††††††† Whitehorse, Yukon
††††††† Monday, December 13, 2004 ó 1:00 p.m.
Speaker: I will now call the House to order. We will proceed at this time with prayers.
Speaker: † We will proceed at this time with the Order Paper.
In remembrance of Jim Slater
†Ms. Duncan: Mr. Speaker, I rise on behalf of all members of all parties in the Legislature to recognize the late Jim Slater.
How do you begin to share the difference that Jim Slater made to so many lives? Mr. Speaker, a few years ago, I was told that it is a cultural belief for some that when the wind is blowing with such force, the elders believe that a very special spirit is leaving us. The wind blew so hard this fall when Jim passed on, and I suspect with the strong gust yesterday that Jim knew we would be saying so long in this place today.
Jim was the beloved partner of Ruth Whitney, father and grandfather in a number of lives. Members of his family have joined us in the gallery today.
His career path included everything. He didnít stick with jobs he didnít find challenging or worthwhile, and he found some joy in everything he did.
The Liberal Party is especially thankful that Jim found such joy in politics. In government he was not only the perfect executive assistant to former Minister Pam Buckway, he was also the source of fair, frank advice and support to everyone. Many of his former colleagues ó our former colleagues ó have joined us in the gallery as well today.
Jim was so honest with us, Iím not sure we always remembered to say thank you. We may have forgotten our thanks on occasion in surprise at his very straightforward comments; we will not forget his nuggets of wisdom, such as ďIf youíre not having fun doing what youíre doing, youíre not doing it rightĒ.
Jim went on from our office to be the executive director of the Association of Yukon Communities where he had fun and, throughout the Yukon, mayors and councillors will tell you that he did it right. Members of the executive of Association of Yukon Communities have also joined us in the gallery. Jimís contribution at the Association of Yukon Communities and throughout his life was the contribution of a great, wise spirit. He is sorely missed by Ruth, his family, friends, colleagues and fiercely within the Liberal Party. To all who knew him and shared his life, please accept on behalf of all members our sincere sympathy.
Mr. Speaker, it was an honour to tribute Jim Slater today. Thank you.
In recognition of students participating in Yukon/Stikine Regional Science Fair
Hon. Mr. Edzerza: I rise today in the House to pay tribute to the many young people who recently took part in the Yukon/Stikine Regional Science Fair. These students, supported by their classmates, teachers and parents, worked very hard to create an innovative science display on the many wonders of our world. On behalf of the Government of Yukon, I would like to congratulate all the students who participated in the Yukon/Stikine Regional Science Fair this year.
Itís important for us to always ask ďwhyĒ and to feed our curiosity about the environment around us. Scientists have invented many great things that have helped many people all over the world. Thatís because, like these students, their hard work and research revealed knowledge that changed how we see things.
This year at the Yukon/Stikine Regional Science Fair, Yukon students studied bacteria, the effect of age on reflexes, colour blindness, noise and its effect on blood pressure, and how music affects the brain, among other things.
†After an evaluation by over 40 professional scientists, several projects from an already excellent collection of projects, distinguished themselves. In many cases, the choices were extremely difficult.
While there are too many winners to list everyone today, I can tell you that students from Selkirk, Holy Family, Christ the King, …cole …milie Tremblay, Hidden Valley and Vanier were among the winners. The Commissioner of the Yukon Award for Best of Fair went to Talia Woodland from Selkirk for her project, ďAre Bacteria Everywhere?Ē. Malkolm Boothroyd, for his project, ďFactors Affecting Mycelia GrowthĒ, and Craig Flaherty for his project, ďDoes Gender Affect Eyewitness Report Accuracy?Ē, were awarded the top prize in grades 7 and 8 respectively. These two students will be representing Yukon at the Canada-wide science fair in Vancouver next May.
Congratulations to all of the Yukon/Stikine Regional Science Fair participants. Science is an important part of our lives, and I commend these students for their thorough investigation and articulate reporting at the 2004 Yukon/Stikine Regional Science Fair.
Speaker: Are there any further tributes?
Introduction of visitors.
INTRODUCTION OF VISITORS
†Mr. Rouble: Mr. Speaker, I would like the House to join me in welcoming Ms. Ethel Tizya, the chair of the Tagish Local Advisory Council, to our Assembly today.
Speaker: Are there any further introductions of visitors?
Are there returns or documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Mr. Lang: Mr. Speaker, I have for tabling the Yukon Development Corporation and Energy Solutions Centre annual report for 2003.
Mr. Hardy: Mr. Speaker, I have for tabling two pages from the latest edition of Frank magazine, the cover of which references this Yukon Premier and the article that is within it.
Speaker: Are there any further 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?
NOTICES OF MOTION
†Ms. Duncan: I give notice of the following motion:
THAT this House urges the Government of Yukon to examine legislation that requires the taking of blood samples to protect victims of crime, emergency service workers, good Samaritans and other persons.
Mr. Hardy: I give notice of the following motion:
THAT this House urges the Government of Yukon to observe both the letter and the spirit of the Access to Information and Protection of Privacy Act in a manner that meets the standard advocated by the Information and Privacy Commissioner that ďthe default position of government should be disclosure, not secrecyĒ.
Speaker: Is there a statement by a minister?
This then brings us to Question Period.
Question re:† ATIPP Act review
†Mr. Hardy: Now the Minister of Highways and Public Works has said that a review of the Access to Information and Protection of Privacy Act is underway. Will the acting minister tell us why confidentiality of requests for information and the undue costs of fulfilling requests arenít among the 23 issues being considered?
Hon. Mr. Lang: I think the issue here is the volume that we are getting in ATIPP requests. We as a government are committed to putting all the ATIPP information out there, and we have resourced the department to do just that.
So, as far as information ó we are committed to getting the information out in a timely fashion, understanding the volume that is coming in.
Mr. Hardy: I would like to remind the minister opposite that the reason there for the volume is because of the wall of secrecy that this government has built around itself. The opposition parties are fed up with the evasive answers and the stonewalling that we get on a daily basis in this House. The media are fed up with Cabinet staffers telling them that they canít speak to ministers and with the Premierís temper tantrums when he doesnít like a given line of questioning.
Now it seems that the Privacy Commissioner is fed up with what he suggests is a government default position of secrecy. Does the Premier agree with the Privacy Commissionerís assessment, and what does he plan to do about it?
Speaker: Before the hon. Premier answers, the Chair is not entirely comfortable with the characterization of ďtemper tantrums.Ē I would ask the leader of the official opposition just to rephrase that in the future.
Hon. Premier, you have the floor.
Hon. Mr. Fentie: I think itís good that the Ombudsman has come forward with issues that obviously relate to access to information. I donít think this is a new thing. This has been an ongoing issue now for some time.
What the government has done to date, though, is increase resources, training, and even in some cases, staffing, to try to deal with the access to information issue. But weíve gone further than that. Not only do we provide information to the public as filtered through this Legislature and/or the media, we have taken steps like pre-announcing items in budgets, extensive community tours, and indeed, more information unfiltered through this House that is being disseminated in the public.
Our job as a government is to inform the public. An informed public is a very, very important element in building a better and brighter future for the Yukon. Thatís what the government is doing, and thatís what the government will continue to do.
Mr. Hardy: Nice try, Premier; it doesnít cut it though. Isnít it interesting how far this government wandered from its campaign promises of only two years ago? Back then Yukoners were told they could expect a Yukon Party government to be open and accountable. Back then we were told that there would be consensus building, consultation, collaboration and compromise; that would be part of it. The only compromise weíve seen is the way this government has compromised its commitment to Yukoners. This governmentís refusal to be open and accountable is nothing short of an abuse of power. Will the Premier now direct his ministers and senior officials to follow the Privacy Commissionerís advice that the default position of government should be disclosure, not secrecy? And will he and his ministers set an example by ending a culture of secrecy on that side of the House?
Hon. Mr. Fentie: First, letís talk about what isnít secret. It is certainly no secret that the government has invested more in education, invested more in our social fabric, invested more in health care. It certainly is no secret that the government has turned around the financial position of this territory dramatically with millions and millions of dollars in new investment into the Yukon. It certainly is no secret that we have one of the lowest unemployment rates in the country and indeed the lowest unemployment rate the Yukon has experienced.
It is certainly no secret that our First Nations are being involved more in the governance of this territory and the building of its future. Itís no secret that the mining industry and its investment is increasing. Tourism is increasing and across the board our small business community is starting to thrive because of the stimulus and the increased cash flow. None of these things are a secret; thatís what the government is dealing with. We are not worried about what the Ombudsman needs to fix administratively with ATIPP; we will work on that and fix it. Thatís what a government does; thatís what this government will continue to do.
Question re: Economic Development minister, trip to China
Mr. Hardy: Itís a shame that the rules of this House donít allow me to rebut that rhetoric. On Thursday during Committee debate on the supplementary budget, the Minister of Economic Development gave an intriguing answer to the leader of the third party about his recent trip to China. The ministerís words are in the Blues on page 3596. What he said was this: ďÖ many of the expenses in China were picked up by Orient Mining.Ē What expenses did this private company pick up for this minister or other Yukon government representatives?
Hon. Mr. Kenyon: The minor delay in filing the report on my personal expenses was because one invoice was in Chinese Yuan, so we had to wait until the VISA bill arrived. On that, it clearly indicates that virtually all the meals were picked up by the Chinese government and a good deal of the transportation internally.
Mr. Hardy: This isnít the first time this minister has blurted out statements that suggest things arenít always as they should be with this government. Perhaps the minister misspoke himself the other day, but it would be helpful if he would provide all the documents of all Yukon government expenses on this trip, as well as any other trip he has been on.
This government has logged an extraordinary amount of travel in recent months to promote the Yukonís resource industries. Yukon people want to know what theyíre getting from all that travel. They also have a right to know who else might be in line for some kind of benefit.
If a private company is underwriting ministerial or government expenses, we do have a problem, and it has been brought up in this Legislature in the past.
Did the minister consult the Conflicts Commissioner about a private company paying what the minister called ďmany of the expenses on this tripĒ and what he has just identified?
Hon. Mr. Kenyon: I understand the documents the member opposite is requesting are being prepared as we speak. As I mentioned the last time, if somebody pays for something, he sees this as a problem; if they donít pay for it, he sees this as a problem. Weíre interested in economic development. That is the primary issue here.
Mr. Hardy: Iím not sure exactly what the minister said. I canít figure out if thatís an answer or not. We need to get this very clear. Perhaps the Premier can help ó letís shift it over to the Premier. Ultimately, everything falls in his lap anyway.
This is the government that has gone to extraordinary lengths to avoid answering questions about this ministerís role in arranging funding for a seat at the vet school in Saskatoon. This is the government that apparently thinks itís okay for a minister to make inquiries for a friend about a business property that could benefit from a government investment in railway infrastructure. We have serious concerns about what standards and policies this government follows and what kind of leadership the Premier is demonstrating in this regard.
What is the current policy regarding private companies or individuals paying expenses when Cabinet ministers or officials are travelling on government business, and what is the Premier doing to make sure his ministers follow that policy?
Hon. Mr. Fentie: I can say categorically that this government is very diligent and vigilant when it comes to due process and the following of due process. The members opposite have made many claims, but those claims are void of the burden of proof. The government side has suggested on many occasions, ďWhy bother this institution with this type of debate when the easiest route is to make the accusation outside of this House and allow due process to unfold.Ē Thatís what the government has responded to in this matter.
I think itís clear that the opposition benches have a problem, and that is finding an area where they can effectively criticize the government side, considering the effort and the work being put forward by the government side of this House. The accomplishments are there. The evidence is clear. Need we go through the list again? I think this is an indication of an opposition grasping to find some area where they can criticize the government ó they have chosen this route. Itís unfortunate because it has no constructive element to the Yukonís future, none whatsoever. The government side will remain focused on building a better and brighter future for the Yukon, with or without the opposition.
Question re: Economic Development minister, trip to China
†Ms. Duncan: I have some questions for the Minister of Economic Development. Last Thursday, as the leader of the official opposition has noted, in response to a question from me, the minister talked about his recent trip to China. He said, and this is the direct quote: ďBut weíre very pleased in terms of the product from that, and many of the expenses in China were picked up by Orient Mining.Ē So we have a private company helping to cover the ministerís travel bills.
When ministers travel on behalf of Yukoners, they usually pay their own way and they do that to avoid the potential for conflict of interest. This company may end up doing business in the Yukon. They may end up getting funding from the government. They may end up getting a water licence signed by the government. It doesnít look good if this same company is helping to pay the ministerís travel costs. Iím sure the minister can see the connection.
Will the minister tell Yukoners exactly what expenses were picked up by Orient Mining? How much money and what did they pay for?
Hon. Mr. Kenyon: Mr. Speaker, again, the member opposite has asked for that information. It is being prepared. To my knowledge, the travel expenses were picked up by the Yukon, but according to Chinese tradition and the way of doing business, many of the meals are picked up by the host, with a thank you dinner at the end of the trip. This was followed. To my knowledge, travel was picked up by this government, but those numbers are coming and will be presented, and I suggest the member opposite debate them in reality rather than in speculation.
Ms. Duncan: Mr. Speaker, as I have already stated, itís very unusual for a private company to pay for any of a ministerís travel bills. In fact, a previous Yukon Conflict of Interest Commissioner recommended specifically against this type of arrangement for very obvious reasons. It creates the perception that the company will receive special treatment after doing the minister a favour. My question for the minister is very specific: did he seek advice from the Conflict of Interest Commissioner before he allowed a private company to pay for his travel bills?
Hon. Mr. Kenyon: Once again, Mr. Speaker, the travel bills, as far as I know, werenít paid by the company. But again, letís deal with reality and not with speculation. We tried to approach this in a way to produce product, to produce economic development ó not like the previous trip to China done by the previous government that produced virtually nothing.
Ms. Duncan: Mr. Speaker, we are, in reality, debating the ministerís own comments. He said on the floor of this House that Orient Mining paid for some of his expenses. This recent trip to China was to promote a single mining company ó Orient Mining. A number of years ago, a former Minister of Economic Development was considering taking a trip to Europe to promote a single mining company. He was severely criticized by the Yukon Party at the time for playing favourites, and he didnít make the trip. The Yukon Party seems to have changed its tune. Now the Yukon Party and this minister are out travelling to promote only one company. Once again, it looks like the minister is playing favourites. Why did the Minister of Economic Development not check this information with the Conflicts Commissioner? Why is he allowing a private mining company to pick up some of his travel costs? Why is he not promoting the industry as a whole, as his own party has recommended on the floor of this House to previous ministers in his position?
Hon. Mr. Kenyon: The trip certainly involved many other companies. But, again, I would urge the member opposite to wait for the documents, wait for the facts and debate reality.
To look at the way of doing business ó again, the previous governmentís trip to China produced virtually nothing. I am quite confident that this will produce much, much more.
Question re: Government accountability
†Mr. Hardy: I have a question for the Minister of Economic Development. On Friday, a Yukon-made film opened in over 500 theatres in Europe, which is certainly good exposure for the territory as a tourism destination. This week, the Yukon is also getting national media attention across Canada, thanks to a magazine article I just tabled a few moments ago. This magazine is read coast to coast to coast.
Can the minister estimate the dollar value of the cover story in the current issue of Frank magazine to the Yukonís economy?
Hon. Mr. Kenyon: My understanding of the rules of this House prohibits me from speculating wildly on something that no one has any knowledge about. Frankly, Iíve never seen Frank Magazine, but I am very encouraged to hear that the member opposite is a fan of it.
Mr. Hardy: Well, Mr. Speaker, this is a government that speculates on their impact on the economy daily. We hear the Premier constantly talking about how huge a turnaround there is just because of the fact that they are over there, which we all know is complete nonsense.
This government likes to brag about how much the Yukon benefits from national and international media attention. Strangely enough, we arenít hearing much bragging about this cover called, ďYukon Premierís ó
Speaker: Order please. I am going to remind the member that a member cannot do indirectly what they canít do directly. If a member wishes to cite or quote from a document that contains unparliamentary language or does not adhere to proper form, the member must paraphrase any offending portion so that they conform to the rules and forms of this Legislative Assembly.
Mr. Hardy: Thank you, Mr. Speaker. I was not going to say those words. I was going to stop. Iíll read, ďYukon Premierís Ugly DrugsÖĒ, and leave it at that. I guess itís a one-way street. If the coverage is positive, the government likes to take credit, of course, but when the Premier does something to give the territory a black eye, nobody wants to take responsibility over there.
The Premier has said he will never apologize for defending his community, but Iíd like to ask him this question: is the Premier prepared to apologize for giving Canadians the impression that rude, abusive behaviour is acceptable at the highest level of Yukon public life?
Hon. Mr. Fentie: I will reiterate that Iíll never apologize for defending my community ó as any MLA in this House should do. Furthermore, of course this government does not condone that type of behaviour and in this case weíre not dealing with anything of the sort. I know the members opposite are winding down toward the end of this sitting, but if their view of the Yukon is based on a magazine such as Frank magazine, it only speaks further to the problems the members opposite have ó they donít have a vision for the Yukon; they donít understand the territory. And one thing is for sure: this government will inject not only effort, its work ethic but also some passion into building a better and brighter future for Yukon Territory and all its citizens.
Question re: Alaska Highway pipeline
†Mr. McRobb: I want to follow up with the Minister of Energy, Mines and Resources about preparing our territory for the Alaska Highway pipeline. The upside impacts from what will be the worldís largest ever privately issued contract are well known. The previous government tabled a study to that effect. Not so well known are the downside impacts.
What is known is that at the end of the day the Yukon we know will be changed. So far this minister has refused to do anything other than what the Yukon government is already doing. Weíre not clear about what that is. We need to establish a benchmark for accountability on exactly who has the responsibility to protect us from the downside impacts.
For the record, will he tell us precisely who within the Yukon government is doing what?
Hon. Mr. Lang: In answering the question from the member opposite, this side of the House is very conscious of our responsibility, even the challenges that come along with the potential pipeline. Thatís why weíve invested in the Aboriginal Pipeline Coalition; thatís why weíre working with our neighbours, Alaska and British Columbia; thatís why weíre working on a daily and weekly basis with our counterparts in Ottawa and Washington, D.C. Weíre moving along with the decision.
As far as the challenges that are going to be set in front of us, we are certainly going to meet them as they arrive. The challenges will come with the project ó understanding that a lot of the challenges that the member opposite is talking about are here in our communities today. Those challenges are challenges that we meet as a government.
Mr. McRobb: Last week the minister rejected our suggestion to ask the Yukon Council on the Economy and the Environment to consult Yukoners and produce a report with recommendations to government on how to best prepare while thereís still time. The minister doesnít feel thereís a need to treat this matter with any kind of priority, but time is of the essence. To do it right, about two years is needed to consult Yukoners and produce a recommendations report. We need more time to act on those recommendations. Meanwhile, letís not forget that our attention will be divided with the 2007 Canada Winter Games.
Will the minister provide us with a schedule that sets out what will be done, when and by whom?
Hon. Mr. Lang: Iíd like to remind the member opposite that weíve been studying this pipeline since 1977. This pipeline is not something that was sprung on the Yukon overnight; this process has been going on since 1977, 1978. A lot of the challenges that were addressed then we have today. We are addressing those challenges. Those challenges are something a government addresses on a daily basis, but as far as a knee-jerk reaction to the problems that are going to arise, we first of all have to get a definite answer on whether thereís going to be a pipeline. At that point we have to move forward with that decision.
Mr. McRobb: Well, the only thing thatís a knee-jerk reaction is this governmentís decision to rely on reports that are three decades old. A lot of those Yukoners arenít even here any more.
Now at some stage this project is expected to go through an environmental screening process and there may be hearings to that effect. The Yukon government isnít living up to its responsibility to inform Yukoners about what opportunities will be available for them to express their concerns and recommendations with respect to the impacts of this project. The minister should be advising the public that the regulatory process will be limited in scope and not have jurisdiction to require action from the Yukon government.
Will the minister confirm his government has not planned any opportunities for gathering public input to allow government action to minimize the social fallout from this mega-project?
Hon. Mr. Lang: Mr. Speaker, again, I remind the member opposite that those are all challenges we will meet. We certainly understand the issue about regulatory overview, environmental overview, green route, NPA, all those other issues that are out there that the government in Ottawa and also the producers are going to have to make some decisions on. So weíre keeping abreast of those decisions. Weíre going to meet the challenges as they are brought forward and certainly minimize the impact that any pipeline will have in our jurisdiction and maximize the benefits. Thatís why we were elected; thatís what weíre committed to do.
Thank you, Mr. Speaker.
Question re: Fish Lake Road, land applications
Mr. Arntzen: Mr. Speaker, I have a question for the Minister of Energy, Mines and Resources in regard to the land applications in the Fish Lake area. As this area is part of my riding, the Copperbelt riding, itís a special interest and concern for my constituents and me. Can the minister give me an update on what has taken place, for example, in regard to supplying power and other services to this new area?
Hon. Mr. Lang: Mr. Speaker, bringing you up to date on the Fish Lake land situation, it is having an overview with LARC, the Land Application Review Committee, at the moment. Because of the number, they are putting it through a subdivision request, so there has to be an environmental overview. All those things are moving forward, and hopefully we will go through the process and come to a solution somewhere in the near future.
Mr. Arntzen: Mr. Speaker, my next question is in regard to an upgrade of the Fish Lake Road. We all know that that road is going to need an upgrade if we are getting more people moving into the area. Is there any thought or any plans in that regard?
Hon. Mr. Lang: Certainly a lot of those questions will have to be answered in the process. If in fact that subdivision goes ahead in that area, that will be one of the questions ó power, communications, telephone per se, and also roads ó so all of those issues will have to be addressed as we go down the application route.
Mr. Arntzen: Perhaps this is a good time to ask the minister to move ahead on the upgrade on the road, since heís the acting Minister of Highways and Public Works.
Hon. Mr. Lang: Again, I repeat what I said in the last question. That certainly would be an issue that would have to be addressed, and with me filling in for the Minister of Highways and Public Works, we hopefully would act positively if the request were made and the demand there.
Question re: Mount Lorne, land applications
†Mr. Cardiff: Same minister, similar question, but different area. Last May I had questions for this minister in Committee about land use planning and zoning regulations in the Hamlet of Mount Lorne. In that discussion the minister said, ďWe have a commitment as a government to make the process streamlined.Ē He also stated that there are checks and balances in place and a process that involves the public. Does the minister still stand by those statements?
Hon. Mr. Lang: I would recommend that the member opposite address that to the minister when he comes back to the House.
Mr. Cardiff: Well, it was for the Minister of Energy, Mines and Resources and he is responsible for land dispositions. The minister also said this: ďWe certainly take into consideration any decision made by a planning group; we take that advice very seriously.Ē And he also said that the department has an obligation to work with them in a positive fashion. Furthermore, the Minister of Community Services wrote me a letter, stating that the Hamlet of Mount Lorne and Carcross Road area plan is being used to guide land use and planning decisions in the area. Why is this minister allowing spot land applications in areas of Mount Lorne that the planning group zoned as protected open space?
Hon. Mr. Lang: I didnít hear the member opposite on that first question, so I must apologize. We certainly take any of our planning groups seriously. As a department, we try to work with them to resolve some of the issues that these areas have. Who better to work with than people who live in the area?
In response to his first question: yes, we will work with them but, at the end of the day, we are the government and some decisions have to be made. We certainly believe in working with local people to solve local problems.
Mr. Cardiff: At the end of the day, they are ignoring the advice. Staking has taken place recently in an area that is zoned as protected open space. People are being misled by the branch to believe that the maps, which are nearly 10 years old, are still current ó zoning decisions that took close to a decade to develop and were done with the full participation of the government as well as the people who live in the area.
Itís a strange example of the checks and balances that the minister has boasted about in this House. So, my question is: why is the government not respecting the draft land use regulations of April 2001, and when can the public expect to have a true picture of the area that reflects the land use planning efforts that have been completed and are now currently awaiting final approval by the government?
Hon. Mr. Lang: We certainly work with the planning groups. At the end of the day, we work with them to solve local problems. We have a process in place for how a land application works. Through that process, there is participation by the general public.
In answer: we have checks and balances, we have a process, and the process will unfold. I think that as we move ahead with the land use plan that has been put together, we certainly will be working with that.
Question re: Government taking credit
†Mr. Hardy: The Premier likes to give a lot of credit to the Yukon Party government for other peopleís work. We are hearing this a lot now. The Canada Winter Games, for example, is generating hundreds and hundreds of jobs already. That came about from work of many, many people years ago, yet the Premier seemed to take credit to the economic upturn around that.
†How about the big box stores that have come into this territory? They came in years ago by the initiative of other governments. This Premier likes to lay credit to that.
Will the Premier now come clean and credit the people of this territory who have done the work previous to make the unemployment rates better than they have been in the past? Will he do that now instead of taking credit for other peopleís work?
Hon. Mr. Fentie: On numerous occasions, the government side has complimented and extended on behalf of the territory our deepest appreciation for all Yukoners who are contributing to this territoryís future. Weíve even in this House, and itís evidenced in Hansard, credited the opposition benches for good initiatives. Furthermore, thatís a sign of what this government is all about. We recognize that building the territoryís future requires more than government.
Weíre not saying that the Yukon Party government of today is solely responsible for the turnaround of this territory ó never have. We are saying that we are doing our part along with others. When it comes to the Canada Winter Games, let us remember that initiative started under a former Yukon Party government. Fast forward to today, and itís another Yukon Party government that had to come up with the investment for the shortfall on the multiplex, for example, and now, dealing with other areas of challenge for the Canada Winter Games, our commitment is to make the Canada Winter Games a resounding success for Yukon and Canada.
Mr. Hardy: Once again, the Premier is wrong. Once again, the Premier tries to take credit for work that was done by Yukon people; 13 people worked extremely hard to make the Canada Winter Games come here. It was not a Yukon Party government from the past; it was an NDP government that put up the initial cash to make that a reality as well. I donít hear any mention from the Premier to recognize that as well.
Also, letís talk about oil and gas; letís talk about mining as well. What is the single biggest factor that turns around that kind of activity? Itís mineral prices. Itís oil and gas prices. Do we ever hear the Premier mention that? Of course not. What do they try to do? They try to take credit for that, once again.
Does the Premier recognize that the single biggest factor in increases in mining and oil and gas is the mineral prices? Or is he going to continue to play the old game of taking credit for an economic upturn that had nothing to do with this Yukon Party government?
Hon. Mr. Fentie: My, my, it must be difficult in the official opposition benches looking at whatís going on in todayís Yukon and recognizing that theyíre missing the boat.
Let us first look at the fact that the one thing, the one fundamental element, for any growth in any economy is investor confidence. Thatís key. Regardless of all the other elements, if investor confidence is missing, prices of metals and prices of oil and gas mean little. Investor confidence is key. Those are the efforts we are putting toward building this territoryís economy, not just by government, but by working with other Yukoners, by working with our governments, other jurisdictions and in partnership with First Nations. We are creating an environment of investor confidence.
The members opposite can stand on the floor of this House day in and day out and try to point the finger at this side for not doing something. I would submit that the evidence out there and the realities out there are quite different. This government is going to continue its efforts to build a strong, vibrant economy for the territory with or without the opposition. We will do it with Yukoners and others.
Mr. Hardy: This Premier is on record already today as saying the reason thereís an economic turnaround is because of the Yukon Party. Then he contradicts himself a few questions later. Now we all know itís commodity prices that instil investor confidence. He didnít lay that out, did he?
Now we also have to remember that this is a Premier who is on record as saying that real jobs are created by the private sector. And weíre heard other MLAs say that as well. What a shame. What message are they giving about the public sector workers? What a put-down. Are you telling me that those are not real jobs ó the people who work in the public sector ó because thatís what that Yukon Party has said time and time again? To be frank, it is completely ó I wonít say the word, Mr. Speaker.
Now the Premier is also on record as saying that the territorial government has to get off its dependency on Ottawa, and he has said that time and time again.
Yes, Mr. Speaker, Iíll hurry up.
But we are more dependent on Ottawa than we have ever been in our life under this leadership ó
Speaker: I asked if the member would ask the question, not to hurry up.
Mr. Hardy: Oh, sorry.
Speaker: Ask the question, please.
Mr. Hardy: Will the Premier recognize the work of previous Yukoners as well as Yukoners today who are contributing to this economy and not credit everything to the Yukon Party?
Hon. Mr. Fentie: Mr. Speaker, I would respond to the member opposite by saying, ďRead Hansard.Ē And on the many occasions that the government side, including me as Premier, has acknowledged and extended our deepest appreciation to Yukoners for their contribution through tributes, through debate, through all kinds of ways, the government side is recognizing Yukoners.
When it comes to our employees, whatís with the contract we negotiated with our employees? The member opposite doesnít recognize that? Letís cut to the chase, Mr. Speaker, and letís look at what would happen under the leadership of an NDP government and where this territory would be: double-digit unemployment, no investment happening from the private sector, conflict between other jurisdictions and the Yukon† ó and that holds true for the third party. There is a difference here, Mr. Speaker, and the difference is how the government is approaching taking this territory in a new direction ó and we do it with all Yukoners.
The Member for Kluane, who is making some kibitzing noises over there, should recognize also that the Member for Kluaneís contribution to date in building the Yukon economy is zero. In fact, it was at a cost for more diesel for generating electricity.
Speaker: The time for Question Period has mercifully elapsed, and we will proceed to Orders of the Day.
ORDERS OF THE DAY
†Hon. Mr. Jenkins: Mr. Speaker, 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.
Motion agreed to
Speaker leaves the Chair
COMMITTEE OF THE WHOLE
†Chair: Order please. Committee of the Whole will now come to order.
Motion re appearance of witnesses
Hon. Mr. Jenkins: Mr. Chair, I move
THAT David Morrison, president and chief executive officer of the Yukon Energy Corporation, appear as a witness in Committee of the Whole from 4:00 p.m. to 6:00 p.m. on Monday, December 13, 2004, to discuss matters relating to the Yukon Energy Corporation.
Chair: It has been moved by Mr. Jenkins
THAT David Morrison, president and chief executive officer of Yukon Energy Corporation, appear as a witness in Committee of the Whole from 4:00 p.m. to 6:00 p.m. on Monday, December 13, 2004, to discuss matters relating to the Yukon Energy Corporation.
††††††† Motion agreed to
††††††† Chair: The matter before the Committee is Bill No. 12, Second Appropriation Act, 2004-05. I understand that the Department of Finance is up next. Before we begin, do members wish a recess?
††††††† Some Hon. Members: Agreed.
††††††† Chair: We will take a 15-minute recess.
Chair: Order please. Committee of the Whole will now come to order. The matter before the Committee is Bill No. 12, Second Appropriation Act, 2004-05, with Vote 12, Department of Finance, and general debate.
Bill No. 12 ó Second Appropriation Act, 2004-05 ó continued
Department of Finance
Hon. Mr. Fentie: The government is very pleased that it has been able to bring forward a supplemental as we have in this fall sitting, but I think itís important that we go over a number of the areas the Department of Finance and its officials have been working on. I think we have to begin with what transpired back in the mid-1990s, and what took place there was a dramatic cut to the base of the transfer from Ottawa to the Yukon.
Considering the fact that that cut was deep and that we did not in the Yukon reduce in any significant way programs or service delivery to Yukoners, we developed over the last decade what is known as ďthe adequacy gapĒ. In short, the adequacy gap is revenues that are being brought into the territory by whatever means versus expenditures and program and service delivery. It is also part and parcel on fairness, the issue of fairness, with distributing the wealth of this country in a fair and equitable manner among the provinces and territories. Therein lies the focus and the effort that the department officials of Finance took on over the last couple of years.
Let us begin with what has transpired. When it comes to the territorial funding formula grant and we consider the efforts put forward to date and extrapolate that over the next few years to the fiscal year of 2007-08, we will clearly see that there is an increase over the published framework to a total of $173 million. This is what can be deemed as monies invested by the federal government in closing the adequacy gap. That is certainly an initiative that the government took on the first day of its mandate.
On the health transfers, in relation to what normally would be coming to the Yukon vis-ŗ-vis the CHT basket or CHST basket, if we extend that forward into subsequent years to 2007-08, we will see an increase of $11,691,000 just in the CHST basket. Thatís important because the negotiations that took place at first ministers meetings were, again, all about increasing the federal contribution in the cost of health care in the country ó in both provinces and territories.
It is also important to note that the territories recognize that the per capita transfer through the CHST basket was not sufficient to ensure that Yukoners and northerners in the three territories were receiving the same standard level of health care that all other Canadians enjoy.
So we negotiated whatís called the northern health fund. Now the Northern Health Accord or fund was a $60-million fund that was negotiated between the three territories and the federal government. The resulting share to the Yukon over three years was $20 million more ó a balance to be paid out by the fiscal year 2006, with a total of $20-million expenditure. That money was earmarked to try to address some of the shortfalls in our health care system.
I am sure that the Minister of Health and Social Services has expanded on some of the detail on where that money was invested. Subsequent to that, Mr. Chair, the three territories and the federal government have negotiated a new territorial health access fund that has a term of five years and the share for the Yukon government over the total five years is $29 million. Keeping consistent with the numbers that I have been relating to this House, if we take that through the period of 2007-08, the increase in health care investment for the Yukon is a total of $17,649,000. Further to that, we have the contribution of strategic infrastructure funds and municipal infrastructure funds, which are Canada-wide. On the municipal rural infrastructure fund itself ó through to 2007-08 ó we will realize a total of $18,750,000 with an additional $4 million for 2008-09.
A total in the municipal rural infrastructure fund of $22.7 million for the Yukon, coupled with the Canadian strategic infrastructure fund that, over the period ending 2007-08, totals $16,300,000 in additional funds. We also, through to the period of 2008-09, will realize an additional $4.2 million totalling $20,500,000 for the infrastructure fund.
Itís important to note that we have also been successful through the work of the Department of Economic Development and the Department of Finance in establishing the northern economic development fund of some $90 million. The Yukonís share in total ó and this is an estimate ó will be in the neighbourhood of $26 million to $30 million in investment in the Yukon for economic development initiatives.
Weíve also recently negotiated through the federal governmentís initiative, as laid out in the throne speech, of a northern vision or strategy thatís called the northern vision strategy trust fund, which is an additional $40 million that will be paid out in requests specific to projects here in the Yukon that relate to the vision and the strategy exercise that we have embarked on with the federal government.
What this all means, by the period ending 2007-08, is a grand total amount of $317 million. That has gone a long way to close the adequacy gap that we found ourselves in upon taking office in November 2002.
What has that done though? Well, it has allowed the government to proceed with many more options than it could have without this increased investment and the work and the effort that was put forward in this regard by many people. It has allowed us to increase our investment in education, for example. For the first time in years, thereís an increase to the Yukon College base grant of $1 million and a substantial increase in training money. We are building a new school in the community of Carmacks, and we have invested in a needs assessment of a million dollars for our schools across the territory. Weíre also investing in curriculum changes. The Minister of Education can certainly expand on this, but thereís another half a million dollars going toward our curriculum. Weíre investing more in our First Nation languages. So on the education front, this increase in terms of investment for the Yukon, in closing the adequacy gap, has provided us the ability to enhance our investment on the education front.
It has also allowed us to increase our investment in the social basket, and I know the Minister of Health and Social Services expanded in great detail on where that money is going, and itís going out to help those in need. Whether it be in daycare or in social assistance, whether it be in FASD investment, investment in the prevention of substance abuse or across the social fabric, the increased investment is there because of the closure of the adequacy gap in terms of resources available to the Yukon government.†
What else has it allowed us to do? One of the main planks of the overall plan for this territory and dealing with its economic woes was to initially increase the stimulus in the Yukon ó in short, to increase the investment or cash flow in the territory in many sectors. With this room, by closure of the adequacy gap, in terms of increasing our resources, that has happened. We are bringing forward in this fiscal year the largest budget in the history of the Yukon Territory. There is some significance to this because that budget of some $705 million has helped to increase the stimulus in the Yukon Territory ó no question about it.
No, the government side is not solely responsible for what is happening in todayís Yukon, in its cash flow and its economic growth, but there is a contribution here that complemented other things, and vice versa. The private sector and others ó even other jurisdictions ó are complementing today what the Yukon is doing in government investment, in creating further stimulus in the Yukon economy. Some of the statistics are clear on what has resulted.†
I think itís important that we recognize, just for the membersí benefit across the floor, that this is not an exercise in taking credit ó this is a presentation of factual information.
The Yukon today has one of the lowest unemployment rates in the country. That is a fact. It is also important to note that in complementing the stimulus that is going on, the private sector has been getting very active. We have a threefold increase in mining exploration. We have a 26-percent increase in real estate transactions. I think itís important that we recognize these are some of the indicators that relate to trends in the territory that are positive.
Also, Mr. Chair, the investment in the community development fund has resulted in some 150,000-plus person hours of work and employment for Yukoners and, in many cases, leaving behind a project in communities that adds to the quality of life and contributes to the overall well-being of the community. Weíve invested in training, as I said, of some $2 million. Some of that was targeted to trades training that fits with where the Yukon of today is going in terms of the direction that it is heading. Trades people are now very much in demand. But all in all, there are a number of indicators that, put together, create the trend in the Yukon and spell out clearly that the Yukon is now heading in a new direction. There is more investor confidence. That is a certainty. Government has presented a much stronger financial position. That, I think, is a contributor to investor confidence. Furthermore, Mr. Chair, the government will continue to work in this direction to further grow the economy but, most importantly, to engage in more detail with the private sector to complement and increase their investment when it comes to what the government invests in todayís Yukon.
Weíve said all along that itís the private sector that will ultimately create the economy of the future for Yukon. Itís the governmentís job to lay the groundwork. That is essentially what we have done through our financial and fiscal management of the territoryís resources.
There are a lot of challenges ahead, Mr. Chair ó nobody disputes that fact ó and one of the challenges, obviously, will be to maintain a healthy financial position. We must do so, so that we do not diminish investor confidence in any way, shape or form and that we continue a sense of optimism in this territory that even helps to generate lending power from financial institutions. If you talk to the ones in the Yukon today, I think it is clear and evident that they have increased their contribution vis-ŗ-vis the borrowing of Yukoners. So that sense of optimism is starting to spread throughout the Yukon, and we are certainly heading in a direction that we and Yukoners wanted this territory to go.
As far as the financial part of the budget, itís fairly straightforward. Iím sure the members will have a few questions; however, I think all in all, the picture that is being presented financially and through other stats and indicators shows clearly that the Yukon Territory is starting to move in a direction that will lend itself to further economic growth and further establishment of our base programs and service delivery that this territory needs. We will continue to see the Yukonís portrayal of itself on the national stage in a manner that will solicit more interest in the Yukon Territory, not only in its tourism sector, but in its resource sector, in what we have to offer for lifestyle and the tremendous social fabric that we have in the Yukon Territory today, whether it be in our health care system or in our education system. All in all, packaged up in one package, the Yukon Territory is a place of optimism; it is a place where people are starting to see the future ahead. I think it is incumbent upon all of us to continue to build on these trends and to make sure that the Yukon realizes its potential in a way that it deserves.
Thank you, Mr. Chair.
Mr. Hardy: † I actually believe that the people of the Yukon are very optimistic and have been through the history of the Yukon, and itís not just that they turn it off and turn it on, turn it off and turn it on, as the Premier likes to indicate. I actually think thatís a fair bit of nonsense that he is mentioning.
However, we spent a lot of time already on debating the supplementary and I just have a couple of questions in this department, because weíve touched on a lot already.
Number one is a question that I did ask the Acting Minister of Finance. That is an update on the loans and where weíre at. Does the Premier have any new plans for collecting? Are we going to see another auctioning off of the amounts? Can he ensure that the opposition is supplied with an update on outstanding amounts and any new agreements that have been signed with them?
Hon. Mr. Fentie: To respond to the latter part of the memberís question, this information is public information, so it is made available in various forms. Itís also important to note that on numerous occasions we have responded with the fact that to date the process has realized some significant developments: the recommitment of $2 million plus, the repatriation of some $600,000-some back to the federal government and the forgiveness of NGOs. Weíve also stated that now there are some remaining delinquencies ó with the possibility of collection as the option ó being looked at. That would mean that if we go that route, all the delinquent files would be part of that collection process.
Mr. Hardy: So Iím assuming once again that the Premier is saying no, he wonít supply the information I just asked for and thatís just typical of the wall of secrecy that we seem to be experiencing with this government. Letís have it on record that he said no.
Now the Premier promised a permanent solution to this matter. He completely failed in that matter. It became quite an embarrassment. He doesnít seem to want to give us an indication of where heís going with it now. Iíd like to put it on record as well that all previous governments have collected loans. All previous governments have allowed forgiveness on loans to NGOs, bad debts. Thereís nothing new with what this government has done. Again heís trying to spin it to make it look like theyíre the only ones who have done anything.
I would just like to see if the Premier would give us the permanent solution that he is planning now.
Hon. Mr. Fentie: † Mr. Chair, you know, it is very difficult to try to engage in debate in any constructive way when you listen to what has just transpired. I think Hansard will clearly show these facts. The government side offered the point that this information is very public and that it can be made available to anyone who chooses to access it. That is point one. For the member to state that we would not allow that information to be made available to the opposition is incorrect. It is there for anyoneís access.
Furthermore, under this portfolio there has never been forgiveness of monies owed by a non-government organization. It is important to note that a number of these delinquent files that we are dealing with have not been collected on, Mr. Chair. The recommitment of more than $2 million is something that is new. Furthermore, we have not repatriated those federal amounts before. That is new also.
Iím just trying to point that out for the member opposite to help the level of debate here in the House. Until we make a decision on the final delinquent files ó and that decision may very well be a collection process ó there is not much more that we can respond to the member with. We are certainly looking at that with the remaining delinquencies, and we will make a decision forthwith on what to do about them, but we are closer now than ever before on bringing closure to this file. That is also a very factual statement.
Though the member opposite may not agree, frankly, that is not a point for debate in the House. The government side is very confident in what it has done to date, and we will continue on to bring closure to this particular issue.
Mr. Hardy: Jeez, Mr. Chair, the Premier is very touchy about this. He makes a promise for a permanent solution, falls flat on his face, staggers around out there, embarrasses everybody, and of course tries to put a new spin on it.
Needless to say, there were 1,500 loans over the period, and 1,400 of them were resolved or settled or paid back. We were only dealing with, what, something like 84 or somewhere around there when the member opposite became the Premier. He struggled to deal with these 84. It seems to be a big problem for him, and there are a lot of other outstanding issues around it.
Iím just asking for the Premier to live up to his promise, which is a permanent solution. Those are his words. Now weíre going on to two and a half years into the mandate before we know what direction heís going in next. So all weíre trying to do on this side is to get information. Thatís all he has to do: give it to us. Itís not so hard. I would like to remind the Premier that itís not that difficult to ensure he works with the opposition on this matter. Weíve tried. We brought forward motions. We brought forward bills and amending bills to address some of these concerns, especially the ones in regard to the Cabinet ministers. He has a difficult time with that. Thatís his choice ó but weíve tried to give some solutions to the problem that exists, especially the one that hangs over the Yukon Party governmentís head.
Iím going to move on though. I think I know where the Premier is on this, and I think most of the people in the territory do as well.
Income Tax Act ó now, Iíve asked this question before, and I havenít really got an answer. If you could just clear it up Iíd be very happy. From what I read ó and I am sure that there is an answer to this. Iím sure the Premier can clear this up for me, and I would be very appreciative on this.
I would just like to read a section of the Taxpayer Protection Act, 8(1). It says, ďA bill to impose a new tax, or to increase the rate of tax imposed by the Income Tax Act or the Fuel Oil Tax Act, must not be presented to the Legislative Assembly unless the government first puts the question of proceeding with such a bill to the electors of the Yukon in a referendum and the electors approve the imposition of the new tax or the increase in the rate of tax.Ē
Maybe this is not complicated. If the government was in a situation where they felt they had to increase a tax ó and I hope it doesnít happen, because we all voted on a recent change in a tax, which was the small business tax and was from six to four percent. Letís hope that stays there. But if there was a situation where ó to use that as an example ó they had to increase a tax, does the consideration of what I just read in regard to the Taxpayer Protection Act cause some difficulty in doing that? Thatís all I really need to know.
Hon. Mr. Fentie: You know, it just suddenly struck me that there is a problem with the official oppositionís understanding of finances, because they have ďcurrentĒ and ďdelinquentĒ confused. The member offered a point that many of the loans or files in the portfolio we are speaking of are ďcurrentĒ or ďpaidĒ. Yes, we understand that. The issue here is the delinquent ones. Those are the ones weíre working on, and those are the ones that have not been collected on. Those are the ones that have us forgiving NGOs. And thatís the portion of the portfolio relating to the federal government and the repatriation of hundreds of thousands of dollars. And thatís the part where we have a recommitment of over $2 million. Those are new things that have developed in the delinquent portion of the overall portfolio. I guess the member opposite just hasnít got an understanding of ďcurrentĒ and ďdelinquentĒ.
Furthermore, there is nothing changed in the Taxpayer Protection Act. It basically states that if a government of the day wants to raise taxes, they have to go to the public. Thatís a fact and that remains. Now this government has chosen, for example, to reduce the small business corporate tax structure from six to four percent. We know that that touches the majority of our small business community in the whole territory given their annual revenues, and it puts approximately $880,000 back into their pockets and subsequently back into the Yukon economy. It could come in many forms with the purchase of supplies and materials, job creation, investment, reinvestment back into a business; there are many options that come with it. So we chose to reduce taxes, but we know that the official opposition, by their ideology, do not like reducing taxes. They only like increasing taxes, because that doctrine is all about tax and spend. Tax the public to the max ó especially the corporate community ó and then go spend it. The government of the day looks at it differently. We see taxation in some levels as a mechanism to promote economic growth, and we are moving in that direction. We also recognize that in todayís Yukon ó and indeed in todayís Canada ó even the thought of increasing taxes is absurd considering the level of taxation in place today.
Mr. Hardy: Once again, we hear the Premier not speaking exactly according to fact in this matter. It was the Yukon Party that reduced wages, which means you ultimately increase the tax upon people. It was the Yukon Party that did that. It wasnít the NDP; it was the Yukon Party that has and is allowing the WCB to increase the amount to employers, to small businesses, interestingly enough. I would consider that a tax increase but for some reason the Premier canít seem to understand that part.
As for the six to four percent, we voted for it; the NDP has a tremendous record of creating incentive and breaks to ensure businesses can move forward. Thatís on record; thatís what the Yukon Party government is working within many of their departments right now; look at Economic Development, look at all the programs that exist there. They came with the NDP initiative, not with the Yukon Party initiative. So they are riding on the coattails of a previous NDP government. What he says is not exactly as it is laid out in our history.
If we go back to whether or not I understand finances, I would like to make it very clear that I havenít gone bankrupt, I havenít lost my businesses, Iíve managed to feed my family, like I think everybody has on this side; weíve managed to balance our books and to run businesses on this side, as many of the people on this side have had businesses. We have a pretty good track record and I think that indicates that we can understand finances enough to be able to move forward in our life without finding ourselves in financial difficulty. So, I think thatís a little bit of a cheap shot by the Premier in that regard.
I do have a couple more questions, but in looking at this, there is one that I think would be probably better in Executive Council Office and Iím going to move it over there; I think it fits better in that area. So Iím going to allow the member from the third party to ask some questions here.
Hon. Mr. Fentie: I think it is important to recognize that we can only respond from this side of the House based on comments being made from the opposition benches. Comments made this afternoon by the leader of the official opposition clearly indicate there is some confusion between delinquent and current. That is not a reflection of how the member would handle his personal finances, none whatsoever. Itís a reflection of understanding the issue at hand and there seems to be some confusion with that.
Furthermore, the member opposite continues to relay the fact that other governments have done things. Well, nobody is disputing that, Mr. Chair. We have recognized that. I would challenge any member opposite to go pull out Hansard and look at the times that the government side has acknowledged, and in some cases paid tribute to the good works of the members opposite. That is not foreign to us; weíve done it on many occasions. Even in the face of all the empty criticism, taking the high road has been a trademark of this government.
Furthermore, the memberís approach in regard to taxation has to be explored somewhat because there are a number of elements that go with any tax measures, whether you reduce or not, and which give effect to the overall desired objective.
The New Democrats canít say on one hand that they were instrumental in dealing with lowering taxes when, on the other hand, they were instrumental in implementing processes and initiatives that were very flawed and reduced investor confidence. It is also important to note that without that investor confidence, itís easy to reduce taxes because there is nobody around to take benefit of those tax reductions. The private sector had fled this territory in droves over the last decade.
Weíre trying to change that, Mr. Chair, and weíre doing it in a number of ways ó taxation being only one instrument at our disposal ó but weíve done other things to complement tax measures ó increased investment, by trying to re-establish investor confidence in the Yukon Territory, and a lot of the evidence before us is showing that that is starting to pay dividends. There are increases across the board in the Yukon, and that is something we wanted to achieve, and that is something now that we must build on. But as I said many times, there are some significant challenges ahead. We know that, and that is why we are making the effort to work with other jurisdictions. That is why we are now negotiating a northern strategy with the federal government. We are putting in place the building blocks to continue the trend and the direction that the Yukon Territory is now embarked upon, and itís all about establishing a future that realizes responsible development and economic growth, a strong social fabric, a strong educational system and a bright future for our children. Thatís what the government is doing, but it comes in many forms, Mr. Chair, not certainly in one element, like taxation. There are many areas that go hand in hand with taxation: investment, policy, regulation, legislation, and so on and so forth.
I think itís truly unfortunate that the official opposition cannot relay to the Yukon public what it is they would have done in the southeast Yukon to get exploration for natural gas going in the absence of a land claim. They havenít relayed that to the public. This government has actually got exploration happening. Chances are that weíre going to increase our production in southeast Yukon, and itís in the absence of a land claim. The members opposite have not relayed to the Yukon public in any great detail how they would have handled the flawed protected areas strategy other than by saying, ďProtected areas first; development second.Ē Well, thatís a fundamental difference between the government side and the opposition benches.
The opposition has not relayed to the Yukon public how they would have dealt with the adequacy gap and what they would have done to address that issue. This was not something that just simply happened; it took a great deal of effort and work by a number of individuals in the Department of Finance, both federally and territorially, and of course, our pan-northern approach with the other territories and the involvement of other people important to this very, very difficult challenge that the Yukon found itself in, not to mention the support that we have received from the 10 provinces in Canada to address our issues on the national stage.
The members opposite in opposition havenít relayed any of this information to the Yukon public. Therein lies the problem with empty criticism. If the members opposite want to establish themselves as a reasonable alternative to the government side, they have to at some point relay to the Yukon public what it is that they would do; what mechanisms would they apply to this territory and its future to build a better and brighter future? What investments would they make in the social fabric? How would they handle the issue of education? What would they do to remove the politics of conflict and move on with collaboration and cooperation, as this government has? How would they handle the issues of the day that come at them?
There are many, many questions that remain unanswered from the opposition benches and this is what debate should be all about. The members opposite have a great opportunity to contribute: to contribute in a constructive way to add to the future of this territory. The government would gladly pay recognition should that be the case and should that start to take place. But the government is not going to simply lay supine at the feet of the opposition. Our focus is on building an economy that would face up, staring into the eyes of the opposition, supine, at their feet, staring upwards. Okay? Supine. For the third party itís ďsupineĒ.
On the government side, itís not our obligation to lay at the feet of the opposition, staring up at them, spouting out answers. Itís the governmentís side to do the work necessary to deliver on our commitments to the Yukon public in a constructive and productive manner; and thatís what we have been doing.
We have urged the members opposite on many occasions to engage in debate constructively. Tell us what you would do.
What do you have to offer to the debate? Far too often it has been the government side that has to bring forward initiatives that will generate unanimous support in this Legislature. Countless motions to date have been brought forward by the government side ó even in some cases amendments to those motions by the opposition and accepted by the government ó proving clearly that the government side is very willing to work cooperatively with the opposition benches, but itís a two-way street. There has to be reciprocity, and to date there has been a serious shortfall from the opposition benches.
So the financial situation in this territory has changed. It has changed for the positive. It has changed because a great deal of effort has been put forward, not just by the government, but by a number of individuals, a number of departments and agencies in addressing our financial situation. Now we must build on it. Now we must make sure that we maintain a financial situation in the Yukon that will contribute to building a better and brighter future. That is the fundamental principle behind what we are doing.
Ms. Duncan: I thank the Premier for that speech. I had thought he had said ďsupplying pineĒ and was discussing forestry initiatives in southeast Yukon. I appreciate his enunciation and thank him for his lucid comments.
In the supplementary budget there is $26,000 less, and I appreciate that weíre in general debate, but really the only part of this Department of Finance ó and certainly one that has generated the greatest amount of comment ó is of course the bad debts. Now there are many. There are the loan collections, and the bad debt expenses are always in the Department of Finance, and these bad debts could be anything from something from Yukon Housing Corporation to a property tax ó any of a number of things. We originally had said we were going to forgive $74,000 in our bad debt expense, but weíre only forgiving $48,000, so weíre having to forgive $26,000 less than that. Could the Finance minister give a detailed breakdown of what has been forgiven under the bad debt expense and what has not been forgiven?
Hon. Mr. Fentie: Let me begin by pointing out that the issue related to the $26,000 reduction is being transferred to Community Services. So, in all likelihood, the $26,000 would show up as an increase in Community Services because this is the department where this type of bad debt expense is better dealt with.
If we went to the public accounts section, schedule of bad debt write-offs and forgiveness, the period ending March 31, 2004, we would see a list of total accounts written off to date on page 166, schedule 12, totalling $1.8 million. It ranges from ó imagine that ó Anvil Range, and there is some stuff in Education and a list of things in Health and Social Services and Highways and Public Works for that total.
Ms. Duncan: I will take a look at that public accounts document. But the Finance minister said that public accounts, of course, end March 31, 2004. This supplementary is 2004-05. I understood the Finance ministerís comments to be that the forgiveness of property tax bad debt expense has been transferred to Community Services. So, we are not including that in the $48,000 of forgiveness of bad debts. None of that is property tax. What is it for, then, in the 2004-05 year?
Hon. Mr. Fentie: To date, at period 8 ó we are in period 7 or 8 right now of the fiscal year ó we have not brought forward any submissions for write-offs as yet. That, Iím sure, will be coming in the new year.
Ms. Duncan: The leader of the official opposition had asked for documentation on the loans situation. Now, some of that information has been made public. What should be, or could be, tabled in this House is a listing of what is current and what is delinquent in terms of the loans on collection.
One would think this would be information that would be private, except that there is a history and precedence in the House for that information to be tabled. Will the Finance minister table that? Given we have only another several hours left for the sitting, including tomorrow, will the Finance minister table a similar document to that tabled by the Minister of Economic Development in 1997, which is a detailed listing of all outstanding loans owed to the Government of Yukon ó both those that are delinquent and those that have now been brought to current?
I see he has the papers in front of him. Perhaps he would be so kind as to send that information over.
Hon. Mr. Fentie: Mr. Chair, Iím going to try to do this ó this is a delicate issue. There are some things that are problematic with just simply tabling financial information, especially when it comes to individuals. First off, if I were to table the documents that are in the binder at this point in time, they would not be current. We have to recognize that on any given day-to-day basis, these things can change. So Iím hesitant. There are accesses for this information. What I would do, though, is update the information and sit down with the members opposite. I will have officials meet with them to go over in detail where the file is at. And if thatís agreeable ó why Iím saying this is because we had situations already in the past where this information was made public and the information in the public domain in some cases was incorrect. Thatís the challenge here, because there are changes going on constantly. So we can set up a detailed briefing with Finance officials and the opposition benches on where exactly this file is at, at that given time.
Ms. Duncan: Fine, Mr. Chair, Iíll accept that, and Iíll even indicate that, as much as I enjoy spending time with him, the Finance minister doesnít have to attend that meeting with the officials.
There is a significant outstanding bill that has been the subject of a great deal of debate in this Legislature over many years, a $700,000 agreement with Argus that the Auditor General made note of in the report on other matters, and which the Government of Yukon should be collecting upon it. Is this in the Department of Finance, or is it in Community Services, and who is collecting on it and what actions have they taken?
Hon. Mr. Fentie: I believe the minister responsible for Community Services has disseminated some information in the House during debate. Itís my understanding, though I would urge the member to contact the ministerís office, that itís this particular issue that is in mediation right now.
Ms. Duncan: Okay. Letís hope it gets resolves because those are outstanding monies that are owed to the taxpayers of the Yukon.
The federal government has announced a northern strategy and some northern economic development funding. Has the Government of Yukon submitted a proposal from the Department of Finance or has it been submitted under some other department?
Hon. Mr. Fentie: Is the member referring to the northern economic development fund or the northern strategy?
Ms. Duncan: Both.
Hon. Mr. Fentie: Okay. With regard to the northern economic development fund, that is a pot of money that was established within the Department of Indian Affairs and Northern Development of $90 million in total for the three territories, to be distributed equally. To date, no money has flowed out of that. There are ongoing discussions about nailing down the final principles and what would happen here in how it is administrated and what involvement DIAND would have in any investment in the economic development area.
On the northern strategy front, we are establishing a framework for consultation with our First Nation governments, with municipalities and with other stakeholders to deal with the northern strategy and the visioning exercise that the federal government is committed to vis-ŗ-vis the throne speech this fall. The money that is being talked about is within the federal purview and they are establishing a trust fund now for the upfront initial investments of the northern strategy and where that money will be invested has yet to be determined. The exercise for now though is to establish the fund within the federal system and have the money booked out of surplus and have it placed into the trust fund. It is a total of $120 million to be distributed, again, equally among the three territories.
Ms. Duncan: So as I understand the Finance ministerís answer, Yukon can anticipate $30 million under the northern economic development fund. Thatís in the hands of the Department of Indian Affairs and Northern Development. No monies have flowed out of it yet, but there is a framework of rules that is being discussed on how the money might flow. Could I have a copy of any input that the Government of Yukon has given in terms of that framework and how money should flow? Thatís the first question. Perhaps the Finance minister would like to address that.
Hon. Mr. Fentie: The economic development monies within DIAND, the department responsible and the department working on the issue ó not only in Yukon but in N.W.T. and Nunavut ó are the Economic Development departments. Because I believe that department has cleared debate, I would urge the member just to write a quick note to the minister responsible to ask for information around the northern economic development fund.
Ms. Duncan: I will do that, but perhaps in the spirit of collaboration, the Finance minister would ask his colleague to send that information over.
The second fund, the northern strategy ó I believe $40 million would be available to Yukon, and the Government of Yukon is preparing ó or has prepared ó a framework for consultation with First Nation governments and the Association of Yukon Communities and Yukon communities themselves and municipalities. Could we have a copy of that framework for consultation?
Hon. Mr. Fentie: Itís important to note that the federal government is the lead government on this. We have to await their final authorization and agreement on the overall strategy. It will be a joint announcement. It is the framework that we will then utilize to go forward in terms of the consultation, so we need to allow the federal government to come to that final decision on what it is they want in it. Until that is done, considering they are the lead on this, this is their commitment, and we are awaiting their final analysis and contribution and input into how they want to proceed.
Ms. Duncan: Is the Finance minister telling me that the Government of Yukon has had no input into how this $40 million will be spent? What Iím looking for is what has been the Government of Yukonís position on this northern strategy?
Hon. Mr. Fentie: Firstly, our position is that itís about time. This is the first federal government that has indicated an interest in a strategy or vision for the north since the Rt. Hon. John G. Diefenbaker, whose vision resulted in the Dempster Highway, which now we know is a major corridor accessing the Beaufort region, and I think we all know whatís going on there with the extensive oil and gas development.
Weíve had discussions with the federal government in a number of areas regarding the northern strategy. We are, as governments, collectively working through the process, allowing the federal government to ensure that they are satisfied that what it is weíre doing meets their commitment to Canada, because this was a national commitment, in terms of a northern strategy, to ensure that not only is our Arctic sovereignty recognized and protected, but our environment is protected, our economic development is responsible, maximizing benefits for northerners, and the list goes on. So there is work yet to be done. As far as the money, that is yet to be determined. What the federal government and the department felt important was making sure that they set up the fund now so that some of the surplus available to date could be used for the northern strategy, which we and the other two territories agreed would be a sensible approach to ensure that the money is booked toward this strategy as we finalize how it would be spent and what the strategy will look like.
Ms. Duncan: Mr. Chair, Iím not positive Iím that much further ahead as to how the Yukon government has envisioned these monies being expended, but I will ó
Some Hon. Member: (Inaudible)
Ms. Duncan: If it has yet to be determined, what has been the position to date? Have we had no input, or what has the Finance minister said to Prime Minister Martin and to Finance Minister Ralph Goodale about this? Has he said, ďYou know, Iíd like to see this money spent in infrastructure; Iíd like to see this money spent in business development programsĒ? What kind of suggestions has the Government of Yukon been putting forward to the Government of Canada on this? I understand positions havenít been made as yet. What Iím trying to learn is what has been the Government of Yukonís position on this strategy and this funding? How does the Government of Yukon think it should be spent?
Hon. Mr. Fentie: To inject a little levity ó on bus tickets for the opposition. Sorry, Mr. Chair. I had to bring in that ó it is Christmas. It is getting closer to Christmas, and I think we are all a little punchy.
Frankly, our purpose here was to make sure the money was locked up in the federal system. That was number one. We have covered a number of areas in discussion with them ó like Arctic sovereignty, like the environment, like responsible economic development, like infrastructure. Those are the types of things we are in discussions on now.
The $40 million specifically for Yukon ó where it will be spent is yet to be determined, but we were very supportive of the federal department getting this trust fund set up now. Now we can do the work on finalizing in detail where we would invest this money.
As territories, we are going to be allowed flexibility, and we will be able to draw down on this fund for specific projects or specific investments that are yet to be determined.
Ms. Duncan: I just have one last question in this department. There is foregone revenue from the mineral exploration tax credit. There is a certain amount of forgone revenue. It is early days to estimate that, but occasionally we do sometimes have a preliminary figure to hold the place, so to speak, in the budget. What is the early figure for the forgone revenue from the mineral exploration tax credit? Does the minister have that information?
Hon. Mr. Fentie: While we are pulling out that information, I want to just go back to the strategy and make a point that there is an extensive consultation process that is going to be embarked on, because not only are we going to consult here internally in the Yukon, this also will be national, because the federal government wants to ensure that there is buy-in in Canada for this approach in the north.
I think the member opposite can recognize why that is important in areas like resource development, because southern Canada, in some cases, has a great interest in what happens in resource development in the north.
So there is going to be a lot of work ahead of us in finalizing the overall strategy and vision for the north, but I think itís important that we recognize that we now have a federal government that has expressed this keen interest to do this. I think that bodes well for us. Itís something that should have happened a long time ago. It may have addressed, to some degree, the situation that we found ourselves in over the last decade, had this type of work been done in the past.
So I think overall it is a positive, but we have to do it right also. It is a national initiative, not just Yukonís. Itís Canada-wide in terms of the overall vision and strategy that they want to employ for the north.
Obviously, our position will always be that we maximize our benefits investment-wise, that they be retained here in the north. I think that is something we will get agreement on across the country, because that will help us reduce our dependence on southern Canada.
Weíre still looking for the information. There was an amount booked in this yearís budget of $2.-million some ó Iím just going off the top of my head. We can get the information for the member opposite. I donít think we have the final numbers in yet and Energy, Mines and Resources would be bringing those forward upon completion of their work. We can probably dig that up for the member opposite. All I would go by ó unless we have the final numbers in ó is what we projected in the mains for our budget.
Ms. Duncan: My purpose in asking that question is that weíve had a very good mineral exploration season and I wondered if the department had increased their figures. They can just send that over if there has been ó for example, the period 8 variances they have sent, if they have put in additional monies in foregone revenues, Iím sure it would come to the ministerís attention in the variance report. So if he could just send it over, I would appreciate it.
Just a final point about the northern strategy and the Canada-wide discussion ó I fully appreciate that and just a word of caution that those in southern Ontario think Thunder Bay is north, too, and northern Saskatchewan has issues. While they will say, yes, we have the western diversification fund and the north has never had this kind of a strategy, a Canada-wide discussion is also going to open up the northern parts of the provinces.
Chair: Is there any further general debate?
Hon. Mr. Fentie: The member made a very good point on northern Canada, which would include a number of the northern reaches and regions of provinces. Itís important to note that the territories have been very supportive of provinces in dealing with their challenges in the north. At the first ministers meetings that have transpired over the last two years, a lot of that has been worked through. In turn, the provinces have been very supportive of the territories and their approach. So there is a good cohesive approach now at the Council of Federation on dealing with issues specific to northern regions, and that would include provinces also.
Ms. Duncan: †I have no further questions in general debate or in line-by-line in the Department of Finance and, in speaking with the leader of the official opposition, I would request unanimous consent of the Committee to deem all lines in the Department of Finance, Vote 12, cleared or carried, as required.
Unanimous consent re deeming all lines in Vote 12, Department of Finance, cleared or carried
Chair: Ms. Duncan has requested the unanimous consent of the Committee to deem all lines in Vote 12, Department of Finance, cleared or carried, as required.
All Hon. Members: Agreed.
†Chair: I believe there is unanimous consent.
On Operation and Maintenance Expenditures
Total Operation and Maintenance underexpenditure of $26,000 cleared
On Capital Expenditures
Capital Expenditures in the amount of nil agreed to
Department of Finance agreed to
Chair: A request for a five-minute recess has been made to allow officials to change.
Some Hon. Members: Agreed.
Chair: We will recess for five minutes.
Chair: Committee of the Whole will now come to order. We will continue with Bill No. 12, Second Appropriation Act, 2004-05, and Vote 2, the Executive Council Office.
Executive Council Office
Hon. Mr. Fentie: The supplementary we have brought forward is, in many areas, related to the broad-ranging mandate that the Executive Council Office has, but just to provide some brief detail, the supplementary budget request has two parts: a decrease in O&M of $150,000 and an increase in capital of $382,000. The decrease in required funds for operation and maintenance is forecast in the personnel allotment in the land claims and implementation secretariat. Members will note that the forecast decrease in personnel costs is offset by two new spending requests: $150,000 to cover emerging government obligations relating to the Canada Winter Games, and $90,000 to cover forecast Yukon Water Board hearing costs to year-end. The request for additional funds in capital is for a revote of funding for the Kwanlin Dun cultural centre, which was approved for expenditure in the 2003-04 capital budget.
With these comments, Mr. Chair, I will turn the debate over to the members opposite for their discussion, although the amounts here are relatively small and have been explained in some detail.
Ms. Duncan: Iíd like to focus in and begin the discussion this afternoon ó and I realize we have a limited time with the minister responsible today ó with the land claims secretariat and the land claims situation in the Yukon. Could I just ask the Premier to go through the current status at each of the negotiating tables with each of the First Nations? Where are we with each of them?
Hon. Mr. Fentie: As the leader of the third party well knows, there are no more land claims negotiations in the Yukon, effective March 31, 2002. The federal mandate ended. Upon that date, we were faced with a situation in the Yukon where, outside of those First Nations that had already settled their claims, we had four memoranda of understanding ó I believe White River First Nation, Kwanlin Dun First Nation, Carcross-Tagish First Nation and the Kluane First Nation. There was no agreement whatsoever between Liard First Nation and the Ross River Dena. That said, we have advanced the processes with the four First Nations that had memoranda of understanding. We know now that Kluane has ratified and has moved on. Weíre not sure on any dates for White River First Nation. That is an ongoing process. And we are working with the federal government and Carcross-Tagish First Nation with a potential second ratification for Carcross-Tagish First Nation. However, itís up to the First Nation on where it wants to go.
In relation to the Liard First Nation and the Ross River Dena, we as a government have a bilateral arrangement with those First Nations, the Kaska. That bilateral includes the commitment by both the Yukon and the First Nations themselves to conclude the land claim process in Kaska traditional territory. That would also require the most important government to be involved ó the federal government. That process, as far as I know, is still dependent upon dealing with the issue of litigation and the abeyance of such litigation.
With that, I donít know if there is anything else I can add. Iím sure the member might have more questions.
Ms. Duncan: Yes, I do have more questions in this particular area with respect to the current status of the land claims. I understand there isnít a negotiating table per se; weíve reached a memorandum of understanding with the first four First Nations that were mentioned. That being said, there is still a great deal of work to be done. For example, does the Premier have an implementation date or a signing date for the Kwanlin Dun First Nation who have recently completed the ratification vote? What is the current status of discussions vis-ŗ-vis Carcross? What is the current position of CTFN with regard to whether or not they wish to have a second ratification vote? What is the governmentís position? What is the current discussion between the Chief of the White River First Nation and the Premier in terms of support for a ratification vote in that particular community? The land claims secretariat is a part of this Executive Council Office that is fundamental to the future of the territory. Itís about certainty; itís about First Nation government-to-government relations.
If I could have an update on the status of those three First Nations that we have signed memorandums of understanding with, and then we can go from there into questions surrounding the Liard First Nation and Ross River First Nation.
Hon. Mr. Fentie: First, on the Kwanlin Dun front, we know that, subsequent to a satisfactory ratification, there is a process that must be gone through. My understanding is sometime in early spring the final elements of this will transpire. As far as Carcross-Tagish, there has been a request by the First Nation for assistance from both the Yukon and federal governments. Vis-ŗ-vis our commitment, we have stepped forward to help Carcross-Tagish, but it is their decision to make on where they go from here. I suspect that the First Nation is now looking at options of what they would do in terms of the issue of a second ratification. By request from a First Nation, the government will be supportive where we can.
White River ó as far as I know, officials met with the White River First Nation most recently in October of this year. We are waiting for a response from the First Nation on the way forward. Technical and legal drafting is essentially complete on the claim itself. So, as I said, we are awaiting a response from the First Nation.
Ms. Duncan: There was $300,000 in the main budget for First Nation economic accords and agreements. What has happened with this money to date? How many agreements have been signed and/or what agreements are in development stages? How has the money been spent?
Hon. Mr. Fentie: This is in relation to First Nation government-to-government relations. When it comes to economic development agreements, the Department of Economic Development is negotiating those directly. There is an element within the department itself that addresses First Nation economic development, regional economic assessment, and so on.
What we are doing with this investment to date is the investment in 17.7 negotiations, which is an obligation under the TríondŽk HwŽchíin Final Agreement to negotiate the areas of Chapter 17. And itís also monies that will be utilized for the memorandum of understanding process in terms of the Yukon forum and establishing the relationship between the Yukon government and First Nation governments in a way that we formalize how we will interact. Those are the two areas to date. But the investment will be predominantly for First Nation relations.
Ms. Duncan: So how much money has been spent to date? Perhaps the Premier doesnít have that information at his fingertips and could send that over.† Whatís the current status of the memorandum of understanding on cooperation in governance with the First Nations?
Hon. Mr. Fentie: Mr. Chair, there has been some money expended to date, because we have been negotiating the memorandum of understanding and we have been negotiating 17.7, and weíll have to see where it goes. Weíre only partway through a fiscal year; however, to date, the investments have proven to be wise, and we are advancing the relationship. As far as the last question, could the member repeat it?
Ms. Duncan: Mr. Chair, as much as I appreciate the Premierís stating that itís a wise investment, he did, in his earlier answer, say that some of the $300,000 that was set aside in Executive Council Officeís budget for First Nation agreements had been spent on reviewing 17.7 with the TríondŽk HwŽchíin.
Some Hon. Member: (Inaudible)
Ms. Duncan: To negotiating, then. So how much of this money has been spent, and how has it been spent?
Hon. Mr. Fentie: I think approximately $50,000 to date has been spent on our obligation under 17.7 for developing a workplan, developing a mandate, a lot of discussions with the First Nation, and itís ongoing. As far as other investment, we have a commitment of $100,000 toward the memorandum of understanding, which is the establishment of the Yukon forum and formalizing our relationship.
Ms. Duncan: And what is the current status of the memorandum of understanding on governance with First Nations? Whatís the current status? Are we discussing ó?
There was to be some kind of formal ceremony but, for one reason or another, that hasnít happened. Whatís the current status?
Hon. Mr. Fentie: The current status is that we are now in discussions for setting a formal meeting date sometime in the new year.
Ms. Duncan: Would that be before the spring sitting or just sometime in the new year as soon as we can? Do we have any more of a fixed date than that?
Hon. Mr. Fentie: It will be early in the new year, but itís all dependent on schedules. We have nine self-governing First Nations. Those are the First Nations that are most involved in the memorandum of understanding process, though those who are not with final agreements and self-governing agreements are surely invited to participate, so we have to determine, based on all those schedules, what date would be there and available to put this all together. Weíre hopeful itís going to be early in the new year.
Ms. Duncan: Is there any significant difference in this memorandum of understanding on cooperation than the one that was negotiated by the previous government?
Hon. Mr. Fentie: Yes, there is a significant difference. Not only is the government investing in it, we are willing to legislate the framework.
Ms. Duncan: Itís word for word the same arrangement.
I just have one last question and itís information that I would like the Premier to send over. There are a number of contracts issued by the Executive Council Office to Mr. John Lawson. Could I have the details of those contracts and the total amount? It can be sent over by letter once the House adjourns, if the Finance minister wishes. Also, it is customary for the Premier to table the travel costs, both within the territory and outside of the territory, of himself and all Cabinet ministers. Could we have that information as well, please?
Hon. Mr. Fentie: We can send over the contracts in question, but as far as the travel issue, there is due process on how that is released publicly. It is certainly not something Iím going to have officials run around on today and try to table something. Itís made very public and it will wind up in the news and in the Legislature and in the hands of the opposition. Thatís the way it has always been.
Mr. Hardy: The way it has always been is also the request from the opposition side to have the travel costs tabled, and invariably the government side tables the travel costs. I donít understand why on every request the Premier seems to not want to work with the opposition. Iíll ask one more time, just to give him a chance to stand up and say, ďYes, weíll table it; no big deal.Ē If you do that, weíd be quite happy on this side. Itís not an effort on their side. So, will they do that?
Hon. Mr. Fentie: Of course, as soon as the numbers are tabulated and the information is available, without changing the corporate structure of government to make it happen, we will make it very public.
Itís hard to respond to the members opposite, who are avid readers of Frank magazine, and itís difficult to get through to the members opposite when that fog is created.
Mr. Hardy: As usual, the Premier likes to point fingers at everybody else for his lack of cooperation in here. It is becoming very obvious. The wall of secrecy just continues to get built higher and higher.
Is the Premier going to resolve the outstanding issues in regard to the reindeer situation, as we know it? Is he going to live up to his end of the bargain in regard to a mediated settlement?
Hon. Mr. Fentie: I think we have to go back again with the member opposite on the facts. When it comes to putting out the information to the Yukon public, the government side is doing a number of things that are new, that other governments have never done before, because we want the public informed.
What is really a secret here are the vision and plan of the members opposite for the Yukon Territory. Thatís a secret because nobody in the territory has ever heard from the members opposite what it is they would do in addressing the challenges that the Yukon Territory faces today.
But the government has done a number of things. Not only are we disseminating information, as filtered by this Legislative Assembly and the media, but we are putting out information to the public that is non-filtered. We are a government that has taken extensive community tours to better inform its public. We are a government that stood up and pre-announced a number of initiatives in the budget to better inform the public. We are a government that will continue to find ways to address our public and make sure they understand what is going on in the Yukon today.
It is very difficult, though, for Yukoners to understand what is happening in their territory when they listen to the opposition, because itís the opposition who labels this territory as a place of madness and misery and is constantly negative. They bombard the Yukon public with so much negativity that people are getting, I think, very tuned out. Thatís why the government, instead of trying to provide information to the public through only this forum, has chosen to try other initiatives to make sure the public is informed.
An informed public is critical to the development and the growth of the Yukonís future. An uninformed public is not that conducive to building and growing the Yukonís economy and, of course, making it a better future. But thatís the approach of the members opposite ó the negative aspect. And one would wonder, considering all the evidence available to date thatís out there in the public, from where do the official opposition and the third party come up with these negative views of the Yukon? Itís not todayís Yukon; itís not todayís Yukon at all. Itís dramatically different, Mr. Chair ó dramatically different in this territory.
In the last two years, a number of things have transpired to change the direction the territory is going in. Nobody can dispute the fact that the financial situation is better today than it was upon our taking office in November of 2002. Those are facts, and we can keep providing that information to the members opposite. Itís not information they want. They want to preach the negativity to the Yukon public ó maybe to sway public opinion, who knows? But I can tell you, Mr. Chair, that the public is not that gullible. In fact, the Yukon public is very astute about whatís going on. That is something that is clearly showing the signs of improvement, because the Yukon public is much more involved and much more informed, and there is a sense of optimism out there that the members opposite donít share.
Nobody can dispute the fact that more money has been put into the education system. Itís there on the pages of the budget ó the biggest budget in the history of the territory, whether it be in the Yukon College base grant, whether it be in needs assessment for our schools, whether it be in curriculum, whether it be in training, with targets like trades training. Itís there. The increases are there on the pages of the budget.
Nobody can dispute the fact, Mr. Chair, that there is more money in health care. In fact, I believe this supplementary alone ó here we are in period 8 of a fiscal year, $8 million more going into the health care system in the Yukon partway through a fiscal year. Thatís here in the supplementary budget. Thatís in addition to the dramatic increase that was brought forward at the beginning of this fiscal year in increasing our investment in health care.
Nobody can dispute the fact that thereís more money for daycare operators, and thereís more investment in health and social services. Nobody can dispute the fact that we have now re-established a detoxification centre, a Crossroads-type facility. Nobody can dispute the fact that thereís more investment going into substance abuse, whether it be in the prevention end, whether it be through the enforcement end or whether it be in the downstream end where program and service delivery is intended to deal with the problems of substance abuse.
Nobody can dispute the fact that the Womenís Directorate was re-established to its former position in government, that we created a stand-alone Department of Tourism, that we recreated the Department of Economic Development. Those are all facts; theyíre there for anyone ó especially the members opposite ó to recognize.
Nobody can dispute the fact that there was an increase in tourism this year in the Yukon. The members opposite seem to find that a secret. The members opposite also find it very secretive that the real estate community has experienced a dramatic increase. I believe itís a 20-plus percent increase. The members opposite seem to find it a secret that our unemployment rate is one of the lowest in the country and has hit the lowest rate since stats were first kept for the Yukon in terms of its unemployment factor. That, to the members opposite, is a secret. Itís not to the Yukon public, and itís certainly not to the government.
Nobody, other than the members opposite who think itís a secret, can dispute the fact that the community development fund has created almost 160,000 hours of employment for Yukoners. The members opposite seem to find it a secret that the mining industry and the exploration investment have tripled in the last two years, but Yukoners and the industry know that. So does the government, and we as a government are helping to promote that industry. Our mineral exploration tax credit, for example, is a solid initiative to ensure that the mining industry finds us an attractive, competitive place to come and invest.
Thatís no secret to the public or to the government side; it is to the members opposite. I think the problem here is that the members opposite will not admit to the positive changes that are taking place in todayís Yukon. One can only wonder why that is. There is much more to be gained as an opposition by getting involved in building this territory, instead of promoting it in such a negative light; instead of promoting it through the kaleidoscope of a Frank magazine; instead of promoting it as it is versus labelling it a place of madness and misery ó which are words right out of the leader of the official opposition. This is how the official opposition and the third party are portraying the Yukon, but itís not how the Yukon is. People are getting tired of that constant bombardment of negativity.
The members opposite could contribute a great deal by being constructive and looking at the Yukon in a way that addresses what factually is going on and how they can contribute to that. How can the members opposite contribute to the financial picture of the Yukon Territory? How do the members opposite contribute to the needs of our education system and what has transpired through the land claims process and the authorities achieved by First Nations? What would the members opposite suggest? How do the members opposite contribute to the growth of our economy? What is their contribution?
Well, I can tell you that from the official oppositionís point of view, and theyíve also said this publicly and in this House, that they would want a network of protected areas throughout the territory before development takes place.† Well, thatís not the governmentís position. This government intends on pursuing development and conservation and protection in a balanced manner, not in a skewed manner. That is exactly what we have set out to do and that is contributing to investor confidence.
What is the big secret to the members opposite about the renewed confidence for the Yukon and the investment community when they look at the Yukon as a place to invest? What is the problem for the members opposite in recognizing that is happening in todayís Yukon, that our investment is increasing? That is something that we are working very hard toward. When I say we, Iím talking Yukon in general. Itís the Yukon public that wants economic growth, increased investment and the reestablishment of industry in our territory, be it tourism, be it the information and technology sector, be it mining, oil and gas, forestry, small business, arts, film, or the sound industry; all these things are areas where Yukoners want to see us focused on, to develop and grow them for the betterment of the Yukon and its future.
What is the contribution of the members opposite to that debate? To date, in two years, it has been a constant storm of negativity, an approach that promotes this territory in a very negative light, which actually does harm to the Yukon and its future. Anybody listening to the members opposite, if there were not a contrast out there for them, would be very wary of the Yukon Territory, but that is not what is happening in todayís Yukon. As the members see it, it is unfortunate, but it is not the Yukon of today. It is some unbelievable view of our territory by the official opposition and the third party. For what motivation, one can only guess. Unfortunately, it is doing the official opposition and the third party little good in the public domain and, more importantly, it is not doing the Yukon one bit of good; therefore, the members opposite would be better served by engaging with the government side on debate that reflects the realities of todayís Yukon.
The Member for Mayo-Tatchun is kibitzing away over there, but we tend to understand where the Member for Mayo-Tatchun is coming from. The last few weeks of this sitting are very reflective of that whole approach by the member opposite.
So the government side will be around as long as the public desires us to be here. We have every confidence in leaving our future in the publicís hands. It is certainly not in the hands of the members opposite ó not by any stretch of the imagination, considering their contribution to the debate.
In listening to the Member for Mayo-Tatchun, it brings to mind another problem. The member canít even listen to the debate and reflect his kibitzing in a way that is connected to what is going on. It is customary in this House to allow those who have the floor to speak unfettered. The constant yammering from the Member for Mayo-Tatchun is not contributing a single thing to this institution, to the debate that is ongoing, to the Executive Council Office, or to the Yukon Territory. In fact, it shows why the members opposite and the Member for Mayo-Tatchun can never be in the position of leading this territory, Mr. Chair.
It shows clearly that there is a lack of understanding of what the Yukon is all about and where the Yukonís future lies. Itís the Yukon public that is making the demands. And you know, it brings to mind an old adage, Mr. Chair: there are three kinds of leadership ó there is the make-it-happen leadership, there is the watch-it-happen leadership, and there is the wonder-what-happened leadership. And considering the evidence of today, itís fair to say that the government side is doing its best to make it happen. Considering the debate that we have experienced in two years from the official opposition, it is clear that that approach to leadership, the watch-it-happen leadership, is very much entrenched in the official opposition. And just to be different, they try to promote this territory in an extremely negative light. That is unfortunate. And then, of course, there is the wonder-what-happened leadership, which I would liken to the third party, which is now very much focused on discussing the many missed opportunities of the past.
So, Mr. Chair, the evidence is clear that the government side is providing in the best way possible a make-it-happen leadership, and the Yukon public is demanding a make-it-happen leadership. And that is what we will continue to provide. All in all, we would like to raise the level of debate from Frank magazine to the realities of the Yukon.
Mr. Hardy: Well, obviously, the Premier doesnít like being featured in Frank magazine. Maybe then he should keep some kind of control over his own behaviour, because the only reason weíre in Frank magazine is because the Premier seems to have a temper problem and definitely doesnít like the media or being questioned by them. However, weíve come to know that on this side quite obviously.
Now, there are a lot of questions around land claims, and I listened to the Premier not answer the third party leader. But weíll be following up on them over the next few months anyway. Travel costs ó of course he wonít table them, because ó no, canít have that. Anything we ask for from the Premier ó no, you canít have that. Thatís how he wants to involve this side of the opposition and, interestingly enough, demonstrations out front of the Legislature canít be the public. They canít be Yukon people, because the Premier says the Yukon people are mad at us. They wouldnít demonstrate out front toward the Yukon Party government or the Premier himself, because he doesnít believe that. So therefore they canít be Yukon people, and thatís what heís saying.
There are a lot of issues that this government and this Premier have to face up to and one big issue is the fact of responsibility for his own actions and for the governmentís actions instead of pointing the finger at past governments or pointing the finger at the present opposition, which is getting to be very common and is being heard by the people in the territory. This is a government that refuses to take responsibility for their own actions, their lack of work, lack of accountability and lack of openness. The list is endless and frankly itís really disappointing.
I just have one last question. Well, Iíve actually got two. If he wants to stand up and give us another speech, thatís fine with us. One is: is he willing to table the results of community tours? Thatís what he brought up ó the community tours. It has been asked before in the Legislature and every other leader has supplied that, so Iím hoping that heíll respond according to what other leaders used to do to make it open and accountable. And is he aware of any breaches with the land claims agreements as they exist today, and who has been breaching those agreements?
Hon. Mr. Fentie: I think itís important that we engage with the opposition in the appropriate manner. The opposition seems to take fault with the fact that, when there is information that will be made public, the government will not have officials scurrying around digging up that information especially for the opposition. The information for travel is very much a public document and itís put out in the public on an annual basis. Thereís no reason why the members should get impatient about that. They will, along with anybody else, be privy to that information. So thereís nothing untoward about what weíre doing. We will follow due process.
Now as far as breaches of land claims, I would assume that the member opposite is trying to refer to TríondŽk HwŽchíin First Nation. Just so I can expand on that, the government has, by obligation, established Tombstone Park. We have done so through the orders-in-council in accordance with the final agreement. So thereís a choice here by another government to have that looked at through legal channels, and thatís fine. That is their choice. We will present our case and Iím sure they ó
The member opposite is talking about federal breaches, and again Iím not sure what that would be. I can tell you, though, weíre working very hard with the federal government on the implementation front. The Auditor General has pointed out that the federal government has entered into a number of agreements with aboriginal Canadians and that they have not provided necessary resources toward those agreements.
So weíre in the middle of whatís known as the nine-year review on the implementation side for our final agreements. We are working very closely with First Nations in that regard. We are urging the federal government to rethink its mandate for implementation to recognize that, to breathe life into many areas of the final agreements, the federal government must participate to a level that would reflect their responsibility and their obligations to the final agreements that they have entered into.
That work is ongoing and I suspect by late spring we will know where the federal government will be at. I think itís important to note that this is an area where not only the opposition but the government side, First Nations, the Auditor General and others can be quite effective in pointing out to the federal government the deficiencies in how theyíve approached implementation. Other than that, I can think of no other breaches. We are going to face, probably from time to time, areas of disagreement; letís not forget that First Nations have taken on governance and powers that are new. There is going to be quite a steep learning curve here for everybody, and that is why we have proceeded with a process to try to formalize the relationship between the Yukon government and First Nation self-government; that is to remove barriers between us and to try to provide a more cost-effective form of governance. That may mean that we develop statutes that can be used jointly. For example, oil and gas are testimony to how we can create a common regime that could be applied not only to Crown lands, but to selected lands. We could probably do the same with forestry legislation. We know that there are a number of challenges on the Justice front. How that will be addressed is yet to be determined. But the administration of justice issues, I think, are quite extensive, and one of the mechanisms that we have proceeded with on correctional reform has resulted in the federal government expressing a keen interest in involving themselves with respect to the administration of justice issues with self-governing First Nations.
Again, I stress that there are going to be areas of disagreement. I donít call those breaches. I call those challenges that we must meet and that will happen from time to time as we go through this process of embarking on a new era for Yukon with self-government very much in the works and involved in the Yukon, and of course, a Yukon government that, along with First Nation governments, must find ways to formalize this relationship so that our governance areas are compatible and that we are starting to jointly build the Yukonís future as the land claims envisioned and as it is the responsibility of any public government to do.
With that, Mr. Chair, the time being approximately 4:00 p.m., I move that we report progress.
Chair: It has been moved by Mr. Fentie that we report progress.
Motion agreed to
Chair: Referring to Committee of the Whole Motion No. 6, the Committee will receive a witness from the Yukon Energy Corporation. In order to allow the witness to take his place in the Chamber, the Committee will now recess briefly ó ďbrieflyĒ being the key word ó and reconvene at 4:00 p.m. sharp.
Chair: Committee of the Whole will now come to order.
Hon. Mr. Lang: Pursuant to Committee of the Whole Motion No. 6, passed December 13, 2004, I would like to welcome to this House Mr. Dave Morrison, president and chief executive officer of the Yukon Energy Corporation. He is here today to appear as a witness before the Committee of the Whole. Mr. Morrison will offer some opening remarks. Following those remarks, he will be taking questions from the Members of the House.
Thank you, Mr. Chair.
Chair: Good afternoon, Mr. Morrison. Welcome to our Assembly. I would just like to remind all members and the witness that questions and answers should be directed through the Chair.
Mr. Morrison: Thank you, Mr. Chair. Thank you for the opportunity this afternoon to appear before Committee of the Whole and answer questions. Iím pleased to be here. I donít have anything in particular in terms of opening remarks, so Iím available for questions from members at any time.
†Mr. McRobb: Thank you to the official for appearing before the Committee and for keeping the opening statements to a bare minimum. That does allow us more time to ask questions. Since this is only the second appearance since the fall of 2001, I think an appearance today is all the more important. It seems somewhere along the line with this Yukon Party government we lost one of the annual opportunities.
I want to start by asking the official if he could explain todayís filing. The Yukon News today indicated that itís a general rate application. Can he confirm that is indeed the case?
Mr. Morrison: No, I wouldnít confirm that itís a general rate application. It doesnít say that on it, and it isnít a general rate application. We have filed an application with the Yukon Utilities Board to have the Yukon Utilities Board review our revenues and some related matters. Iím happy to explain or summarize at least the essence of the filing if that was part of the question. Iím not sure if it was or not.
Some Hon. Member: (Inaudible)
Mr. Morrison: Okay. What weíve done today Iím very pleased to discuss with Committee. We have filed an application to have the board review our revenues and costs, which has been a priority of the corporation for the last year. As I mentioned to the Public Accounts Committee, itís a high priority, and weíve finally been able to achieve it. We have not asked the board to consider or grant a rate increase. We have indicated to the Utilities Board that we have a revenue shortfall for 2005 of approximately a million dollars and that same revenue shortfall will be there in 2006. What weíve asked the board to do is allow us to utilize the deferred accounts that we have ó and we have two primary deferred counts: the Faro de-watering account, which is revenue that the Energy Corporation has been taking into a deferred account since 1997 for power that weíre supplying to the operators of the Faro mine for de-watering and maintenance. That revenue is about $300,000 a year, and the deferred account now sits at about $2 million. Weíre asking the board to let us use that money, along with the additional monies that are in the diesel contingency fund deferred account of about $900,000, to be applied against our revenue shortfall over the two years, which would cover that revenue shortfall and keep the corporation whole in terms of its rate of return.
In addition to that, we are asking the board to grant us permission to revise our energy service regulations, in terms of some administrative issues, and the amount of investment we can make, in terms of customer distribution costs. We are asking the Yukon Utilities Board to change the rate that we apply to the Faro mine dewatering from a special dewatering rate that they set in about 1997 to a government rate, which is appropriate because it is government that is operating the mine and, as a government customer, they should be paying the government rate.
We are asking the board to let us establish a green power rate which, I think, fits with both federal and territorial policy on climate change and greenhouse gases. We are also asking the board to establish or grant us an increase in the rate we charge for secondary power. The secondary power rate that we are asking for is that the board tie the rate we charge for secondary power to 70 percent of the cost of diesel fuel, which would mean that secondary sales are economic. There is a theoretical 30-percent savings to the customers who purchase secondary power.
Mr. McRobb: What the official just said certainly sounds accurate. I have had a couple of minutes to review the binder of information delivered to my desk earlier this afternoon.
I do want to put on record that in no way do I feel that this opportunity this afternoon should really be called any kind of forum of accountability. I want to put on record right now the deficiencies I have as the lead questioner for the official opposition because we have just been provided several hundred pages of information that I have not had the opportunity to examine.
Furthermore, there are more questions than time this afternoon, and any fair opportunity to hold the corporation to account would also include interested parties and members of the public. Of course, we in this Legislature represent only one person from each of the territoryís 18 ridings. Really, only about two of us will have an opportunity this afternoon to ask some questions.
I feel itís important to put that on the record because I have heard the corporation say in other circles how it is held accountable to the Yukon Legislature. I think itís very important to qualify the level of that accountability.
The official indicated that wasnít a full-blown general rate application, in terms of my experience of asking for a few relatively minor issues to be dealt with, which is really a far cry from a full-blown general rate application or GRA. The last such time there was a GRA is coming up to about nine years ago. The application was filed more than nine years ago; it was filed in the fall of 1995. I would like to ask the official just to confirm that power rates are really still based on that exercise from about nine years ago.
Mr. Morrison:†††† I want to clarify the point that I made: this is a full-blown review of all of Yukon Energyís costs, its revenues and its business ó a full-blown review. The only thing that I am in disagreement with is that it is not a rate application because weíre not asking for a rate increase. It isnít a rate application. In every other sense, it is a full-blown review of all our business interests, all our costs, all our revenues and everything that weíve done since the last rate application. The current rates that we charge are based on the last time that we had an approval for rates from the Yukon Utilities Board eight or nine years ago. Those are the rates that we charge. We have no authority under any other piece of legislation or any other directive to charge anything but rates approved by the Yukon Utilities Board and thatís what we do. Until they direct us otherwise, we will continue to charge these current rates.
Mr. McRobb: All right, and I thank the official for that clarification. Iím sure there are people out there who would appreciate knowing the opportunity presently before them will not be limited in its scope. Certainly, after nine years, there are several areas to ask questions about in terms of the corporationís operations and maintenance, as well as capital budget and policies and practices, and what have you, that do relate to the rates.
Now, I do want to ask about the rather unusual approach taken with this application. Mr. Chair, in previous years, the government has heard from interested stakeholders a very strong message that power rates should reflect the actual cost of service and not be clouded too much with external factors or political factors. It seems that to create this fund that is being requested by the corporation ó itís called the income stabilization trust fund ó does exactly that. It will serve to cloud the rates, because in fact this slush fund can be dipped into to recover shortfalls that arenít collected in the rates. So this is the very essence of the message heard loud and clear in the past. I would like to ask the official why, then, did he decide to take this approach?
Mr. Morrison: †Mr. Chair, let me be clear: if we proceeded with a rate increase as a utility, not one consumer in this territory would see one cent of that rate increase on their bills, no matter what we do to increase rates, because there exists in the Yukon a rate stabilization program. That rate stabilization program has been in existence for probably more than eight or nine years, but at least that many in my recollection. And it has frozen rates. That is not something that I created, and the rates that we charge are approved by the Yukon Utilities Board. Successive governments over time have implemented a rate stabilization fund. That rate stabilization fund ó particularly in the area of residential rates ó has frozen rates. So not what Iím doing ó nothing that weíre doing here today freezes those rates. What weíre doing is using money that we should have taken into income to cover a shortfall that we have. It doesnít have anything to do with rates. Weíre not proposing to raise rates.
†Mr. McRobb: I am not sure if I got an answer to the question there. I think what is really needed at this time is perhaps a clarification between ďratesĒ and ďbillsĒ. What Yukoners receive are bills. Within the bill is contained the RSF, or rate stabilization fund benefit, which is applied to the rates. I will agree with the official that any change in rates doesnít necessarily get reflected in terms of the bills received by customers.
However, the question I asked really didnít deal with those factors, Mr. Chair. It dealt with the approach taken in this application, which really creates a slush fund to postpone any review of the actual rates for the corporation. As I have indicated already, this is a significant departure from the message heard loud and clear by previous officials and previous governments. I would like to ask the official again: given that, why did they decide to take to take this approach?
Mr. Morrison: †I thought I answered the question, so I am happy to have another opportunity to provide the information.
These deferred accounts are revenues that the corporation has charged customers, and in our view, should go back to customers. In going back to customers, we just want to take them into income to cover this revenue shortfall. There is no sleight of hand here; there is no activity that is trying to defer monies or set up slush funds. We just want to use the money that we have been able to charge these customers. We havenít been able to take it into income. We are asking the Yukon Utilities Board to let us take it into income today, because this is the first time we have been in front of the Yukon Utilities Board. We have no other opportunity to do that.
I want to reiterate ó I want everybody to understand ó the application that is in front of the board provides an opportunity for the board and interested intervenors and any interested parties to review all our costs, all our programs, all our services ó everything that weíve done for the last period. Everything that weíve done since the last rate application is open to scrutiny. Thatís the whole purpose of going before the Yukon Utilities Board.
I agree that we have been away from the board for far too long. The board is our regulator. Thatís how we understand whether or not the costs we have are appropriate, that the programs we have are appropriate. It was long overdue that we get there. We found a way to get there, to provide the public with an opportunity to see that our rates and our costs are properly scrutinized and also to provide everyone with an opportunity to scrutinize the cost of the Mayo-Dawson project.
We are doing what we thought was the right thing by getting in front of the board. This is a methodology for doing that.
Mr. McRobb: Iím beginning to learn more about why the corporation decided to take this approach. But, Mr. Chair, we should also acknowledge that any general rate application or any application to the regulator, for that matter, does not necessarily translate into an increase in power rates. There have been times before when a utility will apply for a rate decrease, and we in the Yukon ó if you can just allow me a minute, Mr. Chair, I think itís important to provide some background.
We in the Yukon have a unique situation, and it is one that is very beneficial in terms of comparison with other jurisdictions. I did note, I saw somewhere in my glance at the binder ó it could have been in the annual report ó a comparison of power rates. Now, Mr. Chair, one can see from the chart that the cost paid in Whitehorse is quite favourable when compared to major cities in southern Canada. This comparison has greatly improved over the past decade due to a number of favourable factors. Mr. Chair, there are some good reasons to explain why we have favourable rates. One of the reasons is a process the official himself was involved in back in 1987: the transfer of the assets of the Northern Canada Power Commission and the huge write-off of debt from the federal government.
Mr. Chair, Iím not sure in comparable terms if there is any other utility or jurisdiction in the country that can claim such a benefit as we in the Yukon can. Basically all our power generation is done by hydro. And basically those facilities are paid for. Perhaps one could argue the main unit, the number four unit at the Whitehorse Rapids power station, which cost some $56 million in 1984, is still owing to the federal government, but there is a clause in the indemnity factor in the agreement that postpones the payments if that power is not used. And weíll get into that a little later with the official, because I know thatís another endeavour he is working away on.
In the Yukon today, we have a system that provides electricity generated largely by assets that have already been paid for. This gives us a very significant benefit and it means that weíre not very susceptible to large fluctuations in imported fossil fuel costs and shortages in supply of diesel fuel, et cetera. In fact, we have a surplus on the system, on the main power grid ó which is called the Whitehorse-Aishihik-Faro grid ó which covers most of the territory. Most of that surplus is in the summertime. One of the big challenges for the corporation would be to market that surplus power, and if that should ever happen, then we would see a benefit of some $10 million a year if itís sold at current market rates. In terms of the total revenue requirement, that is about one-third. In effect, if we could sell the excess power for the going rate, we could in fact see a power rate decrease of some 35 percent. Itís conceivable that could happen.
We have a very unique situation, and itís one that is probably enviable across the country and perhaps the world, where we have an isolated system with such significant built-in advantages. Because of that, we do have a few local people who have kept up on the history of the Energy Corporation and really want to see it take the right path into the future. There is an area of risk that could serve to destroy all those advantages ó weíll hope to have time to get into that a little later as well ó but basically itís the investment risk of building new supply for unsecured customers.
But I want to return ó Iím not sure what to call it; perhaps a quasi-general rate application, something of that order ó to the official and ask him: how can the public be assured without a review of the rates ó which may or may not go up ó that the corporation is conducting its business in a cost-effective manner?
Mr. Morrison:†††† The public can be assured that the corporation is conducting its business in a cost-effective manner particularly after the Yukon Utilities Board holds a review of our revenue requirements, and that is specifically why weíre doing this, so that the public can be assured of that. Weíre not doing this for the good of our health. This is a necessity. This is part of the process of our governance and accountability systems. Thatís why weíre going before the Yukon Utilities Board. Itís up to them to test whether or not, as the question asked, weíre managing our business in a cost-effective manner. I think we are; weíve put an application together to allow the Yukon Utilities Board an opportunity to review every one of our costs ó every one of them. I donít know what else we can do. They may agree with us and they may not, but we are taking the opportunity that we have in front of us to get in front of this Yukon Utilities Board. We have audited financial statements so we have auditors that, on an annual basis, come in and look at the appropriateness of our financial house and the financial integrity of our systems and control systems. Thatís a measure of assurance for the public.
I want to mention a slight point about some of the previous information. We donít have a debt-free system. We donít have assets that are entirely paid for. We are still paying on debt from the NCPC transfer, so yes, we have a great system; yes, we have a surplus of power, but that surplus of power is fast, fast disappearing; just being taken up ó and I mean ďfastĒ in utility terms. Itís not disappearing tomorrow; itís not disappearing next month. But in utility terms, with the long-range and a long time frame that you require to have new generation capacity in place, this excess capacity that we have at the moment wonít last very long and a major priority for all of us is to determine how are we going to meet loads in the future and what are those loads going to be. I donít know today how well we can forecast loads right now. Thatís a big challenge. But just to be clear, we have long-term debt on our books of $82.5 million. We have debt. Our assets are not debt-free. We have debt; a portion of that debt is the Government of Canada loan that is left over from the NCPC transfer.
Yes, we have great assets. Yes, we have a great hydro system. We have some real positives, but they have to be managed effectively. We think that we have done that. Weíre going before the Yukon Utilities Board to ensure that the public has a public opportunity to make sure that weíre doing that.
Mr. McRobb: Well, on the debt still owed to Canada ó I did allude to that ó the major part would be the remnants of the $56 million flex-term note that is forgiven in probably current conditions because generation stays below the threshold that triggers the payments to Canada. If thatís not correct, I invite the official to comment on that.
In terms of the rate hearing ó well, itís not a rate hearing, Mr. Chair; itís a hearing without consideration of rates ó some might argue that it is avoiding the main issue, which should be the rates. Perhaps the rates should be examined now in light of several favourable conditions. That review should not be postponed to some future date under the watch of the next government.
Mr. Chair, it has been nine years since there has been a full general rate application. It seems to me a lot of things have happened in that period. I am wondering who will intervene in the hearing, Mr. Chair. Iím aware of a couple of long-time intervenors who are retired now from their jobs. They may not wish to get involved. A lot of the councils representing past intervenors, like the City of Whitehorse and Curragh Resources, are no longer around. There is a real discontinuity in the ó if I can say ó the corporate knowledge of intervenors in the territory. One of the recommendations contained in the energy commissionís final report was the government-led process to build the knowledge of intervenors. We have seen nothing from this Yukon Party government to promote the building of knowledge among intervenors in the territory ó nothing at all.
I see in the application that the official wants to work with the Yukon Utilities Board in holding a workshop for intervenors. Well, Iíve been there and done that. I have some understanding and recollection of that process, and that is still a far cry from the process that is needed. Last time the intervenors went along with the utilityís recommendations, and based on my recollection of the aftermath of the experience, they werenít very impressed with the outcome of the entire process, so we may not see a negotiated settlement this time around. There could, in fact, be a hearing lasting several days. If the hearing is open to all matters, excluding power rates, then a hearing might go on for several days in the territory. I recall previous hearings lasting maybe eight or nine days. Who knows? This one may go even longer, considering it has been an absence of some nine years, and the proposal is to further delay a full general rate application for another two or more years.
The last time officials appeared before the Legislature we discussed some of the rate drivers ó the down drivers, if you will ó and Iím trying to recall what some of them were. Certainly, the additional revenues from the Faro mine would be one of them. Secondly, the number of wet years weíve had would be another. Thirdly, the absence of a large amount of diesel generation required on the system would be another factor. There has also been a savings due to direct management of the utility. That was the assumption by Yukon Energy Corporation of the Yukon Electrical staff ó some 50 employees, I believe. There was supposed to be an annual savings of $600,000, I believe, for that alone.
Those are just some of the favourable factors for arguing that power rates should actually go down, not up. Now, I know the official might point to the revenue requirements and how the corporation has in fact under-earned. But before we hear from the official, Iíd like to point out that there are a number of other components to the equation before we can just assume thatís the answer.
Some of those other components could include consulting fees and other expenditures that may not be necessary, so one canít evaluate the actual amount of return each year by the Crown corporation as the indicator of whether rates are sufficient or not, so there are a lot of other components to that equation. But given the fact there are all these advantages, some of which Iíve recited, why should we believe power rates in fact shouldnít be lower than they are now?
Mr. Morrison: Iím not quite sure how to answer the question with anything different from what Iíve already said. Weíve prepared a detailed application that outlines all the costs that we as the Energy Corporation incur to carry out our business. Weíve also provided information about all the revenues we have. This is a detailed set of information. It has taken thousands of hours of our staff time to prepare. That analysis indicates that our revenues, the revenues required to run the corporation, will not completely cover all our costs. I think the Committee of the Whole may not be the best place to debate all those numbers and thatís why weíve applied to the Yukon Utilities Board to have them review all our costs, all our revenues and let them decide ó which is their mandate; itís their mandate to decide ó whether or not the rates we charge for the services we provide are appropriate. Itís their mandate to decide whether or not the costs that we incur for every last expenditure we make are appropriate, and they will decide that.
I agree with the member that we have not been there for eight or nine years, that itís more than time to get there. It has been on the top of my list since I got here. Iím sure everyone in the territory is happy that weíre going before the Yukon Utilities Board to review rates. There may or may not be intervenors ó I have no control over that ó but the Yukon Utilities Board of the Yukon retains the British Columbia Utilities Commission and its experienced staff to provide them with an analysis and staff resources required to review this application in detail.
The British Columbia Utilities Commission does this for a living. They know inside-out how to read financial statements, how to look at utility costs and utility revenues. They will do a thorough analysis. Iím very confident that the Yukon Utilities Board will do a very good job. Thatís what their job is, and Iím quite confident that whatever the outcome is, it will be one that will be fair and equitable for everybody.
Mr. McRobb: Iím not sure the Committee of the Whole was requesting a bunch of numbers or a review thereof. We were just looking for an explanation as to why one would assume the corporation would apply to increase rates when, in fact, there were a number of downward rate drivers evident in this situation. Thatís all. We didnít need to get into the numbers.
Secondly, there is also a concern that there is discontinuity in the corporate knowledge among members of the Yukon Utilities Board. Mr. Chair, just examine how many of the board members were here the last time there was a general rate application. It is definitely a minority on that board.
With respect to the B.C. Utilities Commission, Iím not even sure if itís the same consultant who assisted the board back in 1995 and 1996. But even if it is, Mr. Chair, I personally recall hearing from that person that, indeed, local knowledge was an area of weakness to a person in his position. One from B.C. canít be expected to follow all the intricacies of the Yukon situation. Even when it comes to the focus, the Yukon system is merely one percent of the situation in B.C. So somebody from that jurisdiction reviewing our rates would tend to not get involved in the level of detail expected by many Yukoners, especially if one considers that the hopes of Yukoners are placed largely on that individual. Well, it just isnít there. It doesnít work that way.
All the more reason to make sure that Yukon intervenors are brought up to speed and are provided with prompt information and the information they request.
That brings me to another recommendation from the energy commission report ó number 51 ó which says that the corporation should identify interim solutions that will improve intervenorsí access to relevant information. I would like to ask the official what has been accomplished in that area.
Mr. Morrison: † As was pointed out earlier, we have offered to the Yukon Utilities Board to carry out a workshop for all interested intervenors that would take them through both the regulatory process as well as our application to help them understand everything that is in it. We are happy to do that. We are happy to pay for that. I will remind everyone that the corporation and the ratepayers pay for all the costs of the Yukon Utilities Board and the hearings during the time of an application, including intervenor costs that are approved by the board. We would be happy ó and have offered to the Yukon Utilities Board as part of this application ó to run a workshop or workshops as required to help intervenors understand this material and to understand the regulatory process.
Mr. McRobb: A workshop is nothing new, nor is it unusual. When the energy commission made the recommendation, it was expected there would be some enhancements to this area. Obviously there havenít been. Thatís an issue that, perhaps, I should follow up on with the minister at the appropriate time. So, I will move on.
He did comment on the costs of the regulatory review. This is something I brought up the last time an official appeared. Itís not unusual for officials from the corporation to make such comments but it is a matter of record, Mr. Chair, that, in fact, the costs of hearings have generally been a very good investment on behalf of ratepayers in the Yukon.
I recall a hearing in 1993, when the corporation requested a rate hike in the magnitude of 60 percent following a closure of the Anvil Range mine in Faro and, together with the board, the intervenors succeeded in reducing that increase by more than half. Certainly the net benefit was greater than the cost of the hearing.
Even if it wasnít, people expect accountability within the system and are willing to pay for accountability. And when there isnít a GRA in nine years, there is a definite lack of accountability. If the people werenít willing to pay for accountability then what are we doing in here? You know. Maybe we should just cancel the Legislature. I see some members opposite nodding in full agreement. Iíll remind them: after one more day they can have a break for a few months and be bright-eyed and busy-tailed for the spring sitting.
I think the point is that the cost of regulation and the cost of accountability is a necessary component in the system, whether itís government or utility regulation, because it provides the proper checks and balances. I recall arguments made by intervenors past to the effect that, without proper checks and balances in the system, we would lose control over what is spent in the utilities. In fact, that would lead to even higher rates. There is a very good point there, Mr. Chair. I came to realize in successive hearings how true that really was. The corporation should really welcome these opportunities because they are certainly necessary to make the whole system work.
With regard to the upcoming hearing, is the official willing to ensure that all documents are provided in electronic form and would he support what is known as an electronic hearing?
Mr. Morrison:†††† Just before I answer the very specific question, I hope the member didnít take my comment about paying for intervenor workshops and the cost of the hearings to indicate that I donít fully agree with the point he made that regulation in the utility sector is a necessary function of the system itself. It is very important; I take this very seriously; weíre very pleased to have the opportunity to get in front of the regulator and it is a necessity in this large monopoly-type business. I didnít mean to leave him with the impression that I thought otherwise.
In terms of the electronic issue, we have, in addition to the paper copy of the document that we tabled with the Yukon Utilities Board today, we filed a disk with all of the information on it. All the information is on our Web site. If the member didnít get a copy of the disk, I apologize. Theyíre in the binders. Weíre happy to provide them to him. I didnít bring mine with me, but weíll get you one. My apologies. They certainly are there. Theyíre handed out with the other binders. Iím not sure what he meant by an electronic hearing, but we certainly do our best to provide as much of the information as we can on our Web site, certainly in terms of things like answers to questions, and the information we have is all available electronically. Does that answer the question?
Mr. McRobb: All right, yes, I would just like to note that I searched throughout the binder and everything, and there was no CD as indicated in the cover letter, but Iím sure someone from the corporation will endeavour to provide us and the third party with the CD. That will be fine.
While this area is very interesting and important for several reasons, I would like to get to some other areas because of the time. I want to ask the official about the Mayo-Dawson transmission line because certainly this is probably the largest capital project undertaken by the Yukon Energy Corporation since its inception in 1987. Something obviously went wrong with the cost overrun as significant as it is. I would just like to ask the official if he could give us an update with respect to when the audit will be available, and could he just give us an update on the final costs and maybe a breakdown on those costs and who would pay for them. If thatís too detailed, an undertaking to return with that material would be acceptable.
Mr. Morrison: Mr. Chair, Iíll take a stab at it, and if thereís additional information required, Iíd be happy to provide it.
In general terms on the audit of the Mayo-Dawson line, as I understand it the Auditor General plans to report by the end of January ó as I understand it. Now, my understanding of that is from testimony at the Public Accounts Committee, and Iím quite sure that thatís my recollection of what I heard the Auditor Generalís officials say.
I would have been happier to see it sooner because itís starting to drag out, but I will be very pleased to see that information, even though there may be some criticism of the corporation, because weíll at least be able to identify what those specific issues are.
In terms of the cost we know today, we are applying to the Yukon Utilities Board for the cost of the Mayo-Dawson project in full. We have spent ó these are rough numbers, and Iím happy to provide specifics ó $33.5 million today. We anticipate that the total cost of the project will be $36.2 million, plus any amounts we have to settle with the contractor regarding claims. That would be net of the claims we have against the contractor and those the contractor has filed against us.
The difficult situation we are faced with in terms of these claims is that we have not been able to engage the contractor in a claims process. Under the contract, the contractor and Yukon Energy Corporation were both required to file their claims by a certain date ó Iím not exactly sure of what that date is, but it was something like the end of November 2003 ó which we did. Both parties filed their claims.
All those claims are is a list of what the claims ó a description of the claim and the amount. In order to proceed with claims and a process for dealing with these claims, we require a substantive amount of detailed information regarding each of the claims the contractor has made. They have not provided that information. They have promised to provide that information since January 2004. This is the middle of December 2004, and I have not seen one piece of paper.
I have written them emails, I have phoned them, I have gone to see them, I have submitted request upon request ó ďPlease provide the information, so we can proceed with the claims process.Ē We have received nothing.
I have no ability under the contract to invoke any other clause or any other method to get them to provide this information, and I canít start a process without the information. So weíre in a very difficult situation, a difficult situation that I think the Yukon Utilities Board will deal with in very great detail. The amount of money that will be put into our revenue requirement assigned to the Mayo-Dawson line will be decided by the Yukon Utilities Board. We have proposed that they put the total cost of the project in. They may either agree or disagree with that. But they will decide after a complete review of all the costs, and they will have the benefit of the Auditor Generalís audit report by that time as well. We will provide and have provided to anyone ó such as the Auditor General, and we will provide to the Yukon Utilities Board ó every piece of paper we have to on any of our costs in order to make sure that everyone understands where our numbers come from.
Mr. McRobb: Iíd like to thank the official for that. I do want to follow up on one aspect, and thatís the amount the corporation hopes to recover out of the regulatory process, a decision by the Yukon Utilities Board. I think I heard the official indicate that they would be applying for full cost recovery. Now, rather than get into a bunch of numbers, Mr. Chair, if the official can just indicate what figure that might be. And the reason I ask is I recall some previous order that the corporation used as a basis to proceed with the project that required a Yukon Development Corporation contribution. Is the official now saying theyíre seeking recovery of that Yukon Development Corporation contribution as well?
Mr. Morrison: No, weíre not specifically seeking the recovery of the Yukon Development Corporation contribution. If the Yukon Utilities Board decides that the Yukon Development Corporation contribution was contributed capital, and they likely will decide that, we will outline it for them. Theyíll decide whether itís appropriate or not. But generally it isnít. If it is contributed, they wouldnít normally include it as part of the costs.
I was just trying to be clear about what the total was. I thought the question was: what is the total cost?
Some Hon. Member: (Inaudible)
Mr. Morrison: The contribution from Yukon Development Corporation is $5.8 million.
Mr. McRobb: Okay, so am I correct then in assuming approximately $30 million ó I see the official nodding in agreement ó will be the amount requested from the Yukon Utilities Board. Well, that seems quite a bit higher than the board anticipated. It will be interesting to see how that matter is resolved. It has been a number of years since the Yukon Utilities Board made its decision and it has even been awhile since the line was completed. Perhaps this is the reason why an application is proceeding at this time, but is there such a thing as a statute of limitations for seeking board approval on capital projects already made?
Mr. Morrison: Iím not aware of one. Iím just not aware of anything in the Public Utilities Act that requires a deadline on filing for those things. Iíd be happy to look at it and see if there is, but not that Iím aware of.
Mr. McRobb: All right. Thereís another component I just want to put on record before moving on, and that is that there is such a thing as stranded costs. Thatís a regulatory term to indicate that some of a capital project requested for approval from the regulator was denied. There was a case about a decade ago. I believe Yukon Electrical did some improvements on the Fish Lake hydro plant and those costs were not approved by the board; therefore, they became stranded costs. There is a likelihood some of that $30 million could end up being a stranded cost. I see the official nodding in agreement. Well, if that were the case, then that affects the reality of power rates. And letís take it one step further. Assuming that, then why do we assume that, by not approaching the regulator for a full rate review, weíre in effect deferring a rate increase? So I think there are all kinds of arguments that could be made for lower power rates than what we have today.
I want to move on to the area of governance. I had an opportunity to review the transcripts of the Public Accounts Committee, which reviewed this matter in some detail. Can the official give us an update on where things are at, including these protocols?
Mr. Morrison: I would be happy to reiterate what I said to the Public Accounts Committee. The proposals for governance are within the Cabinet process, and I donít think it would be appropriate for me to be talking about them when they are going through the Cabinet process.
As far as the protocols are concerned, they were signed I think in August ó I just canít come up with the date at the top of my head right now. That is what we are required to do: negotiate a set of protocols with the minister. We have done that, and both parties have signed them. I am not sure if that is sufficient for the member.
Mr. McRobb: Sure it is, Mr. Chair. Again, itís another matter I should take up with the minister at an appropriate opportunity.
I would like to ask the official just some simple questions about the relations the corporation has with the minister. How often do officials from Yukon Development Corporation or Yukon Energy Corporation meet with the minister?
Mr. Morrison: †Well, there is no scheduled time frame, but let me be clear: there are roles and responsibilities of various parties here. Let me just talk about those for a minute. The minister has a role and is accountable to report to this House on the activities of these corporations. As such, he is required to be briefed on issues regarding the corporations. The job of doing that is for the chair and the board.
Management does not meet with the minister on any regular basis. It may be required to assist the chair on a briefing of some kind from time to time. In my previous job as chair, I met with the minister on whatever basis was required to brief the minister on the major issues before the corporation.
You know, sometimes that might have been once a week, sometimes that might have been once a month. It would just depend on what the situation was.
Mr. McRobb: Which officials usually meet with the minister?
Mr. Morrison:†††† As I said previously, itís the chairís job, on behalf of the board, and thatís who met with the minister in the past and who will continue to meet with the minister in the future.†
Iím sorry, Mr. Chair. The chair of YDC and, when necessary, the chair of YEC, or the Energy Solutions Centre, depending on what the issues were.
Mr. McRobb: I think that might be a different answer than what we got from Mr. Austring, the previous witness who appeared. I believe Mr. Austring indicated it was only officials from YDC who had contact with the minister and, of course, the other two entities are housed within YDC. If thatís not correct, the official is more than welcome to speak to it.
Has the minister ever provided any direction to YDC or YEC on any matters?
Mr. Morrison:††††† Let me just take the opportunity to address the first part of the memberís statement. Iím not sure what previous chairs have said in this House; I didnít read that information and I donít know what their opinions might be. As chair of the three corporations, it is my very strongly held belief that the three corporations are entities owned by this government, whether in a primary corporate role such as YDC, with the government being the primary owner, or as subsidiaries of a Crown corporation of this government. If this House or a minister of this House asks questions regarding one of those corporations, then the chair of that corporation or the chair of the parent company on behalf of that corporation should be providing the information.
I would never distinguish between whether I was answering questions here today ó I wouldnít presume to only answer questions in my capacity representing the Yukon Development Corporation. When this House asked a question about a subsidiary corporation, I would answer it.
The second part of the question is has the minister ever provided any direction to me. No, the minister has never provided any direction, other than what was in my original order-in-council appointment, which was to review and sort out the issues with the Mayo-Dawson line and make sure the corporations were run in a properly managed and financial manner. Other than that, no.
Mr. McRobb: Mr. Chair, just to make sure I understand, the official indicated the minister has never provided any direction to him. Would that also extend to other officials from the corporation?
Mr. Morrison: As far as Iím aware, the minister hasnít met with other officials of the corporation and so, therefore, shouldnít have provided any direction to other officials of the corporation.
Mr. McRobb: All right, Mr. Chair.
Iíd like to turn to the Auditor Generalís audit. It is quite apparent there has been a draft of the Auditor Generalís audit kicking around for some time. Can the official indicate if that is, in fact, the case? If so, when was it initially received?
Mr. Morrison: Mr. Chair, could I clarify, are we talking about the Mayo-Dawson line?
Mr. McRobb: No, the Energy Solutions Centre audit.
Mr. Morrison: I have not seen the report which the Auditor General has indicated to the Public Accounts Committee and has indicated publicly they wish to table before this Legislative Assembly sometime early in the new year. I have not seen a draft of that. If there is a draft, I havenít seen it.
Chair: Order please. Before we continue with debate, I would just like to remind members that in order for Hansard to record this properly, oneís microphone has to be turned on.
Mr. McRobb: Well, perhaps the official can clarify for me ó I see in this newspaper article identified earlier that this official was referring to an audit that examines the financial statements of the Energy Solutions Centre and specifically $150,000 in expenses. Is that from the same audit weíre talking about, Mr. Chair?
Mr. Morrison: Yes, it is from the same audit, and let me just clarify it for the member. If you look in the annual report, youíll see that there is a letter from the auditors, and itís ó itís this annual report, Mr. Chair. Itís a different book ó just for the memberís help here. If you would go to page 34, youíll see there is a cover letter, which is always provided with the financial statements that are part of an audit.
What my understanding is, and what the auditors indicated at the Public Accounts Committee, is that they were in the process of finalizing a further report they were writing regarding this audit and wished to table in this Assembly ó and thatís just the difference.
Mr. McRobb: I want to thank the official for that. This doesnít pertain to the official, but I would have expected the minister responsible to table that letter in this Assembly long before now, in the interest of accountability. However, that wasnít done.
I want to turn to the annual report. This was tabled late last week, and unfortunately I didnít get a chance to review the numbers in the annual report. But I noticed the officialís opening comments in the report indicated that the corporation was delivering safe, reliable and cost-effective electricity to Yukoners. I would think that is a general statement made many times previously. But there are probably a number of individuals in the territory who may take exception to that statement because of the several power outages experienced in the past year, especially in the Marsh Lake region.
This is not a new issue. Itís one that has been reviewed by the Yukon Utilities Board on previous occasions, and it may in fact come up again in this hearing without rates weíre expecting in the coming year. Quite often, the corporation is required to table a list of power outages, along with some details about where, when, why and so on. The number of power outages in a year is also a good indicator. But I didnít see that in my quick review of the annual report.
Iím wondering if the official wouldnít mind undertaking to return to us with some detail about the number of power outages in the past year ó or letís say this calendar year ó along with the detail identified.
Mr. Morrison: Iíd like to clarify, in fairness to the minister: the letter that the member referred to on page 34 of the annual report, which accompanies the financial statements, is the letter that the auditors wrote to me as chair. Itís not a letter to the minister. The minister tabled this letter when I gave it to him, which was Friday. He was given this the same as every member of this House was given this report. I gave him these financial statements and this annual report on Friday to table in the House, and I donít want anybody to think that the minister had this letter before that, because he didnít ó so just to clarify.
Secondly, on the power outages, I have absolutely ó we can provide information on power outages. I want to clarify one thing: the recent power outages at Marsh Lake were not Yukon Energyís power outages. Those are not our customers; they are Yukon Electrical Companyís power outages, so I want to be clear. We have our own share of power outages. We donít need to be saddled with anybody elseís. But Iím happy to provide information on power outages. We report monthly within the management of the corporation on all the power outages ó some planned, some unplanned ó and if thatís information that the member would like, Iíd be happy to provide it.
Mr. McRobb: All right, that would be appreciated. I want to turn to the issue of the wind turbine. In June 2003, I believe it was, there was an international wind conference in the territory. A lot of great stuff came out of that. Unfortunately, our Yukon wind turbines havenít had much success since that conference, as the commercial-grade unit was down for much of last winter and appears to be headed toward the same dismal performance this year.
I understand there are reasons for all of this out-of-service by this unit, but can the official indicate to us what the corporationís plans are for expanding on the wind program, specifically at the Haeckel Hill site?
Mr. Morrison: We donít have any plans at the moment in our capital budget for 2005 or 2006 to expand the wind program at Haeckel Hill. Wind as an alternative is not an economic source that we would immediately look to within the territory at the moment. Now, there may be some solutions that will occur and appear to us over the next little while. But the cost of both the large and the small wind turbines at Haeckel Hill ó at roughly $3 million capital cost for those projects ó a little more than $2.5 million was provided by government. If it was not provided by government, the power produced by those windmills would be very, very expensive power. They donít operate much more than on about a 15-percent capacity factor. Thatís very difficult for us to deal with. We are not looking at expanding Haeckel Hill.
The only commercial wind site that Yukon Energy is looking at is one at Ferry Hill at Stewart Crossing, which would feed into the Mayo-Dawson line. Weíre still doing research on it.
As you have pointed out quite fairly, we have had great difficulties with the machines on Haeckel Hill. During this past year, the last repair to the large wind turbine was nearly $200,000. Thatís a lot of money. Before we put that kind of money into something, we have to have good and economic reasons for doing it.
We are happy to have the wind program. We have done a lot of work through the Energy Solutions Centre on identifying wind regimes and wind sites in the territory. We havenít solved one of our greatest problems on mountaintop-located wind turbines, which is this rime icing problem. It causes a ton of grief, where we would be very happy if wind was economic and provided a great benefit. It certainly provides a benefit in terms of greenhouse gas emissions and those kinds of things, but from an economics point of view, they are very costly.
Mr. McRobb: Weíll have to pursue that on another day. Weíre running short on time. I want to ask about the CO2 emissions reductions because the corporation did earn an award recently. Certainly the Mayo-to-Dawson transmission line has provided some substantive numbers in this regard, as well as the secondary sales program. I would like to ask about an initiative that existed a few years ago, to see if itís still around today, and that is the emissions trading. Can the official give us an update on that?
Mr. Morrison:††††††††††††† I can give you a little bit of an update. From the Mayo-Dawson line project and from some of the secondary sales projects, we have accumulated what we would call emission credits. We are not quite sure where the emissions trading market is these days. Six months ago when we looked into trying to find out if there was a market for the credits that we have, the value that was there was very, very limited. Recent information that has come to our attention tells us that value may have jumped even two and three times from what it was six months ago. There doesnít seem to be any real market through North America, or even through Canada. It is very difficult to pinpoint what we should be doing in terms of getting value today. Are we going to have a need for that value tomorrow ourselves? We are reluctant to make a move at the moment until we see where this whole area of emissions trading is going. We really donít have a good handle on it at the moment.
Mr. McRobb: All right. I want to ask the official ó again, I havenít had the opportunity to review the various reports tabled recently ó can he indicate what earnings percentage the corporation has had for the past two or three years, and how that compares with the YUB-approved rate? If he doesnít have this information and it exists in one of the reports, then he is certainly entitled to indicate where it can be found. Alternatively, if it doesnít exist in the report, he is more than welcome to undertake to return with the information.
†Mr. Morrison: I have the information with me. If those with copies of the annual report in front of them turn to page 13, for our rate of return ó thereís a financial summary that shows what our earnings have been over the past ó this pink-bottomed cover report. During 2003, our rate of return was 6.78 percent; in 2002, it was 8.79 ranging up to 9.11 in 1998. Through that whole period, our rate of return approved by the Yukon Utilities Board is 9.14 percent.
Mr. McRobb: It seems to me that interest rates have dropped substantially since the 1995 era when that Yukon Utilities Board-approved rate came into being, so the question would be: isnít the amount of the earnings, you know, quite decent in comparison to what other utilities are earning, especially under more recent regulatory approval?
Mr. Morrison: The recent regulatory return on equity approvals are in the nine-percent range. The rate for all utilities in B.C. for the year 2005, as established by the B.C. Utilities Commission, is 9.04 percent, 9.03 percent, something in that range. The rate of return that we are earning, or that we are approved to earn, under the Yukon Utilities Board is set based on the costs that we have during that period of time. In 2003, or at the end of 2003, and into just early 2004, we were able to renegotiate a series of interest rates on a package of about $30 million worth of our debt. That was the first time we were able to renegotiate and get some lower interest rates.
So what the Yukon Utilities Board does is, it takes the average cost of capital at the time that it has an opportunity to review rates, so it will do the same thing this time. Now that weíre going before them again, there will be a change in some of the interest rates applicable on that $30 million, as Iíve said to you, on the money from the Mayo-Dawson loans that we have in here, and theyíll recalculate what rate of return theyíre going to approve based on interest rates. But rate of returns are generally fixed across the country. They are a formula, and the basis of that formula is long Canada bonds plus a percentage addition for risk. B.C., for the year 2005, has come up with nine percent, or 9.03 percent.
Mr. McRobb: All right, thank you for that. Also, previous regulators have ruled that risk in the Yukon can be quite a bit less than risk experienced by Outside utilities, which are susceptible to a lot of factors that we in the Yukon are insulated from, such as the volatility of the cost of imported fossil fuels, for instance.
I want to turn to an area alluded to earlier, and thatís the topic of new energy supply. This dovetails with the statements made about how we in Yukon have an enviable power system because of the large hydro component, which is essentially already paid for, with the exception of the federal term note, which has escape clauses in it, and our insulation from the volatile costs of imported fuels and so on.
I left off by saying that this is all something that can change very rapidly. How it can change is if the corporation decides to connect a large industrial customer to the grid, letís say, such as the Faro mine, which used about 40 percent of the power on the grid. Before I get to that, a large investment is required by the corporation to produce and distribute power to such an industrial customer. And then it turns out that the industrial customer stops operating for whatever reason, thereby foisting all those costs on to the existing customer base. This is something that is not new to the territory. It happened in 1993, and that explained the 60-percent rate increase application made at the time.
So, although we have a very enviable system and one that is, to a degree, immune to outside factors, one should also never lose sight of the fact that we can blow it in an instant. And it all comes down to a clause in the Public Utilities Act. Itís called the ďrequirement to serve.Ē The particular clause number escapes me, but I want to ask the official ó Iíve been meaning to ask this for a number of years: is a change to that clause something the corporation is willing to consider when it approaches the regulator? What Iím specifically hoping the official will say is that theyíre looking to change the clause to remove the requirement to serve a customer.
That would greatly benefit the utility because then, at least, it would be in a position of leverage when negotiating power agreements with an industrial customer, and that customer wouldnít just assume that it has all the leverage over the power corporation. So is this something the official would undertake to take up with the regulator at the next opportunity?
Mr. Morrison: The short answer is no, only because we have an application in front of the regulator, and this is a clause in the Public Utilities Act, of which I have no jurisdiction over nor am I in a position to be making recommendations at the moment. But let me talk about the concern that the member has raised, because that is a very legitimate concern. In the Yukon Utilities Board process, a number of years ago ó and I believe in response to some of these issues around industrial customers ó the Yukon Utilities Board ordered that industrial customers must pay a rate sufficient to recover 100 percent of the cost of serving that customer. So if we had an industrial customer for surplus power ó which we donít ó we would be very happy to sit down with that industrial customer and figure out a methodology by which we could mitigate the risk and recover the cost of serving the customer. Thatís what our job is, and thatís very important. We have a surplus of hydro on the system. If we had an industrial customer who wanted to connect to the grid, that would be fantastic. That would ensure that Yukon ratepayers had a larger revenue pool from which to draw, and it may mean a very positive downward rate driver. That would be the ultimate.
When we go out to build capital projects to service industrial customers, we will not be doing that without approval of the Yukon Utilities Board, and so there is going to have to be a full examination by the board of what we think the costs and the risks are of providing power to industrial customers. At the moment, we donít have any industrial customers banging on our door, trying to get power. But before I finish on this point, I do want to make the point ó and I think I made it earlier, or at least I alluded to it earlier ó that once we have filed this rate application, I would suggest to everyone that one of the most important challenges facing the Yukon Energy Corporation on a go-forward basis is how do we deal with new supply requirements in the future? What are those supply requirements going to be served by? How are we going to pay for them? Who is going to pay for them? And what are the alternatives?
While we may be getting awards today for reducing greenhouse gas emissions, at the moment, what weíre facing is if we get industrial growth of any kind, if we continue to get the residential and commercial growth that weíre seeing at the moment, then weíre going to be faced with looking at adding diesels to the system. That is going to reverse that greenhouse gas progress that we have made in the last number of years, but it is the quickest addition. It is the easiest addition to the system. Weíre not interested in just whatís quick and easy. Weíre interested in doing the right thing. So weíre taking detailed steps at the moment to look at what our requirements are going to be into the future, what the condition of our current assets are, when weíre going to need new supply and what those supply options are and how weíre going to pay for them. Itís a big job, but itís an important job.
Mr. McRobb: I think the official and I basically agree on this matter and that, in fact, it should be taken up with the minister responsible because the requirement is embedded in legislation and it is something that we need to examine. However, just because the corporation isnít aware of any circumstance on the near-term horizon doesnít mean that the minister isnít planning something. Itís quite possible for the minister to make a decision and then pass a directive to the corporation. We know the previous Yukon Party government was quite serious about a coal plant in the Braeburn area and, had such a project proceeded, Yukoners wouldnít enjoy the same low power bills they have today because all of the capital costs would have been paid for by the existing customers on the system. That would have been very unfair.
I want to ask the official, in the few minutes that I have remaining in my time, about the Alaska Highway pipeline and whether he has examined opportunities to supply electricity to any of the pumping stations and to give us just an update on that.
Mr. Morrison:††††† Let me preface my comment on the pipeline by just reiterating my point that weíre in a process at the moment of examining all the various potential customers that may be out there over the next number of years, including mining customers, pipeline customers, new commercial customers, new residential customers and how we are going to supply that load. We havenít had any discussions on any kind of a basis with the pipeline companies. We are aware that they will have four pump stations in the Yukon and that those pump stations are about 20 megawatts. But we are in no detailed or even preliminary discussions about supplying power to the pipeline. Iím very aware from past discussions and past involvements that there are some requirements within the licence for the pipeline; that if there is electric power available to service the pump stations, that they are required to use it. On a general knowledge basis, I think we are quite aware but we havenít looked at the pipeline in any more detail than weíve looked at every other possibility thatís out there at the moment.†
Mr. McRobb: It seems logical that, since the corporation has been active on the secondary sales program in recent years, the aspect of maybe providing electricity to at least one of the pumping stations might be examined. There is probably going to be a few of them close to the area served by the main power grid, which has the excess hydro in the system, so if the official would care to provide us with any material on that, we would appreciate it.
I will try to close on this question. I will provide a copy of a February 4 newspaper article to the official, and itís entitled ďYukon Energy files lawsuit for millions from fedsĒ. It was an article that appeared in the Whitehorse Star. In it the official describes how heís undertaking to reclaim a large sum of money from the federal government because, apparently back in 1987, it didnít have an authorization to destroy fish at the Aishihik hydro plant. Well, this seems to be a long time ago and Iím wondering if the official can update us on this process. I certainly hope thereís not a lot of money being spent on this.
Mr. Morrison: I would be happy to update everyone. The ratepayers of the Yukon spent $6.5 million renewing the Aishihik water licence. Thatís a lot of money. A big part of that cost was related to issues with the fisheries authorization permit, which NCPC didnít have and apparently was supposed to have. The other part of those costs was related to the compensation that NCPC was supposed to have paid to Champagne-Aishihik claimants in the area and didnít pay. The NCPC transfer agreement is very clear about the fact that it either told the Government of Yukon everything about all issues, including legal obligations, and that it had carried out all obligations it was required to do, and if it didnít, that it would save the government harmless in those areas. All weíre doing is saying to the people of Yukon that we have an obligation, if it exists out there, to go after the federal government to repay monies that we have paid on behalf of issues that we felt they should have handled prior to the transfer and, if I as the senior executive of the corporation donít make an effort to recover that money, then Iím not doing my job.
Now would I spend $3 million to recover it? No, but we tried to talk to the federal government. We tried to get them to sit down at the table and talk to us about this thing, but they refused. So we filed the lawsuit and we got their attention. So that didnít cost very much money. At the moment, weíve agreed with the federal government to enter whatís called a neutral evaluation process regarding these two items. That process, as I understand it ó itís a new concept to me, but I understand in the legal world itís a concept that people utilize to help not spend a lot of money on an issue and determine whether or not there is some legal basis for proceeding with a claim. Both of these issues are going to be subject to that process. Weíll determine whether or not in that process we have any kind of a case to go forward with and whether we have an opportunity to recover the money.
Mr. McRobb: I will just close on a similar question ó a quick question. Can the official provide us with an update on the initiative to renegotiate the indemnity clause in the NCPC transfer agreement? That is the one alluded to earlier about the exemption of the repayment on the $56-million loan when the power generation on the grid is below the threshold. This is an issue because of the secondary sales program.
Mr. Morrison: I am not quite sure that I got the question correctly. So, if I havenít, I will take some direction on it.
The flex-term note that the Yukon Energy Corporation holds with Canada, which is the remaining debt on the NCPC transfer, had an original face value of $40 million. It now sits today at $28.7 million. We call this a flexible-term note. There is a dispute with Canada regarding the payments under that note in relation to secondary sales.
To be correct, the payments under that note are not forgiven at the moment. They are reduced because we are above the threshold of 210 megawatts ó this is a little complicated.
Some Hon. Member: (Inaudible)
Mr. Morrison: Yes, 210 gigawatt hours. We are above it. We are generating at about 234 or 235 gigawatt hours without secondary sales, so we are making payments. The payments we are making on the note are about $1 million in principal and interest. If we were paying the full value of the note, if we were above 300 gigawatt hours, we would be paying $3 million a year to the federal government.
Mr. Morrison:† ††We are negotiating with the federal government to buy that note out at a reduced price. Negotiations are continuing. They are going very, very well. We havenít signed an agreement but we are in the process of discussing with the federal government a buy-out of that note at very favourable terms. When we complete that agreement, I will be happy to share the information with the minister, and Iím sure he will share the information with the House.
Mr. McRobb: I want to thank the official for the answers to my questions.
Ms. Duncan: Iím pleased to enter into the discussions and would like to thank Mr. Morrison for attending in Committee of the Whole today.
Iíd just like to pick up where the last discussion left off. As I understand it, the discussions about the two amounts with Canada are note 17 in the report that was tabled today, the notes to the financial statements, on page 32, on their commitments and contingencies.
So, on the flex-term note, Mr. Morrison indicated that the negotiations with Canada are going very well. And on the second part, part 2, which is the claim with respect to the Aishihik facility, weíve entered into ó call it an alternate dispute resolution process. Is my understanding correct? What would the total be ó well, first of all, is there any sense that these two issues might get linked?
Mr. Morrison: No, the issues arenít linked at the moment, and I think weíre quite a ways down the road on the flex-term note versus where weíre at with the claims for the Aishihik re-licensing issues. Canada hasnít tried to link them, and maybe Iím being naive, but I donít see any evidence that theyíre trying to do that at the moment; maybe they will later.
Ms. Duncan: It just sounds to me ó to anybody reading this ó that Canada owes us money on one hand, and we owe them on the other hand. It would make sense; however, government doesnít always make sense to anybody, no matter where they sit in the debate.
Just clearly again, for the record: what is the balance on the flex-term note? There has been $56 million, and $40 million was the original amount in the NCPC transfer. What is the balance on the flex-term note? Is it $6.5 million that we believe Canada owes us over the Aishihik issue?
Mr. Morrison: Just to be clear, the balance on the flex-term note, as it stands at December 31, 2003, was $28.7 million. Weíre due to make a payment to the federal government at the end of 2004, which will obviously reduce the amount still owing on the note. But itís $28.7 million ó thatís what weíre using today.
The amount of money weíre claiming on the Fisheries Act authorization permit and the Aishihik compensation claims is not $6.5 million. $6.5 million is what it cost the corporation to acquire the renewal of the water licence. Those were all the costs we incurred in renewing that water licence. We are trying to get back a portion of those costs from Canada. The question on the fisheries authorization issue is: how do we quantify what our loss is? As part of the Water Board order, weíve lost some drawdown capacity in the Aishihik system, and that has a value only if and when we have to generate diesel on the system to supplement that.
So itís difficult to say ó about two feet of drawdown is about $4 million. So if we had to draw down a foot, weíd have to generate $2-million worth of power in current dollar terms for diesel. So weíre a little unsure as to how we would quantify that claim, but we have advanced a claim nonetheless. Weíve had good water in the last few years, so we havenít had to draw down Aishihik Lake, but we could have a dry year, and we could have to draw it down. That would be a significant issue.
Ms. Duncan: We have a third claim in that (ii) of (2), which is the soil contamination. And whatís the value on that claim?
Mr. Morrison: The claim is approximately $200,000. We donít have any dispute with Canada on the claim. Canada has asked us to advance the invoices or an outline of our cost to clean up the fuel spill. This fuel spill is an old fuel spill at the Whitehorse diesel plant. We have cleaned it up in anticipation of signing a release form with Canada. Weíre just trying to make sure that we do some more due diligence to ensure that there is no other contaminated soil there and that we donít have to clean anything else up, because we wonít be able to go back to Canada after this. So we think itís about $200,000.
Ms. Duncan: Iím wondering if Mr. Morrison has any sense of when these issues might reach some resolution. For example, discussions with Canada are going well on the flex-term note. We filed a lawsuit and got their attention on the second, and then there is this other one. What sort of a time frame? Will we see these in next yearís financial statements, or might we see some resolution before then?
Mr. Morrison: † †I would think that we would see resolution one way or the other on a majority of these items in 2005. I think weíve had some very good discussions with federal officials on the flex-term note. So I am encouraged there. Weíre just entering this neutral evaluation process, and I donít mean to be facetious, but the federal government moves very slowly. The federal governmentís lawyers move even slower. It has been really frustrating, trying to get them to deal with some of these issues over the year.
Iím not a very patient kind of a person, so sitting, waiting for lawyers to do things is difficult. I think we certainly will resolve the fuel spill issue in the next three or four months. Itís a matter of providing some documents.
The neutral evaluation process ó I have never been involved in one. I donít know how to gauge whether or not it will take a long time. I am told it wonít, but if we can engage them early in the new year on that, I would think within a short period of time after that we would know whether or not we have a good case in law to go ahead with. Weíre not going to spend any money if weíre just chasing our tail here.
Ms. Duncan: I appreciate the witnessí patience, but still, two out of three wouldnít be bad to see; that would be significant progress indeed.
Iíd just like to clarify the actual costs at this point in time of the Mayo-Dawson grid. The reason Iím asking for clarification is that the annual reports says $36.2 million, and I took a brief glance at the documents provided today and they say $35.6 million. Is the difference the estimates? Why is there a difference?
Mr. Morrison:†††† †The difference is that there are still some costs that we anticipate will come along, so $36.2 million is what I think is our best estimate of what the line is going to cost.
Ms. Duncan: The Yukon Utilities Board documents say $35.6 million, so there is a difference there.
My understanding of the Yukon Utilities Board process is that, in brief ó and I understand there was a more complex discussion earlier ó the Yukon Utilities Board has a look at the assets of the Energy Corporation and says ďAll right, you can earn 9.4 percent rate of return.Ē That is the revenue that is able to be generated from those assets. Is it the intent of this Yukon Utilities Board hearing that the Mayo-Dawson grid be considered as one of the assets and be considered at the value of $35.6 million?
Mr. Morrison:††††† The intent of the hearing is that the Mayo-Dawson grid will be put into what we call rate base. So it will form part of all the assets that the corporation has. For only one of the jobs is the Utilities Board setting the rate of return. The Utilities Board will also provide an approval for us on what assets can be included in rate base. They will decide whether the Mayo-Dawson project ó or any other capital project that weíve built or upgraded in the interim ó is allowed to be included in that calculation we use then to calculate our revenues. They will approve that. They will approve the Mayo-Dawson line. Weíre asking them to approve the cost of the line net of the contribution made by Yukon Development Corporation. They wonít allow us to earn a return on contributed capital; thatís a pretty standard utility process.
Ms. Duncan: Iím trying to not lose the listeners who may not be familiar with how the Yukon Utilities Board works. No one is condoning or should read into my question that I am condoning cost overruns. Aside from that particular issue, the fact that the Mayo-Dawson transmission line is in place has saved Yukon consumers and the companies a significant amount of money this year, has it not?
Mr. Morrison: I donít mean to be picky about words, and I donít mean to debate with the member, but I would change the words ďhave savedĒ to ďwill saveĒ and this is the first year that the costs of the line have crossed with the costs of providing power with diesel; whereas in previous times I have said that that point where the cost of the line is going to be cheaper than the cost of providing a service with diesel, I believe Iíve said publicly in the past that it was going to be five or six years away. The increase in the cost of fuel has moved that period forward and that period happens basically at the end of this year.
Ms. Duncan: So ballpark, what are we looking at in the savings then? In the Yukon Energy annual report, thereís a note that fuel costs decreased by $279,000 from 2002. Thatís a result of diesel power generation in Dawson being replaced by hydro power from the Mayo-Dawson transmission line. That was the crossover that Mr. Morrison just mentioned. Ballpark, what are we looking at for future savings as a result of this line being in place?
Mr. Morrison: We have indicated in the past that over the life of the line, the ratepayers will save approximately $20 million.
Ms. Duncan: So a $20-million savings as a result of the line being in place. I donít have a great deal of time left. I would just like a brief response, if I might, on the status of the rate stabilization fund. Could the witness just briefly outline the status of that fund?
Mr. Morrison: The rate stabilization program is currently being ó I want to be careful that I am choosing the right words ó I believe it is under an order-in-council that the rate stabilization program is being funded at the moment. One-hundred percent of the costs of that program are being funded by the Yukon Development Corporation. The program, as I understand it, ends March 31, 2005. At current rates, in 2004, it will cost the Yukon Development Corporation about $3.6 million or $3.8 million. Thatís basically what the program is costing on an annual basis at this point.
Ms. Duncan: I happened to bring in the order-in-council with me for the Yukon Development Corporation. The order-in-council basically talks about the rate stabilization fund and indicates its end as of March 31, 2005. Are there any discussions between the Yukon Development Corporation and the minister as to what happens after March 31, 2005?
Mr. Morrison: Yes. We are actively looking at various options of how the program can be funded on an ongoing basis. We have had discussions with the minister about that. We havenít reached a decision on that yet ó at least on our side ó but Iím sure we will find a solution to the issue in the near future.
Ms. Duncan: As I indicated, I havenít had an opportunity to go through the documents that were filed today. Is the rate stabilization fund part of the discussions before the Yukon Utilities Board?
Mr. Morrison: No, itís not. Itís a Yukon Development Corporation program, so it doesnít cover anything in the Yukon Energy Corporation.
Ms. Duncan: The two corporations ó itís not always easy to keep straight as to who is doing what.
I would just like to ask a couple of questions about the Energy Solutions Centre and the audit. The report that was tabled in the House today of the Yukon Development Corporation ó the auditorís report ó indicates that the financial statements for 2002 ó but my understanding is for 2001, as well ó in 2001 and 2002, the financial statements were audited by KPMG, and the auditorís report says that the Auditor General indicates that they didnít examine 2002, as I read it. Is that correct? So does the Auditor Generalís report for the Energy Solutions Centre simply cover 2003, or did they go back and re-do the other audits that were done by KPMG?
Mr. Morrison: Mr. Chair, no, the audit that the Auditor Generalís office carried out was 2003 only. I think what people may be confused by is, in the 2003 annual report, there is a comparison in the financial statements for the income in 2002, and if you looked at the 2002 annual report, youíll see it is reported differently. But all they have done is restated the income in the same manner, taking substantive dollars out of revenue in both those years and putting them down below the line as subsidies. So all they have done is re-present 2002. They did not go back and audit the corporation.
Ms. Duncan: †So the expenditures that do not have supporting documentation of $152,061 relate to 2003 expenditures ó correct?
Mr. Morrison: Thatís correct.
Ms. Duncan: I would just like to ask further about the Energy Solutions Centre ó the Auditor Generalís letter. Further in the pages, there are quite significant differences in a number of different lines on the revenue and expenses. For example, in the expenses on page 37, the expenses for vehicle operations in 2002 were $2,481, but in 2003 they were $4,898. There is quite a significant difference there. Equipment rentals ó significant differences.
Is this a restatement of 2002 with some of the coding changed, or why were the expenses so significantly different in 2003 from 2002?
Mr. Morrison: Well, I think there are two things. One, there is a heightened level of activity. More money is being spent, as you can see. The total budget for expenses in 2002 was $1.4 million; in 2003, itís $2 million. So there is more activity going on.
I believe there may be some reallocation in terms of expenses here because theyíd have to match some categories, and I donít know whether or not they were matched in 2002. I think overall the big issue weíre talking about here is that in 2002, income was represented to be $1.4 million or $1.5 million, and in 2003, the auditors have come along and clearly said, ďThatís not appropriate. That wasnít income. That was a subsidy from the parent. You have a very close relationship with that parent, and this is a subsidy.Ē
Ms. Duncan: The expenses are significantly different. In addition to the revenue being stated differently from one auditor to the next, the expenses are significantly different. Could I just ask the witness if he would clarify if that is the result of more activity, or is there a difference in activities? Of course, the wind conference is one activity that was more, but are there additional programs that caused the significant increase in expenses?
Mr. Morrison: I believe there were. I didnít go back on 2002, so I canít specifically answer on individual lines for the member, but there was certainly a substantive increase in programs and services being provided by the centre between 2002 and 2003.
Ms. Duncan: I would just like to ask a final question with respect to the forthcoming Yukon Utilities Board hearings. It has been the subject of some debate in the past whether or not intervenors receive funding, and Iím thinking back to the 1992 hearing when I know, for example, one organization ó the Whitehorse Chamber of Commerce ó did not receive the full cost of preparing their submission before the Yukon Utilities Board. And it was the subject of some debate. So I applaud the Energy Corporation putting forward intervenor workshops. I think thatís an excellent suggestion. The Member for Kluane has made the point that there isnít the corporate memory. There isnít the corporate memory in the Yukon at this point. Can organizations like the chambers of commerce, like those community organizations that have an interest, be reassured today in our discussion before Committee of the Whole that, yes, they will be reimbursed for preparing their application? Itís a significant cost because these are very technical hearings, so can they be reassured of that today?
Mr. Morrison:††††††††††††† Unfortunately, I canít give anybody that assurance. The decisions around intervenor funding are the purview of the Yukon Utilities Board. They decide which organizations they will fund and how much they will fund them and thatís a pretty standard process across the country. I think if members might refer to recent news articles about funding requirements for the Mackenzie Valley pipeline hearings, there are groups and organizations asking for intervenor funding and not getting it. Unfortunately our hands are tied on it. All we do is write the cheque when the Yukon Utilities Board tells us how much each organization should get for intervenor funding.
Ms. Duncan: However, the witness has said that the Energy Corporation will go so far as to do what they can in terms of having workshops for interested parties.
†The witness is nodding that is correct. I appreciate that this is a very complex issue.
I very much appreciate the witnessí time this afternoon and his frank answers. We have appreciated that before Public Accounts Committee, as well as before Committee of the Whole this afternoon. I would again like to thank the witness for attending. I appreciate the time, Mr. Chair.
Mr. McRobb: Thank you, Mr. Chair. It looks like Christmas has come early, because there is time for a bonus question here. I would like to refer the official to page 7 in Yukon Energy Corporationís annual report for 2003. It has a paragraph that describes how the Mayo-Dawson transmission line savings will be treated by the corporation. This, Mr. Chair, is something that I want to ask the official about, because it would appear to read as if any savings from the cost of fuel by serving Dawsonís electrical needs with hydro from the Mayo dam, as compared to using diesel generation ó it would appear that any savings wonít get passed on to the ratepayers.†
It appears that any savings might go into the pocket of the Yukon Energy Corporation. Maybe this is one of the reasons why rates arenít being requested to be reviewed by the Yukon Utilities Board in the upcoming hearing.
In addition, there was a point made previously about stranded costs. One must acknowledge that all the figures used in this application by Yukon Energy Corporation to the Yukon Utilities Board are only an application. A lot of the figures are assumptions. I am sure the official would agree that until the Yukon Utilities Board rules, there are no firm figures with respect to how much can be recovered from that transmission line or anything else.
Can the official indicate what is happening to the savings in the Dawson City situation?
The leader of the third party asked about this matter, and I believe I heard a response to the effect that savings will be accrued as of the end of next year because of the high cost of diesel fuel. Well, my question is: what happens to those savings? Iíve already indicated that it would appear that those savings just pour into the bigger pot, which is spent at the discretion of the Yukon Energy Corporation, and it is not under the purview of the Yukon Utilities Board, and it is not reimbursed to customers, so Iím anxious to hear the response to that.
Mr. Morrison: If we have led the member to believe that we have a pot of money where savings can disappear into, I want to correct it at this point in time. All our costs are, and will be, scrutinized by the Yukon Utilities Board.
What we were trying to say in the annual report was that we organized the financing of the Mayo-Dawson line with our parent, the Development Corporation, in a manner that would ensure that, in the interim period whereby the cost of the transmission line exceeded what the cost would have been to provide the power with diesel, that we had flexible terms under our note so the ratepayers would pay no more than what it would have cost to produce with diesel. Thatís what we were trying to say.
What Iím saying today is that, regardless of that situation, whatever our costs are for operating the line ó now that itís up ó and the costs of providing the debt financing for that, those will be scrutinized by the Yukon Utilities Board. If they indicate savings over and above what it would have cost us to provide service with diesel, those costs donít exist any more.
So the Yukon Utilities Board will look at what it actually costs us to operate, what the cost of debt is, what our operating costs of the line are, and they will make a decision. There is no pot where money can disappear into. We canít not give it back to anybody. Itís part of our general revenues. It will be outlined as part of that in the rate application, and there is no ability for us to keep savings from anybody.
Chair: Are there any further questions?
On behalf of the House, I would like to thank the witness, Mr. Morrison, for appearing before us today. With that, Mr. Morrison, you may be excused. Thank you.
Mr. Morrison: Thank you very much.
Hon. Mr. Lang: Mr. Chair, Iíd like to thank Mr. Morrison for two hours of meetings here today. So thanks to you and your officials.
Hon. Mr. Jenkins: Mr. Chair, I move that the Speaker do now resume the Chair.
Chair: It has been moved by Mr. Jenkins that the Speaker do now resume the Chair.
Motion agreed to
Speaker resumes the Chair
Speaker: I will now call the House to order.
May the House have a report from the Chair of Committee of the Whole?
Mr. Rouble: Committee of the Whole has considered Bill No. 12, Second Appropriation Act, 2004-05, and has directed me to report progress on it.
Also, Committee of the Whole has considered Committee of the Whole Motion No. 6 regarding a witness from the Yukon Energy Corporation, and the motion was agreed to. Pursuant to that motion, David Morrison, chair and chief executive officer of the Yukon Energy Corporation, appeared as a witness before the Committee of the Whole from 4:00 p.m. to 6:00 p.m.
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.
††††††† The time being 6:00 p.m., the House now stands adjourned until 1:00 p.m. tomorrow.
The House adjourned at 6:01 p.m.
The following Sessional Paper was tabled December 13, 2004:
Yukon Development Corporation, Energy Solutions Centre, 2003 Annual Report (Lang)