Whitehorse, Yukon

Thursday, January 6, 1994 - 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.

Introduction of Visitors.


Mr. Penikett: I would like to call your attention to the presence in the gallery of two former Members of this Legislature: the former Member for Hootalinqua, Mr. Al Falle, now the President of the Agricultural Association, and the former Member for Vuntut Gwitchin, Norma Kassi.

Mr. McDonald: I would also like to introduce the Members of the Legislature to two people sitting in the gallery: Chief Lena Johns of the Kwanlin Dun First Nation and Pat Joe, the land claims negotiator for the same First Nation.

Speaker: Are there any Returns or Documents for tabling?


Hon. Mr. Brewster: I have a legislative return for tabling.

Hon. Mr. Phillips: I have some legislative returns and the annual report of Yukon College.

Hon. Mr. Fisher: I have some legislative returns.

Hon. Mr. Devries: I have a legislative return.

Speaker: Are there any Reports of Committees?


Introduction of Bills.

Notices of Motion for the Production of Papers.

Notices of Motion.

Statements by Ministers.


Conciliation board report on contract dispute

Hon. Mr. Ostashek: I would like to give my apologies to the Members opposite for giving them such short notice of the Ministerial Statement that I am about to make. I do not know if there is a message here or not, but for some reason our copy of the conciliation board report was faxed to the coroner’s office. As a result, we did not get it until a couple of hours ago.

I would like to announce that the government this morning received the report of the conciliation board on the contract dispute between the Public Service Alliance of Canada and the Yukon government.

I have tabled copies of this report in the Legislature this afternoon.

This report includes a recommended settlement to the bargaining parties that offers the board’s opinion on what a possible contract settlement might look like.

We are currently analyzing the significance of this report with respect to our bargaining position, and with respect to the other factors of which any good employer must be cognizant: equity, flexibility, and cost savings. Throughout the bargaining process, we have been working toward a settlement that is in keeping with the arrangements we have already with our teachers and our managers that will allow us the flexibility to continue to provide a high standard of service to the Yukon public and that will give us continued cost savings to ensure the long-term viability of programs without undue financial impact on our present employees.

In our analysis, we will specifically be addressing the following concerns:

How does this recommendation meet the government’s position? The government has consistently said in these negotiations that it is seeking some cost savings and flexibility in the collective agreement, and that in doing so we are asking nothing more of the YEU member than we are asking from our other employee groups. In fact, we are asking considerably less.

How does the board’s recommendation compare with what the teachers negotiated with the employer? The Yukon Teachers Association agreed to a freeze on their experience increments, a freeze on the Yukon bonus to December 1992 rates, an increase in the initial qualifying period for Yukon bonus for new employees hired after ratification of the new agreement, a reduction in the negotiated prepared time, a restriction on paid injury-on-duty leave, among other items.

How does this recommendation compare with what we have asked of our managers? Managers accepted a rollback of actual salaries by two percent, as well as a freeze on their merit increases, with an approximate five-percent impact.

How does this recommendation compare with what we have asked of all MLAs and political staff? MLAs, for example, had their salaries rolled back five percent, as well as had their indexed increases eliminated.

How does this recommendation address our need to control base payroll costs, now and in the future? For the first time in its history, the Yukon government has an accumulated deficit - a deficit of $13 million. Economic indicators encourage us to live within our means, and look for ways to continue the services we offer to the Yukon public at a level and in a manner that we can afford.

How does this recommendation address our need for operating flexibility? Does the report offer a realistic opportunity for us to look at ways to streamline our staffing process, and set schedules for our employees that reflect the needs of the programs we offer to the public?

Does the proposed recommendation by itself offer the type of cost relief we are seeking, which would make it possible for us to extend the job security clause for the duration of the contract? When we met with the union at the negotiation table two weeks ago, we clearly stated that if the union agreed to meet a few remaining cost proposals on the table, we could be prepared to extend the job security clause for the length of the new collective agreement. That offer was contingent upon the employer realizing the cost savings that would allow us to provide the job security that our union members have enjoyed in the past.

These are the factors upon which we will be analyzing the recommended settlement from the conciliation board, which was received a few short hours ago. However, at first glance, the board’s report does not appear to meet the needs we have consistently stated throughout the bargaining process.

The government is aware that the union has now accepted the need for freezes on merit increases. At the earliest opportunity, we will be able to advise our employees on what we view to be a fair, equitable and responsible contract offer.

Ms. Moorcroft: I am very disappointed to hear the Minister’s statement. We did not have time to read it before we came into the House.

The Minister is unclear when he states that “at the earliest opportunity”, they will advise their employees on what they view to be a fair, equitable and reasonable contract offer. Does that mean they may still accept this conciliation report or not?

I have to ask what kind of bargaining process this is. The Government Leader said that he supported the conciliation process. He took shots at the union for not going to the conciliation table sooner. Now we have the conciliation report, and the union press release indicates that they will be asking members to support it. The union has stated that the report contains some disappointments and some items that are hard to swallow; however, they understand that collective bargaining is a process that involves good faith and give and take by both parties.

The conciliators took all sides into consideration. For the benefit of people who perhaps do not understand what a conciliation board does, it was a board of three people that consisted of a conciliator selected by the government, a conciliator selected by the union and an independent chair who was acceptable to both parties.

This conciliation report has been signed by the chair and by both the employees’ representative and the employer’s representatives. Now the government is bringing in new demands. They are raising the issue of a five-percent rollback of pay; they are talking about controlling their base payroll costs, streamlining and costs release. What we need is to restore confidence in the economy. What we do not need is a public sector strike.

I think there is a fair deal here. I believe the government should accept the conciliators’ report. As the union has indicated, the government should accept some disappointments.

This government had said that they would go to the talks “tomorrow” as early as last September. Here we have the outcome of the conciliation talks and they are not indicating that they will support it. The government is not getting every single thing they want, so they want to change the rules of the game. This jeopardizes both the public employees and the public’s confidence in this government.

Mr. Cable: I have to say that the rumbling noise we hear outside is a collective sigh of relief from the 30,000 Yukoners, both employees and members of the business community, as well as others.

The conciliation board report was unanimous, which is positive, and it should not escape the attention of anyone that both the labour and management representatives on the board agreed to its recommendations. It certainly, at first blush, appears reasonable.

The conciliation board has illustrated its considerable wisdom, in my view, in recognizing that there would likely be a lengthy work stoppage if the parties were left to their own devices, and I suggest that acceptance of this report and its early ratification will allow cooler heads to prevail and, it is hoped, the parties will be able to enter into negotiations at the end of this year in a more positive and constructive fashion.

It is my hope that the parties - the government and the union - will accept the board’s wisdom on the particulars of the recommendations and seek early ratification of the attached memorandum of settlement. The acceptance of this report in the near future, without further acrimony, will certainly improve labour-management relations in the government and help to instill at least one element of confidence in the economy, something that is badly needed.

I should say that in my experience a good settlement is one where neither party is completely happy and neither party feels it has been taken. There are no points to be scored for acting mulishly except among other mules, so I hope the government will rapidly deal with the questions that it has raised, reach some position and bring the issue back to the House so that it can be fully discussed.

Hon. Mr. Ostashek: We certainly do not intend to sit on this report for any great length of time but, as I said, in fairness, we just received it a couple of hours ago. We have to analyze it, and take into consideration the points I made in my ministerial statement.

In my brief response, I want to say to the Member for Mount Lorne that the government has not changed its position. This government, and its negotiators, have been consistent, since the middle of March of last year, in what they hope to achieve from this collective bargaining process.

As I said in my ministerial statement, we have to look at the equity of this collective agreement with the collective agreement that was negotiated with the Yukon Teachers Association. We have to look at the rollbacks that were given to managers and the cuts that we ourselves took. We also have to look at how we can control payroll costs and, as every Member of this House knows, there are not very many options where government can control payroll costs.

Speaker: This, then, brings us to the Question Period.


Question re: Abattoir

Mr. McDonald: After Question Period yesterday, I was left somewhat confused by the government’s position regarding the abattoir project, and more than a little upset at the accusation that the Kwanlin Dun First Nation and the Yukon Agricultural Association had been underhanded in trying to help resolve the land use conflict between them. I have a couple of questions for the Minister of Community and Transportation Services, to help clarify any misunderstandings that may have arisen.

Yesterday, the Minister said that the government had not requested a transfer of Lot 288, because it was part of the forestry transfer. Can the Minister explain why he wrote to the Yukon Agricultural Association approximately a month ago, stating that he had told the lands branch to pursue a spot land transfer request for Lot 288 for the Yukon Agricultural Association, pending further successful consultation?

Hon. Mr. Fisher: I believe I said yesterday that I had instructed the department to look at whatever was the quickest way of having the transfer done. I believe the Member opposite knows quite well that when you ask for a spot land transfer from the federal government it usually takes quite some time.

The forestry transfer, from my understanding, was going to come across on April 1, and I asked the lands department to look at whichever way was quicker to do that.

Mr. McDonald: The point is that the Minister did ask for Lot 288 to be transferred for the Yukon Agricultural Association. Can the Minister tell us whether or not the land advisory review committee, or LARC, has already given approval in principle to seek this spot land transfer for Lot 288 for the use of the Agricultural Association and that it has already initiated, for public discussion, a rezoning request for the entire lot for the use of the abattoir?

Hon. Mr. Fisher: I am not aware of the LARC decision or what they actually considered. The transfer of Lot 288 - there is another lot there also and I cannot remember the number of that off the top of my head but there are two lots there. We would have them both transferred to the Yukon government, mainly because - rather than having a 20-acre parcel - those two lots are surveyed so the whole surveyed piece would be transferred to the Yukon government.

Mr. McDonald: That does not explain why the rezoning requests initiated by LARC and undertaken during the public meeting at the Hidden Valley School incorporated the entire lot.

Can the Minister tell us why there might be any confusion in the circles of the Agricultural Association or the Kwanlin Dun First Nation about the government’s position, given the fact that it had sent a letter of support for this spot land transfer, had initiated a review process to seek a rezoning for the entire lot and had sent no correspondence disagreeing with the proposal in the business plan to the Agricultural Association for the abattoir?

Hon. Mr. Fisher: There were a number of questions that I will try to answer. When the lands branch was first approached about land for the abattoir, it was felt at that time that it was for 20 acres. I cannot remember the exact date, but I believe it was sometime in November when the Yukon Agricultural Association requested the full 146 acres of Lot 288.

I am not sure what the Member is getting at, but we had previously indicated to the Yukon Agricultural Association that we would do whatever was necessary, as quickly and expediently as possible, to provide the 20 acres.

Question re: Abattoir

Mr. McDonald: The public meeting at the Hidden Valley School was billed by the government as the first stage of a public consultation process, involving the rezoning of the entire lot for the purposes of the abattoir. That is the reason that I asked the question.

On the same subject, I will ask this question of the Minister of Renewable Resources. Yesterday, he made it crystal clear that he felt that discussions between the Kwanlin Dun First Nation and the Yukon Agricultural Association to resolve a dispute between them was underhanded.

In the Yukon Party government’s view, is it not possible for First Nations and industry groups to speak to each other without the approval of the Yukon government?

Hon. Mr. Brewster: If I indicated that the discussions were underhanded, I did not mean that the discussions were underhanded in that way. First Nations and industry groups may negotiate any time they want. However, I should point out that the Department of Indian and Northern Affairs - the Government of Canada - owns that land. The territory does not own the land, and although the Kwanlin Dun First Nation are applying for the land, they do not have title to the land.

A similar example would be if you were in Alberta and borrowed someone’s horse and then traded that horse. I do not think that you can publicly trade things that do not belong to you. I do not think that it works.

Mr. McDonald: Is the Minister afraid of the Kwanlin Dun’s land selections, or the Yukon Agricultural Association’s request for land or land application, or even that they might want to solve problems between themselves, particularly when everyone knows that the final decision on land selections - particularly - is a matter of negotiations between Kwanlin Dun, YTG, and the federal government?

Hon. Mr. Brewster: You are right, it is up to the federal government and the negotiators. I do not think that it is up to private individual associations to be doing this.

Mr. McDonald: Given that the government’s policy in the past has been to encourage industry and municipalities to resolve problems with First Nations themselves - to settle arrangements themselves - can the Minister tell us what the future of those discussions will be if the government accuses those same groups of politicking - or blackballing, as one person referred to it - whenever they discuss with First Nations governments issues that are important to them?

Hon. Mr. Brewster: I never mentioned the word “blackmail” at all; the individual across the room did. Maybe he can explain how you can turn around and negotiate for something that you do not own. If they were negotiating with the federal government I would understand it. I have no problem with the Kwanlin Dun putting that in their land claim - I have no problem with that at all. That will go into lands negotiation. It has nothing to do with me. It is very peculiar, though, that when we were first elected and I originally started out to get the 20 acres, nobody claimed that land. I spent time and the staff in the department spent time. We worked hour after hour with Mr. Siddon to get that land, and we finally got an agreement to get the 20 acres, and then it ended up to be 146 that was requested. Quite frankly, I cannot tell you how that happened.

Question re: Abattoir

Mr. Cable: I also have some questions about the abattoir that I would like to direct to the Government Leader, as the head of Yukon Party policy development.

In a local newscast this morning, the president of the Yukon Agricultural Association said that development of the abattoir in the Yukon would not be possible as long as the side opposite was in power. I find that surprising, indeed. The Yukon Party election platform was full of promises about the development of agriculture industry infrastructure. Can the Government Leader tell this House, as the head of the government, whether the government is reneging on its commitment, in principle, to the abattoir project?

Hon. Mr. Ostashek: I am very pleased to rise to answer this question for the Member for Riverside. Governments have no control over comments made by people in the public. That is their opinion, and they have every right to express it. Whether we approve of the abattoir in principle is not even open to question at this point. We have said time and time again that we agree to an abattoir. There seems to be something that has gone off the track now and we are working to try to get it back on track.

Mr. Cable: That brings me to the next question because it is obvious that some consensus building is necessary. The Minister of Renewable Resources, in his department’s InFARMation publication, summer of 1993 edition, stated, and I quote: “I also recognize the concerns many of you have regarding marketing” - this is addressed to the agricultural community - “and the lack of appropriate infrastructures, such as an abattoir and vegetable storage facility. I will continue to do all I can in this regard and I challenge the industry to provide strong support.”

The government’s approach so far does not appear, on the surface anyway, to be cooperative. Will the Government Leader tell the House what he plans to do to revitalize this project?

Hon. Mr. Ostashek: I will disagree with the Member opposite that our approach is not consistent with what was said by the Minister of Renewable Resources. We have stated quite clearly that we believe in the principle of an infrastructure, taking into consideration the commitment by the agricultural community, taking into consideration feasibility studies, and taking into consideration many other things. What appears to be at the root of this problem is that this government made a commitment to provide 20 acres of land for the abattoir and, in all the information I have received, at no point did anyone or any of my Ministers make any other commitment for any more land than 20 acres.

Mr. Cable: The Minister of Renewable Resources went on to say, in this InFARMation document, “Industry and government will have to work in close cooperation over the next several years in order to tackle the numerous marketing challenges the industry will face.” This is in the context of the abattoir. Has the Government Leader considered the fact that, unless something is done very rapidly, the federal financing - which, I gather, is pretty well approved - will be lost to the project?

Hon. Mr. Ostashek: I am not certain at what state the federal financing is, but that would be a concern of mine. We certainly would not want to see it lost. There have been some preliminary discussions since the news that was on the radio this morning - the Ministers have been talking in an informal manner, and I know they are trying to get personnel from two or three different departments together to try to address this issue and try to get it back on track.

Question re: Abattoir

Mr. McDonald: I do not think it is the department officials who will get it back on track. It was the government itself that derailed it. The Ministers should be getting it back on track.

The economic development agreement and renewable resources subagreement, co-managed by the Department of Renewable Resources, has made a $750,000 commitment for a contribution toward the project, knowing that other funding sources would also be contributing funding. This commitment has, I think, been made for one year or so.

Can the Minister of Renewable Resources tell us why he is now saying that he feels the costs of the project are too high or that the project is too large?

Hon. Mr. Brewster: When it first began, it was to cost about $1 million. It is now close to $2 million. Also, we are now to put the equity in by giving them land to raise their share of the money.

Mr. McDonald: The Yukon Agricultural Association business plan has been public for some considerable time. I am surprised at some of the claims the Minister is making. He seems to display a glaring ignorance of the terms of that plan.

My understanding of the business plan is that the Agricultural Association is not intending to seek a subsidy for the abattoir operating losses for the first five years. Why did the Minister say yesterday that the Yukon Agricultural Association had requested money to cover all the operating losses?

Hon. Mr. Brewster: It was my understanding from the meeting we had that they wanted us to look after losses for the first five years. At that time, I made it very plain that they were asking for too much money.

Mr. McDonald: I beg the Minister to please read the business plan and not work from memory. I think his understanding of events is doing more to deep-six this project than anything else.

The plan does not call for the necessity of having a fertilizer plant in the first stage, and any approval for that purpose would require further government approval. Is the fact that this is in the proposal at all a reason for some of the Minister’s objections to this particular project?

Hon. Mr. Brewster: No, my objection from the start was that I worked and worked to get 20 acres. Suddenly, they are looking for 146. My staff and I spent hours writing to the Minister in Ottawa to get it. We thought we had 20 and all of a sudden they needed 146. Apparently, they are going to use that to raise their equity with.

Question re: Abattoir

Mr. McDonald: That is exactly the point. That is the reason they are looking for a larger parcel of land. That is the reason they have done work to try to resolve problems with the Kwanlin Dun First Nation when they discovered that the land they hoped to get was land selected. That is the reason they have jumped through all kinds of hoops to try and get a project started that is economically viable and is not dependent on the government for operating expenses.

Can the Minister of Renewable Resources explain why the Department of Community and Transportation Services would request the entire lot and initiate a rezoning request, through a public medium of the Hidden Valley School, to change the zoning for the entire lot?

Hon. Mr. Fisher: I am not sure that a zoning request has gone forward, but perhaps it has. If I remember correctly, the meeting held at the Hidden Valley School was held during session and we were not able to attend. I am not exactly sure what happened. We can stand in this House and play our political games but, I think if we want to get that abattoir back on track, we need to get some people together from the department, from the Agricultural Association, and possibly the Kwanlin Dun First Nation, and figure out what went wrong and how we can get it going again.

I will be quite happy to work with my colleagues and have people from our various departments put together a team that can do as I just stated.

Mr. McDonald: The good name of the Yukon Agricultural Association, and now, thanks to comments yesterday, the good reputation of the Kwanlin Dun First Nation, have been besmirched by comments made by Members on the government side. That is the reason why we raised the questions in the Legislature; it is not political gamesmanship.

I was at the meeting at the Hidden Valley School, and it was made very clear at that time by department officials that this was the first stage in seeking a rezoning request, with a map showing the entire lot.

No one from the government side stated that they were only going to be considering 20 acres. Can the Minister explain why that was the case?

Hon. Mr. Fisher: There may very well have been a request. I was not aware of a request from anyone, either the Agricultural Association or anyone else, but there may very well have been such a request for a rezoning for that entire parcel. I do not know that.

If that were the case, then I would assume that the officials from the lands branch would show it on a map as the Member opposite has said.

I have not at any time defamed either the Yukon Agricultural Association or the Kwanlin Dun First Nation, nor do I have any intention of doing so. I will not do it in this House, nor will I do it in public.

I want to work with that group of people to try and get this project back on the rails, and I am quite willing to do that.

Mr. McDonald: I am happy with that ministerial commitment with respect to not wanting to join his colleagues in defaming other organizations.

Could the Minister explain this particular sentence in his letter of November 17, 1993, given that he did not know the zoning process had been initiated? He said, “I look forward to reviewing the results of the November 24, 1993, open house and department public zoning process.” That suggests that not only did he know that the zoning process was underway, but he also looked forward to receiving the results of that zoning process.

Could the Minister explain that sentence for us?

Hon. Mr. Fisher: I was still under the impression that we were talking about 20 acres of land.

Question re: Abattoir

Mr. McDonald: Can the Minister explain to us why, in his letter of November 17 to the Agricultural Association, he refers to Lot 288 - 140 acres - and why department officials, who were seeking a rezoning request, were making reference to the entirety of Lot 288 and made no mention of the need for a smaller size? In fact, they were very helpful in explaining why it might be necessary to have a larger portion of land, rather than the smaller amount that had previously been requested.

Hon. Mr. Fisher: I was under the impression, through speaking with my colleague from Renewable Resources, that we were talking about 20 acres of land. Since I have been around here, that is what we have been talking about. At some point in time, I received a letter from the Agricultural Association, asking for all of Lot 288 - 146 acres. I have never replied specifically saying that we would pursue having that land transferred to us and, eventually, to them. I never said we would do that.

Since day one of talking about the abattoir, I was only aware of the 20 acres.

Mr. McDonald: Quite frankly, I do not know what the Minister understands to be the case at all. Clearly, some of the things he has said this afternoon contradict the letter he sent to the Agricultural Association only a month and one-half ago. Consequently, the concerns and frustration that the Agricultural Association might express on the radio appear to be entirely justified.

Can the Minister explain why the department officials in Renewable Resources seem to be labouring under the misapprehension that a larger portion of land might be necessary, and why the Ministers might be so out of touch with the reality of the business plan, which clearly involves, and is entirely dependent upon, there being a larger portion of land for the abattoir project?

Hon. Mr. Fisher: As I said before, there is a lack of communication between the agricultural branch and between various branches and departments of the government. As I said earlier, I would be quite happy to work with my colleagues to set up a team to deal with this particular project, before it gets totally derailed and before something happens, which will make it totally impossible to proceed. I would be happy to head up that team. I made that offer this morning and that is what we expect to be doing in the near future.

Mr. McDonald: It seems now that the broad brush of besmirching people’s reputations has now been washed over department officials. The department officials, in my view, given their performance at the public meeting, knew precisely what they were doing. They were certainly talking to each other. They knew what the proposal was; they had read the business plan.

The problem appears to be not whether or not the departments know what is going on, but whether or not the Ministers know what is going on and whether or not the Ministers are talking to their departments. That appears to be what has derailed the project to the extent that it has been so far.

I would like to ask if the Minister responsible for Renewable Resources will be participating personally in this plan to resurrect the abattoir project and whether or not he would be prepared to read the business plan, so that when we get to Renewable Resources estimates we can have a more thorough discussion than what we can have in Question Period.

Hon. Mr. Brewster: I will work with the new group. I am not against the Yukon Agricultural Association. I have been a Member for years and if I hurt anyone’s name, then I apologize. It certainly was not meant that way. In answer to the Member’s last question, yes, I will read it. Undoubtedly, as the Member has a much better education than I, the Member will probably interpret it differently, but I still stand by what I read.

Question re: Dawson City boundary expansion

Ms. Moorcroft: I have a question for the Minister responsible for Community and Transportation Services.

I have in my hand a letter from the Klondike Rural Residents Association to Mickey Fisher, which was also sent to David Millar, the Member for Klondike. The letter is dated December 3, 1993, and it urges the Minister to postpone any decision to annex the Klondike Valley until a number of problems are properly dealt with. This letter was not responded to, and the concerns of the Klondike Rural Residents Association were ignored.

Why did the Minister proceed with the Dawson City boundary expansion against the recommendation of the people directly affected by this decision?

Hon. Mr. Fisher: The Dawson boundary expansion has been on the books since March, April or May of 1992. The Yukon Municipal Board conducted public hearings in Dawson City, and it recommended the expansion of the boundaries. The boundaries were to be expanded on December 31, 1992. However, with the election and everything else going on, that date was actually missed so, rather than to try and put the boundary expansion in mid-year, which would make it administratively very difficult for taxation purposes, and everything else, it was left until December 31, 1993.

That letter has not, as yet, been responded to, mainly because I actually received it either just before Christmas or between Christmas and New Year’s. As the Member noted, Mr. Millar is cc’d on it; Mr. Millar will be dealing directly with each of those residents this weekend.

Ms. Moorcroft: This is another example of poor political thinking. Here we have the Klondike Rural Residents Association asking municipal affairs to deal with longstanding issues surrounding the annexation and to allow the residents to participate in the process, which is not an unreasonable request. I find it difficult to believe that both copies of the letter - to the Minister and to the MLA - went astray. The response to the request was that the Minister proceeded with the annexation, and the residents were informed by the local media.

Why did the Minister refuse to advise and inform the people living in the Klondike Valley of the annexation decision?

Hon. Mr. Fisher: The decision was made a long time ago, in approximately May of 1992. It was just delayed, as I stated before, because of the election and then, once it went over the December 31 deadline, it was very difficult administratively to expand the boundaries in a time other than January 1 - for instance, March 31 - because of the different taxation levels, and so on.

There were full public hearings held in Dawson City and everyone was aware that the boundary was being expanded.

Ms. Moorcroft: My information is that as late as December 29, 1993, municipal affairs was still advising the Klondike Rural Residents Association that the decision was not made, yet the order-in-council had been signed five days prior to this time, December 24, 1993.

The Klondike Rural Residents Association has requested representation on the Dawson City Council, which the Minister has the authority to grant under the Municipal Act.

Through this issue the Minister has demonstrated a lack of respect for basic democratic processes. Will the Minister appoint a representative of the Klondike Rural Residents Association to the Dawson City Council?

Hon. Mr. Fisher: No, the Municipal Act provides for a ward system when there is a boundary expansion. If the expansion is more than six months prior to an election, then there is provision for a ward to be established and someone to be elected from that ward to sit on the city council.

The Dawson City Council is discussing that at their regular council meeting tonight, and we have instructed them to provide a ward for the expanded area.

Question re: Yukon Housing Corporation, proposal requests

Mrs. Firth: I have some questions for the Minister responsible for the Yukon Housing Corporation.

Last evening we were debating the Yukon Housing Corporation, and I raised a concern with the Minister about the present lack of regulations or guidelines when issuing requests for proposals at Yukon Housing Corporation. I also raised the concern that the Yukon Housing Corporation can do virtually whatever it wishes to do when issuing requests for proposals for multi-million dollar projects.

Why does the Yukon Housing Corporation not have any guidelines or regulations regarding this issue?

Hon. Mr. Fisher: I indicated that I would provide an evaluation criteria to the Member opposite that outlines how these proposals are evaluated.

Mrs. Firth: One of the other departments that the Minister is responsible for, Community and Transportation Services, has general notes regarding proposals and quite lengthy guidelines are in place.

I would like to again ask the Minister why the Yukon Housing Corporation does not have to have any regulations or guidelines in place, yet his other ministerial portfolio has to.

Hon. Mr. Fisher: The Yukon Housing Corporation uses contract regulations. They can put out a request for proposals, which are evaluated. Then a contract is entered into.

I do not quite understand what the Member is getting at.

Mrs. Firth: The Yukon Housing Corporation does not have any rules in place. They can spend millions of taxpayers’ dollars doing whatever they want. However, the Department of Community and Transportation Services has to have guidelines in place. I want to know why the Yukon Housing Corporation does not. I think they should. Why does the Minister not think they should have guidelines in place? Does he plan to do anything about it? Does he even think it is important?

Hon. Mr. Fisher: It would be pretty difficult for the Yukon Housing Corporation or any department of the government to spend, as the Member says, millions of dollars, with no controls.

I will table all the contracting documents for the Member opposite. She will then be able to see exactly how the criteria work.

Question re: Dawson City boundary expansion

Ms. Moorcroft: I also have a question for the Minister of Community and Transportation Services. I have a copy of the recommendations of the Yukon Municipal Board with respect to the proposed Dawson City boundary expansion.

The board recommended, and I quote from their decision, “The Yukon Municipal Board understands and shares the concerns of the Dawson First Nation. The municipality and the First Nation must agree on the planning in any expanded area if land use conflicts are to be avoided. The board urges the City of Dawson and the Dawson First Nation to reach an agreement related to land use in any expansion area, prior to municipal boundary expansion”.

Why is the Minister proceeding against the recommendation of the Yukon Municipal Board?

Hon. Mr. Fisher: There has been over a year and one-half for some sort of a resolution. A planning exercise has taken place in the Klondike Valley. In that planning exercise, the concerns of the First Nations were taken into consideration, and the municipal boundary expansion will not affect any land - a municipal boundary does not change land ownership.

Ms. Moorcroft: There is certainly an issue that the Minister is missing here. If the land becomes part of the municipality of Dawson, that affects the First Nation interest. The First Nation was opposed to the boundary being expanded until after the land claims process was done. During the election, Yukon Party candidate David Millar stated his position on the boundary expansion, which was that if you are going to have a board it should be listened to. Perhaps the Member for Klondike could give me a better answer than the Minister is giving me. At least the Member for Klondike thinks that the Yukon Municipal Board recommendations should be followed. Is it a Yukon Party policy to only pick and choose the recommendations they like from all Yukon Municipal Board decisions?

Hon. Mr. Fisher: No, it is not our policy.

Ms. Moorcroft: Well, I hope that the Minister appreciates the chaos that he has created. Even the City of Dawson councillors have concerns that they do not have time to address the issues with which they are going to be bombarded. The Dawson City boundary expansion has been opposed by the First Nation, it has been opposed by the residents association, and the Yukon Municipal Board also said that the land claims process should be complete before the expansion goes ahead. Why did the Minister go forward with the decision to expand the boundaries now? Whose interest is he serving - that of the Mayor of Dawson City?

Hon. Mr. Fisher: The Land Claims Secretariat has been dealing with the boundary expansion in Dawson. There are more people who have interest in the expansion than the Mayor of Dawson - there are the residents of Dawson City. We are following recommendations made by the Yukon Municipal Board.

Question re: Yukon Housing Corporation, proposal requests

Mrs. Firth: I have a follow-up question for the Minister responsible for the Housing Corporation. Now that we have established that there are no rules in place for the Yukon Housing Corporation regarding issuing proposal calls, that they can essentially do whatever they want with millions of dollars of taxpayers’ money, I would like to ask the Minister some questions about a specific proposal - the one for the 19 social housing units of the government’s job creation scheme.

This is a $2 million project. Three proposals were submitted and evaluated by the Yukon Housing Corporation officials. Usually, in the bidding process, the bids are opened in public with the bidders present. I would like to ask the Minister why these bids were opened behind closed doors by the Housing Corporation officials. Why was it not done openly in public?

Hon. Mr. Fisher: First, we have not established that there are no rules. The Member opposite did not establish that. I said I would provide information to that Member and, once she has perused that information, she can possibly come to a conclusion that there are no rules.

With respect to the opening of tenders, it was not a tender. It was a request for proposals. The requests for proposals are commonly, throughout government, reviewed by a group and are not given to other people who had sent in proposals.

Mrs. Firth: I have the rules for the Yukon Housing Corporation here. There are no rules regarding proposals. Secondly, in government bidding processes, not only are all bidders made aware of the value of all the bids but, in many cases, they are able to meet with contract evaluators and administrators and have their bids critically reviewed. Why does the Yukon Housing Corporation do it in the backroom, behind closed doors, and not provide that information to the other bidders?

Hon. Mr. Fisher: As in regular tendering, the cost is made available to the public and to others submitting proposals.

Mrs. Firth: I have spoken to the two bidders who were unsuccessful. The costs have not been made available to them, nor have they been given information with respect to their own evaluations. They have been given selective information by the president of the Yukon Housing Corporation.

Why can the Yukon Housing Corporation get away with doing this, when other areas of government are not allowed to? When is the Minister going to put some rules in place to make the Yukon Housing Corporation operate under the same rules and regulations as the rest of government?

Hon. Mr. Fisher: I am not sure where the Member opposite is getting her information from, but it is definitely not accurate. There was a report created, and we will be tabling it in the House, at the request of the Member opposite. It was sent out to the people who put in proposals.

Speaker: The time for Question Period has now lapsed. We will proceed to Orders of the Day.


Hon. Mr. Phillips: I move that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.

Speaker: It has been moved by the Government House Leader that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.

Motion agreed to

Speaker leaves the Chair


Chair: I will now call Committee of the Whole to order. Is it the wish of the Members to take a brief recess at this time?

Some Hon. Members: Agreed.

Chair: We will take a brief recess.


Chair: I will call the Committee of the Whole to order.

Bill No. 12 - First Appropriation Act, 1994-94 - continued

Department of Health and Social Services

Chair: We are dealing with Bill No. 12 and we are on Health and Social Services. Is there general debate on the department?

Hon. Mr. Phelps: I have some introductory remarks that I will read into the record.

I am pleased to introduce today the 1994-95 capital budget for the Department of Health and Social Services. This capital budget covers 39 projects, totaling $17,974,000, and will create over 100 jobs.

As you are all aware, the largest project is the construction of the new Whitehorse General Hospital. This project accounts for $16,068,000, or about 90 percent of the department’s capital budget. The cost of this undertaking is fully recoverable from the federal government. The remaining 28 projects amount to $1,906,000, or 10 percent of the total planned capital expenditures.

I would like to speak first about the hospital project. The Yukon is to be fully reimbursed by Canada for the cost of the new hospital up to the negotiated amount of $47,176,000; $44,579,000 represents the class B estimate and costs are directly related to the actual construction; $2,597,000 represents the class C planning money, which will be used to carry out the necessary planning tasks associated with this very large project.

Further to my ministerial statement on our plans to redesign the hospital, I would like to note the following: firstly, there will be no further requests for funding from the federal government as a result of the redesign; secondly, the expiry date of the agreements will not change and neither will the targeted opening of the facility or the core services of the hospital; thirdly, First Nations programming interests will remain the same, and our commitment to First Nations people, as outlined in the agreements, remains firm; fourthly, the total number of beds will not change, but will probably include a mix of acute care and some hostel beds; fifthly, a reprofiling of the cash flow will be done and submitted to the federal government for the necessary approvals; and sixthly, redesign costs will be accommodated within the present budget. In essence, what we will be doing is modifying the functional plan to reflect 1993 standards and to accommodate recent trends in health care delivery, such as shortened hospital inpatient stays, increased use of the surgery or ambulatory care services, increased outpatient services, and so on.

The class B and C contribution agreements cashflow projections relate to the project as follows: for 1992-93, the total was $1,317,508, actual; for 1993-94, the projection is $4,781,000; for 1994-95, the projection is $16,068,000; for 1995 through 1997, the projection is $25,009,000. It should be noted, of course, that this cash flow profile will be adjusted to reflect changes to the construction timetable after the 1993-94 fiscal year. A preliminary revised projection at this time for 1994-95, under the redesign scenario, is set at about $13 million. The vote requested in the budget is based on the previous design at $16 million.

Given that the new construction cashflow figures are preliminary, I am requesting that the capital vote for the next year, 1994-95, remain at $16 million. I will identify the final, revised figure in the first supplementary.

We will be discussing our cashflow projections with the federal government in light of the revised hospital design. More details on the $16,068,000 expenditure request for hospital construction will be given when we reach that line. At this time, however, I want to give Members a brief overview of the remaining capital expenditures planned by the department.

Policy planning and administration and family and children’s services will have their capital expenditures reduced in 1994-95 by 40 to 50 percent. Policy and planning money budgeted for 1993-94 for integrated health and social services has been moved and distributed among specific buildings and specific program areas. The remaining funds are largely associated with systems development costs in a number of key areas in the department. This will enhance the department’s capability of delivering its programs in more efficient and effective ways.

Under family and children’s services, capital expenditures are planned to increase only in the area of child care. It is anticipated that, when new regulations are put into effect next year, there will be an increased need for capital funds associated with enhancement to facilities. These funds will support an increase in the quality of the physical space and present child care centres and family day homes.

In the area of social services, the major capital expenditure associated with this program relates to renovations required to the Crossroads building. This building has been turned over to the department and is in need of repairs that relate to building code and safety standards.

There are a number of new projects planned for 1994-95 in the health services area, other than the major hospital construction project that I have mentioned. As part of the health transfer agreement, No. 2 and No. 4 Hospital Road became the responsibility of YTG. Capital maintenance to these buildings is required and $50,000 has been budgeted for that purpose.

In addition, under the funding arrangements with Health Canada for community health facilities outside Whitehorse, we will be contributing toward some construction projects planned for 1994-95, including the construction start for a new nursing station in Ross River.

In order to keep up the fleet of ambulances in the territory, two new units will be purchased in 1994-95 and a new roof is required for the ambulance station in Whitehorse.

This highlights the capital budget for the department for 1994-95.

Mr. Penikett: I wonder if I could just indicate to the Minister briefly the way in which I would like to proceed in Committee. I am going to begin with a long rambling general question in a minute, which will get to the question of the hospital - which is, of course, the largest single component of this capital budget and the one that warrants the most attention.

I will personally save questions that I have about some of the other specific projects, the other 38 that the Minister mentioned, for the line-by-line debate, but it may serve both of our purposes for me to ask some questions in general debate about the hospital, because some of those questions may require the Minister to come back with information. He may be able to provide that information by the time that we get to that specific line.

Other critics on this side, including my colleague, the Member for Whitehorse Centre, who is the critic for Health and Social Services, may have some other questions.

If I can by my rambling general questions summarize my concerns about the discussions so far about the hospital project and the Minister’s announced redesign, while the Minister has used some of the buzzwords about health reform and references to new concepts, philosophies and new thinking, the Minister did not elaborate about those ideas in his statement today. The Minister will forgive me for saying that we have no sense that these are ideas that have been integrated into the Minister’s thoughts or his world view.

The strongest sense that we have had is that the Minister’s decisions have been driven by a concern about costs alone. I want to be clear with the Minister in saying that we share the concerns about costs, and I believe that the Minister will consult with his deputy who worked with me in the department. She will know that I had identical concerns, and indeed I think some of the toughest of the questions that the Minister may have to face are ones that are not new and have been around for some time. The Minister has cast the decision about redesign, in part, as a decision that was made in the context of new thinking, new philosophies and new concepts. Even respecting the Minister’s concern about costs, we have not received from the department or from the Minister a strong sense of the role the hospital will play in the total health care system. Nor have we received the information that would allow us to evaluate the new hospital project - the redesigned hospital - as an investment in the health of Yukoners.

The shopping centre mall concept - the idea of the concrete forms that will be filled in later with the technical equipment, operating theater equipment, and so forth, once the program has been fleshed out - appears to us to be somewhat back-asswards, in the sense that while it may be driven by the necessity of completing the redesign and construction in the same season, we would agree with those who have concerns that it may, rather than reducing costs, if things go wrong in the Minister’s scheduling, add to the construction costs of the facility. Let us say that if the costs exceed expectations in the early phases, we may have to shortchange ourselves in terms of medical equipment, supplies or hospital programming as a result. That would be an unfortunate outcome.

The Minister has, once or twice in Question Period, referred to the Health Act, suggesting that I, for one, who was involved in the drafting of the Health Act, should understand the Minister’s decisions in the context of the kind of philosophy involved in the Health Act and the kind of emphasis on health promotion, disease prevention and a focus on wellness embodied in the Health Act, rather than the old-fashioned notions of sickness and cure, hospitals, technology, drugs and specialists. However, not since the Minister entered his post have I heard him articulate any of those values on any occasion in any other forum, nor has the House garnered any sense that the Health Act that the Minister refers to is, indeed, being implemented, or that that legislation is having life breathed into it by the Minister.

I do not want to be harsh here but, for example, one of the statutory requirements under that act is for the production of a health status report. I note that we have not received that according to the timetable by which it was supposed to be delivered.

The Minister, in the last budget round, referred to a joint YTG/YMA committee dealing with questions of costs. We have had no further report about that.

Let me concede immediately to the Minister that, on that specific item, the health supplementaries may be the more appropriate occasion for me to ask about that. I am really not making a petty point here. I am really trying to elaborate a single, large point about health policy and health philosophy.

I continue to be concerned about a number of issues about which I have given notice, both on the floor of this House during Question Period and during the briefings we have had with the planner and the deputy, and in a previous briefing with the Minister. Among those concern the question about architect’s fees and whether or not the architect profits from the redesign or has any accountability for the design, which the Minister decided was inherently flawed, or is the client to blame and responsible for absorbing the costs? Are there any consequences for the construction budget of increased design fees? I have a number of questions like that that I may get into later.

Even though we are already behind the original schedule, I confess that, notwithstanding my great concern for the maximum possible employment in the coming construction season, given the local recession, I am really concerned about a rigid or strict adherence to the time frame the Minister has established. To say the least, I think it will be very difficult to meet.

I have some very specific questions that I want to get into about the planning and construction process, as do many other people. I want to know what we will be doing to maximize the utilization of the local labour force and materials.

If I can complete this rambling question, I am concerned most of all with this  decision to redesign the hospital and the decisions to stick to the construction schedule and the methodology of proceeding, in the context of the larger question of health policy and health care philosophy to which the Minister has alluded occasionally and of which there is scant reference in his original ministerial statement. We have not heard any detail about it or elaboration from the department.

Given that we are only going to be with this estimate for a short time today, I am wondering if the Minister would be prepared to give an undertaking to come back to the House with a brief statement of policy or his philosophy about the health care program in the context of not only the Hospital Act, but also the Health Act and the new thinking and concepts he has talked about. I wonder if he would commit to this undertaking to do this prior to our discussion of the actual line in the budget, which I assume would, of necessity, take place some time next week. This would give the House a sense of how we can relate the decisions around the hospital to what he has referred to as “new thinking, new concepts and” - I cannot remember the other phrase he used, but perhaps it was “new philosophy”.

Having gone on at some length, the final question is really the one to which I would like to hear the Minister respond.

Hon. Mr. Phelps: I will respond generally to some of the points raised by the Member opposite and more particularly regarding his concern that this decision is one that is driven by costs alone. I would like to begin by saying that if we put everything into context, we have a situation where the operation and maintenance budget for this year has expanded greatly over the operation and maintenance mains of the previous year, which were something in the order, for the combined department, of $67 million.

There were various reasons for it being over spent during that fiscal year. These are rough figures. The supplementaries brought it up to $83 million and the operation and maintenance mains for the current year that we are in are very close to $100 million for the year.

That increase is something that I personally battled very hard for, partly because it was my opinion that the department, in the previous three or four years, had been given an operation and maintenance that was impossible to meet. My concern was to try to get a realistic amount, so that we would have those targets to work toward and so that it would not be totally frustrating to the people in the two programs most responsible for the overruns, and it would give us some chance to look for efficiencies, restructurings of programs on both sides of the department.

As the Member is well aware, we have been involved in a fairly rigorous process regarding social assistance. We have done some consultation with regard to health care costs as well, and we struck the committee that was mentioned by the Member, the joint management committee of the Yukon Medical Association and the department. This process is ongoing.

The sincere feeling I have with regard to the department’s share of the operation and maintenance pie is that, politically, it will be different as a percentage of the whole to get much change if, all of a sudden, we deem it necessary to have a whole bunch more money to deliver the expectations of the public.

I doubt very much that we are going to have the ability to find money from other areas of government. It is incredibly important that we find ways, through efficiencies, and perhaps new and better programs in some areas, to provide capital money to move toward the visions that I am sure we all share in this House, and some of the issues that have been mentioned by the Member opposite about the Health Act, its implementation and my speaking about that act. It may be that we have some different opinions about how we proceed, for example, to achieve community-based health, but I am sure that the Member has heard me on numerous occasions express my interest in community-based healing, health and justice. I feel that that is a primary goal that I am pursuing as Minister.

The Health Act sets out various mechanisms to try to achieve that goal. I suppose that if there is a difference between the approach and the process that was envisioned by the Member when he was a Minister and mine now, I see it from the community up. The community determines some of these things and we proceed on a building block basis with healing centres and that sort of thing in the communities. Of course, the other interaction has to do with phase 2 of the health transfer, which is a problem, but I have not in any way predetermined the priorities that may be chosen by the various communities that make up the Yukon.

I want to make it clear that the general thrust toward community-based health is held by me, as it was by the Member when he was Minister. I have on numerous occasions spoken about this issue, but I see the process taking place on an incremental basis, in an incremental fashion on various fronts. There are pilot projects being designed and implemented that may seem rather modest in some communities. As we can find funding, we hope to build on any progress that is being made.

An example is the joint approach that we have taken in partnership with the Kaska and the federal government on the delivery of alcohol and drug services for Watson Lake and Ross River, and this in some context is also shared with communities on the British Columbia side, because Kaska also deals there. The Province of British Columbia has also joined in, as we have. I mention this approach as showing evidence of our desire to move in that direction.

When we first discussed the redesign of the hospital, I recall the Member being concerned. I think the phrase he used was the old adage about form following function, and that was a problem he foresaw with the route we are now taking.

My view is that in this case we are trying to have form follow function. The functional programs that have been worked on - and a lot of effort has gone into them by the stakeholders - is certainly not lost. As I see the world - perhaps I am a little naive; I certainly do not profess to have any great expertise in the world of medicine - we are not talking about changing the programs of the hospital. Experts have looked at the functional programs and the design of the hospital and they have said that it is a lousy form for the functions we want to carry out.

If you break it down to its basic elements, that is what I see. The new form will allow more flexibility to carry out the functions of the hospital. Those functions have not changed from those of several years ago, and as they were proposed.

There is the potential for, and we do expect, some operation and maintenance savings. I am advised that, as a rule of thumb, the operation and maintenance costs of hospitals amount to the capital cost of the hospital over two and one-half to three years. So, the magnitude of operation and maintenance is extremely important.

The hospital design allows a great deal of flexibility. By acceding to the new form, we are not in any way saying we want to change the function of the hospital.

Rather, we feel that, for the same dollars and because of some of the efficiencies that the form will allow in performing the functions, the hospital will be able, using the experts it has in its staff, to use some of them to better advantage. To give just a couple of examples - and perhaps my imagination is not all that great on the subject because I am not in any way an expert - but it seems to me, for example, if one is able to reduce nursing stations from even only seven to five, whatever the hospital board decides is the way it should go, what is one doing? One is freeing up some staff, certainly, particularly in the slow hours when people are not needed to be sitting in every single area. With all this expertise, there is a waste there, and these people could - and many nurses I have spoken to, would prefer to - spend that time, rather than simply duplicating something that is not all that necessary, in delivering care to patients at home or being involved in other programming.

I see the potential for the hospital to increase its programs from the strictly in-hospital stuff that is being done there now - and was envisaged for the building all along - to deliver some of the kinds of programs that are either delivered in part by the department, such as home care - or matching or similar programs to home care - for patients who require care not only because of age. They are not senior citizens but they could go home from the hospital earlier, and that sort of thing. I see the same kinds of trained staff getting more involved in aspects of preventive health. I see, as well, a situation where we will have a hospital that, because of its form, will be, from my basic understanding, more user friendly to the community.

Let us take the rough drawings that we have all looked at and consider that the old wing - the mid tech, the atrium area of the hospital - is basically all accessible to the public and there will be extra floor space in that building to provide additional services as time goes by. This might be things like chiropractic and so on. I see the hospital being better integrated into the community, partially because of its form. I have even been thinking about - though I have not yet spoken to anyone - the possibility of leaving the wings that would be cut off in the last phase - I think they are on the south side of the building - to be used for something in the future, if they do not cost any money to maintain. Perhaps Yukon College could use part of it for training in the future, I do not know. I do see the form providing some opportunities that are not provided by the form of the previous hospital, and I do see the potential, at least, for using some staff and some dollars now. The commitment is to not take these dollars away, but to try and use them for building on other programs that the department would like to pursue.

The question that is being raised by the Member in that regard is partially political, perhaps, but it is a genuine concern. I met today, for example, with the staff and doctors over at the hospital at lunch, and that is one of the things that concerns them. My genuine answer to them, as it is here, is simply that changing the form of the hospital is not a decision about how the hospital board is to run the hospital with regard to staff. Changing the form of the hospital is to allow us to perform the functions better. That is my view of it.

The Member mentioned the concern of adherence to time frame, which I would place right up there as an extremely valid concern. It was raised today and has been raised by lots of people along the route between Monday of a couple of weeks ago and now.

Are we going to be bullheaded and stick to this time frame at all costs, no matter what? The answer is no. As I stand here, I believe that we can perform the task within the time frame that has been roughly outlined. However, if, as we proceed, we perceive that there has to be a delay, and it is in the interest of the Yukon and the hospital and so on, I am going to be the first to seriously debate that and consider it. If it makes a lot of sense, I will seek the blessing of this House and Yukoners to change.

I can sincerely say that this decision to change would be based on valid concerns and the belief that Yukoners will understand the need and support it.

I have also been asked by some user groups to recognize the hard work and to delay it one year so as to be sure. I have been asked if that is not the best thing to do. My response to that is, “Let us start into the process and see what real concerns are there.”

I think we have to enter into the process and see if there are some real obstacles that have not been foreseen. If there are, and we can spell them out, there would be some basis for not proceeding as quickly or on the same schedule as the original design.

Unless there are some really good reasons to delay, however, other than simply philosophical ones, such as if we wait longer, it will be better and so on, I do not think it would be fair to the people of the Yukon. If there is a good chance that we can do a good job and get it done on time, it seems to me that the important part of the equation is the economic benefits that this project will bring to Yukon workers, contractors, businesses, suppliers and so on.

In order for us to have risk outweigh that benefit we are going to have something concrete to show us. Thus far, the experts are telling us that we can do it.

Again at noon, a doctor asked me how one decides that these experts are better than whoever was responsible for the old design? My response to him was, exactly how do I know that I should have confidence that my doctor is the expert I need? It is one of the things where you do the best you can. You ask the people whom you think have the expertise to tell you who the best people are. In the end you are going to have to end up having faith in the expertise of those people upon whom you rely, particularly in a professional relationship and that is what I am talking about here - the people in the departments of the two provinces, and so on.

In my judgment, I feel quite comfortable. I can tell you that I have seen people go to lawyers whom they had great faith in and I felt I knew they were making a bad decision. I have seen people go to doctors whom I thought were inappropriate ones to handle those paritcular cases. I think, at this time, we have gone as far as we can to get the best expertise possible under the circumstances.

I will conclude on that, and review the transcript to see if there is more that I can add at a later time. There is the issue of health status report, and so on. I would like to, in view of the time and the fact that we have witnesses coming later, conclude now.

Mr. Penikett: Just before the Minister seeks a recess for the purpose of hearing the witnesses on another matter, I would like to take a couple of minutes to respond to the Minister and reiterate my main question, which unfortunately came at the end of my ramble through a number of topics, and therefore I did not get the response I was looking for, as a result.

First of all, with respect to the hospital design, I understand the Minister has a second opinion. There is a concern, though, that he got the second opinion from the same doctor. I want to come back to that.

I understand the concern about costs and the cost trajectory. That is not new, and this jurisdiction is not unique in that respect. I am not going to talk about the social service costs. I know enough about what health cost trends are in this country, and about the source of those problems, which include the method of payment of physicians, and other professionals - the fee-for-service system, which I think the Minister will understand promotes uneconomic behaviour in the health system, if I can put it politely - high tech medicine, drug therapies, excessive use of specialists and subspecialists, and hospital-based delivery of health programs. I understand those are all cost concerns. I also understand perfectly if the Minister wants to address them in an appropriate way.

Another concern has been low investment, the need for community-based delivery, to be able to measure outcomes, to have things like health status reports, and we had begun to give a statutory base for doing some of those things here in the Health Act.

I want to be clear in respect to that act and the Hospital Act. I am not asking the Minister to agree with my world view, or to the letter, my prescription of it. I am seeking an understanding of the Minister’s view. I am not trying to provoke a debate and, in fact, I had hoped that I was trying to expedite the discussion of the estimate here.

There are a lot of things that, I confess, were at the heart of my thinking in terms of something he commented on about the incremental growth of community-based services, which is fine. I have no problem with that, but I will admit that one of the reasons I was very much interested in community health and social services boards was because of the possibility of finite funding.

That is something that you cannot get in the delivery of health and social services right now. I very much believe that if people are given ownership of the administrative dollars, and control and responsibility for them, they are much more likely to behave responsibly, than if they can just make demands and have someone else pick up the tab, which is essentially the situation we now have. I have no problem in proceeding by increments or by pilot projects.

My question about the Health Act was not to argue those particulars, because I want to ask some particular questions about that in the operation and maintenance debate, but to try and put some of that philosophical framework, or the hospital redesign decision in that philosophical framework.

I want to make this one thing very clear to the Minister so that we do not have any misunderstandings and waste several hours in debate. I hold no brief for the old design, but I also know that things like ambulatory care units are not particularly radical innovations. I went to one in Calgary 20 years ago.

I do not think that some of the other things that I have heard mentioned are particularly radical or that innovative in terms of programming.

I am inviting the Minister, as a way of accelerating passage of the appropriate issues in this debate, before we get to the line item or at the time of the line item, to come to the House with a formal statement, putting the hospital redesign decision into the context of a health philosophy or broad health policy.

I am not asking the Minister to be detailed about programming; I am not asking him to be specific about technology in the hospital, levels of staffing or any of those questions. I would like to understand the decision in the context of this government’s philosophy and policy, perhaps using the existing legislation, for instance the Hospital Act, which is being amended, but the Health Act, as a benchmark. All that I want to do is try and see if I understand, and if I understand, can I support what is being done. I am only suggesting that a formal statement, perhaps filed by way of a legislative return, or even given by the Minister, one which, if we got it in advance, may save a lot of time in the debate. Otherwise I think we are going to be cherry-picking, or nibbling around the edges of this debate, and I would like to get to the core of the subject, if it is possible.

Hon. Mr. Phelps: Briefly, we will certainly attempt that. I think that part of the issue is that this form follows the function better than the old form. We are not really radically changing anything because of it. There are some changes with regard to what is perceived as the better number of acute care beds and whether there should be some hostel beds and so on, but I think that is fairly trivial in the overall question.

I am certainly not here to say that the whole thing magically came about because of brand-new things and that there was such a radical shift so quickly. Rather, my view is that there is more flexibility in this plan for the future. Logically, I think that goes without saying, given the design concept.

There will probably be some efficiencies that can be used for other things within our department’s share of the pie. I do not really foresee us being able to forever increase proportionate to other departments.

Mr. Chair, in view of the time, I move that you report progress on Bill No. 12.

Motion agreed to

Chair: We will now recess until 4 p.m.


Chair: I will now call Committee of the Whole to order.

Bill No. 38 - Yukon Family Services Association Rent Guarantee Act - continued

Chair: We are dealing with Bill No. 38, entitled Yukon Family Services Association Rent Guarantee Act.

Hon. Mr. Phelps: Members of Committee will recall that last night we passed a motion that we should hear two witnesses from Yukon Family Services Association with respect to some issues pertaining to Bill No. 38, in particular regarding the circumstances that led up to the bill that is before us today.

Perhaps I could ask the president of Yukon Family Services if he might give us a brief chronology, which I understand he has made and has available, of the events that led up to the request for, and the obtaining of, my agreement to the attempt to have the government act as guarantor on the lease.

Witnesses introduced

Chair: At this point I would like to introduce the witnesses to the House. They are Mr. Newnham and Mr. Findlater. I would also like to remind the Members and the witnesses to make their comments through the Chair.

Mr. Newnham: I would like to give a brief summary of the sequence of events that have occurred regarding the request for this guarantee. In the summer of 1992, we began our preliminary search for available office space and the establishment of the facility planning committee.

Our five-year lease with the CBC was scheduled to expire on August 31, 1993, with early indications that no additional space would be available. This confirmed our need to look elsewhere. In September of 1992, we recognized the need for more formal evaluation of our office requirements and available options. We therefore developed terms of reference for the facility development project and applied to the community development fund for financial assistance to conduct such a study.

In early February of 1993, having not heard from the community development fund, we hired Form to Function to carry out an assessment of our office needs and options. In early May of 1993, Form to Function presented their final draft of their report to the facility planning committee and later to the board of the Yukon Family Services Association.

The report summarized the immediate and future office needs of YFSA and two other non-profit associations that share our office space and also contained an assessment of the available rental market, plus two preliminary proposals for new office facilities. A comparison of cost indicated that we could obtain new office space at a lower cost than renting existing space, plus renovations to meet our needs.

On May 10, 1993, we instructed Form to Function to send out requests for proposals to six and subsequently seven developers. About the same time, Form to Function explained that they could not do any more work for YFSA on this project as they had been approached by a developer to carry out the building design if they were the successful developer.

Acknowledging this concern, we felt that the sealed proposals still could be delivered to Form to Function, as outlined in the request for proposal. The sealed proposals would then be delivered to the Yukon Family Services Association unopened.

On May 17, Yukon Family Services Association received three sealed proposals unopened. The Executive Director and I evaluated the proposals that evening and agreed that the proposal submitted by Cardinal Contracting was the most preferred. It had the least all-inclusive cost per square foot, preferred location, exterior appearance, purpose built for our needs, sole occupant of the building and involvement in design.

Please note that Form to Function were not involved in the evaluation or selection of the preferred proposal. On May 19, 1993, the board of YFSA concurred that the Cardinal proposal was the preferred proposal. The facility planning committee met with Cardinal Contracting Limited a few days later to clarify any questions, particularly their comment that we could avoid the leasehold improvements if we were to obtain government backing for the lease.

We were advised that the leasehold improvements would cost approximately $50,000. As we did not have $50,000 available, other than to reduce operational salaries, we decided to ask for government backing of this lease in order to overcome this cost hurdle.

On May 27, 1993, we wrote to the Hon. Willard Phelps, Minister of Health and Social Services, requesting such backing. On June 4, 1993, we were pleased to receive his reply providing the requested backing. A letter of intent for YFSA to enter into a lease agreement, plus a copy of the Minister’s letter of support, was provided to the developer, who subsequently provided it to his bank.

We heard no further comment on the question of government backing. As the land was purchased and design and construction proceeded we believed all parties were satisfied. By mid-June of 1993, we were advised that Form to Function would design the building. It was explained that Form to Function was taking an equity position in the ownership of the building in exchange for their design and project services and that a new company, called 11005 Yukon Limited, would own the building and the lot.

Through June and July of 1993, we finalized most design requirements and worked toward a lease agreement, which was signed on July 22, 1993. We occupied the premises on October 22, 1993.

That summarizes the sequence of events.

Mr. Penikett: I would like to thank Mr. Newnham and Mr. Findlater for agreeing to appear here this afternoon.

Let me, if I may, very briefly explain the nature of the two broad concerns that I think are alive in the House, and then perhaps invite the witnesses to respond generally to both of those before we are to ask more specific questions.

I appreciate the information you have given us today, because it helps to give some depth to what has transpired, since it added information that was not available to us before.

I think the major policy concern for the House - I cannot speak for all Members; I am guessing - is that such a guarantee does not seem to have had an exact precedent before for an non-government organization or for a social services agency, so as supportive as most Members may be of Yukon Family Services, there is a concern about what expectations may be created now for other NGOs and other social services agencies, and what kind of commitment this implies for the government to one service and one agency versus another.

The second concern really arises from complaints we had from constituents and concerns problems of appearances in respect to the relationship among the organization, the government, the people who planned the building, the people who were the contractors and the landlord, and how we all get involved in that as a result of providing a guarantee.

To explain that concern, I would refer to an obligation the Auditor General poses on us to be accountable for the expenditure of public funds, not just by way of contributions we may make to an organization, like Yukon Family Services, but, indeed, the Auditor General may require us to be accountable for what Yukon Family Services does with that money. In fact, the Auditor General may insist that we demonstrate that that money has only been spent for the purpose for which it was voted in the Legislature.

I want to emphasize that we have no reason or need to get into a lot of the private dealings of your organization. Indeed, we would have no need, if there were not public expenditures involved, and the guarantee is, for these purposes, in effect, a public expenditure.

I, and others here, may have some specific questions about some of the particulars about what has gone on. I will confess to colleagues that I have had the advantage of having a briefing from people who have been associated with the project, so I have more information than was available to us the last time we were speaking about this.

I wonder if Mr. Newnham and Mr. Findlater would be willing to make some general comments about the question of the guarantee, or about the problem of appearances of a complex relationship among the landlord, the contractor, the planner and the organization, and how we get involved by way of a guarantee.

As I understand it, the bank’s request for a guarantee arose from a concern that an organization like Yukon Family Services has no assets, but I also understand that it was recommended to Yukon Family Services that it might seek a mortgage to build its own building.

Of course, we are interested in why the organization did not ask the government for a guarantee to enable it to do that.

We are also interested, as well, in whether any effort was made to explain to the bank that the level of funding that YTG now provides - in fact, it has been involved in helping to pay the rent for Yukon Family Services Association for a long, long time - did not itself constitute a form of guarantee in that the long-term relationship between the Yukon government and Yukon Family Services is such that, while we are not married, we do have a close enough working relationship that the bank ought to have a reasonable expectation that it would continue.

Could I ask either of you to comment on those general questions before we ask the more specific questions?

Mr. Newnham: I am somewhat overwhelmed by the long dissertation. Could Mr. Penikett please highlight the questions that he has in mind and maybe we can address those questions on an individual basis.

Mr. Penikett: I will do it that way; it is going to take more time, but I will put the questions directly.

A number of constituents have complained to us about the appearances of the inappropriate, close relationship among the planner, contractor, builder, landlord, Yukon Family Services and an arrangement with Yukon Family Services that this government is being asked to guarantee.

Where you aware of that concern, did you discuss that concern and how did you deal with that concern?

Mr. Newnham: With regard to the concern, as I mentioned in my summary of events, Form To Function approached us toward the latter part of their project to do an assessment of our needs and explained that there was a possible opportunity to work with one of the contractors and therefore he would have to stop doing any further work for the Yukon Family Services Association on our project.

We accepted that, and as I explained, at the time that we did this evaluation, we did not receive any comments or concerns from other contractors or other parties. It has only been recently that it has come to our attention that there has been some concern.

From our own point of view, Form To Function indicated that they had the possibility of other work and could not work for us. We therefore decided to continue to have the sealed proposals submitted to Form To Function, where they would be collected, and then delivered to Yukon Family Services for our personal evaluation. Form to Function was not involved in the evaluation.

We did not see any problem with Form to Function collecting the proposals and turning them over to us. We did the evaluation and assessment on our own, and decided on our own, relative to the merits of the proposals received.

I guess there is a further concern where Form To Function has become a part owner in the building. Again, that transpired some time after we considered Cardinal Contracting as the preferred contractor.

As I explained, we understand that Form To Function received an equity position in the ownership of the building by providing their services and design for it.

Mr. Penikett: I would ask Mr. Newnham, through Mr. Chair, if he can confirm that a number of the contractors who presented proposals to Yukon Family Services proposed to use Form To Function as their designer? As this is a very small community and there are few architects or design firms available, did that ever cause the board or management of Yukon Family Services concern or to consider anew the process by which they were going to be making the decisions down through all the stages?

Mr. Newnham: If I understand the question, no, we did not consider any other approach when we learned that Form To Function may have been requested to be involved in the design. We did not see a conflict of interest, because Form To Function explained to us the possibility of future work. They had done their contract with us to simply see a needs assessment of our office requirements.

Mr. Penikett: Let me ask Mr. Findlater or Mr. Newnham a question with respect to the guarantee. As I understand it, Form to Function made the original presentation to the board recommending how the problem of proper facilities for the organization could be dealt with. Was it recommended that the board might acquire their own building and obtain a mortgage for that purpose?

Mr. Newnham:   We gave some thought to the possibility of owning our own building. We felt that the difficulty of obtaining a mortgage would be substantial - somewhat overwhelming. We did not make any inquiries into the possibility of government guaranteeing such a mortgage.

Mr. Penikett: May I ask why not.

Mr. Newnham: As I commented earlier, we considered it to be a substantial responsibility to take on a mortgage and make those annual payments. We felt we would be better off to arrange for a developer to own the building, and have the responsibility of maintaining it and providing the ongoing services that are associated with maintaining a building. We felt those services to be somewhat onerous for a volunteer board.

Mr. Penikett: Could I ask Mr. Newnham or Mr. Findlater if they could comment on the question of the guarantee in respect to how it might affect, or what kind of precedent it might create, for other NGOs, and whether they had any discussion with any other organizations or any concern about creating a precedent here by having an arrangement that I am sure would be desirable for many other organizations besides Yukon Family Services. Could I put that question through you, Mr. Chair?

Mr. Newnham: We did not consider that the providing of the guarantee would cause a precedent.

Mr. Penikett: In the Family Services Association’s discussions with the bank, was the fact that the association has had a long-term relationship with the government, and that the government has been providing substantial funding for some time, not explained to the bank? Did that not impress the banks enough that they were willing to consider financing of some kind other than that which would be associated with the government guarantee?

Mr. Newnham: YFSA did not speak to the bank at any time regarding the financing for this development. That was an arrangement between the developer and the bank itself. As the Member commented earlier, YSFA has no assets, and if we were to default, they would have nothing to claim. I suspect that they felt the guarantee would provide them with some assurance.

Mr. Penikett: The perception problem here is, of course, that the eventual beneficiary of the guarantee, as some lay person or ordinary citizen might see it, is in fact the landlord of the building, not the Yukon Family Services Association. That leads inevitably to a number of questions from people who may have no hostile feeling whatsoever toward Family Services. Those questions become more urgent in some people’s minds because the owner of the building not only designed it but also was the contractor.

Could I ask if that possibility was ever the subject of discussion by the board of Family Services? Could I put that to the witnesses?

Mr. Newnham: The request for the guarantee, we believe, originated with the bank. As I explained earlier, it was because of our lack of assets that they sought this guarantee. We did not feel it was a problem.

Mrs. Firth: I want to do this in about three parts. First, I just want to thank the witnesses and I want to put on the record who I have already spoken to, prior to the witnesses appearing in the House this afternoon. I have had an opportunity to speak very briefly with one of the witnesses, Mr. Jim Newnham, and I have also spoken to Mr. Ken Eby, who is the owner of Cardinal Contracting.

My concern is this: we are dealing with the expenditure of taxpayers’ money here. We have some responsibility to see that the money has been spent in a fair manner. That is my concern - the fairness of it. I am also concerned about the precedent that is going to be set.

This was brought to my attention by other contractors who had felt they did not have an equal and fair opportunity at this particular contract - prior to the legislation even coming into the Legislature. I want to ask the witnesses a couple of questions about the process.

I find interesting the discussion about the possibility of Yukon Family Services Association having their own mortgage and the bank requiring this letter of guarantee.

I know that the company now - it would have been Cardinal Contracting; it is 1105 Yukon Limited now - is going to be providing services to Yukon Family Services in the form of rent, providing all those services that Mr. Newnham referred to as being rather onerous, and yet they are still going to be making money doing that. I wonder why Yukon Family Services Association felt that they would not be able to do that themselves, that they would not be able to make money themselves if they had gone to the bank and done it without the government’s guarantee.

Mr. Newnham: As I commented earlier, we considered the possibility of Yukon Family Services Association owning its own building. We felt that it would be very difficult to get a mortgage in the name of the Yukon Family Services Association, as we had no assets. We considered that such a possibility would result in a lot of extra work for the volunteer board to administer - the maintenance of the building, and things like that, to arrange for car parks, to arrange for siding that was deteriorating, and things of that nature. I guess we felt that we were more concerned with looking at YFSA rather than Imaintaining a building.

Mrs. Firth: Do I understand the witness correctly to say that the Family Services Association was prepared to pay more to have someone else running the building and doing the operation and maintenance and providing the rental and accommodation services to them?

Mr. Newnham: I think that would be correct.

Mrs. Firth: I want to ask the witnesses some questions about the process, in particular what happened when the proposals were evaluated. I think this may be the area some people are raising questions about - fairness and expertise. The witnesses this afternoon have said that they reviewed the proposals themselves - the executive director evaluated them and choose Cardinal Contracting. They made it very clear that they had no advice from Form to Function with respect to that decision.

Did the witnesses feel confident that they had the expertise to make the kind of judgment and evaluation? It is a very sophisticated process to choose successful proposals or tenders, and I would like to hear what the witnesses have to say about that.

Mr. Newnham: In connection with that, it was the executive director and I who evaluated the proposals the evening after they were received, sealed, from Form To Function. I feel that we were comfortable in assessing the proposals that were received. There were some variations in their presentation. Some had the cost per square foot including maintenance, and others had them not including janitorial services. We had to try to balance and add those factors in. However, I was comfortable with the evaluation that we did.

Mrs. Firth: Had the witnesses planned to use the expertise of Form to Function and then did not use it?

Mr. Newnham: In part of our early phases, we did think of the possibility of using Form to Function in the construction of the building, representing us on a project-service basis. When Form to Function came to us and explained that they may have the opportunity to be involved in design, we saw that opportunity pass by. However, we did feel that we could work with the contractor to keep an eye on it as things were going.

Mrs. Firth: Had the witnesses planned to use Form to Function to help with the evaluation of the proposals that were coming forward?

Mr. Newnham: I do not recall any specific discussion regarding using Form to Function to evaluate the proposals. I, myself, have had a considerable number of years in project management and assessing building development of this type - buildings almost of a similar nature. I think we were comfortable with the expertise we had within our committee.

Mrs. Firth: If that is the case, perhaps the witness could tell us why the proposals went to Form to Function, through a sealed envelope process, as opposed to just coming directly to him and the executive director of the Yukon Family Services Association?

Mr. Newnham: In hindsight, perhaps we would have handled it differently. At the time, it was Form to Function that had sent out the request for proposals. It seemed logical, at that time, to have them returned to Form to Function.

Mrs. Firth: I would like to express my concern to the witnesses about the fairness aspect of the contract award.

I know that the witnesses have an appreciation of what the economic situation is like in the Yukon right now, and how there are few dollars and many people are fighting for those dollars.

Had this transaction taken place strictly with private money and between private businesses, I do not think that we would be debating this issue this afternoon in the House, but because taxpayers’ money is involved, I think that questions have been raised about whether or not there was a level playing field, and whether all contractors who wanted to participate had a fair chance. Perhaps there is an appearance or a perception that there was not a level playing field.

I am not asking the witnesses to provide a definitive answer saying yes, that is the case, or no, that is not the case. Could they support the idea that perhaps there could be that appearance to other contractors because of the process that was followed?

Mr. Newnham: It is obvious, through comments that both Mrs. Firth and Mr. Penikett have made, that there are some constituents out there who do perceive a conflict of interest.

However, I have tried to explain that Form To Function was upfront in coming to us and explaining that they had an opportunity to do some work in the design and that they could no longer do any further work for us. I think that they were forthcoming in explaining to us that they had the opportunity to obtain an equity position in the ownership of the building by providing their services for design.

I am regretful that those people who perceived a conflict of interest, in particular the contractors, did not come forward and approach us. I think that we could have tried to explain the situation to them.

Mrs. Firth: I know that the individuals who came to me as an elected representative did not know that alternative was available to them.

Because of the way the issue was handled, the way the proposals were invited and dealt with, I know that the people who raised concerns with me did not realize that was an available option. Perhaps that is why they did not come forward.

There was some question as to who had made the decision with respect to deciding the successful proposal, and I think that may have made some of the contractors uncomfortable.

I think it is unfortunate that it has happened, and perhaps we can learn something from the process and have some stronger rules in place to guide this kind of process.

The last part of my questions and concern has to do with the precedent that is created by this initiative. I have asked the Minister in the House and this will be the first piece of legislation like this in the Yukon.

I want to hear from the witnesses if they think there is any other way that we can accommodate them. Can we do something other than proceeding with this legislation, because I think I have made it clear that I have much difficulty going in this direction? I would like to hear if there are any alternatives, suggestions, or any other ways that we can perhaps help Yukon Family Services, so that we can see the organization continue.

Mr. Newnham: We actually felt that this backing of our lease agreement by the Yukon government would be a very reasonable approach to handling our problem of obtaining the agreements we needed for the rent. I am surprised, because we looked upon it as an almost no-cost approach to the government. I know this is based on the fact that we do not default. If we happen, for some reason, to default and are unable to continue paying the mortgage, it becomes the responsibility of the government to take it on.

The comment has been made that it is a $1 million liability. That would be the case if the building were unoccupied for the full 10 years. I think that is a very small probability, so we are not talking about $1 million. Simply by getting a guarantee from the government, we expected it to be at no cost to the government, and it transferred a lot of the cost to the owners and to the bank. It reduced our cost of covering the leasehold improvements.

Mrs. Firth: It brings me back to the point that, obviously, the banks were concerned about it if they asked for the guarantees, and we had to go through the process of the letters from the Minister, and so on.

I do not, in any way, want to see the Yukon Family Services not being able to provide their services. I have made the concern known on behalf of people who have brought it to me. I have some suggestions I would like to make to the government, after this interview, so this does not happen again. I would like to try to find some alternate way to accommodate the Yukon Family Services Association with this particular initiative. I will finish by saying that I look forward to discussing this with the witnesses later. There are other Members who want to ask questions.

Mr. Penikett: I understand, in talking with the landlords, that they do not expect to make a profit from the ownership of this building for something like 10 years. I should say that, for the record, I have no doubt whatsoever that Form to Function is a reputable firm, or that the Yukon Family Services Association is an ethical organization and providing a valuable institution.

However, it must be understood that this is a small town. When you have a company like Form to Function, which has a long association with the Department of Health and Social Services, when you have an organization whose executive director has also had a long association with the same department, and you have the same department, on its own, not through the normal property management agency of Government Services, offering a guarantee to that organization, there are people who will inevitably ask us, the elected Members, questions.

Those questions become, as I said, even more aggressively posed when we have what seems to most citizens an unusual situation with the designer and the contractor for the building ending up being the landlord with us providing a guarantee for the rent. There are many landlords who would like such an arrangement with government. There are few who will get it.

Rather than trying to turn that statement into a question, I wonder, for the record, since it is partly in context here, if I could ask Mr. Findlater if he could, from memory - and I am not going to ask precise dollars - give the House a sense of the total level of YTG funding from all sources that Yukon Family Services receives.

Mr. Findlater: Yes, I can. In this fiscal year, 1993-94, for our operations in Whitehorse we received $328,000 from the Department of Health and Social Services. I happen to have made some notes on it, and that is 70.3 percent of the anticipated revenue for our operation - $328,000 is the contribution agreement. I had the opportunity to read Hansard when this bill was previously discussed and I think there were suggestions that there were other sources of YTG funding but, at this point, there are not.

Mr. Penikett: That is interesting, Mr. Findlater, because during my days in government I thought the employee assistance program was taking advantage of Yukon Family Services counselling services as well. Is that no longer the case?

Mr. Findlater: That is correct. That is no longer the case.

Mr. Penikett: There are no other branches or agencies of the government that are taking advantage of your services then, at the moment?

Are there any communities that are, with YTG funding, taking advantage of Family Services programs?

Mr. Findlater: We have a contribution agreement with regional services of Health and Social Services for provision of counselling services in Dawson City and in Watson Lake and, as of November 1993, also itinerant service to Mayo, Yukon, from our Dawson City office. That separate contribution agreement, unrelated to our Whitehorse service, is for $190,000 for this year; it is a specific purchase of service for those communities.

Mr. Penikett: Just for the record, in addition to the $328,000 and the $190,000, are there any other sources of revenue for the organization from YTG?

Mr. Findlater: We have a contract with the Department of Justice for the provision of up to $2,500 of counselling services to people referred from the correctional centre or from adult probation. That is drawn upon, if used.

Mr. Penikett: Could I ask if that is $2,500 per month or $2,500 per year? He has answered that it is per year.

At one time, Mr. Findlater, the government and yourself had a secondment arrangement. Is that still in existence? When did it end?

Mr. Findlater: It is presently in existence.

Mr. Penikett: Would I be invading any privacy if I were to ask what approximate level of funding that is?

Mr. Findlater: You would have to obtain that information from the Public Service Commission.

Mr. Penikett: That is in addition to the other levels of funding; is that correct? In terms of contributions of all forms, we might want to take that into account. I do not need to know the precise number, but it is part, in a general sense, of the grant to Yukon Family Services, is that correct?

Mr. Findlater: Yes, it is.

Mr. Cable: I should also indicate that I have spoken to the witness, Mr. Newnham, and to one of the members of the board, and have received information which has relaxed some of my apprehensions. There are some things that would be useful to have on the record.

One of the first points I would make is that the issue of the precedent does not overly concern me. There is some concern, but we should recognize that this House and this Legislature has, in fact, extended financial considerations to many private organizations, albeit business organizations. We talked about a $34 million loan guarantee to Curragh not that long ago, so the $1 million guarantee to the Yukon Family Services Association is not breaking totally new ground. It is potentially a million dollar exposure to the taxpayers, and there are covenants in the lease that, if they are not followed, could theoretically expose the taxpayers to $1 million.

As I read it, the proposal that was accepted exchanges the $50,000 leasehold improvements for the loan guarantee. Is that an accurate appreciation of what the proposal was?

Mr. Newnham: Are you asking what the leasehold improvements are?

Mr. Cable: No, that is not what I was asking. As I read the proposal, the Yukon Family Services Association could pay for the leasehold improvements or it could get a government guarantee. Is that correct?

Mr. Newnham: Yes, that is correct.

Mr. Cable: Could you confirm that the leasehold improvements are of the order of $50,000?

Mr. Newnham: We have recently asked the contractor for his estimates of the leasehold improvements. He has indicated that the leasehold improvements are in the neighbourhood of $147,000. Within that figure is what we call the premium leasehold improvements, which were specifically for our office requirements, such as sounding, one-way glass and solid core doors to reduce sound transmission. They were valued at $52,000 within that $147,000.

Mr. Cable: It was originally indicated that the leasehold improvements would be of the order of $50,000. Is that correct?

Mr. Newnham: That is correct. Our original discussions with the contractor, during the time that we were evaluating them, indicated that leasehold improvements would be in that area. I must admit, in hindsight, that we did not delve into them, because we were advised that they were in the neighbourhood of $50,000, and they could be eliminated by a letter of backing from the government. For that reason, we decided to seek a letter of backing, rather than going through the fine tuning of the leasehold costs.

Mr. Cable: This is an area of concern to me. I expressed this concern to one of the members of the board. Could the witness provide the House with some list of the leasehold improvements, so that we can increase our comfort zone on this transaction? How the witnesses conduct their business is their business, insofar as they are paying for it themselves. However, when they require taxpayers’ backing, it then becomes the business of this House.

I think it would be useful for the Members to satisfy themselves as to the quality of the transaction. Is it possible to get from the witnesses a list of these leasehold improvements?

Mr. Newnham: Our understanding of the leasehold improvements are all those improvements within the building. Our understanding is that, normally in a building of this type, where we take on the entire building, we get a shell with finished outside exterior walls, drywall, stairwells and things of that nature.

Our leasehold improvements included all the interior partitions, the carpets, thicker than normal walls to reduce sound transmission, baffling in the air ducts, so that sound transmission would not go through that means, and rubber underlay in the carpets, so that sound transmission was reduced in that manner.

The interior walls were insulated for sound transmission, and parts of the floor space between the second and ground level were also insulated to reduce sound transmission. We required one-way mirrors on our observation room. We required certain counters, water outlets in certain areas, and washroom facilities for handicapped persons.

I am afraid I do not have a detailed list of the leasehold improvements, but basically, they amount to all the improvements within the exterior walls of the building.

Mr. Cable: For the record, the witness did provide me previously with a rough estimate of those leasehold improvements. I tried to relate them to the proposal call and was rather unsuccessful. If there is further information, it would be useful to get it.

If I am reading what the witness is saying, it would seem that we are exchanging a $1 million exposure to the taxpayers for about $147,000. Is that correct?

Mr. Newnham: The leasehold improvements, we are now advised, are now in the neighbourhood of $147,000. I am afraid I have difficulty in agreeing with the Member on the exposure of the government to $1 million.

Mr. Cable: We will both form our independent judgments on that.

There is another area of concern. I have expressed this to the witness. The lease is clearly a home-drawn lease. It is a $1 million commercial lease, which, I do not believe, has been vetted by lawyers - not that lawyers will have the only say in the matter - but could the witness confirm if the document has or has not been provided to lawyers for review?

Mr. Newnham: During the early stages of negotiating the lease with Cardinal Contracting, we did have some preliminary discussions with a volunteer lawyer regarding some of the comments on the lease. Due to time factors, we went ahead and negotiated it between the two of us - between the contractor and us. We have subsequently had this volunteer lawyer look at the lease agreement again.

Again, a matter of opinion comes in. When we previously had our discussion with Mr. Cable, he raised a point about our lease agreement. Subsequent to that, perhaps it is better that the comment is not in the lease, because it provides us with an out, perhaps.

By negotiating this lease here, as Mr. Cable says, which is not vetted by a lawyer, I suspect it cuts both ways. It may give us an advantage and it may give them an advantage.

Mr. Cable: The only reason I bring the topic up is, if we are to buy into the proposition, we do not want to buy into considerable litigation.

Will the Yukon Family Services Association consider putting this document out for legal advice?

Mr. Newnham: I guess it could be put out. It is already an agreement that has been signed, and I am not sure what would be accomplished by having a lawyer assess it now. We did have a lawyer review it as a volunteer service, and this lawyer has drawn some attention to certain points. Perhaps we can consider those points in any future discussions and be cautious of them.

I think, to a large extent, we were relying on the goodwill of the parties involved in the discussions.

Mrs. Firth: I am going to follow up after some of the new information has been brought forward.

I want to ask about the leasehold improvements. When the executive director and Mr. Newnham evaluated the proposals and chose Cardinal Contracting, did they take into account the leasehold improvements at the time the proposals were evaluated?

Mr. Newnham: Yes, the leasehold improvements that we considered part of this developer’s costs, as well as leasehold improvements from others, were also considered.

I regret that the leasehold improvements came out to be substantially more than what we estimated, because it questions our approach. However, at the same time, we were also using the same logic for the estimate of leasehold improvements for the other developers.

Mrs. Firth: That causes me some concern, but I will leave that for a moment.

I am inclined to agree with the concerns that have been raised by the interim Liberal Leader, with respect to the exchange of the rent guarantee - guaranteeing 10 years’ rent to cover the $147,000 that would be considered Yukon Family Services assets.

With respect to the lease agreement that has now been negotiated and signed by the witnesses today, I happen to have a copy of that lease. I had written to the Minister to get that information, and I have had a chance to look at the lease.

I would like to recommend to the Yukon Family Services Association and to the witnesses that they do have a lawyer look at the lease. I am concerned about the exposure, because of the issues that have been raised today, where there is a concern about the public being exposed to a $1 million liability. The Family Services Association witnesses disagree with that, so I think the lease should be reviewed by legal counsel.

Is the Yukon Family Services Association prepared to do that?

Mr. Newnham: Yes, we will arrange to have a lawyer vet the agreement and request his comments.

Hon. Mr. Phelps: I am not sure if there are further questions. If there are, fine. If there are not, I was going to thank the witnesses. But I see there seems to be one person yet -

Mr. Penikett: I am happy to join the Minister in thanking the witnesses. My final question would have been a bit gratuitous anyway - just to ask if, given what happened, if he would do it exactly the same way again - but I do not think there is any point in asking the question.

There is a question that I think we will want to pursue but Mr. Cable’s concern about the quality of the lease agreement is one that we have to pursue probably with the Minister as much as with the Family Services Association, so we can leave it to the Committee.

With that, I would like to just express the appreciation of my caucus to Mr. Newnham and Mr. Findlater having taken the time to come here and to note that I know that being a witness here is not always a pleasant or relaxing occasion, but I hope it has not been too painful or too unpleasant and we do wish their organization well. We also have a duty to answer questions that constituents put to us about matters involving public funding.

Hon. Mr. Phelps: I would like to thank the witnesses.

Mrs. Firth: I would just like to ask one more question. There is just one issue on which I am still not completely clear. I wonder if the witnesses could tell us again exactly why the bank wanted the guarantee?

Mr. Newnham: In answer to that question, we were led to understand why the bank wanted it. We did not have any direct dealings with the bank, so I cannot completely understand why the bank was requesting such a backing. It was simply in our proposal. The contractor, I suspect, after discussion with the bank when he was preparing his proposal and arranging for financing, must have been advised by the bank that they would be looking for such a letter of backing if he were to obtain financing for this development through their bank.

Our understanding was that we were in a poor position because we have no assets and there would be nothing they could claim.

Mrs. Firth: Did the witnesses ask whomever relayed that information to them  why it was the renter as opposed to the contractor who was being required to have the guarantee?

Mr. Newnham: I do not believe that discussion really took place. The only thing I can assume is that we were the ones who were paying the rent. If we fail to pay the rent, they would be unable to pay the mortgage; therefore, the bank would be dissatisfied.

Mrs. Firth: Is that because this new company that had been formed - the 11005 Yukon Limited - did not have any assets? I know Cardinal is part of that new company. They surely must have some assets.

I find it confusing, and it is kind of critical to the whole principle of the guarantee.

Mr. Newnham: I think, unfortunately, we are getting into an area in which we are not really experienced. I do not know the financial assets of the 11005 company.

Hon. Mr. Phelps: If at first one does not succeed, try, try again, to use an old maxim.

I want to thank the witnesses for attending. It is interesting to note in passing that there seems to be surprisingly more concern from certain Members of the Opposition with this arrangement involving this worthwhile organization, and this very minor financial amount and risk, relative to the issue of guaranteeing $34 million for an outfit such as Curragh.

That sometimes happens in politics. I thank the witnesses for their contribution.

Chair: The witnesses are now excused.

Witnesses excused

Hon. Mr. Phelps: Perhaps there was a question directed to me from the Member for Porter Creek South. He was talking about a paltry million. In my view, the issue is fairly straightforward and one that has been covered before.

The services provided by Yukon Family Services are needed. The design of the building accommodates precisely the kind of services that are being provided by the organization. Should, for any reason, Yukon Family Services cease to exist, government would require that space in any event to provide counselling services.

In fact, I can say that every indication I have from the department, and certainly continuously from the media, is the demand for further counselling services. This is especially so in the areas that are being accommodated by this very worthwhile organization, but also in additional areas, as well, including, but not limited to, alcohol and drug services, child abuse treatment and so on.

My view, for what it is worth, is that this is not a big issue in terms of precedent. My respectful submission is that this was a rather inexpensive way of assisting this organization to get into appropriate accommodation from which they could provide these worthwhile services. As far as I am concerned, my view remains that there was no direct cost to the government. There was a potential liability, as has been stated by some Members on the other side, but that potential liability, in my strongly held view, is diminished almost entirely for the very reasons expressed to Members in this House in response to questions from Members opposite that the likelihood of that building not being usable and needed by government is very slim indeed.

As well, there is an issue regarding precedent. Government does, and has in the past, entered into all sorts of arrangements with NGOs - non-government organizations - that provide services to government. Limiting it to that, and not to businesses, we know that the government also assists businesses in numerous ways and has in the past. Limiting it to the NGO situation, our providing assistance of various sorts, or entering into contracts with any single NGO, does not, in my view, provide a precedent for our negotiations with other NGOs. That has not been the case in the past; I can show an array of circumstances. I am sure most Members are aware of many differences in the arrangements that have been made. For my part, and this is a policy question down the road - a sidetrack to some extent - I would much rather see some NGOs going to fee-for-service arrangements as opposed to core funding, but that is a side issue.

Now, we run the gambit, and it is something that was there when I entered office as Minister. In Health and Social Services, for example, we provide assistance of one kind or another to something like 106 organizations.

They run the gambit from the Child Development Centre, which was raised as a source of concern to the Auditor General, where they received their rent for $1.00 a year and there was no accounting for the operation and maintenance costs -that is something that we are trying to correct - to organizations who receive solely fee for services and a whole range of different kinds of assistance in between, from seconded positions, you name it. There are a whole bunch of resources at the government’s disposal from which it can draw to assist NGOs in providing much-needed services to the community.

My view is, in this particular instance, the guarantee was cost-effective, and I saw what seemed to me an end result that finally put this organization into the kind of accommodation that it desperately needed. I related to this House that I did attend their offices, some months earlier, and was told about the various concerns with the space they were then occupying, in what is now the CBC building. Among the most frequently heard and valid complaint from those who worked there was the lack of soundproofing. They had people who were in there needing counselling and privacy.

The point is, at very little cost, we assisted them into appropriate office space.

I enjoy being heckled by the Member for Riverdale South. She takes some umbrage, if I understand the testimony of last night’s sitting, at the demeanor of people sitting on the opposite side. Let me say that I sometimes take exception to her comments, particularly in view of the fact that, while she may wish to suggest that some of my comments are not exactly on issue, I would make the same observation about some of the questions she asked of the witnesses here today.

It is my view then that the issue of precedent is not a very strong one. It is my view that this association did act with clean hands. It is my view that the allegations that were made against them by other contractors and so on were, to a very large extent, ill informed. I regret the impact of the allegations raised in the previous Committee of the Whole deliberations. I regret the impact of those allegations on Form to Function. I regret, too, the allegations that Mr. Eby is related to somebody in Health and Social Services - that is not true. There is a person in Health and Social Services of the same name; she is not related to that gentleman and that allegation was uncalled for, based, as it was, on hearsay. It might behoove all of us here - because I know each of us, at times, is guilty of it - to be fairly careful about what we say regarding the character of individuals in the Yukon. It appears, to me at least, that the association acted in an ethical fashion and I regret very much that certain individuals have been maligned in this place.

Mrs. Firth: The issue is not the Yukon Family Services Association and the services that they provide. I think that there is unanimous consensus in this House that the service is required and that it is a good service.

The issue is not whether they needed soundproof rooms, better carpets, or more space.

It is my job to ask these questions and find out these answers. The issue is this: the Minister is asking us to pass legislation to make a new law. I want to know why this law is required, and I still do not know, because no one has answered the question about why the bank needed the guarantee, which is what this legislation provides.

I have no issue to take with any of the individuals who are involved in this, but I do have some concerns about the process and the method that was used to achieve the construction of this building.

We had two individuals, who are very good people, sit down and review proposals, accept a proposal and make judgments. They also drew up a legal document. I have some concerns about those individuals doing that because, with the precedent we are setting, we will allow other non-profit organizations to do the same thing.

The Minister asks why. If other organizations come forward and want to do this, what is there to prevent the other organizations from calling requests for proposals for buildings, reviewing those proposals themselves, drawing up lease agreements and coming to the government and asking for a rental guarantee act?

That is my concern. I am not raising questions about this to cause a great concern here. I think it is setting a precedent and I have not been convinced otherwise.

The Minister made some reference to other organizations having similar arrangements. I would like to ask him to provide that information for us. I would like to ask him, when he gets up to respond again, if he could answer the outstanding question in most people’s minds about why the bank needed this guarantee. Can he give us that answer? He is sponsoring this legislation. If the witnesses did not know the answer, the Minister should.

Obviously, from the Minister’s comments, he does not see that it has been of any concern. I should not draw conclusions without giving the Minister the opportunity to explain himself, so I should put it in the form of a question. I would like to know if the Minister is completely satisfied with the way in which this process went or if he perhaps sees the need to put guidelines or safeguards in place, so that the issue of appearances does not occur again.

I would like to know why the government is getting involved in this kind of method. I would like to know what their policy is with respect to this. Are they prepared to do this for other organizations? Could the Minister indicate to us what other organizations he would be prepared to do this for? Is he prepared to enter into these kinds of agreements with other businesses? What exactly is the policy of the government with respect to this particular initiative, in the specific and in the broad sense?

I look forward to the Minister’s answers and I hope he will appreciate that I am just trying to do a job here. I am trying to find out a few facts and I have to make a decision with respect to whether or not I am going to be supporting this new law. I cannot do that without feeling confident that I am making an informed decision.

Hon. Mr. Phelps: With respect to the issue of the bank, I have no idea. I do not really think it is relevant to the issue here today. The simple fact is that the association was entering into a lease arrangement with a landlord and was able to obtain value through the backing by the government of the lease. As to why the landlord would want to have the guarantee, I can think of all kinds of potential reasons, but I really do not think they are very pertinent to the issue here.

With respect to policy, we are sort of going around and around the whole concept of proposals - are proposals a good thing or not when one is looking at buildings or leases, or whatever - we can get into a debate about that. I personally think that in terms of having a building built, sending out a request for proposals, whether it is to be owned or leased by government, often is a much less expensive way to go.

I could give Members all kinds of examples on that, but we are into an entirely different debate.

I can say that I looked at the terms of the lease; I am satisfied and I was satisfied at that time that it was good value for money and, in comparison to the leases that Government Services has for class A space, this lease works out to be roughly 75 cents to $1.00 per square foot less, and that is for buildings that have been built and in existence for some time, including the Royal Bank Building and buildings of that ilk - buildings that were not built to suit special requirements and needs of a single tenant.

From my perspective, and as I have said before, if, for some reason, Yukon Family Services is unable to carry on, we need the space because we are going to be providing those kinds of services if they, for some reason, fail. There is a huge demand for these kinds of services in the Yukon, and there will be more. I know that the Members opposite are well aware of this, because I have been questioned about what we are doing in terms of providing counselling services in other areas, but from the same department.

I understand that we are, once again, running out of time. Mr. Chair, I would therefore move that you report progress on Bill No. 38.

Motion agreed to

Hon. Mr. Phillips: I move that the Speaker do now resume the Chair.

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: The Committee of the Whole has considered Bill No. 12, First Appropriation Act, 1994-95, and directed me to report progress on it.

Witnesses from the Yukon Family Services Association appeared during debate on Bill No. 38. The Committee of the Whole has considered Bill No. 38, entitled Yukon Family Services Association Rent Guarantee Act, and directed me to report progress on it.

Speaker: You have heard the report of 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 that the House do now adjourn.

Speaker: It has been moved by the Hon. Government House Leader that the House do now adjourn.

Motion agreed to

Speaker: This House stands adjourned until 1:30 p.m. Monday next.

The House adjourned at 5:27 p.m.

The following Sessional Papers were tabled January 6, 1994:


Conciliation Board Report dated January 4, 1994: in the matter of the Yukon Public Service Staff Relations Act and of a collective bargaining dispute between the Public Service Alliance of Canada and the Government of the Yukon (Ostashek)


Yukon College 1993-93 Annual Report (Phillips)

The following Legislative Returns were tabled January 6, 1994:


Aishihik Wolf Control Program: 1992-93 expenditures (Brewster)

Oral, Hansard, p. 1812


Ecole Emilie Tremblay and French language programming: 1993-94 bilateral agreement between the Governments of Canada and the Yukon; several letters exchanged between the Minister of Education and the ministry of the Secretary of State in September/October 1993 (Phillips)

Oral, Hansard, p. 1747-48


Rural residential land: services related to second dwelling units (Fisher)

Discussion, Hansard, p. 1415


North Whitehorse Periphery: land use (Fisher)

Discussion, Hansard, p. 1438-39, 1440-42


Ta’an Kwach’an First Nation: planning assistance re Lake Laberge area (Fisher)

Discussion, Hansard, p. 1440


Two Mile Hill reconstruction costs versus estimates in Alaska Highway Corridor Study (Fisher)

Discussion, Hansard, p. 1669, 1712, 1713, 1733, 1734


Fur: usage and promotion of by the Government of Yukon (Devries)

Written Question No. 38, dated December 13, 1993, by Mr. Cable