079 Hansard
Whitehorse, Yukon
Wednesday, April 2, 2008 -- 1:00 p.m.
Speaker: I will now call the House to order. At this time, we will proceed with prayers.
Prayers
DAILY ROUTINE
Withdrawal of motions
Speaker: The Chair wishes to inform the House of changes that have been made to the Order Paper. Motion No. 340 and Motion for the Production of Papers No. 9, both standing in the name of the Member for Kluane, have been removed from the Order Paper, as the action requested in those motions has been fulfilled. We will proceed at this time with the Order Paper.
Tributes.
TRIBUTES
In recognition of Yukon Biodiversity Awareness Month
Hon. Mr. Fentie: I know that the opposition benches will also be paying tribute to Biodiversity Awareness Month, but the government side wishes to present this on behalf of our Assembly.
Biological diversity or biodiversity is the source of the essential goods and ecological services that constitute the source of all life. Mr. Speaker, as we all prepare to welcome spring back into our lives we have the opportunity to celebrate the animals, insects, fish and amphibians that also call the Yukon home.
The Department of Environment is pleased to promote April as Biodiversity Awareness Month here in the Yukon. Department staff, volunteers and a number of environmental groups are offering a wide range of activities throughout the month that will educate and delight all participants. In fact, there are so many events that the department has prepared a detailed schedule that is being mailed out to all Yukon households and also to the Village of Atlin. A Celebration of Swans, National Wildlife Week and Earth Day are all part of the assorted mix of activities on offer. Copies will be delivered to the offices of MLAs as well.
The world is changing faster than ever before and so too is that the case in Yukon. The Yukon government's vision for the future calls for the protection and maintenance of biodiversity. We know that diversity between species increases the resilience of ecosystems, which, in turn, makes sustainable development possible. Biodiversity is the foundation for human well-being.
I would like to take this opportunity to commend the staff of the Department of Environment, who have contributed to the success of Biodiversity Awareness Month. What started just over 10 years ago as a small celebration of the swans returning to the Marsh Lake area has grown into a diverse observance of species and habitats that is fun, educational and often very inspiring.
Credit should be given, too, to the organizations that are involved in Biodiversity Awareness Month, as well as the events and the supporting effort overall. It is a long list which, in the interest of time, I cannot share with the members today, but their contribution is recognized in our flyer.
In closing, I would like to note that the Yukon's Biodiversity Awareness Month is part of a national and international effort to raise the profile of biodiversity issues and, indeed, opportunities.
Awareness is the first important step in changing attitudes and practices. Each of us can make a difference and we can each enjoy in our own way Biodiversity Awareness Month in Yukon.
Thank you.
Mr. Edzerza: I rise on behalf of the opposition parties to pay tribute to the Yukon's own Biodiversity Awareness Month: April.
Biodiversity is a concept that expresses the interaction of various species of animals and plant life on our earth. We live in a fragile environment in which this interdependence of species plays a vital part in the survival of all life on earth, including our own.
On January 29, 2000, Canada became party to the Cartagena protocol on biosafety. The protocol seeks to protect biodiversity from the potential risks posed by modified organisms resulting from modern biotechnology -- in other words, genetically modified organisms or GMOs.
The protocol points out that a precautionary approach should be used with new technology and that it is important to protect native species. We emphasize that approach.
Human activity is putting an enormous strain on the natural functions of earth. The ability of the planet's ecosystems to sustain future generations can no longer be taken for granted. We are too complacent about our vast wilderness and our wildlife. We are living on borrowed time, depleting natural assets as if there were no tomorrow.
In 1996, federal, provincial and territorial governments agreed on a Canadian biodiversity strategy that each jurisdiction would implement according to its own priorities and fiscal circumstances. Five provinces and one territory have developed a biodiversity strategy, including all our neighbours, the Northwest Territories, B.C. and Alberta. Traditional knowledge and inventories of species are key components of a biodiversity strategy. We look forward to the day when Yukon complements others' efforts with our own strategy. Biodiversity is not just an interesting concept; it is vital to all life and we ignore it at our own peril.
Thank you.
Speaker: Are there any further tributes?
Introduction of visitors.
Returns or documents for tabling.
TABLING RETURNS AND DOCUMENTS
Mr. Inverarity: I have for tabling a letter to the Conflicts Commissioner.
Mr. Hardy: I have for tabling 26 copies of the Environment Act preamble. I also have for tabling my Yukon pin, as well another 100 of them, which were made in China.
Speaker: Are there any further documents for tabling?
Reports of committees.
REPORTS OF COMMITTEES
Hon. Ms. Taylor: I have for tabling the fourth and fifth reports of the Standing Committee on Appointments to Major Government Boards and Committees.
Speaker: Are there any further reports of committees?
Are there any petitions?
Are there any bills to be introduced?
Are there any notices of motion?
NOTICES OF MOTION
Mr. Nordick: I give notice of the following motion:
THAT this House urges the Government of Yukon to continue:
(1) to showcase the territory to other jurisdictions through conferences and trade shows, such as the 2008 Prospectors and Developers Association of Canada in Toronto and Yukon Expo 2008 in Edmonton;
(2) to stimulate business development and export growth opportunities; and
(3) to facilitate the increased export of Yukon-made products and services, as well as the development and expansion of Yukon businesses regionally and nationally.
I give notice to the following motion:
THAT this House urges the Leader of the Official Opposition and MLA for Porter Creek South to explain how they can resign from the Public Accounts Committee when they were appointed by a motion of the Yukon Legislative Assembly on November 30, 2006, that has not been amended by a subsequent motion deleting their names from the committee; and
THAT the Leader of the Official Opposition, as chair of the Public Accounts Committee, remains in dereliction of his duties and responsibilities until such time as he is removed from the Public Accounts Committee by motion of this House.
I also give notice of the following motion:
THAT this House urges the Leader of the Official Opposition to explain his public statements that he didn't support the MLA pay increases when minutes of the Members' Services Board meeting of October 30, 2007, show that he was present and part of a unanimous agreement in favour of the report on MLA pay, and in fact moved a motion at the Members' Services Board meeting on December 14, 2007, that the minutes that the October 30 meeting be adopted as presented.
Mr. Inverarity: I give notice of the following motion:
THAT this House urges the Government of Canada to offer free postal service for family members of deployed troops serving overseas, regardless of their location.
Mr. Edzerza: I give notice of the following motion:
THAT this House urges the Yukon government and the Government of Canada to adopt a more comprehensive and effective approach to action on substance abuse and drug addiction by endorsing and committing to programs of harm reduction that will:
(1) increase the ratio of funding for harm reduction programs relative to enforcement actions, which currently stands at approximately 95 percent in favour of enforcement on a national basis;
(2) encourage and support addicted persons in overcoming their addictions by not requiring that they be drug-free before receiving treatment; and
(3) make better use of public funds, since harm reduction programs have proven to provide significant savings in health care and social service costs.
Mr. Hardy: I give notice of the following motion:
THAT it is the opinion of this House that:
(1) the contributions that non-governmental organizations, or NGOs, make to the health, wealth and happiness of our Yukon communities is immeasurable;
(2) NGOs work effectively in a variety of fields to address a great many issues -- in particular, helping women to flee violent relationships, providing outreach to Yukoners struggling with addictions, engaging youth in the arts, advocating for environmental conservation and many other areas; and
(3) because of a lack of stable, long-term, core funding, NGOs are forced to spend an inordinate amount of time raising funds and writing grant proposals rather than being able to devote more of their time, energy and resources to their chief missions;
THAT this House urges the Yukon government to provide stable, long-term core funding to NGOs so that they can concentrate their efforts on the important work of improving the collective welfare of the Yukon community.
Speaker: Are there any further notices of motion?
Is there a statement by a minister?
This then brings us to Question Period.
QUESTION PERIOD
Question re: Liquor Act amendments
Mr. Inverarity: I have some questions for the Minister of Energy, Mines and Resources regarding his involvement in changes to the Liquor Act. We know he was involved in those changes at the time he was the minister. His colleague told Yukoners that last week, and his colleagues said the same thing to a radio reporter. Yesterday, the Premier wrote a letter to the Conflicts Commissioner, asking him to look into whether or not the member responsible for the Liquor Corporation is in a conflict. I believe the Premier is asking about the wrong minister. The minister responsible for the Yukon Liquor Corporation is guilty of maybe spilling the beans, but nothing else, I think. It's the actions of the minister who owned the hotels that need to be examined.
Will the minister write to the Conflicts Commissioner for a formal investigation into his role?
Hon. Mr. Fentie: I have to say that the Member for Porter Creek South is totally confused on the matter and, frankly, what does he think the Conflicts Commissioner is looking into? He's looking into the allegations made by the members opposite in this House many days ago, and that's exactly what we'll allow the Conflicts Commissioner to do: conclude his work on the matter as alleged and referred to by the Official Opposition right here in this Assembly. That's what the request is and that's what the Conflicts Commissioner is doing at this time.
Mr. Inverarity: My question is for the Minister of Energy, Mines and Resources. Yukoners want to hear what he has to say for himself. Last week, his colleague confirmed this minister was involved in discussions about the Liquor Act. At the time of those discussions, the minister owned hotels. Any changes to the act would have a serious effect on his private interests. The letter that went yesterday must be some kind of an April Fools' joke. He's asking the commission to look into actions of the wrong minister. As I said, the minister who spilled the beans is guilty of nothing but thoughtlessness and probably nothing more. It's the action of the minister who owned the hotels that we need answers about.
Will the minister write to the Conflicts Commissioner for a formal investigation on whether or not the discussions he had were allowed under the act? Will he do that?
Hon. Mr. Fentie: The joke here is what the Official Opposition is inferring. There's no such thing. The Official Opposition made the allegations of conflict, and that's why I have formally requested that the Conflicts Commissioner look into those allegations. But if the member feels that strongly about this issue, why bother bandying it about in here where there's immunity? Take it outside of here and make those accusations. Name names. Stand up and be counted.
Mr. Inverarity: I know Yukoners want to hear from the minister himself. I think the Premier should let him do the speaking. The Premier has written to the Conflicts Commissioner about the actions of the wrong minister. It doesn't really matter if the minister responsible talked about the acts with others. What does matter is why members who owned hotels were taking part in backroom discussions. We know these discussions took place when the minister owned hotels. We think that should be looked at.
Will the minister himself write to the Conflicts Commissioner and ask that his role in this affair be examined? Will he do that today?
Hon. Mr. Fentie: What the Member for Porter Creek South is suggesting here is something of a very serious matter, and the member should have the intestinal fortitude, then, if he feels he has the evidence, to make the accusations outside this Assembly. Name names; make the accusations. Let's deal with it in that manner, but for now, based on the allegations they've made in this Assembly, the Conflicts Commissioner is now looking into the matter and we're going to allow the Conflicts Commissioner to do his job and report back on his findings.
Question re: Liquor Act amendments
Mr. Inverarity: The allegations were made by his own minister.
The Minister of Energy, Mines and Resources needs to demonstrate some accountability on the floor of this Legislature. He's being asked direct questions and he's refusing to answer them. Last week his colleague spilled the beans. He let the public know the secret. He said that this minister was consulted about changes to the Liquor Act. He confirmed those discussions took place when he took over the Liquor Corporation in 2004. This minister was asked for his opinion on whether or not changing the act was a good idea. We know that the hotel association was opposed to it, so it's up to the minister to clear the air.
Will he write to the Conflicts Commissioner and ask him to fully investigate his role?
Hon. Mr. Fentie: You know, as the days proceed in this Assembly, what really should be investigated is the source of information of the Official Opposition. The Member for Porter Creek South has just said that the minister in question took on this portfolio in 2004. Well, that is also incorrect because it was another minister in 2004 who had responsibility for the Liquor Corporation.
Furthermore, Mr. Speaker, this government, this side of the House, is not presumptuous enough in any way to predetermine what the Conflicts Commissioner's ruling will be. The members opposite, the Official Opposition, have already made the allegation of conflict. They have nothing further to say in the matter unless they step outside this Assembly and present their evidence.
Mr. Inverarity: Mr. Speaker, once again my question is for the Minister of Energy, Mines and Resources, and he is refusing to answer for his actions.
This letter, written yesterday, asks the wrong question about the wrong minister. It covers the wrong period of time. This minister took part in backroom conversations about changes to the Liquor Act, changes that could have had impact on his private interests. I want the Conflicts Commissioner to examine that question. The Premier says that he wants to get to the bottom of this. Will the minister do the right thing and write to the Conflicts Commissioner to investigate the backroom discussions?
Hon. Mr. Fentie: Mr. Speaker, the Member for Porter Creek South can write a litany of letters to the Conflicts Commissioner if he wants to, but I would caution him to make sure that he has the evidence to go along with those requests. The letter that he is speaking of -- I don't even think that the Member for Porter Creek South understands the content of the letter itself. It is asking the Conflicts Commissioner to look into the allegations levied by the Official Opposition right here in this Assembly. I would encourage the Official Opposition to allow the Conflicts Commissioner to do exactly that. It is their allegation. Let the Conflicts Commissioner report back and then they will know exactly what the facts are.
Mr. Inverarity: The minister responsible for the Yukon Liquor Corporation admitted he discussed possible changes with two ministers who owned hotels shortly after he took over the portfolio. One of the changes would have a negative impact on the ministers' private interests -- namely, their hotels. They should not have been involved in these discussions, but they were.
We need to know whether they did anything wrong by participating in these discussions. The only way to get any answer is to ask the Conflicts Commissioner the right question.
Will the minister write the Conflicts Commissioner and request a formal investigation of his role?
Hon. Mr. Fentie: The Official Opposition, as represented by the Member for Porter Creek South, says now they need to know. They need to know what? They have already made the allegation. Is this the code of conduct that these members signed on to? They have made their allegation; now the Conflicts Commissioner is looking into that allegation made by them.
Question re: Yukon Council on the Economy and the Environment
Mr. Hardy: The Yukon Council on the Economy and the Environment is a requirement under section 40 of the Environment Act. Subsequent sections spell out the powers and duties of the council, including the requirement to make the council's reports public.
The government's Web site makes it clear that the council undertakes projects referred to it by Cabinet, among other things.
Will the Minister of Environment provide a list of projects Cabinet has referred to the Yukon Council on the Economy and the Environment since this government first took office in 2002?
Hon. Mr. Fentie: We recognize the role that the council plays and has played in the past. This government, however, took a much more active role in our economy and in our environment.
I will endeavour, at the department level, on an operational basis, to provide that list to the member through the department.
Mr. Hardy: When the Yukon Council on the Economy and the Environment was first established, it was recognized as a very important body for conducting research and for gathering input from Yukon people about economic development and environmental matters. In fact, I have first-hand knowledge of the work of the council since I was one of the early members on that council, and found it to be an extremely good and working council.
Unfortunately, for the past several years under this Yukon Party government, the council's work seems to have slipped below the radar. On the boards and committees Web site, it says the council meets approximately five times a year.
Will the minister tell us how often the Yukon Council on the Economy and the Environment has met in the past five years, and what recommendations Cabinet has received from the council in that time?
Hon. Mr. Fentie: In the past five years, a tremendous amount of work has been done on the environment. The government has proceeded with modernizing our biophysical database; it's out there protecting vast tracts of the Yukon land base, through special management areas and habitat protection areas. We've proceeded with a climate change action plan we're developing today as part of our climate change strategy. We are reducing CO2 emissions into the air with investments in hydro -- and the list goes on and on.
Over the last five years a marked improvement and increased emphasis on the environment has taken place under this government's watch.
Let's look at the economy. A few years ago when this government took office, in 2002, there was an exodus of the population and a disintegrating economy -- if you want to put it that way. Everybody was leaving the territory and going elsewhere to find work, as far as those who did not have jobs in that time in the Yukon, and they were limited with double-digit unemployment figures. Look at the dramatic turnaround: one of the lowest unemployment rates in the country, a growing population, a growing and diversifying private sector economy, one of the leaders in the country in capital investment -- I say no more.
Mr. Hardy: Well, let's look at some of the council's duties, because that's what the question is about.
Section 42 says, "… The Council shall table a report to the Legislative Assembly at least once per year …" Section 46(1) says, "The Council shall conduct an annual review of the performance of the Government of the Yukon in the implementation of the Yukon Conservation Strategy and report its findings to the Legislative Assembly." Section 49 says, "The Council shall review a Yukon State of the Environment Report and submit a report of its review to the Legislative Assembly."
It is also an advisory council that makes recommendations to Cabinet. According to the Web site, the Yukon Council on the Economy and the Environment is supposed to have 11 members as well. As of this morning, there were only four current members listed.
How does the minister expect the Yukon Council on the Economy and the Environment to perform its important duties on behalf of Yukon people when it has basically been allowed to wither on the vine?
Hon. Mr. Fentie: Oh, I share the member's concern, especially about ensuring that boards and committees have a full complement of appointments. In this case, we're going to allow the standing committee, as we've agreed to in this Assembly, conduct that process. At this time I can't provide any report on the progress in that regard, but it is a standing committee involvement in making appointments, in many cases, when it comes to boards and committees, as we've all agreed to.
Question re: Diabetes programs
Mr. Edzerza: My question is for the Minister of Health and Social Services. Recently there have been indications that the rates of type 2 diabetes are increasing across Canada, including here in the Yukon. Can the minister tell us how we are tracking this trend and what the latest statistics are telling us?
Hon. Mr. Cathers: I don't think that I have the statistics at my fingertips here, but as I have indicated to the member before, one initiative that the department has launched is working with health professionals. The diabetes collaborative is an initiative that has involved a greater collaboration of doctors and other health care professionals such as dieticians, in providing people with the information about how to prevent diabetes, or if they have diabetes, what steps they should be taking to keep that under control. That increased collaboration with those professionals enables better action and assistance to those people. As well, as the member will know, the telehealth network, as of January, is now fully up and running in all Yukon nursing stations, making us the second jurisdiction in Canada to do so. This support, counselling and information are now available in every community in Yukon through this network.
Mr. Edzerza: The minister is no doubt aware of the connection between diabetes and a range of other conditions including kidney problems. When the kidneys stop functioning normally, there are two types of dialysis used to clean the patient's blood. One of those is called hemodialysis. It requires the patients to be hooked up to a machine for up to four or five hours as often as three times a week. As the minister knows, hemodialysis is not available in Yukon. I have received calls from constituents who are very concerned that their families have to leave the Yukon so that they can get this intensive hemodialysis treatment.
Can the minister provide us with a breakdown of what it is now costing our health care system for Yukon patients to get this treatment in a larger centre down south and what it would cost to provide hemodialysis here in Yukon?
Hon. Mr. Cathers: The issue and challenge of providing him with hemodialysis is not primarily related to cost, but it is in keeping up the qualifications of the nurses who are providing that service. It is necessary to have a minimum number of cases to keep their national standards. That is something that, to date, has not existed in the Yukon. We are concerned about the increasing onset of diabetes. The possibility of purchasing a hemodialysis unit and running it is one of the matters that is being discussed in concert with the Whitehorse General Hospital, which would logically be the place to run such a project if it came to be. It would be premature for me to make any commitments to the member opposite, except to note that this is an area where I share his concern.
I am confident in saying that my colleagues on this side and I want to ensure that necessary services are available to Yukon citizens and that, at such point in time that it becomes appropriate to provide this service, we want to ensure that's being done. I have to emphasize to the member opposite that we have to work with the Hospital Corporation. We have to deal with matters such as costs, and primarily ensure that we have a viable program that keeps the people who are running that program to an adequate level of qualification.
Mr. Edzerza: While members in the territory can continue talking about this, as we speak there are some very stressful hardships put on families here in the Yukon. We know that our small jurisdiction cannot expect to have all medical treatment services that are available. We also are aware that there is a high cost involved in buying a hemodialysis machine as well as training and hiring of staff to operate it, as the minister alluded. However, there is also a high social cost to patients and their families if they are forced to leave the Yukon in order to get the treatment they need. Just as recently as last week, I was contacted in my office regarding the hardships some people from the Klondike are experiencing today because of this issue. If our diabetes rates continue to rise, there may be a sufficient demand to justify providing this treatment here in the territory.
Will the minister agree to contact his counterparts in British Columbia and Alaska to explore the possibilities of some type of cost-sharing so that Whitehorse could offer this lifesaving treatment to patients from northern B.C. and Alaska?
Hon. Mr. Cathers: Again, I notice that I did answer some of the member's comments earlier. I realize that he hasn't had a lot of time to amend his question on the floor of the House. As he asked, and as I answered previously, this is a matter that we're looking into. It is one of the potential services that is currently being discussed by the department and the Hospital Corporation, as we look forward to the future and determine how the Yukon health care system should evolve, what services are cost effective to provide here. Based on the need for it and the cost to families of not having those services, it may be appropriate to look there as well.
As I indicated to the member, one of the primary concerns with this type of program is ensuring that it remains viable and that staff are able to meet the level nationally, in terms of number of hours for qualification to maintain proficiency. We have to respect those national standards and accreditation, of course.
In answer to the member's question about services to northern B.C. and to Alaska, those services are considered in any matter that we provide. We know that we do have some service through clients coming from Alaska and through B.C.; we have reciprocal agreements that deal with that already.
Question re: Liquor Act amendments
Mr. Inverarity: The Minister of Energy, Mines and Resources was a hotel owner until recently. Last week it was revealed here in this House that this minister received inside information about pending changes to the Liquor Act that would likely have a negative financial impact on his private business holdings.
Mr. Speaker, the Minister of Energy, Mines and Resources knew of the government's plan to make sweeping changes to the Liquor Act long before these plans were made public. Are we expected to believe that the public's interest was protected by this minister having this inside knowledge?
Hon. Mr. Fentie: Does the Official Opposition in this House have no shame? They've just made another accusation of insider trading. This is getting more and more ridiculous by the question.
The Conflicts Commissioner is looking into the matter. The government will allow the Conflicts Commissioner to do his job and report back. I don't know why the Member for Porter Creek South, as directed by his leader -- who is quite adept at this type of questioning -- is continuing with this. The member is starting to look quite ridiculous.
Mr. Inverarity: It's not this minister who is under investigation for conflicts of interest -- at least, not yet.
These are very serious concerns and they're not frivolous. We've been informed that this minister had information about pending changes to liquor laws that would affect his business. The proposed amendments are, in effect, a threat to the existing hotel owners because amendments enable increased competition within the hotel industry and reduced revenues for existing hotel owners.
This minister could have used that information to get out of his business while the getting was good. Why was this information shared with this minister who owned hotels?
Speaker's statement
Speaker: Before the Hon. Premier answers, a word of caution to the Member for Porter Creek South. The Chair is uncomfortable with the way we're almost looking at 19(g), imputing false or unavowed motives to another member, or a member making financial gain from their actions in this House, and that's out of order, so please keep that in mind.
Hon. Premier, you have the floor.
Hon. Mr. Fentie: What's really at issue here is that the members on the opposition benches have levied an allegation. Now that the Conflicts Commissioner is looking into the matter, based on their allegation -- I repeat: their allegation of conflict -- they have now predetermined the outcome of what the Conflicts Commissioner's findings will be. They are standing on the floor of the House levying further allegations of wrongdoing. I would suggest the Leader of the Official Opposition get control of his caucus and recognize that this is nowhere close to the code of conduct agreement they signed on to.
Mr. Inverarity: I'll keep this short. The minister's colleagues revealed that this minister received inside information about pending changes to liquor laws.
My question is simple. How can we trust this government to do the right thing?
Hon. Mr. Fentie: I don't think there is a problem with trust with this government. I can suggest there is a big problem with trust when it comes to the Official Opposition and the information they bring to the floor of the House.
Let's go back to the beginning.
What about the misrepresentation of the Ombudsman's correspondence by the Leader of the Official Opposition in this House?
What about bringing citizens into the gallery as props, and then trying to recreate what really happened with the hospital pension fund, and with contracts in the Kluane region, whereby the individual in the gallery was actually in receipt of hundreds of thousands of dollars' worth of contracts?
What about the constant misrepresentations of what the Auditor General has said about the investments?
What about the Leader of the Official Opposition's public position regarding his role at the Members' Services Board on a motion that he moved, which raised MLA wages and made them retroactive?
The trust problem is with the Official Opposition, not the government side.
Question re: Watson Lake care facility
Mr. McRobb: I have some follow-up questions for the Health minister about this government's inability to manage projects properly. The Watson Lake Health Centre was promised in 2005 at a cost of $5.2 million. The minister himself confirmed yesterday that approximately $4.2 million has been spent to date on this project, which has a long way to go before it's completed.
The new budget before us adds another $6.9 million. I've taken him up on the suggestion to get out the calculator, which indicated that the cost of the new facility will now be more than $11 million and counting. That's more than double the original estimate.
Can he tell Yukoners what the final bill for this facility is going to be and when it will be opened for the public?
Hon. Mr. Cathers: The Member for Kluane is continuing his approach of yesterday -- continuing in the tone set by his leader and followed by all of his colleagues, in bringing forward information that does not accurately reflect the facts.
Yesterday I indicated to the member opposite the cost to date on the Watson Lake multi-level care facility is $4.179 million. Of course, there will be additional costs in bringing this up to date. The member can see what is in today's budget, but the member is failing to reflect on the revotes from previous years in funding.
The member is failing to reflect the facts. It's very disappointing to see him do so -- to see the member misrepresent the Auditor General, as he did yesterday, in quoting a report that addressed the Property Management Agency and did not address a review of this project, contrary to the member's assertion. The member has a lot of explaining to do to Yukon citizens.
Mr. McRobb: I know the minister is really touchy about this, but I was using his own figures.
It's rapidly becoming a textbook example of mismanagement. In her 2007 report on this matter, the Auditor General of Canada criticized this government for its handling of this building project. For the record, here's part of what she said: "The Department indicated that the roles, responsibilities, authority and accountability of all parties in the process were not clearly defined."
This poor management has led to major cost overruns that Yukon taxpayers will have to pay. The project is years behind schedule and more than double its original budget. We have already spent $4.2 million, and another $6.9 million is in this year's budget. That's more than $11 million.
Again, what's the final bill for this facility going to be, and when will it be open for the public?
Hon. Mr. Cathers: The member has done it again. He refers to a report on the Property Management Agency and suggests it was a report on this project. The member knows what he is doing; I cannot quite call a spade a spade, as it is not allowable under our Standing Orders, but the member is not accurately reflecting the facts.
Yes, the original allocation for this project was $5.2 million, but as the member knows full well, and as I have discussed with members in previous debate at the request of citizens of Watson Lake, the scope of the project was changed; the overall footprint of the project was significantly increased and, as a result, costs went up. As well, an engineering review and analysis of the structural issues with the existing hospital resulted in increased costs in that area, which, by the way, will save us costs down the road. The member is not reflecting the fact that some of the delays in the project were as a result of listening to the public and changing the design through the structure of this project, which was done through -- as I remind the member opposite -- our construction management approach. We listened to the people of Watson Lake and we're moving forward.
Mr. McRobb: Obviously, the minister hasn't read the report; I'll send it over to him now and I draw his attention to section 54; it's all there. It speaks about the Watson Lake care facility.
One of the casualties of this minister's overspending in Watson Lake is the new Dawson health care facility. It has been sidelined completely in the new budget. It has been delayed indefinitely because of financial mismanagement. Yesterday we didn't get much of an answer. In fact, the minister criticized the very words of the Auditor General. Yukoners want to know the costs in Watson Lake, which have more than doubled.
What will the costs finally be? Why did the former minister responsible for the Property Management Agency unload this hot potato? Again, the Auditor General said the roles, responsibilities, authority and accountability of all parties were not clearly defined. Does the minister accept the criticism of the Auditor General or does he, too, dismiss these findings as just her opinion?
Hon. Mr. Cathers: Here we have the Member for Kluane doing it again. The member just stood on his feet and suggested I criticized the Auditor General yesterday. The member knows that is an absolute load of -- I'll censor my language, Mr. Speaker. The member knows he did not accurately reflect the facts and was, in fact, miles away from the facts.
Mr. Speaker, we have not even spent in Watson Lake to date, as the member knows, the original budgetary allocation provided for the Watson Lake multi-level care facility. As indicated, because of the change in the project scope and the engineering work done on the hospital itself, there will be increased costs beyond the original $5.2-million envelope.
If the member would look at what's in the budget, he would perhaps come up with a more accurate figure -- if the member indeed wishes to do so.
Again, the member made the assertion -- which he knows is not true -- that the Dawson City multi-level care facility is a casualty. We will be moving forward with the health centre in Dawson City, addressing the needs of the residents of that town and those of the people in that area.
Speaker: The time for Question Period has now elapsed.
Government House Leader's report on length of sitting
Hon. Mr. Cathers: I rise pursuant to the provisions of Standing Order 75(4) to inform the House that House leaders have met for the purpose of achieving agreement on the maximum number of sitting days in the current sitting. The House leaders have agreed that the current sitting shall be a maximum of 32 sitting days and that the 32nd sitting day will be Thursday, May 15, 2008.
Speaker: Accordingly, I declare the current sitting shall be a maximum of 32 days, with the 32nd sitting day being Thursday, May 15, 2008.
We will now proceed to Orders of the Day.
ORDERS OF THE DAY
MOTIONS OTHER THAN GOVERNMENT MOTIONS
Motion No. 346
Clerk: Motion No. 346, standing in the name of Mr. Mitchell.
Speaker: It is moved by the Leader of the Official Opposition
THAT this House urges the Deputy Premier to explain to Yukoners why she said in the Legislative Assembly that $36.5 million in investments made by the Government of Yukon were guaranteed by a bank when in fact they were not.
Mr. Mitchell: I rise today to speak to my motion, Motion No. 346, which states that this House urges the Deputy Premier to explain to Yukoners why she said in the Legislative Assembly that $36.5 million in investments made by Government of Yukon were guaranteed by a bank, when in fact, they were not.
I must say, that it is a privilege to finally have an opportunity to spend some time on this matter, Mr. Speaker. It is not a simple matter for many people because there have been lots of words and technical terms bandied about, and we will try to explain some of them today in the hope that the general public will be better able to follow along.
Mr. Speaker, the issue of Yukon's frozen investments in the asset-backed commercial paper market is a very important issue. It is important to all Yukoners -- both present Yukoners and, based on the fallout of these frozen investments, future Yukoners as well. It is important for several reasons: because Yukoners need to have confidence that their government is looking after their finances in a prudent and competent manner; because Yukoners depend on their government to have the financial resources at hand to pay for programs and services now and in the future that Yukoners depend on from government; because Yukoners need to trust that their government is not picking and choosing among laws and statutes as to which ones are important to enforce and follow, and which ones are benign -- as the Premier characterized regarding the Department of Environment -- and perhaps not worthy of worrying about.
Mr. Speaker, there is much that has been said by all sides of this House, both in this Assembly and within the media, about this Yukon Party government's ill-fated venture into the asset-backed commercial paper market.
Much has also been put on the record by officials, who too often have been left to explain actions for which they may not have been fully responsible. As has been mentioned here, unfortunately the vehicle that would have allowed us to question officials -- past and present -- as well as other experts, to shed additional light on this critical issue -- the Public Accounts Committee -- chose, by a majority vote, not to investigate this matter -- not to hold public hearings into the Auditor General's report on the Government of Yukon's investment in asset-backed commercial paper. That leaves us to have to do it here today. It leaves us without the full basket of tools. It leaves us having to do it in the political arena, when it would have likely been better to have a full, impartial public hearing.
In our view it was the Public Accounts Committee's duty to do just that -- to hold public hearings. In fact, the Public Accounts Committee is charged with receiving all reports from the Auditor General of Canada, and it has been its practice in recent years to hold public hearings into each and every such report. That is why, as recently as February 12 of this year, the Public Accounts Committee held hearings into the Auditor General's report on the Government of Yukon's role in the 2007 Canada Winter Games -- not because there was necessarily anything done wrong, or any wrongdoing -- but without prejudging the outcome, to try to learn from the government's role in funding the Canada Winter Games, to ask questions of officials and, ultimately, to try to make recommendations for the future in the best interests of Yukoners.
Similarly, in early 2007, the Public Accounts Committee held public hearings into the Auditor General's report on the Property Management Agency of the Department of Highways and Public Works. Much was learned. The officials were asked to follow up with a further report, and that report was tabled in this House just yesterday. It will benefit future governments, as well as the current government and therefore all Yukoners, by holding government accountable and by providing recommendations on how government can do a better job.
The government as recently as today has made much about my resignation as chair and the Member for Porter Creek South's resignation as a member of the Public Accounts Committee. The fact is that after months of delays, after numerous requests on my part for the Public Accounts Committee to meet to consider this important issue -- perhaps the most serious issue ever referred to Public Accounts Committee by the Auditor General -- the majority of its members voted not to hold a public hearing.
In my view, and in the view of the Member for Porter Creek South, that made a mockery of the purpose of the committee. In fact, all that was being served by our membership on the Public Accounts Committee at this point was to have some use it as a vehicle for claiming I could not raise this serious issue, that it was a conflict with my role as chair to ask these questions publicly. There was also criticism of the Member for Porter Creek South when he asked questions about this issue in this House and in the media.
If I'm forced to choose between my responsibilities to chair the Public Accounts Committee and my responsibility to hold this government responsible in my role as Leader of the Official Opposition, my decision is clear. Yes, I, too, wish that the Public Accounts Committee was meeting to address this serious issue, and I will say right here that if any member from the government caucus who serves on the Public Accounts Committee will commit to reconsider their vote not to hold a hearing, will commit to holding free and impartial public hearings into the Auditor General's report on the investment in asset-backed commercial paper, I will commit to returning and chairing those hearings. I'm certain that the Member for Porter Creek South, who wrote the Public Accounts Committee and requested such a hearing, will be pleased to resume his role on the committee as well. He has told me that is what he would like to see happen. While I don't hold out much hope for this outcome, the door is open, Mr. Speaker.
Not everyone in Yukon has a good or clear understanding of just what asset-backed commercial paper, or ABCP for short, actually is. One of the limits of asking these questions in Question Period, when we have only a minute to complete our question, and when the government has a minute and a half not to answer our questions, is that the Question Period format doesn't lend itself to detailed explanations of complex issues.
So let me start with some definitions. I'll try to define ABCP for the members opposite, who may or may not have a clear understanding, and for the general public. As I have said, Mr. Speaker, the explanation of what ABCP is is neither simple, nor is it overly complex. The key is to understand some of the vocabulary of the world of finance. Not widely used by the everyday citizen, many terms are bewildering and, at times, just plain intimidating. For the record, I will attempt to give a rather bare-bone explanation and leave much of the foreign vocabulary for others.
Before there was asset-backed commercial paper or ABCP, there was simply CP or commercial paper. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, such as General Electric, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities -- meaning the period of time before the note needs to be repaid to the lender -- on commercial paper rarely range any longer than 270 days and are often shorter, as short as 30 days. The commercial paper is secured by the good credit rating of the company issuing them. CP has the advantage of not having to be registered with an SCC or a security and exchange commission as long as the terms of the commercial paper do not go over 270 days.
What, then, is ABCP? Asset-backed commercial paper is like traditional commercial paper, in that it's issued with maturities of one year or less -- typically, less than 270 days, and many are issued for 30 days, or periods just beyond 30 days, such as the Yukon government's investments into the three frozen trusts of Opus and Symphony, which were issued for just over 30 days. Such instruments were highly rated.
So commercial paper is used as a short-term vehicle for investing cash, and the ABCP market goes the way of the underlying asset market. If market disruptions occur in the underlying market, this can have real effects in the asset-backed commercial paper market.
For example, asset-backed commercial paper can be created from any type of asset-backed security, such as student loan asset-backed, credit cards, such as VISA asset-backed or residential mortgage asset-backed, including prime or subprime securities.
If there are significant negative developments in any of the underlying markets, this will affect the perceived quality and risk of the ABCP that holds these securities. Because commercial paper investors may be risk-averse, concerns about ABCP should cause them to seek other short-term cash-equivalent investments, such as traditional commercial paper, T-bills, et cetera.
This means that the ABCP issuers will not be able to roll over their ABCP -- that is, to get new investors, or the same investors, to reinvest, as they will have no investors to buy their new issuance.
Mr. Speaker, asset-backed commercial paper, as I've said, is a type of short-term security, through which investors buy a slice of a package of debts, such as a car or mortgage loans or credit card billings. Now, in Canada, the asset-backed commercial paper market, or some $33- or $34-billion worth of it, has been frozen since last summer, when it was learned that U.S. subprime mortgages were part of the mix in some ABCP.
That caused a real crisis of confidence in a whole basket of these investments, because the investors were not able to determine which ABCP were tied to subprime mortgages in the States and which weren't.
There were, however, early signs and warnings that the more astute investors noticed and picked up on.
The important thing is that Yukon's Financial Administration Act, or FAA as we refer to it, was intended to be a control and a protection for Yukon so that our money would be protected from the overzealous, the careless or the less informed investor.
That would have worked for Yukon if the act had been followed. Unfortunately, as the Auditor General determined, it was not. Once you circumvent the FAA, you leave yourself wide open for disaster.
I will elaborate on this shortly.
One of the conditions stipulated in the FAA is that investments should be guaranteed by a bank. The Deputy Premier assured this House, as did the Premier, that our investments were, in fact, guaranteed by a bank.
Let's listen to some of what she said and some of what the Premier said: "First, the investment had the highest rating available. Second, it's backed by the banks."
Hon. Premier, from Hansard, November 7, 2007: "The litmus test was met. This investment was backed by the banks."
Hon. Premier, November 7, 2007. "The investments here have been made based on the litmus test. They are backed by the banks, and they have the highest rating in the marketplace. T. The member is talking about loss. This is not a loss. We are making money in the millions."
Hon. Premier, Hansard, November 7, 2007: "As well, the banks have provided guarantees to the investors."
Hon. Premier, Hansard, November 8, 2007: "At the risk of being repetitive, Mr. Speaker, I'll repeat, but not verbatim: Yes, it's backed by assets. Yes, it is still reconfirmed for November 6, 2007, and has the highest investment rating. Yes, the banks have said they are providing guarantees to the investors."
Let's listen to some of what the Deputy Premier had to say: "Again, in response to his question, the asset-backed commercial paper is backed by the banks. It is also backed by assets, unlike any other commercial paper. The arrangement for the backing by the banks is between the banks and the trusts, Mr. Speaker." There is a slight difference there.
Hon. Deputy Premier, Hansard, November 19, 2007: "As I mentioned earlier, these investments are backed by the banks and also backed by assets, unlike other commercial papers."
Hon. Deputy Premier, Hansard, November 19, 2007: "The asset-backed commercial paper is backed by the banks. It is also backed by assets that are highly rated by Canada's primary rating agency. The arrangement for the backing by the banks is between the banks and the trusts, not with the Government of Yukon." There is a slight change there; a better briefing, perhaps.
Hon. Deputy Premier, Hansard, December 3, 2007: "As I have reiterated on a number of occasions, the particular asset-backed commercial paper is backed by the banks. It is also backed by the assets, which is unlike other commercial paper. Assets, as I have mentioned numerous times, which have received the highest rating possible -- and again, the arrangement for the backing by the banks is between the banks and the trusts, not with the Government of Yukon. The banks have agreements with the trusts. The member opposite is fully cognizant of this. The information between the trusts and the banks, as I mentioned -- the trust deals specifically with the banks directly, not with the Government of Yukon and, in fact, the Montreal Accord, to which the Government of Yukon is a signatory, does not place restrictions on the disclosure of that particular information as to the name of the banks."
That's an interesting quote, because recently on many occasions the Premier has indicated we're not a signatory of anything yet. The Deputy Premier indicated that we are -- that we are a signatory to the Montreal Accord. Those are her words, Mr. Speaker -- right from the record of this Assembly.
Let's look at what the Auditor General has said. The Auditor General in her report clearly took exception to the statements by the Deputy Premier assuring this House -- as did the Premier -- that the investments were in fact guaranteed by a bank. The Auditor General said and I quote: "We noted that the information memorandum for each trust included a clause stipulating that there was no guarantee from the trustee or other parties." Elsewhere in the report the Auditor General states: "The asset-backed commercial paper in which the government invested was not one of three types of investment permitted by Yukon's Financial Administration Act -- it was not guaranteed by the Government of Canada or any provincial government, was not issued or guaranteed by a bank, and was not issued by a company, incorporated federally or provincially and given the highest rating by at least two recognized security institutions, although one rating agency had provided the highest rating of the trusts' commercial paper. Prior to making these investments, the Government did not obtain a legal opinion on whether the investments would comply with the Act."
They didn't get a legal opinion on whether they would be in compliance; they didn't comply with the act. Those are pretty damning words, Mr. Speaker; they're not ambiguous; they're not expressed as an opinion, the way it was referred to by the Hon. Premier -- that's just her opinion; we have others -- but as a finding of fact. It says in this report -- and we don't have to read very far -- it's on page 1: "What we found". We found that it wasn't in compliance with the act.
Now, Mr. Speaker, the appeal of ABCP was that it offered a higher yielding alternative to treasury bills and other short-term securities. Rates on safer investments were approximately some 50 basis points, which is half of one percent lower at the time that this Premier and this Deputy Premier decided to invest Yukon's money in these riskier investments, Mr. Speaker. We've had assertions on the other side of this House, on the government side, that there was no additional risk and that they were the same risk, as safe as houses -- we've seen how safe that is south of the border, Mr. Speaker.
Let us remember the law of super-safe investing: with higher yields comes higher risk. There is no free lunch; that is a fundamental principle. The markets reward risk with a premium. If you are receiving a greater return, a higher interest rate, then you can expect that there is greater risk involved, regardless of the stated rating. That is fundamental. Otherwise, there is no reason to pay it. That is the way markets operate.
T-bills, high-interest savings accounts, bonds, and guaranteed investment certificates are the places to invest money that you can't afford to lose. We shouldn't be talked into other products and not expect there to be a greater risk. As the Member for Kluane mentions, there is a risk premium -- that is what it is called.
Some Hon. Member: (Inaudible)
Mr. Mitchell: Well, that is interesting, Mr. Speaker: how much more were we making? That is a question that we asked again and again in this House last fall. We asked what were we gaining from this? We asked on numerous occasions -- I don't have Hansard in front of me, but I'm sure that I can read the quotes later into the record if required -- we asked of the Deputy Premier, when she was Acting Finance Minister, during Finance debate last fall: = what was the additional premium?
The Premier confuses the issue when he talks about $20 million made under his watch. Yes, but how much difference would it have been if the government had invested as they were supposed to, in investments that were allowed under the Financial Administration Act?
How much different would it have been? Not that much, Mr. Speaker. Certainly not as much as what we're losing, and continue to lose each day, as the interest is not paid.
Let me say this for the record: the Premier continues to say, and the Deputy Premier continues to support, that we haven't lost any money; there has been no loss. We're going to get all our money back down the road -- 2016 or 2014 -- because we're certainly not getting it back now. We certainly didn't get it back on September 7, when it was due. We didn't get it back on October 7, November 7, December 7, but we should trust the people who have our money and we should trust the Premier that all will be well in 2016, if we just hang on -- if we just hang on.
Let me tell you, Mr. Speaker -- based on the Auditor General's report, on page 3, where she indicates the $36.5 million invested in these three trusts -- $36,349,045, to be precise -- according to Finance officials, there was $10 million at face value -- it's always invested at less than face value because that's how the interest is generated; you invest a little less than the face value and you get back the face value -- was 4.65 percent in Symphony Trust on July 30, 2007. On August 1, 2007, another investment was made into Symphony Trust of $13,447,755, which was supposed to be repaid when it matured as $13,500,000, for an effective annual rate of return of 4.73 percent; and to Opus Trust on July 31, 2007, some $12,941,890, which was to be repaid some 30 days or so hence as $13 million. We were supposed to get back $36.5 million; the rates were all in the vicinity of 4.65 percent to 4.73 percent.
If you do the simple math, Mr. Speaker, we were to earn some $140,000 a month, plus or minus, on these investments.
Now, Mr. Speaker, some eight months have gone by. I would suggest that there is over $1 million in interest payments that we have not yet received. Now, again, there is this group trying to restructure these investments. The outcome is certainly in doubt at the moment. The Premier indicates that the Yukon government has not yet decided whether we will sign on to that final agreement.
But to date we don't have the money. He can't show us the money because it hasn't been paid. We don't have the interest, and we don't have the principal.
I hear the Member for Southern Lakes saying, "Show me the money. Show me the money." He wants to see it. Well, he's looking the wrong way, Mr. Speaker. He's looking at the Deputy Premier and the Premier, and they can't show it to him because they don't have it back yet, and if it comes back, it will be in limbo until some eight years down the road, according to the statements we've heard in this House from the government side to now. It won't be available to spend on programs and services for Yukoners.
Bear in mind that if anybody was watching the store, was supervising, was doing their due diligence as the minister responsible, perhaps an advisor might recommend something like ABCP with the best of intentions. The problem is that advisors don't always 100 percent understand what they sell, and sometimes they sell things that their firms are pushing.
But the old cliché is warranted here: caveat emptor -- buyer beware. That is why this government should not have short-circuited the Financial Administration Act. If they had followed the act, we wouldn't be talking about this today -- plain and simple, this wouldn't be a problem for Yukoners.
Now, what were the warning signs? The Hon. Premier has indicated on a couple of occasions that he found out about it at the same time as other Yukoners when he heard about it in the media. That was the informed supervision that the Minister of Finance was making of Yukoners' investments.
He said it here in the House, Mr. Speaker, that he found out at the same time. He said it in the media. Well, there were warning signs. ABCP has been around for some years in Canada, but the subprime mortgages had not been around in Canada. Anyone remotely following financial news was well aware of the problems that were developing in the subprime market as early as 2006 and certainly before mid-2007.
I know the Premier is aware of it, because he made references to it here in this House just a few days ago. Instead of answering questions, he asked me what I thought, what my opinion was, of the Federal Reserve's role in the subprime mess in the United States. Well, it shows one thing; it shows that he was paying some attention, because he apparently was aware of the subprime problems. Now, if his government didn't know that some of their assets, through collateral debt obligations and through derivatives, might be invested -- and "collateral debt obligations" is another fancy term that just means what you see is not necessarily what you get, because it's second-hand, it's third-hand; it's kind of like a cheque that one person writes to another and then it gets re-endorsed and re-endorsed until you're not too sure after awhile whose cheque it is and who owes you the money.
If the Premier wasn't aware that there could be ties to the subprime market, then he should have been. Investors should always review their latest account statements and go down their list of investments. If there's anything in there that they don't feel comfortable with, they should find out what the risks are. Going through this exercise gives you a chance to avoid the trap too many investors fall into and that is to learn about the risk in their portfolios only after they have lost the money. That is what has happened to this Premier and this Deputy Premier; that is what has happened to this government. However, as we've said, if the Financial Administration Act were being followed, there would be little need to do that.
Let's have a look at some of the history of this, because the Premier likes to try to defray his responsibilities by pointing to his predecessors. He says that everybody was doing it, Mr. Speaker. He says that former Finance ministers did it and have been doing it for years in Yukon. He says that they did it in Ontario and they did it in Quebec. You know, Mr. Speaker, the taxpayers and the voters in Quebec and Ontario will make their own decisions about the people who are accountable to them. But I call this the kindergarten excuse, Mr. Speaker, because this is the excuse of someone who tries to defray responsibility by saying that others did it too -- why blame me when the people to the left of me and the right of me did it also?
Mr. Speaker, it is the Finance minister and, in his absence, the Acting Finance minister, the Deputy Premier, who are responsible here, not the Finance minister in Quebec or the Finance minister in Ontario or Alberta and not former Finance ministers who may or may not have erred in their times in this Assembly. They are not answerable to us, Mr. Speaker. We can't interview them; we can't ask them to explain their actions because they are no longer in this House.
Because the members opposite, the Premier and the Deputy Premier, have talked about how much of this was done by their predecessors, I'm going to read off a few names. We'll take a look at the former Liberal government, the government that I didn't have the pleasure of sitting with, but it is the predecessor government to this government's first mandate. They did invest in some trusts and that is a fact. I'm surprised that the Premier hasn't named them, but I'll name them. It is not that long a list: Prime Trust, Sound Trust, Franchise Trust - Series 1997, Sears Credit Receivable Trust, MACRO Trust, Franchise Trust Series 1997 -- again -- Core Trust, RAC Trust, Darwin Trust, and Darwin Trust -- again.
That's commencing May 16, 2000, and the last investment on the list is February 1, 2002.
There's something interesting that these investments have in common, and I'll tell you what that is, Mr. Speaker. Not one of these investments, not one of these trusts, is among the list of the frozen asset-backed commercial paper trusts that are part of the $33-billion fiasco -- none of them. That's the common denominator: none of them are frozen.
This government decides the final eleventh-hour, ill-fated investment -- and you know, Mr. Speaker, had they been paying attention, had the Premier not been asleep at the switch, had the Deputy Premier said to Management Board, "Wait a minute; we should get out of this," they would have gotten away scot-free and none of this would be happening.
Let's look at just a few names on the list this government invested in: Apollo Trust, January 5, 2004, just under $5 million; Apollo Trust again, January 20, 2004, again almost $5 million; Apollo Trust again, January 22, almost $4 million; Apollo Trust again; Apex Trust; Rocket Trust; Rocket Trust again; and again and again; Planet Trust; Rocket Trust; Planet Trust; Planet Trust; Rocket Trust; Rocket Trust; Planet Trust; Apollo Trust; Rocket Trust again; Planet Trust; Apollo Trust three more times; Planet Trust; Rocket Trust; Symphony Trust -- they invested in it before it was frozen; Rocket Trust; Planet Trust; Symphony Trust two more times; and so it goes. The list is so long that I can see the eyes are glazing over across the way, but there are two more pages of it.
What do these ones have in common? I mentioned what the others had in common with their predecessor.
What these investments have in common is that every one of these trusts, at their last rollover date, every one of these names appears on the names of those asset-backed commercial paper trusts that are currently frozen in this crisis.
This government invested, over time, some $245 million in trusts that appear on the frozen list. That's what the common denominator is there. It's not a very happy one.
What's happening now? Pension funds and banks recently agreed on a plan to try to address the frozen ABCP market in Canada, but there is nothing in it that specifically addresses the situation of individual investors.
Those investors who can't afford to wait six, seven or eight years to get their money back -- farmers, pensioners, construction workers -- are left without the resources of what they thought were their retirement funds. Perhaps governments like Yukon can wait seven years or eight years, but others can't.
Certainly, the Premier has made reference to the subprime market in the United States. In July of 2007, the U.S. subprime mortgage market worsened. Investors in Canadian ABCP became increasingly concerned about the possibility that, as a result of some U.S. subprime exposure, Canadian issuer trusts could face credit quality issues. Many investors took that opportunity to sell their investments and move on. Did the Yukon? No, the Yukon, under the watch of the Premier and the Deputy Premier -- the Finance minister and later the acting Finance minister -- reinvested. That's what Yukon did.
I see the members opposite think it's funny, but Yukoners don't think it's humorous. This is serious stuff. It reminds me of an old quote from a long-ago financial bubble -- because this is nothing new -- the South Sea bubble of 1720. That was another case like the subprime housing market in the U.S. and the ABCP bubble in Canada, where smarter investors made money at the expense of others.
It led to a financial meltdown at the time that hurt many, based on the fictitious value that evaporated. A pamphlet from the time -- from back in 1720 -- defined "fictitious value" as follows: "One added to one, by any rules of vulgar arithmetic, will never make three and a half. Consequently, all the fictitious value must be a loss to some persons or other, first or last. The only way to prevent it oneself must be to sell out betimes, and so let the Devil take the hindmost."
Well, Mr. Speaker, it appears that we will be left taking the hindmost because we weren't paying attention. Our Cabinet ministers, the people responsible, weren't paying attention, and so we stayed invested for too long.
By mid-August 2007, a number of sponsors of non-bank-managed ABCP announced that it was not possible to place new ABCP due to unfavourable conditions in the Canadian markets. In response, many sponsors of ABCP elected to extend the maturity date on extendable notes and requested funding under the liquidity facilities.
However, most of the requests for liquidity were denied by the so-called liquidity providers, who took the position that either a market disruption had not occurred or other conditions to funding had not been satisfied. This situation resulted in most trusts being unable to pay holders of maturing ABCP, creating a liquidity crisis for many holders.
The Premier has referred to this. He said that the problem was the banks. They didn't honour their liquidity agreements. These are the liquidity agreements that the Premier likes to refer to.
They were, alas, clearly not guarantees. How do we know that? First of all, it's obvious. We know it because we have not been repaid the money. That, prima facie, shows that there must not have been a guarantee. Second -- as already stated -- because the Auditor General of Canada has found so in her report. So again, that raises the question of today's motion. Why did the Deputy Premier assure this House otherwise? I'm sure she will have an interesting explanation and we certainly look forward to hearing it.
There is more that has been said in this House. There were many references made by the Deputy Premier and the Premier last fall about the so-called "Montreal proposal". What exactly was this proposal, Mr. Speaker? A marriage proposal? Well, in a way it was, because it married everybody who had been suckered in to these investments; it married everybody who had found themselves in this leaky boat -- to each other -- holding hands and whistling Dixie -- praying, says the Member for Kluane. We do pray we see the money again, while we have need of it to build Yukon's future.
What was this proposal? On August 16, 2007, a group of financial institutions comprised of investors in ABCP -- institutions that provided assets to the trusts and shareholders of certain sponsors -- agreed to what is known as the "Montreal proposal", or at other times it has been referred to as the "Montreal Accord". Under this arrangement, these institutions and other holders who later signed on agreed to a 60-day standstill period, during which each party agreed that it would roll over its non-bank sponsored ABCP, on or following its maturity date and would not take any action that would precipitate an event, a default, under the trust indenture governing the ABCP. That's very interesting.
In effect they said, "We'll let you keep our money and we'll promise not to sue you for it." This agreement, as I said, includes a pledge by asset providers to refrain from making any collateral calls on assets held by the trusts and a pledge by trust sponsors to refrain from calling on any liquidity provider who signed on the proposal to fund liquidity facilities. In addition, participants in the Montreal proposal agreed in principle to a proposal that would see ABCP eventually converted to rated floating-rate notes with maturities matching the maturities of the underlying assets.
This proposal is subject to the approval of the requisite number of holders of ABCP in each trust, of which Yukon is but one.
As I say, one of the interesting components of this proposal was an agreement requiring each signatory to waive their right to sue the financial institutions involved -- in other words, a sort of no-fault arrangement. Because we in Yukon were part of this proposal or accord, we were waiving our rights in Yukon to take legal action against the banks or the trusts involved -- this despite all the Premier's strong words about the banks not living up to their agreements and despite the Deputy Premier's words about the banks not living up to their agreements.
I find that surprising. What is our recourse when a party to a contract fails to meet their legal obligations? It's the courts; it's the right to take legal action. If we stay in the accord, if we sign the final agreements this spring, that recourse will be gone.
So after both the Premier and the Deputy Premier told us on numerous occasions that it's the banks that are at fault -- the bad banks; they said the banks didn't live up to their obligations; we've heard that again and again. They will waive our rights to pursue legal action in order to stay on side in the hope that in 2016 we will get some or much of our money back.
Again, this was promised by the same banks, financial institutions and trusts that originally promised to repay our money in early September of 2007, and then, according to the Premier, reneged.
Let's look at some of the other things we heard in this House. There has been a lot of talk about the Auditor General. I'll read some of those comments back into the record.
"It would be irresponsible of the government to make any sort of assertion to the public. What we did is to disclose to the public, through the appropriate mechanism, the public accounts as audited by the Auditor General." Hon. Premier, November 6, 2007.
Hon. Deputy Premier, Hansard, November 21, 2007: "Again, Mr. Speaker, the government has been fully forthcoming with information regarding this matter. We will continue to work very cooperatively with the Auditor General to seek clarity, to seek finality with respect to this matter.
"…something that we on this side of the House will never do is politicize the good work of the Auditor General of Canada. In fact, Mr. Speaker, the government very much welcomes the assistance that the Auditor General can provide in further reviewing these particular investments." That was the Hon. Deputy Premier, Hansard, November 21, 2007.
"I don't think that this side of the House is taking issue with the Auditor General of Canada and her good work. In fact, we fully support her work as we have in the past…" Hon. Deputy Premier, Hansard, December 3, 2007.
What happened when the Auditor General presented her report to this Assembly? The Premier announced in a media scrum that this was her opinion and we had others. These words are in marked contrast to the words put on the record earlier last fall by both the Premier and the Deputy Premier.
Let's hear some more.
"As the member opposite is fully aware, the Auditor General is conducting a further review of these particular investments, as I have mentioned. We look forward to the review. I think that she has articulated from her office that perhaps the review will be done in early 2008, and I think the sooner the better. We certainly welcome that feedback. As I have mentioned on many occasions, we, the Government of Yukon, will welcome the feedback, the findings and the recommendations made by the Auditor General of Canada." Hon. Deputy Premier, December 3, 2007.
Mr. Speaker, I don't have this quote in front of me, so it shouldn't be in quotation marks. After the Premier of Yukon made his comments about it being just her opinion, the media spoke with some of her officials. They were so outraged by those comments that they said, if there is a guarantee -- and I'm paraphrasing; I don't have the quote in front of me, although I think it was referred to in yesterday's Whitehorse Star as recently as yesterday -- if there is a guarantee, then where is the money? It's pretty unusual for the Office of the Auditor General to make those kinds of responses, but it's because they were so outraged over the disparaging comments about the Auditor General and just her opinion.
What else did the Deputy Premier say? She said, "As the member opposite is fully aware, the Auditor General is conducting a further review of these particular investments, as I've mentioned. We look forward to the review. I think that she has articulated from her office that perhaps the review will be done in early 2008, and I think the sooner the better. We certainly welcome that feedback. As I have mentioned on many occasions, we, the Government of Yukon, will welcome the feedback, the findings and the recommendations made by the Auditor General of Canada." Hon. Deputy Premier, Hansard, December 3, 2007.
What happens when it comes out? Members of the Public Accounts Committee are too busy to meet. They respond both in person and by letter that they're too busy to meet, and when they finally meet, they say that this time there's no reason to look into the report. This time, despite the requests made by the Member for McIntyre-Takhini and the Member for Porter Creek South, we don't need any public hearings. The Auditor General has said the act wasn't followed, and we'll accept that.
Well, that's fine, Mr. Speaker, but the tradition has been to bring in officials and find out what else we can learn from it. Perhaps the officials could answer the questions about what supervision was or wasn't coming from the political side, from the executive, from the elected members, that led them to feel it was okay to carry on with these investments.
That would be interesting to know, Mr. Speaker, but we can't find out because we don't hold hearings. What else did the Hon. Deputy Premier say? She said that, "We fully support the Auditor General, as we have in the past. We look forward to the findings and to the outcome of the review, which, as I mentioned should be in early 2008…We certainly look to the Auditor General of Canada for her advice and sound reviews. We have received great recognition of the principles used in administering our finances over the years." What else? That was Hon. Deputy Premier, December 3, 2007.
"I think that it's important to recognize the importance of this particular institution, to let them do their good work. After all, it was at the request of the third party and we very much appreciate that -- so let the Auditor General's Office do its good work." That was the Hon. Deputy Premier, December 3, 2007. Actually, it was at the request of the Official Opposition, Mr. Speaker. It was in my letter of early November.
"I have full and utter confidence in the officials in the Auditor General of Canada's Office, and we look forward to the outcome, which will be occurring pretty quickly." That was the Hon. Deputy Premier from Hansard on December 3, 2007.
That brings us back to the Auditor General's report. There are some other interesting things that the Auditor General says in her report. First of all, to reiterate, in section 13 she said -- and this is pretty clear, Mr. Speaker: "We found that the investments in the two trusts were not obligations of, nor were they guaranteed by, the Government of Canada or by any provincial government." In section 14 it says, "We also found that the investments in the two trusts were not issued or guaranteed by a bank." So there was not a bank guarantee.
There is another thing that is interesting in the Auditor General's report -- Mr. Speaker, it is amazing how much she accomplished in nine pages. In section 20, she refers to the restructuring and here is how she views the restructuring -- the chief financial auditor of the land: "The market for asset-backed commercial paper issued by trusts set up by non-banks effectively froze in August 2007. A group of financial institutions met in an attempt to resolve the liquidity problem that was affecting the market. They agreed to take steps to restructure about $33 billion in asset-backed commercial paper that was stranded in 21 trusts. The restructuring aims to replace the short-term, asset-backed commercial paper with notes that mature over longer terms.
"The restructuring process is expected to be completed in March 2008. As the financial terms of the restructuring have not yet been made available, the government has not yet quantified what the financial impact will be. We will be reviewing the government's analysis of this financial impact when we audit its financial statements for the year ending 31 March 2008."
Mr. Speaker, March 31, 2008, has come and gone. We certainly don't have the financial statement that will be presented in the fall, after they've been reviewed by the Auditor General, and we don't have the version that will go to the Auditor General and then to public accounts.
What we do have is the 2008-09 main estimates and we have the second supplementary estimates for 2007-08. There are no notes in those estimates; there are no references to the $36.5 million out of the projected $130 million net financial resources, or cash surplus, for the end of 2007-08. We don't have that, but we don't have anything in those reports, budgets or estimates that even refers to this. It's just all listed there.
Governments across the country and corporations across the country make provision for estimated loss. They make loan loss provisions. The Premier, the Finance minister, told us just a few short days ago that one of the purposes of the second supplementary estimates for 2007-08 is to present a more accurate picture of Yukon's fiscal situation, of Yukon's finances.
There is no reference to the fact that the value of this $36.5 million is unknown. It's unknown because right now it doesn't trade in any financial marketplace -- there are no buyers for it -- and this committee has been trying for some seven months now to unravel these underlying assets and make heads or tails out of it.
Mr. Speaker, there are all kinds of estimates we've seen in the financial presses that have estimated that if there were an attempt to liquidate these trusts at this point in time, the losses could be as high as 40 percent or higher.
The Premier has indicated that we're not going to have a fire sale. Of course, I concur with him -- we're not going to because we don't want to take that loss. But we may well be rolling that loss over for some future government. We're leaving some other government to inherit this mess.
As I've said, since September 6, 2007 -- and I raise this point because the Premier has started to refer to this individual in his remarks -- an investor committee chaired by Purdy Crawford, a Toronto lawyer, was formed to oversee the proposed restructuring process resulting from the Montreal proposal. The investor committee includes investors who are signatories to the Montreal proposal, plus other investors. I understand that the investor committee does not include institutions that provided liquidity lines or assets to the trusts.
The investor committee has indicated that holders of over 80 percent of the outstanding non-bank-sponsored ABCP listed in the Montreal proposal have signed acknowledgements indicating their support for the standstill provisions of the Montreal proposal. I believe the Deputy Premier indicated in one of the statements I quoted earlier that we were signatories to that.
Indeed, several times in the fall in this Assembly, she indicated that because we're signatories to the Montreal proposal, there were questions she couldn't answer. Among the questions that she would not answer at the time was the name of the bank that she felt that was providing the guarantee, although as we've learned from the Auditor General, there was no such guarantee. The name of the bank becomes somewhat irrelevant, because no guarantee was ever provided by a bank according to Madam Fraser.
A big question in many investors' minds is whether this was just a liquidity crisis only or whether the underlying assets have been either impaired or subject to termination or collateral calls by swap to other parties that could lead to a transfer of trust assets and a sale of trust assets at reduced prices, should that be allowed to occur.
Current consensus in the marketplace ranges between 60 and 80 cents on the dollar; that's what might be recoverable. But all of these questions may only be answered when detailed information regarding the underlying assets behind each trust are made available to holders of ABCP. By the way, there is a reason for these concerns. Although the Premier and the Deputy Premier were quite pleased to repeat over and over again in this House last fall that these trusts they invested in had the highest possible ratings, the highest ratings -- triple-A, R-1(high). In fact, they're currently rated D, and that's because they're insolvent. The Premier will no doubt say that that's just a technicality. They're just rated D because they're currently in bankruptcy protection. He was willing to cite the rating that existed when he purchased them; he should be willing to accept the rating that exists now, and that is D. It's the lowest rating possible -- the lowest.
Many investors are concerned about the continuing delay in providing the information to them about the underlying assets, and they're also concerned about the extent to which -- when eventually made available -- it may only be high-level information that will be insufficient to allow holders of ABCP to assess the credit risks properly.
At this point the overall situation remains very fluid and, as the expression goes, the final chapter has not been written.
Let's just turn again to the Financial Administration Act, which was written to protect Yukoners from the very mess this government has put us in. The power to place investments, section 39(1): "If money in the consolidated revenue fund, other than money in a trust fund, is not immediately required for payments, it may be invested in any of the following
"(a) securities that are obligations of or guaranteed by Canada or a province;
"(b) fixed deposits, notes, certificates, and other short term paper of or guaranteed by a bank including swapped deposit transactions in currency of the United States of America;
"(c) commercial paper issued by a company incorporated under the laws of Canada or a province, the securities of which are rated in the highest rating category by at least two recognized security rating institutions."
It's pretty clear. What did the Auditor General find? None of the above. She said, "We found that the investments in the two trusts were not obligations of, nor were they guaranteed by, the Government of Canada or by any provincial government."
She also said, "We also found that the investments in the two trusts were not issued or guaranteed by a bank."
She went on to say that they also were not rated by two separate rating agencies. What she said was, "… was not issued by a company incorporated federally or provincially and given the highest rating by at least two recognized security rating institutions, although one rating agency had provided the highest rating of the trusts' commercial paper."
As I've said, she said, "Prior to making these investments, the Government did not obtain a legal opinion on whether the investments would comply with the Act."
The government side, the Finance minister and the acting Finance minister, in his absence, have said this has happened before; it has been done by other governments. Other governments did this; other governments failed to follow the act properly. That may well be, or it may not be, because the Auditor General, in this specific report, cites this government and this government only, although it does indicate it looked back several years, and, "The government also made investments in asset-backed commercial paper that was issued by trusts set up by domestic banks. At the end of the 2005-06 and 2006-07 fiscal years…" and she goes on to say when it had made other investments previously.
She cites this government. But you know what? I'm going to use words that have been used in this Assembly before regarding whether or not previous governments may or may not have contravened the act. These are words that came across from this government and the words are very brief: "So what?"
So what? So what if former governments also did this? It doesn't matter, because those governments are not sitting here today; they're not here being held accountable today. They've come and they've gone. They've had their tenure; they've been judged -- for better or for worse by Yukoners -- and they're not here now. So what, is what I say. What does it prove if previous governments did invest in bank trusts? The Auditor General didn't talk about it in this report; she didn't specify the time when governments did so, but what if they weren't in compliance? That's not for us to resolve. If the Premier wants to refer the actions of governments over the past 25 years to the Auditor General and ask for her to describe what they did or didn't do, he's free to do so. We referred the actions of his government, and they were found sorely wanting.
There is a lot more that this government -- this Premier and this Deputy Premier -- has put on the record. Before I go there, I want to point out one other thing. When the Auditor General conducts a report, there is back-and-forth discussion between her officials and the officials of the subject agency. They are provided with an opportunity to answer questions, to offer explanations. Perhaps the Premier had learned that the Auditor General's report wasn't going to be a very happy one.
It wasn't going to be a bright day for this Yukon Party Premier. It wasn't going to be a shining moment in his career. What did he do? Well, he called a press conference and announced that the policy was being changed. The policy would be changed and no longer would the Yukon government be allowed to invest in asset-backed commercial paper.
Well, I would suggest that the Premier was putting in place a policy to protect him from himself. He was putting in place a new policy, when all he had to do was follow the existing one. If he had followed the act -- if he had followed the act, we wouldn't have $36.5 million in frozen investments, and we wouldn't be out there trying to explain every day that we're negotiating a deal that we hope will get Yukoners back their money in 2016.
2016 -- long beyond the date of the latest, most delayed announcements about when we'll have a new Correctional Centre, and long beyond the date for the upgrades to the Robert Campbell Highway, and likely long beyond the date when something is going to need to be done to replace the aging F.H. Collins Secondary School -- long beyond the date at which we might have some call for this money.
After all, Mr. Speaker, the Premier has told us it's not a problem. He's had Finance officials come forward. He pushes the officials forward when he doesn't like the nature of the questions that are coming his way. He brings forward officials, and they said that we're okay -- don't worry; be happy, that we're fine. We don't need the money. We have lots of money on hand.
Well, if we had no need for the $36.5 million, why didn't the Premier look to investing the money in long-term notes? Why wasn't he putting it into notes that would mature in eight years? Because it wouldn't have been prudent -- because there is no way of knowing which federal government -- what Government of Canada might, between now and 2016, cut back on transfer payments. There is no way of knowing whether there could be an international crisis of some sort that would affect the price of minerals and cause a downturn in Yukon's economy.
So the prudent thing would be to have our assets liquid and on hand between now and then, not tied up until 2016. That excuse just does not hold water.
Telling Yukoners they should not worry, we don't need the money, we are not going to need it until 2016, doesn't add up to making much sense.
Let's look at some of the statements that were made about keeping the Auditor General informed. After all, the Auditor General is not some kind of fiscal detective. She has to rely on information that's provided.
"I would just also like to inform the member opposite that the Auditor General is fully cognizant of the government's investment policies and was advised in detail of the actual third party asset-backed investments and the proposed restructuring and that the Auditor General states that, in her opinion, the transactions of the government that have come to her notice have in all significant respects been in accordance with the Financial Administration Act." Hon. Deputy Premier, Hansard, November 13, 2007.
I believe that the quote was an accurate quote, but it was certainly out of context.
The members opposite have said that we on this side have misrepresented statements by the Ombudsman, have misrepresented statements by the Auditor General, have brought misinformation to this Assembly.
Hon. Deputy Premier, Hansard, November 13, 2007: "Again, the Auditor General has stated that, in her opinion, all transactions that have come to her notice have been in accordance with the Financial Administration Act."
"The Auditor General -- again, for the member opposite's reference -- states that, in her opinion, the transactions of the government that have come to her notice have in all significant respects been in accordance with the Financial Administration Act. That was the Hon. Deputy Premier, Hansard, November 13, 2007.
"The Auditor General again states in her opinion that, from what has come to her notice, these investments have in all significant respects been in accordance with the Financial Administration Act." Hon. Deputy Premier, Hansard, November 13, 2007.
"Well, Mr. Speaker, more important, the Government of Yukon has brought this to the attention of the Auditor General of Canada. As I mentioned yesterday, the Auditor General of Canada stated in her opinion the transactions of the government that have come to her notice have, in all significant respects, been in accordance with the government's powers under the Yukon Act, under the Financial Administration Act and regulations and the legislative authorities and bylaws governing the organizations. So, Mr. Speaker, the Auditor General and Finance officials within the Government of Yukon have been fully engaged in discussions over this matter, and they will continue to be fully engaged as they have in the past as a recurring practice." Hon. Deputy Premier answered on November 14, 2007.
Well, Mr. Speaker, clearly, these statements made in response and in reply to our questions asked in this Assembly were made to try to indicate to this House that the Auditor General was fully knowledgeable and fully informed about all of these matters at the time she wrote the letters of transmittal that are included inside the public accounts from prior years -- at the time that she made those -- and she was giving a clean bill of health to this fiasco.
That's not what was happening, and I asked the Auditor General, when she was here in Whitehorse, that question, one on one: was she, by those previous statements, saying that she was, at that time, fully informed about the investment in non-bank trust ABCP that only had one rating from one agency and ABCP that was not an instrument of either the Government of Canada or a province. She said, "No, that's not what I meant. If anybody said that, that was misrepresenting what I was saying." So let's all be careful when we quote the Auditor General.
Again, "For the members' opposite information, I will articulate very closely -- we certainly take the direction and advice of the Auditor General of Canada in this particular regard. The Auditor General of Canada is fully aware of the government's investment policy, has been fully aware of each of these transactions that have been made over the course of the year, has been fully made aware of investments over the last five years, and in turn, the Government of Yukon has been able to receive five consecutive years of healthy financial surpluses within the bank of the Government of Yukon -- as well as unqualified audits for five consecutive years. The Auditor General of Canada has stated in her opinion the transactions of the government that have come to her notice have been, in all respects, in accordance with the government's powers under the Yukon Act, Financial Administration Act, regulations, legislative authorities and bylaws governing the organizations." That was the Hon. Deputy Premier, Hansard, November 15, 2007.
I have one more, Mr. Speaker; they are endless and I know that others want to speak.
"As I have stated though -- and I'll just repeat it for the third party member's information…" This was in reply to a question asked by the third party leader, the Member for Whitehorse Centre, "-- the transactions that have come to her notice have in all significant respects met up to the letter of the law. That is the Financial Administration Act, the Yukon Act, bylaws, the regulations, overseeing organizations and so forth." That again was the Hon. Deputy Premier, Hansard, November 15, 2007.
Well, that is not what it turned out to be. That is not what the Auditor General said i