Whitehorse, Yukon Tuesday, November 9, 1999 - 1:30 p.m. Speaker:
Tuesday, November 9, 1999 - 1:30 p.m.
Speaker:I will now call the House to order.
We will proceed at this time with prayers.
Speaker: We will proceed at this time with the Order Paper.
Are there any tributes?
In remembrance of Helen Seipp
Hon. Ms. Moorcroft:Mr. Speaker, a long-time respected teacher, Helen Louise Seipp, passed away on September 29, 1999.
Helen was born on October 6, 1946 in Deloraine, Manitoba, where she began her teaching career in 1967. In 1968, Helen married Wally Seipp, and in 1971, they moved to the Yukon where they raised their two children, Carla and Anna.
Helen taught French in Mayo and later at F.H. Collins Secondary, Selkirk Elementary and Riverdale Junior High.
She was the teacher/librarian at Whitehorse Elementary School during the present year. Helen was admired by colleagues and students alike for her enthusiasm for children, her willingness to care and her love of learning.
Helen inspired many Yukon students with a love of books. I was honoured to have a visit with Helen at the Centennial Pavilion in Vancouver a few days before her death. Her characteristic good humour and her concern for her students, her colleagues and her friends in the Yukon showed remarkable courage.
Helen had a lifelong love of music and dance. She also enjoyed skiing and hiking in the Yukon outdoors. She's survived by her husband Wally, daughters Carla and Anna, and many dear friends.
On Sunday, October 3, a celebration of life service for Helen was held in Whitehorse. Her ashes will be scattered in the Yukon she loved.
Thank you, Mr. Speaker.
Ms. Duncan: I rise on behalf of the Liberal caucus to pay tribute to a distinguished Yukon educator, Helen Seipp.
Karan Smith wrote of Helen that Sara Tillett's combined grade 6 and 7 class wrote and illustrated a book called The Day the Magic Came for Helen Seipp, when she was in hospital facing sudden, terminal brain cancer.
One day, magic came through the doors of Whitehorse Elementary, the story read. She was our new librarian. The children didn't know how fortunate they were. All those who knew Helen Seipp understood their good fortune in having known her. On behalf of our caucus, I would like to extend our sympathy to Wally Seipp, their daughters Carla and Anna, and to Helen's many friends, students and fellow educators. Thank you, Mr. Speaker.
Mr. Ostashek: I, too, rise on behalf of the Yukon Party to join with my colleagues in the Legislature in extending our condolences to Wally Seipp and his family. I didn't know Helen personally, but I do know Wally, and I have heard many great things about Helen. On behalf of the Yukon Party, we, too, express our condolences to the family.
Tribute to Farmer of the Century award recipients
Hon. Mr. Fairclough:Mr. Speaker, it is a pleasure for me today to bring to the attention of all members information about an event last Saturday in which the Yukon's farmer of the century was announced.
The Yukon agriculture branch developed the Farmer of the Century award and plans to solicit nominations for Farmer of the Year award in the future.
The branch received many nominations with recommendations naming 10 farmers or farm families. When all the paperwork was done, the review committee determined that the first-ever award should be presented to the Bradleys of Pelly River Ranch. Dick and his wife Marjorie and his brother, Hugh, bought the Pelly River Ranch in 1954. That was the start of 45 years, so far, of continuous, self-sustaining agriculture endeavour in the Yukon.
The award was presented to Hugh last Saturday night, who accepted it on behalf of the Bradley family. Hugh has been considered the glue that kept the family and farm together and running smoothly through all these years.
Mr. Speaker, the Bradleys have contributed significantly to the development of agriculture in the territory. They have always shared their experience and knowledge about farming in the Yukon with whomever came to ask. Their hospitality is well-known and, during their years at the Pelly River Ranch, they have shared their farming life with scores of people.
The Bradleys have set an outstanding example for all Yukon agriculturalists, present and future. Their model of perseverance, dedication and hard work, laced with a positive attitude and humour, is something everyone aspires to.
In addition, Mr. Speaker, the family has always received a great deal of respect from their peers in the Yukon.
Mr. Speaker, it is an honour for me to pay a tribute to the Bradleys and their family legacy, born from a pioneering spirit of fondness for working on the land. The Bradleys richly deserve to be chosen as farm family of the century.
Mr. Cable: On behalf of the Liberal caucus, I also rise to salute the Bradley family as a recipient of the Yukon's Farmer of the Century award.
I had the pleasure of joining the Bradleys and the Minister of Renewable Resources and our Yukon agricultural community for a dinner last Saturday night. I also had the pleasure of hearing about the history of the Bradleys in Yukon and the history of the Pelly River Ranch in the reading of a very persuasive nomination by Gordon Allison. As Mr. Allison, one of the Bradley's summer students said, "In their own way, the Bradleys have contributed significantly to expanding the base of agricultural information in the Yukon." And I think it's also safe to say that they kept the spark of interest in agriculture alive, when agricultural production was minimal and we in the Yukon were preoccupied with other pursuits.
And, I should say in passing, I was particularly interested to find out last Saturday that the minister's father had at one time owned the Pelly River Ranch, and I'd like to extend an invitation to him to jump on my old Ford major tractor next summer so we can share some experiences.
So, again, my congratulations to the Bradleys. They, with the many other nominees - Rod Tait and Danny Nolan and the Drurys, to name a few - are acting as models for tomorrow's farmers.
Mr. Ostashek: Mr. Speaker, on behalf of the Yukon Party caucus, I rise to also pay tribute to the Bradley family of the Pelly River Ranch for being chosen Yukon farm family of the century.
This is, indeed, a prestigious award and one that is well-deserved, given the numerous accomplishments and contributions the Bradley family has achieved during their tenure of farming in the Yukon.
Throughout the years, the Bradley family has gained the respect of the agricultural industry through their ability to rise above hardships, while maintaining a positive attitude and having a sense of humour. Through the thick and the thin, they have succeeded in finding ways to make things work. While being able to expand their own operations, they have made large strides in expanding the base of agricultural information that is now available in the Yukon, and they have set an outstanding example for all Yukon farmers to follow.
Farming, as we all know, is anything but easy. It requires hard work, a team effort, and a great deal of patience and understanding. Clearly, the Bradley family has demonstrated all of these traits, and I am pleased that their efforts have been recognized in such a prestigious manner.
Once again, congratulations on a job well done.
Speaker: Introduction of visitors?
Are there any returns or documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Ms. Moorcroft:I have for tabling Yukon Women in Apprenticeship and Trades.
Speaker: Are there any reports of committees?
Are there any petitions?
Are there any bills to be introduced?
Bill No. 82: Introduction and First Reading
Hon. Ms. Moorcroft:Mr. Speaker, I move that Bill No. 82, entitled Elections Act, be now introduced and read a first time.
Speaker: It has been moved by the Minister of Justice that Bill No. 82, entitled Elections Act, be now introduced and read a first time.
Motion for introduction and first reading of Bill No. 82 agreed to
Speaker: Are there any further bills to be introduced?
Are there any notices of motion?
Are there any statements by ministers?
This then brings us to Question Period.
Question re: Watson Lake multi-level care facility
Mrs. Edelman:My question is for the Minister of Health and Social Services. In the spring of 1998, the Town of Watson Lake had a public meeting to discuss community priorities. Out of that meeting came firm direction from the citizens that a multi-level care facility was a high priority for the people of Watson Lake. The people of Watson Lake had no place to care for their citizens with higher level needs - that's people with Alzheimer's or mental illness, or people who are in later stages of MS.
Those people were being sent into Whitehorse or to B.C., and they were being sent away from their families and their community supports. Mr. Speaker, that is still the case today.
The minister has talked about dedicating two extra beds at the Watson Lake hospital for respite needs, but nothing has happened, and it is nearly two years later.
Mr. Speaker, the minister has to do more than talk. The minister is building a fine, new multi-level care facility here for the citizens of Whitehorse. What has this minister done to help keep higher need citizens in Watson Lake?
Hon. Mr. Sloan: I'm afraid the member is mistaken. We have dedicated two rooms, and we've done necessary renovations. We've also done the modification of a tub room in the hospital, and the last time I checked, I believe we were working on the furnishings of that.
As well, we've also worked to increase home care services in the community and have taken that back under our direction, and that process is well underway. The staff was hired, I believe, just over a week ago, so that position should be in place presently.
Mrs. Edelman: Mr. Speaker, the minister, when he did an assessment of the needs in the Watson Lake area, talked about this need for assisted living in the community. One of the things that he did do is take the nurse from the Signpost Seniors and moved her into the hospital.
Now he's talking about another position to replace: probably the position that he took out of the Signpost Seniors, for home care.
What work is the minister doing on the mental health front? There is no support for persons in Watson Lake who have severe mental health needs. If anything, the Help and Hope shelter in Watson Lake has been fulfilling that need. What is the minister doing to help the citizens of Watson Lake keep their higher-need residents in their Watson Lake homes?
Hon. Mr. Sloan: Mr. Speaker, we have Yukon Family Services on contract. We have a worker in the community to do work with families and adolescents and so on, so we do have some mental health services - the same as we do here.
With respect to high-level mental health services, that generally is a function of our mental health services here in town. If we're talking about individuals with psychosis or problems of that nature, I doubt if they could be handled successfully within a community such as Watson Lake, where they may need more extensive treatment. So we are doing services on mental health.
Just with respect to that, I should also say that we've been working with the Liard Basin Task Force to help bring about the fruition of a youth counsellor, as well. So we've offered financial support there. I know that that process is coming along.
Mrs. Edelman: It's been two years, and there are people with Alzheimer's, and people with higher care needs, particularly people with MS, who had to go out of Watson Lake, and they've gone to Dawson City, they've gone to B.C. and they've had to come into Whitehorse, and I know of two cases where that was the case.
Now, two beds at the Watson Lake hospital just for respite are not enough to solve the problem. What is the minister going to do in the long run? What funds have been allocated, and what long-term plans are in place to deal with the higher level care needs of the people of Watson Lake?
Hon. Mr. Sloan: When the proposal came forward with respect to a long-term care facility, I did go down and meet with the individuals in Watson Lake, and it was very apparent - extremely apparent - to me in meetings that I had with individuals who were proposing this, they were not - repeat: not - looking at that level of care. I asked specific questions. "Are you looking at dealing with Alzheimer's? Are you looking at dealing with dementia? Are you looking at people who are essentially non-ambulatory?" And the response was, no.
In subsequent discussions, not only between our director of extended care and me, it became very clear that what was being sought in the community was respite, plus accentuation of services in terms of home care.
Now, interestingly enough, I believe that one of the proponents of this project was a former Liberal candidate down there, so her information may be less precise than what she would like, but I can tell the member that we have had ongoing discussions with individuals down there. I've met with the Signpost Seniors on a number of occasions over this. I've had discussions with the hospital, and we have responded in the way that we felt was most appropriate for the needs, but I can tell the member, quite frankly, that when I raised the issue of high-level care, the interest was not there.
Question re: Range Road mobile home park development
Ms. Buckway:Mr. Speaker, my question is for the minister responsible for the Yukon Housing Corporation. The mobile home condominium park on Range Road in Whitehorse is still looking pretty empty. The 66 lots went on sale starting July 21 this year; four lots were sold at that time. There are, I believe, a total of three mobile homes there now, two of which are currently listed for sale and one of them is a model home that came from Faro and was set up by the government. How many of the 66 lots have been sold? People were supposed to be able to move in at the beginning of September. Is anyone currently living there?
Hon. Mr. Fairclough: We have just completed the construction of the mobile home lots. There were some delays in regard to getting some materials in. We've had approximately 22 applications for help through the Yukon Housing Corporation. Presently we have four that have been approved, and I believe one is to be moving in soon.
Ms. Buckway: Now that the bills are all added up and the last bulldozer is gone, what is the total cost of this project to the taxpayers of the Yukon?
Hon. Mr. Fairclough: Mr. Speaker, that amount has not changed. It is still at $1.9 million.
Ms. Buckway: There is a minimal increase in the carrying costs - at seven percent for 20 years - of a lot in the Arkell subdivision over one in the Range Road mobile home condominium park. The Range Road project doesn't make financial sense to people. They would rather buy a lot outright where they could park beside their mobile home or add on to it, add a storage shed or a garage.
Is the minister prepared to admit that this project was a bad idea to start with, that the government has wasted $2 million of taxpayers' money on a mobile home condominium that nobody wants to live in?
Hon. Mr. Fairclough: Mr. Speaker, if the member had paid some attention to some of the debate in the past, she would have known why we have brought this forward. I again tell her that we were focused on the health and safety issues in some of the older mobile home lots, and we wanted to give an alternative to what is out there to the people there. We've set up programs through the Housing Corporation so that it makes it a lot easier for people to upgrade their units and move them on to a lot that they can consider themselves owners of, and not have to pay pad rent. That's the direction we went forward in, and we still think it's a good idea, and we still have that option out there for those people with older mobile homes, and that wasn't there before.
Question re: Canadian Airlines, continued daily service
Mr. Ostashek:Mr. Speaker, my question's for the Government Leader.
Last Tuesday, our critic for Community and Transportation Services raised the question of the unfortunate situation that Canadian Airlines now finds itself in and the dire consequences for Yukoners should we lose our daily scheduled service. The answers he got to his questions, given by the Minister of Community and Transportation Services, gave us no comfort, as I'm sure they gave no comfort to all Yukoners. So I would like to elevate the level of debate to the Government Leader to find out what contingency plans his government has worked out, further to just a letter being sent to Ottawa advising the federal minister of our problem.
Hon. Mr. McDonald: Mr. Speaker, first of all, the primary government responsibility is, of course, the federal government's responsibility. They regulate the airline industry. They are the prime movers when it comes to dealing with the intercorporate affairs between the various parties involved. I know the member has a great deal of faith in the Yukon government and its ability to solve national problems, but I think it would be a stretch to say that we, alone, can resolve this problem. What we have done is not only to have written to the federal minister, but I've written to the Prime Minister indicating that this is an issue for Yukon people. We do want to ensure that there is regularly scheduled air traffic between Vancouver and Whitehorse, and that, whatever the federal government is thinking or doing in respect of its relationship with the companies involved or in the conversations it has with these companies, it bears in mind that not only the interest of the Yukon remains very considerable with respect to this particular route, but we're also concerned about the employees at the airport and their future livelihoods as well.
Mr. Ostashek: What I don't have much faith in is that this government's on top of this situation. We asked for a copy of the letter that the minister wrote to Ottawa last week. We haven't received that yet. We certainly would like that in the near future, and I would also like a copy of the letter that the Government Leader wrote to the Prime Minister.
Mr. Speaker, with the collapse of the Onex deal, the Onex bid, Canadian Airlines could effectively be out of business, grounded, within the next 90 days to six months, as I heard on the news this morning, possibly nine months max. At any rate, that time frame would put us right in the middle of the summer, during our busiest tourist season, at a time when aircraft are not available from other carriers just to be picked up, to pick up the Whitehorse run. So this situation is very, very serious, and I would like to ask the Government Leader if he could advise this House: what further does this government intend to do to make sure that we don't lose daily airline service from Vancouver to Whitehorse?
Hon. Mr. McDonald: First of all, Mr. Speaker, as the member was aware last week when the minister answered the question, he did indicate that we had an analysis commissioned by some consultants in Calgary, who have specific knowledge of Canadian Airlines and the air industry generally, and we're going to be using, in part, that analysis to help give us a better understanding of the long-term implications of this particular matter.
Now the member wants us to do things. We're clearly doing things. We do care about the future of this particular route. This is obviously a very lucrative route. This is a route that makes money, so I would suspect that if there were ever a chance for another carrier to move in, this route would be high on its priority list.
We have to remember, Mr. Speaker, that whatever happens to Canadian Airlines, it still has its equipment. The equipment is still available for use by anybody. So, to say that there is going to be no equipment at all, for any purpose, is speculation on the member's part that I don't think is justified. At least if he has any justification for this, other than just musings, coffee-shop musings, I wish he'd share it with us.
With respect to the situation here, Mr. Speaker, I think the member should understand as well - I'm sure he does - that if Canadian Airlines ceases to operate, then it's going to cease to operate Canada-wide, and the whole country, not just the Yukon, but the whole country is going to be affected by this change in operations.
And we are, therefore, interested in ensuring that the federal government knows of our particular needs. We are confident that the route between Vancouver and Whitehorse is a lucrative one and will be a high priority for any carrier, and we are making our interests known to the federal government and ensuring that they are aware at all times of our interests.
Mr. Ostashek: Well, Mr. Speaker, the Government Leader has stated that this is a lucrative route, and that's about all that I can agree with him on that he said.
If Canadian Airlines is to find themselves in receivership, I don't know how the Government Leader believes that their aircraft would be available for some other company to take over immediately. It just doesn't happen that way. Those things take time.
Yes, the whole country would be affected, Mr. Speaker, but not as dramatically as how the Yukon will be affected.
I would like to ask the Government Leader this: would he able to table a contingency plan concerning daily airline service to Whitehorse prior to this House adjourning this session?
Hon. Mr. McDonald: Mr. Speaker, the member has - I know from this question - absolutely unlimited faith in this government. I know we took out an option on some ports in Skagway and Haines. I know that we've extended the runway and have done incredible things with the airline charter industry, and I know the member is completely impressed with our telecommunications strategy to wire the entire Yukon.
To purchase Canadian Airlines, Mr. Speaker, is just a little bit too much for us. As much as I would love to be able to simply play the high-finance politics of the super company, like Onex and Air Canada, the Yukon government in this budget is not in that same arena.
What we can do is work with the regulators of the industry, those who are charged with the responsibility of putting together a plan, or responding to Canadian travellers' needs - namely the federal government - make sure that they are aware and understand our issues, and understand the importance of Canadian Airlines to the economy of this territory, and ensure that whatever is decided in the follow-up discussions, the follow-up negotiations between the various parties, whether Air Canada purchases Canadian Airlines or not, that Yukon's interests are well-preserved and protected.
Question re: Customs clearance for air passengers
Mr. Jenkins: I have a question today for the Minister of Community and Transportation Services on potential operational problems next summer at the Whitehorse Airport. Mr. Speaker, it has come to my attention that four airlines are scheduled to arrive from international destinations on Thursday of each week. They are Condor, Ballair, Air Transat and Era Aviation. In addition, there will be the arrival of Air North via Fairbanks. All these flights, Mr. Speaker, require customs and immigration clearance. In addition, we have Canadian Airlines hopefully maintaining three flights a day, as well as Canada 3000 with one flight that day. My concern is with the international flights all landing within a short time of each other. The last thing the Yukon needs is to have our visitors tied up at the airport for several hours, especially after a long flight from Europe. We do not have the operational capacity to handle approximately 1,000 international arrivals of passengers and crews. Is the minister aware of the problem, and what has his government done about it?
Hon. Mr. Keenan: Well, Mr. Speaker, in the words of one of the hotel operators that I've been talking to, "What a problem to have. What a wonderful problem to have." And, certainly, I take it from there that we're doing good things and we'll continue to do those good things with air access and to encourage different people from different parts of the world to come. Am I aware of the problem? Absolutely. We've directed the department, through our different initiatives, to go out and find ways, working with the airlines, to spread it out so that we might be able to better provide a good service. But, again, Mr. Speaker, in the words of a hotel operator, "It's an excellent problem to have," and we're working with due diligence to solve this problem.
Mr. Jenkins: Well, we have four international arrivals on the same day. It's a lot of business. What steps is the minister taking, through his department, to spread out the arrivals over several days rather than having all of these aircraft converge on Whitehorse at the same time? Canada Customs simply cannot handle that many arrivals at the same time. What is the minister doing?
Hon. Mr. Keenan: Again, thank you, Mr. Speaker, for the opportunity to answer the question again.
Mr. Speaker, it's a good problem for us to have when we have people come in here, as the Member for Klondike has said. We have four international airlines coming. We have domestic carriers. The Yukon has proven itself to be an international destination. That's due to the good work that this government has done. We're going to continue to do that good work. We're going to work with the airlines, because we've proven that we can work with the airlines just by the sheer fact that they are coming to the Yukon Territory. Eyeball to eyeball, we'll talk to them. We'll say what the problems are. We'll ask them if we can restructure ourselves somehow or other. We'll do it on a human basis.
So, yes, Mr. Speaker, we'll continue to work for the operators of the Yukon and tourism, whatever they might be. We'll continue to work with air access. We'll continue to enhance the marketing programs that we have now, and we'll continue to look for new markets for the wealth and the lucrativeness of the Yukon Territory.
So, yes, Mr. Speaker, we're on top of it and will continue to be so.
Mr. Jenkins: Well, there are three issues that I'd like the minister to address. One: how is Canada Customs going to handle the inbound passengers? Number two: what are we going to do with that number of passengers in the terminal all at the same time for baggage handling, loading and unloading the aircraft? You've got approximately a thousand coming off the plane, another thousand individuals waiting to get on those planes. We've got a bottleneck there. We want these visitors to have an excellent experience, and their first experience is going to be Customs at the airport and the bottleneck there. What steps is the minister taking in those specific areas?
Hon. Mr. Keenan: As I've said, I think twice now, and I'll say it again: we're going to be working with the proponents, whether they're the charters or whatever they are. We're going to be working with them. We recognize that there are capacity problems. We're looking to spread them out. Not only is it to our benefit to work with these folks and spread them out, it is to their benefit.
Mr. Speaker, we are on top of this situation. I'm looking for results. I'm sure that there are going to be positive results, but again, in the words of a hotelier, it's a very wonderful problem to have.
Question re: Solid waste regulations
Mrs. Edelman: Mr. Speaker, my question is also for the Minister of Community and Transportation Services.
In December of 1997, this government began work on developing new solid waste regulations. This included the issue of open burning at garbage dumps. One of the worst examples is the Mount Lorne dump. The smoke that gets caught in the valley when that dump burns is noxious, and there is a tremendous risk of wild fire in the Mount Lorne area because of the fires that start at this dump. Mr. Speaker, the only way we can ensure that there is no burning at the Mount Lorne dump is to properly staff and manage the facility. The money to pay for the staff at the Mount Lorne dump will run out on April 1, 2000. Does the minister plan to deal with this issue before burning starts again at the Mount Lorne dump?
Hon. Mr. Keenan: Mr. Speaker, yes, I'd like to commend the Minister of Renewable Resources for going out and talking to people about these issues and what is important to them. The Hamlet of Mount Lorne said that this is very important to them. What this government did proactively through my department was to try and find resources and to work with people on a human level to find ways to implement the no-burning process.
That is just one community, as the member knows. We have a broader community. The municipalities are spread around the Yukon and are represented by the Association of Yukon Communities, and we'll continue to work with the AYC and the individual municipalities to find ways to implement this.
Mrs. Edelman: Mr. Speaker, that doesn't answer the question as to what we're going to do after April 1 when the funding runs out for the staff at the Mount Lorne dump.
Now, the minister is only too aware of the fire in Burwash this past summer. Mr. Speaker, it is alleged that the fire was started because of uncontrolled burning of waste at the local dump.
Mr. Speaker, what is this minister's position on open burning at rural dumps in the Yukon?
Hon. Mr. Keenan: Well, Mr. Speaker, as we continue to work with the AYC and as we continue to work with the hamlet councils throughout the Yukon Territory, this government will certainly be reflecting in their policy any initiatives that are good for Peter are certainly good for Paul. Unfortunately, I used the wrong names in this case, but I elevate the discussion.
So, Mr. Speaker, we will be changing our processes as we move through.
Mrs. Edelman: It's difficult to tell what the minister's position was from that, other than the fact that it is flexible.
Now, cities like Dawson and Whitehorse have just spent a great deal of money lately developing new costly cells for their landfill sites. These new cells are supposed to last for at least 10 years. Mr. Speaker, cardboard makes up about 25 percent of what goes into a garbage cell, yet there's still no concrete plan to deal with cardboard at dumps outside of Whitehorse.
Most dumps and landfills are burning their cardboard now. If they didn't, they would have to build new landfill cells every year. If it's not recycled, it has to be burned. Mr. Speaker, we've been talking around this issue for years. When will there be a plan to deal with this recycling issue, or will the burning continue?
Hon. Mr. Keenan: The member has incorrectly had input into what makes dumps burn, and certainly cardboard in the dumps is something to burn. We'll continue to work in partnership with Renewable Resources, so that we will be able to alleviate some of the problems, and certainly recycling is an education and hopefully an answer to burning in the dumps.
So, we're going to do it in partnership with Renewable Resources. We're going to do it through education programs and we're going to encourage recycling. We're also going to work with the AYC to find ways to implement the no-burning issues as they come forward and, yes, the territorial government will look to mirror those types of initiatives.
Question re: Customs clearance for air passengers
Mr. Phillips: My question is for the Minister of Tourism with respect to the issue of several airlines converging on Whitehorse in one day in the summer months. Mr. Speaker, I have been in conversation with some tour wholesalers in Europe, who are now expressing some serious concerns over the operational logistics of these aircraft all converging at our airport at the same time. I agree with the minister that it's a nice problem to have, but I have to raise a concern with the minister that the last thing we want at our Whitehorse Airport is hundreds and hundreds of European and non-European travellers stuck at the airport for hours at a time, waiting for Customs clearance, to get their baggage, for planes to be refuelled, or even having the aircraft waiting to disembark their passengers on to a ramp that might be busy.
Other airports all over the world, Mr. Speaker, schedule airlines to come in at different days so that there isn't a bottleneck. The concern, which I've heard from wholesalers in Europe, is that if we can't solve the problem, and people have a bad experience the first few hours they arrive in the City of Whitehorse, it may do more harm than good.
So I'd like to ask the minister, in light of the marketing that's going on right now - when people are selling these trips at the present time, for Thursdays - what is the minister's timeline with respect to solving the problem, in trying to spread out these international airlines coming in at one or two or possibly three different days?
Hon. Mr. Keenan: Well, Mr. Speaker, I've answered the question previously in the House, and I'll answer the question again.
It's certainly, Mr. Speaker - as we have said and have agreed to - that it's a wonderful problem to have for the Yukon Territory, that the Yukon Territory's being recognized. We recognize the value of the European market, and this government will continue to recognize the value of the European market. We will continue to work with the wholesalers that have the European market.
We're having wholesalers from the European market come to the Yukon Territory here to help us with our strategy, and to empower people to know what that market means.
I would say then, Mr. Speaker, that it's incumbent upon this government - and this government is doing it - to look at how we might spread them out.
It's a wonderful problem to have; it is a problem; we're working with it; we have been working with it; and when we have it solved, I will let the member know.
Mr. Phillips: Mr. Speaker, I just wish for one day in this House this minister would listen to the question.
I asked the minister, what is his deadline? What's his timeline for solving it? The industry is in the marketplace now, selling Thursday flights. What is the timeline that the minister has set aside for himself to resolve the matter, so that if they're all going to arrive on a Thursday, we can somehow gear up for it, or are we going to spread it out?
I mean, there has to be a final date that the minister's shooting for, so that he can at least plan for the arrival of these flights.
Hon. Mr. Keenan: Mr. Speaker, I said that we've been working with the folks, that we'll continue to work with the folks, and I'll notify the member when I have the problem solved. Certainly we're working very hard to do it - the marketing staff, along with our wholesalers in Europe, are working very hard.
Are we looking to do it quickly? Absolutely we're looking to do it quickly. We want it to happen as soon as possible. Am I going to be able to say that tomorrow at 10 o'clock it's going to be solved? No.
But with good work, and with continued good work, we will solve this problem. We're certainly working toward that end.
I'm almost starting to feel that the member does not wish for us to have increased numbers to the Yukon Territory here, from the way that they're handling this. Look at what we're doing: we're working on the airport, we're developing tourism plans, we're developing new plans for the airport. We're looking at all these things.
Mr. Speaker, this is a government that believes in tourism, will continue to believe in tourism, and will work with operators to showcase the Yukon to the world, and to bring people here. So it's a wonderful problem to have, but it is a problem, and we'll continue to work to solve that problem.
Mr. Phillips: Well, Mr. Speaker, the minister doesn't get it. We have an operational capacity problem in the Yukon Territory. We're limited, with the airport facilities and equipment we have, to the number of flights we can have. I'm very happy that there are four flights coming in. I'm concerned that the experience will be dampened by logistical operations problems at the airport, and the people in the marketplace are selling these flights right now. We're going to have to tell the people whom they're selling the flights to what day they're leaving, if someone's going to book a flight, and what day they might arrive. The minister hasn't got much time.
All I want to know from the minister is this: when is his final time? Are these people holding off on selling these flights now? Are they going to start selling them as soon as the minister sorts this out, or are we just going to try and clean up the confusion in the middle of the tourism season when it's almost too late?
Hon. Mr. Keenan: Mr. Speaker, I've been accused of just not getting it, of not understanding the problem. This government created the problem, and it's not a problem. It's an issue of bringing people to the Yukon Territory. So what if it's going to be characterized as a problem? What a wonderful problem to have. Is that my statement? That's a statement from a hotelier here who asked me to work with it. We've been on top of this issue, and we'll continue to be on top of this issue until we are able to solve it. That's exactly what we're looking to do, and we'll continue to work with the proponent to solve this issue.
So, Mr. Speaker, I just do wish that the member opposite would quit fear-mongering in the European marketplace for his own political perspectives and pull in and work with the people of the Yukon because, when you have a 11-percent increase in visitors, you know that the government is doing the right thing and will continue to do the right things through the tourism development strategy plan, through the Whitehorse Airport development strategy plan, and continue to work with access problems to bring people to the Yukon Territory in existing markets and in new markets, because the Yukon is a place that we want to showcase.
Speaker: The time for Question Period has now elapsed.
Notice of government private members' business
Hon. Mr. Harding:Pursuant to Standing Order 14.2(7), I'd like to identify the item standing in the name of the government private members to be called on Wednesday, November 10, 1999: Motion 182, standing in the name of the Member for Whitehorse Centre.
Speaker: We will now proceed to Orders of the Day.
ORDERS OF THE DAY
Bill No. 91: Second Reading - adjourned debate
Clerk:Second reading, Bill No. 91, standing in the name of the hon. Mr. McDonald; adjourned debate, Mr. Cable.
Mr. Cable: I'm pleased to rise on behalf of the Liberal caucus to support this bill. The lack of a pool of venture capital, or risk capital, in the Yukon has long been identified as a stumbling block in business development and job creation, particularly for small and medium businesses. It was identified as a problem in a public forum held in December 1997. At that time, both the Canada/Yukon economic development agreement and the business development fund had ended. These had both been used as sources for capital for small and medium business, and it's interesting to read one of the background observations made by the participants in the forum in their report: "Perhaps more than any other factor, the availability of capital dictates the pace and scale of business development in the Yukon."
The forum report went on to identify the following gaps in business financing. And I will read those four gaps, Mr. Speaker. The first was start-up and venture capital, particularly in the amount of $50,000 to $250,000. The second was working capital, in virtually all business sectors and phases. The third was a preparation gap in assessing a venture's feasibility and preparing a business plan that will support the needed financing. The fourth was local access to virtually any source of capital other than the banks or friends or relatives.
The forum, as expressed in the report, talked about potentially accessible funds in Yukoners' savings, which, at that time, were believed to total around $150 million. And they went on to say that securing even 10 to 20 percent of these savings for business capital would be a significant step, and the forum panel stated that tax and other incentives to encourage broad-based business investment should be investigated. Also, at the time, the representative from the Yukon Federation of Labour brought up labour-sponsored venture capital funds, particularly those funds that are RRSP-eligible, as vehicles for meeting the financing gaps that had been identified.
We in the Liberal caucus have been responsive to these comments. The Member for Porter Creek South, on taking over the leadership of the Yukon Liberal Party in February of 1998, talked about investment tax credits and the companion piece, venture capital funds, in general and labour-sponsored venture capital funds in particular. This was way back in February 1998, as expressed in the newspaper: a motion on investment tax credits was put forward in the House by the Liberal Party in February of 1998 and debated the following month, unfortunately subject to one of our foolish Wednesday afternoon amendments. But labour-sponsored venture capital funds were discussed during the debate.
Now, the first arm of the business venture financing was put in place last spring, with the introduction of the Yukon small business investment tax credit.
This is the arm that permits business to deal with their financing needs through their receipt of tax credits. The companion piece, the labour-sponsored venture capital fund, which we are calling the Fireweed Fund, is before us today. This will permit investments of capital in businesses by way of share capital, or debt.
Now, there's been an extensive paper prepared for the Yukon Federation of Labour, entitled Labour-Sponsored Venture Capital in the Yukon, by a Mr. Luigi Zanasi and Malcolm Taggart, with the assistance of Rod Snow of Davis & Company. It gives an overview of these funds and the options open to us as legislators. Members of the public who would like further information on these funds are encouraged to review this paper.
I should say, Mr. Speaker, that venture capital funds, labour-sponsored and otherwise, have generally received favourable reviews, but there have been critics of these funds, and there have been funds that have had investment problems, but these funds have been around for several years now so that we, in the Yukon, do not need to start at the bottom of the learning curve. We can learn from others' experiences.
We in the Liberal caucus support the concept. There is perhaps no single initiative that this government or any other government can take that will solve all economic problems or will act as a single answer to our job creation problems. Labour-sponsored venture capital funds are a potentially useful tool, and we should approach them on that basis - that as long as the investors' investments are properly protected, then nothing ventured, nothing gained.
I should say, in closing, that I would like to thank the Department of Finance and their officials for the briefing received this morning. There were a number of questions raised in the briefing and other questions that we will explore in Committee, such as the amount of the tax credit and the amount of the seed money, and I look forward to the debate in Committee and the answers to those various questions.
Hon. Mr. Harding: Mr. Speaker, I'm extremely proud today to stand and speak briefly on this legislation. I think it's a testimonial to the courage of this government, which has been the first government that Yukoners are familiar with that has actually made using the tax system to benefit working people, to benefit low-income people, and to benefit job creation industry expansion, a hallmark. We were used to the days of the conservative tax-and-spend administrations, like the Yukon Party government, who used the tax system to bring in massive tax increases. Our government, conversely, has brought in the small business investment tax credit, the mining investment tax credit, low-income family tax credits. Mr. Speaker, we've also now embarked on this very aggressive venture, because we believe in utilizing the tax system to benefit all people in society, not just the people who already have capital, but to expand the access to capital.
I'm pleased with the Department of Economic Development, which organized the first forum of our government on access to capital, where the former president of the YFL, I believe perhaps in conjunction with representatives of the business community, if my memory serves me correctly, talked about this as a particular option. We, as a government, took the action to see this come into being. It's not always easy, because these tax credits aren't so-called free money. There is less revenue for government, which doesn't make it easier to juggle competing needs. Every day in this House we're asked for more money for health care in every corner of this territory, even though we have continued to increase and add new health care funding to that important service. The same holds true for education and training, and for capital works.
All of these are competing needs, whether it be new school construction or roads. This is a move with some courage by government, to say we want the working people of this territory to have a vehicle in which to invest in this territory, and we think, over time, this will be a significant impacting tool to encourage that end.
It is somewhat a desperate attempt by the Liberals to try and claim that, because they mentioned this once in the House, that somehow this is their idea. I think the record of this government, Mr. Speaker - you know, they have no agenda, they have a very obvious lack of ideas and substance. So for them to claim, because they put the words "investment tax credit" in a motion, that somehow they were the architects of this initiative by government - as they did in Question Period, and alluded to in vague form today, in the speech by the Member for Riverside - is somewhat obvious, I think, to most people.
I think this government made the -
Some Hon. Member: (Inaudible)
Hon. Mr. Harding: Well, the Member for Riverside is heckling in his non-confrontational way, says it's obvious, but not the way I think. Mr. Speaker, it's obvious that when we want to talk about economic measures, the members opposite run out of the Legislature, because they're completely void of ideas, and when something good comes along that this government does - as many initiatives have been - they try and glom on to it, to somehow try and take credit for it.
But Mr. Speaker, as the Member for Riverside said, there's no one initiative that's going to solve all the economic problems of this territory. There's going to have to be a combination of initiatives, and we've introduced in the tax system a whole combination of initiatives. It's a warm feeling for us to know that they're trying to somehow sound - because they put a motion forward mentioning tax credits - that they were the architects of the measure, as they did in Question Period the other day.
It tells us that what we're doing is in the right direction. It tells us that what we're doing has a lot of merit, and will be both welcomed by the public, but also have extremely good, practical uses in the public.
Mr. Speaker, access to capital is a critical feature that, I believe, is right now one of the superior deterrents in this territory to business expansion and economic growth.
I hear it about rural Yukon. I hear it in Whitehorse. I hear that the need to raise capital is absolutely critical. The banks in particular in rural Yukon aren't always avid lenders; they feel the risk quotient is too high. So, Mr. Speaker, we think that this eventually will be one tool that will help to deal with that particular problem, and when we commence the forum to discuss and come up with conclusions and advice on access to capital, it's sometimes a very, very difficult challenge, and it involves a couple of things. It involves an idea, and it also involves a government that's willing to implement the idea, even though it means a reduction in revenue when you're dealing with so many competing interests. The same thing holds true for the mineral exploration tax credit, and the small business investment tax credit, and the low-income family tax credit that we brought in. All were tax reductions, but, Mr. Speaker, we felt it was important to engage in this path, that we had to break the history of the Conservatives in the territory and massive tax increases and start to utilize the system to help working people create solutions to access-to-capital problems. And we're extremely proud of that as a government.
So, today, to stand and be able to oversee this legislation, I commend the Department of Finance. I commend the people in the public who worked with us to try to ensure that this happened: the Yukon Federation of Labour, Davis & Company, the past-president of the Yukon Federation of Labour, the people who participated in the access-to-capital forums. I think we'll at least view this action as a very symbolic and important feature that will stand the test of time in ensuring that they know that their time and their efforts and their voices and their thoughts were not wasted. They were listened to, and, most importantly, they were acted upon by this government. So, we're very supportive of this legislation.
Mr. Ostashek: It's always nice to follow the Member for Faro in debate in this Legislature. He has espoused his political rhetoric to such an extent in this Legislature that I think he actually believes it himself. He actually believes it, not that many other Yukoners do, but he does.
Mr. Speaker, I rise today to speak in support of the principles of this bill. I have a few things I want to put on the record. I do have some concerns, and I hope they'll be answered in Committee, but in principle we support the act.
Before I get into that, though, I would just like to respond to some of the comments made by the Member for Faro. And he takes great pleasure in continuing to talk about the tax increases implemented by the Yukon Party government. But what he fails to say is that the reason for the tax increases was a $64-million deficit that was left by a previous NDP government. That's what he fails to say. And further to that, Mr. Speaker, in the three years that they've been in power, as much as they've ridiculed those tax increases, they've done absolutely nothing to get rid of them. In fact, they have benefited from that and from the fact that taxes were reduced in every other jurisdiction in Canada, except the Yukon. They have benefited to the tune of millions and millions of dollars.
Mr. Speaker, when the Yukon Party government was in power, the perversity factor was $1.56. Today, I believe it's a $1.04. Why? Because our tax rates in the Yukon under an NDP government have moved closer to the national average than they've ever been before. And as a result of that, this government is getting millions and millions of dollars and doing absolutely nothing to give it back to the taxpayers. That is the essence and the truth of the matter of taxes in the Yukon.
And I would like to say, Mr. Speaker, that I hope that this Fireweed Fund Act, this venture capital act, has far greater success than the mineral tax credit that this minister brought in, because it hasn't done anything to increase exploration in the Yukon. In fact, the numbers, as I said in the House the other day, are very similar to what they were in 1998 with no tax credit. So there's something more systemically wrong with the policies of this government, which aren't going to be cured by tax credits to put Yukoners back to work.
Mr. Speaker, the venture capital fund can be a tool to help with investment in the territory, and as I and speakers before me have said, it cannot be the be-all and end-all of investment capital in the territory. It can't fill every desire.
I want to put on the public record some of the concerns that I'll be bringing up in the Committee debate and hope that the minister - and I am sure the minister will have some answers for us. I did take the opportunity this morning during the briefing by officials to give them a warning as to what I would be looking for in Committee debate, so they would have that information available, but I just want to put on the public record a few of the concerns that I have with this act that I need further explanation on. As I said, don't get me wrong. I support the act in principle. I don't have any difficulty with it at all.
This is a venture capital act and a venture capital fund and, as a result, there is more risk to this than there is to other investments. We have seen venture capital funds that have done quite well. We have seen some that have gotten into trouble. As the Member for Riverside said, we ought to be able to learn from their experiences.
One of the problems that I hope the minister will be able to answer for me when we get into Committee debate is, there's a clause in the act here, and I don't know where it is right now and I don't need to know right now, because we're talking in general terms, that after four years, 60 percent of the fund has to be invested. Now, I don't know if there's anything in here or any clauses in here that limit the amount that the fund can build up to before it's capped but, in Yukon, we have a lot of people who invest in RRSPs who are looking for different vehicles to get a higher return on their investment than what they get in other areas, so they may want to diversify some.
There are great sums of money that flow into RRSPs. We could end up with a substantial fund here in four years.
My understanding from the technical briefing we had this morning is that the fund can only invest in Yukon and in Yukon businesses. That leaves us a very small pool to invest in, and I need to know from the minister what's going to happen, if we get to a situation where we can't invest 60 percent of the fund.
The last thing that I would want to see is the people who are responsible for analyzing the investments scrambling to meet the requirements of the act that they have to have 60 percent of the fund invested - scrambling and being put under pressure to invest in some projects that maybe they really shouldn't be investing in, just to meet the criteria of the fund.
I hope that wouldn't happen, and I hope that the minister can explain that concern that I have with those clauses in the act when we get into Committee debate.
I also see in the act funds - I believe they're called "I" funds - which are reserved for businesses and corporations for investment in the fund. I would hope that, when we get into committee debate, the minister can give me some idea of what his government is prepared to invest in this fund at this point: what their plans would be for ongoing investment in this fund, or whether it's going to be on a project-by-project basis.
Also, I would like to know from the minister what exposure there will be to the taxpayers of the Yukon, if the venture fund should run into difficulties. Is it going to be limited to the share capital that the government takes out in the fund? Or is there going to be further exposure to the taxpayers of the Yukon?
These are questions that, I believe, need to be answered as we go through this act - this new venture capital act - which will enable the Federation of Labour to set up their venture capital fund. I hope that we can get into some examples of different situations that may arise as we go through the line-by-line debate in the Committee debate of this bill.
I was told this morning by the department officials in the technical briefing that this act is basically based on the Manitoba act - a lot of similarities between it and Manitoba. I've asked the officials to come back with some examples as to how much the Manitoba government invests in the fund, what the criteria is, the terms of reference that they use, and what exposure there is to the Manitoba taxpayers or to other jurisdictions - that taxpayers may be left to exposure if the fund runs into problems.
It's not that I believe the fund should run into problems. I think that there's enough interest in this fund and demand for the fund that it should be done in a professional manner, and a project will be reviewed thoroughly before investing in it, but it is a venture capital fund, as the name says, and there certainly aren't a lot of tangible assets that can be taken as security when we are loaning out venture capital.
So, Mr. Speaker, once again, we support the bill in principle, and we'll be looking forward to Committee debate on it and in getting answers to the concerns that we have about the bill.
Thank you very much, Mr. Speaker.
Mr. Hardy: Always when you stand up to speak to an initiative like this, you prepare your statements, but then you have time to listen to the opposition, and as you listen to them, other ideas come into your mind, or you get a little ticked off with what they're saying, and you write this stuff down. You think you'll respond to it.
In this case, something I don't normally do, I feel I have to respond to some of the comments made. There are a lot of liberties taken when we talk about an initiative or a bill, liberties where people go off on their own little tangent and try to promote their party in different ways. Often it's legitimate within the Legislature, but it does create an environment where you have to respond to it.
The member who just spoke, for Porter Creek North, I believe it was - you know, what does he do? The first thing he does, he talks about a $64-million deficit.
That's not based on fact, but he keeps repeating it hoping that that'll catch out there and then he'll be able to justify the tax increases that he put the Yukon people through the moment he was put into office, and that is a fact.
Some Hon. Member: (Inaudible)
Hon. Mr. Hardy: That's spinning, is what it's called. The member opposite yapping over there from Riverside North is trying to defend it, as usual, from way in the back but it's called spin, it's called spin in this House and this is - you know, the member who just spoke, if I remember rightly, had called tax increases "obscene". When he stepped into this House as the Government Leader, the first thing he did was jack the taxes on the people of the Yukon so, obviously, what was obscene when he was in opposition became perfectly beautiful to him when he was in power. So, those are the facts; we've got to question those ones, and I think the people saw what was happening back then and made a decision on that, and that's why they're sitting in opposition - not only sitting in opposition, they're sitting in third party status.
Now, moving to the Liberals here. Yes, they may have made a suggestion or they may have recognized that the labour venture capital had been done before, and they may have mentioned it, and it's all right to say that you had an interest in it, but it also begs the question of why they questioned the appropriateness of funding for the Yukon Federation of Labour, who are the sponsors of this. Now these are labour people, these are labour organizations, and they were questioned for the small amount of funding that they received from this government. If we have not been willing to ensure that there is funding for the Yukon Federation of Labour, the Building Trades Council, the chambers of commerce, the Chamber of Mines, we would not be seeing these kinds of initiatives brought forward. These are people out in our community, these are organizations in our community, that bring these ideas forward, that support these ideas and that sponsor these ideas that allow us to benefit the people of the territory.
So, you can't have it both ways. Support these organizations. It's not that hard. Support these organizations.
Also, you must discuss it with them. There's nothing wrong with picking up your phone, calling them, talking to them, finding out what they're working on. It doesn't always have to be business. There are also worker organizations out there that do it, too, which brings me to another point. I had a history with this fund, dating back to 1992-93.
Moving on to the phoning bit, I tried to phone the Yukon Party when they were in government, but there seemed to be a policy - and I was specifically wanting to talk to them to see if there was any support within government for a labour-sponsored venture capital fund - that they would not talk to people from labour, and I never got a return phone call except for once in the few years that I called them. One was specifically about this, and one minister called me back. He started talking to me and I raised this issue. When he realized who he was talking to, he told me that he couldn't talk to me and he hung up.
So, what that points to is that some parties only listen to some people in this society. This government, the NDP government, listens to all people in this society and that's why we're bringing forward funds such as this, because the initiative that comes from the community inspires the government to move forward. It should not come the other way, and it doesn't come the other way under this government.
Now, where do many of our business leaders come from? Where do many entrepreneurs come from? They come from, as has been derogatively said many times, from the slave-wage bracket. They come from being employees. They have a great idea. They have initiative to move in a different area. Instead of working for somebody, they wish to start a business. It could be in direct competition to the one that they're working with, but they have the skills. It could be a new idea that they want to move on.
It's one of the biggest drawbacks, and it has already been mentioned by the Member for Riverside, and I agree wholeheartedly with that. One of the biggest drawbacks is capital, trying to find capital. He read a report - and I apologize to him if I can't quote it correctly. But he was reading about a forum when I believe there was a moving out or a closing down of some loaning agencies. They had said that the biggest drawback was availability of capital, which dictates the ability of a start-up, the working capital and so on, so on. And another quote I had read when going through some of these reports and papers is the statement that says, "It has been said time and time again that the smaller the firm and the further its location from financial centres, the greater the odds against it being able to secure such financing." Well, that describes the Yukon to a tee.
Now, I've gone through this report too, and I agree with the Member for Riverside that everybody should take a look at it. It's a discussion and options paper that was done for the Yukon Federation of Labour, and it was done by Luigi Zanasi and Malcolm Taggart with the assistance of Rod Snow of Davis & Company. And it's an excellent discussion paper, and going through it, it's a very clearly written paper that presents options, recommendations, examples and some history. Hopefully, when we go into debate on this, line by line, people will refer to it, because there's a lot of good in it.
I would like to touch a little bit on some history here. People have kind of talked about it, but I'll run through a little bit of it. The labour-sponsored venture capital corporations are 10 years old, a decade old, in Canada, and they account for one-third of all institutional venture capital in this country. What is especially impressive is that the vast majority of the funds - more than $3.1 billion in assets - come from small investments made by average working people.
The labour-sponsored venture capital corporation model was initiated by the Quebec Federation of Labour - the FDQ - in the Province of Quebec in 1984 to meet identified equity capital gaps for small- and medium-sized business in a manner that would address additional social policy concerns. The target market is small and medium-sized business.
The Quebec Solidarity Fund - as it was named - was the first fund to be created under this model. The fund now has $1.5 billion in assets. The current investment portfolio of the fund includes 131 direct investments within a portfolio that also includes investments in regional and sectorial intermediaries, whose value totals $641 million. Investee firms have sales of $2.9 billion Canadian and employ approximately 17,000 individuals.
Recent research by a team attached to Quebec's Institut National de la Recherche Scientifique has concluded that the fund's investments have resulted in the creation of more than 15,000 new full-time jobs, approximately half at investee companies with the remainder in other Quebec companies.
These investments have further resulted in $964 million in value added to the Quebec economy. The same research report also tracked the fiscal impact of the fund, and concluded that the government recouped its seed equity and tax credit investments in the fund within three years, after which the government derived a net gain.
The second labour-sponsored fund was a working ventures fund, established in 1989 by the Canadian Federation of Labour - and that was the one I was alluding to, when I said that I had called over, tried to interest the Yukon Party government at that time in doing something like this. This fund was sponsored by the Canadian Federation of Labour - the association I worked for was an affiliate member - a small national body for the construction trades.
As of December 31, 1995, total assets were at just under $500 million, of which $133 million is invested in small- and medium-sized Canadian companies.
In the 1996 sales season, they raised additional funds to bring their total assets to $848 million. Now, provincial funds, generally modelled on a solidarity fund like the Quebec model template, were established in British Columbia, and it's called the Working Opportunity Fund. That was established in 1991. In Manitoba, the Crocus Investment Fund was established in 1992, and in Ontario, the First Ontario Fund in 1995. Both the Working Opportunity and the Crocus have surpassed the timetables established by the respective provincial governments for placing assets in small- to medium-sized businesses.
What makes these funds so popular among governments is that, despite the tax exemptions to individuals who invest in the fund, studies show that new revenues generated by the new employment pays back the tax credits to the provincial and federal governments in fewer than four years. Shareholders who make the independent decision to invest in the labour-sponsored funds are also satisfied with the funds. A 1992 survey of Solidarity Fund shareholders found that 87 percent were satisfied with the rate of return they received.
Now, I'd like to just read a couple of items from the discussion and options paper that impressed me about this fund as I was going through some of the issues.
Underneath "Broad Issues" - and I bring people's attention to this - it says: "Objectives. All Canadian LSVCCs have the explicit basic objectives of assisting in the development of small- and medium-sized enterprises by investing in them and the creation, maintenance and protection of jobs. Implicit objectives in all LSVCCs include strengthening the venture capital market, creating a new role for unions and workers in the economy, and earning a reasonable return for investors." Very honourable, very good initiatives.
Options are put down in here, which are very, very impressive. Options for additional objectives: retain and invest Yukon savings in the Yukon, and promote economic development. These are very hard things to disagree with. I think all parties can sit back and agree with this.
The fund must consider ethical employment practices, workplace safety, cooperative labour management relations, environmental and economic sustainability and diversification in terms of industry sector, income, growth and risk. This option is taken from a statement in principle and was developed by a number of true LSVCCs - what we'd all like to see in the workplace: promote economic stability, encourage conformity with environmental laws and development of environmental policies, promote training of workers in economic matters. These are all very honourable and all are things that we should strive for in the workplace. In many cases, that is what many employers do strive for. And, under one other section, there is "the sole legal restriction," and I found this statement interesting. "The sole legal restriction that should be put on this should be that investments must be intended to result in job creation or job retention in the Yukon."
Well, if we achieve anything with this fund and we adopt these ideas and this fund grows, we've achieved a great amount, and we've achieved it by including working people, taking their initiative, their capital, allowing them a vehicle to invest in, and an environment that they can work in, and tying it with all other aspects of our society. So if it benefits all people of the Yukon, this is just one of many steps that this government is doing, but I believe that this is a big step and this is an empowerment as well. It shows how broad we can be as people if we would only stop classifying where people are from and what class structure they live in.
I support this fund. I support this initiative and I believe, from what I've heard already, that the official opposition and the third party also support it. I look forward to some debate on it, and I also look forward to the input that they give and the suggestions that they give, because I know we, as a party here, are open, and we have demonstrated that by the creation of this fund.
I would like to finish with a thank you to the people that have worked on it: Davis & Company, the Yukon Federation of Labour, the Building Trades Council, the unions throughout this territory and the working people of this territory. The businesses that at first maybe had some initial discomfort were able to rise above that and recognize the benefits there will be for many of the small businesses in this territory and have come behind this initiative, are standing behind it, and supporting it.
Ms. Duncan: I am delighted to speak at second reading to this bill. My comments today will be fairly brief. Reading back 20 years from now, and the staff listening to this - I'm sure the comments after awhile must seem like so much "he said, she said".
I would like to comment briefly, however, on the Member for Faro's remarks. What kept going through my mind as the member was speaking was that pop psychology book about men being from Venus and women being from Mars, or the other way around. The fundamental principle of this book is that men and women seem to talk at cross purposes to each other and don't really understand each other. And I'm sure that must be the reason why the member failed to understand -
Some Hon. Member: Point of order.
Point of order
Speaker:The hon. Member for Faro, on a point of order.
Hon. Mr. Harding: Mr. Speaker, we have a policy in this House and a rule about non-sexist language, and I'm resenting this attack and sexist-based comparisons and analogies by the leader of the official opposition.
Speaker: The leader of the official opposition, on the point of order.
Ms. Duncan: On the point of order, Mr. Speaker, the ruling is in reference to non-violent, not non-sexist, language.
Speaker:Order please. There's no point of order. The member may continue.
Ms. Duncan: I'm delighted to continue after that extremely rude interruption. The Member for Faro does not want to hear that, in February 1998, I stood before Yukoners and said that we must build and renew our economic structure, which is inadequate for the demands that are about to be made upon it. We must find ways for development to proceed. One of our resources is the money that you and I invest in RRSPs. Yukoners invest millions of dollars every year in these retirement plans, and this money is working outside the Yukon. This money should be used here to build the future of the Yukon.
Now, I can understand that the Member for Faro simply did not want to hear that that's what I had to say. I don't understand why he fails to agree, admit, recognize that the Member for Riverside elaborated on this comment I made in the speech and tabled a motion in February 1998 that specifically dealt with the issue of investment vehicles.
Now, the member has said that the Yukon Liberal Party are not the architects of this particular bill. No, Mr. Speaker, we're not. Neither is the government. The people who are the architects of this bill are the incredibly hard-working people that the Member for Whitehorse Centre has thanked and, in particular, the research work that was completed and the very good questions that were asked in this discussion and option papers for the Fireweed Fund.
Some Hon. Member: (Inaudible)
Ms. Duncan: The member's chirping that no other government has done it before.
Some Hon. Member: (Inaudible)
Ms. Duncan: The point is, Mr. Speaker, we agree with this fund. We agree that this is an idea. We've been talking about it for two years and asking them to do this. Talking about it, asking for the research work and talking about these sorts of funds.
Mr. Speaker, on behalf of our party, I would like to join with the Member for Whitehorse Centre and offer our than to those who have done the work on this. I, too, have had an opportunity to go through the options and discussion paper, and I would like to comment that it is one of the better, more clearly written option papers that I have read. A number of questions have been asked in this discussion paper, and we'll be asking them during debate and during the line-by-line, questions like the amount of the investment tax credit contemplated and the amount of the investment by the Government of Yukon, questions that I understand are to be dealt with by regulation. I would like to see a thorough discussion of them during the line-by-line. I also have a few other questions of actions that are to take place once this particular piece of legislation has passed.
I'd also like to talk briefly about one of the points that the previous speakers have missed. All of the speakers have mentioned the need for the access to capital and how this is one of the primary goals of labour-sponsored venture capital funds.
Another product, and perhaps one of the most important points that should be mentioned as well, in light of our extremely high unemployment rate, is the ability of these funds to create jobs. It's noted throughout this document, and it's a particularly important point that I don't want to lose in the discussion of this fund. The line-by-line debate on this bill, Bill No. 91, is an important one. I'm looking forward to that line-by-line debate. I'd also like to again state that our party is completely supportive of this idea. We believe in it, and we look forward to its full and fair debate.
Mr. McRobb: I rise today in support of this bill because it will help Yukoners start up their small business ideas. The Fireweed Fund will help people acquire the venture capital necessary to realize their dreams of owning and operating their own small businesses. I know several budding entrepreneurs in the Kluane riding who may start down the path of financial independence because of the availability of this fund.
When I'm out travelling in the riding on one of my many trips, I'll be sure to pack along a good supply of the forms necessary for my constituents to apply to this fund. So, I'd like the future board of the Fireweed Fund to take notice that there'll be plenty of response to this fund from the Kluane riding and I'll be sure to pass along any information on the fund to my constituents.
Hon. Mr. Sloan: I am pleased to have the opportunity to speak to this particular issue.
Mr. Speaker, I think this is a very exciting initiative of this government, and I'm proud that we've taken this idea and made it a reality in our jurisdiction, despite the challenges we faced.
You know, today in Question Period, one of the issues that emerged was, what is our position vis-à-vis the changes in the national economy? What happens to us when decisions that are made in the boardrooms of Toronto or Montreal, or elsewhere, come home to roost in this territory? What happens to us here when the London Metal Exchange sets prices?
Like it or not, Mr. Speaker, one of the issues that we have to face in this territory is that, by the very scale of our population, by the very scale of the resources that we have available, we are subject to market prices and economic decisions made elsewhere. That's not desirable, but that is a reality.
One of the things I think that this will do is allow the generation of working capital, venture capital, in this territory, and it will make it available, I believe, to average working people, average individuals in this territory, to make small investments in Yukon businesses.
I believe that that pool of capital can then inspire and can prompt economic development in a variety of areas. One of the things that I would hope that this capital would consider and assist would be developments in telecommunications. We have set down the basis for telecommunications infrastructure. We have made a commitment on the part of this government, not only in terms of local telephones, but also high-speed Internet and other areas. My colleague, the Minister of Education, has made a substantial commitment in terms of distance and distributed learning.
And I believe that, laying down that infrastructure, is analogous in many ways to the investments that governments made in such things as roads and railroads. In the past, governments have made those major infrastructure developments; however, it is up to the other entrepreneurs in this territory to then take advantage of this, to develop new applications, new technologies, and I believe that the development of that kind of venture capital will be one of the sources that people can go to to make those efforts in the future.
I think, as well, that this allows individuals in this territory to make some different arrangements in terms of RRSPs. Right now, we have more than 6,000 Yukon RRSP contributors sending $25 million out of the territory to support businesses elsewhere. What we're hoping is to capture some of that money, to keep it here and to help develop Yukon businesses that are supported by average Yukon workers. I believe the result of this will be jobs. I believe that there will be more jobs in the Yukon, and that's really the essential reason of what this is about. This is about Yukon people investing in Yukon businesses and producing more Yukon jobs and opportunities. Businesses will be able to access venture capital and that will result, I believe, ultimately, in more people being hired for more jobs, and I believe firmly that, with the development of venture capital, this will prompt the growth of several exciting industries in this territory, and I'm looking forward to that in the future.
I think what's truly interesting about this project is that it is a project that is supported by labour organizations and the Yukon Chamber of Commerce, an interesting synchronicity, because they know that the money spent by Yukon businesses results in jobs for Yukon people.
My colleagues have talked a little bit about the history of labour-sponsored venture capital in Canada. They've noted, for example, the Working Opportunity Fund in B.C., the Crocus Fund in Manitoba and the First Ontario Fund in Ontario, and I think, if we take a look at these particular venture capital funds, we'll see these are not fly-by-night operations. These are funds committed to developing competitive returns, to direct money into new, needed sectors, to meet some social goals and key to developing job creation and regional economic development.
Mr. Speaker, one of the things I often hear is the need for access to capital. There are many people who have good ideas, who have opportunities, but they find themselves stymied by that wall of trying to get capital. They may be too small. Perhaps they're relatively new. And, let's face it, the large capital-lending institutions prefer to go with what they know best, and there are not the incentives to get into venture type operations. I believe that this fund will fill that need. I believe that this fund will fill that niche.
I think that this goes along with a number of things that this government has done, in terms of trying to develop not only capital, but also, I believe, creatively using the tax system in this territory to meet a variety of goals.
You know, as I went through and took a look at some of the things we've done just recently, I look at such things as the Yukon low-income family tax credit, which is a direct benefit to low-income families.
One of the things that I have spoken about - and have talked to many, many seniors about - is the senior property tax deferment. This allows more money in the hands of seniors, by allowing them to defer property taxes.
The Yukon small business investment tax credit - now this one was an interesting one, because I think we, who live with these issues, and deal with them all the time, assume that everyone knows. I was at a recent economic summit, where it became apparent that people weren't even aware that this is available. I believe that this government is using the tax system creatively to try to put more money in people's pockets, to try to create some opportunities for business.
I think one of the areas that this government has actively worked in has been the mineral exploration tax credit - the largest in Canada, Mr. Speaker. Now I know that the Member for Porter Creek North scoffs at this, but I can tell him, Mr. Speaker, that the mining community certainly didn't scoff at it when this was unveiled in Vancouver a bit over a year ago. They certainly didn't scoff.
This is a direct benefit to people who get into mining exploration in this territory, and that's a creative use of the tax system to, if you will, prime the economic pump.
I believe that it will allow people to keep more money in this territory to prompt new, innovative ideas. I believe it will allow Yukoners greater diversity for directing their own RRSP funds. I believe it will allow them to keep much of that money in the territory, where they make their living, where they raise their families.
This is not a fund that's directed to somebody who sits on Bay Street and turns over $300,000 or $400,000 a year. This is a fund that's directed at people who work in the local shops, who work in the local businesses, the people who drive the Cats, the people who drive the front-end loaders, the people who are down my street, the people who are in my neighbourhoods, whether it's Arkell or Granger or Hillcrest - ordinary working people who are trying to get by, who are trying to plan for their future. This gives them an option. It gives them an option to invest their money, to have some say in how that money is going to be handled, where it's going to be directed and, ultimately, to produce more jobs, more economic activity for those individuals and their families. I believe that this is a positive step, a positive move, and I commend my colleague for bringing this forward, and I'm pleased to see the support we've enjoyed in this Legislature.
Hon. Ms. Moorcroft: I'm pleased to rise in support of the Fireweed Fund Act, and the development of the labour-sponsored venture capital corporation in the Yukon.
I think that what this bill shows is that our government is committed to economic diversification; we're committed to finding new ways to fund small- and medium-sized businesses; and we're demonstrating our work in consulting with the public and then acting on their recommendations.
We made a commitment to consult with Yukon people about the tax system, and we made good on that commitment by establishing the tax round table. There were representatives of business, of labour, of community governments and First Nations.
The tax round table recommended to us that we establish a vehicle to permit the formation of a labour-sponsored venture capital corporation, and this legislation that we're debating today is the embodiment of that promise. The Fireweed Fund Act will establish the framework for such a corporation in the Yukon.
Outside observers might not be clear on what a labour-sponsored venture capital corporation would be and what venture capital is about. Any person with an idea for a new business, who wants to open a new enterprise, undertakes a certain amount of risk. Venture capital funds exist to help fund that risk.
Small businesses have more of a problem getting access to capital from the banks - the normal lending institutions - than a larger business enterprise would have. And this is particularly a concern for women who may want to start a small business. It's also a problem for youth.
One of the things that we've done as a government to respond to the request from youth to have support for starting their own businesses was to fund $200,000 Dana Naye Ventures to oversee a youth entrepreneurship loan fund, and I've met a number of young people who have used that fund to start a small business.
The establishment of the Fireweed Fund could also lead to providing much-needed capital for new small- and medium-sized businesses, and many new successful business owners/operators are women. My colleague in Government Services spoke of the connect-Yukon project and the major investment we're making in technological infrastructure. We are in a position of transition, not just in the Yukon but around the world. A knowledge economy is developing. There's a potential for the labour-sponsored venture capital corporation to fund e-commerce business. I've seen young people seizing the opportunity for e-commerce and for being incredibly interested in these new technologies being used to their advantage.
I want to acknowledge the work, as other members have done, of the Yukon Federation of Labour and the labour movement generally in the Yukon who have sponsored the Fireweed Fund work and will control the appointment of the majority of the board of directors. As a government, we'll be providing a tax advantage to people who purchase shares in the fund.
Mr. Speaker, we're proud to be bringing this forward and look forward to the future when a Fireweed Fund Act may be in operation and able to support small business development in the Yukon and further economic diversification.
Thank you, Mr. Speaker.
Speaker: If the member now speaks, he will close debate. Does any other member wish to be heard?
Hon. Mr. McDonald: I'd like to begin by thanking all the members who have spoken this afternoon and for the obvious support that all members will give this particular measure today. It's always a pleasure to introduce legislation that various members want to claim credit for. It's reassuring that the particular measure will receive thorough and resounding support, but I think the greatest concession from the opposition today was the admission that no single initiative will resurrect our economic fortunes, and this is, of course, an important statement, given the nature of the debate so far in the Legislature about the economy, however limited it has been.
The government recognizes clearly that a tax round table and the various measures that have been suggested and promulgated from that table - the investments and infrastructure; the investments that the government is making in new energy sources; the investment the government makes in trade and investment; the many different things that the government is undertaking currently, each and of themselves will not resurrect our economic fortunes. They may well, as a body of work that is being promoted by not only the government but by its many partners in this territory, expand and diversify the economic base of this territory and provide for a much more solid foundation for the future. It's always easy to listen to some opposition members who would want one to believe that if only the government would do one thing, the economy would turn around; that if only the government would just make an expenditure in a particular area, the economy would turn around; and this is an old ploy that the current opposition practises as much as anyone has ever practised it in this Legislature to encourage people to believe that the government has yet to find that one thing.
Clearly, Mr. Speaker, that portrays a massive ignorance about not only the problem but the solution, and the partnership that the government has created with many different persons throughout the community understands that the one-item solution to our economic fortunes is no solution at all. What we have before us is but another tool that we're putting in the hands of Yukoners to improve our economic fortunes and to give people a fighting chance at making a better living in the future.
Mr. Speaker, it is not an answer for the people of this territory to simply wait for something to happen, for some decision to be made by somebody else. It is essential that we start crafting the tools that we will need to create jobs and to initiate economic activity. It is necessary for us to understand that we need an array of tools to meet not only the needs of those who require access to capital but who need a trained workforce. They need appropriate telecommunications equipment. They need access to good transportation systems, including good highway systems, and good port access if they are in the export business.
There are many different things that the territory needs in order to give itself the best possible chance to do well in a modern economy, and the fact that we are undertaking so many of these items, I think, demonstrates our commitment to listening to people, and to working with good ideas from wherever they come.
I think there is no shame in standing as Government Leader in this Legislature and saying that the ideas that we have undertaken, whether they be the Whitehorse runway extension or new tourism marketing opportunities with charter airlines around the world, or whether it is the oil and gas work that we are doing, is a result of work that we are doing with the people of the territory and the partnerships that we have created with many people in the territory and the ideas that have come forward from people in the territory. I think it is indicative of a government that is sensitive, that listens - listens carefully - understands its people, the people of the territory, the citizens, and works with them to promote solutions.
And so, however people may want to characterize whether or not they suggested an idea first, I think the only important credit that we perhaps could give would be to the Federation of Labour who, in modern memory, was the first to put the issue, the proposal for this particular measure, on the table in a public forum that was, incidentally, sponsored by the NDP government.
Now, there have been a number of comments made about the various tax initiatives that have been undertaken by this government. I must say that, as much as the Yukon Party would like to justify its massive tax increases a few years back, which supported, incidentally, at the time, the largest spending budgets in Yukon's history, I can't agree with - and have never agreed with -their economic plan and their budgets.
I believe that they were wrong-headed then, and their understanding of the situation is flawed today.
I think that it is terribly unfortunate for the Yukon Party to be so critical of the mineral exploration tax credit, which has received very good reviews by the mining industry - a mining industry that recognizes that there are some worldwide, long-term, difficult issues facing the mining industry and, consequently, depressing metal prices, and feel that what government can do, such as making use of the tax regime, is in fact good public policy, and thoughtful and forward-thinking public policy, particularly for those who believe that this mining industry has a future, as does the NDP government.
The other tax credits that have been suggested at the taxation round table, besides the one before us this afternoon, Mr. Speaker - the small business incentive tax credit, low-income tax credit, et cetera - are clearly good ideas as well. They're now public policy, of course, and the work that has been done to bring them forward was done carefully, deliberately and methodically.
That is also the case in this particular situation, Mr. Speaker, in bringing forward this particular bill today and the labour-sponsored venture capital corporation act. It is hardly the case that, in the last year and a half, nothing has happened, and magically something - poof - happens, as the bill is finally brought into the Legislature. The work started with discussions at the round table. It started with partnerships being created between labour and business, which, in the first instance, had to work with each other and develop a good sense of partnership with each other. Beyond that, they committed together to proceed with this particular measure and to provide support for this particular measure. A study, which has been applauded by a number of members who have spoken, was commissioned, which provided a full range of opportunities and options for people to consider in pursuing this measure.
Following the study, there was legislation that had to be drafted. This is a technically complex bill. The work was done, as well, sponsored by the government but, of course, undertaken by the Federation of Labour with the help of people that all members have mentioned.
The work has not stopped there. There is a business plan being undertaken today to flesh out how such a corporation that is envisioned in this act would operate, and what some of the issues and choices might be that face a board and face a government that want to provide incentives and provide support.
So there is a large body of work that has been undertaken, that has supported this particular measure, and this body of work, of course, didn't begin yesterday.
I will join other members in thanking all those people - the Yukon Federation of Labour, particularly - who have put so much heart and soul into this project, and have with their good offices brought forward this measure, which will be of benefit to the broad community: the small businesses and small enterprises and medium-sized enterprises, everywhere in the Yukon.
If there's one continuing issue that has plagued Yukon business, it has been access to venture capital. There is no shortage of safe capital available for guaranteed investments in this territory. Any project that is guaranteed to make money will be guaranteed to have a bank behind it. But, of course, for those projects for which there is some risk, for which there is some difficulty, some administrative inconvenience in managing those loans, of course there is still concern that there is not sufficient access to capital to allow those enterprises to prosper.
So obviously, Mr. Speaker, this will be among our tools that we will be promoting to ensure that at least some businesses have a better chance of being initiated and surviving and perhaps expanding in the years ahead of us.
Mr. Speaker, there are some very good and legitimate questions that should be put to the government with respect to the government's own commitments in the coming years, and I'll be in a position to answer to the extent that I can later on this afternoon in Committee. I'll point out that any change, any commitment that the government will make in terms of its own tax commitment, will have to come in the form of an amendment to the Income Tax Act and will come in the context of main estimates in a couple of months' time as we head into the spring and the new year.
There is the issue of available capital for this particular fund to ensure that it has sufficient working capital to operate and a sufficient critical mass to be able to meet the interests of potential investors, as well as to cover off administrative expenses, and I believe, given the federal government's commitment to other labour-sponsored venture capital corporations elsewhere in the country, a federal government contribution, a large contribution to this project, would be entirely justifiable, and I can speak more about that later on.
So, Mr. Speaker, of course we will all support the bill, I understand, and we will see how debate proceeds through Committee. The issues that the members have asked questions about I think I can answer and if I can't, then I'll get back to them later on. In any case, I am appreciative of the support they are giving to this particular government initiative, and I would wish the proponents of this particular measure the best and hope that, in the coming year, this project can become more than just a legislative dream, but can actually become a reality.
Motion for second reading of Bill No. 91 agreed to
Hon. Ms. Moorcroft: 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 Minister of Justice that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole. Are you agreed?
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 members' wish to recess?
Some Hon. Members: Agreed.
Chair: Fifteen minutes.
Chair: I will now call Committee of the Whole to order.
Committee is dealing with Bill No. 91, Fireweed Fund Act.
Bill No. 91 - Fireweed Fund Act
Chair:Is there general debate?
Hon. Mr. McDonald: Mr. Speaker, as I mentioned in second reading, this legislation will permit the establishment of a labour-sponsored venture capital corporation in the Yukon. For too many years, a lack of capital, especially when it's called venture capital, has been a limiting factor for many in the Yukon who wish to establish themselves in business. This is a problem that we were determined to address, insofar as it is within our power to do so.
We have already introduced several measures to increase the availability of capital - the mineral exploration tax credit, the small business tax credit - and this bill is a further step in that direction.
Once passed and made into law, the legislative framework will exist for the Federation of Labour to incorporate a venture capital corporation, to be called the Fireweed Fund.
In my remarks on second reading, I spoke of the background that led to the development of this measure, so I don't need to go into that detail again, other than to say that it was a recommendation of the tax round table.
The basic model for this bill was Manitoba's legislation, although there have, of course, been modifications made to suit it to Yukon circumstances.
The fund will, in many respects, be similar to a mutual fund, but in keeping with the patient money philosophy behind such funds, investment will be required to be held for a minimum of eight years, except in cases of hardship.
There will be a considerable tax advantage to investing in the fund. Canada will provide a 15-percent, non-refundable tax credit and Yukon will also provide one. The size of the Yukon credit has not yet been determined, and amendments to our Income Tax Act will be brought forward at a future date.
There is a further tax advantage to the fund in that investments in it will be eligible for registered retirement savings plans and, as mentioned at second reading, it is hoped this will repatriate some of the RRSP investments outside the Yukon held by our citizens, and certain members of the chamber here will agree it is important that Yukoners have a local outlet for some of their savings, rather than being forced to invest it all outside the territory.
Mr. Chair, this is an important piece of legislation that will see Yukoners, both union members and those who aren't, investing in their own futures in the Yukon. Over time, I believe this legislation will see Yukoners are creating more economic activity that is controlled by Yukoners and more jobs that will improve the lot of all of us and contribute to a healthy and vibrant lifestyle and standard of living.
I did indicate in second reading final remarks, the answers - or some points, I guess - in response to some members' questions about the bill before us. I can answer some more questions now if members want to put them.
Mr. Cable: Does the minister have the Yukon Federation of Labour report entitled Labour-Sponsored Venture Capital in the Yukon with him? The minister is indicating yes. Could we look at the chart on page 11, the cost to the Yukon government? I take it from what the Government Leader and the Minister of Finance have said today that there's basic agreement with the contents of this report, but, just for the record, are the costs that are outlined in those various scenarios the anticipated costs that would arise by way of tax credits?
Hon. Mr. McDonald: We've determined, Mr. Chair - I believe that the chart is on page 10, for the record - that the costs associated with the various scenarios are roughly approximate to the costs that the government would bear as a result of a tax credit, so the tax expenditure portion of the government's exposure would be approximately what is listed here.
Mr. Cable: Okay, I was talking about table 6, which, in my copy of the report, is on page 11. Is this what the Government Leader's talking about?
Hon. Mr. McDonald: We're talking about scenarios for different LSVCC regimes, table 6.
Mr. Cable: Now, assumedly, we are going to enter into this to increase some economic activity. Is there any speculation or any work that's been done on the increased tax revenues - the tax flows that we'll get because of the increased economic activity?
The reason I ask this is that assumedly we wouldn't get into this and expend public money unless we thought that down at the end of the road there was some product for the whole community.
Hon. Mr. McDonald: Well, Mr. Chair, at this point there is no precise formula by anyone that I know of that will be able to project the direct economic impact of this particular measure. There is plenty of anecdotal evidence with other labour-sponsored capital corporations in the country that they make successful investments, and that the successful investments involve the employment of a large number of people, and that these investments are classically higher risk. Whether at some point down the road these same investments might have been picked up by a traditional financial institution is anybody's guess, but clearly, they have a history of focusing on those investments that have not already tried and failed to receive bank financing.
Mr. Cable: The question I was asking, and I think there has been some commentary and some reports that we picked up on the Internet, the investment by the public, by the taxpayers, in the labour-sponsored venture capital fund would be recouped over years by increased tax revenues. I think there have been experiences outside that would indicate that that's the case.
Does the minister expect that, in a global sense, eventually the community will get their money back by way of some kind of return on investment?
Hon. Mr. McDonald: Well, yes, Mr. Chair, as the report itself suggests, there will be some recouping of the expenditure through increased economic activity, and we would be presuming that that would happen to. How much, and to define it with any real precision, is difficult, but we do fully expect that the activity generated by the investments from this corporation will, in fact, expand the economy, diversify the economy, strengthen the economy, put people to work, and produce revenues for government.
Mr. Cable: I think the Government Leader has recognized, judging from his comments earlier, that there is no magic bullet to solving problems that we have, and that something like this should be tried. If it'll work, good; if it doesn't, then we'll have to change it.
What sort of evaluation is anticipated to take place by the government? Are we going to look at this five years down the road to check out the number of jobs that were created and the taxes paid, and the total amount of government investment and balance them off and see whether it has been successful or not? Is there something like that anticipated somewhere down the road?
Hon. Mr. McDonald: As a matter of fact, yes, Mr. Chair, with the various tax initiatives that we've undertaken. Built into the departmental planning is to review the performance of these initiatives after there has been a chance to see these initiatives take hold in the community. The actual tax expenditure versus benefit will be an important consideration as to whether or not they're ultimately continued or whether they're expanded or extended in the course of time, but the government's certainly intending to do reviews.
Mr. Cable: This is a fairly technical bill and I don't intend to really get into arguing about any draftsmanship when we get to the line-by-line but I wonder, just for the record it is based on the Manitoba act, which I think has been around for a wee while anyway, and there have been no really substantive changes except for a change at section 15(b), relating to the methodology for sale of the securities. Is that where we're coming from? Could we just get that for the record?
Hon. Mr. McDonald: The short answer is yes, that's the only major change. As you can see in this particular bill, we have provided that the selling of the shares can be undertaken by people who have been approved through a training course approved by the registrar. This is, we believe, more flexible for us but also suggests there ought to be some training so that people who are selling shares do have some sense of the professional obligations of that particular trade. Registered brokers, of course, can sell as well. We haven't got a training program established, but that is the intention.
Mr. Cable: Just on that topic, I note that part of the Securities Act has been made not applicable to this fund. Is it anticipated that the people who will be handling the investors' money will be bonded?
Hon. Mr. McDonald: I'll have to take notice of the question and then get a full answer to the member.
Mr. Cable: The question I raised in the briefing this morning - and I think the minister's staff were going to look into it - related to the arm's-length relationship between the operators of the fund, the Yukon Federation of Labour, and the investments. I think it was decided that under section 11(4)(c) and section 11(4)(d) that that would preclude the Yukon Federation of Labour investing in any vehicle that it owned. But I had raised the question as to whether that would apply to one of the members of the Federation of Labour, and whether it would apply to, say, a trust set up by one of the members, and I was wondering if the minister had the answer to that question.
Hon. Mr. McDonald: From the period of this morning until now, the department has determined that a member of the YFL can set up a trust to partake in a business venture.
It must be a qualified Yukon business entity as defined under the act and meet the conditions of being an eligible investment under the act and, if this were done, then the fund would still have to, as well, meet its objectives, which includes the investment in qualified Yukon businesses that are business entities with a view for earning income and promoting and maintaining investment by Yukoners in Yukon businesses, employee ownership of the Yukon businesses, and any other criteria as established under the act. So they can - essentially the fund can invest in some creature of the - let's put it like this: the fund can invest in an entity that is created by a member of the Yukon Federation of Labour, as long as it meets the objectives of the act.
Mr. Cable: Okay, I'm going to have to clear my head on that one. We're saying a member of the Yukon Federation of Labour can come forward with a business proposal. I understand that. But what about the Yukon Federation of Labour itself, or a trust created by the Yukon Federation of Labour, or one of the member organizations of the Yukon Federation of Labour, or a trust created by one of those members? Is that precluded under this section 11(4)?
Hon. Mr. McDonald: It has been determined that the Federation of Labour itself cannot apply under the fund; any trusts created by the Federation of Labour cannot apply under this provision. A member of the Yukon Federation of Labour can apply, as I understand it, as long as the application meets the provisions of the act.
Mr. Cable: Okay, I misunderstood the minister initially. We're talking about a member organization of the Yukon Federation of Labour. Is that what we're talking about?
Hon. Mr. McDonald: Yes, we're referring to a trust established by a member of the Yukon Federation of Labour.
Mr. Cable: Another issue on the Securities Act - I'm not totally sure how this section 15 is going to operate. Is it anticipated they'll be offering memorandums produced and approved by the securities people before the investments are sold to the various investors?
Hon. Mr. McDonald: Correct.
Mr. Cable: Just a couple of other points - the minister spoke on a couple of occasions about RRSP qualification, and I'm not sure I understood what he said. Do we, in fact, have RRSP qualification from the federal government, or is it anticipated that the act is set up in such a way that we will, in fact, get it?
Hon. Mr. McDonald: Mr. Chair, the department indicates that it is set up in such a way as though we will get RRSP qualification.
Mr. Cable: Is there any clearance procedure involved, and if so, how long do we think it'll take to get the clearance, once we proclaim this act?
Hon. Mr. McDonald: Well, Mr. Chair, not being an expert in selling RRSPs - I'm informed we do have clearance already for these investments - clearance by the federal bureaucracy - if that counts. If the member wants more information about RRSP application, I don't have a lot of personal working knowledge of it, but I can certainly get the information that the member might want.
Mr. Cable: I think the question has been answered. I think the minister has just said we jump through the hoops and that it's just a matter of getting some document, I assumed - if he could verify that.
A couple of timelines. The minister talked about amendments to the Income Tax Act, and I assume there will be a proclamation time for this act. When is it anticipated that we will proclaim the act, and when is it anticipated that we'll make the necessary amendments to the Income Tax Act?
Hon. Mr. McDonald: Mr. Chair, there are a couple of hurdles to overcome. First of all, the corporation has to start, and we have to see that its business plan is being developed now. Graham & Associates is undertaking the work. We'll be interested in seeing this business plan, of course. We're also making a pitch to the federal government to provide some interest-free loan to this corporation so that it can be initiated very soon. There's a fear that if it just simply tries to start up by itself, it will not achieve the critical mass that it requires to operate successfully in the long term. So it, like other venture capital corporations, has received some support from government, and we think this is an excellent opportunity for the first time in a long time for the federal government to invest in northern economy. This is an excellent opportunity.
So, I will be making that pitch to the federal minister shortly.
Let's put it this way: if all goes well, we could see a change to the Income Tax Act as of the next legislative session, and that would be in effect for the 2000 taxation year.
Mr. Cable: I asked this question of the staff this morning, and I believe they answered it, but I would like to get the minister's confirmation on it.
In some jurisdictions, there is enabling legislation set up. You know, you can spin these various labour-sponsored venture capital funds out. Here we have chosen the route of setting up a specific act to deal with a specific labour-sponsored venture capital fund, and I'm just wondering why we took that approach, rather than the more general approach.
Hon. Mr. McDonald: I don't know precisely what the member's referring to. I was under the assumption that any labour-sponsored venture capital corporation would have to be established by an act of legislature, and certainly I'm not aware of any that are not. They're all sponsored, in some way, by a trade union or employee association.
Is the member asking something else? Is he asking me why we've picked the one labour organization, or is he saying - maybe he could explain it for me.
Mr. Cable: The minister's staff person can correct me if I'm wrong, but I think you have a choice of proceeding to put in a general statute that just catches anybody and everybody who wants to incorporate a fund. You don't actually set the rules for the fund; you just set the general rules that the government wants in place, then people go out and create funds. I assume that's what happened with this working venture fund.
But here we have gone directly to setting up the corporation by statute, and I was wondering why we've taken that approach. Now perhaps I misunderstood the comments in the briefing this morning.
Hon. Mr. McDonald: I guess one could do it any number of ways. One could set up a generic one, or set it up for specific organizations, and it's been done both ways, as the member has mentioned. We chose to do it this way because we felt that, in all likelihood, there would be maximum, or room for only one, entity in the Yukon and felt that this was probably the most practical and appropriate way to go. If there are others - and there's a real interest and it appears that the marketplace can handle more - then I'll be the first to have a look at it.
Mr. Cable: I have just one final question. The Yukon Federation of Labour report recommended that there would be no lifetime cap on the tax benefit and - that's on page 15 of the report - that would appear to be what the government has adopted, and I was just wondering what the minister's thinking is on that. The thinking coming out of the consultants was that they didn't anticipate there would be a need for it because, you know, while they anticipated they'd get a few million dollars, it wasn't anticipated that they would be draining the treasury. What was the minister's thinking on the response to that recommendation? Do we not feel that at somewhere down the road we should be reviewing the amount of investment in the vehicle and the amount of income tax that's being credited?
Hon. Mr. McDonald: I would suspect very much that the Minister of Finance, a few years from now, will be interested in looking at the performance of all the tax measures and determining what the impact has been, and whether or not they can be improved or amended in some way.
In this particular case, at this point, I do not see a need for a lifetime cap on the benefit. That may change upon reflection; that may change with the experience over time. At this point I don't see it. We haven't made any final decisions with respect to what the amendments to the Income Tax Act might involve, but that will certainly be one of the issues that will have to be identified, or at least considered, in the drafting of the Income Tax Act amendments.
But as I say, I don't see anything from our analysis so far, or from our notional experience with other funds such as this, that would immediately want one to draw the conclusion that we need a cap. But if the member has some information, then I'd be happy to consider it, and I'm certain that future ministers of Finance will have to consider it in like manner.
Mr. Cable: The only reason I bring the point up is, I'm just wondering if, in fact, the vehicle's launched and there are investors. Is it the minister's opinion that we will, in fact, have the ability to put a cap on it at some juncture, if we find out that the tax credit flows are fairly large.
Hon. Mr. McDonald: My understanding is that we would have the ability at some point, if we wanted to, to put limits on the measure. I don't see the need for it at this point, but I've not been told that there's anything that will prevent us from doing so at some point down the road.
Mr. Ostashek: Mr. Chair, I have a few questions, in no particular order, that I'd like to cover off in general debate, and I'd like to start just on the question my colleague asked on the government's ability to put a cap on it. The minister indicated that he does have the ability. Is that spelled out in the act now, or does the minister say he's going to have the ability by bringing in an amendment to the act?
Hon. Mr. McDonald: Well, first of all, we have to bring in the amendment. The act that would involve the cap would be the Income Tax Act, and for us to initiate a tax break, we have to make an amendment to another act, not this one - the Income Tax Act. When we bring that in, we could either bring it in with a cap, or not, or some time down the road we could put a cap on if it's felt by somebody at some point that that's appropriate.
Mr. Ostashek: If I understand the minister correctly then, in order to put a cap on it down the road, somebody would be bringing in a new amendment to the Income Tax Act?
Hon. Mr. McDonald: Yes. Effectively that's the case, because in order for us to have the tax break in the first place, we have to bring an amendment to the Income Tax Act anyway. So, the moment we initiate the tax break, we could put a cap on it. Or, we could not put a cap on it, initiate the tax break and put a cap on it down the road, or change the level of the tax break at some point down the road, but those are decisions for future members to decide.
Mr. Ostashek: Okay, I understand that. I want to go back now to comments that the minister made that this would be an opportunity for the federal government to invest in the north, and I agree.
Have there been any discussions with the federal government on providing a start-up loan to this venture capital fund, or a grant, or - well, let's go with that first. Has there been any discussion with the federal government?
Hon. Mr. McDonald: Mr. Chair, there's been no specific discussion about this specific measure. I have had a discussion with the federal minister about economic development and potential vehicles, but I have not specifically done this, because at the time I had my meeting we were still working on this particular measure. But I believe that this would make an excellent opportunity for the federal minister to provide a contribution.
Some research has been done by Graham & Associates as to what the federal government has done elsewhere in the country, and it appears that they have been generous supporters of labour-sponsored venture capital corporations, not only in providing a tax break but also in providing loan capital to the corporations, so I would suspect that they would have to be our first stop to take them up on their offer to help the northern economies. They made the offer two years ago. We are anxiously awaiting something to happen, and this, along with a couple of other things, I think, would be fine vehicles for federal investment.
Mr. Ostashek: I would approach the federal government for some start-up capital. What about the Yukon government? Is the Yukon government going to contribute to the start-up of this? And can the minister give us any idea at this time how much, if he is, and whether it would be in the form of a loan or a grant?
Hon. Mr. McDonald: Firstly, Mr. Chair, I would think that a grant would not be a very realistic possibility. Secondly, I believe that this would be primarily a good opportunity for the federal government to contribute, as I think the Yukon government has contributed substantially already. All the development of this proposal - the investment in terms of putting together the discussion paper, paying for the business plan, drafting the legislation, and, in fact, committing, hopefully ultimately, in the spring to a tax break - is a sizable investment, I believe, already, in this particular measure. It's certainly sizable for a small government. So, I will be making a pitch to the federal government to suggest that perhaps they might want to step into the breach and provide some loan funding to the corporation. I think that would make eminent sense.
Mr. Ostashek: I just want the minister to understand I'm not being critical of whether the government is or is not contributing to the fund. I'm just trying to get my head around what the territorial government is going to do, and that's fine.
The minister has spoken of the critical mass that is required to get the fund going. What kind of dollars is he talking about - "critical mass"?
Hon. Mr. McDonald: Well, the advisory committee that has been established, and Graham & Associates, who have been charged with looking into the matter, have considered that, in terms of contribution from Canada, they'd be looking at a loan of $15 million that they'd like to see initiated. This could be supplemented by the sale in the initial year or two of shares to Yukoners, but the contribution from government would be about $15 million, in terms of an interest-free loan.
Mr. Ostashek: I want to go back, and I believe - and the minister can correct me if I misunderstood him when he was giving his wrap-up - or maybe it was in his second reading speech, or somebody today, anyhow - when he said that there was in the neighbourhood of $150 million a year being contributed by Yukoners to RRSPs. Have I got that figure correct? Or, if I don't, does the Finance department know how much is contributed by Yukoners to RRSPs each year?
Hon. Mr. McDonald: Whatever it is, I didn't say it, and I will find out for the member.
Mr. Ostashek: It's not that important, but I would just like to know.
The minister did say that this fund would be RRSP-eligible, that the federal government would give a 15-percent non-refundable tax credit, and that the territorial government will be bringing in legislation to also give a tax credit of which he hasn't stated a percentage as of today - all well and good.
You can contribute up to, I think, $14,500 right now into RRSPs, which are tax deductible and you don't pay income tax on. Let's put it that way. You contribute tax-free money. Is the 15-percent federal non-refundable tax credit on top of that? So that where you get a 100-percent tax deductible on the money you're putting in the RRSP, is the federal government giving another 15-percent tax credit on top of that?
Hon. Mr. McDonald: Mr. Chair, let's take this scenario: if the Yukon, for example, was to have a 15-percent tax credit, you'd initially get the 30-percent tax credit, federal and Yukon together, and then, on top of that, if you put the investment into a RRSP, depending on your tax bracket, you would get the eligible tax benefit as well.
Mr. Ostashek: You could put money into it that's not in an RRSP and get a 15-percent tax credit. If you put RRSP money in it, you get the tax-deductible money you're putting in plus the tax credit. That's fine. I thought I understood it correctly.
The Member for Riverside asked about cost-benefit analysis, and I appreciate that this government hasn't had the experience with this to do it, but can the minister tell me: these funds have been around in other jurisdictions for awhile, and with all the studies that we see conducted nowadays, surely somebody has done a cost-benefit analysis of venture funds. Does the minister have that information? If he has, I would like to have it - not necessarily today, but if he has that information of a study that has been done somewhere, I would appreciate it if he would share it with us.
Hon. Mr. McDonald: Mr. Chair, as I'm sure the member can appreciate, first of all, we don't know of any. If we find out, we'll share them. As this has been explained to me, many of these labour-sponsored venture capital corporations are actually fairly young, and they involve patient capital. So the experience of many of these corporations is that many of them are less than five years in terms of operation. The requirement to hold on to the money for quite awhile has made it a little difficult to have a long-term view of things.
But we will canvass others. We're not aware of any. We understand that it will be very difficult to do it, but we'll canvass others, and see what preliminary work they've done.
Mr. Ostashek: Mr. Chair, in the debate with the Member for Riverside, the minister indicated that a member of the Yukon Federation of Labour could, in fact, set up a trust and be eligible for funds under this venture capital act.
Let me see if I can just elaborate further on that. The carpenters union is a member of the Federation of Labour, I understand. If they were to set up a trust, would they be eligible to apply for funding under this program?
Hon. Mr. McDonald: As I indicated, any member can set up a trust and can be eligible for loan funding, if the board follows the terms of the act - and they must follow the terms of the act. It must, of course, clear the fund managers. They have to follow the same guidelines as anyone else who is also similarly approved.
Mr. Ostashek: Mr. Chair, these funds in other jurisdictions, I believe, come under the watchdog of the securities commissions in the provinces. We don't have a securities commission in the Yukon. Is this fund going to be policed by some security commission somewhere? How is the public going to have the assurances that there is a watchdog over the people administering this fund and that they're operating in compliance with the legislation? My understanding is that securities commissions do that in Ontario, British Columbia and other places.
Hon. Mr. McDonald: Well, there are provisions, Mr. Chair, in the act to report to the registrar of securities in the Department of Justice. There are also, as I am told, pretty significant reporting requirements to shareholders, which is also required by this act, so full disclosure of all activities is given to shareholders.
Mr. Ostashek: Mr. Chair, I understand that, but the minister himself said this was like a mutual fund. Mutual funds in other jurisdictions where they originate fall under the policing of the securities commissions, be it in Ontario, be it British Columbia, be it wherever it is. There is a set of standards set out by the securities commission that they can operate under. I know the standards are set out in this act, and it says you can report to the securities people in the Department of Finance, but I don't believe that those are the watchdogs for this fund. I'm not even sure of the legality of it. I'm sure your people have checked into it, and maybe you could share that with us. I would suspect that this type of fund would have to come under the jurisdiction of a securities commission somewhere, and we don't have that sort of a body in the Yukon.
Hon. Mr. McDonald: The only answer I can give to the member is that the registrar of securities in our jurisdiction, and the registrar of corporations under the Business Corporations Act in our jurisdiction, would be responsible for ensuring that the terms of this act are respected. The shareholders would be, as well, fully aware of the operations of this particular fund.
So, that's the best I can offer for the member.
Mr. Ostashek: Are the shares of this fund going to be sold privately? Are they going to be listed on some stock exchange at some point?
Hon. Mr. McDonald: They will not be listed on the stock exchange.
Mr. Ostashek: I want to turn now to the share structure in the report. I know we can get into it in line-by-line, but if we can get it over in general debate - because they are more general questions that are specifically to the wording in the act. I believe it's section 5, if I'm not mistaken - section 4, share capital, in the act.
It says that there are class A shares, or special shares, and then it goes on to say, I believe, that those are reserved for corporations, that: "Class 'A' shares shall be issued only to institutional or corporate investors, the Government of the Yukon, or the Minister of Finance (Canada) in trust for Her Majesty in right of Canada".
Can the minister give me some scenario of why, or when, or if - it must be if, because it's in here - but why or when the government might be buying shares in this venture capital project?
Hon. Mr. McDonald: The first answer, I guess - the first appropriate answer, I suppose - is that the Government of Yukon is not interested in exercising this provision itself. This is a provision that allows some flexibility for government to do things. Any government, of course, can provide a contribution to the corporation, either through a loan or through the purchase of shares. The one reason for the difference in the class of shares would be that the government may wish to purchase shares but not want dividends, or may want to seek some other benefit other than dividends, as a share owner. This is an enabling provision that allows the government, or governments, to participate in any number of ways. It is not the Yukon government's intention at this time, certainly, to purchase shares. In fact, we're not expecting at this time to have to loan money. That may change but, at this point, we're not expecting that. We're hoping the federal government loans the money.
Mr. Ostashek: I gave the officials a heads-up this morning that I was wanting to know a little bit about government involvement in these venture capital funds in other jurisdictions. If they haven't had time to research it now, I certainly would like to have it.
Are there any funds that they're aware of now that have the government of their respective jurisdictions holding shares in the venture capital fund?
Hon. Mr. McDonald: Yes, Mr. Chair, there are. Perhaps what I could do is share with the member some information that was raised by Graham & Associates in terms of determining what other governments have done, in order to hopefully convince the federal government to participate.
There has been, for example, investment in the Workers' Investment Fund in New Brunswick by both the provincial and federal governments. The Crocus Investment Fund has also received funding from the Manitoba government and from the federal government and from their workers' compensation fund. The Working Opportunity Fund in British Columbia has received funds from the government for start-up and provincial funds. The Working Ventures Canadian Fund received about $15 million in a federal government grant. It was launched in 1990, but the installments, in terms of the grant, began in 1988, and they ended in 1995. The SFTQ Fund in Quebec received a loan from the Quebec government and a matching loan from the federal government.
Those are some examples of government contributions.
Sorry, Mr. Chair, on page 24 of the discussion paper, there are some examples of government contributions.
Mr. Ostashek: Government contributions - I'm asking for more specifics in the areas where the governments, or the government in the jurisdiction, holds shares in the fund. Do we have any examples of that and, if they do - if you don't have it now, that's fine, I'd like to get it at some point - and what are the terms of reference of them holding the shares? Are they bound to hold them for eight years, like a person is who invests in it on their own? Or, what are the terms of reference around the shares, if in fact there are governments that hold shares in the fund?
What I want to do is get my head wrapped around what they do in other jurisdictions, because we do have the ability of the government, through the clause that's in the act, to invest in this, and I'd like to know before I pass the act exactly what is happening in other jurisdictions.
Hon. Mr. McDonald: Well, there is - the Crocus Investment Fund that I mentioned - the Manitoba government could purchase $2 million in start-up equity in that particular case, so it has happened. I think that happened in 1993, 1994. So, it has happened. Right in front of me, I don't have a comprehensive list of all funds and government contributions and the terms and conditions of those contributions, but it would be sufficient to say, at this point at least, that government has invested in the funds and has taken shares in the funds.
If the member wants a list, I can try to get one secured for him.
Mr. Ostashek: Mr. Chair, I don't want to be putting the department to a whole bunch of work that I'm not going to need. What I was looking for more specifically was not contributions, not loans. Loans are repayable, or supposed to be repayable anyhow. I'm looking for governments that have invested in the share structure of the corporation, and what the terms of reference for that share structure is. As you said, the Manitoba government has invested $2 million in start-up money in the fund. They took $2 million worth of shares, I presume, is what you're saying. Are there restrictions on how long they have to hold those shares? Are they entitled to dividends on those shares? That's the kind of thing I would like the department to get for me. I don't need it right now, but I would like to get that at some point, if the department could do that for me.
Hon. Mr. McDonald: Yes, Mr. Chair.
Mr. Ostashek: I thank the minister for that.
I have one further question. We're passing this act, and we're all doing it in a very positive manner, and we wish it every success in the world, but in the event it were to fail, is there exposure to the taxpayers of the Yukon, over and above the tax credits that it would give the people who have contributed to the fund? Is there going to be any exposure of the Government of the Yukon, and, if so, how much exposure?
Hon. Mr. McDonald: Under this act, there would be no exposure other than if, in the future, some other government decided they were going to invest in the fund, invest in share capital and become holders of shares. Then, presumably, they would be faced with what every other shareholder would be faced with. But there is no other exposure than that to taxpayers.
Obviously, Mr. Chair, there is the political equation of the day, and whether or not the government of the day wants to do something. All I can say to anybody who is going to participate in this now is that this is a venture capital fund. People will be getting a very generous tax incentive to invest. These are higher risk investments. They should pay attention to the information they receive. They should make their decisions carefully and treat this like other funds, other investments.
But under this act, there is no exposure to the taxpayer other than if the government had invested in shares.
Mr. Ostashek: I think it's important that, when we're educating the public, that is made very, very clear, because we have incorporated an act specifically for one fund, which I don't have any difficulty with, but it may be interpreted by the people, the taxpayers of the Yukon, that this is a government fund, because of the enacting legislation that we have passed.
So I believe that it's very important that we make all investors in the fund aware that they're getting their benefits through the tax breaks that they're getting by investing in the fund. It is a higher risk than investing in money market funds, or most other funds, for that matter. There may be some very lucrative returns some day, if the fund is successful, but the government is not there to backstop the fund.
I agree with the minister that that's a political decision that would have to be made if and when it ever occurred that that fund got in trouble. The government of the day would have to make that decision, but I think it's important that Yukoners know that there's nothing in the act today that we passed saying that this a government fund.
Hon. Mr. McDonald: Well, I can definitely see the point the member is making, and I think it's quite a valid point. I've thought of this as well myself at one point during the process.
I would think that the member would join with me in insisting that, as part of the training program for any brokers, the number-one statement out of their mouths is that this is not a government-guaranteed investment; this is a venture capital fund; it will be run professionally by professional managers, and there are good reporting requirements in the fund, but this is not a government-guaranteed fund. And that has to be understood.
Ms. Duncan: I just have a couple of questions I'd like to follow up on with the Government Leader. With respect to the federal government and the federal Minister of Finance, the Government Leader indicated that he would be making a pitch to the feds to make an interest-free loan to the venture capital corporation, and he said he would be making this pitch shortly. Does he have a time frame or a date for the meeting?
Hon. Mr. McDonald: Yes, November 20.
Ms. Duncan: In our last debate on this type of investment vehicle, on March 25, the Member for Riverside said - and, just to refresh the Government Leader's memory about this, the Northwest Territories legislation worked with a menu of investment vehicles, including labour-sponsored venture capital funds. In the Member for Riverside's comments on the N.W.T. example, he said, "I'm told from one of our conversations with the Northwest Territories people that the plan will reduce the amount of tax collected by the Northwest Territories government." This was emphasized to us. This will not result in a reduction in the formula financing grant.
Is any reduction in tax collected by this, or do we failsafe that, and is it on the agenda with the Minister of Finance?
Hon. Mr. McDonald: If I thought I could get the federal minister to agree to finance a tax-reduction measure in the Yukon outside the formula financing agreement, I'd do it, but that's pretty much a long shot, frankly. The cost of this, of course, is going to be a true cost, and whatever the tax expenditure is going to be will be a true expenditure. So, it will either be a tax expenditure or a kilometre of road or whatever, but it will be a real expenditure and I would not expect the federal government would pay for that element of things.
Ms. Duncan: I have a couple of quick questions that I'd rather deal with in general debate than in line-by-line.
There are some union members or some working people in Yukon who might belong to a union that is headquartered elsewhere, and who then, in turn, may or may not be members of YFL, and I'm wondering if there's some methodology for ensuring that these individuals and their union representatives are captured in terms of directorship. For example, I can think of some people who are Teamsters. Is there an option for unions that may not be members of YFL? Is there some method whereby they can also become directors of the venture capital corporation?
Hon. Mr. McDonald: I think there are ways that other union members can be members of the board or the initial advisory group. As a matter of fact, as I understand it, the YFL has nominated Steve Duncan, Glen Lamerton and Kim Tanner to be members of the board - I don't know what union they belong to, but they are members - along with JoAnne Oberg and Dave Evans. The Whitehorse Chamber of Commerce has nominated Nick Poushinsky. So I think the representation on the board does not mean that you need to be a member of the Yukon Federation of Labour to be on the board, as this initial board suggests. The people will be appointed because of their skills, their understanding and knowledge of affairs.
Ms. Duncan: I understand the point and what the Government Leader has responded to me. What I was looking at was the list of directors, and what I was thinking about was, for example, an individual I was speaking with last night - we were speaking on different issues - and this particular individual at times has been a member of three different unions, and those unions may or may not be represented within YFL. So, I was curious if there was some method that he was aware of that, in working with YFL on this, that they had made to reach those people, is where I was going with that - in terms of appointment to directors. So that was my question with respect to that.
The other question I had is just a background for the reason for the choice of fiscal year. Is there some background information as to why it's October 1 to September 30?
Hon. Mr. McDonald: This is a proposal put forward by the Federation of Labour, and nobody seemed to see any problem with it. It seemed to make some sense. Our taxation years, of course, don't change.
Ms. Duncan: My experience with business is that it can be quite a lengthy process to change a fiscal year, and that was why I was curious if there were specific reasons for choosing that time frame perhaps, relating to the construction season, or business years - the majority. I just wondered if there was some background information available, and if it does come to light, if the minister could provide it. Thank you, Mr. Chair.
Hon. Mr. McDonald: I will.
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Mr. Ostashek: I just have one question. It really doesn't pertain to clause 17, but we're coming to the end of the act.
The government hasn't put a sunset clause in this for an automatic review. Is there any special reason why that is? I think it's a good practice to have a sunset clause in these acts.
I know this might be a little bit difficult one, because we're setting up a fund that's going to have a whole lot of money in it, but it seems like it's appropriate to review these acts after a certain period of time.
Can the minister tell me if it was even considered?
Hon. Mr. McDonald: Well, we thought of tackling the problem in a slightly different way, Mr. Chair - the problem of determining the efficiency and effectiveness of these measures. We were going to do a review of our tax expenditures - at least the Department of Finance with the minister of the future day will be doing a review of these tax expenditures after a specified period of time for each one, and determining whether or not we want to continue, or change our issues one way or another.
Mr. Ostashek: If the member could just bear with me - I appreciate what the member's saying, and I accept that. But we are setting up a fund here that's going to have Yukoners investing in it. There has to be some stability to the fund, so I don't believe the government will want to pull out in three or four years. Has the government set any period of time that they're going to be committed to this fund before they took the initiative to remove the tax credit that they were offering for it?
Hon. Mr. McDonald: Well, what I was thinking, Mr. Chair, is that when we come forward in the spring, if we come forward in the spring, we want to see the business plan first. We're expecting that by December sometime. When we see the business plan and, for the sake or argument, we decide it is a go, we come forward in the spring with an amendment to the Income Tax Act. I could give a sense, at that point, as to when we would think about doing a review and make that announcement for people who may want to invest. So, if we decide we're going to do this, anybody who's going to invest will have thought the matter through, bearing in mind that we don't want to cause a lack of confidence by our statements. Presumably, if we make a commitment, we want to think about that very carefully, and then, if we decide that we'll review, we'd make it clear when and how at some point down the road.
Nothing, of course, prevents the government of the day from reviewing it any time they want, and that's an option open to people. But in terms of any time-limited tax incentive, I'd want to give it some thought when we actually make the tax, as we did, for example, when we made the mineral exploration tax credit. We said it was going to be 22 percent for two years. People know, it's done, and it's clear.
Mr. Ostashek: Mr. Chair, I have just one more question on that. On the federal government tax credit, have they stated a specific time on it for other funds, or is it just open-ended and could be changed at any time?
Hon. Mr. McDonald: I'm told it's open-ended.
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Chair: As there is no further debate, Committee will now proceed to the schedule.
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Hon. Mr. McDonald: Mr. Chair, I move that you report Bill No. 91, Fireweed Fund Act, out of Committee without amendment.
Motion agreed to
Hon. Mr. Harding: I move that the Speaker do now resume the Chair.
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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. McRobb: The Committee of the Whole considered Bill No. 91, Fireweed Fund Act, and directed me to report it without amendment.
Speaker: You have heard the report of the Chair of Committee of the Whole. Are you agreed?
Some Hon. Members: Agreed.
Speaker: I declare the report carried.
Bill No. 83: Third Reading
Clerk:Third reading, Bill No. 83, standing in the name of the hon. Mr. Harding.
Hon. Mr. Harding: I move that Bill No. 83, entitled An Act to Amend the Workers' Compensation Act, be now read a third time and do pass.
Speaker: It has been moved by the minister responsible for the Workers' Compensation Health and Safety Board that Bill No. 83, entitled An Act to Amend the Workers' Compensation Act, be now read a third time and do pass.
Hon. Mr. Harding: Mr. Speaker, I have to apologize, I'm just so bubbling about the tremendous changes we've made to improve the lives of working people in this territory with this new act. It was unanimously supported in this Legislature yesterday. We had some debate about it yesterday. I was actually surprised at how quickly such major and substantive changes went through the House but, having said that, I think it speaks to the job the government did in organizing the process for how we would embark upon this. It was the result of a lot of consensus and a lot of good work, and I couldn't think of better agents that we asked to carry out this task. They were mentioned yesterday, and I think they did one heck of a job, in terms of dealing with some very contentious issues.
So, I'm pleased that this has come forward. I think it will make some substantive and positive change given some time. It certainly won't resolve all the issues and all the problems, but I think it makes major inroads to that end. There's more work to do in the future, obviously, but I think that we've taken some good steps and some key structural issues with the board - I think mostly about the issues of accountability. That's the key question with the board, and I think we've gone a long way to put that front and centre and allow things that are designed in the system and in the act to take their place and to carry out their functions. With regard to some of the issues that were raised, I tabled the amendment on the workers' advocate on the drafting error. I think that that certainly cleared up any potential future ambiguity about that, although I believe our actions with regard to the workers' advocate very much did that in advance of that amendment being tabled.
I will also say that with regard to the issues around the administration, the operational audit, some work is already underway, and I'd like to see things completed as soon as possible in that endeavour. I think there is some concern among injured workers and some people in labour and business organizations about this issue. I frankly think it's not as serious as it's made out to be in some quarters, but we'll do the work to find out from an independent source, and that will be the catalyst, I think, to some further public discussion and some action being taken by the board to complement the action, frankly, that they already have underway with their administration on these types of issues.
Ironically, this act will create more administration costs for the board, but I think that they are worth it, and I think that they had to be made, and I think that, hopefully, with some of the features of the act, we'll have costs associated with them like the auditing function, like the accountability function. It will have an affect not only on administration costs - because it's all too easy to focus on that particular element - but on service to workers, and the comfort level that employers feel.
The board has done some good things in the last few years under the management of John Wright, and now the current acting chair and alternate chair, Karen Ruddy, who are making sure the board gets out more to talk to the people that it serves, that they form advisory committees to broaden the constituencies in business and labour, to provide more input. Some of that input will now be publicly commanded upon them, essentially, by the new act, whether it's the public review of policies in advance of their being implemented and those sorts of things.
So, I think that we've taken a good step forward, and I'm very, very impressed with the work that was done by the people we hired, and I think the process that we established early on - that the task force chair and I established - worked quite well. And I think the feature that I am most proud of is that we never let business and labour lose sight of the bill from beginning to end. They were involved in the initial commenting meetings, to some of the scope issues, to the ultimate drafting of the legislation. I think that's a key feature, and that's why, while there has been some minimal criticism, it's generally looked upon, particularly in this House, where it's receiving unanimous support, as a good step forward.
So, I look forward to seeing it pass finally in the House today.
Motion for third reading of Bill No. 83 agreed to
Speaker: I declare that Bill No. 83 has passed this House.
Bill No. 84: Third Reading
Clerk:Third reading, Bill No. 84, standing in the name of the hon. Mr. Keenan.
Hon. Mr. Keenan: I move that Bill No. 84, entitled An Act to Amend the Municipal Act, be now read a third time and do pass.
Speaker: It has been moved by the hon. Minister of Community and Transportation Services that Bill No. 84, entitled An Act to Amend the Municipal Act, be now read a third time and do pass.
Motion for third reading of Bill No. 84 agreed to
Speaker: I declare that Bill No. 84 has passed this House.
Bill No. 20: Third Reading
Clerk:Third reading, Bill No. 20, standing in the name of the hon. Mr. McDonald.
Hon. Mr. McDonald: Mr. Speaker, I move that Bill No. 20, Fifth Appropriation Act, 1998-99, be now read a third time and do pass.
Speaker: It has been moved by the hon. Government Leader that Bill No. 20, entitled Fifth Appropriation Act, 1998-99, be now read a third time and do pass.
Motion for third reading of Bill No. 20 agreed to
Speaker: I declare that Bill No. 20 has passed this House.
Hon. Mr. Harding: I move that the House do now adjourn.
Speaker: It has been moved by the acting government House leader that the House do now adjourn.
Motion agreed to
Speaker: This House now stands adjourned until 1:30 p.m. tomorrow.
The House adjourned at 5:12 p.m.
The following Sessional Paper was tabled November 9, 1999:
Yukon Women in Apprenticeship and Trades (dated May 1999) (Moorcroft)