June 18, 2019
GOVERNMENT SERVICES COMMITTEE
Pursuant to Standing Order 68, Scott Reid, MHA for St. George's - Humber,
substitutes for Pam Parsons, MHA for Harbour Grace - Port de Grave.
Pursuant to Standing Order 68, Gerry Byrne, MHA for Corner Brook, substitutes
for Derrick Bragg, MHA for Fogo Island - Cape Freels.
Pursuant to Standing Order 68, Steve Crocker, MHA for Carbonear - Trinity - Bay
de Verde, substitutes for Derek Bennett, MHA for Lewisporte - Twillingate for a
portion of the meeting.
Pursuant to Standing Order 68, Tony Wakeham, MHA for Stephenville - Port au
Port, substitutes for Loyola O'Driscoll, MHA for Ferryland.
The
Committee met at 9 a.m. in the Assembly Chamber.
CHAIR (Reid):
We're going to get started now. Sorry for the delay, I think there was some
notifications maybe that didn't go out. The Chair is not here, so I'm going to
fill in as the Chair this morning.
We're
going to go through the Public Service Commission, Consolidated Fund Services
and the Department of Finance this morning.
First
of all, I'm going to ask everyone to introduce themselves, I guess.
MR. OSBORNE:
Tom Osborne, Minister of Finance and President of Treasury Board.
MR. JOYCE:
George Joyce, Interim Chair, CEO, Public Service Commission.
MS. CHAFE:
Ann Chafe, Commissioner, Public Service Commission.
MR. SMYTH:
Mike Smyth, Manager of Appointments and Accountability with the Public Service
Commission.
MS. ELLIOTT:
Susan Elliott, Executive Assistant to Minister Osborne.
MR. BUDGELL:
Marc Budgell, Director of Communications, Finance and PSC.
MS. COFFIN:
Alison Coffin, St. John's East - Quidi Vidi.
MS. TUBRETT:
Denise Tubrett, Deputy Chief of Staff, Official Opposition.
MR. WAKEHAM:
Tony Wakeham, MHA, Stephenville - Port au Port.
MS. DRODGE:
Megan Drodge, Researcher with the Official Opposition Caucus.
MS. STOODLEY:
Sarah Stoodley, MHA, Mount Scio.
MR. CROCKER:
Steve Crocker, MHA, Carbonear - Trinity - Bay de Verde.
MR. BYRNE:
Gerry Byrne, erudite (inaudible) and Member for the District of Corner Brook.
CHAIR:
I think we've missed some people over here, did we? Did we get everyone?
AN HON. MEMBER:
(Inaudible.)
CHAIR:
You'll introduce them later
on. Okay.
I'm
Scott Reid, I'm the Member for St. George's - Humber and I'm going to fill in as
Chair today. Bear with me as we go through this. We're going to look at the
Public Service Commission first. So, we'll call the first heading.
CLERK (Murphy):
1.1.01.
CHAIR:
I'll ask the Minister if he has any opening comments.
MR. OSBORNE:
Thank you, Mr. Chair.
I guess
the only disappointing part about being 20 minutes late this morning are the
throngs of fans that are home waiting for us to switch channels to the other
version of Family Feud.
As the
minister responsible, I'd like to take the opportunity to make a few remarks
about the Public Service Commission before we proceed.
The PSC
has the responsibility to protect the merit principle and provide oversight to
staff appointments and promotions to permanent positions within the delegated
entity schedule to the Public Service
Commission Act. In addition to their legislated mandate, the PSC offers
services which are compatible with its role as an arm's-length protector of the
values of the public service.
They
administer the Employee Assistance and Respectful Workplace Programs providing
services directly through the in-house professional coordinators, supplemented
by external service providers from across the province. They lead several
adjudication panels designed to resolve certain conflicts within the public
service, such as job evaluation, classification appeals, management
classification appeals and the Conflict of Interest Advisory Committee.
As an
advocate for the principles of merit, fairness and respect, as well as good
public administration, the PSC plays a vital leadership and support role for the
broader organization. With the establishment of the Independent Appointments
Commission in 2016, the mandate of the PSC expanded to support the IAC. Through
the IAC and the PSC, they have the statutory obligation to ensure that the
recommendations for appointments to the province's agencies, boards and
commissions are based on merit, through an open and inclusive process to
identify qualified applicants for the appointment of Tier 1 and Tier 2 entities.
Since
the merit-based appointments process was established in 2016, the PSC and IAC
have combined to put forward just under 2,000 application recommendations, which
has led to a combined 556 appointments.
With
that, Mr. Chair, we will open the floor to questions.
CHAIR:
Okay. We'll start with the
Member for Stephenville - Port au Port.
MR. WAKEHAM:
Thank you, Mr. Chair.
My
first questions today are general questions. I'd like to start off my talking
about the Independent Appointments Commission.
What
was the actual cost of the Independent Appointments Commission in '18-'19?
MR. JOYCE:
The number for the Independent Appointments Commission last year was
approximately $30,000.
MR. WAKEHAM:
How much of their budget was
spent on travel and how much was spent on advertising?
MR. JOYCE:
Travel and advertising, I'll defer to my colleague.
MR. SMYTH:
For travel overall; air travel was roughly $5,600 and another $1,300 for
accommodations. There was no spend on advertising.
MR. WAKEHAM:
What was the remainder of
the $30,000 spent on?
MR. SMYTH:
Twenty thousand dollars of that was for their part-time administrative assistant
and then there were some incidentals, some reimbursements for meal allowances
when they do travel. I don't have an exact total of that but those three or four
items were the main items.
MR. WAKEHAM:
Okay, thank you.
In
'18-'19 how many Tier-1 and Tier-2 appointments were made through the IAC
process?
MR. SMYTH:
I don't have the exact number of appointments; overall, we have the number. For
Tier 1 there were 21 requests that arrived and for Tier 2 there were 39. In
terms of recommendations that were submitted there were 19 recommendations
submitted by the IAC for Tier 1 boards and another 42 recommendations submitted
by the PSC for Tier 2.
MR. WAKEHAM:
Thank you.
Have
there been any appointments made by Cabinet which were not done on the
recommendation of the IAC?
MR. JOYCE:
There have been no appointments made by government that were not put forward by
the IAC.
MR. WAKEHAM:
Last year in the Estimates, the Committee was advised that the usage of the EAP
had levelled out after several years of increases. How would you compare the
demand in '18-'19 for EAP?
MS. CHAFE:
Demand has remained the same. Our pickup rate is about the norm. We're around 13
per cent of those eligible. The norm has been 11 per cent in other jurisdictions
with similar programs. We see our rate has been consistent and that's pretty
well been 10, 11 per cent for the last several years. It went to 13 last year
and the year before and that was a very small increase over last year.
MR. WAKEHAM:
Is there currently a wait-list for EAP?
MS. CHAFE:
No, there is no wait-list for EAP.
MR. WAKEHAM:
Okay.
In the
last Estimates meeting for the Commission there were about 150 management
classifications appeals outstanding. How many are now outstanding?
MR. JOYCE:
Are you talking management classification system?
MR. WAKEHAM:
Yeah.
MR. JOYCE:
Currently there are 161 outstanding.
MR. WAKEHAM:
Do we know how long they've been outstanding?
MR. JOYCE:
It varies. I will say that compared to last year – I chair the management appeal
program. In '17-'18 we brought 187 forward. There were 30 new received in
'18-'19, 10 were confirmed, 24 changed and 22 withdrew for the total of 161.
We're cleaning up; I intend to clean every one of those up this calendar year.
MR. WAKEHAM:
Right.
In my
own district, I know of at least three people who have been waiting since March
2017 –
MR. JOYCE:
2017, yeah.
MR. WAKEHAM:
– to have their reclassifications heard. When they call in, they're told to call
back in three months. Every time they call back three months later, they're told
to call in another three months. I think we need to give them a better answer
than simply call back in three months.
MR. JOYCE:
Sure.
As a
context to that, when I arrived at the PSC in August of '18, government had
appointed, I think, 16 or 17 new members to be part of the management review
committee. We went out and we retained an individual to train us all in the
methodology, so all that training has been completed. Hearings have been
conducted so far, and they're going to continue for this calendar year.
Hopefully, by the end of the year, I'll have every one of those done.
MR. WAKEHAM:
Your actual plan to do that is to schedule hearings, so many per month?
MR. JOYCE:
Yeah, between now and, of course, until they're done. They're ongoing; we have
an individual with us who is in the process of scheduling all those hearings.
MR. WAKEHAM:
So the next time they call in they'll actually have some answers.
MR. JOYCE:
They'll have a clear answer in terms of when their hearing is.
MR. WAKEHAM:
Okay. Thank you for that.
The PSC
is responsible for the Conflict of Interest Advisory Committee. How many reviews
were conducted in '18-'19?
MR. JOYCE:
There were 14 conducted in '18-'19. I chair the Conflict of Interest Advisory
Committee, five deputy ministers, and we dealt with 14 cases.
MR. WAKEHAM:
Okay, thank you.
Going
back to the Independent Appointments Commission for a second, have there been
any instances where individuals were appointed to positions without first
applying through the IAC?
MS. CHAFE:
No, there has not been.
All
appointments have been through the process that's outlined on the website. Most
of our applications are received direct to the website. On occasion, we'll take
résumés, hard copy directly and then just incorporate it into our website
databank.
MR. WAKEHAM:
Right, so if someone applies to be a member of a particular board or agency, are
they then offered an opportunity to be placed on another board or agency, even
though they haven't applied to that board or agency?
MS. CHAFE:
In the databank we ask people to identify their interests. All Tier-1 and Tier-2
boards are listed there. Many applicants will indicate several; some will
indicate one sector only.
If, in
the course of searching for people, we don't have a good body of candidates to
look at for a particular board, we will often go into our databank and find
people who might be suitable for that board. We usually would, prior to doing
anything, call them and say, I know you applied for Nalcor. Unfortunately, you
didn't get Nalcor, but would you be interested in this other board. If they
indicate they are, we advance their name for consideration.
MR. WAKEHAM:
Okay, thank you.
Mr.
Joyce introduced himself as interim acting chair of the Public Service
Commission. I ask the minister: Is a competition planned for a permanent chair,
is it in progress, or what's the status?
MR. OSBORNE:
I will check the status of that and I'll certainly let you know.
MR. WAKEHAM:
Okay, appreciate that.
I'll
keep going now. I'll go into the 1.1.01 into the salary details. I notice that
the Salaries are forecasted to increase by $105,600 compared to the '18-'19
Estimates to the '19-'20. Can you explain why that is?
MR. JOYCE:
I think it was around September or October the PSC retained an adjudicator. The
money itself is not new money; it's been reprofiled from the Human Resource
Secretariat. It's for one year only, this calendar year, and it's for the
purpose of the job evaluation system, the reviews that were currently on the
books. It flowed from, basically, collective bargaining wherein all parties had
agreed to a review process that's appended to the back of the collective
agreements.
It
called for an independent adjudicator. That adjudicator would've been Human
Resource Secretariat, but for independence purpose and impartiality, it was
housed at the Public Service Commission. We have a full-time adjudicator now
adjudicating all outstanding JES appeals.
MR. WAKEHAM:
Okay, so that's what the new contractual position was that was showed up?
MR. JOYCE:
That's correct.
MR. WAKEHAM:
Okay, thank you.
In the
Transportation and Communications section, I notice that the budget amount was
not used, yet this year more is being budgeted for. Why is that? There was
$37,800 unused.
MS. CHAFE:
Yeah, in the past, most of our travel money has been directed with the IAC in
mind because we do have regional representation on all members. One of the
members I was fortunate enough to not have to pay his travel costs from
Labrador. That has since changed and so we'll need to now pick up that cost.
We have
two additional members who may incur costs. The adjudicator for the JES is
anticipated will also have to do some travel. On occasion, members of the EAP
staff in critical incidents will have to travel as well, but that's
unanticipated, you never know. But the other travels for IAC and for the
adjudicator, we do anticipate travel costs there.
MR. WAKEHAM:
So you do anticipate the cost of the IAC going up slightly, then, for travel
costs?
MS. CHAFE:
Yes, the member from Labrador had not been charging for his travel in the past
when he was attached to an airline industry job that brought him here anyway. So
he never billed us and, now, that will change.
MR. WAKEHAM:
Okay.
MR. JOYCE:
And just for context
purposes, government added two new members to the IAC in recent months, and we
anticipated that would be a little earlier, but it wasn't, it was late in the
fiscal year, but that will certainly have added pressures on the transportation.
MR. WAKEHAM:
Right.
Are
they two additional members or two replacement members?
MR. JOYCE:
No, two additional members.
MR. WAKEHAM:
And who would they be?
MR. JOYCE:
The IAC went from five
members to seven.
Correct, Ann?
MS. CHAFE:
Yes.
MR. JOYCE:
And the two additional ones
are Earl Ludlow and Cathy Duke. That brings the complement to seven.
MR. WAKEHAM:
Okay, thank you.
Professional Services, how much of the $630,000 was spent on EAP?
MR. SMYTH:
The Professional Services is all of the EAP services.
MR. WAKEHAM:
So there's nothing else in
there, just the EAP services?
MR. SMYTH:
Yes.
MR. WAKEHAM:
Okay.
In
2018-19, $21,000 of the $32,800 was spent. What accounted for the savings there?
This is last year's that I'm looking at – the budget of $32,800 and expenditure
of $21,200.
MR. SMYTH:
In Purchased Services, those are things like our photocopiers, our training that
could be done, any facility charges within the leased property. There are
budgeted amounts there for any non-discretionary that could come up for security
purposes. We also rent mats for Occupational Health and Safety. Interpreting
services is also in there as well. So there were some savings in that area for
this year.
MR. WAKEHAM:
So, you're budgeting back up
to $29,000 – $8,000 more this year – do you anticipate some of those costs going
up significantly?
MS. CHAFE:
We anticipate, potentially, relocating in October when the lease is up on the
building that we're in, so that will have some impact. We will need movers and
we will need other attachments to the services to facilitate that.
MR. WAKEHAM:
Sure, thanks.
Are you
in a leased property right now?
MS. CHAFE:
Yes, we are.
MR. WAKEHAM:
Okay.
And are
there possible savings when you move into your new space?
MS. CHAFE:
Yes, there's currently a tender out for space, and we will, ideally, see
savings. We're also currently looking at government-owned buildings that could
save again.
MR. WAKEHAM:
Okay.
MR. JOYCE:
For context purposes as
well, the PSC will follow more in line with government's approach – instead of
offices, we will have an open concept. We will have less floor space. We will
save money, yes. Based on the number of employees and based on the floor space,
it would be significant.
MR. WAKEHAM:
Good to hear.
Thank
you, that's all the questions I have.
CHAIR:
Before we move to the Member
for St. John's East - Quidi Vidi, I just want to remind officials that when you
respond to a question, to identify yourself, just for the transcripts and make
it easier for the people transcribing.
Ms.
Coffin.
MS. COFFIN:
Thank you very much.
Thank
you, everyone, for coming here today and taking all the time to prepare this
background document. I know a tremendous amount of work goes into that, so I
appreciate your professionalism and the dedication to this.
I have
a couple of general questions along the way here. Let's start with the PSC is
tasked with enforcing policy for the protection of merit principle and
recruitment and selection within the public service. Has there been any
consideration to bringing other principles, such as the equity principle, not
just gender equity, but equity with respect to people with disabilities, race
and things like that? Has that been included in any of the criteria?
MS. CHAFE:
We are looking at two areas here – the public service in terms of its oversight
role with the Human Resource Secretariat. It's often been discussed but, in
order to do that, legislative changes will have to be enacted, and there are s
also issues related to privacy.
With
the IAC, which has been here for three years, in advance of that, we did put on
our website the ability for people to self-identify when they choose to, and
that's gender, geography, Aboriginal, disabled. Many have, but there's no
compelling reason to make everybody do it. So we've kept stats on that. We've
also worked closely with the Women's Policy Office to advance more women
applying in that IAC process.
I'm
happy to report that almost half of what's been appointed to boards is female.
And within that, we make good attention to geography and, where possible,
Indigenous and disabled people are represented as well. We continue to strive in
that area to be more inclusive, and will go forward keeping our numbers where we
can.
I'll
even make a pitch right now that anybody in their districts who have the
opportunity to point people towards that IAC site should do so. And it's been
through the efforts of many people throughout the province that we've had such a
good response to our databank and the ability to identify citizenship that are
ideal to serve as board members.
MS. COFFIN:
Okay, I will definitely do that. I'm sure there are lots of very capable people
in my district, so I will certainly pass that along.
I did
notice that perhaps another way of looking at this, because I looked at the
website and looked at a lot of the criteria. A lot of the criteria for
individuals on the boards tend to be very sector-specific, a lot of
business-heavy things. You need accounting designation or other experiences on
boards and committees and a lot of things like that.
Perhaps
a way of getting around that a little bit, instead of saying we're having gender
diversity criteria, is in the list of things that you might want to have or
background that you might want to have could be listed there. So maybe a strong
history of community involvement, or an attachment to a particular association
or group might be something that could be added in in the list of attributes
that we would like to see in people who are applying.
That
might be an option. I don't know if you've considered that.
MS. CHAFE:
In some cases, we are actually doing that.
MS. COFFIN:
Oh lovely, okay, good.
MS. CHAFE:
Boards are composites and usually they're not cookie-cutter members. We actually
search for a composite of many skills and experiences and representation. We
also are very mindful of geography, among all the other factors that we
consider.
MS. COFFIN:
Good. That's very
reassuring, thank you.
Next
question – and this is more of a technical question, so perhaps you can answer
it but maybe not; maybe you can tell me where I need to go ask.
Professional Services, it's my understanding that the definition of what falls
under Professional Services has changed slightly. Now I know that you've
included here things that are associated with EAP, so imagine that would be any
kind of counselling and a number of other services that they offer.
But
more specifically, can you tell me what the definition of professional services
is?
MR. JOYCE:
For the purpose of EAP, we
have a myriad of service providers, professional associations that range from
providing services to mediation services, to coaching, to psychological
services, social work services, and that covers the whole gamut depending on
what's needed for a particular employee, family or the case at hand. So it
covers a broad category of professional services.
In
terms of the number of service providers, we have in excess of 100 service
providers –
MS. COFFIN:
Oh good.
MR. JOYCE:
– and their companies
providing different types of skill services.
MS. COFFIN:
Right.
Okay,
that's specific to you.
MR. JOYCE:
Right, yeah.
MS. COFFIN:
Do you know what the general
definition is across government? It's my understanding that that definition has
changed slightly?
MS. CHAFE:
Yeah, to be honest with you, we only use it in that term.
MS. COFFIN:
Okay.
MS. CHAFE:
I would suggest our colleague, Theresa Heffernan, when she comes, will be more
than able to answer your question. She's had a long history of knowing what
exactly fits into the Professional Services.
MS. COFFIN:
Okay. On the spot, there you go and you're not even up.
MS. CHAFE:
But our professional services, in many ways, because we are so small, our only
use is the service providers for the EAP.
MS. COFFIN:
Right.
MS. CHAFE:
And if you want a bit of history on that, I'm happy to provide that. We
basically have an intake system where we seek qualified professionals to offer
counselling services. Those professionals usually have to be affiliated with a
group such as clinical social workers or psychologists. We prefer that they come
in under a licensed professional body.
Then,
depending on their area of expertise and specialty, we often match our clients
to those professionals. As usual, there's no problem getting people on the
Avalon. We struggle at times to get people in Central, Western, Labrador,
Northern Peninsula and the South Coast, but we maintain the same standards and
we basically interview these people and reference check the people to ensure
their properly licensed and insured. Then we also keep close contact with
professionals and with our client group to make sure the relationship is
therapeutic and that it is working as it should.
MS. COFFIN:
Oh, good. That's very reassuring.
Thank
you.
MS. CHAFE:
But that's pretty well our only use for that –
MS. COFFIN:
Right, for that category.
MS. CHAFE:
I know other departments would have much broader applications.
MS. COFFIN:
Yeah, I'll wait until we get to the more general definition of that after.
One
more question – and this is perhaps for all of our benefits here. We have the
Independent Appointments Commission that does appointments to agencies, boards
and commissions. We have the Public Service Commission, but we also have the
Human Resource Secretariat. Can you describe the relationship between all three,
please?
MR. JOYCE:
In terms of the Human Resource Secretariat, they're the human resource arm of
government. In terms of the role of the Public Service Commission, the Public
Service Commission has very specific oversight capabilities and we have, under
MC – it goes back I think 7 years ago – very specific relative to HRS. This
includes the development of staffing policy, standards and procedures,
monitoring, auditing and appeals of Human Resource Secretariat staffing action
and certification of selection boards, and that is our role relative to HRS.
We
also, I guess not formally, work with HRS in terms of – as you asked the
question a little earlier about selecting whether it's females, people with
disabilities, we work closely with them on issues that arise and see what can be
done to accommodate it, vis-á-vis potential legislative amendments.
We also
work with HRS if the Public Service Commission conducts a review of a
recruitment issue. And if we feel that there's been a breach the
Public Service Commission Act, which
is rarity, or if we feel, during the review, that the procedures can be done a
little better, we meet with HRS on a monthly basis, sit down with their director
and go through it to try to be as efficient and client-sensitive as possible in
the public service. That's our relation, formal and informal.
MS. COFFIN:
Okay, interesting.
Do you
know what the rationale was to move the hiring function of government out of the
Public Service Commission and into the Human Resource Secretariat? I realize
this was a number of years ago. I remember a long, long time ago that they moved
everything to the Public Service Commission because they wanted that
independence and they wanted to have that one funnel, and now that seems that
had been reversed. So a little sense of the rationale and perhaps how that's
working.
MS. CHAFE:
The rationale came as a
realignment of human resource
services throughout the departments. And within a department, we often had
fragmentations by one department over another and more centralized services in
all HR functions. In the past, it was employee relations, classification, pay,
compensation, research, benefits, insurance. It's only natural that the staffing
function belonged with those like activities. So the operational aspect was
taken from the PSC and placed with HR as more of a composite service. When you
hire someone and they leave the service, they would be tended to by a central
group.
We
retained oversight over how staffing actions were done. We continue to audit,
review and investigate. We also take complaints when staffing actions are
considered by candidates not to be fair. And we still work very closely with HR
in the world of staffing. We also ensure the quality of the people who are doing
the recruitment must meet our standards.
So,
long range, you can also take your staffing people and develop them into more
full HR people. To staff in isolation of understanding employee relations,
labour contacts or how classification works is pretty well putting staffing in
an isolated spot when it could be a more composite service.
MS. COFFIN:
Right.
Can you
initiate your own, I guess, investigations?
MS. CHAFE:
Yes, we can do spot audits
and we do.
MS. COFFIN:
Okay, excellent. That's nice to know.
MS. CHAFE:
Often we do get complaints
from people who have applied, that
would like to have us look at a file, and we do.
MS. COFFIN:
Right. So a hire can
initiate an investigation or you can initiate one on your own.
MS. CHAFE:
Yes.
MS. COFFIN:
Okay, that gives me a little
bit of reassurance as well.
Thank
you.
CHAIR:
Before we continue, I just
got a message from the people downstairs. They ask that when people respond to
the questions that you speak into the mic. They're having a hard time getting
the message recorded.
No
questions from the government Members, no?
So I'll
move to –
MR. WAKEHAM:
I'd just like to ask a
couple of more questions, if I could?
CHAIR:
Yes.
MR. WAKEHAM:
I was wondering if we could
get a copy of that MC, if that's possible. Also, who's responsible for hiring
contract positions, or temporary contract positions, or temporary workers? Is it
the Public Service Commission or is it the individual departments?
MS. CHAFE:
It would depend on how they're being hired. You can come in as a consultant.
There are also some requirements under procurement that you would go to tender
on certain pieces of work.
There
is, under the union contract with NAPE, the capacity to bring in short-term
temporary to meet specific needs and then, within a specified time period, that
position must be advertised or the person must vacate. But we do not do that
activity, it's done through HRS. And they would have more detailed information
on how that's handled and what it is.
MR. WAKEHAM:
Yes, I'm quite familiar with
the 13-weekers that were used all the time. So that program is still available
to be used?
MS. CHAFE:
Yes. Again, that's an HRS
activity, not a PSC one.
MR. WAKEHAM:
Okay, thank you.
CHAIR:
Any further questions?
MS. COFFIN:
Good here, thank you.
CHAIR:
Okay, seeing no further
questions, shall 1.1.01 carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
All those against, 'nay.'
Carried.
On
motion, Public Service Commission, total head, carried.
CHAIR:
We'll move to the
Consolidated Fund Services now.
We'll
take a couple of minutes, just to allow the new staff to come in.
We're
going to start the Estimates for the Consolidated Fund Services. Since we have
some new staff here, we're going to ask people to introduce themselves, again.
So, we'll just start over here.
MS. HANRAHAN:
Denise Hanrahan, Deputy Minister of Finance.
MS. HEFFERNAN:
Theresa Heffernan, Assistant Deputy Minister, Finance.
MS. BOLAND:
Gail Boland, Assistant Deputy Minister, Finance.
MS. JEWER:
Michelle Jewer, Comptroller General, Finance.
MS. ELLIOTT:
Susan Elliott, Executive Assistant to the Minister.
MR. BUDGELL:
Marc Budgell, Director of Communications, Finance.
CHAIR
: Okay, I'll ask the Members to introduce themselves as well.
MS. COFFIN:
Alison Coffin, MHA St. John's East - Quidi Vidi.
MR. WAKEHAM:
Tony Wakeham, MHA, Stephenville - Port au Port.
MS. DRODGE:
Megan Drodge, Researcher with the Official Opposition Caucus.
MS. STOODLEY:
Sarah Stoodley, MHA, Mt. Scio.
MR. CROCKER:
Steve Crocker, MHA, Carbonear - Trinity - Bay de Verde.
MR. BYRNE:
Gerry Byrne, Corner Brook District.
CHAIR:
I'm Scott Reid, I'm the Member for St. George's - Humber.
I'll
open it up with the Minister of Finance for opening comments.
MR. OSBORNE:
Thank you.
Just a
couple of brief remarks regarding Finance and CFS. The Department of Finance
provides strategic leadership to all government departments in the development
of fiscal, financial, statistical and economic policy. We do this by providing
timely analysis and advice to departments and agencies and Cabinet committees,
such as Treasury Board.
The
staff in my department oversee the management and control of the province's
finances to ensure that public funds are used appropriately. In some instances,
we also provide centralized and corporate shared services to other departments,
such as economic and project specific analysis, statistical services, internal
audits, select accounts receivable and collections, and the administration of
such things as invoice payment processing and support and maintenance of
government's financial management systems.
Each
year the department is responsible for preparing Public Accounts, the
consolidated budget, the supplementary cash estimates book, The Economy document
that is distributed on budget day, the fall fiscal update and the economic
review.
There
are four main divisions of the Department of Finance: the Financial Planning and
Benefits Administration division, led by Theresa Heffernan; the Economic, Fiscal
and Statistics division, led by Craig Martin; the Policy, Planning and Corporate
Services division, led by Gail Boland, this is a new division that was created
this past year and will provide key support to the deputy minister's office, as
well as leadership on department-wide administration and operational improvement
initiatives; and the Comptroller General's office, led by Michelle Jewer. All
four of these divisions report into the deputy minister and myself. Each of
these branches also has sub-functions that feed into them, such as Treasury
Board staff and the minister's staff.
The
role of the Treasury Board is particularly important. As the President of
Treasury Board, I meet regularly with Treasury Board support staff, our deputy
and a complement of ministers to make key financial decisions affecting all
areas of government. Through Treasury Board, we've kept departments accountable
for their fiscal targets, cost-savings measures and expenditure control.
With
that, we will open it up for questions.
CHAIR:
Okay.
Before
I call the headings, I just want to remind people, when they're responding to
identify themselves and to speak up and speak into the mic.
CLERK:
1.1.01.
CHAIR:
Shall 1.1.01 carry?
MR. WAKEHAM:
Thank you, Mr. Chair.
First,
again, I'll start off with some general questions.
The
last time the province borrowed in the US market was 1993. Can the minister give
his thoughts on US borrowing? Are there plans to borrow outside the Canadian
market this year?
MR. OSBORNE:
We generally try to stay in
the domestic market, unless conditions are very favourable. Generally, when you
borrow outside you also have to incorporate mechanisms, such as hedging. We've
seen, for example, a couple of years ago, where Nalcor had lost money on
hedging. Generally, it balances out, but there are times that you'll win and
times that you'll lose.
Market
conditions on the domestic market have been favourable to us since we've started
borrowing again in 2016 and we continuously monitor foreign markets to determine
whether it's advantageous, but we've remained in the domestic market.
MR. WAKEHAM:
Okay, thank you.
How
much was borrowed last year?
MR. OSBORNE:
$1.45 billion, I believe it
was.
OFFICIAL:
$1.425 billion.
MR. OSBORNE:
$1.425 billion.
MR. WAKEHAM:
Okay.
How
much borrowing is planned for this year?
MR. OSBORNE:
$1.2 billion.
MR. WAKEHAM:
$1.2 billion.
What is
the impact of changing the interest rate of the debt-servicing cost?
MR. OSBORNE:
I'll let my official speak a
little more to that.
I guess
in a minority government, the bond rating agencies often look to whether or not
governments will remain on fiscal target in minority situations. So, there is
some concern, I guess, within the department as to how the bond-rating agencies
will view the performance of the minority situation, whether there are
additional pressures on government to expand its spending. A change in bond
ratings could result in millions of dollars additional borrowing costs on an
annual basis.
MR. WAKEHAM:
Okay, thank you.
Can you
provide the borrowing forecast for the next five years?
MS. HANRAHAN:
Yeah, that would be on our investor website.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
I don't have it right in front of me but I can get it for you. I think it's part
of our investor website, I believe.
MR. WAKEHAM:
Right there, okay.
MS. HANRAHAN:
Yeah.
MR. WAKEHAM:
Thank you very much.
We have
a banking syndicate who helps sell our debt. Who are the current members and who
are the lead members?
MS. HANRAHAN:
We share leads amongst our syndicate depending on the issues, so they kind of
take turns. They would be RBC, TD, CIBC, Bank of Montreal, Bank of Nova Scotia
and National Bank.
MR. WAKEHAM:
I have some more questions. On the Temporary Borrowings, is the line of credit
still set at $200 million?
MS. HANRAHAN:
Yes.
MR. WAKEHAM:
Yes. What is the interest rate on the line of credit?
MS. HANRAHAN:
It's prime less 50 basis points. Right now, that would be about 3.45 per cent.
MR. WAKEHAM:
Okay.
Does
the minister plan to use the line of credit this year?
MR. OSBORNE:
We've put forward, as part of budget, our borrowing requirements for this year.
We are looking at some treasury bills as part of that borrowing strategy. Staff
in the department always monitor in terms of whether we're going to go out with
fives, tens, twenties or whether we go out with treasury bills. In shorter term
borrowing, they'll monitor and evaluate the best course of borrowing, so it's
difficult to say today whether we're going to put fives or tens on the market.
In the next round, they evaluate that in motion.
MR. WAKEHAM:
Was the line of credit used last year?
MS. HANRAHAN:
No.
MR. WAKEHAM:
Do you know what the lines of credit are for the regional health authorities?
MS. HANRAHAN:
I wouldn't have the details in front of me now. I think it varies by RHA, based
on size.
MR. WAKEHAM:
Okay. Thank you.
What is
the current interest rate on the treasury-bill program?
MS. HANRAHAN:
For '18-'19 we would have
realized 1.54 per cent on our 91-day T-bills and about 1.93 on our cash
management bills. When we hold the cash, we would have realized just under 2.5
per cent on our cash balances under our new bank agreement. Our forecast for
next year, for '19-'20, is about 2.2, but that would have built in the
expectation of Bank of Canada changes, which continue to be unknown.
MR. WAKEHAM:
This year I noticed the debt
expense for the T-bill program has increased to $23 million compared to an
actual spend of, I think, $16.5 million last year. Why the increase?
MS. HANRAHAN:
It is a combination of an
increase in size in the T-bill program. Again, this year, we added an extra $15
million to each one of our 91-day terms for an extra $195 million in short-term
cash. Basically, we're utilizing the lower T-bill rate and our overnight rate on
our banking account is higher, so we have increased the size of our T-bill
program.
The
total program would be $1.1 billion, so that would lend more interest expense
here. You'll see the offset in 1.1.05, Temporary Investments, in related
revenue, because you'll pick it up on the other side where I'm realizing it in
overnight balances. We also had a little bit better yields in the prior year,
which is the projected revised a little bit lower than it should have been, but
once again you'll see that offset in related revenue.
MR. WAKEHAM:
Okay, so that's in your
Temporary Investments, that's where we're seeing why last year's – why was last
year's revenue not realized?
MS. HANRAHAN:
I'm sorry, what number?
MR. WAKEHAM:
In 1.1.05, under Temporary
Investments.
MS. HANRAHAN:
Oh, yes.
MR. WAKEHAM:
It was $23 million budgeted
and $17 million actual.
MS. HANRAHAN:
It is a combination. One is
we did a lot of our borrowing later in the year, so we didn't have as high a
cash balance for the first half of the year. Normally, we would spread our
borrowing program over the year, but based on market conditions, it tended to be
in the latter part of the year last year, given spreads. We're trying to
maximize that.
The
other thing is we realized when we did this year's budget that the method by
which we were recording this amount, historically we would have used our ending
cash balance, so what we thought the balance was at the end of the year. That
tends to be a little bit higher than throughout the year, because we're
anticipating April 1 payments, so we tend to keep more cash, but it's not really
indicative. We were noticing in most years the budget was higher than projected
revised. We actually corrected that this year and this is why you will see the
$19.6 million in '19-'20. It's more indicative of a daily average cash balance
calculation versus using an end-of-year balance.
MR. Wakeham:
Is the $19.6 million
number that's there in correlation with what you just talked about under the
treasury bills in terms of the increase in the extra revenue that you were
talking about?
MS. HANRAHAN:
Yes, you would see in that
$19.6 million fundamentally in that amount of the cash balance but, again, these
are projections. It all depends on how the cash flows during the year and what
our outlays are and the timing. A lot of it is timing and rates.
What we
do know is that our overnight cash balance that we get from CIBC – 2.47, just
under 2.5 – usually is significantly better than the cost we incur in those
temporary investments. Even when we issue them – and that's why we've increased
our plan because you end up generating more than it was costing you.
MR. Wakeham:
Okay,
that's it for me.
Thank
you.
CHAIR:
The Member for St. John's
East - Quidi Vidi.
MS. COFFIN:
Thank you.
Okay,
lots of interesting things going on here.
If I
could, let's go to Appendix III in the budget document to start. I noticed under
Crown Corporation and Other Debt we have Housing, Municipal and Other. Can you
give me some details on what other is? I noticed it has been declining over
time. It's page A-3 in the budget document, in Estimates.
MS. HANRAHAN:
I don't have details
specifically in front of me now, but I think we can get that for you.
MS. COFFIN:
Okay.
And
that's Crown Corporation and Other Debt, correct?
MS. HANRAHAN:
Yeah,
$281.7 million in '19?
MS. COFFIN:
Okay, yeah.
MS. HANRAHAN:
Yeah, because this schedule
is at March 31 of '19.
MS. COFFIN:
Right. Yeah, that would be –
MS. HANRAHAN:
Whatever else is in the
consolidated cash that we would've had here, I just don't have it with me.
MS. COFFIN:
Right. Is that net or is
that an absolute?
MS. HANRAHAN:
That should be a gross.
Normally, we would have sinking funds stated if it was netted against it.
MS. COFFIN:
Right.
MS. HANRAHAN:
Unless it was in the
entity's financial statement as a net number, that's the only way it would
(inaudible).
MS. COFFIN:
Okay. That was a bit curious
there.
What
else did I want to ask about now? I'm not quite sure exactly what fits exactly
where, but I did have a number of questions that came out of the Auditor
General's report. Perhaps this is the right time or is it better to go to …?
In the
Auditor General's report, they focus on flexibility, sustainability and
vulnerability. I noticed in a number of occasions that the AG had said that the
fall update did not include information on a variety of different indicators.
Are those available now? I haven't marked them exactly, but there were a number
of times that very pointedly it was this information was not updated, so I can't
make comment on it; this information was not updated, so I can't make comment on
it.
So, I'm
a little curious if that information is available and how it might affect some
of these indicators, because throughout the course of the document they talk
about this is a either upward or downward and deteriorating trend, so that means
we haven't addressed those pieces, even though we're balancing the budget and
we're trying to focus on a balanced budget, but if we remain vulnerable,
inflexible and unsustainable, then a balanced budget is going to be unattainable
perhaps.
So, I'm
just a little curious about those. Do you happen to have that or should I go
through and look specifically for the things that were missing?
MS. HANRAHAN:
We can certainly cross
reference the report to see what the gaps are. The challenge has been the fall
update process and the documents generated are not as deep as budget day
documents, so from a reporting perspective, fall update tends to be
fundamentally an update on the deficit and an economic update. Whereas, budget
day, it's about debt and borrowing and some of the other main supply and those
types of things, but we can certainly go back and cross reference because some
of the indicators may be very easy to do.
MS. COFFIN:
Certainly, and the only
reason I ask is because I'm very familiar with the AG's report and I have not
seen that type of discussion before. So, it implied that the information had
previously been available, and I know sometimes that the timing of these things
are a little bit off because sometimes the Public Accounts come out and then you
have a couple of beats before the AG's report comes out. I know the AG's report
they're trying to move to an earlier date, so that might be what's going on
there, but I think that will be a very important piece to get a more fulsome
picture of the actual state of the finances there. So that would be a bit
helpful.
Let's
see what else. I notice over here, just to give me some sense of what's going on
in terms of sinking funds, I know I can do the references myself, but we have
what I see as only one bond that is coming due right now, or one amount of debt,
and that's the borrowing in 1989/2000, AG, it's payable in US dollars. It's $150
million that is coming there.
Can you
give me some sense of how – I guess, if the sinking fund is available to pay
this off, and certainly the sinking fund says there's nothing there, so that's
going to come out of our general revenue or our borrowing?
OFFICIAL:
What page?
MS. COFFIN:
A-4.
MS. HANRAHAN:
You would be looking at the
$150 million, Series, AG?
MS. COFFIN:
Yes.
MS. HANRAHAN:
Yeah.
The
usage of sinking funds has been up and down over the last 30 years and the
latest trend has been not to tend to use them and then there was a period of
time where we did.
In most
times, it depends on if the issuer required them or if there was some reason for
it, because, generally, the interest rates are so low on the reinvestment of
those sinking funds that I'm paying to borrow it; I'm losing money if I also do
the sinking fund.
In this
particular case, and in fairness for the bulk of the debt even above in Canadian
dollars, there aren't any sinking funds to counteract against that.
MS. COFFIN:
Okay, so the sinking fund
stuff is the few things that I see in the second last column from the right.
MS. HANRAHAN:
In that column, that would
be gross sinking funds.
MS. COFFIN:
Yes. So, there's a
significant difference between the assets that we have and the debt that is
owing, correct?
MS. HANRAHAN:
Yes.
MS. COFFIN:
I noticed that there is a
number of debts that are coming due in rather short order. We're seeing a whole
pile in 2021. A number of borrowings that happened in 2016, 2015 that are very
short-term borrowings. Good job on getting the lower interest rate, which is
great, but I question the feasibility of being able to pay $650 million that is
going to be due in a year and a half or so.
I know
we can only pay debt as debt comes due, because you can't pay this off a little
bit early. That's a common thing that I often have to rebut in the media, but
I'm just a little concerned about our ability to pay because a lot of debt is
coming due in very short order.
MS. HANRAHAN:
I know there was a question
about the out years from a borrowing perspective; all of the maturing debt is
rolled into that. In most cases, we are utilizing current interest rates, and
it's really a save as we roll debt over.
We did
issue some short-term debt, five-year fixed or five-year floating notes, it's a
very small portion of our portfolio. Last year, we issued $1.425 billion, and
some of these would've been in 2016.
In
2016, we were new into the market and we noticed that our spreads were very high
because we hadn't been borrowing for about 10 years.
MS. COFFIN:
Yes.
MS. HANRAHAN:
I suspect back then this was
a cash management issue to try to get some interest rate relief, given that we
hadn't been in the market, but the floating note there, Series, 7E, for example,
would've been very much utilizing that under 2 per cent. We do have the ability
for the floating rate note to lock that in, to flip that over to fixed.
MS. COFFIN:
Good.
MS. HANRAHAN:
We're usually pretty
opportunistic about how we manage that. It is a big part of our cash management,
to constantly look at our maturing debt. Most of our debt in the last few years
has been 10- or 30-year debt, it's been long-term debt.
MS. COFFIN:
Right, which is actually not
a bad idea, given the low interest rate environment that we're in.
MS. HANRAHAN:
Yeah.
MS. COFFIN:
Now, good news on the floating is that the Bank of Canada is looking like there
might be a slowdown in our economy, and we're seeing that international as well.
So good from a borrowing perspective; however, it's probably going to
substantially impact our revenues at this point.
We've
budgeted oil at what this year? Was it $64?
MR. OSBORNE:
Sixty-five.
MS. HANRAHAN:
Sixty-five.
MS. COFFIN:
Sixty-five, and an exchange rate of …?
MS. HANRAHAN:
About 75.
MR. OSBORNE:
Seventy-five.
MS. COFFIN:
Seventy-five. Okay, I haven't checked the exchange rate in a while, but oil is
at $60 and a little bit and trending down at this point. So that's a bit
disconcerting.
What's
the lost revenues for every dollar in a barrel of oil? We lose, what, $22
million, is it?
MS. HANRAHAN:
I think it's slightly less than that.
MR. OSBORNE:
Yes. It's just higher than $20 million.
Oil is
a volatile commodity.
MS. COFFIN:
Yes.
MR. OSBORNE:
So last year we saw oil considerably higher than $75 a barrel; for part of the
year we saw oil at considerably lower than what we budgeted. We'll see months
where oil fluctuates within the month at a wide variance.
We
don't focus on what the price of oil is today, any more than a month ago oil was
considerably higher than what we budgeted. It's on an annual basis. Last year,
even though oil fluctuated from far below what we budgeted to far higher than
what we budgeted, we came out at just better than $71 a barrel. We budgeted $63.
MS. COFFIN:
Yes, all right, that's very reassuring. That $71 was in Canadian dollars or US?
MR. OSBORNE:
US.
MS. COFFIN:
Okay, all right. So that's actually much better than it – now we're going into
this year, we're going to see a decrease in production, as well as this lower
oil price. So what's that going to do to?
MR. OSBORNE:
We've got a 12 per cent increase in production this year?
MS. COFFIN:
Is that what I heard, that it was going to decrease production this year that
Terra Nova is shutting down? So, how is that going to impact our ability to meet
some our targets, or has that already been built in?
MR. OSBORNE:
That's been budgeted in.
MS. COFFIN:
That's been budgeted in. Okay, that's, again, reassuring.
I don't
know if I'm going to fit another question in here. Perhaps, no. I'll pass it
back to you, and then if there are more questions, then perhaps we can come back
to me.
CHAIR:
The Member for Stephenville
- Port au Port.
MR. WAKEHAM:
Okay, where are we now?
The
Interest Subsidy from CMHC, I noticed that there's nothing estimated for '19-'20
– 1.1.06.
CHAIR:
Which heading is that again?
MR. WAKEHAM:
1.1.06.
MS. HANRAHAN:
The mortgage that was there was paid off in '18-'19.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
Therefore, there's no future subsidy. There is a miscode. That revenue actually
should've probably been reflected in 1.1.05, Temporary Investments. It's still
revenue but when we checked it's a miscode.
MR. WAKEHAM:
I was going to ask you why the revenue of $1.8 million.
MS. HANRAHAN:
Why it's so large?
MR. WAKEHAM:
Yeah.
MS. HANRAHAN:
That's why. It's a miscode. It was our CIBC contract; it should have been coded
to 1.1.05. It's still related revenue and it's the same amount.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
It leaves behind a little bit less there but, basically, the mortgage was paid
off.
MR. WAKEHAM:
In 1.3.01 under the Guarantee Fees –
CHAIR:
Just before we move from the – the heading was –
MR. WAKEHAM:
1.3.01.
CHAIR:
I've been giving some flexibility but the heading that was called was 1.1.01.
MR. WAKEHAM:
Okay.
CHAIR:
I'd like to keep it to the 1.1 subheadings at this point. We can come back to
that later if that's the way the Committee would like to proceed. Is that okay?
MR. WAKEHAM:
That's fine, Mr. Chair.
I'll
ask one more question under 1.1 then and that is the mortgage that's been paid
off. What's the status of the asset?
MR. OSBORNE:
CMHC mortgage?
MS. HANRAHAN:
Harbour Lodge. It's the Harbour Lodge facility.
MR. WAKEHAM:
The asset is Harbour Lodge.
MS. HANRAHAN:
Harbour Lodge, Carbonear.
MR. WAKEHAM:
What would be the intent of the use of Harbour Lodge?
MS. HANRAHAN:
My understanding is that the regional health authority was transferring it to
Transportation and Works. I don't have the current status but the anticipation
was either sale, repurpose or demolish, if there's a more recent update than
that.
MR. WAKEHAM:
Okay, thank you.
CHAIR:
Any further questions?
AN HON. MEMBER:
(Inaudible.)
CHAIR:
Okay, we'll call that head
now.
CLERK:
1.1.01.
CHAIR:
Shall 1.1.01 carry?
All
those in favor?
CLERK:
1.1.02.
CHAIR:
Although we just called 1.1.01, I allowed some flexibility and I think we've
dealt with all the subheads under 1.1.01 through to 1.1.06. I'm going to call
those inclusively and we'll just vote those as well, before we move on.
CLERK:
1.1.01 to 1.1.06 inclusive.
CHAIR:
Are those carried?
All
those in favour?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 1.1.01 through 1.1.06 carried.
CHAIR:
We're going to move to
1.2.01.
CLERK:
1.201.
CHAIR:
Are those carried?
Are
there any questions on that heading?
MR. WAKEHAM:
None for me.
CHAIR:
No.
Shall
those carry?
SOME HON. MEMBERS:
Aye.
On
motion, subhead 1.2.01 carried.
CLERK:
1.3.01.
CHAIR:
Okay, we'll call heading
1.3.01.
The
Member for Stephenville - Port au Port.
MR. WAKEHAM:
Thank you, Mr. Chair.
1.3.01;
last year revenue was budgeted at $8.9 million, only $8.6 million was attained.
Can you explain why?
MS. HANRAHAN:
The $8.9 million is a
projection based on the guarantee fees that we would get. Fundamentally, the
variance would relate to Newfoundland and Labrador Hydro. The calculation of the
fees varied through the year, depending on the term of the debt, be it 50 basis
points or 25.
MR. WAKEHAM:
Can the minister provide a
list of which organizations were charged for their guarantees in '18-'19 and how
much was charged to each?
MS. HANRAHAN:
I have it here. There are
two people charged fees: Fogo Island Co-operative Society, their fee would have
been $15,000; and all the remaining fees would relate to Newfoundland and
Labrador Hydro.
MR. WAKEHAM:
Are there any new loan
guarantees being considered by Cabinet?
MR. OSBORNE:
Not at this time.
MR. WAKEHAM:
Okay.
Is
there a list of which loan guarantees were approved and issued last year?
MS. HANRAHAN:
I think you would see a
change; all the loan guarantees are disclosed in Public Accounts. There was a
provincial on land in '17-'18 for Newfoundland and Labrador Hydro of about $600
million. There haven't been any increases since.
MR. WAKEHAM:
I noticed your projection is
to go back up to $8.9 million, even though only $8.6 million. Are you confident
that you will achieve $8.9 million this year?
MS. HANRAHAN:
It's a forecast, again.
Based on that timing of that $600 million that we did in '17-'18, we'll get a
full year now and I think the forecast should be okay.
MR. WAKEHAM:
Okay, thank you.
CHAIR:
Any further questions on that heading?
The
Member for Mount Pearl
- Southlands.
MR. LANE:
Yes, thank you, Mr. Chair, with the leave of my colleagues.
CHAIR:
Yeah, with leave.
AN HON. MEMBER:
Leave.
MR. LANE:
I just have a couple of general questions so I think it will fit in here
somewhere.
Minister, I guess my concern is more around the debt that we have and our
ability to pay that debt. First of all, I'm just wondering, right now I believe
– and correct me if I'm wrong – I think it's somewhere in the neighbourhood of
$1.3 billion a year to service our current debt or somewhere in that
neighbourhood.
I'm
wondering, at what point, if we keep borrowing – we're borrowing again, we've
been borrowing year over year; we're going to borrow another billion-plus this
year. I understand you have a target for 2022, I believe, to attain surplus, but
does anybody have a number? Is there a number out there that says once we reach
this much debt, we're simply not going to be sustainable? We keep hearing about
the fact that the debt is growing, growing, growing and pretty soon we're going
to have to be bailed out by Ottawa.
I'm
just wondering, at what point, at what number – how many years can we continue
borrowing a billion-plus dollars before that becomes a reality for us, or is it
just a myth?
MS. HANRAHAN:
The debt expense for '19-'20 is just over a billion dollars from an accrual
perspective, and it represents about 12 per cent of the total expenditure for
the province. The debt expense is really a by-product of the ability to borrow.
I guess the marker or the calculation will come down to the province's ability
to borrow and the interest rates that it will attract.
We
know, from a spread perspective, we pay more than some other provinces just
based on that. The question is, at what point, from a cash and borrowing
perspective, are you not able to do the other parts of the program? Some of our
cash expenditures are done for infrastructure so it doesn't impact deficit. Some
of the cash is used for different things. There are many mechanisms by which you
can manage your cash, there are lines of credit, there are all kinds of ways. We
have not done a calculation or a fine line in the sand to be able to identify
because it is very much subject to how Newfoundland and Labrador is seen from a
borrowing perspective which is a really wide variety of information, from bond
ratings to expenditure control to revenue generation. So I guess the long and
the short of that is we haven't been able to calculate a particular line in the
sand.
MR. LANE:
Okay, I appreciate that. Obviously, no different from your own personal
situation. At some point in time, nobody is going to lend you money. If we keep
growing the debt year over year over year, it just can't go on indefinitely for
sure. So, with that in mind, I will say to the minister that I support the
attrition plan 100 per cent, zero-based budgeting. Some of the things you've
done is good, as far as I'm concerned at least.
I just
want confirmation, the attrition plan, zero-based budgeting and all those other
measures, are they all applying now to all of the ABCs and institutions like
Memorial University, CNA, and so on? Because I do understand that at one point,
maybe a year or so ago, NLC weren't necessarily on board. I'm just wondering is
everybody now doing their part and following that same template, if you will.
MR. OSBORNE:
We've been getting co-operation from our agencies, boards and commissions. In
December, we introduced legislation into the House that allowed them to share
information with us more freely, without concern for privacy in sharing of that
information. The reason for that information was to enhance that level of
co-operation that we're receiving from the agencies, boards and commissions.
MR. LANE:
Okay, thank you, Minister.
Minister, I don't believe there's a process – you can correct me if I'm wrong. I
know we don't have an Estimates process, per se, for agencies, boards and
commissions. Personally, I'd love to see it where NLC and Newfoundland and
Labrador Housing, we would be able to do the exact same thing that we're doing
here, but that's not happening right now. But do you have that ability? Do you
receive something like this that you would review and ask questions every year
on their budget, like we're doing now, to make sure that they're handling their
affairs properly and spending the money wisely?
MR. OSBORNE:
Yes, the concept of being able to do that is an interesting concept. Probably
something that maybe we should have further discussion on. But yes, departmental
officials do monitor the financial reports of our agencies, boards and
commissions.
MR. LANE:
Okay.
Well,
as I said, Minister, as one MHA, I would certainly support a similar process as
to what we're doing here with those agencies, boards and commissions. Because,
at the end of the day, it's still taxpayers' money that's being spent.
My
final question relates to something that's been put out there by the Leader of
the Official Opposition, this whole idea of taxing Hydro-Québec on their power
generation. I'm just wondering is that something that's being even considered or
looked at, if there's a possibility of doing that. Can you say?
MR. OSBORNE:
That has been looked at for
a considerable period of time. I mean, it's a legal issue. Anything that's said
here is obviously on record in Hansard,
so I think caution in anything that's being said, so as not to jeopardize what
may or may not be available as a legal avenue for the province would be wise for
me.
MR. LANE:
Sure, I understand.
As long
as it's being looked at. Obviously, I'm not a lawyer. I don't know the
background around it, but if there is a way of doing it, I think we should
explore every avenue we can. It was something that I wasn't aware of, but if we
can do it, why not?
That's
all I have for now.
Thank
you.
MR. OSBORNE:
Thank you.
CHAIR:
Any further questions?
MR. WAKEHAM:
Yes, just a follow-up
question.
As a
percentage of expenditure, the 12 per cent that we're currently spending now on
debt servicing, is that the highest it's ever been?
MR. OSBORNE:
Yes, it is. At one point,
Education, I think, in the '70s was the largest spend of any department, and
that was overtaken by Health; Education became the second highest. We're now
looking at debt servicing as the second highest expense. I mean, the province
has borrowed for Nalcor and for other purposes since 2016. Primarily we've
gotten back into borrowing, in a larger way. But I think that's the highest
percentage it's ever been.
MR. WAKEHAM:
And that's the 12 per cent,
that's reflective of this year's thing.
Just to
follow up with my hon. colleague there, in relation to the ABCs, the agencies,
boards and commissions and the reference to the return to surplus, there was
$617 million shown as a reduction in expenditure between now and the return to
surplus in '22-'23. Are the agencies, boards and commissions factored into that
particular number?
MR. OSBORNE:
They are. We've got what looks like a bit of a jump in expenditure this year.
First of all, when you factor in debt servicing, I mean, the cost of debt
servicing continues to increase. That's something that's not entirely within the
control of any Member of this Legislature without – once we get back to surplus
and we can actually start paying on the debt, that's when that will start to
reduce. Any increase in expenditures, or any increase in costs to government,
only adds to the wrong side of the ledger.
This
year, we've got about $130 million included in the budget in fully recoverable
expenses. And $125 million of that is federal money. Where the federal
government has provided funding for a particular purpose to be carried out in
the province, it shows as revenue and it also shows as an expense. So $130
million in total, but $125 million of that is federal.
We've
got $235 million, I believe, we've paid out in severance, which is a one-time
expense. Once severance is completely paid out, we no longer have to pay that.
So while it looks like the ledger is moving that way, some of it is very
explainable, such as the severance payout. Severance will save us $25 million a
year. The actual save is $35 million, but $10 million of it is the cost of
borrowing in order to payout the severance. The real savings is $25 million a
year, but we're still paying the severance out, so it is showing as an expense.
That's
a large chunk of it. A large chunk of it will come from 60 per cent of our
expenditures in terms of public spend is within our agencies, boards and
commissions, so they have to be part of the solution.
MR. WAKEHAM:
The $617 million will include a flattening, if you will, or a reduction in their
expenditures?
MR. OSBORNE:
Well, we're looking for efficiencies, similar to what we found in government. We
continue to work with our agencies, boards and commissions to find those
efficiencies.
MR. WAKEHAM:
Thank you.
CHAIR:
Any further questions under headings 1.3.01 and heading 1.3.02?
No
further questions. Seeing no further questions I'll call heading 1.3.01 and
1.3.02 inclusive.
All in
favour?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 1.3.01 and 1.3.02 carried.
CHAIR:
We'll move to call the next
heading.
Shall
1.4.01 carry?
Are
there any questions on those?
MR. WAKEHAM:
I have a question on 1.4.01.
The Professional Services category, the expenses were budgeted to be $11.2
million but only $6.67 million was required. This year we're estimating $8.7
million. Can the minister explain the variance?
MS. HANRAHAN:
The forecast for '18-'19 of
$11.2 million; we actually realized our fees were a little bit better than we
anticipated. We were able to utilize some of our short-term debt in order to
have some savings on commissions because it's all based on the size of what we
issue and the length of time.
We had
a slightly smaller borrowing program; in '18-'19 we were down to $50 million. Of
course, for budget '19-'20 you'll see it's down from $11.2 million to $8.7
million because the borrowing program is actually smaller than the $1.425; it's
now $1.2. We would have realized some savings as well in there. We've been very
aggressive with trying to manage our fees.
MR. WAKEHAM:
That's why I ask because
it's a $2-million increase. I was wondering if you were borrowing less than you
did the previous year would you be as successful as you were –
MR. OSBORNE:
We're borrowing less than we
projected we'd have to borrow.
MS. HANRAHAN:
It's more in line probably
with budget year over year.
The
challenge, of course, is it's hard to project and so we really reflected the
change in the programs. It's possible next year that we won't get the same
management fees and commissions because, depending on interest rates, we may be
doing all 30-year debt and that's more expensive.
MR. WAKEHAM:
I have one more question.
Last year there was $11 million in revenue and I'm trying to understand how that
occurred.
MS. HANRAHAN:
Depending on the type of
issue we issue, the accounting treatment differs. Under debt expenses, we record
any time we make an issue where there's a discount, and a discount would be
where there's a lower interest rate than market. If it's the reverse, we have to
record it as related revenue.
In
fairness, you need to look at the $11.07 million in conjunction with that $8.89
million to really get the picture of if our bonds have been issued at a discount
or premium. Combined it's about $2.18 million in net savings or revenue, because
premiums occurred more than discounts. So, basically, we got a higher interest
rate than the market rate when they were issued.
MR. WAKEHAM:
Okay, thank you.
1.4.02;
last year there was a very small budget for Transportation and Communications,
$4,500 and the expenditure actually went up to $23,000. You're budgeting $25,000
this year.
MS. HANRAHAN:
When we do our budget, we usually forecast investor relations as one single
amount, almost like one function. You would have seen that budgeted under
Professional Services and repeated again in the following year's budget.
When
the expenses are actually spent, depending on what was spent, they'll be coded
to the correct account. That $23,200 you see there actually relates to investor
relation work, such as travel, that occurred to go visit banks and investors.
That's why you'll see the change overall. We did not spend a significant portion
of that money for a US registration or those other costs.
MR. WAKEHAM:
Who exactly would be
travelling?
MS. HANRAHAN:
Normally, for our investor relations, it's the minister and myself, led by one
of the members of our syndicate.
MR. WAKEHAM:
Another question, under
Professional Services I noticed there was a budget of almost $1.3 million and an
actual expenditure of about $280,000. This year, the budget is back up to almost
$1.3 million again. Can you explain why that would be?
MS. HANRAHAN:
In both budgets, we would be having a nominal amount related specifically to our
borrowing program, including investor relations. We've been keeping a marker in
the last few years to keep the option open with respect to going outside the
domestic market. Our investors see these Estimates, they see that we have an
allocation there with the ability to do that, so a pretty strong message for
them as well.
However, every year we assess it a couple times a year, and if the costs
outweigh the benefit, we don't do it. There are jurisdictions that actually
spend money to go outside because it fits their programs. For us, we're very
cost conscious and if there's not an obvious cost benefit, we don't do it.
The
difference between the two years, you'll notice it's about a $20,000 difference.
We actually have one of our bond raters, DBRS, stopped charging us fees. They
stopped charging all the provinces, so we're reflecting that reduction in cost
there.
MR. WAKEHAM:
Under Transportation, would
the minister's travel be charged there as well?
MS. HANRAHAN:
For Consolidated Fund
Services it is.
MR. WAKEHAM:
Okay. Thank you.
CHAIR:
Any further questions for
headings 1.4.01 and 1.4.02?
MS. COFFIN:
Yes, please; a couple of
quick questions in here.
Let's
go back to the question that we had from the Public Service Commission. We're
over to you now. What is the new definition – you had lots of time to look it
up.
Can you
give me what I hear is the revised or new definition of Professional Services?
MS. HEFFERNAN:
I'm not sure that there is
one.
MS. COFFIN:
Oh, okay. That was something
that I had heard along the way and I thought, well, I had better check on that.
Perhaps
then you can give me just the general definition of Professional Services and
type – I know it's a bit of a catch-all in terms of it is services that we
acquire that are not currently provided in-house or that we need for
time-sensitive reasons or a variety of other reasons. Is there like a general
definition for that particular heading?
MS. HEFFERNAN:
I'm not exactly sure of the
actual definition, but I think from my experience of many years in government,
it has been used for numerous contractual-type engagements, anything from
medical to professional services like actuarial services, maybe some forensic
accountants, those types of things.
MS. COFFIN:
Legal fees, these types of
things. Yeah.
MS. HEFFERNAN:
Yeah.
It's
usually geared towards short-term, project-related-type things or, as you
mentioned, services that are not necessarily available in-house.
MS. COFFIN:
Right. Okay, good.
MS. HANRAHAN:
Every year, we find
instances where somebody's been charging something to a particular account and
they have done it many times, and then, in the course of Public Accounts or some
other audit process, we realize it really should be coded somewhere else. I
suspect that may be what they've encountered.
MS. COFFIN:
Right.
MS. HANRAHAN:
It's usually between
Professional and Purchased Services. It's usually that you've always charged
your actuary here, you should have been charging him over there, and it takes
two budget cycles to kind of get it realigned.
MS. COFFIN:
Yeah, to realign that.
Okay,
so maybe the difference between Professional and Purchased – Purchased Services
would be what versus Professional Services? I'm guessing Professional Services
are those with a professional designation, like a P engineer or your forensic
accountants or legal services or medical services.
Purchased Services, comparably, is …?
MS. HEFFERNAN:
Yeah. That would be a fair
assessment, I guess.
Purchased Services are more in line with when you're acquiring printing services
–
MS. COFFIN:
Right.
MS. HEFFERNAN:
– office rentals, maybe a cleaning service or some contractual work like, I
guess, maintenance and those types of things on buildings or whatever.
MS. COFFIN:
Right, okay.
MS. HEFFERNAN:
On the Professional side, it's probably more along the lines of medical doctors,
the legal profession –
MS. COFFIN:
Right.
MS. HEFFERNAN:
– the actuarials and accountants, that kind of thing.
MS. COFFIN:
Yeah, it's more of an individual service. A service provided by a particular
individual versus Purchased Services would be things that are more tangible
services, like that rental thing.
MS. HEFFERNAN:
Absolutely.
MS. COFFIN:
Okay, that's good, that helps frame a lot of stuff for me.
MS. HEFFERNAN:
Okay.
MS. COFFIN:
Okay, let's get back to something a bit more specific now.
We've
spoken a number of times about the bond-rating agencies. Perhaps you can give me
an overview of a lot of their criteria. I know that fiscal stability is a very
important thing, especially for us to even be able to access the bond markets,
at this point, as well as our bond rating.
Can you
give me a sense of what those criteria are?
MS. HANRAHAN:
They would release annually and sometimes every five years, comprehensive
documents that would fully disclose how they do their bond rating and what they
include. They're all a little bit different; they all do their own kind of
calculations.
I don't
have it right in front of me to read, but from a general perspective, they take
in all aspects of a risk assessment on the province, from the perspective of our
ability to repay, our ability to manage our budget, be it our revenue streams,
our expense streams, our debt levels, as well as long-term forecasts. So long
term for them will be a couple of years.
They
look at the political structure in a province. They look at the demographics.
They look at a very wide range of things. They look at consolidated expenses and
are predominantly focused on financial statements that are consolidated for the
province and the sources of that. They do have in-depth meetings with us to be
able to garner information that may not necessarily be – because it's a
confidential service, so they're always – like any bond rater would be, it's
about they telling people that we're worthy of investing in.
So they
do look at things like liquidity, for example, so our borrowing program is a big
part of our meetings with them. They also look at stability, the ability for
governments to be able to adhere to their budgetary plans, their ability to have
clean audit financial statements and they very much are interested in, from a
very big picture, our economic reports, the independent analysis that goes into
economic projections is a big portion of that.
MS. COFFIN:
Yes.
MS. HANRAHAN:
They tend, as well, to want
to meet with, or have questions about, really large initiatives that would be
going on in the province. For example, Muskrat Falls, oil and gas, those types
of things, and they're also interested in relationships we have with the federal
government or any interprovincial tripartite activities that are going on.
They
usually come with lots of questions and then they disclose to us how they've
judged those, and then we take that. They usually do their own metrics of our
numbers.
MS. COFFIN:
Right.
MS. HANRAHAN:
For example, they don't
amortize capital the way public sector accounting amortizes capital.
MS. COFFIN:
Right.
MS. HANRAHAN:
But because it's the same
process year over year, it's still comparative.
MS. COFFIN:
Right, yeah, so you can
compare each –
MS. HANRAHAN:
Right.
MS. COFFIN:
– bond-rating agency because
they have a standardized process by which they evaluate.
MS. HANRAHAN:
Right.
MS. COFFIN:
Are they available online?
MS. HANRAHAN:
That's how they make their
revenue, so in most cases, it's a subscription service.
MS. COFFIN:
Right.
MS. HANRAHAN:
They're very, very conscious
of what is shared.
MS. COFFIN:
Right.
MS. HANRAHAN:
They usually will do a news
release or some public release.
MS. COFFIN:
I've certainly seen some of
those.
MS. HANRAHAN:
In some cases they don't so
we tend to.
MS. COFFIN:
Right.
MS. HANRAHAN:
But that is their business.
MS. COFFIN:
Right, okay.
I
followed many of these updates and what the bond-rating agency says, just the
very superficial public announcements. Maybe that could be one of my first
subscriptions.
I'm
just wondering, when is the next assessment?
MS. HANRAHAN:
It's around this time of the
year now they would come, once the budget has been through the House. So, right
now, we're targeting meetings for late June, early July. This is the one time of
the year where they always visit us. We would go through in depth with them,
with the three bond raters that we have, at that point in time.
MS. COFFIN:
Is it at all possible for me
to sit in on those meetings?
MR. OSBORNE:
Sorry, no. Many of the
discussions that take place there are proprietary. We get into the business of
the oil companies and so on, so they are very highly confidential discussions.
MS. COFFIN:
Okay, all right. Thank you.
I think
that's my questions on this section. There are more on other sections.
Thank
you very much.
CHAIR:
Any further questions on
those headings?
MR. WAKEHAM:
I just have one comment.
The
minister alluded to the fact that the bond agencies are watching a minority
government to ensure that the stability of the expenditure doesn't increase. I
want to assure the minister that our party will not be increasing the
expenditure of the budget this year. It will not go up.
MR. OSBORNE:
I hope they're reading the
transcripts from this meeting.
MR. WAKEHAM:
That's why I put it out
there.
MR. OSBORNE:
I thank you for that.
MS. HANRAHAN:
We'll send a copy.
MR. OSBORNE:
That is important, Tony, so I appreciate it.
MR. WAKEHAM:
That doesn't mean we're not going to argue about some of these expenditures.
CHAIR:
Any further questions from headings 1.4.01 and 1.4.02?
Seeing
no further questions, I'm going to call that head.
Shall
headings 1.4.01 and 1.4.02 carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 1.4.01 and 1.4.02 carried.
CHAIR:
I think in the interest of
time, we'll call 2.1.01 to 2.1.03 inclusive.
Questions?
MR. WAKEHAM:
Thank you.
Under
2.1.02 is where I'll start. Last year, for '18-'19, $359 million was budgeted
but only $91 million spent in this subheading.
How
much was transferred and spent in other departments and what was the total
spent?
MS. HANRAHAN:
$171 million was transferred. With respect to what was spent, that would be in
all the individual departments in their salary plans, and I don't have that.
MR. WAKEHAM:
Okay.
Can the
minister provide some information on the ending of the severance and the payout
of the severance accumulated, have all the payments been made and for those who
choose to take the payment?
MR. OSBORNE:
Under most of our collective agreements, some of them are a little bit
different, but there are five choices. So, for example, I'll use NAPE as an
example, they could've chosen first, second, third or fourth quarter or they
could've deferred it to a later date in which they could take severance anytime
between the fourth quarter and the time they retire, whatever suited their
financial planning best.
So the
majority of people, I think it was over 70 per cent of individuals, requested
severance payout in the first quarter, was it?
MS. HANRAHAN:
Yeah.
MR. OSBORNE:
It was about 70 per cent. Some others requested it in second, third and fourth
quarter. NAPE is primarily looked after now, with the exception of those who
have requested to defer their payment to a later date, which is a very small
number.
The
Registered Nurses' Union, for example, was just recently ratified. So we're now
making plans with them for the payout of their severance. The teachers have been
ratified; plans are established on their payout. We had about $235 million paid
out last year.
OFFICIAL:
Between that, it was $263 million together.
MR. OSBORNE:
Yeah, so we're up to about $263 million. We're about half way in terms of total
payout.
MR. WAKEHAM:
So do expect that most of that will be paid out in this fiscal year or next
fiscal year?
MR. OSBORNE:
There's a large portion of the budget to be paid out again this fiscal year.
We've still got a couple of smaller bargaining units that we've yet to settle
with but, for the most part, most of the contracts have now been settled. So
yes, the majority of the balance should be paid out this fiscal year, or I guess
as early as the first quarter, maybe into the second quarter of the next fiscal
year, based on the timing worked out with the unions.
MR. WAKEHAM:
Okay, thank you.
Under
2.2.01, Deferred Pension Contributions, can the minister outline when the
payments are made to each pension corporation? Is there an annual payment,
quarterly payment, and on what date are the payments made?
MS. HANRAHAN:
The public sector pension plan is paid quarterly; $47 million a quarter
throughout the year. The Teachers' Pension Plan is paid annually in the fall,
$135 million. It's a one-time payment.
MR. WAKEHAM:
Okay, thank you.
Did you
call 3.1, Mr. Chair?
CHAIR:
No, I didn't. Just 2.1.
MR. WAKEHAM:
Okay, I have no further questions.
Thank
you.
CHAIR:
Okay.
Any
further questions on the 2.1.01 to 2.1.03?
MS. COFFIN:
Yes, please.
CHAIR:
The Member for Signal Hill - Quidi Vidi.
MS. COFFIN:
Okay, let's have a chat about some things here. There has been a move in
government to divest itself of outstanding debt, and that's one of the reasons
why we went to a jointly sponsored public sector pension plan as well as why we
went to the jointly sponsored Teachers' Pension Plan. About three years and
three ministers of Advanced Education, Skills and Labour ago, the university was
directed to move itself towards a jointly sponsored pension plan.
When
last I checked, a reform agreement with a pretty solid arrangement that fairly
mirrors the other arrangements was proposed and brought to government, as both
of the parties had been directed. My understanding is nothing has happened with
that, and I think the reform agreement was proposed September of last year. Can
you tell me what's happening with that? Is government still intending to move to
that? When can we expect to see that happen?
MR. OSBORNE:
We can get further details on that. I know that there was a proposal made. We'd
asked for MUN to revisit some of the items that were proposed at the time. That
file is primarily, as you say, in Advanced Education, Skills and Labour, but we
can seek an update to the extent that it doesn't contravene any issues between
ourselves and MUN, in terms of the information that's put out. It's still a
discussion that's in motion, so I'm …
MS. COFFIN:
My understanding was it was no longer in motion, but brought up solid.
MR. OSBORNE:
Well, we can get you an update to the –
MS. COFFIN:
That would be great.
MR. OSBORNE:
– greatest extent we can provide the details.
MS. COFFIN:
Certainly, yes. I'm fairly sure that both parties had agreed on the reform
agreement, and it was a very balanced approach in there. So I was just wondering
what the problem was. Especially given our debt situation, it would be very
useful to have that taken care of. And given that the markets are decreasing
right now, we're not seeing the same gains that we need, that debt is only going
to grow. So I think that's something that needs to be addressed sooner rather
than later.
Let's
go on. Ex-Gratia and Other Payments - Non-Statutory. Are these the severance
payouts that are going in here? Is this what I'm seeing in here? Okay.
Can I
also get a list of all of the individuals receiving ex gratia payments, or at
least a breakdown of the number of individuals who've been receiving ex gratia
pensions under this section? I know, historically, there has been a great number
of individuals that are in that, but I'd just like to have some sense of the
number of people receiving ex gratia pensions in under that heading, if that's
at all possible, please.
MS. HANRAHAN:
You're speaking specifically to the group under Employee Benefits?
MS. COFFIN:
I'm not sure if it's under Employee Benefits – I assume it's probably not under
Salaries. This is –
MS. HANRAHAN:
So under Salaries would be the big pension payouts.
MS. COFFIN:
The salary payouts. So that would be the Employee Benefits. I assume that's what
it's called.
MS. HANRAHAN:
Right. That's the historical amount there. They're particularly related to past
arbitration awards, there's a group of employees, the (inaudible) from 1976.
There was a redundancy payout in 1992. Those are the people that are still
receiving some form of ex gratia pension that would be that $2,347,700 figure.
MS. COFFIN:
Okay. That's good to know.
Let's
see here: Pre-1949 Special Acts, how many people are still getting those? I
imagine the dependants are perhaps well-aged at this point, if this was pre-'49?
MS. HANRAHAN:
Last year there were 43, and at the end of March of '19 there are 36, so our
budget for next year is based on 36 individuals.
MS. COFFIN:
There's 36 individuals, and
they're getting $37,000? Oh my.
Okay.
What else do I see in here? I think that might be it for this section. You say
the Deferred Pension Contributions are the payouts to make the pension plan
whole. So that's to fund the unfunded liability?
MS. HANRAHAN:
This would be the promissory notes that were part of reform.
MS. COFFIN:
Okay. So in that, does this also capture the deferred pension plan, or does that
sit under the public sector pension or Provident10 now, is that where
that sits?
MS. HANRAHAN:
Deferred pension plan? This
$323 million is specifically one payment to Provident10 and one
payment to teachers. Just based on (inaudible).
MS. COFFIN:
Well, that's the only things
that are –
MS. HANRAHAN:
That's all that's in there.
MS. COFFIN:
Okay. So once upon a time, I
was a member of government, so I do have a deferred pension, but that rests in
Provident10 now.
MS. HANRAHAN:
So that would probably be sitting on government's liabilities, as pension owing.
MS. COFFIN:
Right, yeah.
So this
is not over here, this is contributions, yeah. I'm just wondering where that is
resting now –
MS. HANRAHAN:
That's it.
MS. COFFIN:
– so I assume that rests
with Provident10 at that point. As a –
MS. HANRAHAN:
As a deferred pensioner would be part of the plan.
MS. COFFIN:
– in the deferred pension
section, yeah.
Currently under review now. I must have been bad, or good – one or the other.
That's
all of my questions under that section.
Thank
you very much.
CHAIR:
Any further questions under
sections 2.1.01 to 2.1.03 inclusive?
MR. WAKEHAM:
I have one more question,
Mr. Chair.
Just
curious, are all of the ABCs under the same rules with regard to paying out the
severance and the elimination of severance? I know the health authorities are,
but what about some of the other ABCs? Has there been any …?
MR. OSBORNE:
Anybody whose part of our
unions, all of them with the exception – Nalcor is slightly different, I think,
aren't they?
OFFICIAL:
Yeah, I think it would be specific to – be it their collective agreement or if
they were management, non-bargaining – the legislation that was put in related
to that. It would be whatever agreements were struck, but from what I understand
they were relatively the same from a processing perspective.
MR. OSBORNE:
The RNC had their severance paid out a number of years ago, as did Newfoundland
and Labrador Housing.
MR. WAKEHAM:
What about CNA and the Liquor Corporation?
MR. OSBORNE:
Yeah, they would be under the most recent round of negotiations. They'd be
included in that.
MR. WAKEHAM:
Nalcor?
MS. HANRAHAN:
I think they had different arrangements.
MR. OSBORNE:
Yeah, Nalcor has a different arrangement. It's not quite severance. They're set
up with a different arrangement. Everybody else would be similar to government,
but Nalcor has a slightly different arrangement.
MR. WAKEHAM:
What about the university?
MR. OSBORNE:
Pardon me?
MR. WAKEHAM:
What about MUN, the university?
MS. HANRAHAN:
As they do their collective bargaining, that's part of that.
MR. OSBORNE:
Yeah, they do their own collective bargaining. We don't do MUN's collective
bargaining.
MR. WAKEHAM:
Would they be doing the same payout for severance?
MR. OSBORNE:
Well, I don't want to speak to their bargaining process, but I would hope so.
MR. WAKEHAM:
Okay. Thank you.
CHAIR:
Any further questions?
The
Member for Mount Pearl - Southlands.
MR. LANE:
Yes, Mr. Chair.
It
doesn't actually fall under here but I forgot to ask. It just jogged my memory
when I heard the word. Just wondering, Minister, when it comes to the whole
concept of zero-based budgeting, attrition and all the other measures that have
been taken in core government and ABCs to try to cut expenditures, does that
apply to Nalcor?
MR. OSBORNE:
We are working with Nalcor now and they've been co-operating with government. In
fact, Finance officials and Nalcor officials have had ongoing discussions.
MR. LANE:
Okay, thank you.
That's
good to hear.
CHAIR:
No further questions?
Seeing
no further questions, I'm going to call the headings for 2.1.01 to 2.1.03
inclusive.
All
those in favour?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 2.1.01 through 2.1.03 carried.
CHAIR:
I think we'll do the next
two headings together in the interest of time and allow Members flexibility to
use their full time.
I'm
going to call 2.2.01 and heading 3.1.01 together.
Okay,
questions?
MR. WAKEHAM:
I'll move to section 3.1.01.
I think I already asked a question on 2.2.01.
Under
3.1.01, the Contingency, can the minister provide a list of what transfers were
made out of the contingency fund in '18-'19?
MR. OSBORNE:
Yes, we made – to children's
care program under CSSD, to the integrated services management system
implementation under CSSD and judges' salary tribunal. I believe that was it.
Yeah, that's the three.
MR. WAKEHAM:
Do we know how much was paid
out to each?
MR. OSBORNE:
Yes, it was $12.3 million
for the children in care program, $3 million for the integrated services
management and $3.1 million to the judges' salary tribunal – or as a result of
the salary tribunal.
MR. WAKEHAM:
Is there any public
reporting of these expenditures?
MR. OSBORNE:
Yeah, I mean, it's –
MR. WAKEHAM:
Where would it show up?
MS. HANRAHAN:
It is here as part of the Estimates.
MR. WAKEHAM:
Yeah, I just didn't see any
revised expenditure there.
MS. HANRAHAN:
No, you would see them in the individual departments.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
For example, if you look at CSSD, you'll notice projected revised would have
been that much higher than their budget. This is where the money would have come
from.
MR. WAKEHAM:
Okay, that's what I was
looking for.
One
more question: What type of approval is needed to spend this money?
MR. OSBORNE:
It's Treasury Board, so it
would go to Treasury Board for approval before money is transferred. Then it
becomes a matter of public record through the Estimates program.
MR. WAKEHAM:
Thank you.
The
financial assistance pots of money, which are voted on in Finance, can be
transferred to other departments. This contingency fund can be transferred to
other departments. Why are they in different headings?
MS. HANRAHAN:
The financial assistance – the header in Finance is Capital and Current. It's
specific to particular initiatives. The contingency reserve is under
Consolidated Fund Services because of the process for approval and the way the
allocation is made. That's where the two of them have historically sat. The
contingency fund is not necessarily a Finance pot per se, it's more considered
for the entire consolidated fund.
MR. WAKEHAM:
Besides in the Estimates, is there any public reporting as transferring happens?
Is there anything publicly announced when transfers take place?
MS. HANRAHAN:
No. No different than it would be for financial assistance or any other
transfers that are provided for under the
Supply Act.
MR. WAKEHAM:
Thank you. I'm good.
CHAIR:
Any further questions under those headings?
MS. COFFIN:
I'm just curious. I guess nothing happened last year which is why we didn't
spend the $22 million?
MS. HANRAHAN:
The money shows up where it is transferred to.
MS. COFFIN:
Right.
MS. HANRAHAN:
It looks dropped here as zero. You would've seen the expenditures increase in
CSSD and Justice and Public Safety in their projected revised.
MS. COFFIN:
The CSSD and Public Safety?
MS. HANRAHAN:
Yeah. So CSSD got two of the transfers and Justice got the other one. You'll see
it in those programs.
MS. COFFIN:
Okay, in revised.
What
was the spending for exactly? I'm sorry, I wasn't at CSSD, I was at Justice but
there's been a lot going on lately.
MS. HANRAHAN:
For CSSD, there was $12.3 million transferred related to the children in care
program. That's the one in CSSD, you would've seen a large increase in their
projected revised expenditures related to that program. This is where the cash
came from.
MS. COFFIN:
Right.
MS. HANRAHAN:
The integrated service management is a system implementation. There was $3
million that you would've seen in one of their accounts in CSSD. For Justice you
would've seen this specifically in, I would suspect, their court appropriations
related to the salary tribunal which had a retroactive salary portion as well as
a new face.
MS. COFFIN:
That's the judges' one?
MS. HANRAHAN:
The judges –
MS. COFFIN:
Right.
MS. HANRAHAN:
– or civil, depending on where it landed in the Justice Estimates, $3.1 million.
MS. COFFIN:
And that was a one time?
MS. HANRAHAN:
Yeah, that was the tribunal. There's another tribunal then, every –
MS. COFFIN:
That's happening again soon. I think the judges got (inaudible) didn't they?
MS. HANRAHAN:
I think they're trying to get in the early part of the four years as opposed to
the end of the four years.
MS. COFFIN:
Yeah, which would make sense that way.
MS. HANRAHAN:
Well, the retro grows.
MS. COFFIN:
It does, yeah.
The
CSSD, the children in care: that was a one-time expense as well, or was that
something that we expect to be ongoing?
MS. HANRAHAN:
I wouldn't know the CSSD program.
MS. COFFIN:
Yeah, of course, because once that happened, they take over whatever the
expenses are.
MS. HANRAHAN:
It's the management of their program but our contingency is an annual fund, the
transfers go once. This account resets back to $22 million. If they need what is
beyond their Estimates, then they would go through this process again.
MS. COFFIN:
All right, good.
Thank
you very much.
CHAIR:
The Member for Mount Pearl - Southlands.
MR. LANE:
Could you explain to me the
$3.1 million for the judges' tribunal? Somewhere along the way I must've missed
that one.
I'm
just trying to understand. What exactly was the tribunal about and how far does
it date back? We're talking retroactive, so I'm trying to understand what
exactly that was for.
MS. HANRAHAN:
The compensation for judges
is decided based on a tribunal that's struck. I think it happens every four
years.
I think
I'll get Theresa to correct me if I'm wrong, having come from Justice.
MS. HEFFERNAN:
Three or four.
MS. HANRAHAN:
Three or four, yeah,
depending on what they strike.
Usually, what happens, by the time they strike the tribunal, the tribunal does
their evaluation of compensation for judges and makes their ruling and comes to
government with that ruling or recommendation and there's a decision. That's how
long it takes, ultimately, for the value to flow, if there is any, to the
judges.
MR. LANE:
Yes.
MS. HANRAHAN:
In this particular case, I
believe it went to court and it took a bit longer in this process, and because
they used up, I think, several years going through tribunal, their intention is
to strike the tribunal again, earlier. I believe that's the process that they're
going through right now.
MR. LANE:
When did this tribunal, if
you will, or this review start? Do you know?
MS. HANRAHAN:
I've got to be honest, I
think Justice would know more than we would.
MR. LANE:
What I'm trying to get at, I
guess, is that in 2016, when the budget came down and we had the levy and all
the other harsh measures that were taken, and public servants across the
province were all expected to take zero, zero, zero and zero. I'm trying to
understand why judges would be, sort of, placed out there and give them $3.1
million, albeit some of it is retroactive and so on. I'm just trying to
understand what makes them special.
I have
nothing against judges, don't get me wrong, and what they do, but they're still
paid from the public purse like everybody else in this room and in the public
service. I'm just wondering why they would've received special treatment and
gotten a raise when the rest of the public servants were expected to take zero,
and the people were expected to pay more taxes?
MR. OSBORNE:
You may recall back in 2016,
the Minister of Justice actually stood in the House and we put forward – I think
it was legislation or was it a motion, I can't recall, regarding the judges'
salaries. They challenged it; it went to a tribunal, and they were – so, I mean,
it's –
MR. LANE:
Okay. So the government did challenge that?
MR. OSBORNE:
Yeah.
MR. LANE:
Okay, I don't recall that. I'm sure if you're saying it happened, it did, but
there are so many things, of course, that go on in this House. I'm only one
person; I'm not (inaudible) –
MR. OSBORNE:
Yeah, we tried to impose the zeros; they challenged it, and the tribunal
overruled.
MR. LANE:
Okay, so you guys actually did challenge it?
OFFICIAL:
Yes.
MR. LANE:
Well, I'm glad to hear that.
Anyway,
okay, thank you, that's all I have.
CHAIR:
(Inaudible.)
MR. WAKEHAM:
No, all good.
CHAIR:
All good, okay.
You're
good?
AN HON. MEMBER:
Yeah.
CHAIR:
Okay.
Seeing
no further questions on these two headings. I'm going to call heading 2.2.01 and
heading 3.1.01.
All
those in favour?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 2.2.01 and 3.1.01 carried.
CHAIR:
Shall the total carry?
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, Consolidated Fund Services, total heads, carried.
CHAIR:
Okay, I think we'll take a quick break, a five-minute break. We'll be back at
11:21 a.m.
Recess
CHAIR:
Okay, we're going to proceed
with the Estimates for the Department of Finance.
We'll
call the first heading, and then we'll allow the minister to have some opening
comments. I'm going to call headings 1.1.01 through to 1.2.03, inclusive.
Does
the minister have any opening comments?
MR. OSBORNE:
Thank you.
The
comments that I made earlier reflected Finance and the Consolidated Fund. We've
got the same staff here exactly, so we'll just carry on with questions.
CHAIR:
We'll start with questions
on those headings.
MR. WAKEHAM:
I got a few general questions, first, before we actually get into the section.
Generally speaking, throughout the subheadings, there are allocations for Office
Supplies. How is the budget for the Office Supplies calculated? Is there a quote
per person figure, or is it based on previous year's expenditures?
MS. HANRAHAN:
When we did zero based, we would have looked at per person in some regards, but
it depends on the nature of the work. So, for example, budget division uses a
significant amount of paper. If we used a per person, they wouldn't have
sufficient money. There are other groups where there might be 30 people in a
group processing on Topsail Road, they don't print anything. So we kind of do it
that way.
A
couple of years ago, we consolidated most of our expenses under departmental
operations in an effort to be able to play off a little bit when some divisions
need more, some need less. Every year it gives us a chance to squeeze that
little bit more out.
MR. WAKEHAM:
How many employees are in
the Department of Finance? How many of these are permanent, temporary, full time
and part time?
MS. HANRAHAN:
We have about 250 people. I think we have three positions – two people and a
vacancy – that operate outside of the St. John's area, those are tax people that
work in particular regions.
The
split, I think, would be based on the published salary plan, as probably a good
indication, that the majority of our staff would be permanent. We don't really
have part time. We have a little bit of seasonal as it relates to processing at
year end or Public Accounts. We may bring some clerks in for the six or eight
weeks of keying that we need to get through year end.
MR. WAKEHAM:
Do you have any vacant positions right now?
MS. HANRAHAN:
We always have vacant positions based on the nature of the type of work that we
do. We have several shops in Finance that are entry level positions, clerk IIIs,
accounting clerk IIs, those types of things. So, every day it varies.
Part of
the reason for that is we tend to have to utilize staff and move them in order
to make sure that work still gets done. So, if we have a vacancy, for example,
in our document scanning process, I can't pay invoices. So we often have to find
other people, and we temporarily assign them to those spots.
At any
point in time, from a turnover perspective, we seem to be around 10 per cent
vacancy, and most cases it's because it takes us some time to get competitions
completed, particularly public, big general calls that we would use for clerking
staff.
MR. WAKEHAM:
But the intent would be to fill the positions?
MS. HANRAHAN:
Yeah, fundamentally, when the department went through flatter, leaner, we
seriously reduced significantly our management and non-bargaining staff. With
respect to our bargaining unit staff, it's been processing, fundamentally, and
over time we've been reducing those. The exception has been when we moved in the
Student Loan Corporation we would've increased our complement as a result of
moving in that team.
MR. WAKEHAM:
What was the final cost of the Independent Tax Review Committee?
MR. OSBORNE:
We'll get that for you.
MS. HANRAHAN:
We'll have to get that.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
It spanned two fiscal years.
MR. WAKEHAM:
Okay.
OFFICIAL:
(Inaudible.)
MS. HANRAHAN:
It was, because that was the allocation each year.
MR. OSBORNE:
Don't quote me, but I think it was $175,000, but we'll get you the exact number.
MR. WAKEHAM:
Okay.
In the
Estimates over the last couple of years, there was discussion about an indirect
tax review to capture HST, which hadn't been recorded. Is it still ongoing or is
it finished?
MS. HANRAHAN:
It is finished. The intention of the review was to identify processes where HST
wasn't captured in invoices, so it's kind of imbedded tax.
MR. WAKEHAM:
Yeah.
MS. HANRAHAN:
Once the review was completed on a group, they changed the process to capture
the HST on a go-forward, so it really is a point in time. All the groups that
would've been part of that, as well as other groups such as Newfoundland and
Labrador Housing, changed their processing then to capture that tax on a
go-forward.
MR. WAKEHAM:
Was that process carried out
in the ABCs?
MS. HANRAHAN:
I know it was done for
Housing; I'm unsure where else it was done, but we can check to let you know.
MR. WAKEHAM:
Okay.
In last
year's Estimates meeting there was a discussion about consultant contracts. Over
the past 12 months, has spending on consultants increased, decreased, both
government-wide and in the department?
MS. HANRAHAN:
I wouldn't necessarily have
the information for all the government departments, so it would be specific to
them, but I can speak to Finance. We tend to have professional contracts for our
actuarial work and our particular pension system work. That tends to be,
fundamentally, the only consultants, as such, that Finance engages, generally,
with the exception, of course, of the McKinsey project, which would have been
coded to Finance.
MR. WAKEHAM:
Okay.
Under
pension reform – again, I think this might have been brought up earlier – it's
my understanding that the public service and teachers' pensions are now moved to
the appropriate pension corporation. What involvement does the department now
have with respect to these two pensions?
MS. HANRAHAN:
Pensioner payroll is
processed by the Human Resource Secretariat, so they would be in a better
position to discuss that. My understanding is they're working through
transitions in order to move those pensioner payrolls out to those particular
corporations in order for them to do that and to utilize those systems when they
go through there.
MR. WAKEHAM:
Okay, we can ask that
tomorrow.
One
more question here. Is there any reform plan for the Uniformed Services Pension
fund?
MS. HANRAHAN:
They would be the last, I
guess, fund that would be under the pooled pension fund that's not managed by
either the Management Commission, which is the case for MHAs, or the judges,
which is a tribunal. So, they would be the last group that could be considered
for pension reform.
MR. WAKEHAM:
But it is on the table?
MS. HANRAHAN:
I guess that's government's
decision.
MR. OSBORNE:
Yeah. I mean, we'd like to
see that with as many groups as possible, obviously. With the public service and
with teachers, for example, and the ongoing discussions with MUN, it was jointly
agreed by the unions and government, in terms of the public service and the
teachers. As I said, we're still working with MUN.
MR. WAKEHAM:
Right.
MR. OSBORNE:
It would have to be a
collaborative approach with the Uniformed Services, as well.
MR. WAKEHAM:
Okay. Thank you.
It's
been about seven months now since the implementation of the new carbon pricing
mechanism, carbon tax on gasoline and the industrial emission systems. Has there
been any analysis done by the Economics Branch of the department on the impact
of these changes to the provincial economy?
MR. MARTIN:
At this point we haven't performed any additional analysis from what we did at
the outset. However, it's still fairly early days at this point in time in terms
of the impacts from the actual carbon pricing perspective.
MR. WAKEHAM:
Do you intend to do that
analysis?
MR. MARTIN:
Likely we will be doing that analysis. It's likely we will have to do parts of
that in order to report back to the federal government on those pieces.
MR. WAKEHAM:
Okay, thank you.
Last
year in the Estimates, there was discussion about the P-Card program. Officials
noted that the more the P-Card becomes mandatory, the more efficient the system
can become. What's the status now on making that program mandatory?
MS. HANRAHAN:
We continue to implement
P-Cards everywhere that we can.
We have
increased the usage across most all departments, and I think direction has been
given from a procurement perspective to use it as the primary method. Depending
on the vendor there is a challenge sometimes, but it's a very small number of
them.
We are
finding as well that as you spread out the usage of the P-Card, our work and
diligence from a compliance and audit perspective grows as well and so we're
trying to balance those together.
MR. WAKEHAM:
That was my next question,
actually.
What is
the impact of the P-Card program on staffing levels?
MS. HANRAHAN:
At this point we're still in
the midst of working through what the P-Card really means. The P-Card, from a
processing perspective from paying the invoices, has allowed us to realize and
probably retain, in some cases, some vacancies.
For
departments, there is more rigour from a document perspective because everything
is before they – it's really just the usage of the cash. We are finding as well
that we need sufficient resources in order to make sure that it's audited
appropriately.
It is a
different way of operating for people, to have a card in their pocket, and so
we've done a lot of audit work and compliance work around that. It really kind
of switched, in some regards, but we have been realizing a slow change from a
processing perspective, particularly as we work through electronic funds,
scanning documents and other things like that.
MR. WAKEHAM:
At the end of the day, do
you think you'll have less requirements for staffing, or is it looking like it's
actually going to cost you more for staffing because of the audit function?
MS. HANRAHAN:
I think it will net to being
less. I would think that the work we need to put in at the beginning of the
implementation will reduce overtime as well, as people are trained.
I think
the other thing that's happening as departments look for efficiencies, they'll
change how they purchase. You may only have two people do it for the whole
department whereas P-Card makes it very easy for everybody to purchase. From an
efficiency perspective, we may see that change so we're still working through
that piece.
MR. WAKEHAM:
Under 1.1.01, Minister's Office, Salaries, in '18-'19, $194,000 was budgeted,
$236,000 spent. Can the minister explain the difference?
MR. OSBORNE:
My staff have been with me for a significant number of years, so part of it
would obviously be vacation. I think there was a step progression in '18-'19,
there's another step progression in the next fiscal year. Part of it was
temporary staff hired during budgeting and so on.
MR. WAKEHAM:
Comparing the budget from '18-'19 to '19-'20, there is an increase in the budget
by approximately $40,800. The Salaries details show that a new position has been
added. Can we have an explanation as to what that might be?
MR. OSBORNE:
The same one? Yeah, that's the temporary position that I just mentioned.
MR. WAKEHAM:
Oh, so it's still on. I thought temporary was something just temporary. How long
is temporary?
MR. OSBORNE:
Well, we brought somebody on last year, particularly around budget time. I think
we'll see the same thing this year. Inquiries from other Members and between
departments was lacking because of the additional workload at budget time.
MR. WAKEHAM:
The actual function of the person is to coordinate with departments?
MR. OSBORNE:
No, the actual function was we brought somebody in on a temporary capacity as
constituency assistant. The longer term staff member that's with us moved into a
ministerial liaison position to help with inquiries from Members of the House
and members from other departments. It's similar to what's happened in previous
administrations and in other departments where there is an additional staff
member in the busier departments to deal with inquiries.
MR. WAKEHAM:
Under 1.2.01, the Salaries again. In '18-'19 Salaries were over budget by
$210,900. Can you give me an explanation for that?
MS. HANRAHAN:
That would've been termination and related costs for our retiring Comptroller
General and a secretary to an ADM.
MR. WAKEHAM:
Again, for '19-'20 they're actually showing executive salaries being decreased
by $136,500. Is this a result of restructuring or changes?
MS. HANRAHAN:
When we made the addition of a branch for policy – so the staff in policy now
are moved over to Departmental Operations. You'll see that the money was just
transferred here to there.
MR. WAKEHAM:
Okay, so one's down, one's up.
MS. HANRAHAN:
Right.
MR. WAKEHAM:
Okay.
I guess
I better stop right now, because I'm about to run out of time.
Thank
you, Mr. Chair.
CHAIR:
Further questions?
The
Member for St. John's East - Quidi Vidi.
MS. COFFIN:
Okay, let's start with the larger question of attrition and how that's being
managed within the department. I noticed there are a couple of instances where
'18-'19 is slightly higher than '19-'20, but in most cases, salary costs have
gone up. Can you explain how that aligns with the attrition model?
MS. HANRAHAN:
We had a net increase this year because we took in the portions of the Student
Loan Corporation that moved from AESL. We would've taken in 14 of those people.
The attrition targets would've been out of our base budgets, and so they'd be
fully realized in that '19-'20 as well.
We were
able to achieve those through looking at some efficiencies, particularly as it
relates to processing, those types of things. We ended up seeing a net increase
because you're seeing that addition of a new unit come in.
MS. COFFIN:
Right, okay. That explains an awful lot.
MS. HANRAHAN:
It's not a comparative.
MS. COFFIN:
Yeah. I know attrition is a big thing for us, so I wanted to say: How did all
these things align?
MS. HANRAHAN:
Yeah.
MS. COFFIN:
Totally fair, right? Totally fair. Let's see here. Professional Services under
Departmental Operations, so 1.2.02; a big spike in Professional Services there.
That's page 36. I'm just curious what the other, almost $1 million, was for?
MS. HANRAHAN:
That would've been the McKinsey contract.
MS. COFFIN:
Oh right, of course. The revenue associated with the province here, provincial
revenue, what's that all about? How are we getting revenue in from the
Comptroller General? I'm just pulling something out of the heading there, that's
all.
MS. HANRAHAN:
That would be good.
MS. COFFIN:
Wouldn't that be great? You're delighted over there.
MS. HANRAHAN:
That would be recoveries that we would realize through some of the work we do
through our statistical group and we work with other groups and we do surveys or
economic research. So those are actually recoveries for work where we would
charge them back our costs.
MS. COFFIN:
So this is Newfoundland Stats Agency?
MS. HANRAHAN:
It would include Newfoundland Stats, yes.
MS. COFFIN:
What else would it include?
MS. HANRAHAN:
It includes your Economic branch too?
MR. MARTIN:
It would also include the Economic branch. We will do the economic forecast for
the City of St. John's. We do pieces of work for Hydro –
MS. COFFIN:
I'm can't quite hear you.
MR. MARTIN:
Sorry.
MS. COFFIN:
Hydro in the City of St. John's?
MR. MARTIN:
We do the economic forecast for the City of St. John's, through that group. We
also do forecasting for Hydro as well in terms of economic impacts and such.
MS. COFFIN:
Right.
MR. MARTIN:
And then it's also the statistical group because they'll do work for other
entities and it's on cost- recovery basis.
MS. COFFIN:
Well done on that. So they also use the Community Accounts Committee – Accounts
Committee sits with the Newfoundland Statistics Agency or is that in the
Economic branch?
MR. MARTIN:
The Stats Agency and the Economic division are all in the same branch.
MS. COFFIN:
Yes.
MR. MARTIN:
And the Community Accounts itself sits within the Stats Agency, but it's really
populated by both groups. Information flows back and forth between the groups as
required.
MS. COFFIN:
Right. Yes, I'm quite familiar with it and it's an excellent, excellent tool. I
don't know if anyone else in this meeting has used it, but I certainly used it
on a number of occasions. So I often direct community groups that I speak to, to
that area and I make my classes sit through that stuff. I also read aloud to my
classroom the Auditor General's report. Yeah, funniest professor ever.
So
that's kind of an interesting piece there. It's nice to hear on the revenue
sides. And that grew last year? Yeah, so you went up by almost $200,000, so good
job on that.
MR. MARTIN:
And again, it depends on what projects come to us in any given year in terms of
people coming to us seeking to have work done. Again, it's primarily on a
cost-recovery basis.
MS. COFFIN:
Right. I'm going to direct more people over to you because I've talked to a
number of people and especially now in this role I do speak to a lot of
community agencies and a lot community groups and a lot of groups in general. So
that would be an excellent function that I will certainly share. So maybe that
will actually get us some more staff. How cool would that be?
Government Personnel Costs, 1.3.01, is that where we're finding the Student Loan
Corp?
MS. HANRAHAN:
No, (inaudible) Student Loan Corp would've came into Departmental Operations,
under 1.2.02. That's where you'll see that salary increase there. Government
Personnel Costs is fundamentally the employer portion of benefits for the
service. So EI, CPP and pension, those types of things is under 1.3.01,
Government Personnel.
MS. COFFIN:
It is 1.3.01, and under Salaries? Help me through that now.
MS. HANRAHAN:
This is related specifically to a particular salary adjustments that would be
related in there. For example, we did have a settlement payment that was several
years old, so that payment you're seeing there of $1.3 million directly relates
to that particular settlement payment. Generally, the Salaries money here is
transferred out to departments if they need it for a particular adjustment that
they may come across from that perspective. Collective bargaining-specific
settlements, for example, the tribunal or if there was something like that that
came from an arbitration or something like that and we needed to transfer it,
that's where we would take it.
MS. COFFIN:
Okay, so in the budget, we say we had $5.8 million – so '18-'19, there was $5.8
million there – only $1.3 million was used?
MS. HANRAHAN:
No, only $1.3 million would have been charged to this account. Some of those
funds potentially could have been transferred, not unlike contingency or some of
those accounts, because the expense shows up where we sent it to.
MS. COFFIN:
Right. So that's why this is kind of hard to track.
MS. HANRAHAN:
It's hard to follow.
MS. COFFIN:
Because you say the money comes in here, but it shows up elsewhere, so if we're
matching Estimates – and I've tried to do this, match Estimates to the Public
Accounts. Yeah, makes me fun at parties, I'm telling you.
Okay,
and then the employee benefits, that's your CPP, your EI, workers' comp falls
into that, as well, and that's apportioned out according to department.
MS. HANRAHAN:
All of that is charged to this one account on behalf of all of government.
MS. COFFIN:
Right.
MS. HANRAHAN:
Their salaries would be there, but their benefits would all come into this pot
here as well.
MS. COFFIN:
Okay, interesting.
Has
there been an adjustment? Certainly, this is an overarching thing, now. As I've
been watching salaries, and some are going down over the years as we get the
attrition models and stuff like that, and I know that we're not getting annual
increases because we're fixed at zero per cent for four years, but people are
getting step increases unless they're topped or they're red circled. I guess
that's being captured in the change in salaries as well? The attrition would
drop down the numbers, but then the step increases would bring it up a little
bit. Is that correct?
MS. HANRAHAN:
Departments would operate in a salary envelope, so if they had step increases,
they have to fund it from their envelope. Same with attrition targets, they
would fund it from their envelope. For this particular account here, which is
almost like an output for all of those salary plans, what you're seeing in a
change of a year over year has to do with any change in rates that are being
charged for employer portion.
For
'19-'20, we have the CPP enhancement that is starting. That's adding extra
expense to us because of the way the CPP enhancement program now will roll out
for the next few years to increase CPP contributions. That is offset by savings
we're seeing. As departments do attrition, they have less staff so we have less
in (inaudible) accounts. So it's kind of you're seeing one offset the other in
that account.
MS. COFFIN:
Right. When you're looking
at big numbers like this, there's often a lot going on to give you what that
change was, so I would like to get some sense of, well, this is the up, this is
the down, this is how things are moving around.
Are we
going on to two or are we still on the ones?
CHAIR:
We'll stick to the ones for
now.
MS. COFFIN:
Okay, sticking to the ones.
CHAIR:
Yeah.
MS. COFFIN:
Let's go over to some
general overall questions.
In the
Estimates of Transportation and Works we were asking about asset management and
the sale of government assets and we were asked to ask you guys – good job on
that, thank you. You guys can have that out after.
Can we
have an update on the sale of assets and how that's going?
MS. HANRAHAN:
We've been working on an asset management protocol which would help departments
and entities to assess their assets and to ascertain whether they need to retain
it as it is, they can repurpose it, whether we can sell it, those types of
things. That's been going on now for the past while.
We've
had particular connections with Transportation and Works, specifically, to some
of their infrastructure, as well as some other departments related to specific
piece infrastructure that they have.
MS. COFFIN:
Right.
MS. HANRAHAN:
We have used, basically, our capital listing of assets that we would use under
Public Accounts, which is just over $4 billion, made up of thousands and
thousands of lines and shared those with departments, and are working through
that process in order to bring it back to give Treasury Board an update on where
we are to.
In most
cases, things have changed. If departments, for example, sold a building, a
vessel, or aircraft or whatever they might have, we would update it. A lot of
those assets are things that may be smaller in value as well, not necessarily
all big in value.
So this
is the reason why we have been focused on asking people can they repurpose those
types of things. It does go hand in hand with the intention to reduce lease
footprint, to consolidate vehicle management, because those vehicles would be in
that assets, as well as looking at assets like Crown lands or those types of
things on the books. So the process is ongoing.
MS. COFFIN:
Okay, excellent.
All
right, thank you very much.
I think
my time is expired, but I have more, maybe we'll save it for the next time.
CHAIR:
Okay.
I
originally called headings 1.1.01 to 1.2.03, but we've had some questions asked
of heading 1.3.01. So, I'm going to open that up to other Members as well so we
can be consistent.
The
Member for Stephenville - Port au Port.
MR. WAKEHAM:
Thank you.
I want
to go back to 1.2.02, again, the Salaries detail, salary expenditures for
'18-'19 were down significantly, $15.2 million versus $16.7 million budgeted.
What
was the reason for that reduction?
MS. HANRAHAN:
There are a couple of things
happening; it's about the 10 per cent impact, so give or take positions vacant.
About
half of our staff complement is in the Office of Comptroller General. They have
a lot of entry-level positions and they turn very frequently. So people will
come in on public competitions and very quickly be able to get other positions,
so we tend to see a lot of vacancies, and it takes us time, then, to backfill
them. There are such a large quantity between our processing units and our tax
administration units that it takes a big portion of those people, that they're
always moving and it's why we sometimes have to bring in short-term staff to get
through year end, those type of things.
So, we
would've been working though that, as well as any other hiring for our
Professional Services people: our accountants, fundamentally, our economists or
statisticians. Sometimes those are a real challenge and people tend to move. So,
for us, that's part of that.
We put
a real concerted effort in the last few months of the year to start to do more
public competitions to be able to get more lists of people that are eligible
that potentially we can take in order to reduce any other cost that we'd have in
there.
MR. WAKEHAM:
That's a significant amount
of money that it's reduced by and so it would equate to, I would think, a
significant number of positions. I'm wondering if there's a significant impact
on the operations of the division if you can have that many vacancies through
the course of the year, because you still, at the end of the year, despite your
use of temporaries or whatever, wound up with the savings of $1.5 million, and
on your expenditure, less spent.
So how
does all that equate out into the operation of the division in terms of its
effectiveness? If you are working with $1.5 million less in staffing, why the
need to replace?
MS. HANRAHAN:
What we would've encountered
is, there are a lot of teams in Finance doing very specific types of work. For
example, we have four or five people that are doing scanning of documents. When
there's a vacancy or when there's a person moved, that team would pick it up.
It's
not our preference to have them vacant. We've pushed very hard to try to get our
competitions completed sooner, but we're finding we have a lot of competitions
and only so much capacity to be able to get them filled.
I think
it is fair to say that it does have an impact on operations. We're fortunate
enough to be able to try to manage staff, but it does result in, on occasion,
backlogs from a processing perspective, for paying our invoices or our taxes.
This
particular expenditure is about 240 people, if I've dropped about 10 per cent
you would think that equates to give or take 24 positions, but it would've been
spread over multiple division. So, a division that was six people may have felt
that they were four or five people for periods of time.
The
other issue we were encountering in some cases I guess would be normal sick
leave management, those types of things. We've had a bit of a change in the
department in the last year with the new Comptroller General, a new ADM for
Financial Planning and Benefits and a new ADM for Policy, and all of that
impacts the ability to be pretty nimble for managing this. So, I think this is a
one-off that we realized as we worked through some of that change.
MR. WAKEHAM:
Again, I'm struggling to
understand how the efficiency of the department has been compromised by the lack
of staff. Is it a significant difference in terms of some of the things you
mentioned, paying your invoices on time and those type of things, because $1.5
million is a lot of money when it comes to number of positions? I understand
they're spread out over a large department and such, but is there a need then –
again, I have to ask the question, is there a need to replace all of the $1.5
million positions or has that been looked at differently?
Can you
explain that, because I noticed the budget is gone up again in '19-'20. Now, I
know some of that is due to the influx of another division, but I'm just curious
to understand the actual – it would appear to be a significant number of
positions.
MS. HANRAHAN:
We managed through the
competitions. It was difficult because of the amount of vacancies we would have.
So we'll continue to work through that. We would have seen the increase with the
Student Loan Corporation, for example, but in some cases you do the best that
you have.
From a
need perspective, we are currently going through a review of the departments now
to figure out where we should be putting work to, and if there are efficiencies
that we realize, for example, the Student Loan Corporation. There were 14 people
that came over, merged in with our collections.
If, at
the end of the day, we realize that we don't need all 14, then – and that would
certainly be some of that drop balance because some of them would have came over
vacant as well, then we would drop salaries in the following year. So, some of
that increase is Student Loan, but we can't really tell yet if I can drop the
money.
We also
found that we needed to move some money from here over to pensions, as we're
right-sizing the pension function, because that's the one group that's kind of
outside this group here.
MR. WAKEHAM:
Right. So the increase is
significant; a portion of the increase is for the people that have moved –
MS. HANRAHAN:
And it would've been policy.
MR. WAKEHAM:
– people that have moved in.
MS. HANRAHAN:
Yeah, so it would have been Student Loan Corporation, which was $600,000,
$700,000, approximately.
MR. WAKEHAM:
Yeah.
MS. HANRAHAN:
There was another hundred-odd that would've came from Policy.
MR. WAKEHAM:
Right.
MS. HANRAHAN:
That's all part of that increase, but I think when you factor that out, it's not
$16.7 million because some of that (inaudible).
MR. WAKEHAM:
So maybe tomorrow – a heads
up – I'll be asking HRS how they could be more efficient at getting you your
staff that you need. Maybe I can ask that question tomorrow.
MS. HANRAHAN:
I'll just move this way.
MR. WAKEHAM:
I don't know –
MS. HANRAHAN:
Thank you.
MR. WAKEHAM:
I'd like to move on to
Professional Services. I noticed that in '18-'19, the Professional Service
budget was $268,000, it went to $1.2 million, and I think you mentioned earlier
about a report that had been prepared.
Can we
get a list of each of the professional services which accounts for this
particular expenditure, the $1.231 million?
MS. HANRAHAN:
Yeah, we can provide that. Like I said, the million was related to the McKinsey
(inaudible).
MR. WAKEHAM:
Okay.
Again,
I think the revenue question was asked already about how that was achieved.
Under
1.3.01, under the Employee Benefits, can the minister please provide some
information on the Employee Benefits of what's included here?
MS. HANRAHAN:
We can give you a breakdown if you wish, separately, with respect to the
contributions. Specifically, it would be: Canada Pension Plan, our group health
and life premiums, HAPSET costs and EI, as they related down through that
expense, if that's what you'd like, the details in a table?
MR. WAKEHAM:
Yeah. Okay. That would be
all of government, wouldn't it?
MS. HANRAHAN:
It's all of government, yeah.
MR. WAKEHAM:
Yeah.
MS. HANRAHAN:
So when we see CPP enhancements, we add that in based on our base calculations
for that fund.
MR. WAKEHAM:
How many employees would
that – any idea?
MS. HANRAHAN:
Good question, I'd have to take it away.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
We just see pots of $20 million for EI, and $20 million for CPP.
MR. WAKEHAM:
Okay.
The
reason it's going up, is it because of increases in those particular areas, or
salary increases?
MS. HANRAHAN:
It's a net change. The CPP enhancement, we know the incremental cost for next
year is about $1.1 million. But we have savings of about a half a million
directly related to the fact that it's a smaller service. So when people take
their attrition targets and they shrink their salary costs, we pick up the
savings and the benefits on the other side.
MR. WAKEHAM:
Okay, thank you.
One
last quick question under the Salaries. How much of the 2018-2019 budget was
transferred out to other departments, and can you provide a list of how much was
transferred to each department?
MS. HANRAHAN:
Yes, we can bring that back for you.
MR. WAKEHAM:
Thank you.
CHAIR:
Any further questions on
headings 1.1.01 to 1.3.01?
MS. COFFIN:
I have a general question, but I can save that for the next section and we can
just pass this one. That's fine.
CHAIR:
The Member for Mount Pearl -
Southlands.
MR. LANE:
Yes, I have just a couple of very quick questions, hopefully.
Do you
do any analysis government-wide on overtime? I am just wondering is that
something that you look at. Because that's something I've certainly heard from
people on numerous occasions about the fact that there's twice as much money
spent on overtime than if you had to hire a person, and the number of issues
that create overtime. So I'm just wondering is that something that gets analyzed
in any way to determine if we're spending too much on overtime and looking at
the causes for that and trying to correct it.
MS. HANRAHAN:
The Office of the Comptroller General does prepare reports where they assess
overtime. Historically, it's been related to what payouts have been. I think
they're looking now at what's been earned. Because, in a lot of cases, it's
related to collective bargaining agreements that stipulate when overtime would
trigger or different things like that. But they fundamentally focus on core
government.
MR. LANE:
On core government, okay.
It's
fine to analyze and say here's how much overtime that we're paying out, but
there's no initiative, per se, to go to departments and say you need to look at
what is causing all this overtime and what are you going to do to try to cut
that overtime. Are there any initiatives in the spirit of saving money like
we're doing with attrition and all those other measures? Is overtime something
that's on the radar for government to try to address?
MR. OSBORNE:
There are two areas. One is core government and one is the agencies, boards and
commissions. Within core government, Transportation and Works is one of the
areas where we see a fair bit of overtime. Most of the departments are not an
issue. The ferry services, you see a fair bit of overtime. The ferry services is
because of, in large part, the collective agreement and the number of shift
changes and so on that are permitted. So I mean, there are reasons that are very
difficult to address unless you see a change in the collective agreement. That
particular collective agreement is still outstanding, by the way.
When
you look at snow plow operators and so on, it depends on weather conditions to a
certain degree. That's, in large part, uncontrollable. If you look at Eastern
Health or any of the health authorities, for example, it is something –for
example, with the nurses, in their collective agreement, we put in some measures
to try and focus on why there's overtime. Of course, staffing review is part of
that. There are some additional positions that we focused on to try and evaluate
where we can find better efficiencies and better scheduling in that regard as
well. So it's something we're very aware of, we're cognizant of, and trying to
address it.
MR. LANE:
Thank you, Minister. That's
it.
CHAIR:
Seeing there are no further questions, I'll call those headings now.
Shall
headings 1.1.01 to 1.3.01 inclusive carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
All those against, 'nay.'
Carried.
On
motion, subheads 1.1.01 through 1.3.01 carried.
CHAIR:
We're going to move on to
the next section. Again, in the interest of time, I'm going to call a number of
these headings and you'll have the flexibility to move between them.
I'm
going to call headings 2.1.01 to 2.1.03.
Questions?
MR. WAKEHAM:
So 2.1.01, Pensions Administration, Salaries, this year the Salaries have
increased to $661,600. It's an increase of approximately $168,000. Are there
positions being added here, or why the increase?
MS. HANRAHAN:
Pensions for the last several years has been going through the transition of the
reform. So, staff have been going out into the corporations being hired, so
coming out of pensions proper, say, in government, or moving into HRS for
pension or payroll, depending on the work that's going on there. So we've seen a
lot of fluctuations between the budget allocations and what they've actually
used and that type of thing.
What we
found in this year's – and it's also impacting our ability to charge back to the
funds. So we're finally getting to the point now, I think, where we're really
able to define what work government needs to do, from a fund perspective. Be it
from investing and the work related to the Pooled Pension Fund, or to the work
that we need to support the two sponsor bodies.
From
our salary plan perspective, we move money in here, it's more of a right sizing
as we work through the salary plan. Particularly with respect to the resources
we need to support what's left in government for pensions, and it's taken us
several years to kind of even figure out what that is. But we're hopeful that
'19-'20 we should be kind of out of that now.
MR. WAKEHAM:
So again, is it new position or a –?
MS. HANRAHAN:
No, it's not new positions because the division itself would've, at any point in
time, had 50 positions in it. But we would've had vacancies, as we were trying
to ascertain whether we needed the work. So in some cases now, we're filling
positions we may not have filled in two years, as we work through that
transition. And those people took jobs with the corporation for that. So we're
trying to get comfortable.
We're
also trying to figure out what we really need to pay for versus what the corps
can pay for. And that's an ongoing discussion we've had for several years with
the two corporations about what they're willing to pay for from a service versus
what we need from a financial statement, from an oversight, but we are finding
that the sponsor bodies, for example, was work that we really didn't put our
finger on when we did reform, that do require support from government because
that's our stewardship on those pension plans, and we can't just outsource it to
the corporations, and it's just taken some time to get there.
MR. WAKEHAM:
Okay, thank you.
Under
Professional Services, last year you budgeted $179,800 and spent $110,500. This
year the budget is actually being decreased to $81,600. We see a savings in last
year and another planned decrease this year. Can you explain how these savings
will be achieved?
MS. HANRAHAN:
So we actually had lower actuarial costs related to our Pooled Pension Fund
members, so that's uniformed service, House of Assembly and the judges. And for
next year, we're actually anticipating, as we work through that maturity, we
won't need to maintain and do the same level of work that we had to do before.
So we've actually cut the budgets there, related specifically to the actuarial
work and the pension system; we were maintaining a particular pension system. As
they take on payroll now we'll be able to change some of that. Like I said, the
salary money may now become a salary versus a professional contract as we work
through this.
Pensions has been a real evolution for multiple years. We're hoping we're to the
end of it as we work through that work.
MR. WAKEHAM:
Under Revenue - Provincial,
again, there was a nice bonus revenue of a little over $500,000 there attained
in '18-'19. Can you tell us how that money was attained?
MS. HANRAHAN:
We would have gone back to
our pension corps to reimburse for the severance payouts, because historically
staff that worked on pensions would've been charged to the funds.
MR. WAKEHAM:
Right.
MS. HANRAHAN:
Those severance payouts we
would've recaptured against those pension funds as well. This is earned
benefits.
MR. WAKEHAM:
2.1.02, Financial
Assistance, the Grants and Subsidies: Was any money transferred to other
departments? Can we get a list of those transfers made out for '18-'19?
MS. HANRAHAN:
I'll confirm for you to be
sure, but I believe there was only $1.6 million transferred. That would've been
a million dollars to fund the McKinsey project and about $600,000 given to
Executive Council for Muskrat Falls oversight and shared services.
MR. WAKEHAM:
Again, the $24.3 million
budgeted for this year, how did we come up with that amount?
MS. HANRAHAN:
There's usually a base
budget in Financial Assistance, depending on need. That goes for a variety of,
be it, collective bargaining or reviews, those types of things.
It's
fundamentally sometimes a change as opposed to zero based from that perspective.
Fundamentally, that $24.3 million budget, $10 million of that directly relates
to the Little Bay Islands relocation payouts, as an estimate. We would've put
that in there as well, if you need that.
As
well, there's anticipated expenses related to the post-secondary review which is
going to straddle a couple of fiscal years, shared services and the need for
consulting advice or systems work for there, the legislative reviews, any of
those types of things that have been ongoing now and any other strategic reviews
or priorities. If the funds aren't spent or transferred, then they'll be dropped
in this activity.
MR. WAKEHAM:
The single biggest increase,
I guess, over the previous year's budget is to deal with the Little Bay Islands
and the $10 million there.
MS. HANRAHAN:
Little Bay Islands. Yeah.
MR. WAKEHAM:
Okay.
Under
2.1.03, Financial Assistance, under Loans, Advances and Investments, can you
explain what the $8.16 million was spent on? Was any money transferred to other
departments?
MS. HANRAHAN:
That is the last amount
available under the Corner Brook Pulp and Paper $110 million loan. It was not
flowed in '18-'19, and it's anticipated to be given to Corner Brook Pulp and
Paper in '19-'20.
MR. WAKEHAM:
Okay.
The
revenue that's showing there, the provincial – where does this revenue come from
and what would account for the variance in the revenue?
MS. HANRAHAN:
It's directly related to the
interest on that loan, as well as they made a principal repayment during the
year. The cash flow, with respect to the amount of interest that's earned, would
change over time, based on the balance that was owing and the terms of that
loan.
MR. WAKEHAM:
There's a significant
increase projected for '19-'20 of $11.4 million compared to an actual of $6.7
million?
MS. HANRAHAN:
Yeah. That would be as per
terms of the agreement for when the interest is due to be earned. So that's us
recording that in accordance with the assumption that the entire loan would be
let as well.
MR. WAKEHAM:
What is the balance on their
loan?
MS. HANRAHAN:
Today, it's $101.8 million
of the $110 million, so it's a difference between this vote and the $110
million.
MR. WAKEHAM:
What's the current interest
rate you're charging?
MS. HANRAHAN:
I'll have to get that back
to you. I don't have that in front of me, I don't think.
MR. WAKEHAM:
Okay.
From an
earlier comment, you said that Corner Brook Pulp and Paper are making payments
on the capital as well as on the interest?
MS. HANRAHAN:
Yes.
MR. WAKEHAM:
Okay.
CHAIR:
Further questions?
The
Member for St. John's East - Quidi Vidi.
MS. COFFIN:
Thank you.
A
general question that I said I'd ask: How is the audit of the Vale transfer
pricing going?
MS. HANRAHAN:
We don't normally disclose
the names of taxpayers, so our auto processes would routinely happen. Then, as
they're concluded, you would see them flow through tax revenues or mining tax
revenues, but that particular audit is complete.
MS. COFFIN:
It is complete? When was it
completed?
MS. HANRAHAN:
It would've been last fiscal
year.
MS. COFFIN:
So we should see some tax
revenue changes as a result of that?
MS. HANRAHAN:
You would've seen it in that
set of Estimates.
MS. COFFIN:
Where would I find that?
That would be in last year's Estimates that I would've seen that?
MS. HANRAHAN:
I believe it's last year's. We'll confirm for you.
MS. COFFIN:
That'd be great, thank you.
MS. HANRAHAN:
But you would see it in the
schedules at the front of the Estimates book. It would be specifically outlined
under Statement II. You would see a jump there with respect to either Mining Tax
or Other, I think that's how I recall we did it.
MS. COFFIN:
I see Mining Tax goes from
$67,000 to $74,000 there.
MS. HANRAHAN:
In fairness, it would've
been the prior year, and you may have seen it as Other revenue because we don't
disclose the names of tax filers.
MS. COFFIN:
Right. I see Mining Tax and
Royalties there going from $67,000 to $74,000.
MS. HANRAHAN:
Yeah, so (inaudible).
MS. COFFIN:
So it's the Other Provincial
Sources as Other, but that dropped off substantially.
MS. HANRAHAN:
No, it's the prior Estimates
book, last year's.
MS. COFFIN:
Right, yes, of course.
MS. HANRAHAN:
Right?
MS. COFFIN:
Of course.
MS. HANRAHAN:
I think you'll see it there
as Other because there are very few tax filers.
MS. COFFIN:
So that would be the $195,000 there?
I see
under Other Provincial Sources, the line right above that is Other, so that's
that $195,000 and then it drops back to $55,000.
MS. HANRAHAN:
Yeah.
MS. COFFIN:
Yeah, that's it? Okay,
excellent, that's nice to know.
I guess
there's another question, I'm not sure if it's most appropriate to ask here or
if it's in a different department. When can we expect to see the dividends
return to us from Nalcor?
MS. HANRAHAN:
We would have recorded in our consolidated statement the revenue streams we
would've expected in '19-'20.
MS. COFFIN:
Yes.
MS. HANRAHAN:
I believe the dividend stream starts in the next fiscal, but Natural Resources
would have the details on transactions for Nalcor.
MS. COFFIN:
I think that's Thursday
morning, so excellent.
MS. HANRAHAN:
Okay.
MS. COFFIN:
Yeah, I'll look forward to
that. Awesome. Thank you very much.
I think
that's all my questions on this section.
Thank
you.
CHAIR:
Any further questions?
MR. LANE:
One quick question.
I'm
just wondering, I should know this, I'm sure, but someone asked me and I wasn't
100 per cent. On the carbon tax, does that go to the federal government or does
it go to us and then we spend it on environmentally sustainable programs, or
does it go to the feds and they give us money that we spend? How does that work?
MS. HANRAHAN:
It's our revenue stream.
MR. LANE:
It goes into our revenue?
MS. HANRAHAN:
You'll see it in our revenue.
MR. LANE:
It's earmarked for certain
things, or is it just general …?
MS. HANRAHAN:
It's in our general revenue.
MR. LANE:
In your general revenue
fund. Okay. Perfect.
MS. HANRAHAN:
You'll see it called Carbon Tax as a revenue line.
MR. LANE:
Okay.
MS. HANRAHAN:
Under Statement II in the Estimates book, that'll be the cash. I'm not sure if
it's there for accrual. Yeah, it's there for accrual too, under schedule 1 under
the speech statements.
AN HON. MEMBER:
Statement I or Statement II?
MS. HANRAHAN:
Statement I, you'll see the accrual number there, Carbon Tax under taxation
provincial. See it there? Yeah. But you'll also see it in the Estimates book
under the cash statements, yeah.
AN HON. MEMBER:
(Inaudible.)
MS. HANRAHAN:
Okay.
MR. OSBORNE:
You'll see revenue come in, regardless of where it's from, as going into general
revenue. Any decisions, then, whether it's charging stations for electric
vehicles or whether it's home efficiency program or efficiency programs for
government buildings or whatever the case may be, you'll just see those in the
line departments as an expenditure there. There's no line connecting what comes
in as revenue to say this is – it comes in as general revenue.
MR. LANE:
Does that mean, then, that there's no actual requirement? Like that $66 million,
I know what you're saying, there's no actual line, but is there a requirement
under the agreement with the federal government that if you take in $66 million,
that $66 million has to be spent on green initiatives?
MR. OSBORNE:
There are targets to reduce greenhouse gas emissions, so there are a number of
initiatives in a couple of departments to achieve that. The expenditures for
those initiatives you would find in those departments.
MR. LANE:
Okay, thank you.
CHAIR:
Okay, no further –
MR. WAKEHAM:
Just in summary, Mr. Chair, I noticed that we have two rather large contingency
funds. I guess there is a $24 million one here, and then earlier today we talked
about a $22-million contingency fund under financial – are they both able to be
transferred around?
MS. HANRAHAN:
The Financial Assistance current account pot that's under Finance is more
related to things that we know are coming. The value might be a little bit off,
so we'll tend to keep the money in this pot, and if the department can't absorb
it or if they need it, then they will come to Finance, in a submission through
Treasury Board, and they'll transfer it out.
The
contingency pot is more about things that are unforeseen or unknown or are not
easily measured well. For example, disaster assistance, that type of thing.
Rather than appropriating the money out into a department, it sits under
Consolidated Fund Services because it's harder to get at, for a lack of another
way of putting it, in order to look at whether you want to use that money to be
able to appropriate. Ultimately, both are able to be moved and are stipulated in
the Supply Act to be transferred.
MR. WAKEHAM:
You did start to give me a breakdown of the $24.3 million. I don't know if I've
captured all of it. I'm wondering if you could provide a breakdown of what
you're estimating to spend out of that $24.3 million. You did mention the $10
million for Bay of Islands and there were some other things.
MS. HANRAHAN:
We can. Most of it, we can give you that.
MR. WAKEHAM:
Based on what the explanation was that time, it seems like you've got that.
MS. HANRAHAN:
Yeah. Because, like I said, we have the post-secondary review that's a million.
So we can bring that back to you.
MR. WAKEHAM:
That would be great.
Thank
you.
MR. OSBORNE:
Tony, we'll provide the amounts that were provided. A decision of the Treasury
Board and of Finance is that instead of putting, for example, Little Bay Islands
in the department where we don't know the exact figures and then the department
has the ability to move it – if they only use $9 million of it, then we've got
more control of whether or not we give them $9 million or $10 million if it sits
in Finance.
If you
put $10 million into a department and $9 million of it goes to Little Bay
Islands, they can use the other $1 million for other purposes. So if we don't
know the exact amount, we'll hold it and send it over as needed.
MR. WAKEHAM:
Right. And that's what I was wondering, why wasn't it in Municipal Affairs. So
you're the gatekeeper of that particular monies and you're not going to let them
have it. Can you spend the money on something else?
MR. OSBORNE:
No.
MS. HANRAHAN:
Nobody.
It's a
transfer that under our Transfer of Funds Policy dictates Treasury Board
approval to even consider moving.
MR. WAKEHAM:
Okay.
MS. HANRAHAN:
So that's why it tends to go to zero, unless somethings is charged there.
MR. WAKEHAM:
One last thing, I wonder, could I get a copy of the minister's binder with the
notes.
MS. HANRAHAN:
I think we have that here. We have copies, yeah.
MR. WAKEHAM:
Thank you.
CHAIR:
Any further questions?
The
Member for Mount Pearl - Southlands.
MR. LANE:
One last quick question. I'm just wondering what would the cost be – I'm sure
you have it. You're talking about removing the tax on automobile insurance in
this budget. What would the cost be if you also removed the home insurance tax?
MR. OSBORNE:
The figure for automobile insurance, I think, is $57 million, and I'll
double-check with Craig Martin. If we were to eliminate tax on all insurances,
it would be approximately $110 million. I'll just double-check – yeah.
MR. LANE:
So an additional $50 million, thereabouts. That's something that is not in this
budget, but I'm assuming as time goes on, if things improve, it's something that
you would obviously be open to.
MR. OSBORNE:
Yeah, so using the balanced approach, what we've indicated is if we're able to
remain on target to return the surplus in '22-'23 and we're able to reduce – for
example, in last year's budget, we didn't feel we could reduce the full amount
of the automobile insurance tax, so we reduced it by 5 per cent over four years.
MR. LANE:
Yeah.
MR. OSBORNE:
In this year's budget, we were able to reduce it and stay on target to return
the surplus. So whether or not we are able to reduce the homeowners' insurance,
for example, next year or maybe we'll reduce 2 per cent of it, who knows? Once
we get closer to budget if we're able to remain on target to return to surplus
and provide relief, we will.
MR. LANE:
Thank you, Minister, for that.
CHAIR:
Seeing no further questions, I'm going to call the vote on those headings.
Shall
headings 2.1.01 to 2.1.03 inclusive carry?
All in
favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, subheads 2.1.01 through 2.1.03 carried.
CHAIR:
Shall the total carry?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Carried.
On
motion, Department of Finance, total heads, carried.
CHAIR:
Shall I report the Estimates
of the Department of Finance carried without amendment?
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
All those against?
Carried.
On
motion, Estimates of the Department of Finance, Consolidated Fund Service and
Public Service Commission carried without amendment.
CHAIR:
I'd just like to thank
everyone, the minister and his officials and the questions. We've had a very
productive morning, I think. So I thank everyone for their co-operation.
We need
a motion to adjourn.
MS. STOODLEY:
So moved.
CHAIR:
The Member for Mount Scio.
All
those in favour, 'aye.'
SOME HON. MEMBERS:
Aye.
CHAIR:
Against?
Carried.
On
motion, the Committee adjourned.