Tuesday, November 13, 1990 - 1:30 p.m.
Speaker: I will now call the House to order. At this time, we will proceed with Prayers.
Speaker: We will proceed with the Order Paper.
Are there any Returns or Documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Mr. Byblow: I have for tabling two legislative returns relating to information requested by the Member for Riverdale South.
Hon. Mr. Penikett: I have for tabling the annual report of the Yukon Development Corporation and the annual report of the Yukon Energy Corporation.
Speaker: Are there any Reports of Committees?
Petition No. 1
Clerk: I have had the honour to review a petition being Petition No. 1 of the Second Session of the 27th Legislative Assembly as presented by the hon. Member for Kluane on November 8, 1990. This petition meets the requirements as to form of the Standing Orders of the Yukon Legislative Assembly.
Speaker: Petition No. 1 is deemed to have been read and received.
Petition No. 2
Mr. Brewster: I have a petition here to the Yukon Legislative Assembly:
THAT whereas the milepost signposts are of significant historical importance to the Yukon and recognized internationally;
whereas 1992 is the bicentennial of the Alaska Highway and the Yukon Anniversaries Commission and the International Joint Commission are planning various events to celebrate and commemorate the construction of the highway;
whereas the majority of Yukon tourists are from the United States and are familiar with mileposts rather than kilometre signs;
whereas one of the popular tourism guidebooks containing the information relevant to the Yukon is entitled The Milepost and includes both miles and kilometres;
therefore, the undersigned ask the Yukon Legislative Assembly to urge the Government of the Yukon to reinstate the historic mileposts at communities along the Alaska Highway and other appropriate historical important places.
I have 3,746 signatures.
Speaker: Introduction of Bills.
Are there any Notices of Motion for the Production of Papers?
Notices of Motion.
Are there any Statements by Ministers?
This then brings us to Question Period.
Question re: Power rates
Mr. Phelps: I have some questions regarding the increase in electrical bills that Yukoners are facing in a couple of months. The power corporation, that is to say Yukon Energy Corporation, made a profit of $23 million in the first three years of its operation. That being the case, I am wondering why the power corporation is increasing the cost of electricity to Yukon consumers in a couple of months time.
Hon. Mr. Penikett: I believe the Member knows that the power corporation is required to go to the Public Utilities Board to receive approval or not for its rates and for its rate of return. The last time it did that, the Public Utilities Board ordered that there be a temporary reduction expressed in certain riders, which will come off the bills on December 31, 1990. That, combined with the addition of the goods and services tax, means that power bills will be going up on January 1, 1990.
Mr. Phelps: The power corporation paid the Yukon Development Corporation a total of $16.2 million in dividends for 1988 and 1989. I am wondering why it paid the money out to the Yukon Development Corporation if officials knew that electrical bills were going to have to be increased next January.
Hon. Mr. Penikett: Again, the Public Utilities Board allows both the public utility - the Yukon Energy Corporation - and the private utility - Yukon Electrical Corporation - a certain rate of return. That rate of return is consistent with the rate of return allowed for utilities from one end of the country to the other. The surpluses that may be generated by the Energy Corporation are used either for providing new capital or for serving the purposes of the Development Corporation for which it was mandated by an act of this Legislature.
The rate of return is approved by the Public Utilities Board and the Member will note that the Development Corporation has, itself, provided money by way of loans to the Energy Corporation. The transactions between the two have not just been in one direction.
Mr. Phelps: Is it true that the Yukon Development Corporation stripped $16.2 million in cash from the power corporation in order to pay for losses incurred by the Watson Lake saw mill?
Hon. Mr. Penikett: No, that is not true. No matter how many times the Member makes that allegation he cannot support it. The record will show, through documents provided to this House, that the money to get involved initially in the sawmill project initially had been advanced by the Government of the Yukon to the Development Corporation. I think the recent returns tabled in this House indicated that the government itself has advanced something like $14 million to the Development Corporation.
Question re: Power rates
Mr. Phelps: We know that money went to the government of Canada to purchase the assets of NCPC.
The Yukon Energy Corporation has been used as a cash cow by this government. The Yukon Development Corporation has been systematically stripping cash away from the power corporation. In 1988 the power corporation had a net income after paying relief subsidy payments of $8.2 million. Yet, $8.6 million was paid in dividends to the Yukon Development Corporation.
Why did the power corporation pay more to the Yukon Development Corporation in dividends than it earned in 1988?
Hon. Mr. Penikett: Again, the Member is taking one year, I suspect, out of context. I have to deal with the mistakes in his preamble.
I believe that the information is correct that the money provided for the transaction to acquire NCPC was provided by way of previous advances, accounted for in previous years. The Member, again, uses red herrings - and I hate these expressions - when describing a cash cow. They make quite a monstrous animal.
The Development Corporation and Energy Corporation have not been used as cash cows by this government because not a single penny has been taken out of those corporations for use by the government.
Mr. Phelps: The appropriate term might be milking.
In 1989, the next year, the power corporation had a net income, after paying the relief subsidy payments, of $5.1 million, and yet $7.6 million was paid in dividends to the Yukon Development Corporation. Why did the power corporation end up paying that much more in dividends than was earned in 1989?
Hon. Mr. Penikett: Again, the Member is abusing Question Period when he takes a single line out of a financial statement from a single year and attempts to paint an inaccurate picture of the relationship between the Development Corporation and the Energy Corporation.
The Member will recall that the Development Corporation was created to serve certain purposes. One was to make strategic investments for the good of the Yukon economy and society and to work with the private sector toward that end. The Energy Corporation exists to meet the energy needs of the people of the Yukon. Very substantial investments will be made by these two corporations toward that end in the next several years. As I previously indicated in the House, I suspect very significant sums of money will be coming from the operations of these two corporations for that purpose.
To attempt to paint the picture, as I think the Member is, that somehow the consumers of this territory are being abused for some improper purposes is false. The consumers are actually paying less for power now under our management than when the company was managed by the federal Conservatives.
Mr. Phelps: Of course, because there was a large write-down of the assets by the federal government.
In 1989, the total sale of power by the Yukon Energy Corporation to all consumers was $18.6 million. Surely, the Minister would agree that the increase in electrical bills being faced by Yukon consumers would not be necessary if the Yukon Development Corporation had not stripped $16.2 million out of the power corporation.
Hon. Mr. Penikett: I profoundly disagree with that statement. The rate of return and the rates that the Energy Corporation is allowed are established, following public hearings, by the Public Utilities Board. Bills are going up as of January 1, 1991, because a temporary reduction, a rider, authorized by the Public Utilities Board, is coming up. A more substantial reason is because the good and services tax - the gouge and screw tax as it was described by one of my colleagues, or the Conservative sales tax as described by another - is coming into effect. This will add seven percent to everyones power bills. For people who will have difficulty meeting that change, we have provided some cushion for the first quarter.
The real impact of power bills is going to come from the GST in the next year and for years into the future.
Question re: Power rates
Mr. Phelps: The Minister makes much of what the Public Utilities Board rules and says. But, just before the last election and before a ruling was made by the Public Utilities Board, the Minister sent out letters to consumers telling about how the bills were going to be reduced.
It was anticipated that the freeze would continue year after year after the first two years was up. Will the Minister not admit now that what was done by this government was simply to reduce power rates at the expense of the consumer in order to have an election gimmick in the last general election?
Hon. Mr. Penikett: It was quite the opposite. The Member says we reduced power rates at the cost of the consumer. I do not know how you can do that but if we had our way we would have reduced power rates on April 4, 1987, but we were prohibited from doing so by an agreement with the federal government. The federal government would not permit us to do that. So we were not able to reduce power rates for two years following the transfer and that is part of the agreement. We could have done it earlier and we would have done it earlier, if we had been allowed to do so.
Mr. Phelps: I would like to know why the Minister made the announcement of reduced power bills before the government appeared before the Public Utilities Board and got its ruling, if the government is not dictating to the new Public Utilities Board which, incidentally, is brand striking new after Roger Kimmerly got rid of the previous members.
Hon. Mr. Penikett: Excuse me, but the Member is asking, I think, a very silly question. The government of this territory decided to completely restructure the rates and to restructure the rates philosophy to achieve a number of objectives, which have been long argued in this House, by both sides I might add: one, equalization right across the territory for the basic block of power; two, we increased the equalization from the modest amount it was previously to provide equalization for the first 1,000 kilowatt hours for every household and up to 2,000 kilowatt hours for every business - that was a new structure - and we provided the equalization of, and a reduction in, the bills, with the idea that the potential was there for considerable degree of rate stability. Northern Canada Power Commission had planned to raise power bills - and it had announced that they were going to do it - by five percent a year ad infinitum.
That was the rate restructuring we did and it was quite proper that we announce it as a matter of public policy and announce our philosophy and our intentions prior to going before the Public Utilities Board.
Question re: Power rates
Mr. Lang: I always enjoy listening to the Government Leader, who is always blaming somebody else if there is a problem, but I think we are at the stage now where the facts speak for themselves. If one takes a look at the Yukon Energy Corporation report for the year ended December 31, 1989 - and maybe he has not read it - on page 15 it reveals that there was a $16.2 million profit made by the Yukon Energy Corporation from the previous power bills that we as Yukoners were paying.
In view of the fact that Yukoners are being hit every which way, as far as increases are concerned, I do not understand, and the guy on the street does not understand why, when we have been getting profits every year under the current power bills that we are paying - $16.2 million worth - the Minister does not take the necessary steps to appear before the Yukon Public Utilities Board to see that our rates stay the way that they are now?
Hon. Mr. Penikett: This is fascinating. It does not surprise me that the Members opposite would attack a public corporation for not making money but now they are attacking a corporation for being run well enough that it in fact has a surplus. The profits that the Energy Corporation earns are in accordance with the rates of return that are authorized by the Public Utilities Board. There was a year, previously, when the Energy Corporation was deemed to have earned more than an acceptable rate of return and the Public Utilities Board ordered a temporary reduction in power bills as a result.
The Member opposite talks about power rates. Power rates have not gone up. What is happening to power bills on January 1, 1990 is that, and I repeat again, GST is coming on and the temporary rider is coming off. That will have an impact on peoples bills.
Mr. Lang: The fact is that Yukoners, through the power bills that they now pay, are providing a very nice profit for the Yukon Energy Corporation, to the tune in the last two years of over $16 million. Yet, the Government Leader stands in his place and tells them that they are going to have to see an increase at the first of the year when they have been paying more than what it costs to provide the power. Why are Yukoners going to see a significant increase in our power rates when we are paying enough money to have the Energy Corporation realize a $16.2 million profit?
Hon. Mr. Penikett: Once again, Yukoners are not seeing an increase in their power rates. They are seeing an increase in their power bills as a result of the removal of a temporary rider and the addition of the GST. That is point one. Point two is that the Energy Corporation is allowed a rate of return on its operations to serve certain purposes: to meet the supply needs of the energy consumers of the Yukon Territory.
We have a very small rate base and, when we add significant supply to that system, it is a very significant cost that has to be passed on to the consumers.
The Energy Corporation in the Yukon has a very healthy debt/equity ratio, which is a very healthy situation. That will enable it to increase supply and do power projects in the future without the kind of huge burden on the consumers - because consumers end up having to pay for these things - that another power corporation in another jurisdiction might have to face.
I argue that we have had more rate stability and price stability here, in the price of electricity, than any other neighbouring jurisdiction.
Mr. Lang: The fact is that the books show that $16.2 million went to the Yukon Development Corporation. If that is what we, as electrical energy users, paid in extra cost for the service that was provided through the Yukon Energy Corporation, why are we paying for the losses of Hyland Forest Products through our electric bills? That is exactly where that money has gone.
Hon. Mr. Penikett: I know that is ultimately the case the Members are trying to make, but it is not fact. The Member may repeat it as often as he likes, but it still will not make it true. The fact of the matter is that the Energy Corporation is allowed a certain rate of return, by law, after a public review process.
I am sorry, it is not enough that the Leader of the Official Opposition speaks in Question Period ...
They are allowed a certain rate of return, and the rates are set as a result of the public review process. It was always contemplated that the Development Corporation would be there to make strategic investments for the economic development of the Yukon Territory. That is why it was established.
The Members opposite, having voted for that Development Corporation and approved its mandate, may decide, in retrospect, that they do not like it. The other day, the Leader of the Official Opposition was demanding that we take risks and take initiatives. The only thing is that he wants us to take risks and to take initiatives, but never to make any mistakes.
Speaker: Order please. Would the Member please conclude his answer.
Hon. Mr. Penikett: Happily, Mr. Speaker. I do not believe that the selective use of the information contained in the annual reports of the two corporations by the Members opposite will prove the case that they want to make.
Question re: Power rates
Mr. Phelps: This is interesting, because what the Minister is saying by his answer to the previous question is that, yes, they are stripping away all these profits from the power corporation, which is going to result in an increase in the power bills that are going to be paid by the consumer in the Yukon, but that is what they are supposed to do. They are supposed to take this money and dump it into saw mills and whatnot. That is the gist of what he is saying.
When it comes to that $16.2 million that they stripped away, I am interested in the policy whereby they are going to put $2 million of that toward the convention centre that is being built in Whitehorse.
Can the Minister tell us when a policy arose permitting the Yukon Development Corporation to make loans such as the $2 million loan that is being made to the owners of the company building the new convention centre, and exactly who formulated that policy?
Hon. Mr. Penikett: Again, we have to deal with the misstatements of fact and the complete distortions of fact by the Member opposite.
First of all, the Development Corporation is not stripping the profits of the Energy Corporation. I can see the Member is fishing for a headline again in a really scurrilous way.
The Development Corporation was created, as I said, to make certain strategic investments in the territory. That was always contemplated, and it was provided for in the act. Otherwise for what purpose would it exist?
The investment that the board of directors of the Development Corporation have decided to make in the Dakwakada project is in aid of helping to lever the development of a $42 million project. Not incidentally, I understand there is $5 million from the federal government, among other parties. This will attract a major new hotel chain to this territory, and initiate a project which I am told will create dozens, and perhaps over 100 jobs.
The Member asks where the policy comes for that. There is a mandate given by the corporation in law. There is a strategic mandate given by the Cabinet of this government to the Development Corporation and to the Energy Corporation, and they are carrying it out according to those policies.
Mr. Phelps: It is interesting that the consumers of electrical energies are contributing $2 million to the convention centre. I am wondering whether or not the Minister would tell us when the policy was made that allowed the Yukon Development Corporation to enter into such payments, and whether or not he is prepared to table the policy so other businesses can take advantage of this policy?
Hon. Mr. Penikett: I am not quite sure what the Member is getting at, but I am quite prepared, since we have recently reviewed and renewed the mandate of the Development Corporation, to table a document describing that mandate in this House.
Once again I want to say what the Member keeps ignoring is that the most financial significant investments being made by these Crown corporations for the public good of the territory are in energy projects.
This is what the plan indicates for the next several years. The most significant financial investments being made by the corporations are for the provision of electrical power for the people of the Yukon. I think this is consistent with the mandate of both corporations and one that all of us on this side of the House will want to see carried out.
We would not want to see the corporation left in the situation where it could not meet the supply needs. That would be penny wise and pound foolish, and it would just put off the day when consumers would have to pay huge sums of money in the future to catch up.
Mr. Phelps: My final supplementary question has to do with the $2 million the power consumers are paying for the new convention centre. I would like to know if that $2 million loan, or whatever it is, was offered on the same terms of conditions as the other group who bid on the convention centre.
Hon. Mr. Penikett: The services and joint venture capital that the Development Corporation will be providing is available to any proponent who can propose a project that is acceptable to the board.
The Member again, in trying to muddy the water on this issue, seems to forget that the sums of money advanced by this government to the corporations for all these purposes are very considerable. That is why the corporations are healthy. The Energy Corporation has a healthy debt/equity ratio, and it needs to have that because we have a very narrow base. Our energy market has only one industrial customer. We have more risk in the system due to that than comparable utilities have down south. We think the financial structures in which both corporations operate are sound, prudent and in the best interests of the territory.
Question re: Yukon Energy Corporation borrowing
Mr. Phillips: My question is for the same Minister, the Minister responsible for the Yukon Development Corporation. The Energy Corporation has paid $16.2 million in dividends to the Yukon Development Corporation for the years 1988 and 1989. Yet, in July of 1989, the Yukon Energy Corporation borrowed $5.5 million at 11-3/8 percent interest from the Yukon Development Corporation. Why are we - meaning the Yukon Energy Corporation - giving this money to the Yukon Development Corporation on one hand and then borrowing it back at 11-3/8 percent? The Yukon Energy Corporation is ending up paying the interest on its own money. It just does not make any sense.
Hon. Mr. Penikett: It is an interesting proposition the Member is making. I am sure that what the Energy Corporation and Development Corporation are doing is perfectly consistent with the proper operating practices of every utility in the country. In fact, I am pretty sure that a Public Utilities Board would not approve of a situation when money was being advanced from a parent corporation to another and having no costs or carrying charges associated with it.
If the Member would think about it for a second, I am sure he would recognize that the option for the Energy Corporation of borrowing from a bank or retaining its earnings, which the board may decide to do from year to year, are among the options available to it. Again, I ask the Members not to get confused, and to cast their minds about and recognize that this government has advanced very considerable sums to the Energy Corporation. Off the top of my head, it seems to me they are far in advance of $30 million. I can give a precise accounting of that, all of which has had two effects...
Speaker: Order please. Will the Member please conclude his answer.
Hon. Mr. Penikett: ... all of which has had two effects: one is that it enables us to keep power rates relatively low, and; two, it provides the Development Corporation with the capital it requires to carry out the mandate created for it in law by this Legislature.
Mr. Phillips: The Minister asked me what they should be doing with their money. I suggest that they should not be trying to borrow their own money and that is what they are doing now. Why are we paying this high interest rate of 11-3/8 percent? Long-term interest is a lot less than that. It is bad enough that the Yukon Energy Corporation is forced to pay interest on its own profits, but it seems here that it is paying more than the going rate for long-term interest. Why are we paying these higher rates of interest?
Hon. Mr. Penikett: The Member is suggesting that we could go to private markets and get interest rates at 11-3/8 percent? Is that what the Member is suggesting? I know that the Development Corporation, for another one of its projects, has been able to obtain terms that are slightly better that that, but I am not sure that that rate, at the time the other borrowing was made, could have been obtained. Again, I am pretty sure that the Public Utilities Board would have something to say about the rate that was charged on such borrowings.
If the Member is making a representation that the Energy Corporation should simply retain its earnings, those are decisions that will be made by the board from year to year on the basis of policies established in government, and I do not think we would want to have it any other way.
Mr. Phillips: It does not make any sense; it does not make any sense at all. It is as if I gave the Minister across the floor $10,000 and then borrowed back $9,000 of my own money and paid high interest on it. It does not make any sense. It is obvious that by some devious concoction of the books the Yukon Development Corporation is trying to make a profit on the backs of all the electrical users in the territory by loaning back Yukon Energys profits at a premium rate. I would like to ask the Government Leader why he is allowing this to happen and will he stop this kind of practice in the future?
Hon. Mr. Penikett: Again, I do not expect the Member opposite to know any better but he has come very close again to accusing some people in the corporation of wrongdoing, or some kind of unethical or improper practice. I find that very offensive because that is not correct. I am sure that the officers of the corporation, in recommending the dividends, the borrowings, the rate of return, the rate structure and the financial arrangements between the two corporations, are doing so according to well-established financial practices - proper accounting practices - and are doing things as they are required to do by law and by the traditions of their profession.
Question re: Nursing services
Mr. Nordling: I have a question for the Minister of Health and Human Resources with respect to community nursing services. The government has developed a new and innovative Health Act for the Yukon and has committed itself to a preventive approach to health and also to controlling the spiralling cost of health care. The provision of expanded community nursing services would be consistent with the new preventive approach and would be very cost effective. I would like to know if the government is addressing this issue and if the government has a policy with respect to in-home nursing services.
Hon. Mr. Penikett: My apologies if the Members question was not completely clear to me. The Member is quite correct about the commitment to health promotion. There is a stage in the health transfer at which, following stage 1 of the transfer of the hospital, and at which we will be responsible - along with the First Nations, in some respects - for community health services, which is when most of the nurses who are doing the kind of work described by the Member will be our responsibility. But if the Member is making a leap from that to ask if we would be privatizing and contracting out work from this government to a private labour contractor, the answer is no. From the beginning, we have had sought from us from the employee representatives, and have given an undertaking that we would not engage in that practice.
Mr. Nordling: Concern has been expressed that home care services, which are very valuable and much appreciated, are not meeting the needs of Yukoners. Are there any plans to reorganize the present home care program to expand its scope?
Hon. Mr. Penikett: I thank the Member for the question, and I also thank the Member for what I think was a compliment about the existing service.
As a matter of practice, we have been continually reviewing the service. Over time, we are hoping to be able to expand its coverage to meet the needs of the population we are now serving. As there is an aging of the population in Canada, as well as in the Yukon, we can anticipate that there will be an increasing demand for the service. Years in the future, it is quite likely that we will need to be looking at increased allocations to meet the demands for the service. There is a continually increasing demand.
Mr. Nordling: There seems to be a lack of awareness of the role of nurses in health and illness care. Is anything being done to realistically investigate the role of nurses, in both the public and private sectors, as to what role they can play in health and illness care in the Yukon?
Hon. Mr. Penikett: That is a very important question. It is a question about which there is a national debate going on now. The nursing profession has felt for some time that their historic, and perhaps romantically defined role as handmaiden to the doctors is one that is an antique notion, entirely out of fashion and sync with current practices where the potential for nurses to play a much larger role in the health care system is being recognized everywhere.
I cannot go on too much at length about this, but I would say that there is a major national conference on this subject, which is going on shortly, to which we will be sending representatives from our government department. We will also be underwriting representation from the Nurses Association to participate in the conference about the changing and expanding role of nurses. We think where we are going with the Health Act is quite compatible with that change in direction and can encompass a much larger ...
Speaker: Order please. Would the Member please conclude his answer.
Hon. Mr. Penikett: ... role for nurses.
Question re: Old Yukon College
Mrs. Firth: I almost hesitate to ask the same Minister a question because he seems to have a problem today where he goes on and on and on and on and on. I am going to have to ask the Minister responsible for the Development Corporation another question about the corporation.
It is with respect to the Development Corporation getting into the construction business and the renovations at the old Yukon College. Whitehorse residents drive back and forth daily and watch every nail, board and shingle being removed and replaced. The government has announced this project will be in the vicinity of $6 million. The Development Corporation is managing the renovation. I would like to ask the Minister responsible for some of the specifics with respect to the financing.
Can he tell us exactly how much the Confederation Life Insurance Company is financing and what the Development Corporations financial commitment to this project is?
Hon. Mr. Penikett: The Development Corporation is not getting into the construction business, although I understand they are really more actively described in property management. They are doing this on behalf of the government as a contractor. The cost of the project for renovations is, as has been previously indicated, $6 million. The financing for the Development Corporation has been provided by the company mentioned by the Member on what officers of the company believe are attractive terms. The recoveries will come from the leasing of this space to Government Services for their client, the Department of Education, over the life of the job.
If the Member is asking me to quote the terms of a financial document off the top of my head without giving any notice, that is not a reasonable request. I will take it as notice.
Mrs. Firth: It is not an unreasonable request. It is a major expenditure we are going to be debating in the budget. If the Development Corporation is not in the construction business why is it putting out public tenders? Their tender appeared in the paper under the Development Corporation - a public tender for renovations to the old Yukon College.
Can the Minister tell us what interest rate is required on the money provided by the life insurance company?
Hon. Mr. Penikett: Of course, I will come back to the House with that information for the Member. The Member asks why the corporation is putting out tenders if it is not in the construction business. If I put out a tender to have my house renovated, it does not mean I am in the construction business. The Development Corporation is managing the property and has put out one tender. There is another one now for the roof and another for the other renovations, to people who are in the construction business, because it is not doing it itself, it is contracting with people to provide that service.
Mrs. Firth: The Development Corporation is still a general contractor, just as the Minister would be if he were having his plumbing fixed or electrical work done or carpet. Let us not try to split hairs.
Can the Minister answer one question?
What about this $6 million project? Can he tell us what the final estimates are? Is it holding fast at $6 million? Is this project going to cost $6 million and that will be the end of it?
Hon. Mr. Penikett: I am happy to answer the Members question. It is the intention of the Development Corporation to bring the project in on time and under budget.
The Member asks as well in her preamble about whether we are in the construction business. To do a project like this, we have to have a project manager. But just because I, for instance, undertake to do some renovations to my house, this would not make me a contractor. That does not logically follow.
Question re: Old Yukon College
Mrs. Firth: My question is to the same matter, the renovations at the old Yukon College, but to a different Minister - the Minister of Government Services.
I would like to ask the Minister if an agreement between YTG and the Development Corporation for rent for the 20-year period at $16.50 per square foot for office space exists.
Hon. Mr. Byblow: An agreement does exist. It confirms the rights of the lease for a 20-year period. It is a very attractive and lucrative price for the space for that period, especially in light of what the actual costs for leases will be in other locations on the market during that same time.
Mrs. Firth: We will make an analysis for ourselves once we see a copy of the agreement.
The Minister made a commitment back in January, some nine months ago, to provide us with a copy of the agreement. We still have not seen or heard of it. Can the Minister tell us if he will bring that agreement to us in the Legislature tomorrow?
Hon. Mr. Byblow: I am not sure I can bring it for tomorrow. The Member has, on numerous occasions, asked for volumes of information, contracts and documents that are fairly onerous to replicate and provide to all Members. I am sure I can provide a copy of the lease agreement if it is available to the Clerk. The Member may review it in that situation.
Mrs. Firth: Nine months ago in this House the Minister was quite insistent, and I quote from Hansard, January 29, 1990, page 922, Yes, I am telling the Members that we are ready, or just about ready, to sign an iron-clad arrangement where we will be paying $16.50 per square foot..., and at that time he said that he could see no reason why he could not table it when it is signed and that could be well within the next few days or the next week.
Again, this is another piece of information he must get permission to bring to the House. We would like a copy of the agreement. It has been nine months. We would like it in the Legislature tomorrow.
Hon. Mr. Byblow: If the Member will review the very Hansard she quotes from, she has not requested that I table it in the House. She simply asked if it would be available, and it certainly would be available. I will take the Members question as notice, and I will proceed to arrange for my wheelbarrow to bring another volume of information to the Member opposite, who may or may not review the documents.
Speaker: The time for Question Period has now lapsed. We will now proceed with Orders of the Day.
ORDERS OF THE DAY
NOTICE OF BUSINESS
Mr. Phillips: I would ask for the unanimous consent of the House that the motions will be heard tomorrow in the following order: Motion No. 4, Motion No. 6, Motion No. 7, Motion No. 5 and Motion No. 10.
Speaker: Is there unanimous consent?
All Hon. Members: Agreed.
Speaker: Unanimous consent has been granted.
Hon. Mr. McDonald: I move that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Speaker: It has been moved by the Hon. Government House Leader that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Motion agreed to
The Speaker leaves the Chair
COMMITTEE OF THE WHOLE
Chair: I will now call Committee of the Whole to order. We will have a short recess.
Bill No. 15 - Second Appropriation Act, 1990-91 - continued
Community and Transportation Services - continued
On Policy, Planning and Administration - continued
Chair: We are on Community and Transportation Services. Operation and maintenance expenditures, policy planning and administration. $11,000 reduction.
Mr. Lang: I had asked the Minister if he could provide me with a cost breakdown as far as the past year on roads. I was referring specifically to the engineering services agreement. If he will recall, I asked if he could state for us the cost comparisons on road construction this year as opposed to last year. I am just wondering if he has it available for us yet.
Hon. Mr. Byblow: It is not available this instant. It is being prepared. I have responded to the Members request by seeking that information. I will have it prior to the main estimates. If the Member wishes, I can table it or circulate it prior to getting into debate on the main estimates because I am sure it will be ready in the next day or two.
Mr. Devries: Where did the bright idea come up for the chicklets, and how much did it cost?
Hon. Mr. Byblow: I was entirely unprepared for that question but I am advised that the idea for it came out of a committee that was struck as a result of the Yukon Alaska Transport accident last year. The Member may recall that my department, the Leader of the Opposition and I worked quite closely on addressing all the problems and potential problems relating to traffic and stops for school buses. The committee that got together as a result of doing that study subsequently met and followed up on a number of recommendations of the study. It is the working group to make sure that the original efforts are followed through, and that is where the idea came from. The costs are unknown to me at this time. I will research that and have the information for him.
I imagine the cost is not significant. I can predict this as it is the simple installation of a post and reflective chicklet at staggered, paced, areas depending on the visual ability around that point.
I could find out what specific costs were associated with that initiative.
Mr. Phillips: I would like to ask the Minister a question on the same topic.
I was in Mayo approximately one month ago for a meeting and, on the way back, we counted 45 of these chicklets in a 16 kilometre stretch. That is actually 90 of them, as they are on both sides of the road. I would like to know what kind of technical information was used to determine where these should go. If the Minister was to drive along that part of the road, he would be amazed at the amount of these things. These chicklets are set up on sections of the road where there are no turnoffs and no one could possibly board a bus.
Someone asked a question about what would happen if a bus stalls on the road and he happens to be in a red zone. Does everyone get out and run into the bush or do they push the bus into a green zone?
Another thing I felt was unusual was that, in some cases, the red zone and green zone were fewer than 50 feet apart. If the bus stopped in the green zone, the driver would find that either the front or the back would be in the red zone, depending on where he parks, because the zone is shorter than the bus.
I heard that the highways crews thought it was quite funny to have to put these things in the ground in such large numbers.
I can understand the safety reasons for them and that they should be at designated bus stops or for stops along the road, but for a whole 14 kilometres? I am sure the Member for Mayo has driven along that road recently. These things are everywhere. Someone must have been a little overzealous in determining where they should go. I would like to know what criteria was used to determine where the signs should go. Sometimes, when the headlights are on, one can see three different colour changes in one small section of the road.
Hon. Mr. Byblow: I respect the specific issue about the signs being too close together and perhaps not being practical enough. Members must remember that the chicklet signs are intended to be informational, safety support systems to drivers, particularly of buses. As the Member has correctly outlined, the areas relating to the green designate that there is an adequate line of vision to comfortably stop in that zone should you see a school bus. The red zone indicates that there is not a 500-metre distance of clear vision. The entire initiative is to provide an additional safety support mechanism to bus drivers and drivers who are perhaps using the road as well. It is not intended for regular drivers, because one does not drive around looking at the red and green chicklets trying to determine whether this is a safe area or not. As a driver, you react to what you can see down the road.
It tells the bus drivers that immediately after a red chicklet, they are in a poor area to stop because there is not 500 clear metres of viewing.
I appreciate the concerns of the Member about the signs in the Mayo area and will address it with my staff. At the same time, I should point out this was an initiative that was driven and originated from a potentially serious accident last year that we were all very concerned about. It was one of the recommendations from that group. The initiative was run by the school bus advisory group of Whitehorse, who I understand approved it for use. So it was not without consultation, and this initiative was not undertaken without some serious-minded thinking.
Mr. Phillips: I am not questioning the good intentions of the committee to provide safer bus stops for the children. I am questioning what they have done in the Mayo area. The number of signs that have been installed in that one section - the 45 chicklets in 16 kilometres - is an insult to the intelligence of the bus drivers in that area.
Would the Minister take the time to drive to Mayo? The Member for Whitehorse South Centre is talking about it, but I am sure she is just as concerned as everyone else in this House about wasteful spending in government. She is on the Public Accounts Committee. Take a look at that, where the signs are less than 30 and 40 feet apart. It is ludicrous, in some cases. I think somebody got a little overzealous. I am just asking the Minister to look at the area. I am sure they could take a considerable number of those signs down and use them in another area, if they had to.
I do not see the same number of signs in any other area I have driven through between here and Carcross, for example. In that particular 14-kilometre stretch, in some cases there is no place anywhere where anyone could turn off, pull off or pick anyone up, unless the kids just came out of the bush on snowshoes. There are no roads there, nor does it look like there are any cabins there. They just started out of Mayo for 16 kilometres and put 45 of these things along the road, everywhere they did not have clear vision.
I am concerned that it is the governments plan for every highway in the Yukon. If it is, we are going to have hundreds of thousands of signs all over the territory in short order. I do not think that was the intent of the policy put forward by the group of parents concerned about safety for the children.
Will the Minister go to have a look at that particular area? There may be some other areas I am not familiar with, but he should take a look at that one. I think it has cost us quite a few dollars.
Hon. Mr. Byblow: I will certainly review the initiative, particularly in the Mayo area. It stands to reason that if there is a higher frequency of these chicklets on a specific road it tells me something else. It tells me that the road does not have many areas of clear vision for 500 metres. That is what this all boils down to. The more crooked the road is, the more of these you will have.
If you have a clear view for 2,000 metres, then you have only one sign for that entire 2,000 metre stretch. If you have shorter distances of clear vision, you are going to have more signs.
I should reassure the Member there was no intention to insult anybodys intelligence. The initiative was to provide an additional safety mechanism for use by bus drivers respecting safe stopping areas. On a road that does not have many clear stretches of 500 metres, you are going to have more signs. That is probably what has happened in Mayo.
Yes, at the next opportunity, I will take a look. In the meantime, I will be talking to my department about some ramifications of having too many signs if, perhaps by having too many, it can create some redundancy or create an over compensation, where they begin to be ignored. From my past experience, that is another possibility.
I do want to compliment the intent of the initiative, which is to make buses safer for children to use.
That was the original intention. The logistics of it are related to sight and distances of sight, where a bus can be safely stopped. The less distances you have of clear vision, the more signs you will have. I will be talking with my officials following this discussion in the House today to see if that in fact has not got a consequence of perhaps creating a problem as opposed to providing the kinds of support mechanism that we have in mind.
Mr. Phelps: I just wanted to follow up briefly on the note that he ended with on November 8. I did speak briefly to the Minister with regard to my representation about the situation in Carcross regarding sewage eduction and my representation that the policy that was applicable for the operation and maintenance payments throughout the rest of the territory, namely that people pay an amount each month based on the cost in Whitehorse and the rest be subsidized. That policy ought to be applied across the board, particularly to those in Carcross who presently are paying a very large amount for the eduction of their storage tanks. The difficulty, as I said on November 8, is simply that at a certain point in time people were no longer allowed to install septic tanks. Those people with new houses who are now waiting for the water and sewer to be installed have installed the required holding tanks for sewage. The difficulty is that they are often paying more than $2,000 a year to have sewage eduction. It just seems to me that they ought to pay the same per month as the people in Whitehorse do, particularly given the very salient point that people in Whitehorse are allowed to dump their sewage into the Yukon River, and they are not penalized by the fact that that is probably the most environmentally offensive breach of a water licence that the territory has ever seen.
Hon. Mr. Byblow: I would request of the Member that he make his statements with respect to the effluent discharge by Whitehorse directly to the city council. I would appreciate that gesture.
With respect to the issue he raises in Carcross, where septic fields can no longer be used for new construction, that the government should assist in an alternate retention system, I have some problems with that. I think the Member is suggesting that if in any case in the territory where residents feel they have to incur additional expense to meet water and sewer discharge standards, the government should subsidize that cost, whether in Ross River, Carcross or Whitehorse. I think the Member can appreciate how that would be a very complex and arbitrary policy to create and implement.
As a government, we are prepared to move forward in Carcross to put in place a suitable system for water distribution and sewage discharge that will meet the residents needs and be approved by them. This will also meet the current needs in Carcross.
As the Member is aware, I have had discussions with his community. I had hoped that by now I would have been able to conduct a plebiscite that would address the various options and costs of water delivery and sewage discharge. Unfortunately, we are still completing our discussions and the cost assessment of the options.
The type of water delivery and sewage discharge system will be determined by the type of lagoon system available and the extent to which residents will approve one option or another. They go hand in hand. At this point, I do not have the cost assessments of the options completed. I have every reason to believe we will have some resolution within the next month or two and will be able to carry out the commitment to conduct a plebiscite, complete with costs of options. At that point, residents of Carcross can decide which service they are prepared to see and how much they are prepared to pay toward it.
That is the direction in which we will continue to move. We will go forward with putting a water and sewage system in place in Carcross that meets the needs of the Carcross residents and one that can be delivered within budgetary guidelines and meet environmental requirements.
Mr. Phelps: I am sure the Minister will agree that whatever option is chosen in the end, the operational and maintenance cost borne by each resident will be subsidized to an extent that the resident will be paying an amount equivalent to the amount charged for operation and maintenance by the City of Whitehorse for the consumer in Whitehorse. Is that not one universal feature of whatever option is put in place?
Hon. Mr. Byblow: The Member is generally accurate. That is the basis for any assessment of costs that apply to other communities currently within AYC. We provide operating deficits to the operation of municipal sewage and water systems. In principle, the Member is correct. We use Whitehorse as a base. On the operational side, we provide deficit funding to maintain the operation of these systems.
I would remind the Member that, in my discussions with AYC, I am trying to pool all these funds into a single pot with a formula for distribution. The basic formula still remains: Whitehorse is a base and the rural communities are currently receiving subsidies. That should apply to Carcross as it comes onstream with a system.
Mr. Phelps: The Minister will also agree that at present the residents in Carcross are subsidized with regard to the water supplied to each and every resident. Is that not correct?
Hon. Mr. Byblow: I am trying to anticipate the series of questions to follow.
The Member is correct. Currently the water delivery service that is provided in Carcross would receive a subsidy. I do not know the amount. The Member probably knows the specific figure in Carcross of what the users pay now. I believe it is in the $8 range. The Member can nod if that is correct. The actual contract service that we provide is considerably more than what is collected in user fees.
It is fair to say there is currently a subsidy on the water delivery service.
Mr. Phelps: In this day of preventive health care, the Minister would be well advised to reduce his stress by not trying to anticipate where my questions are leading. My simple proposition is this: a few people now have to pay the entire cost of sewage eduction. Everyone in Carcross is subsidized in regard to water delivery. Everyone in Carcross will be subsidized with regard to the removal of sewage from the residence once a universal system is put in place. My very simple proposition is that surely the small handful of residents in Carcross who are caught in between - those who cannot use septic fields and are paying over $2,000 a year for sewage removal - surely ought to be entitled, as residents of a community of the Yukon, to a subsidy with regard to removal or the eduction of their sewage.
Hon. Mr. Byblow: I accept the Members representation. He has made the same case in private communication and here on the floor in budget debate. I am not prepared to provide the Member any definitive answer other than to tell him that I am not persuaded that the government should be providing some subsidy to the installation of an eduction system. What the Member is talking about is the creation of holding tanks for sewage eduction and the cost of the pump-out of those tanks.
Through the plebiscite, the community residents may choose an eduction system that requires the type of facility that is being installed by new construction now. There may be, heaven forbid the horrendous cost involved, there may a requirement for every resident to have a holding tank for eduction purposes. That would then be an onerous problem for individual residents, but I am sure the Member then will be coming back to the floor and back to discussions with me on how to offset that cost. I guess the long and the short of it is that it may well prove that the systems being installed now, at some additional cost because septic fields are no longer permitted, may be a required cost as part of the overall system or the new system that is eventually put into place in Carcross. I cannot go further than that. I go back to my earlier comments. To implement such a variation to the policy would have to be territory-wide. That could be a horrendous experience and cost.
Mr. Phelps: I do not understand the logic behind the Ministers assertion. His department has already made the offer to the residents of Carcross that, should they choose a sewage eduction from each individual residence, the operation and maintenance cost would be subsidized so they would pay nearly the same amount as is paid by Whitehorse residents. I do not understand why he feels some sudden new policy is being asked for. The policy offered, and the commitment made, to the residents of Carcross was whatever system they chose - one of the options they were given was having individual pump-outs - the operation and maintenance cost would be based on what is paid on a monthly basis in Whitehorse.
Hon. Mr. Byblow: I appreciate the clarification. I was of the understanding that the Member was making a representation for recovery of the capital costs related to the eduction system. What the Member is talking about is the operational cost of the eduction system. In essence, he is asking for some support to cover the high cost of pump-outs of that system.
I believe the Member has quoted an approximate annual cost of about $2,000. I am surprised it is that high, but he is most likely correct.
I can provide this response to the Member: if a community-wide service is being put in place, under current policy there is a requirement for the government to provide for it on the operation and maintenance side. In other words, if the eduction system chosen is a pump-out and haulage system, then the government has a role to play in picking up the cost of that pump-out and the delivery to the lagoon, or wherever.
It would have a role to play if it were a community-wide service. The Member is correct when he describes the system in Carcross as one where an old system was applied that was cheap, is no longer is permitted and, while waiting for the new system to be put in place, people have this additional onerous cost.
In short, there is no provision for costs to be picked up for a select group of residents who are faced with that additional cost in this interim period. I accept the Members representation. I can only undertake to investigate it with my department officials and try to respond to the Member in more detail as to what our capability may be to assist, or whether it is impossible for us to do so. Beyond that, I cannot say anything further in the form of a commitment.
I appreciate the complexity of the problem. I now have a better understanding of it, and can only undertake to investigate it with my officials.
Policy, Planning and Administration in the amount of an under expenditurec of $11,000 agreed to
Mr. Brewster: Why, with all the problems we are having with roads, would you return some money here. It could be used anywhere.
Hon. Mr. Byblow: The $685,000 reduction is represented by a reduction of $670,000 under the Alaska Highway agreement.
The Member has to understand that when we presented a budget one year ago at this time, we had not concluded negotiations with Public Works Canada on the precise amount that would be put into the highway maintenance budget. We made our best-guess calculation. We told Public Works the amount we would need and that is what we put into the budget, in full anticipation of getting that money. When Public Works concluded its budgeting, it was $670,000 less than what we had asked for. That is reflected below on the page in the budget where we recover that $670,000.
It is just a matter of tidying up the budgets. The Public Works budget was not complete at the time we brought our budget to the House one year ago. This adjusted the amount we found out in February we were really going to get.
While I am on my feet, the other $15,000 reduction is just a number of other refined calculations in the transportation section where we do not expect to have as high a cost.
Transportation in the amount of an under expenditure of $685,000 agreed to
On Community Services
Community Services in the amount of $70,000 agreed to
Operation and Maintenance in the amount of an under expenditure of $626,000 agreed to
On VHF Systems Replacement
Hon. Mr. Byblow: That may appear to be a substantial increase. It represents a revote of money budgeted last year for the VHF replacement program by Northwestel. There were some problems encountered putting the service in so we did not make our payments to Northwestel until the work was in place. As Members will recall this is the program under which we are putting repeater stations along various highways to improve the communication ability between locations along the highway. This will involve departments of the government as well as members of the public who wish to buy into that service. I believe it is a $9 million program overall.
We are into phase two this year. This money being voted in the supplementary is money that did not get paid out last year because the job was not done on schedule. It is being done now so we still have to pay the bill.
Mr. Brewster: Are the people around Dezadeash Lake and down the Haines Road on this same installation?
Hon. Mr. Byblow: The Member is correct. Phase 1 is the Alaska Highway and the Haines Road. That should be in place sometime soon. I believe it was turned on about October 14. There were some bugs in the system that are still being worked out. The system is essentially up and running for the Alaska Highway and the Haines Road now.
Mr. Brewster: I find it rather confusing that you held back money for a revote because the system was not working right, yet they were continually charging the people on the highway when they had absolutely no system. There was no service at all and people had to come to Haines Junction to make a phone call. It seems ridiculous that they could charge private people when you admit the system was not working.
Hon. Mr. Byblow: Just to clarify this, we are beginning to talk about two different systems. The system voted in this budget reflects the VHF replacement system that is being put in place by Northwestel and amounts to a number of repeater stations along the highway into which the government mobile telephone system will hook.
The Member is talking about the regular mobile telephone service provided by Northwestel. I can appreciate the complaints he makes about it because I have received a number of complaints as well. In every case where I have received a complaint, from all over the territory, I have taken them to Northwestel and they have in turn, quite honourably, addressed each one. I would encourage the Member to encourage people with mobile telephone complaints to take them directly to Northwestel, or do so through the Member, and somehow send a copy to me so I can keep informed. I have had fairly good response from Northwestel on system complaints.
Mr. Brewster: We had fairly good results too after a number of letters went back and forth. They agreed to refund some of the money, but my understanding was that the system was going to be changed. I presume that would the same system. You mean we have two systems there now?
Hon. Mr. Byblow: The Member is partially correct. The mobile system that is used by the public is not immediately impacted or affected by the installation that we are voting money for; however, I understand from Northwestel that they are putting in a new system for mobile users. I think they call it the Cellular 400 System. That system will be using these towers that are being put in for our system. They will be separate systems using some of the same equipment. When I talk about the system being turned on, it is for the use of government departments and RCMP and the other users who have bought into this. We are just one of several users of the system. Public users of the mobile phone system, whom the Member describes, are going to be hooking into the system later when they bring in this new Cellular 400 system.
VHF Systems Replacement in the amount of $1,457,000 agreed to
On Community TV and Radio
Mr. Phelps: I am rising once again to make representation on behalf of people in Tagish and Carcross with regard to community television. As the Minister is well aware, both Carcross and Tagish - and the tower at Tagish covers an area that includes about 800 or 900 permanent residents - residents only get one channel. As the Minister knows, the new towers that have been put in can accommodate rebroadcasting any number of new channels out to the residents. It has been a recommendation made by myself on several occasions to his predecessor and in this House that the government ought to look at providing at least one new channel to areas that have inadequate TV service; namely, only CBC.
I wonder whether or not the government has looked into the feasibility of providing an additional channel, possibly BCTV from Vancouver, to residents in the area. By adding the capability to each of the installations, namely the one at Carcross in the grader station and the one at Tagish near the Northwestel receiver dish, and if so when we might expect an additional channel in those two areas?
Hon. Mr. Byblow: I have to admit to the Member that there has not been progress on the provision of a second channel, territory-wide, as I had hoped. A number of factors have come into play. Certainly, the budgetary restraints are one of them. Another is that there are ongoing discussions with the cable company about the possibility of the provision of a second channel. The Member and I discussed that in previous debates. At the same time, I have had discussions with the federal Minister of Communications respecting the reduction of the regulations pertaining to provision of a second channel of television. And I have to admit that Mr. Masse was quite receptive in those discussions to looking at Canadian Radio-Television and Telecommunications Commission regulations and perhaps relaxing them for northern areas. The Member knows that current policy of the government is to move toward a second channel in all communities but at the same time we are quite prepared to permit our equipment to be used by any community group that wishes to expand existing single-channel service.
In a number of communities there are indeed two or more channels where there has been an initiative by a community organization. I guess what I can say to the Member is that I will continue to pursue discussions with the cable company, with federal communications and with communities where there is interest to permit our existing equipment to be utilized. Ultimately, we will try to achieve our policy, which is to have at least two channels in every community, including the two areas the Member spoke about.
Mr. Phelps: It is unfortunate we have not yet moved in this regard. The provision of equipment some time ago by the Ministers predecessor was a giant step in this regard. The capital cost per transmission facility is somewhere in the neighbourhood of $10,000. It is not very much to invest, when one considers all the elders and retired people in the area who inhabit the Marsh Lake, Tagish and Carcross areas. Those who can afford it have been moving to get their own dish. As those who can afford the extra TV channels do that, it lessens the viability of cable and pay TV in the area.
Again, I want to stress that it seems to me the social benefit to the retirees and older people in these communities would be great. The benefit provided for such a small cost is something that ought not to be overlooked. It is unfortunate that the idea that these areas might be properly serviced by cable is being diminished almost daily by people who, being able to afford cable TV, are now purchasing their own communication dishes because of the frustration of having only one TV channel.
I would urge the government to investigate this matter as soon as possible. I hope the only conclusion would be that, in terms of benefit provided at dollar cost, this would be a great boon to a large number of people who, because of their age, are kept at home for many months during the year.
Hon. Mr. Byblow: I accept the Members representation and choose not to debate the issue with him, because I agree with him. It would be a worthy exercise to provide this enhanced service to all communities.
We may have some ability to move in the course of the next year, largely because there is an effort by the federal Department of Communications to reduce the regulations surrounding the provision of service. There may also be reinstatement of an earlier commitment for some $25 million that had been earmarked for the provision of television services to remote and rural areas throughout the country.
If any portion of that program is reinstated, that will encourage the cable company to react. It may also permit us to assist where there may be some support from the federal government. There is another point I should expand on. In discussions with the federal government over relaxing the rules surrounding the provision of expanded television service, they are now calling for comments from people and firms on integrated services by telephone and cable companies. In other words, the federal government is giving consideration to widening that whole scope of potential service suppliers.
The bottom line of what I am suggesting to the Member is that we may one day see our telephone company get involved in the provision of television service. This is something for which the federal government is clearly calling for input. That may also create a very new dimension to the provision of rural television service.
I am hopeful that, over the course of the next year, we can tie up some of these loose ends and move along a little more quickly. But the Member is right. There are costs involved and someone must bear them. If we can strike an arrangement where we can share them, it will move the system into place faster.
Community TV and Radio in the amount of $4,000 agreed to
Communication in the amount of $1,461,000 agreed to
On Highway Construction
On Klondike Highway #2
Mr. Brewster: Could the Minister explain why there is a reduction of $48,000? I want to know about all of these reductions and what they are. As I said, I have a real problem when money is turned back and we still have bad roads. This money could have been used on them.
Hon. Mr. Byblow: I would be quite pleased to provide details on these reductions.
The $48,000 reduction on the Klondike Highway is largely due to the reduced work and cost on the reconstruction of the highway in the Fox Lake area. The Member may have driven along this section and would know we are upgrading it section by section. It was upgraded some 10 or 12 years ago, but there has been some collapsing of sections of the roadbed there. Departmental officials have recommended spot sectional reconstruction year by year.
The bottom line is that there was a savings of $37,000 in the work that was done there this year. The other $11,000 is what was transferred to Government Services to fund the business incentive policy. By way of background, we instituted the business incentive policy over the last year to allow contractors to get a rebate if they meet certain criteria relating to local hire and local materials. This would also apply to highway construction. The policy also establishes the pool or fund from which to pay these rebates. Every construction job had money identified to be transferred to the central account. That was $10,000 or $11,000 of the $48,000 involved to do that.
Klondike Highway #2 in the amount of an under expenditure of $48,000 agreed to
On Campbell #4
Hon. Mr. Byblow: That is specifically for the costs to run the business incentive policy portion. We had some $2.5 million worth of construction. We estimated that about three percent may be required to be paid on the business incentive policy, so that is where the $34,000 would come from.
I should point out that on the business incentive policy this money moved to a pot, but if the contractors do not meet the eligible criteria for rebate, then the money stays with the government, it is not paid out.
Campbell #4 in the amount of an under expenditure of $34,000 agreed to
On Silver Trail #11
Hon. Mr. Byblow: This is what we refer to as a period 4 variance supplementary. In other words after the fourth month of the year we take a reassessment of where our costs are coming in at. While we have a reduction of costs for line items in some highways on the Silver Trail we had bids come in higher than we estimated. That was higher by $37,000. Only $6,000 was transferred to Government Services so it reduces our required amount by another $6,000.
The Member understands that when we transfer money to the business incentive policy account in Government Services it reduces our budget by the same amount.
Silver Trail #11 in the amount of $31,000 agreed to
On Bridges - Numbered Highways
Bridges - Numbered Highways in the amount of an under sxpenditure of $6,000 agreed to
On Facilitie and Equipment
On Engineering and Design
Engineering and Design in the amount of $60,000 agreed to
On Miscellaneous Branch Facilities
Mr. Brewster: I would like to have that broken down.
Hon. Mr. Byblow: If the Member recalls, in the spring a large portion of money in the facilities account was to upgrade air quality around the Highways camps, and the entire $74,000 is the additional work that was necessary when we actually undertook the new ventilation systems. I do not have the breakdown camp by camp, but that $74,000 reflects the higher-than-anticipated cost when the tenders came in, to upgrade the ventilation and air quality systems throughout the camp.
Miscellaneous Branch Facilities in the amount of $74,000 agreed to
On Engineering Services Agreement
On South Klondike #2
Hon. Mr. Byblow: This is a substantial amount and it is work that is totally recoverable. It is on the South Klondike Highway. There were increased expenditure costs on two sections of the road under construction - kilometres 57 to 61 and kilometres 65 to 79. Essentially, what it amounts to is just that ground conditions were not adequately calculated and there was additional excavation and fill, causing the substantial increase in the amount of work. The Member is familiar with the road. A considerable amount of rip-rap had to be done on that slope in those areas and some rock had not been assessed.
South Klondike #2 in the amount $775,000 agreed to
Hon. Mr. Byblow: That is a combination of a number of things. The Member will note that it relates to the engineering services agreement that would have still been in place when these numbers were applied, notwithstanding the fact that we have signed a roads agreement and the money is now moving into the budgetary base of formula financing while the agreement is in place.
The $835,000 is comprised of less cost than anticipated on the Dempster for the erosion control that we had budgeted for, by $210,000. We had a decision to reduce the amount of work and still get an adequate job done on the Ogilvie maintenance camp, and that saved us $300,000. The sum of $275,000 is the result of less work than expected on the North Canol and Top of the World Highway. I do not have a break-out of how many dollars to each road; that is a combination of the two roads.
There was $50,000 saved on the Klondike maintenance camp upgrade by the tender simply being that much less than we expected.
Other in the amount of an under expenditure of $835,000 agreed to
On Emergency Airstrips
Mr. Brewster: Where would that emergency airstrip go? What was that money for? What airstrip?
Hon. Mr. Byblow: The $2,000 reflects engineering work. What we are trying to quickly determine is where. Does miscellaneous help? I will have to undertake to the Member to provide him more specifically what that $2,000 emergency engineering work was about.
Mr. Brewster: Is there any chance it could be the emergency airstrip at White River?
Hon. Mr. Byblow: My deputy stakes his reputation on this answer. He says it is not.
Chair: Would you like this item stood over?
Emergency Airstrips in the amount of $2,000 stood over
On M.O.T. Airstrips
Hon. Mr. Byblow: The $170,000 is a combination of a number of adjustments that took place as a result of the devolution agreement that was signed. The original budget is reduced by $27,000, that was transferred to Government Services for the business incentive fund. A number of capital programs were revised following devolution, which created a reduction of $388,000 and there was an increase of $585,000 in the process of that revision for completion of an extension on the Faro strip. So combining those, $585,000 and $388,000 and $27,000 gives you the $170,000 increased cost.
M.O.T. Airstrips in the amount of $170,000 agreed to
Hon. Mr. Byblow: The residential development monies identified here are essentially revote monies. They are items that were budgeted for in last years budget for jobs that were not completed but were intended to be completed, and so the money is revoted. The $338,000 is a revote of the Granger mobile home subdivision. Members will recall that that is a development where we have had extensive discussions with the city. It is just now clearing the hurdles of agreement respecting standards, so we will be proceeding. That is a revote.
Hamilton Boulevard is also a revote of $184,000. There is a revote of $31,000 regarding some work that was planned last year on some lots at the Teslin airport. Consultation with the community had not been adequately completed before we could start the project, so we are just revoting it to get that work done.
There is one more, that of $33,000, which is new money relating to some work on lots at Watson Lake, where the tenders came in higher than expected. The lots in question are those referred to as Campbell Way.
Residential in the amount of $586,000 agreed to
On Rural Residential
Rural Residential in the amount of $63,000 agreed to
Hon. Mr. Byblow: That is a single item. It is a revote of money budgeted for last year to finish the work on the Kopper King commercial development here in Whitehorse. It bogged down due to some problems relating to the service road the city would like to see and the department cannot justify. I am not sure precisely where the development is, but we are revoting the money to get the lots in place and the job finished.
Commercial in the amount of $450,000 agreed to
Hon. Mr. Byblow: The $25,000 is the increased costs associated with the Pine Lake cottage lots at Haines Junction.
Mr. Brewster: Let us start a little bit of an argument; let us get at it. If these lots are going to have septic tanks, was this cleared by the Department of Health, which it was not last time?
Hon. Mr. Byblow: The existing nine lots have septic tanks and fields because they were engineered and planned that way. If there is any further development, we are going to require holding tanks. My recollection of the studies surrounding development of that area is that it cannot take more septic field concentration than the nine lots would provide.
Mr. Brewster: I simply asked if the health department cleared these.
Hon. Mr. Byblow: As far as I know and recall, Health and Welfare Canada was involved in the approval for these lots to have septic tanks. Yes, they have been approved by Health and Welfare Canada, as far as I know.
Mr. Brewster: He mentions just the septic tanks. Does that include the field from the septic tanks?
Hon. Mr. Byblow: Most septic tanks have fields, but perhaps not. The reason there were only nine lots put into that area is because that area could not handle more effluent discharge into the ground. That is why they have septic tanks and fields. That is the maximum allowable septic discharge the area would permit, so the Member is right.
Mr. Brewster: I am glad to have him on record.
Recreational in the amount of $25,000 agreed to
Agricultural in the amount of $25,000 agreed to
On Central Services
On Non-Recoverable Central Services
Mr. Brewster: Just what does that mean in plain English; non-recoverable for $115,000?
Hon. Mr. Byblow: Non-recoverable are costs that cannot be assigned to a specific project. It would be the type of administrative cost that is fairly universal and not specific to a particular land project. In this case, the $115,000 is a revote from the budget last year in order for us to complete the Prospector Road and the Kopper King construction. This will cover the anticipated costs related to the delay of that particular commercial project.
Mr. Brewster: As we go through this, we are seeing more and more revotes. If we keep revoting this money we will be wearing it out pretty soon. It is quite apparent that we are just putting fancy things into the budget and revoting them next year, never intending to complete them. We keep building this money up. It is going to get worn out pretty soon.
Hon. Mr. Byblow: I can appreciate what the Member is saying. It sometimes concerns me too that we revote, in some cases, considerable funds. But in every case, I have been able to determine that there is a legitimate reason for the delay. If you do not revote the money, it lapses. That has been the subject of some budgetary debate in the past.
Considering the amount of money that lapses, it is not, on a percentage basis, any abnormal amount. The revoted money is generally in areas where consultation is required. That usually takes longer than anticipated. You often therefore find money in land developments, in lot developments and much less so in construction. Clearly, you find that consultation takes longer. What it amounts to is that democracy takes time.
It is not an extraordinary amount, though I would like to see less of it in time.
Non-Recoverable Central Services in the amount of $115,000 agreed to
Lands in the amount of $1,264,000 agreed to
On Community Services
On Public Health and Safety
On Planning and Pre-Engineering
Planning and Pre-Engineering in the amount of an under expenditure of $5,000 agreed to
On Water Supply, Treatment and Storage
Hon. Mr. Byblow: There are a number of items as the department has attempted to refine its expected work.
We have $22,000 transferred to Government Services for office space rental of the Whitehorse Performance Centre. There is a revote of $27,000 for the Dawson water supply study carried forward from the year before. There is a $76,000 increase on the Tagish community water supply, which is made up of $56,000 revoted plus $20,000 higher-than-anticipated costs.
There is $520,000 consisting of a revote for work in Carcross on the water supply pumphouse. This is the one about which the Leader of the Official Opposition and I have discussed in the past. It was started, but it looks like it will not be completed. It is the one with the lake intake, wet water well at the shore and then piped water to a pumphouse. That work did not get completed so $520,000 is a revote of that.
There is an increase of costs on the Haines Junction water supply improvements made up of a $345,000 revote and $50,000 increase in cost to the system due to problems related to locating a well and some higher construction costs.
That is, generally, the reasons for the $1,000,000 makeup.
Water Supply, Treatment and Storage in the amount of $1,035,000 agreed to
On Water and Sewer Mains
Mr. Brewster: That is just about the same amount of money we originally voted. Why was it out that far?
Hon. Mr. Byblow: Most of it is revote money. There is a $225,000 revote of money for the Mayo fireflow improvements from last years budget; $48,000 is a revote of money for sewage collection treatment at Carcross. The Member for Hootalinqua and I have discussed the problem relating to Carcross. It is a problem relating to necessary consultations with the community to try to determine the best location for the lagoon and what type of lagoon which, in turn, will predict the cost for the type of system of sewer and water the community will have.
There is $25,000, which is an increased cost related to the piped water and sewer at Haines Junction, of which $15,000 is a revote and $10,000 is an increased cost; $30,000 is involved with the work being done on sewer line extension at Teslin. The total of all that is $348,000.
Water and Sewer Mains in the amount of $348,000 agreed to
On Sewage Treatment and Disposal
Sewage Treatment and Disposal in the amount of $80,000 agreed to
On Solid Waste
Solid Waste in the amount of an under expenditure of $4,000 agreed to
On Emergency Measures
Emergency Measures in the amount of $38,000 agreed to
On Fire Protection
Fire Protection in the amount of $81,000 agreed to
On Equipment Purchase
Equipment Purchase in the amount of $5,000 agreed to
On Hazardous Waste
Mr. Brewster: We only voted one dollar, and it has gone up to $197,000. What are we doing that we could not figure out before?
Hon. Mr. Byblow: The $197,000 is the amount of money we put in last years budget, being shown here as a revote. The Member is correct: we put in one dollar because we could not predict how much a hazardous waste facility could cost. The $197,000 reflects money we identified in last years budget but it was moved into this years budget because it was not spent. If the Member recalls, a steering committee was struck that has been doing a review process, a public consultation process, to try to determine a site. That committee went around the territory. It is now concentrating its work in the Whitehorse area. All Members are familiar with the work of the committee because I have been updating them regularly on what the committee has been doing. This is a revote of money not expended last year but it covers the costs of the committee work and research and consultants. It still does not address a possible hazardous waste facility.
Hazardous Waste in the amount of $197,000 agreed to
On Roads and Streets
On Road Upgrade
Mr. Brewster: Here again we are asking for over a half of what we started out with. Somebody is certainly not making proper estimates or something or this is another one of those revotes that will wear out money again.
Hon. Mr. Byblow: To provide the Member with some information on the $231,000 supplementary amount, it is mostly revotes; $173,000 of it is the street upgrading work at Burwash. That was, again, quite a legitimate delay. The delay was at the communitys request. It wanted to defer the construction of the streets and roads that we had planned into the next year because they had enough activity going on for the year that was in the budget. So it is a reflection of our response to the communitys request: $173,000 of that $231,000.
There is $60,000 at Beaver Creek for street upgrading work. That also is a revote. The problem was inadequate service material, inadequate crush and rock for doing that job. There was no material because it could not be found, stripped and made ready in time.
An additional $21,000 is street upgrading at Destruction Bay. It is only a portion of the work that was not completed on that job. There is a $4,000 reduction through the business incentive transfer to Government Services.
So in every case, the department provides me with an adequate justification for the job not finishing in the year in which it was budgeted. To some extent I agree with the Member; we should attempt to commit, in a budget year, only what we can do. That would permit us not to be faced with less-than-adequate budget predictions.
Mr. Brewster: I will just point out one curious thing - the $60,000 in Beaver Creek. Surely, when the engineers are getting ready to build these projects and commit the money they look at whether or not they have the gravel. After all, that is a big part of that job. Surely someone in the government should have looked and said that if there was no gravel the project should not go ahead until there is gravel.
Hon. Mr. Byblow: I can agree with the Member to some extent. The calculations ought to be made on what is doable. I am advised that on this particular job in Beaver Creek the intended crushing was delayed because of additional work required on another site and they simply never got to Beaver Creek to do that crushing job. Whether that is an adequate explanation is something I will talk with my officials about.
Road Upgrade in the amount of $231,000 agreed to
On Recreation & Community Facilities & Services:
On Recreation Facilities
Recreation Facilities in the amount of $16,000 agreed to
On Rural Electrification & Telephone
Mr. Brewster: I would just like to know where that electrification went in. That is well over what was budgeted for.
Hon. Mr. Byblow: The business of rural electrification is such that you have limited ability to control the budget for that service. Rural electrification operates in such a way that whenever there are residents requesting rural electrification, and they approve through an application process that includes a 75 percent majority approval for that service in that area, the government is required to go ahead and fund that service.
I am not bothered at all by overruns and supplementaries in rural electrification, largely because it tells me that another community, another region has asked for a service. We are committed to providing that service, in other words paying for its installation, and assign the recovery of it against the property. It is all recoverable. When I see high numbers I say it is great that more people are requesting electricity. We are quite happy to fund it and we will recover it. This particular one does not bother me at all.
Mr. Brewster: I am going to have to read Hansard because I do not think I asked for a lecture; I simply asked where this was. They get so carried away explaining things that I already know. All I asked was a simple question: where? Was it in the Yukon?
Hon. Mr. Byblow: Absolutely it was in the Yukon. I do not have the list here; I did not expect it for the supplements. I will undertake to provide during the main estimates, or prior to the main estimates debate, a listing of all the projects that we have funded in the last year. That information is available. I have reviewed it; I do so on a regular basis. I would be more than happy to provide a detail of the expenditure and regions.
Mr. Brewster: That was a little easier on the Minister than the long lecture we got, which I never asked for.
Rural Electrification & Telephone in the amount of $358,000 agreed to
Chair: Committee will take a break.
Chair: I will now call Committee of the Whole to order.
Economic Development: Mines and Small Business
Hon. Mr. McDonald: I have a short and a long version. I will deal with the short version first. Then, if I have the opportunity, I will deal with the long version.
A supplementary estimate is based on an analysis of the expenditures as of July of this year, together with projections for the year-end. The operation and maintenance expenditures projected to the year-end reflect no supplementary appropriation being requested. The revised forecast for capital expenditures reflects the requirement for an additional $2,052,000, comprised of the following four items: for revotes, there is a request for $1,206,000, which is well over half of the total request. This is for the following program areas: community development fund, $370,000; internal energy management, $6,000; exploration incentive program, $42,000; SEAL, $136,000; business development fund, $425,000; and economic development agreement, $227,000.
Recoveries expected for the revotes total $491,500, for a net expenditure revote of $715,500.
For the 1990-91 economic development agreement, there is a request for $706,000 additional capital funding. From this money, it is expected that $282,000 will be recovered, for a net expenditure of $424,000.
For the 1990-91 northern oil and gas program, NOGAP, $136,000 additional funding is being requested, of which 100 percent is recoverable from the federal government. There is also a $16,000 favourable variance designated for a transfer to Government Services to fund the rental of additional office space required to establish the Whitehorse One-Stop Business Shop on Main Street.
That is the short explanation. There is also a longer one.
Mr. Phillips: What types of loans does this government guarantee through the Department of Economic Development, for whom and how much? Does he have that information here today? Could it be provided to us?
Hon. Mr. McDonald: I will have to pull the information about loan guarantees, as opposed to the traditional straight loan, as provided through the business development fund. I know of one loan guarantee. To my understanding, the circumstances of each loan application determines whether or not a loan guarantee is more appropriate than a loan itself. I have the same sort of information on loan programs that I provided last year with respect to applicants, and I can make that information available straight away, if the Member wishes.
Mr. Phillips: I think this is the information the Member was talking about. There are lists and pages I got in a brown envelope from the Member for Riverdale South. He made the information available to that Member, and it was passed on to me, but I am sure other Members would be interested in it. Would the Member make copies of that for us?
Do we guarantee loans for anyone? What is the policy for guaranteeing loans in the Department of Economic Development?
Hon. Mr. McDonald: Loan guarantees are considered by the business development fund, depending on the circumstances of the application and what it is intended to accomplish. If the Member has any sort of specific issues he wants to address, I can put this in perspective and will have a better understanding, or a better angle, from which to respond. As I indicated before, individual circumstances play a significant part in determining whether or not a loan should be an outright loan or whether it should be a loan guarantee.
Mr. Phillips: I do not have any particular loan in mind. We receive all the information on other loans, low interest loans and contributions, but I was not aware of how much we got involved in guaranteeing loans for various businesses. Would the Minister bring that information back and, when he brings it back, could he tell us if we have ever lost any money on guaranteeing a loan? Have we ever had to come up with the guarantee, so to speak, of a business that has run into difficulties?
Hon. Mr. McDonald: I do not think so. My recollection is obviously not perfect, so I will be checking with the department. I do not recall any notable case where a guarantee has been defaulted on, but I will check.
Mr. Phillips: I would like to move into the area of the business development fund and the community development fund. Last year, the Minister told us that he was doing an evaluation of the business development fund in January. It was supposed to be completed in January of last year. Is that complete? Could the Minister table the evaluation of both those funds?
Hon. Mr. McDonald: We did not do a formal evaluation in the sense that we had a consultant come in and evaluate the program. We did an internal review of the programs in an effort to try to improve some areas. I do not have a document to table in the form of an evaluation because we did not do one of that sort. As a result of some of the review we did do, there was a concern that the first-year experience of the fund - and it would have been a partial year at that - did not provide useful results given the startup nature of the program.
A proper analysis would include a full year of operation after startup. We are going to be doing the same sort of review again this year. It is my intention to do one every year.
Mr. Phillips: Are these reviews going to be made public or will they just be internal reviews? I raised this last year with the Minister and he pointed out at that time that things had changed in the programs in that they had just become the business development fund and community development fund and so it was too soon to do an evaluation. If things keep changing all the time, it will always be too soon to do an evaluation.
I want to know when we will be doing an in-depth evaluation of the whole program. It could include all the changes, as I am sure some of the changes have created some problems, even just in the changeover process itself. I wonder when we will be able to sit down with an actual document to see how well this program is working. Several hundreds of thousands of dollars are spent in this program and people want to know how efficiently it is working.
Hon. Mr. McDonald: I had not planned to do a formally funded review such as the Member is requesting. A program review such as is done for SEAL is probably what he is asking for. The reviews we have done are ongoing internal reviews and are done annually.
As I indicated before, there is no formal documented program review as is done for the SEAL program review or the YEAP review. There is potential for this being done, but it is not currently in our plans to spend money on that particular area.
I have taken to heart the comment the Member made about changing the programs, given the discussion we had last year. I am concerned that the program remain stable for a particular period of time in order that the business community can get used to the program guidelines and ultimately have set rules on which they can rely over a long period of time. That is consistent with what we are trying to accomplish through the EDA negotiations. We want a long-term program with clearly identifiable, consistent rules that the business community can respond to and knows exists well in advance.
We did move from a system where there were a plethora of programs: small business loan program; venture capital program; et cetera - all of which had their own administrative units, all of which had their own guidelines, and we moved to the business development fund program, which has one consistent set of rules and one administrative unit. We intend to keep it that way, because we feel it is the best delivery mechanism we can have for the operation of funds like the business development fund. The Member can rest assured, that at least in the foreseeable future, we are not planning any major renovations to our funds. We are not planning any major departmental reorganization either to accommodate anything.
Mr. Phillips: I am pleased to see the government does not plan to make any major changes, because the constant changes have been a concern of the business community. The Minister raised the issue about the type of evaluation I want to see. The type of evaluation I would like to see in a program like this where we are spending in the neighbourhood of $8 million is a SEAL-type evaluation. We must see that the money is spent properly and programs are actually carried out and the program is doing what it is supposed to be doing. Between $5 million and $7 million a year is what we have spent over the last few years and that is a lot of money. It would be useful to know how wisely it has been spent and if, in fact, it was spent on what it was intended for.
I would encourage the Minister to look at a review or evaluation of those two programs. That document should not only be internal but something everyone can see. That is an awful lot of public money being spent, and people should have the opportunity to see how well it was spent.
Hon. Mr. McDonald: The Member makes a useful suggestion. I will take it as notice and discuss what can be accomplished by the suggestion in discussions with department officials, as well as the parameters of such an analysis. I will consider the proposal. If, on reflection, it appears to be as worthwhile as the Member represents it to be, then we can proceed with it.
Mr. Phillips: I talked a moment ago about the SEAL program. I have spoken with the Minister about this, and I asked him a question the other day in Question Period on it. Does he have the information I requested then about the SEAL fund and whether they have been able to collect more money, or if they have fewer people in arrears? Could he bring us up to date on the status of the SEAL program?
Hon. Mr. McDonald: This was information I was going to provide in a legislative return, but I can provide most of the information right now.
According to my figures here, there are approximately 654 loans approved, of which 65 have been repaid in full, leaving 589 that have ongoing activity. Of that 589, we are in the process of loaning out the funds in 92 cases. Therefore, 497 are in repayment status.
Of those, 317, or 63.8 percent, are on time in their payments. The balance have more than one payment in arrears. Of these 180, 93 are in arrears by anywhere between one and nine payments, and 87 are in arrears 10 or more payments. That is as far as I have taken it so far. I have asked for a breakdown on what is happening with the 87, and what collection action is being taken on those remaining.
Mr. Phillips: That is a fairly high number of people who are in arrears of this loan. Of the total of 180 people in arrears, what is the total amount of money that is in arrears?
Hon. Mr. McDonald: It is $145,000.
Mr. Phillips: This is about the same amount, or a little more, than the amount that was in arrears last time. The other day in his statements in the House, the Minister mentioned that we had increased our collections in the last month or two. When did we actually start to get a handle on this? How far along are we with it? Are we taking some of these people to court, or is that necessary, or are we just encouraging them to pay their back payments as soon as possible?
Hon. Mr. McDonald: As I indicated to the Member during Question Period, the actual success in receiving receipts from the SEAL program has not really shown up until this summer, after more significant collection action was taken. There was $60,000 for October, which is approximately double what was received in the previous month, which was higher than what was received in the month before that. Clearly, the collection action is improving, and there is every intention of seeking all funds that are in arrears.
One reason why I have yet to come back with all the information on the delinquency status of the SEAL program is because, of the numbers I mentioned who are in arrears of 10 or more payments, it does not necessarily portray any information such as whether or not the persons are making an attempt to pay back. They may be the equivalent of 10 payments in arrears, or one to nine payments in arrears, but they are showing at least some good faith in paying back the loan. I will have to get more break-out as to who is showing that effort, and who is not.
With respect to loan collection procedures, I did pass it out with the package of information. We intend to proceed through small claims court. It says here in Item No. 6 that accounts that are 120 days overdue will proceed to court to collect, if the review is that there is no attempt to repay. Sometimes individual circumstances can show good faith and, in those cases, it would not be our intention to drag the people into court. However, we do intend to collect, and we will go to court if we have to.
Mr. Phillips: I hope that if they do have to go to court they keep their facts straight because I know that some of the difficulties with people keeping their payments up to date are not necessarily the fault of the people. I know some people have attempted time after time to get their loans straightened around, to find out how much their payments are, to find out how far they are in arrears or to find out even what the amount of the payment is. There has been a rather large staff turnover in the SEAL program and they have been unable to give out that information. It has not always been the fault of the people trying to make the payments. I have explained this to the Minister before. We had better be careful when we decide to come down hard on some of these people who have not made their payments. The negligence may be on the part of the government for not following up on the program, or not having a program for collection in place.
The program to do the inspections and loan the money was in place. The SEAL program is a great program and is doing its job. Once they loan the money everything else is forgotten, it seems. It is indicated by the numbers today that 180 people are in arrears and $145,000 is unable to be collected up until today.
I would suggest to the Minister that they tread softly in this because I think they will find it is not just an isolated incident of one or two people who have had this difficulty, but it may be because of the large staff turnover, or the proper guidelines not being in place in the beginning that we do have the problem we have today.
I would like to ask the Minister if we have now instituted a more sophisticated system of collecting the money, possibly a payment book or something you would give someone when they take out a SEAL loan. Or if we do credit checks do we put anything in place that normal banks or lenders would do when they carry out these type of programs, or is it just that one signs a contract and the onus is completely on you to do whatever down the road and no one ever follows it up?
Hon. Mr. McDonald: Well I am not prepared to make any bones about it. The collection activity has not been up to snuff. I have said that before and I am saying it now. The Member has made representation before that in some cases people have not been contacted for a very long period of time to remind them that they have money outstanding and do owe that money on a specified payment schedule. It is essential that no decision about court action is even contemplated unless there is current and thorough collection activity taking place in every case.
The collection activity, as I have indicated through the statistics, is proof positive that collection activity is being stepped up. Collection activity is being pursued much more aggressively than it has in the past. The situation is improving. I was not aware of all the problems that the Member mentioned until he brought them to my attention himself. Subsequently, I have spent quite a bit of time dealing with this particular matter and I am satisfied that while there was a problem in collection activities some time ago, a great deal of effort has been put into this by the department following the SEAL evaluation to improve collection procedures to make them more aggressive, provide appropriate outreach capabilities, contact people who are in arrears or are not paying back as understood in the original loan agreement and to remind them that they have payments owing.
Following that, if they have outstanding payments, it gives them time to pay. I think that is a reasonable approach to take. The situation is definitely improving as a result of the telephone work and contact by mail that has been made by the department over the past six or eight months.
Mr. Phillips: I am pleased to see that the Minister has apprised himself of the situation a little better. Things seem to be happening there.
The Minister may have missed my last question. I was asking about credit checks and making the application a little more similar to lending companies and banks. This would enable us to deal with a problem up front instead of trying to deal with it later when we cannot collect the funds. Do we make sure that the people who are receiving the funds can actually pay them back?
Hon. Mr. McDonald: I am not an expert on banking practices, but I am satisfied that the department does what is reasonable under the circumstances in letting out loans. I do not believe they do it through a credit check as I am sure the banks do on loan applications; however, I did go back to the SEAL evaluation and looked at the recommendation with respect to credit checks. It was made in a context of collection activity and encouraged us to be more aggressive in collections. It suggested that if we could not get an improved system for collections, we should be considering a credit check option. But they suggested considerable caution in pursuing the option of credit checks, because one other severe criticism of the SEAL program was that it was unwittingly targeting persons who may not be in need of the program through a government lending agency but could probably receive the same funding through normal lending institutions.
The Member may remember that one of the concerns was that lower-income people were not being targeted as persons who should receive SEAL funds as first priorities. Credit checks should be dealt with very carefully if collection activity proved to be too much of a problem.
We have opted to aggressively pursue collections to see whether or not there is a collection problem at all. So far, in the vast majority of applications, we have been able to recover funding that had been loaned out and was in arrears. On further analysis, we will be able to determine whether or not there is any problem with respect to loaning funds to persons who simply cannot repay. There is a preliminary analysis done to determine whether there is reasonable cause to expect a person can or cannot pay back the loan. It is not done to the extent the banks do it.
Mr. Phillips: I share the Ministers concern that some people who really do not need the SEAL loan can get it and use it and those of lower income who do need it cannot. I do not think we are doing anybody a favour by giving them a SEAL loan, then clamping down on the collection part of it if they could not afford it in the first place.
Perhaps you have to look at changing the SEAL loan program. For some people who cannot afford it, perhaps there should be a whole different program. I do not think you are doing them any favour by loaning them the money up front and, then, coming down hard in the collections down the road, if they cannot afford to repay it.
Hon. Mr. McDonald: I do not believe there is information to suggest we are experiencing a problem with collections. The problem in the past has been with the collectors, and not with the people who borrowed the money for the purpose of upgrading their homes. If it is determined that there is a problem, then we would add a layer of bureaucracy on to do the credit checks. However, I think we should wait to determine whether or not we have a problem with the people who have borrowed the money before we add that layer of bureaucracy.
At the same time, the people who are now doing the collections are doing the job as it was intended to be done, in accordance with the recommendations of the evaluation and with due caution for some of the concerns expressed in the evaluation.
Mr. Phillips: I can live with waiting awhile, but I suppose we will have to wait until this time next year or possibly the spring session for an update on the SEAL program to see how well it is going. I would like to move on if there are no more questions in this area from anyone.
I would like to ask the Minister a few questions about mining in the territory and what is happening to the mining industry in the territory. Possibly he can start off by giving us an update on what is happening in Elsa, and whether or not the Minister expects it to open up again as a full-fledged mine, or a fly-in mine, and in what capacity, a quarter the capacity or half the capacity as before? Are there going to be as many people employed there as there were before?
Hon. Mr. McDonald: There is a long answer and a short answer. I will give the short answer in terms of my own personal analysis to start with. I believe the jury is still out with respect to the new owners of the United Keno Mine bringing it into production by January or February. The only reason we have at this time for that assessment is the price of silver and the stated price the company indicated publicly that they would need in order to make a reasonable return on their investment.
Having said that, there may be other internal considerations made by United Keno Hill on whether they may pursue production earlier or later, depending on what they think their long-term investment should look like, given the fact they have made an obvious considerable commitment to this property. They are now going through the process of rehabilitating parts of the operation in Elsa with a view to operating a part bus-in, bus-out operation out of Whitehorse, and part of the operation staffed by people living in the district, including some people living in Elsa.
The so-called bedroom communities, or feeder communities, would be Keno and Mayo, and potentially any community between Whitehorse and Elsa through which the bus taking miners to and from work would pass.
When the mine was purchased in the summer, the original plan was to get the collective agreement in place; this has been accomplished. They wanted to get an amendment to the water licence - this has been accomplished - and to start mining and milling in January or February.
They have not indicated any change in plans to me, personally, although I will be meeting with them shortly. But they have not shown any signs of wanting to amend the plans significantly through any of the actions they have taken over the course of the last couple of months when the silver price has remained chronically low.
That is the short answer with respect to their plans. Once we get closer to our originally conceived date for production and see how silver prices fare, I think we will have a better chance, from the outside of the company, to determine what their production aspirations are.
Mr. Phillips: Have the new owners approached the Yukon government and asked for any assistance in any way through Yukon government programs for restarting the mine or assisting in the operation of the mine?
Hon. Mr. McDonald: Informally, they have indicated a desire to discuss with the government certain infrastructural requirements: transportation roads, power, housing, town site issues, exploration funding and programs we currently offer. We have not yet come to any conclusions about any of these items.
There have been no formal requests for anything in addition to that.
Mr. Phillips: I would like to move on to the Windy Craggy Mine issue. It seems to have died out in the news for the last little while and that may be because the mine is hiding from all the flack it has been getting from environmentalists all over the world. I just wonder if the Minister could update us on the situation. Is he in contact with the officials? What is the current status of that mine?
Hon. Mr. McDonald: Not a lot has happened publicly with this mine since the coverage it received in the media last spring when it submitted its mining plans to the B.C. mine development review committee. I have had a chance to visit the mine site and speak with the managers about some of the concerns expressed by the environmental groups about the impact of this mine and I detected in their comments a real desire to overcome all the hurdles, whether they be from Alaska, B.C. or the Yukon.
At this point, all I can tell the Member is that Geddes Resources has requested a general information session with me for this month where we will certainly be talking to them about some of their aspirations. But they have not publicly indicated that they are prepared to formally take the next step by submitting the next stage report to the B.C. mine development steering committee.
Mr. Phillips: Well you cannot really blame them for being a little gun shy at this time. They virtually took it from all sides when they came out with some of their announcements before and I think they are sitting back and re-evaluating their position. At the same time, they have discovered significantly more ore reserves, which makes that area a little more attractive for a mine. Of course it does not solve any of the problems that the environmentalists have, but it certainly has made Geddes Resources go back to the drawing board and look at its future.
Does the Minister know of any other potential site right now, or potential mining areas, that people have indicated to him look like they may come under production in the near future?
Hon. Mr. McDonald: To answer the question, I have to cover myself by stating that this is the mining industry we are talking about. The mining industry is made up of some of the most optimistic people, probably, on the face of this earth. They are that optimistic out of absolute necessity. But they do have fairly good feelings about some projects, one in the Carmacks area in particular, as well as some projects in and around the current operations of Curragh, both in Faro and at Mt. Hundere. Some of the other projects, such as Wellgreen in the Kluane area, appear to be on hold while the company involved makes a decision to proceed to seek financing and, consequently, I would not bank my own money on that project, for example, coming forward in the near future. There is not a lot that I would be prepared to say this year that would be the same as I said last year about Mt. Hundere, but I may be prepared to say that next year.
I think the others are longer shots, especially anything that has to do with gold bearing or precious metals. I would consider it at this point to be a long shot.
Mr. Phillips: I share some of the concerns the Minister has that things are not quite as optimistic about new mines as they were at this time last year, but as well, I have a very strong concern about the significant downturn in exploration that has been occurring in the territory over the past two years, mainly as a result of the cutting off of the flow-through shares.
I am wondering if the government has any plans in place to encourage mineral exploration in the near future. Being from a mining community himself, the Minister knows that mines are not found today and opened up tomorrow. It takes three to five years sometimes to get a mine onstream. What we are seeing in the last two years we will pay for three, four, five, six or seven years from now. Mining is one of the most significant factors in the Yukon economy. That is something we should pay heed to, because mining exploration does have a profound effect on the number of mines that are opened.
Does the Minister have any comments on the exploration or downturn in exploration, and is his government doing anything to encourage people to get out there and discover more mines?
Hon. Mr. McDonald: Yes. As Members know, we did refine our mining programs to make one mining program in consultation with the Chamber of Mines. The Yukon mining incentives program provides the necessary grubstake funding to encourage prospectors to initiate the first stages of exploration, as well as to support junior mining companies in the exploration/drilling stage, the next stage of exploration.
If we went through the various projects that appear to be likely prospects in the next five to 10 years one would see that most of them have received support from the government through either the exploration incentives program or from the current Yukon mining incentives program.
It must be acknowledged, however, that there is very little that this government can do to reverse the downturn in exploration, largely because the real tax incentives no longer exist to encourage exploration companies to explore. Many of the exploration companies that have been doing the vast majority of exploration and drilling in the territory, and some of the more risky work, were junior mining companies and not the big operators. The big operators are the ones that generally come in and purchase work that has already been done by others.
In some respects Curragh Resources and the Mt. Hundere projects are classic examples of that.
Big mining companies do not generally grubstake prospectors, and they do not help junior mining companies, except inasmuch as they come and buy their work. Junior mining companies are experiencing a problem in that many of them are listed on the Vancouver Stock Exchange, which does not have the reputation right now that would encourage people to risk their hard-earned money on a mining venture. Coupled with a singular lack of tax incentives for high risk exploration, that has contributed to one of the lowest exploration years in the last 20 years of mineral exploration in the territory.
This is a depressing sign for the future of mining development, but we are providing support at the initial stages of exploration, particularly at the prospecting stage. We have a very good program to support prospectors.
Unless the Member really wants to be on the record for the last couple of seconds this afternoon, I will move that we report progress on this bill.
Motion agreed to
Hon. Mr. McDonald: I move that Mr. 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 the report from the Chair of Committee of the Whole.
Ms. Kassi: The Committee of the Whole has considered Bill No. 15, entitled Second Appropriation Act, 1990-91, and directed me to report progress on same.
Speaker: You have heard the report from the Chair of Committee of the Whole. Are you agreed?
Some Hon. Members: Agreed.
Speaker: I declare the report carried.
Hon. Mr. McDonald: I move that the House do now adjourn.
Speaker: It has been moved by the Hon. Government House Leader that the House do now adjourn.
Motion agreed to
Speaker: This House now stands adjourned until 1:30 p.m. tomorrow.
The House adjourned at 5:29 p.m.
The following Sessional Papers were tabled November 13, 1990:
Yukon Development Corporation - Report for the year ended March 31, 1990 (Penikett)
Yukon Energy Corporation - Report for the year ended December 31, 1989 (Penikett)
The following Legislative Returns were tabled November 13, 1990:
Provision of Filed Documents pertaining to South Highway School service and construction contracts (Byblow)
Oral, Hansard, p. 132
Provision of Filed Documents pertaining to 911 service (Byblow)
Oral, Hansard, p. 150
The following Documents were filed November 13, 1990:
Original purchase contract with ATCO trailer company, and other service and construction contracts related to the South Highway School (Byblow)
Report (July 1990), supplemented by various documents, provided to Government of Yukon by Northwestel regarding 911 service (Byblow)