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.

Tributes.

Introduction of visitors.

Mr. Hardy: I would like the members of the Legislative Assembly to welcome Mr. Campana and the Whitehorse Elementary School grade 4-5 split French immersion class. There are approximately 15 students.

Speaker: Are there any returns or documents for tabling?

Are there any reports of committees?

Are there any petitions?

Are there any bills to be introduced?

Are there any notices of motion?

Are there any statements by ministers?

This then brings us to Question Period.

Ms. Duncan: Today I have some questions for the Minister of Tourism.

In April 1999, I asked the minister to provide some numbers on the operations of the Beringia Centre. What I'm looking for from this open and accountable NDP government is a financial statement that outlines the revenue and expenses associated with the Beringia Interpretive Centre.

In April 1999, the minister said, "It's a little ambitious to say by the end of this week, but certainly we could have something next week." My colleague from Lake Laberge asked the minister the same question last fall. The minister said, "So, I will apologize that the information never got over to you, and I will ensure that it does." That was on December 1, 1999. I don't want apologies, and I'm not looking for excuses. I would like to see the numbers. Why has the minister refused to provide this information?

Hon. Mr. Keenan: Well, Mr. Speaker, it's not a refusal to provide the information. I do have the information I can provide to the member opposite.

From 1998, April 1 to March 31, there were 21,043 visitors, and from April 1, 1999, there were 20,395 visitors.

Ms. Duncan: Mr. Speaker, I thank the minister for providing me with the number of visitors. I asked for the revenue - all the revenue and all the expenses - as we know they are in several departments - associated with the Beringia Interpretive Centre. All of the numbers, Mr. Speaker.

I asked the minister in this House for that information; he has committed to give it to me. The Member for Laberge has asked for the information; he has committed to give it to her. We still haven't seen it.

Will the minister provide the revenue and expenses associated with the Beringia Interpretation Centre to the opposition caucus today?

Hon. Mr. Keenan: Certainly, Mr. Speaker, the operating costs for the Beringia were $347,000. The revenue from April 1, 1998 to March 31, 1999 was $76,761, and from April 1, 1999 to February 14, 2000, it was $69,127. This is in addition to the $400,000 that we have, over and above last year's main estimates, put into the heritage budget.

Ms. Duncan: The minister is providing a little bit of information in dribs and drabs. A little bit is coming from the Department of Tourism. The complete information, which I requested, was all the revenue associated with the Beringia Centre and all the expenses. What about the expenses that are covered by Community and Transportation Services? What about the expenses that are covered by Government Services? A complete accounting was to be provided, and that is what I'm looking for from the minister. The government is negotiating to turn the Beringia Centre over to the MacBride Museum. Presumably, the minister has provided the MacBride Museum board of directors with this complete accounting. Has the minister done that, and will he provide, in writing, the full information to the opposition caucus?

Hon. Mr. Keenan: Well, certainly, Mr. Speaker, I see where the member's coming from now. I can say - and she can read the Blues in the morning, or write it down on a piece of paper right now if she likes - that the Beringia annual operating costs, O&M is $347,000. That is the total O&M cost for the Beringia Centre.

As far as working with the MacBride Museum, yes, we are a very open and accountable government, we like to consult with people, and we like to work with people, and will continue to be that. We are in the process right now of working with the MacBride Museum and the Yukon Historical Museums Association, to find which way we might be able to transfer the Beringia Centre over, and we're doing it in a very forthright manner.

Ms. Duncan: Again, to the Minister of Tourism and again regarding the Beringia Interpretive Centre: it's interesting that the minister closed his remarks, indicating that this government was open and accountable, and negotiating in a forthright manner.

Well, last fall the government indicated that they were doing this negotiating with the MacBride Museum over the Beringia Centre, and a decision was supposed to be made in time for the transfer on April 1 of this year. Part of those negotiations was the development of terms of reference and the establishment of negotiating principles.

Again last fall, the minister promised to provide everyone with those negotiating principles. He said, "We've developed a set of principles that are working with the museum society and us. It's a set of principles that's going to be transparent, so that people will know what we're getting into." It's two and a half months later, and the minister hasn't provided that information - as he promised to do - to the opposition caucus.

Will the minister provide that set of information?

Hon. Mr. Keenan: Well, Mr. Speaker, we're doing what should have been done in the very first place by the Yukon Party government. We're involving the community and we're turning it over to community control. It is what should have been done in the first place and is certainly our ambition in this transfer.

The set of principles are being refined and defined as we go through the negotiating process. I can say, though, that such topics are included in the funding, and whether there will be adequate funding for it, which I've committed to. The staffing of it, what will happen to the gift shop, the heritage interpretation, and much wider community interests that are large, are coming out and are evolving.

So, certainly we'll continue to work with the McBride association on it and I will provide the information as relevant, when relevant, to the member opposite. But right now we are in the process of negotiating and talking with them in a very open manner, and we'll continue to do that because we do want the Beringia Centre to work. As a government, heritage is very near and dear to our hearts, and we've proven that every year in this Legislature by putting incremental increases, so do the comparison - and I know you don't like to hear this - from mains to mains. Our heritage funding is $400,000 over and above last year.

Ms. Duncan: Mr. Speaker, what I don't like to hear and what other members don't like to hear and members of the public don't like to hear is this government that stands on its feet promising to be open and accountable - to share information, to provide it - and then they don't deliver. Just like all their other promises, Mr. Speaker.

The minister's quite paranoid about this transfer. The consultant who was hired on a sole-source contract to help with the transfer - a former NDP candidate - was instructed to produce a report by February 15 on the transfer. Will the minister provide that report and all the other information that I've asked for today?

Hon. Mr. Keenan: Well, certainly, Mr. Speaker, if the member will read the Blues in the morning and get one of her researchers to read it to her, they'll understand that the information is being provided in totality.

I'd also like to point out, Mr. Speaker, that the consultant who was hired was chosen by the association and not by this government. They were chosen by the museum association. So, it's not us telling them what to do. It's us asking them how we can facilitate in making the Beringia Centre a good transfer and more of a community model.

Ms. Duncan: Well, Mr. Speaker, the minister can try and deflect that all he wants. It's the minister and the minister's department who signed that sole-source contract.

The government is trying to negotiate the turnover of the Beringia Centre to the MacBride Museum by a deadline of March 31, 2000. That was the last information that the minister gave in the House. That's little over a month away. Is that going to happen?

Hon. Mr. Keenan: Mr. Speaker, again, I am not trying to deflect anything. Certainly, we've put the resources to the transfer, and we've done it in the terms of bringing on a contractor so that we might be able to have a facilitator between the department and the MacBride Museum Society. The sole intent was to make it work, to find a way to make it work, and that's what we're doing.

Did we pay for it? Yes, we paid for it. Did we sign the contract? Yes, we did. Did they choose the contractor? Absolutely, because we believe in working with people to create a good atmosphere so that we might be able to correct the boondoggles of the previous government.

Mr. Ostashek: My question is for the Minister of Economic Development regarding the government's involvement in the Argus project. In response to a question I asked last Wednesday in this House, the minister went on at some length explaining how this government provided similar offsite water and sewer infrastructure to other businesses, just as it was providing to Argus. This minister stated, "This is an offsite infrastructure water and sewer commitment, very similar to what's being targeted right now for Trans North" and Northwestel, two other local companies.

My question to the minister: is he as confident today as he was last Wednesday that what's being provided to Northwestel and Trans North is the same as is being provided to Argus?

Hon. Mr. Harding: The budget is very clear. There is $1.5 million in the budget for the Range Road infrastructure over a couple of years and it's not being charged back to anyone - any business.

Mr. Ostashek: Well, Mr. Speaker, the minister said last Wednesday that they are providing the same services to Northwestel and Trans North as they are providing to Argus. That seemed to raise the ire of those companies, because what they tell me is that Argus is getting sewer and water put to their property line - a property that never had sewer and water services before.

Trans North and Northwestel are being asked to upgrade existing water and sewer services to their property line at a cost of some $200,000 or $250,000 - upgrade existing services that don't meet the city fire code flow standards now.

Mr. Speaker, I want to know from this minister what he is going to do to level the playing field between outside businesses and local businesses.

Hon. Mr. Harding: Well, Mr. Speaker, how the city deals with lots of prospective investors in the territory is the city's business. We have been consistent in terms of our commitments on infrastructure. The point here is that there are infrastructure investments being made - $1.5 million, in this case, over two years - and it is not being charged back to any business, whether it's a Yukon business or anyone else, for that matter.

Mr. Ostashek: Mr. Speaker, the minister quite clearly said on Wednesday that this offsite infrastructure sewer and water commitment is very similar to what's being targeted for Trans North, a local company, and Northwestel, another local company. I suggest to the minister that it's as different as day and night, and now this government and this minister are trying to wash their hands of it and lay the blame on the city, when they must bear their share of the responsibility for creating an unlevel playing field for investors in the Yukon.

What is this government going to do to correct it?

Hon. Mr. Harding: I'm not washing my hands of anything. There's an enterprise that wants to invest $35 million of private sector money into the economy of the Yukon because they believe it has a bright future. There's $1.5 million - double the amount that was put into offsite water and sewer infrastructure - to accommodate that extension of that service along the waterfront, going to this Range Road development - double, $1.5 million over two years. It's not being charged back to any Yukon business, and it will benefit businesses.

The Yukon government, previous NDP governments, have put over $1 million into the Main Street area in non-charge-back improvements to services and in partnership with the city. We have done things in the downtown core, like improving the White Pass Building, like putting a trolley downtown, so that people will be able to have another tourist attraction and something else to do down there.

We have been trying to encourage people - investors from inside the territory and outside - to invest in the Yukon economy, and it's paying off.

Mr. Ostashek: My question is for the same minister, the Minister of Economic Development. This minister is full of talk about supporting Yukon businesses; however, his actions speak much louder than words. We can see what the minister has done in relation to the Argus development, as opposed to what he's doing for two local businesses in the same situation.

On February 23, I asked the minister if he and his colleague supported a local-buy program sponsored by the Yukon Chamber of Commerce and the Whitehorse Chamber of Commerce. The minister went on at great lengths patting himself on the back, just as he did a few minutes ago, Mr. Speaker, but he failed to answer the question. I can understand why. It has been found out that the minister himself didn't buy locally but went outside and bought a vehicle. My question to the minister: can he assure this House that the transactions relating to the purchase of that vehicle did not take place on any trips that were funded by the Yukon taxpayer?

Hon. Mr. Harding: Well, Mr. Speaker, you know when the Yukon Party is desperate. With regard to his extensive preamble about support for small business, I want to tell the member opposite that the commitment that we are making to improvements on Range Road that will benefit businesses there are not being charged back. That's $1.5 million - double the commitment for water and sewer extension along the waterfront. The member opposite will know that we also have just cut taxes some 12 percent in the last budget that we tabled. We brought in eight tax credits, and I know this is different economics from the member opposite's, who was the biggest spending, biggest taxing Government Leader in the history of this territory. When you come to the trade investment fund or the tourism marketing fund or the rate stabilization fund, where we've stabilized rates for commercial customers - something that the member opposite did not do with the old rate relief program that he had - we've been doing a tremendous amount for Yukon small business. That has been reflected in many publications and a lot of literature that has been put out by the small business community. In particular, we just received a letter a few days ago about the red-tape reduction initiative for Yukon small business. Time and time again, Mr. Speaker, we have demonstrated that we're listening to small business in this territory, and we're trying to provide adequate and responsible and thoughtful support in a bunch of ways that have never been done before by Yukon government.

Mr. Ostashek: Mr. Speaker, let the record show that the minister has failed to answer the question, and from that, I would assume that some of the transactions did take place while he was out on government business, and that is a further insult to Yukoners - a further insult by this minister.

This minister has a duty to set an example for other Yukoners to buy locally - especially a minister of Economic Development. The purchase of a vehicle is the second-largest purchase that most Yukon families will make, and during these tough economic times that the minister himself has helped to create, doesn't he recognize that he has a special responsibility to do everything within his power to help turn Yukon's economy around, and to do that by supporting local businesses? Does he not believe that he's supposed to set an example?

Hon. Mr. Harding: Well, Mr. Speaker, the member's accusation is not true, and again, he's delving into personal issues for some sense that he must have of trying to garner some political gain from it. I won't respond to that any more, Mr. Speaker, other than saying his allegation is incorrect.

Secondly, Mr. Speaker, with regard to the economy of the Yukon, the Yukon Economic Outlook 2000 that was just tabled shows population growth in every economic sector. It also shows population growth. It expects that in just about every area of the Yukon economy there will be improvement.

The latest retail sales numbers from December to December of last year are up an astonishing 11 percent - that's an 11-percent increase in retail sales in this territory. That is a significant improvement, and it shows that the diversification initiatives of this government are worthwhile and are having an effect on the economy that's positive.

Mr. Ostashek: The arrogance of this minister saying that this is a personal issue. He's a minister of the Crown. He's supposed to be setting an example for other Yukoners, and what does he do? He goes outside and makes a major purchase. What's that saying to other Yukoners? On one hand he gets up and pats himself on the back about all the great things he's doing for people to buy locally; he's going to stop leakage. He's going to stop leakage by subsidizing the Argus development, then he goes outside and makes a major purchase himself.

My final supplementary is to the Government Leader, and I would like the Government Leader to say to this House whether he condones the actions of this minister, and what instructions he's giving to his other ministers about shopping locally.

Hon. Mr. McDonald: Mr. Speaker, every minister in this government is working very hard to improve the economic fortunes of this territory. I would like to point out that the Yukon Party has always been noted in this Legislature for striking way below the belt. This is no exception at all. This is no exception at all, Mr. Speaker. This is a low point, yet another low point, sponsored by the Yukon Party in this Legislature. The members opposite have behaved in the most despicable, outrageous manner in this Legislature. They have nothing to say. When it comes time to debating the economy of this territory, they walk out of the Legislature. When it comes time to actually make real-life suggestions for how to improve the economy, they have nothing to say. The only thing they can do is delve into the life of a spouse of a minister of this government. That's the only thing that they can think of doing. It's despicable, disgusting and typical of the Yukon Party.

Some Hon. Members: (Inaudible)

Speaker: Order please. Order.

Mrs. Edelman: My question is for the Minister of Health and Social Services.

In August of 1998, the results of a review into the Yukon group homes was released. There were 49 recommendations in that report. One of the major recommendations called for strengthening First Nations staffing and integration of First Nations programs into all aspects of the group home program.

A recent tour of the Whitehorse group homes by the Health and Social Services Council noted that First Nations programming was still very much lacking.

On Thursday last week, the minister admitted that, after 18 months, he believed that the operators were trying to incorporate those recommendations from the report. In other words, almost two years later, this major recommendation on First Nations programming had not been implemented.

I'll ask the minister again: why haven't the recommendations about First Nations programs been implemented?

Hon. Mr. Sloan: Well, I'm afraid that the member is mistaken both in her statement and in her interpretation of my statement, because I felt that the operators of the group home were making best efforts to comply with the direction.

Just by way of interest, 50 percent of the staff at 16 Klondike are now First Nations. At least one person on each shift is First Nations. At 52 Liard, three of the staff are First Nations. At Mountainridge Residence, two of the staff are First Nations. At Diamond Willow, two are First Nation staff. All of the staff at these group homes have taken the First Nation cultural programming workshop run by Betsy Jackson and Gaye Hanson, and both Liz and Ted Hall oversee all Gibbs programming as elders.

Mrs. Edelman: It's a start. It's a start, Mr. Speaker.

The minister says that these have been implemented, but the Health and Social Services Council did a tour of those group homes in December 1999, and they said that those programs were still lacking. The minister has disagreed with judges in the past, and now he disagrees with his own Health and Social Services Council.

Mr. Speaker, the minister's department is the contracting agency with these group homes. The minister was the one who commissioned the review in the first place. It is the minister who is responsible for making sure that Yukon youth have the best possible services in our group homes, and making sure that these recommendations are implemented is the responsibility of the minister. Why won't the minister take on the responsibility for implementing these major recommendations around First Nation programming in our group homes?

Hon. Mr. Sloan: I just went through a series of things that the group homes - on contract with us, by the way - have undertaken. I didn't go into all of it but I can also say that Dianne Smith is on contract to 16 Klondike to run First Nation programming, and she has also involved her parents, Annie and Johnny Smith. As well, the new Balsam Residence on Wood Street is operated by a partnership of First Nation women. So I believe that the operators in this case are making very good efforts toward achieving this. I believe that they have the best interests of the children at heart. I think they are taking seriously the recommendations, and we're satisfied that they're making the appropriate steps.

Mrs. Edelman: Mr. Speaker, when I first brought up this issue in the Legislature, the minister sent me many, many letters saying that everything was just fine, that there was lots of First Nation programming going on and lots of First Nation staff at the group homes. That wasn't the case.

On Thursday, we also learned that the Yukon Health and Social Services Council, which toured some of the group home facilities, believes that our youth were being warehoused in some of these facilities. Mr. Speaker, 19 of the 49 recommendations of the group home review dealt with the lack of programming in the group homes, and thus the warehousing of Yukon youth.

Again, I asked the minister on Thursday why, almost two years after the report was released, there is still a perception of Yukon youth being warehoused in our group homes. The minister went on at great length about the Web site, but he did not say why our youth are still being warehoused. Can the minister answer the question today?

Hon. Mr. Sloan: Well, I'm at a bit of a loss by what the member means by "warehousing". Perhaps I will ask for clarification from the Health and Social Services Council when I meet with them. But I don't believe that we are warehousing people. I believe that we are treating children. We are providing programming for children. We are providing everything from alcohol and drug programming for children in care to, clearly, First Nation programming for all children, but primarily for children with an aboriginal background.

I would suggest that if the member has a chance to visit some of these group homes, be it 16 Klondike or the receiving home or be it other places - I have been there, and I don't describe those children as being warehoused. I see those children as being in a loving, caring environment. I believe that the people who are undertaking the care of these children have their best interest at heart. I find the term "warehousing" pejorative, and, quite frankly, I think it does a disservice to those people who operate these group homes, and it does a disservice to the children.

Mr. Ostashek: My question is for the Government Leader on the Economic Development minister's purchase of a vehicle outside.

We know when this government and this Government Leader are in trouble, because they go on the attack and try to bluster their way out of it that way. The Government Leader seems to condone major purchases by his colleagues outside, which is adding insult to injury to Yukon businesses, especially in a depressed economy.

I asked the minister quite clearly if he condoned these types of actions by his Cabinet colleagues. Then he tries to wiggle out of it by saying that he didn't make the purchase. The minister admitted making the purchase. There is no argument there. He admitted to the purchase in the paper. He hasn't even denied that he didn't do it on government travel. He hasn't even made a clear indication that he hasn't done that.

I want to know from this Government Leader whether or not he condones his ministers making major purchases outside when, on the other hand, they are out there promoting buy-Yukon.

Hon. Mr. McDonald: I hope the member can forgive me for making a spirited defence of the actions of members on this side of the House, because we all know that the members opposite do attempt to engage in character assassination quite routinely, and they have attacked not only me, my spouse, my friends and others, and they're trying to do it again.

So, Mr. Speaker, the Yukon Party is known for sponsoring new lows in questions in order to try to raise headlines.

In this particular case, though the member doesn't deserve to know, I'll tell the community anyway. In this particular case, the spouse of the minister living in Vancouver needed a vehicle in Vancouver and purchased it in Vancouver. That is perfectly legitimate, in my view.

Mr. Speaker, the member did not do this on government travel status. He has already indicated that. But the member himself does not deserve to know. The member does not deserve the answer, Mr. Speaker. This government has taken actions on many fronts to improve the economy in ways that the Yukon Party could never even have dreamed of. When the economy was down and in difficult shape a few years back, that member, the member who asked me the question, raised people's taxes across this territory in a way that was unheard of in modern memory. That's what that member did when the economy was down.

Our members are working overtime, working hard, to improve the economic fortunes of this territory, and the line of questioning the member is putting forward today, even though he doesn't deserve to know, the line of questioning I find disgusting.

Mr. Ostashek: Well, Mr. Speaker, what's disgusting is this Government Leader's arrogant attitude, the same as his minister's. Numerous Yukoners have phoned us, totally upset with the actions of this minister, and he stands there and defends him. The minister made absolutely no effort to purchase this vehicle locally, and now we have a Government Leader who has stood up here for three questions and won't say whether he condones it or does not condone it. This leads me to believe that he thinks it's quite all right. And as far as this being personal, nothing could be further from the truth.

Some Hon. Member: (Inaudible)

Mr. Ostashek:Listen to them. Mr. Speaker, as ministers of the Crown it is their duty to lead, and by doing so they ought to be doing everything in their power to buy locally, especially in these depressed economic times, for which they bear the brunt of the responsibility. I ask the Government Leader once more: does he condone the actions of his minister of buying a vehicle outside?

Hon. Mr. McDonald: The member quite commonly uses this line nowadays, that he has had numerous phone calls from Yukoners, and we have discovered that what he actually means is that he's had numerous phone calls from the Yukon Party cabal, which is tiny, getting smaller - a kitchen cabinet which seems to advise this party. What would cause the Yukon Party cabal, the little phone-in group that provides advice to this member to avoid asking policy questions about government public business, but would instead encourage the leader of the third party, someone who pretends that he would like to be Government Leader again, to pursue the private lives of minister's spouses? I would presume, given that the member had his staff on government time out there taking pictures of cars in the parking lot, that perhaps he has been following my spouse around.

I'm wondering whether or not - maybe we should have true confessions here. Maybe if my spouse leaves the territory she should take a bag lunch.

But, Mr. Speaker, the point of the matter is that the government here on this side of the House, when it comes to conducting public policy, public business, is working hard to do its job, and it is not having any help from the members of the opposition benches, who can only engage in this kind of questioning about the private life of a spouse.

Mr. Ostashek: Well, Mr. Speaker, all the bluster in the world won't get the government off the hook on this one. Let me assure the Government Leader of that. It won't get him off the hook on this one.

Let me change my line of questioning a little bit to the Government Leader. Can the Government Leader tell me this: does he have any policy or any directive to his ministers about shopping locally?

Hon. Mr. McDonald: Let me ask the member this question: when he was conducting the Yukon-buy campaign when his government was in office, did any of his ministers at any time buy anything outside the territory? Did they do it? Did the Minister of Tourism, who was conducting the Yukon-buy campaign, at any time when he was promoting this campaign, buy anything outside the territory?

Now, Mr. Speaker, if somebody is living in Vancouver and going to school in Vancouver, then unless the Minister of Economic Development can fire down bag lunches - presumably the member's spouse would have had to purchase a few things in Vancouver just to live. But you know, Mr. Speaker, I'll bet he didn't do that. I'll bet she supported herself. I bet she made decisions for herself.

And, Mr. Speaker, this whole line of questioning - this pathetic, pathetic, terribly pathetic line of questioning by the Yukon Party - is maybe a good example of how the Yukon Party behaves. And this may be a reflection of its dying moments in this Legislature, but it's truly a sad and pathetic sight.

Speaker: The time for Question Period has now elapsed.

Mr. Fentie: Pursuant to Standing Order 14.2(7), I would like to identify the items standing in the name of the government private members to be called on Wednesday, March 1, 2000. They are Motion No. 210, standing in the name of the Member for Whitehorse Centre, and Motion No. 215, standing in the name of the Member for Watson Lake.

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

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 that the House resolve into Committee of the Whole.

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.

Committee is dealing with Bill No. 99, the main estimates.

Chair: Is there further general debate?

Mr. Cable: The provinces and territories have signed a deal that changes the tax collection agreement with the federal government. Right now, as I understand it anyway, our tax revenues are a percentage of the federal revenues. So, if Mr. Martin drops his taxes, our taxes automatically drop. I think that the Government Leader went into the numbers last night and established that there will be over $3-million worth of total tax cuts, both from the Yukon government's stream and the federal government's stream.

Now, the new agreement permits the provinces and territories to strike their own tax regimes if they want to. They can set their own rates, so that, in effect, they are taxing income directly, rather than just simply saying, "Give us a percentage of your take." The ramification of that is that if Mr. Martin were to continue tax cuts, those tax cuts wouldn't automatically trigger a territorial or provincial tax cut. The other side of the coin, though, is that there would be more discretion in the territorial government to deal with taxes along the lines of social policy. There may be different views on whether the high-income surcharge should be continued or brought in, and there may be different views as to the distribution of taxes between the poor and the middle class and the rich.

There was an interesting article in the Vancouver Sun January 26, talking about the deal, and there was a quote from David Perry, analyst with the Canadian Tax Foundation, and it says that he noted the idea of allowing the provinces to tax income directly has been around for years. Nobody saw it as a good idea until both the federal and provincial governments realized federal tax cuts were possible, he said. The provinces were desperately afraid it was going to cost them big bucks. Until recently, the government has raised taxes, and the nine provinces were automatic beneficiaries. Of course, with the burgeoning surpluses now, the whole game has changed.

What is the Government Leader's - and Minister of Finance, with his other hat on - view as to where we should go in the future on this?

Hon. Mr. McDonald: At this point, we are watching the actions of other provinces on this front. We have not made a decision to change our system to taxing income directly ourselves. It's not as urgent an issue for the northern territories as it is for the provinces, because the tax changes - the tax reductions - that the federal government is undertaking now do not have the same kind of impact on the territories as they do on the provinces.

If they did, of course, for example, the new contributions toward the CHST that were announced yesterday would be almost wholly offset by a reduction in tax revenue as a result of the tax reductions at the federal level. Obviously the provinces have a good reason to be worried and concerned about the situation, because the only way, of course, for them to make up the difference is to raise tax rates in order to maintain the same flow of revenue. So they're clearly upset, and they were upset the last time the CHST was enhanced and the federal government was proposing tax reductions. I mean, obviously they want to see some net gains as a result of some new federal spending on health care.

We're in the situation now, as are the other territories, of looking at the experience of the provinces. Apparently most of them are considering taxing income directly. Some have been considering this move for some time in order to have greater control over the tax system so that they can make some moves themselves independently of the federal government that might assist their social policy objectives.

But at this point we are watching the progress that the others are making to determine what the consequences might be and whether or not there will be some additional benefit for us to do so.

Mr. Cable: I'd like to get into the government's long-term plans and their projections. But before moving there, I have an unrelated question that has arisen in the last few weeks. As the Government Leader is probably aware, the Toronto Dominion Bank is challenging the City of Whitehorse with respect to penalties that accrue on taxes, and I think this would involve an analysis of the constitutionality of the territorial legislation - I think, but I haven't looked at it. Basically, what the Toronto Dominion Bank is saying is that the criminal interest rate of 60 percent has been infringed because of the way that the penalties are affixed to outstanding taxes, when they go by the due date. Does this government - in view of the fact that this may affect this government's revenues and the validity of the enabling statute - intend to take a role in the argument as to whether what the City of Whitehorse has been doing infringes the Criminal Code?

Hon. Mr. McDonald: Mr. Chair, we have not - certainly at the Cabinet level - taken a position to intervene in any way at this point. We are, of course, taking an interest in the outcome and the developments as they occur, and the Justice lawyers are aware of the situation, of course, and are taking an interest in the implications but, at this point, we have not made a decision to take any position or to intervene in any way at this point.

Mr. Cable: I assume this would bear on the government revenue, with respect to the properties that are taxed by the territorial government. Has there been any analysis done on what the financial implications are if the Toronto Dominion Bank is successful in the court action?

Hon. Mr. McDonald: Mr. Chair, I don't know if the department has done any analysis with respect to this matter - whether the Department of Community and Transportation Services has done any analysis with respect to this matter. This - as the member knows - largely arises from the penalties for unpaid property taxes, so I'd have to check on that for the member.

Mr. Cable: Yes, I'd appreciate hearing as to whether it is significant or whether it comes under the category of annoyance.

Does the minister have his budget speech in front of him? I'd like to refer him to one of the schedules, in particular the long-term capital plan in the Government of Yukon projections.

I know there's a certain amount of crystal-ball gazing here and it's difficult to look five years into the future with all the imponderables that go on in budget making here in the Yukon, but it appears, just looking at the projections, at page 3 of the tab marked "long-term plans", that this government anticipates that there will be an ever-decreasing deficit until the accumulated surplus is virtually run down in the projected years 2003 and 2004, and that the deficits are going to be financed in part by a reduction in capital expenditures, at least in the first three years of the five-year projection.

I believe the minister, last night, alluded to the fact that he thought the private sector is going to be well-advised to look less to government to provide capital projects and more to capital projects in the private sector.

Just what triggered that thinking?

Hon. Mr. McDonald: Well, firstly, Mr. Chair, in the context of the discussions last night, the debate was about whether or not the actions of government to create a more self-sustaining private sector could best be undertaken through direct expenditures and contractual arrangements for building capital works, or if they could best be obtained by trying to foster economic activity through trade and investment, tourism expenditures and the like.

That was the character of the discussion last night, and the basic thesis behind the comments that I was making was that simple capital expenditures do not reduce dependency of the private sector on government. One might argue, depending on the expenditure, that you might be increasing the dependency on government. But, in fact, there are some expenditures on both the capital and O&M side which may distance the private sector from its need to depend on direct government expenditures. One can point to the trade and investment expenditures that we're making, some of the tourism marketing expenditures that we're making. It could be a technology innovation centre that is being supported, which will encourage more independent activity in the private sector and not a direct dependency relationship, whether one works for government or whether one does capital works on behalf of government.

The concerns that we have about the very long term are simply this: the economy itself has to change and expand in order for us to meet the public expectations with respect to quality of life and standard of living. This is not going to be done simply by targeting, as carefully as we can, capital expenditures to support private sector industries that do work for government. That, by itself, is not going to be sufficient to create the kind of economy that is going to have greater strength and depth or reduce its dependency on any particular sector or source of income, including the federal government.

So consequently, the goal is to try to encourage more independent activity - activity that is not dependent necessarily on direct financial relationship with the government - and that can only be healthier in the long term. It doesn't mean that we're going to consciously abandon the field of providing supports and contributing to the economy, but a healthier economy would be a more diverse economy.

Mr. Cable: Yes, I quite agree. And that was indeed the context in which the remarks were made. But it appears - just trying to look in the minister's crystal ball - that, over the five-year period, the net income is not going to increase very significantly. It's going to increase from $395 million to $416 million. And the way the minister has designed the protection of the health and social programs and education - and at the same time ensured that he is not going to go into the red and bump up against the Taxpayer Protection Act - is by lowering capital expenditures. Now, whether that simply flowed from the fact that revenues are sort of constant and we're short of money - we have to make sure that we don't go into the red - or whether that was by conscious design - that was the question I'm really asking the minister.

Hon. Mr. McDonald: The capital expenditures do fluctuate from time to time, as the member I'm sure can appreciate. With respect to the projections of $48 million for a typical capital construction year, those were the projections that we had in last year's - when we first started projecting long-term capital expenditure plans, we projected a $48-million net capital budget as sort of the base for the main estimates. Clearly, we've spent more than that. It has been in part a reflection of the fact that the estimates themselves are fairly conservative, fairly careful, fairly - they're not overstated, in terms of revenue.

And so consequently we have had some extra funding to invest in capital works from time to time. We have to be very careful about comparing forecasted funds from previous years in capital and comparing that to the estimates for the following year, because we revote money from the previous year into the year we're in, so consequently it looks as though the capital budget is very high. The same will be true for this coming year. We will be moving money from this year into next year as we revote money for projects not yet done into next year. But as it shakes out, we expect that the actual capital expenditures, based on what has happened so far, will probably be higher than what is projected here, and it is my opinion that the estimates are conservative on the revenue side. Time will tell, but so far - based on our experience over the past few years - we have certainly not been in a situation where we are spending wildly.

Mr. Cable: As the minister is aware, of course, there has been quite a considerable debate in this House about whether government capital expenditures should be up to beef up the economy, or whether we should be looking at payroll and O&M as a way of stimulating the economy. What do other jurisdictions do? Does the government keep tabs on, say, what Prince Edward Island's ratio of O&M to capital is of the total budget, and if so, are we far off the Canadian average on the ratio of O&M to capital?

Hon. Mr. McDonald: Mr. Chair, as the member knows, my view is that O&M and capital do stimulate the economy in various ways and, depending on the nature of the expenditure, it can have a greater impact than other things. Obviously, some capital can be very stimulating to the economy. Some O&M can be even more stimulating to the economy.

But the reservation that I have about some O&M expenditures is that when we make a commitment to a service, we want to maintain that service, and so we expect that that commitment will continue over the long term. We want to seek efficiencies and perhaps see some cost savings, but, on the whole, when we make a commitment for a service, we want to maintain it.

Capital commitments tend to be short-term in nature, so that is one reason why there should be some check on - in my opinion, and I differ from the Yukon Party on this point, obviously. But in my opinion, the main reason why one would want to maintain some measure of control on the operations budget is that, on the one hand, we want to ensure that the commitments we make can be sustained in the long term, and on the other hand, we want to reserve a certain amount of money on the capital side for short-term emerging commitments that are required to be met.

If the member looks at that budget book that he has in front of him on page 14, he'll see a graph that demonstrates the capital expenditures as a percentage of total expenditures, so it gives you a sense of, in the Yukon's case, how we regard capital spending. And one can see that, certainly as a percentage of total expenditures, the Yukon's expenditures in capital are very high. In fact, it's higher than in other jurisdictions - all other jurisdictions. There may be a number of reasons for that - certainly a number of historic reasons for that - but nevertheless that is where we stand at this point. It's roughly 22 percent of the total expenditures. The next closest jurisdiction is the Northwest Territories at 12 percent, and P.E.I. - as the member requested - was about four percent.

Mr. Cable: Thank you for the reference to the graph.

It would appear from the projections at page 3 of the tab "long-term plan" that there will be a significant drop in the Yukon's capital expenditures by jurisdiction - as a percentage of total expenditures, they would drop at least closer to the norm, if I'm reading the document correctly.

Just out of curiosity, our capital expenditures seem to be significantly higher than, say, the Northwest Territories. What has led to that sort of ratio here in the Yukon?

Hon. Mr. McDonald: I think, Mr. Chair, it's probably a reflection of priorities over a very long period of time. The Northwest Territories has put a heavier emphasis on O&M expenditures, providing support for communities and subsidies for communities. We have a history of road building in this territory, capital construction and building construction, that we have put a lot of stock in. We have very good infrastructure to look to, by comparison.

So, I would suspect that it's probably a trend that has been 20 or 25 years in the making that has brought us to the point we are at today. But I don't know enough about the history of the spending practices in the Northwest Territories to be a particular expert on the subject.

Mr. Cable: I have just a few questions on what is factored into the territorial revenue projections over the five years. Is the cost of the tax reduction factored into those numbers? Is the PSAC settlement factored into those numbers? I gather the settlement will cost $9.7 million in 2002-03. Are the resource revenues that assumedly will accrue to our jurisdiction on devolution factored into the projections?

Hon. Mr. McDonald: The tax changes are factored into the revenue projections. The resource revenues are not factored into the projections. The PSAC wage settlements are factored in.

Ms. Duncan: Mr. Chair, I just have a couple of follow-up questions with regard to the discussion about capital spending by the Government of Yukon.

The Government Leader has discussed it in this House and made reference to this budget document as a mix of specific priorities, some O&M and some capital. There's been a discussion about capital spending as an economic stimulus. I would also like to reference it as an investment in infrastructure in the territory.

Some years ago, when we were discussing a supplementary budget, the Government Leader made reference to using government money for capital works projects that were on the shelf. It was a supplementary budget where the government was able to go to the departments and say, "What have you got on the shelf that we could put in place as a project this year?" We did that. Have we taken steps to ensure that, the next time we're in that fortunate situation, there are projects on the shelf that can be done? On the long-term capital works projects, other than those that have been outlined, such as the extended care facility and the Mayo school, what are the long-range capital plans of the government?

Hon. Mr. McDonald: First of all, Mr. Chair, as I indicated when we had the discussion before, there had been some - and there still are plenty - road-building projects that one would consider to be on the shelf. They would still need a little bit of advance time, but the engineering work is largely done. The gravel assessment and all the rest of the things that need to be done would be done and can consequently go out at fairly short notice. It is more difficult to do that for building construction, because the building construction requires a fair amount of community consultation, discussion among people about what is required. To go through the process of anticipating a project and designing a project, only to leave it on the shelf, would be an exercise in defeating public expectations. So we're much more careful about raising expectations on the building construction front, naturally enough.

The government's capital plans, in terms of the projects that we feel should proceed, are found in the long-term capital plan project listing. They identify a number of building projects that we feel are doable, that meet community expectations, and are affordable.

Now, it doesn't mean that these are the only projects that can go forward, but it is a listing of those projects that we think should go forward, and they do include building facility construction, as well as infrastructure development around the territory - roads, land development, et cetera, throughout the territory - and demonstrate a desire to proceed in certain areas.

For example, in Old Crow, there is a desire to proceed with a new airport passenger handling facility for that community.

We have discovered some general costs associated with that particular facility and feel that it is affordable. It is also a high priority in the community's new community plan. We consequently are prepared to support it, and so we've flowed that into the project, and people who are in the building construction business can see this list and will know that that is the intention of the government to proceed.

So, in terms of the building construction, as I say, this is a listing of those projects that are of substantial size - not every capital activity - that we feel should go ahead. It is not an exclusive list; there may be other capital activities of a large size that we may decide to proceed with, but this is the list that we feel at this point we are prepared to publicly support.

Ms. Duncan:The other question I had was around leakage. The Member for Riverside has asked the Minister of Economic Development about any studies that have been undertaken to quantify leakage with respect to particular projects in the City of Whitehorse. When the former Yukon Party government raised corporate taxes, there was a real discussion at the chambers at some length - at the Whitehorse Chamber of Commerce - regarding what we lost, what leaked out of our economy in terms of the industry that supported these corporations who had their headquarters in the Yukon. And, essentially what happened was that because of the low corporate tax rate at the time, there was quite an industry of bookkeepers, accountants, bankers, et cetera, who dealt with these corporations. And when the corporate taxes were raised, that industry, if you will, leaked out, left the territory. And that's the view that many in the chamber held. And while we may or may not have a competitive corporate tax rate - that's a discussion for another day - I'm wondering if there was any quantification or any study or any work done by the Department of Finance on what left the territory as a result of that corporate tax increase.

Hon. Mr. McDonald: The Department of Finance apparently did do some work, and I will endeavour to get it. I'm not personally familiar with it, but I will find the information and pass it over.

Mr. Jenkins: I have a couple of questions for the Government Leader.

If we look back over the past number of years, we see a trend - go back four or five years. We generated approximately $100 million of the total budget of the Government of the Yukon internally, from our own sources. We are projected to raise about $72 million this period. It would appear that the trend is that we are more than even dependent on federal government transfers. Yet, we are told that the doom and gloom has bottomed out; that we have hit the bottom of the cycle and we're heading back up.

We're still one of the few regions in Canada with a shrinking population, a shrinking economy. Census figures are down. We'll probably be achieving a reduction in our transfer payments the next federal census cycle. Does the government have any plan as to where we are headed overall, as to what it considers to be a fair amount of the total budget of the Yukon that we raise ourselves? Do we have some goals in that area, or are we just going to continue to be reliant on Mother Ottawa?

Hon. Mr. McDonald: I would like to explore this for awhile with the member, because he has put the question in a very intriguing way.

And somewhat reminiscent to the debate that we had in 1993 and 1994 in the Legislature, so I want to see whether or not we're reliving that debate.

Firstly, the revenues that we get from the federal government we're, of course, factoring into the equation here, we're not turning any money back. The member can be certain of that. We are, in fact, finding a useful purpose for that funding, and I'd be interested in knowing from the member whether or not he agrees that that is a useful course of action - whether we should be spending it all or returning some.

But the member may or may not know this, but back in 1994 we had this discussion about how much of the total expenditures we were, in fact, raising locally, and that was used as an argument - at the time, at least - for the government to raise taxes. The member will remember that the government at the time had a financial advisor - Mr. Miller - who was quite open about suggesting that Yukoners did not pay enough taxes, and consequently should realize that they should consider paying more, in order to pay more of the freight, so to speak. So, that led to tax increases of the biggest range and set - comprehensive tax increases - in the territory's modern memory.

There was a furious debate in the House as to whether or not that was desirable for the economy and whether this was the appropriate course of action, so I'd like to explore that with the member.

Everyone knows, of course, that the closure of the Faro mine has had a huge impact on the private sector economy - that one operation, one business and one community, by itself, had a significant impact on the economy of the territory, and consequently on the Yukon Legislature.

What we are, of course, doing to try to avoid such circumstances in the future is to take significant and substantial efforts to diversify our economy into new areas and to support the mining industry; also, to support other resource industries more aggressively, like forestry and oil and gas, and to get into trading activities with a much more aggressive thrust to support tourism.

So, obviously the objective of the government is to see a more diversified economy, a more resilient economy, an economy that's less subject to shocks and ultimately an economy that's less dependent upon any source of revenue - federal or one mine in one community. In the long term, we clearly want to see a broader based economy. That's the objective.

I'd be interested in hearing the member's comments on this, because, based on how he characterized the debate, there was a bit of déjà vu there in terms of what might come next. I'd be interested in hearing his comments about government revenues and how much the Yukon taxpayer should pay.

Mr. Jenkins: Well, Mr. Chair, we can look backwards and attempt to reinterpret history or rewrite history, but we're not going to be able to rewrite the history book. We can interpret it in different ways. I think the thrust of Merv Miller back a number of years ago was that Yukoners were in a very favourable position taxwise, compared to what was charged in the rest of the provinces of Canada. That was clearly reflected in the perversity factor and that funding formula that the Government of Canada has in place with the Government of the Yukon.

Now, Yukoners have come more in line with the rest of Canada, not because we have changed significantly our tax structure over the years - which this government had the ability to do and has had the ability to do for the last three years - but because, in the rest of the provinces of Canada, they have significantly reduced their personal tax rates and other tax rates. And, at one time, the perversity factor was up at $1.50 plus. It's now down to $1.02. That in itself speaks well of the change in the respective tax positions in the various taxing authorities in Canada, and how they impact on this formula.

What I want to know from the minister is this: does he have a game plan as to where we are ultimately heading? Does he have a rationale for how much we should be raising internally? Is there any tracking mechanism that he is looking at having in place when our economy increases? Are we going to have more coming from the economy as it increases, or are we just going to continue in the manner that we are continuing today - much more dependent on federal government transfers? Where are we heading? That's what I'm asking the minister.

Hon. Mr. McDonald: The member said some very fascinating things there. The member said that there is no point in rewriting history, and I agree with him. There is no point in rewriting history. If he means that we're trying to tell a different story or to reinterpret history - but the member was gracious enough to repeat history by repeating the arguments made by the Yukon Party Minister of Finance back in 1994, that Yukoners were not paying enough taxes.

So we don't have to rewrite history; we only have to hear the repetition of the arguments made by the Yukon Party in 1994 that Yukoners were not paying enough taxes. One has to determine whether or not the circumstances today are substantially different from the circumstances then, and decide whether or not Yukoners should be contributing more or less, based on the member's own analysis, to the Yukon economy. I would think, from what the member said, that perhaps he not only thinks that the tax rates should be maintained, but I'd be interested in if he thinks that the tax rates should be increased further in order to pay people's fair share of the freight. Because if the argument is that our dependency is increasing, and he's comparing that to the argument made in 1994 that we weren't paying enough, then surely he is suggesting that we should be paying a greater share, and we should not see the dependency increase at all. That's an interesting argument for tax increases, Mr. Chair; however, it is not one that I share. In fact, I vigorously opposed the tax rates in 1994, and I would vigorously oppose the member's suggestion now that perhaps we should pay a greater share of the freight because our dependency is up, as he puts it, and that consequently the tax rates should go up to pay a greater share of the freight.

Now, Mr. Chair, I think the member should think that through. I know he's following the Yukon Party line on this, but I think he should think it through, because I don't think it's good for the economy of this territory. I don't think a tax increase would assist the fortunes of the private sector in this territory. We have always suggested that the rates of tax, in terms of the broad band of taxes applied in this territory, should be roughly comparable to the national average, and that we should receive services roughly comparable to the national average. I would argue, Mr. Chair, that the economy would not be able to sustain a tax increase now, any more than it could sustain a tax increase in 1993 when the Faro mine was down and the economy was in difficult straits. The member has heard people say that the drop in the GDP in 1993 was the greatest drop in the last 20 years at least -

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: The GDP drop of 18 percent, and the response by government should not be to raise taxes.

The response by government should not be to raise taxes. The response by government and the community should be to try to expand the economy, diversify the economy and make the economy stronger and more resilient so that it can withstand shocks in the future and, in fact, in the longer term, pay more of its share to the Canadian whole.

Now, it's an interesting diversion from Conservatives in Ontario. They've got a deficit now and they in fact have a large deficit that has been made even more significant and substantial through the tax reductions, so they're collecting even less revenue. They've got still a big accumulated deficit and in fact an annual deficit, but they're cutting taxes. It's interesting that the Conservatives in the Yukon are advocating tax increases.

Now the position of the tax table - the round table on taxation, the community tax table which includes people from labour and the Chambers of Commerce, and Tourism Industry Association, Association of Yukon Communities, et cetera - has been not to gear our tax rates to ensuring that the percentage of income raised by the Yukon goes down, but to gear our tax rates to some comparable level with other jurisdictions. Admittedly, for the most part, we're already in good shape. There are a couple of industries that are a little higher, but overall the mean average shows that we're in good shape.

Now we're making some further changes just to ensure that we're comparable and comfortable in terms of a tax regime that would be attractive to attract investment and to keep people feeling that they are not paying an unreasonable share as a Canadian. But at no time was the member's thesis raised that we should be somehow gearing taxes or that we should somehow design a tax system that should somehow match with the level of so-called dependency on Ottawa.

So, before the member goes too far down that track, I think he should think about it a bit.

Now, with respect to the dependency ratio, I'll point out to the member that, when programs are transferred from the federal government to the Yukon government - and the community health transfer was one, but, of course, there are others and there will be one next year - then technically, based on the calculation the member is making, the Yukon looks as though it is more dependent upon the federal government because the Yukon's budget is higher. But what is, in fact, happening is a simple transfer from Yukon-based services for running programs and services from one government based in the Yukon to another government based in the Yukon. So, the dependency ratio hasn't really changed at all. But, if one uses the simple calculation that the member has cited, one might be tempted, out of ignorance at least, to consider that the dependency ratio has, in fact, increased.

So, I would encourage the member to think that through as well, and to rethink his theories about dependency and what the Yukon public is expected to bear, because those same theories help justify the tax increases the last time the Faro mine went down, and they were unpopular, and they weren't, in my view, healthy for the economy.

Mr. Jenkins: Well, that's quite a spin that the Government Leader puts on my question.

What I could tell the Government Leader is that I am not advocating tax increases. I am not advocating tax increases at all, but let's look at it in a very simplistic form. Had the perversity factor remained the same for the last four years as it was four years ago, how much of a reduction in taxes each year would there have been in the Yukon? In order to keep in line with the rest of Canada, there would have had to have been significant personal tax reductions and other tax reductions here in the Yukon.

But the minister has deliberately kept the tax rates artificially high and, on the other side of the equation, has benefited from that in transfer payments under this perversity factor of some $32 million - almost $40 million plus a year. Now, I'm sure that has been the case, Mr. Chair, so I want to make it abundantly clear for the record that what I'm looking to do is compare apples to apples for the past period of time.

Had the perversity factor remained the same, there would have been considerable personal tax reductions over these past three years - every fiscal period that this minister has had responsibility for. That has not been the case. But the overall question that I'm still seeking an answer for: does this government have a game plan as to where he's taking the Yukon down the road, or are we just going to become virtually dependent, in every respect, on Ottawa and transfer payments?

Hon. Mr. McDonald: In the member's words, looking at this in its simplest of forms is what has gotten the member into trouble in the first place.

Mr. Chair, there are a number of elements about tax policy that the member has to understand, and the first is that, if you start from the impact on the community from any tax measure - and consequently the economy itself - then one would have a hard time justifying a tax increase for people who are already paying their fair share of taxes.

Now, the member said that Mr. Miller said that the taxes were too high, and he was saying that based on federal claims that the taxes were too high. I take issue with that. I don't believe the taxes were too high. I don't believe the Yukon Party should have succumbed to the pressure to raise taxes. I don't believe that it was good for the economy.

And the member asks, what has the government done? Well, last year the government did lower taxes. Now, it wasn't to benefit the member so he probably didn't notice, but when the taxes were lowered for low-income people, it was a benefit to the economy. When there were targeted tax measures to mineral exploration, the member wasn't in the business, so he didn't notice.

So, Mr. Speaker, there were measures taken already, and there are further measures in this budget. But, Mr. Speaker, one has to decide whether or not they're going to stand up for the Yukon people or not. And what the members in the Yukon Party seem to want to do is follow the lead of the federal government, which has been claiming that our tax rates were too high. We believe the tax burden was high enough.

So the member wants to know where we're taking it. We're taking it to a situation where we want to provide a comparable tax environment. We don't have to go very far to do it, but we will do it. We've made some reductions already; we'll be making some more. But, simply, the member may say that we're rewriting history; we're not rewriting history at all; the member just repeated history. He repeated the same arguments that were made by the Yukon Party Finance minister four or five years ago. And the economic circumstances were similar - even though the situation is improving now - with the closure of the Faro mine. And somebody told the Finance minister that the tax rates weren't high enough, and rather than holding the forces back, and saying, "I don't care what you want me to do, I don't care what you're going to do to us, we're not going to penalize those folks any more."

The Yukon Party members have got themselves into this group think that somehow what they did was justified. Nothing could be further from the truth.

If we are going to start analyzing the total situation for this territory, there are government revenues - I would point out to the member that when the taxes were applied, there were also other things that were helping out the government at the time. There was the construction of the hospital project, the Shakwak project and a number of things that were helping to compound the expenditures. There were record expenditures in land development that shot the land inventory up. There were all kinds of things that the government was employing to do what, in the end, overall? To spend large budgets. In fact, they were larger than ever before. But to take some money out of the economy from the individual pockets of those who could least afford it at the time wasn't something that we could support.

So, when the time comes now, we have certainly targeted expenditures to improve the situation for people generally. We've taken tax measures two years in a row. We have restored funding to public servants, who have had their wages cut. We have provided benefits to low-income people. We've provided strategic investments and infrastructure right around the territory. We believe that we have done a balanced job of restoring confidence and making people feel comfortable about the fiscal situation in the territory.

But, Mr. Chair, the member can say now that he doesn't want to raise taxes, but he just made a big argument for raising taxes. That's what I heard. It was obvious. He was making the same arguments that were made by somebody before who was saying the same things - in fact, at that time, taxes were raised. So, forgive me for drawing conclusions that the member wants to raise taxes. That's what I heard.

Mr. Jenkins: On the contrary, nothing could be further from the truth. This is a wonderful NDP spin on the situation, and that's all it is.

What I'm looking for, Mr. Chair, from the Minister of Finance, is how much of a tax reduction would individuals in the Yukon have received in each of the last three years had the perversity factor remained what it was when this NDP government came into power.

Back in 1993-94, the perversity factor was $1.56. Today, it is $1.02. Now, there's a big difference in transfer payments, but in order to achieve that, Yukoners have to pay more, and we're required by this government to pay more. And they've been paying considerably more in relation to other provinces in Canada than ever before.

Now, it's a simple question. I'm looking to maintaining the same standard as we had back in 1993-94, but that would require a significant personal tax reduction by this government for each of the past three fiscal periods. They were in a position to do that, but they didn't. Why?

The minister still has not answered the overall question that I asked when I first stood on my feet, as to where the government is heading fiscally. Does this government envision a percentage that we're going to raise internally - a percentage of our total income - or are we just going to become more and more reliant in every respect on Ottawa and our transfer payments? That appears to be the way we're headed.

Now, a couple of simple questions for the Minister of Finance. Had the perversity factor remained the same, what kind of a tax reduction would the workers in the Yukon have enjoyed these last three years? They would have enjoyed a significant tax reduction, but this government was not forthcoming in providing it. They kept the tax rate artificially high in relation to what other provinces in Canada were doing.

Why did they do that? The minister hasn't answered that. He just goes back and tries to put a different spin on history. Where are we heading? Those are the two questions, Mr. Chair.

Hon. Mr. McDonald: Well, Mr. Chair, if we were to follow the member's suggestions, we would be headed down the road to destruction. We can only thank our lucky stars that the member opposite has nothing to do with the fiscal tiller of this government. He doesn't understand many things and tries to speak with some authority. You can always tell that the member wants to impress people when he lowers his voice one decibel.

But, Mr. Chair, I'm listening to what the member is actually saying, and I am in fact comprehending exactly what he's saying. I understand what he's saying. I mean, on the one hand the member is making the same arguments that were made before to justify tax increases. Now he's saying we should reduce taxes, which would - according to his own calculations - increase the Yukon's dependency on Ottawa, which is something he doesn't want to see happen. I understand exactly what the member is saying. I don't think the member understands what he's saying. The arguments are going in all directions. This is real pleasure to listen to this particular line of questioning. This is a real joy. Good heavens, Mr. Chair. This is a really pathetic line of questioning. Just sit back for a second, Mr. Chair.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: If the member could just sit back for second and stop talking, because when he's talking, he's obviously not thinking - but if he would just stop talking for a moment and let the wheels click over a little bit, he would understand that he is making arguments at cross purposes with each other. He's making arguments that clearly would lead one to the conclusion that they want to raise taxes to reduce dependency on Ottawa. At the same time, he wants to lower taxes, distance himself as much as he can from his own party's previous agenda, and has us going in all directions.

Mr. Chair, the member always likes to just lie, because it means that somehow he's got it locked in his head. Quit spitting - what he means is: quit providing rational justification and thoughtful discourse because the member himself wants to engage in a bunch of nonsense. He wants to carry forth this jumbled confusion of thoughts and hope that with a stern-sounding voice, with his chest thrust out and if he says it with confidence, people will be impressed. I'm not impressed, because I understand what he's saying.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: And, Mr. Chair, the member says he wants some answers. I'm giving him answers. In fact, I was trying to help him out earlier on, but he wanted to bluster his way through this process. He wanted to try to thrust himself on, the way he does with so many other debates. Now, Mr. Chair, it doesn't make any difference to me.

When I listen to the member - number one, I can't understand some of the things he's saying. Nobody else around here can either. I can understand some of the arguments he's making when I get a thread of the argument and I see that they're at cross-purposes, that the arguments are in fact contradictory arguments. I understand that. So I don't know where the member is going.

Now, the member asked a question about the effect of tax changes in the provinces and what effect that would have on the Yukon. Well, the benefit from provincial tax cuts is between $3.5 million to $4 million a year. The perversity factor has gone down largely because of the introduction of the economic development incentives in the formula. So, in terms of comparative tax rates, we've benefited, say, $4 million a year. The tax changes last year were estimated at around $4 million - or a little over $4 million - a year. Consequently, there have been some changes. They were for low-income people. There were some changes for the mining community, changes for the small business community.

There are further changes this year and, obviously, we'll continue working with our tax round table to consider further changes.

What we have decided to do - and the member can disagree with it if he wants - is to ensure that the tax rates for the community are comparative with our immediate neighbours, with the exception of Alaska and all their oil money. They have a situation that's different. They have a situation where 80 percent of their revenues come from oil. They don't have state income tax at all. We're different.

So, what we're trying to do is compare ourselves favourably with other jurisdictions on personal income tax, corporate tax, sales tax, Medicare premiums, WCB assessment rates - a full range of tax measures that affect people. We're looking for comparability, and we believe that that's good for the economy in the long term - for the people of the territory, it's good for the long term.

If there's a concern about formula - a concern about perversity - we'll fight that battle with the federal government. We'll stand them off. We will not succumb, as the member opposite would have us do. We will not succumb to that. So, consequently, we believe that this is the right course of action and the right fiscal policy for this territory. It's the right fiscal policy for individuals, for communities and for business. It gives us the right sense of direction in the long term and, in time, we'll have improvements to our financing arrangements with Ottawa. We'll have a growth in resource revenues, hopefully in years to come, so that we will be able to overcome any anomalies in the system that may prove to be a disincentive.

But we believe that we were starting our analysis with the health of the community - not the health of government revenues, but the health of the communities - and building from there.

Mr. Jenkins: Well, we spin her around again. But the question, Mr. Chair, is a very simple one. I want to know from the Minister of Finance how much of a reduction would Yukon workers have received in their personal income tax rate if the tax rate in the Yukon that was set by this government had been kept, or had been reduced, to maintain the perversity factor at 1.56?

How much of a reduction in personal income tax rates would Yukoners have enjoyed over the last three fiscal periods that this NDP government has had responsibility for? There would have been a reduction, there would have been a considerable reduction. Can the minister give us those calculations as to how much they would have been, to maintain the perversity factor at what it was when they came into power?

Hon. Mr. McDonald: Mr. Chair, didn't the member listen to anything I said? Is this pointless? Is this whole exercise completely pointless? I already answered the question, Mr. Chair. I said that the perversity has gone down largely because of the introduction of the economic development incentives in the formula; that the provincial tax rates mean a difference of between $3.5 million to $4 million. How many times do I have to say it? Does the member understand the question he's asking?

Mr. Chair, this is a joke. Can the member please understand - what's wrong here? Either the member is simply unable to understand, or the member wants to somehow make some kind of case. I don't know - we started off with him making a case for increased taxes. Then he wanted to make a case for reduced taxes, but then he doesn't want the outcome of the reduced taxes, which may mean more dependency on Ottawa, as the percentage of revenues to income from Ottawa - I mean, locally raised revenues versus income from Ottawa. I mean, I don't understand what he wants.

What's the matter here? Isn't the member embarrassed?

Mr. Jenkins: Well, it ought to be the minister who is embarrassed for keeping the personal income tax rates of Yukoners artificially high these last three fiscal periods. They could have been reduced, they should have been reduced, and they weren't reduced.

Now the minister comes out with a figure of $3 million to $4 million and, if you use the minister's own figure that he gave in the House the other day, that every one-percent reduction in personal income tax amounts to $750,000, there was room over each of the last several years for a considerable personal income tax reduction. Just for the record, how much of a reduction - I'm not looking at how much of a reduction in revenues the government would have received, but I'm looking at what everyone here in the Yukon can understand. How much of a reduction in what they pay in personal income tax would they have had in each of the last three years, had the perversity factor remained at 1.56?

The minister has thrown out a figure of $3 million to $4 million. Three to four million dollars is the shortfall in revenues that the government would have received from the people of the Yukon. Relate that back to an individual as to how much less tax he would pay. That's something we can all understand.

Hon. Mr. McDonald: I'm embarrassed for the member. I'm absolutely embarrassed for the member. He should be ashamed of himself, trying to bluster on in a way that's just absolutely ridiculous.

The member tells me we should have and could have reduced taxes. It's $750,000 a point, by the way - could have, should have reduced taxes, but we didn't.

Now, he says that before, when Mr. Miller was around - and he agreed with Mr. Miller that we weren't paying enough taxes. So, on the one hand, when the Yukon Party Finance minister says we should be paying more, he agrees. The moment the government changes over to the NDP, he says that we should reduce taxes - the moment. It's like a boom. Mr. Chair, that is called inconsistent.

Mr. Chair, the perversity factor dropped not because of the change in provincial tax rates - because the member is trying to make the case that it dropped from $1.56 to $1.02 on the basis of changes in provincial taxes. I indicated to him that it was about $3.5 million or $4 million worth of change. The perversity factor changed largely because of the economic development incentive in the formula.

So, what is with this guy? I hear that he agrees that taxes should have been raised. That's what I hear. He agreed with Mr. Miller - it's a matter of record. We weren't paying enough taxes. It's a matter of record. He thinks that we should be paying more of our freight - a matter of record. Our dependency on Ottawa - his prime thesis that our dependency on Ottawa is increasing and we're not paying enough of our freight. That was the argument that was made to increase taxes. That was the initial thesis. That's what we spent 25 long minutes exploring.

Then he says that we should have reduced the taxes, we should have abandoned that same platform and divorced ourselves as quickly as possible from the Yukon Party record, which he has just championed. And, we should have done it sooner and faster than we already have. Isn't the member embarrassed at all by this? He has taken two different positions in one afternoon - two diametrically opposed positions in one afternoon.

I have to hand it to the member. He can say - oh gosh, well, never mind.

Mr. Chair, our position is that tax rates should be comparable. I'll repeat it: tax rates should be comparable. We're moving to comparability on a wide variety of fronts. We're doing it in consultation with the tax round table. We believe comparability is a target that is worthwhile achieving. We believe we're close to it. We should be there shortly. We made some changes last year in the tax structure to accommodate that. We're making more this year to drive that home. We'll be in a good position to do so, and that's our tax philosophy. Those are our tax actions. We're looking forward to making even more progress.

Mr. Jenkins: Well, it's obvious, Mr. Chair, that the minister is not going to provide an answer. It's an answer he doesn't want to put on the record. I guess we can just move on and ask the minister if he does have an overall game plan as to where we're headed with respect to dependency on Ottawa. Is there some overall guiding philosophy as to what he feels we should be generating from our own sources and what should be in transfer payments? Is there any kind of a game plan in this regard?

Hon. Mr. McDonald: The member may not realize it, but he has received a lot of information from the government side. He has received a very clear explanation of government tax policy. He has received the information I think he wants. I can't provide him information that would justify all his theories, because his theories contradict each other. What I can do is provide an explanation of what has happened, what we are doing and why we are doing it.

The member and I disagree with respect to the rationale for the Yukon Party's actions with respect to the tax increases, and I can only tell the member that his concerns about dependency and relating that to the tax rates levied by this Legislature to individuals in the territory, I think, are mistaken. They are not justified, because one has to start tax policy not from the point of how to fix government revenues, but from the point of what it means to the people involved, what it means to the citizens, what it means to small business. So, we obviously disagree fundamentally on that point.

The member asks us where we're going. Well, clearly where we're going is we're trying to generate more activity. We're trying to generate a healthier, more diversified, broader, stronger, more resilient economy. That's what we're trying to achieve. We're trying to become less dependent upon any individual source of revenue that we as a community and we as the government want to rely on. We want to reduce dependency as much as we can on any single source of revenue, whether it be the federal government or whether it be a single mine. But what it requires is a more resilient, broader, more diversified economic base, and the theories put forward by members opposite, including the member himself, that we simply look to more spending on the capital side does not, in my opinion, necessarily lead to a stronger, more resilient private sector. The expenditures should be made for a variety of reasons to build infrastructure, to support various industries where we can in the short term, but clearly if we were simply to continue that same practice then the dependency relationship on direct government expenditures, direct capital relationships, just continues.

We don't make progress if the progress is translated into an economy that's less dependent upon direct government transfers - a direct contractual financial relationship between government and the private sector.

So what we're doing is that, on the O&M and capital side - we don't necessarily think O&M is as bad as the Yukon Party has said - on the O&M and capital side, we're taking action, on the economic front, in concert with partners around the territory, to encourage new economic activity, whether it be somebody who's bottling beer and exporting it, or whether it be Alaskan log homes, or homes that are built here, that are sent to Alaska, or whether it's a more resilient forest industry. These are all things that we're intent on trying to do.

Some of it requires some investment in infrastructure, such as airport runway expansions in Whitehorse, as one example that has encouraged - along with some targeted tourism marketing - more flights from Europe. Last year we had one, this year we're going to have three per week, which again is going to make more resilient and broader the economic base on which we all depend. And dependency on government - federal government, by extension Yukon government - or any one single employer will be lessened, because we'll be doing many new things, and the jobs will be created in new fields. We're not focused exclusively on one sector to try to solve our long-term problems, but we're not ignoring any sector.

Arguments were made that we're ignoring the mining industry - we're doing no such thing. We're putting millions of dollars into the mining industry. The geoscience work that's being funded by this government continues.

Mr. Chair, on the tourism front, we're doing things that are changing the face of the tourism industry. On the forestry front, we're encouraging and providing training and support to the mills that are now beginning to open, and trying to work through the regulatory environment with the real regulator, the federal government.

We're trying to do that cooperatively.

On the trade front, we're trying to encourage new activities in cooperation with businesses that are actually showing progress already, and we've only been engaged in this kind of activity for two and a half years. That's a fairly fast turnaround, by anyone's standards. I know the moment we made our first expenditure we were already being asked for performance indicators by the members opposite, but it does take a little bit of lead time to start expanding our economic base.

We're doing a wide variety of things to make the economy stronger, and we are working with communities throughout the territory as well. We're even in discussions with the Association of Yukon Communities. I know one of the member's constituents, a good friend of his, the president of the Association of Yukon Communities, the Mayor of Dawson, has been making arguments, too, that the municipalities want to get more involved in promoting economic activity and want help from this government. There's money in this budget to provide help for the association to do exactly that.

So, we recognize there are a number of things the government can do, on the operations side and the capital side, to expand the economic base, to make us less dependent upon any single source of income, to make us more able to withstand any shocks to our system. In the long term, in the medium term and, to an extent, in the short term, we are going to see ourselves less dependent on other sources of income.

But the simple answer to just simply use a tax structure to increase taxes, which would certainly make us less dependent, is, in my opinion - and I disagree with the members opposite - not the answer.

All I'm saying to the member, when he makes his calculation to try to determine what constitutes dependency on the federal government, he should be careful about factoring out devolution, because that should not be considered a net change to dependency. That's simply a transfer from one government to another.

So, if the opposition wants to know where we're going, that's where we're going.

I think the community at large would agree with us and, in fact, is agreeing with us that this is what should be happening, and we're doing it.

Mr. Jenkins: Well, for the record, Mr. Chair, I'll state categorically that the position I take is that personal tax rates here in the Yukon could have been reduced for each of the last three fiscal periods, and they could have been reduced while keeping the perversity factor the same, but this government chose to keep the personal income tax rate artificially high to benefit on the other side of the equation, on transfer payments from Ottawa.

Mr. Chair, the one area that has grown and has grown considerably in the Yukon - and that I'd like to ask the Government Leader about, the Minister of Finance - is government itself. The size of government now in the Government of the Yukon is at an all-time high.

Would the Government Leader share with us what he envisions to be the appropriate size of a government for 30,000 people? Just how much government do we need? We have the basic infrastructure, the education system and the justice system that has to be addressed, but how much government do we actually need overall? And could he explain the reasons why it has grown so much under this NDP government over the last three years, outside of the devolution process?

Hon. Mr. McDonald: Well, Mr. Chair, when the member is lying alone in his bed tonight, and he doesn't have to huff out his chest for anybody who's watching and he's not going to lose face, I only ask him to think through what he has said today and think it through carefully, because, if one wanted to be mean, one could really exploit comments the member has made for partisan advantage. I will resist.

But, Mr. Chair, the fact of the matter is that we have a clear sense of direction. We have been following that sense of direction. We have been refining that sense of direction in discussion with people throughout the territory, and we have a good deal of support for this direction because it's coming, in large part, from the community itself.

Now, the member wants to make the argument that it's government out of control. He has made the argument in the context of the O&M budget, that the budget is growing. His leader made the same argument last night. He doesn't care what the expenditures are about. It's just that he wants to make the general argument on the basis of the size of the O&M budget. Well, Mr. Chair, I would ask the member what side of the O&M budget he'd like to move on first. We have new a expenditure in the budget, the CT scan. Is the member opposed? He doesn't want it to happen? It's increasing the size of the O&M budget. Is he opposed to it? That's a clear statement about a specific. What we have in this Legislature so often is the opposition continually saying, "Don't grow the O&M budget," but we have opposition members asking for new O&M increases constantly, and the only thing that some of them can think of is to cut the community development fund in order to pay some lip service to the offsets that would have to take place.

Tourism marketing dollars in this budget - there are hundreds of thousands of new dollars in the budget. That's O&M money. This is growth in the tourism department. Is this something the member is opposed to?

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: I'm sorry, I was not paying attention to the member's remarks in second reading. I thought I just heard negativity, but he's now saying that those are the two items in the budget that he liked.

Well, what about the school lunch program? What about that? That's growth in government. This will be an interesting one - what does the member think about the social assistance rates? I'd like to hear that from the Yukon Party.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: No, no, no, I have already explained why - he says it's my budget. He wants me to explain why I wanted to raise social assistance rates. Well, the answer is simple, Mr. Chair - they haven't received an increase for a long time. These are the lowest income people in our community. They live a relatively mean existence, and so we wanted to raise the rates.

So, my position is clear - I want to know his position. He is making the argument with us that the O&M budget is growing unreasonably, and I'm trying to bring it home in terms of some specifics to ask the member which increases he would be opposed to. He says he's opposed to the growth but, so far, he hasn't disagreed with any of the details, any of the instances. So, I have mentioned social assistance rates. Is the member opposed to social assistance rate increases? Let the record show he's not kibitzing now. What about the training allowances? That's another increase. That's an increase of $150,000. Is the member opposed to that? Is the member opposed to training allowances? I'm just taking these things one by one. We have time. I'm going down the list.

The member was quick to say he supported the CAT scan, he was quick to say he supported the tourism marketing funds. I'm putting to him whether or not he wants to support the social assistance rate increases, and he says nothing. I'm trying, for the sake of the public, to determine where these guys stand. We have put our cards on the table. The numbers are all there - a great big, fat binder of numbers - look. I know the member has a copy - it's all there. The O&M increases that he's objecting to as a total are all laid out. And I'm going through the O&M increases, and I'm trying to determine, in order to bring some clarity to this debate, what the member is opposed to.

It's too easy a criticism to just simply say, "We disagree with O&M increases," but refuse to say anything about the particulars to give the impression to all the individuals out there and all the various organizations and societies that maybe you just might be in favour of their sliver of financial support. But, you can appeal to the conservative crowd and the member's own party faithful that the member would be opposed to the sum total of all of these.

So, I'm just trying to find out, for the sake of clarity in this debate, what's on and what's off in the member's mind. And so, once we boil it down, if the member doesn't like funding for YRAC or the funding for the Association of Yukon Communities, we'll have a debate about the specifics so that everyone will know. It's not just a debate about big, general principles. This is an honest debate about the actual stuff that's going on here.

Mr. Chair, I'm really interested in having a general debate about where this member stands with respect to O&M increases and what he calls this burgeoning growth in government. There's a growth in the O&M budget here. He freely allowed that he was supporting tourism marketing. He freely allowed that he was supporting the O&M associated with CAT scan. He has claimed the fifth when it came to support for the social assistance; he hasn't made any kibitz. He has said nothing. The training allowance, does he support that? Kids lunch program, does he support that? Does he support the O&M money for the college? Does he support the money for the hospital? Does he support that? Those are two increases, which are approximately $600,000 between the two, for those two institutions. Does he support the money for the reading recovery program?

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Yes, those are FTEs. There will be FTEs in the support, I'm sure, for the college and the hospital.

What about support for the college for international programs? Maybe that's something he can pick on. Does he have a position on that? The funding for the Handy Bus - are there any takers there?

The member has made a big point of the fact that we were - how did they put it? - targeting funding for special interest groups, in some way, that somehow this was illegitimate. Well, one of those is the Trappers Association for marketing. Is he opposed to that? Funding for the Fish and Game Association, is that a problem?

How about the increase to the Dawson City Arts Society? That involves FTEs - not FTEs for the government, but it will be FTEs or the equivalent for the society in Dawson. That brings the increase to the Arts Society to $100,000 a year. That's $100,000 O&M per year for the Dawson City Arts Society.

Does he have anything to say about the Victoria Faulkner Women's Centre women's advocacy? I'm sure he must want to say something about that. That's $50,000.

There's some funding here for education for new programming for the school system associated with Connect Yukon. That's $300,000 a year in O&M. It's ongoing. That's the growth in the O&M budget. What does he have to say about that?

I'm striking out here, Mr. Chair. I haven't found anything he disagrees with yet. Let me see here. There must be something.

Legal aid - are there any concerns there?

Well, Mr. Chair, these are all elements of the increase. We have gone through the increase in the O&M budget in previous years, and we have debated each individual budget and each individual slice of the O&M increases from the time we assumed office to now. We have explained some of that increase in terms of some fairly sizable increases associated with devolution. We have also explained that some of that increase is public servants' wages, because that has been probably the largest single O&M increase in any of the budgets, and certainly that's true again here if one factors in the contingency, which I've indicated will be applied to the payroll of government.

I think what we've got here, Mr. Chair, is a dilemma, in that we've got a desire to criticize the growth in O&M but are not prepared to criticize any of the details. Well, you know, that's really not good enough, because the public would be inclined to believe that the Yukon Party would want to do something differently, and if they want to do something differently, then we should know what it is and debate it.

We're prepared to defend every expenditure in all the various areas, and, so far, I've had some difficulty getting the member to fess up here in terms of what irks him most about the specifics. Maybe the member could help us out?

Mr. Jenkins: Wow, Mr. Chair. That was an extensive overview of what would boggle anyone's imagination. NDP governments are synonymous with a growth in government itself. One only has to look at what has transpired in Ontario, and how that economy has subsequently turned around under a new government. One only has to look at the devastation to the economy of British Columbia under an NDP government, and the significant growth that that province has experienced in all facets of government. One only has to look at the exodus of all the resource-industry operators from the Province of British Columbia and, indeed, from the Yukon.

It's interesting to note a letter from the Alaska Miners Association, praising Canadian firms for their involvement in that industry over there, and passing a resolution recognizing the importance of Canadian companies in the mining fraternity in their state and the significant contribution they have made to that state's economy.

We're in the same mineralized zone, we have virtually the same potential in many of our areas but, under this government's initiatives, we're either going to make it a protected area or a park, or something else - chase away the mining activity, the exploration. And I'll give credit to this minister and his government. They have done an excellent job of chasing away mining exploration from the Yukon Territory.

It's probably one of the lowest it's going to be for quite a number of years. Yes, it's down in other jurisdictions and around the world, but the Northwest Territories and Alaska are still enjoying a very buoyant mining sector.

Mr. Chair, government, under this minister and this NDP government, has grown significantly. What I'm asking the Government Leader, the Minister of Finance, is if he has a game plan as to just how much this is going to grow, or where he envisions it ending. I'm referring to the expansion of government outside of devolution. We are going to take over more and more federal programs and the FTEs associated with it. But, outside of those transfers, there has been a significant growth in government. Just where does this government and this Government Leader envision it ending?

Hon. Mr. McDonald: Well, Mr. Chair, that was an interesting statement that the member made. The member said that the - well, he made a couple of very interesting points. He said that the protected areas strategy was designed to create a park and chase away exploration. Does the member have any idea who signed the Yukon on to the national protected areas strategy? Does the member know that? It's not a tough question. There's not a lot of pressure here. It's not Who Wants To Be A Millionaire? It is quite simple. The Yukon Party did. His own party did. That's who signed us on to the protected areas strategy.

Here's another question: can the member tell us what year the Yukon Party was going to have all the territorial ecosystems represented?

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: Oh, the Member for Watson Lake told him.

Mr. Chair, yes. It was the year 2000. It was this year. We're going to have 23 parks in the territory, just like that - boom, badda bing, badda boom. The member retreated into attacks on other governments when I asked him what it was about the growth in this particular O&M budget he didn't like. He immediately disappeared to talk about British Columbia, Ontario, whomever else he could think of at the time.

All I'm asking him for is an honest debate. Can he tell me whether or not he supports the items I've mentioned in this budget? What doesn't he like that reflects the increase in O&M? I've gone down the list. What doesn't he like? He's not able to say. When I gave some easy ones, he was quick to jump in and say he supported those. But all he's prepared to say is that he criticizes the increase, but he's not prepared to say anything about the details. Now, I want just a straight-up debate here. He doesn't like this. He doesn't like some of these expenditures, or what? Can he tell me which he doesn't like? Can he tell me that?

Mr. Jenkins: I might remind the Government Leader that I ask the questions, and he's here to answer them. And I've asked a question, and I've asked it repeatedly. And I guess the best defence is a very good offence, and this Government Leader, Minister of Finance, is putting up an excellent offence. But he is failing to answer the questions that are posed to him, and that's the whole purpose of this -

Some Hon. Member: (Inaudible)

Mr. Jenkins: And now we have the chirping in the backbenches -

Chair: Order please. Let the member speak.

Mr. Jenkins: My gosh, thank you, Mr. Chair. Now, before I was so rudely interrupted, I had posed a very sincere and upfront question of the Government Leader, the Minister of Finance, as to what he envisioned the optimum size of government was for the Yukon. You know, for 30,000 people, we have to be the most over-governed area in the world, never mind North America or Canada. Just what does this government and his party envision to be the optimum size of government?

I did mention the Alaska Chamber of Mines, and all the minister has to do is listen to the news. They're publicly thanking the Canadian mining companies for the jobs they are creating in Alaska. We have the same mineral potential here in the Yukon as the State of Alaska, Mr. Chair, but because of the message being sent out by this Government Leader, his government and his officials, under his instructions, we are not attracting the exploration dollars that we used to attract. We are not attracting the exploration dollars that Alaska is attracting from Canadian mining companies, and why? Because of the message that this government is giving out through its various agencies and bodies. That's not fair to Yukoners. That's not fair to the Yukon.

And, yes, it was the Yukon Party that signed on to the initiative to create these special areas for parks and in the wilderness, these special ego-regions. But one only has to look at all the accolades that flow to Ontario when they set aside a maximum of 12 percent of their total land mass for that purpose - for parks, for special areas. And we're seeking an answer as to how much of the Yukon we're going to set aside for that purpose, and there is no answer.

In fact, the Minister of Renewable Resources says, "Well, it probably won't be 50 percent, but it might be." The message that is being delivered by this government to the mining sector will not attract mining exploration dollars here in the Yukon. It hasn't attracted, and it will continue to not attract it with the policies that are in place. Level the playing field. Put in place consistent rules and keep them consistent.

The article on the radio today clearly states that. The fact that Alaska is enjoying a mining boom during low metal prices tells that they are successful because they have government initiatives that support mining and create certainty, whereas here in the Yukon, we're the opposite.

The opposite to that is we have a government that does not support mining initiative and creates uncertainty. That's the message that's being delivered.

For the Alaska Chamber of Mines to move a resolution at their annual meeting and publicly thank the Canadian mining companies is a slap in the face for what we're doing, what this NDP government is doing here in the Yukon, Mr. Chair.

Now, are we going to get on board or is the Government Leader, the Minister of Finance, going to stand up on his feet and spew some more rhetoric forward?

What I'm looking for is a clear and concise answer to a question. I'm not looking for the minister to pose a series of questions at myself. I'm just looking for his response as to where he feels the optimum size of the Government of the Yukon should be.

Hon. Mr. McDonald: Mr. Chair, if the member thinks that he's going to get away today without answering these questions, he's crazy. I'm not letting it go. We're going to be here until the member comes clean. His own leader says we'll be here for days. Days it is.

That's fine, because I think it's time we had an honest debate about some of these things.

You know, the member spends most of his time talking about the mining climate and the protected areas strategy and all these sorts of things. He raises the example of Alaska and says that we should emulate Alaska, that they obviously have some good activities going on over there, that they're attracting lots of investments. They have what - 35 percent in protected areas? So can I draw the conclusion from the member that we should be seeking, in order to have the same kind of environment as Alaska, 35 percent?

The Member for Riverdale North is giving me the A-OK sign. You want the certainty, yes. The certainty - so 35 percent certainty, that's okay. I understand that. I understand. I understand that they're looking at - even if it's 35 percent, as long as it's certainty, that's fine. I understand.

Now, with respect to the issue about Ontario and their protected areas, the member sure hasn't been reading the newspapers. Ontario has been amidst a great controversy over their protected areas strategy. In northern Ontario there's all kinds of controversy about the protected areas strategy - all kinds - as the basic objective is trying to be met, and as the people debate when and how and how much and where. There's lots of controversy in Ontario. He wants us to emulate Ontario, Mr. Chair, and I'm going to try to avoid that experience as much as we can.

Mr. Chair, the member talks about the Yukon not getting any credit from the mining industry. That's just not true. It's not true at all. I was at the Cordilleran Roundup and had lots of good comments from people. Number one, they understand who the regulator for the mining industry in the territory is, and they recognize that the work that's being done - largely with the leadership of this government in the blue-book process to refine the policy regulatory environment - is valuable work, and they say so.

I just got a letter, was it yesterday, I think - a couple or a few days ago - from a mining company that thanked us for our contributions and looks forward to a good working relationship and hopes that they can do some good work this summer.

Mr. Chair, I see lots of support from mining companies. These are people who want to do work in this territory, but they recognize that the mining industry in Canada is facing difficulties. That's the truth.

Now, the member has made an argument, and I will take it seriously. The member has made the argument that we should be like Alaska - bring certainty like Alaska. Okay, Mr. Chair, I understand. Everybody knows how much protected areas they have in Alaska. "Certainty" is the key word - okay, I understand.

Mr. Chair, the member goes back to what he says is the optimal size of government. I think we should have a discussion about the actual O&M expenditures. The member makes his comment about the size of the O&M increases, and yet refuses to criticize individual expenditures on the O&M side.

The greatest, single expenditure easily would be public servants' wage increases, freely negotiated. Surely the member is complaining about the size of the government, the size of the O&M expenditures, but he hasn't complained yet about the devolution of health benefits, so factor out devolution. You can see the size of the O&M; you can see that wages make up a fairly sizable portion of that.

Is he opposed to those wage increases?

He was free to kibitz before and give all kinds of answers. I asked him before if he was in favour of tax cuts and he said, "Yes." I asked, "Are you in favour of tourism marketing?" He said, "Yes." I say, "Are you in favour of wage increases?" He looks down. I ask, "Are you in favour of social assistance increases?" No comment. Well, if there's no comment, maybe we can draw the conclusion that the member is not in favour. It gives me something to argue, so we actually have an honest debate about the specifics - about what's going on.

It's not a fair discussion to only discuss the global numbers without being able to discuss whether or not one agrees with - I'm not talking about the details of the budget - the general thrust in terms of the O&M. It's not complicated.

Mr. Chair, this is an important discussion, because we hear regularly from the Yukon Party about growth in the O&M. The member complains about the growth in the O&M. Tell me what he doesn't like about the growth in the O&M. What does he not like? Does the member like social assistance increases? Does the member like tourism marketing increases? Does the member not like tourism marketing? Asia-Pacific marketing?

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: The member is saying, "Answer the question. Answer the question as to what is the optimal size of government." The optimal size. For this year, this is the optimal size. This is what we're prepared to defend - these estimates in front of us. These estimates include tourism marketing increases. These estimates include social assistance increases. These estimates include training allowance increases.

This is what we're prepared to defend. I'm here, standing, defending this budget, and yet the members opposite can only talk about the global numbers, but they're dishonest. They're not saying what they believe -

Some Hon. Member: Point of order, Mr. Chair.

Chair: Member for Riverdale North, on a point of order.

Mr. Phillips: The word "dishonest" is unparliamentary, Mr. Chair. According to our rules, the member should withdraw it.

Hon. Mr. McDonald: As much as I may believe that the word is true, I will withdraw it.

Some Hon. Member: Point of order, Mr. Chair.

Chair: Member for Riverdale North, on the point of order.

Mr. Phillips: Mr. Chair, you have to withdraw the remark categorically. You can't add to it. The point is, the remark is unparliamentary and has to be withdrawn.

Chair: I would ask the member to withdraw the word completely.

Hon. Mr. McDonald: I will withdraw the entire word - d-i-s-h-o-n-e-s-t.

Chair: Is there further general debate?

Hon. Mr. McDonald: Well, Mr. Chair, the case has obviously been made. The members opposite are not prepared to debate this fairly at all; clearly they're not. They're - on the one hand, they want to say there's growth in government. They want to ask me what the optimal size of the government is and what the optimal size of government spending is, and it's these estimates. When it comes to answering any questions about the particulars, they're not prepared to do it. When it comes to wanting to defend or to take a position on, say, something like social assistance rate increases for the lowest income people in this territory, they're not prepared to say a single thing.

So all I can say is that we disagree with them. They would not give people who need them some funds to survive in our community. They would not make that a priority. They would see that as an unreasonable growth in government. For those people who need training allowance increases, the Yukon Party would not see an increase in training allowances for people going to school - the lowest income people in our community. They would not see that increase. That's the Yukon Party for you.

They regularly criticize O&M increases, and regularly those increases include growth in tourism marketing. They would rather criticize the growth in government and hope that nobody looks at the details - hope against hope that nobody would realize that that growth in O&M actually involves tourism marketing and support for growth in that industry.

Some of the expenditures in here are not just tourism marketing for new markets; it's also supporting joint marketing programs with airlines, which are now coming in and increasing the size of our tourism industry. The Yukon Party, by their comments this afternoon, are saying they're opposed to this.

Now, the member opposite will go off to the media now, expressing concern about a growth in O&M, but do you think the member will say growth in O&M, except for $400,000 for the CAT scan, except for the hundreds of thousands in tourism marketing, except for a couple of hundred thousand dollars in social assistance increases, except for $150,000 for an increase in training allowances, except for the kids lunch program, except for the kids recreation fund, except for the increase in YRAC, except for the increases for the college, except for the increases for the hospital? Not a chance, Mr. Chair.

The Yukon Party only wants the simplistic message to be delivered, and I hope they can bully their way through the debate to leave the same simple message. If the members disagree with the general increase, then they disagree with the particulars. The members opposite clearly don't like to see wage increases for public servants. This is despite the fact, I would point out, that their own candidate in Laberge said the one biggest mistake he ever made was to participate in a Cabinet that made that decision - to cut public servants' wages.

But when we have a budget that includes increases fairly negotiated with public servants, no, that's growth. Disagree with it - it's growth. Just on the face of it, it's growth, and they're opposed. They're trying to have it both ways. They're trying to be able to champion everybody, and that's generally uncharacteristic about the Yukon Party. Generally, when they have pissed off somebody, they do it with some panache.

Chair: Order please. I would point out that that's unparliamentary. I ask the member to withdraw it.

Hon. Mr. McDonald: Mr. Chair, I withdraw that word, too.

Mr. Chair, the Member for Riverdale North says I should apologize. The Member for Riverdale North should apologize. He should be embarrassed to be in that party. He should be embarrassed to be keeping company with those folks. That's what he should be doing.

Some Hon. Member: (Inaudible)

Some Hon. Member: Point of order.

Chair: Point of order, the Member for Riverdale North.

Mr. Phillips: On a point of order, Mr. Chair. I said the Government Leader should apologize for swearing deliberately in the House, Mr. Chair, and he was called to order by you, Mr. Chair.

Chair: Order please. There is no point of order and, furthermore, I would ask members if they would like to have a recess.

Some Hon. Members: Agreed.

Chair: Ten minutes.

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

Hon. Mr. McDonald: Mr. Chair, before the break, we were talking about the size of the O&M budget, the optimal size of the budget, the growth in the O&M budget, and I was making the point that the only way to have a useful discussion about the size of the O&M budget or the size of increases is to have a discussion about the particulars of that increase.

And the only fair way and the only reasonable way to have a discussion about the increase would be to discuss what the increase is constituted of.

Now, earlier on this afternoon, the member indicated that there was some marketing funding that he supported on the O&M side, and he also supported some funding for the O&M associated with the CT scan in this budget.

But the member has refused to comment on any other increase, and so I feel an obligation, in order to justify the size of the increase in O&M, to justify the particulars. As I indicated to members, there are a number of things there which constitute the growth in spending that I think are worth defending.

The member indicated that the growth was a problem, but we see, for example, in the Department of Community and Transportation Services that municipal grants will be increased by two percent. The member is not indicating any support one way or another for that, so I'll justify it by saying that I believe that municipal governments are deserving of some increase for their operations. A portion of their basic operations, of course, comes from property taxation, but a portion of it also comes from the block fund from the Yukon government. Under the Yukon Party government, the municipalities didn't receive any increase. For the first time last year, they received an increase from the NDP government of one percent, which is about $110,000, and this year it will be two percent, which is about $232,000. Not every municipality benefits from that, because the formula decides exactly how much individual municipalities get, but the growth of the fund by $232,000 is, I think, justifiable.

There is an increase, as well, in the Department of Community and Transportation Services for the Yukon Recreation Advisory Committee. This has been a request by many people for awhile, to see a real increase in expenditures here. The member has said nothing about this. It constitutes a portion of the increase in the O&M budget, and I would like to stand here and support it.

As I said before, the Association of Yukon Communities will be receiving an increase in their allotment of $25,000. I know that they had not received any increase during the Yukon Party era. They have received an increase. This will now be the second increase in two years that they have received, but I believe it is justified, given the role the Association of Yukon Communities plays and their growing interest in new fields of endeavour, particularly in the field of economic development, which they would like to pursue, so that they can become real partners in encouraging growth in the economic base within their communities.

In Economic Development, there is an increase in oil and gas royalties payments to First Nations. This is expected to be the case because we are getting more oil and gas royalties generally, so we have an obligation to pay money to First Nations. That is an increase in the O&M budget.

Now, clearly in Education, there are a number of things that we have identified here already that I think are perfectly justifiable. The telecommunications project is to see an increase of $300,000 for the department to make best use of the new telecommunications equipment and the high-speed data transmission capacity, which will allow each school in the territory to communicate with each other, and do so better than ever before, so there's the capacity for video conferencing to create virtual classrooms, so that people can connect and we can make better use of our existing resources. So, I think that O&M increase is justifiable.

There are a couple of increases to the Yukon College Board, aside from the increase to the college generally, to support not only just general ongoing increases that they may have to face but, also, to encourage them to participate in international programs to attract students, and ESL students particularly, and encourage growth in the wilderness tourism business, which will benefit from that activity.

There is funding for the environment - this is the citizenship and research program here. I know it's only $10,000 but perhaps the member opposite is not supportive of that, because he's not supportive of the growth in the O&M, so maybe that $10,000 is part of something he's not supportive of.

The training allowances for social assistance recipients is something that was requested by those who suggested we should provide an incentive to people who are on social assistance to take part-time courses at the college, and this is one way, through an investment in their tuition, to encourage that activity. This is obviously not a lot of money, but it's $70,000 and will make a big difference in certain people's lives, particularly those who need the funding the most. So, I would support that particular expenditure.

In terms of the training allowance rates, as I say, they haven't had a real rate increase for many years. These are people who are trying to make do and improve their education and consequently increase the level of trained and educated people in our community. I think the increase in the training allowance is well-justified under the circumstances.

There are some increases here - there's one increase in some French-first-language programming. This is 100-percent recoverable, so it's not necessarily a growth in government, because it doesn't mean a net growth in the O&M budget but, still, it is a growth in the O&M budget, but then again it's recoverable as a direct recovery from the federal government.

In Government Services, there is some cost associated with the Connect Yukon project, which will ensure that various departments and citizens can communicate effectively with each other in an affordable way using the new technology. That is something that we made a point of wanting to promote last fall, it's a growth in the O&M budget and it shows up in this budget.

We've spoken about the CT scan; we've spoken about the healthy family initiative, about the social assistance rate increases. The health summit for the year 2000 was requested by the people who participated in the last health summit, because they wanted to continue on with the discussion about where the health system was going. They felt that a health summit 2000 would be a way to focus particularly on healthy lifestyles and to encourage healthier living and thereby prevent the likelihood of increases in those requiring curative care services.

We've talked about the food for learning program, the school lunch program, the kids recreation fund, the social justice forum, the funding for the Handy Bus. These were all expenditures; they're not large, but they contribute to the growth in the O&M budget. If the member has some specifics about those, that he would like to take issue with, then I can respond in an honest way to those concerns. There is an increase to legal aid services, particularly for child custody cases, et cetera. That was something that was requested by the society that runs the service, and we're happy to be able to respond.

There's a recycling initiative here for $100,000. This was raised by a number of municipalities and by people around the territory, that they want to account for the need to transport some recyclables to disposition points, and have a more integrated and better recycling system territory-wide. We are providing some resources to help facilitate that.

I mentioned the fur marketing program, the Fish and Game Association and the Agricultural Association. In Tourism we've talked briefly - or we've actually talked extensively - about the marketing funds that are being directed to the new Asia-Pacific market, to tourism marketing generally and to TIA itself. We've spoken briefly in the main estimate speeches about the trade ambassador program. There's an increase to the Historical and Museums Association - it's not much, but I'd be interested in hearing the member's comments on the specifics. I've already spoken to the member about the Victoria Faulkner Women's Centre, and then, of course, there are funds for the elections office.

So, these all constitute growth in the O&M and, along with the wage increases, which are factored into the contingency fund available here that we've identified, we will fold into a departmental basis once the ratification takes place. These are the sum total of the O&M increases that we have identified

So, if the member can - I've talked about every O&M expenditure. I've talked about the public service wages. Can the member indicate to us what it is he doesn't like?

Mr. Jenkins: Well, the Government Leader, the Minister of Finance, has gone on at great length and gone around in a great big circle, used unparliamentary language here today, but he hasn't answered the question I posed to him. That question - I will repeat if for his benefit - is quite specific: what does this Government Leader see as the optimum size of government for an area with a population of just over 30,000? How much government do we need?

Hon. Mr. McDonald: I've answered the question probably 10 times this afternoon alone, and I can only draw the conclusion that either the member is not listening or the member does not care to listen, and the member has nothing to contribute to the debate at all.

I have asked the member to try, given his concerns about the O&M budget, to define and identify those things he does not support. The member refuses to say anything about the things he doesn't support. He has said some things about the things he does, but he refuses to say anything about the things he doesn't. Surely, anybody listening to the discussion would express serious concerns about the legitimacy of the member's arguments. Surely, anyone listening would feel that what the member is promoting here is not legitimate at all.

The member has asked what the optimal size of government spending is. The optimal size of government spending at this time in this year is reflected in these main estimates. That's the optimal size of spending. In terms of funding for various organizations, for the size of the public service for this year and right now, the optimal size is reflected in these main estimates. This is where we are this year. If the member wants to know where we're going, we have some analysis of the longer term.

So, I have come clean and provided all the information and put it on the table. I've pleaded with the member all afternoon to identify and move past the simple rhetoric - move past the simple, ideological statement - so that we can actually have a clear discussion about what the member is specifically concerned about. Let the record show that the member has no interest whatsoever in engaging in that discussion. All the member wants to do is criticize the O&M budget, but he wants to pretend to everybody out there - every citizen and everyone who benefits from this O&M budget - that he's probably in favour of what they are to receive as part of government expenditures. He doesn't want to disappoint anyone, but he simply wants to criticize the overall spending program. Well, Mr. Chair, that's not right. It's not right. The Yukon public deserves more than that - better than that.

The member has not been able to demonstrate an understanding of the budget process this afternoon. He has asked questions that make no sense. He has confused and mixed and matched all kinds of arguments. Yet, this afternoon, he comes forward, makes the same, old, bogus argument about growth in O&M, but doesn't care to even debate it. We're standing here. We're all here.

There are lists of things that constitute the so-called growth in government and growth in the O&M budget. I've listed them and, apart from a couple that the member feels free to say he supports, he's not prepared to say anything about anything else. He does not want it on the record that he may not support something in this budget. He does want it on the record that he doesn't support the O&M increase, but he doesn't want it on the record that he doesn't support - what? Social assistance increases? Training allowances? The Handy Bus increase?

We can draw some conclusions perhaps from his colleagues' time in the Legislature. When they had large expenditures, they chose to put the expenditures into certain areas and not into others. They made choices. Those choices include, for example - even though they had large budgets, they chose not to put any new money into the grant for municipalities. They chose not to do that. Then we come along and we choose to do it. It will be interesting to see whether or not the municipalities three or four or five years were asking for increases. I don't know. Maybe the member can help me out there. The government of the day, spending large amounts of money, chose not to give it. We choose to give it, and the member criticizes the O&M increases. Mr. Chair, this is not a fair argument. This is not a fair situation for the member to be in. The member has got to come clean on these arguments.

Does the member disagree with the particulars? I'm not asking him to debate every last detail of exactly where all these funds are going. This is general debate. But the member has made a general argument, and I'm asking for particulars so we can have an honest debate.

It doesn't matter what I say, but the member will return to, "What is the optimal size of government spending?" Well, it's right here in the budget once again. I'm prepared to defend what we're coming forward with and what the government is doing today. I stand here, in my place, to defend that.

So, I've answered the question, even the simple question. Even the simplistic question I've answered. And in order to facilitate a discussion with the member so that we can truly understand the member's concerns, all I've asked for is a little bit of information to clarify, to focus on where the member has concerns. That's all.

I'm not trying to put the member on the spot. I'm just trying to say, "Listen, if you have problems with the overall, tell me what you have problems with, in terms of particulars." You disagree with the growth, and then I say, "What about this section of it, this section and this section? The member starts by saying, yes, he supports it, but as we start to get into some other areas, he puts his head down. He's not prepared to actually stand in his place and say that he supports things, which should be a singular message. This is as far as we can get in this discussion. Because the member simply refuses to discuss or debate in any substantive way, it has to be a singular message to people who are listening, and who may be monitoring the discussion. People should know, for the record, that he doesn't like the total increase; he's only prepared to support a couple of the O&M expenditures, but the rest he does not want to say anything about.

What conclusions can we possibly draw from that? We can only draw the conclusion that he doesn't support these other items, and I'm saying to him I'm prepared to support them, and if he wants a general discussion around them, I'm here to defend them, and if we agree to disagree, if it's no training allowances for Yukon College students, all he has to say is, "I disagree; these are my reasons, why are you doing this? This means a growth in government; we are ideologically opposed to the growth in government, so we disagree with them." And we'd know; we'd have a debate. We could talk about why we're making a specific expenditure. That's a fair and honest debate.

But these general questions while trying to hide in the weeds about the particulars, that's not a fair debate at all. The member knows that.

So I'd like to ask the member to please tell me where he has some concerns about the O&M. It's all listed in the general operations side of the budget - in the general pages, not in the departments, not in the department particulars - but it's on page S-5 of the budget. There's an explanation of changes from the forecast estimate on the O&M side.

Generally put, what is it that he doesn't like? Is there something thematically he doesn't like? Does he not like certain expenditures on the social side - is that the concern? Is there a problem on some of the other things? I mean, what generally doesn't he like, so that I can respond in some kind of credible way to the member's concerns.

Mr. Jenkins: Well, Mr. Chair, I will be voting against this budget, just like the current Government Leader did when he was in opposition. He voted against the government, the budget of the day. He voted against them all when he was in opposition. To the best of my recollection, that was the case. And, like the current Government Leader when he sat in opposition, he didn't vote against it because he didn't agree with a lot of the initiatives in the budget or a lot of the expenditures. In fact, I agree with a lot of the initiatives and a lot of the direction that the government has taken. And I went on the record in my response and made mention of a number of the areas that I agreed with the direction that the government was taking. But, like the current Government Leader when he sat in opposition, I will be voting against the budget. It doesn't mean that I'm opposed to any or all of the expenditures, or any or all of the initiatives.

Mr. Chair, what I'm looking for from the Government Leader - the Minister of Finance - is an understanding of where this Government Leader feels we are heading with the size of government - with the size of government and the number of FTEs it's going to require to run, with the percentage of the GDP of the Yukon that it's going to consume.

Just how much government do we need in the minds of this NDP government to run the Yukon? There are just over 30,000 people. We have the Government of Yukon, we have a federal presence that is being devolved to the Yukon, and then we have all our respective Yukon communities, which also have governments and are to a large part funded by the Government of Yukon, and we have 14 First Nation governments - and powers and responsibilities are being devolved, rightfully, to these governments. It would appear that, overall, the Yukon is being more and more consumed by government. The territorial government has grown, and it has grown significantly since the NDP took power.

I just want to know where we're headed and where this government eventually sees us ending up. How much government do we need, and at what cost? I guess that as long as it's sustainable - and those were the Government Leader's own words. He sees this government as sustainable as a consequence of the flow of funds from Ottawa. But just how much government do we need? Is it all necessary, and do we need it all? And where are we going, given the large amount of government we have created, are creating and continue to create under this NDP government? That's the question. We can get into the specifics of the line by line with the various departments, but in general debate, overall, I'm just asking the Government Leader a very simple, fundamental question about where we're heading.

Hon. Mr. McDonald: Well, now we're making a little progress, Mr. Chair. I'm happy for that. The member now recognizes that it's legitimate for a real debate to take place, that it's okay to talk about me while I'm in opposition, and I think that's legitimate. What did I do when I was in opposition, what am I doing now? That discussion is legitimate. So it's equally legitimate to talk about why the member opposite is doing what he's doing in opposition now, and he shouldn't hide in the weeds about his positioning.

Now, the member says that he doesn't necessarily disagree with any single thing the government is doing - he's still going to vote against the budget. He doesn't necessarily disagree with anything.

Well, I can only tell him that I did disagree with things that the Yukon Party was doing; that's the reason why I voted against the Yukon Party budgets. There were a number of things that they were doing that I thought were not appropriate. That's not to say that absolutely every expenditure was objectionable, but there are many things that made it, on balance, very objectionable. And so we disagreed with the direction the government was going and many of the expenditures it was making.

You know, didn't agree with the wage cuts, didn't agree with squeezing the building construction industry, didn't agree with squeezing the social services side of things - didn't agree with that. Didn't agree with the way they were approaching the relationship with NGOs and municipalities and First Nations around the territory - didn't agree with that. And there were financial implications to much of that.

So, Mr. Chair, I don't have any problems saying that, yes, in opposition, I disagreed with the direction and I voted against it. That wasn't to say that it was unanimous on opposition benches to vote against the government budgets, but we certainly did.

So we disagree, and if the member disagrees in main estimates with what I'm trying to do here - I already know he's going to vote against the budget. He already has in principle.

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: The member has. Well, no, actually, the member is right; he hasn't. He's right. I correct myself. This member has an uncanny way of being absent when it comes to critical moments. I've got to hand it to him. It's a survival tactic or something, I guess.

Nevertheless, he's right. He hasn't technically voted against it, but he says he's going to when the time comes, so we'll give him time.

Anyway, what I'm trying to do is get the debate focused so that it can be a debate about real things, things that matter to people.

The member asked me the simple question, and I answered the simple question about do I support the operations of the budget of this government. Yes, I do. Do I support what the government is doing right now in terms of the people of the territory? Yes, I do. I voted for the budget. I'm the lead, responsible agent for this government so, consequently, I do support, overall, what the government is doing. That's not to say we can't reform things, we can't move things and make things more efficient. We certainly want to do that, too, but in terms of us taking a snapshot of where we're going, of course I support the main estimates here.

But I need to know, though, Mr. Chair, so that I can answer the question in a meaningful way that will actually mean something to people on the street. I need to know what it is the member doesn't like. It can't just be sort of the size of the budget, because he hasn't told us to turn any of it back - that he thinks that should happen. It's got to be something in the particulars.

I just ask him, can he at least hone it down to, say, the social envelope or the economic envelope or something? Something so that I can actually respond to it in some practical or realistic way.

I've indicated to members opposite that I believe that the service levels we're providing to the people of the territory are sustainable into the foreseeable future. I believe that. That is what we're shooting to see happen, and we think we can deliver that. The services we're providing to the people of the territory are, in my view, sustainable, and I would like to see them sustained.

If the member wants me to go further, he's going to have to give me some information as to what it is that he's got a problem with. I can't read his mind. So, if he could tell me, does he have a problem with the social side of the spending? His leader has indicated in the past that he does. He's referred to that as debt creation and the capital side as wealth creation. Maybe we could at least chew on that concept a bit.

Mr. Jenkins: Well, Mr. Chair, this still brings us back to the main question for the Government Leader. It's a very simple one.

Here we have the Yukon with a shrinking population for the last three years. We've lost a considerable number of the people in our workforce. They have had to get out of here, leave to find work. A lot of them moved to Alberta, some moved back to Ontario, some to Alaska, some to the Northwest Territories and some to other areas. Some even went right back to the east coast, where there's work. But the bottom line is that we've lost population, we've lost jobs, and the Government of Yukon is growing.

The size of the Government of Yukon is growing. The O&M is growing. The total budget of the Yukon is growing. If you look at the historical comparisons, the projected O&M of $392,801,000 for 2000-01, the capital of $109 million, for a total of $502 million. And if I just look back a number of years - the previous fiscal period - the total capital and O&M, $478 million. The previous 1999-98, $440 million and $451 million the year before - $471 million, $488 million.

And you start looking under the Yukon Party, as to the budgets, which were screamed at by the NDP - then in opposition. It was the biggest budget ever, and yet the biggest amount was the transfer payments for the hospital and the Shakwak money. You factor those two out of the equation, and it skews all the numbers. But the reality is the total amount that's been spent over the years, add up the total O&M expenditures, add up the total capital and this, in a time when the population of the Yukon is dwindling, is the largest total budget ever in the history of the Yukon, the largest O&M ever in the history of the Yukon.

But what I'm looking for is the basic NDP philosophy as to where they want to take the Yukon as far as the size of government. Is there something that the minister - the Government Leader - is comparing it to? Across Canada, government consists of a certain percentage of the total workforce.

Are we headed in that direction? We're virtually double the standard across Canada in many, many respects, as far as the size of the workforce of government employees and expansion that has taken place the last three years go. In most other areas of Canada, the provincial government workforce has shrunk. In the Yukon, it has grown and grown significantly as a percentage of the total.

I just want to know where this government plans on taking the Yukon, as far as the size of the workforce employed by government goes, and what percentage of the gross domestic product here in the Yukon this government intends the government itself to create and consume. It's all really dependent on transfer payments from Ottawa, and that's why this size of government is sustainable. It's nothing to do with this government's ability to go out and create products and sell products overseas. It's because of the amount of money flowing from Ottawa that we are as vibrant as we are, which is no screaming heck compared to what the rest of the Canada is doing.

We have one of the worst performing areas of Canada, and anyone that I have spoken to traces it directly to NDP policies and what they have put in place in their respective areas.

So, I'm just asking the Government Leader where he intends on taking the government in the next little while. Where does he foresee us going? More government as more funds flow to the Yukon? We create bigger and bigger and more government all the time? Is that what is going to drive the economy? Just what is it? The Government Leader refers to all of the various budget line areas where there has been an increase and goes through them one by one and asks for my opinion on those respective lines. I'd like to just look at the fundamental policies - the thought process that may or may not exist - that is driving this government. Just what is it?

Where are we heading? What is the optimum size of government for our area? Can the Government Leader just tell us what he foresees that to be, now and in the future. I can understand that right now he says, "This is what it is, this is what I support, this is what it should be, and it's sustainable." Now, does he foresee that for the future also, Mr. Chair?

Hon. Mr. McDonald: Well, Mr. Chair, I asked the member's opinion on various individual expenditures, and he allowed that he had no disagreement with anything in particular, but that he was still going to vote against the budget. So, we have determined that this afternoon.

You know, I'm starting to understand a little more about where the member is coming from. We started off the afternoon with the member making what was clearly an argument for tax increases, in order to increase our-

Some Hon. Member: (Inaudible)

Hon. Mr. McDonald: No, he made the argument that we wanted to become less dependent on Ottawa, supported the tax increases before 1993, and made a justification for tax increases. He reversed himself over the course of the afternoon, because he realized that that particular line of questioning and attack was going nowhere. He said he wanted us, at the same time, to reverse the Yukon Party track record as quickly as we possibly could.

Now, I'm starting to understand a little more about where the member is coming from here. The member has said that we have lost workforce in the territory. We certainly did, with the closure of the Faro mine. That did see a loss and a drop in population, a loss in our GDP.

It's almost as low as it was when the Yukon Party lost the Faro mine, and the drop in the GDP was, in fact, the lowest in the last 20 years.

But the member is actually saying, making this his case, as I understand it, and the member can correct me if I'm wrong. He's saying that we have lost jobs, the government is growing - or at least is being sustained at the same rate, so that we have, in his view, more government per capita than we had before. Clearly he dislikes the notion, and so perhaps now we understand that he's advocating layoffs of government personnel. He is not, at this point - unless he's disagreeing with the transfers to individuals to industry associations and others, which do not have any effect on FTEs - he is now focusing on FTEs as being the concern, and the number of FTEs in government, based on what he says is a decline in the general population's workforce, so he's advocating that the government reduce its workforce - lay off people.

Now, Mr. Chair, the Yukon Party has tried a lot of things in its time, but layoffs is new. Layoffs is new. They've tried public service wage reductions, and now it's layoffs. Now it's reducing the workforce, or certainly there are not a lot of PYs associated with this particular O&M, so I am presuming that he's saying that, because the workforce's general population has decreased a bit, there should be a decrease in the public service.

That seems to be the track that the member is on.

So, we have the spectacle this afternoon of listening to this member advocate for tax increases, tax decreases and layoffs. He has said this afternoon that he doesn't disagree with any particular expenditure, but is going to vote against the budget.

One can only wonder what the point of this afternoon has been. If it was only, Mr. Chair, to suss out the Yukon Party position on tax increases once again, which is consistent with what they believed in 1993-94 and consistent with what they believe with respect to the public service generally, then I think we may have made some progress. But apart from that, very little else was achieved.

I move that you report progress, Mr. Chair.

Mr. Fentie: Mr. Chair, I move that the Speaker do now resume 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 directed me to report progress on it.

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

Some Hon. Members: Agreed.

Speaker: I declare the report carried.

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

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

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