Wednesday, November 14, 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 filing with the Clerk two copies of the lease document between Yukon Development Corporation and the Department of Government Services.
Hon. Ms. Joe: I have for tabling responses to questions from the Member for Hootalinqua and the Member for Riverdale South.
Hon. Mr. McDonald: I have for tabling a legislative return in response to questions from the Member for Riverdale North.
Speaker: Are there any Reports of Committees?
Petition No. 2
Clerk: Mr. Speaker and hon. Members of the Assembly, I have had the honour to review a petition, being Petition No. 2 of the Second Session of the 27th Legislative Assembly, as presented by the hon. Member for Kluane on November 13, 1990. This petition meets the requirements as to form of the Standing Orders of the Yukon Legislative Assembly.
Speaker: Petition No. 2 is deemed to have been read and received.
Hon. Mr. Webster: I have for tabling a Legislative Return, which addresses the petition that was tabled in the House yesterday.
Speaker: Introduction of bills.
Are there any Notices of Motion for the Production of Papers?
Notices of Motion.
STATEMENTS BY MINISTERS
Medical Travel and Corporate Credit Cards
Hon. Mr. Penikett: I rise today to inform the Members of a new initiative to better utilize the taxpayers money in providing medical and government business travel.
Medical travel is an essential service provided by this government. But because of the unpredictable nature of the travel, we cannot utilize the cost-saving benefits of something as elementary as airline seat sales. However, an agreement negotiated with Canadian Airlines International, by Government Services, has the potential of generating cost-savings for our medical travel program.
Canadian Airlines will continue to provide priority service for stretcher patients and allow the use of nine seats for the cost of three.
And, for the time being, the airline will allow us to use a special discount fare for all sit-up medical-related travel with no restrictions on destinations. This fare will apply equally to one-way and return airfares.
In return, this government has agreed to permit the introduction of Diners Corporate Credit Card as the governments corporate credit card for all out-of-territory travel.
The Diners Club program will permit the government to acquire travel bonus points that can then be utilized to reduce the governments travel costs.
There will be one card issued to the government to be used for all government travel.
This new agreement also allows individual employees to apply for personal Diners Club cards. Application for these cards is entirely a matter of choice for employees.
Health travel costs are not something we can directly control just as we cannot directly control essential medical treatment.
It is estimated that in one year under the new program, medical travel costs could be cut by $129,000 and bonus points accumulated for government travel could result in a potential savings of $85,000, for a total annual saving of $214,000.
Our negotiations with Canadian Airlines International have resulted in an innovative way of remaining fiscally responsible while still providing the necessary service to Yukon people.
Mr. Lang: We welcome an initiative such as this. I do have a couple of questions regarding this statement, however, as it is not clear to me.
I want to ask the Minister if this applies to all government employees while travelling out of territory. If it does, how is this going to affect Air B.C. and their market during the summer months?
Further, could he clarify his statement that this new agreement also allows individual employees to apply for personal Diners Club credit cards? What are the implications and benefits of that?
Hon. Mr. Byblow: I will provide the Member with a brief response to the two questions raised by the Member respecting Government Services monitoring of the travel arrangements.
The initiative for bonus points to be accumulated to employees is a purely voluntary exercise. Individual employees may or may not choose to apply for membership in the Diners Club. The implications of this is that on any travel, government or not, with that card, points would accrue for travel on Canadian Airlines.
The second question related to Air B.C. We have ongoing discussions with them and have invited them to participate in similar negotiations of fare reductions and benefits to government for volume traffic on the airline. To date, they have not responded. At this point, they have not indicated any willingness to provide any particular benefit with respect to their summer schedules.
Speaker: This then brings us to Question Period.
Question re: Watson Lake sawmill logs
Mr. Phelps: I have some questions for the Minister responsible for the Yukon Development Corporation with regard to the burning of logs at the mill site in Watson Lake.
It takes around 150 years or so for a tree to reach maturity in the Yukon. Now we have a situation where hundreds of trees are being burned for no useful purpose at the mill site in Watson Lake. Those logs were harvested by Hyland Forest Products when it was run by the Yukon Development Corporation.
I want to know why Hyland Forest Products harvested thousands of trees that would never be milled, were allowed to rot and then were burned in the yard as scrap timber?
Hon. Mr. Penikett: I am absolutely certain that Hyland Forest Products did not cut or harvest the trees for the purpose alleged by the Member opposite. Only a fool would do that. The trees were cut with the idea of them being for sale. Those were decisions made by the management of the company, people who were retained because they were experts and professionals in the field at the time.
Mr. Phelps: We all know that the logs being burned now are ones that were cut by Hyland Forest Products. They were logged under instructions from Mr. Alwarid, the right-hand man of the Minister at the time. I would like to know why the Yukon Development Corporation insisted on over harvesting logs in 1987-88.
Hon. Mr. Penikett: Again, the Member is making an allegation which, given the previous allegations made by the Member on this subject, I doubt is supported by fact. That question will subsequently be decided objectively at some point, but I do not accept the allegation of the Member.
Mr. Phelps: Is the Minister saying that Mr. Siglet, in his statements, did not make it clear that he was ordered to over harvest, to cut more trees than were needed by the person who was speaking on behalf of the Yukon Development Corporation?
Hon. Mr. Penikett: The Member is making an allegation based on one statement. I am sure the Member would want to admit that there is more than one side to the story. I think the Members opposite are going to have to get it straight in their minds whether their critique of the Development Corporation amounts to an accusation that we did not involve ourselves enough in the project, which seems to be the accusation of some Members, or that we involved ourselves too much. They have taken both positions. I do not think they are supportable.
The Member is asking me to comment on an allegation made by a third party. I cannot comment on that allegation, because I do not have any evidence that that is the case.
Question re: Watson Lake sawmill logs
Mr. Phelps: We may never get a straight answer on that issue, but it is very clear that the Yukon Development Corporation over harvested the timber near Watson Lake, and thousands of cords of wood have been, and are being, totally wasted.
Hundreds of thousands of trees have been cut down. Is the Development Corporation doing anything to reforest areas that were cut?
Hon. Mr. Penikett: Reforestation was one of the undertakings of the previous owners and operators of the mill, Shieldings, which was not met. The Member asks why the trees were harvested. Obviously, they were harvested with the intent of being milled and sold. The receiver/manager appointed by the courts was charged with managing the assets, which are under receivership, including trying to find customers for the wood that had been cut. I understand his decision to sell the material for fuel, and to burn the material, has been made as a result of the failure to find sales for that wood.
Mr. Phelps: Back in the spring of 1988, the Yukon Development Corporation, through its wholly-owned subsidiary, Hyland Forest Products, obtained $45,000 for a regeneration survey of forest lands. Having spent those taxpayer dollars - a grant from the federal government with 10 percent from YTG - why has YDC not followed up and done something to replace the hundreds of thousands of trees that have been harvested by the Watson Lake sawmill operation?
Hon. Mr. Penikett: I believe the question was in the form of a representation. If I understand it correctly, the Member is arguing that, subsequent to the sale of Hyland Forest Products to Shieldings, the YDC continues to have a responsibility to discharge the obligations of the new owners in respect to reforestation. Is that the representation he is making?
Mr. Phelps: I would like to know why there was no follow-up on the grant of $45,000 that was to go toward studying how to go about replacing all these hundreds of thousands of trees that have been cut. That is what my question was about.
Hon. Mr. Penikett: Is the Member asking that YDC carry out commercial obligations that have been assumed by a new owner, or had been assumed in this case by the receiver/manager? I am not sure what the Members point is.
Question re: Watson Lake sawmill logs
Mr. Phelps: Now I am being asked the questions. I am sorry if I am being a little difficult today.
I would like to know whether or not the Minister in question feels comfortable with $45,000 of taxpayers money being spent on a study of forest regeneration, to replant some of the trees that are now going up in smoke in the mill yard in Watson Lake, trees that were cut by Yukon Development Corporation when it was completely in charge. I would like to know if that is the end of it, if this $45,000 has gone into a study and nothing more is going to be done by Yukon Development Corporation to try to replace some of those hundreds of thousands of trees that have been cut.
Hon. Mr. Penikett: I think I have heard everything now. The Member is suggesting that we replant trees that have gone up in smoke, which I think is probably asking the impossible of us.
The study that the Member mentions was done at public expense and I am sure that the study will remain a useful document, but again the Member seems to be making a representation that somehow the Development Corporation carry out some obligation that had been transferred to the new owners of the mill and that somehow we should carry that obligation out past the point where we continue to operate it.
With respect to the commitments that this government is making in terms of forestry management, the Minister of Renewable Resources has indicated already that he will be coming forward with policy statements in that area. I have no hesitation in telling the House that our experience in Watson Lake has been instructive on that score.
Mr. Phelps: While we are on the subject on grant monies that were wasted by Yukon Development Corporation while it was running the mill at Watson Lake, I am rather curious to know whether or not the bridge over the Rancheria River was ever completed. Mr. Speaker will probably recall the pictures of the pilings sticking out of the river during the documentary that was done by Focus North regarding the Hyland Forest Products debacle.
I am curious about whether or not that bridge was ever completed or whether the pilings are still there in the river with no bridge attached to the top of them.
Hon. Mr. Penikett: I am not absolutely sure about the condition of the bridge project. I have not personally inspected it but I will take the question as notice and bring information back to the Member.
Question re: Yukon Pacific Forest Products power house
Mr. Devries: I have a question for the Minister responsible for the Yukon Development Corporation. The power house at the Yukon Pacific Forest Products site was refurbished the Hyland Forest Products at a cost to the taxpayers of approximately $800,000. It operated one year and lost an additional $350,000. Then it was sold to a wholly-owned subsidiary of Yukon Pacific Forest Products for $800,000, which is still outstanding. My question is: does the Minister expect to collect the first payment of $200,000 due on December 31, 1990?
Hon. Mr. Penikett: As the Member knows, the whole question of the assets of the previous company and the mill are in the hands of the receiver and before the courts. The Member may know that we have a lien against that particular asset. The Member, I think it was the Leader of the Opposition in one of his many mischievous and inaccurate statements on this subject the other day, alleged that we are not likely to receive anything for that. That is a question I will dispute, but time will tell. The question the Member asks is in fact premature because a final answer cannot be given yet.
Mr. Devries: In the YDC report for the year ended March 1990, one of the assets the corporation shows on the balance sheet is the power house at $565,000. From what the Minister said, the power house is still considered an asset of the Yukon Development Corporation and not part of the receivership?
Hon. Mr. Penikett: As I just finished saying to the Member, it is an asset that we claimed.
Mr. Devries: A recently filed court document from a professional appraiser places the value of the power house at $15,000. Why does the YDC evaluation in the annual report show $565,000, a difference of $550,000?
Hon. Mr. Penikett: Well that question does not make a lot of sense. I could just as well ask the Member why does the friend he is referring to value it only at $15,000. This is a question that will ultimately be decided by the courts. We do have a lien against it. These things will be worked out.
Question re: Power rates
Mr. Lang: Yesterday it was established that the Yukon Energy Corporation had made a profit of $16.2 million that had been transferred to the Yukon Development Corporation. At the same time, we were notified in October of this year that the electrical consumers of the Yukon would be looking at up to a 22 percent increase in their rates. At the same time, it was just discovered that the electrical consumers had paid an extra $16.2 million in profits to the YDC. The proposed increase does not include the ever-rising, escalating costs of fuel that are part of running the electrical system in the Yukon. I would like to ask the Minister responsible for the Yukon Energy Corporation what additional charges electrical consumers will face in their power bills in the coming months because of the increased costs in fuel?
Hon. Mr. Penikett: First of all, I again have to correct the misinformation that the Member has attempted to bootleg onto the record. I think either he or his colleague said something yesterday about the corporation having a net income of $43 million over a three-year period ending December 31, 1989. That is not correct.
Just as a matter of fact, the net income was closer to $17 million for the same period. Just as a matter of fact, the energy rates are not going up 22 percent, as I told the Member yesterday. I know he does not want to hear this, and he hopes if he keeps repeating his misinformation often enough, somebody out there will believe him. Rates are not going up January 1, 1991. Bills will be going up as a result of the removal of the temporary rider and the application of the GST.
The Public Utilities Board has contemplated and will contemplate a situation where, if the cost of diesel fuel goes up, that cost will ultimately be passed on to consumers if it reaches a very high point. But the Member may know that a very tiny percentage of the total energy provided in the territory comes from the burning of diesel. It is something like six percent. My hope is that, unless the Middle East situation deteriorates to the point of war, the impact on the consumers will not be as massive as we might fear if that awful eventuality develops.
Mr. Lang: I am not trying to bootleg anything onto the record. There is a $16.2 million profit identified on page 15 of the Yukon Energy Corporation books. I and my constituents all pay electrical bills, and obviously there was extra money paid to the Yukon Development Corporation.
We are looking at a minimum of a 22 percent increase, according to the government, and looking at escalating diesel fuel costs, which, as the Minister indicated, are six or more percent of the system. I want to know when the consumer, the Joe Lunchbucket out there the Minister sometimes forgets about, can expect to see the additional increase in power bills?
Hon. Mr. Penikett: I answered the question before.
As I understand it, the decision of the Public Utilities Board is that, in a way similar to public utilities boards everywhere, there is usually a provision made in the rate structure where, if there is a factor such as fuel prices increasing beyond a certain point, the costs are passed on to consumers.
I am very puzzled by the rules that permit questions on the same subject as the motions to be debated later.
The Member is confusing something. He is confusing the question of the rate of return. Utilities everywhere allow a rate of return based on a certain debt/equity ratio, which is approved by the utilities board or regulating authority. The transfers between the two corporations, the rate of return of the Energy Corporation and the surplus that it has generated is consistent with the debt/equity ratio proposed by the corporation and approved by the board. This is consistent with the sound financial practices...
Speaker: Order please. Will the Member please conclude his answer.
Hon. Mr. Penikett: ...and the proper operation of utilities everywhere in the country.
Mr. Lang: More and more people who watch the proceedings in the House are commenting that we never get an answer from the other side. I asked a very simple question, and I would like to know the answer. Surely the Yukon Energy Corporation or the Economic Development department has made some projected costs on what the increased cost of fuel is going to do to our power rates.
Has the Yukon Energy Corporation done any projections on costs that are going to be submitted to the Yukon Public Utilities Board as an additional cost to the consumer?
Hon. Mr. Penikett: The people in the corporation can do projections based on various scenarios, according to fossil and diesel fuel prices. I am prepared to come back to the House with information on this.
The Member complains about not getting answers but, if all we get are accusations, and if we get preambles that contain completely wrong information, it is only reasonable that we try to correct the record so the poor citizen watching is not deceived by the Member opposite about the facts of a situation.
Question re: Kathleen Road improvement
Hon. Mr. Byblow: I too would like to provide Members opposite with an answer, specifically to a question raised by the Member for Porter Creek West on October 29, who raised with me some questions about the proposed improvement to Kathleen Road, as was recommended by the Alaska Highway corridor study.
I am pleased to tell him that, in respect of that particular road, the plans suggested by the highway study include a red/amber flash beacon to be installed at the intersection, improved street lighting to be put in place at the intersection, and speed limits to be reduced to 70 kilometres from Rabbits Foot Canyon to Kathleen Road.
I can further advise the Member that I have directed that a copy of the specific report recommendations affecting that area of the highway be forwarded to the Member.
Question re: Government contracts
Mrs. Firth: We thank the Minister for his paid political announcement.
I have another request for information from the Minister of Government Services. To assist in thorough budget debate, could the Minister provide a listing of all the government contracts from April 1, 1990, to November 15, 1990?
Hon. Mr. Byblow: The Member may ask, but I will not provide.
Mrs. Firth: Perhaps the Minister can tell us why he will not make those contracts available. He did for the last budget debate, and I do think it would assist in a more constructive debate when it comes to the budget and the monies that have already been expended, particularly in light of the supplementary budget we are presently debating.
Hon. Mr. Byblow: The Member is not correct when she suggests the contract listings were provided during previous budget debate. The policy of the government has been stated quite clearly by me. We annually table all contracts entered into by the government, and we do so at the earliest opportunity following the close of the fiscal year.
The Member is aware that, to be accurate, the task of compiling these contract listings is a fairly onerous task. I am not prepared to direct my Government Services officials to drop everything they have on their plate at this moment and compile these contract listings. To refresh the Members memory, during their budget debates, individual Ministers provided information that was specifically requested. I cannot undertake the provision of a full listing, because I cannot guarantee the accuracy, and I will not be tabling anything that is short of accurate.
Mrs. Firth: We go through this every time this Legislature sits. Contract Administration has a central registry. It is automated and the information has been keyed in, and the information can be pulled out.
My memory serves me quite correctly ...
Speaker: Order please. Would the Member please get to the supplementary question.
Mrs. Firth: Yes, I will, Mr. Speaker. The Minister made a lot of charges in his response that have to be responded to.
Last session individual Ministers provided us with listings of the contracts up until December or whenever the date was that we were sitting.
I would like to ask the Minister of Government Services again if his department, as the central agency, can provide us with a listing of those contracts up to this date. I would like to ask him to reconsider and give direction to his department to bring that forward in the House.
Hon. Mr. Byblow: The Member is correct that we go through this nearly every sitting of the Legislature. We certainly have since I have become Minister. The facts of the matter are that I will not direct my Government Services staff to spend time accumulating, through the central registry, a verification of all the contracts that have been entered into. Individual Ministers have those listings available to them, and they may choose to provide them as Members request.
I will not direct my officials to drop everything for the next two weeks so Members can have a complete and accurate listing. Individual Ministers have that option.
I would conclude by reminding the Member that when they were in office, and I was sitting over there, we could not even get a single detail on any single contract, much less the compiled comprehensive listing.
Question re: Alaska Highway corridor study
Mr. Nordling: I would like to follow up on the response today of the Minister of Community and Transportation Services to my questions of October 29, 1990.
Also on October 29, the Minister said that his department was assembling an implementation plan with the two other levels of government involved. Does the Minister know now when this implementation plan will be completed?
Hon. Mr. Byblow: I can advise the Member that we are working on such an implementation plan. It is clearly not complete yet and cannot be completed until we have a better handle on finances available. The Member recognizes, correctly, that three levels of government are going to have to share on the funding requirements to implement the recommendations of the study. Certainly in the budget debates that are to come up in the mains, I will be advising the Member in detail with respect to the $500,000 that this government has allocated toward Alaska Highway corridor work, specifically in relation to the Two-Mile Hill and the South Access.
A specific detailed implementation scheme of when the recommendations are going to be put into place requires further discussion with Public Works Canada and the City of Whitehorse, as well as our own projections of our funding availability over the three-, five- and 10-year period as outlined by the study.
Mr. Nordling: I knew all that. I just wanted to know when. Will there be a chart prepared with time lines that covers the whole Alaska Highway corridor study and its implementation?
Hon. Mr. Byblow: The study itself has a number of such charts it recommends as a reasonable implementation plan. The study itself is six inches thick, and it has many charts and many time schedules of implementation plans. We cannot accept any of those until we can confirm that we are able to deliver that implementation scheme. I remind the Member that we have just begun discussions with Public Works Canada for a possible takeover of the Alaska Highway. We are preparing our respective mandates. I can anticipate that the implementation may well fall...
Speaker: Order please. Will the Member please conclude his answer.
Hon. Mr. Byblow: I can predict that the implementation may ultimately fall, because it has a 10-year time frame to it with the territorial government and the City of Whitehorse.
Mr. Nordling: I would like to thank the Minister for ordering a copy of the report to be forwarded to me, relating to the Kathleen Road and Mackenzie RV Park intersections. I have a meeting in my riding tomorrow night. Will that copy of the report be available before we finish tomorrow afternoon?
Hon. Mr. Byblow: I am sure that, as we speak, my officials are scrambling to meet that deadline. I will endeavour to achieve it.
Question re: Whitehorse Recycling Centre
Mr. Phillips: I would like to direct my question to the Minister responsible for the Liquor Corporation and the Department of Renewable Resources. In the early summer of this year, the Government of the Yukon announced that it was going to cooperate with the Whitehorse Recycling Centre by sending them all the Liquor Corporations returned bottles, instead of disposing of them in local landfill sites. Everyone involved or concerned about the environment was pleased and applauded the move. Unfortunately, the cost of recycling the bottles exceeds the amount of funding the government allocated for this project. For example, current government funding provided for this project only covers one person per day to process the bottles, and the volume today requires three and one-half person days to process the incoming bottles. The Recycling Centre is currently running a desperate plea for volunteer help to keep up with the volume.
Would the Minister give this House a commitment today that they will provide adequate funding for the Recycling Centre to decontaminate and process the Liquor Corporations bottles?
Hon. Mr. Webster: I will give my commitment to continue talking with the Yukon Liquor Corporation and the Recycling Centre to ensure that glass is recycled outside. As a matter of fact, I have a meeting scheduled for tomorrow afternoon with the president of the group and the general manager of the operation to discuss this very thing.
Mr. Phillips: Just for the Ministers information, it currently costs the Recycling Centre about $9,000 per month to process the bottles they receive from the Liquor Corporation, and they only receive about $4,200 in payment from the same corporation. On one hand, we have made a great, strong environmental move to stop the bottles from going to the landfill site but, on the other hand, the buck has sort of stopped. They cannot complete the process, the bottles cannot get recycled, and the Recycling Centre may be in trouble, if it continues to go at this speed.
Will the Minister give us a commitment today to provide adequate funding for the Recycling Centre to process the bottles his department has given them to recycle?
Hon. Mr. Webster: I want to thank the Member opposite for his words of encouragement in supporting the recycling movement in the territory. In response to his first question, I have already made a commitment that I will continue discussions with the Recycling Centre to see what amount of funding they do need to continue operations. We do not want to continue this operation and put the Recycling Centre at a deficit.
I want to inform the Member that, when this plan was first made with the recycling group, earlier this year, it was anticipated at that time that it would only cost about 10 cents a bottle for handling and operation charges. That was the reason for the 10 cent surcharge on wine and liquor bottles handled through the Liquor Corporation.
They have discovered that it does require more than 10 cents a bottle for handling, to sustain their operations. That is the reason why we are continuing to talk, to find out what is a reasonable amount required to conduct their business.
Question re: Helicopter contract, Kluane area
Mr. Brewster: I have a question for the Minister of Renewable Resources. Recently the Department of Renewable Resources tendered a contract to a helicopter firm for 100 hours to conduct a moose count in the Kluane area and the contract was not to include fuel, oil, living expenses for the crew or heating expenses for the helicopter. There were three bids. The helicopter firm in Haines Junction lost the contract because its bid was $71 more than the bid of the Whitehorse firm. Can the Minister advise the House why his department, at departmental expense, brought a generator right from Whitehorse to heat the helicopter, which had frozen up, and did this not cost more than the difference of $71?
Hon. Mr. Webster: I am not aware of the problem that the Member opposite has just described but I will look into the situation and report back to him.
Mr. Brewster: I find that rather strange. I just talked to the young lady this morning and she informed the Minister yesterday of some of the problems. I would have thought he would have got all the problems at once.
Is it true that the Department of Renewable Resources is renting a house for the crew rather than using local hotel facilities that offer very reasonable rates, and that this is being done contrary to the terms of the original contract and is certainly costing the department much more than $71?
Hon. Mr. Webster: In response to the Members question, I do not know if the $71 is part of the contract for the helicopter or if it is part of the contract to get housing for the crew. All I can say is there are two reasons why our department decided to rent a house at $500 a month to accommodate the entire nine-person crew. One, of course, is optimal efficiency of our operations and the other is to save money.
Mr. Brewster: If the Haines Junction helicopter firm had received the contract, the helicopter crew would have stayed in their own homes. Is it true that the contractor was told to use the Renewable Resources compound for landing and also for heating the helicopter, but ordered to move by the RCMP because nearby wires make the site hazardous? It should be noted that the local firm has a garage to heat its own helicopters.
Mr. Brewster: Again I am not aware of every detail associated with this contract and this operation but I will endeavor to find out the information and get back to the Member.
Question re: Helicopter contract, Kluane area
Mr. Brewster: The question is to the same Minister. The helicopter contract was conducting a moose survey in the Kluane area. In view of all the added costs to the Department of Renewable Resources and the breaches of the original contract tender, I would like the Minister to explain why the local helicopter firm in Haines Junction did not receive the contract.
Hon. Mr. Webster: I will have that explanation in my response to his other question.
Mr. Brewster: Can the Minister explain how the wording of this contract conforms to the government policy to give preference to local contractors?
Hon. Mr. Webster: No, I cannot. Local contracts in this example, I would imagine, would include Whitehorse.
Mr. Brewster: Can the Minister advise the House if this contract was tendered in accordance with the Government Services tendering procedure or was this a maverick Renewable Resources operation?
Hon. Mr. Webster: I will return with that information.
Question re: Watson Lake high school, phase 2
Mr. Devries: I have a question for the Minister of Government Services with regard to the Watson Lake high school, phase 2 tender. Does the Minister know if this has been advertised? If not, when will it be?
Hon. Mr. Byblow: If I remember correctly, it is my understanding that it will be going out this month.
Mr. Devries: I am not sure which Minister can answer this; perhaps it should be the Minister of Education.
In the 1990-91 budget, the multi-year costs for the high school were $9,000,000. Yet in the 1991-92, the multi-year cost is $7,000,000. Is this a typographical error, or is the school project being down scaled?
Hon. Mr. McDonald: The school project, as it has been designed, is the same school project that we hope to be tendering this month. I am sure the Member has seen the design.
The first phase of the project is to be used this week by school children in Watson Lake and should be formally opened probably next week, along with the school council.
The project, as it was originally conceived in total - the gym, the rest of the school and the community learning centre - is exactly as we had agreed it should be in the original design phase.
Mr. Devries: I have to take it then that the $7 million is a typo in the 1991-92 budget. It was originally $9 million in the budget of the previous year.
Hon. Mr. McDonald: I do not have my budget book in front of me, so I will have to take the question the Member poses as notice. I do not know if the Member is referring to the first or second phase of the school project or both phases. I will have to answer this in budget debates, which is where this type of debate properly belongs.
Question re: Chronic disease list
Mr. Lang: I have a question for the Minister of Health and Human Resources.
About one year ago, there was a lengthy debate on the question of the guidelines for the chronic disease list. The Minister, at that time, said it was going to be under review by his department officials and some decisions would be made due to the ever escalating costs of the program. Could the Minister indicate to this House exactly where that review is and if he will be tabling anything over the course of this session?
Hon. Mr. Penikett: I indicated I would be looking at the chronic diseases program, as well as a number of other programs, as part of an effort to try to get control on some of the costs, especially those that were rapidly rising in the health branch.
In this sitting, it is my intention to come forward with proposals, which I will be announcing in the House, to achieve that end. Among those proposals will be some changes I am going to be suggesting in that area.
Mr. Lang: Does this also include a review of the Pharmacare program?
Hon. Mr. Penikett: It may, but I am less optimistic about changes, or achieving savings, in the Pharmacare program than I am in the chronic diseases program. In either case, both are programs that meet real needs in the community and are much appreciated by their clients. Anything we do to attempt to reduce or control the costs of such programs will be done in a way that, I hope, will have no negative impacts on people who need those programs and services.
Mr. Lang: We share that hope. As the Minister will recall, this side of the House raised the very question that has brought these particular programs under review. It seemed to us that there were no set guidelines that governed these programs and, subsequently, ...
Speaker: Order please. Would the Member please get to the supplementary question.
Mr. Lang: Subsequently, the taxpayers were going to be experiencing a very significant increase in cost. The Minister has committed himself to coming forward to the House, but he is very unclear as far as timing is concerned. Can he give us at least an approximate date when he expects this to be brought forward to the Legislature? Will it be prior to Christmas?
Hon. Mr. Penikett: I have no idea how long this sitting will last. If I can, I am going to try and bring the decisions in this area to the House before Christmas.
Speaker: The time for Question Period has now lapsed. We will now proceed with Orders of the Day.
ORDERS OF THE DAY
MOTIONS OTHER THAN GOVERNMENT MOTIONS
Clerk: Item No. 1, standing in the name of Mr. Phelps.
Speaker: Is the hon. Member prepared to proceed with Item No. 1?
Mr. Phelps: Yes, Mr. Speaker.
Motion No. 4
Speaker: It has been moved by the Hon. Leader of the Official Opposition
THAT it is the opinion of this House that the Yukon Energy Corporation should not pay dividends or transfer profits to the Yukon Development Corporation but rather should retain such money for investment in hydro facilities and transmission lines so as to keep down the cost of electrical energy to Yukon consumers.
Mr. Phelps: The motion is pretty straight forward. In my discussions and speech in support of the motion, I want to keep things in perspective and keep things simple, so consumers do not get baffled by things like debt equity ratios, and all this kind of stuff.
The background to the takeover of the assets of NCPC by the Yukon Development Corporation is fairly straightforward.
It was fairly straightforward. It is a process that was begun under the previous administration and continued by the present government. The announcement that the federal government was prepared to sell the assets of NCPC to Yukoners was made by the Minister, David Crombie, in April of 1985, after some negotiation between the Government of the Yukon and the federal government. A negotiating team was assembled and talks were barely getting started when there was a change in government.
Back in those days, Yukoners faced a sad legacy of mismanagement by the federal agency known as the Northern Canada Power Commission. There were many protest movements during the course of the 1970s with regard to the rapid escalation of power rates that took place because of the huge overruns that were associated with the dam that was installed, known as the Aishihik Lake power system.
Many of us here and many people who will read this debate in Hansard will recall the Aishihik fiasco; they will recall that we had a dam there that was designed for more than 30 megawatts, yet could not possibly reach that capacity on a steady basis. In fact, it was found later that the Aishihik Lake rainfall was much less than anyone realized. The actual water collected in the storage basin was far, far less than anticipated by the consultants who were used in those days. The cost of that dam went from something in the order of $15 million to more than $40 million.
People in the Yukon were alarmed by the rapid increase in electrical costs and the federal government took steps in the 1980s to freeze them. Those costs were frozen during the period in which negotiations took place for the eventual purchase of the assets by Yukon Development Corporation, and the negotiations resulted in a substantial portion of the debt load being, in effect, written off.
It was anticipated from day one that the successful transfer of NCPCs Yukon assets to a development corporation or a government agency would result in a substantial write-off. It was anticipated by our government and by the new government that came about in the summer of 1985 that the profits would be such that the people of Yukon could enjoy lower power bills for many years to come.
There were pronouncements made by the Minister responsible for the Yukon Development Corporation in anticipation of the takeover that power rates would be reduced as a result of the transfer and the write-down of the debt load. That did not come to pass. It certainly did not come to pass immediately, because shortly after the assets were sold to the Yukon Development Corporation, it was announced that one of the conditions of the sale was that the rates would be frozen for two years. For that reason, we were told that power rates and energy bills would not be coming down until the two-year agreed-upon time period passed by.
Prior to the general election of February 1989, the Minister responsible announced there would be a substantial reduction in power bills, that there would be an application made before the Public Utilities Board and that Yukoners could look forward to a reduction in their bills.
This has been called the rebate system rather than a reduction of rates. The Minister in Question Period, time after time, states that the rates were not reduced, that really what has taken place in the course of the reduction of bills was a rebate rather than a rate change.
Just yesterday, the Minister tabled in this House the Yukon Development Corporation report for the year ending March 31, 1990. It is interesting to note, on page 4 of that document, the language used when it speaks about the Yukon Energy Corporation. It says on page 4 that Yukon Energy Corporation, YEC, submitted its first rate application to the Yukon Utilities Board, YUB, in December 1988. This resulted in revised rates that took effect on an interim basis on April 1, 1989. As a result of earnings in 1989, new rates were to take effect on April 1, 1990 to continue the policy of equity for all Yukon consumers.
People jump, occasionally, back and forth, between rates and bills and so on. It is all very confusing to the average consumer in the Yukon. I do not want to get into semantics, but the fact is that during the two-year period, during which time the rates were to be frozen in accordance with the agreement made between Canada and the Yukon for the sale of the assets by Canada to the Yukon, power bills went down, and now we are told that the power bills are going back up and that the average consumer in Whitehorse will be paying more for power, and more money to the Yukon Development Corporation, as wholesaler, or to Yukon Electrical, as retailer, and that the bills will be about the same as they were before the cut in bills that took place back on the April 1, 1989.
The issue that gives us a great deal of concern has to do with the fact that there has been a lot of profit made by the power corporation. We are referring, of course, to Yukon Energy Corporation. It made a pile of money in the time since it was incorporated and took over the assets of NCPC. Almost all of the retained earnings, almost all of the money that it made as profit has been sliced away, siphoned off, to the coffers of Yukon Development Corporation.
It is a matter of record. It shows up in the books. I refer to the Yukon Energy Corporation report for the year ended December 31, 1989, the most recent set of audited books available to us. I point out that in 1988, the net income for the corporation was $9,595,000. Power rate relief subsidy payments to the tune of $1,342,000 were paid out. That would have left, for that year, $8.2 million or so. Dividends were paid; that is, money was paid from this corporation over to the parent company, Yukon Development Corporation, of $8,615,000 more than the Yukon Energy Corporation made, particularly after it paid out the subsidy payments.
The next year the net income, in 1989, was $5.503 million. It paid out $482,000 in power rate relief subsidy payments yet $7,623,000 was siphoned off into the parent corporation, Yukon Development Corporation.
What is especially interesting about the Yukon Energy Corporation books is that they siphoned off $7.6 million that year - $2 million more than the net profits show - and yet Yukon Development Corporation was kind enough, generous enough to lend $5.5 million back to its subsidiary. That shows up as a long-term debt, and the interest on that money, which is being paid by the consumers of electrical energy - and I refer to page 15 of that report under Note 5, Long-term Debt B - the long-term debt of $5.5 million to Yukon Development Corporation was issued on July 31, 1989, and bears interest at 11-3/8 percent, which was the corporations estimate of its long-term borrowing rate at that time.
Here we have a corporation that has made all of this money. We have a fact that the power corporation has been stripped of $16.2 million of profits - profits from the pockets of Yukon consumers. That money has gone to the parent company, which has lent some of it back at a very nice interest rate indeed: 11-3/8 percent for long-term debt. That means that next year the interest that the consumers of electricity will be paying to the parent corporation, Santa Claus, will be over $600,000 for money it was given to lend back to us.
The concern we have, on this side, is that this is money that ought to be either used solely to develop alternative power, hydro and transmission lines so that we have cheap power in the future for Yukoners, or it ought to be held in the company so that power rates can go down. I suspect the reason the power corporation has been stripped of all this money by the Yukon Development Corporation is that there is an unholy fear on the part of the side opposite that if it was held as cash for short-term investments by the power corporation that the Public Utilities Board would demand that there be a rate decrease rather than an increase.
I suppose a mere year and one-half after a general election would be poor timing for a gift to be bestowed on the consumer of electricity in Yukon by the magnanimous government that wants to get re-elected. It is better to wait, hurt the people as much as possible and get them to pay for their own gift just before an election is called, as happened last time.
I guess they are not content to have a bunch of puppets dancing to their tune. They call the shots from the Premiers office. They are a little worried that some of the puppets, the Public Utilities Board, might actually put them through the grievous situation of having to reduce power rates rather than increase them. Timing is everything. It is so much better to make these kinds of announcements just before a general election is called.
In anticipation that the side opposite might say that it is just common practice to rip off profits and that other people do it, or, that if we do not rip off the profits, our debt equity will all change, et cetera, I would say that is nonsense. Surely, this money ought to be held in a trust relationship between the power corporation and the shareholders and the future consumers of electricity in this territory.
That is the issue, but is not what is happening. Instead, the money is being siphoned off to the Yukon Development Corporation, which is going to stumble around, spending money willy-nilly on the various schemes the political masters opposite deem to be appropriate.
Thus, the guy who pays the power bill is being stuck for investment schemes, the hare-brained ideas of the side opposite. These have nothing to do with reducing power rates, or keeping them steady, or assuring that we will have good sources of energy in the future, which meet the test of efficiency, as well as having a minimum impact on our cherished environment.
The fact is that, when the time came for the Yukon Development Corporation to be formed, the government put a working equity of less than $5 million into that corporation. There was a payment made to purchase the assets, but that was a capital payment. That payment of $19.5 million cash was made toward the purchase price of NCPC to purchase the assets.
The working capital that was given the corporation shows up in the public accounts the first year of its incorporation. It was less than $5 million. Since that time, we have a situation where we have the Yukon Development Corporation, through its other arm, losing millions and millions of dollars in the Watson Lake sawmill, through the Hyland operation. We also have its less-than-prudent sale to some gentlemen from Howe Street, who came along just before the general election with Nelson Skalbania, and said they would like to buy the mill. They were told that we could not deal with Nelson Skalbania, as he would not sell and was rather infamous, and that they should find someone else to replace Skalbania.
They eventually did: TF Properties found Shieldings. That was okay, because they could pretend they were dealing with a more reputable organization, which was something that was very near and dear to the hearts of the side opposite, as they were entering into an election campaign with a sawmill that had lost $1.8 million in the first year and more than $4.5 million in the second year. Then, they were going to sell it and try to pretend that was a good deal, except that they immediately wrote off a bunch more. Perhaps we will get into that at another time.
The corporation obtained some working capital, and we are not talking about the investment on the capital side. This capital shows up on the public accounts as a little over $4.8 million. When one looks at the position of the corporation now, it still has working capital. Depending on how you calculate the working capital, it has more now than it had been given by the government - not a lot more, but a few million.
It has enjoyed the profits from the Yukon Energy Corporation and the power corporation.
Is the side opposite going to stand in its place and say they have used none of those profits to subsidize the losses incurred on the Watson Lake deal? Is the side opposite going to say that none of the power corporation profits make up the $2 million loan that has been given to the people who are developing the new convention centre/hotel complex/office complex? Is the side opposite going to say the $16.2 million is not being used by the Yukon Development Corporation as its own money? Is the side opposite going to say that the $5.5 million that show on the books now, which was loaned as long-term debt to the power corporation by the parent company, the Yukon Development Corporation, really was not the proceeds of dividends paid to the Yukon Development Corporation during 1988 and 1989?
Give those who live and work here in the Yukon some credit for being intelligent. Perhaps not everybody can read books perfectly, but it seems to me that most everyone will understand what $16.2 million is, and what the impact of that is when you siphon it away from the power company.
It seems to me that when you have an Energy Corporation that announces its total revenues from the sale of power for the year 1989 is $18,675,000, and we know that $16.2 million has been siphoned off to the Yukon Development Corporation, the average consumers in the territory would have some penetrating questions about why their electrical bills are going to be going up in a couple of months time.
We are not talking about the GST. That is a problem we all face when we pay electrical bills, pay rent for an office, or on most of the things we buy.
The Minister responsible is cleverly trying to blend the two, and use one to try to hide the other. I do not think the average consumer of electricity, the people who live and work here, are going to be fooled by that.
We are not happy about the GST. We have said that time and time again in this House. We have written scathing letters to the Ministers responsible in Ottawa, to the Prime Minister and the Minister of Finance about the GST. We have given briefs to committees, attacking the GST, but that is a side issue. We are concerned with what is happening to electrical bills because of what this government is doing through its Crown corporation, the Yukon Development Corporation, and its subsidiary, the power corporation.
In our view, the profits are monies that have been paid by the consumer. They ought to be held for the benefit of the consumer, and they ought to be either applied to further rate subsidization or invested in better power production facilities and transmission lines. That is our simple position, and I trust that I will enjoy the support of all the consumers of electricity in this fair territory, as well as the side opposite as well.
Hon. Mr. Penikett: Let me begin by observing that the Leader of the Official Oppositions speech had all the conviction of a defence lawyer arguing for some habitual criminal going down for the 10th count.
Once again, the Leader of the Official Opposition has been pumping the same old dry wells. Notwithstanding the text of his motion today we discover, not to our surprise, that he wants to debate the sawmill issue yet again, in an effort to achieve what, I do not know, except possibly some political advantage for himself.
He began again with a recitation of his view on the negotiations respecting the transfer of NCPC. On this occasion, I am pleased he did not claim that he was totally responsible, as he had done during the last election with regard to the mine re-opening in Faro. I think he once told us in this House that he was also responsible for the NCPC transfer.
I well remember for what he was responsible. He was responsible for issuing a press release with Mr. Crombie and retaining a consultant. I well remember going through my files, as the new Government Leader here and the new Minister responsible, and trying to find what had been left behind for us by the previous administration to build on during those negotiations. I discovered nothing but an empty file.
He does talk about the negotiating team, and I would like to pay a tribute here to the negotiating team. It was led by a gentleman by the name of Shakir Alwarid, who is much abused by Members opposite. I suspect this is due in part to some odious reasons that I will not discuss on the floor of this House. This is a man who did an excellent job on those negotiations and saved Yukon taxpayers and electrical consumers millions of dollars because of the rigor and energy he brought to that project.
It is a matter of record that the previous government never gave the stated intention of the previous federal Minister responsible for NCPC, Mr. Crombie. The intention was that power rates were going to go up under federal control at a rate of five percent a year, on annual increments for a number of years to come, until the federal government was achieving what they thought was an acceptable debt/equity ratio for NCPC. It is a matter of fact, not fallacious argument or feeble negotiations, that it was the federal government who insisted that, as a condition of the transfer, the rates be frozen for two years following the transfer, rather than reduced, as would have been our preference.
The strict text of this motion will not surprise you. It is not about sawmills, nor about the NCPC transfer, nor even about power rates, as much as it is about dividend policy and whether or not there should be dividends for this corporation. If you will bear with me, I will try and address the text of the motion rather than the Leader of the Official Oppositions arguments.
The Energy Corporation, to state the obvious, is established and structured as a business corporation, all the shares of which are held by the Yukon Development Corporation, which is in turn owned by the Government of the Yukon on behalf of the people of the territory.
It should be pointed out that the Energy Corporation is run as a commercial utility. I know the Members opposite are sometimes horrified at providing what might be termed as benefits to the public, or even horrified by the idea of public ownership, but I do not think that any sensible Government of the Yukon would operate it in any other way.
As in the case of any business corporation, dividends are not paid out arbitrarily or at the whim of the board of the Energy Corporation or the Development Corporation; rather, they are issued according or pursuant to a dividend policy. In the case of the Energy Corporation, the policy mandates an examination of whether funds are surplus to the needs of the Energy Corporation at a particular point in time, and more important, whether payment of the dividends will maintain the corporations debt/equity ratio at the approved level.
It was interesting because I think the Opposition Leader knows that the debt/equity ratio is an important issue and a very valid issue and that is why, in his speech, he attempted to pooh-pooh it and suggest that it was a question of no consequence whatsoever.
When the corporation was first formed, it was thought - and this was a recommendation of the officers of the corporation - that the appropriate debt/equity ratio would be to maintain a relationship of 60 percent debt to a 40 percent equity, that that was a balanced relationship. I may say in passing that that is the healthiest debt/equity ratio of any public utility in Canada. But this healthy relationship was established for a very good reason and that was that we own a utility that is very vulnerable to certain kinds of potential market shifts. We really have only one major industrial consumer on which we have, I think from a point of view of risk analysis, an excessive dependency, and we have one major residential and commercial load here in Whitehorse.
The desirability of having a debt/equity ratio similar to other utilities in the country was examined and rejected very, very early on, for very good reasons. The business of the corporation, i.e. the filing of rate applications and financial transactions, was designed to maintain this ratio. In the case of a utility - and this is the case of utilities everywhere: British Columbia, Alberta, Saskatchewan, Manitoba, Quebec and throughout the country - the debt/equity ratio can be regulated by a Public Utilities Board. Pardon me, Mr. Speaker, it used to be regulated by a Public Utilities Board in Saskatchewan but the Conservatives there abolished it, I have just recalled, preferring instead to do it directly by Cabinet, with no public intervention.
The debt/equity ratio, which is regulated by the Public Utilities Board, is done in many jurisdictions after some public debate. The issues are as follows: if high equity levels are maintained, the cost to the consumers may be greater. Conversely, with a high debt ratio, there is increased risk and, therefore, greater cost to borrowing in the event that there has to be an expansion to the system. The Yukon Utilities Board, like all utilities boards, has to look at balancing two competing goals: the continuing financial health of the utility as opposed to savings to consumers. It is this balance they keep in mind when approving the debt/equity ratio.
Subject to Utility Board concurrence, I might mention that the corporation is in the process of contemplating a change to its debt/equity ratio to 50/50 to improve its interest coverage ratio, which is one measure of a financially healthy company and, therefore, an important sign to possible lenders.
Such a change in the debt/equity ratio would also reflect the following factors: the systems growth has been greater than originally projected, requirements for capital upgrading and improvements have been greater than projected before the transfer, and, of course, the corporation wishes to obtain the lowest possible interest rates. As well, the corporation wishes to minimize consumer risk.
Under the existing dividend policy and debt/equity ratio, the Yukon Energy Corporation paid dividends out in 1988 of $8,615,000 and in 1989 of $7,623,000. Those amounts have been mentioned by the Leader of the Official Opposition. In paying out these dividends, the YEC was acting in a fiscally responsible manner, and in accordance with sound business practice - the proper practice for such utilities.
In the same manner, it should be noted that no dividends were paid out in 1990. In fact, it is not anticipated that dividends will be paid out in the short term. That fact does not alter the situation that when paying out dividends, the Energy Corporation does so on a sound financial basis.
I suspect from what the Members opposite have been saying that they would wish to alter the purpose of the Energy Corporation. They would wish it to have a different corporate structure. If I understand the argument they are making, they would be looking for what I think is a penny-wise/pound-foolish policy - a policy that would change the corporate structure so that consumers might have short-term temporary benefits while the company becomes increasingly financially unstable. I think, in the long run, the consumers would be paying a very, very heavy price for that strategy.
I look forward to what Members opposite have to say on that point because I think that their argument is fundamentally fallacious and, in fact I think, financially dangerous.
Nevertheless, I want to record, before I go any further, that I am fundamentally opposed to the motion as it is presented to the House today.
This has been, in a way, yet another motion about the Watson Lake sawmill. In essence, what is being proposed by the Members opposite is that the Development Corporation should not carry out the mandate it was given by this House. The Development Corporation should not be involved in making strategic investments for the public good. It should not do what all Members in this House voted to have it do, which is to participate with the private sector in trying to strengthen and diversify our economy.
I take it that it is the view now of the Members of the Opposition that the Development Corporation should not invest in communities such as Watson Lake or any others. I believe the Leader of the Official Opposition has stated the position that we should not get involved in projects like the Dakwakada Development Corporation project. I suspect that we should not get involved in anything that involves people from any community or any project in which there is any risk. I think their argument is essentially that the Development Corporation should not exist at all, or, if it does exist, it should do absolutely nothing.
This side of the House fundamentally disagrees with that proposition. I know that when the friends and colleagues of the Member for Watson Lake begged us to do something for the desperate condition of their economy, it was clear we had no other potential instrument with which to do this other than the Development Corporation. There may be situations like that again in the future.
I want to mention that it is not at all unusual that surpluses that may be generated at a power company can be used for good social or economic purposes.
On one visit that I made to Scandinavia - a trip I believe the Leader of the Official Opposition expressed regret at not having been on - we went to a community called Sheleftio, which is quite remarkable in a number of ways, not only for its innovative cooperative marketing projects, but also because the municipal power company there had used its surpluses, its profits, in a very impressive way. Sweden is a very commercially ambitious and aggressive nation. It wanted to locate, somewhere in the country, a super computer, as this, by itself, would attract all kinds of business and industry. There was a national debate in Sweden about the location of this super computer. Many people assumed it would go to one of the industrial centres, perhaps where SAAB produces its cars and airplanes, or possibly even Stockholm. But this aggressive, innovative and entrepreneurial community decided to steal a march on the nation by using its hydro profits to buy a super computer, locate it in this community and essentially make the decision for the national government. It proved to be an enormously advantageous decision for the town. I am sure it was also frustrating for the national government, who expected that they would be making that decision.
I am not proposing that we do anything quite as bold as that, but we do not want to see the Development Corporation hopelessly hobbled. We want to see it as a useful tool, notwithstanding our unhappy experience in Watson Lake, and we will continue to ask the Development Corporation to play the role it was mandated to play by this House.
The proposal made by the Leader of the Official Opposition was a different kind of economic development proposal. He asserted that what we should be doing as a development tool, and perhaps as a loss leader, is offering extremely cheap power to mining companies. I disagree with that philosophy and I believe most Yukoners do, too. Not only would that considerably hurt residential consumers, it is the opposite of diversification.
If we are indeed going to diversify our economy, to be subsidizing the mining industry in that particular way, I think it would have the opposite effect. It would tend over time to make us have a more narrow and more unstable economy than it would a more diversified and stronger one.
I guess the bottom line, or the essential argument made by the Leader of the Opposition, is that the power consumers have paid for the sawmill and all the losses in the sawmill. I would like to deal with that argument if I can for the few minutes that remain in my speech.
Lest there is any citizen listening or any reader of Hansard confused by the numbers that have been inserted into the debate by the Opposition Leader, I would like to put on the record the flow of funds from the Yukon government to the Development Corporation and to the Energy Corporation.
First of all, there was an equity grant from the territorial government to the Development Corporation of $29 million. Second, there was an advance from the territorial government to the Development Corporation of $14,336,000. The Development Corporation purchased Energy Corporation shares, which involved a transaction of $39 million going from the Development Corporation to the Energy Corporation. There were dividends paid in two years and those numbers have been put on the record: one year, $8,615,000; and the next year, $7,623,000. There were advances to Hyland Forest Products of $10.9 million from the Development Corporation, and lastly there was a loan from the Development Corporation to the Energy Corporation of $5.5 million.
I do want to say something about that loan, but before I do I want to note the kind of language used by the Opposition Leader when he talks about the Development Corporation having stripped money, the assets, of the Energy Corporation, and siphoned money from the Energy Corporation. They are very colorful and vivid words but I suspect they were designed to be used to deceive rather than to communicate honestly about the situation.
He also referred to the members of the Public Utilities Board as puppets. I look forward to discussing this with some members of the board, including Ms. Edie Walters, Mrs. Vi Campbell, two members of the board, about the kind of puppetry being alleged by the Leader of the Official Opposition, because I am sure these good Conservative folks will not appreciate being described as puppets. If they are puppets, they are certainly not puppets of this leader or this government.
I heard the Leader of the Official Opposition muttering about something. Perhaps it was about the fact that they never had any problem with boards, but of course they only put Conservatives on them, which is not a practice followed by this government. We do put Conservatives on boards, but not exclusively Conservatives.
The Members have again mentioned that rates are going up, and again the Leader of the Official Opposition deliberately tried to confuse the issue by suggesting that there was no difference between rates and bills. As with all public utilities, if there is an approved arrangement, the cost of those utilities do get passed on to the consumers. Even though the utility is absorbing some of the cost of the GST in the first quarter, I think it would be ludicrous to suggest that a new burdensome federal tax should somehow simply be absorbed by the energy companies, public and private. That is not going to happen.
The Leader of the Official Opposition did not make note of a simple fact: that the total dividends paid out are less than the total earnings, not more, as he seemed to want to imply. At the end of 1989, the retained earnings were $621,000. He made note of the interest paid on the $5.5 million loan from the Development Corporation to the Energy Corporation. That interest is at 11-3/4 percent.
I want to make a very, very important point that the Leader of the Official Opposition knows, I suspect, but is choosing to ignore, and that is that that amount is less than it would have been if it had been left in as equity because the debt of $5.5 million, with the interest on that at 11-3/8 percent amounts to $625,625. On the equity, with the approved rate of return by the Public Utilities Board of 13.25 percent, the cost would be $728,750. The gain to consumers is over $100,000.
If I can distill the essence of the argument of the Member, and he has made a number of them: one, that the Development Corporation essentially should not be investing in the territory, should not be doing anything at all; the second being that if we could achieve temporary power savings now, then we should be doing it now no matter what the cost to consumers would be in the long run; and finally, that the $16 million profit from the Energy Corporation has somehow been misappropriated, or misused, or stolen, or ripped off, or siphoned off - I am going to put a couple of numbers on the record that I believe will demonstrate what nonsense the Leader of the Official Opposition speaks on this question.
His argument is that the $16 million should have been used for the benefit of electrical consumers. I think that is essentially the argument. I am going to demonstrate that the money from the Energy Corporation has been and is being used for the benefit of consumers.
It is a fact that the capital expenditures of the Energy Corporation - not the Development Corporation but the Energy Corporation - for improving, increasing and enhancing the power supply to the people of the Yukon Territory are as follows: in 1987 they were $1,285,000; in 1988 they were $1,857,000; in 1989 they were $6,461,000; and in 1990 they are estimated to be $6 million. In round numbers, that represents capital investments of $16 million. Coincidentally, that happens to be the same number that the Member claims has been ripped off, stolen, abused, misappropriated, siphoned off, or some other horrible thing, from the Energy Corporation. It is a matter of record. If you look at this situation, while there has been a $16 million profit, there has been $16 million in capital investments already planned and made by the corporation.
I could go on at some length about the financial information of the corporation but I suspect we would come very quickly, no matter what issue I talked about, to a fundamental divide between the Members on this side and the Members on the opposite side.
I believe the Members opposite have talked about political gain and political capital. They are quite right; there may be some political profit for them in getting the word out that we could radically reduce power rates by distributing to consumers all the profits of the Energy Corporation, and that we not operate the Energy Corporation as the law requires it to be operated - as a commercial entity. We should not operate it with a rate of return on equity as approved by the Public Utilities Board. We should simply do what the Leader of the Official Opposition is proposing and strip all the profits from the Energy Corporation, give them back to the consumers and reduce power rates.
I have to tell you that might be politically opportune for the Members opposite, and it may be a superficially attractive policy, but it would leave us in a disastrous situation in a very short period of time. We would have an Energy Corporation strapped for cash. It would have to borrow to increase the supply, presenting to the markets a very unhealthy balance sheet of a very financially unhealthy operation. It would have to pay a huge premium to borrow if it could even borrow at all.
I suspect such an approach would not only be contrary to good, sound business practices, it would be a source of great annoyance to Yukon electrical consumers.
I do not know how many times we will debate this, probably as long as some of us in this Legislature are here and perhaps for as long as some of us are alive. The unhappy experience of the Watson Lake sawmill will become part of the legend of this Legislature. But I, unlike the Member for Watson Lake, never worked at the sawmill. I was not part of the management. I simply did what I felt a leader of this territory should do, which was to respond to the cry of a community desperate for help that had asked us to take action. We did that. The instrument through which we chose to take action was the Development Corporation.
The Development Corporation has a mandate to work with the private sector in promoting the economy of the territory all over the territory. It has and will continue to consider investment opportunities from a number of sources in a number of communities and has made some decisions about where it would like to pursue some of these investments. That is the role it was given by this Legislature in a unanimous vote. The Energy Corporation, its subsidiary corporation, is a regulated public utility. Its profits, rate of return and the rates it charges customers were all established by the Public Utilities Board, who, contrary to the Leader of the Official Oppositions opinion, are not puppets. They are credible, serious and responsible citizens who, after hearing from interveners, not only the private utility and public utility but also consumers, make decisions about the rate of return and the price of energy.
That is the operating situation as it has been decided here, not only as a matter of policy, but as a matter of law. I absolutely reject the proposition put forward by the Leader of the Official Opposition that the Energy Corporation should not have a rate of return but should simply distribute all its surplus earnings to consumers. I reject also the proposition of the Leader of the Official Opposition that the Development Corporation should be a do-nothing entity.
Mr. Lang: I want to begin by reading the motion we are debating into the record so it is clear to everybody what we are actually discussing, because the previous speaker misread the motion put forward by the Leader of the Official Opposition.
It states as follows: THAT it is the opinion of this House that the Yukon Energy Corporation should not pay dividends or transfer profits to the Yukon Development Corporation but rather should retain such money for investment in hydro facilities and transmission lines so as to keep down the cost of electrical energy to Yukon consumers.
We are not asking any Member of this House to lower rates to the lowest amount possible, and not to put any money away for planning for the future. That is not the intent of the motion. The fact is that it has been revealed, and the Minister has indirectly agreed with the premise put forward by this side of the House, that they have been taking money from the Yukon Energy Corporation and paying it to the parent company, the Yukon Development Corporation, for doing other things such as Hyland Forest Products. That is on the record. That is exactly what has taken place.
He talks about the sums of money. In 1988 the Energy Corporation profit, on page 15 of the report, is $8.6 million. In 1989, it was $7.6 million. That is two years ago. That is two years of interest. If you collect interest on $8.6 million for two years and just put it into the bank, we are speaking of an additional $1.6 to $2 million in interest, plus the $7.6 million.
What we are talking about in real terms is close to $20 million that the consumers of the territory have provided to the Yukon Development Corporation.
This House has been deceived. The people of the territory were deceived when the first step was taken toward the creation of the Yukon Development Corporation. Why I say that is nobody, but nobody, in this House was informed by our illustrious Leader, or anyone else on that side, that it was the intention of the government to over charge the Yukon consumers of electricity for the purpose of taking that money, year after year when it was available, and providing it to the Yukon Development Corporation so it could undertake various other commercial undertakings. That is where we philosophically part with the side opposite in respect to the issue at hand.
The Minister can try to justify the numbers as best he can. The fact is also revealed in this particular document, and I hope that it is finally the truth, that we borrowed from ourselves $5.5 million after paying a dividend of $7.6 million, and we will pay 11-3/8 percent interest, which is roughly $600,000. I heard the logic of the Government Leader talking about what a good deal we were getting because otherwise we would have had to pay 13 percent.
What we are saying in this motion is that there should be a restructuring that would direct, through legislation for the Yukon Public Utilities Board and the corporation itself, as to how to handle excess funds. There is nothing wrong with the fact that if the Yukon Energy Corporation had an extra fund of $2 million or $3 million dollars it could put it into an interest-bearing account and accrue interest on it. The decision may well be that maybe we should have lower rates, depending on the market and depending what we are presented with within our electrical grid.
But the other decision and the other option that this has to be there is for the purpose of providing alternative energy. Right now, I do not think there is any question. We are going to provide some other source of energy for some of our other communities. There is no question about it; it is by far too expensive to continue to be on diesel or generation. We all know that we are at capacity now.
And all of a sudden, we are having public meetings. We just saw the entourage go around this past fall, with nothing substantive from the Yukon Energy Corporation or the Yukon Development Corporation, but just to ask: what do you think about the energy situation in the Yukon? Are we supposed to say that is good planning, that that is the consequence of well thought out policy decisions? What it is is the action of a government that is so afraid of whatever the environmental consequences of any proposal they put forward will be, they are not prepared to put anything on the table.
We had $16.2 million of taxpayers money. If you convert it, and include interest, effectively the electrical consumers in the Yukon have paid an extra $20 million over the last two years over the cost of the system to run. We have the Government Leader, standing in his place, telling us how he should have freedom - basically, I would say to steal, I would have to say to steal because nobody who is an electrical user, including everybody in this House, knew or even contemplated that we were going to be paying for things such as Hyland Forest Products - or the right to take that money and spend it on new hotels, or to take that money and spend it in the forest industry.
We debated the Yukon Development Corporation. It never crossed my mind to quiz the side opposite about what they were going to do with the excess money accrued from electrical rates. I never contemplated that they were going to use it, as the Leader of the Opposition says, as a cash cow, and take that money and use it for some socialistic scheme that somebody dreams up.
The Minister of Government Services says that hotels are not socialistic. Well, when they all start getting government money what do you call them? Although, we heard today from the Minister of Renewable Resources, when now you take a contract in a small community, you do not use the hotel, you rent a house. I guess that is a new policy, except probably for Faro. That would probably be an exception to the rule.
Point of Order
Speaker: Point of order.
Hon. Mr. Byblow: The Member is deliberately misleading the House and casting aspersions on my character by suggesting that somehow this government would favour the Faro Hotel, and I think he should apologize to me and the House.
Speaker: Order please. I would like to point out there is a Point of Order. Our Standing Order 19(h) states, imputes false or unavowed motives to another Member. At this time, I would ask that there be no more words like this used, and I ask the Member to withdraw his remark.
Mr. Lang: What more can I say? I would be the last guy to accuse the Member opposite to take Faro as an exception. I am more than prepared to withdraw my remarks. I find it passing strange that, in the community of Haines Junction, we are starting to rent houses instead of using hotel rooms. It does beg the question. I hope the policy applies in Faro, as it does in Haines Junction. I will be watching closely over the next number of years, as we get service contracts, and see what they rent in the community of Faro, vis-a-vis Haines Junction, and we will compare apples with apples and oranges with oranges.
I am more than prepared to speak to the motion, and more than prepared to speak to the question the Member for Kluane raised. I have all day. Well, the lights went on. Anybody home? He is back.
We were talking about what the government started to get involved in: the Yukon Development Corporation. We were talking with respect to where the government was going, and I was using the Ministers illustrious department as an example, and how we are renting houses in the community of Haines Junction now instead of using hotel rooms.
Perhaps you had better read Hansard. I do not know why you were absent. Are you that busy upstairs that you cannot stay in the House? I recognize that the proceedings in this House are irrelevant to the Member opposite.
We have before us a motion that is calling for the government to start taking the energy requirements within the territory seriously, and to start properly using the dollars being provided by the electrical users in the territory, as opposed to using the Yukon Energy Corporation as a source of money, so they can channel it through the Yukon Development Corporation, and so they do not have to come back to this House for a public vote.
If the money from the Yukon Energy Corporation has not been abused, where did they get the money to fund Hyland Forest Products? The Government Leader brought forward a number of $10.9 million, but we know for a fact it is more than that, as far as the public expenditure respecting Hyland Forest Products is concerned. That is not including what was spent vis-a-vis banks, the private sector, the small businessman who owns his own truck and went broke. That does not include those figures.
My question is a simple one, and one that the media should also be asking. Where are they getting the money to fund such a venture with such a scope, if they are not getting it through the Yukon Energy Corporation?
This House gets to vote a lot of money for the Yukon Development Corporation - we vote one dollar. Not 50 cents; not 75 cents, but one dollar.
That man thinks he can sit there deflecting criticism and, at the same time, spend over $11 million of the taxpayers money without telling us where it came from. He must think we are stupid. He is really saying that the public is stupid.
We do not vote any money and yet we find there is $16.2 million, plus the interest - and interest is not reflected in here over the two years the money has been held by the Yukon Development Corporation, so let us round it off to $20 million. He is trying to tell us that this $20 million did not go into the Yukon Hyland Forest Products. That is not correct. He stands in his place and deceives the general public with respect to how he spends their money. It is a manipulation of the system.
It is the responsibility of the side opposite to provide accurate information - not to us personally. We may not get along, and that is probably common knowledge. More importantly, they have the responsibility to the general public, whom we represent, to tell us exactly how this money is being spent and why.
The Yukon Development Corporation was formed on October 24, 1985. At that time, we had assurances from the Government Leader that anything of major importance would come back to this House for a vote. On page 283 of Hansard, the Hon. Mr. Penikett stated, ... we will be coming back to the House to get the approval to spend a penny to do anything. That statement not only applied to NCPC, when we were negotiating for those assets, but also to the Yukon Development Corporation as a whole. We have never voted any money for Yukon Hyland Forest Products except for the extra grants that were given over and above the investment by the Yukon Development Corporation.
It is this sides contention that the Yukon Development Corporation was not formed with the unanimous consent of this House with the understanding that profits from that organization were going to be used for other quasi-commercial undertakings. What we are saying with this motion is that from what we accrue from our energy costs and what we pay as consumers, any profits should stay within that corporation.
There may have to be a requirement that the legislation be changed to allow that to happen. That $16 million plus interest that is $20 million should be put into the area of energy, such as providing an alternate source of energy or providing updates on our energy requirements - all those things that are necessary in anticipation of the year 2000.
We have not done much in the past five years. The only significant development in our energy system has been the rebuilding of the Mayo dam. The government side was pushed to do that because there were major physical problems with that plant, and a decision had to be made.
It was not made because of long-range planning. It was made because it had to be done, and there was no choice in the matter. It was that or eventually it was going to have to close.
What have we created or caused to be created in the area of energy that is going to be of assistance to our grid? The Minister of Government Services is going to talk about his little dam at Fraser. He will probably speak for an hour on the merits of that little project and how it is going to help the major city of Fraser. Those small projects are a benefit. I am talking about something of some consequence, something significant; I am talking about megawatts.
What has happened in the past five years? Just look around us. Think about it. What have we done in Dawson City? We have made an extension out to Hendersons Corner. That is the extent of what has been done to provide alternate energy sources or to build on the energy sources that are there.
What have we done in the community of Faro? There is a situation in Faro that I am sure the Member opposite is just as concerned about as we are. There are major pieces of equipment in there that are testing the whole grid, causing, to some degree, some of the power outages we are having at peak hours. What have we done to resolve that issue? Are we going to bring in more diesel generators? That seems to be the only option we are going to have if the grid continues to grow.
The one investment we did get and do not want to talk about is the power house in Watson Lake. Eight hundred thousand dollars was paid for that power house, and we learn today in the House that it is on the books for $550,000. Yet, the receiver is valuing it in the neighbourhood of $15,000. That is quite an investment. That is something the Government Leader would be really proud of. If it ever starts to generate again in the years to come, I am hoping he is there to cut the cake and ribbon. With an investment of $800,000 now down to $15,000 in value, I would say we should get an independent appraiser in there to try to find out why there is that difference.
The motion before us is very simple. It states that we should be keeping any profits from our Energy Corporation within the corporation itself as opposed to allowing and permitting what we see as direct political involvement by having the government invest in projects such as the construction business and project management business. That is a great investment for the government to become involved in.
It is a very simple solution to what is becoming a real problem. We are trying to help the side opposite. I would say it is a friendly motion. We are trying to say that in the past the government has obviously erred in some major decisions affecting the territory politically, socially and economically. We are saying that it is time the government cleaned up its act.
The government should clean up its act by keeping the money that the electrical users pay within the electrical system. Electrical rates were not meant as a method of taxation, and that is exactly what has gone on over the course of the last five years, unbeknownst to the electrical user in the territory.
To the side opposite, I say have a second look at this motion. It was well thought out, and we are looking for the side opposite to support it.
Hon. Mr. McDonald: It is always a dubious pleasure to have the honour to speak directly after the Member for Porter Creek East, especially after he has just harassed the House with a vintage, ill-informed harangue on any number of subjects that have gone through the House in the last number of days. It seems that any subject that crosses his mind in his stream of consciousness is decent fodder for any debate at hand.
We have had the pleasure of listening to the Member accuse Members on this side of the Legislature of deception. In some sense, he was imputing almost criminal motives on at least one Member of the House, but without having the civility to withdraw the remarks at Mr. Speakers request. He even discussed housing in Haines Junction, and all the issues will have their time for debate. I am certain we will all enjoy dealing with them and dispatching them one at a time, at the appropriate time.
I found the Member for Porter Creek Easts remarks, as well as the Member for Hootalinquas remarks, fascinating. They were typical of the Conservative Opposition onslaught. They take 15 different contradictory positions at once, in order to have some of them hit home, and perhaps one of them, with a clever twist of phrase, will hit the front pages of the paper, without any thought as to the philosophical thread that will bind them together to give us a sense of where this Opposition is coming from. I will get to that in a moment.
The Member for Porter Creek East has made the charge that the House was originally deceived in the development of the Yukon Development Corporations mandate, even though we are dealing with an act of this Legislature, and I am certain the Member was present while it was being debated. Not only does he suggest that he is being deceived because he did not believe the mandate of the corporation might be to undertake various projects of the sort the Member for Hootalinqua calls hare-brained ideas, but the Member for Porter Creek East goes on to say that he does recognize that the legislation will have to be changed, in all likelihood, in order to reflect his vision of what the Development Corporation and Energy Corporation should be doing.
On the one hand, they are feeling there is a deception because legislation was duly passed in this Legislature, and they did not understand what it was all about. On the other hand, they go on to say that they recognize that legislation will have to be changed in order to conform to their vision of what the legislation ought to be all about. This is classically referred to in common parlance as a contradiction.
That is probably one of the more classic examples of a contradiction, confused thinking and confused double thinking or confused rubbish that the Member for Porter Creek East is propagating in this particular debate.
I think the real issue here is the role of the Yukon Development Corporation. That is the real issue. I think the Member for Whitehorse West, the Premier, has clearly illustrated the financial relationship between the Yukon government, the Yukon Development Corporation and the Yukon Energy Corporation. He also provided an extremely good account of the financial transactions and the relative roles and responsibilities of each corporation, as well as the understanding under which each corporation was originally conceived, as to their respective role or responsibility. I think anyone who wants to clarify that, and I realize the Member for Hootalinqua would encourage us all to forget about things like equity ratios because that kind of fact does not easily fold into the arguments that they are trying to make - ultimately, that the Energy Corporation has no place in returning profits to the Yukon Development Corporation, the owner - that it is unfortunate when one demands in ones speech to be selective about their facts, one must understand that the conclusion that they reached may be, and in fact are, flawed. Despite the fact that it takes a little intellectual rigor to understand the issues, I would still encourage the Member for Hootalinqua to put in the mental effort to make those connections because I think they are essential to the conduct of proper public policy.
I think, as I said, the real issue at least in the mind of the Member for Porter Creek East, and I am certain in the minds of other Members across the floor, given what they have indicated in the past, is the role of the Yukon Development Corporation, and the view the Yukon Development Corporation has no role to play in encouraging economic development in this territory or in diversifying the economy of this territory and playing any kind of commercial role whatsoever despite the dually legislated mandate that this Legislature, including all the Members presented, provided to this Corporation.
The Member for Hootalinqua has now branded the Development Corporation as being the instrument of investment schemes and hare-brained ideas in the same manner he branded government economic development programs as being a bust, despite knowing the statistics did not favour that particular view. There are many, many different businesses, and varied businesses in this territory, that are doing many things that are accomplishing exactly the goals that were expressed collectively during the Yukon 2000 process, and some of the goals that the Members across the floor have enunciated themselves.
I realize that many of the goals that the Members expressed across the floor are contradictory and in fact conflict with each other. Nevertheless, there are some of them that they have expressed that are being furthered not only by the Yukon Development Corporation but also by our government programs. I realize that the Members opposite do not believe on the one hand that government investment in the private sector has a role to play, depending on what audience they think they are targeting, for the time being.
Some seem to prefer a right-wing audience, which some of them have a tendency to champion. On the other hand, they are more than willing to talk about the funds the Yukon government has received in the past, and the need to diversify the economy with those funds. That is targeted at a different audience, perhaps not the right-wing audience; more the political centre audience, which presumably is encouraged by those statements of collective responsibility to diversify the economy.
We have a fundamental contradiction here, in terms of the economic policy of the Opposition and the instruments of those economic policies. This has to be resolved before we can make any sense of where they want to come from next. I realize that they are going to take whatever position they can to critique the governments operations, sometimes in the same speech and sometimes in the same sentence, never mind that the positions may be contradictory.
The Member for Hootalinqua would be fond of standing up and saying the Government of Yukon must be doing something in the field of economic development. What about Mayo?
Well, what about Mayo. I am very familiar with Mayo. This is a community and district with very little entrepreneurial experience in any sort of activity, apart from traditional mining-related support. There is very little private capital. There is next to no private sector activity in Mayo. Yet, the demand from the Opposition is for the government to get off its duff, get into communities like that, and encourage economic support by spending money but, for gosh sakes, do not spend the money. Do not use any of your investment arms to encourage it to happen.
There is a contradiction. There is a fundamental problem here understanding how the deed is to be done. They have not expressed any alternatives on how we are supposed to spend money without spending money, or encourage diversification without encouraging diversification.
I cannot go to the Department of Economic Development and ask them to figure it out, because they are only human beings. They are only people experienced in business and in rural development. They do not know the lofty goals of the Members in the Opposition for doing the impossible, in terms of diversifying our economy.
Every time we stand in our places in this House - and I use the favourite expression of the Member opposite - and talk about wanting to diversify the economy, why is it that every single vehicle we have in place is roundly criticized by the Members opposite, whether it is the Yukon Development Corporation, or business loans programs, or anything else?
Let us ask a fundamental question. The Member for Porter Creek East suggests that, when the Yukon Development Corporation invests in a particular project, they are not aware of the particular project when they make the vote. What a ridiculous argument. We are about to vote main estimates for next year, as we have for many years in this Legislature. We are about to vote money for loans programs. To be consistent, the Member for Porter Creek East is going to be demanding that I have in mind all the various specific business projects to put on the table, in order to justify a loan fund for the private sector.
Hogwash. It is ridiculous. The argument makes no sense. We established the programs and vehicles. We hear next to nothing from the Opposition about the establishment of the programs, and nothing in the way of alternatives. If they were to provide us with their real thoughts on the matter, I think we would have such a confused jumble of alternatives, we could not make heads nor tails out of it. Yet, when the time comes to talk about the performance, the Members opposite will give them a blanket thumbs down, despite the many good things that have happened. They will continue to fixate on the projects that have not gone well.
This motion this afternoon is a perfect example of a let us milk Watson Lake Forest Products once again; maybe we can convince consumers about the argument a few months ago, that the taxpayer lost money on Watson Lake Forest Products, as well as perhaps the electrical consumer lost an additional equal sum on Watson Lake Forest Products. It is $16 million, so let us try to convince the public it is $32 million. Let us milk this one for all it is worth and, then, draw some vast generalizations about everything the government has done with respect to economic development, in the process.
The Member for Porter Creek East invites me to comment on something he says. He says it is not a good record. Where was their record in Mayo prior to 1985? They took credit for United Keno Hill Mines. They did not do a darn thing to help them, but they took credit for it. Where was their record anywhere else? Where was their record with their business programs?
Some Hon. Member: (Inaudible)
Hon. Mr. McDonald: Where is Mayo today? Today, Mayo has a hell of a lot more going for it, thanks to our programs, than it would have with the programs of the Members opposite, who would not have believed in doing anything anyway. They did not do anything anyway.
What about the economic development programs? Talking about support for economic development, when the present NDP government took over, there were 26 people in the Department of Economic Development, with 19 vacancies.
Where is the commitment? Where was the commitment toward economic development in those days? Where were the programs in those days? They were nowhere.
I enjoyed the speech by the Leader of the Official Opposition regarding the time before time, and the development of talks between NCPC and the Yukon government. It was just like his argument with respect to Curragh; supposedly everything was in place and all the new government had to do was come in and sign over the papers, because all the policy issues had been decided and the details worked out. All the NDP government had to do, whether it was Curragh or NCPC, was to sign some papers. Thanks to the brilliant leadership of the Member for Hootalinqua, all these things were just waiting to be harvested from the rich fields of opportunity passed on by the PC government. What a bunch of hooey.
The transfer of NCPC was an interesting case. I am really surprised that the Member for Hootalinqua has the brass to take credit for the transfer once again.
Some Hon. Member: (Inaudible)
Hon. Mr. McDonald: Mr. Speaker, may I sit in your chair and take control of the House?
The Premier has already indicated that all that came out of the transfer of negotiations from the PC government was a press release. When I sat down with the consultants for the first time, I asked them if they had been provided with any direction whatsoever other than to study the process. They said they had not. The Member knows full well that there was no development of any position. It was still in question as to whether the utilities would be publicly or privately owned. That was still an open question. If the Member now says it was clear in his mind, he certainly did not communicate that with the consultant.
There was no direction whatsoever. Emphatically, that is true, Mr. Speaker. There was no direction; there was nothing, nothing at all. Not only was there no policy direction given to the consultants but there were no negotiations undertaken at all because the consultants were simply collating information, bringing up information, getting comparisons from other jurisdictions and assessing the assets of NCPC. That was the extent of their work, without direction from the government of the day, the PC Yukon government. It was far from having the documents ready for the new NDP Minister to sign; no work had been done, except by the consultants, which was basic research.
The convenient memories now of the Members are that they had it all taken care of and that they had Curragh Resources all in line and that all the deals were done and that the road deal had been taken care of and that the housing deal had been taken care of. That is all fantasy. None of that was done by the Members opposite. None of it at all was done by the Members opposite.
It is downright disgusting to listen to Members opposite, and especially the Member for Hootalinqua, in office for all of about two months, take credit for a project that took years to develop. It is just disgusting to listen to that.
The Yukon Development Corporation and the Yukon Energy Corporation are healthy companies, in my opinion. The statements say so. The electrical rates of this territory are comparable with rates across the country. The bills that people are paying now are comparable, in dollar value terms - not in constant dollar terms but in dollar value terms - with the bills that were being paid pre-1989.
Because the rates have been essentially frozen for five years and the dollar value of the bills has not changed, one would have to conclude that because inflation has had some impact on this territory - and we heard a speech from the Member for Porter Creek East recently about inflation and how devastating inflation is to the consumers of this territory - bills should have gone up, yet the dollar values are the same as they were three, four or five years ago, in terms of the average residential consumer in Whitehorse. One would think that at least the bills would have gone up as a result of inflation but they have not gone up. So, I guess in real dollar terms, the bills that people are paying are in fact down; they are not the same at all.
That is one of those facts you cannot get the Opposition to feed into the equation in order to provide a balanced perspective, because that fact just does not fit the argument the Members opposite are putting forward.
We, the Members of this House, mandated the Yukon Energy Corporation to act and operate in a commercial environment. That means that we expect the Energy Corporation to get a commercial return on its investment. If the Members opposite had their way and it was all owned by private utilities, we also would have expected they would be receiving a commercial return on their investment. In fact, there would be no change in rates.
In order to operate in a financially responsibly fashion, they have to operate as a healthy utility. They have to receive a commercial return on their investment. The debt/equity ratio ought to be well-considered and favourable for a small utility, balancing the risks associated with new projects, as well as the amount of equity the utility puts into the corporation. These are essential features of a fiscally responsible corporation.
We all expected it to act as a fiscally responsible corporation. A fiscally responsible corporation will and can pay dividends to the owners, the owners being the Yukon Development Corporation, the owners of which are the taxpayers of the Yukon.
The Member for Whitehorse West pointed out adequately enough that it is a fact of life that the Yukon government, through the Yukon Development Corporation, has put in much more to the Yukon Energy Corporation for improving electricity rates than has been given in dividends by the utility to its parent company. Again, we have to return to the issue, as identified by the Members opposite, which is the issue of the role of the Development Corporation. They say it is just a thinly-disguised vehicle to discuss Watson Lake Forest Products once again.
I should respond to a couple of things said by the Member for Porter Creek East. The Member lamented that the system of power generation we have now uses diesel, forgetting the reality that the system we have will always use diesel. This is because no responsible utility will ever build hydro-generating capacity to justify the very few weeks of peak period demand that are now serviced by diesel. That is a reality, and I hope the Member for Porter Creek East will understand that there will always be some diesel-generating capacity, and will, in the future, be careful of making vast generalizations about how terrible it is that we are generating diesel within the Whitehorse-Aishihik power grid.
The Member was kibitzing, in case the record did not pick it up, about CO2 emissions. In that respect, I agree with him; CO2 emissions are not something we should be promoting.
In respect to new hydro facilities in the future, one has to understand that there is heavy capitalization required to build new hydro facilities in the territory. It is not simply the paranoia that Members opposite feel about environmentalists critiquing hydro plants that is preventing hydro plants from being constructed. It is that the threshold of energy need has to be high enough to justify a jump in power generation, associated with a hydro project, and so consequently there will be a period where diesel generation will increase gradually as the market for more power becomes greater. And consequently, there will also have to be some analysis of what the increased demand actually entails. How risky is it going to be to invest in megaprojects, which the Members opposite feel, given what they said in the throne speech debate and budget debate, et cetera, is going to be the salvation for the Yukon economy. How risky is it going to be if there is a downturn in energy use in the territory? How risky will that be for the consumers of energy in this territory? These are the questions that a responsible government asks and a responsible corporation asks, and unfortunately we have not yet persuaded the Opposition to ask.
The Member for Porter Creek East went on to ridicule the public review process that the Energy Corporation and the Development Corporation have undertaken to ask the public what they think about energy supply options and the operations of the Energy Corporation. All I can tell them, not having been to all the meetings myself, is that the meetings that I attended, including a meeting in Mayo, were very useful for the people of Mayo and very useful for the Energy Corporation as well, to understand the clear and coherent views of the people of that community on some of the issues that have been addressed in this Legislature with respect to supply options. I think the people in this territory deserve to be heard on these matters, and I think the reaching-out by the Energy Corporation to people, to hear their views, is a worthwhile effort, and certainly something that should not be ridiculed by the Member for Porter Creek East.
Every once in a while we listen to the Members opposite talk about megaprojects and then express a concern about the bogey people environmentalists, who will be the first to critique ill-conceived hydro projects. Let me simply state that this paranoia that the Members opposite feel is somewhat at odds with their thin commitment to environmental protection. Their commitment to environmental protection, I can only say, is going to have to be demonstrated through more than the occasional comment they make on Whitehorse water sewage treatment. I think the rubber hits the road in a number of other areas, and we will be listening intently to their thoughts about other projects, other issues before this Legislature and before the public.
The Member was apparently upset that the work plan for the Development Corporation at $16 million over the past few years is somehow insignificant and the work on the Mayo dam was something that had to be done so, consequently, we did not have a choice but to do it. That was not the case. That never has been the case.
I will check this, but I recall being in this Legislature when the work on the Mayo dam was proceeding and United Keno Hill was announcing its closure in December of 1989. Members opposite asked why we were proceeding with that project. I will pull that debate because it will be interesting. Of course, it is another contradiction so maybe there is no point in doing the work, especially for the Leader of the Official Opposition.
The decision making that lead to the continuation of that project was quite clearly that we wanted the generating capacity to continue. We did not want to move to diesel, which would have been very easy to do in Mayo, given the size of the market. We ultimately wanted to have the generating capacity on the Mayo River provide hydro power to other parts of the territory as well. It was a well-considered decision and one that I supported from the very beginning.
We hear from time to time the Members opposite doing all they possibly can to play down the impact of the goods and service tax. Notwithstanding the motion last session opposing the goods and service tax we have heard some very interesting and very conflicting messages with respect to this particular tax expressed by Members opposite in recent months and in recent weeks. I am no longer of the view that the Members opposite do hold the deep-seated abhorrence of this tax that I had thought they held. I think we will have to test the House on this subject in this sitting in order to verify the positions of the Members with respect to this tax.
I indicated the other day that the President of the Yukon PC Yukon Party has been active in his support for the tax and has suggested it might even be good for the Yukon. I presume this is heralding a new position being expressed by the PC Yukon MLAs that they are now only leaking into legislative debate as we go, and developing new positions on various other items, including power rates. There is a not so subtle defence of the GST by the Members opposite being exposed and now it is being considered as an insignificant cost, and if there is a cost it should be borne by either the Energy Corporation or borne by the Yukon government. We really do have to determine where they stand in the final analysis on the eve of the tax now being introduced. It is obvious that they have changed their position on this matter.
I am certain we will have more opportunity to discuss the role of the Yukon Development Corporation and the Energy Corporation in the future because I think what we are doing is a move from one vehicle to another to discuss Watson Lake Forest Products and the fact that Watson Lake Forest Products was one example where good intentions failed and bad management by the private sector prevailed, as was stated by the Member for Riverdale North and, in this particular case, it did not meet our aspirations.
Apparently we should forget, for the time being, all the projects that are going well. We have to fixate on the one project that did not go well.
I am certain we will be dealing with yet another vehicle, in the weeks to come, which will allow Members opposite to suggest that perhaps the bill will be $64,000,000 instead of $32,000,000 or $16,000,000. They will have to find another motion to debate where we will have to endure the rather tedious arguments being put forward by the Members opposite, and especially the Member for Hootalinqua, every day in Question Period, analyzing to the very last detail the Watson Lake Forest Products issue.
I am prepared to deal with that because I recognize it was not the success we had hoped for, but I will applaud the goverment on its guts to do something for a rural community and an industry that was operating in a high-risk environment. The Members opposite have no conception of the hopelessness of many regional rural economies. I do not for a moment pretend to be the one who will convince them that operating in a risky environment means that the government should take risks and reach out to do something the private sector is not able to do.
One of the reasons I am here is to oppose them, to oppose their that did noting for rural Yukon, to oppose their vision that was inimical to the interests of rural economies. I believe that our vision, as risky as it is and with the failures that it does have, will be better for the long-term interests of this territory than theirs.
Speaker: Order please. I would like to remind the Member he has three minutes to continue.
Hon. Mr. McDonald: I will not take even three minutes to conclude. What I will say is that I cannot support this motion. I do not believe the motion is good for rural Yukon or for those sectors of our economy that have not participated fully in economic activity and require support from the Yukon Development Corporation. I do not believe that the Energy Corporation should be operated in the fiscally irresponsibly style they suggest. I do not believe their intentions are straightforward in this motion. Consequently, I can not and will not support it.
Mr. Devries: I always find it interesting listening to the Minister of Education. It always kind of reminds me of going to church. In the first five minutes the Minister convinces me to become a believer and in the next half-hour he destroys all of the belief I ever had. He preaches like you do, Piers.
I had a very short, prepared speech here but as I listened to the other Members carrying on and possibly making allegations, I felt that I disagreed with the government ever getting into the Watson Lake sawmill. I had to make a lot of notations and I am sure glad that I double spaced my comments because they are really cluttered up now.
I do speak in support of this motion. To me, one of the chief drawbacks of development in the Watson Lake area has been the high cost of power or the lack of a reliable power source. I must say that when I heard the Minister responsible for the Yukon Development Corporation speaking, I found it strange that this is probably the first time that he ever really admitted that money was sluffed from Yukon Energy Corporation into supporting the Watson Lake sawmill. He said this and then in the next half-hour he carried on speaking and it seemed to me that he was trying to say that they had not done it; really, I do not know what his position is on that anymore.
Another interesting comment the Minister made was when he remarked about me being in a management position there. This was probably one of the most frustrating jobs I ever had and to make the comment that I was in a management position is, I feel, entirely false. In fact, I telephoned Jack Sigalet late last fall and mentioned how I was bothered by the fact that some of these losses had occurred while I was working there, in what many people considered a management position. Jack told me at that time, Do not feel too bad about that because we were just being used as puppets to meet this governments agenda.
Jack often went to Whitehorse and came back from the board meetings completely frustrated. He would call me at the office and say, What are we going to do, John? They will not listen to me. They are telling me what to do. I do not make any decisions. He did not always say they either; he was referring to one person in particular. He finally came back, a broken man, when he was instructed to tell the media and the employees that he was quitting due to family problems.
I would like to get back to the topic we are discussing on the motion.
In the forest industry a high percentage of the losses in Watson Lake can be attributed to the tremendous costs associated with the diesel generators at the site and trying to refurbish a power plant that was so old that if you look at it there are actually swastikas on some of the equipment. Some of that equipment came out of old, I guess, submarines that we must have blown out of the water during the war.
The power plant proved to be too small and expensive to operate to produce the power needed to run a viable operation. When the sawmill was running last fall, about a year ago, it actually took more electrical power to run the mill than the power plant could produce. It takes more power to run that mill than the whole Town of Watson Lake needs to operate.
The Mt. Hundere joint venture has actually contracted Yukon Electrical to meet the needs of the mine, which will be diesel generated: more CO2 emissions.
There are several more attractive mineral deposits within reach of Watson Lake, yet the Development Corporation is playing games with the money of the rate payers rather than investing it in the development infrastructure needed to put these mines into production.
We cannot afford to neglect this issue any longer. With the crisis in the Gulf region it becomes even more essential for the Yukon Energy Corporation to retain the profits for development or rate reductions. If this is not permitted under Public Utilities Board legislation then pass the saving along to the consumers if you are not allowed to put it into a dam.
I do not think the Yukon power consumer wants to see this money invested in high-risk ventures like the Watson Lake sawmill. I realize some power requirements are high-risk ventures too, but I think that Yukon consumers would be willing to take a risk there. They do not want to see it going into ventures where the money is just going to disappear and they will see nothing when it is over. They would much prefer to see their hard-earned cash go toward rate reduction and environmentally friendly energy projects.
At this time I would also like to congratulate the Rancheria Lodge on throwing a switch to their micro-hydro project in Canyon Creek. During the past two years I have stopped there many times and watched the progress on this project. I have taken a very personal interest in it. It has been a long and frustrating experience for them but was well rewarded when the quiet environmentally friendly power surged into the lines last week on Sunday.
To me the ironic thing is that the $16 million handed to the Yukon Development Corporation from the Yukon Energy Corporation could have funded 25 similar projects to what we have at Rancheria today. We still see government highway camps, except for the one at Fraser, continue to gulp down fuel and create more CO2 emissions.
It is a time for this government to really show it is committed to a clean energy policy. I feel the Minister contradicted himself when he said the problem that faces Yukon Energy is that there is only one main commercial consumer. I ask him how this will ever change, if there is no development in the energy field to attract private diversification of the economy. I do not feel that any Member who truly represents the will of the Yukon people, the voting public, can afford to disagree with this motion.
Mr. Phillips: I do not intend to speak for a long time on this issue, but I feel it is an extremely important motion for all Yukoners. For the past two years, the money-making Yukon Energy Corporation has been paying excessive dividends to its parent company, the Yukon Development Corporation, at the expense of Yukon electrical users.
Worse yet, the Yukon Energy Corporation is then turning around and borrowing back its own money at an inflated interest rate. Yesterday, the Minister responsible, the Government Leader, said I came close to accusing some people of wrongdoing. Well, he is right. I am saying that paying the Yukon Development Corporation $16.2 million in dividends and, then, borrowing back $5.5 million at a high interest rate, is dead wrong.
To add insult to injury, the Yukon Development Corporation took the money and squandered it on the poorly thought out Hyland Forest Products venture. Now, the Yukon Energy Corporation wants to hit us with higher power bills.
Yukoners were deceived by the Government Leader prior to the last election when he announced that, because of good management, power bills would go down. One can only deduce that, since he is now telling Yukoners that their monthly bills are going to increase, this increase is because of poor or bad management. It is unfortunate the Government Leader turned the Yukon Development Corporation into a political tool. The interference by the Government Leader and the previous deputy minister has cost Yukoners millions of dollars. It has milked the Yukon Energy Corporation dry at every opportunity.
Funds generated by the sale of power should be used to develop more efficient and environmentally safe hydro for Yukon consumers. History has shown us that this government cannot be trusted with Yukons future. Millions have been lost with the transfer of funds from the Yukon Energy Corporation to the Yukon Development Corporation. It is time to send a clear message to the two corporations to manage their money wisely.
I urge all Members to support this motion.
Mr. Brewster: I will not be speaking very long on this, but I will use two favourite words of the Minister of Education. I am sure you will allow me to use them, as you allowed him, and they are hogwash and phooey. Let us get this down to plain language that you and I can understand. They keep telling me that the electrical rates are not going up, yet then they turn around and tell us that, starting in January, we are going to have a 20 to 24 percent raise. When you and I pay our light bills, and our cheque goes up, it is quite apparent something has happened.
Now, they can have it one of two ways. They can blame the GST, which is only seven percent. There is another 13, 12 or 10 percent hidden in there. You can take your choice of the three. So, if the rates are not going up, then this government is putting a hidden tax on us of 10 percent, because we are going to pay more. I do not care what you use this for, or anything else. It is something like the licence fee. We sneak it in the back door, and it is a tax.
There is no question that the rates are up, whether you like it or not. They can turn around and say the rates are there, and they are fine, but if that is what they want to take, then they put a tax on to us, over and above the seven percent sales tax. As they tell us, we are going up by 20 percent, so there is no argument there. When you and I write our cheque out in January to pay our light bill, we are going to pay 20 percent more. Now when you have a lodge, such as the one at Beaver Creek, which pays $3,000 a month for its light bill, and then you add 20 percent on to that, I can tell you they are in a lot of trouble.
Then, we see the electrical company making all this money, and where does it go? It is going other places. It does not come back to help the people who paid it so, as far as I am concerned, it is a tax, a tax against the whole bunch of us. They can take our profits and turn around and use them in other things, then they are taxing us in a hidden tax.
Mrs. Firth: I will not be long. I just want to participate in the debate this afternoon to make representation on behalf of the constituents I represent, who pay their electrical bills faithfully every month.
The Minister of Education stood up in the House, and kind of jumped up and down there for a while about what the real issue was here with respect to this particular motion. As I see it, the real issue is people are paying their electricity bills. There are huge profits that have the potential of building and accumulating in the Energy Corporation and, then, the Development Corporation is turning around and taking that money, and they are using it whichever way they want to use it. They may as well take it right out of the hands of the people who are paying their bills. This government is condoning that action.
Let us look at the examples of where the money has been redirected, through the Yukon Development Corporation. First of all, there is the Watson Lake sawmill. People paid their electricity bills two or three years ago, or even longer than that, when the new Minister of Justice dismissed or fired the Public Utilities Board. The ratepayers continued to pay inflated power rates for two years with no noticeable change.
The money was taken and was used to create jobs at Watson Lake sawmill. That money was taken from the pockets and hands of the people of the Yukon, who were paying their electricity bills, and it was used to create jobs at any cost. The people of the Yukon really object to that. They object to money being taken from them and having no say or power over what happens to it.
The next example is the $2 million loan to the Dakwakada Development Corporation for the hotel complex/convention centre. The gentleman who bid against this corporation paid his electricity bill. The money was taken and lent to his competition, so they could fulfill the requirements of the tender and have the financial backing to compete against him for a government project.
Although the Government Leader denies this is happening, the Development Corporation is getting into the construction business. It is going to renovate the old Yukon College to provide office space to the government. The private sector business people who rent office space to the government are faithfully paying their electricity bills and will now be paying higher rates. Their money is going into the Energy Corporation, being used by the Development Corporation to enter into the construction project, to go into competition with them. This is the issue the people of the Yukon, who are paying their electricity bills, are objecting to.
The people of the Yukon want to have some control over the money they are paying every month for electricity. That is what our motion is requesting. It is like taxes. Taxpayers feel helpless, because the money goes into government coffers and is used by politicians who want to do special things in their ridings, or do whatever they want to do to achieve their objectives, but no one goes to the people who are paying their taxes and supporting the system to ask them what they want to happen to the money, or what they think would be a fit distribution of the funds.
That is what this motion is asking for. It is asking that the money be focused and directed to energy initiatives, so that the people who are paying the bills know the money is going to be spent on keeping the power rates reasonable and on initiatives for energy production in the Yukon Territory. That is all they are asking for. It is not complicated.
The Minister of Education does not defend the governments position, other than to say the Development Corporation is healthy. He always comes back with the we know what is best for Yukoners, and to trust them as they have all the answers and the best solutions and that, what they decide in the long run will be best for us. He reinforces the attitude toward people like ourselves, like you, Mr. Speaker, and like all Yukoners, of the arrogant, knowing-the-best-for-you politician to the people who are paying all the bills. That is what people object to. We pay and pay, and our parents pay, yet we have no say in where the money goes.
The principle of this motion is simple and solid. We are asking that, if people have to pay higher power rates, which they may not like, then that money should be focussed and directed to power initiatives and to keeping the rates reasonable in the future.
That is it in a nutshell. It is not complicated. It is not difficult to understand. It is not difficult for people to grasp that concept. That is what we are asking for.
People I talk to, in my constituency and in other areas of the Yukon, really object to politicians thinking that they are smarter or that they understand more or that their ideas are better and that they know what the best way is to spend all of the money. They object to that.
So on behalf of the people in Riverdale South, I want to say that I strongly support the motion that the Leader of the Opposition has brought forward. People in the Yukon deserve better. They deserve better explanations of what is happening to their funds. They deserve that the money being paid through their electricity bills be more properly directed to better use and to more efficient management of their electrical rates.
Hon. Mr. Byblow: I guess when I first saw the motion I naively thought that it was a serious intent to debate the structure and the finances and the purpose of the Yukon Energy Corporation. I guess that I have to admit that that was indeed a very naive assumption. Having listened to the debate from the Members opposite, I think that the motion was indeed a devious effort to debate the Watson Lake sawmill issue once again. I have to say that when I heard the comments of the Member for Watson Lake, it became vividly clear to me that that had to have been the original intent.
I guess I am a little concerned that we, as Members in this House, are not listening to what others are saying because, having listened to the debate this afternoon for the past three hours, approximately, it became so obvious to me also that Members opposite are saying opposite points of fact to what Members on this side are saying; I find that disturbing. It is disturbing because you have got the perpetration of two opposite - not points of view but two opposite points of fact. I listened to the Member for Kluane moments ago and he makes the emphatic point that the rates are being changed.
I hear the Premier say that rates have not changed. Obviously, we are not understanding or communicating the facts of the matter. The facts of the matter are that the rates are not changing and that has been repeated in Question Period; that has been repeated on the floor this afternoon, yet we seem to be saying opposite things to each other.
The rates are essentially, and in fact, the same as they were. The explanation being provided to all Members of the House repeatedly is that a rider that was placed on the rate by the Public Utilities Board effectively comes off on January 1. The rate remains the same. The benefit changes. The bill changes. There is a difference. The rate did not change. The rates are less today than they were in 1985, and that is a fact.
From the issue of whether the rates are changing or not, the fact of the matter seems to be simply that they are not changing; a rider is coming off and the bill will be greater than the rider coming off because of the GST that will be applied to this service. Members suggest that somewhere here this government, or the Development Corporation - or even the Energy Corporation, because I am not sure that Members opposite have sorted out the difference between the three parties - is imposing a tax. I do not understand that misrepresentation of the fact.
In listening to the debate this afternoon, I would conclude that Members opposite would choose to have us believe that somehow the Yukon Energy Corporation is profiteering, and unethically so, on the backs of all the electrical consumers and sending all the money down to Watson Lake. That is what seems to be the underlying message here. I have to say that I have some difficulty with all of that.
Members opposite have made one argument that I can support in their presentation. I think there is a general agreement in the House that the Yukon Development Corporation has a vital purpose. It has a useful mandate to foster the economic development of the territory.
I reviewed the remarks of the Leader of the Official Opposition when the Yukon Development Corporation Act was introduced into the House. I read the remarks of the Leader of the Official Opposition about the concept of a development corporation having been a platform in their party policy.
The side opposite recognizes the economic value of having a tool and lever at the disposal of the government to encourage economic development around the territory. In general principle, we do not disagree that a development corporation has a most useful function: to encourage economic diversification, to encourage economic development, to encourage the private sector to become involved, to reduce the risk of investment in rural communities and the urban Whitehorse community.
In a general sense, I see there is no tremendous variance in principle about what a development corporation ought to do. In terms of rural Yukon, the private sector will often not take the risk because it is too high. Something like a development corporation can provide that impetus and extra incentive to make the private sector feel a little more comfortable with taking that bolder step, thereby encouraging further private sector involvement. All of that is a very healthy thing.
Quite often, any kind of strategic investment by a corporation will precipitate further private sector initiative. That is something we have to encourage. I think of communities that I am familiar with in other jurisdictions, where a community has actually created a development corporation as an economic development tool, which was created expressly to pool resources for that community and to encourage the kind of investment that no individual or government would undertake.
As a tool, the Development Corporation is a very useful mechanism to encourage the kind of marketplace investment that, ordinarily, will not happen. We had debates in this House through the throne speech and the budget of how important it is to diversify, to invest, and to encourage development in the rural communities.
What would anyone have done in Watson Lake without a development corporation? What private sector would have walked in there and responded to the plea of that community?
We were fortunate in Faro that we did have a private sector interest, but it would not have gone in on its own. It needed the nudge, not in this case of a development corporation, because none existed, but it needed the nudge of government to support that private sector initiative in the community. There were loans involved. There were assets acquired to create cash flow. There were power rate structures put in place. There were incentives that ordinarily would have been provided by a development corporation.
I would not suggest that this is a position of the government but rather a personal opinion. I would not have any objection if a development corporations support had been required to re-open Faro; I would have been speaking in favour of that. As it turned out, we did not have to do that. The private sector was motivated enough, with some support, to take over the entire project themselves. So, whether it is an economic development tool that is created by the government or created by a community, it does not really matter. It is a tool that we have to use to encourage economic development. To have that economic development, if you will, requires some investment.
I want to put a question to Members opposite. From where would Members opposite suggest such investment come? It is a matter of fact that when the Yukon Energy Corporation was created - and it was stated by my colleagues - some $39 million were injected by the government to acquire the assets of NCPC. In other words, this government made an investment of $39 million to acquire NCPC assets.
I am puzzled, because what I hear Members opposite saying is that the government suddenly has no right to expect a return from that $40 million investment. It is perfectly legitimate, Members would argue, for a private sector utility company to generate and be guaranteed a profit of a 14 percent or a 16 percent return, as permitted by the Public Utilities Board, but it is not permissible when the government has made that investment.
So there is something here that I do not understand. If the government is going to function as a credible agent, then it is going to operate on some principles in its investment portfolio that correspond to sound business principles. Now, what is unreasonable for the Yukon government, on principle, to expect a return on its $40 million investment?
It does not stop there. It does not conclude by some return on that investment coming to the government. Sure, over a two-year period there was a $15 million return on investment, but there was a $15 million expenditure on capital items for the Yukon Energy Corporation by YDC at the same time.
So look at the picture. Here you have a $40 million investment. Here you have a $16 million return. Over here you have a $16 million capital expenditure. You still have no return on the $40 million. What is the point of this motion? What are Members asking the government to do? On one hand you have a right to a return on investment guaranteed by the Public Utilities Board and guaranteed by sound principles of good business. On the other hand, you have a return on that investment. You spend that return on investment back on capital and somehow we are not to be allowed to collect any dividends, which is a decision for the board of directors, I would point out; it is not a decision by this Cabinet.
I am trying to understand the criticism. The Member raises the $5.5 million. That has already been responded to in the debt/equity requirement.
Members interrupt me and I lose my flow. I will have to restrain myself and not listen.
The point that I want to make is not just the point that a development corporation is a primary tool for development of Yukon industry, economy and communities. There has been no abrogation of responsible management between the Development Corporation, the government, and the Yukon Energy Corporation. What it simplifies down to is that I have a hard time making the connection between the $16 million dividend that was indeed paid to YDC, the $16 million expenditure by YDC on Yukon Energy Corporation capital costs, and some kind of mythical payment to the Watson Lake sawmill. I am having difficulty making that connection.
Members have made emphatic points that $16 million was creamed off the Energy Corporation and poured into Watson Lake. Yet, I point out to the Members that $16 million directly corresponds to the capital investment by YDC and the Yukon Energy Corporation subsequent to this governments $40 million investment for the acquisition of the assets.
Those are some things the record will show; the motion does not have credible merit in what it is asking for.
I want to draw on a couple of other minor points that were raised by Members opposite. The Member for Riverdale South made several references to an attitude of the government that it knew best on everything. I am curious, in the first place, about what is offensive about the government making sound decisions after consultation; in the second place, what is wrong with a board of directors making decisions, - a board that represents a broad cross-section of people from the business community, as well as the government and the public at large.
My curiosity is piqued about how this government reflects some negative or, as implied by the Member, arrogant attitude that it knew best and was dictating all that should happen. In some instances, through consultation, the government is required to make decisions. In other instances, boards direct those decisions. In other instances, a number of other steps and processes govern the decision making.
My difficulty, and objection, is that there is anything even resembling an arrogant attitude of knowing best.
It was not my intention to speak at any great length, other than to emphasize that the relationship between the Yukon Energy Corporation and the Yukon Development Corporation - one being a totally and wholly owned subsidiary of the other - does not belie the original intention of that structure. Members will recall the original debate surrounding the creation of the Yukon Energy Corporation, through the Yukon Development Corporation Act.
I cannot conceive of the notion that there was never an intention to utilize the allowable rate of return from the Yukon Energy Corporation by someone, whether it is the umbrella mother company, Yukon Development Corporation, the Energy Corporation itself or some combination thereof. The structure that was created for YEC was a structure that was conceived of and put into place with the approval of all Members of this House at that time. It is an error to suggest that when Yukon Energy Corporation would be created, somehow a guaranteed rate of return would fall away, that there would not be a return through that corporation. I just repeated what other Members have said, that return was on the one hand a dividend calculation and on the other hand a capital expenditure, so that in fact you do not have even a return on that original $40 million investment.
I cannot support the motion. I will not be supporting the motion. I believe the explanations afforded by my colleagues suffice to clarify the record as to why the motion would not be wisely passed by the House, that we are quite comfortable with the current structure and relationship, and the track record of those corporations in the delivery of their mandates.
Mr. Nordling: I had not planned at all to speak to this motion but I must get up to make my position known, although it is not exactly clear. I am going to be brief because I take a very simplistic view of the motion. I was not going to argue over the dividends paid or whether $16 million was too much or too little or whether or not the Watson Lake mill was a good investment because to me that is not what the motion is all about. The motion simply asks that the Yukon Energy Corporation be stopped from paying dividends to the Yukon Development Corporation and it limits the Yukon Energy Corporations ability to invest its money. My understanding is that the corporate structure of the YDC and the YEC was acceptable to all Members of this House when they were established.
I do not think the structure is the problem. My understanding is that the Yukon Development Corporation would act as a holding company and that the Energy Corporation would be a wholly owned subsidiary. My view is that the Energy Corporation is a commercial utility and is entitled to a certain level of profit. The Development Corporation is its parent company and I have no problem with a subsidiary paying dividends to its parent company. But I agree with a lot of the concerns expressed by the Official Opposition with respect to the cost of electrical energy to consumers and the need to invest in hydro facilities and transmission lines.
I agree that millions of dollars were wasted on the Watson Lake sawmill. But the motion does not simply ask the Yukon Energy Corporation to keep its profits within the corporation itself, as the Member for Porter Creek East had suggested, nor is it well thought out, as the Member for Porter Creek East said. The motion says that profits should be invested in hydro facilities and transmission lines. But what about investments in other sources of energy? Does this motion preclude that? What about investment in improved diesel generating capacity or alternate sources of energy?
In my reading of the motion, it recommends two things: first, a change in legislation to prevent a subsidiary from paying dividends to its parent company and, second, limiting the Energy Corporation to using its profits for hydro facilities and transmission lines.
I could support a motion condemning the Yukon Energy Corporation for paying such large dividends to the Development Corporation in 1988 and 1989 and then borrowing money when the Yukon is in need of new sources of energy to keep up with demand. I think the Energy Corporation should be condemned and no amount of posturing or mumbo-jumbo from the Government Leader about debt/equity ratio is going to convince the public of anything else. The Opposition speeches dealt with this, but that is not what the motion says.
The speeches from the government side have similarly avoided the point of the motion and, for the most part, have been nonsense designed to waste the afternoon away. I do not think the debate this afternoon has done anything to advance the credibility of this House.
In conclusion, I understand and sympathize with what the Opposition has been saying and I, like most Yukoners, would be terribly upset if profits from the Energy Corporation were being siphoned off to support losses incurred by the Development Corporation. Despite the fact that the motion is not going to pass, the government should take a close look at the relationship between the Yukon Development Corporation and the Yukon Energy Corporation, especially from the point of view of the composition of the board of directors and the officers of the two corporations.
The two groups are virtually the same and despite what the reality may be, the perception is that to maintain their reputations as the good managers of the YDC, they are using profits from a monopoly with a guaranteed rate of return to cover up poor investments in the competitive private sector. Well, public perception is that these two corporations are not operating as they should or as they were designed to operate. The government must take steps to restore public confidence and its efforts today certainly have not done that.
To be frank, I am embarrassed for the government over its handling of the whole concept of setting up and staffing the Yukon Development Corporation and I am embarrassed about the governments meddling in the affairs of the Yukon Development Corporation and the Yukon Energy Corporation. What the government has done is that, instead of taking responsibility and looking for solutions, it has made excuses and blamed someone else. Although I cannot support the motion the way it is written, I have no hesitation in agreeing that the governments performance in this area has been pitiful. Thank you.
Speaker: The hon. Member will close debate if he now speaks. Does any other Member wish to be heard? The Hon. Leader of the Official Opposition.
Mr. Phelps: Thank you, Mr. Speaker. I want to close with a few comments about the debate and respond to some of the comments made by other Members in these Chambers.
The idea behind the motion is fairly simplistic and I think it is important that we get the message out. The message really is that the Yukon Energy Corporation has been making profits because it has been charging more for providing electrical energy than it has cost to provide it, and that some of those profits have gone into ventures such as the Watson Lake sawmill, the loan to Dakwakada and the ill-fated, I am sure, revamping of old Yukon College.
There was a fair amount of discussion about various issues, but essentially the difference between the Official Opposition and the government has to do, I suppose, with the mandate of Yukon Development Corporation and the mandate of the Yukon Energy Corporation, i.e. what should Yukon Development Corporation be doing and with what money.
Our position with regard to Yukon Development Corporation is basically that it is a tool that should be restricted severely in its activities, that its activities should be restricted to developing infrastructure - namely, energy - and in rare cases transportation infrastructure. In our view, the Yukon Development Corporation has no place competing against companies in the private sector and no business getting involved, as owner, in such enterprises such as the Watson Lake sawmill. Further, it is our very simple, clear view that profits by the power corporation ought to be handled in such a way that they will be only invested in the provision of electrical energy to Yukoners.
They should be used for nothing else. Nothing else.
One can get into esoteric arguments about how that is to be done and whether you have to have a parent company that puts cash in so you can pull it back and have 14 or 15 different hats, but we say that that money should be only invested and used for the provision of electrical energy to Yukoners, and for nothing else.
The motion before us today is an attempt to capture that concept. The Yukon Development Corporation, if it is going to do anything else, should be severely limited with regard to its mandate. I would like to see a clear set of principles come from the board itself without undue interference from the government, and particularly the Minister responsible for the Yukon Development Corporation.
We have here a situation where a profitable enterprise, namely the Yukon Energy Corporation, is being milked to achieve other agenda items so people paying for electrical power in the Yukon are paying a hidden tax in effect to go toward other objectives rather than ensuring their power rates will be secure and as low as is possible in future years.
It is my deep-seated belief that the vast majority of power consumers in the Yukon object to their money being used for hare-brained schemes such as revamping the old Yukon College, and, dare we say it, the Watson Lake sawmill.
The people of the Yukon have the right to insist that all monies they pay in power rates be accounted for and that all of that money be held in a trust relationship so it is invested and spent only on the provision of safe, environmentally sound, economically feasible power projects so that in the future the people of the Yukon can be certain that that one area of infrastructure that this government is so responsible for will be secure.
The government, as is its want, has tried to attack us on this side for suggesting that their economic diversification schemes have been a bust. Well, they have been a bust. They then try to say that our alternative is one of megaprojects. Well, as an idea, or as a reflection of what we have said at any time, that is a bust too.
Our position is that one of the things this government should be doing, and it should have started doing when it first got into office, was work aggressively toward the provision of cheaper power and environmentally sound power, because that is a basic infrastructure that attracts business; it attracts diverse companies and can build a secure base for towns and villages such as Watson Lake or Mayo.
A small hydro project providing cheap power to Watson Lake would have gone a long way toward solving some of the problems surrounding the forest industry, because the lack of certainty with regard to good, reliable power has caused a lot of would-be investors to back off that area in the past. Of course, power is essential to developing new mines. I hate to say the word mines, because apparently that means we all hate the environment or something. It is critical that we know where we are going with the production of power, and that we know that we will have hydro sites or other forms of energy supply in place to meet the demand that we hope will come from mining activity in the future. Essentially, our position is, in regard to economic diversification, that we are here to supply the kinds of things that government ought to supply, and the most important things in this day and age, and given the scope of what this government has jurisdiction over, is good, reliable, inexpensive transportation and good, reliable, environmentally sound supplies of electrical energy. This government has neglected to look at the provision of electrical energy as a priority. Instead, it has been spending money pretending it knows something about running businesses, which obviously it has not got the faintest clue about.
I should respond to the Member for Porter Creek West. He will not support the motion because he feels there are other kinds of energy that may have been overlooked in the motion. I think that is nitpicking, but it is an argument that can be made. I cannot deny that.
There are a lot of technical things we could have included in the motion, but what we wanted to convey to the people and the consumers of the Yukon is that they are being taken to the cleaners by this government, that the profits of the power corporation are being siphoned off, and they are not being used to develop energy in the Yukon. They are being used for whatever ideas the side opposite might come up with to dabble in with their cherished Yukon Development Corporation.
Once again, I urge all Members to support this motion.
Some Hon. Members: Division.
Speaker: Division has been called. Mr. Clerk, would you kindly poll the House.
Hon. Mr. Penikett: Disagree.
Hon. Mr. Byblow: Disagree.
Hon. Mr. McDonald: Disagree.
Hon. Mr. Webster: Disagree.
Hon. Ms. Joe: Disagree.
Mr. Joe: Disagree.
Ms. Kassi: Disagree.
Ms. Hayden: Disagree.
Mr. Phelps: Agree.
Mrs. Firth: Agree.
Mr. Phillips: Agree.
Mr. Lang: Agree.
Mr. Devries: Agree.
Mr. Brewster: Agree.
Mr. Nordling: Disagree.
Clerk: Mr. Speaker, the results are six yea, nine nay.
Speaker: I declare the motion defeated.
Motion No. 4 negatived
Mr. Phillips: In light of the time, I would ask unanimous consent to move a motion that the Speaker do now leave the Chair and that the House do resolve into Committee of the Whole.
Speaker: Is there unanimous consent?
All Hon. Members: Agreed.
Speaker: Unanimous consent has been granted. It has been moved by the Hon. Opposition House Leader that the Speaker do now leave the Chair and that the House do resolve into Committee of the Whole.
Motion agreed to
The Speaker leaves the Chair
COMMITTEE OF THE WHOLE
Chair: I will call Committee of the Whole to order.
We will break until 7:30 p.m.
Chair: I will call Committee of the Whole to order.
Bill No. 15 - Second Appropriation Act, 1990-91 - continued
Department of Economic Development: Mines and Small Business - continued
Mr. Phillips: This afternoon when the Member for Riverdale South asked the Minister responsible for Government Services for copies of the contracts he said we had to address the question to the individual Minister. So I would like to address that question to the Minister of Economic Development. Are there any contracts involved in the funds we are talking about here? Could the Minister provide us with those contracts?
Hon. Mr. McDonald: I can provide the Member with a list of the contracts. They will have to request copies of specific contracts. I will not go and dig them all up and copy them all. I have one copy of a list that I can pass to the Member, but if he has any questions he will have to explain exactly what he is talking about because this is the only copy I have got.
Mr. Phillips: Last year there was a contract to McPherson Research and Consulting for an economic profile of the Kluane region. Can the Minister make that contract available to us?
Hon. Mr. McDonald: Certainly. I will have it copied. I thought I had done that already. I remember them asking for it and I said yes, but I can have it copied again.
Mr. Phillips: He may have provided the contract. I was just looking in Hansard of last year and he gave us an indication he would provide it when available but I do not recall seeing it. I would appreciate a copy of that contract.
I wonder if the Minister could bring us up to date on the status of the Northern Accord.
Hon. Mr. McDonald: The Government of Yukon tabled a formal position with the federal government on the Northern Accord during the summer. The Northwest Territories also tabled a formal position with the federal government during the summer. As the Premier indicated during Question Period, the Government of the Northwest Territories and the Government of the Yukon are attempting to resolve a couple of issues of common concern to both territories so that there can be a common northern position to take to the federal government. In the period leading to the tabling of the formal position we had some formal discussions with the federal government about various features of the Northern Accord agreement.
We had done some work to assess the financing options internally, and through contract as well, to better flush out our positions with respect to things like revenue options, royalty options, management options. At the present time, the department is ready to negotiate a large portion of their mandate, to negotiate an agreement under the agreement in principle, which was signed between Mr. McKnight and Mr. Penikett. As I say, there are a couple of outstanding areas such as the location of an administrative line north of the Yukon/NWT border, and there are some issues with respect to joint management that have to be worked out prior to any finalized offshore agreement that all three governments would willingly enter into. Of course there is also the obligation to negotiate onshore oil and gas management and revenue options. I think that our general position appears to be acceptable to the federal government, but we have not finalized any particular arrangement.
Mr. Phillips: I do not have any other questions in general debate unless someone else has some questions they would like to ask the Minister. I am prepared to go line by line.
Mr. Devries: I am not sure whether the Yukon energy alternatives program and the Fraser project contracts would have to come from this Minister or from the Minister of Government Services, but I would like to know how much, if any, money went toward the development of that project in the form of grants and if possible the agreement that exists with YTG to purchase power from them.
Hon. Mr. McDonald: The agreement to purchase power is not between Economic Development and the proponents. It is an agreement with Community and Transportation Services to purchase the power from the proponents for the purposes of providing electrical power to the Fraser Camp.
Part of the funding was through the Yukon energy alternatives program. I listed that last year as a funding obligation, so it is not in the current year budget for that reason.
I am sure that the details for the agreement can be sought through the Minister of Community and Transportation Services.
Hon. Mr. McDonald: This represents the transfer of one position from the administration branch to the economic programs branch. The position is the ADM of economic programs.
Mr. Phillips: Perhaps the Minister could tell us the reason for the transfer.
Hon. Mr. McDonald: It made more administrative sense to put it in economic programs. The person is responsible for economic programs and, generally speaking, all costs associated with personnel in a particular branch are found within that branch. The other ADM, for example, is in another branch, not administration. I believe the only senior administrative position above or at the ADM level is the DM.
Administration in the amount of an under expenditure of $76,000 agreed to
On Economic Programs
Economic Programs in the amount of $76,000 agreed to
On Capital Expenditures
On Energy and Mines
On Energy Conservation Fund (SEAL)
Hon. Mr. McDonald: This represents some revote project funds from previous years commitments.
Energy Conservation Fund (SEAL) in the amount of $136,000 agreed to
On Internal Energy Management
Hon. Mr. McDonald: This also represents revote projects approved last year that were not completed by year-end.
Internal Energy Management in the amount of $6,000 agreed to
On Prospectors Assistance
Hon. Mr. McDonald: The prospectors assistance and the exploration incentives have evolved into the new program, Yukon mining incentives, which is found in the bottom line of the energy and mines branch. We have added $42,000 in revotes for a total of $742,000. The $42,000 in revotes is for commitments made last year that were not completed by the end of the year.
Mr. Phillips: Will those two lines disappear off the budget in the future?
Hon. Mr. McDonald: Yes, they will. The reason they are showing up here in this way is because, when we put forward the main estimates in the first instance, the prospectors assistance program and exploration incentives program were in effect. During that year, after the main estimates were established, the department worked with the Chamber of Mines in creating a new program and new program guidelines, the Yukon mining incentives program. We actually came to conclusions while we were debating the main estimates last year, and I reported on the new guidelines for the Yukon mining incentives program while we were actually discussing the main estimates.
Because the main estimates were revised and printed before we came to conclusions with respect to the Yukon mining incentives program, we are obligated to continue showing it in the two line items - the prospectors assistance program and the exploration incentives program - until the end of the fiscal year.
Prospectors Assistance in the amount of an under expenditure of $200,000 agreed to
On Exploration Incentives
Exploration Incentives in the amount of an under expenditure of $500,000 agreed to
On Economic Development Agreement
Hon. Mr. McDonald: This is part of the interim economic development agreement that was negotiated entirely for the mineral resource subagreement. This is the one agreement we do not administer. We simply provide a 30 percent contribution toward it. Unlike the other subagreements, we are not voting the gross amount for the subagreement. We are only voting the net amount. For all other subagreements, we vote the gross amount. We only provide a contribution on this one, and the federal government administers this program, even though there is the same decision-making structure for approving payments under this program as for the others. This represents 30 percent of the mineral resource subagreement.
Mr. Phillips: Have these funds been allocated for the 1990-91 season already? Have they all been spoken for, more or less? I know that if people apply on some of the subagreements now, they will find they have been fully subscribed for, and there is no other funding until the new agreement for 1991-92.
Hon. Mr. McDonald: I will have to check on that. I believe a fair portion of the funds have been committed at this point. I can secure that information. It is relatively easily retrievable.
Economic Development Agreement in the amount of $303,000 agreed to
On Yukon Mining Incentives
Mr. Phillips: This is the one into which the Minister said the exploration incentives and the prospectors assistance have been rolled. Before, there was quite a difference in the two amounts. There was $500,000 in one and $200,000 in the other. Is there still that kind of difference in the two programs? How do they administer the two programs? Is there some way we can tell how much prospectors assistance is actually in this new line item?
Hon. Mr. McDonald: The prospectors assistance program was changed moreso than the old exploration incentive program. The prospectors assistance program has now moved from a total allowable contribution of $5,500 to $10,000 per season. Give me a moment and I might be able to provide a better accounting of this.
The new program for prospectors assistance was raised from $5,500 to $10,000. Prospectors are reimbursed up to 100 percent of their approved operational expenses. Individuals in junior mining companies are reimbursed 25 percent of operating expenses up to a maximum of $50,000 for exploration.
The lifetime limit of funding for any particular deposit was raised from $100,000 to $200,000. There are a couple of other components added.
The target evaluation on mining claims that had not previously been explored can earn a 50 percent contribution toward exploration expenses to a maximum of $20,000. Also, companies or individuals who grubstake a prospector can be reimbursed up to 75 percent of their expenses to a maximum of $10,000, which is a new feature. It used to be that you had to be the actual claimant and had to do the actual prospecting yourself, but if you are supporting a prospector, you will be reimbursed expenses up to 75 percent to a maximum of $10,000.
The general target is for approximately 30 prospectors and about $200,000. The break-out is roughly the same: prospectors versus exploration incentives.
Yukon Mining Incentives in the amount of $742,000 agreed to
On Economic Policy, Planning and Research
On Economic Development Agreement
Hon. Mr. McDonald: As I explained last year, when the Economic Development Agreement was first negotiated, all the funds that we commit to the agreement are put into one line item, economic policy, planning and research. Once the agreement is signed, then we break the program up into subagreements and transfer the funds to various branches within the department.
For example, we had originally voted $1,740,000 gross for the EDA. That is the number shown in the main estimate.
Now, in the planning subagreement we are leaving $615,000 in this line item in economic policy, planning and research. The $303,000 we moved into energy and mines for the mines sub-agreement and the balance of the EDA program - the tourism subagreement, the renewable resource subagreement, small business incentives - are put into economic programs and that shows you the increase of $1,755,000 lower down in economic programs. Is that more or less clear?
Mr. Lang: I just want to raise a question here. In going through all these grants that have been given out, I want to ask the Minister why government departments are going after funds such as this for additional funding for their programs. When we go through the exercise of voting money for the various departments for certain objectives and you tell us how they are going to meet those objectives and then 10 months later we get a printout of hundreds of thousands of dollars, it is not just one isolated case, but thousands and thousands of dollars, where various government departments, because they have not got enough money in their budget or because the Minister of Finance has said no or the Minister has said no we are not prepared to put this in your budget, they go through the back door and they get financing through these various grant programs. I would like to hear the Ministers comments on this because it just seems to me that it is a backward way of getting money without getting approval from this House for what they are supposed to be doing.
Hon. Mr. McDonald: First of all, the BDF and the CDF do not allow departments of any governments, apart from municipal governments, to have access to those funds. The concept of approving funds for departments, as I understand it, is to approve special project funds, funds for projects that are not normally considered to be A-base funds. These are projects that are ongoing operations or the like. They are supposed to be projects that are special ones that come up during the course of the year. I think what has happened on occasion, and this is something I expressed concern about last year and am expressing concern about again this year in our negotiations is that there is some sense that some A-base responsibilities are leaking into the approval process under the EDA. I realize, and admit, that sometimes it is difficult to define what is A-base and what is not A-base responsibilities.
I think there is a good argument to make that some of these responsibilities are A-based responsibilities and not special projects, and are ongoing obligations of the department. They should not be approved under the EDA. That is the position we have been taking in negotiations.
If there are any particular projects the Member feels are A-based for a YTG department, then he should make the case, and I would certainly be interested in essentially trying to exclude those in the future.
With respect to the federal governments A-based projects, that is a problem that we will have to work out, because we do not have an agreement on that element yet.
Mr. Lang: Does the same principle not apply here as it does to the business development fund or the community development fund? The reasoning is that these are set up primarily for non-profit organizations, individuals or businesses, depending upon the category, to apply for various avenues of financing. Now, all of a sudden, we are in a situation where the Minister and I are talking in a government lingo. Anybody who had not been involved with government before would not understand what we were talking about: A-based versus leakage, and all these types of terminology.
My point is that I think there ought to be a policy where the government is not eligible to apply for these monies through the departments. If it is an A level, they should justify it as being A level and, if you in your wisdom decide that it is, then you present it to the House accordingly.
There seems to be another way of government getting access to funds, through the bureaucracy. In this case, we in the House, and perhaps the Ministers across the way, initially disagreed with the concept. Then they find out there is an extra slush fund of $500,000 or $1 million, whatever the case may be, and say they can do it because they have this extra money. I do not think that is the way that it should work.
What is the point of myself standing up and talking to the Minister, saying that it is an A level versus a B level, after the money has been spent. That does not make any sense. It is all finished and done with, in any event. It is after the fact. The horse is out of the barn.
Hon. Mr. McDonald: That is the nature of supplementary votes. I cannot help that. With respect to the delineation, historically it is supposed to be where there is an A-based responsibility, or an ongoing departmental responsibility, that must be met through a normal capital or operations vote in the House, not special projects.
Those are supposedly, whether YTG or federal government, ineligible under the EDA. If it is special project funding or the department is working with a community group or makes the application on behalf of a community group or if it is a special occurrence - a one-time event - and it is within the program criteria for the subagreement, then in the past the EDA has been considered a funding source for those types of projects.
The element I see as the problem is the fact that there have been some projects that have been approved that I would consider to be ongoing obligations of the department year after year. It is my position that those projects should not be eligible and that it should be very clear in EDA negotiations that they not be permitted by the approval group, the joint federal-territorial administrators. The suggestion that this is considered by administrators to be a slush fund is entirely unfounded. I personally see applications before they are given final approval and work is underway, because, historically, what we have done is set up the program, establish guidelines very specifically and then delegate responsibility to administrators in both levels of government to make project approvals.
The position I have taken in the most recent set of negotiations is that we have identified what amounts to ongoing obligations by government departments more clearly and exclude those from funding under the agreement. That is something we must ensure, if we can, under the EDA. We are still negotiating this as it is something we cannot unilaterally decide, but that is our position in the negotiations, that that should be the case.
Mrs. Firth: I would like to follow up with the Minister with respect to the particular issue of the EDA money going to government departments. I will use an example to emphasize the concern I have. In 1989-90, under the mineral resources, there was a total of $1,016,000 spent. I am using rough figures, because I have not tabulated them exactly. Of that, approximately $800,000 went to the Department of Indian Affairs and Northern Development and to the Government of Canada for surveys and stuff.
In the listing for 1990-91, the total amount that we had to spend has gone down to $982,000, yet the amount that went to the Department of Indian Affairs and Northern Development, and EMR Canada and the Government of the Yukon, was well in excess of $800,000. It would seem that the total amount of money we have is being reduced, yet the amount that government is applying for and getting is actually increasing. If it is supposed to be economic development incentives, I get concerned when I see about a dozen applications going to government, and only five going to the chamber and to private developers.
Has the Minister consulted with the industry? Do they feel that these kinds of programs should be funded and ongoing? Are they aware of the widening gap and the smaller amounts of money we seem to be faced with right now? Are they in agreement with that?
Hon. Mr. McDonald: I have had half a dozen meetings or so with the Yukon Chamber of Mines on this very subject. The Chamber of Mines is neither happy with it, nor are they prepared to oppose it for some fairly good reasons. There are fairly good reasons for them being kind of schizophrenic. Firstly, they would agree that the EDA ought to be for non-government proponents as a priority. They feel there are probably enough proponents to justify this expenditure level in the mineral resources subagreement.
At the same time, they recognize that DIAND activities are rapidly declining, and positions are not being filled on Range Road. A lot of the work they are proposing to do here is critically important to the future health of the industry.
So on one hand they do believe, and I share their sentiments entirely, that these projects should be primarily for private sector proponents. On the other hand, they feel that the work that is being done here is the highest priority work for DIAND in their mining division. My additional concern is this: I am not a believer that we should be cost sharing federal ongoing responsibilities before they evolve to the Government of the Yukon, even if it is only 30 percent. I do not believe, as important as these things are, that in the future rounds of negotiations we should have an agreement that funds the normal operating responsibilities of the Department of Indian and Northern Affairs. This is probably the one example of all the subagreements where I think we do cross the line of special project funding to ongoing responsibilities very clearly. Many of these things that are in both the 1989-90 and the 1990-91 subagreement are things that the Northern Affairs Program on Range Road has been doing for years and years, every year. Over the past few years, they have been doing them more and more through EDA funding because the powers that be have not been filling positions, not providing enough support to the mineral resources division of DIAND.
Consequently, this is one of the reasons that we have taken the position in negotiations that this ongoing responsibility should be more clearly defined. This should be excluded from funding in the future. I am not sure if I can carry that through to the final negotiations, because it may be that the federal negotiating authorities are going to take a very hard position that what is happening now should continue and that if we want an economic development agreement at all, we will have to allow this to continue to happen.
Mrs. Firth: We are talking about a lot of money. Is this just the Yukon governments 30 percent portion we are talking about? Does that mean there is another 70 percent added on to each of these projects from federal monies?
Hon. Mr. McDonald: No, this is the total amount and it includes the Yukon governments share.
Mrs. Firth: That is a relief. It is almost $1 million extra now.
Other than the problems he has with the federal government in negotiating the agreement, can the Minister tell us what kind of checks and balances he has. Is the funding all approved by the committee? Is there any consultation with industry done at that time? Do they have a representative on the committee? How is industry kept informed so that there is at least a minimal check and balance on what the funding is for?
Hon. Mr. McDonald: In the case of, for example, the Renewable Resources subagreement, there is a fairly thorough informal contact with the chamber and the subsections on the chamber: prospectors, mine operators and the KPA members.
With respect to all of these projects, however, there is no formal mechanism that encourages consultation on a particular project proposal. But I was impressed by the details the Chamber of Mines had on each one of these projects, knowing not only what the project was for and how much it was, but also who was doing it and at what stage the projects were, and so on. They had a good working knowledge of every dime that was spent, or so it seemed, and were in a good position to speak to this issue. I think that the consultation, as informal as it is, is very thorough.
Mrs. Firth: Could the Minister tell us what the status of the EDA is? Is there one that is carrying on, or is there a new one coming onstream? When will that announcement be made? Does the Minister have any idea how much it will be for?
Hon. Mr. McDonald: I do not know exactly how much it will be for. There appears to be a general acceptance at Treasury Board that there will be a long-term agreement in the neighbourhood of five years. The individual allotment per year has not been established. I am not aware of the total amount, but the details of the first year are being negotiated now and have been under negotiation for a long time.
I am hoping there will be an agreement in place for five years and announced as early as January, so it comes well before the end of the fiscal year and the beginning of the next year.
Mr. Lang: I am looking through these grants and various other allocations of dollars. I notice that a number of these items provided to us say they are administered by IS&TC. There is nowhere I can find out who IS&TC is. Could the Minister give us the name for these initials? As far as I can make out, it is a new government station.
Hon. Mr. McDonald: I believe it is Industry, Science and Technology Canada.
Mr. Lang: In this case, where it is a federal department, does that mean they manage YTGs portion of it, as well? I am referring to where it says CYTSA YTG-administered projects. I guess it is the EDA. The one before it is the SBI loans. I am sure this is meant to confuse people. I am confused about what these initials stand for what. It would be under the Canada/Yukon tourism subagreement. I was looking under repayable loans.
In some cases, organizations have received grants over and above this. Does this mean that, in one case, the federal department is administering the loan and, if there is a grant from another department, they administer the grant as well?
Hon. Mr. McDonald: I am having a bit of a hard time figuring out what the Member is referring to. The EDA itself is administered by YTG with the exception of the mineral resource subagreement. That is the only one that is administered by the federal government. That is why we vote 100 percent of the funding for the other subagreements, and we then show a recovery of 70 percent on the subagreements. The one we do not show a recovery on is the mineral resource subagreement, because the federal government votes that and we only expend our 30 percent.
I am looking at the same figures that I think you are looking at. I am looking at the economic development agreement.
I think we are looking at different things.
Mr. Lang: The top is CYTSA YTG-administered projects. And then it goes on and starts with applicant is Ballard Management. It is about a half page of print. I know we are in trouble when we get so many pages, with so much typewriting on them. It means that we are definitely, definitely making lots of monies available to whomever wants to apply for it.
Hon. Mr. McDonald: I do not want to answer off the top of my head but I will find an answer for that question. The coordination on all EDA projects is through joint management committee and whether one government or the other government administers the program, decisions are made by the same committee. I will have to get an answer for the Member with respect to the administrative arrangements and how the funds are administered.
Mr. Lang: I would appreciate it if he could have those for the main estimates for me.
The other question I have is: on all these various applicants and the allocation of dollars, is it okay if we just note those that we have some questions on and the Minister can give us copies of exactly what they are instead of us standing in the House and asking what each one is.
Hon. Mr. McDonald: If the Members want to note down any particular project they are interested in, I will attempt to provide the information.
Economic Development Agreement in the amount of an under expenditure of $1,125,000 agreed to
On Northern Oil & Gas Action Plan
Mr. Devries: I am not sure if it would be under this but the Kotaneelee gas field in the southeast Yukon owned by Columbia Gas is really doing a wonderful job of keeping me informed of their hiring policies. Does the Minister know if their wells are on line yet? I believe their target date was for around November 1.
Hon. Mr. McDonald: I understand that the Kotaneelee gas fields have been experiencing some difficulty in getting their gas fields on line. It is probably all the beer they are drinking - I am just kidding. The Kotaneelee is experiencing considerable difficulty getting on line but I understand they are still planning to produce. We have been encouraging them to speak with the people in Watson Lake ever since they expressed an interest in operating and to talk about the business opportunities and employment opportunities. The employment opportunities, I understand, are not extensive. I think there may be two or three positions in total for the whole field and only one would come from Watson Lake but there are other feeder communities in the area. Nevertheless, what value there is for the Watson Lake area, we have been encouraging them to provide.
Mr. Devries: Regarding the potential royalties that would be derived from this gas field once the northern gas accord and everything is resolved, does the Minister have any idea of what the potential revenue would be if the Yukon government ever acquired it? I also understand there is still an outstanding dispute on the Northwest Territories fields: that they also should get a portion of these royalties, since the gas wells are within hundreds of metres of the border.
Hon. Mr. McDonald: Certainly we would be taking over responsibility for oil and gas management, rights issuance and the ongoing management of the Kotaneelee fields. It is premature at this point to indicate what our revenues might be upon assuming that responsibility because those revenues would have to be negotiated yet with the federal government. The situation with respect to oil management issues and royalty rights issues and royalty collection issues are the stuff of the negotiations now.
In the interim, Canada Oil and Gas Lands Administration and the company proponent have been working very closely with us, anticipating the transfer, seeking our advice on a number of things including local benefits and keeping us apprised of the problems they are experiencing with their startup. I believe they are looking at a startup of February 1, but I think we should wait to see if they can manage the difficulties they are experiencing now before we move forward to that date.
Mr. Phillips: I have a couple of questions for the Minister. What is the position of the Yukon government on oil and gas development on the North Slope of the Yukon?
Hon. Mr. McDonald: We are not in favour of oil and gas development on the North Slope and have expressed that many times in this Legislature. We are in favour of development in the Beaufort Sea if it is environmentally sound and have been actively negotiating a Northern Accord as a result of that interest.
Mr. Phillips: How would the Minister get the oil and gas off the north coast of the Yukon if it were discovered there? I know there has been some talk on the hazards of tanker traffic. Is the Minister in favour of the Dempster lateral pipeline? Is that the idea? Or would there have to be another pipeline from the off shore leading into a main trunk line? How would we get the gas off of the north coast?
Hon. Mr. McDonald: The Member is asking a very technical question because whether tankers are used or an underwater pipeline is used to remove gas from the oil wells off the Yukon coast to a focal point on shore is something that will have to be tested. There is no experience in production in the Beaufort Sea with respect to that particular problem. It would certainly have to be transported some way, either by underwater pipelines that would not be subject to ice scouring, or by tanker. We have expressed a concern, in fact opposition, to tanker traffic out of the Beaufort Sea, but that is a different thing from transporting oil or gas from a well to the delivery point on shore.
With respect to the Dempster lateral pipeline proposal, we have indicated in the past that we would be prepared to consider that but only after environmental studies had indicated that it was a sound proposition. Those studies have not been undertaken.
Mr. Phillips: I think it is a reasonable question, because we are currently negotiating the northern oil and gas accord so we are anticipating some oil and gas discoveries in northern Yukon or we are at least hoping to be deriving some revenues from any oil and gas discoveries. I think it is reasonable to ask the Minister what options the government is considering for getting the oil and gas out of that fragile environment. Everyone is concerned about it and obviously the Yukon government has thought about it. I would just like to know the Ministers ideas on the recovering of any oil and gas discovered in northern Yukon and how we will be transporting it to market.
Hon. Mr. McDonald: Perhaps the Member could explain in more detail what he is looking for. I answered the question on oil and gas retrieval.
Mr. Phillips: I do not think the Minister did answer the question. He just gave us some wild scenarios or options. I would have thought the government might have done some work on it. What is the point in negotiating an oil and gas accord if we have no ideas about how we will get the oil and gas out of the Yukon.
It would be nice to know that we own it, but it will not do us much good if we cannot move it anywhere. I would have thought the government would at least have investigated some concrete options, such as tanker traffic, pipelines, even an underwater pipeline, as the Minister said, and what routes they think are best, that they would want to investigate - that is the kind of information I am looking for from the Minister.
Hon. Mr. McDonald: With all due respect, the Member is asking the wrong person. The Member actually should not be asking the front bench of the government for information like that at all.
The proponents are responsible for responding to technical challenges on the transportation of oil and gas. It is not for the government to study the various options at the cost of millions of dollars and then express its opinion on one proposal or another outside the context of real activity in the Beaufort Sea. All the technical work is traditionally done by industry proponents. The government reviews the technical work for its soundness through the environmental review processes.
I am aware of some of the options available for the transportation of gas from the Beaufort Sea, and I have named the options I consider to have the most credence. I am not in a position to favour one particular option over another option.
I have indicated that yes, if there is gas found in the Beaufort Sea, we do anticipate it will be transported out. It will have to be transported out through some sort of mechanism, whether it be a pipeline or a tanker. I am not aware of any other particular option but, if there are others that are cost-effective, I am certain they will come forward. With respect to what is better, I am not technically competent to tell the Member, and I do not think there is a human on this earth who is.
One of the problems experienced in Yukon waters is that there are deep waters outside the 12-mile limit, but there are fairly shallow waters inside and the land is subject to ice scouring, meaning the ice is frozen right to the bottom and it rubs along the bed of the ocean. If you were going to run a pipeline along the bed, you are going to have to dig a fairly deep trench and put the pipeline in the trench, or you are going to have to put a portable pipeline in that operates when there is no ice in the area, and remove it when there is potential for scouring.
The alternative is short-haul tanker traffic. We are very nervous about short-haul tanker traffic, or any tanker traffic, but any transportation option of oil and gas is going to be a fascinating technical challenge in an environment that is very sensitive and an area where there is, at the present time at least, very little in the way of clean-up capacity.
I cannot offer the Member any more information than that. I do not think it is the governments role to work out the technical challenges. I think it is the industrys role to work out the technical challenges and present them to the regulatory bodies and, at that time, we will assess their analysis to determine whether or not we feel comfortable with it as a government.
Mr. Phillips: There is industry in the North Slope already, and they are drilling and do have some wells that are capped up there. Do they already have a single option that they are considering more than others? What is that option? Is the government supportive of that option to get the oil and gas out of the North Slope?
Hon. Mr. McDonald: I am not aware of any single option that they do support. They have not expressed any position respecting transportation options on land, let alone offshore. We have received no approvals even to export gas at this stage. That decision is still pending. I have personally listened to a number of options being expressed by various proponents, both onshore and offshore.
We had the opportunity to question proponents on what their preliminary thoughts are and almost universally they indicate that a lot more technical work must be done, that they would never go before an environmental screening process, or even a normal regulatory process to seek approval for information they currently have. A lot of what they are going to do, especially offshore, will depend on more delineation drilling, more assessment of where the oil and gas fields are. That will determine, based on the depth of the water they are in right now and the environmental circumstances they are in, what kind of transportation options they will be investigating.
That is all that I know, and I cannot offer anything more than that.
Mr. Phillips: I will move onto a different topic but in the same area. It was reported in the media about a week or a week and one-half ago about some groups contemplating expanding the boundaries of the North Yukon Park further north. Has the government heard about that, and does it have a position on expanding those boundaries further north?
Hon. Mr. McDonald: The Inuvialuit Regional Corporation, in particular, has been advocating extension of the North Yukon Park. We have not been encouraging such a development for a number of reasons. We feel that the definition of the park at the present time is sufficient. I think the Minister for Renewable Resources is perhaps the best person to comment on the park boundaries. I am aware of the position of the Inuvialuit Regional Corporation, and I must draw a distinction between the Regional Corporation and the Game Council. From what I know of their position with respect to development at Stokes Point, we have not responded officially to any of their proposals.
Northern Oil & Gas Action Plan in the amount of $156,000 agreed to
On Economic Programs
On Community Development Fund
Hon. Mr. McDonald: These are entirely for revote funds associated with projects that were approved prior to the fiscal year for which the claims of the claimants were delayed.
Community Development Fund in the amount of $362,000 agreed to
On Business Development Fund
Hon. Mr. McDonald: This is entirely revote funds for the business development funds that were not claimed prior to the end of the fiscal year but for which there was a commitment made.
Mrs. Firth: I want to ask the Minister about the Community Development Fund. Can we go back to that?
Chair: Go ahead.
On Community Development Fund - continued
Mrs. Firth: I was looking through the lists for the community development fund. I notice there are some very large contributions. The total for the fund is $2 million. The Keno City community club was over $80,000. Could the Minister tell us what is happening with that? It seems like a lot of money.
Hon. Mr. McDonald: The community club was renovating the interior of the community hall, which was a centennial project in 1967.
The project entailed a redefinition of the office space, a kitchen area in the front, insulating the walls, improving the foundation, putting in insulation in the back walls of the stage area, interior siding and improving access to the furnace in the basement.
Mrs. Firth: Is that consistent with what other community clubs are doing? Is this request for between $50,000 and $150,000 standard to upgrade the community centres and just deemed capital projects for reconstruction?
Hon. Mr. McDonald: If we go back through a combination of CDF and LEOP, a number of community clubs have been retrofitted or fixed at varying expense. I can think of a whole series of community clubs, off the top of my head, that have experienced this kind of upgrade. Many of them were falling apart and needed repairs.
Although there are exceptions, the general program limit is around $100,000.
Mrs. Firth: When day care societies apply for money under the community development fund - for example, the Ross River Day Care Society is getting $40,000 - is that for capital construction, or is it allowed to be used for operation and maintenance? I raise it because they would also be eligible for day care assistance money from the Department of Health and Human Resources. I believe Health and Human Resources is a little more specific about what its money can be used for.
Hon. Mr. McDonald: The guidelines state that the proponent must account for their operation funding themselves, and not obligate the community development fund for any future project funding.
They have to demonstrate that they have the operation and maintenance funding in place, whether it be Indian Affairs because it is an Indian band project, or a project like the Keno City community club. For example, for the project the Member mentioned, they have to show they have ongoing funding for the project.
In the case of a new project that is starting up that would appear to obligate the Yukon government for operations funding, we seek clearance from the program department on whether they are in agreement with the project before we give approvals, if the proponent is anticipating receiving operation and maintenance funds from YTG that have not yet been committed.
Mrs. Firth: There is a day care on the list. I do not want to risk mispronouncing it, so I will spell it for the Minister. Could he tell us where that day care is? It is spelled T-R-I-N-K-E, second word Z-H-O day care.
Hon. Mr. McDonald: The Trinke Zho Day Care is in Dawson City and it was just opened up.
Mrs. Firth: They have $100,000 committed for capital and then, as the Minister has said, they have the ability to carry on with the operating and maintenance costs. Could the Minister tell me what the Gwichin Band Council is - there are four contributions here - and could he tell us what that money is for?
Hon. Mr. McDonald: That is the Old Crow band. One project is upgrading the ball field; one project is cleaning up and landscaping; one project is housing manager training, and; one project is the native training instructor at the college campus.
Mr. Lang: I just want to get it clarified. In applying for such financial assistance, did the Minister say that the applicants had to develop their application fully and that it reflect no further ongoing operation and maintenance cost to the government? Is that correct?
Hon. Mr. McDonald: There are no ongoing obligations to the community development fund. They have to show on the application that they have covered operation and maintenance funding. If they show that they want to obligate the Yukon government for operation and maintenance funding, we check with the department that is responsible for providing that funding as to whether or not they agree that they will be prepared to provide the funding. If they are not prepared to provide the funding, we give the proponent an opportunity to change their application and see if they can secure funding. If they cannot, then we do not agree with the project.
Mr. Lang: It was noted some time ago that there were $300,000 given to the Downtown Community Centre Association. Who made the commitment for the ongoing operation and maintenance, if such a facility is built?
Hon. Mr. McDonald: When the community association came forward, we indicated there would be seed funding available for a community centre facility downtown, and for any project that came forward, they would have to indicate that they would be able to handle the operation and maintenance funding.
The group that did come forward indicated that, through various cost recovery means, they would be capable of handling the funding and would not obligate the Yukon government for such funding.
Chair: The Committee of the Whole will have a short recess.
Community Development Fund in the amount of $362,000 agreed to
On Business Development Fund - continued
Mr. Phillips: Going through the projects in the business development fund, I have to ask just one question about one of these projects and that is the $7,834.72 to record wildlife sounds. It just seems to me to be a bit excessive and it is sort of like counting butterflies. It is one of those things that I would really be interested in hearing about from the Minister and finding out exactly what this project involves.
Hon. Mr. McDonald: I can only guess that someone took one of the Hansard tapes and has charged $7,000 for it. Could the Member identify the project proposal so I could look it up please? Could the Member identify the project component?
Mr. Phillips: It is contract number 4140-62 to Daniel Janke to record wildlife sounds for $7,834.72.
I have a couple of comments while the Minister is looking at it. It seems to me to be rather excessive. I do not know what kind of wildlife sounds they were recording but you can go to many many stores in the Yukon - tape stores or music stores - and you can buy tapes of the sounds of the loon or the sounds of the jungle or whatever you want. It just seems to me to be a bit repetitive unless we were looking for some strange, the wild life of the Yukon or the kiwi bird or something like this.
Hon. Mr. McDonald: I am going to have to get back to the Member on these accounts.
Mr. Phillips: There is one other contract I would like to ask the Minister a question about. It is contract number 4140-416, Dakwakada Development Corporation, predevelopment costs for a hotel complex for $75,000. Is that related to the proposal that was put together for the new hotel convention centre complex? Are there any other contracts in here related to that project? We were told very clearly by the Minister of Government Services that there was no more government money in this complex other than the agreement for the rental of the space.
Hon. Mr. Byblow: I would like to clarify the record, because I am sure the Member did not mean to be inaccurate. When I was asked the question at the Chamber of Commerce, because I think that is what he is referring to, I said that, to my knowledge, I was not aware of any other government funds; however, the organization, like any business, would be eligible for regular program funding. I believe that was, almost verbatim, the response I gave.
Mr. Phillips: I was at that same luncheon and I did hear the Minister say something similar to that, but I can assure the Minister that the question he was asked was: is there any other government funding involved in this project? The impression the Minister gave to the people in the audience was that there would not be any other funding. In fact he was so emphatic about no other funding forthcoming, and no other government funding involved, that the president of the Yukon Development Corporation had to write a big letter to the editor in the local newspapers to inform people that there was more funding. In the letter, he stated that people should be aware there was more funding.
I think an impression was left, and the Minister has to agree, that there was no other funding involved. What I am trying to determine is whether there was any other funding from this program, or any other economic development program that is related to the Dakwakada project, specifically the hotel/convention centre project. I wonder if the Minister can bring that information forward - any other funds involved in the Economic Development Department that have to do with the Dakwakada proposal.
Hon. Mr. McDonald: Funding for Dakwakada Development Corporation, through the Department of Economic Development, includes $27,000 under the Canada/Yukon economic program subagreement. There is $75,000 from the business development fund as an interest-bearing loan, and $50,000 is a non-repayable contribution from the business development fund.
Mr. Lang: I want to just follow up with the Minister on the issue of the Downtown Community Centre Association for $300,000.
Chair: Are we going back then to the community development fund?
Mr. Lang: I would appreciate it if I could ask this question. We did leave it hanging just before the break.
On Community Development Fund - continued
Mr. Lang: The Minister indicated there would be a cost recovery for any of the O&M costs. Could the Minister expound a little on that? Who will the money be coming from?
Hon. Mr. McDonald: The money will be coming from the users of the community centre. It would be cost recoverable, in that receipts from ticket sales and rentals of the centre would cover the costs of the operation and maintenance of the facility. That is the understanding under which we have provided funds. There will be no obligation, as we made clear in our letter of award, to the Yukon government for any O&M associated with the facility. It was on that basis that we provided the contribution.
Mr. Lang: What about on the capital side? I understand the $300,000 is strictly for a feasibility study. Is the government then looking at putting a substantial capital contribution toward that project?
Hon. Mr. McDonald: The contribution ends at $300,000 for capital and O&M. We have made that clear to the proponents as well.
Mr. Lang: There is no money then that is expected to be put toward this from the City of Whitehorse, either in capital or O&M?
Hon. Mr. McDonald: I cannot speak for the City of Whitehorse. The operation and maintenance obligations will depend on the size of the facility. The proponents are going to have to look for commitments from other sources if they want a project that is bigger than what we have provided funding for and if they feel they need operations funding beyond what they are intending to recover from ticket sales. It is my understanding that their position is that it is entirely self-supporting.
Mr. Lang: Is the Minister telling us that he is expecting them to be able to build the building within the scope of that $300,000 that has been awarded to them?
Hon. Mr. McDonald: Their aspirations are for a structure that is larger than $300,000 can provide. It would be up to them to seek funding for the balance of the project. We have advanced approximately $48,000 toward the delineation and determination of all elements of the project. Presumably, they will return for the balance of their funding, once they have their project put together.
In the letter of award, the governments total commitment is made very clear, and there is to be no obligation on the government for capital or operation and maintenance funding beyond $300,000.
Mr. Lang: Could the Minister tell us what the Help and Hope Society is, for $11,000? What is that project?
Hon. Mr. McDonald: I am not sure whether the Member for Watson Lake wants to speak in favour of this project or not. I am sure he knows as much as I do, if not more. It is a project to construct a facility for women in difficulty in Watson Lake: a safe home. It is also a drop-in centre, as well. There are other funding sources for total funding commitments: Health and Human Resources, plus local funding agencies in Watson Lake. I would have to look at the project proposal summary to get more details. I recall it is the minister in Watson Lake who is leading the project. It should be out to tender now. I can check on the details of the construction.
Mr. Lang: I have one more question with respect to the Young Yukon Society for $10,189. Can the Minister tell us what that is?
Hon. Mr. McDonald: This is a survey that is being done in cooperation with our statistics bureau to determine the needs of young people in Whitehorse. It will be conducted at the junior and senior high schools to determine the potential uses of a teen centre and what a teen centre might incorporate to actually encourage the young people to attend and enjoy themselves in an alcohol- and drug-free environment.
Community Development Fund in the amount of $362,000 agreed to
On Business Development Fund - continued
Business Development Fund in the amount of $417,000 agreed to
On Economic Development Agreement
Hon. Mr. McDonald: This is the balance of the economic development agreement for the department, and it includes the Renewable Resources subagreement, the tourism subagreement and the small business incentives subagreement. Let me just check to see if I can get the break-out here.
This represents $612,000 for Renewable Resources, $247,500 for the tourism subagreement, and $210,000 for the small business incentives subagreement. The difference between that and the voted amount would be revotes again.
Mr. Phillips: Just a comment on the economic development agreements: I would encourage the Minister to try to come to some kind of agreement with Ottawa as soon as possible because these one-year agreements and extensions are simply not doing the job. Although there are many programs being undertaken by the agreements, they are usually last-minute programs. People from the department are actually phoning people who have applied before, saying that they have to get in here and apply for this before March 31 because we have to use the money before March 31. We are carrying out some of the building programs in the middle of the winter when it is costing half again as much to do the program that normally could have been carried out in the summer if the planning was based over a longer period. It just does not lead to good planning at all by doing it once a year. In fact, it has not even been once a year that the agreements have been renewed. We usually find out in August or September that we have money for this following year and have to spend it by March 31. It has led to panic programming, and I do not think that has served the program very well. Some programs have come out of the agreements that have been very, very good. Possibly some of the failures in the programs are reflected in the fact that it has happened so fast with not a great deal of planning going into it.
Hon. Mr. McDonald: I agree with the Member entirely on this particular point. I have lamented the fact that we have not had an ongoing commitment over a number of years and have not been particularly happy about giving interim extensions even though, of course, an interim extension is far better than nothing at all. I am grateful to the federal government for at least that.
The case has been made very forcefully that we would like longer-term agreements, that we would like some of the issues resolved through negotiations, such as some of the ones we have identified this evening.
We want them rectified for the longer-term arrangement with the federal government. We also want all the subagreements to be reviewed. There was some concern until recently that there would not be a tourism subagreement in the future. We forcefully resisted the cancellation of that subagreement, I believe successfully.
There are a number of other issues that the Members have just now identified that have also been discussed between the officials of both governments. We are not convinced that the best planning takes place or even that the best projects come forward when there is almost no advanced notice and then a rush to spend funding. I believe that the best prepared and thought-out projects that have the most input from the private sector, and therefore a better chance for success, are those that are well planned. Consequently, we have been pushing every year to negotiate early in order not to have them drag on well into the next fiscal year and have the program approved late, as the Member mentioned.
For that reason, we have indicated in this long-term agreement, that we are amenable to considering lesser amounts in the initial year, the first year of the new agreement, and increased amounts in subsequent years to allow those projects that are best planned to have the greatest chance of success to receive funding.
In the past, the Member will remember that when funding lapsed in a particular year, that funding was not renewed. So, rather than having a situation where we are approving funding simply to extend the funding, it would be my preference that we would have lower amounts in the first year and then greater amounts in subsequent years. That is just a bargaining position at this point and I probably should not be discussing it too much. Nevertheless, it is a concern we have had and it is a position we have expressed to the federal government.
Economic Development Agreement in the amount of $1,755,000 agreed to
Economic Development: Mines and Small Business in the amount of $2,052,000 agreed to
Chair: Are there any questions on recoveries?
Hon. Mr. McDonald: Madam Chair, I move that you report progress on Bill No. 15.
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 a report from the Chair of Committee of the Whole?
Ms. Kassi: The Committee of the Whole has considered Bill No. 15 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 9:26 p.m.
The following Legislative Returns were tabled November 14, 1990:
Lawsuits actively being pursued by Department of Justice (M. Joe)
Oral, Hansard, p. 99
Employment status of employees occupying term positions being decentralized from Whitehorse to other communities (M. Joe)
Oral, Hansard, pp. 44 & 45
SEAL Program - Delinquency status of loans (McDonald)
Oral, Hansard, p. 182
Historic mileposts along Alaska Highway (Webster) (Response to Petition No. 2)
Oral, Hansard, p. 197
The following Document was filed November 14, 1990:
Lease Agreement dated May 24, 1990, between Yukon Development Corporation and Government of Yukon re Old Yukon College (Byblow)