PDF Version


May 8, 2017                                                               GOVERNMENT SERVICES COMMITTEE


Pursuant to Standing Order 68, Scott Reid, MHA for St. George's – Humber, substitutes for Betty Parsley, MHA for Harbour Main.


The Committee met at approximately 6:09 p.m. in the Assembly Chamber.


CHAIR (Edmunds): Okay, let's get started here to go through the Estimates for Finance. I'll first ask the Members of the Government Services Committee to introduce yourselves, starting with the front row.


MR. HUTCHINGS: Good evening, Keith Hutchings, MHA, District of Ferryland.


MS. DRODGE: Megan Drodge, Researcher with the Official Opposition caucus.


MR. FINN: John Finn, District of Stephenville – Port au Port.


MS. MICHAEL: Lorraine Michael, St. John's East – Quidi Vidi.


MR. MORGAN: Ivan Morgan, Researcher, NDP caucus.


MR. REID: Scott Reid, St. George's – Humber.


MR. KING: Neil King, District of Bonavista.


MS. HALEY: Carol Anne Haley, Burin – Grand Bank.


CHAIR: Okay, thank you.


I'd like to point out that the Member for St. George's – Humber is replacing the Member for Harbour Main in these Estimates.


Okay, without further ado, I call for the first heading.


CLERK (Proudfoot): (Inaudible) minutes for the last meeting?


CHAIR: I call for a motion to approve the minutes from the last meeting.


MS. MICHAEL: I was present but my name is not here, and I have a number of witnesses who say, yes, I definitely was present.


CHAIR: Okay, we'll make that correction to the minutes.


Do we have an approver for the minutes, pending changes?


MS. HALEY: So moved.


CHAIR: Okay, moved.






All those in favour, 'aye.'




On motion, minutes adopted as circulated.


CHAIR: Okay. I call for the first heading on the Office of the Chief Information Officer which is the first section that we will be doing.


CLERK: Subheads 4.1.01 to 4.1.05.


CHAIR: Shall subheads 4.1.01 to 4.1.05 carry?


MS. C. BENNETT: Mr. Chair, with permission of the Members of the Committee, it might help if I make some initial comments. The department has seen some transition and in order to help facilitate the questions as we go through the headings, it might make sense for me to do some opening comments, depending on if the Committee is okay with that.


CHAIR: Yes, I'll call for the minister's opening remarks now with the introduction of your staff.


MS. MICHAEL: I have a question, Mr. Chair, with regard to the headings that were called.


Could it be repeated? We have 1.1.01, then we have 1.2.01, there is no 1.5.


CLERK: 4.1.05.


CHAIR: 4.1.01 to 4.1.05.


MS. MICHAEL: Okay. Thank you.


I didn't get the four.


CHAIR: Okay, Minister, can you start off by introducing your departmental staff? Then we'll give you ample time to have a few opening remarks, then we'll go back to the Committee for opening remarks. Then what we'll do is alternative approximately 10 minutes between responders from the Government Services Committee.




MS. C. BENNETT: Sure. I'm going to turn it to Ellen MacDonald and let the team introduce themselves so they can make sure that their mics are aligned with where they're sitting.


This is Ellen MacDonald, Chief Information Officer responsible for OCIO and deputy minister.


MR. HARDING: Craig Harding, Executive Director for Corporate Services and Projects Branch.


MR. MOULAND: Randy Mouland, Executive Director of Operations and Security.


MR. GELLATELY: Bruce Gellately, Director of Corporate Services.


MS. MUNDON: Tansy Mundon, Director of Communications.


MS. TRICKETT: Wanda Trickett, Departmental Controller.


MS. C. BENNETT: I want to say welcome to everybody as we do the Estimates for the Office of the Chief Information Officer, OCIO.


As you would know, OCIO supports all the information technology, IT, and information management, IM, functions of core government and certain agencies, boards, commissions and entities such as the Royal Newfoundland Constabulary, the Provincial and Supreme Courts, and the Research & Development Corporation, among others.


These activities include provisioning and supportive backend technology infrastructure, client computer support, backup and protection of over 450 terabits of government data, and support of 500-plus existing departmental systems. In case you ever wondered, to print one terabit of data on paper would require approximately 50,000 trees, just to give you a sense of the depth of information that OCIO is responsible for.


OCIO has 294 employees, and that would include both permanent and temporary, and 51 vacancies.


In the recent Flatter, Leaner Management exercise, the OCIO reduced its management layer by 16 per cent. Eliminating nine positions, of which four were terminations, four were vacancies and one was the elimination of a management position which resulted in the incumbent moving back to their permanent non-management position. This resulted in salary savings of $750,000 annually. In addition, a total of $276,000 has been eliminated as part of the overall salary changes in the last number of years.


OCIO has not eliminated any services as a result of these changes. Resources have been reallocated, and the work has been reprioritized to ensure that all critical work items are dealt with in a timely manner.


OCIO only uses consultants to augment staffing for two main purposes. That would be for specific time-bound project work, and to fill some vacancies that are classified as hard to fill due to lack of skills in the local marketplace, or intense competition for people qualified to fill these positions. Multiple attempts at recruitment for these hard to fill positions may not have been successful and OCIO has seen a reduction of 29 per cent since 2015-16 in Professional Services and has significantly reduced its reliance on contractors over the past several years.


On an annual basis the OCIO processes in excess of 155,000 requests for service, which range from password resets to changes to existing systems, and managing a portfolio of 40-plus active projects at any given point in time.


The Estimates structure for OCIO has changed since last fiscal year, and this change was a result of a resignation from an executive director last November and the subsequent abolishment of that position. This required a realignment of responsibilities across the three remaining OCIO directors in order to balance workload. This was in addition to the Flatter, Leaner Management changes noted above.


OCIO has gone from four branches to three branches, each with a distinct set of responsibilities. You may note that there are five unique activities in Estimates, but two of them are for capital allocations.


We have Corporate Services and Projects, both current and capital. This area would be responsible for all new project work for the departments and agencies and for Corporate Services.


The second one is Application and Information Management Services, and this would be responsible for support and maintenance of the existing 500-plus applications and databases in use today.


Operations and Security, both current and capital; this area is responsible for technology infrastructure, security of desktops, laptops, servers, wide area networks, email systems, mobility management, support services, and backup and recovery of all government data.


In addition to the structural changes noted, OCIO performed a bottom-up build as part of the zero-based budgeting exercise and noted where savings could be achieved, but also reallocated funds to the appropriate areas to better represent where the spending actually occurs.


For example, spending in Professional Services related to the support for the LaMPSS system, a system that manages the labour market program, was reallocated from 4.1.01 to 4.1.02 where the services are actually procured. These changes impacted all branches and are the rationale for some of the year-over-year changes. Variances that you will see when we go through each activity are mostly recorded as zero-based budgeting entries; however, in some instances they are a combination of annualization of prior-year decisions and new reductions for '17-'18.


It is also worth noting that OCIO has some differences from the rest of government in terms of what is funded under certain accounts. OCIO activity 4.1.03, the Supplies budget, covers software purchases, software maintenance renewals and small hardware purchases. In this fiscal year, there are 159 different software renewals in the Operations and Security's current budget, as well as an estimated increase for new software.


Another key difference is in Purchased Services, activity 4.1.03. Purchased Services is primarily to cover the cost of the data centre and the service management contract with Bell.


When you look at Corporate Services and Projects and the current account, which is 4.1.01, and the Capital, 4.1.04, these accounts capture the funding required to implement new projects. Some of these projects involve multi-year funding that must be allocated between current and capital accounts, depending on what phase of the project you're in.


This is a complex budgeting area. While best efforts are made to budget funding into each spending envelope at the onset of each project, there are often adjustments to the envelopes for the out years and as projects progress. Budgets become more refined depending on the progress of the project. We do have a handout here that explains the various phases of each project, and whether the project is in a capital phase or is in a current phase, that we'll be happy to share with the Committee.


Predicting the timeline of projects is another challenge. A project can be delayed at any point for a variety of reasons, changes in the department, a delay or a change in procurement or implementation of technology platform, along with expected contract negotiations, et cetera.


For example, the OCIO budgeted the start of a project to put the Land Use Atlas online early last fiscal but project start-up was delayed until October. OCIO dropped some of the funds for this project last fiscal and is now projecting them for fiscal '17-'18.


As you will see in headings 4.1.01 and 4.1.04, most envelopes involve transfers of funding depending on the projects for the next year. The integrated management system implementation for Education and Early Childhood Development, and Children, Seniors and Social Development is the largest ongoing project and it's being implemented over multiple years.


OCIO projected completing the project in the last fiscal year within the allocated budget, noting that the build was 50 per cent complete at the time of that projection. This is a very large, complex project with 45 work streams resulting in 247 individual screens. The project ran into challenges early in the fiscal due to many factors, one being incremental and unplanned scope changes.


A ministerial committee was created that provided guidance, re-scope management, resources and resources were redeployed while detailed scope refinement was underway, which enabled the project to remain within budget but spread the work out a little longer. Due to this delay, the Operating Accounts, both the Capital and Current, show a smaller spend in last fiscal, and all related to the change in the schedule.


The budget for this fiscal show the carry forward of funding not utilized in last fiscal. In terms of overall status of the project, the online build is now 100 per cent completed and the functional testing has started, as has the data conversion. The user acceptance testing is due to start in June, which will be followed by training, and the implementation for EECD is scheduled for the November-December time frame with the final implementation set for March of 2018 for CSSD. The project remains within the approved budget.


The majority of changes in 2016-17 in headings 4.1.01 and 4.1.04, an increased spend in '17-'18 is driven by timing changes of the ISM project and a total of $4.1 million was carried forward. Other smaller project portfolio changes are also reflected here. You will note that irrespective of the salary reductions noted above due to Flatter, Leaner Management and to other salary changes, that the salary budget for both 4.1.01 and 4.1.04 have actually increased in 2017-18 over the actual spend in '16-'17. As I said, this is due to the carry forward of funds not spent in last fiscal but required to complete projects this year. Again, this is all within the approved budget.


With that, I'll ask one of the staff on this side to pass you out the System Development Life Cycle and if there are questions going forward, we can refer to the chart.


I'll turn it over to the Chair for questions.


Thank you.


CHAIR: Okay. I'll ask for an opening response from the Member for Ferryland and then we'll alternate 10 minute intervals between the Government Services Committee Members.


MR. HUTCHINGS: Thank you, Mr. Chair.


Minister, I just had a couple of questions in regard to some of your outline that you gave. The 51 vacancies, did they become vacant in current year or were they in the prior year as well?


MS. C. BENNETT: My understanding is some of the vacancies have been long-term vacancies and some would be driven from staff turnover in the last fiscal year.


MR. HUTCHINGS: Okay. You mentioned there were those 51, you broke them down in terms of positions and I think you mentioned it was $750,000 annualized, that was the saving. Is that correct?


MS. C. BENNETT: No, the $750,000 was related to the Flatter, Leaner Management.




MS. C. BENNETT: And the changes the department and the office went through as a result of Flatter, Leaner Management.


MR. HUTCHINGS: Would they intertwine, the 51 vacancies and the Flatter, Leaner Management approach? Do they cross paths anywhere or is it two separate exercises?


MS. MACDONALD: The flatter, leaner was done before March 31, and those numbers of the positions and vacancies were as of March 31.




You also indicated, Minister, because of the positions you went through there were no services affected. Is that correct?






You also made reference to consultants and in the past few years a decrease in consultants by OCIO. So based on what was just articulated in regard to leaner, flatter and those positions, there's been no change in the use of consultants? You wouldn't see an increase in consultants because of that? You'll accommodate it inside, is that correct?


MS. C. BENNETT: Right.




You mentioned the Land Use Atlas project, and I think in your remarks, I'm not sure if it flowed into – I think you used the acronym CCSD. What is CCSD again?




MR. HUTCHINGS: Oh, sorry.


MS. MACDONALD: – and CSSD. Education and Early Childhood Development –




MS. MACDONALD: – are supposed to go live with their new case management system at the end of this year and Children, Seniors and Social Development are supposed to go live in March. The Land Use Atlas is a different project.




The child, youth, that one, how long has that been a project? When was that started? It sounds familiar.


MS. MACDONALD: It is. It's two, three years ago or maybe even longer.




Was that the one that was adopted from another Atlantic province? No.


MS. MACDONALD: No. Well, the system, the bones of it I guess, a small part of it is in operation in some places in Ontario.


MR. HUTCHINGS: Okay, maybe that was it.






Just to get back to the Land Use Atlas; I think, Minister, you indicated there were attempts to move that through and complete the project in the past fiscal year but, for whatever reason, I guess you couldn't meet what you needed to meet so it's been pushed out to this fiscal year. Is that correct?


MS. C. BENNETT: Yes. Some of the decisions around where OCIO would have been focusing their attention based on priorities would have shifted.




MS. C. BENNETT: Certainly the project that relates to the Department of Children, Seniors and Social Development, as well as the one for education and early learning, was a priority for the department. So the LaMPSS program, as an example, LaMPSS work would have been pushed based on priority setting in the department.




The Land Use Atlas, that's a service for Crown Lands, I think, is it? Correct?


MS. C. BENNETT: Yes. Correct.


MR. HUTCHINGS: With the move of Crown Lands to Corner Brook, does that change anything in regard to that project or where it will be operated from, the service or anything like that?


MS. C. BENNETT: No. No change.




CHAIR: Before you continue there, Minister, I ask all staff to identify themselves before they – so it helps the Broadcast Centre out.




MR. HUTCHINGS: We don't have to start over, do we?


CHAIR: No, go ahead.


Carry on.


MR. HUTCHINGS: Thank you.


Okay. I'll go through a couple of line items, Minister, please, if I could; 4.1.01, Corporate Services and Projects, when we look at Salaries there we can see there was, I think, $836,600 saved on Salaries, and this year Salaries are being reduced from what was originally estimated last year. Could we get some feedback on that and what exactly those would be?


MS. MACDONALD: The changes related to this are related to changes in the management structure, some annualization of prior-year decisions and some of the carry forward of the ISM project. We carried forward funds from last year to this year.


MR. HUTCHINGS: Okay. Could you just list those again please, because there's a lot going on there?


MS. MACDONALD: Okay, sorry.


There was $621,700 in changes to management structure –




MS. MACDONALD: – which would be Flatter, Leaner; $544,500 for annualization of prior-year decisions and $620,800 new funding approved in the budget.


MR. HUTCHINGS: Okay. So the new funding would be related to what?


MS. MACDONALD: To the project carry forward. The money we did not spend last year, it carried forward to this year.


MR. HUTCHINGS: Okay. That project carry-forward money would be for the same projects or different projects?


MS. MACDONALD: The carry forward was all related to this big ISM project.






MS. C. BENNETT: If I might, one of the decisions we made last year as part of the budget process was that when there were these carry forwards, because OCIO spends money that could be capital at any given time or current, we felt it was appropriate that if money carried over it would have to be approved as part of new decisions.




MS. C. BENNETT: So that's why Ellen's referring to it as new spending because it would have been part of new decisions that would have said, yes, let the project continue. It's important the project continue, rather than letting it carry forward through multiply years with any visibility in Treasury Board; Treasury Board (inaudible).


MR. HUTCHINGS: So it would be a continuation of those projects, yes.




MR. HUTCHINGS: Okay, thank you.


I just wanted to reference, last year – and it's about annualized savings – there was reference to, as part of the Government Renewal Initiative, that there were changes to the project delivery model, and I guess that's some of the things you've talked about to this point.


There were savings of $411,000 in 2016-2017; $2.9 million annualized savings when the new project delivery model was implemented. There was also reference of changes in technology support models and savings of $1.3 million in '16-'17 and $1.6 million in annualized savings when fully implemented. Has that been done? Have those been realized?


MS. MACDONALD: Yes, that's been done.


MR. HUTCHINGS: Okay. So you've had your one-time savings and then it's annualized. So it's –






If we go to 4.1.01, we've got Professional Services listed there. There was a shortfall from what was budgeted last year to what the actual expenditures were. Could you just give me an idea of what that would have been? And this year the estimate is down from what it was, the original estimate last year.


MS. MACDONALD: That, again, relates to the ISM project. We didn't spend as much of the Professional Services that we needed to spend because we delayed some of the activities, but we have to pick them up again this year in order to complete the project.




So those Professional Services, would that number there pretty well include all consultants' fees or would there be anything else in there?


MS. MACDONALD: It would pretty well be consultants fees related to projects, yes.




In the other headings, there's also some that would have the reference to Professional Services. So throughout the headings, the Professional Services, with each heading there would be a component of consultant attached to that heading. Is that correct?


MS. MACDONALD: Yes, that's correct. Some of it is for contract professional services that we have for long-term support of certain applications and others are for project work, new project work that we'll pick up and then they'll go away when the project is done.




Mr. Chair, that's all I have on that section if you wanted to move on to Ms. Michael, or I can go to the next section. It's up to you.


CHAIR: You still have five minutes if you want to move on, or we can move it on to the Member for ….




MS. C. BENNETT: Mr. Chair, if I might, with permission of Members of the Committee. I'd just like to remind the Committee that OCIO has seen a reduction of 29 per cent since '15-'16 in Professional Services, and that's been due to significant reduction and reliance on contractors. So because of the unique technical nature of some of the applications that OCIO works on, it does make sense periodically to look at using contractors to support that, but a 29 per cent reduction I think is progress in the right direction.


MR. HUTCHINGS: Just on that note; Minister, 29 per cent, is that from one year to the next or just over the past couple of years?


MS. C. BENNETT: That would have been a reduction since fiscal '15-'16, just over two years.


MR. HUTCHINGS: Okay. Thank you.


4.1.02, Application and Information Management Services; again on the Salaries line, what was budgeted in 2016-17, there was a shortfall of approximately $300,000 and then the budget has been readjusted again for this year, compared to last year's estimate. I'm just wondering if I can get some explanation on that.


MS. MACDONALD: The '16-'17 monies reflect savings related to some hard to fill vacancies. We tried to recruit and couldn't find anybody locally.




MS. MACDONALD: The increase in '17-'18 – no, it's a decrease – reflects savings of $412,900, which is annualization of prior-year decisions, and $50,900 due to changes to the management structure.


MR. HUTCHINGS: Okay, thank you.


Just in terms of some of the hard to fill positions, what would some of those technical positions be that were challenging?


MS. MACDONALD: We have several different layers of hard to fill positions. We have a lot of our big systems, our MCP and our MRD system runs on a mainframe.




MS. MACDONALD: That requires a certain skill level that nobody's trained in anymore. People are ready to retire. We can't hire them, so we use consultants.




MS. MACDONALD: We also have PeopleSoft skills. We can't recruit them because we don't pay the salary those people need and they can demand in the open market. So we end up stuck using some consultants for some of those jobs.




A lot of the consultants hired, are they local, local firms, or –?


MS. MACDONALD: Yes, the majority of them are local.




Have you seen a difference in the past couple of years in terms of the availability of those unique skills, I guess because it's old mainframes, that type of knowledge and expertise, people are probably leaving the industry and they're not there anymore. Is that the biggest challenge, as you said?


MS. MACDONALD: It's a challenge for a lot of people. The banks, there's a lot of industries that are very reliant on mainframe skills. So it's a bit of what you'd almost call a hot skill, even though it's an old skill. It's very difficult to recruit them. We find it in several areas that we're having trouble.


MR. HUTCHINGS: Okay, thank you.


Profession Services in 4.1.02; again, it's a large number but that's based to consultants, and as you just described, it's sometimes hard to get those services in-house, so you need that amount to basically meet your needs.


MS. MACDONALD: The mainframe skills sit in this group, and so that would be some of the skills we need. It's also some contractual work for some systems that we did not build. So we're contractually linked to somebody to provide that support and it comes out of Professional Services.


MR. HUTCHINGS: Sure. Okay, thank you.


4.1.03, Operations and Security; again, I'll just ask you about the salary component. There's a small reduction there, or about $300,000. That's again related to some restructuring, what you're doing?


MS. MACDONALD: Yes, it's $140,000 related to annualization of prior-year decisions and $80,500 for changes to the management structure.


MR. HUTCHINGS: Okay. And that will be related to some of the numbers we talked about earlier, right?




MR. HUTCHINGS: Okay, thank you.


That's good for me, Mr. Chair.


CHAIR: Okay, we'll go to the Member for St. John's East – Quidi Vidi for approximately 10 minutes of questioning on the Estimates.


MS. MICHAEL: Thank you very much, Mr. Chair.


I'm sure the minister and her staff appreciate how confusing this is because we haven't seen any of this before. So I hope I'm not going to be asking questions that sound very simple to you, but I do want to get a handle.


So if we can just come back to 4.1.01 again. Mr. Hutchings covered the Professional Services, but I'm interested in the Supplies, and it seems to me that the only way to understand 4.1.01 is to also look at 4.1.04. Is that correct or can we understand one without the other?


MS. MACDONALD: They're essentially, in very many ways, the same thing. It's just different phases of projects. One of them is current dollars operating and one is capital.


MS. MICHAEL: Okay, so that's the main difference.






So if we come back then to 4.1.01, could I have an explanation of the Supplies line because the Supplies line again, maybe it's because of projects being finished, but it's down by $341,600 from last year's budget. And maybe it's carried over because last year the revision was down by $402,400.


MS. C. BENNETT: Sorry, Ms. Michael, I missed the heading number that you said.


MS. MICHAEL: 4.1.01, I'm looking at the Supplies line. And in the Supplies line – it's connected, I guess, to something else that you've said earlier – $402,400 was not spent last year but this year the estimate is $156,900 which is down also $341,600 from last year's budget. So could I have a full explanation of that line, please?


MS. MACDONALD: Supplies in the OCIO world is not regular supplies. These are actually software purchases.




MS. MACDONALD: So depending on the project that we're doing and the stage it is, we may have to buy new software and we may not.




MS. MACDONALD: So every year we have our list of projects that we're doing and the stage it is, we may have to buy new software and we may not.




MS. MACDONALD: So every year we have our list of projects and we estimate what we're going to need to purchase that year, that's why that number varies so much. So last year, we thought we were going to need to spend $500,498, we only spent $96,000 and this year we're estimating we're going to need to spend around $157,000.


MS. MICHAEL: Did that have anything to do with the changes that have been made, et cetera? I'm really trying to get a handle on this.


MS. MACDONALD: No, it's just really about the projects that we're delivering now.


MS. MICHAEL: Okay, all right. Thank you very much.


I think Keith covered the rest, so I'll move on. I'll just go straight to 4.1.03. Could we have a breakdown of the salary line there, please, because it's down $220,800 from last year's budget?


Oh, did you do that, Keith?


MR. HUTCHINGS: Is that 4.1.03?


MS. MICHAEL: You did 4.1. Yes, you did that, sorry.


See what I mean by being confused. Okay, I don't repeat what somebody else has asked. So now I just move over to the Capital, 4.1.04. I would like to breakdown of this salary line, please, because it's down $209,600 from last year's budget.


MS. MACDONALD: This again is related to our project load and the number of projects we're doing. It's a couple of numbers. It's actually the net effect of $1.7 million reduction in annualizing prior-year decisions and $1.5 million increase for the projects.




MS. MACDONALD: So again this would be money that we were due to spend last year and it's now moved forward to this fiscal.


MS. MICHAEL: Okay, thank you very much.


So there are no changes in personnel or anything, it's just –?




MS. MICHAEL: Yeah, okay. Thank you very much.


MS. C. BENNETT: Ms. Michael, one of the challenges with OCIO is when they're working on a project, depending on what phase they're in, the dollars have to be properly allocated to either a Capital expense or a Current expense and when the budgets are done in the beginning of the year and the project timeline changes, sometimes the allocation of those dollars, whether it's Current or Capital, has to change. And that's what you see oftentimes in these line items is that dollars will shift because they are moving from one phase, either a Capital or Current, because the project timeline shifted in the year.


MS. MICHAEL: Right. Thank you.


Would that then be the explanation for the Supplies line?


MS. MACDONALD: Yes, it is. We have a lot of expenditures expected this year for Apprenticeship Harmonization; it's a project we're running across the Atlantic region and we have to spend money in this year, so that's why we have moved money into this.


MS. MICHAEL: Okay. And did that start last year because last year you spent almost $652,000 more than had been budgeted? So that began –


MS. MACDONALD: That's another project that started up that we didn't think was going to start up then, so it's always a movement of the funds back and forth.


MS. MICHAEL: Right. Okay, thank you very much.


Now, under Professional Services, last year it was just slightly over $4 million that wasn't expended and then this year it's almost $2.5 million down from last year's budget. So could we have an explanation there?


MS. MACDONALD: Again, this is the ISM project, primarily.




MS. MACDONALD: This is the large project that we delayed and we moved it out – we didn't spend as much last year but we have to spend to complete the project this year.


MS. MICHAEL: Okay, but it's still less than – well, I guess maybe it has to be with the phase that you're in.




MS. MICHAEL: Okay. Thank you very much.


Under Property, Furnishings and Equipment, I presume that a major expenditure there. It must have something to do with ISM too, does it?


MS. MACDONALD: Yes, $400,000 of that is directly related to the ISM project. The other $900,000 relates to an upgrade that we have to do to really – we have a major server refresh. We have so many new projects that are coming on that we're running out of horsepower. So we have to do an upgrade this year to enable the systems to run optimally.


MS. MICHAEL: Right. Thank you very much.


Under Operations and Security, 4.1.05, the Supplies line was $138,000. Last year, you spent almost $120,000 more than budgeted and this year up another $100,000. I'm sorry, not another, up $100,000 from last year's budget.


MS. MACDONALD: This activity is to buy hardware and software. This is our infrastructure backend; our technology. Some years we need to buy more software than hardware and other years we buy more hardware than software. That's what the two buckets really are all about. So we look at our technology investment plan and say: What do we have to upgrade? And that's where we allocate the funding.


MS. MICHAEL: Okay, thank you.


Under Property, Furnishing and Equipment, if I could have an explanation of that line, please.


MS. MACDONALD: That relates to the hardware that we have to purchase similar to the software which is the line item above.




I think that's all the questions I have, Mr. Chair.


CHAIR: Okay.


Mr. Hutchings.


MR. HUTCHINGS: Minister, it's a huge system, obviously, the province has in terms of data. Who provides backup or is there a data warehouse service that is contracted? How does that work?


MS. MACDONALD: We have backup sites away from – we're situated in 40 Higgins Line and so we have other alternate sites.


MR. HUTCHINGS: Is that the province's site or do you lease from somebody else?


MS. MACDONALD: We're using province sites.




So you don't lease any space from anybody else for that purpose?


MS. MACDONALD: We do not.




I'm good.


CHAIR: Okay.


Call the headings.


CLERK: 4.1.01 to 4.1.05 inclusive.


CHAIR: Shall 4.1.01 to 4.1.05 inclusive carry?


All those in favour, 'aye.'




CHAIR: Carried.


On motion, subheads 4.1.01 through 4.1.05 carried.


CLERK: The totals.


CHAIR: Shall the total carry?


All those in favour, 'aye.'




CHAIR: Carried.


On motion, Office of the Chief Information Officer, total heads, carried.


CHAIR: Okay, that concludes the Estimates for Office of the Chief Information Officer.


MS. C. BENNETT: Mr. Chair, as minister, if I might, I just want to take a minute to thank the officials who prepared for the Estimates tonight on behalf of the Committee. I also wanted to recognize the work that this team does in OCIO is some of the more challenging work in the context of they must serve many masters and many departments and many entities who they have to serve in addition to those of us who are elected in the House of Assembly to provide answers to the questions.


They are responsible for a tremendous amount of things that I think many of us wish we didn't have to understand but we need to understand. So I do want to say thank you to them for all their hard work. There's been a tremendous amount of effort put in this year, particularly on the ISM project. They've done some incredible work in getting that project back on budget and also in a timeline that will deliver it to the front-line individuals who need to use it.


Thank you.


MR. HUTCHINGS: Thank you.




CHAIR: Okay.


CLERK: Subheads 1.1.01 to 2.2.02.


CHAIR: Shall subheads 1.1.01 to 2.2.02 carry?


We'll go with opening remarks by the minister upon introduction of her staff and then we'll go to Ms. Michael to lead off on the response.




MS. C. BENNETT: Okay, I'll turn it over to Donna Brewer, the Deputy Minister of Finance, to introduce the team.


MS. BREWER: Donna Brewer, Deputy Minister of Finance.


With me is Maureen McCarthy. Do you want to tell them your new title?


MS. MCCARTHY: Director of Pensions and Debt Management.


MS. BREWER: Behind us we have Wanda Trickett, our Controller, and Tansy Mundon is the Director of Communications.


CHAIR: Okay.


MS. C. BENNETT: With that, I'll make a couple of opening comments with the permission of the Committee.


The Consolidated Fund Services or CFS gross expenditures of just over $1 billion represents the cost of servicing and managing the direct debt of the province and the funding of the pension plans for employees of government and its agencies.


CFS expenditures are primarily statutory; expenditures of $524 million related to debt servicing are provided under the authority of the Financial Administration Act, while expenditures of $437 million relate to employee retirement arrangements and are provided for the most part under the Pensions Funding Act.


Three subdivisions of expenditures totalling just over $48 million are non-statutory and have to be voted. These include: 1.3.01 relating to payments into sinking funds established in 1993 for the lease purchase of health facilities in Burgeo, Port Saunders and St. Lawrence; 1.4.01 relating to collections of loans and guarantees; and 2.1.02 for special retirement salary and employer-related payments as approved by Treasury Board.


Related revenues, the Current account plus the Capital account, is estimated at about $23 million in 2017-18. Major components of this are interest revenues of $14.4 million from the investment of cash balances and $7.1 million from Newfoundland Hydro guarantee fees.


New borrowings of $400 million are planned during fiscal '17-'18 and estimated provincial borrowing rates as of March 31, 2017 are for 91-day Treasury bills, 0.6 per cent; five-year bonds, 1.87 per cent; 10-year bonds, 2.8 per cent; and 30-year bonds, 3.7 per cent.


Budgeted exchange rates for the US dollar in '17-'18 is at 1.3109 and a 0.01 change impacts debt servicing cost by approximately $1 million.


When we took office in 2016-17, the borrowing requirements had increased from a budget estimate of $2 billion to $2.4 billion, and only $400 million had been borrowed through new bond issuances. Government of the day had to rely on a special T-bill cash management program, and the extent of short-term borrowing of this nature peaked on February 26, 2016, at $2.6 billion outstanding. Cash management bills were fully repaid as of August 17, 2016. For 2017-18, we are planning for our normal weekly $60 million T-bill program, bringing the maximum amount outstanding to $780 million.


Since December of 2015, the province has completed 11 issues in the Canada domestic market totalling $4.9 billion. The details of these issues are on our investor relations website on the Department of Finance website.


The province has been working hard to execute its borrowing strategy. We've partnered with Nalcor to get our collective story out to those who trade our bonds and investors who buy the bonds. We launched an investor relations website and conducted several investor relations road trips in Canada and in New York that have been well-received.


I meet, as the Minister of Finance, on a periodic basis with bank economists, our banking syndicate and bond-rating agencies to ensure they have the facts as they communicate our story to their clients.


We continue to work on our first non-Canadian bond issue since 1993. We are working hard to improve the timelines of the release of the financial statements, and we have committed through legislation to having public accounts released before November 1 each year.


Last week, I was pleased to advise that Newfoundland and Labrador has been acknowledged for improvements in a C.D. Howe financial report card that assesses the quality of various government financial information and their success or failure in achieving budgetary goals. The Government of Newfoundland and Labrador scored a B grade in 2017 – up from an E grade in 2016 and a D grade in 2015. The report looks at the relevance, accessibility, timeliness and reliability of government's financial reports across the country.


C.D. Howe stated in the report that Newfoundland and Labrador has improved markedly, and particularly with the quality and timeliness of its budget and its public accounts documents. The report assesses whether individuals can get valid, timely and readily understood figures for total revenue and spending in the budget each government presents at the beginning of the year, as well as in Public Accounts at the end of the fiscal year.


Mr. Chair, these are just a few highlights of the activities impacting the head of expenditure of Consolidated Fund Services.


With that, I'll turn it over to the Committee for questions.


CHAIR: Okay.


The Member for St. John's East – Quidi Vidi.


MS. MICHAEL: Thank you very much, Mr. Chair.


I'm just going to proceed with line items at the moment. I just want to get things straight here.


If we could look at 1.2.01, Executive Support, we had a jump last year – excuse me.


MR. MORGAN: This is Finance. We're doing Consolidated Services and we have no questions.


MS. C. BENNETT: That's okay.


MS. MICHAEL: I have no questions, too.


MS. C. BENNETT: That's okay.


MR. MORGAN: It's been a long day.


MS. MICHAEL: I have no questions.


CHAIR: Okay.


MR. HUTCHINGS: Thank you.


Minister, 1.1.01, Temporary Borrowings; if I remember correctly there was a line of credit set at $200 million. Is that still at $200 million?






I'm not sure, the interest rate for short-term borrowing on the line of credit, what would that be? Did you mention it already here?


MS. C. BENNETT: We'd have to check that and get back to you. I don't have that information here, but we can get it and let you know.


MR. HUTCHINGS: Okay. I think last year it was prime plus one-half cent. I think you mentioned in the discussion we had.


So we look at Temporary Borrowings, how much was the credit line used last year?


MS. BREWER: There was very little. We try to manage the cash balances as best we can to avoid going into overdraft. The overdraft is there in the banking agreement just as added protection.


MR. HUTCHINGS: Okay. In terms of looking at this year in terms of the line of credit, Minister, as a need basis, I guess you don't really know as you go forward.


MS. C. BENNETT: A line of credit is typically designed for when you have cash flow peaks and valleys to smooth it out. Certainly, avoiding using the line of credit means you're avoiding incurring extra costs by not managing your cash.




MS. C. BENNETT: And that's, I think, what the deputy just referred to is that the officials are working very hard to manage the cash on hand to make sure we have the right amount and that we restrict and reduce and eliminate the use of a line of credit, but you need it there when you have a rolling payroll, for example, the size that we have in the provincial government. It's prudent to have a line of credit, but not prudent to use it.


MR. HUTCHINGS: Okay, thank you.


1.1.02, Treasury Bills, the current interest rate on the T-bill program now, do you have that? I think it was 0.67 per cent last year I think we discussed.


MS. C. BENNETT: Yeah, as of the end of March 2017, T-bills were 0.6 per cent.




I think the program last year was $780 million. What's the current size and balance of the program?


MS. BREWER: We're planning for the same level of borrowing. It's a weekly auction of $60 million a week.


MR. HUTCHINGS: Okay, that's what you mentioned earlier.


MS. BREWER: So the maximum outstanding would be $780 million.


MR. HUTCHINGS: Okay, thank you.


1.1.05, Temporary Investments, I think this shows money that the province generates in interest earnings. This year's estimate is $14.4 million. I think it was $3 million that was generated last year. So how come it's $14.4 million?


MS. BREWER: You may recall that last year we had a borrowing program of $3.4 million and we actually borrowed $2.95 million. So we're actually ahead. We actually have more cash in the bank available to us than was available in previous years.


MR. HUTCHINGS: What did you say it was $3.4 million?


MS. BREWER: $3.4 million was the target.




MS. BREWER: We actually borrowed $2.925 million, but the actual requirements ended up to be less than that. We had completed our borrowing program in December, so we pretty much pre-borrowed, in a sense, for the following fiscal year.


MR. HUTCHINGS: Okay, thank you.


1.1.06, Recoveries on Loans and Advances; last year I think there was some discussion, and we talked about this, there was – contained the interest that the province was receiving for student loans. I think the Student Loan Corp. was ending; the final payments I think would be in '16-'17. Is that correct?


MS. BREWER: That's correct, yes.




1.2.01, Recoveries on Loans, Advances and Investments, that's in Capital. So that was the same thing, it was related to the Student Loan Corp.? Is there any update on that?


MS. BREWER: It has been fully repaid.






MR. HUTCHINGS: Okay, thank you.


1.4.01, Guarantee Fees – Non-Statutory, there's a thousand dollars required for '16-'17. What was that about?


MS. BREWER: That was just a placeholder.




MS. BREWER: At the time the Estimates were cut off for projected revised, they just left a small balance there.




Who were the organizations that were charged for guarantees in '16-'17, and what would the type of organizations be?


MS. BREWER: Newfoundland Hydro was the largest, and the Fogo Island Cooperative Society.


MR. HUTCHINGS: Okay. So how much would be charged to each?


MS. BREWER: For '17-'18 the estimate for Fogo Island Cooperative is $15,000, and for Newfoundland Hydro the estimate is $7.1 million.


MR. HUTCHINGS: In 1.4.01, Guarantee Fees, when you look at the revenue line there's a significant increase there. I'm just wondering if you could explain that.


MS. BREWER: The increase relates to Newfoundland Hydro. The budget was $4.5 million and collected $4.125 million, and they're projecting $7.1 million for '17-'18. There's more borrowing planned, more borrowing required for Newfoundland and Labrador in '17-'18.




1.4.02, Issues Under Guarantee, what would they represent, the Issues Under Guarantee we're talking about here?


MS. BREWER: Pretty much there, again, that's a placeholder. When we issue loan guarantees, the Comptroller General sets it up as a contingent liability. It's only when those guarantees are called then the payment would flow through here.


MR. HUTCHINGS: So you just keep that open for when that actually occurs, obviously.


MS. BREWER: Yes. It's statutory; it's not an area that has to be voted.


MR. HUTCHINGS: Okay. Thank you.


We'll move to 1.5.01, Debt Management Expenses – Statutory. I think you mentioned just earlier, Minister, last year in Estimates we talked a lot about debt expenses related to the US market. You mentioned earlier, I think, just about getting close to – I don't think you're into the US markets now, but can you give us an update on that?




The work we did with investor relations was to ascertain whether or not there would be investors outside of the domestic market that would be interested. We also did a significant amount of research on a variety of options that would allow us to enter the US market, but also potentially look at other markets.




MS. C. BENNETT: Whether it was European markets, et cetera.


We also did work around discussing making sure that we can mitigate the FX risk. As part of the work to borrow outside you want to mitigate any exchange risk.




MS. C. BENNETT: So that was one of the reasons we wanted to, yes, go outside the domestic market, but also want to do it in a responsible way that we don't end up in a situation where we have unintended consequences. The officials in the department are continuing to assess options for us.


We feel strongly that moving outside of the domestic market will help us lower the rates on our bonds going forward. And when we have the right opportunity and we know we can do it at the least amount of cost possible, with the best interest rate we can, that's when we'll do it.


MR. HUTCHINGS: Okay. So you foresee that in the coming year or …?


MS. C. BENNETT: I would anticipate that in this fiscal year; however, when we undertook the analysis, we certainly were planning, based on the borrowing requirements of last year's budget. Through the work of government last year and certainly the budget for this year, we've been able to lower the borrowing needs.




MS. C. BENNETT: We will have to continue to work to make sure that when we do it, we're doing it, as I said earlier, in the best interests of the people of the province and the Treasury, but we would hope to do it this year.


CHAIR: Okay, we'll go back to the Member for St. John's East – Quidi Vidi.


MS. MICHAEL: I have no questions in this section.


CHAIR: Okay, do you have any questions on CFS?


MS. MICHAEL: No, no questions on CFS.


CHAIR: No, okay.


We'll go back to the Member for Ferryland.


MR. HUTCHINGS: Thank you.


1.5.01, there was $19 million spent there. There was none related to US borrowing, right, because we're not there yet. This number is going to drop to $3.5 million this year. Can you just give us some understanding of that?


MS. BREWER: Okay, a number of the issues that were issued during 2016-17 were actually issued at a discount. That accounts for a significant portion of the $19 million. When we budget for '17-'18 we don't know necessarily if we're going to be issuing at a discount or a premium at a par. But this particular one, there was one done late in the fiscal year that was at a significant discount. The other part of the $19 million would include any of the commissions that we have to pay the people who underwrite our bonds.




What percentage would that underwriting be? Would that be a percentage or …?


MS. BREWER: It varies depending on whether you're the lead or a co-lead or a manager, and it varies by the size of the issue.


MR. HUTCHINGS: Okay. Thank you.


The 1.5.02, when you look at these line items here, a number of these Operating Accounts are decreasing this year. I'm just wondering if you can give some insight into that.


MS. BREWER: This is the area where there was anticipated to be significant expenses incurred relating to the US issuance –




MS. BREWER: – that as the minister indicated, we continue to watch that market. We're being opportunistic; we'll go when the time is right and if the time is right.




MS. BREWER: Sorry, I made a mistake there, Mr. Hutchings. This is the area where the banking agency commission fees are paid under Professional Services.


MR. HUTCHINGS: Oh, 1.5.02?


MS. BREWER: 1.5.02, yeah.




So the fees and services are expected to be far less this …?


MS. BREWER: Well, the borrowing program is far less, yeah.


MR. HUTCHINGS: With the borrowing. Okay, sure.


MS. C. BENNETT: Just for the Committee, we borrowed last fiscal 10 times the amount of money we're going to borrow this fiscal.


MR. HUTCHINGS: Yes, your servicing fees, obviously, are –


MS. C. BENNETT: Right.


MR. HUTCHINGS: – reflective of that.


Okay. Thank you.


Yeah, the other questions I had I think we covered them moving through, so that's good for me.


CHAIR: Okay.


I call for the head.


CLERK: 1.1.01 to 2.2.02.


CHAIR: Shall subheads 1.1.01 to 2.2.02 carry?


All in favour?




CHAIR: Carried.


On motion, subheads 1.1.01 through 2.2.02 carried.


CLERK: The total.


CHAIR: Shall the total carry?


All in favour?




CHAIR: Carried.


On motion, Consolidated Fund Services, total heads, carried.


CHAIR: Okay, moving right along.


Minister, do you require time to switch out?


MS. C. BENNETT: I just have to swap one person out and we'll be good to go.


CHAIR: Okay.


CLERK: Do you want me to call it again?


CHAIR: No, we've already called it.


Okay, Minister, we'll go to your department and opening remarks.


MS. C. BENNETT: Thank you, Mr. Chair.


I'll turn it over to Donna Brewer, the deputy, so she can introduce the officials that are with us.


MS. BREWER: Donna Brewer, Deputy Minister of Finance.


To my left, Wanda Trickett.


MS. TRICKETT: Wanda Trickett, Departmental Comptroller.


MS. MUNDON: Tansy Mundon, Director of Communications.


MS. MILLER: Ann Marie Miller, Comptroller General of Finance.


MR. MARTIN: Craig Martin, Assistant Deputy Minister of Finance.


CHAIR: Okay, carry on.


MS. C. BENNETT: Thanks.


So with the Committee's indulgence a couple of opening comments. The Department of Finance is mandated to provide strategic leadership across government in the development of fiscal, financial, statistical and economic policy. These responsibilities are primarily achieved through the provision of timely analysis and advice to government departments and agencies, Cabinet and Committees of Cabinet, particularly Treasury Board for which I serve as the president.


The department is also mandated to oversee the management and control of the province's finances to ensure appropriate use of public funds and to provide centralized and corporate shared services to other government departments in the areas of such things as economic and project-specific analysis, statistical services, internal audit, centralization of 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.


Additionally, each year the department spends a considerable amount of time and effort to prepare government's public accounts, the consolidated budget, the supplementary cash estimates book, the Economy, the fall fiscal update and the economic review. This mandate is delivered through the following lines of business. We have revenue and expenditure policy and planning, federal fiscal relations, Treasury management, economic and project analysis, statistical research analysis and data development, comptrollership responsibilities, supports to Cabinet and Committees of Cabinet, as well as tax administration.


The total current and capital account gross expenditures for the Department of Finance are about $118 million. This includes the salary and operating costs of the Department of Finance, as well as blocked funds held on behalf of other government departments. These blocks total $94 million, and are under subhead 1.3.01 for the payment of government's share of employee benefits for employees and retirees.


Funding is also included for compensation and contract adjustments that may be approved from time to time by Treasury Board, and 2.1.05 and 2.1.06 for financial assistance to support Corner Brook Pulp and Paper and various government initiatives such as collective bargaining, Muskrat Falls oversight, implementation of The Way Forward actions and pension reform.


The budget of the Department of Finance therefore is $23.6 million, down from '16-'17 restated budget of $26.1 million. This is a $2.5 million reduction and it represents a 9.5 per cent drop. This was achieved through a combination of zero-based approach to budgeting and changes to the executive and management structure.


I can highlight some of the areas where we have identified savings through zero based. We will reduce travel wherever possible using conference and video calls when these modes are appropriate. We have limited travel to conferences, as well as the number of officials attending per conference. I will continue my practice of scheduling investor relations meetings around other work related trips such as federal-provincial-territorial meetings.


We have reviewed and, where feasible, removed phone lines. We have reviewed and reduced printing requirements, relying on website communications wherever possible. We have consolidated within one administrative area the budget for ergonomic assessments and purchases of furnishings and equipment. We have assigned a per-head budget for general office supplies.


We continue to work with the Department of Transportation and Works to reduce our lease square footprint through better allocation of space within Confederation Building and Mews Place. The department has also continued its work with Deloitte on the indirect taxation review. This work was completed over three phases and identified almost $23 million in tax recoveries for government, Newfoundland and Labrador Housing and government's group insurance plan.


I'll now ask the Deputy Minister, Donna Brewer, to briefly outline the changes to the Department of Finance structure and then, Mr. Chair, we'll be pleased to answer questions from the Committee.


MS. BREWER: The department has consolidated from four down to three branches resulting in the reduction of one assistant deputy minister and the one ADM secretary. The former Economic and Statistics Branch and the Fiscal and Economic Policy Branch were combined into the fiscal and economic branch. This allows the ADM there, Craig Martin, to take advantage of similar skill sets to create some redundancies and to reassign resources to critical areas such as revenue modelling and economic forecasting.


The division of Debt Management was moved to the Financial Planning and Benefits Administration Branch, while Tax Administration was transferred to the Office of the Comptroller General.


Synergies can be achieved, we feel, by combining the functions of accounts receivable and collections. That provides a first step in moving forward with The Way Forward action to centralize collections.


As reflected in the Estimates, the Financial Planning and Benefits Administration Branch includes the Treasury Board and budgeting operations, the general insurance and financial analysis and Pensions and Debt Management. There was a reduction in one director position through the consolidation of the Pensions and Debt Management Divisions. There were also reductions at the manager level within Debt Management due to vacancies and combinations of duties among some managers.


A number of pension staff have transitioned to Provident10 – that's the corporation that now oversees the administration of the Public Service Pension Plan – while a few others will be moving to the Teachers' Pension Plan Corporation.


The new branch, the Fiscal and Economic Branch, now has three directors versus the previous two branches had a combined five directors. Next year's Estimates, the subheads 2.2.01 Tax Policy, 2.2.02 Fiscal Policy, 2.2.03 Project Analysis, and 2.2.04 Economics and Statistics, will be consolidated.


The Office of the Comptroller General had a reduction of one director and was able to reduce various management analyst positions though the reassignment of work to existing directors and managers/analysts.


We went through a review and we feel right now all the programs currently delivered by the department are core to its mandate, and for the most part are required under provincial legislation, such as the Financial Administration Act, the Statistics Agency Act and the Revenue Administration Act.


There are various initiatives currently underway across government that would have been outlined in The Way Forward document that once developed may have impacts on the department structure going forward, such as the shared services review, the reduction in agencies, boards and commissions, and more effective business financing.


With that, I'll turn it back to the Committee.


MS. C. BENNETT: Mr. Chair, we'll turn it over for questions.


CHAIR: The hon. the Member for St. John's East – Quidi Vidi.


MS. MICHAEL: Thank you very much, Mr. Chair.


Okay, looking at line items, then, in the Department of Finance, I will go to 1.1.01, it's not a lot, but the Estimates for this year is $42,900 lower than last year. So I presume that may be a position, or not?




I'm sorry, Ms. Michael, can you –


MS. MICHAEL: 1.1.01, the Salaries line –





MS. MICHAEL: – this year's estimate is $42,900 less than last year's budget.


MS. C. BENNETT: Right. In '16-'17 there was a decrease because the executive assistant wasn't at the top of the salary scale and there was no temporary assistance required and for '17-'18 there's a reduction. Requirements are less as per the zero-based budgeting in the departmental submission.


MS. MICHAEL: Okay. Thank you very much.


1.2.01, here the budget last year was $1,276,600 and in actual fact the revision was $629,800 more than the budget. If I could have an explanation of that first, please.




That increase was due to termination costs for retiring employees and the reduction of an executive position. I think the deputy minister mentioned there was a reduction in the ADM.


MS. MICHAEL: That's what happened here?


MS. C. BENNETT: And that would have been reflected here.




Would that have included the ADM secretary there as well?


MS. BREWER: The ADM secretary actually ended up to be a retirement.


MS. MICHAEL: Oh, okay.


MS. BREWER: There was at least one other retirement there as well.


MS. MICHAEL: But the ADM was not a retirement?


MS. BREWER: The ADM, yeah, was an abolishment there.




Is that person still in the government system or …?


MS. BREWER: He is now on pensioner payroll.




MS. BREWER: But he is providing some continuity free of charge to the government – to the department.


MS. MICHAEL: Okay. Thank you.


MS. C. BENNETT: If I might, in fairness to the individual, he's a long-serving employee. Very passionate about the work he did and was very much wanting to be able to support residents of the province. I'm really pleased with the leadership in the department to figure out a way to make that happen.


MS. MICHAEL: Okay. Thank you very much.


Then, Minister, when we look at the Estimate for this year, it is $110,700 less than the Estimate last year.


MS. C. BENNETT: That would have been a reduction as related to – requirements are less so that as per the zero-based budgeting, the departmental submission was less.


MS. MICHAEL: Okay. And of course we have one less ADM as well.




MS. MICHAEL: Okay. Thank you.


Going to 1.2.02, nothing major but under the Employee Benefits, it was $18,600 more spent than was budgeted.


MS. C. BENNETT: That increase relates to additional workers' compensation costs as injury-on-duty costs increased in the fiscal year. November 2016 claim had prior period out-of-province treatments that were not approved but were awarded upon appeal. This one month was $19,500.


MS. MICHAEL: Okay. Thank you.


Under Property, Furnishings and Equipment is there something in particular that you know you're going to purchase, $28,100? There was nothing budgeted last year.


MS. C. BENNETT: Yeah, this would have been the area in the preamble where I referenced that we've consolidated things for the department. So this is an increase that the zero-based budgeting departmental submission centralized all Property, Furnishings and Equipment requirements for 2017-18 in this account.




MS. C. BENNETT: So you'll see it all in this one.


MS. MICHAEL: Okay. Thank you very much.


1.3.01, here the budget was $8,980,700 and was underspent by $7,169,200; an explanation for that.


MS. C. BENNETT: Sorry, can I just confirm that the head was 1.3.01?


MS. MICHAEL: 1.3.01, yes.


MS. C. BENNETT: And your question is around the Salaries?


MS. MICHAEL: Around the Salaries, yes.


MS. C. BENNETT: Right.


This particular activity is government-wide funding. So this would be government's share of Employee Benefits for current and retired government employees such as the Canadian pension plan, Employment Insurance, Group Medical and Group Life, Health and Post Secondary Education Tax and anticipated compensation and contract adjustments for contracts that are negotiated or in process of being negotiated.


The decrease you would have seen in '16-'17; expenditures would allow for salary adjustments throughout government. If any salary adjustment is required in the year, the funding is transferred to the applicable department and the expenditure will be reflected in the department's applicable activity. Therefore, no expenditures are ever recorded under this particular activity in the Department of Finance, it always looks this way. I'll ask the deputy to add any other comments.


MS. BREWER: The minister is correct with one exception; there's an amount there of $1,811,500. That was a payment that was made in relation to a settlement that is in process relating to the closure of the transportation depots many years ago. As a result of that, that was a payment that had to be made.


Wanda, was it for EI overpayments or something? That payment was the only one that was actually – the cheque was cut and was actually flowed through there. But the minister is correct, the balance of that, like any funding that was there for the Job Evaluation System, the JES funding, when that was determined that would have been transferred to the applicable department. I believe there was some money there in budget '16-'17 where they made to minimum wage changes. Those amounts would have gone to the applicable departments.


MS. MICHAEL: I'm just curious as to why the budget would have been – what would have been the basis for having almost $9 million for the budget?


MS. BREWER: The director of Budgeting or the ADM for the budget would have had a discussion primarily with the Human Resource Secretariat. We knew a possibility of minimum wage increases, we knew the Job Evaluation System was being implemented and Labrador benefits contracts were under negotiations. She would check with him and based on that, there would be blocks set aside.


MS. MICHAEL: And yet slightly over $7 million wasn't spent.


MS. BREWER: Not necessarily, Ms. Michael, that it wasn't spent; it wasn't spent in Finance. The way these votes are set up, if you look in the Supply bill, it allows for funds to be transferred to the applicable department, once the amount is known and the amount is approved then by Treasury Board to be transferred.


MS. C. BENNETT: These amounts wouldn't have been expensed, as the deputy said, inside the Department of Finance, but they would be expensed in other departments when they were transferred out from us into their departments at their request. That happens on a normal basis.


MS. MICHAEL: Right. I guess I'm not a budget person, a finance person, but it shows up as budgeted what may be transferred out. But when the transfer out happens, it doesn't show up as having been transferred out.


MS. C. BENNETT: Yeah, it does –


MS. MICHAEL: That's how I read it when I look at it.


MS. C. BENNETT: And that's exactly how I read it as well, until officials were able to demonstrate that those funds would have been transferred to other departments. So other departments that would have come in to Estimates would have seen increases in their salary lines related to last year's spending.




MS. C. BENNETT: And it will be picked up in Public Accounts, as well, as expenses incurred by the departments. I don't know if the Comptroller General wants to add any texture to this.


MS. MICHAEL: No, I'm –


MS. C. BENNETT: Have I missed anything, Anne Marie?


MS. MILLER: No, that's correct. There is an allowance. As long as the Supply bill contemplates the transfers in the Supply bill that you actually show that you're going to transfer out to other departments, that's allowable under the Financial Administration Act.




MS. MILLER: At the beginning of the year, you don't know where the expenditure is going to be incurred, but for Public Accounts purposes, you're actually showing the funding where it's expensed which is the way it should be.


MS. MICHAEL: Right, understood.


On what would you have based, then, the decision for this year to estimate $5.8 million?


MS. C. BENNETT: There is a breakdown that Donna referenced that the budgeting team would have gathered information from the HR team. It would have related to things like the continuation of the Transportation and Works depot settlement.


There are some monies there related to salaries around financial capacity that we budgeted for, monies related to the Labrador Benefits Agreement that's in place, the RCMP collective agreement and additional funding related to any collective bargaining pressures from existing agreements.




MS. C. BENNETT: That's what's in that salary block.


MS. MICHAEL: Okay. Thank you very much.


I see my time is up, yes.


CHAIR: Okay, we'll go back to Mr. Hutchings.


MR. HUTCHINGS: Thank you.


Minister, I just had a couple of general questions. I'm back to 1.2.01, Executive Support. Treasury Board is mentioned there.


In our briefing with your officials last week, there was discussion about the zero-based budgeting process, building from the bottom up and transfer of funds from, I guess, within departments and across department lines. There was some discussion about the fact that you've – I don't know if you made new rules or been very cognizant of future transfer of funds with your zero-based budgeting. It can never be definitive, but a good shot based on past experiences of what you expect you're going to have to spend.


My question is: Is there a change to the ability to transfer funds within departments or across departments and is there is any change reflective of that in Treasury Board?


MS. C. BENNETT: Treasury Board ministers have provided feedback to the departments and strongly advise that if they come in to Treasury Board looking for approval for transferring funds, that Treasury Board will be asking: Why does that have to happen, based on the fact that zero-based budgeting was supposed to be done and their budgets were built up.


So the practice of transferring funds inside a department at the discretion of either officials or a minister is one that we are working hard to provide additional oversight to because the spending really must be reflective of the priorities of government. While, undoubtedly, ministers and deputies would have great insight into their departments and certainly can provide leadership, we feel strongly that the decisions must be made collectively so that if there are savings in one particular area of government, that may not necessarily be spent in that department, they may have to be used in another department in next year's budget.


Certainly, we're not expecting a transfer interdepartmentally this year, that wouldn't be appropriate, nor is it allowed. But we certainly are working very hard to make sure that ministers and deputies are making sure that their budgets they presented this year are based on what they actually need. If they do have some reason why they don't spend all their allocated money that's budgeted, that they don't feel that it's a blank – pardon the choice of language, but a blank cheque to make decisions inside their own department, that they have to have some additional oversight and Treasury Board can support them in that.


MR. HUTCHINGS: Okay. Thank you.


You indicated in your opening remarks, Minister, about $23 million tax recovery. Can you just give me some details on that, please?


MS. C. BENNETT: Yeah. For the second year in a row – second year, I think it is?




MS. C. BENNETT: Second or third, Deloitte has been permitted to review government's expenditures and look for reclaims on HST remittances that government shouldn't be spending. Over the last number of years, that's proven to provide some much-needed funds that taxpayers of the province should not be paying.


I'll turn it over to the Comptroller General to add any additional texture.


MS. MILLER: Yeah, there was roughly, in the three phases, recoveries of about $23 million. Deloitte would claim a fee associated with those total recoveries. So we roughly paid about $3.2 million for the $23 million in recoveries.


MR. HUTCHINGS: That would be remittances on someone or companies in the province for the HST rebate and it was determined that they weren't actually entitled to it?


MS. C. BENNETT: This would be monies that Gov.NL has paid in response to an invoice and we haven't claimed our portion of HST. So as –


MR. HUTCHINGS: (Inaudible) employer.


MS. C. BENNETT: – our tax exemption.


MR. HUTCHINGS: Yeah, okay.


MS. C. BENNETT: There's no payment to Deloitte in advance. They only get their finder's fee, so to speak, when they actually find a savings that we can actually put in the bank. As an entity that pays bills, we are entitled to certain credits and we haven't been claiming those. Government as a whole hasn't been claiming those. Deloitte is working through that to make sure we capture every single penny so we don't pay money that we shouldn't pay.


MR. HUTCHINGS: Is there a statute of limitations on that, how far back you can go? I'm just curious if it hadn't been done.


Deloitte would look at what? Look at the past 24 months or 12 months or something? Is that how they do it?






MS. MILLER: Yes, they've gone back roughly each period that they do. It's a two- to three-year time frame of review they would go back.




As well, Minister, you referenced in your commentary the lease per square foot. You're looking at a reduction or have achieved reduction in that. Could you describe that as well?


MS. C. BENNETT: We're still working on the reduction with Transportation and Works. We're looking at continuing to consolidate staff into one area.


As I think Members of the House would know, Finance is on the first floor here. We actually had the Pensions division in with us. As the pension corporation became live and active on April 1 that freed up some space.


We also have some space that the Department of Finance has been responsible for paying the lease on outside of government. We are working hard with Transportation and Works to make sure that space is optimized. As the minister responsible for this department, it comes off the departmental expenditures, so we can reduce the overall footprint of the department, as all departments are supposed to be undergoing.




Last year you had an initiative, I think, with TW in regard to the sale of provincial assets in regard to buildings and those types of things. I think there was a target of $60 million that was predicted. How did that go in terms of achieving that target?


MS. C. BENNETT: That's a question for Transportation and Works. They are responsible for that program.


Inside Finance, we'd be responsible for the leases inside Finance. As Treasury Board President we would have – through Treasury Board – done work to support Transportation and Works on leases.




MS. C. BENNETT: But the sale of government properties would be Transportation and Works. They would lead that.


MR. HUTCHINGS: Okay. Thank you.


1.3.01; we had some discussion earlier in regard to Government Personnel Costs and what's involved there. This is the entity – that's what's described there in the heading and I think it's understood that provides that throughout government as a whole. We had some discussion, Ms. Michael spoke, in regard to Salaries and what was estimated, what the revision was and what the estimate was for this year.


First off, I've seen this before in some of the Estimates we've done. It's probably about the reconfiguration and some of the things that are done within the department. We've seen where the estimate for last year has changed when you compare it to the estimate that's in this year's budget document. We've seen it with this line for Salaries.


I think last year the estimate in the Estimates book for last year was a little over $11 million. This year it's restated here as $8.9 million. Can you just give us some understanding of that?


MS. C. BENNETT: Can we check that and then we'll get back to you?


MR. HUTCHINGS: Yeah, sure.


MS. C. BENNETT: Wanda is looking here in her book. If she gets the answer before we finish tonight, we'll let you know.


MR. HUTCHINGS: Fair enough. Yeah.


MS. BREWER: Sorry, I have it here. It was folded over.


It was money restated; $1,311,400 was restated to the Department of Health relating to the interns and residents contract and $854,400 was re-charged out to the applicable departments relating to the Labrador Benefits Agreement. So it's $2,165,800 that was reallocated to other departments and we did a restatement.


MR. HUTCHINGS: Okay, so I'm just wondering – that would have been last year in the document, it would have been an estimate.




MR. HUTCHINGS: And at that point it would have been included in the department. But would that mean that for some reason it's no longer part of Finance or it's just a transfer out?


MS. BREWER: Well, once the money was transferred out they restated the original budget for comparative purposes.




CHAIR: Okay, we'll go back to Ms. Michael.


MS. MICHAEL: Thank you, Mr. Chair.


I'll be moving on to 2.1.01, the next subhead. First of all, I'm looking at Salaries. I don't often question or I often do not have questions around re-profiling, but there was a major re-profiling in the Salaries line. The budget had been approximately $803,000 I think and it was re-profiled by almost $1.4 million up to $2,241,000. So what was that re-profiling about because it's been maintained, although there's a drop, but it's certainly up from where it had been.


MS. BREWER: There was a decision made last year as a pre-curser for transitioning the pension administration work to the pension corporations that the Pensions Administration would move from the Human Resources Secretariat back to the Department of Finance. So you would have seen, when you did the Estimates for Human Resources Secretariat, you should have seen a similar reduction in one of their activities.




MS. BREWER: So all the Pensions people came together within Finance and then we worked with the pension corporations to lead the transition to the corporations.


MS. MICHAEL: Okay, thank you.


So then let's continue along the line. That was the budget; the revision was $1.9 million, approximately, but this year, now in this budget, it is down by $491,000.


MS. BREWER: So what we did there, Ms. Michael, is we estimated the number of staff who would be transitioning to the corporation and because that's not a government entity, they essentially were resigning their positions. So we had to estimate whatever termination costs they were entitled to, whether it was severance or overtime they might have had on the books or leave provisions, things of that nature. So we estimated that. As well, there is still a smaller number of staff that we have to provide salary for, as well.


So the combination of that, plus there was some vacancies that we didn't fill and those got removed as well. So the net result was a lower requirement required as when we did the zero-based budget build up for '17-'18.


MS. MICHAEL: Okay, thank you very much.


MS. BREWER: And that may change again in '18-'19 once we finish the transition.


MS. MICHAEL: Right, okay. Thank you, Ms. Brewer.


Under the Professional Services, the budget last year was $307,000 and then the revision added $30,000 and this year it is up again. So if we could have an explanation of what's entailed in the Professional Services here.


MS. C. BENNETT: The increase in Professional Services of $30,000 in '16-'17 was related to greater actuarial requirements than had been anticipated and the budget in '17-'18 is increased as part of the zero-based budgeting. It was identified through the departmental submission that there were additional requirements for actuaries and we wanted to make sure it was in the right line item and that's what's reflected here.


MS. MICHAEL: Okay, thank you.


2.1.02, just a minor question, but under Professional Services there was $25,000 budgeted and nothing spent and now nothing budgeted this year either. What were the professional services that one thought might happen in that line?


MS. C. BENNETT: The decrease in '16-'17 was budget extracts by actuaries were not required in this particular one. In the '17-'18 reduction, during the zero-based budgeting the departmental submission centralized all actuary requirements for the Department of Finance in 2.3.01 for the finance of the Comptroller General under Professional Services.


MS. MICHAEL: Okay, thank you.


When you say centralized, Minister, can you give an explanation of what prior decentralizing was?




MS. MILLER: Previously, a number of different areas in Finance who needed to use actuarial information, they all budgeted for the actuaries in their own activities. But it was felt that it was better placed in one area so that one area was dealing with the actuaries in all of the requirements for the department.


Where the Office of the Comptroller General is responsible for the financial statements of the province, it was deemed that was the most appropriate place for it to be, so it was transferred to us.


MS. MICHAEL: Okay. Thank you very much. I appreciate that.


2.1.03, General Insurance and Financial Analysis; again, looking at the salary line first, the budget was approximately $271,000, but the budget for this year has gone up by almost $310,000. Could we have an explanation of that?


MS. BREWER: You may have heard in the preamble that one of the blocks there was an initiative for financial capacity. So as a result of that there was money reallocated to this division. There are two positions to support some Treasury Board initiatives. There needs to be a review of financial policies. There's probably a list as long as your arm of different requests that Treasury Board has asked, so we need some dedicated staff to resource that.


Last year, there were two people assigned through the Office of the Comptroller General, but they were actually funded by the Human Resource Secretariat. It was a major initiative that the department, through the Office of the Comptroller General, undertook to provide online, some courses, to help any manager understand the Financial Administration Act, preparation of Public Accounts, preparation of budgets and just some basic financial capacity initiatives.


That worked so well, but because it's not in the training environment – we're moving on to policy development and policy documentation – that money is now being budgeted under this activity which is General Insurance as well as Financial Analysis.


As well, we put some money in place there. The ADM there, Denise Hanrahan, Financial Planning and Benefits Administration, really felt that area needed a director, at least in the short term, because there are certain projects that have to be looked at such as the Vehicle Fleet Management Policy. Looking at trying to identify ways we can save money through how we procure insurance and things of that nature.


There was a combination of some three contractual positions put in place to help support some of the financial capacity and other work the Department of Finance has to lead with respect to The Way Forward actions.


MS. MICHAEL: And do I understand correctly that the director position is also contractual?


MS. BREWER: It is, yes.


MS. MICHAEL: All right.


Coming down in the same subhead, down to Purchased Services, last year there was nothing budgeted but $7,800 was the revision and this year $8,700. What are the services that would be purchased here?


MS. C. BENNETT: In fiscal '16-'17, there was a requirement for an optic risk claims system and compulsory risk management courses. So this would be to support efforts to manage insurance, manage insurance costs and insurance claims, property insurance and the like.


In '17-'18, the requirement – as part of the zero-based budgeting it was recognized that an allocation needed to be provided for the optic risk claims system as well as the continuation of compulsory risk management courses for those individuals that are working in this unit.


MS. MICHAEL: Okay. Thank you very much.


2.1.04 – I must be getting tired – again, the salary line here began last year in the budget estimate as $743,300. It went down in the revision and this year it is down again by $298,800 from what was budgeted last year.


MS. BREWER: There were some delays in filling some positions that were provided for in '16-'17, so that's part of the savings from '16-'17 revised. As well, this is an area that has gone through extensive changes as a result of changes in management structure. There was a director position that was eliminated there, as well as, there was a combination of a couple of manager positions that saw another manager position eliminated. There was also a vacant manager position that we are not filling.




Did those eliminated positions result in individuals losing positions? Well, certainly one was empty so that didn't …


MS. BREWER: Yeah, there was a director and a manager. But then there was somebody who was also redeployed who would have been impacted in another branch in another division. That individual was able to obtain employment at a manager level.




MS. BREWER: Then there was a retirement. We're taking a couple of positions and combining and we'll be filling so, overall, it's still a reduction.


MS. MICHAEL: Okay and –


CHAIR: Okay, we'll go back to Mr. Hutchings.


MS. MICHAEL: Could I just ask one follow-up question?


CHAIR: Okay, Mr. Hutchings, any problem or ...?




MS. MICHAEL: Yeah, it's just directly to what Ms. Brewer just said.


CHAIR: Right.


MS. MICHAEL: I just want to get it straight. Were there people who actually lost jobs that are no longer in the system?




MS. MICHAEL: Okay. And was that three?


MS. BREWER: There were two.


MS. MICHAEL: Two. Okay, I got it straight.


Thank you very much.


CHAIR: Okay, Mr. Hutchings.


MR. HUTCHINGS: Thank you, Mr. Chair.


I want to go back to 1.3.01, the revision for Salaries, $1.8 million. I think, Minister, yourself or your staff indicated that was due to a settlement or issues related to maybe a benefit related to an issue with the closure of depots with Transportation and Works.


Just tell me again what that was. It was something to do with Transportation and Works and some other element you indicated reflected the number.


MS. BREWER: Anne Marie, can you speak here? Were you involved in the payout of the $1.8 million?


MS. MILLER: I know it had to do with the HRS. I'm not sure if it was, maybe, EI related. It was paid directly from Finance, yeah.


I don't remember a lot of the details. I know it was just after – it was in January month that we initiated the payment.


MR. HUTCHINGS: Maybe if we could get just a list of what it is and any trend.




MR. HUTCHINGS: So just explain to me as well, the initial budget Estimate was $8.9 million, $1.811 million was paid out by Finance and was used by Finance, but there could have been other transfers that would have been done by other departments? You would have transferred the money to them for certain needs, but that's not reflected here, is that correct?


MS. BREWER: Yes, ordinarily, you would see zero there under revised for Finance, right?




MS. BREWER: Because if Finance was using something for its own purpose, it would be reflected in the particular activity or division.




MS. BREWER: It's just this particular one, like the transportation depots, you may recall, was the government of the day closed a number of depots.




MS. BREWER: And that was challenged by the union and grieved and went to arbitration and they were award.


Basically, the government – then there's a negotiation process because they're basically saying people lost their jobs, they shouldn't have lost their job and there are all kinds of mitigations that has to happen. Some people might have gotten re-employed elsewhere and things like that.


So there was a fair bit of time, as I understand it, trying to determine what the actual settlement was per person for that. This has something to do with the EI because people would have been entitled to EI payments. So there was some sort of one payment that was made and there was no ability to charge it off to individual divisions so they left it. It was one cheque that was cut and therefore was left in this particular vote.




MS. BREWER: But I'm a bit hazy on the – because I wasn't directly involved in the actual payment, but –


MR. HUTCHINGS: No, fair enough. Maybe we'll get just an explanation at some point afterwards (inaudible).


MS. BREWER: Right, yeah.




So this here, this wouldn't include, Minister, anything – and whether you include it or not I don't know – anything included for future contract negotiations with – would it?


MS. C. BENNETT: No, there is no assumption in any regard with regard to future collective bargaining and future contracts.




MS. C. BENNETT: The dollars here that you'd see in '17-'18, I listed earlier, where those assumptions are coming from, based on discussions between budgeting and HR. They had been related to Transportation and Works depot settlement, ferry captains, Labrador Benefits agreements, RCMP collective agreements and any additional funding from existing collective agreements that are in place.


MR. HUTCHINGS: Okay, fair enough.


Anything related to JES, this would be referred out to applicable departments to meet those needs? Would that be correct?


MS. BREWER: The majority of the JES has been implemented and rolled out, but there is the odd appeal that might happen. There would be –


MR. HUTCHINGS: (Inaudible) there are over 400 appeals still existing, right?


MS. BREWER: Four hundred appeals.


MR. HUTCHINGS: So if there were any implications of those appeals, it would flow out of here?


MS. BREWER: We would look to the department first to see if they could find those.


MR. HUTCHINGS: Okay, yeah.


MS. BREWER: But if not, then that would be an area that if they came to Treasury Board and Treasury Board agreed, we could transfer the money from there.


MR. HUTCHINGS: Okay, fair enough. Could we –


MS. C. BENNETT: Sorry, if I could. Mr. Hutchings, earlier you asked about Treasury Board. This would be a good example of where Treasury Board is working hard with the departments to make sure that if they're able to cover the costs of something that is unexpected or maybe that they haven't anticipated, that they can actually work to cover those expenses in the department before they come to Treasury Board.


MR. HUTCHINGS: Okay. Thank you.


Could I get the list of transfers, what was transferred out of this? Would that be possible to get, as well?


Thank you.


2.1.01, Pensions Administration, there was just a conversation earlier, Ms. Michael indicated, in regard to, I think it's Professional Services actuary requirements. Under Professional Services in 2.1.01 there was an increase. Would that be actuarial requirements related to something specific or is it just that you feel that this year it will be a little bit more?


MS. BREWER: I don't have the (inaudible) with me, but the valuations of the various plans tend to happen on a triannual cycle.




MS. BREWER: So it depends on when the particular plans are due and –


MR. HUTCHINGS: And you'd make the projections on that, obviously.






Okay. Thank you.


There's a line there, Revenue – Provincial. What exactly is that?


MS. BREWER: Sorry, are you on 2.1.01, Pensions Administration?




MS. BREWER: All activities relating to the administration of the pension plan are actually funded by the pension plan. That would be a recovery to leave to the various plans.


MR. HUTCHINGS: Of the cost and just pull it out; the various plans would cover it.


MS. BREWER: Right.


MR. HUTCHINGS: Okay. Thank you.


I'm just trying to work my way through here. I don't want to repeat things that Ms. Michael has asked so I'm just trying to follow my notes. My writing is not very good.


If I go to 2.1.05, Financial Assistance, this particular heading is defined as promoting business opportunity and financial support for departments and Crown agencies. Relevant funding would be transferred to departments during the year as required.


First of all, can you just explain to me if there were transfers through the year and what they were under the Grants and Subsidies of 2.1.05?


MS. C. BENNETT: Okay, so that's with reference to the $4.7 million?






MS. BREWER: There was $236,400 transferred relating to collective bargaining and there was $2,041,000 transferred to Executive Council relating to their Government Renewal Initiative and the Muskrat Falls-Lower Churchill project committee. A total of $2,277,400 was transferred.


MR. HUTCHINGS: You said $236,400 and $2 million?


MS. BREWER: $2,041,000.


MR. HUTCHINGS: And the total transfer was …?


MS. BREWER: $2,277,400.


MR. HUTCHINGS: Did you say collective bargaining?


MS. BREWER: Collective bargaining was $236,400.


MR. HUTCHINGS: Okay, so what would that be collective bargaining? What would those monies be for?


MS. C. BENNETT: That would be related to expenses that we would have incurred in departments that had expenses that would have supported the work that government is undertaking for collective bargaining. Justice may have incurred some expenses, and this would have been where the transfer would have been from.


MR. HUTCHINGS: Okay, so would you charge off an hourly rate for their employers? Would it be for travel or something like that or all of the above?


MS. C. BENNETT: I think in the HRS Estimates, Mr. Hutchings, you asked in HRS where the expenses related to McInnes Cooper may have been?


MR. HUTCHINGS: Oh, yes. Okay.


MS. C. BENNETT: At the time my answer – and just for clarity for the Members of the Committee I had said that the invoices for McInnes Cooper would have been generated and invoiced to Justice. This would be an example of one of the items that could be covering this transfer.


MR. HUTCHINGS: I guess, Minister, just a question in regard to McInnes Cooper. Would that be a law firm that's basically retained by the Department of Justice; therefore, the easiest thing would be if you wanted assistance, that it's with the Department of Justice and they would bill it out and then you just …


MS. C. BENNETT: Yeah, so specifically related to McInnes Cooper's involvement in collective bargaining, they would have a contract that would be in place and that contract would be for a certain hourly amount. That hourly amount would be billed.


When it's billed, the bill would go to Justice. Justice would cover the bill, or monies would be transferred from this line item as we had said last year in Estimates it would be.


MR. HUTCHINGS: Okay, but I guess my question is Justice would retain McInnes Cooper. The contract would be with Justice.


MS. C. BENNETT: Any contracts for law firms would be held through Justice.


MR. HUTCHINGS: Okay, yeah.


Thank you.


CHAIR: Okay, before we convene again, we're going to take a short break to give Don in the Broadcast Centre a short break.




CHAIR: Okay, we'll reconvene and hopefully clue up on this stretch.


We'll go to Ms. Michael.


MS. MICHAEL: Thank you very much, Mr. Chair.


Minister, I'll pick up at 2.1.05 where Mr. Hutchings was before the break. The $236,400, that is a cost attributed to costs of collective bargaining. Could you tell us how much of that has been invoiced and paid to McInnes Cooper?


MS. C. BENNETT: I don't have that information here tonight, but I can provide that to you.


MS. MICHAEL: Okay. Thank you very much.


Staying in that line and going into this year's budget where the budget for this year is $11,351,300, what is that about? Is that about the collective bargaining? Is that anticipating? No.


MS. C. BENNETT: No, there's no increase in the amount that we are budgeting for collective bargaining over last year. This amount and this increase are specific to the various government initiatives to be transferred to the Department of Finance, such as things like Salaries and Operating Accounts.


It relates to work that has to happen on the enhanced federal loan guarantee, Muskrat Falls oversight and Way Forward-led initiatives that have to led by Finance, including things like shared services and centralized collections. It also includes initiatives to support Treasury Board financial capacity.


There's also a contingency – and this is new and this would explain the difference from last year to this year – related to pension reform. That's the primary reason for this increase over last year.


MS. MICHAEL: How much is that contingency?


MS. C. BENNETT: That contingency is over $6 million.


MS. MICHAEL: Okay. Thank you.


And, of course, all of that is in the briefing book? Yes.


Thank you.


I'd like to come back to 2.1.04 and if we could have an explanation of the Revenue – Provincial, 02.




The decrease in '16-'17 was due to recoverable positions being vacant. The recoverable amount from Newfoundland and Labrador Municipal Financing Corporation and the sinking funds will be less than anticipated. So this recovery was less for the (inaudible) market licence paid for by the sinking funds.


Then, in '17-'18, the reduction is related to the recoverable expenditures for the division from the Newfoundland and Labrador Municipal Financial Corporation. The sinking funds have declined further.


MS. MICHAEL: Okay. Thank you very much.


Going forward, then, to 2.1.06, Financial Assistance, Loans, Advances and Investments; the budget last year was $10,731,400 and down this year. Well, first of all, it looks like only $2,566,300 went out. This year the estimate is $8,165,100. So I guess two things: the reasons for the big difference between budget and revision last year and what exactly is covered in this line right now?


MS. BREWER: The Loans, Advances and Investments: the budget is the remaining amount owing to Corner Brook Pulp and Paper on the $110 million loan.




MS. BREWER: You may recall there was $25 million available but it's for capital advances. They submit a capital advance request when they're ready to implement some capital expenditures. The amount of capital expenditures, the requests were less than had been anticipated. When we asked, from a cash flow perspective, they had indicated to budget the balance in '17-'18.


MS. MICHAEL: Okay. I thought it was the Corner Brook Pulp and Paper, but just verifying.


Again, in the same subhead, 2.1.06, the provincial revenue, could you explain that line, please?


MS. BREWER: That would be the interest payments that are owed from –


MS. MICHAEL: The interest payments.


MS. BREWER: – paid from Corner Brook Pulp and Paper on the loan that's been issued to date.




Okay. Thank you very much.


What is the interest on that loan?


MS. BREWER: I think currently it's around close to 4 per cent, if I recall. If I'm wrong, I'll get that to you.


MS. MICHAEL: Okay. Thank you.


2.2.01, Tax Policy and here, Professional Services – there's a big drop in the Professional Services line. Last year, the revision actually went up by $873,000. Then, this year, the budget is almost $237,000 less than last year's budget. There's quite an up and down there, if we could have an explanation.


MS. BREWER: Primarily, the increase in projected revised is relating to the commission that was paid to Deloitte for the indirect taxation review that Ann Marie Miller had mentioned. The provision next year is money there to commence the comprehensive taxation review that was announced.


MS. MICHAEL: Okay. Being done by Deloitte?


MS. BREWER: No, we haven't decided yet in terms of how we're engaging outside expertise for that.


MS. MICHAEL: Okay. Thank you very much.


MS. C. BENNETT: Ms. Michael, I just want to make sure that we're clear. The $236,000, the Professional Services amount for '17-'18 – I wasn't sure that you heard and I just wanted to double check – that's related to the tax review.


MS. MICHAEL: Yes, I did hear that.




MS. MICHAEL: Yeah, thank you very much.


MS. C. BENNETT: The HST work that Deloitte would have done, the Professional Services line there in fiscal '16-'17 would reflect what was paid to them. But if you look down at the bottom under provincial revenues –




MS. C. BENNETT: – you would have seen revenues anticipated at $8.7 million. That would have been tax recovery.


MS. MICHAEL: Where are you, Minister?


MS. C. BENNETT: If you look down under '17-'18 – 




MS. C. BENNETT: See where it says related revenues provincial, the $9.9 million?


MS. MICHAEL: Yeah, $9.9 million, right.


MS. C. BENNETT: So that would be the revenue coming from the work that Deloitte had done on the HST.




MS. C. BENNETT: Or we anticipate coming from the work that Deloitte has done on HST.


MS. MICHAEL: Okay. I was coming down to that.


MS. C. BENNETT: Sorry.


MS. MICHAEL: Okay. That's all right.


MS. C. BENNETT: I'm always excited when I get revenue from somewhere we don't expect to.


MS. MICHAEL: Okay, very good.


Well then, I have no more questions in that subhead because that would have been my next question.


Coming down to Fiscal Policy, again, just an explanation of the salary line there because it's a fair bit below what was budgeted last year, over $100,000, I think.


MS. BREWER: Okay, Ms. Michael, this is one of the areas where we indicated there was a consolidation. This division is now part of the new economic and fiscal policy branch.




MS. BREWER: So there was a reduction there in the director position.


MS. MICHAEL: Right. Okay, thank you very much.


I think what I'll do is just turn it over to Mr. Hutchings at this point.


CHAIR: Okay.


Mr. Hutchings.


MR. HUTCHINGS: Okay, thank you.


I just had a quick question. I want to go back to 2.1.04, Debt Management. There's reference to loan guarantees. I'm just wondering the Fisheries Loan Guarantee Program; would that be part of that, in terms of – because the province would guarantee.


MS. BREWER: Well, the minister signs off on all guarantees, but the actual program is through –


MR. HUTCHINGS: But a program like that would fall under something like this, I guess, under this heading?


MS. BREWER: Well, there's actually a committee, I believe, through the Tourism, Culture, the department –






MS. BREWER: TCII. But once a decision is made to provide the guarantee, then the administration of that guarantee would follow.


MR. HUTCHINGS: It wouldn't happen here.


Okay. Thank you.


If I could just go to 2.1.05, the Financial Assistance piece there. I know you listed what was included in 2.1.05 in the Grants and Subsidies. In the top it says promoting business opportunities. Could you just explain how that relates to the Grants and Subsidies?




Included in that $11,351,000 is money that the Finance Department will hold to cover costs associated with things like The Way Forward, I mentioned earlier the shared services and centralized collections.


This heading is not just about promoting business opportunities and financial supports; it's also about government's objectives, where we need to keep monies available to be able to implement activities such as shared services. It would also be – as I mentioned in Ms. Michael's question, there's also a contingency amount in here relating to pension reform.




MS. C. BENNETT: That amount is over $6 million. I want to be clear because this is a significant increase in this line item. I want to be transparent about what that is.




2.1.06, Financial Assistance; it talks about here, one of the lines there, entities to leverage federal funding initiatives. What federal funding initiatives have we been successful with that would fall under this?


MS. BREWER: Last year, if you look at last year's Estimates, I believe that original budget, Wanda, was closer to $20 million. You may recall the federal government budget was late last year, so we did not have a lot of information on how the federal government was going to allocate, particularly to, I believe, it was social infrastructure.


During the year there were initiatives approved, both from Memorial University and the college. Some of that money was actually transferred then to the Advanced Education. You'll probably have a discussion with them tomorrow if they're in Estimates Committee tomorrow.


So this year with the Canada Infrastructure Fund and the New Building Canada Fund, that money is actually voted in the applicable departments.


MR. HUTCHINGS: Okay, to leverage those federal dollars to various departments, okay.




MR. HUTCHINGS: I don't know, Minister, if this is the right spot to ask, but I know with monies that were allocated for the new science centre, there were monies from Voisey's Bay, I think, there were monies allocated initially but then I think you reported or government reported that was backfilled by federal dollars. Has there been a decision made on that, or does that sit in Finance or –?


MS. BREWER: That particular project, at the end of the day the government applied to the federal government for federal assistance. So the money was then used for the federal – I think it was $99 million approved, just under $100 million was –


MR. HUTCHINGS: But from the feds?


MS. BREWER: It was from the feds.




MS. C. BENNETT: Mr. Hutchings, just to let you know, that money would be flowing directly from the feds to the university, that $99 million. So your question was around monies from Voisey's Bay that the former administration had –


MR. HUTCHINGS: Had allocated; a part of that was allocated for the science centre, but I guess with the federal dollars coming in that frees up that money.


MS. BREWER: I'm not sure if it was Voisey's Bay or Hebron. I'd have to check.


MR. HUTCHINGS: Oh, I'm sorry. Yes, you're right. It was the Hebron Project. I'm sorry, it wasn't Voisey's Bay. It was in regard to a building of one of the components. Bull Arm and Marystown were full. They couldn't do it here. They wanted to get moving, so we negotiated that they build it in Korea. I think it was $150 million, and part of that was $100 million to go to the science centre. But I guess my point is the feds have backfilled that.


MS. BREWER: If the feds have stepped in, then the money then became available as general revenues used to fund government's share, the leveraging that's required for other federal infrastructure projects.


MR. HUTCHINGS: Okay, thank you.


Could I just go to 2.2.01, Tax Policy? Under Grants and Subsidies, there's an amount there; $23,600 was estimated – was paid last year and it's in again. Is that related to paying for the harness racing, the Maritime racing commission.




MR. HUTCHINGS: Okay. So we're still paying basically to be a member of the Maritime harness racing association, I think it's called.


MR. MARTIN: Yes, we're still a member at this point in time.




MR. MARTIN: But we have been speaking with IGA at looking at our membership in terms of methodology, given that the racetrack is currently closed.


MR. HUTCHINGS: Yes, unfortunately.


2.2.03; the Salaries for what was estimated and what was revised and then the Estimates for this year have been readjusted. I'm just wondering about those changes and the reduction. I guess that's related to positions or …?


MS. BREWER: The reduction from budget to revised was there was a senior policy analyst who was on unpaid leave for a period of four months and there was an analyst position that was vacant for the entire year. Then, there are changes as a result of changes to management structure. There was actually a manager position that was eliminated there.


MR. HUTCHINGS: The senior policy and the analyst; were they positions that just were vacant and they're going to be filled at a later point or …?


MR. MARTIN: There was one position that was eliminated through the process.




MR. MARTIN: There was another position that was vacant for most of last year, that has since been backfilled, but since it was backfilled at a lower scale, it's budgeted at a lower salary scale as well.




MR. MARTIN: So it's a combination of the two.


MR. HUTCHINGS: Okay. Thank you.


We'll go down to Economics and Statistics, 2.2.04. I wonder under Salaries there as well, if we could just get some explanation in regard to what was budgeted last year, the revision and again the estimate for this fiscal year.


MS. BREWER: The reduction is due to vacancies and recruitments were longer than anticipated. As well, there's some contractual work. It depends on the volume of the survey. There was some survey unit work that had been delayed. So that accounts for the majority of the savings from budget to revised.


Then, as well, going into next year the money is up because part of the work here is some contract work that the division does for other jurisdictions. As a result of that, there were some contractual resources that were supplemented. As well, there were also some reductions in positions due to changes in the management structure.


MR. HUTCHINGS: Okay, so contract work with other jurisdictions would be related to sharing of statistics and …?


MS. BREWER: It could be the City of St. John's helping with some economic projections.




MS. BREWER: One of the projects that the former ADM, I know, has particular passion in is some work they're doing with the Irish – there's a professor who they're documenting a lot of the work, from a census perceptive, that he has with respect to the Irish immigration.




MS. BREWER: It varies and it fluctuates from year to year. You can see the revenue line would be higher as well.


MR. HUTCHINGS: Okay, yeah.


MS. BREWER: Because we actually bill for this work.


MR. HUTCHINGS: Most of the revenue would be tied to the activity you just described, basically.


MS. BREWER: Right, yeah.


MR. HUTCHINGS: Okay, Mr. Chair, my time is up I think.


CHAIR: Okay.


Ms. Michael.


MS. MICHAEL: Thank you, Mr. Chair.


Minister, I'd just like to come back to 2.2.01 for a minute. I'm just curious why we're still paying the harness racing fee if we no longer have harness racing happening in the province. I know it's not a lot but …


MR. MARTIN: It was last year when the actual racetrack closed; it's currently for sale at this point in time. We still have an obligation to be in a regulatory part.


However, given the fact that they are closed, we have been discussing right now with Intergovernmental Affairs – this is an interprovincial harness racing association – to discuss with them the opportunity for us to, rather than strictly withdraw, whether or not we can put either our piece of the (inaudible) or at some reduced fee amount, recognizing the fact that it's not currently operating.


MS. MICHAEL: Okay. Hoping that something might operate again?


MR. MARTIN: Obviously, while it's sitting there we do have a regulatory authority.




MR. MARTIN: It could impact the business as well.


MS. MICHAEL: Okay. Thank you very much.


With regard to the tax review, is that report done? Would it be available?


MS. C. BENNETT: The tax review for the HST or the tax review that we're going to do around personal and corporate tax?


MS. MICHAEL: For the HST. You haven't started the other one yet. You're waiting on the federal government, aren't you?






MS. C. BENNETT: With the tax review – actually, let me correct. The federal government had done their tax review in two phases.




MS. C. BENNETT: They had originally announced they were going to do it in one phase. They have since said they're going to do it in two. They have the first one done.


We're going to start ours this fiscal year with the hopes of concluding it before next year. I have ministerial meetings in June and I'm hoping to get an update on phase two of where the federal government is with regard to theirs, so that we can link it into ours so that there will only be one tax change happening at the same time.


MS. MICHAEL: Right. Okay.


What about the HST?


MS. C. BENNETT: Sorry, I misunderstood your question. I thought you were asking about the work that Deloitte was doing on HST recovery.


MS. MICHAEL: Yes, right – oh, no, that wasn't what I was talking about.


MS. C. BENNETT: My apologies.


MS. MICHAEL: Okay. Thank you very much.


Okay, then moving forward. Keith was at 2.2.04, right, and he asked about Salaries.


2.2.04; if we could have an explanation of the Supplies line. What exactly are the supplies here? It's gone up by almost $19,000 in this year's budget.


MS. C. BENNETT: The increase in the Supplies line; when the department did the zero-based budgeting review and looked at what their expenses were going to be from the ground up, they noted there was going to be a one-time funding of $15,000 to purchase census data. That's primarily the reason for the increase this year.


MS. MICHAEL: Okay. Thank you very much.


Minister, what is the source of the Revenue – Provincial in this subhead? Last year the budget for that was $86,400, but it looks like $288,000 more actually came in and then this year it's actually up by $335,000.


MS. C. BENNETT: There was a variety of recoveries made in '16-'17: Newfoundland and Labrador Housing, the City of St. John's, Newfoundland Hydro, Eastern Health, workers' comp and MUN. In this coming year, this '17-'18, we're anticipating revenues coming in from the Northern Policy Institute, Memorial University, Newfoundland Hydro, the City of St. John's, WorkplaceNL and the Irish Project that Ms. Brewer spoke about earlier. In your Estimates book, these line items are detailed out with actual dollar amounts.




MS. C. BENNETT: So you'll be able to see those revenue line items.


MS. MICHAEL: Okay. So this is sort of paying for the services to the department.


MS. C. BENNETT: That's correct.


MS. MICHAEL: Okay. Thank you very much.


Guess what? We're down to the last subhead, I think, 2.3.01, Office of the Comptroller.


Just an explanation of the salary line here; it's down by about – how much, $1,000, is it? Yes.


MS. BREWER: The reduction there is – again, significant changes occurred there through our changes to the management structure. As I indicated earlier, there was a director position that was eliminated there, various manager positions, as well as management analyst positions.


MS. MICHAEL: I guess the book probably has all that detail does it, the briefing book? Not necessarily.


MS. BREWER: I think as a separate exercise you're going to be releasing – it might not – the positions throughout government?


MS. C. BENNETT: Yes. As I said, in HRS, within the next day or so we'll be able to table in the House the final numbers related to the management changes.


MS. MICHAEL: Right, because it's $1.03 million. So it's a fair bit.


MS. C. BENNETT: Yeah. But, Ms. Michael, that $1 million is built from a number of items. It's built not only from the management structure, but also savings from zero-based budgeting and the annualization of last year's decisions. There are a number of items that are contributing to that, and the dollar figures will be in the book.


MS. MICHAEL: Okay. Thank you very much.


Professional Services has gone up considerably from the budget last year. It went up in the revision and now gone up by $126,000, give or take, above last year's budget for this year.


MS. BREWER: You may recall, Ms. Michael, the earlier discussion where Ann Marie mentioned that it was decided to consolidate into her area –


MS. MICHAEL: Oh, right. Yes.


MS. BREWER: – to better manage the actuarial contracts. As well, based on discussions with the Auditor General, there are evaluations that will need to be done in the future with respect to sick leave.


Ann Marie, what was the other one, severance? No, it was just sick leave.


MS. MILLER: Just mostly.


MS. BREWER: Mostly sick leave.


MS. MICHAEL: Okay. Thank you.


Then, under Purchased Services, this has dropped by approximately $164,000. Could we have an explanation of that?


MS. BREWER: As the minister indicated, we're working hard with Transportation and Works to try to shrink our lease footprint. This is an area out on Topsail Road where our payment processing is, and there was some excess space there that we managed to work with Transportation and Works. I believe it's being sublet to one of the units belonging to Eastern Health, if I recall. So they're going to take over some of that space and some of that rent.


MS. MICHAEL: Thank you very much.


Finally, the revenue line, Revenue – Provincial, what is that about?


MS. C. BENNETT: That would have been related to international fuel tax agreement fees. In '17-'18 we expect the same, that there'll be changes in the international fuel tax agreement registration and decal fees, and this is also zero-based budgeting related.


MS. MICHAEL: Okay, thank you.


That's the end of my questions at the moment. A question may come up again, but at the moment I'm finished.


CHAIR: Okay, thank you.


Mr. Hutchings.


MR. HUTCHINGS: Thank you, Mr. Chair.


Minister, I just want to go back and clarify something earlier, 2.2.01, just so I'm clear on the Professional Services. It was $1.2 million, and I think that was tied, you said, to Deloitte and some of the work they've done on HST and I think directed down to $9.9 million in terms of the revenue.


The expenditure in Professional Services equates to what the return was back to the province in what they found in regard to HST?


MS. C. BENNETT: The $873,000 that you would have seen in '16 – sorry. In '16-'17, the $1.2 million, $873,000 of that is to reimburse or repay Deloitte as part of the identified significant tax recovery opportunity in Budget 2016.


In the revenue line, that would have been revenues that we anticipate getting from their review. The review was completed in '16-'17, but the revenue won't be received until '17-'18.


MR. HUTCHINGS: That's the $9.9 million, is that the number that you're –?


MS. C. BENNETT: Of the $9.9 million, $8.7 million is related to the Deloitte work, and $1.2 million is annualization of prior year decisions.


MR. HUTCHINGS: Okay. So you've submitted them to the federal government and waiting to hear back, but in the interim the calculation was done, Deloitte was paid $873,000.




MR. HUTCHINGS: Okay, thank you.


I just had a couple of general questions, Minister, and then clue up here.


In February of 2017, there was an issue with an overpayment in regard to HST from the federal government; I think it was somewhere in the range of $140 million. Can you just give me an update on where that is in regard to paying that off, or a payment arrangement or status (inaudible)?


MS. C. BENNETT: The HST overpayment, there's been a request made of the federal government to, instead of requiring that payment in one year or in the years that it was due, if they can stretch the payment.


I don't have the information here tonight.


MR. MARTIN: I believe it's five years. We'd have to confirm, but I believe it's paid back over a five-year period.


MS. C. BENNETT: They've agreed to that, obviously?


MR. MARTIN: They've agreed to that, yes.


MS. C. BENNETT: So I'll confirm that for you, but when the original information came in, there was a payment structure we thought was too tight so we asked them to give us more time and they've since come back and provided us with more time. And as the assistant deputy minister just mentioned, we believe it's five years but we'll confirm that for you.


MR. HUTCHINGS: Okay, thank you.


Last year, we talked about the use of, I think, P-Card programming that was implemented and the initiative was to lower the cost of government.


Do we have any assessment done of the success of that to date and what the return has been back to government for savings?


MS. C. BENNETT: I'm going to ask Ann Marie Miller, the Comptroller General, to provide you an update on the information she might have.


MS. MILLER: We're still rolling out the P-Card program. Last year, it was piloted in a few departments and each department was asked to identify people as P-Card holders.




MS. MILLER: So I can try and get you some information. I don't know if there's been an assessment done of the overall savings at this point, but I can certainly discuss and go to GPA because they're the ones who are actually administering the P-Card program.


MR. HUTCHINGS: Okay. So the program was piloted and it hasn't gone full blown yet across the government, has it?


MS. MILLER: No, it's still continuing to –




MS. MILLER: But the goal would be that the more P-Card holders, the less administrative costs because you don't have the cost associated with processing purchase orders and invoices.




Okay, that's good for me for now, Mr. Chair.


CHAIR: Thank you.


Ms. Michael.


Okay, we'll call the heading.


CLERK: Subheads 1.1.01 to 2.3.01 inclusive.


CHAIR: Shall 1.1.01 to 2.3.01 inclusive carry?


All those in favour, 'aye.'




CHAIR: Carried.


On motion, subheads 1.1.01 through 2.3.01 carried.


CHAIR: Shall the total carry?


All those in favour, 'aye.'




CHAIR: Carried.


On motion, Department of Finance, total heads, carried.


CHAIR: Shall I report the Estimates of the Department of Finance carried?


All those in favour, 'aye.'




CHAIR: Carried.


On motion, Estimates of the Department of Finance, Consolidated Fund Services and Office of the Chief Information Officer carried without amendment.


CHAIR: Okay, we've already accepted the minutes of the previous meeting. The time and date of the next meeting will be tomorrow, May 9, at 6 p.m. in the same location.


Ms. Michael.


MS. MICHAEL: Just concluding comments to thank the minister and her officials. This was a very good session tonight and thank you very much for all the work you do, not just tonight. We understand how much work you have a on your plates.


Thank you very much, Minister, and your officials.


MS. C. BENNETT: Thank you.


Mr. Chair, I just want to take a minute and thank the team that sat here. As I'm sure Members of this House would appreciate, this team does a tremendous amount of work, not only in its own department but across government to help prepare the budget. I have to tell you, I've never seen a bunch of CAs work as hard as these individuals. So I want to say thank you and congratulations to them on serving the people of the province with dignity, integrity and competency.


Thank you.


CHAIR: Okay, a motion to adjourn.


MS. HALEY: So moved.


CHAIR: Adjourned.


On motion, the Committee adjourned.