Whitehorse, Yukon

Tuesday, March 28, 1995 - 1:30 p.m.

Speaker: I will now call the House to order. At this time, we will proceed with silent Prayers.



Speaker: We will proceed with the Order Paper.

Are there any Returns or Documents for tabling?


Hon. Mr. Fisher: I have a document for tabling.

Speaker: Are there any Reports of Committees?

Are there any Petitions?


Petition No. 2 - received

Clerk: Mr. Speaker and hon. Members of the Assembly, I have had the honour to review a petition, being Petition No. 2 of the Second Session of the Twenty-Eighth Legislative Assembly, as presented by the Hon. Member for Klondike on March 27, 1995.

The first page contains the body of the petition. This is in accordance with the model petition found in Appendix 2 of the Standing Orders of the Yukon Legislative Assembly. It complies with all of the rules regarding petitions, including Standing Order 65(1), which requires that "the signature of at least three petitioners shall be subscribed on the sheet containing the body of the petition". The remaining five pages do not include the full body of the petition but rather include only the prayer of the petition in a paraphrased form. This restatement does reflect the intent of the full prayer.

Petition No. 2, taking into account the aforementioned, meets the requirements as to form of the Standing Orders of the Yukon Legislative Assembly.

Speaker: Petition No. 2, accordingly, is deemed to be read and received.

Are there any Bills to be introduced?

Are there any Notices of Motion for the Production of Papers?

Are there any Notices of Motion?

Are there any Statements by Ministers?


Community justice agreements

Hon. Mr. Phillips: I rise today to inform the House of progress in my department's approach to community-based justice development. Our community justice policy was announced in this House by my predecessor, Mr. Phelps, on December 16, 1993. Since that time, Justice officials have held meetings in most Yukon communities and various community justice programs and initiatives have been put in place.

Today, I am especially pleased to report that we have concluded our first two community justice agreements in Haines Junction and Carmacks. Copies of these agreements are available to Members for their information.

The purpose of both agreements is to transfer resources to community agencies in these two communities. In the case of Haines Junction, funds will be directed to the community justice committee. In Carmacks, the Little Salmon/Carmacks First Nation will operate as a carrier agency, working in concert with the Carmacks community justice committee. In both cases, the money will be used to operate a community justice program for all community residents.

These programs will involve direct, community-driven delivery of justice services in a wide array of areas. A major emphasis will be on training and public information. We feel it is vital that if community justice is to be successful, we must focus at the early stages on developing both the capacity and expertise at the local level to deliver effective programming.

Other areas of programming will relate to justice services, such as circle court coordination, victim support and advocacy, community policing and crime prevention, community offender management, among others. Program priorities and emphases will reflect each community's unique interests and circumstances.

What we hope to achieve with these agreements is improved program quality and efficiency. We believe that program dollars will be spent more wisely when the people in the community - the people who best understand the community's needs and concerns - have an integral role in deciding how programs will be run. Our progress is incremental, and the dollars involved are not great. The two agreements together involve a total of $50,000 for the 1995-96 fiscal year.

A careful, deliberate approach at the early stages will allow us to establish a firm foundation on which we can base future growth. These agreements add to our progress to date, and Justice officials are continuing to meet with community leaders, as requested, to examine the potential for agreements in other Yukon communities. I believe that these agreements are an excellent example of our continuing commitment to the justice policy.

We are dedicated to responding to the desire among Yukon communities for meaningful and comprehensive changes to the justice system. We are achieving this by supporting communities and taking greater ownership of local programming and service delivery to meet local needs, opportunities and concerns.

Ms. Commodore:

As the Minister has mentioned, this program was introduced in the House as a ministerial statement on December 16 with a plan to put some form of community justice into the communities, something that would be approved by all members of that community. I would like to think that the consultation process was a good one.

I am happy to see that two agreements have been signed. I would like copies of those agreements that the Minister had mentioned.

One of the concerns that was brought to our attention was that officials did not spend enough time discussing this program with individuals in the communities.

In one instance, I believe they said they met with officials for 20 minutes or a half-hour. The Minister said the meetings were ongoing, so it may be important for officials to go back to some communities.

Over the weekend, at the hockey tournament, I ran into a lot of people who were discussing this program. There was some concern with regard to the manner in which the government was moving, which was also stated yesterday by the former Minister of Justice - that the government would not support any more First Nations programs that were strictly for First Nations and that that responsibility would belong to the federal government. That is the message coming across to individuals in communities. I understand funding for some positions has been cut as a result of that.

That is a concern of First Nation communities. One individual spoke to me about circle sentencing. Because of the manner in which this government is going, it would not allow them to do that, unless it was approved by the whole community. The Minister mentioned circle sentencing in his ministerial statement, but I do not know how that ties in.

There appears to be a lack of information with regard to where this government is coming from regarding cultural programs and how this government and the federal government fit in.

I am letting the Minister know about these concerns brought to me by a number of people over the weekend. A lot of people are pleased with some of the programs in existence right now and who welcome any kind of new programs. However, there are still concerns out there, and I would like the Minister to know about them. I told the individuals to see the Minister to find out exactly where this government is going with regard to the separation of funding for certain justice programs for First Nations people.

I would, however, like to commend the Minister on the agreement he has reached with these two groups.

Hon. Mr. Phillips: I thank the Member for her comments and I do take the Member's representations very seriously. The Member asked about copies of the agreement. I do have them here and I will make them available at the break.

I would like to point out that the agreements are signed by me and, in the case of Carmacks, the Chief of the Carmacks First Nations and the Mayor of Carmacks.

I believe the people of Carmacks have had some strong input into it. In the case of Haines Junction, a justice committee was struck, in cooperation with First Nations as well as the non-native community. An individual signed on their behalf, as did a First Nation person. Both First Nations and non-First Nations have signed.

I would have thought that a great deal of consultation had taken place and I am surprised by the comments that were made by the Member. I will certainly look into some of the concerns that were raised.

Speaker: This then brings us to the Question Period.


Question re: Outfitting areas, foreign ownership

Mr. Penikett: Yesterday morning, in a CBC Radio interview, a professor of law from Queen's University suggested that Yukon's Minister of Renewable Resources was wrong in some of his public statements, and that a requirement for a 51-percent resident control of an outfitting business is, in his opinion, perfectly legal. Could the Minister indicate to the House why he believes otherwise?

Hon. Mr. Fisher: I do not disagree with that statement. I believe that section 106 of the Wildlife Act says that 51 percent must be owned locally. I do not know that I said anything different from that. I looked in Hansard, and could not see where I had said anything different.

Mr. Penikett: We are not clear what the Minister's position is, because when the question of the legality of reported side deals came up, such as the draft document tabled in this House, it seemed to be the clear position of this government that such arrangements, if they existed, were perfectly correct, even if they seemed to have been designed to subvert the intent of the Wildlife Act, which says that 51-percent resident control is required. We are curious why the government, which insisted that that provision is not Charter-proof, has not been prepared to test its argument about the Charter in a court of law.

Hon. Mr. Fisher: Section 89 of the act requires that the concession holder must be a resident of the Yukon. Section 106 says that that provision is for outfitter certificates, as I recall. An outfitter's certificate can be provided to the owner of the concession or to a corporation if one percent of that corporation is owned by Canadian citizens, and so on.

The Department of Renewable Resources is reviewing both those sections - as well as section 39 of the act, along with the Charter - with the Justice department to determine if the intent of the act is being contravened.

Mr. Penikett: The Minister did not answer the question about why they have not tested their beliefs in the courts. There are a lot of citizens out there who have raised reasonable questions about the legality of reported side deals. I would like to ask the Minister when, for example, the department sees evidence of someone who is allegedly a minority owner, firing the concession holder, does that not raise a twinge of doubt in the Minister's mind about the possibility of side deals and about who may really be calling the shots in an outfitting area?

Hon. Mr. Fisher: Certainly it concerns us, but the question is whether a law has or has not been broken, and that is exactly what we are trying to determine now.

Question re: Outfitting areas, foreign ownership

Mr. Penikett: We do not know how the Minister is trying to determine the law since he has not gone to court. We know the Wildlife Act says one thing and we know that the Minister says the Charter says something quite different. Let me ask this very direct question of the Minister, since it must be the foundation of public policy in this matter.

Does the Minister agree that the vast majority of Yukon citizens do not want foreign ownership and control of big game outfitting areas in the Yukon Territory? Does he agree that that is the belief of Yukon citizens?

Hon. Mr. Fisher: I am aware that there are many Yukon citizens who feel the way the Member has iterated, but the question is if someone has broken the law, and that is exactly what the department and the Department of Justice are trying to determine.

The previous government is the one that actually okayed these concessions in the first place, and my understanding is that it was checked into very thoroughly at that time and the legal opinions indicate that no law has been broken.

Mr. Penikett: No one on this side of the House had heard about side deals until very recently. However, everyone in the Yukon knows that the problem of foreign ownership of outfitting areas is increasing. Someone asked the Minister why he does not do the democratic thing and respect the wishes of Yukoners to enforce the Wildlife Act, as it was written by the Yukon Legislative Assembly, or take the political risk and introduce amendments to the Wildlife Act that conform to his minority view of the thing.

Hon. Mr. Fisher: The Departments of Renewable Resources and Justice are looking at the Wildlife Act. If amendments are necessary to keep the intent of the act pure, then that is what we will do. I believe that I understand what the intent of the act is, and if that is being contravened, then a decision will have to be made whether or not to pursue the matter in court or to change the act. Those are the kinds of questions we are trying to deal with at this time.

Mr. Penikett: We all agree that the question of what the law is, exactly, is a relevant one. Before we start talking about bringing in amendments that are necessary to respect the impact of the original act, the Minister has not answered the question about if the government believes that the Charter invalidates some section of the act, why does it not take some of the evidence of foreign ownership and control of outfitting areas - which have been made public - and test the government's arguments about the Charter in a court of law. Why does the Minister and the Department of Renewable Resources not do that?

Hon. Mr. Fisher: I think that we could just turn around and ask why the previous government did not do that. The officials tell me the answer is that we do not have evidence of a law being broken.

Question re: Forestry, raw log exports

Mr. Cable: I also have some questions for the Minister of Renewable Resources about the raw log export policy. There has been a number of positions put out by both the government and the Yukon Party about raw log export over the last couple years. Under rigorous cross-examination by the Member for Faro and during the debate on the forest policy resolution a couple weeks ago, the Minister indicated that this government opposed raw log exports to Asia, but it did not oppose raw log exports to British Columbia. Have I appreciated the Minister's position and the government's position correctly?

Hon. Mr. Fisher: It depends on the extent. The government has opposed raw log exports out of the country. We opposed that prior to the last election and we reiterated it when we got into office. However, if we want to create a forest industry in the Yukon to other parts of Canada, it will most certainly include some raw log exports.

Mr. Cable: The Minister's predecessor filed a legislative return, dated January 18, 1994, which indicated that the Yukon government should continue to oppose log exports in principle but allow for exceptions in special circumstances on timber harvesting agreements only. It went on to say that exports from commercial timber permits would not be supported in any circumstances. Am I to understand from what the Minister just said that that latter qualification is no longer part of this government's policy?

Hon. Mr. Fisher: I think that the question of exports within Canada was not even a question at the time that that was put together. I believe that what was meant was export overseas - out of the nation.

Mr. Cable: Perhaps the same qualification applies to a Yukon Party resolution, passed at the spring convention in 1994. A report from the newspaper states, "The Watson Lake constituency also put forward a resolution that the party ask Ottawa to stop the export of raw logs. Free market supporters then asked why the government should tell businesses who they could sell to. It was eventually passed when Dan Lang suggested that the freeze last only until forestry is devolved to Yukon." What was the substance of that resolution? If it is as it reads literally, there should be no log exports. Has it been passed over or rejected by this government?

Hon. Mr. Fisher: Actually, I would like to invite the Member to the spring convention in Watson Lake. We can probably resolve this quite easily if he would join our party.

I am not sure about the intent of the motion, but I believe, again, that it was talking about exports offshore.

Question re: Science fair, national competition

Ms. Moorcroft: I have a question for the Government Leader about the Canada-wide science fair that will be held in Whitehorse on May 15 and 16.

The Yukon government has supported this event since the bid to hold the fair in the Yukon was put in three years ago. Six hundred students, parents and teachers from across the country will be staying in Whitehorse while participating in the science fair. This is a joint venture between the Yukon Science Institute and the Department of Education, which will require 250 judges. Can the Government Leader tell me who made the decision that Yukon government employees will have to take holiday leave to participate as judges at the Canada-wide science fair?

Hon. Mr. Ostashek: I think the Member opposite should check her information, because that is simply not true.

Ms. Moorcroft: I have heard that from a few people who have contacted us about the fact that teachers and scientists who work for the government judge local science fairs all the time. I saw some great projects at the Golden Horn science fair this morning, and government biologists and engineers - who judge our local school and regional science fairs, as they have been doing all this month - do not have to take vacation time.

Will the Yukon government employees who will be judging the Canada-wide science fair be expected to take vacation time?

Hon. Mr. Ostashek: I just told the Member she should check her source of information, because there is no truth to that allegation. The employees who are judging will be doing so on government time.

Ms. Moorcroft: I am really glad the Government Leader was able to clear that up. People were very concerned that they were being asked to take holiday time. I will take the Government Leader at his word. Will he communicate clearly to all the employees that they will be allowed to judge the Canada-wide science fair on government time and not be expected to take holiday leave for it?

Hon. Mr. Ostashek: I dealt with this issue last week. My understanding was that it had already been communicated to the departments. If it has not, I will check on it.

Question re: Historic Resources Act amendments

Mr. McDonald: The Yukon Heritage Resources Board is expected to hold its first meeting shortly, and the Minister of Tourism has already committed to ensure that the changes to the Historic Resources Act, initiated by the Cabinet, will be shown to the board for its consideration and advice.

Can the Minister tell us if he solicited names from the heritage community, particularly the Yukon Historical and Museum Association and the museums community, for possible nominees to sit on the Heritage Resources Board?

Hon. Mr. Phillips: Names were solicited, but I do not know if they were solicited from specific groups. I can tell the Member that we have heard from the Yukon Historical and Museum Association that it has no problem with the people whom have been selected.

Mr. McDonald: That was not my point. I think the Minister understands where I am coming from. I am asking a very specific question, and I think he knows the answer.

Did he solicit from the Yukon Historical and Museum Association or any museum board names of persons to sit on the Heritage Resources Board?

Hon. Mr. Phillips: I am sure they were consulted and the issue was discussed. I am not sure whether or not, specifically, they sent names in from their board. I can check that for the Member, but my understanding since the names were selected was that they had been supportive of the names chosen. I have been told that by individuals from the board who have run into me in the street, and they have said, "Good choice of names." I do not know what the Member is getting at.

Mr. McDonald: I will follow the matter up in Committee. I do not think the Minister is giving us the whole goods. I asked him specifically whether or not he solicited the names from the heritage community, and I do not think he did.

That is no reflection on the good people who are going to be working on that board. I know a few of them, and I am sure they are very good. The issue is consultation and whether or not the government believes in it. In this case it does not and, in many other cases, it does not either.

Can the Minister tell us whether or not the government has created a list of sites and historic buildings that it would like to see formally designated under the act, when the act is ultimately proclaimed, if it ever is, and whether or not he will be taking that list of sites before the board itself?

Hon. Mr. Phillips: I am not aware that the government itself has a list of sites. I know the people in the heritage branch have been working with people in the City of Whitehorse to designate, I believe, 20-some buildings around the City of Whitehorse that are priority heritage sites that the city is aware of. As far as an overall list, we do have a list of heritage sites, but as to a list to present to the board, I would have to get back to the Member if there is such a list.

Question re: Historic Resources Act amendments

Mr. Penikett: I would like to ask a question of the same Minister. Despite assurances in writing from the Minister of Tourism that he would be introducing minor amendments to the Historic Resources Act, is he aware that there is now a feeling in the heritage community that the Minister has betrayed them by contemplating major revisions to essentially cut the heart out of the old legislation by removing protection for private buildings?Is the Minister aware of that?

Hon. Mr. Phillips: I am aware that the Historical and Museum Association has concerns with the proposed amendments, but to describe them "as cutting the heart out of the legislation" is a bit of a over-statement.


concern is private property rights, and that is an area that we feel strongly about. If the government wants to designate a site, then it must reach an agreement with the owner of the site, and if it cannot reach an agreement with the owner, that it fairly compensates the owner to protect the resource.

Mr. Penikett: It is nonsense to talk about protecting property rights when the Minister is also talking about expropriation.

This act was the product of 10 years of meetings and consultation with a wide range of stakeholders in the heritage community, First Nations, Chamber of Mines and all political parties, including the Yukon Party, which voted for the bill in Opposition. Can the Minister explain why, after all this consultation, after having worked for years to build this consensus, the Minister is prepared to destroy it by proceeding unilaterally with amendments, which do not have the support of the heritage community? Why is he doing that?

Hon. Mr. Phillips: Maybe it is for the same reason that the Members on the side opposite, when they were in government, could not walk a block to the Commissioner's office to have the bill proclaimed into law. It took 10 years to develop this legislation and they had seven months to take it a block down the street, and they did not do that.

The Members on the side opposite are now standing up and pretending this legislation is so important to them and that they are champions of heritage, yet they could not take this most important bill and walk it one block down the street. This is outrageous.

Mr. Penikett: What is outrageous is the continuing repetition of this answer, when the Minister's colleague, the Government Leader, just told me the other day that it takes at least six months to get regulations proclaimed under a new act. The Minister is talking through his hat.

Section 13(4)(5) of the umbrella final agreement - the Minister may not know what the umbrella final agreement is, it is the umbrella final agreement for Yukon land claims - states, "Government shall consult Yukon First Nations in the formulation of legislation related to government policies on heritage resources in the Yukon." Could the Minister tell us why his government has completely failed to consult, according to the provisions of the umbrella final agreement on the changes that the right-wingers opposite plan to ram through in the heritage legislation?

Hon. Mr. Phillips: It is the Leader of the Official Opposition who has completely failed to do his homework, because if he had, he would know that a bill is not tabled before this because there is a draft of the bill now before all 14 First Nations for their review and their comments and concerns. We are consulting with the First Nations at the present time, and if the Leader of the Official Opposition did his homework, he would know that the First Nations now have the legislation before them.

Question re: Gun registration legislation

Mrs. Firth: I have a question for the Minister responsible for Justice.

The New Democratic government in Saskatchewan has been the most aggressive in continuing the battle against the federal Liberals' gun control legislation. That government has introduced a property rights bill to enshrine property rights before the gun control bill is passed in the House of Commons so that firearms cannot be confiscated. Has the Minister of Justice directed his department officials to proceed in this same direction?

Hon. Mr. Phillips: We are in consultation with the Saskatchewan government, the Alberta government and the NWT government, and we could certainly have a look at that.

I can tell the Member that I have written a letter to the justice committee and I received a letter back the other day. I am hoping to appear before the justice committee in Ottawa. I believe the Alberta minister will, and the Saskatchewan minister is trying to do the same. We are all working together to try to take a joint approach to this issue.

Mrs. Firth: In all that rhetoric, I did not get an answer to my question, which was whether or not Justice officials had been directed to proceed in that direction. Obviously they have not been, as the Minister said they could have a look at it.

After the big speeches I heard a couple of weeks ago and again today about how strongly this government feels about private property rights - I believe the Minister just stood up in the House this afternoon and said, "We feel very strongly about it" - why has he not directed his Justice officials to proceed in the same fashion and get a property rights bill before the Yukon Legislative Assembly so that we can protect people's guns as well as grandpa's watch that they want to protect under the Historic Resources Act?

Hon. Mr. Phillips: I will look into that. I told the Member I would look into it. I can tell the Member that, although she may not consider us doing much with respect to gun control legislation, all the other jurisdictions in the country know that the Yukon is one of the leaders in opposing the registration system in particular, and we are working with other provinces in a joint approach. The feeling from the other provinces is that if we work together we will have a lot more clout with the Liberals in Ottawa who are trying to take firearms away from most Canadians.

Mrs. Firth: I do not really care if the other jurisdictions in Canada see the Yukon as leaders. I want to look after Yukoners, and Yukoners are telling me that this government is weak and compromising in its position.

There was a letter to the editor in the paper just last week saying that.

The Government Leader stood up in this House and told us he pledged and vowed he was going to fight this thing to the bitter end. I hope the bitter end has not come.

I want to get this definitive answer from the Minister of Justice: is he going to give some direction to his Justice officials, and are we going to have a property rights bill tabled in the House so that we can fight this issue just as aggressively as Saskatchewan can? If the government believes in protecting property rights, get a bill into the House here.

Hon. Mr. Phillips: For the third time I will tell the Member that I will have a look at that initiative. I do not know if the Member opposite has written any letters to the federal Minister, or to anyone else, with respect to gun control. She has certainly not written any letters to me about gun control. Her constituents are not represented very well in the House. I deal with her constituents every day about the issue of gun control, and they tell me that they think we are doing a reasonably good job of dealing with the issue of gun control.

Question re: Historic Resources Act amendments

Mr. McDonald: I am interested in the consultation around the proposed changes to the Historic Resources Act. I have not yet heard from the Minister who in the citizenry has asked for any of the changes that the government is proposing. I am now most interested in what consultation took place before the time the government decided to make these proposed amendments public.

I would point out that when I asked the Minister a couple of years ago about the Historic Resources Act, and its proclamation, he only expressed concerns to me about some financial implications of what the act involved, and consequently, needed to have it reviewed. There was no discussion about the designation of historic sites.

Can the Minister tell us whether or not anyone in the First Nations community, or in the heritage community for that matter, was told, in any formal way at all, about the government's intention to make a significant change to the act, that being the designation of historic sites and historic artifacts?

Hon. Mr. Phillips: I met with the Historical and Museum Association before the bill was even being tabled to tell them about some of the changes. I did mention the one about private property. If the Member is concerned about where the private property issue came from, he can go back to 1987, I believe it was, when I introduced a bill in this House about the private property rights of individuals.

I have always had a concern about private property and personal property rights. I introduced a motion in this House at the time, and I have been consistent all along. A lot of people in the heritage community were concerned about it. We raised it in the debate on the heritage act, and stated what our position is on the issue. Now we are following up on that. Because we are now the government, we have an opportunity to put into place the private property rights provisions that the previous government neglected to put in the act.

Mr. McDonald: Consequently, that is the reason the Minister is going to be the champion of expropriation, where historic sites are going to come under the control of government. It is going to be using this brutal instrument whenever it cannot come to an agreement with the holders of historic sites on the future of those historic sites. I am sure that the public is going to be rich with resources, and is going to have one hell of a reputation to have to defend when it comes to its brutal relationship with its citizens.

I would like to ask the Minister a question about regulations pursuant to the act. Can the Minister tell us where those regulations are? Can he tell us what the progress has been? Does he have the regulations ready?

Hon. Mr. Phillips: I can get back to the Member about that. I think the approach that the NDP took on this was much more heavy handed. The NDP would just designate a site as an historic site, without consultation with the owner. Let me give you an example.

If the group of people had bought a site, for example, just behind Riverside Grocery to build a hotel on in the future, there are a lot of old buildings over there. If one of the old buildings in the middle happened to be a historic building, does the Member not think that the government should at least negotiate something with the individuals, or at least fairly compensate the individuals, if it wants to change the value of that site and change the total use of that site? If it is a historic site and needs protecting, the government should move in and protect it.

Mr. McDonald: Of course, that is not what the existing Historic Resources Act says. The existing Historic Resources Act does talk about consulting with the owners and does talk about wanting to come to an agreement. The bottom line for the government side now, though - the Yukon Party - is that if that does not work, the government will expropriate the site for the public's enjoyment and benefit.

How is it that the Minister cannot say whether or not the regulations are completed? That was the original question in the first place. It has been two years. On May 6, the Minister complained that there are no regulations pursuant to this act. That was the first point that he made during second reading debate. How can the Minister say that the regulations are not done? What has he done in the two years that he has been Minister? Has he done nothing? Has he provided no direction whatsoever?

Hon. Mr. Phillips: I will check about the regulations. I will also check the first seven months after the bill was passed in the House under the previous government to see if that government started work on the regulations. I do not think it did. I do not think it did anything in seven months. However, now that those Members are on the other side of the House, it is "Snap to it, get it done immediately." The act is still before the House. Once it is passed, we will be dealing with it.

Question re: Haines Junction weigh scale

Mr. Cable: I have a question for the Minister of Community and Transportation Services about his action in the closing of the Haines Junction weigh scale.

Yesterday, when I was asking the Minister some questions on the savings he anticipated would come from closing that weigh scale, he launched a blizzard of statistics, none of which seemed very relevant to the question. He indicated that he was staying firm with his figure of a $250,000 saving.

This flies in the face of some of the statistics that the Minister has produced in the legislative return that he gave us earlier this year and on some material that he provided on the cost of the mobile operation that will replace the closed fixed station.

The legislative return of February 2, 1995, sets out that the cost of the Haines Junction weigh scale for the current fiscal year is $251,000. The cost of the mobile scale operator, according to figures from his department, will be $154,000. He said he expects a 10-percent slippage in revenue, which is perhaps an $8,000 or $9,000 loss. The actual saving, using the government's figures, will be less than $100,000.

In order that we do not prolong this argument ad nauseum, will the Minister provide a further legislative return, instead of dictating a pile of statistics in the House of how he calculates the savings that will arise from closing the Haines Junction weigh scale?

Hon. Mr. Brewster: I hope you will forgive me, Mr. Speaker, as I am going to make a long speech like everybody else did. I will start out with the Haines Junction weigh scale.

In the 1990-91 fiscal year, there was a loss of $143,000; in 1991-92, a loss of $194,600; in 1992-93, a loss of $211,900; in 1993-94, a loss of $142,100; in 1994-95, a loss of $140,549, for a total daily loss to date of $462.28.

Regarding the situation that was talked about the other day, the first employee's wages for that day was $224; the second employee's wages for that day was $208, for a total of $432. He said he took in $500; our records show he took in $350.

Some Hon. Member: (Inaudible)

Hon. Mr. Brewster: Excuse me, Mr. Speaker. I would just like to finish this so that we can get some of it on the record.

The other day, I told him that I checked Customs continually -

Some Hon. Member: (Inaudible)

Hon. Mr. Brewster: The Members do not like it when you give them the facts.

Speaker: Order please. Allow the Minister to conclude his answer.

Some Hon. Member: (Inaudible)

Hon. Mr. Brewster: I sit here for 45 minutes at a time and do not heckle anybody. Once in awhile I get up to clarify something, and some people turn around and tell me that I am not telling the truth and they want to heckle all the time.

Some Hon. Member: (Inaudible)

Speaker: Order please. Please let the Minister answer the question.

Hon. Mr. Brewster: From January to December 1994, there were 580 U.S.-resident truck drivers and 1,118 Yukon-resident truck drivers. During that same time, there were 1,531 trucks, of which 1164 were Canadian, which would have to come into Whitehorse. Petro-Canada is no longer hauling out of there; only Totem Oil was hauling out of the area at the same time.

In 1993, there were 631 U.S.-resident trucks, and 911 Yukon resident trucks.

Things have not changed in Haines Junction. It is a losing operation. We said from the first day we came in here that we would do our best to get this government on its feet.

Every one of those people who got hurt - everybody thinks this is funny. Every one of the people whom I had to lay off were personal friends of mine. The Members opposite are continually accusing us of looking after our people and giving them jobs, but nobody else. I have lost three good friends. If you people think it is funny, let me tell you that it is not.

Mr. Cable: The record will show that I did not heckle.

In the report put out in September 1991 on an evaluation of the weigh station program there is an excerpt that says, "The Yukon weigh stations program was created to control and monitor all commercial traffic travelling into, out of and within the Yukon."

The Minister's verbiage yesterday and today - yesterday he was talking about losing money - suggests that weigh scale stations are actually profit centres. Is the Minister saying they were set up to generate a profit, or were they set up to control and monitor commercial traffic?

Hon. Mr. Brewster: I have to apologize to the Member. He is quite correct: he does not heckle. He is about the only one on that side who does not.

Weigh stations are set up to control the traffic. As we have already pointed out, 90 percent of that traffic will come in through Whitehorse. Only 10 percent is left. We have a mobile scale person there who is not only travelling the road, but she is also taking drivers' tests and looking after all the heavy equipment at the Shakwak project. We believe we made a move that saved us money, yet we have not hurt, stopped or prevented everybody from checking vehicles on the road.

Mr. Cable: Just so we have the whole program, the report of September 1991 I just referred to indicates that if the Yukon generates an additional $100,000 in revenue from the weigh station program, due to increased sale of permits - this is a volume increase - its revenue is offset in the formula under the agreement with Ottawa to the extent of $140,000. Is not the real reason for closing the Haines Junction weigh scale the fact that the perversity factory operates against us if we create more revenue? We know the Government Leader is actually trying to negotiate the perversity factor away.

Hon. Mr. Brewster: After all of the deficits I have read out, that was certainly not an issue and it was never considered.

Speaker: The time for Question Period has now elapsed.

Notice of Opposition Private Members' Business

Ms. Moorcroft: Pursuant to Standing Order 14.2(3), I would like to identify the items standing in the name of the Official Opposition to be called Wednesday, March 29, 1995: Motion. No. 46, standing in the name of the Member for Mount Lorne.

Mr. Cable: Pursuant to Standing Order 14.2(3), I would like to identify the items standing in the name of the Member for Riverside to be called Wednesday, March 29, 1995: Motion No. 41.

Speaker: We will now proceed with Orders of the Day.



Bill No. 5: Second Reading

Clerk: Second reading, Bill No. 5, standing in the name of the Hon. Mr. Ostashek.

Hon. Mr. Ostashek: I move that Bill No. 5, entitled Interim Supply Appropriation Act, 1995-96, be now read a second time.

Speaker: It has been moved by the Hon. Government Leader that Bill No. 5, entitled Interim Supply Appropriation Act, 1995-96, be now read a second time.

Hon. Mr. Ostashek: This bill is necessary if government operations are to be funded for the month of April. I do not believe that the main estimates for the 1995-96 fiscal year will become law before April 1, and interim appropriation authority is therefore required until such time as those estimates clear this Chamber.

Of course, that is well in excess of one-twelfth of our annual expenditures but, as Members will know, we do make several payments in an up-front manner in April and, more importantly, departments require appropriation authority to make commitments on contracts even though the money will not be spent in the month of April.

Mr. McDonald: As usual, a version such as this will be encouraged to be given speedy passage, given that we are in the middle of the budget estimates debate itself and that this only reflects a small portion of the annual spending plans of the Yukon government.

However, this particular bill raises a policy issue to which we will want some answers during Committee debate. That issue is that it has been made clear during the debate on the main estimates that some organizations are entitled to receive their annual operating grants at the beginning of the year and some organizations are not, and there does not appear to be a clear definition as to who is entitled to receive funds up front and who is not. We know the Auditor General has critiqued the practice of providing the funds in advance, or at the beginning of the year, complaining that the interest income is lost to the federal government in the first instance, and secondly that, in the Auditor General's view, it does not permit the Government of Yukon to provide an adequate review of how this money is spent by these organizations.

This would not be an issue if it were not for the fact that various government departments are stopping the practice of providing the funds up front. Some departments are continuing the practice, so I would like to have a clearer statement as to who is entitled to receive the funds up front and who is not, and the rationale for it.

Speaker: If the Member now speaks, he will close debate.

Hon. Mr. Ostashek: I will try to get that information for Committee. I do have a list of what funds are requested for the month of April.

In reference to the policy question, the Member opposite is aware - or he may not be - that the federal government is making all kinds of noises about not giving us our formula up front every year and is looking at possibly even changing it to a monthly basis. We are making policy changes to move away from front-end funding - not immediately, but we are making moves in that direction and some of them are starting now. I will get what information I can for the Member for Committee debate.

Speaker: I should have asked if any other Member wished to be heard. I sort of jumped the gun on that one.

Motion for second reading of Bill No. 5 agreed to

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

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

Motion agreed to

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 now call Committee of the Whole to order.

Bill No. 5 - Interim Supply Appropriation Act, 1995-96

Chair: Is there any general debate?

Hon. Mr. Ostashek: Just before I get into general debate, I would like to clarify the record. At the end of second reading, I was talking about the federal government moving to a monthly basis. We are on a monthly basis now in our formula grant, but it is a lot more heavily weighted to the front end of the year than the tail end. For the new formula, the federal government is proposing to go to 12 equal monthly payments. That will have a dramatic effect on our bank balances.

The critic asked me for a policy statement about how we are funding the NGOs and other funded bodies. The policy that we have just implemented is that funding will be on a quarterly basis, with the exception of the municipalities, Yukon College and any NGO that is receiving under $20,000 a year.

As I said, the rationale for this is that if the federal government moves to 12 equal instalments, we may have to look at doing the same for the college and the municipalities. However, for this year we are going to fund them up front and see how we make out with a new formula.

As I said earlier, we are asking for $132,374,000 in this appropriation. That is approximately three times the sum one would arrive at by dividing the total annual expenditures by 12. As I said, there are several reasons for that. First, according to the strict letter of the Financial Administration Act, departments require appropriation authority to commit monies under a contract, even if the money may not actually be spent for a number of months. This fact accounts for the bulk of the excess over the one-twelfth level, and is especially important to Government Services and Community and Transportation Services, in both O&M and capital. Secondly, the government is continuing to make some payments up front, most to the college and municipalities. This accounts for a portion of the imbalance between the appropriation and the equal monthly expenditures.

This is true of the Education and Community and Transportation Services O&M expenditures, but also has an impact on several departments' capital allotments. In light of the cuts that we are to take in 1996-97 as a result of Mr. Martin's budget, we may be required to re-examine the remaining upfront contribution payments, as has already been done with those payable to some of the other organizations.

I would be happy to try to answer any questions the Members opposite may have at this time.

Mr. McDonald: I have a series of questions, the first of which has to do with the policy move to pay all NGOs, with the exception of the college and the municipalities, on a quarterly basis. What savings does the government realize from that change, or does it realize any savings? How much interest income would then be transferred to the federal government as a result?

Hon. Mr. Ostashek: We do not have all of the figures here, but I can have Finance provide a rationalization. As I said, we might be okay for this year. We are starting to move toward getting NGOs and various other organizations used to the fact that that might be the way we have to move, depending on what the federal government does in the next formula financing agreement. It will save us from running overdrafts at the start of the year, and save us from paying interest on the money and bank charges. As I say, I do not have a complete breakdown, but we can try to get a paper on it for the Member.

Mr. McDonald: I thought we had sufficient compensating balance at this point so that we would not have to face the bank charges, even at the beginning of the year. However, perhaps the Minister can provide more information about that.

Is the policy change to move to quarterly payments the result of signals the government received from the federal government, or is there an internal reason - internal to Yukon, I mean - for wanting more financial accountability by the organizations to the Government of Yukon?

Hon. Mr. Ostashek: The money is just one part of it. The other part of it - probably the larger portion - is the accountability. We feel, as the Auditor General has said in his report, that we have more accountability if it is paid on a quarterly basis. I would like to add to what I have said about that. If this is going to create a hardship for some organization or body that we contribute money to, they will have the ability to make their case to the department, and we will look at it.

Mr. McDonald: We believe that we heard one Minister recently indicate that the up-front payment to non-government organizations was illegal, and that he had been given that advice by Finance. What is that all about? If it is illegal, this is the first I have heard about it. What was the Minister referring to?

Hon. Mr. Ostashek: It is not law, but it is a policy. When we are making these payments, we have to make them on an interim, monthly or quarterly basis, or have something in place for accountability. We are moving to the quarterly payment system to try to rationalize not only the money that is being paid out, but also the accountability for the money that is being paid out.

Mr. McDonald: As far as the Finance Minister and the Finance officials know, it is not illegal under the Financial Administration Act. That will be an interesting point that maybe the Minister of Health and Social Services may want to address when he gets back into his estimates. However, it is a matter of policy, he says. Has the government experienced a problem with accountability? What experience has the government had that suggested that there are problems that need to be rectified?

Hon. Mr. Ostashek: The issue arose because several departments have experienced difficulties in that respect. In some instances, organizations that they are funding are running out of money and coming back to ask for more. One of the most visible instances was the Health and Hope Society in Watson Lake last fall. It said that it was out of money and that it needed more money from the government. That is not the only case. Others have occurred. Those situations are behind some of the reasoning for going to the quarterly payments, because we have better accountability for the money that is being expended by the taxpayers of the Yukon.

Mr. McDonald: In the examples that the Minister can think of, including the one he cited, the problems that he has identified would be resolved in some way through the quarterly payment system - is that correct? The government would not have had to face the situation with the Health and Hope Society in Watson Lake had the government moved to a quarterly payment system - is that correct?

What kind of reporting requirements are going to be required once there is a move to the quarterly payment system? How much reporting to the government is going to be required by these organizations? How much extra paperwork is going to be required to demonstrate that they are spending the money as they have indicated they would?

Hon. Mr. Ostashek: That will be negotiated with the various departments that are funding these organizations and the level of accountability that the departments will be asking for from the organizations depends on how comfortable they feel about the organizations.

Mr. McDonald: So will each individual department decide how much reporting is required in order to receive the next quarterly instalment? Is that correct? Are there no general guidelines as to how much extra bureaucracy the government is going to inject into the relationship with the non-governmental organizations?

Hon. Mr. Ostashek: That will be the way it will start out. There have been no general policy guidelines issued at this time, but after we have more experience with this situation, general policy guidelines about how to keep the organizations accountable may be given to the departments.

Mr. McDonald: I would be very interested in that subject. Perhaps when we deal with this matter in the next budget cycle this will be very interesting. At least two organizations have indicated to me their concern about reporting requirements and the amount of paperwork that a small or volunteer organization is expected to provide to the government. If they are expected to provide the same or a similar amount of paper work each time they receive money, along with what they are expected to do on an annual basis, it is their position that the paper burden will be too severe.


are also concerned that, in reporting back to the government, the government may be subtly trying to exert more control over these organizations that had some small measure of independence and operating room, but there may be some measure of additional control, which is not obvious, that public servants may want to apply to the organizations. If some departments are essentially trying to manipulate these organizations, pretending that they are volunteer organizations, pretending that they are citizen bodies, when, in reality, because public funding is involved, they are insisting that every last departmental objective must be met, that may be cause for very, very significant concern in the Legislature.

This situation can get worse, not better, if there are not some clear guidelines that the government may want to apply on a government-wide basis.

Hon. Mr. Ostashek: I understand the Member's point. There is no doubt that when a government changes a procedure, there is going to be some skepticism from the organizations. I want to point out that any organization receiving $20,000 or less will be getting it up front, so that covers a lot of the small community organizations and so on. We are not going to burden them with paperwork. We are just concerned with the larger ones, and we will be watching it very closely. I will be quite happy to report back next budget cycle as to how it has worked and whether we have run into any difficulties with it.

Mr. Penikett: I want to pick up on something the Government Leader said a few minutes ago. I refer him to page 1446 of Hansard on March 20, 1995, where I asked about the decision that was made to change the payment schedules of NGOs from one lump sum at the beginning of the fiscal year to quarterly payments, and I asked the Minister of Health and Social Services to explain to the House why this decision was made at the eleventh hour. The Minister said, "First of all, the change was one that is consistent with the Financial Administration Act and the regulations thereunder. The practice of the previous administration - in making one lump payment at the start of each year - is considered to be in breach of those regulations and that law."

A few minutes ago, the Minister of Finance said the direct opposite of that, a complete contradiction, so I would like to have the Government Leader clarify the position of government - because we have two senior Ministers saying two completely opposite things.

Hon. Mr. Ostashek: It is my understanding that it is in breach of the financial administration manual, which is policy, not law.

Mr. Penikett: That may make sense, but I am curious, because I recall that the recommendation that we make payments on the first of the year under the previous administration came from the Department of Finance, which believed it was opportune to do that under the financial arrangements we had with the federal government. The statement by the other Minister is that it was not contrary to the policy, but contrary to the act and to the regulations.

In a further question, I asked where this advice came from. Quoting the other Minister, he said, "The interpretation regarding the Financial Administration Act was provided us by the Department of Finance." We, on this side of the House, are left in some confusion, as the Minister can see.

If it is simply a question of policy in the manual, can I ask the Government Leader if this is a function of a new policy or is this a policy that has been in the manual for years and has simply been interpreted differently more recently?

Hon. Mr. Ostashek: My understanding is that periodic payment is part of the policy and has always been. The up-front payments were more practical because of the formula arrangements with the federal government of the day. Those things are changing now. Good accounting practices would require one to make periodic payments. We have been making them up front. Management Board altered that policy because it made sense at the time to do so.

Mr. Penikett: I do not want to spend an excessive amount of time on this. The former government, and this government, until recently, observed one practice, and I am not clear if the Government Leader is saying it was contrary to policy or if the policy was recently amended to disallow the practice.

Hon. Mr. Ostashek: We had an official policy we were not following. We were following an unofficial policy, as was the previous administration, by paying it up front.

Mr. Penikett: I just want to explain to the Government Leader that - and we are not dealing with Health and Human Resources now - during Question Period, I asked questions about non-government agencies and the significance of their receiving money on April 1, and then being able to obtain interest on the grant, which was important to some of them. The reason given by the Government Leader's ministerial colleague was entirely based on the claim that what we were doing was contrary to law and regulation. In fact, it is a matter of policy. I will not pursue that with the Government Leader now, but I will pursue it with his colleague. The policy has some very precise implications for the NGOs.

Mr. McDonald: What precise signals has the government received causing it to anticipate that the federal government will move to 12 equal instalments? When would the federal government apply this payment schedule?

Hon. Mr. Ostashek: The federal government has given us a draft of the new formula and what it would like to see in it, and part of that is 12 equal payments. That is not the only issue concerning me. That issue, along with the $20-million cut we must absorb this year, is what is going to cause us some difficulty in continuing to make the payments up front.

Mr. McDonald: I was going to raise that issue. I was just trying to tie down this one last little point.

Is the federal government suggesting that there will be some return benefit for the Yukon with this move to 12 equal instalments, such as allowing the Yukon to retain interest income? Is that corollary being applied, or is it simply looking at further ways of cutting funds to the Yukon government?

Hon. Mr. Ostashek: Apparently, in that same draft agreement there is a section dealing with interest income in a somewhat different manner. It gives us an incentive to accept this, but it is not finalized yet. I think that the stark reality is that, based on everything coming down the federal government that we know about, it is looking for ways to stretch its payments out over the year, so that it is not running as big a deficit as it had in the past.

Mr. McDonald: The big issue for us in the last few years has obviously been the perversity factor of the formula. To the common person on the street that means - at least it means this to me - that the federal government thinks that my tax rates are too low and that I should be paying more taxes. Until it is removed, the only operating assumption that we can honestly have about the federal government's intentions is that it is continuing to think that our taxes should be raised, and is providing significant pressure on the Yukon government to raise those taxes, because it does not want to do it - I guess it is doing it, but it also wants the Yukon government to do it.

In this proposed formula financing agreement that the government is presenting, has the perversity factor been removed? Are we now mercifully free from this yoke around our necks?

Hon. Mr. Ostashek: The day I can stand up in this House and say that it has been removed will be a happy day, as I am sure the Member and many Yukoners would agree. That is not the case. In fact, it will be increased in the new formula.

I cannot argue with the Member opposite. The federal government is giving every indication, short of coming out and saying it, that it thinks that all Yukoners should be paying more in taxes, because the federal government is not prepared to look at it in any other light.

We have not signed this agreement, and we are a long way from signing it. We hope that we can get some amendments to it and some relief from the financial pressure it will cause. We will continue to do that. However, at this point, the federal government is not even prepared to talk about removing the perversity factory. We are putting as much pressure on as we can, as is the Northwest Territories. We will continue to make those arguments until we cannot do so any longer. We will just keep at it.

Mr. McDonald: Frankly, I think the issue deserves a lot more exposure in the territory, because I think some people are accepting a free ride when it comes to defending some of the budget initiatives implemented by the federal government. Yet, this particular provision is enormously hurtful to our economic prospects. Ultimately, it will probably do more damage by itself if the Yukon government is finally forced into raising taxes to simply survive. This situation could only get worse in my view and it deserves a lot more public exposure.

Regarding the $20-million cut to the Yukon government's transfer payment that the federal government is expecting to pursue in the next fiscal year, how is the government proposing that that cut be implemented? Will the cut simply be $20 million off the top from the gross expenditure base?

Hon. Mr. Ostashek: The Member is right; it is $20 million off the government's gross expenditure base.

Mr. McDonald: Is the federal government at all impressed by the fact that this cut, on a per capita basis, is much more severe here in the territory than it is elsewhere? Obviously, the federal government is not impressed by our tax burden arguments given that the federal government wants the territorial government to raise taxes further.

Has the federal government not been persuaded that, as a percentage cut, it is more severe than they have exacted on the provinces?

Hon. Mr. Ostashek: I can only tell the Member that I have voiced my disappointment to the Minister by way of a letter after the budget came down, and that will be the topic of discussion that I will be having with federal Minister when I am in Ottawa next Tuesday. I will be conveying to the Minister that this government feels it is being hit harder than the provinces, but after the federal Minister of Finance has been told by every province that it is being hit harder than the others, I do not know how much he will buy into that argument. However, I will be as vocal as possible on this issue.

I do not want to create undue alarm, but I think this government can absorb the $20-million cut, even though it is more than what has been imposed upon the provinces. My concern is what will happen with the formula financing agreement, because there could be more coming from this formula. The final analysis of the formula could impact on our finances, in addition to the $20-million cut we have already had to absorb.

Mr. McDonald: I would agree with the Minister that the federal Minister is probably so immune to criticism at this point that he is probably not listening to - what he would refer to as - whining from the regions, and obviously there are some issues out there that are receiving a lot more public air play than whether or not the Yukon government is being unfairly dealt with. When one hears from people in the Yukon about not wanting us to whine about the situation, given the state of affairs that we have just described, I get really angry about that and would love the opportunity to have a face-to-face debate with those people - I am certain we will get it, and in the not-too-distant future.

The $20-million cut that the Minister mentions is going to be an interesting topic for discussion once we understand where the government wants to apply the cut. I realize that it is a bit early to ask about budget questions for next year. However, I would ask this general question: given the basic budget priorities of the government and given its reliance on capital spending to promote, in its view, economic growth and private sector activity, can we expect a large or small proportion of this cut to be applied to the operation or capital budgets?

Hon. Mr. Ostashek: I have tried to make the point that the $20-million cut is manageable. We are running a small surplus, which will offset the cut to some extent. We have taken actions to control the operation and maintenance costs of the government, and I am sure we can tighten up a little more without impacting too dramatically on the economy of the Yukon.

I am not too alarmed. Nobody likes to take cuts, but I believe - without getting into a big political debate about it - that the actions we have taken have helped us to deal with the $20-million cut that has come along now, without having to make any dramatic changes in our approach to budgeting in the next budget cycle.

Mr. McDonald: The Minister was on the border line of getting into a big debate there. However, I will resist the opportunity to engage him on that point.

There is some concern about where the general financial situation of the territory will be in two years' time. In two years, we will have a cut in net expenditures of $20 million. The Alaska Highway reconstruction program will be virtually at an end. We hope that the hospital will be constructed. The gross spending in the territory will be down substantially. Whether or not the expenditures are made through the salary of a public servant or through a contract to construct a building, it cannot help but have a fairly significant impact on the territorial economy.

That will not be too far into the future. People have expressed the concern that it is coming, and we should be thinking about the situation in those terms, not simply in the terms of the one $20-million cut.

Can the Minister tell us if there are any other significant changes being proposed to the formula financing agreement that could negatively impact upon us if, in the end, they are imposed by the federal government?

Hon. Mr. Ostashek: I think they have covered the basic principles of what the federal government is proposing. The big thing - the change in the base year for the perversity - is the one that is going to have a dramatic impact on us and that is why the perversity will go up. We hope we can come to some reasonable compromise with them and impress upon them that we have taken our fair share of cuts for this round.

Having said that, the Member opposite talks about the projects winding down and the $20-million cut having an effect on the economy no matter where we do it. He is right, because if we take it out of capital, it is also going to take jobs away. It makes no difference. We can only hope that the economic recovery in the Yukon continues to grow and can be offset by increased activity in the private sector, which will create jobs to offset the ones that will be lost, whether out of capital or out of O&M. It really does not matter in the final analysis. There is going to be $20 million less to spend in the Yukon.

Mr. McDonald: I think that if the Minister ever presides over a true economic recovery, he is going to realize that recovery comes with increased expenditure requests from children through to adults who want medical work done. It is all part of doing business as a government.

That makes the concerns about the perversity factor even greater. If we expect some greater private sector activity at the existing tax rates, we can expect increased tax revenue, which will hurt us in the end. Has there been an analysis done of the situation as it may play out in the next 12 or 24 months? If some of the mines come onstream and the perversity factor is still in place, perhaps it will be worse than it currently is.

Hon. Mr. Ostashek: There has been some broad work done on it. We have not created any scenarios based on increases in population because, as the Member opposite knows, there is a population factor in the grant, as well as the perversity loss on the volume increase in taxes, which is the one that really hurts Yukoners. It is an argument that we continue to make to the federal government - that it is unfair and unjust - and we will continue to do that. We have not done any 12-month projections, or anything like that, but the Finance department is continually doing projections on what-if scenarios based on what the final results of the formula might be.

Mr. McDonald: Can the Minister tell us what the nature of the proposed change in the perversity factor is? He made reference to a change in the base year. What, in terms of numbers, is he looking at? How much do we lose for every dollar we gain?

Hon. Mr. Ostashek: In a worst case scenario - well, I should not say that either, because we do not know what the worst case scenario will be when the federal government gets finished with us. Regarding the proposals being put forward now, if we cannot get the federal government to change its mind, we could be looking at a further $20-million cut.

Mr. McDonald: I am continually impressed by this close relationship that the Liberal government has with the north. I am hoping that it does not become any closer. In fact, I really wish they would keep their distance. In terms of the actual rate - the amount of money that we would lose for every dollar gained - what is the ratio? It was $1.46 awhile ago. What would it be, in terms of dollars lost, for every dollar gained?

Hon. Mr. Ostashek: Right now, it is about $1.50. If we use the proposed base year that the federal government is using - the 1991-92 year - this would increase it to about $1.58 or $1.59.

Mr. McDonald: What is the rationale for doing this? If the federal government wanted more money, why did it not just say, "Look, Yukon and the Northwest Territories, we do not care what you say. If we are going to cut the provinces five percent, then we are going to cut you 10 percent, or 15 percent, just because we want to. You are too small, and you cannot do anything about it." Why is it trying to exact this money through this mechanism? It is stupid public policy. It provides no incentive - no encouragement whatsoever - for people here to take control of their lives and seek maximum advantage from the economic base. If we consciously calculated, as a territory, that every mine opened is a loss in the quality of life for every other citizen, in terms of services provided, what possible incentive can the Yukon have to ever acquire more self-sufficiency, or to support itself to a greater degree from its own revenues? This seems completely ridiculous to me.

Has the federal Minister given the Government Leader any clear indication of what it is that he is thinking?

Hon. Mr. Ostashek: I am not trying to defend the federal Liberal government, but the Member opposite ought not to forget that there is a population factor in the formula. That is, as the population goes up, we get an increase in the grant, as well.

However, the federal government's rationale and the arguments it makes with our officials and has convinced this Minister of, is that this is technically right, and that we should not be upset with it. This agreement looks after us if there is a downturn in the economy, and we should be thankful for that.

I have made the same arguments that the Member opposite just stated on the floor of the Legislature. I have said that it is wrong and that there is no incentive for a government to be trying to create economic activity in the territory. I have made this argument time and time again. I did it when the Conservative government was in Ottawa, and I was making some headway when the Conservatives were there. They were starting to listen to the argument, at least. It is too bad that we did not have another six, eight or 10 months, so we may have been able to get some relief from it - I do not know. At least it was being a lot more sympathetic to us than the present administration is. It is irrational, illogical and very detrimental to the expansion of the Yukon.

I keep making the argument that if the federal government wants the Yukon to be self-sufficient and wants Yukoners to take responsibility for ourselves, it has to quit penalizing us when we try to do it.

I just have not been able to get the federal government to buy that argument yet. It is an argument that the Finance Minister for the Northwest Territories and I are going to make again in Ottawa, and hope that we can get the Minister's ear - because we certainly cannot get the officials' ears - and try to get him to change his mind about what his officials are telling him and to prove to him that it is in the best interest of all Canadians not to penalize us for economic activity in the north. When economic activity is created in the north, it creates economic activity in all of Canada.

Mr. McDonald: What tax increase would be required now, in ball-park terms, to eliminate the perversity factor? What would we have to do here to eliminate this provision from the formula financing agreement?

Hon. Mr. Ostashek: We are always tossing these numbers around. It would take about $30 million in tax increases to eliminate the perversity factor.

Mr. McDonald: The Minister has indicated that the federal Minister is aware of this, and that we are not talking about the public service or the bureaucracy simply inflicting this on us. It obviously needs the sanction of the federal Minister. Without it, the bureaucracy could not proceed.

It is the contention of the federal Minister and the federal government that every man, woman and child in the Yukon would have to donate another $1,000 each in order for this perversity factor to be eliminated? Who, in their right mind, would buy that? Who, in the Yukon - or in the country - would think that that is fair? It would mean that an average family of five would be paying an extra $5,000 a year to the government, without there being any change in the government's financial fortunes. That means that if every person in this territory were to pay an extra $1,000 a year in taxes, the Yukon government would not be any the better for it; there would be no extra funding available to do important community activities.

What really surprises me is that for us to take advantage of the perversity factor, we have to have a downturn in the economy. What incentive is there for us to do anything other than look for the downturn, particularly when we are facing cuts, which, in and of themselves, are greater on a percentage basis - and certainly on a per capita basis - than they are for the provinces.

One could argue that those cuts are tough enough. Certainly there have been a succession of Finance Ministers from the Yukon who have always argued that whatever cuts come, it should be done fairly. We have not, to my knowledge, resisted the notion that no cuts are possible or justified. Fairness has always been a pretty important element to the Yukon government's position.

I think we have a real problem. I think that those who would defend the federal initiatives ought to have a very close second look at precisely what it is they are doing.

I asked the Minister a written question, and I have not received a response to it, about the amount of taxes paid by public servants. I also asked him about the amount of money that had been designated as a bad debt. How much of that is being recovered, or is expected to be recovered? Does the Minister have that information?

Hon. Mr. Ostashek: My deputy minister says that he has the one about the tax of public servants and he can provide that to the Members today. He will obtain the information with regard to the bad debts from Economic Development and he will follow up with that information shortly.

Going back to the comments that the Member opposite made about it not being of any benefit to the Yukon if the government did raise another $30 million in taxes, it would be a benefit to the government and a travesty to the people of the Yukon. But that is what the federal government is trying to force us to do, as we debated earlier. The $30 million per year, under the old formula - not under the new formula - at the $1.50 figure, would eliminate what the federal government sees as the inequity in the tax burden of the Yukon. Then we would be receiving a dollar for every dollar, as opposed to being penalized by $1.50 for every dollar raised. Again, it is impossible for people in the Yukon to absorb that much in taxes and they should not be asked to absorb it. It is not equitable.

I can be most critical of the federal government, because it was a government that preached fairness. It introduced a pumped-up infrastructure program, which it campaigned on, and said that it would only be fair that it treat the Yukon as it does the rest of Canada, on a per capita basis. The federal government did that, but when it comes to tax cuts to transfer payments, the territory has to absorb a larger percentage than the rest of Canadians do.

Mr. McDonald: I think the Minister is right in one respect. Certainly $5,000 out of people's pockets would have a pretty devastating effect on a lot of people. The government would have to do a lot of catch-up to help some of those people through the damage being done.

It is absolutely ludicrous, however, to promote a policy that effectively states that that amount of tax revenue should be raised before this disincentive to economic development is removed from the formula financing arrangement.

Because I want no escapes for anyone who will be an erstwhile defender of this kind of action, I want it to be absolutely clear that it is the politicians who know what is happening, not public servants who, from time to time, have done things that are insensitive or seek to pursue the narrow interests of the federal government.

Is the Minister confident that Paul Martin and the Liberal Cabinet are aware of this situation? What will he do in the next week to drive the point home, so there is no mistake that, when we are talking about the federal government, we are talking about the elected people who make these decisions?

Hon. Mr. Ostashek: I never miss the opportunity to impress upon any federal politician, especially Cabinet Ministers, the inequities in the formula financing agreement for the north. The Minister of DIAND is fully aware of it. I have had many debates with him on this. When we talk with the Minister of Finance on a political level, he seems to understand and have sympathy for us. Then the bureaucrats get hold of him again and he changes his mind. He has offered to look at this several times. If he has looked at it, that is all he has done; he has done nothing with it at all.

In fact, when the Minister of DIAND sent his fact finder, Mr. Wright, up here to talk with us on devolution, we made a very strong case to him. He thought it was the most ludicrous arrangement he had ever heard of, and I hope he will go back to Ottawa and address it when he drafts his report. We made our Finance officials available to him to give him a thorough briefing to make sure that he understood what a detriment the perversity factor is to the Yukon and what kind of hardships it was creating for us.

We do take every opportunity we can to make our case to the federal ministers but we have not yet been successful in getting much relief from it, outside the small relief that we did get - I believe under the previous administration - with risk sharing, which gave

us several million dollars in the formula. But with this administration we have not been able to make any headway at all.

In fact, as the Member opposite is aware, these formula financing negotiations are now a year overdue. The new formula was supposed to take effect on April 1 and, as a result of not having a new formula in place, we had our grant frozen and our formula frozen for one year. Even on the commitment by the federal minister that the formula was frozen for one year we could not figure out how much money we were going to get because nobody would make a decision if the grant was frozen or if the formula was frozen.

Those are the kinds of frustrations we face when we deal with the Liberals in Ottawa.

Mr. McDonald: It seems that, even though this is slightly more complicated than the subject of gun control, we quite often spend more time working on an aggressive lobby campaign to get the federal government to change a policy such as its gun control measures. This situation, which will have infinitely more real-life impact on the territory, does not get as much exposure. I think that is too bad.

I realize that the Minister is engaged in negotiations, and perhaps during the period of negotiations one should not get too frantic; however, if the federal government is still talking about wanting us to increase our taxes by horrific amounts, obviously something ought to be done to pursue some kind of lobby campaign, particularly with the people who cast their fortunes with the federal government in this territory.

In having a quick look at the budget projections for next year, if one factors in the worst case scenario that the Minister mentioned with respect to even the worst perversity factor than he anticipated, we could be facing upwards of a 15-percent cut to our net expenditures and also face the natural elimination of some capital projects at - I do not know what it would be - probably about $50,000 plus.

We are talking about a huge change to the public expenditure plan, and not a minor one at all. This is obviously going to have an impact on everything from the number of teachers in the school to the amount of social assistance we pay. It certainly could have that kind of impact. It could conceivably eliminate the capital program altogether, or most of it.

We have a serious problem, which we should be facing, and there should be much more attention paid to the impact of what is apparently being proposed. I can only assume that if the Minister has made representation to the federal Minister on a number of occasions in the past, and the federal department is returning with proposals to make matters worse and, knowing that the federal public servants are not unprofessional about this, they must get some sanction from their political masters before they take initiatives such as this.

The federal Minister has not been swayed by the Yukon government's arguments. In fact, he feels that the Yukon can justifiably take an even greater hit and can suffer an even worse perversity factor than we had before.

Can the Minister tell us whether or not he will make a clear statement of the state of the negotiations when he returns from his meetings in Ottawa, to let us all know precisely what is transpiring on the central points that we have addressed this afternoon?

Hon. Mr. Ostashek: I will most definitely be giving a statement in the Legislature when I get back.

As the Member opposite knows, I will be meeting with the federal Minister. It sometimes can take awhile before one gets an answer back in totality as to what he is going to do. I will keep the Member opposite and the Legislature fully aware of what is transpiring. The Finance Minister in the Northwest Territories and I felt it was important that we got down and spoke with the federal Finance Minister prior to our officials going back into formula financing negotiations. In fact, we refused to go to one meeting in Vancouver a couple of weeks ago because we do not want them coming forward with a position that they feel is carved in stone. It is hard to get them to change their mind.

We hope that if Mr. Pollard from the Northwest Territories and I meet with the federal Finance Minister we can impress on him that the magnitude of the cuts that are being proposed for the Yukon and the Northwest Territories are totally unfair to people in the north. We will share a far greater burden than any Canadian. That is not appropriate. I am not sure that the federal Finance Minister is entirely aware of the magnitude of the $20-million cut that he has already inflicted with his budget and the ramifications of the adjustments to the formula. We want to make that case to him before we get back into negotiations on the formula at the officials level.

Mr. McDonald: I am all in favour of public education, and educating the Minister is a worthwhile endeavour. The only concern I would express here is that, apparently, the federal Minister - and I think that he has a fairly good reputation for grasping certain details - has already been made aware of the problems with the perversity factor some considerable time ago. Yet, the first response from the public service is to make it worse.

I am certain the Minister may hear from the federal Minister that he is going to get back, and he will look into things, and he will be as accommodating as he can, face to face. I am hoping that this does not mean the federal department will come back with an even worse scenario than we anticipated before. That seems to be the track record.

I wish the Minister well in his endeavour. However, I am increasingly cynical and more and more angry about the special relationship that we are supposed to have with the Liberals in Ottawa. I think that if I hear another person tell me to stop whining about this, particularly when I know specifically what the perversity factor means, and I know that by a reasonable standard the cuts that we are facing now are, by themselves and in terms of transfers to governments, more significant to this territory than they are elsewhere, I will scream bloody murder. I think the territory is facing a situation where we are expected to do a very large amount of work, in terms of ploughing roads up into the high Arctic - we are expected to do a lot with an essentially small caretaker population.

If we are going to guilt-trip ourselves that somehow we are not able to generate enough revenue from our own taxes to fulfill those obligations, many of which are national, and that we have no right to critique a cut unless we can somehow relate our situation to that of Newfoundland, which is in a significantly different circumstance from ours, o

bviously we have got a lot of internal public education to do in the Yukon, and I think we need to have a good, hard political debate about it, and I think we need to have, without the rhetoric, as much baseline information as we can get hold of so that we understand the true impact of what is happening. I would hope that the Minister will be able to provide us with as much baseline information as he can, so that the debate that appears to be shaping up inside this territory can get a full airing and people can stand and be counted where it counts.

As I have said before, I think that this situation, even though it is moderately complicated, is going to have a much bigger impact than virtually anything else that we have discussed for the last three months. Removing $40 million or $20 million from our net expenditures is going to have an enormous impact on the territory and it is going to be very difficult to do it with sensitivity and achieve the level of public acceptance that we would hope to get.

I make that point, and I am looking forward to the Minister's statement. I hope it could be as detailed as possible when he comes back from his meetings with the federal Minister.

The Minister has indicated briefly that he would be able to provide information with respect to the amount of taxes paid by public servants. Can he provide that information - both territorial and federal tax - and can he give that information to me in terms of the percentage of personal income tax that is paid by all citizens of the territory to the Yukon government? Can he do that as well?

Hon. Mr. Ostashek: Yes, there will be no problem in doing that. Also, I just want to follow up and say that there are not very many times in this Legislature when the Member opposite and I are in agreement on an issue, but I believe we certainly are on this one.

The Yukon government is expected to administer an area the size of France with only 30,000 people in it, and provide services - and, as the Member opposite said - many of which were imposed by the federal government. We are also looking after a lot of federal infrastructure. It certainly leaves a bad taste in one's mouth when the federal government talks about fairness, yet it is going to impose severe cuts. If we are not successful in getting some relief from the formula, I believe that the whole issue of formula financing may be worthy of a debate in this Legislature after I return.

Mr. Cable: Some time ago, the Government Leader was asked for some statistics that he had provided a couple of years ago on worst case/best case scenarios. I believe it was in 1993 when the Government Leader, as Finance Minister, had provided worst case/best case scenarios on revenues and on expenses, so that we could see what the likely variations in the surplus would be. As I recollect, that was asked for at some juncture during the budget debate. I am just wondering if the Minister and his deputy have had a chance to organize that information?

Hon. Mr. Ostashek: I will have to check on that, because I thought that information was provided a long time ago. I recall bringing that information back to the Legislature.

Mr. Cable: I will research my files and contact the Minister. If that information has not been provided, could the information be provided in a fairly timely fashion?

Hon. Mr. Ostashek: Yes, it could.

Chair: Is there further general debate?

Mr. McDonald: Generally, we do not go through these bills line by line, but I do have a question that perhaps the Minister can help us with.

I notice that, in Schedule B for grants, the Yukon College capital grant is included. Is the Yukon College operation and maintenance grant not a grant? I thought that in the past I had seen that grant listed in the interim supply bills, but could the Minister explain why the operation and maintenance funds for the college are not listed?

Hon. Mr. Ostashek: I am not certain, but we may be considering the grant as a contribution. I do not know for sure, but if it will make it easier for the Member, it would not take me very long to run briefly through the notes.

There is $909,000 allocated for MLA pension monies, which is to be paid in full. The Legislative Assembly capital is $20,000, with all capital being purchased in April. The Executive Council Office operation and maintenance is $1,900,000 for land claims money for language services required in April. There is $30,000 on the capital side for higher capital purchases at the beginning of the year. In the Department of Community and Transportation Services there is $18,097,000 for municipal grants to be paid in April. There is $29,819,000 in capital commitments for highway construction contracts. In the Department of Economic Development, there is $313,000, which is not significantly different. In the area of capital there is no significant difference in the amount of $1,161,000. These figures reflect one-half of the main estimates.

Education operation and maintenance is $17,433,000, including the payment to Yukon College. On the capital side, $1,917,000 includes the Yukon College grants. They are probably all lumped in there together.

In Finance, the $920,000 includes a public utilities income tax transfer. On the capital side, $37,000 is for purchases at the beginning of the year.

In Government Services, there is a required commitment authority for $3,626,000 for the full-year contracts. Capital is $584,000, which is less than one-half of the main estimates.

In Health and Social Services, $40,075,000 reflects the commitment authority for hospital and community health and for hospital insurance services costs. On the capital side, $3,946,000 reflects the commitment authority for capital contribution agreements and some capital projects.

In Justice, $3,205,000 includes the Human Rights Commission grant commitment authority for some full-time costs. Capital is $407,000, which includes the commitment authority for some capital projects.

In Public Service Commission, $260,000 is less than one-twelfth and excludes the leave liability accrual. In capital, there is $25,000 for capital purchases at the beginning of the year.

In Renewable Resources, $1.5 million is required as commitment authority for full-year contracts. On the capital side, $350,000 is the required commitment authority for some capital projects.

In Tourism, $2,770,000 includes the commitment authority for marketing activities and various grants and contributions. An example is museums, the Arts Centre, the Anniversaries Commission and TIA. On the capital side, $902,000 reflects the commitment for summary capital projects.

The rest - the Women's Directorate, the Yukon Housing Corporation and loan amortization - there are no significant differences here - $1 million, $1 million and $125,000, respectively.

Mr. McDonald: The Minister has already indicated to us that he will come back with the interest income earned by YTG as a result of the change to quarterly payments to the NGOs. The interest income, I suppose, would be kept by the federal government.

I will not ask him about the total amount yet, because I understand that information is coming, but is the Human Rights Commission going to be treated like other NGOs? Is it going to be paid on a quarterly basis as well?

Hon. Mr. Ostashek: I do not believe so. I think it would have to come forward with a request and make a case for why it should be paid up front.

Mr. McDonald: Presumably that is one organization for whom the Minister would want to make a case, at least in the Legislature, that the government needs more accountability for the expenditure of those funds. I know there are a number of organizations - and I think the Arts Centre is one - that do calculate in what small interest income they earn from the up-front payment, and that is an important part of their budget - not a significant part but certainly a part on which they count. Obviously those organizations are going to lose out in favour of the federal government because the federal government will be getting the interest income.

Would it be possible for the Department of Finance to do a calculation for the Human Rights Commission and for the Arts Centre as to how much interest income they will lose as a result of the change to quarterly instalments?

Hon. Mr. Ostashek: Yes, we will get that for the Member.

Mr. McDonald: In the instance that the federal government moves to 12 equal monthly instalments to the Yukon government and the Yukon government feels compelled to provide the same treatment to the municipalities, does the Minister anticipate any change in the reporting requirements the municipalities, as junior governments, must undertake on receiving that money, or will it simply be an automatic cheque to those governments every month?

Hon. Mr. Ostashek: No. If that were to happen, it would just be a cheque every month to those municipal governments.

Mr. McDonald: I am interested in the college. I was just given the Interim Supply Appropriation Act, 1994-95, and it lists the college as a recipient of a grant under Schedule B, on the operations side as well as on the capital side. This bill has captured the capital grant. What has changed, in terms of how the money is being paid out, that would cause the government to want to delete the college from the Schedule B grants under the act?

Hon. Mr. Ostashek: I do not think that anything has changed. I think it is just that the Department of Education now considers it a contribution, rather than a grant. I do not think that anything has changed in the manner in which it is paid out.

Mr. McDonald: What is the material difference in the Minister's mind or in the Department of Finance's mind as to why it is not here?

Hon. Mr. Ostashek: Basically, a grant is free and clear. One has no obligation to do anything under a grant. Under a contribution, one provides something in return for that contribution. I think that is why the Department of Education calls it a contribution rather than an outright grant.

Mr. McDonald: I was under the impression that, with the exception of the College Act, which provides for certain legislative control of the college and delineates roles and responsibilities for the Minister, historically, at least a portion of the college funding is a grant. Some of it is contingent funding, because the department obviously has some expectations that certain very specific services will be undertaken in return for the money paid. What is the rationale for the Department of Education wanting to make it a contribution, if, as the Minister says, it wants to seek more accountability - they want to have a greater degree of control, perhaps, over the college? What is driving this? Does the Minister know?

Hon. Mr. Ostashek: This is a debate in which the Minister opposite may want to engage the Minister of Education. I am not certain, but I think we could debate whether it is a grant or a contribution forever. I do not know all the reasoning behind it, but I would suspect that the department calls it a contribution because it has given it to the Yukon College to run a college and to provide some services. With a grant, it would not have any obligation at all.

Mr. McDonald: Under the College Act, the college has an obligation to pursue the objectives of the act itself. The Minister has certain powers to appoint members to the college board, and that is the Minister's control over the college. There was the assumption that a grant, provided to the college, would be a no-strings-attached grant for a percentage of that budget, with the exception of the restrictions that I cited being in law, and the difference would be contingent funding for very specific kinds of programs.

I remember the Yukon native teachers education program was one that was managed by the college, but for which there were some specific objectives that the government wanted to achieve. They wanted a measure of control over it, so they essentially signed a side-contract with the college, but it was not part of the core operating budget.

It appears - perhaps the Minister can correct me - that the department is not satisfied with that level of control over the college. Do they want more control or less? It is unfortunate that we have passed the Education estimates, so that I can only get the information now.

Hon. Mr. Ostashek: I do not know for sure, but I just think that the department feels that if it has to do something under the act, it is called a contribution. I do not think there is any difference; I do not think they are asking for any more or any less accountability. It is unfortunate that we are past Education, but the Member opposite still has Question Period available to him. He may want to ask a question of the Minister of Education, who may be able to shed a different light on it for the Member opposite than I.

Mr. McDonald: There must be some reason for this. Can the Minister tell me, if he asked for some advice, what the specific arrangements are for a contribution agreement that make it different from the grant? What, specifically, is required in a contribution agreement that is not required in a grant?

Hon. Mr. Ostashek: It might be better if we bring the Member opposite a written reply to that question, but I will just paraphrase it in words that would help interpret it.

A grant, I would say, is something that you are given to do whatever you want with. A home owner's grant is a grant. There is no commitment to do anything under a grant.

Contributions are given for a specific reason. You are given a contribution because you are providing some educational courses at the college, say, in the case of Yukon College. That is the difference I would make.

I will get a note back to the Member about how Finance explains it and possibly how Education explains it. It may give him better insight into it.

Mr. McDonald: I am surprised that the College Act in the operating agreement between the college and the Department of Education is not considered to be sufficient control for the government. That they would want to move to a contribution agreement rather than a grant is a further change that requires more scrutiny, I suppose.

Was the designation of the funds for the college initiated by the Department of Finance or the Department of Education?

Hon. Mr. Ostashek: It never came out of the Department of Finance; it must have come from the Department of Education.

Mr. McDonald: Presumably the Department of Education has made the request to eliminate the grant to the college and move to a contribution agreement. Does the Minister know whether or not this was accepted by Yukon College? Did the college acquiesce? Was the college consulted? Did the college ask for this? How did this transpire?

Hon. Mr. Ostashek: I think this debate is getting into outer space. The Department of Education feels that anything that is done under its act should be considered a contribution. I do not think there are any other changes; it is being called a contribution because anything that is done under an act should be called a contribution. The Member may wish to discuss this further with the Minister of Education, because I do not have any further information on it.

Mr. McDonald: I guess we will, because I think there may be a difference in how much control over an organization the Minister thinks is appropriate, as compared to what some Members in the Opposition think is an appropriate amount of control.

Can the Minister tell us how the Hospital Corporation is funded? Does that corporation receive grants and contributions? Does the corporation receive an up-front payment at the beginning of the year? Can the corporation expect 12 equal instalments?

Hon. Mr. Ostashek: They do not get all of the money up front. They receive it in instalments. I am not certain if the payments are monthly or quarterly, but the payments are calculated as a contribution.

Mr. McDonald: So, it is a contribution agreement. I will not bother him any further, but I would like to know whether or not the Minister could undertake to give us information about the Hospital Corporation's payment schedule, whether it is quarterly or monthly or something else. Can he also give us a copy of the contribution agreements for both the Hospital Corporation and for the college, so that we might understand more precisely what the government intends by this change in procedure?

Hon. Mr. Ostashek: Yes, we will do that for the Member.

On Schedule A

Schedule A agreed to

On Schedule B

Schedule B agreed to

On Clause 1

Clause 1 agreed to

On Clause 2

Clause 2 agreed to

On Title

Title agreed to

Hon. Mr. Ostashek: Mr. Chair, I move that you report Bill No. 5 out of Committee without amendment.

Motion agreed to

Chair: 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 now call Committee of the Whole to order.

Bill No. 4 - First Appropriation Act, 1995-96 - continued

Department of Health and Social Services - continued

On Social Services - continued

Chair: We are dealing with Bill No. 4. We are on Health and Social Services. Is there any general debate on the program social services?

Hon. Mr. Phelps: There are a couple of things I want to put on the record. The first thing had to do with the Thomson Centre and the information that I had given yesterday regarding the charge-back, or usage, by WCB. I had indicated that it was slightly more than $250,000, whereas in the past year the charge-back was about $7,000 under $250,000. I am now advised that the actual charge-back for the fiscal year is $242,861.10. The power program is fully staffed. They are short one person in rehabilitation, but that is not part of the power program.

Regarding child care and the questions raised by Ms. Firth about the statistics that are increasing, whereas the amount for child care remains the same, I am advised that we are holding the funding, and that the direct operating grant is subject to modification as we proceed. It is hoped that there will not have to be additional monies put into the direct operating grant. There have been some changes already regarding the way it is paid out. As well, the department is waiting to find out what monies are forthcoming from Axworthy's infamous initiatives as, I gather, is Yukon College, which has made application for some training money from the Axworthy initiatives.

Regarding the increase in people with subsidies - which show up at the bottom of page 8-16 - I would say that subsidies involve more than numbers. Quite often subsidies are only partial subsidies. I guess the best guess of the officials is that the subsidies will probably be fairly close, given the nature of the subsidies that are being paid out. However, these things are subject to change.

Mrs. Firth: I wanted to ask the Minister about the announcement he made regarding his fraud squad and the individual who is going to be looking after potential fraudelent social assistance cases. According to the Minister's priorities, this is a new initiative. Have there been any other changes with respect to the Minister's social assistance reform? Will the Minister be making any other changes with respect to regulations and rates? If so, could he tell us what those changes are?

Hon. Mr. Phelps: The regulations have been extensively redrawn to conform with the initiatives that were announced in this House last May. It has taken until now to have those regulations drafted and approved by Cabinet. The regulations are now in the implementation phase; therefore, all the necessary changes to the regulations resulting from the announcements - the makeup of the appeal board and the manner in which the appeal board operates, t

he changes to the portion of earnings that employed people are allowed to keep - will be coming into effect, and we will see what the impact of those changes are during the course of the current fiscal year. It is our hope that these regulations will result in meaningful changes to the number of clients and the amounts paid out in encouraging the clients to work. In addition, there is the intention to increase the SAR program, by $200,000 from the territorial government and $200,000 from the federal government; however, we still have not received the final word from Ottawa in that regard.

That is kind of in abeyance. We have been guaranteed the $300,000, but not the additional two.

The fraud squad consists of one person. We are looking at paying people to verify information given to social workers by people applying for social assistance, and that will be done on an auxilliary basis from time to time at unexpected intervals in order to reduce the kind of misinformation that has been given in the past.

I think the majority of the comprehensive changes that were announced by a very comprehensive ministerial statement in May will be implemented and felt during the course of the next fiscal year.

Mrs. Firth: The Opposition has not had the privilege of seeing these regulations, nor has the public had the privilege of seeing them. When will these regulations come into effect?

Hon. Mr. Phelps: It is intended that they come into effect as of April 1. I am not sure if the French version has been completed. They have passed through Cabinet and are ready for implementation by the first of the fiscal year.

Mrs. Firth: Could we have a copy of the regulations?

Hon. Mr. Phelps: Certainly.

Chair: Is there further general debate on the program?

Mrs. Firth: Perhaps the Minister could be more specific. Are we going to get those now, or do we have to wait until April 1 when they come into effect. I would like to ask the Minister if he could provide copies of the regulations for all Opposition Members this week, tomorrow, this afternoon, as soon as possible?

Hon. Mr. Phelps: It has gone through Cabinet. I am sure we will be able to provide copies to the Members tomorrow.

Chair: Is there further general debate on the program?

Ms. Commodore: Are we on general debate on this branch?

Chair: We are on the social services program.

Ms. Commodore: So we are on general debate on social services. Does this area cover home care workers?

Some Hon. Member: (Inaudible)

Ms. Commodore: I would like the Minister to bring me up to date about the home care workers. I have not heard any up-to-date information. Are the home care workers being used very often? How many cases are we looking at? How many workers do we have and how many people are benefiting from that service?

Hon. Mr. Phelps: The reason we are looking is that it is intended to expand home care over the course of the next fiscal year. Just as we closed last night, I had read out the particulars of the general debate. I mentioned, for example, that there was a $156,000 increase to the transfer of home care workers from community health care workers, so it has been transferred back. That is just a book entry. The statistics on page 8-23 answer the question. It is our belief, however, that we will be requiring more home care with the aging population.

Ms. Commodore: Do the services that are offered by the workers include nursing, cooking, cleaning and such things?

Hon. Mr. Phelps: It covers all those things: nursing, cooking, cleaning, helping people stay at home, and so on.

Ms. Commodore: What kind of qualifications are required for the positions, if they include nursing and cooking?

Hon. Mr. Phelps: There are a range of job descriptions, from professional nurses to auxiliary people who are homemakers who do not nurse - they clean and do meals, and such.

Ms. Commodore: Is it likely that an individual could be visited by a nurse and also by someone who would clean the house? Are we looking at two different people going into these homes?

Hon. Mr. Phelps: The attempt is to gear the higher skill levels to the higher skill needs. There are people who do not have the higher skill levels, so I imagine there are situations where there may be two people going into a home.

Mr. Cable: In his opening remarks, the Minister spoke about the success of the SAR program. Is there any written material he can provide to us, not necessarily in this debate, but at some juncture, to indicate what that success is?

Hon. Mr. Phelps: There was a summary done two or three months ago, providing the numbers that went through the program - those who are working, those who have gone on to higher education and those who are not doing anything, and so on. It gives a bit of a statistical background for the first year and a half or so.

Mr. Cable: What is the intended follow up on that program? Are the Minister's officials going to look at it one or two years from now, or look at where the people are, so that there is some long-term view as to whether or not it is successful?

Hon. Mr. Phelps: Absolutely. I can bring the initial, preliminary figures for the Member. We intend to follow up in order to ensure that we are getting a reasonable number of people going through the courses, getting jobs, keeping jobs or going on to training in other things. If there is too much of a drop-out factor, we will have to look at the whole program to see why. It may be that in some cases our rates are too high.

Mr. Cable: Has the Minister compiled the savings on social assistance in the initial period to which he just referred? Is there some financial check on the success of the program, as well as on the individuals having successfully entered the workforce?

Hon. Mr. Phelps: I am not sure that the data I have seen is presented in quite that way. There is some saving on social assistance, of course, but during the period in which we have been doing a number of things, including SAR, the numbers per month on social assistance and payments under social assiatance have been declining. So we can show that pattern over the last year and show how it is declining.

We would anticipate that decline to accelerate as we implement the new regulations, which are a rewrite of the old regulations that have not been redone since 1972 I believe, with the incentives to work - or the removal of disincentives to work I guess would be a better way of saying it - and so on. So, yes, we have some preliminary statistics that I was trying to have worked up by the department into a report.

We do not have a complete enough picture yet to make a report. Probably by next late fall there will be a better overall picture, especially factoring in not only SAR and the reduction in the loss to UI payments that were never paid back and the tightening up of double dipping in two jurisdictions, which has had some success, and the fraud investigator and the verification teams that have been used. All of these things will provide a better picture as we get into January and see what period 9 next year offers. We have some preliminary material we can show the Member.

Mrs. Firth: I want to follow up on that, because I had a question for the Minister with respect to the estimates that the government has done to show that the fraud investigator is saving the government money. In the information that came out, the Minister and his officials were touting figures as high as half a million dollars, stating that there was the potential to save that amount of money. Yet the substantiating information that was tabled - with individuals' names and amounts of money that had been claimed - were relatively small amounts. I totaled up the amounts and I believe it came to approximately $20,000. There were small amounts like $5,000 from one individual, and $2,500 had to be paid back by another individual, and so on.

Hon. Mr. Phelps: Not at all. There was a fraud investigator hired. He had a number of tasks to perform, one of which was to look at some files that had been identified by the social workers as suspicious. He looked at 47 files, of which 35 contained elements of fraud. At the same time, there were 500 files randomly selected, looked at and checked up on by the verification team. It was found that 20 of those files had elements of fraud, which would be a rate of about four or five percent. There were a number of files sent to the RCMP; six people were charged, the court disposed of the cases by finding them guilty, or guilty pleas were entered, and fines levied. That is the small number that the Member is talking about. When I last checked, there were 21 files still under active investigation by the RCMP.

It is our estimation that the rate of fraud is about five percent, and that is consistent with other jurisdictions. It should be remembered that, during the first month that the investigator was working, there was an amnesty. People were allowed to come in, 'fess up and make some payments. Some people did that, and those numbers do not count in any of the statistics. When people were told that their statements would be checked by a verification team, sometimes they got up and walked out and did not complete filling in the papers. That sort of thing was going on.

So, from a fairly small sample, and having checked the statistics, there is every reason to believe that our incidence of fraud in the Yukon is probably similar to that anticipated elsewhere in Canada.

It is by no means certain or right, except for one time out of 20. I am convinced that we have a very serious problem, and a more serious potential for abuse of the system, and that it more than justifies spending some money on verification teams from time to time during the year, and an investigator.

Mrs. Firth: I guess the way to measure it so that we can all see it is to know the money collected versus the money used to operate the program. Right now, the evidence of money collected does not come anywhere near meeting the money needed to administer the program. Does the Minister have some figures that just take into account the salaries, operating costs, office space, et cetera, for that program - the verification teams, the fraud investigator, and so on? I am just trying to get some kind of a grasp of the real benefits. I am not questioning that we have a problem, or saying that I do not see any merit in this program. However, I would like to get some figures, in real terms, that we can all identify with.

Hon. Mr. Phelps: We will be advertising for the fraud investigator for the full year. It is felt that the cost of a fraud investigator for a full year would be somewhere in the order of $70,000. A verification team would be in the order of $30,000 to $40,000, depending on how often they are used, and so on, on a from-time-to-time basis. We are looking at costs in the order of $100,000 a year. The test is not money collected; the test is fraud deterred, or fraud stopped once it has been going. The collection of the money is, in my view, not going to pay for the exercise. The payoff is in stopping a lot of fraudulent use and abuse of the system.

There were all kinds of things that were being uncovered. In the report, it talks about things like double dipping, and so on. It also talks about looseness in the system that is being largely corrected by the new regulations. For example, the system was such that there was no maximum on one's utility bill; the department simply paid it. So, there were cases where people had all kinds of electrical cords running out of their dwelling and other people were using the electricity - that type of thing. We had people cutting wood for their neighbour, who was on welfare, and vice versa. There were numerous practices that were going on, some of which have been tightened up as a result of this type of investigation, and some of which will be deterred by the knowledge that we will be investigating fraud and having teams verify, from time to time, the applications.

I am personally of the view that the abuse is higher than the five percent, but that, too, is difficult to prove.

Chair: Is there further general debate on the program?

On Program Management

Hon. Mr. Phelps: This was reduced from $1,453,000 in 1993-94, and is down a further $5,000 this year. The major reduction in 1994-95 resulted from a decrease of $190,000 in funding to NGOs. The $5,000 reduction for 1995-96 results primarily from savings generated through the wage reduction program.

Hon. Mr. Phelps: There is no reduction to the NGO funding level between 1994 and 1995 and this upcoming year.

Program Management in the amount of $1,268,000 agreed to

On Alcohol and Drug Services

Hon. Mr. Phelps: This item has increased from $1,285,000 in 1993-94 to $1,625,000 for 1994-95, and has increased a further $24,000 for this coming year. A major impact of approved increases in staffing and related supports were felt in 1994-95. The $24,000 increase for 1995-96 is due to a personnel increase of $9,000 as a result of positions approved for 1994-95 now being filled for the full fiscal year. Operating has increased by $15,000 due to increased material cost for detox, as it expands the number of beds available.

Ms. Commodore: I am a bit disturbed by the lack of information that the Minister is providing to us. This has been a concern with the other branches as well, because we are looking at an expenditure of $1.2 million. I know that certain amounts of money go into different programs within the department. There does not appear to be a breakdown of those different programs. Does the Minister have that information available in his briefing book?

Hon. Mr. Phelps: I am not exactly sure what information the Member wants in alcohol and drug services. Personnel is $1,265,882; Other is $373,530. There is a transfer of $10,000. We can go into the details, but I am just not sure what the Member wants.

Ms. Commodore: I used to be a Minister once; it seems like it was decades ago. I seem to recall that these lines were separated into the programs that were included in them - for instance, detox, alcohol and drug counselling, and whatever other programs were in existence. There was a breakdown of all the different programs under each line item. I think $1.6 million is an awful lot of money, and the very brief explanation of expenditures does not provide enough information.

I would certainly like to know a little bit more about the individual programs that are administered under this line item.

Hon. Mr. Phelps: Well, detox personnel is $678,578, and Other is $88,800.

Some Hon. Member: What is the $88,000 for?

Hon. Mr. Phelps: Employee travel is nil. Repairs and maintenance is $2,500. Office supplies is $1,300. Program materials, other than materials in Whitehorse, is $65,000. Fuel in Whitehorse is $3,500. Utilities and electrical in Whitehorse is $12,000. Communications is $3,000. Non-consumable assets is $1,500.

We can give the breakdowns of personnel, but I am not sure what it is the Members opposite want and why.

Ms. Commodore: I would like to know how much money is going into Crossroads and what is happening there. How much money is going into detox and what are they doing there? How much money is going into workshops for alcohol and drug services? I want to know those kinds of things. There are programs within every single one of these groups and I would like to know what they are.

The Minister talks about the detox centre being moved and the capital expenditures that are going into it, but what is the government offering? For instance, how much money is going to Crossroads?

How much money is going to detox? What is included in the programs that they are providing?

Hon. Mr. Phelps: In the budget book, Crossroads is on page 8-41. It receives $386,000 for operation and maintenance.

Mrs. Firth:

Some time ago, the Minister made an announcement about initiatives that would take place with respect to fetal alcohol syndrome and fetal alcohol effects. I remember asking the Minister about this over two months ago, at which time I was told he would be making an announcement in a matter of weeks. I remember raising the concern that there is no money identified in the budget for these initiatives.

I believe they were referred to as a variety of broad-based fetal alcohol prevention activities that were being planned.

How much money in the alcohol and drug services budget has been identified for that particular initiative, and when will we see the broad variety of initiatives?

Hon. Mr. Phelps: The actual announcement concerning the implementation of the alcohol and drug strategy will be coming shortly. It has to go back to Cabinet. With regard to fetal alcohol prevention, all of those initiatives are contained within the monies identified here, with the exception of our negotiating with the federal government under the Canada drug strategy. We are hoping to conclude arrangements for $200,000 in funding from the Canada drug strategy, under which a research project will be undertaken to answer some fundamental questions regarding the effects of prenatal alcohol abuse on individual families and communities. It is intended to help policy makers and staff understand the extent and nature of FAS/FAE in the Yukon. With this information, we can determine what works best to prevent FAS/FAE and how to help persons already afflicted with the disability.

It is by Health and Social Services, with technical support from the Bureau of Statistics. Once we have that funding, we will be trying to identify those issues, who has it, who is at risk, and what the scope of the problem is in the Yukon.

Mrs. Firth: Are they going to get $200,000 to study FAS/ FAE?

Hon. Mr. Phelps: Yes.

Ms. Commodore: Does the Minister have a breakdown of any of the other programs? That was extensive information for FAS/FAE. Does he have any more of that kind of information in his briefing book?

Hon. Mr. Phelps: It technically had to go back to Cabinet. It has gone to Executive Council Office. It will probably show up in Cabinet a week from Thursday, after which there will be a ministerial statement.

Mrs. Firth: Are there some problems with it?

Hon. Mr. Phelps: Why would the Member that?

Mrs. Firth: The reason I am saying that is because more that two months ago we were told that we would have an announcement within a matter of weeks. The Minister today said that we will be getting it, but that it had to go back to Cabinet. I am drawing the conclusion that there is something in it that has to be clarified or that there is some problem with it. Why is it taking so long for Cabinet to make a decision about this particular issue, which was supposed to be announced quite a while ago?

Hon. Mr. Phelps: It is a document that has been in the works for some time. If the Member is suggesting that a two to three week delay is something untoward or that there are terrible problems in government, then I suspect that there is not a government in western civilization that is not fraught with problems.

The implementation plan was vetted by the Health and Social Services Council just recently. It came back with some recommended changes. It has gone back to Cabinet on the advice of the department, and we will then be announcing it in a ministerial statement.

Mrs. Firth: We do not receive minutes from the meetings of the Health and Social Services Council. Are they public minutes?

Hon. Mr. Phelps: Yes, we made a commitment to send minutes to the Member for Riverside, and we can certainly make the same commitment to the Member for Riverdale South. I understand that Members of the NDP caucus have been receiving the minutes for quite some time.

Alcohol and Drug Services in the amount of $1,649,000 agreed to

On Social Assistance Services

Hon. Mr. Phelps: This budget decreased from $9,206,000 in 1993-94 to $8,513,000 for 1994-95. This was due, in part, to a $667,000 transfer of the pioneer utility grant and the Yukon seniors' income supplement to community support services, but also included a $234,000 reduction in social assistance payments resulting from our initiatives to increase the SAR program and begin a verification function. These initiatives are being extended for 1995-96. The social assistance budget will increase from $8,513,000 in 1994-95 to $8,743,000 in 1995-96, which is an increase of $230,000, which is due to a net increase of $30,000 for verification.

These will be hired as auxiliaries, rather than by contract. On an allotment basis, this is reflected as a personnel increase of $54,000, and a decrease in other costs of $24,000.

Over the two years from 1993-94, this represents a $63,000 increase in verification. There is a social assistance recipients grant increase of $200,000 from $300,000 in 1994-95. This is conditional on Ottawa's agreement to continue to fully match our level of funding, and represents a combined increase from 1993-94 of $336,000 in this government's commitment to the program, which assists social assistance clients to gain entry into the labour force.

Mr. Cable: Does the Minister have any long-term projections for the social assistance services portion of his budget? The reason I ask is that he is moving on several fronts, and he just outlined them. One would think that, as years go by, those moves will yield more and more reductions in the social assistance budget.

Hon. Mr. Phelps: Yes, there are a number of factors at play, but if one looks at the graphs that we have tabled on social assistance, it is our opinion that this year the final figures will be down slightly from what that graph shows. We expect continued reductions, although we have not quantified them, as a result of implementation of the last major portion of the social assistance reform or, at least, the first phase of it, which is the implementation of the regulations and changes for everything from the appeals to the reduction of disincentives to work, and so on.

This graph will taper off, but by exactly how much remains to be seen. We will have a better handle on it by period 9 next year. Once we have those figures, we will be able to put together a report looking at all the factors laid out in the report on social services done by an interdepartmental committee to kick this exercise off.

Before this time next year, we hope to come forward with a report showing what the trends are and some relationship between measures and successes.

Mr. Cable: I just have one quick question before we break.

What is the usual projection the Minister uses for his social assistance budget? Does he do a five year or a 10 year projection into the future?

Hon. Mr. Phelps: No. When we took over, it was apparent that social assistance was out of control, having been growing in leaps and bounds from just over $2 million in 1988-89 to $9 million in 1992-93, despite the fact that it was supposed to be boom time in the economy, with the mines running. It was before the shutdown of the mines or anything else.

The initial year that we budgeted, 1993-94, was based on a continuation of the rate of growth, which did not occur because we started tightening up. The rate of increase declined markedly for that year and now we are really basing it, year by year, on things we are implementing.

If one looks at the graph, it shot up during the so-called boom times of the previous administration. The mine shut down, but even so we were able to bring it back down, and we expect this trend to continue.

Hon. Mr. Phelps: Mr. Chair, in view of the time, I move that you report progress on Bill No. 4.

Motion agreed to

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

Motion agreed to

Speaker resumes the Chair

Speaker: I will now call the House to order.

May the House have a report from the Chair of Committee of the Whole?

Mr. Abel: Committee of the Whole has considered Bill No. 5, entitled Interim Supply Appropriation Act, 1995-96, and directed me to report it without amendment.

Further, Committee has considered Bill No. 4, entitled First Appropriation Act, 1995-96, 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. tomorrow.

The House adjourned at 5:29 p.m.

The following Sessional Paper was tabled March 28, 1995:


Business Development Advisory Board annual report, 1993-94 (Fisher)