Tuesday, May 2, 1995 - 1:30 p.m.
Speaker: I will now call the House to order. At this time, we will proceed with silent Prayers.
In Recognition of V.E. Day
Hon. Mr. Brewster: I would like to take this opportunity to bring attention to the 50th anniversary of V.E. Day on Monday, May 8. World leaders will be gathering in Moscow on that day to commemorate the liberation of Europe in 1945. Our memories of war may dim as time passes, so we need to mark these occasions to remind us of the lessons of the past. We can gain strength and inspiration from the patriotism of those who went to war, from their demonstration of courage and from their commitment to their country. We recognize the efforts of those men, women and children who remained behind, but who provided their support through home, school and factory.
We observe V.E. Day as a celebration, but we remind ourselves that it is a celebration to mark the end of an armed conflict. We must remember it so that we do not repeat that terrible time in our history.
At the same time, Yukoners can be justly proud of their part in Canada's major role in the conflict, which helped preserve our right to express our belief and to enjoy the democracy and freedom we have experienced ever since. A small ceremony is being planned as part of the National Canada Remembrance program, which was started last year. The program encouraged a committee to commemorate the 50th anniversary of the major events leading to the end of the Second World War. It will be held at the site of the tulip bed outside this building. Timing of the event will depend on when the tulips bloom, and the Members of this House will be advised accordingly.
Mr. Penikett: On behalf of the Official Opposition, I would like to join the Minister in the expression of his sentiments on the occasion of the 50th anniversary of V.E. Day.
I know the Minister opposite was part of the Canadian Armed Forces that liberated Holland and I can think of no better person in this House to articulate this tribute. In my family, my father was in the Second World War from Dunkirk through to the very end. I had an uncle buried in Arnhem, who was in the First Airborne, so I, too, on behalf of our caucus, want to personally and officially join this tribute.
Speaker: We will proceed with the Order Paper.
Are there any Introduction of Visitors?
Are there any Returns or Documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Mr. Phillips: I have some Documents for tabling.
Hon. Mr. Fisher: I have the Yukon Economic Review and Short-term Outlook for 1994-95 for tabling.
Hon. Mr. Brewster: I have some legislative returns for tabling.
Speaker: Are there any Reports of Committees?
Are there any Petitions?
Are there any Bills to be introduced?
INTRODUCTION OF BILLS
Bill No. 6: Introduction and First Reading
Hon. Mr. Ostashek: I move that Bill No. 6, Second Appropriation Act, 1995-96, be now introduced and read for a first time.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 6, entitled Second Appropriation Act, 1995-96, be now introduced and read a first time.
Motion for introduction and first reading of Bill No. 6 agreed to
Speaker: Are there any Notices of Motion for the Production of Papers?
Are there any Notices of Motion?
Are there any Statements by Ministers?
This then brings us to the Question Period.
Question re: Outfitter quotas
Mr. Harding: I have a question for the Minister of Renewable Resources. The outfitter quota committee wrapped up their community consultations in the winter of 1994. A little while ago they held their final meeting to finalize and develop their recommendations on the issue of outfitter quotas.
I have since heard officials of the department say that it does not look as if there will be any quota decision until 1997 and then one year's notice will be given, which means the implementation of outfitter quotas will happen, at best, by the government's own estimates, in 1998.
I would like to ask the Minister of Renewable Resources why this is taking so long.
Hon. Mr. Fisher: The dates the Member opposite has are not quite accurate. I think the official did note that it may be 1997 before the outfitter quota system is actually in place, but the reason for a possible delay is that the recommendations of the committee had to go before the Fish and Wildlife Management Board. The Fish and Wildlife Management Board will then be providing information to me as Minister, and then the recommendations will be effected one year hence.
It could be as long as 1997 before the quota system is in place.
Mr. Harding: I suggest that the Minister should start taking responsibility for this initiative within his department, because I know what I read. It was an official speaking from the Minister's department.
This committee finalized their consultations last winter - the winter of 1994. This issue is on the minds of quite a few Yukoners who have expressed a lot of interest to me and others about trying to establish an outfitter quota system. I would like to get a clearer explanation from the Minister as to why this particular issue is going to take until 1997 or 1998 to be resolved. What is the reason for that?
Hon. Mr. Fisher: I think that I just told him the reason. To reiterate, it is not 1998, it would be 1997. In fact, it could be sooner than that; it could be 1996. We are required by law to provide the information to the Fish and Wildlife Management Board, which we have done. They will then come back with recommendations. It does take one year from the time the recommendations are received by me. We have to give the outfitters one year's notice if there is a change in their patterns.
Mr. Harding: We are not opposed to the recommendations of the quota committee going to the Fish and Wildlife Management Board. What we are questioning is how long this process is taking. The Fish and Wildlife Management Board does not sit just once a year. They have been a fully empowered body for several years now in this territory.
I was looking through my files on this particular issue, and I came across a CBC interview with the previous Minister of Renewable Resources from February 24, 1993. In that particular interview, he was asked how long it might take for outfitter quotas to be implemented. The Minister said, "I am quite busy right now on another problem, and I guess the outfitters and quotas are going to be the next one." That was over two years ago. I would like to ask the government where the priority agenda got waylaid in favour of other things, so that these quotas are going to take a lot longer than that Minister expected.
Hon. Mr. Fisher: There was no delay. From the manner in which the Member opposite is speaking and his tone, he is implying that there is some reason why the quota system should not, or may not, go into place. The fact of the matter is that the outfitters, who were part of the whole review process, are in favour of the quota system. The Fish and Wildlife Management Board has agreed to look at it and give us its recommendations, which we will be acting upon as soon as they are provided to me.
Question re: Outfitter quotas
Mr. Harding: There are some outfitters in favour of the quota system; there are many who are not, such as Mr. Fritz Mayr-Melnhof, who has told me that he is adamantly opposed to the outfitter quota system in the Yukon. In a front page story in the local media on February 18, 1994, the Government Leader was quoted in a headlined story, "No Quotas", "Government Leader John Ostashek feels that outfitters should be immune from hunting quotas." There is a further quotation of the Government Leader stating that he is "still entitled to personal opinions even though I am leader of the government. The Government Leader said that he personally did not believe quotas are necessary."
I would like to ask the Minister of Renewable Resources, who is responsible for this initiative, this: how many discussions have there been in Cabinet about the issue of outfitter quotas? Is the Minister trying to tell Yukoners that the Government Leader's opinion is going to have no impact on government policy in this area?
Hon. Mr. Fisher: It is a new question and an old question. There were about four of them.
I have outlined what the government is doing on this issue. As recently as the outfitters meeting in March in Haines Junction, which I attended, the association - of which 19 of the 20 outfitters are members - came out in favour of the outfitter quota system. There were concerns when it was first discussed two or three years ago, but after all the meetings and input from various organizations - and outfitters themselves - the outfitters are no longer opposed to the quota system.
Mr. Harding: The Minister is trying to tell Yukoners that the Government Leader, who states in the media his adamant opposition to outfitter quotas, has no influence on government policy. I think the public will find that very difficult to believe.
The Minister was responsible for the game farming regulations, which were rammed through despite a lot of public opposition, for some game farmers who are in the Minister's riding association.
Why could that Minister ram through these game farming regulations but take five years to implement the outfitter quota system, which organizations such as the Yukon Fish and Game Association and First Nations are asking for?
Hon. Mr. Fisher: I guess there are three or four questions there again. I am not commenting on whether they are personal opinions put forward by Members in Opposition or by Members on this side of the House. I did not ram through the game farm regulations. The regulations were started under the previous government. They went through a massive consultation process. The interesting thing is that regulations were asked for by the game farmers to regulate their own industry. They did not have any regulations whatsoever. They were saying, "Why does the government not regulate us?"
I am not going to push the Yukon Fish and Wildlife Management Board. It is a duly constituted board. It has representatives from both First Nations and non-First Nations people. They will make recommendations on the quota system, based on 29 - I believe it was - public meetings that were held across the territory. They will make recommendations to me and I will act on them.
Mr. Harding: The outfitter quota committee that travelled around the territory met with a lot of Yukoners and came up with some recommendations that were finalized just recently. The government has been in the media stating to Yukoners that the public cannot see the findings of this committee, which was paid for at taxpayers' expense, prior to their going to the Yukon Fish and Wildlife Management Board. Wildlife is a public resource and I think people should know what the recommendations are.
What is the big secret? Why does the government have to wait to make them public until they have been sent to the Yukon Fish and Wildlife Management Board?
Hon. Mr. Fisher: The public meetings were exactly that - they were public. The results of the public meetings went to the Fish and Wildlife Management Board. I will not try to influence the Fish and Wildlife Management Board one way or the other. When it comes up with its recommendations, I will act on those recommendations.
Question re: Environment Act amendments
Mr. Cable: I have some questions for the same Minister about the Environment Act. The Minister has been asked a number of questions about the Environment Act and about the review carried out by the Yukon Council on the Economy and the Environment in relation to changes to the act proposed by the government. The Minister stated at one juncture that, as the council started to review the government's proposed changes, "other things came to the forefront in the consultation process."
The report from the council that was given to the Members last week does not seem to spell out any new issues. What are those "other things" that came to the forefront?
Hon. Mr. Ostashek: It has been a while since I read the report, but I believe the report says that the two controversial amendments should go to further public consultation before they are brought to the Legislature. I think that is what the Minister may have been commenting on at that time. The report states which amendments were put forward that were not controversial, but the council also identified two that it felt needed further public consultation.
Mr. Cable: That was not the issue. Perhaps the Minister could answer my question. What were those new issues?
On the point that the Government Leader raised, the Government Leader, in his letter to the council setting up the review, asked the council to have an in-house review on the proposed amendments, taking the view from eight groups named in his letter. This was to save the public at large, and the Opposition, from jumping to conclusions that the act was being gutted. I note that the council recommends that the Yukon government, as the Government Leader just indicated, should consider a broader review of the act, and gain more input from the stakeholders on such a review. Where does the government stand on that recommendation?
Hon. Mr. Ostashek: We have not discussed that in Cabinet yet. We will be discussing it shortly, to see where we will go with that recommendation.
Mr. Cable: This question is to the Minister of Renewable Resources, with his hat on as the chair of the Canadian Council of Ministers of the Environment. The council is having a meeting later this month, I believe, in Haines Junction. One of the issues will be the harmonization of the various environmental laws. How will the Minister's initiatives on harmonization be melded into, or linked to, the review that is now going on on the Environment Act amendment proposals put forward by the government?
Hon. Mr. Ostashek: There really is no review going on right now. The amendments that we put forward to the Yukon Council on the Economy and the Environment were more or less housekeeping amendments. We considered two of them to be more than housekeeping. To go a step further, the idea of harmonization is that if there are overriding jurisdictions, like the federal government and the territorial government, for example, which both have jurisdiction in a certain area, then the legislation will be written so that, rather than going through two processes, it would only be necessary to go through either the federal, territorial, or provincial process - whatever the case may be. That would eliminate a second process for someone who was trying to start a resource-based industry, for instance.
Question re: Energy conference
Mr. McDonald: I was captivated by that response. I was mesmerized.
I have a question for either the Government Leader or the Minister of Economic Development about the Yukon Council on the Economy and the Environment's recent energy conference.
The Minister of Economic Development said that the electrical rate policy would be discussed at the conference and that the government would be getting ideas from the public. In the end, there appeared to be very little opportunity to discuss the policy and, certainly, only limited information even about what the Yukon Energy Corporation or the Yukon Electrical Company Ltd. wanted to see happen. Can the Minister tell us what the government felt it heard about the way electrical rates should be set?
Hon. Mr. Fisher: There was talk about the 160 percent of cost of service for government institutions and, I believe, something like 70 percent cost of service for residential and that there should be, at some point in the future, a move to get those closer together - in the 90-percent to 110-percent range.
The Member is right; there was limited discussion on that whole issue.
Mr. McDonald: The "somewhat" that we did hear was that the Yukon Energy Corporation was suggesting that, in order to reduce the electrical cost to government and increase the cost to the residential consumers, the Yukon Utilities Board, given direction through the government, should increase rates one percent per year for 10 years, over and above other rate increases that would be justified for other reasons. Is that government policy?
Hon. Mr. Fisher: There has not been a policy established and the government has not discussed that particular feature at this point in time.
Mr. McDonald: It is a pretty fundamental question I am asking. Once again, I would point out to the Minister - and I have given him notice of the question - it is another old question that the government provided an answer to in a legislative return dated March 14. The legislative return stated that there would be a new electrical rate policy directive issued to the Yukon Utilities Board by now, in order to give time for intervenors and the Yukon Utilities Board to prepare for a rate application later this year or early next year. I had asked the Minister about the electricity rate policy directive that the government promised would be on the table for public review at this moment. Where is the policy?
Hon. Mr. Ostashek: I am not familiar with the legislative return that the Member received from the Minister of Economic Development. Cabinet has not discussed any changes to the rate policy that is in place now as set by the Yukon Utilities Board.
What the Member is saying is absolutely right, that, at some point - it was even a recommendation of the Yukon Utilities Board - all user groups should get closer to the cost of service, but the
government has to be able to come up with a policy without impacting negatively on consumer rates.
We do not have it in documented form for Cabinet to consider, but some of the discussions - for the Member's information - consider looking at moving to a cost of service from 90 to 110 percent, over a long period of time, it may not mean an increase to the consumer's power bill, because as the base builds and more customers come online, rates should come down. This could be accomplished without an increase in the power bills to consumers if it is done over a long enough period of time and all of the parameters fall into place, such as economic expansion and a larger customer base.
Question re: Electrical rate policy
Mr. McDonald: I suppose if the Casino mine comes onstream, the railroad to Carmacks is built, and the pipeline from Watson Lake is built, all these things will contribute to a growth in the economic base and a greater use of electricity in the territory. Consequently, there will be no impact for this new cost-based rate policy the government is promoting.
Can the Minister tell us whether or not the suggestion made by the Yukon Energy Corporation to see the rates increased by one percent per year for 10 years is government policy? Is that something the government is promoting?
Hon. Mr. Ostashek: By the preamble of the Member opposite, I am surprised there was any expansion in the economy under their administration. They seem so negative toward economic expansion in the territory. They cannot say anything positive about it at all.
I just said the Cabinet has not discussed anything; the policy has not changed from what it was before, and we have not implemented anything on the assumptions being made by the Member opposite.
Mr. McDonald: We did believe in real economic development, not fantasy economic development, and consequently Cyprus Anvil, Skukum, Canamax and United Keno Hill were all operating in those days.
One of the things that has come out of the conference is that there is a real desire to discuss this policy, as well as the industrial rate policy, which the government promised a couple of years ago.
Can we take it that the commitments made in the legislative return to put forward a rate policy are null and void, and this was essentially nonsense? Are we to discard this legislative return? If that is the case, can the Minister tell us what the new plan is with respect to providing us with some information about the industrial rate policy?
Hon. Mr. Fisher: I would like to have a look at that legislative return. I do not recall it, and I would like to see exactly what it says.
As the Government Leader has said, we have not discussed electrical rates in Cabinet. As new customers come online, the load should increase and we may very well be able to get closer to the 90- to 110-percent cost.
Mr. McDonald: I will send over the legislative return with the Minister's signature on it in a moment.
I will point out to the Minister that when I asked the question about cost-based rates, the Minister told me to wait until the energy conference, when there would be public discussion about it. There was no discussion about it at the conference. What I would like to ask the Minister now is this: will there be public consultation on cost-based rates, or has the government made up its mind on the matter and is not interested in hearing what anyone else has to say? Also, with respect to industrial rates - which have been the subject of a lot of discussion in this Legislature - is the government going to be coming forward with a policy, and is the policy going to involve further consultation, or is the government going to depend on the consultation for the industrial support policy? What is happening?
Hon. Mr. Ostashek: I guess we can probably refresh the Member's memory, but we have gone over the subject of industrial rates time and time again. We started out to set an electrical rate policy, but found that we were not able to accomplish it because there are so many unknowns. If a mine were to come into production a long way away from the grid, how can we set an electrical rate when we do not know where the mine is going to be?
The industrial support policy is what came out of that exercise. We will negotiate with each company on an individual basis.
Question re: Electrical rate policy
Mr. McDonald: Come on; this is ridiculous. The industrial support policy discussion paper said that the government was going to develop a policy that was essentially going to establish industrial power rates in the territory. We started with a discussion paper behind the industrial support policy. It did not happen in reverse, where the industrial support policy came out of discussions about industrial rates.
I do not have the draft industrial support policy with me, but in May 1994, in the discussion paper, the government said that it was going to develop an industrial rate policy. We were all interested in finding out what power rates the government would be charging the various mines coming onstream, and the mines were interested in knowing if there was going to be a level playing field.
Has the government abandoned that objective and said that now it is going to be a free-for-all, and every mine is going to cut its own deal?
Hon. Mr. Ostashek: That is one thing that will not happen under this administration like it did the previous administration, where each mine cut its own deal.
The Member knows full well that the rate structure for the mines is set by the Yukon Utilities Board.
Mr. McDonald: In the industrial support policy and in the draft of the industrial support policy last year, the government said that, in order to avoid the process of each mine cutting its own deal, the government would set an industrial rate policy as a directive to the Yukon Utilities Board. That is what it said it would do.
The government did not do it, and now the Government Leader is saying that the situation is wide open again, and seemed to suggest just a minute ago that it is "everybody for themselves" and that each mine is going to come in - because it is impossible for them to make this industrial rate policy, apparently - and cut its own deal. Is that the way it is going to run?
Hon. Mr. Ostashek: No. We are talking between industrial rate and industrial rate policy. We will be giving some policy direction on industrial rates, but we have not done that yet. Prior to that, we said that we would set an industrial rate for power. That cannot be done because we do not know where the mines are coming on in the Yukon; we do not know how far they are going to be away from the grid, and what kind of costs would be involved. It would be impossible to set an industrial rate.
Mr. McDonald: We have always been talking about the policy direction that the government would be providing to the Yukon Utilities Board. That is what we have been talking about all along. The government promised this policy direction years ago, have not developed it, have not delivered, and it promised policy direction on cost-based rates for all other consumers in the territory but have not delivered it. It said it was going to do this a long time ago. Is there going to be such a direction? Is it wide open? Are we just supposed to simply wander off into this interim netherland between sessional periods, not knowing anything and waiting to find out what might happen some time in the future? Does the government have any sense of direction on the subject at all whatsoever?
Hon. Mr. Ostashek: It is rather odd that the Members opposite would wonder about wandering off between sessions when we notice that some of them wander off during session, at taxpayers' expense.
The Member knows full well that we had hearings with stakeholders on how we deal with power rates. That is still in the works; it will be coming out shortly.
Question re: Burwash, sewage treatment study
Ms. Moorcroft: I have a question for another Minister. I do not know whether or not he will dig himself into a hole as well.
I would like to ask the Minister of Community and Transportation Services a question about sewage treatment and disposal. In the budget debate, the Minister indicated that the government is waiting for studies to be done toward the end of the 1994-95 year, so that it would know what needed to be done in Burwash and at Marsh Lake. I am aware that the draft terms of reference for the Marsh Lake sewage study was just distributed to community members last week. Can the Minister tell me if the study has been done on sewage treatment in Burwash and what has it found?
Hon. Mr. Brewster: I am not sure that they have distributed it to the Burwash area at the present time. I will find out and get back to the Member.
Ms. Moorcroft: There are a lot of people doing spring clean-up this month. I know that there is a problem in Burwash. When I was there in the winter, I had the disconcerting experience of driving on the road behind the First Nation offices along the Kluane lakeshore. We stopped and were asked to take note of a frozen puddle of pee from the sewage outflow. Since the Minister has declined invitations to meet with his constituents from the Kluane First Nation, can I ask him if he knows anything about this problem and what he has done about it?
Hon. Mr. Brewster: I would like to advise the Member that I have never refused to meet with the First Nations. The Member for Mount Lorne is getting quite good at making suggestions, such as she made about Robinson Road, stating that the school bus could not get in there. The school bus has never gone in there at any time. The road was never intended for school buses. She is apparently doing the same thing about Burwash. I wish that she would get her facts straight.
Ms. Moorcroft: I only know that people have told me that the Minister does not have his facts straight, because he has not gone there to hear them, despite invitations to do that. The lodge nearby apparently has an outdated sewage system, which has been leaking into the lake. Can the Minister tell me what his department can do to help improve the sewage treatment facility in Burwash Landing, and how soon it will do that?
Hon. Mr. Brewster: The department officials have been out there to talk with the people and we are looking at the situation. A lot of the sewage from Burwash is taken down to Destruction Bay and placed in the lagoon there.
Question re: Whitehorse General Hospital, project manager contract
Mrs. Firth: I have a question for the Minister responsible for Health and Social Services. I wrote to the Minister and asked for copies of all the contracts for the project manager for the Whitehorse General Hospital. The original contract that was signed with this individual was supposed to be for $100 an hour, for a maximum of $150,000 a year for the project manager and his assistant.
The first contract for four months was for $50,000, from November 22, 1993, to March 31, 1994. A month later they added a three-month payment to the contract, but still had the same term date of March 31. Actually, what they ended up paying was $96,682 for seven months' work done in a four-month period of time. The change order more than doubled the value of the contract. How does the Minister justify this $96,682 for four months' work?
Hon. Mr. Phelps: As usual, I will have to verify each and every statement and allegation the Member opposite makes, because so often she stands up and makes these allegations and they are simply not correct. I, of course, do not have the contracts in front of me, but if she is suggesting that paying the project manager and his assistant good money to manage the largest and most technical building construction operation that this government has ever been engaged in is a mistake, then let me say that I am completely amazed. Because what we did was pay what we thought, in our judgment, was fair money for an extremely complex and challenging job on which, not only has the project manager brought us in on budget, on time, but has also undertaken and has been in charge of stick handling changes to the original concept, which were dramatic in scope and which were going to save the taxpayers of the Yukon millions of dollars.
Mrs. Firth: The Minister's definition of "paying good money" is probably quite different from that of other Yukoners.
This contract limit was supposed to be $150,000. Yet, for the first year, I have added up all the contracts, and it has totalled almost $210,000. I have it all here, if the Minister wants it. I have all the contracts and contract books. I have done all the arithmetic.
Can the Minister tell us how he justifies the huge cost overrun when there was a limit on the contract and a limit on the legislative return the Minister tabled in the House, which was $150,000 a year. How does he justify this to Yukon taxpayers?
Hon. Mr. Phelps: Once again, I will have all the information verified. So often, the Member stands in her place and makes these allegations based on rumour or a misinterpretation of whatever has been given to her. I have no way of verifying it on my feet, but I will have my department come back with a complete, written question. I will make sure it goes to the media, as well.
Mrs. Firth: This is the guy who keeps signing the contracts. He does not even know how much money he is spending. I find that quite appalling.
There is a new contract for this individual, which has been signed by the Minister, for $200,000 a year. In the new contract, there is a minimum monthly retainer of $12,500 to be paid to the project manager, whether he does an hour's work or not. I think that Yukoners deserve some justification for this - particularly Yukoners' whose lives and livelihoods are being affected by this individual.
The retainer is to call the guy in from outside to tell local people that they cannot have jobs. I want to know how the Minister justifies paying someone $12,500 just to be around, on hand, without even doing an hour's work.
Hon. Mr. Phelps: I was about to congratulate the Member over there, because her first question was practically lacking in venom. Now we are getting more and more venom in these questions. The Member is coming forward with numbers and details, and expecting me, on an issue of policy, to answer them in Question Period. That is ridiculous. It has nothing to do with a policy issue.
It so happens that the Department of Health and Social Services, together with the Department of Education, spends something like $200 million a year, and I am supposed to know each and every detail of each and every cheque and contract and arrangement that is made? I am quite happy to provide her with a written response to her questions. For her to expect that I would have all of those sums and tallies ready in my back pocket for a Question Period that is designed to discuss policy, particularly when she has the opportunity to give me warning ahead of time if she wants an answer while I am on my feet - and I am happy to oblige her in that way. I do not mind her standing up and spewing venom all over the place, if that is what she wants to do. However, I would ask her to really use some reason in designing her questions - the detailed type of questions - in such a way that either she can expect a written response, or she can tell me ahead of time what area she is concerned about, and I will do the homework ahead of time in order to answer a detailed question.
Question re: Whitehorse General Hospital, local suppliers
Mr. Penikett: I have a question about policy for the Minister of Health about the hospital construction project.
It is our understanding that many of the specialized furnishings of the hospital will go to southern firms to supply, but I wonder if the Minister has made any provision to enable local cabinet-making shops to be able to supply the shelving, millwork and certain basic cabinet work, which is certain to be a significant part of the finishing work in the hospital project.
Hon. Mr. Phelps: Again, that is something that I would have to take under advisement. Certainly, the vast majority of hospital equipment, the concept for hospital rooms, and that sort of thing, are based on modules. Much of this is specialty work that is extremely cost effective to have done as large packages by specialty firms. This is not true only in Yukon, but it is true wherever hospitals are built.
If the Member is suggesting that somehow or other this government is going out of its way to award contracts outside of the territory - as the other Member, in her venomous way, suggested - I would simply remind the Member about what this government has not done, in this case, or any others, since I have been Minister, which is to have its officials responsible for tendering contracts travel across western Canada encouraging outside contractors to bid on Yukon contracts, as the Members opposite did when they were in government.
Mr. Penikett: I remember when that happened. The then Leader of the Conservative Party - or was it the House Leader - demanded that the government of the day do that.
I simply had a question. I did not know I would provoke such an outburst.
In the next few years, the territory will build a number of schools. The local woodworking shops have demonstrated that they can provide a cost-effective product in a number of areas - office furniture, for example. Some of them now believe they have the capacity and skill to produce a competitively priced school desk if they were given some kind of sustainable order, or large enough orders on a continuing basis.
Can the Minister of Government Services tell me if that is something his department has investigated in cooperation with the Department of Education?
Hon. Mr. Nordling: I do not know if it has. We discussed locally manufactured furniture briefly during the budget debate. I would certainly encourage the Department of Government Services, in letting contracts for any department, to look to the locals first. I do not know what sort of incentives we could have to get by the interprovincial agreements, but I agree that local manufacturers are quite good.
We have all seen the new tables in the cafeteria, which are locally made and far more attractive than the chrome and plastic we had there previously.
Mr. Penikett: I quite agree with the Minister and, in distributing the discussion we had on the estimates with people in this business, the point was made by them that, in order for small companies to effectively provision the government in this area, the contracts have to be of a certain size and have to be spun out over a period of time in order for us to compete with large suppliers offshore.
I know the standing offer program has now ended. Could I ask the Minister, given his previous answer, what arrangements he is making or trying to make to take advantage of the high quality local product, such as the cafeteria furniture that he has just mentioned?
Hon. Mr. Nordling: The Leader of the Official Opposition would probably know better than I, but the original idea with the standing offer agreements and purchase from local manufacturers over a period of approximately five years was so that they could afford to set themselves up, buy the equipment and bid competitively against outside firms. My hope is that they are in a position to do that.
I will take the Leader of the Official Opposition's suggestion that contracts be broken down into smaller packages so that they can competitively bid as a representation, and I will pass that on to the department.
Notice of Government Private Members' Business
Hon. Mr. Phillips: Pursuant to Standing Order 14.2(7), I would like to inform the House that the government private Members do not wish to identify any items to be called on Wednesday, May 3, 1995, under the heading Government Private Members' Business.
Speaker: The time for Question Period has now elapsed. We will proceed to Orders of the Day.
ORDERS OF THE DAY
Unanimous consent requested pursuant to Standing Order 55(2)
Hon. Mr. Phillips: Pursuant to Standing Order 55(2), I would request unanimous consent of the House to call Bill No. 6 for second reading at this time.
Speaker: Is there unanimous consent?
All Hon. Members: Agreed.
Speaker: Unanimous consent has been granted.
Bill No. 6: Second Reading
Clerk: Second reading, Bill No. 6, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 6, Second Appropriation Act, 1995-96, be now read a second time.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 6, entitled Second Appropriation Act, 1995-96, be now read a second time.
Hon. Mr. Ostashek:
The purpose of this bill is to appropriate monies as a contribution toward the upgrading of the North Fork Ditch Road. As Members know, this road runs from the Demptster Highway to the Brewery Creek property of Loki Gold Corporation, and was discussed quite extensively in the main estimates as a $1.00 line item under the industrial support policy. The upgrade of this road is essential for the development and the operation of a mine at Brewery Creek.
As part of our commitment to encourage economic development in the territory and jobs for Yukoners, we are pleased to be able to contribute to the improvement of the infrastructure necessary to the success of this project.
The Brewery Creek mine will bring many benefits to the country. The project's capital cost will be in the neighborhood of $67 million, and will create 78 direct jobs at the mine site. In addition, there will be indirect jobs created and spinoff benefits will accrue throughout the economy.
The government will contribute a maximum of $2,479,000 toward the improvement of the North Fork Ditch Road. Of this sum, a maximum of $1,239,500 will be spent in the 1995-96 fiscal year.
In addition to these capital monies, the Yukon government will contribute up to $17,000 per year in road maintenance costs. This is the sum that we are currently spending to maintain the road.
The expenditure of government funds is, of course, contingent upon a clear production and investment decision, with the project financing and regulatory permitting being in place. We are confident that these conditions will be successfully met by the company in the very near future and expect the funds being appropriated in this bill will be required in the current year.
This is the first agreement signed under the Yukon industrial support policy and, as I promised the House earlier, we are pleased to discuss this matter in the House and look forward to the support of the Members.
Mr. McDonald: This is a unique opportunity for me, to debate a bill that I have literally never seen before - and still have not seen. I am somewhat at a loss, so I will have to respond to the Minister's comments about the measure itself.
The Government House Leader, who asked that this bill be given two readings in one day and did not inform the Opposition about what is in the bill, suggested that because I am asking some questions about it, consequently I am against mining or something. The point of the matter is that if a bill -
Some Hon. Member: (Inaudible)
Speaker: Order. Please allow the Member to speak.
Mr. McDonald: The point of the matter is that, not having seen the bill, I am at a bit of a loss about what it says; nevertheless, there are many issues to address about the Loki project.
It was discussed extensively, in the sense that questions were asked, but all answers were deferred to this point. We have yet to hear any answers about the negotiations - how they went, under what conditions they occurred, whether benefits were sought and received through negotiations, whether or not public investment is required to see that the project proceeds, whether proper contracting procedures will be followed in the construction of the road, whether or not the government's tender regulations will be respected, and whether or not the government is truly interested in pursuing the contracting out of government services and how far it is prepared to go. Obviously, the latter is a feature of the agreement, when it comes to the maintenance of the road.
I have ancillary questions about the Dawson First Nation's agreement and what that achieves. I am interested in a number of things that have been addressed with respect to the industrial support policy and will be asking those questions in Committee. If I receive satisfactory answers, we will be supporting the bill. I hope that the project proceeds and provides good benefit to the territory.
Mr. Cable: I think the issues have been pretty well canvassed, but the one issue that particularly interests me - in recognizing that all mining projects have some risk - is what the taxpayers will get out of this in a worst case scenario if the mine does not go ahead, or goes ahead for a few months and shuts down, as have some mines in the territory over the last 25 years. I will be interested in hearing the Government Leader's observations on what we, as taxpayers, get out of this in the event that the worst case scenario comes true.
Mrs. Firth: I have a fairly extensive number of questions I would like to give the Minister notice of and to which I would like to get some answers with respect to this particular expenditure. A lot of the concerns have been enunciated by one of the previous speakers. I want to take it one step further.
I see this agreement essentially as a transfer of some responsibility for highway maintenance in the case of the North Fork or the Old Ditch Road from the Yukon government to this private company. In this case, it is a mining company.
I am interested in knowing what the cost will be for the maintenance of the road. The government is making a commitment of $17,000 a year. I want to know if that covers it completely or if Loki has to kick in some money as well.
The total amount of money that Loki is to get, according to the documents we were given yesterday, is $2,479,000. I am drawing the conclusion that this supplementary is for half of that, if it is only for $1.2 million. I would like to know what Loki's total costs for the Dempster Highway to the Lee Creek portion of the road will be, what Loki's entire expenditures on road construction will be and what the total estimated cost of the mine, mill and road construction will be.
There has been a lot of debate in this House about the cost to government of negotiating agreements. I would like to know if the Minister can give us some information on just how much time was spent by the different departments negotiating this and who took the lead role. We know that the mines person was involved in the negotiations. I would like to know what that person's role was. Has the Department of Justice been involved in any kind of legal consultations? What other costs were incurred with respect to the negotiations of the agreement, including travel costs and other government departments that may have had some input?
According to the standards for project assessment for industrial support, proponents were to have secured all the necessary permits. It was interesting to hear on the news this morning that Loki Gold was just securing their permits - their water licence and so on. I would like to ask the sponsoring Minister if he will provide the necessary documentation to substantiate that Loki met with the standards for project assessment for industrial support, which we were given by the Minister of Economic Development. That includes the statutory declaration of the intent to proceed with the development, the proponents providing financial statements or other documentary evidence of necessary funding, the economic viability of the project, the Department of Economic Development's assessments with respect to the financial and technical and business risks and opportunities, the assessment of the proponent's ability to implement the proposed project according to a corporate and market review that was done by the Department of Economic Development, and the detailed cost benefit and macro-economic effects analysis, to determine the net economic benefits of the project to the Yukon's economy.
All of these things that I am asking for were to be completed before the expenditure or the commitment of any money to these projects, or to the applicants or proponents who are applying. I am just giving this as notice to the Minister that I would like to have that information. I think it would be a benefit to all Members of the Opposition to have that information before we are asked to support this particular initiative.
Speaker: If the Member now speaks he will close debate. Does any other Member wish to be heard?
Hon. Mr. Ostashek: I will be very brief. First of all, in reply to the Member for McIntyre-Takhini, my understanding is that copies of the agreement and documentation were delivered to all caucuses yesterday.
Today, the bill was tabled in the Legislature, and it is a one-line bill. The Member says he does not know that. With his experience, I would have thought he would have known there would not be pages and pages for the industrial support policy. That is just political rhetoric from the Member opposite.
I am quite confident that when we get into general debate we will be able to answer the Member opposite's questions. The Minister of Economic Development will answer them. I am sure this contract meets with all the requirements of the industrial support policy. I believe that this is a very good contract and positive development for mining in the Yukon. As I said, we are talking about $67 million in capital investment that will be flowing to the Yukon possibly as early as June of this year.
The Member for McIntyre-Takhini asked about a worst case scenario. As the Minister of Economic Development goes through Committee debate on this, it will be seen that none of this money will start to flow until everything is in place. All the permitting and financing has to be in place before any money starts to flow.
We made a commitment to bring this agreement to the Legislature so the Members opposite would have the benefit of debating it and seeing how the industrial support policy works.
As a result of that, the Member for Riverdale South said that all of the necessary permits had to be secured. I listened to the news reports this morning and I thought they were very positive. I understand the only permit that is still outstanding is the water licence and that there are no intervenors objecting to the water licence. I also understand that many letters of support were received from Yukoners for a very worthwhile project. I would hope that this project gets the support of the Legislature.
Motion agreed to
Bill No. 2: Second Reading
Clerk: Second reading, Bill No. 2, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 2, entitled Fourth Appropriation Act, 1993-94, be now read a second time.
Speaker: It has been moved by the Hon. Mr. Ostashek that Bill No. 2, entitled Fourth Appropriation Act, 1993-94, be now read a second time.
Hon. Mr. Ostashek: I will be very brief in speaking about this bill. This bill makes provisions for the possibility that a loan originally made by the Yukon Development Corporation in connection with the Taga Ku project may prove uncollectable. The loan was assumed by the Yukon government in the 1993-94 fiscal year and is comprised of $2 million in principle and $336,000 in accrued interest.
The making of this provision resulted in the Department of Finance overspending its vote by $1.7 million. Had it not been for this particular item the Department of Finance would have been underspent for the year.
The bill also converts the remainder of a loan made by the government a number of years ago to the Yukon Development Corporation to an equity grant. The conversion is in the amount of $12 million and has been charged to the Yukon Development Corporation vote.
The transaction recognizes the fact that the advance can never be repaid by the Yukon Development Corporation and does not represent monies that will ever be available for use by the government. It is important to note that neither of the items comprising this supplementary entail a current cash outlay. These monies have been spent some years ago, and, in total, departments have underspent their votes for the 1993-94 fiscal year.
However, as Members know, even though there may have been an overall underexpenditure, we must have an appropriation for any individual votes that may have overspent.
The result of this year's operations was a surplus of sufficient size to bring our unconsolidated finances back into a small, accumulated surplus position.
Mr. McDonald: Unlike the previous bill, which we just received, this bill has been sitting on the Order Paper for about three or four months. I want to point out to the Minister that until he tables the bill, we do not know what is in it and whether, for example, it deals with an agreement, or it may deal with other items. We do not know until the Minister shows us. All the decision making is held in the tight clique of the Cabinet and it does not share that information with the Legislature until the bill is tabled, so consequently it is very difficult to understand what is in the bill, unless we see it. Otherwise, we have to take the Minister's word for it. That is a practice that we, on this side, would like to avoid, if at all possible. That is the reason for the previous comments.
With respect to this bill, I think, as I say, there is no surprise as to why this bill was left to virtually the last moment. Here is a bill that makes clear what the lapsing dollars were for last year; approximately $40 million. It also refers to, as the Minister has pointed out, appropriations neighbouring in the $12 million to $13 million range, appropriations that have received star billing in the Auditor General's recent statements, indicating that he has essentially said, "Gotcha. You tried to paint a bleak picture of your finances. You did not fool us. We know your finances are a lot better than you have made out; consequently, we have called you on it."
That subject has been discussed in the Legislature at great length. We have made claims that the government has tried to paint a bleak picture of a very good financial situation. We now have allies, very credible allies, in making that claim and, consequently, feel somewhat vindicated as a result. We will have a number of questions about the details, of course. I should not say "somewhat vindicated"; I should say "totally vindicated".
We will have some questions about the various votes. I am interested in the Finance estimate particularly, and I know the Minister will be pleased to respond to questions about that. The issue around the Yukon Development Corporation expenditure is fairly clear in my view and does not require a lot of debate. It either requires very little debate or an enormous amount of debate - one or the other. In any case, the situation, as it is laid out compared to last year, is fairly clear. Most of the public understands, too, what the true agendas are here.
Speaker: If the Member now speaks, he will close debate. Does any other Member wish to be heard?
Hon. Mr. Ostashek: I will be very, very brief on this, but I just could not pass up commenting on the former Finance Minister's great interest in finances. If he had paid a little more attention when he was Finance Minister, we would not have had great deficits under their administration.
This is the Member now who says they have a great ally in the Auditor General. I believe it was that same Auditor General whom they would not believe when he said they had a $64 million deficit.
The Member opposite goes on to say that our finances are a lot better than what we are bringing out. I will say this for the record: they are a lot better than when they were in government.
Motion agreed to
Hon. Mr. Phillips: I move that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Speaker: It has been moved by the 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
COMMITTEE OF THE WHOLE
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. 28 - An Act to Amend the Employment Standards Act - continued
Chair: We are dealing with Bill No. 28, entitled An Act to Amend the Employment Standards Act. Clause 5 has been stood over, and there is an amendment proposed by Mr. Phillips that was stood over. The amendment opens a new section in the Employment Standards Act and therefore requires unanimous consent to be moved. Do we have unanimous consent?
All Hon. Members: Agreed.
Chair: Unanimous consent has been granted.
On Clause 5 - previously stood over
On amendment - previously stood over
Hon. Mr. Phillips: I just passed a note over to the Member who asked a question about the definition of "just cause" in the regulations. Just cause is defined in Black's Law Dictionary as fair, adequate, reasonable cause; legitimate cause; legal or lawful ground for action; such reasons as will suffice in law to justify the action; a cause outside legal cause, which must be based on reasonable grounds; and there must be fair, honest cause or reason regulated by good faith, as used in a statutory sense that is to an ordinary, intelligent person, justifiable reason for doing or not doing a particular act.
The definition of "just cause" that will be relied upon in situations of overtime refusal will be taken from common law and case law that has developed over the years. The definition will not be set out in the regulations. As the legal interpretations in this area are constantly evolving, it would be difficult to spell out a definition of regulations that would apply to every circumstance of overtime refusal. Each situation will be looked at on a case-by-case basis. When making decisions in this area the labour services branch will rely on guidelines as to what is just cause. The director of employment standards will determine whether or not there is just cause based on common law, case law, and common sense. A person who is dissatisfied with the director's decision could have the matter referred to the Employment Standards Board for further clarification.
The term "just cause" is used in the current act in connection with the termination of an employee's employment. There is no definition of that term in the act. The decision as to whether or not an employee was terminated for just cause is made by referring to court decisions and decisions made in employment standard and labour arbitration cases from across Canada.
This clause is one that permits the employer and employee to work out an arrangement for working overtime. I think it is a fair compromise and one that Members should be able to accept.
Ms. Commodore: I am very disappointed that the Minister chose not to go to the extent that we felt he should and that workers could benefit from. This is a much watered-down version of our amendment and we are supporting it because it improves what is already contained in the existing act, but it still leaves a problem that our amendment could have dealt with.
I wanted to put that on record. Our concerns in regard to the amendments that were proposed are already recorded in Hansard and they will be well distributed.
Amendment agreed to
Clause 5 agreed to as amended
Chair: Clause 19 was stood over, as well.
On Clause 19 - previously stood over
Chair: We are on subsection (3).
Hon. Mr. Phillips: I apologize to Members, but there were many drafts of this bill. In the drafting, somehow this one clause jumped out of the computer and disappeared. We found it again, and I will now move an amendment to the bill, and it is the clause 3 that Mrs. Firth pointed out was missing.
Hon. Mr. Phillips: I move
THAT Bill No. 28, entitled An Act to Amend the Employment Standards Act be amended in section 19 on page 10 by
adding the following immediately after subsection (2):
"(3) Subject to subsection 37.2(1), the employee must complete the parental leave no later than the first anniversary date of the birth or adoption of the child or of the date on which the child comes into the employee's care and custody."
Chair: Is there further debate on the amendment?
Amendment to Clause 19 agreed to
Clause 19 agreed to as amended
Mr. Harding: I would like to perhaps bootleg something in at this point; it relates to employment standards.
The question of wages and the definition of wages has come up in this debate. It is my understanding from a letter signed by the Government Leader that $659,000 of wages were supposed to be paid out to former Curragh employees on or before April 30. That was in a letter written to me by the Government Leader. I know that the Minister's department has been working on this particular case.
I am wondering if he can tell me if that has been paid out, as was expressed by the Government Leader, on or before April 30. If he cannot tell me right now, can he get an update from labour services for me as soon as possible?
Hon. Mr. Phillips: I have been advised that they have been granted an extension of one week to the end of this week. After that, the cheques will be issued.
They have to pay us some of the money by the fifth of the month, with the balance by the tenth.
Preamble agreed to
Title agreed to
Hon. Mr. Phillips: I move that you report Bill No. 28 out of Committee with amendment.
Motion agreed to
Bill No. 39 - An Act to Amend the Travel for Medical Treatment Act
Chair: We will proceed with Bill No. 39, An Act to Amend the Travel for Medical Treatment Act. Is there any general debate?
Hon. Mr. Phelps: By way of opening comment, there were certain questions raised during second reading. One was whether the program would continue to pay for chartered flights for emergency medical evacuation.
Yes, the program will pay for emergency charters but it will not pay any charter costs for non-emergency travel.
Another question was whether the daily rate for accommodation had changed. No, the rate for accommodation remains at the current level of $30 per day after the first three days.
Why is the age for compassionate travel escorts different from the age for escorting all children? The answer is that compassionate travel is used to allow one or more parents to escort a critically or terminally ill child. Older teenagers who need to go outside for a simple consultation may well be able to manage on their own. Some escorts can be approved for patients above the age of 16, when it is warranted by the condition or special needs of the patient.
Is a definition of "critically ill" necessary? The answer is that physicians are accustomed to this form of rating of the condition of patients. This has not been a problem under the policy. The medical officer of health provides a check, if this is necessary.
Why is the ability of the attending physician to approve medical travel not specified in the regulations? The answer is that hospitals and nursing stations have defined procedures for arranging medical evacuations when necessary. Although the necessity for timely action precludes the possibility of pre-approval of emergency evacuations by the MOH, these trips are reviewed, so that any problems can be identified and resolved.
The regulations were drawn up to meet the following recommendations: firstly, to reduce the mileage rate paid for in-territory medical travel from 23 cents per kilometre to 18.5 cents per kilometre; secondly, to change the policy in the following areas:
(a) introduce a provision for those outside on business or personal travel to cover the cost of change fees or upgrades in order to accommodate medical appointments for services not normally provided in the Yukon;
(b) introduce a provision to reimburse the equivalent of actual airfare paid to Edmonton or Vancouver to a maximum of economy fare;
(c) change the age of children for whom a compassionate escort may be approved under 16 to 18 and under - ravel cost may be approved under the compassionate escort category for one or both parents of a critically or terminally child;
(d) introduce a 90-day limit to long-term accommodation subsidies, provided at the discretion of the director of health care insurance;
(e) establish a separate program for recipients of social assistance, so that the cost can be tracked for cost-sharing purposes, as is done for chronic diseases under the Canada Assistance Program;
(f) remove the word "local" from section 3.3.3 of the policy in order to allow Whitehorse practitioners to approve travel for services not available in the communities;
(g) change point of referral in section 4.3.1 and 4.4.1 to point of departure, and add a clause that prohibits reimbursement charter flight costs for non-emergency travel;
(h) change procedures to ensure that all in-territory medical travel has been pre-approved, except for emergency travel.
Those were the instructions upon which the regulations that I tabled the other day were drafted.
Mr. Penikett: I thank the Minister for the answers. I do not have a lot more problems with this bill, and I would recommend that we move through it so that we can get to the next one, which, I am beginning to discover, is a big problem.
On Clause 1
Clause 1 agreed to
On Clause 2
Clause 2 agreed to
On Clause 3
Clause 3 agreed to
Title agreed to
Hon. Mr. Phelps: I move that
Bill No. 39, An Act to Amend the Travel for Medical Treatment Act, be moved out of Committee without amendment.
Motion agreed to
Bill No. 7 - An Act to Amend the Hospital Act
Hon. Mr. Phelps: I think I elaborated upon the principles in this bill; namely, to enable the Hospital Corporation, under its objects, to take on supervised residential care and continuing care, rehabilitative care and services and community health services and programs. This is enabling legislation only. It has been made necessary in order to facilitate the transfer that is under negotiation for the Thomson Centre and Macaulay Lodge to be under the wing of the Hospital Corporation. It also would allow the hospital to take on and provide community health services and programs. That may facilitate such things as providing home care, allowing, for example, chronically ill patients to remain in their home until they die, and allowing the provision of nursing care to people who go home and do not need the special equipment that is available in hospitals.
It might lead to the hospital board running a health centre, a health promotion or disease prevention centre in one or more communities, including Whitehorse, by utilizing such things as nurse practitioners, and, of course, it could be utilized to allow the Hospital Corporation to take on some or all of whatever phase 2 of the negotiations might result in. However, it does not mean that the hospital board must take on any of these responsibilities. It is enabling legislation only.
I will take my chair and see what the ominous words emanating from the critic just a while ago are about.
Mr. Penikett: I hope that the Minister will take me seriously, and I also hope that the Government Leader will pay attention to this. I say this with all seriousness; I do not want to get into a belligerent debate here, but there is a serious question about policy. I think that there is a substantial problem with this bill.
The Minister knows that I expressed concern at second reading about the integrity of the continuing care program under this arrangement. It is an issue that I have raised before. But I also raised the question of community health services and the Minister's agenda on community health services, because during the estimates debate he indicated that it was his idea that the community health services could all be run by one corporation, the hospital board, a board that was structured to run a hospital program, not to run community health services, and was never designed to do that.
I perfectly understand the Minister's reasons for economy and efficiency, but we have another piece of legislation called the Health Act, which is law, and which has a radically different proposal, which is that the communities, if they wish, can exercise the option to negotiate with the government to directly administer health and social services programs. That is something that a number of communities have said they want to do.
What this bill does - and the Minister said it is enabling legislation - is to repeal clause 2, which has purposeful language about the provision of hospital and medical services to meet the needs of the people of the Yukon, something against which we can measure performance, and this replaces it with some segmented objectives, which include hospital medical care, residential care and continuing care - which is the Thomson Centre - rehabilitative care and services that include some things that Workers' Compensation Board does and some things that are done at the Thomson Centre and elsewhere, and community health services and programs.
I had assumed, when the Minister made casual mention of this in the estimates, and when he referred to this in his bill, that he was talking about some long-range agenda. I assumed that there would be some future public debate, and I assumed there would be consultation with First Nations and communities as there was in developing the Health Act. Imagine my surprise when I received very angry calls this morning, and again at noon, that a complete restructuring of the health services program was presented to First Nations in a meeting this morning.
With everything except health insurance moving under the new Hospital Corporation, what is the problem with community health services, which clause (d) mandates, now being delivered by the Hospital Corporation? Well, there are a number of problems.
There has been no discussion in this House. This House has not seen this organization chart that was apparently tabled at the meeting this morning. There has been no public consultation whatsoever, and as far as the First Nations are concerned, there has been no formal consultation, as required, under the umbrella final agreement - this is happening before the second stage of the health transfer has been negotiated and it is happening before there has been any serious discussion about what First Nations want to do in terms of the exercise of their authority for delivering community health services under First Nations.
This is doubly serious, because the particular act that we are amending, the Hospital Act, as the Minister well knows, was the creature, in part, of negotiations with First Nations. The actual structuring of the hospital board was the result of a series of agreements between the federal government and First Nations, federal government and the territorial government, the territorial government and First Nations.
Therefore, I would logically argue that the restructuring of that board should not happen without formal consultation as required under the umbrella final agreement, and according to the First Nations - people who called our offices this morning - that has not taken place.
I do not understand what the rush is here. The Minister says that this is enabling legislation, and he insists, although I do not think the language says this, that this only enables the Hospital Corporation Board to take on these things; it does not necessarily mean that it will. However, what we are talking about here is essentially a rewrite of the provisions of the Health Act for the delivery of community health services. We are talking about a legal arrangement for the provision of community health services before they have been negotiated with First Nations, and we are talking about structuring the delivery of these services before even the transfer negotiations, - which involve not only the federal government and the territorial government, but also First Nations - have been completed.
I think it is not only premature, but it may in fact, if the organization plan presented this morning to the group at the Yukon Inn is the government's plan, be fell swooped. What we have, without proper consultation or public debate, is a total reorganization of health services in the territory, and there has been no discussion anywhere.
My view is that I do not understand the urgency for this bill. In fact, people in Dawson City, for example, who very much wanted to go to the Health Act model of community service delivery, and First Nations, who my colleagues in the rural communities have told me are extremely upset about the direction of the Minister - it seems to be a very Whitehorse-centered top-down structure - are complaining.
There has been no public debate. Those people were phoning me this morning and asking what I could do to delay this bill. I said that we have a problem, because this bill is coming in here at the tail end of the Legislature - this may be the last sitting day - or two days, at most. I said that, frankly, I do not think that I have the persuasive skills to convince the government to table the bill or to hold the bill until there has been some real debate and consultation. What I committed to do - and I have discussed this in my caucus - is to try to deal by way of an amendment with the clause that gives the most offence, which has really gotten people absolutely fuming. It is clause (d), which gives the hospital board the ability to manage community health services and programs. As a courtesy, I will wait until we get to the clause. However, I want to distribute my proposed amendment now, so that the Minister and others can see it, because it is very simple. I wonder if I might arrange to do that, Mr. Chair.
I was just handed a 12:30 p.m. news broadcast from CHON, which indicates that there was a meeting between First Nations leadership and health officials from YTG and the federal government that turned into a heated dispute this morning. It was this bill that was the subject of the dispute. I understand that the organization plan for the complete restructuring of the health program is described in this new report as a possible model - though I think the Minister will understand that when an organization chart is presented, and it is only one model, some people see it as a fait accompli.
It is certainly consistent with what the Minister told us during the estimates, and I apologize if I misunderstood him. I assumed this was a long-range plan. I understand the First Nations were also presented this morning with a timetable that suggests the conclusion of the devolution discussions on the community health services is imminent - perhaps with a deadline just a few weeks away.
All of this seems to suggest that there is something being done in a rush, with unnecessary haste and without the kind of public debate that is necessary for the restructuring of health services, the delivery of community health services, and the involvement of First Nations and communities.
In my view, this is a very big deal and warrants very serious discussion. I have circulated the amendment without waiting until we get to the clause. As I said to the Minister, I was concerned yesterday when we discussed it during second reading. I want to communicate to him that there are people in the communities who are not just concerned - they are angry about what they think is happening.
Could I ask the Minister to respond?
Hon. Mr. Phelps: There is a bit of misunderstanding. The whole issue of the process for negotiating phase 2 of the health transfer was agreed to under phase 1 of the transfer. The proposal that the hospital board take this on, in addition to the continuing care stuff we have already talked about at length previous to this sitting, was made a couple of months ago. Present at those meetings, and during the entire briefing, were those members from the First Nations part of the board.
As I understand it, the proposal was something that had been submitted to and discussed with CYI. CYI has been dissolving and lacking a mandate from the chiefs regarding who should be responsible for negotiating phase 2. The model presented was not new - it was a discussion document.
I do not think that enabling the hospital board to take on community health services and programs presupposes any particular model for phase 2. I think that is just a fallacy.
If the Member is suggesting to us that we simply not enable the hospital to take on some or all of those programs - until when? That is the problem I have. I do not see this as damaging. I read the news bulletin that was just quoted by the Member and had a call from my deputy minister just before Question Period about the meeting. It is not our intention to try and railroad some foregone conclusion as to issues involving self-government, or whatever. I guess I view this entirely differently. It seems to me that the so-called emotional response to the briefing from our department and the federal MSB is not exactly on point.
In looking at his amendment, I guess I have two questions for the Member, which I will have to take up with my colleagues. Is it the Member's intention that absolutely no community health services be provided by the hospital board in the interim, or is it his view that hospital and medical care and services would extend to such things as preventive health care outside the hospital building? Would it enable the hospital to take on home-care issues and provision of nursing and other care to people in their homes?
Just by way of clarification, I do not have a difficulty with standing the clause aside. That clause might seem to prejudge phase 2. But understand that if we were to agree, and if the federal government was to move in a hurry, we might even have to come back to this House in order to get a sub-clause like this passed, in order to conclude negotiations. That is my concern - enabling us to do it.
Mr. Penikett: Let me be very frank with the Minister. I will not respond to his claim that this is an emotional response. Let us all understand that health is a very emotional issue. It is the most precious asset that any one of us have. First Nations people have not only a lot invested in the negotiations and self-government, but also in the devolution of services. Other communities feel that they had before them the hope of some real devolution in coming years, with the decentralization of administration and priority-setting to their communities.
Leave that aside. Let me respond to the Minister's question by saying this: the services in southern hospitals are called ambulatory health care services, and the delivery of home care from the hospital may not be a problem.
There are many Whitehorse health services that could be delivered from the hospital. I understand we are talking about changing program models and we are moving in that direction, but there is absolutely nothing that anyone has said in this House that has provided a serious inhibition for the Minister to make such proposals, had debate in the House indicated, by way of ministerial statements and other debates, how we can change the direction in the coming years. Surely, it is a reasonable question to ask. Why can we not wait until the devolution discussions are finished before we write language that suggests the hospital board is going to be delivering community health service programs, which, for the people in the communities, means the programs in rural Yukon, rather than doing what is bound to be offensive to not only the First Nations, but other community people, assuming that we are prejudging the arrangements that have not been negotiated yet?
We are saying that, in law, hospitals are going to be delivering them, but we have not even completed negotiations. The First Nations may have an entirely different idea. I do not know what their ideas are, I confess, because I have not been part of those discussions.
I do not know. The Minister may be expressing some frustration with the changing nature of CYI, but I know that individual chiefs, too, indicated this morning that the first time they ever heard of the new program delivery model was this morning, and it causes them great concern. I do not think anybody is going to say that they are absolutely against it, but it means big changes for them. They had never heard about it before. They have not had a chance to discuss it, but it seems like it is happening, just like that.
When they heard that this was the last day the Legislature is sitting and that this bill may pass and they have had no chance to have any say on it, it should not surprise anyone that they are worried.
I am really responding to the Minister's question. Why cannot at least clause (d) wait until we have completed the negotiations?
Hon. Mr. Phelps: I am sympathetic to the arguments made by the Member opposite. I would certainly entertain his amendment and proceed to vote on the amendment at the appropriate time.
Mr. Penikett: I just want to ask the Minister one policy question, if I may, about clause 2. Someone to whom I was talking this morning read great importance into the change in clause 2 of the objects of the corporation toward the requirement of the hospital to provide hospital and medical services to meet the needs of the people of the Yukon, which is a needs-based test, if one likes, or policy standard, quality provision or quality test, which disappears in the language of section 2 as it is proposed in the amendment. As I mentioned previously, this segments the different health care needs - it removes the references to the needs of the people - and simply references really what are programs and activities in the health field.
Could the Minister share with us his thinking on that? Was there some particular policy intent in removing the reference to the objective of the corporation being to meet the health and medical service needs of the people?
Hon. Mr. Phelps: Not at all. We could add words in that are appropriate if that is what the Member wishes. I would entertain an amendment to add the words if it is seen as an issue of importance by the Member.
Mr. Penikett: I know it is a mistake for me to do any drafting on my feet, but could we not retain the original language of clause 2 and then add the (a), (b) and (c) and so on underneath, without doing any damage to the integrity of the clause?
Hon. Mr. Phelps: I do not have the original clause with me. Perhaps the Member could read it.
Mr. Penikett: Perhaps I can request the assistance of the Clerk. I do have the original language in front of me, which is clause 2 of the Hospital Act as it was assented to on December 7, 1989, and which was not amended in the Minister's previous amendment, which amended clauses 1 and 3, but not 2.
I would like to ask the Clerk to assist us by perhaps doing both amendments as one, because there is an amendment to clause 2, which is that we change the language and delete the words, "the objects of the corporation are to supply" and replace them with the words, "the objects of the corporation are to provide hospital and medical services to meet the needs of the people of the Yukon." There is a period here, which will have to be replaced by a colon. Then, clauses (a), (b) and (c) can follow, as in the Minister's proposal.
I am nervous about drafting while on my feet. The Liberal Member is suggesting that there may be some duplication. I just saw this fortuitous event - a legal draftsperson just wandered into the gallery. Perhaps we could deal with the other clauses in the bill. If we can get consultation between the Clerk and the drafter, we might get a mutually agreeable amendment to clause 2.
I would ask that we stand the bill until we get this amendment back; we will then give ready passage.
Mrs. Firth: Can I just ask the Minister if we could have a copy of the proposed model that caused the discussion? I have not seen it; I do not know if other Members of the Opposition have. Is it available to the Members of the Legislature?
Hon. Mr. Phelps: There is even a slide show that shows the graph. I will certainly get it for the Member. It is simply that the Hospital Corporation take on phase 2 of the community stuff, and the hospital board would have jurisdiction over the Whitehorse hospital, continuing care and community health services, with a director and an executive director. It is a fairly simple concept. I will provide it to the Member. In fact, if the Members wish, I can have the department do a show and tell with the slide show.
Mr. Penikett: Obviously, the organization of the slide show was extremely exciting this morning. If it is possible to table the chart today, that would be interesting. I do not need it to deal with this bill.
I repeat my proposal to stand the bill, pending the amendment to clause 2.
Chair: Mr. Phelps, would you like to report progress?
Hon. Mr. Phelps: Mr. Chair, I move that you report progress on Bill No. 7.
Motion agreed to
Bill No. 19 - Enduring Power of Attorney Act
Chair: We will move on to Bill No. 19, entitled Enduring Power of Attorney Act.
Hon. Mr. Phillips: Yesterday, the critic raised a concern about First Nations and the concern First Nations had about how this act would affect them. I met with the critic this morning and discussed the matter with her, and provided the critics with a letter from myself to Ms. Adamson of the Ta'an Kwach'an First Nation. Most Members have the letter. I read the pertinent section into the record yesterday, which really pointed out that, under the land claims agreements we now have in place - the umbrella final agreement and the self-government agreement - notwithstanding clauses are in those agreements and they do cover the concern raised by Ms. Commodore.
That is the reason why non-withstanding clauses were put in the land claims agreements, so that we would not have to have duplicate wording in each and every agreement as we go down the road.
We feel comfortable that the clauses that were put in the umbrella final agreement and self-government agreement will cover the concerns raised by Ms. Adamson and the Ta'an Kwach'an Council.
Ms. Commodore: I have had the opportunity to read the Minister's letter. I have not had the opportunity to speak with Shirley Adamson about the Minister's response.
I agreed with everything the Minister said - that there was provision, protection and everything else in the different acts that would meet their needs. However, one of the things that we are facing right now is in regard to the First Nations' lack of trust in this government. It is becoming more evident all of the time and I think that we just had an example of that a few moments ago as a result of a representation that was made to the leadership this morning in regard to the Health Act.
I felt obligated to bring it up and say it in this House. It has been said more than once and I think that the Government Leader now knows that if there was any trust at all it is not there any more, because First Nations believe that the consultation process has not been proper, that they are not asked about different things that this government is doing and that they are told about them after a program, a bill or something has been put together. The statements are, "Here it is; do you like it?" or "Here it is; this is what we are going to do; what do you think?" Whether First Nations agree with it or not appears to make no difference.
In order to assure First Nations that this government is acting in good faith I thought I would be introducing the amendment that I gave a copy of to the Minister.
I have not decided if I am going to be introducing it, because it does not come up until clause 18.
I agree that there is protection for them in the other bills, and there is provision for it. I do not know if we would be looking at introducing this section into all the bills that come before us or not.
I will wait until we get to section 18 to decide whether or not to introduce the amendment at that time.
Hon. Mr. Phillips: The Member has good intentions, but the amendment is redundant - it is there already, as I pointed out. The Member says there is a total lack of confidence by the Council for Yukon Indians. I know we are talking about a lot of things with them, and there are no problems. There are some problems with some issues. The other government was not without problems on some issues either. I remember a general assembly at Lake Laberge that was quite heated. I think the Leader of the Official Opposition can also remember that.
There always will be some areas of concerns and issues, but there are some we are working well on. Especially with the land claims and the new agreement, there will be concerns expressed. There will be growing pains in the agreement as we go along. Some consultation was put off when concerns were raised, and other agreements were reached to proceed with some things. That will be natural with this new process. No matter who is in government, we will run into these kinds of things in the future.
What the Member and the representative of the Ta'an Kwach'an were concerned about is adequately covered in the existing land claims agreement. The intent was to put them in there so that all other acts of the Legislature would be covered.
Ms. Commodore: Can I ask the Minister if he has had discussions with Shirley Adamson since he answered her letter?
Hon. Mr. Phillips: No, I have not, nor have I received a call from her since I sent the letter to her. I do not want to make this into a big deal, but I got a letter from the First Nation saying that it was concerned about whether or not this covered them. I replied, advising that it did. We pointed out some areas where it does, in the House here.
What I think the Member is concerned about, and what Ms. Adamson is concerned about, is adequately covered. If it was not, I would be looking at some other way to deal with the issue, but it is covered.
On Clause 1
Clause 1 agreed to
On Clause 2
Clause 2 agreed to
On Clause 3
Clause 3 agreed to
On Clause 4
Clause 4 agreed to
On Clause 5
Clause 5 agreed to
On Clause 6
Clause 6 agreed to
On Clause 7
Clause 7 agreed to
On Clause 8
Clause 8 agreed to
On Clause 9
Clause 9 agreed to
On Clause 10
Clause 10 agreed to
On Clause 11
Clause 11 agreed to
On Clause 12
Clause 12 agreed to
On Clause 13
Clause 13 agreed to
On Clause 14
Clause 14 agreed to
On Clause 15
Clause 15 agreed to
On Clause 16
Clause 16 agreed to
On Clause 17
Clause 17 agreed to
On Clause 18
This is the section where I would have introduced this amendment. I think what I will do right now is move this amendment, so that it will be on the record.
Ms. Commodore: I move
THAT Bill No. 19, entitled Enduring Power of Attorney Act, be amended in clause 18 at page 11 by adding the following new section:
"Land Claims and Self-Government Agreements
"18.1 Notwithstanding anything in this Act where there is conflict between this Act and
"a) a Yukon Land Claim Agreement that is in force, or
"b) a Self-Government Agreement between a Yukon First Nation and the Government of Canada or the Government of the Yukon that is in force, the Yukon Land Claim Agreement or the Yukon First Nation Self-Government Agreement shall prevail to the extent of the conflict."
While we are waiting, I would like to go back to another section where there might have been a typo that I would like to point out to the Minister, if that is allowed.
Deputy Chair: Is there unanimous consent?
All Hon. Members: Agreed.
On Clause 7
Ms. Commodore: It is in clause 7 on page 6. The lawyer is sitting beside the Minister, so he may be able to let us know whether or not this is the proper wording. It is in the sixth sentence of that clause, where it says "the mental incapacity of infirmity of the donor". We were wondering if the word "of" should have been "or".
Hon. Mr. Phillips: It should be "or". It is a typo.
Deputy Chair: "Of" should be "or".
Is there unanimous consent to correct that typo?
All Hon. Members: Agreed.
Deputy Chair: "Of" is now "or".
Clause 7 agreed to
We are now back on clause 18.
Hon. Mr. Phillips: I really thought that I made every effort to try and convince the Member that this was taken care of. I made a special visit to the Member's office and raised the issue with the Member. The Member said that she had looked in the land claims bills and saw that it was covered. She agreed that it was covered, but felt that she wanted to bring this forward on the floor of the House. I guess there is nothing else to waste our time and cost us money.
It is in the law already. The language in the two land claims acts protect the First Nations better than this amendment does. I do not know what to say. I have made every effort to convince the Member that this is unnecessary. We cannot support the amendment. What the amendment intends to do is already covered by existing legislation. To just write laws over and over, using up white paper and trees for the sake of rewriting laws does not make sense.
It is already well taken care of, as has been pointed out. I cannot support the amendment.
Ms. Commodore: This is a really good example of the importance that they put on First Nations' concerns. We are talking about ensuring that there is something in the act with which they can be comfortable, and the Minister calls it a waste of time and money.
I have to say to this House that this is exactly how First Nations people view this government. Now it has been said. We are wasting time and it is costing us money, because we are talking about the concerns of First Nations people. I know that we are going to lose the vote on this amendment, but it is in there and it is there for a purpose.
Hon. Mr. Phillips: If the Member wants, I have the sections of the land claims agreements that cover this section. They are quite lengthy but I can read them into the record for the Member. It is important to note that it is there and that we do care. That is why it is in the land claims agreement. There is not much point, if the Member does not have confidence in us, to put it in two or three times. It is there and it does cover it. That is the point I am trying to make. I am not trying to trivialize it at all. I am just trying to tell the Member that there is no point in writing it down a second, third, fourth and fifth time if it is there once already, and in the strongest terms it could possibly be.
I have the copies of them here and if the Member wishes I can read the sections into the record, or I can send copies over to all Members if that would save time.
Maybe I will do that. I will table it. It is a copy of the sections that cover the point completely. The reason we did it at that time was to cover the very thing we are talking about.
I will table these rather than take the time of the House to read them into the record. It is in the strongest terms in the existing land claims and self-government agreements that takes care of the Member's concern.
Ms. Commodore: I will not stand here and debate it any longer. I have made my point. It will be in Hansard forever, and I did it because I know that First Nations people are concerned about where this government is headed in regard to implementing and following through on the different agreements that they have.
Ms. Moorcroft: I just have a brief comment to make. I would support the amendment that says "land claims and self-government agreements shall prevail". There are a couple of very reasonable goals here.
Laws should be accessible. People should be able to pick up a law, read it and understand it. In the past, during debate on other laws, we have stated that we support bills being written in plain English; they are easy to understand.
I would like to suggest that someone may have a lawyer, under the Enduring Power of Attorney Act, who will make decisions on behalf of an individual who becomes incapacitated. That lawyer will not necessarily work in the Yukon and may not be aware of the land claims and self-government agreements. I do not see why the Minister is getting all excited about this being unnecessary and a waste of time and money, when all we are proposing is an amendment that specifies that land claims and self-government agreements prevail.
I would support the amendment.
Amendment to Clause 18 negatived
Clause 18 agreed to
On Clause 19
Clause 19 agreed to
On Clause 20
Clause 20 agreed to
On Clause 21
Clause 21 agreed to
On Clause 22
Clause 22 agreed to
Schedule agreed to
Title agreed to
Hon. Mr. Phillips: Mr. Chair, I move that you report Bill No. 19 out of Committee without amendment.
Motion agreed to
Bill No. 93 - An Act to Amend the Maintenance and Custody Orders Enforcement Act
Chair: Is there any general debate on Bill No. 93?
Hon. Mr. Phillips: There were some questions raised on Bill No. 93. Mr. Cable asked how section 14 will operate if the motor vehicle operator is avoiding service. As noted in the policy, there will be an administrative process to impose sanctions for default on maintenance payments. This situation will be dealt with in the following way: a warning notice letter will be sent out by certified mail to the last known address of the respondent, indicating that the administrative sanctions could be applied. The notice will be deemed served on the date Canada Post certifies it was delivered to the address. This is the same process established in Bill No. 64, An Act to Amend the Motor Vehicles Act. The respondent will have 60 days from receipt of the mail to comply with the maintenance order or make arrangements to comply with the order.
Another question was asked regarding section 64(2) of An Act to Amend the Motor Vehicles Act. The question was: how will the service be effected by the order of the registrar and the vehicle owner. Service will be effected by certified mail deemed to be served on the date Canada Post certifies it was delivered.
Ms. Moorcroft raised the following question: have I attended maintenance enforcement court? No, I have not. I have been here for about four months. I do plan to attend, though, after we are finished here. The other question she raised was: has the Member responded to the concerns of Trish Evans, raised by the Opposition during the budget debate? Yes, a l
etter is going to be prepared for my signature in the next day or two, and I understand that the individual met with the director of maintenance enforcement on April 27. It was a very productive meeting and we were informed verbally that the proposals that will address the concerns will be forthcoming as part of the legislative review of maintenance enforcement when it is completed.
Ms. Commodore: I am very pleased to support this bill. I think that the Minister did put a lot of thought and effort into bringing it before this House. I will say again that there are many individuals who will not be completely satisfied, but will be satisfied to a certain extent, and that it will meet their needs.
On Clause 1
Clause 1 agreed to
On Clause 2
Clause 2 agreed to
On Clause 3
Clause 3 agreed to
Title agreed to
Hon. Mr. Phillips: Mr. Chair, I move that you report Bill No. 93, entitled An Act to Amend the Maintenance and Custody Orders Enforcement Act, out of Committee without amendment.
Motion agreed to
Bill No. 80 - An Act to Amend the Public Utilities Act
Deputy Chair: We will be discussing Bill No. 80.
Hon. Mr. Phillips: Yesterday there were some questions raised during second reading debate from the Members, and I thank the Members for raising their concerns during that debate.
The Member for Whitehorse West referred to a private utility such as a mining company. A mining company is not a utility, even if it self-generates. As well, the Member referred to a private utility and I believe he means a non-utility generator. The Member is correct that a non-utility generator selling to a single, industrial customer would not be scrutinized by the Yukon Utilities Board.
As well, the Member gives the mines an option to supply power without going through the Yukon Utilities Board. Any mine in the territory right now can self-generate at any time it wishes. That self-generation is not subject to the scrutiny of the Yukon Utilities Board. The mine in Faro could decide to generate its own power by installing its own diesel generators and go off the grid. That is permissible under the act as it is now.
I do not doubt that we have mines in the territory that self-generate. In fact, the mine at Minto is considering that among other options.
The concern seems to be that NUGs could come along and build a plant on property and transmit to Faro, particularly if we use Braeburn for an example. A NUG could indeed build a plant at Braeburn, but it could not transmit power to Faro, since the act specifically precludes a transmission line from a NUG to a customer where the utilities have existing facilities.
We are really talking about installations in remote areas when the generating site is distant from the mine operation, thus necessitating a transmission line in those areas where there is no existing transmission line or no planned facilities. In other circumstances, where the utilities have existed or there are planned facilities, the NUG would have to sell the power to the utility company.
Mr. Cable also asked some questions. The subsection on the exemption for gas, et cetera, has not been deleted from the legislation. Sections have been added, but not deleted. I have already made reference to the fact that a NUG could not build where the grid is in existence and supply an industrial customer. The purchase of the surplus, that is the contract under which we would buy the surplus power from a NUG, would be subject to the scrutiny of the Yukon Utilities Board, as it essentially makes all decisions related to costs. The Utilities Board determines what we can and cannot put into the rate base. Unless the utility wanted to absorb the cost of purchasing the surplus itself, it would be most imprudent not to bring that contract before the Utilities Board. By definition, the utilities pass costs on to the ratepayers. Hence, the Utilities Board would have scrutiny.
There was a question asked about whether or not other provinces have similar legislation provisions to deal with NUGs. In most provinces, NUGs can sell the power to the franchised utilities. In this way, private producers become another generation option in utility supply planning. In all jurisdictions contacted, individual industries or institutions are permitted to set up their own power plant and supply their own power needs.
The way in which the proposed amendments to the Public Utilities Act in Yukon differ from other provincial jurisdictions is that the individual companies or institutions will now be able to enter into a contract agreement to have their power needs supplied by a NUG. This is done in a number of other provincial jurisdictions, but the legislation in these jurisdictions has not been amended and is currently done through the good graces of the local, Crown-owned utility. Ontario Hydro is a good example of this. The Alberta-based Trans-Alberta Utilities Company is now operating a number of NUG plants to supply individual industrial complexes in Ontario. This is done by permission of Ontario Hydro.
Most of the provinces report that they are anticipating significant change due to international restructuring of utilities and regulatory systems. In most cases, provinces report that they expect generation to be completely deregulated by the end of the decade. The expectation is that the transmission systems would continue to be regulated in order to ensure fair access for power wheeling. Most of this restructuring will not apply to Yukon, simply because our grid system is not connected with any other grid system, either in a province or across the border to an American state.
It is the inter-provincial linkages - and, more particularly, the cross-border linkages - that are currently driving restructuring initiatives in other provinces. There is no requirement for the utilities to buy power from non-utility generators. If NUGs can produce power cheaper than the utilities can produce it for themselves, we are anticipating that the utilities will make the best economic decision and that the independent utilities board will ensure that this is the case.
I also will be bringing forth an amendment to the bill. The proposed amendment, as in paragraph (a)(ii), states that a person is not a public utility if they make electricity on their own property, sell it and transmit it to one customer on transmission lines owned and operated by the generator. Those transmission lines cannot be connected to public utilities transmission lines or to any other customer and cannot duplicate facilities existing or planned by the public utility.
I will table the amendment at this time, so that Members will have a chance to look at it.
I hope that answers most of the questions from the Members of the side opposite who spoke yesterday. If there are other questions, the Government Leader, who has been involved in this in the past, and I will attempt to answer them.
Mr. Penikett: We have four people over there who are in different capacities, and have answered questions about energy. I thank the Minister for his explanation, which clarifies some points. I regret to inform him that, since yesterday's debate, I have had a few more calls, and I have a few more questions. Rather than doing them one by one, I will read them all and we can make note of them, and then the Minister can respond if he is able. One person who called me said that the issue here for the ordinary citizen is the impact on them as a consumer, and whether there is any impact. I think almost everybody in the House at some point in the past has supported the idea of alternate energy or independent power producers and NUGs. Many of us probably had in our minds something like the local wind generation project, which is very interesting. However, the Minister will understand that if we are contemplating something of the order of magnitude of a Division Mountain project in this legislation, there are obviously many more questions about such a proposal than there would be about some wind generators on Haeckel Hill.
I had someone else call me wanting to know who asked for this change, because they had not heard publicly from anyone. My response was that, as far as I knew, it was the mining industry that was most interested in the possibilities of these kinds of arrangements. There are a few people, such as New Era Engineering, and the people who are involved in the wind project, and so forth, who may also have an interest. The Minister may be able to tell the Committee that there are others as well. We would be interested in hearing that.
As I have said, a lot of the interest in this bill has been heightened by the comments I think were made by the Government Leader about coal generation, and about recent reports that the decision about coal had been made some time ago, and that a major announcement was to come this fall.
It would be interesting to know if the timing of the legislation in the House has any relationship whatsoever to the Division Mountain coal proposal.
There are some interesting questions about the price of the energy and the ability of the supplier to set the price - I cannot remember the words. I think there was language about reasonable rates; I do not have the actual clause in front of me. If somebody was able to produce power at seven cents a kilowatt and they were selling it at 10 cents, some people might argue there was some public interest in the regulation.
The problem for this small territory and the problem of predicting demand is that there is a real problem in the history of demand fluctuations.
Friends of mine have had experience with the California policy on NUGs.
There was a law passed by the state legislature in California at one time that the utility had to buy from non-utility generators or from independent power producers. When we first discussed this issue, I raised this problem the utility experienced of having to buy dirty power, but a more serious problem occurs in an area such as this where we have demand fluctuations, in that when demand drops, who gets displaced - the NUG or the public utility?
The examples used by the Minister addressed isolated industrial projects and an isolated power plant, but at some point we will have mines coming in close enough to the grid, and the mining company may want to have the option to look at the alternatives that the private sector may offer.
I have raised the question about pricing and whether any excessive profits were being obtained by a particularly well-avenged supplier.
Section 18 of the Public Utilities Act does say that the Cabinet can order contracts to be accepted and, of course, this is an interesting power for the government to have in connection with independent power producers.
One of my contacts has suggested as well that maybe there should be an amendment that any contract signed between a public utility and a private generator must be reviewed and approved by the Yukon Utilities Board with the criteria that the consumer would pay the lowest cost possible for energy at all times. I understand the consumer point of view there, but if I understand also what the Minister is saying, one of the two circumstances in which these independent power producers will be regulated will be if they are trying to sell anything that goes on to the grid or if they are charging such unreasonable rates that there is some claim that there needs to be some regulation in the public interest.
I have mentioned previously, as other people have, that most of us, when we thought about independent power producers or NUGs, conceptually thought about projects on the scale of micro-hydro at Fraser or the wind project or some potential for wood-burning projects that have been suggested in other communities; but if we are going to be getting into something of a much larger scale, then whether or not the generator, the power supplier, is regulated by the Utilities Board there will almost certainl,y in those cases, be some contractual arrangements with the government. Either the government would be asked for guarantees or it would be asked to be a customer in certain circumstances, or the government would be asked to facilitate a major project. Usually, this happens by licensing in some way.
It seems to me that if one is dealing with a large project like that, even though this bill exempts it from regulation by the Yukon Utilities Board, there could reasonably be a role for the board, and Cabinet has the power to ask the board to do things. In some of those cases, Cabinet probably should, rather than making the decisions purely political ones.
Someone else asked me what happens if an unregulated power supplier and a regulated utility get together for some purpose in the future - perhaps not to supply power to the grid, but perhaps in a joint venture. Does it mean, because of that relationship, that they will both be regulated, or that the project they are involved in will be regulated? What happens in that circumstance is not clear.
A final question I would ask relates to the Division Mountain coal. What is the urgency of this bill? Is there a sense of urgency? Other than the Division Mountain coal project, about which there has been a lot of public debate, is there any other significant project pending that requires the passage of this legislation?
Hon. Mr. Ostashek: I will try to answer the Member's questions to the best of my ability.
First of all, without these amendments, the non-utility generator developed about a year ago is useless. We need the amendments for the policy to be effective and to permit the freedom for non-utility generators to be able to pursue a customer other than the utility.
I want to make very clear that they can only pursue one customer. If they have two customers they are automatically a regulated utility. They can only have one customer.
The Member asked about the impact on the consumer. I would suggest that if there were to be any impact on the consumer it would be a positive impact, not a negative impact. I do not see how this could be a negative impact upon the consumer.
Who asked for the non-utility generator changes? This goes back to when we first brought in the policy. There are several mini-hydro sites in the Yukon. There is one at Rancheria that I am aware of. There is another potential site in the Squanga Lake area and I heard the ERA say at the meeting over the weekend that it has identified several other potential sites.
We must make some changes so that they can sell to a customer other than just the utility. The utility right now does need power. We have excess power until such time as Faro comes back on line. I have had at least two non-utility generators in to talk to me, one as recently as last week. They were concerned that the policy we passed is useless because the Yukon Energy Corporation did not need the power now, so what was the use of having a non-utility generator policy?
This change will allow a non-utility generator to pursue one customer that is not being serviced by a hydro transmission line at this point.
The Minister pointed out in his discussion that it would not be possible for them to take a customer away from the utility. The timing of the NUG policy was announced over a year ago, and we want to get on with allowing for the potential of the micro-hydro sites in the Yukon, wind generation and possibly even Division Mountain coal. That should be a benefit, not anything that would be negative to the consumer. As the Members opposite know, the Utilities Board is very, very reluctant to allow the corporation to put huge capital investments in Division Mountain coal that cannot be covered by the rate base. I take the position in the Yukon that we ought to be, if at all possible, 10 or 15 megawatts ahead of the demand, rather than being 10 or 15 megawatts behind the demand all the time and having to produce that electricity with diesel motors.
By passing this policy, it would allow whoever develops Division Mountain to deal with the Yukon Energy Corporation to supply power, which would be addressed by the Utilities Board, as the Member said in his response to questions. If the Yukon Energy Corporation decided to buy the power from a non-utility generator, that certainly would be scrutinized by the Utilities Board. Or the amendments may allow for the development of Division Mountain coal to supply a major mine, which, in my understanding and from all the information that I have seen, the Utilities Board is very reluctant to allow the Yukon Energy Corporation to enter into those kinds of agreements, because mines tend to go up and down in the Yukon.
I believe that this gives us another alternative to producing power in the Yukon. With that, the excess power could be sold to the Yukon Energy Corporation, if it requires it and if it can be produced at a cheaper rate than the Yukon Energy Corporation is producing it. That is the key to this.
The Member spoke on the pricing. I just said how I see the pricing working. The issue of a non-utility generator supplying one industrial customer that is not connected to the grid is, I think, a good thing. It could alleviate some of the demands on the Yukon Energy Corporation for grid expansions into a mine site at which the potential is unknown or how long it will last. Even ones with track records do shut down and then we are stuck with a big supply of energy. We can allow NUGs to take that risk. If they have excess power, it may be conceivable that the Yukon Energy Corporation would buy that power. Nothing says that the Yukon Energy Corporation has to purchase it, however.
The Member spoke about the problems of the projection of demand, and I quite agree with him. There is some risk involved and I do not believe it should all be shared by the ratepayers; some should be shared by government. If the government decided to get involved, it would be debated in this Legislature. We would have a full debate on those issues.
The Member raised concerns about mines coming on stream close to the grid. I believe that I addressed that by saying that even with mines that are close to the grid, if they needed excess capacity and we needed to put in another 20 or 30 megawatts of generation just for that one mine, the Yukon Utilities Board would be very skeptical about the Yukon Energy Corporation getting involved in that kind of a deal, due to the track record of mines in the Yukon.
The Member spoke about section 18, which states that government could order contracts to be accepted. Quite possibly that is in there, although I am not that familiar with it. I would suggest to the Members opposite that any government would be looking for cheap power, not expensive power. That is why we also changed the mandate of the Yukon Development Corporation - so that it could only invest in energy electrical-related issues and spend money on other things. If there was any subsidization to be done, it would be through this Legislature. So I believe we have covered that.
I believe that contracts entered into between the Yukon Energy Corporation and a NUG will be subject to the scrutiny of the Utilities Board because they have to go to the Utilities Board with their costs. If those costs were disallowed, then the corporation would be in a dilemma, so I do not see that as a valid concern.
The Member raised the issue of projects and that they assumed they would be projects of a small size. I think there will be projects of a small size. There are several looking for the ability now to supply power to just one customer where there is no power grid in place. It could relate to a fairly large facility as well. I do not see that as being a negative. I see that as being positive.
If government did get involved in a project - and there seemed to be some skepticism by the Members opposite about the government getting involved - I can assure the Members here that it will be debated on the floor of this Legislature. I do not think there is any other way a government could do it and try to hide it from the people that it was not involved. I agree with the Members - there may be merit for the government getting involved, based on economic development and expansion of economic development in the territory. This would be the proper forum for that to be debated. I do not see the non-utility generators as having an impact on that.
The other issue that was raised: what happens if the regulated utility goes into a joint venture with a non-utility generator? In my opinion, that would automatically be a regulated utility. They would have to have a contract to buy or invest or whatever. It would have to be approved by the Utilities Board.
Is the timing of this done strictly for Division Mountain? No, but I think the timing is appropriate with the possibility of Division Mountain coming on some time in the future. Also, a request had been raised to us by non-utility generators - mini-hydros - who want to get into the supply of power to industrial customers.
I believe the amendments to this act will not have any impact on the rates charged to the ratepayers. It will give the Energy Corporation another avenue to pursue in meeting the power requirements of the Yukon in the future, and it will also allow for an industrial venture, which does not have access to the grid, to be able to negotiate with a company to supply them with power on a contract basis for one customer only. As I said earlier, if it goes to two customers, then they automatically become a regulated utility.
Mr. Penikett: I thank the Government Leader for his comments. I will just make a passing comment, and I have two quick questions. The Government Leader is right; I suppose that any government will look for cheap power. However, it is a matter of record that this government is paying 161percent of the cost of power, and that is a policy decision. We want cheap power, but a series of governments have made decisions about pricing, which do not always provide low-cost or the cheapest possible power to institutional or public sector clients.
Let me just premise my two questions with this scenario: at one point things were quite simple in the territory, in the sense that basically there was the Energy Corporation, or previous to that, Northern Canada Power Commission, in the hydro business. There was a private utility, Yukon Electrical, in the diesel business. And then there were the small utilities, New Era, the windmill people, and so forth, doing what we call alternate energy projects or small hydro projects.
I want to ask a question about what the Government Leader sees is the impact of this on the Energy Corporation. If the government is going to permit or sanction private companies to compete for valuable hydro sites, that affects the role of the Energy Corporation, unless there is a policy about the maximum size for such projects. I know of one private company that was interested in being able to build all hydro projects in the Yukon up to the size of 7.5 megawatts. However, it may well be that the voters in the next few years will prefer to have a number of small or medium-sized projects than to have one great big hydro project with major impacts and difficult approval processes and long public debate.
There is an interesting problem. The Yukon Energy Corporation may have a site reserved - it may not be planning to develop it now - and a non-utility generator or some private company comes along and says, "We want to develop it. Where is the government going in this? Does it have a maximum size that it might be reserving for small or private developers?"
The Minister gave the example of the mining company - this was the second part - that might make an arrangement with a non-utility generator to supply power. Presumably, in that case, one of the options for the mining company is to do it themselves. Another option is to go to someone like Yukon Electrical, which is in the diesel business.
If Yukon Electrical bid successfully to supply power in that case, is it a utility for the purposes of this legislation, or is it a non-utility generator? I would not mind receiving answers to those two short questions.
Hon. Mr. Ostashek: That is a very interesting question about whether or not they would be treated as a utility or a non-utility generator. Because they are a supplier of power to many people in the Yukon - even some who are not connected to the grid - they would be considered a utility and would be regulated by the Utilities Board.
On the issue of the maximum size of hydro, no, we have not yet addressed that. However, reality comes into play here. As the Member opposite knows, under his administration, many potential hydro sites were reviewed by the Yukon Energy Corporation and the Yukon Development Corporation. The reality of the situation is that we have very few sites in the Yukon that can provide a consistent base for hydro. Most are run-of-the-river sites, where the amount of power that can be produced from them drops off in the winter. As a result of that, we have been complementing that supply with diesel generation. That is the point at which we are now.
It is my understanding, from the projections that we have from the Energy Corporation so far, that with Faro back on stream and the possibility of Western Copper coming along - just those two projects - we will be required to produce about 30 megawatts of diesel-generated electricity in the wintertime. It does not allow for any expansion resulting from some of the things that are on the horizon and, as a result of that, I believe that we are in the situation - and we have been in this situation for a long time - where a good supply of power has not been available to anybody wanting to develop in the Yukon. I believe it is something that has hampered development in the Yukon. That is why I feel so strongly about Division Mountain coal. It is a source of power that could possibly be developed to whatever size.
I wish that the Member could have been at the energy conference on Saturday afternoon. I missed the morning session, but I arrived in at noon.
A presentation was given by Luscar Coal, of Forestburg, Alberta, which is just a few hundred kilometres out of Edmonton. It began in 1956 with a 35 megawatt coal-fired generation plant. In 1960, it was expanded to 70 megawatts. In 1970, it was expanded by another 150 megawatts. It was expanded again in the 1980s to somewhere close to 350 megawatts. That facility is now producing 500 to 600 megawatts of electricity for Albertans, as the demand developed.
The nice part about coal generation is that one can build them in modules to adequately supply the demand. One does not have to build in a huge oversupply to start with. Having said that, the smaller the modules, the more the cost per kilowatt, but it still looks very attractive when compared to diesel generation.
The NUG policy allows the Energy Corporation two options. There is nothing to say that the Energy Corporation may not decide that it wants to develop a coal-fired facility and only purchase coal from Division Mountain for the facility. It has the option to explore whether that is more cost effective for the ratepayers of the Yukon.
Mr. Penikett: This is my last word on the subject. I am pleased to hear the Government Leader indicate some flexibility on the last point, because we do not have a huge utility here - the public utility is small. We have a couple of lines and we have a couple of dams. We have two large communities, Dawson City and Watson Lake - in the long-range planning, in my view, these should eventually be on the grid; they are not now. We have an industrial base that fluctuates and has to have power requirements met, and this power will only be supplied by the grid if the power is accessible at a reasonable rate.
I know what the Government Leader is saying about the coal plants in Alberta. I went to high school in Alberta and I know a little bit about the history there. The problem with coal plants, as one constituent of mine pointed out, is that there are almost none being built in the world right now because of the CO2 emissions problem and the international agreements. I am conveying the views of a constituent, which is that there are very few being built in the world.
For example, in Britain, the coal industry is basically being shut down because they cannot meet the European environmental standards. The one fuel that power plants are using there is some kind of sludge - I cannot remember the correct name of it, but they actually have to mix it with oil to get it to the point where it is acceptable as a fuel - I am not talking about sulfur emissions here, I am talking about CO2 standards.
I am not going to take time to debate this now, but the Government Leader must know, as attractive as it may be economically - in terms of a large-scale plant, one has to get it large enough to get one's unit costs down - the larger the plant the more debates there will be about environmental and socio-economic impacts. Today is not the day for that debate.
Just from listening to my own constituents, I know there are an awful lot of questions about that. It is not that people are against it - they just have a lot of questions.
Hon. Mr. Ostashek: I will be very brief. I believe that the Member is wrong. A brand new plant started up in Saskatchewan. There are several more going through permitting right now. The use of coal in the world is projected to go up 2.1 percent per year until at least the year 2010.
There are many coal-fired plants coming onstream in the Pacific Rim countries, where companies, such as Trans-Alta Utilities, are going over to provide the power. They are not only opening a plant there, but also are providing the coal to provide the power for those countries. They see a tremendous expansion in the use of coal in the next two decades.
Mr. Penikett: This may be a case where we are both right. I know that in Britain there used to be hundreds of coal mines. There are now 15. The pattern is not the same everywhere and it may depend upon whether or not it is clean or dirty coal, and whether or not it is deep coal or readily accessible coal, as it is in some parts of the world.
As someone pointed out, there is lots of coal in the world, but it does not have the same markets it used to have.
Hon. Mr. Ostashek: I have one more comment about this. When we talk about carbon dioxide emissions as a result of burning diesel to create electricity - this was also discussed at the forum on Saturday, and the Member for Riverside was there - the projections are that if an entire fuel cycle is taken, from the production of that diesel fuel, and even in some cases for gas, the carbon dioxide emissions are almost comparable to the production of electricity by coal. The jury is still out on that, but if we are going to haul diesel fuel from Alberta to the Yukon to create electricity, we are still transmitting a substantial amount of carbon dioxide into the atmosphere.
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. Is there further general debate on Bill No. 80?
Mr. Cable: Just for the record, there has been some misunderstanding among some people I have talked to about what this bill does. Would the Minister confirm that it is not the intent of the government to set up wheeling rights in this bill - wheeling, whereby NUG would use the public utilities transmission lines to sell and transport electricity to a single customer somewhere else?
Hon. Mr. Ostashek: No, the Member is correct. This does not. If they want to sell power to a customer, they must provide their own transmission line. They cannot use the utility's transmission lines.
Mr. Cable: The rights to wheel are a topic of debate across Canada and, I think, in the United States as well. What is the government's intention in that area? Has it formulated a policy? Or has the Minister formed any initial intentions or impressions?
Hon. Mr. Ostashek: Right now, as the debate went today, and the Leader of the Official Opposition pointed out, our utility in the Yukon is very, very small. We are not connected to other grids and we are an isolated utility. I believe we have a long way to expand. I, personally, would not be in favour of wheeling at this time. I think that would be detrimental to the ratepayers of the Yukon and it could be detrimental to the development of our own utility in the future. While we do believe in the non-utility generated policy, we believe in allowing it only to supply one customer. We see this mainly as a way to address energy needs in rural areas where there are no power grids. At this time, I would not support a policy to allow wheeling by non-utility generators.
Mr. Cable: Is there any policy development work going on at the present time on this particular issue? I know we have batted around in the House the words "comprehensive energy policy" and that, of course, would be one element of it. Does the Government Leader intend to make that part of what we think will be a comprehensive energy policy at some time - either a yes or a no on wheeling?
Hon. Mr. Ostashek: The Department of Economic Development is doing the energy policy, which will cover more than just electrical generation. Energy is a pretty broad field so it will cover more than just electrical generation.
I am not certain where the policy development is now or whether they have addressed the issue. I know that concern has been raised with me by the Energy Corporation. I am not certain if the Member was at the AYC meeting when the representative from the independent power producers was here. He was a great proponent of non-utility generation and wheeling and all those things when he was talking to the municipalities. I believe that meeting was in Mayo last fall.
As I said, it is an issue that we will address when we get to the comprehensive energy policy, but at this point the concerns have been raised by our utility and I support those concerns. I believe we need to have the ability for our own utility to be able to grow so that we can get the costs to the consumer down without becoming too complex by allowing non-utility generators to use our transmission lines to supply power to another customer.
Mr. Cable: This is perhaps hypothetical, but in the event that the Braeburn coal project ever happens and it has a surplus and there is another mine a few miles down the road, is it the Government Leader's intention that the Braeburn coal generator would not be able to use the utilities line that services the second mine?
Hon. Mr. Ostashek: That is correct. As I said in debate with the Leader of the Official Opposition, if Braeburn were to go ahead, there would be two alternatives. The Yukon Energy Corporation might look into putting in a facility itself, if it has the rate base and feels it can handle it without an impact on rates in the Yukon. If we went to a NUG and made an agreement with the NUG to buy the power it produced from that facility, then the Yukon Energy Corporation could distribute that power.
Mrs. Firth: I have some general concerns about the bill. I guess it has to do with the definition portion of it. Did the government consider making the definition a different way? Did it consider defining what a private utility is, instead of stating what a public utility is not?
The concern is that the more "this is not what it is" there is, the more obscure the bill becomes. Why was it done this way, instead of just adding a new definition of what a private utility is considered to be.
Motion to extend sitting hours
Hon. Mr. Phillips: Before we answer that question, we are nearing the end of many of the bills on the Order Paper. There is some sense we may be completed very shortly. I would like to move a motion. I move
THAT the Committee of the Whole and the Assembly be empowered to sit beyond 5:30 p.m. for the purpose of completing consideration of the bills identified for discussion today in Committee; for permitting the House to consider third reading of all government bills that reach that stage; and, for receiving the Commissioner to give assent to the bills passed by the House.
Mrs. Firth: I want to speak to the motion that has been presented. I think I should have the opportunity to speak to it. This is exactly why I want to speak to the motion. Everything is going "agreed, agreed; passed, passed; clause, clause".
I think it would be in the best interests of the Yukon public if we were to come back tomorrow afternoon and finish up the business of the House. I will give my reasons.
The Loki Gold bill has just been tabled; the information was presented to us yesterday. I think this is going to require a considerable amount of debate. I think it is fair to the Yukon public that the debate be carried on during the day, as opposed to someone trying to squirrel it through late in the evening in the Legislative Assembly.
I think the supplementary budget that has been left to the end of the session and called for debate at the eleventh hour may require considerable public debate. There are several bills on the Order Paper, many to which I wish to give third reading speeches. I do not want Members of the House rushing me to get through my third reading speeches.
I think it has been demonstrated this afternoon that we have been rushing through the business of the House and I frankly do not see that there is a need to do that.
I am sure that other Members will present reasons that they think are good reasons for finishing up the business of the House. I cannot agree to that. I think that we should stay here and have a long debate on the Loki Gold issue, the supplementaries and the third reading of the bills.
I think Members should be given an opportunity to go home this evening and come back fresh tomorrow when we collect all our thoughts and have all of our third reading presentations ready. I can see no reason why we have to sit here until 9:00, 10:00 or 11:00 p.m. tonight to finish the business of the House.
I do not think it is in the best interest of the Yukon public. We have been there five months now; what is another day? I do not think it is going to hurt anybody to come back here and finish up the business of the House.
Chair: Is there further debate?
Motion to extend sitting hours agreed to
Bill No. 80 - An Act to Amend the Public Utilities Act - continued
Chair: Is there further general debate on Bill No. 80?
Mrs. Firth: I would like to ask the Minister a question about the definition in the bill. He did not answer my question about the definition. Could he answer that question? The Minister is in such a hurry to get out of here that he does not remember what the question was. I will ask it again.
When the department decided to do a definition for what a private utility is going to be, why did they not consider a definition of a private utility, instead of listing a bunch of exclusions to what a public utility was? My concern is that each time one adds a new definition of what something is not, the act gets more and more obscure, until it becomes fairly difficult for a lot of people to understand. I would like to know why this direction was taken?
Hon. Mr. Phillips: It is my understanding that a NUG is not a private utility. That is why there are more descriptions of what a NUG is in the act. There is no need to define the private utility. We are trying to define the non-utility generator. It is not a utility.
Mrs. Firth: The way I read it - this has been brought to my attention - it may be interpreted as meaning that any company that owns facilities for the production of gas is considered a public utility. Does Anderson Exploration, who produces gas from the Kotaneelee field consider itself to be a public utility? I do not think so.
Likewise, if someone owns or operates equipment for the storage or delivery of gas, they are considered to be a public utility, such as ICG Propane or Premier Propane.
Perhaps I could let the Minister answer that concern first, and then I have a concern about another hydro project that I want to raise, as well.
Hon. Mr. Phillips: My understanding is that it all comes down to the number of customers. A non-utility generator can only have one other customer. If it has more than one customer for any purposes, it becomes a utility and is subject to the Yukon Utilities Board.
Mrs. Firth: How does that relate to ICG Propane and Anderson Exploration?
Hon. Mr. Phillips: I understand that the gas company only sells to one customer. ICG does not have a distribution franchise, but the gas field in the southern Yukon only sells to one customer.
Mrs. Firth: Can the Minister tell us how the Rancheria micro-hydro project fits into this regulatory regime?
Hon. Mr. Ostashek: Right now, Rancheria is a private power producer. I am not sure what the Rancheria corporate structure is or if it is all under one structure, but my understanding is that the lodge is now sold and if he were to sell power to the lodge, it would not be able to sell power to anyone else. Right now, it cannot sell power to anyone until we get this non-utility generator through. That would allow them to sell power to one customer without being considered a utility. If they sell to two customers, they automatically fall under the Public Utilities Act and would be regulated.
Mrs. Firth: Is the project cooperatively owned or is the power company set up as a company, with the residents of Rancheria as customers? Is it then considered a public utility? Is that what the Minister is saying?
Hon. Mr. Ostashek: They would be considered a regulated utility under these amendments if they had more than one customer.
On Clause 1
Clause 1 agreed to
On Clause 2
Clause 2 agreed to
On Clause 3
Hon. Mr. Phillips: I move
THAT Bill No. 80, entitled An Act to Amend the Public Utilities Act, be amended in section 3 on page 2 by:
adding the following after paragraph (a.1):
"(a.2) generates on a property electricity which is consumed by no more than one customer on a separate property connected by a transmission or distribution line owned and operated by the generator or the customer such that the resulting electrical system is not connected with a public utility or with any other customer and does not duplicate any existing or planned facilities of any public utility. The generator may sell any additional electric energy generated but not consumed by the customer to a public utility connected to the generator's property,"
Amendment to Clause 3 agreed to
Clause 3 agreed to as amended
On Clause 4
Clause 4 agreed to
Title agreed to
Hon. Mr. Phillips: Mr. Chair, I move you report Bill No. 80, entitled An Act to Amend the Public Utilities Act, out of Committee with amendment.
Motion agreed to
Mr. Penikett: I would indicate that we are ready to deal with Bill No. 7, if that is the wish of the government.
Bill No. 7 - An Act to Amend the Hospital Act - continued
Chair: Bill No. 7 was stood over.
Is there further debate on the bill?
On Clause 1
Clause 1 agreed to
On Clause 2
Mr. Penikett: I move
THAT Bill No. 7, entitled An Act to Amend the Hospital Act, be amended in clause 2 at page 1 by:
substituting the following for section 2:
"2. The objects of the corporation are to supply
(a) hospital and medical care and services,
(b) supervised residential care and continuing care, and
(c) rehabilitative care and services,
so as to meet the needs of people in the Yukon."
Chair: Is there further debate on the amendment?
Amendment to Clause 2 agreed to
Clause 2 agreed to as amended
On Clause 3
Clause 3 agreed to
Title agreed to
Hon. Mr. Phelps: Mr. Chair, I move you report Bill No. 7, entitled An Act to Amend the Hospital Act, out of Committee with amendment.
Motion agreed to
Bill No. 2 - Fourth Appropriation Act, 1993-94
Hon. Mr. Ostashek: The purpose of this bill is to vote additional amounts for the year ended March 31, 1994. These additional amounts were required because two departments had overspent by the end of the year of 1993-94.
Vote 12, Department of Finance, operation and maintenance, overspent by $1,711,000. Vote 22, Yukon Development Corporation, capital, overspent by $12,001,000. These overexpenditures total $13,712,000.
While on a net basis total authorized operation and maintenance votes for all departments was an underexpenditure of $18,291,000, or 5.2 percent, and a total authorized capital vote was underspent by $2,150,000, or 2.25 percent, it is necessary that the overexpenditures be approved by the House retroactively.
The Department of Finance overexpenditures are due entirely to making provisions for the potential uncollectability of a loan to Taga Ku that was taken over from the Yukon Development Corporation during the year. The overexpenditure for the Yukon Development Corporation relates to the conversion of an operating loan to an equity grant during the fiscal year. This operating loan had been provided to the Yukon Development Corporation by the government in 1987.
I would be pleased to answer questions that the Members opposite may have.
Mr. McDonald: I have a few questions to ask about this bill. I think that there are some issues to address here. First of all, I will make a couple of comments based on the Minister's outburst in second reading about the NDP's budgeting practices. Was the Minister aware that there was an accumulated surplus every year from 1985 through to 1992?
Hon. Mr. Ostashek: Yes, I was. I was also aware that there were two years with fiscal deficits.
Mr. McDonald: Is the Minister aware he agreed that, from time to time, there will be an annual deficit that he himself has indicated he would be prepared to run, if it meant drawing down the bank account?
Hon. Mr. Ostashek: Yes, I did; however, I certainly would not run one that would overdraw the bank account.
Mr. McDonald: That is right. I think the problem we face here is that the government has done absolutely everything in its power - which has even been picked up by local media sources and even by the editorial writers - to make the 1992-93 fiscal year look as absolutely bleak as they possibly could. Since then, they have tried every trick in the book to try and write things off and to spend the money, so that ultimately the surplus-deficit situation would look as bleak as they could make it. I do not think there is any secret about that. I think the difference here is that the Auditor General shook his finger at the government.
The Minister indicates that now that the Auditor General seems to be supporting our case about all of these write-offs that do not truly change the financial position of the government. The difference here is that the Auditor General has called him on these practices, and made it very clear that these changes, while a limp attempt to continue to make the financial position look bleak, do not really change the true financial position of the government at all - particularly the $12 million expenditure of the Yukon Development Corporation.
The Minister indicates that we have been fair-weather friends of the Auditor General. That is true, but not for the reasons the Minister indicates. The Minister seems to think that we did not believe the Auditor General's accounting report in 1993, for the 1992-93 fiscal year. That is not true. We believe that the Auditor General was doing precisely what the Auditor General should do, and we believe what he reported. What we did not believe was that the government would go to such lengths to paint the bleakest possible picture of the government's finances. I think there are some moments when we have disagreed with the Auditor General and some of his recommendations, but certainly not on this point. I make that point, because I think it is something that should be noted here.
I think I have a fairly clear picture of what the Yukon Development Corporation vote is, but could the Minister give us some more details about the Taga Ku vote in the Department of Finance and what this expenditure entails? When did the government decide to make the write-off? Does the government expect any recovery at all? Has the government made any reasonable attempts to discuss a repayment schedule with the Champagne-Aishihik First Nation?
Hon. Mr. Ostashek: On the issue of Taga Ku, there have been no discussions at this point with the Champagne-Aishihik First Nation. The government is awaiting the outcome of the court case before we deal with that issue. Once that is settled, this issue will be addressed.
I do not want to get into a lengthy debate about this, but I want to state for the record how the $12 million will be treated. It is treated exactly the same as the previous administration treated the $29.5 million equity grant in 1987-88. The only difference is the statement it is shown on, and that is where the concern with the Auditor General lies. All the Auditor General was saying is that the figure should not have been shown on the statement of operations; rather, it should have been shown on the statement of surplus. What he is saying is that we should have shown the surplus for the year as $26,848,000 and then on the next sheet, the statement of surplus, we ought to have shown it in the format balance at the beginning of the year as a $13,299,000 deficit, with a surplus deficit for the year of $26,848,000, an adjustment for the related party equity grant - note 23(a) - of $12,001,000, with a balance at the end of the year of a $1,548,000 surplus - the same result, but a different presentation. We do not have a strong feeling one way or the other.
Mr. McDonald: The fundamental issue is how the money is shown and for what reason we are taking this particular action. I am positive that the reason this action was taken in the way it was, was to draw down the accumulated surplus in the unconsolidated accounts. In my view, the government did not want to show as extensive an accumulated surplus as it obviously had at the end of the year.
We will recall that the government was saying that the budgets were tighter than a drum and that everything was virtually going to be on track. We were told that right up until the time that the very extensive lapses were announced. There was no mention at that time that we should be rushing to convert this loan into a grant. If there had been such a suggestion, given the government's belief in the fact that the budgets were tighter than a drum and that there would be no lapses, it obviously would have announced that it might be $12 million in the hole.
However, this was something that was decided after the year-end accounts came in. They looked around and said, "Jeepers, creepers. We have written off everything else and some of these people are even paying us back. We cannot continue taking this course of action. What else do we have? Is there anything else at the bottom of the barrel that we can scrape out that would change the surplus-deficit projections?" And this came up.
That was the reason why last year I asked, tongue in cheek, what other alternatives the government had to seek more write-offs. I guess at that time I was kidding slightly, but I did not realize this was there, that this was available to the government - not as a write-off, of course, but as another way of drawing down the surplus.
That is the point I make with the Development Corporation. It does not change the consolidated financial position of the government at all. Nothing really changes, but what one can do now is say to the teachers, "We cut your wages back because we really needed the money, but after all the surplus-deficit position looks like this, and what can we do? Things are tight."
The fact of the matter is that the teachers realize that, as far as the government Management Board is concerned, there was an unexpected windfall of millions of dollars. I believe they did have an honest belief that there were not going to be any significant lapses but that proved not to be the case, and they simply could not permit that circumstance to continue. They had to do something, and this is what they did.
Taga Ku is a side-bar to that. The Taga Ku thing is just one of those little items that one can always throw into the mix.
With respect to the Taga Ku, why would the government Finance department not at least make contact with the Champagne-Aishihik Band? Were they told or informed by legal sources that they should not have any discussion whatsoever even on this point? Does this at all affect its legal position with the Champagne-Aishihik Band, or is this taken as an action completely separate and apart from anything that may be happening in terms of the Government Services' relationship with Champagne-Aishihik?
Hon. Mr. Ostashek: With respect to the treatment of the $12 million, I know what the opinions of the Member opposite are; however, I could come back with the opinion that they treated the $12 million as a loan to Yukon Development Corporation so that they could hide the losses of the Watson Lake sawmill, rather than doing it as an equity injection, like they did the $29.5 million a few years before that. If there is a loan on the books since 1987, and there is no way to see it repaid, I think it should be dealt with in a proper manner. The Member should not be trying to fool both himself and the people of the Yukon that there is $12 million more to spend than there is.
In relation to the Taga Ku project, we talked about it with Justice at one time. They did not think we should deal with it at that time. It is involved in a court case. Once the court case is settled, we will deal with the outstanding loan.
Mr. McDonald: The Minister did not answer the question about Taga Ku, but I will ask him again in a moment.
I do not understand the rationale the Minister mentioned with respect to the $12 million and the Watson Lake sawmill at all. What possible information was hidden in the Watson Lake sawmill situation? What could possibly have been accomplished by that manoeuvre? What political rationale could have been employed to justify that manoeuvre if that is what the Minister says happened? Why did the government not do that if it wanted to create the bleakest possible picture, which it was trying to do earlier on? Why would it not have thrown that into the mix at any time? I think that the government was absolutely desperate.
I would like to ask the question again, perhaps a bit more seriously. What other things does the government have in its repertoire to draw down the surplus, which is coming. We know that there is going to be lapsing money. I am going to be asking, in the next budget we will be dealing with in a few minutes, what those lapses are. I am sure that the government has a ballpark figure by this time.
What other things does the government have in mind? Are there any loans in the business development fund that we are going to write off, even though we expect that there will be a payback? Is there anything else that the government might do - so that we can at least prepare a response when it comes? Can the Government Leader give me a hint about that?
I asked a serious question about Taga Ku, too, and that was this: will there be any impact on the legal position the government has taken with the First Nation, as a key partner in the Taga Ku group? I take it that the government has not had any discussions whatsoever, apparently, with the Champagne-Aishihik, which seems a little surprising, because with most people who owe money to the government, before the government writes them off, they at least make contact, or something.
The Champagne-Aishihik Band is one organization that is not going to leave this territory. It is here and it has phone numbers, so I think it is still connected. Was there any analysis done with respect to this action that we are taking today that would have any impact, whatsoever, on the government's position in court?
Hon. Mr. Ostashek: I do not know. The advice from Justice was to leave it alone at this time, and we have not pursued it since then.
Mr. McDonald: Leave the collection procedure alone? Is it wise, then, to take this action at this point? All debts are considered collectible, et cetera, but in terms of this Legislature taking this action at this time, does this change the weight of the government's position at all, to the Government Leader's knowledge?
Hon. Mr. Ostashek: If the Member is asking if it hampers us in pursuing collection, I must say, no, it does not. This is strictly a bookkeeping exercise that the Auditor General recommends on any accounts that are one year overdue - that allowances be made for them.
Mr. McDonald: We do not do that all of the time. For every loan that is overdue by a year the government does not automatically make an allowance for it, does it? Are financial allowances made for all loans overdue by a year under the business development fund? I am not aware of that. Maybe we did. We were trying to do what we could to draw down the surplus, but I did not pick it up in the past if that was done.
Could the Minister answer that question? Also, could the Minister tell us if there are other areas the government can use to draw down the surplus - write-offs, special allowances for bad debts, any transfers between the consolidated and unconsolidated positions, and, I hasten to add, because I do not have complete knowledge of this, anything else that a government might do as an accounting manoeuvre to draw down the surplus? Is the government contemplating anything, or is there anything left in the government's repertoire, that would allow it to draw down the surplus?
Hon. Mr. Ostashek: I do not know what the Members opposite did, but this government is following prudent bookkeeping practices. There are allowances for any loan that is a year overdue and there have been ever since this government came into power.
I believe that we have cleaned up everything that was there, such as the $12 million that was identified as a loan rather than equity. In our opinion, anything that has been there for seven years, as it was last spring, without any payments and no hope of collecting it, should be converted to equity. The money is gone and the government will never get it back.
Mr. McDonald: Okay, that is what the government is calling prudent bookkeeping practices.
What else does the Minister know of that we can anticipate, unless they get truly creative by this time in October? We will be watching - do not worry. I have been impressed so far. I am certain the Auditor General has been a little less than impressed with some of the actions. I am sure that the Auditor General will also be waiting and watching to see what happens.
I do not have any more questions about this. I cannot claim to be completely comfortable with the Taga Ku write-off, even though I think that in the end, when everything shakes down, the expenditure will be a heck of a lot more than $1.7 million. I feel that the government's actions in the last little while have been done for a very obvious political purpose, and I cannot say that I am terribly impressed by that.
My remarks have been put on the record on a number of occasions. I am sure I will have the opportunity at some point in the future to repeat myself when the next year-end accounting takes place.
Hon. Mr. Ostashek: I have a correction for the Member. It is not a write-off; it is an allowance for a bad debt.
On Schedule A
Finance in the amount of $1,711,000 agreed to
On Yukon Development Corporation
Yukon Development Corporation in the amount of $12,001,000 agreed to
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
Title agreed to
Hon. Mr. Ostashek: Mr. Chair, I move that you report Bill No. 2, Fourth Appropriation Act, 1993-94, out of Committee without amendment.
Motion agreed to
Bill No. 6 - Second Appropriation Act, 1995-96
Chair: Is there any general debate on Bill No. 6, entitled Second Appropriation Act, 1995-96.
Hon. Mr. Ostashek: Because this is only a one-line appropriation act, and as the Minister of Finance I had to introduce the bill, I will speak to it in general debate.
I will suggest to the Members opposite that, if they have other questions in general debate, they address them to me first, and then the Minister responsible for the industrial support policy will have some words he wants read into the record before we get into the line-by-line debate. I know that there will be lots of questions by the Members opposite, but I will just start and the Minister for Economic Development can follow up.
The bill will increase the 1995-96 spending authority by $1.24 million for the purpose of contributing to the road upgrading that will permit access to the Brewery Creek property of Loki Gold Corporation. I spoke of the details of this arrangement in my remarks in second reading, so I will not repeat them again except to say that we are pleased to be able to contribute to the infrastructure necessary for this project. Loki Gold will invest many millions of dollars in this property, and many Yukoners will be directly employed at the mine for a number of years.
There will also be secondary benefits, as the impact of this investment and these jobs spread throughout our economy, although this is obviously very difficult to quantify at this time. As Members know, additional monies will be dedicated to this purpose in future years, for a maximum total contribution by the government of $2,479,000. The government's contribution is contingent upon financing and regulatory approvals being in place, but we are confident that these conditions will be met very shortly.
I look forward to the support of all Members in the passage of this bill, which represents the first agreement reached with the private sector under our industrial support policy.
We will be prepared to address questions at this time.
Mr. McDonald: I have a number of questions about the Loki Gold deal and about the industrial support policy, but I have a couple of general questions first.
The Minister did not indicate clearly in Question Period, at least to my satisfaction, what the government was doing with the $8 million fund set aside for further expenditures this year. Has any other item been committed by Management Board for any project under the $8 million, and are any decisions pending for approval by Management Board for that money?
Hon. Mr. Ostashek: No, there has been nothing approved at this time. We are only one month into the budget and the departments still have financial resources, so they do not need to apply for supplementaries, with the exception of this one, which will come out of the $8 million. Along with that, as we said in general debate on the budget, we expect greater costs in operation and maintenance and highways because of the reopening of the Faro mine which, to my understanding, will now be shipping concentrate on August 15. I expect the Department of Education will also be requiring a supplementary because there will be more teachers required in the Town of Faro, so there are other expenses for which that money will be utilized. This is the first one to draw on the $8 million.
Mr. McDonald: What does the financial position from last year, as we lead into this year, look like for lapsed funds from last year?
Hon. Mr. Ostashek: I will qualify these figures for the record. As they are very rough yet, as the Member opposite is aware, it will be late May or early June before we have them refined and start to prepare the books for the auditor. It appears that there will be about $5.7 million lapses in operation and maintenance of government and there will be capital lapses of about $16,300,000. There appears to be about $8.4 million that will reduce the capital recoveries that will have to be revoted.
We are looking at a possible ball-park figure right now - a very broad ball park - of about a $13,500,000 surplus.
Mr. McDonald: By the end of May, these will be focused. Will the Minister give me a commitment that, by the end of May, he will provide more reliable numbers?
Hon. Mr. Ostashek: I will make the commitment to the Member opposite that, as soon as we have them - it will be late May or early June when we will have refined numbers about which we will be prepared to talk to the Auditor General - I will get them to the Member opposite.
Mr. McDonald: Where does that put the cumulative surplus, in the Minister's opinion, for March 31, 1996?
Hon. Mr. Ostashek: If we include the $8 million contingency fund, it would be somewhere in the neighbourhood of $30 million.
Mr. McDonald: I am sure Mr. Martin will appreciate that.
I asked a question of the Minister about public servants' income tax revenue and the amount of income tax that the government had secured as a percentage of the total that comes from public servants. Can the Minister give us that information now, please?
Hon. Mr. Ostashek: If the Member would give us a minute, we have a legislative return that has not yet been tabled, which includes that information. My deputy will dig it out. The Member can carry on with another question in the meantime.
Mr. McDonald: I would like to hear about any updates to the formula financing negotiations. Have there been any other signals that the perversity factor is going to be changed? Will it, from our perspective, be made worse or eliminated?
Hon. Mr. Ostashek: I do not believe we have anything to add. I believe I gave a report to the Members opposite after we met with Mr. Martin.
As we already know, we will be taking a $20 million cut, which came out in the February budget. With respect to the debate on the formula, we are still arguing strenuously that the numbers the federal government is using are flawed. If the federal government continues to insist that we use 1991-92 as a base year, it could cost us between $10 million and $20 million more. If we take the figures on an annual basis and add them up from 1987 and on, they do not correspond to the 1991-92 year. There is something flawed in the numbers the government is using. We have asked for the numbers so we can review them, but they have not been forwarded to us yet. We will continue to ask for them.
If it were only us feeling the impact, I could say that it may be the deficiencies of the formula, but it also impacts similarly on the Northwest Territories. There is something wrong with the numbers somewhere, and both territories are having a vigorous debate with the Department of Finance to get a different base year, which we feel would rectify the problem. It would make quite a difference to us.
We projected the perversity in a new formula should be $1.41. I believe the federal government is projecting it to be $1.60. There is a tremendous difference.
Mr. McDonald: Has the federal government made any definitive statements about our tax rates? I realize this government has been discussing them implicitly with the federal government through the formula negotiations. Have they explicitly said that tax rates are too low and should be increased?
Hon. Mr. Ostashek: They are not making the explicit statement, but just by the perversity in the formula that is exactly what they are saying. They are not publicly stating that our tax rates are too low; they just say they are not going to make up the difference because we are not taxing at the national average. Those are arguments that I know the former Minister of Finance made to them, as I have.
In this time and in the financial reality of the federal government it is very hard to get anything through to them if it is going to cost the federal government more money. Along with the debate on a different base year, we have put forward other proposals to entirely eliminate the perversity.
I hope that those are still being discussed. I have not received a response from Mr. Martin to say that they are off the table, so I would hope that somewhere in the negotiations we can come to some middle ground, at the very least.
Mr. McDonald: Part of the problem that I have - I am sure the Minister will appreciate this - is that even in the agreement and the analysis done by the department on the fiscal benefits of this project, they appear to be completely out of line.
I draw the Minister's attention to the agreement, which is being passed around and at an item entitled "Economic Benefits Analysis Summary". At page 2, section (b) refers to fiscal benefits. It says here that the Brewery Creek mine will provide a stream of tax benefits to the Yukon government in the form of personal income taxes on payrolls earned and corporate income taxes.
As far as economic development, it is estimated that the present value of those tax revenues will exceed $16 million for the pre-production, production and post-production phases of the project. This represents a return of around $6.50 for every government dollar invested in the road upgrade. This does not consider incremental cost to government for the provision of other services.
The point of the matter is that if we receive tax revenues of $16 million from this mine - this is a volume increase - with no change to the perversity factor, then this is not going to be a return of $6.50 for every government dollar invested - it will be a major loss in government revenues, and it will cost the government money.
We knew when Sa Dena Hes opened that mine would cost the government money. That decision was made because we believed in the long-term, good sense of the federal government and that it would come to its senses at some point.
Obviously, they are not coming to their senses here at all. Can the Department of Finance correct this in some way, if the perversity factor does not change? Do we lose $1.60 for every dollar of revenue we receive? What is that in terms of dollars lost to the territory?
Hon. Mr. Ostashek: He is absolutely right. I guess the decision comes down to whether we throw our hands up in the air and give up, or chase everybody out of the Yukon and create a government town with no tax base. The Member is absolutely right. I do not have any argument with his logic. It is the same argument we make with the federal government: that we ought not to be penalized for economic activity in the territory. We are going to continue to make those arguments until reality sinks in.
The Member is right. The perversity factor is not calculated into those estimates and never is on any protection that is done by any government department on taxes. The only place we calculate it is in the Finance department, but if you want to use a quick and dirty calculation on it, just use $1.50. For example, on the $16 million we raise, we will lose $24 million in transfer payments.
Mr. McDonald: To sum it up, we both agree on this point. I agree that we should be promoting mining and refusing to try to accommodate federal fiscal policies in our economic planning. We have talked now about a new school and the relocation of a highway camp at Tats, and that is at a cost of $7 million. P
olicing costs and other associated costs are going to come. I do not know how many people are going to be employed locally - I will try to find out in a few minutes. In addition to all those ancillary costs, over an eight year period, it is going to cost us $3 million a year to have the pleasure of the mine operating at Brewery Creek.
As far as the Government of Yukon is concerned, there may be $24 million plus the cost of a new school, plus the cost of the relocation of the highway camp, plus all the ancillary costs. This is going to be a very expensive proposition for the government, but that does not mean we should not support it. It means that it is going to be an expensive one and, ultimately, there ought to be a full accounting.
When these things happen, we should make it very clear to our public what we are prepared to invest in order to see the project proceed and what the costs are, so that the people who are making these decisions about the formula agreement, who are quietly sitting in their backrooms in high-rise towers someplace else, can take some heat from the general population.
This is a situation that is really quite untenable. If we are serious - and I personally believe that a lot of the claims about all the mining activities going ahead this year are overblown - and if the best case scenario takes place and we actually do get some production in the next couple of years and some significant mining activities, we are going to see the Yukon government's transfers reduced by $20 million or whatever it is, and that is just in the first year. We are going to see the demand for services increase because people will be coming to the territory looking for a teacher for their kids and all that sort of thing, and that is no insignificant cost as I know all too well, and we are going to be losing big money.
Brewery Creek is one mine. It is going to provide 87 employees with jobs. Anvil Range, this month, is going to add a shift of 100 employees - one shift. We have had no air play on that at all, yet it is going to have more of an impact in terms of territorial economy and the costs to this government. If Anvil Range operates for the next eight years, with a similar number of employees, similar expenditures by mining companies and similar revenue streams to the Yukon government, we could be looking at a cost of $3 million a mine, on top of extra associated costs. At some point, we are going to have to take that into account.
That is something I was going to raise with respect to the economic forecast if we had another Question Period.
The economic forecast does not give full play to this kind of factor. It is something that we should not be hiding; we should be publicizing it so that somebody listens to us. These are enormous disincentives to promoting economic development.
I remember when Sa Dena Hes started. We did a similar calculation. We found out that it was going to cost us lots of money, but in the name of regional development, we said fine. We can do the same with Brewery Creek and we will be expecting the same with Anvil Range, as when Carmacks Copper starts up. When other mines start up, we will be in a critical position in this Legislature, because these mines costing perhaps $3 million a crack, in terms of revenue cuts and the increased costs of doing business - Carmacks has high expectations about what should happen in that community - is going to make for a very difficult situation for this Legislature to respond to.
So, I would recommend that the circumstances that we face ought to be more aggressively discussed publicly.
I have had an opportunity to try to explain formula financing arrangements to people on the street. It is very complicated and it is a difficult thing to explain in a short period of time. I have come to the conclusion that the best way to try to mobilize public support is not to discuss what the tax adjustment is and what the indices of tax rates are; it is simply to say that it is costing us big money every time we try or the public sector tries to promote any kind of economic activity whatsoever, and that an extra dollar paid in taxes is not doing this Legislature any favours; it is costing us big time. The more people who come into this territory with an expectation of services, the more we are losing - we are losing every dime they give to us and more. It is an insane situation that cannot be maintained in the long term.
I will make that recommendation. I will be asking the Minister of Economic Development about the fiscal benefits arrangement, and how they have calculated the fiscal benefits, given the fact that until the perversity factor is changed, this is not right.
I will just make that representation to the Minister, because I think that at some point somebody is going to have to say something, and say it loudly.
Hon. Mr. Ostashek: As I have said many times in this Legislature, the Member and I do not agree, but this is one time when we fully agree. I do not want to mislead the Legislature or the people of the Yukon, so I want to point out that with the perversity factor, as the tax base goes up - the population increases - there is some offset, because we get extra for having more people in the Yukon. However, it still does not add up. We are getting shafted by the federal government. I have made that case time and time again to the government. At times I believe that the Finance Minister has some sympathy for this. I think that is why it was important, the last time we were in Ottawa for a meeting, that we got the Finance Minister and the officials in the same room for a good two and-a-half hours to lay out our concerns about the perversity. We will see how much good it does. We will see if the Liberal government in Ottawa is really listening, or if that is just more political rhetoric from their red book.
The Member for McIntyre-Takhini has raised a very valid concern. The ironic part of this is that, as our population grows, and as our industry grows, we are contributing to the net economic benefit of Canada and to the GDP, and we are being penalized for it. The ironic side is that, with the closure of the Faro mine, as a government, we had more money to service fewer people, because the bottom dropped out of our tax base. As a result, our grant went up.
That is the perversity of the formula financing. I will continue, on behalf of Yukoners, to put pressure on the federal government until some day - very soon, I hope - it will come to its senses and realize that we are not being a drain on the federal government. If it wants us to stand on our own feet, then it ought not to be penalizing us for creating economic activity.
The Member mentioned Anvil Range coming in with another 100 employees. I agree. We have the possibility of Cominco coming in with 300 employees. What is that going to do to our grant from Ottawa? We are going to be in a very serious position in the Yukon, unless the federal government is prepared to address it. It is not something that I or any Yukoner should look forward to. I agree with the Member opposite; we have to continue to make more and more Yukoners aware about how we are being treated by the federal government.
I have the numbers on the income tax that the Member asked for. I will be sending a return to the Member, but I will read them into the record now.
In 1993, the total personal income tax deducted from YTG employees was $32,964,252. The portion that was the Yukon personal income tax was $10,662,576 and the federal portion made up the rest. The total Yukon personal income tax in 1993 actual, was $27,925,182. The portion of the total personal income tax paid by YTG employees, which is A minus B, is about 38 percent of the total tax revenue.
The figures for 1994 are similar, with the exception that the percentage dropped to 34.85 percent. The total personal income tax from YTG employees in 1994 was similar - $32,856,000. The Yukon portion of that was $10,952,000, and the total Yukon tax that year was $31,427,000. So, it runs at about 35 to 38 percent.
Mrs. Firth: I want to ask the Minister some general finance questions before I move on to questions with respect to Loki Gold and the analysis that was done.
I heard the Minister say this evening that we are going to have a surplus by the end of March 1996 of about $30 million. There will be extra revenues coming in the form of taxes because of all of the jobs that we have discussed. The Loki presentation is saying $16 million. There will also be other benefits that come in because our population is going to increase.
Has the Department of Finance done any preliminary calculations with respect to what the financial position of the government will be when all the dust settles, assuming that these mines the Minister talks about go ahead and a number of jobs are created, together with the additional revenue that the territory will receive?
It is great to say we have to tell Yukoners what is happening, but if we do not have any figures, what do we tell them?
I would like to know what exactly the Department of Finance is working on with respect to making these kinds of calculations and drawing conclusions with respect to what the financial position of the government is going to be.
Hon. Mr. Ostashek: I would like to make a couple of clarifications. The $30 million surplus as of March 31, 1996, includes the $8 million contingency, much of which will be spent. The one big ticket item that I never mentioned was that some of the contingency will be used to move the garage in Dawson City.
The $16 million that the Member mentioned in taxes - I do not have the contract in front of me - I am not sure if that is in one year, or if it is over a period of years.
The Department of Finance continually prepares projections based on some fairly realistic numbers. When we are talking about projections of mines starting up, these are very hypothetical at this point, and I do not ask the department to make those kinds of projections that far into the future.
As the Member for McIntyre-Takhini and I were debating, even with $16 million coming in, it actually costs us money because of the perversity factor. We do not make money on it. Our formula will go down. It is difficult to judge.
The biggest unknown is the formula financing agreement, which is one of the things we are working on now.
Mrs. Firth: On the first point of $16 million, in the Loki economic benefit analysis, it says the Department of Economic Development has estimated the present value of the tax revenues to exceed $16 million for the pre-production, production and post-production phases of the project. I am assuming that is over the whole life of the project. I see the Minister nodding in agreement.
The point the Minister made with respect to the hypothetical situation of mines opening is exactly my concern. We must not go out and scare Yukoners by saying that if these mines open we will have no money, and it will be even worse than we thought.
The government has more money now than it can spend. I think it is unfair to scare Yukoners by saying we will lose all this revenue if we have all these mines come into production, and that it is all the fault of the federal government. I love bashing other governments, but one has to be reasonably responsible in what we are doing.
With respect to formula financing, the last information the Minister gave us was rather sketchy. It said that he had raised the issue with the Minister, said we were being treated unfairly, and that they would have further discussions.
When does the agreement expire, or has it already expired?
Hon. Mr. Ostashek: The agreement expired as of March 31, 1995. The formula is frozen for this year, which cost us - had it not been frozen and had we had some kind of agreement - another $10 million to $12 million, but it was frozen, so we lost it. The agreement that we are trying to negotiate now will be for the remaining three years, because it was only to be a four-year agreement to start with. They want it to coincide with the creation of the new territory in the Northwest Territories in 1999.
I do not believe we are trying to scare Yukoners. I think what we are trying to do is portray a reality to Yukoners that they will be fairly well off. They will be working. I would expect with all the jobs around, there will be a lot of economic activity. We, as a government, will have less money to provide services to Yukoners than we have today due to the formula-financing agreement with Ottawa. That is the message that we are trying to get out.
Mrs. Firth: What does Minister anticipate will happen with the formula financing agreement? When does he meet next with the federal officials? When is there going to be some communication taking place between this government and the federal government?
Hon. Mr. Ostashek: This formula-financing agreement is an ongoing process. We have forwarded papers to the federal Finance officials, as have the Northwest Territories, I imagine. The federal government has yet to respond to those papers and the positions that we advanced.
When will it be finalized? I cannot say. I would hope that it would be in the very near future. It depends how agreeable the negotiations are and how far apart we are on our different positions.
One thing that we have - at least I feel it is a plus - is that DIAND is no longer involved in formula financing negotiations. We are dealing directly with Finance and Treasury officials.
Mrs. Firth: Why does the Minister see that as a good move for us?
Hon. Mr. Ostashek: Because we certainly were not getting any support from DIAND officials, and we can deal directly with the Finance officials and not have to worry about people in DIAND giving them a different story after negotiations are over and our people have left Ottawa, or wherever we meet. It is now a direct one on one, as it is with the provinces, and I believe that is in recognition of the devolution of powers to the territories that will be an ongoing process.
Mrs. Firth: I want to make some comments with respect to what the government's goals are, what it hopes to achieve and what it would like to see. On the one hand, the government wants to encourage mining, it wants us to be more self-sufficient, it wants to see more Yukoners working, and it wants to see us generating our own tax base, but then on the other hand the perversity factor is always there, kind of hanging over everyone's head.
Does government have any idea financially just how far it can go? My preference would be to see more Yukoners working in the private sector, as opposed to government, more mines operating, and more businesses operating. If it means that we are going to take a bit of a penalty from the federal government, I guess the debate then becomes, "How much are you prepared to accept?"
Does the government have any figures or any idea on this? The Minister kept saying we are going to be hurt really badly if this mine goes. There are 100 employees going to work in Faro. There are 80 here, there are 87 there. I guess the question is what is the critical point?
I just want the Minister to know that I do not want the government to stop moving toward us generating more of our own tax base. The dependence now on the federal government is staggering.
I do not know if we can ever get away from that. I hope that the government will continue to try to do that.
What is the critical point?
Hon. Mr. Ostashek: I want the Member to clearly understand that we will not stop promoting the Yukon and promoting economic development of the Yukon, regardless of the cost to us. The goal is to become self-sufficient. The more that we devolve responsibilities from Ottawa, the better opportunity we have to get self-sufficient with resource revenues as well.
The challenge is this: how do we provide services for Yukoners when we are being penalized by the federal government, and we need more money when our population is growing and we are getting less money as a result of the formula? We will continue to pursue that. The way to eliminate that is to raise enough money so that we do not need any money from Ottawa, then we will be rid of the damn perversity and the whole works. That will take some time.
In the short term, I want to say to the Members opposite - I have said it in this House before - that we can handle the $20 million cut that we took in February in the 1996-97 year, with the projected surplus that we have. That is not a big challenge to us. If we had to take another $20 million cut and we were faced with a $40 million cut for the 1996-97 year, it would start to cause us some difficulties, and I think that it is fairly easy for the Members opposite to see that.
We can absorb the $20 million right now. With the projected surplus, I would expect that we would still be in a fairly balanced position in the 1996-97 year, but if we have to absorb another $20 million on top of that, we will have to dramatically reduce the costs of government - on the capital side, the O&M side, or somewhere - in order to keep balanced budgets.
Mrs. Firth: I do not think the government has reduced the cost of government yet. The Minister says that he has, and we have been around and around with that debate. As devolution occurs, the general principle is that it is going to cost more. We have more boards and committees, we have more employees and we have more areas of responsibility. I just do not see the cost of government going down, unless the Cabinet makes a firm decision that it is either going to eliminate some programs, or eliminate a large number of staff, or cut back on the Housing Corporation, or privatize in a big way, or something like that. I only see the cost of government growing, and the cost of supporting government growing. As long as that continues to happen, there will be less money available to provide services for Yukoners.
Regarding the government's ability to handle the cuts, the government said it could handle the $20 million this time. However, he said it could happen again and become $40 million. Has the Department of Finance done up any preliminary figures with respect to that? Can those be provided to us?
Hon. Mr. Ostashek: We do not have written documentation. We do not know that we are going to suffer the other $20 million cut; that is in the formula financing arrangements. We know what the $20 million cut will do, and I am not concerned about it. We can absorb that in the next budgetary cycle without any difficulty. If we have to absorb another $20 million on top of that, I would say that we would have to look at what we are doing in order to maintain a balanced budget. There would have to be some decisions made.
In reply to the Member's preamble about how she sees the cost of government going up with devolution, everything is relative. With devolution, certainly the overall cost of government will go up, but there will also be a bigger increase in the revenues of government - I am talking about the cost of operating a stationary government. We have put a cap on that. Social insurance costs are coming down, other costs are coming down, payroll costs are stabilized. We are providing more services now with less staff than we did when we took over government. We are going to continue to work in that way. It is not a dramatic shift, but it is a shift in the trend.
Mrs. Firth: I guess we will probably be debating that for the next 18 months. I do not have any more questions about the financial debate we have been having. However, before I move into talking about Loki, I would be rather interested to hear the statement that the Minister of Economic Development is going to make. I do not know if other Members are in agreement with moving on to that, or if they have questions on the budget they want to follow up on. The Liberal representative has not had an opportunity to ask any financial questions yet. I am open to suggestions from the other Opposition Members. However, I am prepared to move to general debate in order to hear what the Minister of Economic Development has to say about the industrial support policy and Loki Gold.
Department of Economic Development
Deputy Chair: We will now move into general debate on Economic Development.
Hon. Mr. Fisher: I did provide copies of the Loki agreement and appendices to all Members yesterday, so I hope that will help to speed the process.
In January, we completed our industrial support policy. This agreement was negotiated under the auspices of this policy. The agreement clearly demonstrates our commitment to improving the infrastructure base for private sector investment in the Yukon. One of the most important factors investors look to is the political climate and role of government in facilitating investment. Policies must be supported by concrete action. The entire investment community - especially Loki's investors - will be watching closely how we handle this first request under our industrial support policy.
The challenges facing a mining company and financing any project in Canada are formidable. Given the benefits that we all share, this assistance will provide assurance to Loki's bankers and other investors that this government is doing its fair share to contribute to a successful operation.
Bankers take a dim view of jurisdictions where governments are reluctant to play a supportive role. This support for the road sets the stage for Loki to successfully finalize its project financing.
The investment community is not looking to government to produce lengthy and complex policy documents. This agreement constitutes the start of our track record and provides real substance to our Yukon industrial support policy. Mining companies have made it clear that they do not want direct subsidies for their mining operations. They agree that the role of government is to ensure that the necessary infrastructure is in place, but they are the very first to point out that government stands to benefit significantly from mining, particularly through taxation.
My officials have estimated that the tax revenues alone will exceed $16 million over all phases of this development. That is only Yukon government revenues. There would be about another $20 million of federal tax revenues from the same development.
This represents a return of about $6.50 for every government dollar spent. Over its life, the project is expected to create approximately 840 full-time person years of employment, with a total payroll estimate at $42 million. Local purchases are estimated to total $72 million.
Loki has some of the best available engineering and design expertise available in its project planning.
Given the present positive economic climate, we agree that this project is viable and will provide an important contribution to the Yukon economy. The agreement will provide a maximum of $2,479,000 to upgrade about 17 kilometres of the North Fork road, between the Dempster Highway and south to the Loki property boundary. This work will include the installation of a bridge over the Klondike River, at an estimated cost of $620,000.
Fifty percent of project costs will be provided during the initial construction. Loki is expected to arrange a loan for the remaining 50 percent. The Yukon government will advance the balance to Loki over the first years of the mining operation in equal annual payments.
The Department of Community and Transportation Services will approve the tender documents and will inspect and approve all work completed on the road and in the construction of the bridge, prior to any payments. There has already been extensive consultation between Loki and this department to establish the engineering standards that are to be required.
The Yukon government now expends an average of $17,000 per year to maintain the existing road. We expect a significant increase in maintenance costs. Loki has agreed to provide the maintenance and cover any additional costs at its own expense. To ensure public safety, the agreement outlines a maintenance standard acceptable to the Department of Community and Transportation Services that Loki will satisfy.
The company expects all necessary permits to be in place this summer. A Yukon Water Board hearing is set for May 10 in Dawson City. Once the water licence has been granted, the necessary project financing can then be secured. Road construction funded under this agreement will then be able to proceed. No work can begin under this agreement until Loki has all of the necessary permits in place for its mining operation and financing has been arranged. However, we fully expect the company to be successful, and hope much of the work can be completed this season.
The company has agreed to a number of conditions to help to ensure that Yukon residents, in general, and the Dawson community, in particular, can benefit from this project. It should be noted most of these conditions were offered by Loki as part of their own corporate policy, prior to any negotiations with this government. They include the following: advertising job vacancies in Dawson City, Yukon, prior to advertising elsewhere; preferential hiring of Yukon residents over southerners, where skills are equal; on-the-job training opportunities for process plant operators for local residents; assistance to Yukon entrepreneurs in the provision of housing; not maintaining housing facilities at the mine site during mining operations; use of local suppliers when the goods and services are competitively priced; no hunting and no unauthorized firearms on the property for mine employees; transportation for employees at company expense between Dawson City and the mine; cooperation with the Yukon Department of Education and Yukon College in identifying training skills and requirements and assistance in the placement of successful Yukon candidates; providing contracting opportunities to Yukon-based contractors; a reasonable effort to reach an agreement with the Dawson First Nation for participation and opportunities associated with mining operations.
In regard to this last point, I am happy to say that Loki has established a positive working relationship with the Dawson First Nation. An agreement in principle was signed between the two parties last Friday. This is expected to provide the First Nation with some significant benefits, including job training, scholarships, participation in environmental monitoring and contracting opportunities.
On the environmental side, Loki is proposing some measures that should ensure a safe operation with the minimum of impact on the environment. It will have a construction assurance quality control program to ensure that the construction of the padliner-system process and overflow ponds meet all requirements. A double liner with a leak detection and recovery system is planned. In addition, the company will have in place an emergency response plan, a monitoring plan and a fluid management plan.
Wildlife will be protected by ensuring that the process ponds are covered by screening to prevent wildlife access, especially by birds.
Groundwater quality is not expected to be affected. Regardless, groundwater monitoring and testing and remedial action, if necessary, will ensure that the fish resources in the local waters are not affected.
The agreement is also consistent with the key principles of the industrial support policy. It will allow the company to focus on mine financing and will let government focus on infrastructure development.
The agreement includes provision for cooperation on training and education. The agreement also requires the company to satisfy important environmental concerns through a comprehensive environmental assessment process and through the Yukon Territory Water Board's licensing process.
This project is good for the Yukon, good for all Yukon residents and good for the company. This agreement constitutes this government's recognition of the benefits of responsible development and mining by ensuring assistance is available, and the environmental and social benefits were also carefully considered.
Mr. McDonald: I have a fair number of questions, as I know other Members do, as well. I would like to begin with a subject that I know will be fresh in the Minister's memory regarding the fiscal benefits to the Yukon government.
The Minister sat through 45 minutes' worth of discussion about the perversity factor and our formula agreement with the federal government, and he took note of the fact that the Minister of Finance agreed with the assessment that, when we get dollar volume increases in income tax revenue and corporate tax revenue, we lose $1.60 in federal payments. He took note that this was something that had not been resolved at the federal level. In fact, the federal government had been suggesting recently that the impact of the perversity factor had even been strengthened in the government's favour.
I realize that the Department of Economic Development may not have taken note of that in their analysis of the benefits to the Yukon government, but the Minister was just here and listened to the whole discussion. Given that he just spoke, reiterating the benefits to the Yukon government, I am surprised. I do not understand. Is the Minister at odds with the Minister of Finance and me on this question of fiscal benefits to the Yukon government, or does he just want to read out the prepared statement? What is the scoop here?
Does he really believe that the -
Excuse me, Mr. Chair, it appears that we are experiencing technical problems with the sound system. I suggest that we take a 10-minute recess.
[Electrical failure interrupted proceedings]
Chair: We will take a brief recess.
Chair: I will now call Committee of the Whole to order. Is there further general debate on Bill No. 6?
Hon. Mr. Fisher: The Member for McIntyre-Takhini posed a question just before the break - or the power failure - with respect to the benefits to the Yukon. There is no question that under our current financial arrangement with the federal government there will be some sort of a net negative benefit to the Yukon with the advent of this mine coming on. The revenues to the Yukon government generated by the mine will affect our financing from Ottawa. That certainly should not put us in a situation where we say there is no development in the territory - that would just be foolish. I would hope that the Member opposite is not advocating that particular scenario.
The benefits are jobs that will be created, the spinoffs and so on. As the Government Leader stated earlier during debate, we are working with the federal government to do something about the perversity factor.
While I am up, the Member for Riverdale South had posed some questions earlier when the bill was first introduced. I would like to respond to those. I believe some were already responded to in my opening remarks.
There was a question about the actual highway maintenance - the $17,000 a year we would provide toward the maintenance of that road. That is the amount YTG currently pays to maintain that road. Loki Gold wants to maintain the road to a higher standard than we are willing to do. We have said that we will provide that $17,000 to Loki Gold, and they can maintain it to the higher standard themselves. Any additional costs - which there will be to maintain it to the higher standard - will have to be borne by the company.
The total cost to government of $2,479,000 is the amount we have estimated, along with Loki Gold, to upgrade the road to a certain standard. I am not familiar with the standard any more. If the cost to upgrade it is more than that, then Loki will pick up the cost. The mine has already paid for the detailed engineering of $223,000. If the amount to upgrade the road is less than $2,479,000 that is the amount that we would pay. Our maximum is the $2,479,000.
The amount of time spent by various individuals is nearly impossible to quantify, mainly because it has been going on for quite some time and some senior people have been working on it in several departments. Their time is not charged out - I think that most Members are aware that senior managerial time is not charged out by project or by job. So, it is pretty well impossible to quantify that.
The travel was all done by Loki. All meetings were conducted right here in Whitehorse, so no out-of-territory travel was involved.
The mining facilitator played the lead coordinating role to ensure that concerns and issues of various departments were considered. It was a coordinating effort with the Department of Community and Transportation Services, Economic Development and the Department of Justice. All of these departments were involved in the drafting of the agreement.
On the permitting, the Yukon government can easily independently determine the status of the permitting. The federal Minister's signature on the water licence is required before the project can proceed. The licence is a key condition that the company must satisfy for both road and project funding. All permits must be in place before any funding is forthcoming to Loki.
On the documentation, the circulation of documentation that supports the economic assessment is not possible at this time. Most of the documentation with respect to financing came from confidential Loki correspondence.
The real test of the economic viability of a project, or potential project, is whether or not the financial institutions will support the initiative. Our support is contingent on backing from those financial institutions.
Mr. McDonald: I want to go back to the fiscal benefits. As I said earlier on, we spent some time talking about this. The Government Leader and I agreed that the costs to government of this mine are supportable in the short term. If there is more economic activity and it gets more intense, then the economic impact for the territory may be improved, but the impact to the financial position of the government may be severely challenged. Consequently, our ability to provide expected levels of service may be severely challenged.
I have indicated already that, in the past, the government has supported, in a very similar way, the Sa Dena Hes mine going into production by providing financial support - financial support in the amount of $1 million for infrastructure, incidentally - knowing full well that it was going to cost the Yukon government revenues. It was going to be a net loser to the Yukon government.
The reason that support was given was because we believed in the long-term economic future of the territory and did not want to make decisions about certain development projects based on what the formula happened to say. However, when one is doing the analysis, it is important to provide the true costs of a project, in order to make a rational, thoughtful judgment about whether or not one is going to support it and what the impact will be on government revenues.
The kind of information I would expect to see coming out of Economic Development would be objective information and not a simple promoter's analysis of the project.
As I pointed out, the Minister was there, sitting listening to the conversation we had about the fiscal benefits, and heard every word of a shared concern about the consequences of receiving more tax revenue. Following that investment in our time, the Minister stood up and repeated in his remarks, word for word, that we are going to be a net beneficiary - one dollar spent on the road is going to give the government $6.50 in return.
If the Minister were not here, I would chock it up to the Minister simply reading a prepared statement and that he had not heard the latest information. I know the Minister did hear the information, as he was listening. I do not understand why he now apparently believes that there is going to be a net benefit to the government. Is that what he does believe or is there some other analysis that I do not know about?
Hon. Mr. Fisher: My officials have estimated that the tax revenues alone will exceed $16 million over all phases of development. This represents a return of about $6.50 for every government dollar spent.
In his analysis, the Member is right; we did not factor in that there could, in fact, be a negative benefit to the Yukon caused by the formula financing factor. There is no question that that has to be looked at, but we want to focus on the number of people employed, the economic spinoffs and the economic opportunities for business, and so on, in the territory.
There are revenues, but there are two separate issues. The revenues do offset revenues from the federal government. As the Member for Riverdale South has said, on a few occasions, we should not stop development because of the perversity factor. Let us try to do something about the perversity factor.
Mr. McDonald: I appeal to the Minister not to get sidetracked on the issue of whether or not we stop or start projects based on the perversity factor. At least most of us have agreed so far that we are not going to resist promoting economic development based on the fact that we know that a particular project is going to cost us money. We have already agreed to that, and in the foreseeable future we are presumably going to be promoting more mining development and we are going to be acknowledging that there is going to be a cost. What I want is a true accounting.
When the government provided this package, which included a section called "Economic Benefits", and did what they call a cost-benefit analysis, I wanted a true cost-benefit accounting, not a promoter's accounting. That we can get in another section. That we can get from the developers themselves, and probably more effectively and more articulately put than by officials in the Department of Economic Development. What I want to know, as a legislator here, is what the costs are as well as what the benefits are.
There are sections here about benefits and certainly a couple of hundred million dollars, approximately, over eight years is an advantage to the territory. I can understand that.
Based on what we know, in terms of the way our revenue picture operates, we also know that there are certain costs associated with more taxpayers. We know that. We have discussed it many times in this Legislature. For example, when we get a certain amount of income taxes from the employees, we know what the benefit or the cost will be. We know, for example, that if they provide $72 million in local purchases, that is going to have an economic impact not only in the private sector, which is a good thing, but we should also know from the government's side of the picture what the cost to us is going to be, because when the people who take advantage of providing services to the mine then pay income taxes to this government, we lose.
I am not saying that I want the government and the Ministers to paint a bleak picture or a positive picture. I am not saying that we should not be supporting this project. All I am saying is that I want a real account. At some place in the package, I want a real account of what the costs are. What triggered my concern was that the moment the discussions ended with the Finance Minister, the Minister of Economic Development stands and repeats, word for word, the Department of Economic Development's analysis of the fiscal benefits. Will the Minister ask his department to provide us with a real accounting, to the best of its knowledge, based on what it knows, based on the current reality, in terms of our own relationship with the federal government, what we expect in terms of revenues, what the true fiscal cost-benefit analysis would be from this project, so we could all be fully aware of it? Can he do that?
Hon. Mr. Ostashek: I am going to get into this debate, because I think what the Member is asking for is virtually impossible. I do not believe that their administration calculated the perversity factor in net benefits or in net losses to the territory when they were projecting economic benefits for the territory. The Member opposite is saying that if we hire a government employee, we should calculate how much that is costing in transfer payments because the perversity factor affects that as well.
I do not think that Economic Development can realistically give any closer numbers than what the Member has now by doing it on a straight net income and net tax basis, which we know is affected by the perversity factor. If they were to take that, they also have to take the population increase into account and all these other vagrancies that are in the formula financing agreement to give an accurate picture. It would not give any more of an accurate picture if the department did a quick and dirty conversion by calculating $1.50 for every $1.00 on the taxes. That would not be accurate either, because there are other things offsetting that.
The Member knows it is a very complicated formula. In fact, we discussed that in the House today. I do not know how he expects Economic Development to give him any more realistic figures than what they have. They have said that is the projected net increase in taxes over the life of the program. As he said, there are spinoffs in the private sector, but they also pay taxes and that will also have an impact on the government. I do not know how the Member opposite could expect anyone to calculate those figures and be anywhere reasonably close to a true figure. I believe that the department has projected what will come in tax revenues. To deal with the perversity factor is another issue that we have to deal with with the federal government when it makes projections that do not calculate the perversity.
No other department does it, and I do not think that we should expect Economic Development to be doing it on this project.
Mr. McDonald: For the Minister's information, that very same analysis was done on the Sa Dena Hes project. I invite the Minister to ask his officials to provide it to him so that he can see it. That kind of analysis is in fact done, and it has been done. I have seen it done, I have asked for it to be done and it was done. So to say that it cannot be done is nonsense.
To say that it can be done to the nearest $5 is clearly ridiculous. These are ball-park estimates, as are some of the estimates in terms of the macro-economic benefits that will be achieved. Is $72 million an absolutely accurate estimate? I would not think so, and I would not expect that it would be. I will not stand up and ask the Minister to justify $72 million and prove it, but what I will ask is that when the Minister puts forward an analysis to show that it is a net benefit, as far as I am aware, I should go up right now, based on what the Economic Development Ministers told me, and say that the government will have an extra $2 million per year to spend on things all around this territory - $2 million - so everybody who has ever needed a little bit more revenue for a women's shelter can expect that the money will be there. We know that that is not true. We know that there will not be $2 million there unless something significant changes in the formula financing agreement, and it does appear that the decision making is going in the right direction.
It can be done. While it is very difficult to do it, and while it is probably insignificant to do it for, say, Watson Lake's planetarium and the impact that will have - three or four employees and a few construction dollars - it does make some sense on a project such as this to understand what the costs are. It is not that hard to do. I remember the turnaround time being fairly quick on the Sa Dena Hes project.
It has nothing to do with whether or not a decision will be made based on cost to government, because there are benefits to society that have to be weighed in the balance. When there is a cost-benefit analysis, one does not just list the benefits. Unfortunately, I am on the outside, not on the inside, and I have not gone through all of the discussions that all the folks on the floor have gone through. I am on the outside, and all I see is a benefit analysis. I see a promoter's analysis; I do not see a cost- benefit analysis. From my perspective, I am not getting the whole picture. From my experience, I know that more of a picture can be provided - not a picture with perfect resolution and perfect colour, but a better picture can be provided - and it has not been, so far. I am asking the government if it can be provided, so that we know more about this project.
Hon. Mr. Ostashek: I do not believe that we can provide any closer estimates than those that have already been provided. They are not going to be accurate. They are going to be lower than what they are, and maybe that will satisfy the Member opposite. If that is what he is looking for, then we will do another quick and dirty. It just cannot be done any more accurately. However, if that is what he wants, we will get Finance to take a look at it. There are so many things that go into it. I do not believe that the Member was any more accurate on Sa Dena Hes. I will go back and look at the calculations on that. If the Member opposite is so concerned about the perversity, we can fix that. We can just ask Loki to house their employees in Alberta or British Columbia, and then it will not affect our perversity.
Mr. McDonald: The Minister does not have to be so ridiculous about this.
Some Hon. Member: (Inaudible)
Mr. McDonald: The Minister is saying that I am being ridiculous. Let me tell the Minister something. Whatever happened to reasoned decision making here. I have seen the analysis done before. Every time we ask for a reasonable analysis of the costs, they say that we are opposed to tourism, we are opposed to mining, we are opposed to forestry - that is completely ridiculous. Is that the kind of analysis that the Ministers themselves do - they only think of benefits, and not of costs?
Is that what comes to mind when they do the analysis?
Let us be realistic. I am not going to be put off by a bunch of Ministers who may not have done their homework. I am telling the Ministers right now that we knew that Sa Dena Hes was going to cost us. We supported it anyway. It has nothing to do with whether or not we are going to support this project. It has everything to do with accurate information so that we can make a decision. We are not looking for bleak information; I am looking for real information - realistic, accurate information.
It is the Minister who wanted to sit through dinner. He does not have to get excited because his blood sugar level is low and suggest that we want to move the employees to Alberta and have a fly-in/fly-out camp. That is nonsense. If there is going to be a cost, why can we not know that?
Some Hon. Member: (Inaudible)
Mr. McDonald: The Minister says there is no cost. He says there will be a net benefit. We are having a more informal conversation here. Is the Government of Yukon going to show a net benefit? He says that it is not.
This section here deals with governments and fiscal benefits. In this document that the government tabled, they have benefits to the community, benefits to the territory and benefits to the government. The benefit to the government, as the Government Leader has said, is nil. Yet, here, in section B, it states that there is a big benefit to government. All I am asking for is the real picture on this story, please. Can I get some real information? If I ask a question about what the Dawson First Nation did or about the power requirements or how long the road is or about the government's industrial support policy, can I please see some resistance on the government side to the knee-jerk reaction that, because I ask a question in the Legislature, I must be opposed to mining. I am the only guy in this Legislature who has done hardrock mining.
Some Hon. Member: (Inaudible)
Mr. McDonald: Well, who has? Yeah, like how much? You stand up and give me your experience, as if that matters.
Mr. McDonald: The Minister of -
Mr. McDonald: The Minister of Tourism suggests that I believe I am smarter than everyone else. Number one, that is not true. Number two, that is irrelevant. Number three, I am asking for accurate information. So far, I am not getting it. I will ask the Minister of Economic Development this: can I get the information?
Hon. Mr. Ostashek: If the Member wants a different set of numbers, I am sure we can get him a different set of numbers.
All that I am saying is that all of the numbers we use are going to be very subjective. I do not believe that another set of numbers will be any more accurate than those that have been put forward now.
The department has calculated the increase in tax revenues and has calculated some of the other spinoff benefits. If the Member wants another set of numbers, I am sure the Minister of Economic Development can provide him with another set.
Mr. McDonald: I do not want a random set of numbers. I want some real analyses. I am not asking for the Minister to come up with just any old number. They came up with $16 million. Why could it not have been $15 million, $20 million or $10 million?
I trust the people in the department to show some professionalism. They will give us as accurate a set of numbers as they can, but we know that there is not going to be a net benefit of $16 million. We know that it is probably going to be a negative figure. It does not matter, but we know it is going to be a negative, but what is it? I want to know what it is. That is fair. I do not want a random set of numbers.
Can I get a commitment from the Minister responsible that he will get us the best information the government can provide, taking into account the formula financing situation?
Hon. Mr. Fisher: I can get Finance to look at the projections - considering the number of people, the approximate payroll and the taxes going to the Yukon - and determine approximately what will happen under the federal formula.
The thing that I think is totally lacking here is the fact that the benefits to the Yukon are not to the Yukon government; the benefits are to people. I do not know what those numbers are. I know some of those calculations have already been done, and we can get Finance to produce a calculation. We will have to qualify it because it is probably almost impossible to do.
The Member is protesting that he is not against this. If we came out and said to people that we are going to open this mine and it will cost Yukoners $2 million, why would anyone want to open the mine, using the scenario the Member opposite used?
The reason we cannot do that is because it will be almost impossible to calculate that number. If we say it will be a negative benefit of $2 million, and we are wrong, how does one measure that $2 million against all the spinoff benefits to people?
If that is what the Member wants, and that certainly seems to be what he wants us to do, yes, we will ask Finance to see if it can come up with some sort of a calculation.
Mr. McDonald: I thank the Minister for that commitment. First of all, it is not impossible to provide a ball-park figure any more than it was not impossible to provide a ball-park figure for benefit and tax revenue. It is not impossible. Secondly, I do not believe the government should be painting a picture that is completely one-sided in order to promote a particular project. I have promoted projects in the past that were a cost to the government, namely the Sa Dena Hes mine, knowing that it would be a cost to government revenues, knowing that there would be a net benefit to society and that it was good for the economic and psychological state of this community to have the activity go on.
However, it is simply not a reasonable proposition to hide the truth and, very patronizingly, decide what is good for people and decide that they cannot handle the truth. The Minister said in Question Period that the decision to decide whether or not this will be a good deal takes place now, in the Legislature. When we asked questions about the industrial support policy and whether or not there was anything specific in the industrial support policy to determine what kinds of things to shoot for to determine how much public investment would be made, the Minister continually responded by telling us not worry, that there was nothing there, but that when we got to the Legislature, the Legislature would decide whether or not this is a good deal.
So the Minister should not be upset, nobody should be upset, by our asking for a true accounting of the numbers.
That is the point I am making.
With respect to some of the other issues, I would like to know what specific community benefits, such as jobs or business opportunities, were sought by the government during the negotiations and what did it receive in return for the investment?
Hon. Mr. Fisher: The benefits are all summarized in my opening remarks. In addition, there are the economic benefits and the analysis in the package that outlines the policy of the corporation, which is part of the package. It talks about hiring practices, and so on, which will be of benefit to the people of the Yukon.
Mr. McDonald: Is the corporate policy at the tail end of the package that the Minister provided us an enforceable provision under the agreement?
Hon. Mr. Fisher: In the agreement under section 2(g), "Loki agrees to ..." It says, "maintain the Loki corporate policy detailed in section 2(4) of the Brewery Creek project, initial environmental evaluation, supporting document number 3, socio-economic impact assessment regarding hiring, training, housing, procurement, hunting, firearms and transportation."
Mr. McDonald: Can the Minister clear up one thing for me? How is that enforceable when the mine has received the funds and the road is upgraded in the next two years? What ability does the government have to enforce that provision?
Hon. Mr. Fisher: Once the road is completed and all payments have been made, which, I believe, is in a three- to five-year period, no, there is no way we can enforce the agreement. I suppose that we could withhold our $17,000 annual payment of road maintenance - something like that - but most of the large construction monies would be gone.
Mr. McDonald: So, the corporate policy is the special community benefits that the government has achieved, and they are enforceable until the road construction is finished. If the Minister can confirm or reject that interpretation, I would like him to feel free.
The corporate policy talks about making a lot of best efforts to do things. I have a few questions about that. First of all, I would like to deal with the housing section. It says that Loki Gold will assist Yukon entrepreneurs in the provision of housing alternatives for its employees. What does that mean?
Hon. Mr. Fisher: I have just a couple of comments before we talk about the housing.
The agreement is a legal document. If one party or the other does not live up to the terms of the agreement - some of our legal people may be able to talk about this - I expect that something could be done through the courts, but I would hope that that kind of action would not become necessary.
With respect to the housing, Loki is currently negotiating with some private sector people for the provision of housing. I understand that there may be some sort of arrangement with the people who work for the mine to assist with housing purchases in Dawson.
Mr. McDonald: I guess I am no longer clear about what the enforceability of the corporate policy is. The Minister seems to suggest that there are legal remedies after the period of construction on the road is over. If the Minister knows what those remedies are, please tell me; if he does not, please send them to me. Can the Minister do that?
Hon. Mr. Fisher: I would not want to guess about what a court would do. If there were a breach of an agreement and it was taken to court I would expect that there would be some sort of judgment. I do not have any idea what that would be or could be. While the construction is going on and until the payments are made, we do have the ability to withhold payment. After all of the money has been expended, the only recourse that I can see would be to go to court. It is a legal agreement, so I would expect that the court would make a judgment.
Mr. McDonald: If people do believe that the corporate policy or any other provision of the agreement is not being broken, it would be the government's policy that it would ensure that the company lives up to the agreement - is that the case? Would the government find some way to live up to the terms of the agreement if the company decided to break the agreement? Would the government defend the provisions - in court or otherwise?
Hon. Mr. Fisher: I think that it depends entirely on the nature of the breach. This is strictly hypothetical. If there were some minor breach of the agreement, would we take them to court? I do not know whether we would or not. I really do not know that. Again, it is hypothetical, and I cannot comment on it. All I can say is that it is a legal agreement with Loki Corporation. For the first three to five years, there will be monies being paid to them over a period of time. If there is a serious breach, we can withhold the money. After that, the only way I can see that we could hold Loki to the agreement if they tried to get out of it would be to go through a court of law.
Mr. McDonald: The Minister says three to five years for construction. I just want to clear up one little point here. Is the Minister saying that the $2,790,000 will be expended over that three to five years - I notice that half of it is in the current year. I had incorrectly assumed that the other half would be voted next year. What is the plan?
Hon. Mr. Fisher: The first $1.2 million will be expended this year, but the remaining $1.2 million - approximately - will be expended over the life of the loan that Loki secures, for a minimum of three years to a maximum of five years. So it depends on the loan arrangements. We would be paying our payments over that period of time.
Mr. McDonald: When precisely will the construction take place? This is only money for construction - is that correct? During what period will the construction take place?
Hon. Mr. Fisher: We are hoping that, if all the permitting and so on is in place, construction will take place this summer. The bulk of the construction will take place this summer and what remains will be built next summer.
Mr. McDonald: How much does the government intend to vote next year for the project?
Hon. Mr. Fisher: It would be approximately $400,000, because there would $1,238,000 paid this year. The remainder would be over three to five years, depending on Loki's arrangements with its bank - it is a minimum of three years and a maximum of five years. The best case scenario for Loki would be three years. The remaining $1,238,000 would be paid over three years, which would be just over $400,000 per year. If it were five years, then it would be just over $240,000 per year.
Mr. McDonald: I have to ask some basic questions, because I am a little confused. It has not been explained to us. This is the very first time, so I would ask the Minister to tell us, first of all, how much the total construction price of the road will be. The Minister says it will be built this year and next year. What portion of that construction price will be borne by Yukon and what portion by Loki, and can he give us a few more details about what the loan arrangement that Loki has that the Yukon government is going to be paying in some way? Can the Minister just lay out all the details right now about how this is going to operate? Then, we will not get off on any tangents and save some time.
Hon. Mr. Fisher: The total agreement is for $2,479,000, of which 50 percent will be provided during the initial construction phase. If one looks at the tender specifications, I think one will see that the government pays up to 40 percent, I believe, of the cost of the work completed. We are paying a little behind the actual confirmed construction. For example, if $100,000 worth of work has been done, we would pay something like $60,000 or $70,000 of that.
The Yukon shall pay 50 percent of the eligible project costs, estimated to be a maximum of $1,239,500 in fiscal year 1995-96, or 1996-97, if completion is delayed, and the remaining 50 percent in equal, annual payments, as calculated by dividing the balance of the unreimbursed project costs by the number of years of the amortization term of the loan negotiated by Loki with its primary bankers and, in any event, not to be less than three years. The completion date of the project will be determined by the Department of Community and Transportation Services.
Payments will be made to Loki Corporation on a progress-invoicing basis. The Department of Community and Transportation Services will certify that the progress invoices reasonably reflect work done for the invoice period. Loki will provide a statutory declaration to the Department of Community and Transportation Services confirming that all contractors have been paid. To facilitate the cash flow for Loki, these duly certified invoices will be paid at 100 percent by Yukon until the project is 40 percent completed.
Mr. McDonald: Is it correct that the total construction price of this road is the $2,479,000, and that this road construction will take place immediately; that 50 percent, which is $1,239,000, will be supported by the Yukon government through the supplementary; Loki will borrow the balance to complete the project, and then we will pay Loki's loan payments for the road for the next few years - could the Minister clarify for me if that would be three or five years?
Hon. Mr. Fisher: The minimum period is three years but it depends upon what kind of arrangements Loki makes with its financial people. The maximum amount that we would pay would be on a three-year basis. The minimum amount we would pay would be on a five-year basis.
Mr. McDonald: Are we paying the interest costs on that loan, by the way, or is Loki?
Hon. Mr. Fisher: Loki is picking up the interest costs.
Mr. McDonald: Is the total cost of this road $2,479,000? Is that the total cost of construction? Are we paying 100 percent of the construction of this road?
Hon. Mr. Fisher: Yes. I did mention that before, but yes, we are.
Mr. McDonald: We are paying the total cost of the reconstruction. Is there any particular reason why the government chose to provide the money in this way? Was it that it had other things to do with the other $1.2 million, or whatever it was, and could not support the construction up front? What was the rationale for constructing the support this way?
Hon. Mr. Fisher: Although it is a public highway and we do maintain it right now as a public highway, the main beneficiary of that road will be Loki. We wanted Loki to be spending money up front, as well as the Yukon government. We did not realize that there would be a large construction cost at the startup. We have committed to 60 percent of the cost once work has been done. We wanted Loki to make a full commitment toward the project as well. Consequently, we ended up with this three- or five-year deal.
Mr. McDonald: If the government has already agreed to pay 100 percent of the cost of the road construction, is it not a bit of a sham to suggest that Loki is somehow supporting us? It is going to be putting $70 million or so into the mine. Is that not a commitment to the project? If the government is going to be expected to put up 100 percent of the cost of this project, why would we want to enter into a deal that is going to cost us - or the proponent, for that matter - interest charges on a $1,250,000 loan, which has to be worth something to someone.
Why would the government not simply provide whatever the costs are?
Hon. Mr. Fisher: I think there are a couple of things. The Yukon government will not be picking up the interest costs - that is Loki's responsibility. This agreement, as we said before, is based on a mine life of approximately eight years. If the mine was to run for only two years, I am not sure whether or not we would want to expend that whole amount - we could very easily stop making the payments. We are committed for the $1,239,000 after 50 percent of the construction is complete. The remainder of the payment will be based over a minimum of three years. If Loki were to shut down after one or two years, the government could withhold the remaining balance.
Mr. McDonald: So the government can do that then. The government is not liable to the banks for anything? Is that correct?
Hon. Mr. Fisher: There is one other point. It is a little bit of a leverage placed upon the mine to ensure that it lives up to its corporate policy. I am sorry I did miss the direct question, because I was speaking to my official. Would the Member mind repeating it?
Mr. McDonald: There is no way that the government has any liability to pay a portion of the loan as a result of this arrangement? Is the bank completely Loki's responsibility? The bank would have no recourse against the government - is that correct?
Hon. Mr. Fisher: Yes, that is our intent.
Mr. McDonald: I would like to discuss the corporate policy for the moment. The housing section states that Loki Gold will assist Yukon entrepreneurs in the provision of housing alternatives for its employees. That wording suggests to me that it could be any number of things, but two realistic scenarios would be that the Loki Gold Corporation could provide financial incentives, such as loan funding and incentives, to encourage entrepreneurs to provide housing in Dawson for its employees who move into the community. Or, it could mean that Loki Gold puts an ad in the newspaper saying that a certain number of people are going to be moving into Dawson and if people want to take advantage of the situation they can contact prospective tenants through the personnel office.
There are two different ways of looking at that and both ways could be accommodated by this language.
Is there anything more specific than this that would give the Yukon entrepreneurs who are identified here any more comfort that Loki will be making a more significant commitment than simply notifying people that there may be some housing needs in Dawson that it might want to satisfy, if it can talk to the employees in some way?
Hon. Mr. Ostashek: While the Minister is conferring with his assistant, I would like to perhaps shed a little light for the Member opposite.
I had discussions with Loki as far back as a year ago. At that time Loki was trying to talk to Dawson First Nations. It was trying to encourage someone to put up an apartment building, and Loki would guarantee the rent for a certain period of time to help finance the apartment building. I believe that that is the approach it is taking with housing in Dawson City. It knows that it will need places for the employees, so it is prepared to enter into an agreement with a developer to guarantee rents for so many years for so many units to help finance the project.
Hon. Mr. Fisher: The Government Leader is correct. Loki has had meetings with First Nations, it has had meetings with a couple of private individuals, and it has had meetings with our own Yukon Housing Corporation. The other possibility it is looking at is the construction of a trailer court in Dawson. I am not positive about this, but I believe there has been some discussion with the City of Dawson about a location for a trailer park.
Mr. McDonald: Moving on to training, it says that the Loki Gold Corporation will make available on-the-job training courses for process plant operators, and it hopes to be able to attract Dawson City residents for some of these positions, and that Loki Gold Corporation will encourage trade employees to register in the Yukon apprenticeship program.
Again, there are many different ways of looking at this commitment. Loki Gold could put on extensive training courses for people in Dawson to operate the plant, and they will hire the number of people that they need from Dawson in order to do that, and go to some expense. They will also tell their trade employees that they want them to become proper apprentices, and they will consequently be journey level trades people in time, and that Loki Gold will provide full support.
It could also mean that Loki Gold Corporation will put on a job orientation course for people to see if they like the idea of working for the company, and if they start at entry level and work their way up, at some point they might become a plant operator. It might also mean that in order to attract Dawson City employees, they put a notice on the bulletin board in the post office saying, "Please apply". When it comes to trade employees, it might also mean that they will inform people who work in trades-related jobs that there is a chance that they might become a registered apprentice - no guarantees.
There are different ways of looking at this article. What does Loki Gold anticipate will be the way in which this provision operates?
Hon. Mr. Fisher: Yukon College has a group that is called the president's committee. The Department of Economic Development sits on it, as does the Department of Education. Loki Gold is a member of that committee and is working with Yukon College to set up programs that will be available to Yukoners to get into skilled jobs.
Mr. McDonald: I will not take a lot of time. I just want to cover a few bases, make a comment and then we can get on to the next subject. In terms of hiring, we see in the newspapers that the agreement with the Dawson First Nation is not going to be dealing a lot with jobs; it is going to talk more about business opportunities and such things. There will be some, according to the paper, at least, job training, contracting opportunities for persons for goods and services, environmental monitoring, trapper compensation, et cetera.
In the section here under "hiring", it says that preference will be given to hiring Yukoners over southerners where skills are equal. It means that where Yukoners have skills in this kind of mining that are equal to those that are possessed by southerners, preference will be given to Yukoners. It sounds to me like a pretty good and pretty commonsense commitment to make. The problem is that there are probably a fair number of people at the practical end of this kind of an operation who have greater experience who live out of the territory than live inside the Yukon. Was this matter discussed with the company? Were there any efforts to try to raise the skill levels of Yukoners who may not have the same kind of plant experience that, obviously, other people probably do have in southern Canada?
Hon. Mr. Fisher: Yes, apparently almost exactly the same point as the Member brings out was discussed at this president's committee. My understanding is that, working through the Department of Education and through the college, the idea is to try and bring some people up to the skill level required, and Loki appears to have bought right into the whole idea.
The other thing I should point out is that the agreement in principle they have come to with the Dawson First Nation does talk about such things as job training - not just business opportunities but also employing people from the Dawson First Nation.
Mr. McDonald: Yes, I said that, but according to the chief, here in the paper at least, he says that the agreement focusing on jobs for Dawson members is a low priority - not that job training does not lead to jobs, but they have focused on other things. That is the only point I make, and it is taken from the paper, so I guess one has to take that into account when assessing the completeness of the information.
With respect to procurement, the section basically says that they will take whatever supplies are the cheapest and they will be happy to discuss their needs with local suppliers. How is that intended to play out? What does it precisely mean? Obviously it makes a lot of sense. If I were any mining company anywhere and I said that I was going to take the goods that I needed at the cheapest price, I would be more than happy to have my warehouse people discuss the company's needs with any supplier, particularly if they are local. That is not exactly a tough commitment to live up to.
What was the intent here? Was there something more? Were they going to do something extra here that caused this particular section to be put into the corporate policy?
Hon. Mr. Fisher: I cannot really add a lot to that. The deal is that if the local dealers, such as Northern Metalic or Northern Kat, can provide the hardware, and so on, for a competitive price, then that is where Loki will buy it. Loki has made it fairly clear that it does want to buy locally, but it is not going to pay a premium for purchasing locally.
Mr. McDonald: I gathered that; however, I did wonder why the provision is in here if the company is going to do what the company would normally do anyway.
With respect to the hunting and firearms section, the commitment is that no one is going to hunt on company time or on company property. Is there something that I do not know about? Why is this provision in here? How is this different from any other mine or operation that might operate anywhere? Obviously, not many people hunt on company time - not in the mining industry, at least. What special provisions are there that increase people's comfort about hunting pressures in the area?
Hon. Mr. Fisher: One has to remember that this is part of Loki's overall corporate policy. I am not sure, but I expect that this is more of a "heads up" to employees of the mining company. It is something that I expect was in the negotiations between the Dawson First Nation and Loki, when the socio-economic agreement was being set up. I do not know the exact reasons for it, but I expect that it is notice that the company does not want people to be hunting on its property and that there will be no hunting during working hours, and they do not encourage anyone to hunt along the road, which is essentially a public road.
I do not think there is anything more or less than that intended.
Mr. McDonald: I do not think it is any more or less what a mining company would do anyway. I am trying to pull out what special things happened as a result of the negotiations that one could point to and say "good public investment, but look at what happened."
Notwithstanding the good intentions of the negotiators, this is very much a best efforts policy. I am certain that if everybody is honourable, particularly on the company side, then all of these things will play out as was designed or discussed during the negotiating stage.
I do recall good people with good intentions who negotiated a best efforts policy for the Cyprus Anvil project years ago. They were very good people with very good intentions, but circumstances got in the way. If I were a person looking at any of the corporate policy sections that we were speaking to this evening, I would say that there are a variety of different ways of interpreting them. There is not much of a legal remedy in saying "you promised that you were going to build an apartment building", or "you promised you were going to construct a trailer court". Loki Gold lawyers, with different people involved, come forward and say they are living up to the agreement, you have this high-cost vision of this commitment and they have this low-cost commitment. Low-cost vision is the notice on the bulletin board in the Dawson post office. I do not doubt that there are good intentions involved here, but this is a best efforts agreement in every particular.
Are there other things that are more specific in terms of jobs and business opportunities, and which are more precise and not contained in the corporate policy that the Minister could point to?
Hon. Mr. Fisher: If one goes back to section 2 of the actual agreement, under (h) and (i), these are separate from its corporate policy. It cooperates with the Yukon Department of Education and Yukon College in identifying training and skill requirements and assisting in the placement of successful Yukon candidates in the mine site; making contracting opportunities, including this project, available to Yukon-based contractors wherever economically feasible and practical, and undertake reasonable efforts to reach an agreement with the Dawson First Nation that provides for First Nation participation consistent with contracting and hiring opportunities provided by Loki to other Yukon communities.
Those are separate from its corporate policy. The Member did point out that the corporate policy was its best effort.
The whole mining industry is, in a lot of respects, best efforts.
I believe that Loki will live up to the agreement. It has been pointed out that, in a worst case scenario under the economic analysis somewhere in there, if the price of gold goes down and the Canadian dollar goes up and operational costs were 20 percent more than it anticipated, it could get into trouble; however, I do not think that is any different from any other mine that has operated before or will operate again in the Yukon.
The big benefit to Yukoners in this whole operation is the number of jobs that will be provided to Yukoners and the resulting economic benefit to those people, to Dawson and to the rest of the Yukon.
Mr. McDonald: That is the point I am making. I hope I am not making it too obliquely. I am certain that Loki Gold will live up to this agreement, too, because I do not think that it is very hard to live up to the agreement. It depends on one's interpretation of the agreement. The negotiator's interpretation may be somewhat different from that of mine operator's two years from now. People will have gone on to other things and the mine operators will say that providing housing or even providing guaranteed rents is not something they should do, or afford. Their priorities will be to take the profits of the mine and invest it in another Yukon property or give it to the shareholders, who are long-suffering people, too. Without specific deliverables; this is a best efforts agreement.
One of the criticisms that the previous government faced from the Cyprus Anvil project was that we had a lengthy best efforts agreement. One could take from the language of that best efforts agreement that a lot of people in Ross River were going to be employed. If optimistic, one could also take from this agreement that a whole slough of Yukoners will be employed in this project, particularly from Dawson. I think there are some pretty high expectations from some people there. One could also draw the conclusion from this agreement, depending on the situation, who is negotiating, what the circumstances are, that not one dime of materials will be bought from Yukon suppliers because, in the opinion of the operators, they may not be cost competitive. Not one person will be employed from the Yukon because they could not find people with sufficient skills and experience, so they were brought up from down south. That is not an unreasonable conclusion to draw, and it might make economic sense from the operator's perspective.
I was not a negotiator and did not put my mind to this question at all, but there are a lot of best efforts here, a lot of good intentions, and if the best case scenario holds up, there could be even more value-added benefit to this territory from this mine.
It is not found in the agreement. You cannot deliver it through the agreement. I am not saying that it could be done differently, but I am responding to the basic political claim that somehow the industrial support policy is going to change things and that the actions of the government had advanced the whole notion of value added to the mining industry a quantum leap. I frankly do not see that. That is the point I am making.
I am not saying that one can make a big difference from a best efforts agreement; I am just saying that one cannot draw great and marvelous political conclusions from a new policy or anything else that ends up with a best efforts arrangement.
One of the things that has been identified in our discussions in the House before is that any project under the industrial support policy - any development - would have to need a public investment in order to receive a public investment. In order for the government to justify a public expenditure, the company would have to demonstrate that it needed the money to put the project over the top and make the project go - that this was not just going to be simply a cash handout in some way, but is going to make the difference between no-go and go. Can the Minister tell us what evidence the company gave that this $2,479,000 on a $76 million project was the thing that made this project a go?
Hon. Mr. Fisher: No, I cannot. In the industrial support policy, we said that the company would have to show that the assistance would be an incentive to carry out the project. I do not think I would want to stand here and say that if it were not for our assistance, Loki Gold would not be able to open its mine. However, I really do believe that, because of our assistance, Loki Gold is going to be in a lot better position to obtain the financial backing that it is going to need to actually open the mine.
There is no question that the road has to be upgraded. I do not think that is part of the question at all. If Loki is going to go in there, the road would have to be upgraded. We own the road. We would likely not upgrade it at this point in time unless there was a company like Loki operating in there.
The thing that will help a lot is when Loki goes for their financing, and the people who will be funding them will see that the Yukon government is supportive of not only the mine, but it is willing to help to financially support the mine. There is no question that there is a bit of a risk up front, but I think that that is important for the financiers. I am sure that Loki will use this agreement in the process of obtaining funds.
Mr. McDonald: As a general principle, it is obvious that all investors in a development project like this would seek comfort in numbers. Certainly, if the government was prepared to show a level of commitment, that would improve the comfort factor for other institutional lenders. However, in the industrial support policy, it does say that the burden of proof, as a basic guideline and condition, is on the proponent to show to the satisfaction of the department that the assistance will act as a necessary incentive to carry out the project. What did the proponent show the department?
Hon. Mr. Fisher: Loki advised our department officials that, without any financial support of government, their financing would become very difficult. The official with me here confirmed that himself with their banking people.
Mr. McDonald: The bankers themselves, then, indicated to the government that, should the government not provide this level of financial support, the financing would be in some way difficult or impossible to receive - what was the specific signal?
Hon. Mr. Fisher: I think words like "very difficult" and so on would have come into it, but there was definitely a need from the bankers for a firm infrastructure commitment from the Yukon government. If we had not come through, would they have packed up and left? I do not know. I think the words were couched to a certain extent, but it was to the effect that it would make a difference on how they dealt with Loki.
Mr. McDonald: I realize the guideline under the industrial support policy is very difficult to read or to see come into action, because in order to get solid proof that an investor will pull out or stay based on a specific public investment is a very difficult thing to determine. Certainly one would be hard-pressed to believe that the institutional investors - namely the banks - would have felt that a $79 million project was out of the question but that a $76 million project was workable. That is a point that we may not be able to tie down to any great degree.
With respect to the road construction itself, this agreement has the mining company doing the upgrading of a public road. I know the Minister remembers the debate - when he was in public service - about devolution of responsibilities to communities, and the significant debate we got into in this Legislature about allowing community governments to take public funds and undertake the project management and construction of various municipal projects, funded by the government, using their own contracting guidelines.
At that time - the Minister knows this - we took the position that community non-profit groups and governments undertaking the responsibility for establishing their own contracting guidelines was controversial, but it was still supported by a majority in the Legislature. Now, that system is well accepted. This takes it a step further. This has the Government of Yukon providing to a private company with the funds to upgrade a public road at public expense. Are the contracting guidelines, which the government has adopted, going to be applied to the construction of this road so that if Loki Gold is going to be undertaking the construction, it must follow the tendering guidelines of this government for the construction project?
Hon. Mr. Ostashek: While the Minister is conferring with his assistant, I want to shed a bit more light on the feasibility of the mine and whether or not it would have gone ahead without government financing. There are a couple of variables that have to be taken into consideration. The first one is that, without the upgrade of the road, Loki would not have been able to keep their staff and employees in Dawson City. They would have had to put in a camp facility.
With a camp facility, that may have raised the cost of the operation to where the bankers felt uncomfortable with it. I know, in my first discussions with Loki two years ago, a concern of theirs was how they would be able to bus their people from Dawson on that very narrow Old Ditch Road. There are variables. The Member said, quite rightly, that one cannot always know for sure whether or not the project will go ahead. We need to use some judgment in that.
Those were some of the things that came to light and that is why we got involved in the road. It was for the benefit of Dawson City to have the people housed there. It will bring great benefits to that community. If we had a mining camp out there, there would have been a great possibility that a lot of the employees would have even been from out of the territory. We felt it was important that all these things were factored in.
Mr. McDonald: I can understand what the Government Leader is saying, but if the economics could be improved by putting in a road, one would argue that the proponents should put in the road. If there is a choice between a camp facility or road construction plus free transportation, because the company is going to provide free transportation, obviously someone is going to have to draw conclusions about what is economic and what is not. Obviously, the most economic option is the road, with free transportation of employees. I had assumed that that was worked out between the banks, the developer and the government.
Hon. Mr. Fisher: Getting back to the construction issue, there is nothing in the agreement that says Loki has to follow Yukon government contracting guidelines, but what there is in the agreement is the specifications for the road. We have our engineering people inspecting the road and carrying out other duties. The road does meet a classified standard - it used to mean a lot to me, but it does not mean that much any more, because I have kind of forgotten exactly what it means.
In any event, the road will meet a certain standard, so that when the mine life is over, the road will be there and it will be to a standard acceptable in the Yukon.
Mr. McDonald: How does the company intend to bid this project? If some road construction company comes to us tomorrow and says, "Look that is a public road, built with public money, do I have the right to bid on this project? My tax dollars are going into this project, it is going to be a public road, it is a public road right now, why can I not bid?", what is going to happen?
Hon. Mr. Fisher: I understand that it is going out to tender, and certainly local companies are invited to bid. It will be not too dissimilar from a Yukon government tendering project.
Mrs. Firth: I have been listening very closely to the debate this evening about this particular project. One question that keeps nagging at me is whether or not the Department of Community and Transportation Services did a cost analysis about what it would cost the government to upgrade the road. Would it have been the same cost, the approximately $2.5 million that this agreement is being made for?
Hon. Mr. Fisher: People from the Department of Community and Transportation Services - our engineering people - worked very closely with the engineering people Loki had hired, and they actually helped to put together the tender for the job. This is their best estimate, just the same as they would estimate for a highway construction project, for instance. This is their best estimate of what the cost will be. It could come in on budget; it could come in lower. If it does, that would be the level to which we would fund. If it came in at more, Loki would be required to pick up the overrun, or whatever it is called.
Mrs. Firth: I find that fairly puzzling. Why could the government not just go ahead and pave the road if it is paying for the whole thing in the first place? This government maintains that it supports infrastructure. We had a huge debate here about one and a half years ago about what infrastructure is, and whether or not the government knew what it is. Why did the government not just show its commitment to Loki Gold by saying, "Okay, we will fix up the road"? It is going to cost the government $2.5 million. The government has tons of money to put in its highways budget. Why did it not just do that? Why did it go through this whole convoluted process of the industrial support policy and negotiations and a contract and "You pay this much and we will pay this much back to you"? Why did the government make the decision to do it this way instead of just upgrading the road?
Hon. Mr. Fisher: I guess there are a couple of things. Our funding is totally contingent on all the permitting being in place. It is contingent on them getting financing for the rest of the project. What could very easily happen to Loki is that, if we would have done it as the Member suggested, they could be ready to go, for instance, in September, and then we would have to get busy and put out a contract, and it would be too late.
Loki suggested that they would do the road, because there is going to be a lot of traffic at the same time that construction is going on - there will be quite a pile of traffic. They wanted to have control over it, as well as the construction people, while it was all happening. There are reasonable grounds for that argument. As far as the work is concerned, the specifications outline exactly what needs to be done. They do have an engineer hired to look after the whole construction. I think that it is probably easier for them to do it than it is for government.
Mrs. Firth: I think that is a fairly bold statement to make. A logical, thinking person who has common sense would be just as astonished as I with the Minister's comments. The Department of Community and Transportation Services has a whole bunch of engineers working in it. They are responsible for building roads. I think that if anyone could have done it, the cheapest way to have done it would have been to put a public tender out to the private sector to get them to build and upgrade the road and have the government pick up the tab.
I do not know why the government is going through these hoops and agreements. It looks like the government has an industrial support policy and it has been getting pounded in the House because it could not defend it. It could not explain the policy. It could not tell us what it meant, so it had to find some way to use the industrial support policy. So, the government went through this whole act - I do not know what to call it, this whole process - of getting this agreement: Loki is going to build it, but we are going to pay for the whole thing. I do not understand why the government had to do that way. If this government supports infrastructure, and if this mine is going to go ahead and make this worthwhile contribution to the Yukon, I think Yukoners would have supported it. It is a public road that YTG has responsibility for anyway. Why did it not just upgrade the road instead of doing this? The Minister still has not answered this question.
Hon. Mr. Fisher: If we had gone ahead and upgraded that road and the mine did not go ahead, we would be answering for that for a long time in this House. There is absolutely no question about it. In fact, I think that when we did a little bit of work on the Freegold Road we answered a lot of questions in the House.
The road construction is tied to the mine going ahead. Loki is better set up to actually be prepared to let the tenders. If, in fact, they let the tenders now - if we read in the paper next week that it is going ahead with the road if, for whatever reason, it decided to do that now - our funding would still be contingent only on the mine going ahead. We wanted to protect our money, and that is exactly what we have done. Yet, we have allowed for the flexibility for Loki to go ahead with the road if it should choose to.
Mrs. Firth: Could the government not have tied the upgrading of the road to the mine going ahead? If there is a difficult way to do something, this government has done it. I do not know whose idea it was, who suggested it or who engineered the plan. I just do not understand it. I think that there could have been a much easier way to do it and we would not have had to go to all this trouble.
The next question this brings me to is with respect to the financing. I understand from the industrial support policy and the standards for project assessment that the proponents must provide financial statements and other documented evidence of necessary funding. I want to ask the Minister this question: I understood from all the debates we have had with respect to the industrial support policy that if a proponent comes to the government to get assistance, it has to have its financing from the bank in place, and that obtaining funding from the government was not supposed to be the key to its getting funding from the bank. Yet, the government is taking the opposite position with respect to this project. If the government had not supported this project and this road roundabout, Loki would not have been able to get its funding from the bank. Could the Minister explain that to us, please?
Hon. Mr. Fisher: There has been no funding whatsoever that has gone to Loki Gold, and there will be no funding for Loki Gold until all its permitting and financing is in place. We had to make the agreement with Loki Gold, but it is contingent on financing from financial institutions.
Mrs. Firth: The Minister said that Loki Gold would not have been able to get its financing unless the government demonstrated support for the project. Both the Minister of Economic Development and the Government Leader stood up and supported that theory. I thought it was supposed to be the other way around. We are being asked to support a supplementary expenditure of $1.2 million.
All of the requirements of the proponent to be eligible for that funding are not in place yet. I can appreciate that the government wants to get it done and help get the tentative financing in place, but the industrial support policy does say that we should not be approving this until it is all in place.
Some Hon. Member: (Inaudible)
The Minister of Tourism says we are not giving them the money. Once we leave the House, and we have agreed to this bill, it is in the hands of the government. That gives me a bit of concern. It gives me just as much concern as the budget for one-half billion dollars. The Ministers can just go out and spend it on whatever they want to spend it on - that is hard enough to take.
I want the Minister to explain this relationship to me. In the House, we have been led to believe that, under the industrial support policy, the financing has to be in place. There was never anything stated that it was supposed to serve as some kind of guarantee or incentive for the banks to provide the proponents with financing. However, both the Minister and the Government Leader have stood up this evening and said that that is what happened here. Has something in the industrial support policy changed?
Deputy Chair: Is it the wish of the Members to take a brief recess at this time?
Chair: I will now call Committee of the Whole to order. Is there further general debate on Bill No. 6?
Hon. Mr. Fisher: I do not recall the exact questions from the Member for Riverdale South, but there was one about the guidelines and conditions under the industrial support policy. One of the components of it is number 6: "A proponent will need to show to the satisfaction of the department that the assistance will act as the necessary incentive to carry out the project." There is a legal agreement that says that there will be no funding forwarded to Loki until all the permitting and the financing is in place.
The third point that I would like to make is that I had promised that I would bring this bill to the House, either prior to sitting or that we would call the Legislature back into session. I feel that we have an agreement with Loki, and the agreement is a legal document contingent on financing and permitting, so I cannot understand why the Member is so against the agreement at this time.
Mrs. Firth: Here we go, we are against everything again. I am asking questions. I asked one simple, fundamental question that the Minister has yet to answer.
He says I am against this. I will ask him the question again, and I will ask the question until 3:00 in the morning, if I have to. I want to know why the government did not do the road themselves - which, in my view, would have been an awful lot easier and made a lot more sense, if we are paying for the whole thing in the first place - instead of going through this whole process that it has gone through? What was the determining factor that made the Cabinet decide not to build the road as a government, but give the money through the industrial support policy? What was the reason?
Hon. Mr. Fisher: I have already answered that question. The number one reason was because Loki requested that it let the tenders for the road and that it look after the road construction, according to our specifications. That is exactly what we did do.
Mrs. Firth: Could the Minister elaborate on that a bit? Loki Gold came to the government and said that it wanted to build the road and look after the tendering on it - but it wanted the government to pay for it? Could the Minister elaborate on exactly how this happened?
Hon. Mr. Fisher: When Loki started talking, its number one concern was the road, and it was quite aware that we were working on the industrial support policy. We had encouraged Loki Gold - as we encouraged other mining companies. We had talked about industrial support through infrastructure and when we got into negotiations about the road, Loki said that it wanted to be responsible for the road construction - that it would construct the road to our specifications, but that it wanted to be responsible for it.
Some of the reasons for that are as I have previously laid out, and one being that, when the road is under construction, Loki will have full control over what happens there. It will have equipment coming in, it will be the contractor constructing the road and its equipment will be on the road.
They go back and forth to Dawson from the Dempster Highway. That is one of the reasons that Loki wanted to control construction.
Mrs. Firth: None of what the Minister said made sense. The only thing he said that made any sense was that when Loki talked to the government about the mine going ahead, its number one concern was the road. Why did the government not say to it, "That sounds reasonable. We are a government that supports infrastructure. We are a government that supports the mining industry. We are a government that believes in building roads. Let us sit down and talk about this, and we will build this road for you." Why did the government not do that?
Hon. Mr. Fisher: For the third time, we did not do that because Loki wanted to have control over the construction. Therefore, they asked to build the road.
Mrs. Firth: Why would the mining company want to have control of the construction? It does not make any sense. I think the mining company would have been delighted to have had the government build the road for it. Did the government ever offer to do it? Did it ever say to Loki that it would build the road, and did Loki say to it, "No, we do not want you to build the road. We want to build it, but you can pay for it"?
Hon. Mr. Fisher: Loki did indicate that it wanted to build the road. It was because of the timing of the construction and the traffic that is going to be on it when the road is under construction. Loki wanted to have full control of that construction. If it needed to shut down construction for two days, for instance - and I do not know whether that is a possibility - if it is under its control, it can do it. If we have control, it is pretty unlikely, unless we wrote some strong agreements first, that we would want to, or be in a position to, shut it down.
Mrs. Firth: It is still a public road. Loki does not own the road or have control over it. Before we get into all these details about shutting down the road, and timing and all these other red herrings, did the government, at any time, offer to build the road for Loki Gold, since it is a government that supports infrastructure and the mining industry?
Hon. Mr. Fisher: The Member's point about it being a public road is correct, but section 19 of the agreement says, "While it is contemplated that the North Fork Road east reconstructed by the project shall be available for public use, such use by the public may be restricted or denied temporarily should Loki be of the bona fide and reasonable view that it is in the interest of the safety of the public that such use be either restricted or denied temporarily. To that extent, Loki shall obtain the authority to post and close the road from the northern area highway superintendent. Loki wants to be able to control the use of that road while construction is going on and while it is setting up its mine. That is one of the reasons why there were discussions about who should actually construct the road. There was a lot of discussion about that, and it was mutually agreed that Loki could construct the road.
Mrs. Firth: I do not know if the Minister is intentionally avoiding answering the specific question or what he is doing. I asked a very direct question. Did the government ever offer to Loki to build that road for it, and did Loki say, "No, we want to build it ourselves, but we want you to pay for it"? Did the government ever make an offer to Loki to build the road?
Hon. Mr. Fisher: Certainly. I just said that. I just said that there were a lot of discussions about who should build the road - whether the government should build it or whether Loki should build it. It was mutually agreed that Loki would build the road, and I said that just two minutes ago.
Mrs. Firth: He did not answer the question. Sure, there were discussions about building the road, but did the government say to Loki, "We will build this road for you"? Did it ever say that specifically - "We will build the road for you"?
Hon. Mr. Fisher: I do not know the actual discussion. I do not know if someone from C&TS said to Rupert Allen or Anielski the exact quote the Member used, but I did say, and I will say for the third time, that there were discussions about who should build the road and it was mutually agreed that Loki would build the road. "Mutually agreed" in my estimation, concerning "should you build the road or should I build the road" means that "you" would build the road. That is all I can say. If the Member cannot understand quite plain and clear English, that is not my problem.
Mrs. Firth: It is going to be a long, long night.
The Minister is trying to be cute here. He tries this business. Everyone understands that people can sit down at the table and discuss who should build the road. Before they got to that stage, before they got to the table discussing who should build the road, did the government ever approach Loki, when Loki first said it was going to open and the road was of number one concern to it, did the government ever say to Loki, "We are prepared to build that road for you based on certain conditions"? Did the government offer to do that? That is the question we want answered.
That is a question we want answered.
Hon. Mr. Fisher: I do not know what the Member is doing; I have no idea.
If Loki had said that it wanted us to build the road, we would have built the road. It is not a big deal. It was mutually agreed. I guess that the Member maybe does not understand what "mutually agreed" means. She does not mutually agree with anyone.
Under the industrial support policy, it says that "proposals will be considered for industry support for resource development projects in the Yukon if your resource project requires road improvement or construction. The Yukon government is willing to enter into a development agreement to assist in the provision of infrastructure." That is exactly what we did. Loki, through discussions with our people in Community and Transportation Services and Economic Development, wanted to build the road, and that is exactly what happened.
Mrs. Firth: I am going to draw the conclusion from the Minister's comments that this government never did offer to build the road for Loki. The Minister has never stood up and said that it had. I have to draw the conclusion that it never did offer to build it, and that is wrong.
This government is supposed to support infrastructure and the mining industry. It should have made that offer. Instead, what happened is that the government had an industrial support policy that was very thin on substance, direction and policy. Now, the exercise has become a game to justify the industrial support policy. It has gone through this exercise now to try to justify this policy. I think that is unfortunate, because I believe that this will end up costing more money to the taxpayer than if the government had just gone ahead and built the road in the first place.
Now that we have concluded that the government never did offer to build the road for Loki Gold, I would like to ask the Minister exactly who the people were who were involved in the negotiations. He has made reference to the mining facilitator taking the lead role and someone from Community and Transportation Services, someone from Economic Development, and then someone from Justice drafted the agreement. Who were the individuals? The Minister does not have to name them, but just give me their position titles, so that we know in what capacity these individuals were working on the negotiations.
Hon. Mr. Fisher: The Member opposite said we have come to that conclusion, but it is that Member who has come to some kind of a conclusion, though I am not sure what. The conclusion is not that the offer was not there. As I said, it was an agreement between the two parties. The people involved were a mining facilitator from Economic Development; the policy and planning people from Economic Development; people from economic programs; people from the engineering department, under the direction of the assistant deputy minister from highways; one of the lawyers from Justice; and there were people from - I had not mentioned it before - the Land Claims Secretariat.
Mrs. Firth: In the Minister's - or the official, who is sitting with him and taking the lead role - estimation, how long did it take from day one, when the negotiations were started, to the completion of the negotiations?
Hon. Mr. Fisher: From the very first time they actually contacted us to now would be approximately eight to nine months.
Mrs. Firth: I have listened to the Government Leader this evening stand up every now and then and talk about the discussions he had with Loki Gold. Did the Government Leader have some private discussions with Loki Gold, prior to them even coming and applying for this assistance through the industrial support policy?
Hon. Mr. Fisher: Not that I am aware of. The Minister can certainly ask the Government Leader about that. However, I do not know of any separate meetings.
Mrs. Firth: I will ask him that question. Has the Minister heard any feedback about whether or not this whole process has been cumbersome, and that there is a possibility that other mining companies that may have approached the government to participate are not approaching the government now? It is rather curious that there is only one mining company that has approached the government with respect to their industrial support policy.
I have heard that there has been talk among other mining companies that it is not worth the trouble to come and sit for eight or nine months, or whatever the time would be - they knew it was a long time - to negotiate with this government.
Some Hon. Member: (Inaudible)
Mrs. Firth: The Minister thinks this is funny. I do not think it is funny. This is the first opportunity we have had to question the Minister on his great policy, and he thinks it is a joke. I knew this would happen. The Members do not have the endurance to sit without getting silly and giddy. Could the Minister just answer the question and take the issue seriously? I think we would all appreciate it if he could do that.
Hon. Mr. Fisher: There have been other discussions. In the case of Loki, there was quite a long period of discussion, eight to nine months, but there was no actual formal request until some time around Christmas. As with any other mining company, all kinds of activity and discussions go on before there is a decision made for actual production. That was exactly where Loki was at. They wanted to know if we would be willing to sit down with them and discuss possible infrastructure some time ago, but the actual formal negotiations did not start until around the end of January.
Mrs. Firth: I want to ask the Minister some questions about the costs for which Loki is going to have to pick up the tab. Although some of these are included in the agreement, the Minister has not given us any solid numbers. I am curious about the costs being onerous to Loki Gold and perhaps derailing the whole project, or jeopardizing the project. I am looking at things like the cost of the agreement with the First Nations, the cost of the agreement with respect to housing, the potential costs with respect to the educational opportunities. Included are the apprenticeship opportunities, the environmental costs that the Minister made mention of this afternoon, the engineering standards of the roads and the additional costs that they may have to incur there. The Minister said that the government was going to pay $17,000, but the maintenance costs will go up because it has to be maintained to a higher standard, and Loki is picking up the tab for that.
We have not even touched on the bridge yet. It will cost Loki $620,000. This afternoon, the Minister said that they paid $223,000 for engineering costs. Has the Minister any figures? Has there been any information of costs associated with the commitments in the contract that has been given to the government by Loki, in order to try to instill some confidence on the government's part that the project is solid and that these extra costs are not going to jeopardize its success?
Hon. Mr. Fisher: Most of the costs that the Member has referred to are the costs of mining. An environmental assessment has to be done no matter where one is located in Canada. It is a very onerous, costly exercise. I have no idea how much Loki has invested in it.
If, in fact, we were not providing any support under the industrial support policy for the road construction, it would be a cost Loki would have to arrange. Whether they house their people in Dawson or run a camp, it is still a cost to the company. It is all part of the cost of mining. I do not know how much Loki has spent to date.
Mrs. Firth: Have the costs of the commitments that Loki is agreeing to even been discussed with Loki Gold? Is it going to be onerous? I can appreciate the costs of mining, but some of the costs can add up very quickly. It goes back to some of the former questions that were raised with respect to the viability of the project and whether or not the interpretation of the clauses may be open to a different interpretation because of onerous or extreme costs. I would like to know what reassurance the government sought from Loki, or if it even discussed it with Loki with respect to its ability to fulfill the terms of the agreement cost wise.
Hon. Mr. Fisher: I do not know what the Member is getting at. If we were not helping with the road under the industrial support policy, those costs would still be there for the mining company.
Mrs. Firth: The Minister does not know a lot of things about the industrial support policy. Perhaps I will ask the Minister another question; perhaps he can answer this one.
The Minister said something about the road being a public road, but according to clause 19, Loki is going to have the ability to restrict or deny use on it temporarily. I thought it was against the law to deny access on a public road. How is the government planning on accommodating Loki and giving it the ability to do that? Is it going to be done by regulation? How is that going to be achieved?
Hon. Mr. Fisher: Getting back to the Member's original comment, if the Member is interested, Loki has spent approximately $16 million so far, if that was the information she was trying to find out - I am not sure.
On the closing of the road, when it comes to a public safety question, the road can be closed. If a road is going to be closed for longer than a temporary period of time for safety reasons, then yes, on a public highway - I am not sure of the process any more - but I believe that we have to do it through an order-in-council. However, temporary closures for public safety can be done through a highway foreman or a superintendent. Essentially, that is the way it will be done under the agreement.
Mrs. Firth: That is where the Minister's rationale of why Loki wanted to build the road does not make sense to me. The Minister said that they wanted to build the road so they could shut it down, but they cannot shut it down without the government giving that authorization. It would have been easier for the government to build the road, maintain the control of the road and shut it down at the request of Loki, if need be.
The arguments that the Minister puts forward are really not arguments; they are more in the form of something that the Minister is making up on his feet or whatever.
With respect to the $16 million figure that the Minister just gave us as having been spent so far by Loki, is that a figure that Loki has given? What does that include - all of the things that I mentioned prior to this, such as the questions we have been discussing about the road? Is it for the environmental costs, the engineering standards, does it cover all the housing or the First Nations agreements, or the educational agreement?
Hon. Mr. Fisher: I believe the number that the company gave our people Friday was actually $16.5 million, which is the total project cost to date.
Mrs. Firth: Can the Minister tell us what it was for? I guess he cannot break it down. He is just telling us the total for whatever they have done so far.
Hon. Mr. Fisher: That is for everything.
Mr. Cable: I have some questions dealing with the risk and what happens if this operation shuts down or is shut down.
Last year, some of the Members went to the Loki site and were given a briefing by the manager. I was led to believe that there are a number of other areas of mineralization in the immediate area. Is it the understanding of the department that there are other potential mines in the area?
Hon. Mr. Fisher: Apparently there are other mineral zones on property that is staked by Loki. Off its property, there are some potential deposits but they have apparently not been tested.
Mr. Cable: Is there any mineralization that could lead to other mining projects to the east of the property - beyond where the road ends at the Loki property and farther east?
Hon. Mr. Fisher: They have not identified any quantities at this point in time.
Mr. Cable: The way the agreement is structured, it seems to focus solely on Loki. In fact, when we talk about the fiscal benefits, we talk about the benefit to the Brewery Creek project. On page 2 in the handout, it goes on to say, "There are no other known economic benefits attached to the road." Is there not a potential for other mining developments that would, in some fashion, justify the road - besides the Loki project?
Hon. Mr. Fisher: There is always that possibility, but when Loki was discussing the road to its property, there was nothing else that could be quantified at the time. I can see what the Member is getting at. If another large mine opened up nearby and the road were extended, then what would the new mine pay for the portion of the road that Loki had already paid for? I think that is probably what the Member is getting at. At this point in time, there is no indication of further mines in the very short-term future. There may very well be something down the road, but so far there is only exploration going on in some of the properties beyond Loki.
Mr. Cable: The reason that I bring it up - and the Minister has just indicated one reason - is that the contract has focused on Loki maintaining the road. Of course, if there were other mining developments that came onstream, I could see where that would pose some problems between the government and the party that has to maintain the road. I am just wondering how far the thinking got. I was also wondering if access to these mineralizations to the east of the Loki property would pose a problem if one had to go through Loki. That does not seem to be dealt with in the mining agreement. We have established that the road is owned by the government, assumedly up to the Loki property, but what happens after that?
Hon. Mr. Fisher: The road does not go on to Loki property. I will put it a little differently: Loki has not staked over top of the road. The road remains a public road. When it goes on to Loki property, or when they go off of the Old Ditch Road and on to Loki property, they can control that in whatever way they wish. The public would still have access on the Old Ditch Road.
In the agreement there is provision for the eventuality of someone else using the road - I am just trying to find it. I believe that there would then be a renegotiation, or the Yukon government would just take back over the maintenance of the road.
Mr. Cable: Where is that particular section?
Hon. Mr. Fisher: On page 7, section 15 of the agreement it says, "a period of eight years from the day of this agreement, or until such earlier time as Loki can demonstrate to the Yukon's satisfaction that Loki is no longer the sole substantial user of the road."
Mr. Cable: That answers my question.
On another issue, the issue of the risk of this mining operation either shutting down or never getting off the ground: what environmental permitting is necessary under the agreement? I know the agreement talks about a water licence and a land use permit.
This is at section 2(a), where it talks about all statutory and regulatory authorities governing road reconstruction and mining activities. Is there anything other than the EARP and the water licence that we are talking about?
Hon. Mr. Fisher: The ERP and the Water Board licensing are the costly processes that Loki has to undertake. There are other permits required for doing the work on the road. There are some permits required from our highways people, but they are not onerous permits.
Mr. Cable: Is the government an intervenor in either the EARP or the Water Board licensing? I see vigorous negative shaking of the heads of Members in the front benches.
Hon. Mr. Fisher: The Water Board hearing is on May 10 in Dawson. The mining facilitator will be at the hearing, but the government will not be intervening.
Mr. Cable: Has the Minister's department, and in particular, the mining facilitator, reviewed the heap leaching process with a view to determining whether or not it is suitable in this northern climate? The reason I ask is that, up until Wheaton River Minerals started its project - and I assume it has been started - near Dease Lake, I gather that the cyanide heap leaching process had only been used in dry climates.
Hon. Mr. Fisher: It is not really the mining facilitator's job. There is a whole process - the environmental screening - that takes all of that into consideration. Our mining facilitator and other people in the department have been watching and reading the information on it with a lot of interest, but it is not really our job to determine whether it is possible or not.
For the Member's information, there is another cyanide leaching operation just outside of Fairbanks.
Mr. Cable: The news reports in August dealing with the Wheaton River Minerals operation indicated that the heap leaching processing would start fairly soon. Does the Minister's official know if the Wheaton River project has actually started up and if the cyanide process is working?
Hon. Mr. Phelps: The Wheaton River project is the one just north of Telegraph Creek. They are going to heap leach the Golden Bear property. They built a pad, which was flooded out. A whole year was lost; the company is currently rebuilding the pad. There were heavy rains, and disaster befell the pad. It was placed on a spot on a mountain where it was washed away.
Mr. Cable: That is interesting news. The news reports of August 17, 1994, indicated that the B.C. government had in fact given approval to Wheaton River Minerals. From what the Minister just said, I would assume that it started up and then ran into problems. Is that what the Member is saying?
Hon. Mr. Phelps: What they do is they build a pad upon which they pile the ore. They built the pad, and before they got to the stage of piling ore on it, there was unusual flooding at the mine site. It washed out the road and the pad, so they never did go into production. They have to start from scratch and start over again, but they intend to go ahead.
Mr. Cable: I am curious as to why the government is not an intervenor in this fairly significant new technology, and why it does not seem to be keeping some sort of watching brief on this process. It ran into a lot of mischief in the northern United States, and I am not sure why the Government Leader - who is leaning back questioning why we have some interest in cyanide - would not realize that it could be a problem and could put this whole operation on the rocks. Why has the government not had a more active role in monitoring this process?
Hon. Mr. Fisher: We are monitoring it very closely because it is a new process for the Yukon. There is a lot of interest in it. We are monitoring it very closely.
Mr. Cable: I was going to say "define closely" but even at quarter to 10:00 that is stretching things.
What is it that the government is actually doing? This is a federal process, so the territorial government can take some sort of advocacy or adversarial role. I do not know what its reticence is. Could the Minister tell the House just exactly what the Department of Economic Development has done in relation to closely monitoring this cyanide heap leaching process?
Hon. Mr. Fisher: We have staff from the Department of Economic Development sitting on a committee with the federal government that reviews all the technical data that goes through the various processes. As I said before, we will have staff at the Water Board hearings and we have attended all of those types of hearings and meetings, as well as looking at Loki's applications, with all of its documentation. Our people have reviewed all of that material.
Mr. Cable: I take it, then, if I could put some words in the mouth of the Minister, that he is satisfied that we are not going to see any permitting problem with respect to the cyanide process and that he anticipates that this road construction will start shortly?
Hon. Mr. Fisher: Yes, the final permitting is through the Water Board and, once it gets the water permit - well, I do not know; they may be working in parallel right now - but it is financing and the water licence that are the two holdups right now. The water licence is on May 10, so we should know more after that date.
Mr. Cable: I have a question that derives more from curiosity - my support of the bill, or lack of support, certainly will not hang on it. In paragraph 16, the clause says, "Loki agrees to allow the supply, erection and maintenance by Yukon of a project sign or signs specifying that the project is a Yukon industrial support policy project."
If the government owns the road, and presumably the right-of-way and edges of it, why do we have the government going hat in hand to Loki to put up a sign on its great Yukon industrial support policy?
Hon. Mr. Fisher: I do not really know. As a matter of fact, when we were elected into government, highway signs no longer display the Minister's name on them. We changed that right away. I really do not know why this is in there. I expect that whoever drew up the agreement thought it would be a nice touch to the road, so they included it. Other than that, I honestly and truly do not know.
Mr. Cable: I thank the Minister for that answer. I wonder if the Minister could flip over to Schedule A, at the first page. We have this $620,000 bridge referred to at paragraph 3. It says, "The bridge shall be designed for highway bridge 230 and in accordance with appropriate bridge design code. Does the term "highway bridge loadings" have a definitive meaning with the Department of Community and Transportation Services? I know the Minister was the former Minister of that department.
Hon. Mr. Fisher: Yes, it does, but I do not recall exactly what it means. I do not know if it is a single lane or a two-lane. In section 2, it does say, "to a minimum RLU-60 geometric standard". The Member opposite is actually an engineer and probably knows more about that than I do.
Mr. Cable: No, I do not. I have never built a bridge.
Is the bridge a double-lane bridge? The reason I ask is that we have had a little kefuffle in the House here about the Carmacks area. Here we have a bridge designed for highway bridge loadings, costing us only $620,000, over a river roughly as wide as the Nordenskiold. I am rather curious about the costing and just what this bridge entails.
Hon. Mr. Fisher: I am not sure if it is a single or double lane. However, there is consideration being given to purchasing a Bailey bridge, which normally are single-lane bridges. The cost would be for purchasing a used Bailey bridge, transporting it up here and then installing it.
Mr. Cable: I wonder if the Minister could let me know at some juncture if that is a double- or single-lane bridge, and what its dimensions are? I am anxious to take that back to the good burghers of Carmacks, to see if they can get a $620,000 bridge.
Let me go back to the first point that I was talking about a few moments ago. That was the other properties that are in and around Loki. What does the Minister see realistically within the life of this mine, which I gather is eight years - eight years from later this year I suppose - as the prospect for other properties being brought onstream and being serviced by this road?
Hon. Mr. Fisher: We are getting into hypothetical situations. However, there are a couple of possibilities. The First Nations have signed an agreement with Loki, and some of their selections have never been explored, so they do not know if there is a possibility of mineralization there or not. They have some sort of agreement with Loki that they may be able to mine on Loki property. Those are a couple of possibilities. However, we do not know at this point in time. It may be that Loki has mineralization on its own property, such that the whole mine life could be extended.
The known reserves are for an approximate mine life of eight years. Beyond that, we really do not know.
Mr. Cable: We have a road that goes up to the edge of the Loki property and presumably it has the surface rights. There is some mineralization to the east of the Loki property. What is the long-term strategic goal of this government in servicing these properties? How is it going to get around the Loki surface rights, if, in fact, we find some mineralization and potential mines to the east of the Loki property?
Hon. Mr. Fisher: If there was some potential for mining some of those properties to the east, it may very well be that a different access would have to be built. Apparently they are quite a distance from the Old Ditch Road.
Mr. Cable: Were there any discussions in the negotiations with Loki about providing access through the Loki property at some juncture in the future?
Hon. Mr. Fisher: It was not discussed, but under the mining acts Loki only has the right to the mineral. They do not have rights to the surface, so I do not see where there would be a big problem if there was something beyond the Loki property that required access. I do not see that as being a difficulty.
Mr. Cable: I think, to use Whitehorse Copper as an example, surface rights are usually tied down for roads and buildings, too.
I think what the Minister has indicated, if I could encapsulate, is that this whole project relates solely to Loki, and I think this is confirmed by the analysis of the benefits, in that there are no long-term strategic considerations attached to this road for other purposes. Am I understanding the Minister correctly?
Hon. Mr. Fisher: Yes, that is generally correct. There will be some incidental uses of the road by residents of the Dawson area. It was thought at the time that Loki would be the significant user of the road.
Chair: Is there any further general debate?
Mr. McDonald: Yes, I have a few more questions. I must admit that I listened carefully to the Minister's explanation about why the mine will build the road and not the government. I can honestly tell the Minister that I do not know why, other than the fact that the government and Loki came to a mutual agreement in the end that the mine would do it. I do not know why it is going this particular way.
I faithfully wrote down the Minister's explanations, but they do not make any sense to me.
That is neither here nor there and under normal circumstances I am sure we would get off on that tangent. What I would like to talk to the Minister about is tendering procedures.
When I asked the Minister whether or not the tendering procedures would be the same as those for the government, the Minister said that locals would be able to bid. The Minister will know that our tendering procedures clearly specify how bids will be prepared, the timing of bidding, and that sort of thing, to ensure that the process is fair. There is no guarantee that, if the mine does not adopt the tendering procedures of the government, it will be fair in the same sense that the government procedures are fair.
I will ask this very specific question to close this subject off: are the tendering procedures expected to be the same as the government's?
Hon. Mr. Fisher: I do not know if they would be exactly the same tendering procedures. I can get back to the Member about that - I can get comments from Community and Transportation Services - but they would be recognizing tendering procedures. I cannot remember the name, but there are contract documents that are usually put out by a lot of engineering firms when they are putting together a tender for a proponent. They use forms that they put together - I cannot remember the number of them. I am not sure if they are using those or ones similar to the ones that the Yukon government uses. I am not sure, but I can get back to the Member with that information, once I have checked with Community and Transportation Services.
Mr. McDonald: I would appreciate that information. I know that the Minister will be aware that a few years ago the previous Leader of the Official Opposition - the Leader of the Yukon Party - would have had a field day on this subject and would have engaged the Minister at great length about tendering procedures, and o
n the general question about why the government is not tendering the work itself, given that this is public money for a public road, but I will not be so cruel as to go in that direction. I will wait for the Minister to provide the information.
I will make a political point. There will be people who expect fair procedures and will really object if there is any perception that friends of Loki are building this public road at public expense, and they will want a fair and even chance, if they are cost competitive, to build the road. I will just make that point and hope that Loki hears it, too; otherwise, this whole project can turn very sour.
The second issue is the conditions under which the road will be closed. The agreement states that Loki will have the right to close it on reasonable grounds, and it will have to seek permission from the highway foreman in order to get a permit.
Can the Minister tell us why the agreement does not say that when Loki, for safety reasons, wants to close the road it will seek the approval of the foreman and why, instead, it says that Loki has the right to close this public road and inconvenience the public when it perceives a safety problem on the road?
Hon. Mr. Fisher: I do not think anyone considered that an issue because there is extremely little, if any, traffic on that road. For legal reasons, I do believe that the highway superintendent has to be the one to authorize the closing of a road for safety reasons and so on, but I do not believe anyone felt it was an issue.
Mr. McDonald: Was any attempt made to discuss existing use with the people who use the road right now, to determine their thoughts on the matter? I ask the question quite frankly, because I dealt with a public road on a mining claim that was considered public access and was closed from time to time by a particular mine; it caused great upset to some people in the area. It is not a huge issue, but it can, from time to time, be a big issue for some people.
Hon. Mr. Fisher: What I will do is get a note from Community and Transportation Services on this matter, because apparently there is one leaseholder aside from Loki, near the start of the road. The department felt that there was not really an issue there, but, again, I am somewhat curious myself about whether it talked to this person and what his feelings were about it. I will get a note from C&TS and I will pass the information on to the Member.
Mr. McDonald: I would appreciate that. I would just make this point to the Minister, and I know he is aware of it. All we are going to need is for some people, who normally use the road for recreation purposes, to travel down the road on a weekend jaunt and come up against a barricade erected by the mining company. Obviously, there are going to be some hard feelings about it if they do not understand or if they do not feel that the closure is justified. I hope the closures would only be used very sparingly. I am a little surprised that the company would write into the agreement the right to close the road. Usually, if any user can demonstrate that safety would be jeopardized by the legitimate use of the road, then preventive measures are taken, including - in the extreme case - closure.
The Minister did indicate, as he put it, that a road that goes on to Loki property is a road that Loki can control. I am not aware of its ability to do that under the Highways Act. I guess it depends on what kind of property we are talking about. I am presuming that most of the property the Minister is referring to is actually mineral claims. There may be some limited leases. The Minister can correct me if there is any land owned by Loki at the site.
It certainly does make a difference for Loki's ability to control access. I know there are mines with roads that the mining companies have built throughout their claims that are public roads. Once a road is opened up to the public, it is a public road - even if the mining company builds it on mining claims. That is my understanding of the Highways Act. Is there something new that I do not know about, in terms of Loki's rights to control access to rights-of-way on their leases?
Hon. Mr. Fisher: Apparently they have taken out leases where the buildings and heap will be. They do have control over who gets in there. The Member is right that they only have mineral rights anywhere there is a road. If one can get to the road, anyone can use it. They apparently have leases and can control access to those leases.
Mr. McDonald: I understand what the Minister is saying. The control of the access to the campsite and mining site is reasonable, unless of course the right-of-way goes through and continues on. Ultimately it constitutes a right-of-way. That would also be a difficult thing for the mining company to control. Anyway, I understand what the Minister is saying on that count.
With respect to the maintenance of the road, the Minister indicated that work previously done by government forces would now be done by the mining company. Did the Minister or government at any time discuss this contracting out of public work with the public service union?
Hon. Mr. Fisher: I am not sure whether or not the Department of Community and Transportation Services did. I think the $17,000 was for two wet bladings and one dry blading, which would mean snow removal twice in the winter and one blading of the gravel in the summer. It is a minimal amount, but I am not sure if it was discussed with the union or not.
Mr. McDonald: I do not know what the union's reaction would be either, quite frankly. I just asked the question because what came to mind because the amount of work that is being done by the mining company, which used to be government work, is relatively minor in nature. There is a principle here that I know some unions hold quite dearly. I would advocate to the Minister and the government that it actually take the trouble of informing their employees and agents about the government's action. Otherwise, people may get the wrong impression about the government's intention.
I would like to briefly discuss the viability of the project. I know that Economic Development has made a best guess judgment that the project is a viable one and certainly, anything that we say here would only be the briefest of sketches of what constitutes economic viability for the project.
I did note that the department analysis indicated that gold would have to be above $380 an ounce over the long term and the dollar would have to be below 71 cents U.S. in order for the project to remain viable.
Having looked at the Globe and Mail's Report on Business and the key market indicators for gold and the dollar, it does not seem that reassuring to me, but maybe the Minister can give us some comfort. I feel obligated to bring it up, only because I noticed that the dollar has been pretty consistently over 71 cents and it has been around the 73 cents mark for the last while., even though gold, right now, is at $389 per ounce. It has showed some considerable volatility down below the $380 mark on a number of occasions in the last year. The Report on Business does give the year-long projection. What comfort can the Minister give us that the viability is as secure as the proponents and others have led us to believe?
Hon. Mr. Fisher: In the summary, the energy and mines branch indicated that it would take a number of variables. If gold prices dropped to $375 per ounce and the dollar rose to 75 cents Canadian, the operating costs rose to one and a quarter times Loki's estimates, the capital costs rose to 1.15 times and the recoverable gold dropped by five percent, the impact would be to render the project marginal. I think that is generally not unlike most mining companies that have been in the Yukon before and probably not unlike a lot that will be here in the future.
I cannot really comment on it. I do not know if the price of gold will go up or down. I know there are some people who would like it to go up and others would like the dollar to go down. I cannot really comment on what my own thoughts are on where it is going to go, but I think that is not unlike most mines in North America.
Mr. Harding: I have some questions about the economic assessment that was done. I do not feel much comfort that there has been extensive work done in the feasibility ranges with this particular company. That is somewhat disconcerting, given the value of the taxpayer expenditure that we are looking at investing in this particular project, given that it is a new and unproven project with only an eight-year life.
Nonetheless, I would like to ask the Minister about some of the information that has been provided to us. I hope to get more detail than was provided in the last answer. The project viability comes into question regarding net present value and internal rate of return. An example is provided, and that is that gold prices dropped to $375 U.S. per ounce. I have reviewed gold prices over the last couple of years, and we have been in that range consistently for a while - it is now up around $390. However, for January, February, and March, it had actually dropped into the range of $375 or $380.
The dollar rose to 75 cents Canadian - right now we are at 73.5 cents, roughly. Most projections are that it is probably not going to rise much further. That is still getting close to 75 cents, and it is certainly more than the 71-percent projection, which is supposed to provide some net internal rate of return for investors in Loki Gold. The example also points to 25 percent, or 1.25 times Loki's estimates of operating costs, and 1.15 times Loki's estimates of capital costs. Then there is a proviso underneath that says there is a likelihood that the operating and capital costs that Loki had should increase above their estimated costs. It seems that on those two scores there is some likelihood that we might see something in the range of a 1.25 times increase in operating costs, and a 1.15 times increase in capital costs.
That leaves us to discuss the issues of the Canadian dollar and the U.S. price of gold per ounce, which we have seen hover in the last little while around the ranges of an unsustainable level by Loki Gold over the long term, in terms of positive cashflow. We then get into the issue of recoverable gold, the specific gravity and what the return is per tonne of ore.
The Minister will more than likely know from his department that one of the serious factors that caused the closure of the Canamax mine was the fact that it had overestimated the density of the gold in its deposit. It actually had to do a heck of a lot more mining to return the gold figures that it wanted to return, and that increased costs dramatically, coupled with the downturn in gold prices around the $330 to $340 an ounce mark, such as we had a couple of years ago, and it ended up leading to the eventual shutdown of the mine.
Can the Minister give me some more comfort that this worst case scenario, or unfeasible-case scenario, which appears to be closer than what has been indicated in the Minister's statements about the project, has been well investigated by the department prior to the expenditure being made on the highway?
Hon. Mr. Fisher: There has not been an expenditure on the highway, and the expenditure will not be made until the permitting is completed and until the financing is in place. I believe the banks are far more qualified than I am to determine if the project is viable; they are going to be looking at all those factors and they are the ones who are going to be determining if it is financially viable.
Mr. Harding: We are debating this expenditure this evening and as far as we, in the Opposition, are concerned we are approving this expenditure. The Minister says it is based on financing, but we are limited in the information. Certainly the banks have a lot more cards to play in terms of extracting this detailed information from the mining company. We are relying on the information, in terms of approval of this expenditure, that the Minister has provided for us so we want to gain some comfort from that that the homework has been done by this government when it is about to approve an expenditure of this amount.
I certainly am one who has a made a livelihood from the mining industry, and I am in support of it, but nonetheless I have heard lots of talk from this government about how the Faro property has been marginal in the past on all kinds of hypothetical and stretched arguments. It is only important and imperative that I bring these issues to the government and try and get some comfort that it is doing its homework.
We are going to be approving this expenditure this evening in this debate, one would think, and the Minister has said though that this money will not be expended. Am I to infer from that that there is going to be more work done to assess the feasibility of this and that he will be bringing that forward prior to the expenditure?
Hon. Mr. Fisher: No, we will not. The department has looked at the viability of it, and has made a determination that, if all of those factors kicked in, then it might be marginal. I think they have made a fair analysis.
Mr. Harding: If some similar arrangement of those figures comes into play, then the government will not make the expenditure - is that correct?
I asked the Minister if some arrangement of price per ounce, dollar amounts, costs of capital, costs of operation, recoverable gold comes into effect and estimates are provided to the government and they are going to ask for them, I assume that they will not provide the expenditure - is that correct?
Hon. Mr. Fisher: If the Member is asking if the expenditure is dependent upon the price of gold and the price of the dollar, and so on - no. The price of gold is dependent upon the company's ability to raise financing and the company's ability to get through the permitting process.
Mr. Harding: The Minister is apparently relying on the financial institution, or wherever the financing comes from, for this particular project, to determine whether or not the government is going to make a multi-million-dollar expenditure. I would not say that that is particularly fiscally responsible on the part of this government. I think we have as much right as a bank to know what the figures are, when we are talking about an expenditure for a road that is primarily - as the document that the government provided to us said - going to be for the benefit of that mining company. So, I do not know why the Minister would not be more interested in getting very detailed information from the mining company about what - as they call it in some mining companies - the red-light numbers are.
Let me get into that with the Minister just briefly. I touched on the issue of specific gravity and I will be asking the Minister - when we come back after the break - for some commitments for some information on that. The winter forecast that was tabled today calls for a gold forecasted price of $390. That differentiates from what we have seen over the last three months, where it has hovered around $380. It is slightly above the price that is desired by the mining company for a minimum to return a positive cashflow and eternal rate of return.
However, gold prices normally rise when people are buying gold as a hedge against inflation. As the Minister of Economic Development will know, we have seen the gross domestic product in this country trail off dramatically because of the real interest rates in this country. There is not as much fear in either America or in Canada about higher inflation rates, which would seem - in most of the projections I have read about - that people are calling for some reduction in the price of gold.
Does the Minister agree that gold is often bought as a hedge against inflation and that we are not in a period of inflation worry because of the Bank of Canada's rise in interest rates that we were in over the last few months?
Hon. Mr. Fisher: The Department of Economic Development used Loki Gold's feasibility study, and that is where they got the numbers from. The feasibility study is a confidential document, and the company allowed us to use that document to make that determination. That document will also be given to financial institutions to make their determination of whether or not funding will be forwarded to Loki or not.
Chair: Is the wish of the Members to take a brief recess?
Some Hon. Members: Agreed.
Chair: We will take a brief recess.
Chair: I will now call Committee of the Whole to order. Is there further general debate on Bill No. 6?
Mr. Harding: I was questioning the Minister, to not much avail, prior to the break about the information that has been obtained from the company, and I am sure that it is information that has been provided to the best of its ability at this point. Where is the company obtaining financing? Is it from a chartered bank?
Hon. Mr. Fisher: It is my understanding that the Rothchilds have been identified in a public statement issued by the company as the prime lending institution.
Mr. Harding: Is the government's policy going to be that, if the Rothchilds or the financial institution support the project with financing, they will ask no more questions about the feasibility and build the road pursuant to the agreement?
Hon. Mr. Fisher: Part of the policy is that, when financing is in place and all permitting is in place, we will carry on with our infrastructure. Unless something new occurred of which we had previously been unaware, yes, we would go ahead and provide the funding.
Mr. Harding: Even though the mid- to worst case scenario identified in the economic assessment is fairly ascertainable, given market conditions over the last year or two, the government is not going to seek any further understanding or commitment on the feasibility of the project prior building the road - is that correct?
Hon. Mr. Fisher: Yes, that is correct.
Mr. Harding: I will just make the point with the Minister that I think the government should be entitled to the same information that the Rothschilds are going to be entitled to with regard to feasibility study, projections for price and projections for recoveries, particularly when referencing operating and capital costs, as they have a massive impact on the project. Can the Minister provide for me the most up-to-date information they have about the recoveries that are projected for this project, and the specific gravities - the densities - of gold that they are going to have in the ore that they mine?
I would like to get that on the record so that we can see whether or not it is a reasonable forecast. I pointed out that Canamax had some real problems, for financing purposes, by overestimating what the density of its ore was going to be. When they went into actual production, they had a heck of a lot of problems, and ultimately it led to their shutdown.
Hon. Mr. Fisher: I have some information that is apparently public information. The gold production is estimated at 80,000 plus ounces per year for seven and a half years, for a total of 626,000 ounces. The overall gold recovery is estimated at 80.3 percent. Capital costs are $41.7 million. Production costs are as follows: mining, $3.49 million; processing, $2.27 million; roads and power, $1,54 million; reclamation, $0.57 million. The cash costs are $173 per ounce US per ounce of gold. The cash plus total capital cost is $234 US per ounce of gold. Discounted cashflow rate of interest after tax is 45.8 percent, and the payback from startup is 1.8 years.
Mr. Harding: I thank the Minister for that. Perhaps I did not hear him. I am not sure what gold is measured in. I have been involved in gold, but is it measured in grams per ton? What is the expected density of the gold in the ore that they expect to mine?
Hon. Mr. Fisher: The mine's reserves are 16,677,000 tons at 1.48 grams per ton, which works out to 793,500 contained ounces of gold. We do not have the density figures here. I am sorry.
Mr. Harding: I thank the Minister for that. That is essentially the density figure I was looking for.
The next question I want to ask is about the projections that are provided for the gold prices in the economic forecast. Surely the Minister would have been briefed on that and how it relates to the agreement that he has brought before the Legislature, because, of course, gold prices are going to have a direct impact. I remember the Members telling me I was only responsible to look at lead and zinc prices when making decisions about financing for the Faro mine. I know the government has done its homework on this.
My question is this: in terms of forecasting gold prices, how confident is the government in its projections of increased prices, given that there has been somewhat of a stranglehold on inflation? How did the Department of Economic Development come up with a forecast that pointed to increased gold prices?
Hon. Mr. Fisher: The department has not indicated that prices would increase. They are saying if prices went down - as well as other factors - it could be marginal.
Mr. Harding: Perhaps the Minister misunderstood me. I am looking at the economic forecast, on which I am sure the Minister was briefed. He certainly would have asked questions with respect to the agreement to provide financial assistance to Loki Gold about the forecast for gold prices. In that particular document, an increase to the price of gold is forecast.
How did the Department of Economic Development rationalize that increase? What was the basis of the department's assumption, given that inflation has been strangled to the ground and our economy slowing down, which was the desired effect of Allen Greenspan in America and the Bank of Canada here?
Hon. Mr. Fisher: Is the Member referring to the economic forecast document? Which document? What was the question?
Mr. Harding: I am making an assumption that, when the Minister was shown this bill and the document to justify the expenditure of millions of dollars on the road, he would have asked his department about the feasibility of the mine. One of the key components of that feasibility would be the price of gold.
Today, the Minister tabled an economic forecast with assumptions based on the department's forecast that gold prices will increase. I have not heard a lot of those projections, because the gross domestic product has been slowed down and inflation fears have been reduced in the country. Often gold is bought as a hedge against inflation.
What was the rationalization of the department in forecasting the increase in gold prices?
Hon. Mr. Fisher: I would have to ask the economists on what they based their assumption that the price would increase. I have not asked them for those details at all.
Mr. Harding: Why would the Minister not do that when we are talking about a fundamental assumption in terms of the feasibility of this project? Why would he not ask why Loki expects gold prices to rise? The Minister should test the officials, at least to the extent of his abilities, on their assumptions, because we are talking about millions of dollars.
Hon. Mr. Fisher: I wish I did have the time, but I certainly do not question every figure the economists put in the forecast. I just cannot believe that the Member thinks that that should be a Minister's job - to question every figure in the department's forecast. I did not ask the economists where they got their figures; I really did not.
Mr. Harding: We are talking about an expenditure of millions of dollars that is based on the feasibility of this project. The document that the Minister has brought forward for us to approve states that the government is only going to build the road if it is financially feasible. When I ask him detailed questions about what level of research has been done by the department and what level of questioning the Minister has put to the officials to improve his understanding whether or not this is a legitimate expenditure, he cannot answer a thing.
He is getting advice from the Member for the Klondike, which is certainly a hazardous prospect.
Let me ask the Minister this: does he not have any understanding of how important the price of the product is going to be, when the economic summary that has been provided for the Brewery Creek project clearly points out that we have some serious questions, given the historic price of gold over the last two years, and whether or not it will be feasible when coupled with increasing capital and operations costs, which the economic summary points too, as well as the Canadian dollar, which is well above the 71 percent mentioned for a positive cashflow. Does he not care about that?
Hon. Mr. Fisher: I think that the Member took some silly pills at the break.
The department provided an analysis based on feasibility that the company had done and based on some work that their economists had done, and it has made the statement that if the price dropped to $375, the dollar rose to 75 cents, the operating costs rose to $1.25, the capital cost rose 1.5 times Loki's estimate and the recovery of gold dropped by five percent, the impact would be to render the project marginal. That is the information that Loki has provided. It has used various people from its departments, and it has used various correspondence and documentation to come up with that. I certainly did not question their research; I did not sit there with them when they did it. I am quite comfortable with the figures they provided.
Mr. Harding: The Minister just read out why we might have a problem.
The economic assessment points out a price of $375, where we are going to have some problems with feasibility for this project. Over the last couple of years, the price has hovered around that range; yet, his economists are predicting a price of $390. If it drops below $375, then we have a problem - bingo.
Surely the Minister would have asked that question. I am not saying that the economists are wrong. They certainly are more educated that I am; that is for sure. What I want to know is what the rationalization was. Perhaps the Minister can stand up and say that he will provide me with some of the information that the department used. That would be a fair response.
The Minister is laughing with the Government Leader. He is a big expert on mining. We know all about his business expertise in this Legislature.
Can the Minister provide me with some of the rationalization for the forecasted increase in gold prices?
Hon. Mr. Fisher: I will ask the economists what type of information they have, and we can certainly provide it to the Member opposite.
Mr. McDonald: I have a few questions for the Minister. I will not go on about Loki's liability, although I will take note of the fact that whenever Cyprus Anvil or Curragh were discussed in the past, the government Ministers were fond of trying to encourage the Member for Faro to justify his support for the mine in Faro and particularly to demonstrate where lead and zinc prices were going to go. So our operating assumption coming into the Legislature this afternoon and this evening was that the government would have taken the trouble to get deeply into where gold prices were because that was a test they had put us through even though we had no staff, no economist, nothing to aid us. We assumed that because they had all the resources at their disposal they would give us a lot of good information, but we were wrong. So what - right?
Anyway, I do have some questions about a couple of other things, particularly the Dawson First Nation's agreement and whether or not the Minister can provide us with a copy of it. Also, I notice that the company has indicated that it is going to be purchasing power-generating equipment from the government, so I would like to know what that is all about.
I cannot identify the page clearly - it is page 5 in the agreement but there are a number of page 5s here and it is not clearly lined up, so I do not know what precisely this refers to - but I will just read it out - it is just one short paragraph: "In the event of a temporary shutdown of Loki's mining operation exceeding six months in duration, Yukon and Loki may agree that Yukon will assume maintenance responsibilities for the period of the shutdown. Maintenance costs incurred by Yukon during the shutdown period will be set off against payments due to Loki."
This suggests that even if there is a shutdown greater than six months the Yukon will continue to make Loki's debt payments with respect to the road construction loan. I was under the impression that the Yukon's reason for wanting to provide Loki with funding in this way was to ensure that if there was a shutdown of any length of time they could rescind the obligation to make the debt payments. I am a little confused as to what this might mean. As far as I am aware, it explicitly says that the minimum maintenance requirements could be assumed by the Yukon, and the $17,000 a year would be deducted from the debt repayment schedule that Loki incurred by constructing the road in the first place.
From what the Minister has said, I get the impression that if there is a shutdown in six months, the Yukon should feel no obligation at all to make those debt payments. What is the case?
Hon. Mr. Fisher: I believe that the maintenance costs - if there is a shutdown, and Loki no longer maintains the road - we would take up our old maintenance schedule, which I outlined earlier, and we would use the $17,000 that would have been paid to Loki to pay the maintenance costs on the road.
Mr. McDonald: I understand that, but I do not understand why the government would be continuing its payments to Loki, with a likely shutdown, as is anticipated in the agreement. From our discussions earlier this evening, the Minister led us to believe that the reason why the payments were being provided to Loki in this extended payment schedule is to ensure that, if the mine shuts down, Yukon would not be held wholly responsible for the balance of the construction costs. I was given to believe that if the mine shut down, we could recover some of the costs. For example, if it shut down in year three for an extended period of time, the government could simply cut off payments and we would limit our liability. This seems to suggest that we continue the payments, even on an extended shutdown. What is the case?
Hon. Mr. Fisher: My understanding is that we would not continue the payments and that this would be offset against the $17,000 that we would normally provide on an annual basis to Loki. Rather than pay it to Loki, we would be offsetting the maintenance costs against $17,000.
Mr. McDonald: I am not sure that is what it says at all, but is it the intention of the government that when the mine shuts down for an extended period of time that the government will stop debt servicing that Loki has incurred with some lender? Is that the intention?
Hon. Mr. Fisher: Yes, it is. If the Member goes back a couple of pages and looks at that schedule, he will see that it falls under the maintenance schedule.
Mr. McDonald: I know that this refers to maintenance of the road, and I am asking if the government is intending to cut out debt payments and the Minister has assured me that yes, indeed, the government will. We will wait for that in the event that that unfortunate eventuality occurs.
A preliminary arrangement has been struck with the Dawson First Nation. What specific deliverables did the Dawson First Nation receive in their agreement? What can the Minister tell us about that arrangement?
Hon. Mr. Fisher: The government does not yet have a copy of their agreement. I understand that the agreement was only signed Friday afternoon and all the government has is the news release from the Loki Gold Corporation. I am not sure what is contained in the agreement between the First Nations and Loki.
Mr. McDonald: Does the Minister have any knowledge of what might be in the agreement?
I do not want to be distracted by the Minister of Tourism; he is always an irritation, but at 11:00 p.m. it can be quite upsetting.
I am talking about the Dawson First Nation agreement and I am interested in knowing what local benefit was achieved by the First Nations? Has there been a watching brief prepared by this government on the negotiations between the Dawson First Nation and Loki Gold? Does the Minister, the department or anybody know what is going on there?
Hon. Mr. Fisher: The negotiations between Loki and the Dawson First Nations were entirely private negotiations. They did not involve the government. All we know is that they were negotiating - as it says in the news release - job training scholarships, contracting opportunities for the purchase of goods and services, environmental monitoring and trapper compensation, and opportunities for expanding the land base for a joint-venture exploration program. We have not been party to the negotiations, nor have we received a draft agreement yet.
Mr. McDonald: Did the Dawson First Nation object to informing the Government of the Yukon about what it was seeking in the negotiations? Did they indicate that is was none of the government's business? Is that the reason we do not know, or is it that the government did not take an interest in the negotiations and waited for the press release, along with the rest of us?
Hon. Mr. Fisher: We have been watching the negotiations from a distance and talking to the First Nation and to Loki Gold. However, we were never invited to be part of those negotiations, and we did not push it one way or the other.
Mr. McDonald: I am not going to push it either. I think it is remarkable that the government and the Opposition Members are on an equal footing when it comes to finding out what the Dawson First Nations have secured in negotiations. I would have thought that it would have been otherwise.
The company's officials have made reference to the fact that they are seeking the purchase of power-generating equipment from Yukon Energy Corporation. To what does that refer?
Hon. Mr. Fisher: Loki has had discussions with Yukon Energy Corporation, but there have been no decisions made at this point in time. I am not even sure what it was asking for, but there have been a couple of discussions with Yukon Energy Corporation.
Mr. McDonald: Can someone find out what it has been asking for - in terms of a legislative return, or some sort of report back to the Legislature - just to let us know; for example, if it is equipment, then let us know that it is equipment. If it is something more than that, can someone let us know at some point?
Hon. Mr. Fisher: Apparently, Loki has asked Yukon Energy Corporation if it would be interested in putting a bid in to supply its power requirements, but there has not been a formal response to that yet. I may be able to get more details from the Yukon Energy Corporation and provide that to the Member.
Ms. Moorcroft: I have a couple of questions here. It seems that the Minister has not had a great deal of time to read over the document and become familiar with it. He did not seem to be aware of the part of the agreement that talks about the mining company getting power facilities from the Yukon Energy Corporation, or the feasibility of it.
I have a couple of questions related specifically to the road. There will be no camp at the mine site; housing will be in Dawson City and area. I noticed that, under transportation, the policy of the company is that Loki Gold will provide transportation for its employees at its expense to and from Dawson City and the mine site. Parking for personal vehicles at the mine site will be tightly controlled by management.
The mine will not be allowing employees to park personal vehicles on the site. That leads me to question whether or not the road remains a public road. Is that the case?
Hon. Mr. Fisher: The Old Ditch Road certainly remains a public road.
Ms. Moorcroft: The Old Ditch Road is, I take it, what is referred to here as "the North Fork Road (East)".
The agreement also refers to the bridge that will be built. I wonder if the Minister can tell us when he will get back to us about whether the bridge will be a single-lane or two-lane bridge? When is he going to come back with that answer?
Hon. Mr. Fisher: I said that I would get back. I will have to refer to Community and Transportation Services. I will contact the department tomorrow. As soon as it knows for sure what will be in it, we can provide it to the Member opposite.
Ms. Moorcroft: That is exactly why I wanted to ask the question; it was so that I could find out when we would get an answer. We have had a lot of experience with asking questions and, months later, still not getting answers.
I was referring to the new bridge that they will be constructing over the north fork of the Klondike River. Since there is a schedule of a couple of pages about the construction of the bridge, I do not think it should be hard to find that information and get it back to us soon.
There is also reference to the Lee Creek bridge, which will be the company's sole responsibility. Does that mean that once we get to the Lee Creek bridge on the North Fork Road, it becomes a private road after that point?
Hon. Mr. Fisher: The Lee Creek bridge and onward is not part of the agreement.
Ms. Moorcroft: Is the Minister saying that since it is not part of the agreement he cannot answer the question as to whether or not it will be a private road after that point?
Hon. Mr. Fisher: It is still a public road, but it is not covered by this agreement.
Ms. Moorcroft: In the specifics of the agreement, they anticipate that the road shall be available for public use, but that that use may be restricted or denied temporarily by Loki in the interests of public safety. I wonder what the definition of "temporarily" is. For how long will the government accept the road remaining closed? Will there be a two-week maximum? Has the Minister thought about that?
Hon. Mr. Fisher: It was intended just as scheduling for construction, which normally would mean two or three hours, but if the Member is going to belabour this I can get C&TS to give an estimate of time.
Ms. Moorcroft: I would appreciate it if the Minister could come back with an answer to the questions.
I note that, in the event of a dispute, a matter can be referred to arbitration. Does the government anticipate any arbitration costs or does it think it will be able to continue to reach mutual agreement?
Hon. Mr. Fisher: That is hypothetical. We certainly do not anticipate having to use arbitration, but it is covered in the event that it does happen.
Ms. Moorcroft: The Minister might think these are hypothetical questions, but I am just following up on the actual items that have been put into this agreement.
The document states, "The Yukon shall prepare and, after prior notice to Loki, release the initial public announcement in respect of this agreement." Does the Minister know when the public announcement will be? Is he going to spend a little more time becoming more familiar with this agreement or is the department going to put out a public announcement tomorrow or next week? Does the Minister know?
Hon. Mr. Fisher: We will be issuing a public announcement after the bill is passed by the Legislature.
Ms. Moorcroft: The final question I have relates to the section of the agreement that announces that Loki will allow the Yukon to supply, erect and maintain a project sign specifying that this is a Yukon industrial support policy project. Is the Minister quite confident that this agreement is not simply in aid of that sign announcing the reality of the Yukon industrial support policy because there is a road project for it?
Hon. Mr. Fisher: I am not sure if it is in the regulations or if it is a policy, but all roads that are funded by the Government of the Yukon have a Government of the Yukon sign of some sort on them. I would expect that is the reason for this particular clause in the agreement.
Mr. Harding: I have some questions for the Minister about a level playing field for the mining industry. I would like to ask the Minister this: if another mining company wanted help on an access road, how would it go about it with the Minister, in terms of seeing if it could come up with a similar agreement for road upgrading, such as this agreement with Loki?
Hon. Mr. Fisher: The policy does outline who could be eligible. If a mining company feels it is eligible under the policy, certainly we would be interested in talking to it.
Mr. Harding: I wonder how the situation about the public road that accesses the Faro mine would be different from the situation of the public road that is going to access the Loki mine.
Hon. Mr. Fisher: That is interesting. I have not personally spoken to representatives of Anvil Range about that road, but I understand they have approached our people about the possibility of getting that road included in the maintenance program of Community and Transportation Services.
Mr. Harding: It is no surprise to anyone involved with Anvil Range. When the Yukon Party government first came on the scene to get the Faro mine going, it offered no support for Anvil Range's bid and refused a letter of support for the company, which upset quite a few of the people involved, given the quick public support of the Division Mountain coal/Archer Cathro proposal. They engaged in a whisper campaign, questioning the credibility of Anvil Range's financing, and I was personally a witness to some of that.
The government has raised the bulk haulage fees that the company will face when it hits certain tonnage rates for haulage. It got so bad that the chief executive officer of the company publicly complained. He said that it seemed that people in other parts of Canada were more interested in getting the Faro mine going than the Yukon Party government.
At the Watson Lake Yukon Party fantasy camp for the remnants of the Yukon Party, they made the incredible claim that the Faro mine would not be operating except for the Yukon Party government - the grass would not grow, the sun would not shine and the rain would not fall if it was not for the Yukon Party.
In actual fact, reality is quite different from that with respect to the Faro mine. This particular government is quite hostile toward that company. It is only now, when the mine has created several hundreds of jobs, that this government has started to warm up and try to take some credit for the economic activity in the throne speech and press releases. I am sure it will want to stick a "courtesy-of-the-Yukon-industrial-support-policy" sign on the Faro mine road soon, but I do not think many people will buy that.
Is the government prepared to look at upgrading the Faro mine road, which is in bad shape and needs some fairly extensive work?
Hon. Mr. Fisher: If representatives from Anvil Range approach us, we will certainly be willing to sit down and talk to them about the mine haul road.
Mr. Harding: What principles are guiding this? The government made a commitment of over $2 million for 17 kilometres of road for Loki Gold. What kind of principles are they going to espouse in their discussions with Anvil Range? The Minister has already told us that they have been approached by Anvil Range officials. What level of industrial support policy commitment is the government prepared to make?
Hon. Mr. Fisher: As I have said before, they should come in and talk to us about it. They have made some informal inquiries. Certainly, we would be willing to sit down and talk to them about it.
Mr. Harding: Tell me more about these informal inquiries.
Hon. Mr. Fisher: I was not approached at all. I just heard, I am not sure where, that it had been mentioned. I am not aware of them making that request. I do not know if it was made jokingly or seriously, but they have not approached me or the Department of Economic Development.
As I said, we would be quite interested in sitting down and talking with Anvil Range about the mine haul road.
Mr. Harding: A couple of minutes ago, the Minister said that there had been representations by officials. He said that it was kind of interesting. He is the Economic Development Minister and responsible for mining. Is he now saying that there was no representation by Anvil Range regarding the mine road, or was there, or was it all just a big joke and a big rumour around the Cabinet offices upstairs?
Hon. Mr. Fisher: Again, no one from Anvil Range approached me. I have heard that there was talk of it some time ago. As I said before, I believe that road is on Crown land; I do not believe it is on leased land. Certainly, we could look at it.
Mr. Harding: To the best of my knowledge, Curragh was always responsible for road upgrading and maintenance of the road. This government has taken responsibility for road upgrading for this particular mine, and they have taken responsibility for a portion of road maintenance. I am sure that mining companies out there are thinking that if the government has changed its policy and is getting into road upgrading and maintenance for mining companies, they might want a bit of that action. It is an issue of a level playing field.
The Minister said there was some talk a little while ago, but that it was not with him. Was there any talk or requests in discussions about the road with anybody in the department, or anybody who works for this government? Where did he hear this information?
Hon. Mr. Fisher: Apparently he was with some departmental people when someone from Anvil Range talked about a number of things that it was going to discuss with government some time in the future. So far, it has not come in to talk about any of those things, because it is trying to get the mine up and running.
Mrs. Firth: The agreement that we have been discussing this evening also identifies that there must be post-project information provided to both the Department of Economic Development and the Department of Community and Transportation Services, so that they may adequately evaluate the project. Can the Minister tell us what the cost will be, primarily in terms of staff time, for the collection of information and the evaluation of this project?
Hon. Mr. Fisher: The company will provide that information. The evaluation would be just the same as any other highway project. I cannot give an estimate of that cost while standing on my feet.
Mrs. Firth: Can the Minister tell us what the criteria for the evaluation by Economic Development will be?
Hon. Mr. Fisher: It would have to satisfy the technical requirements and the cost projections.
Mrs. Firth: What does the Minister mean? What is he talking about? I asked what the criteria for the evaluation by Economic Development will be? The project is supposed to be evaluated to see if the taxpayers got their monies' worth. What will the criteria be?
Hon. Mr. Fisher: The road must meet construction standards and be built as the specifications require.
Mrs. Firth: Why do I get the feeling that the Minister is just making it up?
What will the criteria for the evaluation by Community and Transportation Services be? If Economic Development will be evaluating the road standards, what is Community and Transportation Services going to evaluate? What will the criteria for that be?
I am looking at the agreement. The agreement identifies that there has to be post-project evaluations with respect to this project. Does he not know about this being in the agreement? Does the Minister not know that this is in his agreement, and I have to find it for him? It is on the same page as the audits.
Hon. Mr. Fisher: I think that I found the section that the Member is looking at. The Yukon may at any time audit and inspect the accounting records and supporting documentation of Loki, which shall make available to Yukon all accounting records and supporting documentation relating to the project, and shall assist Yukon representatives in carrying out any auditor inspections. Is that what the Member is concerned with?
Mrs. Firth: There is also an identification of post-project information being provided to the department, so it can do a post-project evaluation. The audit is a separate issue. Who is going to do the audit? Who will carry it out? Will the Department of Finance officials do it, or accounting personnel, or will the Auditor General? So, there are two separate issues. I will find the clause for the Minister. I have it in my briefing notes, so I will find the clause in the agreement for him, although the Minister should know about it - God, it is his agreement.
Hon. Mr. Fisher: It is on page 3 of the main agreement. Loki agrees to provide any ancillary post-project information that may be reasonably required by Yukon Economic Development or Community and Transportation Services to conduct its evaluation of the project. What that essentially means is that Loki will provide to the government all of the information that I read before about supporting documentation for the cost, and so on - any information that either department may require.
If there are questions about the road standard, there may very well be questions about engineering reports they need to see. That is the type of thing that could fall under that category.
Mrs. Firth: Is the Minister saying that there are no criteria in place for doing this evaluation? The Minister just got up and said a few things, but I think he was talking off the top of his head. I want to know if the Department of Economic Development and the Department of Community and Transportation Services have some kind of criteria on which they are going to base this evaluation and that the project has to have met certain standards for the post-evaluation to determine whether or not it has been a successful project?
Hon. Mr. Fisher: There are all kinds of criteria from Community and Transportation Services. Community and Transportation Services would be interested in looking at the whole road standard - what the company said it would do and what it had actually done. There are several things that Community and Transportation Services would want to look at.
Economic Development may very well want to look at the financial records.
Mrs. Firth: How does the department determine that? It is the same as the economic development agreement evaluations. It is evaluating the worth of a program, the value of the program and the benefit to Yukoners of the program. How is the department going to determine whether or not this is a valuable program in its evaluation? Has it determined the cost benefit of it? I know what will happen. This will go through and the government will come back in a year, just before the election, and have a big foofaraw about what a great program it was, how successful it was and how we are all so much richer because of it. It will have this whole litany of political rhetoric and niceties that some public relations person has written for it. Yet, when I asked the Minister today how it was going to evaluate the program, first of all he could not find it in his agreement and then he could not tell me what -
Some Hon. Member: (Inaudible)
Mrs. Firth: The Minister is saying that I brought it up and could not find it. The Minister did not know what is in his contract. He should not have had to find it for me. He should have been able to stand up and tell us what the evaluation criteria was. He did not even know that there was a post-evaluation clause in the contract. He did not even know it was there.
Hon. Mr. Fisher: I found it for her.
Mrs. Firth: For heaven's sake, sit down Mickey, you silly person.
Hon. Mr. Fisher: You sit down. We are tired of listening -
Mrs. Firth: Mr. Chair, I have the floor; tell him to sit down. What a production.
Can the Minister tell us if any criteria have been developed yet, and would the Minister not make it up as he stands up. Are there any criteria in these two departments or are there not?
Hon. Mr. Fisher: There would be quite a bit of criteria and I will be happy to get the departments to send it to the Member opposite.
Mrs. Firth: In a year, or maybe even less than a year, depending on when the Members opposite decide to go to an election, I just know that there is going to be a big press release, a big publicity thing, and it will go in conjunction with the big signs that have to be put up, saying "Loki Gold project - the success of Loki Gold because of the Yukon Party industrial support policy", and the Minister is going to have all kinds of wonderful things to say about how this program was evaluated, how many jobs it created, how much money the Yukon got, how many businesses benefited from it and how the project was very worthwhile - just like the Government Leader stood up in the House today and practically said that if people did not fall over dead in support of this project then one would be against everything to do with the mining industry.
If the Minister says he knows there is a bunch of criteria in the department, or a whole lot - what was it he said, "a bunch of criteria" - could he give us one for each department. Could he give us one for Economic Development and one for Community and Transportation Services?
Hon. Mr. Fisher: I said to the Member opposite that I would provide the criteria that the Member wants for the evaluation, which I will get from the departments.
Mrs. Firth: Could the Minister tell us when he will provide that information for us?
Hon. Mr. Fisher: I should be able to do that within the next couple of weeks.
Mrs. Firth: I would have thought that the Minister would have been able to provide that for us tomorrow, but I will move on to my second question with respect to the agreement identifying the fact that the Yukon will audit the accounting and records of Loki Gold. Who will carry out this audit?
Hon. Mr. Fisher: The department would carry out the audit.
Mrs. Firth: The Department of Economic Development?
Hon. Mr. Fisher: It would be the Department of Economic Development that would carry out the audit of the finances, and if the Member would give me the section, I would look to see if Community and Transportation Services would audit the actual road standard.
Mrs. Firth: Are there auditors in the Department of Economic Development?
Hon. Mr. Fisher: No, there are no actual auditors in the department. However, the department would conduct an audit of the actual finances of the project. If the department felt that professional people were needed, they would arrange for that, either through Finance or through a private sector person.
Mrs. Firth: What the Minister is saying is that Economic Development will make the decision after they look at the financial management of the project about whether it needs an actual audit or not - is that correct?
Hon. Mr. Fisher: The department will do the audit. It does that for many projects. If everything is in order, it is generally done in house. If there are some discrepancies or some problems, it may very well use someone else.
Mrs. Firth: I guess we will just have to wait and see what happens there. It sounds rather vague and unclear to me. If the Department of Economic Development is just going to do an evaluation, it is not really an audit.
I want to move on to a question about the contracting process for the road. The Minister has been unable to give us any information this evening, or this afternoon, about what kind of process is going to be used for the tendering of the contracts for the road. I understand from the exchange that Loki does not have to follow any particular contract rules or regulations. Therefore, we have to conclude that it can do whatever it wants. It can have an invitational bid, it can sole source it or it can go through some prequalification process. I wonder if the Minister could give Yukon contractors some comfort that they are all going to have a fair chance when it comes time for this road reconstruction project to be let?
Hon. Mr. Fisher: The Member opposite is back to her old ways of making accusations and allegations that are just absolutely untrue. If she will go to Schedule A, detailing specifications for the project, she will see that the plans, specifications and tender documents as approved by Community and Transportation Services shall become part of this as annex 1. The tender documents will be standard tender documents and, as I have said before, there are two or three different types of standard documents that are used. What I was not able to say was which set of standards they will use, but it says right in here that the documents will be approved by the Department of Community and Transportation Services. On the tender itself, yes, it will be open to Yukon contractors.
Mrs. Firth: I am not quite clear what the Minister is saying. Is he saying that none of the tenders will go out until they are approved by the Department of Community and Transportation Services? Is it going to have a veto over the tendering process that Loki Gold uses?
Hon. Mr. Fisher: Essentially, yes. It will approve the documents.
Mrs. Firth: I will ask my question again: why is the Department of Community and Transportation Services not building the road? It just does not make any sense. This whole convoluted exercise does not make any sense. I just do not understand what the government hoped to achieve by doing this. I guess it is a feeble attempt to legitimize the Yukon industrial support policy. I just want to state for the record again that I think that this whole process could have been avoided if the government had simply made a commitment to Loki Gold that it was supportive of the company and was prepared to put up the finances for the reconstruction of the road. Obviously, it was not prepared to do that in a neat, clean way. It wanted to go through the deal of legitimizing its already weak and criticized industrial support policy.
Deputy Chair: Is there any further general debate on Economic Development?
We will proceed with line-by-line debate.
On Schedule A
On Economic Development
On Contribution to Loki Gold Corporation for road construction
Contribution to Loki Gold Corporation for road construction in the amount of $13,936,000 agreed to
Schedule A agreed to
On Clause 1
Clause 1 agreed to
On Clause 2
Clause 2 agreed to
Title agreed to
Hon. Mr. Ostashek: Mr. Chair, I move that you report Bill No. 6, entitled Second Appropriation Act, 1995-96, out of Committee without amendment.
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: Mr. Speaker, at 4:55 p.m., Committee of the Whole passed the following motion:
THAT the Committee of the Whole and the Assembly be empowered to sit beyond 5:30 p.m. for the purpose of completing consideration of the bills identified for discussion today in Committee; for permitting the House to consider third reading of all government bills that reach that stage; and for receiving the Commissioner to give assent to the bills passed by the House.
Further, the Committee of the Whole has considered Bill No. 28, An Act to Amend the Employment Standards Act; Bill No. 80, An Act to Amend the Public Utilities Act; and Bill No. 7, An Act to Amend the Hospital Act, and directed me to report them with amendment.
Further, the Committee of the Whole has considered Bill No. 39, An Act to Amend the Travel for Medical Treatment Act; Bill No. 19, Enduring Power of Attorney Act; Bill No. 93, An Act to Amend the Maintenance and Custody Orders Enforcement Act; Bill No. 2, Fourth Appropriation Act, 1993-94; and Bill No. 6, Second Appropriation Act, 1995-96, and directed me to report them without amendment.
Speaker: You have heard the report from the Chair of the Committee of the Whole. Are you agreed?
Some Hon. Member: Agreed.
Speaker: I declare the report carried.
Bill No. 71: Third Reading
Clerk: Third reading, Bill No. 71, standing in the name of the Hon. Mr. Phillips.
Hon. Mr. Phillips: I move that Bill No. 71, entitled Engineering Profession Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 71, entitled Engineering Profession Act, be now read a third time and do pass.
Motion for third reading of Bill No. 71 agreed to
Speaker: I declare that Bill No. 71 has passed this House.
Bill No. 88: Third Reading
Hon. Mr. Phillips: I move that Bill No. 88, entitled Yukon Foundation Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 88, entitled Yukon Foundation Act, be now read a third time and do pass.
Motion for third reading of Bill No. 88 agreed to
Speaker: I declare that Bill No. 88 has passed this House.
Bill No. 99: Third Reading
Hon. Mr. Ostashek: I move that Bill No. 99, entitled Ombudsman Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 99, entitled Ombudsman Act, be now read a third time and do pass.
Mrs. Firth: I just wanted to make some comments at third reading with respect to this particular piece of legislation. We have been through debate, and some amendments have been made to this piece of legislation. Of the three controversial pieces of legislation that were included in the Public Government Act - the Ombudsman Act, Access to Information and Conflict of Interest - I think this one is probably the one that has passed most easily through Committee of the Whole, where suggestions made by Opposition Members were readily accepted by the sponsoring Minister of the bill.
I still have some concerns about choosing the ombudsman and I particularly have a concern about whether or not this piece of legislation will ever apply to this government. I also have a great deal of concern about the fact that the bill will not be proclaimed as soon as possible. The government has cited as an excuse or reason for not wanting to enforce this bill immediately the caution that has been given to it by other jurisdictions about the cost and not going too quickly.
I would recommend to the government that it try to move as quickly as possible because I think there is an expectation in the public that, now that this legislation is passing the House, there will be an ombudsman for them to go to for help with their problems.
I have some reservations in supporting the bill because there is no date of proclamation, but I want to indicate that I will be supporting this particular piece of legislation, and I will be urging the government not to be too tardy in getting this office up and running.
Motion for third reading of Bill No. 99 agreed to
Speaker: I declare that Bill No. 99 has passed this House.
Bill No. 64: Third Reading
Clerk: Third reading, Bill No. 64, standing in the name of the Hon. Mr. Phillips.
Hon. Mr. Phillips: I move that Bill No. 64, An Act to Amend the Motor Vehicles Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 64, entitled An Act to Amend the Motor Vehicles Act, be now read a third time and do pass.
Motion for third reading of Bill No. 64 agreed to
Speaker: I declare that Bill No. 64 has passed this House.
Bill No. 55: Third Reading
Clerk: Third reading, Bill No. 55, standing in the name of the Hon. Mr. Phelps.
Hon. Mr. Phelps: I move that Bill No. 55, entitled An Act to Amend the Apprentice Training Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Education that Bill No. 55, entitled An Act to Amend the Apprentice Training Act, be now read a third time and do pass.
Motion for third reading of Bill No. 55 agreed to
Speaker: I declare that Bill No. 55 has passed this House.
Bill No. 50: Third Reading
Clerk: Third reading, Bill No. 50, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 50, Conflict of Interest (Members and Ministers) Act, be now read for the third time and do pass.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 50, entitled Conflict of Interest (Members and Ministers) Act, be now read a third time and do pass.
Mr. Penikett: I would like to go on the record on behalf of our caucus in saying that, while we appreciate the efforts of the Government Leader during the latter days of this session to be flexible and responsive to suggestions from our side and, indeed, in accepting or making amendments that improve the legislation in the package of bills, including the Access to Information and Protection of Privacy Act, the Ombudsman Act and the Conflict of Interest (Members and Ministers) Act, I confess that, in respect to the Conflict of Interest (Members and Ministers) Act, our decision to vote for this bill at third reading came after some real soul searching. We do not believe that this bill is as good as the version contained in the Public Government Act for a number of reasons, including the fact that it does not cover public servants and political staff.
Nonetheless, we are going to support it at third reading. I do want to go on the record, on behalf of the Official Opposition, as indicating that it was a close call and we do so with some hesitation and some reluctance.
Mrs. Firth: I want to put on the record that I will not be supporting this piece of legislation for the reasons that I have raised in Committee of the Whole and that I am about to raise again now.
I have, for a long time in this Legislature as an Opposition Member, been raising the issue about conflict-of-interest legislation - six years and possibly more. We had a conflict-of-interest bill in this House that the majority of the Members who are still here debated and agreed to. I think it was a far superior bill than the one that we have here today.
I do not see any sincerity on the part of the government Members about the issue of conflict of interest. I have heard the Government Leader stand up and express to us that he does not think that the government has any problems with conflict of interest, with the public servants or with the Members. The public is demanding this legislation.
They are demanding that it be effective immediately. They are not just demanding it for Ministers and for MLAs, they are demanding it for public servants, orders-in-council, boards and committees, Ministers, MLAs, everyone - all of the people that the previous Public Government Act applied to.
When people ask me what happened to the individuals who took the free trips, what is happening with respect to Ministers operating their businesses and what is happening with respect to the issue of conflict of interest, I have to admit to them that the legislation we have before us today is not satisfactory because of two prominent, major reasons.
The first one is that it does not apply to public servants. I know there are many examples of conflicts of interest within the public service, as well as the allegations and accusations that have been made with respect to Ministers.
This government had an opportunity to clean up its act and to bring in some strong conflict-of-interest legislation, and it chose not to do that.
The second reason that I am not prepared to support this legislation is that I think all this government wants to be able to do is say that it brought forward conflict-of-interest legislation, but we all know that it is never going to apply to them. I cannot support that principle.
I see no reason why this legislation could not come into effect immediately. I do not agree with the Government Leader's comments or concerns that it is a big, onerous task to get a conflicts commissioner in place - one person - on a temporary basis. The reason for not wanting to do this, according to the government, is because they want to look at combining the offices of the ombudsman, the conflicts commissioner, and the access to information commissioner. I think the government can look at that. The government can take some time to look at that if it wants. However, I do not think that there would be any problem implementing an interim or temporary conflicts commissioner, so that there can be some reassurance in the public that this government took the issue of conflict of interest seriously, and is prepared to bring in some legislation that they were prepared to proclaim immediately.
Well, many things could happen before then, including an election. I am sure the Minister could find lots of excuses and reasons, and come back and say they were not able to do it, it was more onerous than they thought, and it is being delayed again. This Minister has been promising for the last two and one-half years that we would have conflict-of-interest legislation next session. I have heard that for about twice a year for the last two and one-half years, so I do not have a lot of confidence that this will be in force and proclaimed by this time next year.
Unfortunately, I am not going to be able to support this, and I am going to continue the battle with respect to conflict-of-interest legislation, in particular as it applies to public service. I will ask the Minister on a regular basis when this legislation will be proclaimed.
Motion for third reading of Bill No. 50 agreed to
Speaker: I declare that Bill No. 50 has passed this House.
Bill No. 77: Third Reading
Clerk: Third reading, Bill No. 77, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 77, entitled Access to Information and Protection of Privacy Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 77, entitled Access to Information and Protection of Privacy Act, be now read a third time.
Motion for third reading of Bill No. 77 agreed to
Speaker: I declare that Bill No. 77 has passed this House.
Bill No. 39: Third Reading
Clerk: Third reading, Bill No. 39, standing in the name of the Hon. Mr. Phelps.
Hon. Mr. Phelps: I move that Bill No. 39, entitled An Act to Amend the Travel for Medical Treatment Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Health and Social Services that Bill No. 39, entitled An Act to Amend the Travel for Medical Treatment Act, be now read a third time and do pass.
Motion for third reading of Bill No. 39 agreed to
Speaker: I declare that Bill No. 39 has passed this House.
Bill No. 19: Third Reading
Clerk: Third reading, Bill No. 19, standing in the name of the Hon. Mr. Phillips.
Hon. Mr. Phillips: I move that Bill No. 19, entitled Enduring Power of Attorney Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 19, entitled Enduring Power of Attorney Act, be now read a third time and do pass.
Motion for the third reading of Bill No. 19 agreed to
Speaker: I declare that Bill No. 19 has passed this House.
Bill No. 93: Third Reading
Clerk: Third reading, Bill No. 93, standing in the name of the Hon. Mr. Phillips.
Hon. Mr. Phillips: I move that Bill No. 93, entitled An Act to Amend the Maintenance and Custody Orders Enforcement Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 93, entitled An Act to Amend the Maintenance and Custody Orders Enforcement Act, be now read a third time and do pass.
Motion for third reading of Bill No. 93 agreed to
Speaker: I declare that Bill No. 93 has passed this House.
Unanimous consent requested pursuant to Standing Orders 55(2) and 59(2)
Hon. Mr. Phillips: I request the unanimous consent of the House under Standing Order No. 55(2) to have Bill No. 2 and Bill No. 6 called for third reading at this time. I would also request the unanimous consent of the House to waive Standing Order No. 59(2) in order to have Bill No. 28, Bill No. 7 and Bill No. 80 called for third reading at this time.
All Hon. Members: Agreed.
Speaker: I believe there is unanimous consent.
Bill No. 28: Third Reading
Clerk: Third reading, Bill No. 28, standing in the name of the Hon. Mr. Phillips.
Hon. Mr. Phillips: I move that Bill No. 28, An Act to Amend the Employment Standards Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 28, entitled An Act to Amend the Employment Standards Act, be now read a third time and do pass.
Mrs. Firth: I did not support these amendments when the NDP brought them in, and I do not think I will support them when the Yukon Party is bringing in the same amendments.
Some Hon. Member: (Inaudible)
Mrs. Firth: That is right; there are a bunch of socialists over there.
I went back and studied this bill very carefully, and I have done a lot of soul searching over the last couple of days about this legislation.
I remember when the previous government brought forward these amendments. I was an independent at the time and I voted against them. This new Yukon Party government was elected by accident, but nevertheless it was elected. It was going to repeal the amendments. It had my support to repeal the amendments. Twice, it did not bring in an act to repeal the amendments. The government now comes forward with the same amendments.
I have raised a concern about the personal liability that directors have to take. I still have those concerns. I do not think that the insurance is adequate coverage. I think that it will discourage people from wanting to be directors, and that gives me some concern. I have had people in the business community say to me that this is a socialist initiative. Why is the Yukon Party government doing it? Some Members said, "It is not because they are socialists, Bea." That is exactly part of the problem - no one knows what the Yukon Party stands for, or what or who they are, except a bunch of "unparliamentary words", which I am not allowed to use.
I reviewed the concerns that were expressed by the Chamber of Commerce and the Canadian Federation of Independent Business when the original amendments were tabled in this Legislature. Nothing has changed, except clause 50, and I have already stood in my place and voted on that. I am glad the government at least did that. Why did the government have to do the rest of it?
Again, I will stand in my place in this House and vote against these same amendments presented by the previous government.
Hon. Mr. Phelps: I want to say a couple of words about the bill, particularly from my perch over here as an Independent Member of the coalition on this side of the House. It rather annoys me when the Member opposite, who just spoke, stands up and talks, often not knowing what she is talking about. She did earlier, of course, when she suggested that the Ombudsman Act was the least contentious part of the Public Government Act that we were changing. Of course, it was not included in the Public Government Act, but that should not bother her. It is new legislation - entirely new.
With regard to the Employment Standards Act and the amendments we have before us, as the previous Minister of Justice, I was determined to repeal the existing legislation that had not been passed into law by the action of the Commissioner after the election but before the power of government was transferred to the newly elected government in 1992.
I said at the time that I fully intended to come forward with the non-contentious amendments to the act, because a lot of work had been done. All kinds of consultation had taken place. There were a lot of non-contentious portions of the previous bill, upon which virtually everyone agreed and which brought the bill to the 1990s. Changes were made to the act that were necessary, just for the practical administration of the act. Therefore, we did finally bring forward a bill that was very similar to the bill we are speaking about in third reading today.
I think it is a good thing that we have managed to come forward without doctrinaire, socialistic changes. These changes are common sense, practical and necessary. They are changes that were not contentious and went back out again for consultation among all the parties.
I do not mind someone standing up and saying that she is a right-wing or left-wing person or has this or that kind of philosophy. I would appreciate it if she understood what the philosophy was all about before she starts to prattle on about it, that is all.
I am very pleased to see this bill pass this House. I fully support it and I think it is an act that will be for the good of the worker and the employer. It does a lot to raise the standards of the safety net that we have out there for those people who are not in unions. Once again, I fully commend the motion to all of those in the House and I fully support it.
Mr. Harding: It is always a pleasure to follow the Member for Ross River-Southern Lakes in debate. He is certainly the man who is searching for his political ideology even to this day. He is often bewildered when it comes to that subject, as we all know in this House. He first was a Liberal, then he was a Progressive Conservative, then he was the Yukon Party leader and now he tried to pawn his way on his constituency in the last election as an Independent; but we all know that the reality is that this particular Minister has voted with his Yukon Party colleagues every time, 100 percent of the votes that have been recorded in this House, and he is not Independent. He is a member of the Yukon Party for all intents and purposes. Some on the right have accused him of now going full circle and becoming a socialist with this bill. This is truly a man who is searching for his political ideology, and he is now acting in his usual fashion across the way, but people are becoming increasingly more inclined to see just how silly that particular Minister can be in response to serious questions posed to him in Question Period.
I am just happy for the Yukon Party that he is no longer the leader and I am happy that the Yukon electorate twice dumped him at the polls when he was a leader of that particular party, because of his arrogant attitude.
Let me just speak to this bill briefly. I know the Members opposite would like me to continue on about the Minister of Health and Social Services - usually they do it behind his back and they like a chance for him to hear it directly.
What I would like to say to the Members opposite with regard to this bill is that it is inadequate, but it furthers the existing legislation without the proclamation of the 1992 amendments by the New Democratic Party. We are going to support this bill not for the inadequacies but because of that particular fact. We are not going to oppose it because of what is not in it. We certainly believe that there are examples, which we have pointed out in hours and hours of debate with the Members opposite and with some of the amendments that we proposed, of progressive changes that have to be furthered in terms of agenda for helping the unorganized working people out there. If we get into government, we certainly pledge to continue to fight for that agenda of the working people.
Speaker: If the Minister now speaks, he will close debate. Does any other Member wish to be heard?
Hon. Mr. Phillips: I am very pleased to speak in full support of the bill that is before us. I think this bill is a balanced bill. It is balanced for the employee - it does improve the workplace for the employee - and it takes into account the concerns of the employer. I think it is balanced in that way.
I am a bit surprised at the Member for Riverdale South. I know that Member has in her riding many single mothers and other people in the territory who are not protected by other legislation, and this bill will improve their workplace. I can understand the concern - I know that the Member is heckling me now, because she is sensitive. If she has the opportunity in the next few months to enter back into Riverdale South, which I understand she has not been anywhere near for about two and a half years, she may find there are some individuals in that riding who will be affected by this bill.
That Member never ceases to surprise me. She is so inconsistent in the way that she deals with things. A few days ago in the House, she was screaming at the government and urging us to privatize everything. Then today when she was talking about the Loki deal, she wanted the government to do the highway, and not privatize it to Loki. She is totally inconsistent. The record will show clearly that, in the last two and a half years, that Member was elected from a strong right-wing conservative riding - Riverdale South. When you stack up the number of times that Member has supported the socialist left in votes in this House, time after time, people in her riding are shocked. They are telling me that they do not have an MLA any more. They are shocked and appalled at their representative.
Speaker: Order please. I cannot find it in this book, but I am not sure what this discussion has to do with what we are debating here.
Hon. Mr. Phillips: The Member for Riverdale South accused us of adopting a socialist agenda. I am just pointing out to her a little about where she stands in respect to socialism, and what her position is supposed to be for her constituents. It is actually a shame, because that Member has not represented her constituents in this House for the last two and a half years.
I think this is a good bill. I think it is a balanced bill. It is a bill that approximately 70 groups were asked to comment upon, and very few made just minor comments to the bill, including business people and others.
Some business people, despite the feelings of the Member for Riverdale South, do have a heart and do care about their employees and do feel that the employee should get a fair shake. I think this is a very good bill and I recommend that all Members in the House support it.
Motion for third reading of Bill No. 28 agreed to
Speaker: I declare that Bill No. 28 has passed this House.
Bill No. 7: Third Reading
Clerk: Third reading, Bill No. 7, standing in the name of the Hon. Mr. Phelps.
Hon. Mr. Phelps: I move that Bill No. 7, entitled An Act to Amend the Hospital Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Health and Social Services that Bill No. 7, entitled An Act to Amend the Hospital Act, be now read a third time and do pass.
Hon. Mr. Phelps: Very briefly, I am pleased that the original act, as amended, is passing. I would like to extend my thanks to the critic for the Official Opposition for his helpful amendment that was brought forward today and commend this motion to all present.
Motion for third reading of Bill No. 7 agreed to
Speaker: I declare that Bill No. 7 has passed this House.
Bill No. 80: Third Reading
Clerk: Third reading, Bill No. 80, standing in the name of the Hon. Mr. Phillips.
Hon. Mr. Phillips: I move that Bill No. 80, entitled An Act to Amend the Public Utilities Act, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Minister of Justice that Bill No. 80, entitled An Act to Amend the Public Utilities Act, be now read a third time and do pass.
Motion for third reading of Bill No. 80 agreed to
Speaker: I declare that Bill No. 80 has passed this House.
Bill No. 2: Third Reading
Clerk: Third reading, Bill No. 2, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 2, entitled Fourth Appropriation Act, 1993-94, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 2, entitled Fourth Appropriation Act, 1993-94, be now read a third time and do pass.
Motion for third reading of Bill No. 2 agreed to
Speaker: I declare that Bill No. 2 has passed this House.
Bill No. 6: Third Reading
Clerk: Third reading, Bill No. 6, standing in the name of the Hon. Mr. Ostashek.
Hon. Mr. Ostashek: I move that Bill No. 6, Second Appropriation Act, 1995-96, be now read a third time and do pass.
Speaker: It has been moved by the Hon. Government Leader that Bill No. 6, entitled Second Appropriation Act, 1995-96, be now read a third time and do pass.
Hon. Mr. Ostashek: I just want to say a few words about this act. I believe that if I were the Member for Dawson I would be clipping the Blues from tonight and making sure that every one of my constituents received it.
We promised to bring the industrial support policy into this House so that the Members opposite could see that it can and will work, and it will work in future times when mining companies need assistance. I believe that we have proved that the agreement with Loki Gold met all the criteria of the industrial support policy. I urge all Members to support it.
Mr. McDonald: I would ask the Government Leader to tell us who he wants to send the Blues to in Dawson, because if he misses anyone, we would be more than happy to send the Blues to everyone else. I think that they should receive a full accounting of the debate this evening. Unfortunately, the Member for Klondike, who is sitting in the Chair, had little to contribute to the debate. That may not be something he may want to advertise to his constituents.
Nevertheless, we are supporting the expenditure, but we make it clear - and it is clear from the debate we had this evening - that this constitutes a best efforts agreement. There are no specific deliverables under the agreement that one can point to that indicate clearly that there is something that the government is going to receive absolutely. That may be all that the government was able to attain in its negotiations with Loki Gold and interested parties; however, it does not advance the industrial support policy in this agreement and does not advance the cause of increasing Yukon benefits from the mining industry, other than that which would have normally occurred anyway. I think that has been made patently obvious through the entire discussion.
There are a number of questions that remain outstanding. We have been very generous with the Minister by indicating that we will be more than happy to wait for the information, particularly with respect to the impact on government revenues, and so on - issues that have been raised over the course of the discussion. We have been given the assurances by the Minister that the project is viable, despite our inability to get full information or information to our satisfaction that the expenditures will produce great benefit.
We support this particular project, but we do not like it being billed as something that it is not.
I know that suspicions have been raised this evening that this entire project, and the way in which it was constructed and undertaken was simply done in order to show that there is a project that has been furthered by the industrial support policy.
The industrial support policy is one very vacuous document - a statement of general principles. I know that people have expressed concern that it does not provide clear direction to negotiators and does not advance the cause for more economic benefit from mining industries to be secured through contractual arrangements.
I think we have made our position clear, and we will be looking forward to further answers from the Minister - which he has graciously promised to provide. Time will tell whether or not the project is, in the long term, as positive as it has been billed. If it does meet expectations, it will be good for this territory, and we are happy to see that that kind of activity is taking place.
Mr. Millar: I thank the two previous speakers for their suggestion to send Hansard back to my riding in the Klondike. I think I would have to carefully consider that. I am not sure that I would want my constituents in the Klondike to know how we behave in the House, and especially this evening.
Speaking about this particular bill, I can remember when I believe it was the Minister of Tourism and I were on a plane trip to Dawson. We met the manager of Loki at the time. I would just like to tell the Members of this House that that meeting did not exactly go very well. I did not like what that particular person had to say about how this project was going to proceed. To be perfectly honest with you, it was quite a shocking experience - I am a placer miner and support mining wholeheartedly - as we had quite a heated discussion.
I can honestly say that I think that person believed what the Minister and I had to say, because he has done a lot of the things that we suggested in Dawson. One of the first things we were talking about was making sure that Loki dealt with the Dawson First Nation. I believe they have done that.
In addition, I believe they had to make the heap leeching process. It was something that was quite new to the Klondike and no one really knew or understood what it was about. The company went out of its way to make that information available to the people of both the Klondike and Whitehorse. They held a number of seminars throughout the territory, explaining the heap leeching process, how it works and what kind of an impact it could have on the environment.
I think that Loki Corporation has proved to be an excellent corporate citizen in Dawson. It has been a major sponsor in a number of events that occurred in Dawson. I think that it has gone out of its way in the last nine months to a year, a little over a year, in what it has done to meet Dawson First Nations' and DIAND's expectations as far as their permitting is concerned. I think that Loki is going to double the production of gold in the Yukon. I do not see how anyone could feel that that was not going to be of benefit to the whole of the Yukon.
I do not want to go on for too long on this topic. I could, but I think I will just close now in saying that I certainly support this bill. I am very pleased with the work that Loki has done, and I believe that it will continue to carry out its affairs in a very beneficial manner for the whole Yukon Territory.
Mr. Harding: I have a few brief comments. We in the Official Opposition have supported this bill. We have asked some tough questions tonight of this government about the initiative. We have received very few answers from the government on those tough questions. It is our job to ask those questions. I have read the debates of the Members opposite, who were around when there were expenditures made in any form to mining companies, and very tough questions were asked. I never assumed from those debates that they were against everything they asked a question about. I think that is a childish position to take.
We will do our job. We will make sure this government is doing theirs. I would just say to the Member for Klondike that if there was not a commitment and some form of a socio-economic agreement to the Dawson First Nation, then the NDP would have been asking questions all night and into tomorrow and the next day, and the next day. We would have demanded that it was there.
With that, and as most of the comments about this bill have been reiterated very well by the Member for McIntyre-Takhini, we will support the initiative, but we have great reservations about the industrial support policy. What we had here was a deal cut to build the road. It had nothing whatsoever to do with the industrial support policy.
Speaker: If the Government Leader now speaks, he will close debate. Does any other Member wish to be heard?
Hon. Mr. Ostashek: I will just say that I am happy to see that the Members opposite are going to support the bill. For a while tonight, I was doubtful whether they were going to support it. Some of the questions in the debate this evening, I thought, bordered on being ridiculous and were, I thought, inappropriate.
The Members opposite were the ones who a year ago said that we ought not to question the economist and that we should just publish whatever he says. Yet I heard the Member for Faro asking the Minister why he did not question the economist on the price of gold. That is very inconsistent.
I think the department has taken great pains in negotiating this contract to put in safeguards for the Yukon taxpayer. No monies flow until the financing is in place, and I am sure those bankers are going to be very, very careful to make sure that the feasibility study produced by Loki Gold is accurate and reflects the true cost of mining the property.
I do not know that this government has to be too concerned about that. We have the security of the permitting and the financing being placed before any money starts to flow.
I believe that without this government's help, we would not have seen the employees of Loki Gold Corporation being housed in Dawson City and the great benefits to Dawson City that will flow from that. We probably would have seen another mine with a camp and employees possibly housed in Whitehorse or even outside of the territory.
I believe that the contribution that this government made to the mine is going to have a very positive effect, not only on the whole Klondike, but on the Yukon as a whole and on mining in the Yukon. This contribution is going to give comfort to new bankers that are coming to the territory, and I am very glad to see them here.
Having said that, I am happy to see that the Members opposite, besides all of the negative questioning this evening, are going to support the bill and I commend them for that.
Motion for third reading of Bill No. 6 agreed to
Speaker: I declare that Bill No. 6 has passed this House.
Hon. Mr. Phillips: I move
THAT the House, at its rising, do stand adjourned until it appears to the satisfaction of the Speaker, after consultation with the Government Leader, that the public interest requires that the House shall meet;
THAT the Speaker give notice that he is so satisfied, and thereupon the House shall meet at the time stated in such notice and shall transact its business as if it had been duly adjourned to that time; and
THAT, if the Speaker is unable to act owing to illness or other causes, the Deputy Speaker shall act in his stead for the purpose of this Order.
Speaker: It has been moved by the Hon. Government House Leader
THAT the House, at its rising, do stand adjourned until it appears to the satisfaction of the Speaker, after consultation with the Government Leader, that the public interest requires that the House shall meet;
THAT the Speaker give notice that he is so satisfied, and thereupon the House shall meet at the time stated in such notice and shall transact its business as if it had been duly adjourned to that time; and
THAT, if the Speaker is unable to act owing to illness or other causes, the Deputy Speaker shall act in his stead for the purpose of this Order.
Motion agreed to
Speaker: I would like to inform the House that we are now prepared to receive the Commissioner in his capacity as Lieutenant Governor, to give assent to certain bills that have passed this House.
ASSENT TO BILLS
Commissioner: Hon. Members, you cannot believe how I have been dying to do this for nine long years.
Please set yourselves down and get comfy.
Speaker: Mr. Commissioner, the Assembly has, at its present session, passed certain bills to which, in the name of and on behalf of the Assembly I respectfully request your assent.
Clerk: Engineering Profession Act, Yukon Foundation Act, Ombudsman Act, An Act to Amend the Motor Vehicles Act, An Act to Amend the Apprentice Training Act, Conflict of Interest (Members and Ministers) Act, Access to Information and Protection of Privacy Act, An Act to Amend the Travel for Medical Treatment Act; Enduring Power of Attorney Act; An Act to Amend the Maintenance and Custody Orders Enforcement Act; An Act to Amend the Employment Standards Act; An Act to Amend the Hospital Act; An Act to Amend the Public Utilities Act; Fourth Appropriation Act, 1993-94; Second Appropriation Act, 1995-96.
Commissioner: Thank you, Mr. Clerk.
Hon. Members, I hereby assent to the bills as enumerated by the Clerk.
Considering it was nearly 35 years ago that I spoke my first words in the Yukon Legislative Assembly, it is with some nostalgia tonight that I am probably speaking my last in this House. I could not resist, while I was waiting for your deliberations to terminate, to go into the library in the lounge and pick out the old Votes and Proceedings of 1961, the Third Session, of November. Of course, the Votes and Proceedings were not like the Hansard; they were not a verbatim record of what was said in the House. However, for the record, the first words I ever spoke in the House were on November 2, 1961, on page 3 of Votes and Proceedings: "Mr. McKinnon wished to leave this issue to discuss after the first session of the council." I was obviously wise beyond my years at that very early age.
Just for the record, the indemnity of 1961 was $4,000 a year and, of course, there was no pension plan. It was truly a labour of love that I have never regretted for a moment.
I would like to thank all of you for the kindness and considerations you have shown toward me, toward Judy, and indeed toward all of our family during my term of office.
I would also like to take this final opportunity to wish all of you and your families continued success for the Yukon and best wishes for another one of our magnificent Yukon summers.
Thank you and goodbye.
Speaker: I will now call the House to order.
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 now stands adjourned.
The House adjourned at 12:42 a.m., Wednesday, May 3, 1995
The following Sessional Paper was tabled May 2, 1995:
Yukon economic review and short-term outlook, 1994-95 (dated March 31, 1995) (Fisher)
The following Legislative Returns were tabled May 2, 1995:
Positions created, deleted, appointments made, breakdown of employee numbers: responses to Written Question No. 10 (Phillips)
Written Question No. 10, dated March 21, 1995, by Mr. Cable
Positions in the communities: list of; summary of positions created, deleted or redeployed from October 1, 1992, to March 27, 1995 (Phillips)
Oral, Hansard, p. 1742
Positions created and deleted: summaries by department from November 1, 1992, to February 28, 1995 (Phillips)
Oral, Hansard, p. 1754
Freegold Road upgrading: does not include the Nordenskiold Bridge; $20 million committed through the strategic highway infrastructure program agreement (Brewster)
Oral, Hansard, p. 1986
Quarry operation, km 105, South Klondike Highway: explanation of activities (Brewster)
Oral, Hansard, p. 2024