Monday, April 5, 1993 - 1:30 p.m.
Speaker: I will now call the House to order. We will begin with Prayers.
Speaker: We will proceed with the Order Paper.
Condolences to family of Willie Porter
Ms. Joe: I rise today to express condolences to a former Member of this House, the Hon. Dave Porter, who lost a brother in a tragic car accident last week on the Stewart-Cassiar Highway. Daves brother, Willie Porter, was one of four people killed in the accident; four others were injured and required hospital care. This accident, with so many victims, has caused considerable horror and grief for family members, both in Yukon and northern British Columbia. The Yukon communities of Watson Lake, Upper Liard, Lower Post and the northern B.C. communities of Good Hope Lake and Dease Lake are in mourning. This accident came as a shock and, once again, we extend our condolences to the people and families in the communities affected by the tragedy.
Hon. Mr. Devries: I also offer my condolences and prayers to the families; we also pray for those who were hospitalized by this tragedy.
Mr. Abel: I, too, would like to offer my condolences to former Member of this House, David Porter, and his family and the other families affected by this tragedy.
Mr. Speaker: Introduction of visitors.
INTRODUCTION OF VISITORS
Hon. Mr. Phillips: It is my great pleasure today to introduce two members from a group of people who have recently done the Yukon very proud in international competition.
The concert band from the F. H. Collins Senior Secondary School has recently returned from the Pacific Basin Music Festival in Honolulu, Hawaii. It was one of only two bands representing Canada, among other groups from Australia, Singapore, Japan, New Zealand, Guam, California and Hawaii. The band received enthusiastic response whether in an outdoor shopping mall for the public, or on the festival stage for some very fussy adjudicators. I am told the band was so busy with clinics and workshops that the poor kids hardly had any time to spend on the beach.
As the Minister of Education, although I wanted to go with the band, due to the travel freeze I could not get that past my Cabinet colleagues. However, the band did an excellent job while in Hawaii.
At the end of the festival, the F.H. Collins Band received a silver standing from the judges, reflecting an exceedingly high standard of performance.
It is not only their musical achievements that deserve our recognition. The students raised almost $100,000 to get to the festival. In many cases they received support from their parents, but in other cases the students paid their share on their own, either from after-school jobs or by selling oranges and grapefruit door-to-door.
To represent the 42 excellent musicians from the F. H. Collins Concert Band, I would like to introduce the six students who were chosen to play in the festivals select, or honour band: Keren Estabrooks, flute; Andrea Hureau, alto saxophone; Anna Seipp, trumpet; Jenny Snell, trombone; Lisa Turner, trombone; and Jamie Ayers, tuba.
Their conductor is Ross Peterson, who is with us in the gallery today. Mr. Peterson has been the music director at F.H. Collins for three years, since coming from Porter Creek Junior Secondary.
The other person that I must introduce you to is Bertha Ayers, president of the Band Parents Association, without whose support and volunteer time, these students would never have went to the festival. Bertha was also the Parent Association president at Porter Creek, and Ross says she has been his right arm in fund-raising and support for years.
Of the 42 students who went to Honolulu, 21 are in grade 10 this year, so we can continue to expect great things from this group in future.
I would like to ask the Members of this House to join me in congratulating everyone associated with the F.H. Collins School Band for a job superbly done at the Pacific Basin Music Festival.
TABLING RETURNS AND DOCUMENTS
Speaker: Under Tabling Returns and Documents I have for tabling the report of the Chief Electoral Officer of the Yukon on contributions to political parties during 1992.
Are there any further Returns or Documents for tabling?
Reports of Committees.
Petition No. 3 - Received
Clerk: Mr. Speaker and hon. Members of the Assembly, I have had the honour to review a petition, being Petition No. 3, of the First Session of the Twenty-eighth Legislative Assembly, as presented by the Leader of the Official Opposition on April 1, 1993.
This petition meets the requirements as to form of the Standing Orders of the Yukon Legislative Assembly.
Speaker: Petition No. 3, accordingly, is deemed to be read and received.
Are there any Introduction of Bills?
Notices of Motion for the Production of Papers.
Notices of Motion.
Are there any Statements by Ministers?
Initiatives of Yukon government regarding assistance to citizens of Faro and Watson Lake during shutdown of Curragh Inc.
Hon. Mr. Ostashek: This morning, in Toronto, Curragh Inc. filed an application seeking protection from creditors under the Companies Creditors Arrangement Act. During this interim period, Curragh will work with the Bank of Nova Scotia to restructure its financial affairs.
Curragh believes its assets base, including extensive mineral reserves, is solid and given time to identify and implement a restructure will return to financial health. Curragh will continue to seek an equity infusion and pursue selling their Stronsay holdings.
Negotiations between Curragh Inc. and the Government of the Yukon on financing the stripping of the Grum deposit will continue. Given this latest development, a senior official from the Department of Finance is going to Toronto today to participate in these on-going discussions with Curragh. These negotiations are a priority for this government.
I will stress that there is nothing the Yukon government can do to reverse the mine closures. These closures are not related to the loan guarantee talks.
As I said earlier, this latest shutdown is due to low metal prices; in fact, they are the lowest metal prices in many years. We hope that metal prices will rebound enough so that the mines will reopen. However, the Yukon government does not have enough money to subsidize the day-to-day operations of Curragh Inc.
Our first priority is to assist the people of Faro and Watson Lake during this period. For Faro, in particular, the government is starting several initiatives:
There will be a task force consisting of six different departments and led by the Departments of Economic Development and Finance, which has established a contingency plan.
A Faro information line for inquiries about assistance has been established and is now operational.
The activities of the contingency plan are being coordinated through a Faro desk in Economic Development.
The Department of Economic Development is looking at possible projects that could be funded under economic programs. This has been a top priority of our business and community development officer.
In conjunction with Canada Employment an Industrial Adjustment Service will be established within a week. The IAS will provide financial incentives to businesses, organizations, communities and sector groups to help employers and workers meet the challenges in adjusting to industrial change. The Yukon government and Canada Employment are working together to clarify the application of UIC rules related to several specific problems identified by individuals and groups in Faro - for example, payment of tuition and relocation limits.
Upon the request of YTG, the EIC is sending two staff to Faro today. The Department of Health and Social Services regional services has been given authorization to provide additional services.
Three staff from the Department of Education are in Faro this week to assist with upgrading, career counselling and to help coordinate services provided by that department.
All goverment services, including the school, will continue to operate as normal.
The Yukon government is committed to assisting Curragh Inc. and the residents of Faro through this difficult time. I stress that negotiations on loan guarantees with Curragh Inc. are ongoing and continue to be a priority for this government because we want to see these mines reopened.
Mr. Penikett: I thank the government for the one minutes notice we had on the content of this ministerial statement. To state the obvious, most of this ministerial statement is not a ministerial statement of new policy at all, but a reiteration of things that we have heard in the news, such as that Curragh is seeking a chapter 11 type protection from the courts this morning, and that Curragh is trying to sell Stronsay and restore the company to financial health.
We did not need the ministerial statement to tell us all that. What is astonishing is the ministerial statement, which arrives just before we come to the House, says that a senior official from the Department of Finance is going to Toronto to participate in these ongoing negotiations today, something that should have happened a long, long time ago.
The point is, it does not matter how competent, or how capable the people from Burns Fry are, they are, first, Torontonians, not Yukoners, and secondly, no matter how professional they are, they do not care about the Yukon the same way as Yukoners do. They are not people whose lives depend on this mine being open. They will be paid whether the negotiations succeed, or fail. We should have had negotiators at that table from the beginning. In fact, I think we should have had the negotiations here. The fact that the government began the negotiations late, by adopting a late mandate, the fact that they had non-negotiable conditions, the fact that the whole governments approach has compromised Curraghs ability to obtain money from the markets, and the failure of the Government Leader and the Cabinet to directly involve themselves in these negotiations to bring them to a quick conclusion, for the sake of the whole territory, is an absolute disaster.
The Government Leader talks in his statement about how we hope metal prices will rebound. I understand that there was some indication of movement this morning, with 50-cent zinc.
The rest of the statement goes on about the provisions that are being made by various departments and agencies to help the people of Faro and Watson Lake - the employees of the Faro mine and Sa Dena Hes. Essentially, it is a doomsday scenario, which assumes that the mine is going to shut down and stay shut for a long time. We did not need to wait until today to hear this statement about these initiatives. We know that many of these steps have been in the works for some time.
The very fact that the government concentrates so much of the statement today about contingencies for an eventual shutdown, rather than committing Cabinet time and energy, much less senior officials, to the actual negotiations of getting to the table, is very disappointing. I am sure the Government Leader will come to realize that, whether it is land claims negotiations, negotiations to open a mine, or any other major negotiation, unless and until the leaders of the government become directly and personally involved, they are not likely to get a successful solution.
I am very disappointed in the ministerial statement today, coming, as it does, on a day when we have had the news of Curragh seeking bankruptcy protection, following the news of Friday, where the company announced extended shutdowns of the mines in Watson Lake and Faro.
Hon. Mr. Ostashek: The Leader of the Official Opposition says he is very concerned. It does not appear to me that he is at all concerned, when he is still prepared to play politics with a very serious issue.
We are very serious about this, and we have been very serious about it. Negotiations have been ongoing. We have been in touch, more than once a day - probably on the hour - with our negotiators in Toronto, as negotiations have been ongoing.
The reason for the senior official going down there now is because it is in front of the courts, and the situation of negotiations has changed dramatically in that scenario. Burns Fry are very competent in these types of negotiations. They do them every day. They are far more competent than anyone we have employed in our government. The political people would have taken over when they had gotten the base work done and were closer to some agreement.
The Member went on at great lengths about a doomsday scenario and what we are doing for the people of Faro. I could just hear the furor from that side of the House if we had not even mentioned it, of if we had had no plans. We have been accused of that all winter. I say to the Member opposite, let us get down to the seriousness of the situation and quit playing politics with it.
Speaker: This then brings us to the Question Period.
Question re: Curragh Inc., financial assistance
Mr. Penikett: I want to get down to the seriousness of this situation, which the Government Leader has been dithering with for months and about which we have been told we can have no reports on the negotiations.
Let me ask the Government Leader now, since he has been negotiating through a third party, a Toronto-based company rather than Yukoners - people who care about what happens here - does he not think it is now time for him to get personally involved, directly, in negotiations with Clifford Frame and the other players in order to bring a resolution to this situation, which is affecting the economy of the entire Yukon Territory?
Hon. Mr. Ostashek: If the Member opposite will get on with discussing the supplementaries and get them out of the road so that we could get this House adjourned, I would certainly do that.
The negotiations are ongoing. The legal people are working in the courts; it is not the place for a politician to be involved right now.
Burns Fry is working on instructions from us on a daily basis.
Mr. Penikett: If the Government Leader wants to go to Toronto to take part in these negotiations, I am prepared to say I will pair with him right now. But, more to the point, if he brought the negotiations here, he would not have to have a pair. It is absurd that the fate of the Yukon economy is being negotiated in Toronto.
I would like to ask the Government Leader: does he not agree that given the urgency now facing us, arising from Fridays announcement of extended shutdowns and todays announcement about application to the court for bankruptcy protection, it is now time, instead of working bankers hours on the negotiations, to instruct our negotiators to work around the clock until we get a resolution on this question?
Hon. Mr. Ostashek: I do not know where the Member opposite is getting his information. I was just on an hour- or hour-and-15-minute-long phone call with our people in Toronto this morning. They have negotiated through the entire weekend.
This matter is in front of the courts now. It will be dealt with accordingly. We have a senior official from Finance there to deal directly with Burns Fry and who can get back to us as quickly as possible on any major issues that arise.
Mr. Penikett: This has been a crisis since the end of the year. In a crisis, whether it is the land claims negotiations or labour negotiations, we should have been at the table negotiating around the clock the whole time.
Let me ask the Government Leader if he does not think that we would be better off at this stage, given what is at stake, to move the negotiations here to the Yukon Territory where people can get some idea of what is going on and give our negotiators, the Burns Fry people, some appreciation of what is at stake for our economy.
Hon. Mr. Ostashek: The Member opposite is trying to say that the crisis has been ongoing this winter. I would suggest to him that it has been ongoing for about a year, when the negotiations were in front of this House for a $5 million loan guarantee. He would not deal with the much bigger issue of seeing that the company could survive in the long term, but did a patchwork job on it.
There is no need to move the negotiations to Whitehorse at this point. I say again for the benefit of this House and all Yukoners that the negotiations are for the stripping of the Grum deposit, not to put the Faro mine back to work before the financial issues of the company are resolved. We have always said that there are two problems here, not one.
Question re: Curragh Inc., financial assistance
Mr. Penikett: I think the Government Leader is going to have to understand that it is time for him to start taking responsibility for things and not blame other people.
Does he not agree that the fact this matter of a loan guarantee by the Yukon government is not resolved has had serious negative effects on the ability of this company to raise money on the markets and to position itself for the recovery we all want?
Hon. Mr. Ostashek: Nothing could be further from the truth. This government made a serious commitment one month ago to get involved with the Grum stripping. That should have sent a positive signal to the financial markets around the world. This government was prepared to commit $34 million to this operation - an additional $29 million to the $5 million already advanced. The fact that the money was not being put in the ground immediately should not have had a negative impact on Curragh raising additional funding. The commitment was there.
Mr. Penikett: I am glad that the Government Leader is now admitting that he did not really do anything of consequence until one month ago. More needs to be done.
Given that the Government Leaders first condition, as reported from his speech in Watson Lake was not negotiable, and given that the Government Leader, in public statements, has talked about the dire consequences facing this mine and operations in Watson Lake, will the Government Leader not agree that the conditions he has set and the lateness of his coming to the table - plus the fact that we have failed to have Yukoners representing us at the table - has in fact added to the problems that the company is now facing?
Hon. Mr. Ostashek: I could not disagree more with what the Leader of the Official Opposition has just said. I would suggest to the Member opposite that if he would have had some better, professional people negotiating the $5 million loan guarantee, we would not now have an unsecured $5 million loan.
Mr. Penikett: Of course, the loan that was made last year is not unsecured. As the Government Leader has chosen to put together an inter-departmental committee to preside over the shut-down of Faro, I ask him: did he consider using the model that the NDP government used in 1985, which is an inter-departmental committee of Yukoners, to negotiate the opening of the mine, and in this case now, in 1993, the reopening of the mine?
Hon. Mr. Ostashek: We have all of the negotiators in place that we need for the reopening of the mine. We have contacted and consulted with many professional people to put this arrangement together. We have been negotiating with the company all winter. The company was adamant that they could survive and deal with their financial crises without having to seek the protection of the courts.
As far as the government being involved in the Grum stripping - as sad as it is that the company is under CCAA now, it may lift a burden off the negotiations and enable Yukoners to obtain adequate security, to permit the company to begin to strip the Grum deposit as soon as possible.
Question re: Infrastructure funding from the federal government
Mr. Cable: I have a question for the Government Leader that may be more topical, now that a major corporation appears to be insolvent.
The government made a claim to have negotiated $10 million for infrastructure from Mr. Mazankowski. Can the Government Leader tell us what the status of this commitment is?
Hon. Mr. Ostashek: Officials met in Ottawa, I believe a week ago Friday, and exchanged letters. My understanding is that it is coming forward and I am hoping that Mr. Siddon will be making an announcement when he is in Whitehorse on April 16.
Mr. Cable: It appears that there is, in fact, something in writing on this. Is the government in a position to table the exchange of correspondence so that all Members can be brought up to date?
Hon. Mr. Ostashek: I have no problem bringing the Members up to date. I am not exactly sure what we could table at this point, but I will look into it.
Mr. Cable: Since it would appear that these additional funds are not in the budget, can the Government Leader inform this House as to how he anticipates the $10 million will be spent?
Hon. Mr. Ostashek: The reason they are not in the budget is because they came out of a federal economic statement. I do not believe there will be a direct transfer to us, but we have had major input on how the monies will be spent. It appears the government wants to spend the money on highway upgrading in various areas in the Yukon. It is my understanding that the money will be dispersed through the federal budget once the programs are identified and agreed to by them.
Question re: Curragh Inc., financial assistance
Mr. Harding: I have a question for the Minister of Economic Development. The Minister of Economic Development has said in the Legislature that the blackout regarding the Curragh conditions is to protect the equity offering that Curragh currently has on the market. I would like to ask the Minister: specifically, how would a favourable progress report on the negotiations and a detailed discussion of what conditions have been taken off the table hurt the equity offering, unless it is a negative statement?
Hon. Mr. Ostashek: The blackout is like any other blackout during ongoing negotiations. There are discussions that go back and forth that, if not taken in their proper context, could be detrimental to negotiations. As soon as we have something to report, I can assure the Member opposite that we will be making a statement in the Legislature.
Mr. Harding: The Government Leader did not answer my question. What I would like to know specifically is: how would a favourable progress report on the negotiations, and an understanding given to this House and the people of the Yukon on this critical matter, unless they were negative comments, hurt the equity offering, which is crying for some positive news?
Hon. Mr. Ostashek: The Member opposite is asking for positive news. We gave positive news a month ago when we said we were prepared to loan the company $29 million. We gave positive news then. That should have given some financial assurance to the financial markets that we were prepared to get involved. I do not know what more the Member wants. We have made several announcements - both ourselves and the Curragh officials - that the negotiations were proceeding. No negative information came from us or from Curragh.
Mr. Harding: They opened the door on March 4 with the conditions, and they slammed it tight and boarded it up on March 10 with the unprecedented 14 conditions on the loan guarantee, which were scoffed at by investors in the industry; that is the problem. The offer was contingent on too many tough conditions that cannot be met. That is why the progress report is so important.
Today in the news on the CBC, as well as in the ministerial statement, the Government Leader said that the mine closures are not related to loan-guarantee talks. How can the Government Leader claim that the loan-guarantee discussions are not related directly to the ability of Curragh to raise equity and working capital on the world markets, as well as sell Stronsay? Investors are waiting, following the news today, to buy Stronsay for a nickel.
Hon. Mr. Ostashek: The Member opposite seems to think that Curragh is the only lead-zinc producer in the world that is having difficulties today. Let us look at the reality of the situation. Mine after mine after mine has had to curtail production because of low zinc prices.
The Member opposite was in Juneau with us when the Green Creek mine shut down because of low metal prices. We have always stated that we will get involved in the stripping of the Grum deposit, but we could not and do not have the ability or the financial resources to get involved in the cashflow problems of the company.
Question re: Curragh Inc., financial assistance
Mr. Harding: I am fully aware that zinc mines throughout the world are in trouble, but this is the only show in town for our private sector economy, and that makes it all the more important. Some zinc producers are going to need a lot of help to get through these tough periods.
What I have to say to the Government Leader is that there is no way for the company to sell that equity offering and sell the Stronsay project without some positive news on the loan guarantee talks. Will the Government Leader give the House, today, a detailed progress report on what is going on in the discussions?
Hon. Mr. Ostashek: If the Member would have asked that question first, I would have answered it first. It is in front of the courts. That is where the negotiations are now. Until this is settled under the Companies Creditors Arrangement Act, we will be dealing with it in that forum.
Mr. Harding: Now that they have filed for creditor protection, is the Government Leader telling this House that he has no ability to tell the elected representatives, who sit in this House, and the Yukon people what is happening with regard to the conditions and the progress that is being made? Curragh Inc. needs a positive signal on this loan guarantee situation if they are going to attract investors.
Hon. Mr. Ostashek: We are not only in touch with Burns Fry, but we are also in touch with Curragh on a daily basis. They are fully aware of what our position is. Negotiations are ongoing. When we have something to report to this House, I will make certain it comes here immediately.
Mr. Harding: I would say that the news we got on Friday, and the news we got today, are important to this House. Every Yukoner has a right to be concerned about what is happening.
What are we getting from the government? Absolutely nothing but rhetoric. There is a contingency plan, but the emphasis should be placed on getting people back to work. Will the Government Leader tell us if they are really committed, given that they dawdled for months on this question, placed impossible conditions on Curragh, and had nobody at the negotiating table until they made this announcement today? Why are they not making this a priority, because it is going to affect all Yukoners?
Hon. Mr. Ostashek: I am a little bewildered - the Member opposite has made many statements in the House about somebody misleading the public, but he just went through a whole bunch of rhetoric that misleads the public.
We have negotiators. They are negotiating. We are committed to Faro. We are committed to stripping the Grum deposit. What more does the Member want?
Question re: Curragh Inc., financial assistance
Mr. McDonald: I also have a question for the Government Leader about Curraghs operations in Faro and Watson Lake. I would like to begin by saying that it appears that the government has accommodated a possible shutdown with more determination and confidence in the contingency plan than they are putting into the reopening exercise.
We have heard, from the economic development Minister, that there was a contingency plan when the Government Leader and the Minister of Economic Development were in Faro in January or February. I would like to know when the contingency plan was developed and whether or not it is written down - whether or not there is anything beyond the ministerial statement of which we should be aware?
Hon. Mr. Ostashek: The question may have been better addressed to the Minister of Economic Development. I am certain things are being written down. We worked on the development of the plan in January and February this year, and it has been continually updated to meet the changes in times as things went on. As different things became a concern, the departments kept updating the plan almost on a daily basis, so I am sure there is something written down.
Mr. McDonald: I will ask the question of the Minister of Economic Development as I am certain there should be something written down, as well. The plan itself is a fairly conventional plan but it makes a great deal of two things: first of all, a Faro desk and also the fact that the local regional community development officer is going to give Faro a high priority.
Can the Minister indicate what this Faro desk is and who staffs the desk? Secondly, is the community development officer in Ross River the lead agent in the governments efforts to reopen or to provide for some economic diversification in the area?
Hon. Mr. Devries: We have sent additional personnel from the Department of Economic Development in Whitehorse to assist in staffing the desk. Likewise, in Watson Lake the existing economic development officer and various agencies within the community have been working together, coordinating activities there. So, the majority of the people in Faro have been sent there from Whitehorse; in Watson Lake, we have been mainly using the existing people we have available there.
Mr. McDonald: I am not quite sure what to make of the answer. It appears that the Faro desk is going to be established in Faro. Is that correct? Will the Faro desk be staffed by senior people from the Department of Economic Development or by the people already staffing those offices in the communities?
Hon. Mr. Devries: The Member is partly right. We have an 1-800 number that people can reach in Whitehorse. These people work in conjunction with the Faro desk in addressing various problems regarding UIC and make-work projects that are available.
Question re: Faro, economic diversification
Mr. McDonald: I am not too impressed by the 1-800 number for Faro residents to get in touch with people in Whitehorse to ask about potential make-work projects.
What I would like to ask about is not make-work projects but about a full chance for economic diversification for the Town of Faro. I would like to ask whether or not the Minister has charged his department with the responsibility, in conjunction with the Town of Faro and the Faro Chamber of Commerce, of developing a plan for economic diversification that will give the town some hope. That way, even in the terrible and unlikely event that the Faro mine goes down, there will still be some economic life so that the town can carry on.
Hon. Mr. Devries: Yes, there are various projects, but, again, it all depends on what happens with the mine in the short term. There are some short term make-work projects. In the long term, there is some consideration of work on the Campbell Highway. The Grew Creek project is one of the possibilities and the Chateau Jomini has been mentioned, but, again, it all depends on the long-term viability of the community. Right now, we feel that we do not want to jump into something with both feet. We are trying to address it from an approach of trying to get as many people as possible to work on short-term projects and, if the shutdown looks like it is going to continue, we will go into the next stage of the long-term projects.
Mr. McDonald: I am trying to encourage the Minister to think about promoting the long-term viability of the mine and town instead of just waiting for everything to collapse before responding.
The Minister has indicated that he is not going to be pursuing a number of projects until such time as there is a greater certainty about the mining company in Faro. At the same time, the government issues a press release today that basically plans for the shutdown of the mine and the relocation of people should there be no work. What I would like to know is what the government is specifically doing, through projects like Chateau Jomini - which they cancelled - and other projects that may encourage more economic activity in Faro, so that the people in that town can plan a life in the community and worry less about their long-term futures.
Hon. Mr. Devries: The past government did very little to diversify the economy of Faro. If we look at the contingency plan, there is the stripping of the Grum that can be considered. First we have to make sure that we can do it in such a way that we have some assurances that there is security for money that gets put into Grum stripping; for example, first hold on the Grum property. There is some of the environmental work that can be done to the tailings pond.
Mr. McDonald: The obvious point to make here is that the NDP government was not presiding over the collapse of the Faro mine and was instead doing everything it could to keep the mine open, ensuring that there were jobs for the people of Faro, Watson Lake and Whitehorse.
The question I would like to ask is: given the fact that the government has already taken one opportunity it had, and let it slip through its fingers, particularly with respect to Chateau Jomini - I believe that particular project has been handed to Government Services or Economic Development - can the Minister indicate whether or not they are interested in pursuing the decentralization that was associated with that project, ensuring that more thorough federal government services were going to be provided to that community and ultimately a little more economic activity, that the community craves at this point?
Hon. Mr. Devries: During the last few weeks there have been ongoing discussion with the communities and we have asked them what projects they would like. We have put suggestions to them and we are asking the people within the community to provide recommendations back to us. We are not going to force something on them that they do not want. By the same token, we are open to anything they come forward with. There are several projects that they have indicated an interest in.
Question re: Communications advisor
Mrs. Firth: My question is for the Government Leader. It has come to my attention that the Government Leaders communications advisor, who is now on staff with this government, is being paid in the base salary range of $72,000 to $93,700. The previous NDP governments communications advisor was paid in the salary range of $57,000 to $74,600. This was the person whom the previous Members had touted as the John Trump of the North. Why should the Government Leaders communications advisor be paid a salary in a range almost $20,000 more than the previous governments?
Hon. Mr. Ostashek: Perhaps I should indicate to the Member opposite how the salary ranges were developed for employees. All employees submitted resumes. The resumes were given to the Public Service Commission and I asked them to make recommendations as to what the salary range should be.
Mrs. Firth: This is absolutely scandalous. These Members criticized the NDP government for the overpayment of their communications advisor and now they have one who is costing us $20,000 more a year - after all the talk, during the election campaign, about lower salaries. I would like to know why this person is $20,000 a year more valuable than the previous communications advisor.
Hon. Mr. Ostashek: I just pointed out why to the Member opposite.
It was based on recommendations from PSC as to the qualifications of people who were hired. We have reduced the overall cost of the office by 15 percent.
Mrs. Firth: They certainly can claim that they are getting value for their dollar.
I want an explanation from the Government Leader, not the Public Service Commission, why this person is worth $20,000 more than the previous communications advisor.
Hon. Mr. Ostashek: I just gave the Member opposite the reason why. The effectiveness of the people we have in our office has reduced the number of people we need in the office, and we have reduced the cost of the office by 15 percent overall, in excess of $1 million.
Question re: Fees, permits and licences
Ms. Joe: In our budget for this year, we are looking at proposed raises in taxes. Once again, we hear they may have added something else to that. We hear that they are now going to be raising the fees for permits and licences, and not just in one area, but right across the board. I remember the uproar from that side of the House, when they were over here, when we proposed to raise the fishing licences.
Could the Minister of Finance tell us, because it is such a very important part of the budget, why that was not mentioned in the budget speech to this House?
Hon. Mr. Ostashek: I do not know that it is such a big part of the budget. I am not sure how much capital will be raised by it.
Once we get into the line-by-line debate on the budget, the different Ministers would be better equipped to answer questions on increases in their own departments than I am.
Ms. Joe: This is absolutely scandalous, as was mentioned by another speaker in this House. When we were in government, we proposed to raise the fishing licences. They said it was akin to raising taxes, or even worse. Now, they have decided they are going to raise the fees for permits and licences right across the board.
Did Cabinet make this decision, or was it just something that was dreamed up by the Government Leader?
Hon. Mr. Ostashek: When we get the supplementaries out of the road and get into budget debate, we can answer all these questions. I believe the increase in fees is not coming in until next year.
Ms. Joe: It appears that the Minister of Finance does not know exactly what his government is doing, with regard to raising taxes or licence fees.
Since this increase is going to cost Yukoners more money - as is their proposed tax increases - I would like to know whether or not he has had any consultations with the general public, or did he only consult with party supporters?
Hon. Mr. Ostashek: As I said to the Member, once we get into the budget debate, she will have the opportunity to ask all kinds of questions that will be adequately explained to her.
Question re: Curragh Inc., court application
Mr. Cable: I assume the Government Leader has had an opportunity to be briefed on the court application, by either reviewing the documents or having the contents related to him.
Has the Government Leader reached a conclusion as to whether the nature of the insolvency of Curragh relates to their liabilities exceeding their assets, or whether they cannot meet their debts as they are coming due?
Hon. Mr. Ostashek: I have certainly been briefed on the documents, in a general way, as to what is proceeding before the court today. Once the filings are made under the CCAA, we will be able to see exactly what the problem is - whether it is too great a debt load or whether it is a cash-flow problem.
Mr. Cable: I would think that would be very germane to the nature of the negotiations that are ongoing through Burns Fry.
Has the Government Leader been able to determine from the court documents the amount of money owed to Yukon creditors?
Hon. Mr. Ostashek: We have not seen all of the court documents yet, but we have instructed our officials to do everything they can to protect the creditors in the Yukon.
Mr. Cable: Both the Government Leader, in his ministerial statement, and the Minister of Economic Development have referred to a contingency plan. Is the government in a position to table that contingency plan, so that the rest of the Members can review the plan?
Hon. Mr. Devries: Yes, I will table the plan tomorrow.
Question re: Property taxes, rural
Ms. Moorcroft: I have a question for the Minister of Community and Transportation Services regarding property taxes for rural Yukoners. During the past weekend, the Association of Yukon Communities passed a resolution entitled, Tax Compensation for Municipalities, which was sponsored by the City of Whitehorse.
This is the city councils blatant tax grab that I questioned the Minister about last week. As the resolution calls on the Yukon government to participate in a committee to review what the city calls, cost-sharing agreements between communities, can the Minister state if he is aware of the resolution and whether or not the Yukon government will participate in this committee?
Hon. Mr. Fisher: I have not seen the actual resolution, but yes, we would certainly be involved in the committee that has a look at it.
Ms. Moorcroft: Last week, the Minister stated that the property tax rates for people outside the city have not yet been set for 1993. Will the Minister, when he sets this rate, ensure that this pressure from the City of Whitehorse is having no effect on his decision?
Hon. Mr. Fisher: Just to correct the Member opposite, it is actually Cabinet that sets the tax rate. In fact, this move by the Association of Yukon Communities, and/or the City of Whitehorse, will not affect that decision.
Ms. Moorcroft: Given the large tax increases in the budget on gasoline, and the tax increases on personal and corporate income, will the Minister do the right thing and stand in his place at this time and assure the taxpayers of rural Yukon that there will be no property tax increase on their properties in 1993?
Hon. Mr. Fisher: I noticed a brochure that came out by the Members opposite saying that the cigarette tax was going up two cents a litre.
Speaker: I remind the Minister that the answer should be relevant to the question and as brief as possible.
Hon. Mr. Fisher: I have forgotten the question. Again, I cannot speak on behalf of all of Cabinet, but it will be going to Cabinet very soon.
Question re: Agricultural policy
Ms. Moorcroft: If the Minister is going to forget the question, then maybe I will try a different Minister. In view of the debate at the Yukon Party convention this weekend on subdividing agricultural land for resale, could the Minister tell this House if the Yukon agricultural policy is under review?
Hon. Mr. Brewster: I must be the unknown Minister because I never even heard my name mentioned and that hurts me very much. I will try and answer. No, it is not under review. We simply suggested that we wanted to be very careful that we do not get all our agricultural land subdivided so that we do not have any agricultural land left.
Ms. Moorcroft: To clarify, does he support the existing agricultural policy, including section 253, which states that lands disposed for agricultural purposes will not be subdivided? Does the Minister support this policy?
Hon. Mr. Brewster: Yes.
Ms. Moorcroft: From the news reports, it seemed evident that Yukon Party supporters agree that agricultural land should be available for subdividing and resale. Given the pressure the government must be under from the party faithful and that the government often consults with party members on its policy decisions, will the Minister guarantee that designated agricultural land will be used for that purpose only?
Hon. Mr. Brewster: If she is listening to the news media and their really accurate reports, then she must have got one.
Question re: Education review
Mrs. Firth: I have a question for the Minister of Education regarding his education review.
The mandate the Minister has now made public refers, on its first page, to dealing with children with special needs, at least three times. When the Minister listed who was going to be appointed to the steering committee, there was a glaring absence of anyone to represent the association or children with special needs. I would like to ask the Minister if he will reconsider and put on that steering committee someone who could represent the association and the children with special needs.
Hon. Mr. Phillips: I will consider that request from the Member for Riverdale South. I should remind the Member that the education review committee is to look at curriculum and mainstreaming as well, so the makeup of the board must be fairly broad. There are 23 or so different groups who could have insisted on participating on that review committee and that would make it rather cumbersome. I would fully welcome and expect all groups and persons with special needs to make presentations to the review committee when it makes its tour around the Yukon in the fall, and I would expect they would make strong representation about their concerns in each and every community.
Mrs. Firth: Had the Minister not brought it to everyones attention in his mandate by listing that the department would be dealing with children with special needs and what to do with them in the classroom, it may not have been a necessity to put someone on the committee; they could have just received submissions from them.
I would like to ask the Minister if he will tell us when he is going to consider this, and could he give us a statement or report back to the House this week and tell us whether or not there will be a person on that committee to represent those special people?
Hon. Mr. Phillips: I do not know if I can get back to the Member this week, but I will give it consideration. There are two groups that would want to sit on this committee: one group that feels mainstreaming is a necessity and one that feels that very few of the children should be mainstreamed. I am not looking at increasing the board by one; I am looking at increasing it by two, three or possibly four, as other groups all want to be involved in the review.
What the Member is suggesting is that possibly we have 22 or 23 people on the review committee. It would be rather cumbersome and would curtail its effect.
Speaker: The time for Question Period has now elapsed.
MATTER OF URGENT AND PUBLIC IMPORTANCE
(Standing Order No. 16)
Mr. Penikett: I rise because of the emergency situation occurring because of Curragh Incorporateds shutdown notices for Faro and Sa Dena Hes last Friday, April 2, and their application for bankruptcy protection today, April 5. I would like to move
THAT the ordinary business of the Assembly be adjourned.
Speaker: The Leader of the Official Opposition provided me with the required written notice of this request. I understand that copies were transmitted to the House Leaders.
Under the provisions of Standing Order 16(4), one Member from each party may speak to the request for not more than five minutes. Then the Speaker will make his ruling.
Mr. Penikett: Curraghs contribution to the Yukon economy is enormous. It is the largest single private-sector employer and contributes, directly and indirectly, 3,000 jobs to the Yukon economy. One out of every eight private-sector jobs in the Yukon is a Curragh job. Curragh purchases $100 million of goods and services locally each year. Unemployment in the Yukon is already at 14 percent. If these mines close permanently, the unemployment rate will go up and we will have lost perhaps one-third of our gross territorial product.
I, and many Members in this House, are deeply concerned about this governments actions: their delay in adopting a negotiating mandate, their adoption of non-negotiable conditions, their failure to take direct responsibility for the negotiations, their negotiating through a third party, their failure to have Yukoners at the negotiating table and the fact that, instead of negotiating as if our lives depended on it - as it should have been and would have necessitated our negotiating around the clock beginning months and months ago - we have been negotiating part-time, in Toronto, under a news blackout and through a company that includes, as far as I know, no Yukon residents.
I think the situation is serious. I am proposing today that we set aside some time for debate on this emergency and that we do so without a vote at the end of it. This proposal is not for a vote - not a non-confidence vote, but simply an opportunity for Members to express their concerns and government Members can respond with some information. We desperately want information about what is going on and what they are doing about it.
The citizens of Faro are hanging on by their fingernails to any hopes and dreams they have had about life and work here. Many Main Street merchants in this town worry about the fate of the mine and many Yukon Alaska truckers worry about their futures, as well.
We are here, trying to function in a vacuum, without any news, information or any credible statements from the government about what they are doing at the negotiating table or whether they have negotiating positions that are attainable; nor are they giving us an indication that they understand the kind of seriousness this matter has for all of us or the kind of personal responsibility that the Government Leader and other Members of the Cabinet should be taking for this situation.
Mr. Cable: I would agree that the information that has been forthcoming in the last two or three weeks has been negligible. Any information we can pry out of the government through debate or an exchange of positions would be useful.
We have had two very important events happen in the last five days - the layoffs announced on Friday and the insolvency announced this morning. I am sure the Members would want to receive any information we can obtain on the nature of the insolvency and how that will affect the negotiations, and I am sure the rest of the Yukon would also want to receive it.
I will support the motion.
Hon. Mr. Phillips: I would like to speak briefly to the motion to adjourn the normal business of the House today so we can address the very important issue of Curragh Inc. We, on this side, have no problem discussing this issue, even though we see it may be contrary to Standing Order 16(11)(b), which states that the motion must not revive discussion on a matter that has been discussed in the same session.
We have discussed this matter by way of motion, and discussed it again today by way of many questions on the issue; therefore, it is contrary to that Standing Order. I would suggest that this is an issue that we have discussed probably more than any other issue in this House this session, in one way or another.
We also have some concerns about the letter that all Members received regarding the topic of Curragh Inc. and the reasons for the motion. The letter was written by the Government Leader. I might be naive, but I would have thought that this would have been an excellent time for all Members of this House to be compassionate to the people of Faro, who will be directly affected by todays announcement.
Instead, the Opposition has chosen to be very bitter, and they are again choosing to play politics with these peoples lives. It is unfortunate that they have chosen that route.
Personally, I would have felt a lot better if the very bitter Opposition would have presented the reasons for debating this motion in a more positive manner. We should be sitting here, talking about how we could be assisting the people of Faro, in not only getting the mine open, but also helping them in the time of closure. That is the issue we should be talking about, rather than condemning the government and the playing of politics in the situation, which the Opposition seems to be trying to make hay out of.
We, on this side, are prepared to debate this issue, and we would urge you, Mr. Speaker, to allow debate to continue.
Speakers Ruling on Matter of Urgent Public Importance
Speaker: It appears that the House has decided that it will debate the issue of Curragh Inc. The Speaker is not required to give a ruling, because it is an agreement of the House. However, I would like to comment on the comments made by the Members with respect to this issue, in an attempt to focus the debate.
The issue of Curragh Inc., and the shut down of its operations at Faro and Sa Dena Hes, is a matter of critical importance to the Yukon economy. I think that all Yukoners are hanging on every word that comes forward, and every hour is critical.
The announcement, on Friday, of a two-month shutdown at Faro and a three-month shutdown at Sa Dena Hes, followed by the announcement this morning that Curragh would be seeking protection from its creditors, is new to us and has not been debated by this House.
The other issue of ongoing negotiations has already been the subject of debate in this House and, if it was only a discussion of the negotiations that are going on, I would not have found that it complied with Standing Order No. 16. However, I do find the two new issues - the shutdown of the mines for several months and the protection from creditors - is sufficiently urgent that it can be debated under Standing Order No. 16.
Under that Standing Order, each Member who wishes to speak has up to 15 minutes. After that, there will not be a vote, but we will simply return to the ordinary business of the day.
Motion to adjourn ordinary business of the House agreed to
Mr. Penikett: I thank the Leader of the Liberal Party and the House Leader of the Yukon Party for committing and encouraging this debate.
I want to say to the Government House Leader that his characterization of questions and resolutions on this matter as political is somewhat unfortunate, especially in a matter such as this.
An argument by a politician that something is political is always a strange thing to my ears, since I believe that almost everything we talk about in this House is political, and literal, as not.
The attribution to Members opposite of an attitude of bitterness is even more strange. The Member for Faro says, bizarre, and I would have to agree, because his constituents in Faro are entitled to feel some deep anxiety, great alarm, and perhaps even some bitterness about what has been happening to them, their families and their community over the last several months.
Mr. Speaker, you have correctly cautioned us that we should be debating the narrow issues arising from the announcement of last Friday and the announcement of this morning, which I believe heightened the sense of urgency, ratcheted up the degree of crisis, and indeed contributed greatly to the sense of emergency which all of us feel.
I believe that the Government Leader is wrong when he attributes Curraghs problems simply to low metal prices. I believe the Government Leader is wrong when he says that the negotiations for a loan guarantee to strip Grum have nothing to do with the other problems. I believe that the Government Leader is wrong when he suggests the way this government has conducted those negotiations has nothing to do with Curraghs other problems.
I think it is quite obviously the case that the financial crisis for Curragh Inc. is the biggest economic issue to face the Yukon this year, last year, and perhaps even for a decade. The Government Leader has continued to misrepresent the actions of the previous government in asserting that we were invited to make a $34 loan guarantee a year ago, which was not the case. Throughout most of last year, we were negotiating with Curragh, and Curragh was negotiating with the federal government to try to arrange an aid package similar to what is now on the table. To state the obvious, the situation for Curragh has gotten far worse since the Westray disaster, and I believe, as prices have been low, and stockpiles have increased, the situation over this past winter has become much worse.
The Government Leader will understand that I have some experience in negotiations, as have my Cabinet colleagues.
It is not exactly the same kind of experience he has as a proprietor of a business in the Yukon, but I have been involved in negotiations on behalf of this government on a number of fronts - whether we are talking about negotiations for a collective agreement with our employees, whether we are talking about negotiations at the land claims table, or whether it is negotiations to reopen the mine at Faro. One thing I know for sure is that, no matter how confident and how professional the people are who are conducting the day-to-day negotiations, no Government Leader and no Cabinet Minister can escape direct responsibility at two crucial stages in the negotiations - for that matter, all stages of the negotiations.
The Government Leader and the Cabinet have to, very early and very quickly, establish a mandate for the negotiations. The Government Leader and Ministers may also have to be involved at the closing of a deal, to close the gap between the parties. They also have to be intensely involved throughout the negotiations, perhaps even to the point of having to come to the table themselves.
This was my experience when we were negotiating to open the mine in 1985; it was my experience when we were negotiating to transfer NCPC to the Yukon Territory, where Bill McKnight and I had to conclude an arrangement; it was my experience during the negotiations of land claims, where, again, Mr. McKnight, I and the First Nation leadership here had to actually get to the table ourselves and close the deal - sometimes in all-night sessions.
I believe the situation we have with Curragh has not just now but has for some time been crying out for this kind of leadership, and I believe that the situation, following the announcement of last Friday and the announcement of this morning, was avoidable. It was avoidable if this government had adopted a mandate earlier and if it had become more personally and directly involved earlier, and if, in fact, it had adopted positions that were attainable and realistic earlier.
I am concerned about the negotiations that have been going on in Toronto - using as an agent the company Burns Fry, a brokerage house - which, I am told, does not normally do these kinds of negotiations on behalf of governments - a company that wrote a report for the federal government and for the Yukon on the prospects for Curragh Inc. and which is widely believed in Ottawa as having been asked by the federal government to write a pessimistic report.
I am sure that the people at Burns Fry are competent, caring professional individuals, but they lack one characteristic that I think is essential to the success of these negotiations: they are not Yukoners. They do not live here; they do not pay taxes here; they do not have children in school here; they are not involved in our life. They cannot possibly understand how important these mines are to our economy. I am sure that, to them, it is just a job - I am sure that it is a job that they will do well, but I am sure it is also true that they will get paid whether they succeed or fail.
If we fail, we will pay and pay and pay for years and years and years to come. Most of all, the people, the employees of Faro and Sa Dena Hes, will pay; so, too, will the suppliers and customers of Curragh.
The Government Leader says they were negotiating all through this last weekend, but one could have phoned Curragh Inc. any time in the last few weeks and asked how the negotiations were going and they would have replied that they did not know, that not much was happening, that they are not at the table and that the Burns Fry people are perhaps nine-to-fivers, working bankers hours.
I know that if one wants to get a deal, and if this government had said they wanted a deal, the same as in the 11th hour of labour negotiations or land claims negotiations or anything else, we would have been working round the clock; and if this was really important to the Yukon and to the Government of the Yukon, the Government Leader would have sent a signal about that by being at the table himself - not just having the Minister for Economic Development go to Toronto to meet with officials who had met with Burns Fry, who had met with Curragh.
I believe that in the end the way we are going to get an arrangement here is to recognize that there has to be a role to play for the Government Leader in demonstrating economic leadership, perhaps even to the point of sitting down with Mr. Frame here in Whitehorse to hammer out some essentials in order to get these mines open and get our economy back on its feet.
The government began the negotiations with a published list of conditions. It was widely mooted about that there were other conditions that were not on the list. The most troubling things about those conditions, as we have mentioned before, was that some of them were not negotiable. I have had some experience in negotiations but I do not know how you can negotiate non-negotiable conditions, especially when one of those conditions, we have heard, is totally unprecedented. To negotiate non-negotiable, unprecedented conditions, under a short time frame, I am sure has contributed enormously to the difficulties this company has had in solving its own problems: private sector borrowing, bringing new equity into the company and selling assets.
The government began the negotiations with a great blast of publicity, issued press releases, went on open-line shows and then as soon as it got serious there was a blackout. We have heard no more.
The Government Leader said today that now that Curragh has applied for bankruptcy protection - he seemed to be saying in Question Period that the matter is now in front of the courts, implying, I thought, in some of his answers, that some of these issues are only going to be dealt with before the courts, not on the negotiating table. We know also that there is someone from the Department of Finance going to Toronto to participate in the ongoing discussions with Curragh, something that we wished had happened a long time ago.
The government has announced today a very large and competent inter-departmental group to deal with the contingency plan for the shutdown of the mines. I find it ironic, when he says that we did not have any competent people on our staff, that in 1985 we put together that kind of inter-departmental group of senior people to carry out the negotiations to open the mine. We only brought the kind of professional experts, financial experts and third-party experts to have an objective look at what we negotiated in the meantime.
This is the most important economic question facing us. It is maybe more important than the fate of the tax increases proposed by the Members opposite. People in Faro have been suffering, waiting and going through agony for the last several months. When the Government Leader attended a meeting with 600 people in Faro he said that he would have a deal ready to sign as soon as he had the Burns Fry report. He said that in January, the Burns Fry report came out in March and we did not begin negotiating until March - that is now clear.
The Government Leader has finally sent someone from the Department of Finance to negotiate but I want to urge him now that he has to get directly involved himself. For the sake of the people in Faro, Whitehorse, Watson Lake and all citizens in the territory he has to start giving us some clear idea of what he is doing, what his direction is at the negotiating table, whether some of these preposterous non-negotiable conditions are really that, whether he is prepared to bargain in good faith and whether he is prepared to play a leadership role in this economy by getting more personally involved.
That is the question that we have today and I hope the short debate we will have this afternoon will allow, not only the Government Leader, but other Members opposite who want to participate to give us the information that the Liberal Leader has said we all want and need. I am not asking him to betray confidences; we just want to hear something about what are governments real intentions at the table. If they just want to have conditions that cannot be negotiated, but they can say we went to the table, we fought the battle, we came away, we took an honourable but hard-headed position and we could not get a deal; too bad, we are going to have a big debate about that.
We would like to know that the government is negotiating in good faith. We would like to know that the Government Leader is going to get involved himself and we would like to know that he would recognize the urgency of the situation.
It is absolutely imperative now to get serious and recognize that this whole thing is going to fall apart unless we start to really put some energy and effort into it.
Hon. Mr. Phillips: I have a few words I would like to add to this debate. I am pleased to see we have the opportunity to debate it again, although it is something we have talked about from time to time in this House. Some new conditions have been imposed on us recently: Friday, Curragh Inc. announced an extension of layoffs until this spring, and there was the news this morning that the whole matter was going before the courts.
I take exception to the comments made by the Leader of the Official Opposition and the Member for Faro, when they keep asking us to publicly tell the people of the Yukon what is going on in the negotiations. I know that there are daily communications between the Government of the Yukon officials and Burns Fry. What surprises me about the request from the Members opposite, and especially from the Member for Faro, is because that individual used to be a union negotiator and knows that, in those types of negotiations, neither party exposes its side until the negotiations are complete.
We have given some positive signals to the general public, first of all, by agreeing to the $29 million loan, by presenting Curragh with conditions, by having Curragh accept those conditions as a basis of negotiations, by appointing Burns Fry to negotiate on our behalf, and by having Curragh Inc. and the Government of the Yukon state clearly that negotiations are proceeding. If there was a problem, and negotiations had broken down, that would send a clear message to the business community that this deal was not going to work.
We all have to remember what we are talking about here. We all knew, in the beginning, as we know now, that $34 million will not help Curragh Inc. operate.
It will not help them. It is not enough. It will strip the Grum deposit; it will provide the gem, or the lure, for other companies or individuals to purchase Curraghs stock and help Curragh raise the $50 million.
We sent that clear message to those individuals: we want to negotiate an agreement with Curragh so that we can protect the Yukon taxpayers dollar.
The previous government knew back last year that Curragh was in some financial difficulty. In fact, we debated in this House, for some time, about a $5 million loan to Curragh. One of our biggest concerns at that time was whether or not this would be enough. The leader of the government at that time, who is the Leader of the Official Opposition now, said clearly that $5 million would be enough. It would help Curragh produce into the next century, were his words. I wish I had them before me here, but I would be more than happy to make them available to anybody who would like to read that. It is clearly in Hansard that the Government Leader said that this $5 million would help Curragh produce into the next century.
At the same time, the Government Leader at that time, now the Leader of the Official Opposition, stated just as clearly that no way could the Government of the Yukon loan Curragh the $34 million, which was anticipated at that time that they would need to strip the Grum deposit. He said clearly that there was no way the Yukon people could afford that kind of money.
Now, we have agreed to loan Curragh that kind of money. We have agreed to loan Curragh that kind of money on 14 conditions, some of which are negotiable. I would suggest that the one condition that is not negotiable, overriding all these conditions, is that we are just not giving them the money carte blanche. We have to ensure that the taxpayers money we give Curragh has some protection, that we have an opportunity to recover some of that money, or most of that money at a future date. That is what we are doing by those conditions and Curragh knows that.
I talked about the $5 million and I have strong concerns about that. I understand the $5 million has gone across the sea. It is my understanding that the $5 million is no longer as secure as we thought it was. We may not be able to recover any of that $5 million, no matter what happens now. If we do recover anything, it will probably be a small portion of the $5 million. Yet in this House, less than a year ago, the then-Government Leader, the Leader of the Official Opposition, stood in his place and said, We have got tons of security and collateral for that. We hold a 35 percent share of the ore in Skagway. Well, it is not in Skagway. It is in the hull of some ship going to some other foreign country. The people we talk to, the experts in the field, tell us that there may be a problem in recovering any of that money in the future.
That concerns me, because we were led to believe that that money was secure. What we should be talking about here today is what we can do, what we should be doing for the people of Faro with the latest announcement that has come forward from Curragh.
I can tell the Members opposite that we are preparing for the worst. If we were not, we would be severely criticized by the Members opposite for not doing so. We have assembled a contingency team that has been in Faro several times. I believe some members are on their way to Faro again today.
I want to assure the Member for Faro that, as far as I am concerned, all programs involved in my department, especially the Department of Education and the school in Faro, will remain as they are for the time being. There will be no changes whatsoever to the schooling in Faro. He can assure his constituents - the students and parents of the children in the school in Faro - that this school year will be completed, regardless of what happens to Curragh and regardless of what announcement is made in Curragh between now and the end of the school year.
Again, I just want to suggest to Members on the other side that it is too late to be attaching blame to people. We should be sending a message to the Yukon government, Curragh and others that we are concerned about the situation.
It was really interesting to hear on the radio this morning the Member of Parliament for the Yukon and the Leader of the NDP - Audrey McLaughlin - criticizing this government for inaction. I have yet to hear that Member speaking out for the people of the Yukon with respect to there being no federal involvement in this particular loan. There has been hardly a peep from that Member in Ottawa about the concern of the people of Faro and the Yukon. It is a shame that that Member has been hiding in the closet, trying to avoid this particular question, because she knows it is a sensitive one to her constituents.
I would hope that the Member for Faro would gather his constituents, en masse, much like when he marched on us, and march to the office of the Leader of the New Democratic Party - Audrey McLaughlin - and say to her that it is time to get off her butt and do something. Pardon the language, Mr. Speaker, but the Member used the same words publicly. I would hope that that Member would say the same thing to Audrey McLaughlin, because she has been silent on this issue. I think that is a shame.
It is time for the Government of the Yukon and others to work hard to try and get the mine up and running. I know that is being done.
The decisions that have taken place in the last couple of days are very serious. They point out clearly to me - more clearly than they have ever been - that we were right when we offered the money to Curragh and asked for security. If we had given the money to Curragh the way the NDP wanted to give it to Curragh a few months ago, with no guarantees whatsoever, we would be standing in line like everyone else with no security for the $29 million. We would be in the exact position we wanted to avoid.
We are in a good position now, and as the Government Leader said earlier today, the recent court action may even help us get the Grum deposit stripping moving a little faster. I know officials are working very hard on that, and I would hope for the sake of the people in Faro and for the sake of the Yukon, we can get this mine up and running as soon as possible.
Mr. Harding: Today, from the side opposite, we have a new person to blame: Audrey McLaughlin. She is concerned about the people in Faro, but we have a new person to blame. Absolutely incredible.
Our Member of Parliament has had press release after press release and meeting after meeting on this subject. She has come to the point where she had to publicly beg the territorial government to do something and they have not done a thing. To say that there have been no public comments regarding the federal government commitment is absolutely misleading, because I have heard the commitments.
The $5 million loan that was secured with concentrate is now the fault of the Leader of the Official Opposition. Although we were defeated in the October 19 election, perhaps it was a requirement of Mr. Penikett to stand by the concentrate pile in Skagway with a shotgun, to make sure Frame would not carry it across the sea. That is now our fault, too. This is absolutely incredible.
The Members opposite voted for that agreement, and they voted for the $5 million loan.
I take extreme exception to the statements made by the Member for Riverdale North, who stated that we were bitter, showing no positive commitment that we were not speaking in a positive manner - absolutely ridiculous. For months and months, we pleaded for action from this government. My emphasis is: what is this government doing to put people back to work? That is what I want to know. First and foremost, I want to know what they are doing for the unemployed.
The contingency plan is fine, it should be worked on, but it should not be the emphasis, and that is why I ask questions about what they are doing, because they do not bring anything into this House.
The Member for Riverdale North is quite right; I was a union negotiator. One thing I always did as a negotiator was keep my troops informed. In the case of the Government of Yukon, the troops are the people of the Yukon. The government has not kept the people informed; they have not even talked to the people.
It is not only the NDP, but the Member for Riverside has been quite vocal about being involved in the process, but they are so defensive and so afraid of the big, bad NDP, because they are doing such a pathetic job, that they continue to make us the emphasis of everything. They absolve themselves of total responsibility. They have been in government for almost six months.
I know that there is a limit to expertise on the other side of the House, as the Minister of Economic Development said, but there is no excuse for what has happened thus far with Curragh.
I then read the comments and ministerial statement of John Ostashek, Government Leader, I will stress that there is nothing that the Yukon government can do to reverse the mine closures. These closures are not related to the loan guarantee talks. Does the Government Leader expect the Members of this House to believe that? If you were an investor, Mr. Speaker, would you say, I am going to buy some shares now; I am going to purchase a huge, multi-million investment in a private placement in Curragh, because I feel quite confident that the Yukon government is really committed to this project, because they placed 14 impossible conditions upon Curragh. I feel pretty good about that investment.
I am waiting to see what the Yukon government does. I want to know if those conditions are negotiable. I want to know if they can be met by Curragh. I want to know if they are serious - some of those conditions are absolutely ludicrous. That is what one would do - wait. That is why we are in the situation that was announced on Friday and the situation that was announced today.
Yes, there is no question that prices are low and that is a contributing factor. I understand that today the price hit over 50 cents again; that is a good sign - a mine closes in Mexico. It is a very good sign. But to suggest that they are not linked is absolutely irresponsible and again it is the other side absolving themselves of responsibility.
There has to be some commitment on the loan guarantee. The 14 conditions are ludicrous, they are loony tunes, they are not going to work; yet, when we ask for examples from the other side to demonstrate what they have pulled off the table, so that we could draw some comfort that they were an opening mandate in the negotiations, they do not tell us anything. Then they wonder why we have this reaction. They wonder why we are concerned.
I was home all weekend at the big curling bonspiel and everyone I talked to doubts this governments commitment to this loan guarantee - everyone I talked to.
No, $29 million will not save Curragh right now. They need to raise some working capital, but the trigger for that is the loan guarantee.
The government has gone to great lengths to try to convince people that the money has to be handed out in one $34 million lump sum and, if the mine went down the next day, the government would automatically have lost $34 million down the drain.
That is not the case. The money could be advanced on an incremental basis. As the bills for the Grum stripping come in, the company could go to the bank and get the loan. I am told it is probably in the vicinity of $3 million a month. As that commitment comes into play, it provides a buffer zone for investors to consider it with a new look. The share prices have taken a beating and, without positive news, it is risky; there is risk in it and I applaud efforts to get as much security as possible - what I am concerned about is the first charge on security being non-negotiable. That is where I think they have gone overboard. We have never said we want no guarantees whatsoever; never, never, never. As a matter of fact, we put a resolution forward that we wanted tough but realistic conditions. We want to see as much security as possible, but there is going to be some risk in the equation.
Unless we create the buffer to give some investors a chance to take a fresh new look at this, the mine is going to go down. The mine in Faro is going to go down, and the Sa Dena Hes is going to go down. To suggest that these events are not related to loan guarantee talks is absolutely unbelievable. What is an investor interested in buying the Stronsay property doing right now? Is he saying, I should buy that Stronsay now for $35 billion because the company has today filed for creditor protection? No, he is saying, I want to buy that mine for a nickel when those buggers go under. That is what the investor is saying. Until there is a loan guarantee or some spark, nothing is going to happen.
They are waiting for Curragh to go down. It is a risk, and I will admit that, but the only spark that will save this is if the government gets to the table, puts some work and real personal commitment into the negotiations, burns the midnight oil, gets the Burns Fry people here, if they need them, involves the Members of the Legislature and talks to us about what is going on.
We have one right in this Legislature, and that is to debate and ask questions. When we are not given any information, what else can we do but do what we did today. To us, this is an emergency. It is an emergency to the Member for Riverside, who also supported us on the motion. It is an emergency for this territory.
Talk about dependency on the feds. The Members opposite like to talk about moving to self-sufficiency. Do you know, Mr. Speaker, what is going to happen to our territorial economy here and the private sector? Now I know, under the perversity factory, the government might be saved for the time being with regard to the drop in income tax and gross domestic product. However, the fact is that it will bring us closer and tighter to the feds, and the ideas of self-sufficiency will go by the wayside.
The 14 conditions that were laid down on March 10 have been called a clear message to the investors in the industry. We have heard that the 14 conditions are the laughingstock to investors in the industry, because they do not believe they are achievable.
If they were in an opening position, we could accept that. If they came to us and said they had dropped this or that off the table, that was a little bit of padding, we have moved off that and are getting closer, then we would not criticize the conditions, because we would know that is what they are. However, we have been given no indication of that.
As a matter of fact, the Government Leader went to Watson Lake and said that the first charge on security was a condition that was non-negotiable. That gives us a great problem. My community is hurting badly. Those people are in Faro because they want to live in Faro, because they love the Yukon, and because they want to put a roof over their heads and food on their table. Time and time again, when I go home and they ask me what is going on, I have to tell them that the government will not tell me anything. They say they are not serious about it, and cannot be serious about it. They want them to move their office from Toronto to Whitehorse; they want 14 conditions, some of which are unprecedented; they want the note holders to postpone interest payments; they want Stronsay to be sold and 50 percent of the proceeds to be turned over to the loan guarantee - this, in a time when things are desperate. The Members themselves have said it: that $29 million will not save the company.
They are trying to take 50 percent of the proceeds of the sale of Stronsay back on the loan guarantee. We are robbing Peter to pay Paul because, when we do that, we giveth here and taketh there. That will not allow them to have the working capital to work through these depressed metal prices, and that is what it will take. It will take some working capital to work through the low prices because, at the price we have had for the last little while, they are going to have a depressed, or negative, cashflow. There is no question; they cannot operate at those low prices without losing a bit of money on the working capital side, which is why it is so important for the share and equity offering to work. That is why it is so important that they sell Stronsay.
There is one match that will spark that, and that is an around-the-clock effort by the territorial government, to bang out a deal and to give this its number one priority as a government. Instead, what have we had? We have had nothing but blame, blame, blame. The $5 million loan has been made so much of by the Members opposite. They voted for it. If they were concerned that there was not enough information, why did they vote for it? That is what I am asking.
Some Hon. Member: (Inaudible)
Mr. Harding: I did read the Hansard. I read what Danny Lang had to say. I read what Mr. Benner had to say. I read the whole conversation when he came before the House and appeared as a witness. I know what went on. They try and make the argument that they should not do anything, or we should not be able to ask questions because, for some reason, the Leader of the Official Opposition and the NDP government, when there was no request even made to them by Curragh for it to go alone on a loan guarantee, should have lent $34 million. There was no request. What they asked for was a portion, and that is what they got. That is what the Members opposite voted for.
In the meantime, there was the Westray fallout, which has taken awhile. I know the Member for Riverdale North has probably gone to get the Hansard, where the Leader of the Official Opposition talks about the timing of the announcement that the Leader of the Official Opposition made. What I am trying to explain to the Member for Riverdale North is, after that statement, the Westray fallout took some time to get to the point where it was well known to the Members in this House that the company could not survive on its own. There was just no way.
A lot of things have changed since then. At that time, there was no request for the $34 million. The Westray fallout was still occurring. The federal government had not said unequivocally that they were not going to provide any help. The prices dropped tremendously. Inventories rose tremendously. The equation is all changed now. To somehow parallel that time to now is absolutely ludicrous; it is absolutely irresponsible.
The government is now charged with the responsibility because they have been given a request that no one else has ever been given. That is why they should deal with it. They should deal with it on behalf of the people of the territory because it is an urgent situation that is affecting many, many people in this territory. We are only now beginning to understand what it is going to do. The people from Yukon Alaska Transport have now stopped the ore truck haulage. As their layoffs start to have a spinoff effect on the economy here in Whitehorse, it is going to become more and more apparent how pervasive the Faro and Watson Lake mines are on the Yukon.
I cannot for a minute relax my position of concern for what the government has done with regard to this issue for months and months. The request first came to go it alone in December - they were elected on October 19. They commissioned a study, only on January 11, at the request to the federal government to look into the financial situation affecting the company, through Burns Fry. They came to a public meeting in Faro January 21. What happened there? They made promises that the agreement in principle would be reached, and the numbers would be punched in once the study came back. That did not happen at all.
They waited from January 11, while the study is going on, to adopt a negotiating position. On March 4, they come out with a hastily typed news release saying that the loan guarantee was going to be approved, based on a number of conditions. Six days later, they come out with 14 flabbergasting conditions. There was no indication to the people of the territory, or to the Members of this House, as to exactly which are negotiable and which are not. You really have to question if they are serious about this. All along negativity is spread.
The Government Leader spoke, in stories picked up by the Globe and Mail, about how close to bankruptcy the company is. They may have been, but there is a very subtle difference between somebody on the street saying that, and the Government Leader, who is being asked to back a $34 million loan guarantee. I think that it is time for this government to make this its number one priority, to start giving the information that we require as elected people in this House, and for Yukoners to get the information that they need, because it is going to affect most of their lives. I think it is time that this government started accepting responsibility for getting people back to work in the Yukon.
Mr. Cable: I have been sitting here trying to think of some silver lining to speak about for the people of Faro and other people in the Yukon. I suppose that silver lining is that the Companies Creditors Arrangement Act provides some measure, short of bankruptcy, that permits a corporation to regroup and hold its creditors at bay for a short time. It also has the advantage of flushing those mysterious note holders out of the woodwork so that we can find out who they are and what they want.
The government has two hats on right now. It has one as a secured creditor with some rights under the Companies Creditors Arrangement Act and it also has some rights as a party negotiating with the corporation for further money.
I would hope that with its hat on as a secured creditor under the act that it will take a lead role in persuading the other creditors to help restructure the corporation. There has been a number of comments made in this House and elsewhere that the problem with the corporation is a liquidity problem and not one relating to its assets and liabilities. I hope that is the case. I hope that this application in court will provide a solution to that.
The government should realize - I hope it does realize - it now has two levers for levering the corporation back to some sort of health and keeping the overall debt structure in some sort of manageable form.
One point I would like to make to the Government Leader, in particular, is that the Members of the Opposition do not have a lot of high-priced help to analyze the financial wheelings and dealings that are going on now. If a deal is struck, I would hate to see it brought into this House in the same way as this ministerial statement this afternoon, just at the last minute, in the hopes that our hands would automatically rise.
I would hope that the Government Leader will keep the House informed as to what is going on, both in relation to the Companies Creditors Arrangement Act application and with respect to the Burns Fry negotiations that are going on in Toronto at the moment. We have not been informed adequately and we cannot form opinions at the last minute.
Mrs. Firth: I have been listening quite closely to the debate this afternoon. The concern I have, as a Member of this Legislature, and the question I have for the government is whether or not they are going to do something or are they just going to sit back and wait for something to happen and for the problem to solve itself. That is the concern I have had all along with this governments action or inaction with respect to the whole Curragh situation.
It seems that all Yukoners, not just the people in Faro, are feeling it the most; they have felt like they have been kept dangling on this string. Everybody is waiting for something to happen.
The people in the Yukon can sit around and wait for something to happen, because they really do not have the ability to take the control and decision-making into their own hands. They are at the mercy of the government and other Members of the Legislative Assembly; therefore, it is my hope that the government is not going to just sit back and wait for something to happen, but that they are going to step in and make something happen, which we hope will be in the best interests of all Yukoners.
My preference would be that the Government Leader set some specific terms for the negotiations as to where they are going to take place and how much longer we are going to have this carry on, and whether or not he will be more forthcoming with which of those terms and conditions are negotiable. We, as Members of the Legislature, do not know which are negotiable and which are not.
The negotiations should be held here in the Yukon. There should be Yukon representation at the table. Perhaps, for the negotiating team to get a real flavour of the seriousness of the situation, the negotiations should be held in Faro, so they could see what people in that community are going through. That way, there would be no breaks for golf games, tea or whatever.
When negotiations are taking place, if there is a goal that has to be achieved, or a decision that has to be arrived at, people can lock themselves in a room and arrive at conclusions, make decisions, and take however long it takes to do that. Perhaps that is what we should be doing and the direction the Government Leader should be giving to his negotiating team.
My concern is not who did what when and whether it was right or wrong, or whether this side was better than the other side. My concern is for all the people of the Yukon.
The people in Faro are bearing the brunt of the stress right now. They do not know what they are going to do tomorrow. We are losing jobs. I understand the message is being passed on to truckers at Yukon Alaska Transport to look for jobs anywhere else in Canada. There is not a lot of optimism.
There are constituents, not only those whom I represent, who are now in a position of losing money because of what has happened. We are facing a budget that is increasing taxes for Yukon people. There is going to be lost business to Yukoners because of loss of population, if that is what happens as a result of Yukon Alaska truckers leaving, as well as Faro residents.
We have a budget on the table that we are debating, one that we have been told, by the government, is based upon Curragh being open and operating. As a Member of this House, I am going to be asking about ramifications on this budget of Curragh closing down.
I know that Yukoners are facing increases in the costs of their electrical rates and if Curragh closes down, the increase is going to go up enough more. Some of the officials at the Energy Corporation and Electrical Company have predicted that rates could go up as high as 40 percent if Curragh closes down. Whether that is accurate or not, I do not know, but that is going to have a tremendous effect on the people whom I represent and all Yukoners.
We have to, as Members of this Legislature, get our priorities in order. My first priority is for the people of the Yukon - not whether some other government did a worse job of negotiating, not whether the Member of Parliament is doing a good job, but what we are doing as 17 Members of the Legislative Assembly to help the people we represent.
I find it very unsettling and very disturbing that we are standing up in this House and asking Yukoners to accept this agonizing, slow torture as we debate this issue day by day, issue by issue and new development by new development.
When I received this ministerial statement, as other Members have said, a minute or two before we came into the Legislature, it gave me a sick feeling in the pit of my stomach because the government was announcing their contingency plan and it made me feel like it was all over, finished and that there was no hope. The information that I want from the government is to know if this is all that there is or is there some hope and can we be optimistic that maybe we can arrive at a conclusion or decision that is going to be a positive announcement and favourable for all Yukoners?
We are not protecting Curragh; we are not doing this for Curragh; we are not doing this for Clifford Frame; we are not doing it for anyone, other than the people we represent. At least that is the way I see it.
I want some answers from the government. I want to know if they are going to carry on negotiating? I want to know if there is going to be any direction to have the negotiations take place in the Yukon, either in Whitehorse or Faro? I want to know if we are going to have a Yukon representative at the table? I want to know if there is there going to be a time line, or some direction that once you get in that room, you do not come out until you have an answer one way or the other.
I would like to hear from the government what their contingency plan involves, in the event that negotiations do fail and that Curragh is not going to open again.
I do not think we can afford to debate this issue for too many more days in the Legislative Assembly without having some answers for all the people in the Yukon.
Hon. Mr. Devries: I also rise to speak to this motion.
I appreciate some of the comments that the Member for Riverdale South made, although I do find it interesting to hear the rhetoric that we have seen coming from most of the Opposition Members.
It seems to me that a few weeks ago Members on the other side of the House kept asking us over and over, What is the contingency plan? Today, in the ministerial statement, we indicate some of the parameters of the contingency plan, and all of a sudden they say it is doom and gloom, because we have tabled the contingency plan. Did they or did they not want the contingency plan?
Some Hon. Member: (Inaudible)
Hon. Mr. Devries: It may not have been mentioned in Question Period, but it was sure mentioned in some of the speeches.
I agree with the Member for Riverdale South, that, yes, the Yukon public is concerned to a certain extent; however, I think she is overemphasizing public negativity.
In my discussions with people on the street, and calls that I have been getting from Watson Lake - even from truck drivers for Yukon Alaska and for Gateway Transport - all indicate that we should hang in there and make sure the loan is secured. Indications to me have been that the company should restructure. These people probably know more about the inner workings of the company than any of us, because they work with them either directly or indirectly.
I want to go back to the question of the $5 million. In Hansard, I believe it was Mr. Lang who said, Primarily, the question that I have is with respect to the $5 million, accepting the principle that the government lends the company the $5 million. Is it safe to say then, that with all of the known variables today, that this will be the only amount of money required of the government with respect to getting phase 1 into a position of being able to pay for the stripping program as well as the mining of a new deposit?
Mr. Benner answered, The $5 million contribution from the Yukon territorial government, matched by $5 million from Curragh Inc. - as of two days ago, we have had a change of name ... The purpose of the venture going forward was to enable Curragh, by the way of a loan from the government, to show the outside potential investors that there was confidence in the project. This would allow us to be in a position to move forward and seek further financing and funding. This statement was made right before the $5 million was given to them approximately one year ago.
It has not worked. Curragh has not managed to raise the financing and the funding. The primary problem with Curragh today is the fact that they have a huge debt and low metal prices. The problem is not because the Yukon territorial government has not advanced the $34 million at this point.
Can I ask the Members if they seriously suggest that we go ahead and give that $34 million to Curragh, without at least having some security in place? All of the financial advisors, and people whom I have talked to, indicate those conditions are not unrealistic.
Mr. Lang went on to say, Is Curragh going to be back here for more money in four months? Is the $5 million going to be sufficient to meet the objectives Mr. Benner has just outlined?
The answer is that $5 million will not be sufficient to complete the phase 1 stripping of Grum. Further financing is required. We are currently having discussions with the federal government with respect to the financing.
For the Opposition to be saying that they were not aware that Curragh was going to be coming to us for more money is irrelevant in this case.
I also find interesting some of the comments made by the Leader of the Official Opposition. Having followed some of the negotiations that went on in 1984-85 in relation to Curragh, this is a completely different matter. Then, there was basically the construction of a company taking place - a new company was moving in to purchase the assets of, I believe, Cyprus Anvil, which was in receivership; and there were the complexities of establishing markets and negotiations on the roads and power rates, and things like that. This is a much more complex matter, in that this is the restructuring of a company that already exists. I just do not feel that the Leader of the Official Opposition understands the complexity of this issue.
The majority of the negotiations have been taking place have been between Curragh and the banks, and between Curragh and the note holders. I feel the Leader of the Opposition is suggesting that we should go and talk to the banks as Curragh does not seem able to do it. But it is not that easy. We have to get permission from Curragh to talk to the banks and things like that. We cannot just jump in there with both feet. The other suggestion seems to be that maybe we should go and talk to the note holders for Curragh. Well, they will not even tell us who the note holders are. I feel this CCAA action is a restructuring of the company and it might help us resolve this important matter.
It is true - none of us like to see the workers at Faro out of work and the workers at Sa Dena Hes out of work, and it is true that hardships are being placed on the families. I am very aware of that when I think back to some of the problems we had in Watson Lake in the past. It seems to me that the Leader of the Official Opposition was also in charge then. Obviously, the negotiations he made on that project failed because we have an empty yard there today.
I do not really want to get into that. The other issue is: what are we doing for the people who are laid off and those who are out of work? I know of several incidences now in Watson Lake where individuals bought new pickups while they were working at Sa Dena Hes and have since had to return them. It creates a lot of stress and strain. We are fortunate that, during the last five or six months, we have had a counsellor in Watson Lake. This person has been kept very busy. Meanwhile, there are also people from Economic Development, who are working with people and assisting them in restructuring their debts in such a way that their needs can be met by the minimal amount of assistance they get from UIC and various things.
Much the same strategy is taking place in Faro. There is also training being made available for people who would like to seek different skills. There is resume writing for people who have decided they want to move on. At this point, however, much of the focus is not necessarily encouraging but, at least it is making it possible for the people to stay in the existing communities with the hope that the mine will be reactivated. That is really the end result of everything we want to see.
Again, the big fear I originally had, when we developed the contingency plan, was that, by releasing the contingency plan during the early stages of negotiation, we would be sending the message to Faroites and Watson Lakers that we had given up on Curragh Inc. The fact that it was mentioned today does not mean that we have given up, but it was basically because of pressure from the Opposition to show that we do have something in place. I am sure that once they see the particulars surrounding it, they will be quite pleased with what we are doing.
I believe it was the Member for Riverside who asked about the negotiations. I assure the Member that, yes, negotiations are proceeding. I do not think we are in a position to speak about them at this point, but I hope to in the near future - perhaps in the next three or four days - and we may be able to discuss them at some length.
I feel quite comfortable that we are doing whatever we possibly can for the people of Watson Lake and Faro and that, whatever happens in this case, even if the worst-case scenario happens to take place, it will be because there was no chance of the company surviving, and the monies this government uses to put the contingency plan in place, or to strip the Grum, will be used in the best interests of Yukoners and all the people involved with the two projects.
Ms. Moorcroft: Today Curragh was forced to file for court protection from its creditors, so it is imperative that we have this debate.
The announcement on Friday of the suspension of mining operations for Faro is having a critical effect on the Yukon economy. Yukon people believe that the longer we go without action, the less likely it is that these negotiations will succeed. It is not just imperative that we have this debate, it is imperative that this debate have some effect on Yukon government actions.
Workers in Faro are devastated by these further layoffs, but it is not just Faro or just the Sa Dena Hes workers in Watson Lake. Some of my constituents in Mount Lorne have been laid off. Working people all over the Yukon have lost jobs.
The people in Faro are not the only ones asking if this government is serious about negotiating a loan guarantee. Some of the 14 conditions, which were publicly laid out, have made the Yukon a laughing stock in national financial circles. What kind of politicians put forward a condition that they have prior repayment over other existing note holders and mortgagees?
We have some very grave concerns about how the Yukon government is paying big bucks for an outside brokerage company to negotiate Curragh loan conditions.
Given the admitted lack of expertise in financial matters on the part of the government, as stated by the Minister of Economic Development, perhaps they need to take some professional advisors with them. However, if I were to take a cynical view, I might suggest that the longer Burns Fry takes to negotiate, the more money they make.
This is having a devastating effect on the Yukon economy. We need to think about the amount of money that is being spent on negotiating this loan guarantee. Unsuccessful negotiations will continue the stress and the strain and will result in a devastation of the Yukon economy. We have to ask the government to take action and put a negotiator at the table.
Right now, we have a negative trickle effect on the economy, with jobs shutting down. This will become a flood if the negotiations fail. People will be going on social assistance and will not be able to pay the taxes the government wants to raise. None of this will happen unless these negotiations fail. I urge the government to take immediate action, show some economic leadership and put a negotiator at the table.
Hon. Mr. Ostashek: I welcome the opportunity to enter this debate. I want to put on the record that we certainly realize how serious the situation is.
I am not going to go too far back into the history of what has and has not been done, but I do have a couple of comments I would like to make. One is in regard to the Leader of the Official Opposition saying he was not asked for a $34 million loan. He was asked to cost-share a loan with the federal government. The same request came to me in December of this year: to cost-share a loan with the federal government.
Even though he was not asked, he still made the statement in this House, that there was no way that his government could afford a $34 million loan guarantee for Curragh. Even though he was not asked, he made that statement in this House. It is on the public record. Yet now, one year later, when metal prices are further depressed than they were a year ago, he feels that we should be able to make a $34 million loan to this company. I cannot believe it.
This government has negotiated in good faith. We have negotiated earnestly. Nothing was changed in the major conditions that were put forward to Curragh in early March of this year from what I told Curragh this government would need the first time I sat down with them. I said we would need some security for the loan and we had to see that the company had the ability to survive. Those were two main concerns of ours all winter. I think the transactions of the last two days point out how valid those concerns were.
The Members opposite condemn me for coming in with a rushed ministerial statement that was delivered to them minutes before the House started session this afternoon. I just want to tell the Members opposite that I had been working all morning long, right up to coming into House, with officials who are representing us in Toronto. Things are changing on a minute-by-minute basis. The statement was only prepared for me minutes before I came into the House.
It was not something that was done haphazardly.
The Members opposite are condemning us for stalling negotiations, and they are going to pooh-pooh me again when I say that it was Curragh that was stalling negotiations. Curragh was stalling negotiations. I stood in this House during an Opposition Day debate on Curragh a couple of weeks ago, and I listed off the dates when we met with officials from Curragh.
The Member for Faro said that I was going to have an agreement in principle together by the time the Burns Fry report was ready. I wanted that agreement in principle, but I could not get Curragh to move. They were not prepared to give us the financial information that was required. They would not tell us what debts they owed. We had to wait for their year-end statements to come out to find out that they have accounts payable of $44 million. They would not advance that information to us.
The negotiators - Burns Fry, who are negotiating on our behalf - are prepared to negotiate around the clock, and they have been since we engaged them. It was Curragh that was not prepared to negotiate. They were trying their best to avoid having to make the decision that they made this morning - to go in under the CCAA.
In my opinion, this gives us the best opportunity to salvage the company under this court protection. We are prepared to go ahead with the Grum stripping. We are prepared to go ahead without any conditions, as long as we have security for our money in the interim, so that Curragh can see if they can restructure their debt. Under the court arrangements, that may be possible. However, what is going to happen now is something that Curragh was not prepared to do three weeks ago, and that is to go to the banks and the note holders. Now, they have no alternative - they have to go to the banks and the note holders and, if we are going to put money in to start stripping the Grum, they have to be in agreement that that money is secured.
We are prepared to put $4 million or $5 million in for six weeks and start the stripping operation moving, as long as that money is secured and not going to go to pay off debt at the Bank of Nova Scotia. That has been our major concern all along.
Now that these papers are filed, I can reveal a little more information. I am sure that some of the Members opposite are aware of that information: Curragh Inc., as of March 31, 1993, was in technical default. We knew that, and we could not advance taxpayers money, not knowing whether the note holders were going to put them under at the end of the month. They were in technical default, and I think the Leader of the Official Opposition is fully aware of that. Along with that, we knew interest payments were due and that they would have difficulty making them. How could we, in a responsible manner, advance funds in this scenario when we did not know if it was even going to get the company through the next six weeks? Now, under the court protection, we are in a position where we can probably get some security for our money to strip the Grum, and we are prepared to start advancing monies to them, as soon as we can get that security. Those are the instructions we have given to Burns Fry and the official who went to Ottawa this afternoon on the airplane.
I am going to table the documents that were filed in court in Toronto today. They will not give the Members much information, but they will give them some information.
I want to say once more for the record that it was not the Government of the Yukon that had been stalling. We were prepared to move ahead when the company was prepared to move ahead. The company was trying to avoid this situation, and understandably so. They had an equity issue out on the market, and that was another reason why we could not make statements - it could affect that. We did not have the ability to start putting out the conditions in public and pour cold water on it.
The other thing is that I totally disagree with the impression the Members opposite are leaving that the conditions were irresponsible and unachievable. We had the best financial advice available to us, and it was that those conditions were achievable if the company wanted them to be achieved. That has been the stumbling block and, as the Member for Watson Lake said, they did not want us to talk to the bankers or to the note holders.
The Member for Riverside has suggested, time and time again, that we talk to the bankers. I would have loved to have been able to talk to the bankers.
I just want to go through some of the documents that were filed today. They basically state that the value of Curraghs assets exceed its liabilities, as of today.
However, Curragh has failed to make a number of payments that came due on or before April 2, and is not able to meet its liabilities, as they generally come due.
Curragh has encountered significant liquidity and cashflow problems, principally attributed to costs and losses resulting from the Westray accident and to the low lead, and particularly low zinc, prices in the world market. Curraghs excellent mineral reserves and operating resources position it to return to financial health.
I truly believe that, and I think they require this sort of protection, so they can restructure their debt and be a viable company.
On the Stronsay property, Curragh is actively engaged in discussions with a view to the sale of all, or part, of Stronsay. They could receive between $5 million and $15 million by the end of April and possibly another $35 million by the end of July, if they are successful.
However, they go on to say that all these initiatives will require more time to bring them to fruition.
As of March 31, Curragh had accounts payable of $37 million. The money we are advancing for Grum cannot address those issues.
Some of the other problems we encountered in dealing with Curragh are the number of layered companies. There are five subsidiary companies we had to try and track through negotiations. Without that information, it was impossible to see where the money was going. All along, our major concern was that the money we were advancing was going to the Grum stripping and was not being milked off by a subsidiary company.
We filed with the courts that we are prepared to go ahead with the Grum stripping, as long as we can receive security for our money. It is a position that attorneys, who will be in court on our behalf, will be putting forward to the judge. If we can get that security, we will start advancing monies for the Grum stripping to give the company time to restructure their debt.
As we have said all along, and which is no secret to anyone in this House, the company has had a liquidity and cashflow problem for many months now, back to a year ago, when the now-Leader of the Official Opposition was in my position and was negotiating with them.
According to the documents we have received so far, it appears that there is about $221 million in debt out there that has to be dealt with.
I want to make another point about the security for a $5 million loan, which the Leader of the Official Opposition and the Member for Faro say is a secured loan. From our discussions with our people, and it will be coming out in the court proceedings, it is our understanding that the line of credit to the Bank of Nova Scotia has been over-extended. Now we are going to have to fight in court to see if we cannot get some protection for what was supposed to be 35 percent unencumbered of that concentrate. That is how little security we have for that $5 million loan.
Our concern all along has been that we did not get the taxpayers of the Yukon into a situation where we would have these notes called, and we would be faced with the burden of this excessive debt, when, from everything we have seen, was not enough to salvage the company. I believe the fact that we agreed, in principle, to give them the loan guarantee, as the Member opposite did a year ago, as was pointed out by the Member for Watson Lake and also said by Mr. Benner in this House, that it would give some comfort to the financial market so that they could raise equity. They have not been able to raise equity for over a year, not just in the last three or four months. They have a serious problem.
I want to touch on another issue, that of our MP in Ottawa. According to the information we have received from Ottawa today, during the current sitting of the House of Commons, since 1991, neither Audrey McLaughlin, nor her NDP Energy Mines and Resources critic, Ross Harvey, have asked one single question about Curragh and the Faro situation in the House of Commons, after I personally briefed her in December. I visited her when I was in Ottawa and briefed her on the situation. We do understand that she did ask questions about Curragh and the Westray situation, but she has not asked about Curragh and how it pertains to the Faro operation. Who is being irresponsible?
In summation, this government has acted in a fiscally responsible and prudent manner. We are working very, very hard to see that the Faro operation survives in the long term, not a patch-work job that was accomplished with a $5 million loan by the Leader of the Official Opposition.
Mr. Joe: We have been here some four weeks now. We hear the same story, and we blame each other. What does it accomplish? In the four weeks we have been here, people have been having problems out there. They are asking the government for help. I think that is what we should be looking at, instead of blaming each other.
Sometimes I wonder why we are sitting in this House. We are supposed to represent Yukoners. Now, we are wasting more time fighting among ourselves. When we try to share our experiences, no one wants to take it. We just keep saying, I do it better than you do. I do not think there are people out there who like that too much.
If we cannot do our job in this House, we should give the people out there the chance to start with some new blood. They might run the Yukon even better than we do.
Sometimes, it is hard to speak in this House, when I hear you blaming each other. Sometimes, I find a very bad attitude. Shame on the government for acting like this. Let us deal with the problem and take some possible steps that might help the people in Faro.
I know from experience how it is when you do not have a job. Sometimes I would have to wait for a job for months. I would get tired of waiting and have to look for something else to do. I am pretty sure that a lot of the people in Faro are like that.
In my younger days, there was no welfare. I have never gone to welfare even once in my life. I always worked my way out, somehow. Sometimes, I would draw unemployment insurance when I did not have a job.
I know, when you are out of a job, that household banks go pretty fast, especially with todays cost of living. Nowadays, $1,000 does not last too long. I think about my younger days, when $1,000 used to be big money.
Today, it is a different world altogether. I urge the government that it is time to take action and get people back to work in Faro, somehow.
Hon. Mr. Fisher: I do not want to speak too long and prolong this debate. There is not much that I would have to say that has not already been said. I have lived most of my life in the Yukon Territory, and I have seen hardship and mines shut down. There were good friends of mine in Faro when the mine shut down in the early 1980s. I had friends at Cassiar when it shut down many times over the past number of years. Tungsten has shut down at least three times I am aware of. It is very much of a hardship on these people.
I do not like it that we are in this House, trying to blame each other. I agree with the Member for Riverdale South, when she says for us to get on with it. I also agree with the Member for Mayo-Tatchun, when he says for us to get on with it and stop talking about it. In that respect, I would like to ask the Members opposite to get on with the supplementary budget. Let us get it out of the way. Let us get on with debate on the main budget.
On the supplementary budget, I think the Opposition has done what they wanted to do. They have smokescreened it, so it is old news now. People do not care any more. Forget it, and let us get on with it and finish it. We have things in our capital budget this year so there will be jobs in Faro. If worse comes to worst, and the mine does not reopen, there is some work in the territory. There is the community development fund, which the Member for Riverdale South is not very fussy about. In some respects, I am also not very fussy about it, either. However, in cases like this, it is very much a needed tool, as it was in Elsa, when it shut down in 1985 or 1986.
Let us do as your own Member from Pelly said: let us get on with it.
We have something like $28 million in highway projects, like the Shakwak project. We have the new hospital, the Teslin correctional centre and some school additions. There is work in the territory. Let us get on with the budget and get it completed so that some of these jobs can go ahead. Then, if worse comes to worst, at least some of the people have jobs.
I was in Watson Lake years ago, when a fellow rented a house from me. It was right next door from my house. He was running a logging truck. He owned the truck. He would leave for work and I would hear that Kenworth fire up in the morning at about four oclock. He would go back in the house for a cup of coffee and the truck would run for about 30 minutes. He would never get home until after I was in bed. He did that six days a week. On Sundays, he was monkey wrenching the thing - he was his own mechanic. He hauled logs all winter. At the end of the winter, he could not even pay his rent. I had to lend him some money. I know about hardship. I know what the people in Faro are going through. The waiting is probably every bit as bad as when the news finally comes. It is horrible to have nothing to do and just sit around the house. I imagine there are all sorts of things going on in Faro. I wish the Member for Faro would get himself more concerned with those kinds of things and not try to stop us from going ahead with the budget we are here to debate.
Hon. Mr. Brewster: After 12 years in here, and I have often had problems with what has happened in this Legislature, this last four weeks has been an absolute disgrace. I see the whiz kid over there saying, Hear, hear and he is very good at these things but he has not faced the realities of life and he had better start.
Speaker: Before the Minister gets too wound up, we are discussing the news with respect to Faro: the announcement of the shutdown and the application for protection from creditors.
Hon. Mr. Brewster: I fully realize that, Mr. Speaker; however, I believe in the House one should have the courtesy to keep quiet when other people talk. I have always tried to do that and I would suggest it be done for me, too.
First, I would like to tell a little story about the mine at Curragh. A young fellow I know has a trucking business and he drove in from Haines, Alaska, with a load of oil and he was ordered to get it up there immediately. He got in here late one night and he arrived up there Saturday. The gates were locked up so he phoned and asked if he could get a key so he could unload the oil. Mr. Speaker, you may think this a little out of the way but it shows what I have to face when I have to deal with whether or not we give this company money. He stayed there all day Saturday; nobody would open the gate. So he came back here. Monday morning he received a phone call to get the fuel up there immediately. They paid twice for that fuel to be trucked up there.
Mr. Speaker, if you think that I want to deal with people and organizations like that, it is not true. I have a real problem with actions like that. That is only one little example. There are probably a lot more.
I really find it funny that we are talking about this thing. Elsa closed and I never heard a big ruckus or roar. Yet Elsa contributed much more than Curragh ever has, for years and years. Clinton Creek closed. I did not see a big rush in the Yukon, yet we all survived. Tungsten went down and Watson Lake came back out of that one. Whitehorse Copper closed here and there was not a big ruckus. Everyone accepted that mines only last so long and then they go. Cassiar went out of business and there was a little ruckus in the north, but they have all survived and moved on. Any miner who has mined a lot will say that a life of a mine is about the only time that you will get in.
The true story is not coming out of Faro. I have a friend who is up there and I am certainly not going to mention names around here because he probably would be lynched tomorrow. He is a true Yukoner and he and his family were born and raised here.
He phoned and said, Stick to your guns. There is a bunch of us up here who feel that way, but we do not dare say anything.
We have tried hard, and we have tried going the right way. We have protected the taxpayers of the Yukon, and I think that is the way we should have gone and, by golly, we had better go that way, or why stay here?
Hon. Mr. Phelps: I would like to put a few comments on the record during this timely debate. I would like to make a few fairly simple points. The first point is that this is 1993, not 1985.
In 1985, the federal government took the lead role and engaged experts long before the side opposite came into power. The two leading experts they engaged were Pierre Lassonde and Peter Steen, who did a very thorough analysis of the mine situation on the governments behalf. They put their finger on the things that would have to be done in order for the mine to become a viable one. Most of that work was done by the feds, and much of it was done prior to the election in 1985.
I say that because things are different now. Then, the federal government was not only involved, but it also took the lead role and was willing to take the major burden of financial risk.
The second point I would like to make is that, back then, the Government of the Yukon was in far healthier financial shape than it is today, with the formula financing agreement freshly signed and all kinds of new money coming in to its coffers. Again, that had been done before the 1985 election.
The third difference between now and 1985 is that, in 1985-86, the focus was on getting the mine started again, knowing full well that the likelihood was that the mine would last for only seven years.
Those seven years have gone by and that ore body, for all intents and purposes, is depleted. We are now talking about a different ore body - the Grum deposit. The Grum ore body has a lot of different characteristics from the ore body we were talking about back in 1985, and I can tell anybody who wants to listen that there is a good deal of doubt that that ore body is economically viable. In fact, I can assure everyone in this House, and in the Yukon that, at current metal prices, it is not viable. Period.
There is not an expert in the world who would disagree with that statement. It is a different ore body and a different situation.
In 1985, we had a new company coming along called Curragh. There was no Westray, with all of the political liability and cloud that company sits under, in conjunction with this mine. There was no Westray in 1985. In 1985, we did not have the history of people, who are officers of Curragh, having stripped out of the company millions and millions of dollars for their personal use. That was not on the books or on the record in 1985, because it was a new company coming forward.
In 1985, we did not have the Stronsay deposit in B.C. which, again, is totally and completely uneconomical at the current prices of zinc. Any expert will tell us that. The only potential that property has is if zinc goes up for a substantial period of time. Of course, that is why it is so difficult to sell, despite the fact that all kinds of money from Faro has, directly or indirectly, gone into the development of that property. That is another difference between now and 1985.
Another difference between now and 1985 is, of course, that we did not have Sa Dena Hes, another mining property that was put up and made to run, again, with a lot of money that came from the Faro operation. It is another mine that, at these prices, will never pay back those monies to the parent company. There was no Sa Dena Hes owned by Curragh in 1985.
In 1985, there was the situation before us where there was not a lot of nervousness over an over supply of zinc and about a company that probably could not meet its obligations to the purchasers overseas. Right now we have, by the admission of many people involved in the marketing of ore, a situation where there is no question but that the reputation of this company, as a reliable supplier, is not exactly very good. That is another difference between now and 1985.
There are a lot of differences in play. Let me say that this government has never intended to subsidize the mine at Faro, ever.
Despite the expertise of Mr. Frame and his company at squeezing money from every government that he seems to come in contact with, we were never going to give away millions of dollars to the private sector in this fashion, to try to subsidize the mine and fight against a world price over which no government, including the federal government, could have any possible control. The supply and demand of the world is what we are talking about. Subsidizing Faro was never this governments position.
I can tell every person in this House that Yukoners whom I come in contact with - there are quite a few from every walk of life - would be very concerned if they thought they were being used by Curragh.
People are terrified that this government is going to start handing out money to Mr. Frame and the boys to run the mine. They know the reputation of those people in getting money, levering money out of government and they are happy that we are using experts - playing hardball with respect to negotiations and making sure that any money that we do advance to Curragh is protected in the best way possible. We are not here to give money away or throw money at the private sector, which should stand on its own two feet. We are not here to subsidize the mine, and we are not here to try and pretend that we, this little government, can overcome the world prices for lead and zinc and all that happened in Westray. We cannot do that; the people of the Yukon know that and they expect better from us.
What about Curragh? What about the newspaper articles? For example, they claim that Mr. Frame personally makes more than $7 million in one year as a result of his relationship with Curragh. Where is the personal money coming from these people to help the mine? What about allegations that many of the companies that are working on behalf of Curragh are companies owned by relatives of the officers of Curragh? Apparently, the companies owned by relatives are being paid money in preference to other debtors. What about those allegations? Do the people of the Yukon really want us to throw money at the situation no matter what? Do people really think we would be that foolish to cave in to that kind of pressure?
Let me read something that just came in to the hon. Members. This is from Japan, from somebody who works for Mitsubishi. He says that, as a result of the Curragh announcement, the Japanese smelter customers of Curragh were told, by a Curragh rep who was meeting with smelter interests in Japan, that todays move gives Curragh bargaining power in its dealing with the Government of the Yukon. That is the kind of thing we want to avoid. That is the kind of the folding that we will not get involved in. We will not knuckle under to that kind of pressure.
Let the people of the Yukon know this: our commitment and our only commitment was to advance money to strip the Grum, not to run the mine. Let them know this: we will not advance that money unless it is in the best interest of all Yukoners to do so and we get the best possible security for that money.
Mr. McDonald: I knew that if we allowed the Members on the front benches of the government side to speak long enough, the true position they were taking would finally come forward. We had listened to the Government Leader. He was somewhat practiced. The Minister of Economic Development is now newly practiced at being sensitive to the needs of the people of Faro and our economy. When the other Members are allowed to start speaking, a much clearer vision of what it is they are truly interested in can be seen.
We heard from one Minister that we should not get in a knot about this because other mines in other places have closed. We should get used to the idea and simply accept it when it happens. After all, the people who work in those mines presumably are not true Yukoners. They were not born and raised in the Yukon. There are not many people in this room, at least in these Chambers, who were born and raised in the Yukon. I would like to challenge them for one second to say that anyone who is sitting in this room as an elected representative for the people of this territory is not a true Yukoner. There are a lot of good citizens in this territory who would have something to say about that.
We have heard other Ministers plead that we should be getting on with something more important. Let us get on with those phony supplementary estimates and, the sooner the better, let us get on with the main estimates. If we do not deal with something like Curragh, what is the point of dealing with the budgets. Are we focussing so much inwardly these days that we care only about the governments finances and the fiscal position but do not give a darn about what is going on out in the streets? There are people living with the anxiety of having no job every single day and every moment. Is the government saying this is not the most important subject we could possibly be dealing with?
Are we so concerned about whether or not there is a small percentage change in this budget, or that budget, that we cannot spend the time to deal with this issue first? Is it wrong for Members in the Legislature, who are not dealing first hand with negotiations to show some concern about getting more information, and ensuring that the government itself makes Curragh the priority that it deserves?
Is the position of the Member for Ross River-Southern Lakes, with respect to negotiating with Curragh, dependent on whether or not we like Clifford Frame? If that is the case, then nobody could put together a deal that would be acceptable. We hear the situation from the Member for Ross River-Southern Lakes that this is a much more difficult situation. We are talking about restructuring a company. We are talking about the metals markets being nervous about whether or not Curragh can supply metals or ore to the smelters. He tries to suggest that everything was set up in 1985, and all we had to do was simply come in and sign on the dotted line and everything would just click into place.
The Member is so incredibly wrong about his own assessment of what was happening in 1985, that it makes the situation now seem like a cakewalk. In 1985, you will recall, nothing was happening. The Government of Yukon was spinning its wheels for a couple of years doing nothing. People were saying that nobody could open that mine and run it economically after Cyprus Anvil had virtually shut down. The information that was coming out of the Department of Transportation in Juneau was that if the Yukon government sent Mr. Lang, the Minister of Transportation at the time, over there one more time, we would never get a deal on the road. There were issues to do with housing, with financing, with electricity - all for a mine that was not running. There was not even a buyer available. There was no private capital anywhere.
Now we have got a situation where there are hundreds of workers sitting there, waiting to go to work every day. We have got experienced company officers, who are prepared to manage the company, on the site. In 1985, after Dome Petroleum had its way with that mine site, there was no sense of security in what that mine could produce and deliver to foreign markets. The Government Leader of the day had to join with company officers to try to convince them that the experience that we had with the mine prior to 1985 was now going to be different - we were going to ensure a more steady supply of ore. What we have now is a situation where the Minister of Economic Development says that the Leader of the Official Opposition does not understand the complexity of the issue.
A couple of weeks ago, the Curragh officers did not understand the kind of trouble they were facing. Suddenly, we have the people across the floor, who feel they are masters at putting together the good, old, tough deal, playing the macho game the Member for Ross River wants us all to play. Somehow, we have to show some faith in what they are doing to put this deal together.
These have been the reluctant brides in this marriage - if I can use that terminology - on this deal from virtually the first day. I stood in the meeting hall in Faro, where there were hundreds and hundreds of people. At that time, the only arrangements the Members opposite said they had taken thus far was to develop a contingency plan for Faros collapse - the contingency plan we received today. It is a very conventional one. There are some problems that I will bring up later, but it contains all the basic essentials of what one does when a mine closes down, the regional economy collapses and everybody leaves the territory.
They indicated quite clearly that they would have a deal put together, and that they would work around the clock. They were doing everything they could to convince us all that they were seized of the need to do something, and they were going to do it. What happened?
We were told that there were a few meetings between some officials of the Yukon government and Curragh officials. We were told that nothing ever came of those meetings. When the Faro delegation finally came to this city to impress upon them, once again, that there were needs out there that had to be addressed and there had to be some economic leadership, it was only then that we got a very reluctant indication that there was going to be any support at all. It was only a week later that we got a sense of what the conditions would be, should they go ahead and loan the company some money to keep going and to keep jobs going.
That begs the question of why these conditions were not given to Curragh when they said they were getting serious in negotiations in the beginning. It was obvious to every observer that they were serious, and that is the reason why we had the debate today. It is no mystery. The issue is that the people on the government benches are not committed to putting this deal together. We have already been acclimatized to the fact that we are going to be facing a shutdown - and the Member for Kluane has suggested that we should just live with that idea - but we do not have anything that gives us any degree of comfort. The Members opposite say that what we must be advocating is to give the money away with no conditions. That is not what we are advocating at all, and that has never been what we have advocated. We want tough negotiations, but we want negotiations.
The negotiations are being undertaken by the people who are the most reluctant partners in the whole equation: the Yukon governments Cabinet. This makes us very, very nervous. Negotiations are being carried out via long distance and now we hear the people in Faro say that if they want some economic development all they have to do is phone 1-800; phone the Faro desk.
That aside, the point of the matter is that there has to be some sense of urgency on the front benches. If this Legislature allows the Members opposite to go home thinking that they have pulled another stunt and satisfied the public need to talk about the issue so they can go about their merry way in these slow-poke negotiations, they have another think coming.
If that mine goes down and this economy collapses, the budget they have tabled so far - which is the laughing stock in many corners of this territory - will seem minor in comparison to the fall-out that will result with the loss of all those jobs - not only in Faro, but in my constituency in Whitehorse, around the city and in Watson Lake.
All that we have heard to date are negative reports about the potential reopening of Faro. When we attended briefings with the government, the impression that we were left with was that these government characters are going to let the mine go down and that the analysis supported a conclusion that the mine should go down.
The socio-economic analysis that we were promised never materialized. That was the one analysis that would show precisely what the consequences would be to the economy - not the government - to other peoples jobs, to the workplace and to the small businesses out there. What will happen to them if the mine goes down? That analysis still has not materialized. We are still operating without that information.
Now we hear from the Members opposite who have been in the saddle for six months - certainly long enough to put together a deal - is that if there is any concern about any of the details, if we think they are reluctant partners, then it should have been someone else who did it. Look to someone else.
If our Member of Parliament, Audrey McLaughlin, has not been asking questions, she sure has been making up for it in private meetings with Ministers and virtually anyone who will listen to her. That is sound strategy, given the fact of Westray today, in my view.
The Members opposite laugh. These Members do not have one bit of experience with a single successful project. They have not handled things competently on virtually every front and yet they sit back with a self-satisfied grin thinking that they are going to manage to put this deal together, without any input or any encouragement or advice from the Members on this side or the public. I do not buy that.
We have been told on a number of occasions that the Members opposite are interested in putting a deal together. We have seen, time after time where they only come reluctantly, kicking and screaming, to a conclusion, whether it be agreeing in principle that the mine should be helped, whether it is putting together the conditions, whether it is getting on with negotiations or whether it is getting the study prepared in the first place. Every time we hear from the Members opposite, with the exception of the Government Leader who is a little more practiced at the art of the positive than the rest of the Cabinet Members, it is always the same old story: there are serious problems; it is not worth it; we should let it go down; they are not real Yukoners; why should we worry, the government is going to be rich anyway; why are we going through this problem in the first place? The reason why we are going through this problem is because there are a lot of peoples future on the line - true Yukoners, true working people who are depending on everything that is decided in the Legislature and by Cabinet. That is the reason we are dealing with it and if we can do something to encourage the Cabinet to take action - because we know that is what it takes; it takes this kind of debate; it takes people speaking out - then we will do it. If we get a crumb of information now and again that lets us know precisely what is happening then I think it is worth the effort.
Speaker: Does any other Member wish to be heard?
We will now proceed to Orders of the Day.
ORDERS OF THE DAY
Hon. Mr. Phillips: I move that the Speaker do now leave the Chair and that the House resolve into the Committee of the Whole.
Speaker: It has been moved by the Government House Leader that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Motion agreed to
Speaker leaves the Chair
COMMITTEE OF THE WHOLE
Chair: I will now call Committee of the Whole to order. Is it the wish of the Committee to recess until 7:30 p.m.?
Some Hon. Members: Agreed.
Chair: I will now call Committee to order.
Is there any further general debate on Bill No. 4?
Bill No. 4 - Second Appropriation Act, 1992-93 - continued
Hon. Mr. Ostashek: When we closed debate last week, the Member for McIntyre-Takhini got a little long winded in the last 10 minutes of the debate and did not give me a chance to reply. I am going to take this opportunity to put some statements on the record prior to the continuation of questioning here and general debate.
In the exchange the other night, the Member for McIntyre-Takhini made the statement in Committee that our travel savings were not as great as we were trying to lead him to believe and that there we were going on with a lot of rhetoric, but not presenting exact figures. He said he needed something more concrete than that to make a decision as to whether or not there were any savings to government.
I replied that to put accurate figures on the savings would be really difficult because the overall cost of government had been reduced, but the actual penny-by-penny count of the savings would be difficult.
In that debate, Mr. McDonald was saying that, the Government Leader has indicated that travel bookings are down 45 percent from the main estimates last year. We know from the main estimates last year that there was a conscious effort and, in fact, there was a decision made by government at the time that they were going to reduce their travel budgets by 25 percent. He went on to ask me if we had factored that 25 percent into the 45-percent reduction figures we had calculated. I made a reply and then Mr. McDonald came back in and said that in November 1991 there was an announcement of a 25-percent reduction in travel government-wide and that, from the travel budget for the period April 1, 1992 through to March 31, 1993, the 25-percent budget reduction is included. He asked me if the 25-percent budget figure was included in the figures as part of the travel freeze. I went on to say that I presumed that would be correct and that it would be included in there if that were the case.
I guess my concern is that the Member opposite has been very critical of our not putting any dollar amounts on the percentages that we are saying we are saving. The percentages were the easiest way to go and we gave some glaring examples of how dramatically things were cut. My concern is that I was prepared to accept his figures - his 25-percent reduction - as I felt he was telling me what he believed to be true. I am relating to him what I believe to be true, but he does not want to accept it. He wants hard and fast figures.
My concern is that what is sauce for the goose can be sauce for the gander. I may be out of order, but I would like to ask the Member opposite if he has a figure on what he saved with his forecasted 25-percent reduction in travel, prior to our taking office.
Mr. McDonald: On this side of the House, we have no departments. I know the Government Leader is gesturing that I was there, and consequently, I should have some details respecting travel budgets of all the departments at my fingertips. While there are many things I do remember, I do not remember precise dollar amounts of travel costs. I would be more than happy to tell him those costs if he would not mind turning over the operation of his departments to me for a few days. I could go in, provide ministerial direction and be the Minister for a couple of days.
Some Hon. Member: (Inaudible)
Mr. McDonald: The Member for Riverdale North is saying that it is not affordable; he does not know how ludicrous that sounds under the circumstances.
The problem I have here is simply this: I am trying to understand the figures the Government Leader has provided. I take him to be an honest man, and I am trying to get an honest appreciation of what the numbers are saying. I am trying to do my best to figure out, precisely, the appropriate interpretation of the claims that Members opposite are making. I think it is a reasonable thing for the Members in this House to do, to analyze the actions that the government has taken to save money, because they have made some grand claims about that.
The Member will have to forgive me if I do want to analyze claims that have been made; after all, that is what the Legislature is all about. Ministers can make some grand claims, get everyone worked up, get everyone feeling good, or say any number of things with any particular effect. The one fact the Member can always count on is that he will always pay the piper when he comes back to this Legislature; there is always someone listening and someone who will want verification of what has been said. That is why I wanted to determine what the figures were.
I do not have any departments. If the Member wants me to be a Minister for a few days, I will be more than happy to do that. Just swear me in. Then I will find the figures and do the appropriate thing.
If the Member has any other further information in terms of real dollars, and that sort of thing, then I would be more than happy to accept it; but I think I said more or less what I wanted to say last time around.
Hon. Mr. Ostashek: It is ironic that the word fabrication keeps coming up. I think we have made a conscious effort to relate to the House and to the Members opposite the percentages in the dramatic cuts we have made and how the travel requests dropped in the neighbourhood of 45 to 50 percent; hiring was down by 50 percent and discretionary buying was down. We are making a conscious effort to do that, and I believe that this administration, upon taking office, did make a very conscious effort and has, in fact, saved millions of dollars by doing so.
Maybe I could just refresh the Member opposites memory a little on the travel reduction. After his statements in the House the other day when he was so adamantly saying that they reduced travel by 25 percent because their travel costs were high and a conscious effort was being made, I had officials - who he says he does not have but if he had wanted these figures I would have seen that he got them just as easily as I did - go back and do some calculations from April 1, 1991 until October 31, 1991. Then we compared the same figure when the Member opposite - who would like to be a Minister in this administration, as he stated earlier - said they imposed their 25-percent travel reduction and that should have been included in our 45 percent. We compared the figures also from April 1, 1992, to October 31, 1993. The findings were surprising - maybe I should say disappointing, as far as I am concerned.
They managed, with a conscious effort, with directions to their departments to reduce travel by 25 percent - that is what the Member opposite said in this Legislature - in the period from April 1 to October 31 to reduce their travel costs by $27,000 - 3.1 percent. I do not believe that we are trying to mislead this House at all. We did try to do some calculations, but I wanted to go back and set the record straight first. If the Members opposite want to consider their three percent out of our 45 percent, they should feel free to do so.
I cannot give totally accurate figures because some assumptions have to be made on this. On the staffing actions that were taken, the controlled hiring, there was a 37-percent reduction in hiring between the month of November 1991 and November 1992. In December, it was a 68-percent reduction in hirings. In January it was a 50-percent reduction in hirings. In February, it was a 45-percent reduction in hiring. March figures are not available yet, but I imagine that they will come in about the same area, although not as dramatically because term employees are being called back to work. Overall it is about a 50 percent average. If we were to take an average salary - this is the easiest way to do it as we cannot pull every one of the figures and I do not think the Member opposite is looking for that from us - of $52,755, across the board, the savings would be approximately $2 million over five months.
We would be safe to assume that we saved at least $1 million in wages - not $2 million; that is what that figure adds up to. We would be safe to assume that, based on the different categories of salaries, we saved at least $1 million, or $200,000 a month, as I said in this House earlier.
There were some statements made the other night that we had a big ballooning of discretionary buying in the month of March this year. The officials checked for us, and that is simply not the case. The summary I have here says there was a 17.36 percent decrease in the number of purchase orders placed between December and March 1992-93, as compared to the same period for 1991-92. There was a 13.7 percent decrease in the value of those purchase orders, when compared to the same figure in 1991-92.
On the service contracts issued, there was a 9.9 percent decrease in the value of the contracts and change orders processed in February and March of 1993, compared to the same period in 1992. There was a 47.8 percent decrease in the number of transactions for new contracting change orders processed in February and March of 1993, compared to the same period a year previous.
I think this indicates that we have taken every caution that we could to reduce the cost of government and we have made substantial savings, which are included in the supplementary estimates that are before this House.
Mr. McDonald: First of all, I think we will have to deal with these items one at a time. The fact remains, from the last time around, that there appeared to be a lot of claims being made about the savings that the Members opposite feel that they have accomplished.
With respect to the airline bookings, I will have to take that information from the Member as gospel; I have no way of verifying it. The fact remains that the government did make a decision to reduce the travel budget by 25 percent over the course of the year. If they sought less of a savings in the beginning part of the year, that would be up to them but, certainly, the direction was absolutely clear. Again, I cannot do anything more than take the Members word for it, which is somewhat unfortunate.
With respect to the hiring procedures, I will have to do some calculations. At this point, it is very difficult for me to get comfortable with the information the Member has provided.
With respect to the discretionary buying, based on the information that we have already requested in written questions, we will get a better appreciation for precisely how the expenditure patterns are being applied over the course of this year, and we will be able to better determine at that time whether or not the savings are as significant or as dramatic as the Member has made out.
Nevertheless, that is one thing we will have to pursue at a later time, for our own needs.
I do not have much more to say.
Hon. Mr. Phillips: Those were very interesting figures produced by the Government Leader on the overall government spending. I took the same opportunity that the Government Leader did when the Member opposite, the former Minister of Education, raised this concern in the departments.
I have some figures that I would like to read into the record, to show comparisons between 1991-92 and 1992-93. For instance, in the Department of Education - this is just travel expenditures from April to October, which is the period of time that the Government of Yukon had a 25-percent travel freeze on - in the Ministers previous department, the amount spent went from $131,000 to $170,000, which is a 29-percent increase for employee travel in Yukon. The amount went up 14 percent, from $86,000 to $98,000 for employee travel out of Yukon. Other in-Yukon travel went up 90.62 percent and other out-of-Yukon travel went up 27.6 percent.
Overall, from April to October 1992-93, the numbers went down significantly in the latter part of the year. When we came into power in November, there was a dramatic change. Between November 1991-92 and 1992-93, there was a 31-percent decrease, versus a seven-percent decrease for the previous government in that area.
There was a 93.5-percent decrease in employee out-of-Yukon travel, compared to a 36-percent decrease for the year previous, under the former administration.
Under the line other in-Yukon travel: the previous government increased this by 16.11 percent between November 1991 and March 1992; from November 1992 to March 1993, we decreased that same line 32.72 percent.
Regarding out-of-Yukon travel, when the previous government had their 25-percent travel freeze on, travel increased by 159.82 percent in that area. We decreased travel from the $79,000 that the previous government spent from November 1991 to March 1992. From November 1992 to March 1993, travel decreased to $43,507. That is a 45-percent decrease.
These are significant figures. I would be more than happy to table this information for the Member opposite if he wants to look at it. We did not tinker with it at all. I basically asked the department how much we travelled in 1991-92 between April and October, what the percentage differences were - how much they went down or up - and it appears that in only one case that I can see, the government was successful in decreasing their travel in that period. They decreased it by 27 percent, but that was in only one particular case.
Overall, the Department of Educations budget did not decrease very much during that period of time. It has decreased 44 percent from 1991-92 to 1992-93. I think that is a significant decrease for that department. I commend the department managers and others in the department who took it seriously when we asked them to try and save some money. They did a great job.
Mr. McDonald: The Minister has just raised an interesting point. What we will have to do is put a written question on the Order Paper regarding getting some comparative information over the last three years on travel patterns. The period the Minister has identified as being comparative periods are not comparative at all, particularly for the Department of Education, where there is a lot of travel at the beginning of the year, given the teacher hiring.
The professional development fund has also been increased over the last fiscal year. I am certain the Member would not be able to curtail too much of that travel, given that is not within his purview to decide and rightly so, given that that is a responsibility of the collective agreement.
Given the Ministers eagerness to provide this information, it is going to cause us to extract a lot more information - because when the claims are made they have to be justified, so I will be putting a written question on the Order Paper tomorrow, asking for comparative information by department over the last three years, by month.
Hon. Mr. Ostashek: I have for tabling the staffing action and discretionary purchasing documents.
Mrs. Firth: The Deputy Minister of Finance has said that we could have the month-end figures printed from the computer within seven days of the month-end, which would give us a clear picture of the governments financial position. That would mean that, on Wednesday, we could have a financial printout of the figures as of March 31. I would like to ask the Government Leader if he will be providing that information to the Members of the House.
Hon. Mr. Ostashek: If the Member recalls the discussion the other day, I stated in the House that those figures would be irrelevant until we had all the accounts payable, which is in the millions of dollars. Those will not be available until the third week in April. Until we get all those figures in, the printouts on April 10 will not show the whole picture, because there are still all the accounts payable from the month of March to be gone through, and they are in the millions of dollars.
Mrs. Firth: Could the Minister provide us with the printout after the accounts payable have come forward?
Hon. Mr. Ostashek: We can do it, but we will have to put the caveat on it that it is not accurate until all the accounts payable are accounted for, or we can wait until all the accounts payable are in and table it at that time. The amount that will be missing from there is in the millions of dollars.
Mrs. Firth: I am prepared to take the information on that basis, if the Government Leader will provide it. What is the millions of dollars of accounts payable? What is that all about?
Hon. Mr. Ostashek: It is any bill that has not been paid in March and is still owing for the previous year. It will be in the accounts payable, and it will be about the third week of April before those are calculated. They are for monies that have been spent, but the bill has not yet been paid.
Mrs. Firth: I am trying to get a handle on this. Why do we not know that right now? Do the departments not know what is owing in their budgets? Are they not paying their bills? Are they saving them all up until the end of the year, and that is why there are millions and millions of dollars? How does it work?
Hon. Mr. Ostashek: It is like any other business. The government probably has not received a lot of those bills yet, because the invoices are mailed out March 31. By the time they are all in, and they are all calculated, it will be about the third week of April before they actually know what is owing.
Mrs. Firth: Surely, the departments should still know the amount of money they have spent. When I have my little bank book, I also have accounts payable. I know how much money I have spent. I do a bank reconciliation, so I know what has been spent. Surely, we can get that information from the government.
Hon. Mr. Ostashek: I have said we will get the information. It will take a bit of time. Like I said in the House the other day, by about the third week of April, it will all be tallied up, and the Member will be able to see what it is.
Mr. Cable: When is the entry put into the computer? <197> when the work is done or the service provided, or when the invoice actually is received up at the front desk by the government?
Hon. Mr. Ostashek: The process starts when the commitment is made and the purchase order is issued.
While I am on my feet, if I may explain this for the Member for Riverdale South, the government processes 147,000 invoices in a year. There are a lot of invoices every month that have to be processed, so it does take some time.
Mr. Cable: I do not think the last question was answered. I will ask you again in a moment, but there is another question. If there is work done in March, and it is actually invoiced in April, is that recorded in the fiscal year ending March 31?
Hon. Mr. Ostashek: Yes, that would be recorded in the month of March.
Mr. Cable: Perhaps the Government Leader has answered the question in a roundabout sort of way. If the work is performed in March, what triggers the computer: the invoice floating over somebodys desk, or the work having been done?
Hon. Mr. Ostashek: The issuance of the contract would be what would start it. That is what would trigger it.
Mr. McDonald: We will be looking forward to seeing the information when it comes forward, with whatever caveats the Member wants to put on it.
What I would like to do is to introduce the subject of formula financing, and then carry on with the subject in the debate on the main estimates. Perhaps as a question to start off with, I would like to ask the Government Leader if he could provide us with a list of both positive and negative changes in the transfer payments that have taken place since the figure was first projected at $229 million. It shows an increase of $15,304,000, for a total of $244 million. Can the Government Leader provide me with a reasonably precise list of changes that would account for the increase, including both the positive and negative sides?
Hon. Mr. Ostashek: I have a document here that I can table but I must first provide a brief explanation. It starts out with a transfer payment of $229,013,000, and the transfer payment for the 1992-93 period 2 variance report is $251,700,000. The additions and subtractions are listed, for a total that is in the supplementary of $244,317,000. I will table that document for the Members opposite. Once copies are made, perhaps we could have the document back.
Mrs. Firth: I just want to follow up to find out what the governments real financial position is. I would like to ask the Minister of Finance if we will know the financial position of the government before we have to come into the House to debate any bills; for example, the bill for the personal tax rate increase. Will we have an accurate picture of the governments financial position before we do that?
Hon. Mr. Ostashek: No, I am afraid we will not have an accurate picture until the Auditor Generals report is completed.
Mrs. Firth: The Minister has just stood up and told us that by April 21 or so we will have an idea; we will have a printout April 6, then accounts payable later on in April. We should know by April 10 the governments financial position. I would like to know why we will not know the governments financial position before having to debate and give further readings to any of the tax bills in the House, such as the personal income tax rate increase.
Hon. Mr. Ostashek: What we will have is a rough estimate. The Auditor General moves things around quite a bit, I understand, so you will not have a totally accurate picture.
Mrs. Firth: Is the bottom line going to be different in the Auditor Generals report?
Hon. Mr. Ostashek: Yes. The Auditor General will make all sorts of adjustments to it.
Mrs. Firth: Could the Minister tell us what is wrong with our system, then, that we cannot get an accurate financial picture of the governments state of finances, and that it is only the Auditor General who can and that his is accurate and ours is not? We should know whether we have surpluses or what the state of our books is from all these printouts.
Hon. Mr. Ostashek: The Member opposite is asking for something that is just not possible. I do not know of any company, even in the private sector, that could put out an audited financial statement within three weeks of year-end. It takes more time than that. As we said, there will be a rough estimate. We may not always agree with the changes the Auditor General makes, but there will be a multitude of changes made before the audited financial statement comes out.
Mrs. Firth: We are not asking for an audited statement. We are asking what the bottom line is going to be, and any company would certainly know what their bottom line is. Perhaps we should be expecting that government would as well.
Hon. Mr. Ostashek: Not really. If we could do that, the statements would be issued within three weeks. As I said earlier, we will have a rough idea and that is all we will have. We have been accused quite convincingly by the other side; they do not believe our figures and the only ones they will believe are those of the Auditor General.
Mr. McDonald: I still do not have the information the Member provided, so I am a little bit at a loss as to where to go. In terms of the amount of the increase in the transfer payment due to recoveries or a switch in payment for such things as the Alaska Highway - it used to be a recovery but is now part of the transfer payment - how much is that?
Hon. Mr. Ostashek: That figure should be on the document the Member has in front of him.
Mr. McDonald: I only have the document - he has the Finance official.
As much as I have seen many of these things before, I need at least a couple of minutes.
I am looking for a tax adjustment factor. I think I have found the addition regarding the Alaska Highway transfer. It is the very first item on the sheet. Is that correct? Yes.
What effect does the tax effort adjustment factor have on the transfer agreement?
Hon. Mr. Ostashek: It was assumed to be 1.46190. It is now 1.44885. Is that what the Member is after? We do not know the dollar terms as we do not have a calculator here either.
Mr. McDonald: Perhaps I will ask some questions for the record, if the Government Leader would be good enough to come back with some information.
Hon. Mr. Ostashek: The figure is $27,700,000.
Mrs. Firth: I am going to go back to the issue I was discussing with the Minister of Finance earlier about the rough estimates and statements of the governments books. He never did answer my question about whether or not we could have the rough estimates before we debate any tax bills in this House.
Hon. Mr. Ostashek: As the Member opposite knows full well, I talked to her in my office today about what we are faced with here. I do not know whether or not that will be possible.
Mrs. Firth: Could the Government Leader check with his Finance official, who is sitting there with him, and give us an answer tonight, please?
Hon. Mr. Ostashek: I would like to have the figures in, so that we are fairly accurate in what we are releasing, rather than updating the figures on a daily basis as to what the rough balance is. As I said, it will be about the third week in April before we have that.
Mrs. Firth: That is fine, and I understand that. I am simply asking if we could have the figures before we debate any tax bills in this House.
Hon. Mr. Ostashek: As I have already indicated to the Member, we may be bringing tax bills forward before that date.
Mr. McDonald: I am still studying the chart, so I will ask a question respecting the negotiations on the Formula Financing Agreement. There have been a number of hints from the Government Leader that he has been talking to federal Ministers about the Formula Financing Agreement and has engaged in some discussions and negotiations on changes to the agreement.
Can the Government Leader indicate to us the character of those discussions? What has been pursued? What is the federal position? What has the government been seeking to do in those discussions?
Hon. Mr. Ostashek: I certainly have no problem sharing that information with the Members opposite.
The tone of the discussions are basically that the federal government is not prepared to change the formula now, but they are considering giving us some interim relief from it until the agreement comes up for renegotiation for the next five-year period.
They are saying that the formula would remain the same, but we are looking for some relief from it by having monies transferred that would be repaid. The more favourable adjustments we get to the perversity factor would be the money used to repay the relief that we get from the agreement now.
There is one other stipulation that I have asked to be put on this, and that is that any of the monies received from the federal government, under the perversity factor adjustment, would be earmarked and specified for self-sufficiency infrastructure. It would not be for the regular O&M of government.
Mr. McDonald: I am a little confused about what the Member has been saying here. Is he saying the amount he feels they have saved, as a result of the fact that they have promised to raise taxes, will be directed toward infrastructure? What is the intent of the Members remarks? He has not put it into any kind of context, so I am struggling.
Hon. Mr. Ostashek: As the Members opposite know full well, the perversity factor is dramatically hurting Yukoners. The way we have it calculated now, it will be to the tune of $120 million over the five-year life of the agreement. While the federal government is making motions that they will look at a readjustment of the perversity factor in the next set of negotiations, they do not seem too interested in dealing with the change in the formula at this point. To offset that, they are talking about perhaps giving us some relief from it by granting us some funds we can use in the infrastructure for a power grid, for highway upgrading, or for anything that would be classified as infrastructure for self-sufficiency.
Basically, this all came together as a result more by the efforts of the Minister of DIAND, who wants to see a self-sufficiency infrastructure program put together in the north. We offered to look at it in that context, if we could get some relief from the perversity factor until such time as it is renegotiated, and that whatever funding we got from that would be repaid on favourable adjustments to the perversity factor.
I am looking for a lot more than there is in tax increases in the budget.
Mr. McDonald: I hope so. I do not see why the federal government would have any say whatsoever on the funds that we would no longer be penalized on, as a result of the Yukon raising its taxes. Why would they have any right to say anything about that money?
Is this relief in the form of an addition to the transfer payment? Is this the $10 million the Member has been talking about? What sort of relief is he talking about?
Hon. Mr. Ostashek: No, not at all. The $10 million that is forthcoming to the Yukon is a result of the economic statement made by the federal Finance Minister in December, where he provided $500 million across Canada for infrastructure upgrading. It appears that we will be getting $10 million out of that, as will the Northwest Territories. This is a separate issue from that.
Mr. McDonald: Did the Government Leader get a commitment in writing indicating that should there be tax increases in the Yukon at some future stage they would get some commensurate, or better than commensurate, benefit for the effort?
Hon. Mr. Ostashek: No, not at all. There was no commitment made to the federal government on tax increases, or anything of the sort. I went down there, basically alluding to our financial position, stating that we needed some help to put some infrastructure in place, which this party feels is required to diversify the economy of the Yukon. Based on the financial situation that the Yukon is in, I said to the federal government that it could continue to keep funding us at this high level or it could invest some money and hope that we get to be more self-sufficient, and less dependent on the federal government. As the Member opposite knows, any increase in taxes will already play favourably on the perversity factor, so that was not part of the argument. The argument was just basically that we were going to be a fiscally responsible government and we needed some help in the interim to get the Yukon moving.
Mr. McDonald: The Minister should listen to himself sometime when he makes comments like that. It does sound a little inconsistent. Maybe if I said it, I know the Minister, with his critical ear, would understand the contradiction immediately. If I were to say that I went to the federal government and thanked them for providing us with this high level of support, and then went on to say that if they really wanted us to be self-sufficient, they would invest even more in the Yukon, this does seem, on its face, to be something of an inconsistency.
That is not what I want to drive at here right now. I want to find out, not whether or not there is a commitment to the federal government to do something, but whether or not there is a commitment from the federal government to the Yukon that they would provide, in return for this effort in respect to taxes, a more than commensurate benefit for our effort. Clearly, if we raise our income ourselves by $8 million, the perversity factor in the formula, the tax effort adjustment factor, would give some benefit to the Yukon. I would like to know whether the federal government has committed to providing some benefit to us, and to what extent is that commitment?
Hon. Mr. Ostashek: I would just like to clear up the confusion that the Member opposite seems to have. We did not make any agreement with the federal government to raise taxes to get relief from the perversity factor. That is not the case at all. We raised taxes to balance the budget. By doing so, it will have a more favourable effect on the next set of negotiations on the perversity factor - not immediately.
The Member says that I am talking in circles by saying that I want more help from the federal government. What I am saying is that that is specifically why I indicated to the federal government that any money they invested would not go for the operation and maintenance of more government in the Yukon, but would go to put infrastructure in place, so that we could have more reasonably priced power, better highways, and more highways for mining companies and other people who are interested in developing in the Yukon, to be able to do so on a more competitive basis. Any job we create in the Yukon, through infrastructure, creates about four or five jobs in southern Canada. It is a benefit to all Canadians to see the Yukon more self-sufficient. That is basically why I put the kicker in there, that we would use the money that had been earmarked for self-sufficiency infrastructure, not just to continue having a bigger government in the Yukon.
Mr. McDonald: I do not believe I am labouring under any misunderstanding about what the Government Leader has said in the last couple of weeks regarding the reasons for raising taxes. It has been very clear in the debate in the Legislature as to the reasons and it is all on the public record. I do not want to focus on the reasons for raising taxes, because this is a supplementary estimates debate. What I am trying to do is understand the character of the discussions between the federal government and the Yukon government during the period that we are reviewing here and get some sense of where things are going. That way, when we do get to the main estimates, we can have a thorough, knowledgeable discussion about this. I am trying to get some baseline information now so that when we get into the main estimates we will have a more useful discussion.
The Minister has indicated that he went to Ottawa and got an agreement of some sort. I am trying to get a sense of what kind of agreement it is, that should he raise taxes, he will get some kind of commensurate benefit, which he has said he will dedicate to infrastructure.
He is shaking his head. If this is not right, I do not know where we are going. I have to find out what the Minister is up to here.
Hon. Mr. Ostashek: The Member, either intentionally or unintentionally, is trying to get this twisted around. I said in the House and in public that the reason we are raising taxes is to balance the budget. We said we would not deficit finance. We needed that money to balance the budget.
At the same time, we are negotiating with Ottawa and have exchanged papers on some relief from the perversity factor. All I have said is that, in conjunction with raising taxes, the federal government will look upon us more favourably, in that we are being more fiscally responsible.
Mr. McDonald: I must say that if the Member is going to invite debate on the reasons for raising taxes in the main estimates, I will have to engage in that debate. The information that is on the record is quite clear. The information was that the Government Leader stood in his place and indicated to us that we should have raised taxes in 1987-88, because we could have received an extra $120 million. He made it sound like we were irresponsible for not having raised taxes at that time, not having achieved that extra $120 million - or whatever it was.
That is on the record, but that is not what I am asking. What I am asking is: what kind of arrangement has been struck? They said that the agreement is that if the taxes were raised, there will be some relief on the perversity factor. We know that there would be some relief on the perversity factor because under the Formula Financing Agreement, when the Yukon raises tax rates it is consequently allowed to collect all that extra revenue; therefore, there would be less of a penalty as a result.
Is the Minister saying that he has some sort of agreement from the federal government that they will give the Yukon more money or will they simply promise to be nice to the Yukon? What has been accomplished in this mission to the federal government showing them that we can raise taxes? What precisely is the accomplishment? Is it written down? Is there an agreement we can chew on?
Hon. Mr. Ostashek: I have said time and time again that there is no agreement with the federal government to raise taxes, to get money from the federal government. I did not say that. I did say in this House, and I have no problem saying it again tonight, that I feel the Members opposite - when they were in government - were irresponsible in not dealing with the perversity factor. I have no problem saying that. Maybe if I had been more familiar with it, I would have known. What I have said is that I am negotiating with the federal government to get some money. There is no agreement that we are going to do this for this. We have exchanged position papers. I wish I could announce today what we are going to get, but it has not got to that stage yet. We are trying to get some relief from the perversity factor in the interim without adjusting the perversity factor - to get some money for infrastructure for the Yukon.
Mr. McDonald: So we have established that there is no agreement of any sort with respect to the perversity factor; the government has simply gone down to Ottawa and indicated that they are going to raise taxes and this is going to be a reflection of our goodwill. Is that right? And this goodwill is going to translate into something in the future. What is it going to translate into?
Hon. Mr. Ostashek: I cannot put a dollar value on it now, but I am sure it will bode us well. I just want to make it explicitly clear again that the reason the taxes were raised was to balance the budget and we will discuss that when we debate the budget. It has nothing to do with the supplementaries and I think that we are getting away from the supplementaries.
Mr. McDonald: With the greatest respect, the Minister has insisted on putting on the record some arguments with respect to the main estimates and the reason for the tax increases. I have shown enormous restraint not to engage in that debate; it is a debate I would love, but I am not trying to get into the question of the reasons for the tax increases. What I am trying to do is understand the character of the negotiations or discussions the Minister has had with the federal government. There are pots of money here and pots of money there; there is goodwill here and goodwill there, and it is going to mean megabucks to us if we just do this or we just do that. It is a very confusing jumble of things. I am not saying that the Minister does not have a grand design or vision. All I am saying is that I do not understand it yet and I am, legitimately, I think, just trying to ask questions about it. That is all.
I swear, if there is more propaganda about why they are raising taxes, I will engage in the debate right now, because there is too much provocation, too much to resist.
In terms of the goodwill that we are supposed to be achieving as a result of the desire to raise taxes - as the Member says, deal with the perversity factor. Members in the past have said that we should have dealt with the perversity factor. Clearly, at the time the matter was arranged and imposed on the Yukon, we could not get an agreement from the federal government to simply do away with it, without giving in to their desire for us to raise taxes during that period.
Clearly, that was not an option. We could have accepted no cash, of course, but that was not a realistic option from our perspective either.
There has been some discussion about there being some kind of arrangement; I think the Minister made reference in the House to an arrangement being struck on the perversity factor - these are discussions that have taken place in this past year. I am trying to get an appreciation for what has transpired.
Hon. Mr. Phillips: Point of order.
We are wandering into the main budget. We are dealing with the supplementaries. There are no tax increases in the supplementaries and the Member keeps tying the perversity factor into the tax increases. We have been over three weeks in this House now, and we have yet to talk about one number in the supplementaries. It is time we get down to business and talk about what we are supposed to be talking about. We are going to have all kinds of time to deal with the O&M budget, the tax increases and the other issues that flow from it but, with all due respect, we have been here for three weeks and have not talked about one number. We have raised some numbers here today, but unfortunately the Opposition did not want to hear those numbers because they proved the fact that they spent an awful lot of money in a short period of time.
We should get back to the supplementaries and deal with the bill that is in front of us today.
Chair: The Member for McIntyre-Takhini, on the point of order.
Mr. McDonald: I could not give two hoots about what the Member opposite thinks about my line of questioning.
This line of questioning is all about formula financing negotiations that were announced to be in effect - there was a lot of talk about formula financing negotiations, from the period of December through to the end of the fiscal year. I am trying to get an appreciation for some of the things that were happening, because this is a complicated area. I am having limited success, and the fact of the matter remains that this is a very significant element.
We could spend hours and hours debating $25,000 here and $40,000 there, but if you look at the change in the transfer payments, we have changes that are in the millions of dollars each.
As the Finance critic, I do not think it is right to pass over the discussion about these major changes and the assumptions contained in those changes that have to do with the transfer payment in this supplementary, just to have us focus on whether or not Community and Transportation Services spent so much money on the Emergency Measures Organization, or something of that nature. There has been a lot of discussion about these things. The Members opposite do not want to discuss these issues, but darn it, these issues have been raised time and time again in public. The Minister has made comments about them; I am interested in them; I am an elected Member; it is my right to ask questions about these things.
On the point of order, I would also like to point out that we spent the first week of this session doing some valuable work - as you will know - dealing with land claims. Technically, we have only finished two weeks. We have already passed a main estimates budget - by the skin of his teeth. We have gone through some debate - not that long - but some debate on the supplementary estimates general debate. We have covered a lot of ground.
I take issue with some of the comments the Member has made with respect to them providing us with information. I do not believe they have provided much information at all.
What I am trying to do is put this budget into a certain context. I am not trying to stonewall debate or filibuster. These are all good questions and they deal with millions of dollars.
The paper that the Minister gave me - this is for this year, is it not? This transfer payment says 1992-93 on it; that is this year. I am interested in this subject, and I realize it is complicated.
Some Hon. Member: (Inaudible)
Mr. McDonald: I am asking questions about the formula negotiations. Those are the same kinds of issues the Minister has spoken about when speaking about millions of dollars of infrastructure payments.
I am going to leave the point where it is. I do not personally care at all whether or not they are upset. These are interesting questions to me, and I think they are interesting questions to the general public. We want to get some analysis of this information.
Chair: The Committee of the Whole will now take a brief recess.
Chair: I will now call Committee of the Whole to order.
On the point of order, I do not believe there was a point of order but I would ask all Members to help the Chair by making their best efforts to relate their remarks as closely as possible to the supplementaries.
Mr. McDonald: I will do my best to do exactly as you ask. I will also try to help matters by being as clear in my questioning as I can so that the Minister of Finance can understand what my questions are all about. This subject matter is complicated enough as it is.
Over the course of the break, I had the opportunity to go over the transfer payment changes for 1992-93. First of all, given all the changes, even with the Alaska Highway transfer we would be down to a $221 million transfer payment, which is approximately $8 million less than that projected in the mains in the first instance. Is this correct?
Some Hon. Member: (Inaudible)
Mr. McDonald: At the end of this year, according to current projections, we would have a federal transfer of $221 million, which is $244 million minus $23 million. This is less than what was projected in the mains. Is that correct? By subtracting the Alaska Highway transfer, the mains show a reduction in the transfer payment of approximately $8 million. Is that correct?
Hon. Mr. Ostashek: Yes, the Member opposite is correct in that. The basic difference is the third line on the deductions as the decline in population-adjusted escalator from 5.5 percent to 3.71 percent.
Mr. McDonald: There appear to be two major reductions in that first category of changes. I would like to ask the reasons for those deductions: the one that the Minister cited, plus the reduction in the creditor base due to the GDP ceiling kicking in. I wonder if the Minister might not mind trying to explain that to me. I think that is a total of $10 million and I do not understand why that would be the case.
Hon. Mr. Ostashek: It is my understanding that the projections were made way back in 1991 when Canada still had a fast-growing economy. We all know what happened to the economy after that, so that is where we have the reduction.
Mr. McDonald: Is that meant to be an explanation for the $4,680,000 or the $6,137,000?
Hon. Mr. Ostashek: Essentially that will be the explanation for both of them.
Mr. McDonald: The population-adjusted escalator goes down. Can the Minister explain why this is going down, what the reason is? I am still not clear as to the reasons. If the Minister cannot, I would be more than happy to go over the reasons tomorrow morning with the Deputy Minister of Finance.
Hon. Mr. Ostashek: Perhaps to relieve me and the Member opposite of our agony, it might be the best solution to sit down with the Deputy Minister of Finance and go over it with him.
Mr. McDonald: That sounds fair. I will do it tomorrow.
The territorial revenue for the supplementary shows a reduction of approximately $9.5 million. Is this $9.5 million offset only to the extent of the cumulative keep-up factor increase of $3,899,000 and the cumulative keep-up factor of $2,868,000? Is that the total offset for the reduction in territorial revenue?
Hon. Mr. Ostashek: The Member is basically correct. Some of the decline is due to the perversity factor, but some of it is not.
Mr. McDonald: The perversity factor, I understand, would be the reduction and increase in the projected tax effort factor on the last page. Is that not correct - the $20,025,000? So, the only offset we would get for the total $9,474,000 would be $6,757,000. Is that what Finance is projecting?
Hon. Mr. Ostashek: Basically, I think the Member is correct, but the deputy minister will be able to explain that in detail to him tomorrow.
Mr. McDonald: I have a whole line of questioning around this, so perhaps I will reserve it until tomorrow. Then I will come back later and ask some questions about it.
The Consulting and Audit Canada forecast for capital expenditures showed projected expenditures and capital of $106 million, yet the capital expenditures in this supplementary are $120 million. Can the Government Leader explain the discrepancy there?
Hon. Mr. Ostashek: My understanding is that the Consulting and Audit Canada report was based on a net calculation. The calculation of figures in here is the gross, including Yukon Housing and other areas like that. I believe I explained that in a briefing note I presented to the House here about a week or 10 days ago.
Mr. McDonald: The Minister cannot mean that $106 million is net spending by the Yukon territorial government and that $120 million is the gross spending. There has to be another explanation than that. I think the net spending has never been over $16 million. I am puzzled.
I have another question. The actual capital spending in 1991-92 was $69 million; in 1992-93 it was $74 million. The supplementaries show the actual capital spending almost doubling in the current year, from $74 million to $120 million. What gives the Finance Minister the confidence that $50 million over actual spending last year will be spent this year?
Hon. Mr. Ostashek: My understanding is that some of the numbers that the Member opposite is quoting are net numbers and not gross numbers.
Mr. McDonald: I am not referring to that. Perhaps what I will do is raise this matter with the Deputy Minister of Finance tomorrow as well, as I feel there are some interesting issues to address. I will reserve the right, if we get out of general debate tonight, to come back to these items in the financial estimates, because I do not want to leave these things hanging. I am very interested in this area and I like to go through the agony of trying to understand what it is all about.
Back to the transfer payments, the transfer payments listed in DIANDs main estimates for the current year are $247 million. That is about $2.5 million more than what was indicated in this budget. Why would that be?
Hon. Mr. Ostashek: The answer is basically that the government of the Yukon is on an accrual accounting basis whereas the federal government is on a cash accounting basis. This in itself will account for some of the difference.
Secondly, the federal numbers are usually obsolete when published and are in any event calculated at a different time than our calculations.
Since the escalators and other variables in the formula are constantly changing, it would be pure coincidence if the numbers ever agreed. The figures have never agreed in the past, as some Members on the side opposite may be well aware.
Also, the federal government is not privy to all the current data contained in the formula projections; an example is the most recent projections of our locally raised revenues. These figures are not released to anyone until they are presented to the House.
Mr. McDonald: I remember the speech. I think that is an old briefing note. He should not let the Deputy Minister of Finance tell him that he created that briefing note just for him. I cannot say that I understood the speech entirely, the first time around, so I will be asking the deputy minister about that tomorrow.
What I would like to do is review a few highlights in the revenue sources: tax revenue and other revenue. I would like to get the Government Leaders reasons for the reductions.
The income tax reduction of almost $4 million is a rather remarkable sum - a remarkable sum to make, prior to the closure of Curragh. Can the Minister indicate the reason for that reduction?
Hon. Mr. Ostashek: There are simply updated estimates from Revenue Canada that may or may not be accurate.
Mr. McDonald: What are the reasons for that reduction? It is a fairly significant reduction.
I cannot remember - I will check the main estimates to get the actuals for the previous year. We are actually looking at a reduction below the 1991-92 forecast, and given the fact that Sa Dena Hes was in operation for the best part of the year, one would be surprised to see this kind of reduction.
Hon. Mr. Ostashek: Basically, the model that the government uses is based upon the Canadian economy. We no longer do our own estimates in the Yukon; we take those figures from the Canadian model.
Mr. McDonald: I can understand the convenience of having someone else give the projections. Presumably, there would be very little evidence, on the street, in the community, that would suggest that economic activity was plunging to the extent indicated, at the time the estimates were made.
Was the government anticipating the decline of Curragh Inc. activities, or was this decision prior to that? Surely, if Revenue Canadas projections were to show a reduction of $10 million, we would not simply take that at face value. I do not see why we should take a reduction of $4 million at face value without some indication as to precisely what is happening out there. All that we have seen is a growing economy.
Hon. Mr. Ostashek: I will try to answer all the questions the Member has asked.
First of all, the Canadian model would not take into account the effect that Curragh would have on that. The other answer is that we do not have any data on which to base the figures.
Mr. McDonald: I am fascinated by this. I will not belabour it, but I am fascinated by the fact that we would see the unemployment rate drop to the point at which these figures would be calculated. We see economic activity growing and a new mine come onstream. We see a record tourism year yet, just because some computer printout suggests that our income tax should drop, we accept that, to the tune of $4 million. There has to be some evidence to make us feel comfortable with this. It is a fairly significant bit of money.
Hon. Mr. Ostashek: Perhaps the Member opposite, when he was Minister of Finance, never ran into this, but it has been going on for some time. It is the way it has been calculated. Our grant is based on the computer printout.
Mr. McDonald: I understand what the Minister is saying but, if I expected a reduction in the income tax revenues, I would have at least had a position or reason for that prepared prior to going into the House. A record of numbers would at least help to identify some evidence I could point to, such as a mine shutting down, or because we projected too much in the first place and were being overly optimistic - something. It did not seem to me, given the growth from 33 to 35 in the economy last year, that the growth rate was out of line in any way.
If the Member is saying that some computer printout has told us this, I guess we just have to wait until the figures are in.
Hon. Mr. Ostashek: As I said, the model that Finance in Ottawa uses would not take into consideration the changes in the Yukon. It is also my understanding that it will be two or three years down the road before this is all worked through the system with the different changes. It takes some time to work through the system, and it has always been that way.
Mr. McDonald: I am sure that is the case but, again, I would simply reiterate that a $4 million reduction is very hefty. If one factors out Curraghs closure, it is simply unexplainable, unless there is something I have missed. I do not understand why that would be the case.
The same is true for the fuel oil tax. We are showing a reduction in the fuel oil tax revenues down to a level below that of the 1991-92 forecasts. I am puzzled as to why we are projecting that. If we are not factoring in the Curragh situation, what is the economic activity out there that projects this figure? We have increased tourism activity. The decline of the mining exploration industry would have no effect on this figure because, they get an off-road fuel tax rebate, in any case.
Is there any reason for this, or is this another computer printout we have to wait for?
Hon. Mr. Ostashek: The fuel tax credit estimates are done on the actuals, and there has been an increase from 1991-92, which was $4,116,000. It is projected for 1992-93 at $4.4 million.
Mr. McDonald: Did the Government Leader say that the fuel oil tax went from a projection of $4,945,000 to $4,400,000, and that represented an increase in the tax revenue?
Hon. Mr. Ostashek: No. I said it is a decrease from what the projection was in the main estimates, but it is an actual increase over the 1991-92, which was $4,116,000. The 1992-93 is $4.4 million.
Mr. McDonald: I was looking at the forecast in the main estimates, which showed quite a considerable difference in that amount. I will check on that between now and tomorrow, for my own purposes.
The investment income shows a rather remarkable decrease. Can the Minister explain the reasons?
Hon. Mr. Ostashek: One of the reasons is that we did not have any money to invest toward the end of the year. We are borrowing money.
Mr. McDonald: What are the offsets for investment income, in terms of the Formula Financing Agreement? Is that an offset of a dollar for a dollar?
Hon. Mr. Ostashek: The offset is $1.141.
Mr. McDonald: That is $1.14 for $1 dollar lost, or what?
Hon. Mr. Ostashek: The offsets are dollar for dollar.
Mr. McDonald: I will just ask a couple of questions and then probably come back to this in the Finance estimates.
I would like to know why the recoveries for the Alaska Highway agreement show an expenditure of $13.5 million and a recovery of $3.5 on the capital side? Can the Government Leader explain that?
Hon. Mr. Ostashek: We took over the Alaska Highway in this year, but there was some money left in our grant. The bulk of it was in the recovery. I am sorry, that would be the other way around.
Mr. McDonald: I will pursue that with the Deputy Minister of Finance, if the Government Leader does not mind. I am not certain that I understand that entirely either. I have a couple of other lines of questioning, but I think what I will do is raise them with the Deputy Minister of Finance, rather than try to ask the questions here. It is obviously a little too complicated to be pursuing. I will leave it for later.
Mr. Penikett: Earlier this evening, the Government Leader read from a document that, as far as I know, we have yet to receive, describing the pattern of expenditures month by month, including evidence that the governments number of purchase orders and total expenditures were down in March. I think that was the essence of what the Government Leader said.
One of the helpful, democratically motivated citizens who spoke to me made mention of a large number of computers that were delivered to the government in March. I hasten to add that they were not computers for Members of the Opposition; they were obviously destined for some other quarters.
The little birdie said something about these computers being a large number and actually coming from Radio Shack, but I did not know that Radio Shack was a supplier of the kind of equipment we have.
Could the Government Leader indicate whether, to his knowledge, there was a significant number of computers acquired from Radio Shack in March - just for the record?
Hon. Mr. Ostashek: Perhaps the government services Minister could answer that. I am not aware of a number of computers being purchased from Radio Shack.
Mr. Penikett: Is the Government Leader, in his capacity as Minister of Finance, or the Minister of Government Services, therefore prepared to put the rumour to rest that there was not the delivery of 60 computers from Radio Shack in the month of March to this government?
Hon. Mr. Ostashek: Perhaps the Leader of the Official Opposition should get a new bird. I am not aware of any purchase like that. If the Member opposite would like, I will certainly check and bring the information back to him. However, I am not aware of any purchase of that magnitude.
Mr. Penikett: Believe me, I think this bird is available to all Members at no charge whatsoever. This bird is quite willing to whisper in his ear, probably as much as mine.
I was fascinated to hear some of the discussion about the perversity element in the formula financing question earlier this evening. The Government Leader may have felt he answered this question perfectly clearly.
The Member who is giggling across the floor seems to be quite sensitive about answering questions now. I am mindful of the fact that we spent five weeks on the supplementaries last year. He should not be such a delicate, sensitive flower. We have lots of questions to ask.
Some Hon. Member: (Inaudible)
Mr. Penikett: The Member opposite very rarely talked about the supplementaries when we were dealing with them. I would have thought the innovation, led by my colleague, the Member for McIntyre-Takhini, that we should actually talk about the supplementaries when they are before the House would be one that he would welcome.
Anyway, if I could get past these interruptions and this flagrant heckling, to which I have been subjected, knowing that I too am a sensitive soul who suffers greatly from this kind of interruption and ribald comment from Members opposite, I would like to get back to my question, which was about formula financing and the perversity element. Did I understand the Government Leader correctly when he said that the $10 million item, which was referred to in a press release put out by the Government of Yukon following the Government Leaders meeting with the Deputy Prime Minister as the Minister of Finance, had nothing whatsoever to do with the discussions that he had with Mr. Siddon on formula financing and the perversity element - is that correct?
Hon. Mr. Ostashek: Yes, that is correct.
Mr. Penikett: Could the Government Leader explain to us something about his press release on the $10 million. My question arises from my experience of dealing with the federal government, which is that whenever they had an announcement to make, especially if it was an announcement of an agreement of consequence, they would always insist on there being a jointly authored press release, jointly sponsored by the Government of Canada and the Government of Yukon, with the letterhead of both governments on it and the contact number from the communications officials - that would be Mr. Drown, in the case of the Yukon, and some counterpart of his either here, or in Ottawa - and the two Ministers signatures. There would often be indications in the press release about the signing date of the agreement, and usually a little more content than Mr. Ostasheks press release contained, about the nature of the agreement and the implementation of it, the effective date and so forth. Could the Government Leader shed some light on why, in respect to this $10 million, there was no such jointly issued announcement by the two governments?
Hon. Mr. Ostashek: As I told the Member for McIntyre-Takhini, the $10 million came out of the economic statement made by the Minister of Finance in December. What I was doing in Ottawa was to see if we could redirect that infrastructure for a power grid or for highways, rather than for airports, where it was designated. That is what we accomplished at that time.
Mr. Penikett: I would like to ask about the power grid assumptions of the Government Leader. With the greatest of respect, he did not answer my question.
I have had some dealings with the federal government over the years, and I have never seen a case where they were actually going to convey some money to a province, territory, municipality or First Nation by way of a ministerial agreement when they did not insist on having joint parentage of any announcement and shared control over the releases that went out and any press conferences or other such announcements. What is the nature of the Government Leaders agreement with the federal government? Is it in the form of a contract? Is it in the form of a verbal commitment from the Minister, or is his press release supported by something a little more substantial, such as a letter of commitment from a federal Minister?
The Government Leader talks about the announcement the federal government made in December. I have no problem understanding that but I know that, in any flow of monies following that announcement to any individual jurisdiction, the normal practice would have been for the federal government to insist on having some control over publicity before actually turning over the money or completing the commitment of the money.
Hon. Mr. Ostashek: As I have told this House, the money is not in the budget because it has not been turned over yet. However, there was the commitment to spend it on highways in the Yukon and, upon that commitment, there were papers exchanged here about 10 days ago indicating where we would prefer the money to be spent.
At this point, as I said earlier in the House tonight, the reason it is not in the budget is that we are not sure it is going to be turned over directly to us to spend or whether the federal government will go ahead with the projects we have designated it be spent on.
Mr. Penikett: The Government Leader has not answered the question about the nature of the commitment. He refers to the exchange of some documents a couple of weeks ago. If there is a signed agreement between himself and a federal Minister - the Minister of DIAND or Finance - that commits the federal government to transmitting the $10 million to us in this fiscal year.
Hon. Mr. Ostashek: I have stated two or three times in this House that there is no signed agreement, at this point. We have the commitment from them to spend $10 million on highways in the Yukon.
Mr. Penikett: I still do not know whether this is a verbal or written commitment. The Government Leader has fascinated me more by just now suggesting that the federal government may want to spend this money directly. He has previously indicated that, if the mine at Faro is going, the money might be spent on the Campbell Highway.
By what kind of arrangement would the federal government spend money directly on a territorial highway or, for that matter, even on a federal road, when the responsibility for rebuilding and maintaining has already been transferred to the Yukon Territory?
Hon. Mr. Ostashek: As the Member opposite is fully aware, and as I said earlier in the House, the $10 million came out of the economic statement that Mr. Mazankowski proposed for infrastructure across Canada. That is where the money is coming from. Whether or not it will be delegated directly to us and in what format is not definite yet. However, the commitment has been made for $10 million to be spent in the Yukon on infrastructure.
Mr. Penikett: I appreciate the Government Leaders answer, but I want to ask him something. Is he seriously telling this House that there is a possibility that the federal government may directly spend $10 million on a road in the Yukon, even though the responsibility for maintaining and rebuilding all those roads has now been transferred to the territorial government?
Hon. Mr. Ostashek: Not at all. What I am saying is that the federal government asked which roads we wanted to upgrade and which roads we wanted to rebuild, and we submitted that list to the federal government. I am sure the monies will be forthcoming, and I do not expect they will be in any other format than they should be - the proper format. If it is to be funnelled through us, it will be, but that is why is was not put in the budget - it was not ready in time for this budget.
Mr. Penikett: Let me go back then to the Government Leader with a very precise question. What is the form of the commitment from the federal government to us? Is it a verbal commitment from a federal Minister to the Government Leader? Is it a letter of commitment from the same Minister to the Government Leader, or is it in some other form?
Hon. Mr. Ostashek: At this point, it is a verbal commitment that has been followed up with a priority of highways we want to see upgraded in the Yukon.
Mr. Penikett: When the Government Leader gets to spend some time at federal/provincial conferences and interprovincial conferences, he will find that one of the most respected philosophers - often quoted in those circles - is the well-known philosopher, Yogi Berra who pointed out that verbal agreements are not worth the paper they are written on.
I want to find out from the Government Leader, when does he expect this verbal commitment to be translated into something tangible.
Hon. Mr. Ostashek: I am not certain that I know exactly what time it will be, but there could be the possibility that Mr. Siddon will be making an announcement when he is in Whitehorse on April 16; however, I am not certain of that at this point.
Mr. Penikett: Mr. Chairman, I move that you report progress on Bill No. 4.
Motion agreed to
Hon. Mr. Phillips: I move that the Speaker do now resume the Chair.
Motion agreed to
Speaker resumes the Chair
Speaker: I will now call the House to order.
May the House have a report from the Chair of Committee of the Whole?
Mr. Abel: Committee of the Whole has considered Bill No. 4, entitled Second Appropriation Act, 1992-93, and directed me to report progress on it.
Speaker: You have heard the report from the Chair of Committee of the Whole.
Are you agreed?
Some Hon. Members: Agreed.
Speaker: I declare the report carried.
Hon. Mr. Phillips: I move the House do now adjourn.
Speaker: It has been moved by the Government House Leader that the House do now adjourn.
Motion agreed to
Speaker: This House stands adjourned until 1:30 p.m. tomorrow.
The House adjourned at 9:27 p.m.
The following Sessional Paper was tabled April 5, 1993:
Report of the Chief Electoral Officer of the Yukon on Contributions to Political Parties During 1992 (Speaker)
The following Document was filed April 5, 1993:
Copy of order granting Curragh Inc. protection under the Companies Creditors Arrangement Act (Ostashek)