those on the capital side of the budget, but that the O&M side are somehow inherently destructive to the future of the territory, that even when we put money into the budget on the O&M side that supports tourism marketing, that too is, I guess, all part of the bad O&M that is this member's thesis. I think that some of the investments we make on the O&M side are not simply comfort expenditures as the member might see it, that make life simply better. There are certainly many investments here that improve our chances to make money and to expand our economy.

The member and I just absolutely disagree on the question. I know he tries to make the case. I guess he now likes the line, because he has used it a couple of times today, that if he excluded income taxes he'd have a better paycheque. That seems to resonate with him. But the fact remains that a large portion of our exports in the past have not just come from mining but from one mine - one single operator - the Faro mine. That has been the major engine of the entire private sector economy, in terms of the largest portion of the private sector mining economy. So, when the Faro mine goes up and down, there are large swings in the GDP. The member will know that the largest swing in the GDP was not during this administration at all. In fact, it was during his. The greatest drop in the GDP took place during his administration when what happened? The Faro mine closed.

Luckily for the member opposite, the Faro mine reopened. Why? Because prices were good. The Faro mine opened and the situation improved, almost overnight. But it wasn't because the Yukon Party government of the day decreed that that should be the case. It happened. He likes to take advantage of the fact and likes to say that that, by itself, somehow justifies everything he did with respect to the economy, that somehow his grand design for the economy is supportable because the Faro mine reopened.

Well, Mr. Chair, the reason why mines close is because of price. It wasn't even because they had a regulatory problem. It was price. Sa Dena Hes closed because of price. United Keno Hill closed because of price.

Anvil Range closed because of price. It didn't have a problem with federal bureaucrat regulators. It was the price that closed the mines. There was nothing that the Yukon Party government did that caused the Faro mine to reopen, and yet he will go out on the street - and he may even do it tonight if he finds a willing ear - and he'll say, "Well, you know, it was the Yukon Party government that created a climate for investment, that created good economic conditions and made things happen."

I think I've even got a letter here, Mr. Chair, from the Yukon Party, signed by its president. It says, "We know" - "we" meaning the Yukon Party - "We know we can do a better job because we did just that only four years ago when Yukon's unemployment was the lowest on record, mining exploration totalled $55 million and tourism and construction were booming, spurred on by the programs and policies of the Yukon Party government."

Mr. Chair, the economy was booming because the Faro mine opened. I remember the news stories. The Faro mine owners in Toronto were even complaining that there was more interest in Toronto seeing the mine open than there was in the Yukon Party government. The tourism industry was doing very well, but at the same time, the tourism industry has continued to do well and is, in fact, growing. In fact, every year that we've been around here, there has been increased tourism. There was a boom in the construction activity. The Whitehorse Hospital was under construction and people were thankful for it - so was the Shakwak project under construction. People were thankful for that.

But I fail to see how that was the result of Yukon Party policies. What was it, what policy, what action did the Yukon Party take to secure the hospital project? What action did they take to secure the Shakwak? That was a bequeath. They were bequeathed these projects. We were all very thankful that they actually carried them off, but these were not something that the Yukon Party worked hard to negotiate. It was done.

Mr. Chair, I know what the member is trying to do and how he's trying to characterize his party's administration when it came to economic activity, but it's just not supportable. He's taking advantage of things that were just handed to him. The Faro mine was just handed to him. The major capital construction projects were just handed to him. Apart from that, there was some small-scale work done on industrial support policy and that sort of thing, but in terms of the government's actual actions, there was virtually nothing. It's a no-brainer to spend the money that's given to you. But if you really want to diversify the economy, it is hard work. There are things happening now that were never happening before.

Mr. Chair, the member minimizes the amount of activity in the forest industry, and suggests that, as a percentage of the GDP, the forest industry is no better off now than it was in the mid-1980s. I can always check to see the size of the GDP and the size of industry and all that sort of thing, but the point of the matter - the real point - is that a few years back, there was nothing of consequence in the forest industry. There was a real problem with respect to raw-log exports. There were hungry mills in B.C. that wanted to swallow up everything that the Yukon could produce. Today, there are three mills.

And the mill in Watson Lake is a major employer in that town. So that has got to be a reflection of some interest and deserving of some respect by the members opposite in terms of the activity there. I mean, surely that is a laudable project.

The member asked me what I think about the future number of years. I see a more diversified economy. I see more diversification taking place right now. I see us being able to sustain the services that we've provided. Now the member only last year was saying that if I'd just put - I think he said $13 million, or maybe it was $15 million - another $15 million in the budget, he'd support it. That may have been overstating his position, but he was talking about just a little bit more spending and it would be OK.

Mr. Chair, the whole point of the budget exercise here and for the last few years is to think about spending trajectories that we can afford in the horizon that we know. And I believe that the spending trajectories are sustainable, the commitments that we've made are sustainable, and that there will be funds available for future governments and future legislatures. I would point out that the estimates here, in my opinion - and we'll have to see what happens in coming years, but in my opinion the estimates here are on the conservative side. I've indicated the same in the past, and I still believe that the estimates are conservative, and so consequently I suspect that our financial position will be better than is shown here. But, nevertheless, these estimates are certainly within my comfort zone and the comfort zone of the officials here.

So, if the member wants a sense of where we're going, I think we're going in a direction that people will support. They certainly indicated very clearly to me on the many occasions and the many meetings I've had with them that these priorities are their priorities. They would like to see us do these things.

The Chamber of Commerce, for example, in their musings on the budget, said that they liked the tax measures, but they expressed some concern about the growth in Education and Health - not because it was too much, but because it was too little, in their opinion. They said that Education and Health, in their view, was only growing by one percent. Now, the reality, of course, is that it's not growing by one percent, because if you compare mains to mains, Education and Health are going up by an amount that's greater than what the - three and four percent is greater than what the Yukon Chamber of Commerce suggested should take place or thought was taking place. So I'm sure that, once they understand what we are doing, the Yukon Chamber of Commerce will now be satisfied with the growth in expenditures in these areas.

But they, too - even the Yukon Chamber of Commerce - have expressed interest in ensuring that there's a healthy investment on the O&M side of the budget, in education, health care, et cetera. So I think that what we're doing is, in fact, supported by the community as a whole.

Mr. Ostashek: I set off quite a tirade when I asked how long the increases in O&M could be sustainable. I mean, we have the Finance minister going off on quite a tangent.

He made a very interesting comment: "It's a no-brainer to spend money that's given to you." I suggest to this Finance minister that that's exactly what he's been doing for four years, and with no end in sight. For him to sit there and say that it was only the Faro mine coming back that made our administration look good - I suggest he go back and look at the numbers and see what was going on. I agree with him on one thing: you can't put all your eggs in one basket at the Faro mine.

It's about the only thing he said in the last 10 or 15 minutes that I can agree with. The fact remains that there are substantially more employees working for government today than when it came to power in 1996. At the same time, the population of the Yukon has shrunk by some 10 percent. It doesn't add up, and that's what Yukoners are telling me. The Finance minister can get defensive if he likes and say I have something against government employees. I have nothing against them at all. Neither do Yukoners. In fact, they're a good stabilizing force.

My question to the Finance minister was, how long is this sustainable - this tremendous growth in government? Many Yukoners don't believe it's sustainable.

The fact remains that we need to diversify the economy and we need to do a better job than this government has been doing. They're barely getting their seed money back. When you look at what they're spending on travel around the world and how much they've increased in exports, and when you exclude lead and zinc, it's a pittance. At that rate, neither that Minister of Finance, who is in office today, or I will be around to see the Yukon be able to prosper.

I, for one, believe that there are many opportunities out there for the Yukon to be self-sustaining and we need not live off federal transfers forever, but we're not going to accomplish it by continuing this rapid growth in government. That's the difference between myself and that Finance minister. I believe in a private sector economy and I believe the Yukon can have a healthy public sector and a healthy private sector.

I don't like projections that say that the population of the Yukon is going to remain flat until the year 2005. That's doing nothing for my children or my grandchildren to find work and opportunities in the Yukon - absolutely nothing. And that's what Yukoners are telling us. The Finance minister is right: it is a no-brainer to spend money that's being handed to you. That's exactly what has transpired over the last four years and what is going to continue to transpire unless some changes are made.

Mr. Chair, the operation and maintenance of government going into the fourth year - or halfway through the fourth year - has increased in the neighbourhood of $50 million, and we've lost about 3,000 people from the Yukon. I asked the Finance minister before, and I'll ask him again: does he believe that's sustainable, and how long is it going to continue?

Hon. Mr. McDonald: Well, Mr. Chair, I should correct myself. When I said it was a no-brainer to spend money effectively that is given to you, I should have said it was a no-brainer for the NDP to do that. The member will remember that his budgets were criticized roundly by people every time he presented a budget, with the exception of the Liberal Party, which didn't and voted for them. But the budgets themselves showed spending that topped $500 million. Now, here's a budget that's going to show spending that has topped $500 million, as well. Obviously, in this particular budget, there are targeted expenditures in a number of different areas that people find important. I would point out to the member that one thing he didn't have that we do have and accounts for some of it, of course, is devolution.

The rural health care has been factored into the increases. I know he doesn't like increases to public servants. That has been factored in as well. Despite the fact that he and his party claim that the Government of Yukon has given the first increase or returned the two percent to public servants for the first time this year, the fact of the matter is, of course, that we have given them increases every year that we've been in government. So, there have been increases in the cost of the public service payroll. That has been factored in.

We've put new marketing dollars for tourism into every budget before this Legislature. That's an O&M cost. We've put new money into the hands of municipalities. That's an O&M cost. When we announced the CAT scan, which nobody seems to want to criticize, there are O&M costs associated with that. We put a million dollars into the hospital; that's an O&M cost in the first year. We've been providing increases to the hospital and to the college every year thereafter; those are O&M costs.

Now, the member opposite can criticize and dismiss these expenditures as growth in government and somehow evil. I say that they are good, necessary investments. And I believe, based on our projections to the year 2003-04, that we can sustain these commitments to people. We do not have to cut back.

We made that commitment three years ago, that we can make commitments to people and sustain them, and we have. So, the total horizon that we're talking about is not just the three years that we've been through, but it is this year and three years hence.

So it's the seven-year horizon I think that is something people wanted to see happen. They wanted to bring stability to financing everything from women's transition homes to health care to education, and we've been able to sustain these commitments. We believe that this is a good, laudable objective by government and that it is something that people in the territory keep saying that they want to see happen. Yet at the same time, in terms of our capital spending, we spend more on our capital as a percentage of our expenditures than any other jurisdiction in the country and nobody even comes close - nobody else even comes close.

Now the member opposite seems to think that if we spend it on government operations that that's somehow not legitimate, but if we spend it in capital, that creates a private sector economy. Well, if we pay a public servant and the public servant goes out to a local store and buys a good in the private sector economy, what substantially is the difference between us providing money for capital works on which the private sector depends?

The member himself only last year was saying, "Spend more in capital." So when we say we want to foster a private sector economy, we're actually doing something about it through diversification; through trying to find new ways of doing business throughout the territory. We're seeing some real growth in tourism; we're seeing some new businesses starting throughout the territory.

The member is shaking his head, but look, even the sale of local beer to Ontario wasn't happening a few years ago. I realize that's only 10 or 20 jobs or something, but it's still 10 or 20 jobs. What's wrong with it? I don't understand the member opposite. On the one hand, he wants us to put as much money as we can into capital spending - he's not saying spend less, but more money into capital - because that's going to create a less dependent atmosphere in the private sector. I'd say that encouraging the private sector to do new things that do not depend on seeking out government tenders is what we should be focusing our energies on.

Now, obviously we've got a healthy capital budget too, We're maintaining a long and fine tradition of improving the infrastructure of this territory.

And there's no doubt that there are expenditures proposed here everywhere in the territory. But, Mr. Chair, I can't accept the basic premise of the member's argument that somehow, if you invest in the O&M side of the budget, it's illegitimate and has no impact on the economy.

I think it's a legitimate request by the people of the territory; they do have an economic impact on the economy of the territory, and as long as we're trying to foster new jobs and a diversified economy, then we are making best efforts to improve our fortunes.

We're investing millions of dollars into telecommunications. This is a tool that even the member opposite now - I noticed in his propaganda - he's now defining infrastructure as something greater than just simply roads. Now he's including communication infrastructure, because people everywhere are saying that better communication infrastructure is a necessary tool for the modern economy. This budget is investing in that.

Every speaker who came before the economic forums said that a well-trained workforce - a well-educated workforce - is critical to success in a modern economy. So there are millions of dollars being proposed to be spent here in ourselves - in people, in training, in education - recognizing that basic building blocks need to be there, and that's in the O&M budget, for the most part. Those are O&M expenditures.

Now, surely these things together will contribute to a healthier, more diversified economy. The whole trade and investment wing, which is all about trying to encourage the private sector to do something besides just maintaining a financial relationship with government - that whole branch, that whole stream of activity, which is clearly seeing results to any objective person - that's all O&M. That's an investment of O&M dollars into diversifying our economy and seeing a broader, deeper, stronger economic base.

Mr. Chair, the member says he has nothing against public servants, and I'm presuming that, on an individual basis, he doesn't have anything against them. Why would he? But the Yukon Party's actions, when they were in government, tell a different story in that there was a real desire to target public servants. The cuts to wages were a resounding example of that. Every time we present a budget that shows an increase to wages, the member complains. That sends some very clear signals to me, at least, about the notion of priorities.

Mr. Chair, for the first time in my time in the Legislature, the government is consciously attempting to do some long-term planning, long-term projections, and not simply a year-over-year planning process, to only plan one year ahead and hope we can make it for the next year. We are actually doing the calculations about our territorial revenue, about expenditures in the long term to determine what we think we can afford, and we are sending out clear signals about everything from our projections on the operations but also on the capital, including specific and individual capital projects. I think that that is something people want to see happen.

Let's put it this way: I believe that what we have committed to we can sustain. We've thought through not just the next year but the years following, and we feel that these meet the expectations of the public at large.

Mr. Ostashek: I'm still no smarter than I was when I stood up before and asked the minister a question because he has not answered it. He has not answered it at all. He goes off on a tirade and gets very defensive, and I can understand why.

The member has made several comments that need to be corrected in the record. He says that they have devolution, which the previous administration did not have, and that that's some of the growth in government - wrong. We had the first phase of the hospital transfer. Numerous employees came over. The fact remains that if you look at the main estimates in his own budget book, they tell the tale of what the difference is between the administrations. The operation and maintenance costs under this administration - and he can say what he wants about it, whether it went into tourism marketing or whatever. The fact remains that there is a substantial number - I think somewhere in the neighbourhood of 600 - that was the last figure I saw - more employees than there were when this administration came to power, and 3,000 people have left the Yukon, Mr. Speaker.

So, the fact is that what this Finance minister is trying to tell me here today is that there is a bigger bang in O&M than there is in capital, and every economist's report that I have seen says quite the opposite - you get more bang for a capital dollar spent than you do an operation-and-maintenance dollar. The Finance minister knows that. He can stand there and say what he likes, but he knows that for a fact. He knows that he asked us to pull those figures up when we were in government, and we did. So, he knows that. I'm not going to ask him to go and pull those studies again. But this Finance minister is telling me that we can sustain this tremendous growth in operation and maintenance budgets indefinitely. That's what he's telling me. It's going to keep going on and on and up at the rate it's been going up. There's no end in sight, and that's good for the economy of the Yukon, he says. That's what he's trying to tell me, that this is money to be spent in the stores, in the private sector and that. The point he's missing is that this doesn't create a private sector economy.

We need some change in policy from this administration in order to do that, and that hasn't been forthcoming. And he's been given the message every year for three years by the opposition parties in this Legislature, but it has fallen on deaf ears.

Mr. Chair, we know that land claims need to be settled in order for Yukon to move ahead quickly, and the opportunities there are numerous, but unless we can overcome some of the blocks that are stopping us, we're going to be a long time replacing the jobs that have left the Yukon under this administration, and there have been a lot of them.

Mr. Chair, there are a lot of people still living in the Yukon who are going outside to work. That seems to be quite all right by this administration. The fact remains that the economy isn't doing very well, and every time the members opposite stand up and say it is, they incense Yukoners. And they know it. The only economy we have in the Yukon is a government-based economy, and thank God we have that, at least.

If we're going to continue on this path, we're going to have a much smaller economy than if we worked very, very hard to create a private sector economy and a healthy public service.

Growth, in my opinion, that has been experienced under this administration in the public sector is not sustainable. We will come to the point in not too many more years when the money flowing from the United States government for the Shakwak project dries up. Capital dollars will shrink dramatically, and with the growth in government, if it continues at the rate that it has experienced since 1995-96 to the present projections of 2000-01, we'll be using a major portion of our budgets to fund the operation and maintenance of government. I've asked the Finance minister twice: how long does he think this is sustainable? I'd like him to answer that question.

Hon. Mr. McDonald: I'm going to be a little longer in responding to this than just one minute so -

Chair: Would members prefer to take a break?

Some Hon. Members: Agreed.

Chair: Ten minutes.


Chair: I will now call Committee of the Whole to order. Is there further debate on the general estimates?

Hon. Mr. McDonald: Mr. Chair, before the break, the member said a few things that I think are probably worth responding to. First of all, the member said that I claimed that the Yukon Party did not undertake any devolution. I want to assure him that I didn't say anything of the sort. Certainly there was some devolution in the period during which the Yukon Party was in office. Although they may not have negotiated the hospital transfer, they certainly did see the growth in their personnel budgets as a result of the hospital transfer. Consequently, the hospital transfer would have meant some growth in government personnel, in terms of the growth in Yukon government personnel at the time. But there would also have been a corresponding decrease in federal government personnel.

As well, Mr. Chair, there was a transfer of rural health to the Yukon government. That saw over 200 employees being transferred to the Yukon government from the federal government, and that is a factor in the change, not only in personnel budgets, but in the number of people employed by the Yukon government.

The other thing that the member said was that I was trying to make the case that you get a bigger bang for the O&M dollar than you do for the capital. I did not try to make that case. It is true, though, that some O&M expenditures have a greater impact on the economy than some capital expenditures, but it's not true that all O&M expenditures necessarily have a greater impact than all capital or vice versa. There is clearly a case to be made that some O&M expenditures have a greater impact than other O&M expenditures. Some capital expenditures have a greater impact on the economy than other capital expenditures. But whatever he was suggesting that I was trying to argue is, I think, a stretch.

He said that he believed that the Yukon government needed a change in policy to foster a private sector. What is he referring to? Is he saying that our efforts to promote trade and investment do not foster private sector activity? This is what the private sector has indicated they would like to see happen. We have a partnership with the private sector to try to promote that activity. We are making gains in that area. We are encouraging a sustainable forest industry that is encouraging private sector. We are encouraging oil and gas activity. That is encouraging the private sector.

We have taken measures in the tax system to encourage the private sector.

Clearly, we're doing a number of things to encourage the private sector, to ensure that there's more private sector activity. But his solution of just simply more capital spending doesn't necessarily encourage more private sector. Obviously, if he's saying simply that government spending is to provide some construction contracts, and that that by itself is encouraging more private sector, I take issue with that. I say it's necessary to engage in capital activity, build infrastructure and do various things to the capital program, just as I think it's necessary to do things with the O&M program, but that by definition does not mean that the private sector is growing, as a result. Or that the private sector is becoming more sustainable, or more self-sufficient, or less dependent upon government. One could argue that it's getting more dependent upon government.

What we are doing is taking action through the O&M and capital, to encourage and foster more genuine private sector activity, on a whole series of fronts.

As I pointed out before the break, the trade and investment branch in the Department of Economic Development is doing precisely that. One could argue that the branch that promotes mining in the Department of Economic Development is doing precisely that: to encourage private sector activity, not encourage a contractual relationship with government but real private sector activity. Surely, the member can't take issue with that? That is a genuine attempt to increase our GDP and grow the economy.

Now, the member then went on to say that overcoming land claims is important to help support the economy, give the economy a greater boost, and I can't agree with him more. If nothing had happened in the last three years, I'd feel guilty. The reality is that a lot has happened at the land claims table in the last three years. If there were two issues resolved, we'd have five claims now, with only a few to go, so we certainly are taking that area seriously. But I cannot, unless the member is advocating I should - now, I'm afraid I won't agree with him if he does - but I cannot open up the Yukon government treasury to simply overcome this problem.

Now the member repeated his points that somehow the Yukon Party took some specific actions to resurrect the economy. Well, the member's government, apart from spending money provided to them, took no action that I could detect that seriously diversified our economy. There is no doubt that the Faro closure knocked the stuffing out of the government in 1993, and the Faro mine reopening resurrected the government's fortunes overnight. Now, the members opposite don't like Faro too much - they make snide remarks about it constantly - but the fact remains that when Faro was operating, there was a whole lot of economic activity in this territory. And the economy can rebound in short order when it is operating, and I think it would be a great thing if it did operate, and some other mines, too. But I can't see where the Yukon government took strategic action to make it happen, it just happened. And there were tens of millions of dollars in capital spending that they simply spent because it was there.

Mr. Chair, the members opposite say that the economy was not doing very well due to the Faro mine closure. I agree. It did not do as well, but we have taken action to see things turn around.

Now, the members opposite spent days discussing previous economic forecasts, and if they could find a negative indicator, they tried to grind the government's nose into it, saying, "Face up to the realities." But the moment there is an economic forecast that shows a turnaround and has some optimism, they dismiss it. They say it's a bunch of propaganda. That's what I call trying to have it both ways. Well, Mr. Chair, no way can they have it both ways.

The member asked what will happen when the Shakwak project dries up. Well, I'm glad to see that the member cares a little bit about it, because it certainly would have been somewhat beneficial to our administration in the first year if somebody had thought about that a little more aggressively. We wouldn't have had to work so bloody hard to get the project restarted.

There's most definitely something to think about in the coming years: if a major project like this is no longer receiving funding, given the size of the project, there is going to be an impact if it can't be replaced with something else. So, I guess the NDP government is going to have to start working on it.

Mr. Chair, I do see that what we have here - and we have considered it carefully - and the spending patterns that we're projecting can be sustained over the horizon that we're identifying, pure and simple. I think that this mix of spending priorities is what people want. They said they wanted them. I'm not just referring to people in need or the lowest income people. I'm referring to people throughout our territory who said they want expenditures in O&M and capital.

I mentioned already a claim by the Chamber of Commerce that they think there was not enough spending on Education and Health, and I want to reassure them there is enough spending on Education and Health. We're talking about the Yukon Chamber of Commerce, of all people.

Rick Neilsen was quoted saying that they were concerned that we may not be keeping up with inflation in Education and Health. I want to assure him we're doing better than that.

But even the Chamber of Commerce is saying, "More O&M". It's a priority for the community. They want to see these services maintained and strategically enhanced in certain areas. And we're there. We are there.

And when the Tourism Industry Association asks for tourism marketing, we are there with hundreds of thousands of dollars in new investment in tourism marketing to spur on a sector of our economy that has some real potential. We're there for them, too, on the O&M side.

And we believe a healthy expenditure for a certain infrastructure that is typically funded through the capital budget will also be there. We also think that that can be sustained, in terms of the projections that we've made. We believe that we can sustain those figures and that we should.

Mr. Chair, we've been at the long-term projections for a couple of years now; we've been trying to stick to them. Last year the members opposite thought the Government of Yukon, the NDP government, was going to spend wildly in the last year of the mandate, just put lots of money into all kinds of things.

Well, Mr. Chair, we said that we were committed to stable spending. We were committed to long-term commitments. We're doing precisely what we said we were going to do. We resisted the calls from members in the opposition to spend more. We resisted the temptation to spend big in the election year because that was what the members in the opposition wanted us to do, because we know there's a next year, and there's a year after, and people want good government, and they want sustainable commitments.

They don't want commitments like that which was just announced in the federal budget, for a one-time health CHST contribution. They don't want that.

They want sustained commitments over the long term, and we will, to the extent that we can with our commitments, do that.

So, all I can say to the member - he asked me if it was sustainable - is that I think what we are doing is sustainable. The member asked me if I think this is what the Yukon people want, and I'll say yes, this is what I believe Yukon people want. And I think the expenditures on the O&M side and the capital side have economic impact. I think that the expenditures we are making on the O&M and the capital to foster real private sector activity does not show a dependency on government. I think that's happening, too, and I think that the economy over time will show results by being more diversified and a stronger economy as a result.

Mr. Ostashek: Mr. Chair, let's look at this positive economic outlook that the members opposite are trying to spin and use to convince Yukoners - some of whom are in very dire straits - that everything is great and is turning around and that they've been great managers of our economy. Let's really look and see what this economic outlook says. They say we ignore it because it looks good. Things have turned around. We've turned the corner, as the Finance minister and the Government Leader say. The economy has bottomed out. It's getting better. Yukoners should be optimistic.

Well, Mr. Chair, let's look at the population. The population is expected to grow to 31,250 in the year 2000, but what has happened to the population? It declined 3.3 percent in 1999, following a 3.9-percent drop in 1998. The Bureau of Statistics estimates that the Yukon population averaged 31,166 last year, down by 1,050 people from 1998. The population reached a low of 30,922 in August and has increased slightly since then, and the projections in the budget are that it's going to remain flat for the next five years.

Those are what the projections are in all this great diversification that this government has undertaken in their mandate. Yukoners are not seeing the results of it. They wonder if they ever will.

Further in this positive Yukon Economic Outlook 2000, in the sectoral outlook, mining - spending on exploration has declined further in 1999 to a total of $9.5 million, down from $15.4 million in 1988, down from about $55 million in 1996, Mr. Chair. This economy in the Yukon is really improving.

In 1999, mine development was estimated at $6.5 million from work at the Brewery Creek mine and the Minto project. Exploration spending is expected to remain at low levels for 2000 due to difficulties by junior mining companies raising equity and further exploration cutbacks by major companies.

Some Hon. Member: (Inaudible)

Mr. Ostashek: "Exactly," the Minister of Economic Development says.

Yet we have seen today a letter from the Alaska Chamber of Commerce, which says that they have $1 billion in 1999 in mine exploration and development by Canadian companies raising money in Canadian equity markets to spend in Alaska on the same mineral belt that runs through the Yukon. Now, they can raise money to spend in Alaska, but they're having difficulty raising money to spend in the Yukon. There's something wrong here. There are the same mineral prices around the world. This government can dream on that things are getting better. Quite clearly, this report doesn't say that they are.

Mr. Chair, it goes on to say that new residential construction is expected to remain low. That's really a turnaround.

What I want to say to the Finance minister and the Economic Development minister is that I want them to continue standing in this Legislature and saying that the economy has turned around and shows optimism. I want them to continue saying that, because every time they say it I get another 10 or 15 phone calls asking what planet those people live on.

What planet do those people live on because -

Some Hon. Member: (Inaudible)

Mr. Ostashek: Mr. Chair, it's not the same 10 or 15. It's not the same 10 or 15. Yukoners are incensed with that attitude that everything's all well and good and that things are starting to improve. Because quite clearly, nothing in reports put out by this government show that things are getting better to any amount. It might be a small turnaround from 1998, but it has certainly got to go a long way to replace all the jobs that have been lost in the Yukon.

But what I can understand from what this Finance minister has told me - and I'm not going to prolong this debate on this because I'm not going to convince him, no more than he's going to convince me that he's on the right track. But what I glean from what he has said today is that if the NDP government is elected, the operation and maintenance costs to government are going to continue to go up - and that's all well and good, people want that to happen - and it's sustainable. It's sustainable for the foreseeable future. Is that the message that the Finance minister is sending out to the Yukon public?

Hon. Mr. McDonald: I don't want to prolong the debate unnecessarily either because I don't want to shoot at an unarmed man here. The member continually raises the impact of the Faro mine closure. One mine employing hundreds and hundreds of people, one mine employing many, many people both in Faro and around the territory, a lot in Whitehorse - when that mine closes, a huge impact is felt by the people of this territory. The greatest-ever drop in the GDP in this territory was not faced in the last three years at all. It was faced in 1993 under the Yukon Party government when the mine closed.

That's what happened. That was the most significant drop in the gross domestic product of this territory. Now, what action did the Yukon Party take to actually start the Faro mine? I don't remember any action. The members opposite in government, the Yukon Party government, simply waited for the mine to reopen. When the people of Faro came calling on the Yukon Party government to do something, there was a siege mentality up in the Cabinet offices. They weren't intending to do much. When it came to taking specific actions, the Yukon Party was seen by people in Toronto as being not particularly helpful- at least, as reported in the media.

Now, Mr. Chair, the impact of that closure had a huge effect around the territory, back in 1993 and again in 1997. What we are doing now that's different from 1993 is that we're not getting into taxing the public, cutting wages and virtually taking no specific or direct action to try and get things going. We are, in fact, working with the community broadly to try to diversify the economy in a whole wide variety of areas. And we're trying to work on the trade side, on the tourism side, on the oil and gas side and on the forestry side. Everywhere there is a real opportunity, we are trying to make substantial change in our fortunes. No single action will replace the Faro mine, but we will be improving the economy and making it a much more diversified economy so that when mining does come back - and, historically, it has - it will be a part of a stronger, more diversified economy.

Mr. Chair, back in 1994 when the member was introducing his budgets, he introduced a budget which the Chamber of Mines at the time commented on, and the chamber director at the time - Mr. Rob McIntyre - said, "The territorial government has so little responsibility in jurisdiction over mining, what happens with the budget here doesn't tend to affect companies' exploration expenditures, or anticipation for doing business in the territory." Now, that's what Mr. McIntyre was saying a few years back.

Mr. Chair, the fact of the matter is that the Yukon government - this Yukon government - is investing in trying to diversify our economy and build our resource base, and we're making investments to the extent that we can in that area. But, whether the member wants to believe it or not, mining in Canada is suffering, and mining companies told me that over and over at the Cordilleran Roundup a month ago. And if he doesn't like it that I say that, or I say that the economy is slowly turning around, I can only ask him to tell his own executive to stop calling him every time I say these things, because the reality is that actions taken by us can make a difference. We are trying to make a difference in key areas; we are working with a community in trying to improve our fortunes, and we're getting good support from the community at large in taking these actions to improve our economic fortunes.

Mr. Chair, our answer, however, is more comprehensive than the simple answers that the member suggests are necessary to deliver.

They've tried to make a case that the Government of Yukon is responsible for not being able to close final land claims. The evidence suggests otherwise; that the Yukon government here is trying very much to close, but it can't overcome some issues that can only be resolved by others.

They tried to make the case about the development assessment process - the fact that we haven't got it designed - is affecting the situation. All I can say is that the development assessment process - actually, the Yukon Party leader did not raise the development assessment process, and I think I know why. But we have tried to ensure that there is a process that meets the needs of Yukoners in the long term.

Mr. Chair, in speaking to mining companies, they know exactly why we're doing what we're doing and they are happy that we're doing what we're doing, because somebody has to speak up for Yukoners. It is our obligation and our role to ensure that the development assessment process is done right, and that is precisely what we're doing.

Mr. Chair, we are doing what we can, and good ideas that are suggested by the public to improve our fortunes on any front are seriously considered by this government, and I think the public reaction to this budget is testimony to the fact that we have worked hard to understand what the public thinking is and to also ensure that we have targeted our expenditures appropriately.

Mr. Cable: Mr. Chair, I have some questions for the minister on the tax decrease and also his long-term projections. I'd like to explore his thinking on both these matters.

Premier Harris in Ontario brought in these great tax reductions a few years ago and his theory, I believe, was to stimulate the economy. That's what was driving his tax reductions. Martin, on the other hand, appears to be responding to those people in society who want to leave more money in the taxpayers' pockets. They take the view that the taxpayer knows best how to spend their money. They are two different motivations.

What was it that caused the Government Leader to bring in the tax decrease?

Hon. Mr. McDonald: Well, Mr. Chair, I do not share Mr. Harris' view that his tax cuts are creating a huge stimulus to the Ontario economy. I take the position that is shared by many economists - in fact, although I'm not an economist myself, I am persuaded by those who do say that the Ontario economy is driven by a very hot American economy, and that it is driven mostly by exports, largely in the auto industry. That is what is driving the Ontario economy, and it's doing quite well, but the ideological argument that tax cuts has automatically created this situation is one I cannot accept. I have not seen any evidence to that end.

In terms of the rationale for the tax measures in this budget, it can be found in the discussions that we had at our tax round table, which was to be sure to meet the objective of having a competitive tax regime for what the tax round table has referred to as the "Yukon universe", meaning that, in the context of our neighbors and others in western Canada, we had a regime that was no better and no worse. In some cases this makes us better than other jurisdictions in Canada. That has been our objective.

The feeling was - and this was expressed by many at the tax round table - that the indices of taxes that we have in the Yukon should not be a disincentive for activity, but, recognizing that we have services to pay for and public expectations to meet, we should not overshoot the mark either in terms of reductions. However, we should not have rates that are higher, but ones that are in the middle of the pack.

We do have a few rates that are better. One could argue that the environment here, certainly after the personal tax reductions that are being proposed, will be better than others. That will be an opportunity for the Yukon to sell the tax environment to potential investors.

There are not a lot of people I have met, in the context of these discussions, who have said that a massive reduction in taxes is going to create activity, just like that. The manufacturing tax, by the way, is the lowest in the country by far, but we don't have a lot of manufacturing yet. So, that by itself is obviously not generating or driving activity. So, it's a balancing act, to ensure that we are consistent with other jurisdictions, and perhaps a little better in certain key areas, but we want to retain sufficient revenue to meet public expectation. I believe we are doing both.

Mr. Cable: Now, the federal government got at it a little differently, as I'm sure the minister is aware. Where their thinking started was that they looked at the projected surplus, and said, "Well, half for you" - the fiscal people - "and half for you" - the people people - the program people. The fiscal people were going to put part of it on debt reduction and part of it on tax reduction. It appears that what this minister is saying is something a little different. What he's saying is that we want a competitive tax regime. From the information that was given in the budget speech, it appears that the minister is moving in that direction. Did the same sort of thinking apply to the corporate income tax?

Hon. Mr. McDonald: Well, firstly, Mr. Chair, I don't know that we can detect from the federal Finance minister's actions to date where he wants to take the tax system in this country. All we know, as the member has pointed out, is that in the short term he's adopted the 50:50 plan - 50 percent for tax reduction and debt reduction, and 50 percent for spending. Maybe now it's one-third, one-third and one-third. Whatever it is, he is basing his judgment on what to do next, in the immediate term, with how much money is available.

I don't know that we can draw conclusions from that as to precisely where he wants to see the Canadian economy or our tax rates; whether he's got some objective of making them competitive or lower than the United States or anything else. I have not been able to detect that from immediate fiscal policy.

All I can tell you is that we are in a position to be able to afford to do what we want to do, in terms of positioning ourselves in our environment, and in our immediate universe, because we know that we can not only sustain services that are important to people, but we can also enhance them in key areas.

I'm certain that Mr. Martin does have some vision as to where he'd like to go. What was the question? You had a question there, didn't you?

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Oh, corporate tax. Well, the feeling at the tax round table has been that the priority now is personal income tax. It was, prior to that, targeted tax credits for various sectors of the economy - sectors like mining, for example, mining exploration - and also to encourage small business investment last year.

We, as government, took the position outside the round table, so to speak, to provide targeted tax breaks to low-income people. This year it's personal income tax. The Whitehorse Chamber of Commerce, for example, asked formally for some relief on the personal income tax side, but made no mention of the corporate tax, because we are, more or less, in a competitive position now.

That's not to say, if they were sitting here and were we to say, "What do you think about corporate income tax - should it go up or down?" - I'm pretty sure they would say that it should go down.

But in terms of setting priorities - and everybody has to come to some priority, they, along with us, agree that personal income tax was the priority.

Mr. Cable: In the budget lock-up, the rate reductions that were given to us around the calendar year - if I appreciated them correctly - starting January 1 of this calendar year, one basis point, or two percent; 2001 calendar year, three basis points, or six percent; and 2002, two basis points, or four percent.

I noticed in the presentation of the budget speech, though, we're talking about an eight-percent reduction. We're talking about a drop in the basis points from 50 percent to 46 percent of the federal tax, which comes out to an eight-percent reduction, I assume at some juncture later this year.

Just how much is the tax reduction for the present fiscal year - the fiscal year that this budget relates to, which is the 2000-01 year?

Hon. Mr. McDonald: There will be, as the member is quite rightly pointing out, one basis point for this calendar year. There will be three more basis points, January 1, 2001, which is also in this fiscal year, and the impact of that reduction is also taken into account in calculating our revenue. So, in this fiscal year, there will be two moves, moving it down initially and then moving it down again on January 1, 2001. The financial impact on the revenues for both moves is calculated into the fiscal year revenue estimates.

Mr. Cable: How much is that, though? That's the question I'm asking. How much is the tax reduction in absolute numbers for the fiscal period starting April 1?

Hon. Mr. McDonald: The impact in dollar terms for this fiscal year will be $750,000. The impact for next fiscal year will be $3 million.

Mr. Cable: Where I'm coming from is I wanted to see if there's any significant incentive. Mr. Martin, in his budget today, dropped taxes. Has the minister had a chance to do any back-of-the-matchbox type calculations on what that will mean for the Yukon government on its tax revenues under the tax collection agreement?

Hon. Mr. McDonald: As I indicated to Mr. Ostashek, the loss to the Yukon government is expected to be $900,000, which will be made up in the form of a financing calculation. So the impact on the Yukon government revenues will also drop $900,000, but we'll be making up that $900,000 under the formula financing agreement. So we will not be a net loser as a result of the federal government's decision to lower its tax rates.

Mr. Cable: So we've got three tax reductions. We've got the $750,000 in the budget because of the basis point reduction that was talked about before Mr. Martin's budget. We've got Mr. Martin's drop in taxes, and we've got the $900,000 that is going to occur because of the operation of the tax collection agreement. What is that - $2 million or $3 million all together?

Hon. Mr. McDonald: It's about $3.3 million total.

Chair: Order please. It being near 9:30 p.m., I will now rise and report.

Speaker resumes the Chair

Speaker: I will now call the House to order.

May the House have the report from the Chair of Committee of the Whole?

Mr. McRobb: Committee of the Whole has considered Bill No. 99, First Appropriation Act, 2000-01, and I now report progress on it.

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

Some Hon. Members: Agreed.

Speaker: I declare the report carried.

Mr. Fentie: Mr. Speaker, I move the House do now adjourn.

Speaker: It has been moved by the government House leader that the House do now adjourn.

Motion agreed to

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

The House adjourned at 9:30 p.m.

The following Sessional Papers were tabled February 28, 2000:


Yukon College 1998-99 Annual Report (Moorcroft)


Yukon College financial statements, as at June 30, 1999 (Moorcroft)