Pursuant to Standing Order 87, Mr. William Ramsay, M.H.A., (LaPoile) substitutes for John Crane, M.H.A., (Harbour Grace) who replaces Mr. Paul Dicks, M.H.A., (Humber West) as Chairman of the Committee.

The Committee met at 9:20 a.m. in the Legislative Chamber of the Colonial Building.

MR. CHAIRMAN (Crane): Order, please!

Okay gentlemen, we might as well begin. We are sort of shorthanded this morning but we can be shorthanded if we waited all day.

We ask you to state your name before you speak. The recorder will need that to sort out who is speaking, since he won't know everybody.

On motion, Minutes adopted as circulated.

MR. CHAIRMAN: My name is John Crane, I am MHA for Harbour Grace and I am a substitute for a substitute. Paul Dicks, is supposed to be the Chairperson, then John Efford, then Bill Ramsay and it finally got down to me.

I will ask you to introduce yourselves, starting with you, Sir.

MR. OLDFORD: Doug Oldford, MHA, Trinity North.

MR. SHORT: Larry Short, MHA, St. George's.

MR. DOYLE: Norm Doyle, Harbour Main.

MR. CHAIRMAN: Okay, Mr. Minister, you may introduce yourself and your staff.

MR. HOGAN: I have copies of the opening statement, Mr. Chairman, I don't know if we have enough to go around but certainly enough to - I have to give one to Mr. Doyle and to the Chair.

I am William Hogan, Mr. Chairman, Minister of Municipal and Provincial Affairs, also responsible for Newfoundland and Labrador Housing.

Mr. Chairman and Members of the Committee, I am pleased to be here today to present my department's estimates and to answer any questions that the Committee may have.

Following my opening statement, I would be happy to answer questions; however, there may be occasions in some of the technical areas where I would wish to defer to some member of my staff to provide additional details or information. I trust that this will be acceptable to all members of the Committee.

Before I read the statement, please allow me to introduce the officials present: on my immediate right, Mr. Art Colbourne, Assistant Deputy Minister, Municipal Support Services, Sports and Fitness; on my immediate left, Mr. Don Peckham, Assistant Deputy Minister Financial Planning and Administration; Mr. William Frost, Assistant Deputy Minister, Culture, Historic Resources, Community and Youth and, on my far left, Mr. Rick Hayward, Director of Financial and General Operations.

With permission of the Chair and other members of the Committee, I would like to present my report on estimates in two parts, going with the Department of Municipal and Provincial Affairs first, and then with Newfoundland and Labrador Housing, at which time I will present those officials. Is that fine with the Committee?

AN HON. MEMBER: Yes.

MR. HOGAN: Mr. Chairman, I will commence by handling the major items in the estimates of the Department of Municipal and Provincial Affairs. The total estimates for the department is $172,732,900 gross expenditure. There are revenues in both current and capital account totalling $20,935,000 leaving a net expenditure of $151,797,900. There are 319 permanent positions in the department, operating all divisions.

Mr. Chairman, the department is comprised of three main branches in its delivery service and embodies a number of regional offices to ensure the best delivery of services to the municipalities, sports and recreation commissions, youth groups, culture and historic resources organizations, libraries, etc., in the most efficient manner possible.

The Department of Municipal and Provincial Affairs is responsible for matters relating to local government, municipal financing, real property assessment, urban and rural planning, development control, engineering for water and sewer and road construction and reconstruction, co-ordination of emergency planning to municipalities. It is also responsible for the Office of the Fire Commissioner, which is responsible for fire prevention, suppression and regulation and training throughout the Province. The department is responsible for amateur sports, fitness and recreation activities, as well as youth services, historic resources, culture and communication policies for the Province.

Newfoundland and Labrador Housing Corporation, as I indicated, is a separate entity and will be dealt with separately later on. The activities of the department are broken down within the activities into the following main categories: Executive and Support Services; this activity mainly provides the funding for the operation of the executive administrative accounting and other financial support services for the whole department.

Services to Municipalities: Funding in this area totalling $27,045,200 covers the provision of engineering services for water and sewer installation, street reconstruction and paving programs, the provision of town planning for municipalities, the provision of assessment services to municipalities with real property tax, the provision of developmental control services to areas on protected roads within municipalities, maintenance operation, and industrial water systems.

Funding is also provided to support Newfoundland and Labrador Federation of Municipalities, the Newfoundland and Labrador Association of Municipal Administrators, and the Association of Fire Chiefs and Fire Fighters.

Mr. Chairman, we would like to provide details on some of these services. First, in my department there are regional offices established for the following regions: Labrador, Western, Central and Eastern.

The idea of these offices is to have delivery of services provided in the areas close to the communities and groups served by the department. It also provides for better liaison between the department and municipalities, and for more timely and meaningful response to municipalities and organizations. Departmental employees and regions can get to know the municipal needs of towns, cities, local service districts, sports and recreation organizations, etc., in the region, more intimately than could have been done directly through the head office only.

These regional offices have been given a considerable amount of authority and latitude to manage the responsibilities within their jurisdictions. The Real Property Assessment Division operates under a separate Act and has responsibility for the assessment of real property in all municipalities with a real property tax, except the City of St. John's. At present, some 236 communities have adopted a real property tax and the division has assessed approximately 175,000 properties throughout the Province. This division must continuously conduct re-assessment of these municipalities on a rotational basis.

To assist the division in its ever-growing task, my department has purchased and just recently completed the installation of a computerized mass appraisal system which has automated the assessment process. Now what MASS stands for, I guess we will have to ask somebody else.

AN HON. MEMBER: Municipal Assessment Support System.

MR. HOGAN: Municipal Assessment Support System. Using the system, my department will be able to catch up with the backlog of re-assessments and new assessments required to be done over time. The re-assessments which are now conducted every six to seven years will be conducted more frequently, probably every three years. This will be of tremendous benefit to the municipalities, as they will be much more current in their assessed values, which will eliminate the need for major increases in the taxation value of properties which occur every six years due to the large amount of inflation which normally occurs during such long intervals. We will also have the advantage of allowing the municipalities to earn more revenue through the adoption of an earlier re-assessment cycle without having to necessarily increase the mil rate. The new system can also provide information to the private sector which can be sold to them, and therefore, produce some revenue to reduce government's operating costs of the new system.

Within the services to other municipalities groupings, it is a municipal inspection division. The small staff of eight inspectors is available on a continuous basis to all municipalities to undertake internal audits, and where there are financial problems in the municipalities, to offer them advice when they require it for financial planning, or to advise them of general municipal procedures. This service is especially helpful to new councils when they are not familiar with the procedures and the operation of the council.

There is a Development Control Division within the Urban and Rural Planning Division, which is responsible for the establishment and monitoring of policies for the control of the Province's main highways and other areas. They are places where its controlled. This ensures that proper planning is adhered to in areas which are not incorporated but which may be near municipalities or other areas where growth activities take place.

There is a local government division with a staff of five people. This group provides general support to the municipal operations section of the department. It provides advice to the regional managers on matters of departmental programs and policy.

Mr. Chairman, there is also an Urban and Rural Planning Division. This division is staffed by professional town planners and supported by planning technicians and other administrative staff. The role of this division is to provide town planning advice to prepare municipal plans for municipalities, and to advise them on various planning policies and regulations which may be used within the individual municipalities. The department also occasionally hires town planning firms to supplement the work of the Urban and Rural Planning Division and cost-shares the development of town plans for some municipalities throughout this process.

There is an Engineering Services Division of the department. This division is responsible for administering the municipal water and sewer and street reconstruction and paving programs of the department. Within this division also is a Planning and Design section and Industrial Water Services section. The Planning and Design group is responsible for reviewing the plans and specifications of water and sewer projects which are approved for municipalities, throughout the year, and the Industrial Water Services Division is responsible for the operation and maintenance of the government-owned industrial water systems which have been installed to service certain industrial enterprises throughout the Province in some municipalities.

Grant funding is also provided for community water services. This is separate from the other capital and sewer installations. It is also designed to provide domestic water and sewer services to local service districts. It is comprised of smaller type systems. Funding is also provided to assist municipalities with the development of solid waste management facilities. Mr. Chairman, this year some $16 million has been provided for the development of water and sewer facilities pursuant to a federal-provincial cost-shared agreement for the communities in Northern and Coastal Labrador.

The section assistance and infrastructure support provides funding for the water and sewer programs. The amount provided in the estimates is the amount required to meet the repayment on debt which is financed through the municipal financing corporation once the projects are completed. Some $63 million is available to cover the debt of both principle and interest payment for road construction and paving programs, water and sewer subsidies.

Provision is also made for special assistance to municipalities. This $1,676,100 is provided to enable the department to respond to requests from municipalities for special assistance when they are in dire need. It covers such items as special assistance to meet administrative and operational overheads when there is insufficient revenue generated within the town during the year. The fund is managed by a Department of Finance committee, which reviews all requests for this kind of assistance and recommends whether or not this funding should be made available, and the amount. A considerable amount of funding is also provided for the statutory grants to municipalities. This year, some $44,950,000 will be granted to municipalities under the Municipal Operating Grants and Adjustments Program.

Municipal Protection Services: Mr. Chairman, funding in this section will cover emergency measures, planning and response, funding municipalities under Joint Emergency Preparedness Program, which is cost-shared with the Government of Canada. It also provides funding for fire protection services and operation of the Fire Commissioner's Office. Funding is also provided to assist municipalities with acquisition of fire-fighting vehicles and apparatus.

Recreation Services and Facilities: This program provides for the encouragement and financial support of recreation, fitness and amateur sports for all ages, throughout the Province. Support services are provided to municipalities in sport and recreation organizations by the department, as well. Grant funding is made available directly to these organizations to support in the development of approved activities. The major activities of this service sector includes supporting community groups in the amount of $2,690,300, and community sports facilities, $1,531,000.

The service under Culture, Historic Resources and Youth includes responsibility for maintaining and promoting public awareness of our heritage and culture resources through support for the development and operation of museums, archives, historic sites, arts and culture centres, and the provision of a secondary touring circuit. Financial support is also provided for Youth Services, the Public Libraries Board, the Heritage Foundation, the Arts Council and the Art Procurement Program.

Mr. Chairman, my department spends a considerable amount of money in the operation and maintenance of six arts and culture centres located throughout the Province. In addition, funding is provided by the way of grants and subsidies to support the development of arts and cultural activities throughout the Province. Six million dollars is provided to support the Newfoundland Public Libraries Board, which has 106 libraries scattered throughout the entire Province. Funding is also provided for the Newfoundland and Labrador Arts Council and for the operation and development of historic sites.

Mr. Chairman, there have been very exciting developments in this area over the past several years, the most notable being the research into the Basque whaling activities at Red Bay, Labrador.

The department is also responsible for the operation of the Provincial Archives. It provides grant funding to the Heritage Foundation of Newfoundland and Labrador. Funding for Youth Services is also provided within this area.

The department has an active Youth Service Division, which provides support and services to many youth organizations throughout the Province. Funding is provided directly by way of grants and subsidies to various youth activities throughout the Province.

Mr. Chairman, this is the last section of the Department of Municipal and Provincial Affairs, the responsibility for Communications Policy and Development for the entire Province. This division is responsible to oversee the regulation and control of communications within the Province. It provides technical advice to the government in the formulation of the provincial policy from time to time.

Mr. Chairman, that concludes my opening statement. I trust the details will be of assistance to the Committee and that it will have answered some of the questions members may have. I would certainly be most happy now to answer any other questions, and should I not be able to answer them, I will direct them to either one of the other members of the staff.

MR. CHAIRMAN: Thank you, Mr. Hogan.

Before we begin, a member of Mr. Hogan's staff, Mr. Callahan, would like to take a picture of the Committee. Is that okay with the Committee members? You, Mr. Doyle? You fellows? No problem?

Okay Gary, if you want to take a picture of them, do it now or forever hold your peace.

I will get a cup of coffee while you are taking the picture.

MR. CHAIRMAN: We will begin with questions on the department subheads, and when we are finished with them we will go to Newfoundland and Labrador Housing. We will begin with ten minutes per person. It may end up, Mr. Doyle, that you will have the majority of questions, so you may begin and take the first ten minutes.

MR. DOYLE: I wanted to first of all get into an area not specifically connected with your department, but still one that your department might be able to shed some light on for me.

There is a great deal of controversy, as you know, regarding the cost recovery policy in Conception Bay South and the legality, if you will, of it. I believe the Department of Municipal Affairs, after examining the policy, ruled that several parts of it violated the Municipalities Act. I believe the sequence of events was that the town's lawyers sent back a revised policy to the department, and the town is now still awaiting some answer as to whether or not the policy is legal.

You may not know anything, specifically, about it, but maybe Mr. Colbourne or one of your officials could shed a little light on it for me. Because it is still a controversial topic and quite a concern in Conception Bay South, and nobody really knows, at this point in time, where the town stands on it. I don't know if the town, themselves know, given the fact that they haven't received any go-ahead on it, really, from the department. Maybe, Art, you, or the minister, or someone, could tell me a little bit about it.

MR. HOGAN: Probably, just to answer your question in general terms, from experience, the implementation of the recovery costs - and I am not sure of the form in which it was done in Conception Bay South, or the specific practice that is there, but the principle of cost recovery is certainly legal.

Having been mayor of a small municipality for many, many years and having sought advice, up to 1989, certainly - unless the rules and regulations have changed since then, and I don't think they have - up to 1989 the cost recovery of installation of services was certainly practised. That was allowed under municipal authority. Whether or not it was practised by the individual municipalities was another thing. I found that in a great many cases, in my particular town, for example, we would install the services in new areas at no cost, up to the curb stop, and from the curb stop on, then the individual homes would pay the connection fees, etc., that were with it.

Certainly, on new installations the practice with us was - and this was questioned a couple of times under legalities - that an individual home being built today on an already established service, no matter what the cost was, the town would recover that particular cost, and I know that was legal.

I don't know if that sheds any light on your question, but specifically in Conception Bay South, as I understand it, the same principle was applied. And, as I understand, wherein there might be some quarrel was that the department probably disagreed with some particular part of the policy and just voiced that disagreement with us, and they said: We disagree with this practice but it is not necessary illegal. I will leave it for Mr. Colbourne to answer that. Then it was referred to the Justice Department and the Justice Department deemed that cost recovery was, indeed, a legal practice under the municipality.

MR. DOYLE: Because the town has now sent in a revised policy that you may not be aware of, that the officials, I guess, would be aware of. They sent in a revised policy to the department, and the town is still awaiting some answer, because they had contacted their lawyer and their lawyer has redone the policy, if you will, and tried to correct some of the -

MR. COLBOURNE: Mr. Chairman, we have received a policy some time ago from Conception Bay South which was called the Local Improvement Assessment Policy. We were asked by CBS - we weren't directing them on exactly what to do - we were asked if it appeared to be in order with the Municipalities Act. There were some discrepancies which we noted in there with reference to various percentages of payment as varying, and also when final payment should be received upon termination of sale of property and so on and so forth. There were some inconsistencies which we did not agree with, and we had forwarded the initial policy to Justice. It came back. We had the Department of Justice lawyers meet with ourselves and CBS and explain where we thought there should be some changes.

We have since received the new policy, as Mr. Doyle points out, and we have referred it to the Department of Justice. I expect we will hear back within the next week or two as to how this policy would look. So, within the next week or two, we should have some direction to give CBS if we feel that everything is okay with respect to that.

MR. DOYLE: I guess there is really nothing all that unusual about a cost recovery policy, is there? I mean, how many towns in the Province operate - now I don't expect you to know that, but it is a fairly common thing, is it not?

MR. COLBOURNE: There are not that many municipalities in the Province using it. We encourage it, but generally, due to the water and sewer subsidy program as it used to be, there wasn't too great a requirement to charge for services anymore when the subsidy by the Province was so great. What it is - it is a percentage of the cost toward the total cost of water and sewer services and/or roads or sidewalks and so on, which can be assessed against the property per foot frontage. It should be a normal procedure. It's done probably in fifteen or twenty municipalities in the Province, but the remainder - if not, CBS is encouraging it, and the policy is completely in order and certainly complies with the Municipalities Act. A municipality can charge up to 100 per cent of the cost of servicing or any percentages thereof which they feel it is necessary for them to acquire. The reason it is not done, as I said, in a lot of municipalities, is under the old municipal subsidies system, municipalities were asked to pay 20 per cent of their fixed revenues. In the majority of cases in the Province, the Province was carrying 100 per cent of the cost. Therefore, there was no need.

MR. DOYLE: Given the amount of water and sewer that CBS needs - approximately $55 million to $60 million, I believe, is the last count I heard on it - is it fair to say that if council had not implemented a cost recovery program that it might be difficult for them to receive capital funding?

MR. COLBOURNE: The situation in CBS was such that CBS has requested that the Department approve the fact that what is collected under the direct cost recovery from local improvement assessment be turned over, go into the coffers of water - or not the coffers, the municipality - be spent completely on water and sewer services, in addition to any long-term loans provided by the Province. It is felt that in the long-term they may be able to complete CBS within ten years, whereas the rate of funding which is being provided right now might take twenty or twenty-five years.

MR. DOYLE: But it would be difficult for them to get capital funding if they had not implemented a cost recovery program.

MR. COLBOURNE: Not any greater than they always have, to my knowledge.

MR. DOYLE: Okay. Just leave that for a moment. The minister was questioned in the House about a week or so ago regarding capital allocations and whether all councils are going to accept their capital allocations this year. With the new grant structure some councils obviously can't afford to take it. Is there any reading on it yet as to how many councils are going to find themselves in that position this year?

MR. HOGAN: Not exactly, Mr. Chairman. Mr. Doyle, in anticipation of that question I had some notes for you along those lines. Only slightly over $1 million has been indicated so far. Officially, that might be termed as slippage on capital works, actually, a note that Mr. Colbourne has shown me here, of some $901,000 slippage.

MR. DOYLE: What was that again? I never quite got it.

MR. HOGAN: There is $901,400 indicated so far that could be slippage - that was up to probably Thursday. We're going to do an assessment of that sometime this week. Give it a month, giving the municipalities until May 15. When approving each of the capital works, each municipality which is to receive loans or grants through the capital works this year was asked to give indication of whether they were going to be able to carry on this work this year or not, by April 30. It was our feeling that probably it would take until the middle of May or probably May 20 for that to get in and be probably looked at. So we've been sort of doing that.

AN HON. MEMBER: (Inaudible).

MR. HOGAN: There has been about $30 million to date agreed to, a little under (inaudible) -

MR. DOYLE: Thirty million dollars out of the entire program.

AN HON. MEMBER: (Inaudible).

MR. HOGAN: Yes.

MR. DOYLE: So they are expected by May 15, is it, to -

MR. HOGAN: We gave them until April 30 but I would anticipate by the end of May or the latter part of May, assessing it, certainly by the end of this week having some sort of an assessment to say with any kind of knowledge that there is going to be a percentage sent back.

MR. DOYLE: Now, was there approximately $20 million last year? Was that the figure? Am I wrong on that?

MR. HOGAN: Yes.

MR. DOYLE: Okay.

MR. HOGAN: The precise value as I recall it from the information that I gathered at the time was $900,000 which was returned, unequivocally, wasn't going to be spent. There was another in excess of $10 million - these are approximate figures now - that was carry-over work. That was committed either on its way to the drawing board or on the drawing board or in some process on the drawing board or waiting financing. But there was some measure of indication to say that that was going, too. So in (Inaudible) a million dollars, nine hundred some odd thousand, I forget now the exact figure, but you could say $1 million of the $52 million last year was actually returned, said: no thanks.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Okay, Norman -

MR. DOYLE: Just a million dollars -

MR. HOGAN: One second now, Mr. Chairman.

AN HON. MEMBER: (Inaudible).

MR. HOGAN: At this point in time there is probably $5 million that has yet to go to the drawing board or is on its way to the drawing board, but we're anticipating that to go through.

MR. DOYLE: Okay.

MR. HOGAN: There's no indication as I would suspect, Mr. Doyle, and (Inaudible) members of I would say both sides of the House who are suspecting a lot to be returned, when in fact there has not been a lot returned - both years.

MR. DOYLE: Okay. But last year it was only $1 million?

MR. HOGAN: Yes.

MR. DOYLE: Okay.

MR. HOGAN: Little under $1 million, actually.

MR. CHAIRMAN: Okay. (Inaudible) okay, Larry Short.

MR. SHORT: Just one question, Mr. Chairman. Under Assistance and Infrastructure, page 240, Grants to Municipalities. Subheading 3.2.01. It says Water and Sewer Subsidy, Grants and Subsidies. It's up approximately $3 million. Section 3.2.01. I was just wondering what that $3 million....

MR. HOGAN: (Inaudible).

AN HON. MEMBER: (Inaudible).

MR. SHORT: Pardon?

AN HON. MEMBER: (Inaudible).

MR. SHORT: Yes, $31,350,000.

AN HON. MEMBER: It's up about $3 million from your revised figures from last year.

AN HON. MEMBER: Subhead 3.2.01.

SOME HON. MEMBERS: (Inaudible).

MR. HOGAN: That's the annual subsidies that are carried over and it's not a real - for interest payments and debt charges respecting installation of water and sewer systems.

AN HON. MEMBER: Province's share.

MR. SHORT: So it's under capital, is it?

AN HON. MEMBER: (Inaudible).

MR. HOGAN: Our share (Inaudible) municipalities share.

MR. CHAIRMAN: Would you repeat your name, Larry, each time you speak? This gentleman will never know who you are.

MR. SHORT: Okay.

MR. CHAIRMAN: He doesn't know you that well. So say your name each time you speak, or refrain from speaking. Try it again, Larry.

MR. SHORT: Okay. Thank you, Mr. Chairman. So that's on debt charges on the capital funding.

MR. HOGAN: Yes, that's the Province's share of interest.

MR. SHORT: Okay.

MR. CHAIRMAN: Bill Ramsay.

MR. RAMSAY: Okay. With regard to that, what calendar year would that $31.3 million represent, or does it represent a combined total of all the years up to and including 1989?

MR. HOGAN: That covers accumulated interest debts over the years up to - what?

AN HON. MEMBER: 1991.

MR. HOGAN: 1991.

MR. RAMSAY: Up to 1991. Okay. So the ones from the year 1991 have been -

MR. HOGAN: You won't see them until next year (Inaudible).

MR. RAMSAY: - I suppose turned, rolled into debentures and....

AN HON. MEMBER: (Inaudible) down the line.

MR. HOGAN: Yes, you'll see that accumulated down the line. Or up the line, whatever way you want to look at it.

MR. RAMSAY: Alright. Well that is all I have.

MR. CHAIRMAN: (Inaudible).

MR. DOYLE: Thank you, Mr. Chairman.

I want to get into the amalgamation for a second here. I remember speaking with the minister approximately about a month ago regarding some of the groupings that were left over on amalgamation. The minister indicated that several groupings have yet to be dealt with, and I believe he was going to deal with these before Easter.

I was specifically interested in the Conception Bay centre area, as a matter of fact, because this goes back, as Mr. Colbourne knows, approximately two years ago when the former minister was first appointed minister of that department and he had public hearings in the Holyrood area; he had public hearings in the Avondale area to have a look at that grouping of Avondale, Conception Harbour, Harbour Main, Colliers and Holyrood. To bring the minister up to speed on it, the former minister said it probably would not be feasible to have Holyrood in with that particular grouping, which left the Avondale, Conception Harbour, Harbour Main and Colliers area wondering what was going to happen with regard to those four communities.

I have spoken to Mr. Peckham on probably twenty-five different occasions on this, and Mr. Colbourne, Mr. Randell, and the former minister who assured me every single day that it was going to be dealt with, and I have been pursuing the matter to find out exactly what is going on because councils up in that area have been asking me almost on a daily basis what is going to happen. It makes it difficult for planning purposes if you do not know, really - a definite 'yes' or a definite 'no' - get it over with one way or the other type thing. Now it has gone on for three years and it seems to me that whenever you meet with councils, or some of the councillors, the underlying thing is: Well we will not start that now because we do not know - next month we could be amalgamated.

I am not saying that there is anyone against it or for it, but people want to know what is happening there, and we do not seem to be able to get a firm answer on it.

MR. HOGAN: I can assure you that it is not my intention to be evasive. As a matter of fact, I made a commitment to you that it would be dealt with rather quickly. I made a commitment to a number of people; I look around here - Mr. Crane, for example, and his dilemma in Harbour Grace. In my search to do it this time, or to approach what is left to be done; to examine, or having to examine every facet of what has been done to see what we have accomplished or not accomplished; to see what our trials and errors were; to make sure that no stone is left unturned to meet both the constructive criticisms and the negative criticism that has been directed at the amalgamation process.

I do not think there is very much argument out there against the principle and theory of amalgamation where it is applicable. Most of the criticism, as I have read it, internally and externally - and I include you internally, Mr. Doyle - has been with the process. There are a number, probably, that we could strike the hammer and say: Let's go with it tomorrow. I do not know if that would be treating all the others properly; so what I did is, as I told you, and I think we had our first meeting on the twenty-second of March, was start a process of evaluation of what we had accomplished so far. To be quite frank with you, I was anticipating a written appraisal of that before now, and have not got it. I am getting rather impatient about that myself because I was supposed to be a party to it, but preparation of the budget, preparation of the House of Assembly, and other things have delayed my input into the departments participation in doing that right has delayed our final answer. I have had queries from your region and other regions of the Province. I went to western Newfoundland, as a matter of fact, and met a number of groupings out there. I spoke to them on what I was doing and asked them to be patient with the minister and the department, although we are not patient ourselves. Now we would like to get on with it.

I'll be terribly disappointed, Sir, if we don't have something done by the end of June at the latest in relieving the fears. I can understand the anxiety because I was pushing for decisions in certain areas myself including my own district. Even that one is held up now because of trying to do the whole thing (inaudible) that hopefully everybody will feel comfortable with, even those who want to come together now on their own and some of those who don't want to come together. We have a 50/50 split where there are all kinds of scenarios yet to be addressed. In every one of them there is a degree of being uncomfortable because of the criticism that has been labelled on it, and I am trying to get rid of that discomfort.

All I'll be able to say is as soon as we get that thing put together the way I want it put together for my satisfaction and to the satisfaction of the executive of the department, I would like to be able to go out and say to your grouping either it is going to be done or it is not going to be done. It is the same with everybody - I think everybody around the table here has some interest in this one way or the other. All I can do, Sir, at this point in time is apologise for the delay because it is taking longer than I anticipated.

MR. DOYLE: Well I can appreciate that. It is not something that can be done over night, as your officials are aware. I can see Mr. Peckham there smiling and rightly so, Mr. Colbourne too. I mean I have been through this long before your time, Mr. Hogan, as minister. This has gone on now for about over two years I believe, maybe two and a half years. It is a fairly cut and dry affair. Now you may not necessarily agree with that statement in an overall blanket way. I know it is not a cut and dry thing with regards to all of the groupings, but in this particular instance this has been through the wringer a dozen times, and the public hearings have taken place and recommendations by the commission have taken place, and the councils have been contacted. The officials are well aware of what their opinions are and all the rest of it. You know, I won't pursue it. I will take your word for it that it is something that you are going to move on fairly quickly when you get a chance.

MR. HOGAN: Let me say this to you. I have been working on one for fifteen years and your two years to my fifteen years are about the same stuff right now.

MR. DOYLE: But there is really nothing remaining to be done is the point I am trying to make.

MR. HOGAN: No there isn't. If you can bear with us until - I can say somewhere down the line when all is said and done if, for example, Deer Lake and Kippens and Nicholsville are put together in one and your group and the Placentia group are all put together I can turn around and say that all three groupings I treated you all alike, and you were all done according to the same policy and procedure.

MR. DOYLE: Yes. Well my main concern, like I told you, is the fact that -

MR. HOGAN: Do you have a problem with the evaluation process, Mr. (inaudible).

AN HON. MEMBER: (Inaudible).

AN HON. MEMBER: Go back where you come from.

MR. HOGAN: Whatever way it is resolved, I want the resolution to be uniform across the Province so that there is no criticism. I don't ever want any of us doing it.

AN HON. MEMBER: (Inaudible) when it is going to happen, right.

MR. DOYLE: Just to reiterate, Mr. minister. The concern right now is the fact that people can't make decisions in their own individual communities as to what they should be doing and undertaking because they really don't know where they stand (inaudible) with the amalgamation issue and how it is going to be resolved. So from that point of view it is necessary that something be done as expeditiously as possible really on it.

MR. HOGAN: To be quite frank with you, I made a note (Inaudible) publicise it. I made a note yesterday in going over some documents to speak to yourself and Mr. Crane, because I've had correspondence recently from people interested in both these areas who wanted me to get on with the decision making of it. I was going to speak to both of you to ask them to be patient a little while longer and (Inaudible). I heard from Mayor Moriarity last week, and I forget who - I was up in your part of the country that -

AN HON. MEMBER: (Inaudible) Mayor Moriarity today.

MR. HOGAN: These are two of the simplest ones to deal with.

MR. DOYLE: Okay. I thank the minister for his promise on that. (Inaudible). The minister a while ago said he was going to review the municipal grants structure, the current municipal grants program that's in place. Is that review under way? Is there a report that the minister can make available or can tell us about? Is it something that's being considered by Cabinet or - because he did recently say that there was going to be a review.

I guess you have to agree that the new municipal grants program is not universally accepted. There are a number of councils which have expressed a great deal of criticism on it. I believe I wouldn't be too far out if I said the Federation has not totally come to grips with it yet, and the whole thing. The minister did say that he was going to have a review of it. Is there any light he can shed on that right now?

MR. HOGAN: Your criticism is quite correct in so much as it has been widely accepted. There has been universal criticism of it and, including myself, a great deal of ignorance about the system. The more we get to know it, the more understanding we get of it, that I think - or we're coming to the determination that it's not having the affects that we anticipated. Or I don't know what the affects were anticipated, but certainly in my view it's not having the affects that - other than the - outside of time, not having the affects that it should have.

To make a long story short, the criticisms were forthcoming in whatever nature from most municipalities and from the Federation. So much so that they had numerous meetings with my predecessor and with the Premier's office, actually. Subsequently, when I assumed the ministry I met with the Federation of Municipalities on a number of occasions and their representatives, and I think I might have had one meeting with the administrators. Arising out of these deliberations and discussions I agreed to put in place a committee made up of two people from the Department, two people from the Federation of Municipalities, and two people from the Municipal Administrators Association.

The two people from the Federation were the president, Ms. - what's her name? Dunderdale.

MR. DOYLE: Who was that again, Mr. Minister?

MR. HOGAN: The president, Ms. Kathy -

MR. DOYLE: Oh, the president of the Federation. Okay.

MR. HOGAN: Yes, Ms. Kathy Dunderdale, and Pat Murray, from St. John's East (Inaudible) Portugal Cove. From the Administrators Association was the town manager of Lab City, was it?

AN HON. MEMBER: (Inaudible) the town manager of Mount Pearl.

MR. HOGAN: And the town manager of Mount Pearl. Their names escape me now.

MR. DOYLE: That's okay, I don't need to know that.

MR. HOGAN: The town manager...?

AN HON. MEMBER: Gerard Lewis?

MR. HOGAN: Gerard Lewis.

SOME HON. MEMBERS: Mount Pearl.

SOME HON. MEMBERS: (Inaudible).

MR. HOGAN: Vincent, is it? Vincent? Is Vincent his last name? The chap who was the town manager of Lab City, and our officials are who? (Inaudible)?

AN HON. MEMBER: (Inaudible).

MR. HOGAN: The assistant deputy minister, Mr. Colbourne, and our director of finance, Cliff Goodland. That's his title, director of finance. These six people, together with the professionals, outside people, who helped design the system, the debt retirement system and the MOG system. With their assistance they will review what has transpired to date; review some submissions that have been already made by the two organizations; and review as much of the experience as possible, with my direction, to have something back to me so that I can do whatever has to be done with it to meet the next budget deadlines of not only the Province but of the municipalities so that some sort of a resolution can be met to that criticism. Now whether that is going to change the system or not remains to be seen.

Hopefully, having done that, we will have the designers of the system, and we will have the three parties to the system, the Province, the municipalities, and the administrators, have a viewpoint of not only the design of it but the experiences to date, and if there are knotholes they are to be flushed out, I guess.

MR. DOYLE: Because I believe the original intent of the new grant system, the new grant structure, was to provide additional help for the smaller municipalities. Now, at least according to the federation, and I guess according to some of the municipalities that you hear about in the news media, the new grant structure certainly has not met that need, that the smaller municipalities receive more help as a result of (inaudible). Is that a fair statement? Would you support that - that the smaller municipalities really have not come out of it as good as what was originally expected?

MR. HOGAN: That is right, and the larger municipalities have come out even less.

MR. DOYLE: Yes.

MR. HOGAN: But you will also note, Mr. Doyle, that the funding for the grant system was capped last year, and even reduced this year. It is going to be further reduced next year, according to the plan to meet the restraint program. That would lessen the degree of funding to everybody, including the larger municipalities.

MR. CHAIRMAN: Okay, Mr. Doyle, (inaudible) again now. I will give the other fellows another chance, if you do not mind please. Okay, Sir.

MR. OLDFORD: Mr. Minister, I just want to make a comment and hopefully I will solicit a comment from you.

Over the last number of years, whenever your municipal capital works - not yours, but even when the previous government was in - when the municipal capital works were announced, there was always a cry and a criticism that opposition districts were somehow treated unfairly. I notice this year when your announced your capital works there was very little criticism. I just wonder how much of that lack of criticism do you attribute to this government's policy of fairness and balance? Would you like to comment on that, please?

MR. HOGAN: I attribute it to the fairness and balance of the minister. It has nothing to do with the government.

AN HON. MEMBER: No further questions.

MR. HOGAN: If there is any credit going to be taken, the minister is going to take it.

I will just comment. I do not know if it is attributed to anybody. I think there was a system set in place in the department and the cookie crumbled this year in such a fashion that there was not much criticism, I guess, and we stuck to an inside system that was designed to identify need, and it was solid, I guess.

I guess you set a procedure in place, and if there is any credit to be given to any government or any ministry it is the one to say that they followed the procedure and stuck with it and the chips fell where they did. The chips, I guess, were satisfactory to most people and therefore they did not criticize it.

MR. CHAIRMAN: Is that it for you, Sir? Doug?

MR. OLDFORD: (Inaudible).

MR. CHAIRMAN: Larry?

MR. SHORT: Just one question. That committee that you have in place looking at the grant structure, are they going to be - say if a town council wanted to meet with some or whatever for input, is it set up in that manner, or is it totally kind of an internal system where they're going just look at the affects over the last couple of years? Say if a request came in from my district to meet with that group, is that the kind of thing that they'd welcome or...?

MR. HOGAN: Well, I would think that the committee - I haven't given them any particular mandate except to assess the design and application of the MOG and of the debt retirement system that has been introduced in the last two years. In their search for that I guess they would do any number of things. I'm probably being presumptuous but I would presume that they would check out a number of avenues of doing it. I don't know if they would have time to go and talk to every individual municipality in here, because I think they might have enough now, and take some innovative and some initiatives on their own to search out information.

It's almost like doing an investigation. They look at the books on some of the experiences in the Department now and the Federation looked at what they have, and the Administrators looked at what they have. I think they could put together sufficient evidence to come to a conclusion. Now if it's their wish to speak to other people I'm not going to encumber them with any restrictive - they can do what they like as long as they get me a report fairly soon.

MR. SHORT: Okay.

MR. CHAIRMAN: Bill Ramsay.

MR. HOGAN: I would, Mr. Chairman, hope - I would encourage any member in the House of Assembly, any member of the public, who wishes to write the committee and make some sort of a submission to them to get it in, get it in quickly. Hopefully they'll deal with it in a fair and satisfactory manner. The Federation (Inaudible) by the way you know, they should have their homework done, and I would anticipate they would. Hopefully they'll have something done. (Inaudible).

I might also add that they are bringing together information now. I would anticipate them sitting down in the next ten days, two weeks, and commencing their deliberations. They should do that fairly fast. They're very knowledgeable people and I just mention what has transpired (Inaudible) won't have much of a chance and leave it.

MR. RAMSAY: Okay. Just a couple of things. One was related to Youth and the (Inaudible) of the Budget, 6.5.01, page 249.

MR. HOGAN: What was that? Six two what?

MR. RAMSAY: Page 249, 6.5.01.

MR. HOGAN: Did you say 01 - Salaries?

MR. RAMSAY: Yes, 01 is salaries, $379,700.

MR. HOGAN: Yes.

MR. RAMSAY: Okay? With regards to that, Mr. Hogan, I'm just wondering, maybe a brief thing of what's happened with the Youth services division over the last two or three budgets and where we expect to go from here as far as what the plans are for dealing with youth. Youth serving agencies I think was one group, another was the Youth Advisory Council. They are now combined, or maybe they will be combined. Maybe just a brief explanation of how this funding that's there applies to youth in the Province. Just where do we go from here sort of thing. I'm just wondering if you could comment on that.

MR. HOGAN: The aim of the department is to develop and administer programs to the Youth Services Division and to provide educational opportunities in the rural parts of our Province for young people. We send out volunteer leaders to develop career, life and leadership skills, and programs and services which include the Duke of Edinburgh's awards. There are grants to youth organizations, travel and exchanges, there are special projects. There is a whole litany of things which we could go on with: the youth of the year awards, organization assistance, consultative services, leadership training, and the whole ball of wax. The salaries component that you point to only covers the requirements of the youth division's director, and ten permanent staff plus, I think, probably a part-time employee or two. It also provides for overtime and vacation pay for that particular grouping.

If you go to grants and subsidies under youth, we can give you an outline of the grants and subsidies which has met, I guess, the restraint and cutback grants.

MR. RAMSAY: What was that $60,000 in difference, Mr. minister?

MR. HOGAN: A $60,000 difference between what?

MR. RAMSAY: The $435,000 in grants last year down to $368,000. What specific things were addressed in that cut in expenditure?

MR. HOGAN: Perhaps Mr. Frost could address that. It is generally about a 10 per cent reduction in costs in all divisions?

MR. FROST: Yes, that is correct, Mr. Chairman. The reduction in budget is part of government's restraint program which has been throughout the various divisions of government, and this means that in many cases there will be a similar reduction to the grants which were provided to the youth organizations.

MR. RAMSAY: So it is spread evenly across all the institutions which received grants from that subhead, or is there any specific group that had to bear the brunt of the total decrease.

MR. FROST: The intent is to try to spread it evenly throughout the recipient groups, however some groups received funding just sufficient to keep them running with their very high annual costs. We don't wish to diminish any budget that would cause severe hardship to any particular group so that there will be some cases where budgets will not be diminished because any further diminution of budget would cause severe hardship. But in general the idea is to apply the reduction across the board.

MR. RAMSAY: Mr. Minister, in the Arts and Culture Centre subhead, I note that last year it went over budget by $300,000. Actually it was more than that, it went over by $500,000 approximately, in the totals. There is some variation of $300,000, I think, difference in revenue, probably in actual revenue to the province I would guess if I am reading this correctly. This is 6.1.01 by the way on page 246.

I am just wondering what accounted for the variation from what was planned last year and what actually happened. Now this year I note that the budget is more in line with what last year's budget amount was and what may have been taken in the way of contingency plans to see to it that whatever did happen last year may not happen again this year, or what have you. I would just like a comment on that.

MR. HOGAN: Mr. Frost will answer that, Mr. Chairman.

MR. FROST: Yes, Mr. Chairman, the speaker is quite correct when he realizes that there was a $300,000 diminution in revenues last year, and I think this is indicative of the economy, not only of Newfoundland and Labrador but of the whole country, that it is quite a challenge these days to get folks to come and pay for live theatre when you are competing with movies and home videos and so on.

As for his specific question as to the costs of the remaining $200,000 we had an unusual happening last year whereby the airline which flies to Labrador took off its 737 aircraft, and we had a policy of designing all of our stage sets so that they could fit in the belly of a 737 aircraft. The idea is, when we were touring our own shows to all six Arts and Culture Centres, we wanted to make sure that all centres received the exact same service and the folks in Labrador West would get the same groups plus the very good scenery and so on that would be required for a show.

When the airline decided not to use 737 aircraft on the St. John's/Labrador West run, it caused us severe problems because the airline now requires that you pay 500 per cent more on your freight costs if you want to reserve freight to Labrador West. In the past it was understood that when our group was sent to Labrador West that the freight - that is the scenery and equipment and so on, musical instruments - went with that group. Now to ensure that the luggage, equipment, scenery, and so on goes with the group, we have to reserve space in the hole of the aircraft in advance and pay five times as much for that. So that has driven the budget very, very high, and it was not planned for last year, of course, because we did not know this was going to happen. So this is the major part of the loss.

The other thing which we did is that in an effort to assist Newfoundland talent and Newfoundland performers to get on the stage and get exposure, and to receive contracts from other provinces and other countries, we did a Newfoundland showcase last year. We brought as many Newfoundland groups as we could into Gander during a specific ten day period, and we highlighted and showcased them to all purchasers of shows for Arts and Culture Centres, and last year we are very happy to advise that 46 per cent of all shows put on in our six centres were Newfoundland performing art shows. So this is an extra cost, because when you bring in groups from elsewhere they come in with a package; they have all their advertising ready and done; all of their scenery ready and done; all of their sound and lighting preprogrammed, whereas we have to do this for our own Newfoundland and Labrador groups, and there is a higher cost associated with that.

MR. RAMSAY: Thank you, Mr. Minister and Mr. Frost.

6.1.04, Cultural Industry Support - by the looks of it, it is a federal/provincial agreement for cultural industry support that was announced a while ago, or is this contingency for a -

MR. HOGAN: This is in anticipation of the yet to be announced program.

MR. RAMSAY: Okay. Alright, thank you.

MR. CHAIRMAN: I would like to welcome Mr. Rick Woodford, MHA for Humber Valley. Welcome, Rick, and before we give you the opportunity to ask a few questions we will take a ten minute break.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: Mr. Chairman, I have a few questions for the minister and his staff.

I am at the disadvantage now of not knowing what has and has not been asked, so I will probably just touch on some of the subjects which you already have touched upon.

I understand you addressed the new MOG program, and one of the questions that I would like to ask the minister - I know he cannot answer directly for it, but maybe his officials can answer for it - is that why, in late 1989 - in fact it was after Christmas Day, after Boxing Day - he came out with the new program with regard to an MOG, and municipalities had to have their budgets in by the end of December. Then, to add insult to injury as far as I am concerned, this year the same thing, in late 1991, you come out and knock down the roads component of the MOG, and it was retroactive, to make it worse, and then tell municipalities it was gone down further, to eight hundred and some odd dollars for next year.

Isn't that a callous way to treat municipalities in the Province, to put it bluntly? With budgets already in and so on and then to have that addressed at such a time?

MR. HOGAN: I think, Mr. Chairman, if I might. I take it for granted that the hon. member's question of dates is correct. Assuming that question of dates is correct I would suggest that if such was the case probably the timing on our part wasn't what it should have been. We'll certainly take that criticism under advisement. There's probably some good justifiable reason in the eyes of the Department officials. The ministry will take it under advisement so that it won't be at such an inconvenient time to municipalities or otherwise in the future.

MR. WOODFORD: I've sensed some reaction from other officials that that wasn't the case. I have it here in front of me. I have examples from municipalities that it was the case. But in any case I suppose the minister is going to make sure that that is not repeated, the roads component especially.

MR. HOGAN: No, Mr. Chairman. If I might. If the member is implying that I answered his question or criticism less than truthfully, what I said was, so he won't misunderstand me, if anything, the timing was bad, if his dates are correct. I'm assuming that he would be correct himself in giving these dates, he wouldn't utter an untruth or mislead me. I'm assuming that. Having assumed that, then the timing I would suggest might have been bad in so far as the municipalities were concerned, and not very convenient, and certainly reflect badly on their budgets.

Now if that's the message I'm getting from him I would suggest to him that what the official was telling me was that the timing was based solely on the information coming back from the municipalities concerned, or all the municipalities. That could have been also a case of poor timing. Such timing will be given every consideration in future application of this particular aspect of Municipal Affairs and will be done when it's not as inconvenient or the timing is not as critical to the municipalities concerned.

MR. WOODFORD: There's no question of bad timing. The first time and the second time, as far as I'm concerned. A lot of municipalities were hurt by it. On the committee - I don't want to dwell on it because you've already - I don't want to be repetitious. The minister has said there's a committee in place to look into the new municipal operating grant. Who is on that committee?

MR. HOGAN: I beg your pardon, Mr. Chairman.

MR. WOODFORD: The new committee for looking into the new municipal operating grants and so on, who is on that committee, who is represented?

MR. HOGAN: The Province, the Federation of Municipalities, and the Administrators Association. Represented by Messrs. Colbourne and Goodland from the Department of Municipal Affairs; Ms. Kathy Dunderdale, president of the Federation of Municipalities; Pat Murray of the town council or deputy mayor of St. Phillips - Portugal Cove, or whatever he is now; and the town manager of Lab City, whose name escapes me but I know him will.

AN HON. MEMBER: (Inaudible).

MR. HOGAN: Cec Vincent, and Gerard Lewis of Mount Pearl. They have also been given the authority to discuss same with the professional firm of accountants that designed the program initially.

MR. WOODFORD: When are they due to report, Minister?

MR. HOGAN: So that the ministry and the Department can give information or take whatever action might have to be taken before the next municipal and provincial budgets are brought down, or discussed or considered.

MR. WOODFORD: What figure was the MOG capped at this year? I understand it was capped.

MR. HOGAN: About $44 million, I would say.

MR. WOODFORD: Forty-four. So that's in the estimates anyway. That's the figure I was looking at in the estimates.

MR. HOGAN: That's in the estimates, yes.

MR. WOODFORD: How did the Province arrive at the figure they got for the formula they used under the equalization component? How did they arrive at a provincial average?

MR. HOGAN: I will refer that to Mr. Colbourne.

MR. COLBOURNE: I have the definition, and I can read it out to you, Mr. Woodford.

It says: An equalization component - and, Minister, I can see no reason why we cannot circulate it, if anybody should need a copy of what has been sent to municipalities as to what each component of the new grant system is.

MR. WOODFORD: I know what each component is. I am wondering how they arrived at the provincial average for the equalization component. They used a provincial figure of something like $42,000.

MR. COLBOURNE: That is right. They took the property assessments across the Province.

MR. WOODFORD: All property assessments across the Province, or did they leave out the three cities?

MR. COLBOURNE: No, they took the entire average -

MR. WOODFORD: They could not have taken the entire average.

MR. COLBOURNE: - minus the three cities.

MR. WOODFORD: So they left out St. John's, Mount Pearl and Corner Brook; and that is where they arrived at a figure of $48,000?

MR. COLBOURNE: Yes.

AN HON. MEMBER: Forty-eight or forty-two?

MR. WOODFORD: Forty-two at first, but I notice it is forty-eight in some cases now. How does that change?

MR. COLBOURNE: It changes each year.

MR. WOODFORD: Is that based on the assessments?

MR. COLBOURNE: Yes.

MR. WOODFORD: That would mean that it is only natural that the assessments are going to go up.

MR. COLBOURNE: When you eliminate three -

MR. WOODFORD: When you eliminate the three cities. Well if they were included they would go up more, I know, especially based on St. John's. This year St. John's is up 25 per cent is it not? So it is only natural then, in that component, that would decrease pretty well every year, because your average is going to be lower. Really, it is based on your deficiency. That is all that a municipality gets. For instance, in Jackson's Arm if a house is worth $28,000 and the provincial average is forty-eight, you get a deficiency based on the twenty, on the percentage of that.

I do not know. All of this is going to be addressed in that committee, is it, those four components - the equalization component, the local revenue component, the roads component and the household component?

AN HON. MEMBER: And the subsidy.

MR. HOGAN: The entire methodology; the design of the methodology; the experiences; the whole gamut since it was introduced will be examined by that committee.

MR. WOODFORD: And they will report back in time so you can make some adjustments for the new year, for the budget year.

MR. HOGAN: I will certainly consider such adjustments, yes.

MR. WOODFORD: I hope they do a better assessment than they did last time, especially with The Federation of Municipalities. It is ridiculous, as far as I am concerned, for the parties to come out and say it is going to benefit municipalities in the Province and then, all of a sudden, turn tail and say that it is wrong. I am talking about the federation now - not you.

Under the new formula for the calculation of capital debt, your new formula is applicable only to debt incurred up to the end of 1991, and then the new formula kicks in - say for instance a municipality comes to a maximum of $300 per household, then the only thing that is added is the consumer price index; is that true?

MR. HOGAN: Yes. That is true up until 1991, is it? After that then there is another principle.

MR. COLBOURNE: Any debentures issued up until 1990 is a 60/40 arrangement with which I expect you are familiar.

MR. WOODFORD: Yes.

MR. COLBOURNE: After 1990 -

MR. HOGAN: That is where your three hundred comes in, Mr. Woodford.

MR. COLBOURNE: That is where your first three hundred comes in - 60/40 up to $750.00.

MR. WOODFORD: Maximum per household. Then everything over that is paid by the Department.

MR. COLBOURNE: Any additional after that would bring it up - yes. If up to $750 your debt charges only work out to $200 per household, then your new loans after that would go up to an additional $100 per household to get up to the $300 per household, yes. But anything prior to that still won't change. If that doesn't bring it all the way up then any new loans continuing will. Now the thing to remember also in the new ones of course is that as with the grant system both will be phased in over one-third for the next three years in order to ease the burden.

MR. WOODFORD: Yes, the old one, now that's what I wanted, that's another question. The old one, where you calculated your debt under your formula up to a maximum of $750, 60 per cent, that was we say phased in over a three year period, now. But any new debt added to that particular formula -

MR. COLBOURNE: It automatically jumps up to the $300, yes.

MR. WOODFORD: It automatically goes -

MR. COLBOURNE: With the inflation rate added to it -

MR. WOODFORD: The consumer price index would be added to it, that's the only thing that would be over the $300.

MR. COLBOURNE: That's right.

MR. WOODFORD: Once you got to your maximum -

MR. COLBOURNE: (Inaudible), yes.

MR. WOODFORD: Anything over that. Three hundred and thirty-seven this year, is it?

MR. COLBOURNE: Somewhere around that figure there now. Anything over that is picked up by the Province.

MR. WOODFORD: Picked up by the Province, yes. Because that's having a bad affect too. I can understand, if you're going to change the formula, probably a longer phase-in period or something. Because there are a lot of municipalities - despite the minister telling me last week that there are only three that didn't, so far, that have let the Department know that they're not going to accept any capital funding. There are a lot of municipalities out there that I know of that just cannot take the new money.

MR. HOGAN: It belies everybody's imagination to date, but to date I guess in round figures there's been about $30 million acceptance and about a little less than a million dollars not accepted. Assistant deputy Colbourne will elaborate on that.

MR. COLBOURNE: I was just going to say that when the $750 initially was set up, for some municipalities of course out there where it automatically went to the $300 per household, as you're aware.

MR. WOODFORD: Yes.

MR. COLBOURNE: So it's only fair that in the new grants, or new ones coming up, for some other municipalities may not have been required to meet the $300, it's only fair that as the additional burden came on that they pay an equivalent amount equal to other areas of the Province that were already paying $300. Some very small municipalities right off the bat were required to pay up to $300 per household. So it wouldn't be fair to say - to phase in the remainder now and keep them well below the $300, when probably they would have twice the debt on debt charges. So this is why it automatically jumped to the $300 under the new formula anyway.

MR. WOODFORD: The problem with that is this. Where you're midway through a fiscal year. Your budgets have to be submitted by December 31. You have to submit a balanced budget. Now all of a sudden they find out at the end of March that they've been allocated, say, for instance, $300,000. Now I know that's not applicable until next year's budget. The only thing about it, they find out after going into debt, rather than have a couple of years to gradually put up the mil rate, they all of a sudden have to go smack one year. Instead of one, two, three, it has to go to four, or whatever it is, in order to cover that debt.

MR. COLBOURNE: That's right. For any new debt, that is correct. At the same time, with the publication of the new subsidy system and the way it works the councils are well aware when they apply for capital works and they are instructed - through our regional staff as well as information provided by the Department - to make allowance just in case some of these loans are paid off by NMFC and refinanced, and of the possibility there will be a payment due sometime during the next fiscal year. Generally that doesn't happen for a year or so after the money's drawn down anyway to give them at least a year, a year and a half, to prepare.

MR. WOODFORD: Yes, that was my next question. Will there be any flexibility in that? For instance, a community has $300,000 and they can get their engineering work for instance done this summer, and probably a portion of the contract or something like that, will they be allowed to carry that over? Say for instance they only incurred $50,000 of a $300,000 allocation.

MR. COLBOURNE: The loan is financed through a chartered bank, and until such time as we have received the certificate of substantial completion then the loan is not refinanced. In some cases where if you say of the $300,000 and there's $20,000 left over, and the interest is starting to accrue, we retire the loan with the bank and put it through NMFC and the $20,000 would be lost unless it's used. Because it would only cost the Province (Inaudible) of money or the municipalities involved. But yes, any loan through the bank can be held over until the project is finished. As long as there's a reasonable period of course, with no intentional delay or anything.

MR. HOGAN: Most cases take a year, though. It's in to the next year anyway, at least the next year, and probably, in most cases, probably even two years.

MR. WOODFORD: That committee that you have set up. Are they going to have any hearings or anything, or are they just going to talk to municipalities or what?

MR. HOGAN: Mr. Chairman, I don't anticipate any hearings per se. They have to evaluate what's before them and what has been experienced over the last while since the introduction of these systems. To be quite frank with you I can't see the need for it at the moment. But if they deem it necessary, as long as they get the job done and within their capabilities, hearings would incur some cost that they haven't been allocated the authority to incur. I would anticipate them having enough information to do what has to be done within their own resources of their own particular jurisdictions. I can't see the need for the committee having to go outside, too far afield outside their own immediate knowledge and contacts, to do what has to be done.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: So they're doing it within their membership?

MR. HOGAN: Both the outside groups I would imagine are utilizing the full resources of their membership. That should surely God give us a good understanding of the experience.

MR. WOODFORD: Yes, it would, if they utilized the full resources of their membership. That's the point.

MR. HOGAN: You have to trust them to be representative of their membership.

MR. WOODFORD: On the rating sheets that have been around for awhile, Mr. Minister, how strict are those rating sheets regarded within the Department? Are they abiding by those or what? Every municipality has to submit it with their five-year plan. Usually they're rated by the regional offices with regards to what the priorities are and usually the allocation for capital funding is done based supposedly on those rating sheets. Are they or are they not?

MR. HOGAN: Yes they are.

MR. WOODFORD: They are? Both for the cost-shared paving road construction and for the municipal capital works program with regards to water and sewer?

MR. HOGAN: Yes.

MR. WOODFORD: Strictly, Mr. Minister?

MR. HOGAN: As strict as I can enforce strictness, yes.

MR. WOODFORD: Can those rating sheets be accessed by any municipality?

MR. HOGAN: I don't know if the rating sheets can. They're only a piece of paper with -

AN HON. MEMBER: (Inaudible).

MR. HOGAN: They have never been released?

AN HON. MEMBER: No.

MR. HOGAN: They've never been released, I'm told. They're utilized by the various members of the committee in making their final judgement. I think it's the rating sheets your speaking about. I've had an interest in the subject for some time myself, Mr. Woodford. I found this year that there were anomalies in it, although it seems to lend itself acceptable to most, at least there hasn't been all that much criticism directed towards the results.

I found in some particular instances that have come to my attention through a great many councils that the results sometimes come out strange. If not right, they're strange, in that there is some unfinished work out there, work that has been started and that's now in between. I found cases that were judged to be rated rather highly compared to others that I know of specifically about that I don't know how in the name of God they could be rated as high.

If you think through the system and all the reports and contributions that are made to it - or should be made to it - if you take into consideration an environmental report, for example or a health or engineering report - I guess most of the decisions - not the decisions but the judgements - are subjective as to who's looking at them. What appears to be a bad sewage situation to one might not be a bad sewage situation to another, and so on. I think subjective to that degree.

Even in this year's solicitation to all members of the House of Assembly, as I understand in talking to the chairman, and I didn't review them, only some that came to me directly as opposed to going through the chairman of the committee, left something to be desired in descriptions of situations in the various communities when you know what a council said about some of the things in the same community. So it is all subjective you know.

MR. WOODFORD: I was always baffled ever since that came out with why a municipality would not have access really to the way they were rated.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: Well I got them. I mean I happen to have them. But ever since I did get them there is -

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: The Freedom of Information Act can get anything.

MR. HOGAN: I'm sorry, Mr. Chairman, I missed Mr. Woodford's last question or comment.

MR. CHAIRMAN: He was talking to you about how the towns are assessed.

MR. WOODFORD: Yes, I was wondering why, I could never understand why they wouldn't be available to a municipality. The rating sheet pertaining, for instance, to a municipality - whether it is water and sewer or roads or whatever - why wouldn't that be accessible to that municipality?

MR. HOGAN: Well I will take it under determination and see. I don't have any ready answer for you, Mr. Woodford, but I will certainly take it under advisement and discuss it with you at a later time. I don't have an answer for you right off the bat. I will say this to you, that as the thing exists now there is very little change to the rating system that was designed by our predecessors. In answer to the question, I have asked far and wide in the department and if there has been any input it has come from the federation of municipalities, health, and the society of consulting engineers and other groups that would have an objective interest in something like that.

We have ventured into the unknown of asking the MHAs, representatives of the districts, to have some input, I have never gone over the formula in detail myself, but I'm going to have that formula reviewed and have some input into it myself to see exactly what it is.

MR. RAMSAY: We only have about an hour or so remaining for Newfoundland and Labrador Housing. If there are no objections could we move the subheads, or do you have anything more specific you want to -

MR. WOODFORD: Oh I see. You are going to have it separate are you?

MR. CHAIRMAN: Yes. This is only the department.

MR. WOODFORD: I see.

MR. CHAIRMAN: Then we are going into Newfoundland and Labrador Housing.

MR. WOODFORD: Well there are a lot of other questions I have on that, but that is all you can do. I don't want to disrupt the meeting.

MR. RAMSAY: With that, Mr. Minister -

MR. WOODFORD: I have no intensions -

AN HON. MEMBER: Has the thing got to be done today?

MR. WOODFORD: No, it hasn't got to be passed today. I mean it is up to the boys if they want to pass it.

MR. DOYLE: I'm a little bit confused. I mean have we decided that we are going to spend two hours on the department and then one hour on Newfoundland and Labrador Housing, then tomorrow if the subheads are not passed we will spend two hours on the department and an hour on Newfoundland and Labrador Housing.

MR. CHAIRMAN: Well, we will just put the motion to the floor and see what happens and let the committee decide.

MR. WOODFORD: You know what is going to happen if you put the motion to the floor. If that is the way you want to treat it you should turn it back to the House of Assembly.

MR. RAMSAY: I am not suggesting we want to treat it that way, I just asked if you disagree with that approach then we will continue on with the department. I suppose it is up to the committee. You have to put it through motion though before you can decide.

MR. HOGAN: Mr. Chairman, for the information of the committee and the chair I don't know what time has been allotted.

MR. CHAIRMAN: Three hours has been allotted.

MR. HOGAN: Three hours totally?

MR. CHAIRMAN: Three hours, yes.

For the committee. You can go nine hours, but it will be three hours chalked up against -

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Yes. You have three hours. That is all you get for this department. You can work six hours or nine hours, there is no saying you have to -

MR. HOGAN: I was just going to suggest for the information of the committee if they wanted to learn something more in the department that I, myself, will be absent from the Province at the end of the week and might not fall back in within the fifteen days.

MR. CHAIRMAN: Well it has to be finished by the end of the week, according to Wins Baker.

AN HON. MEMBER: Fifteen days (inaudible).

MR. CHAIRMAN: It has to be finished by Friday.

Would you rather go half an hour departmental and then go half an hour with Newfoundland and Labrador Housing?

MR. RAMSAY: We are open to suggestion.

MR. WOODFORD: I am not a member of the committee. I am here as a member of the House of Assembly, with the right to ask questions. Norm is the only member we have, and it is obvious that if the motion is put it is going to be passed. That is what I am saying, and the minister -

MR. RAMSAY: That is why I said it in the way that I did, because if you want to continue on, I am in no hurry to -

MR. CHAIRMAN: Which is the most important part to you - housing or the department?

MR. WOODFORD: I do not want to be disruptive or disrupt the committee. The minister and his officials are very forthcoming and forthright about their answers.

MR. CHAIRMAN: They are, yes.

MR. WOODFORD: It would not be fair, as far as I am concerned. But I have just a few short comments, that is all.

MR. RAMSAY: We will let you continue on. I am in no hurry to put the motion.

MR. WOODFORD: Well I will just ask a couple of what I consider to be pertinent questions, and then if you want to go into Newfoundland and Labrador Housing we can. Is that okay with you?

MR. CHAIRMAN: Yes, okay. Go ahead, Rick.

MR. WOODFORD: Under the assessment services, 2.1.02, minister, under salaries, I know that 1841 was budgeted last year and then you went in to revise and used pretty well the same figure for this year. Would that have to do with extra assessments around the Province?

MR. HOGAN: Yes, we had an increase in staff by ten, Mr. Woodford.

MR. WOODFORD: Assessors?

MR. HOGAN: There were ten temporary assessors brought on last year, and they were made permanent this year.

MR. WOODFORD: That is to deal with the extra assessments because a lot of communities were behind in assessments?

MR. HOGAN: Oh yes. I hear the assistant deputy minister saying every now and then that if he had fifty he would be able to put them to work.

MR. WOODFORD: Yes. How many municipalities are behind now? Do you have a figure on that, because a lot of municipalities were behind. One of the conditions in the criteria, under the rating sheets and so on, and to be looked at and considered for capital funding, was to have property tax, for instance, in place. If you made an application for capital funding and did not have property tax in, and it was because the assessment was not done, was there a municipality ever turned down because of that?

MR. HOGAN: I will refer that to Mr. Peckham.

MR. PECKHAM: Mr. Chairman and Mr. Woodford, there are about seventeen towns that have not been assessed for the first time right now that have requested assessments. In the last couple of years we have given priority to assessing first time municipalities, so we are pretty well up-to-date on that. That represents all new requests, pretty well. There would not be anybody with more than a two year request in that now, and we will probably be able to eliminate that lot this coming year.

In order to do that we have had to defer reassessments, and towns that had reassessments due in their six year recycling process. So we have deferred a number, on an annual basis, for not more than one year in the last couple of years.

We should be able to catch up - we hope to be able to catch up - the entire backlog of new assessments and reassessments within the next two years, using the new system that is now on stream.

MR. HOGAN: I might also add to that, Mr. Chairman, for Mr. Woodford's information, that no request for capital is turned down as long as the request for assessment is in. If the request for assessment is in and not done, then the consideration for capital will still be made.

MR. WOODFORD: Well that is good to know, because as long as the municipality has that request in at least they can be considered for capital; but on the other side of it, then, the reassessment is going to be important too, under the new program, because your equalization component is based on property value firstly, divided by your number of households, and then your local revenue component is based, really, on the total amount of property tax collected. So if your assessment happened to go up like St. John's this year it would make quite a difference. I know it has always been a problem to try to get assessors.

MR. RAMSAY: We have seen certain areas where reassessments have caused a lot of pain for home owners by going up by such a large amount. I am wondering if there has ever been any consideration given in the department to the idea of putting out an advisory each year as to the amount that housing costs, or the value of land has increased, land and/or property, so that they could raise their mil rates commensurately and then bring them back down when the reassessment did come in? So they could, as opposed to having a 100 per cent jump every four or five years or whatever, that the councils be given an advisory, so that they could, through the mil rate structure, address the increase in values. Then bring it back later on. Has that been considered by the Department?

MR. HOGAN: Yes. The MASS program introduced by the Department is one that will overcome this and that probably year by year - undoubtedly year by year - the assessment role can increase so that the mil rate may not have to change. So it could be under the computerized program that you could have established changes every year. You won't get this quantum leap that you get every six years. This is what's happening, to my home, and your home, and everybody's home in the Province. The assessor comes in six years after he was last there and just taking this magnificent leap of world record proportion and the rates go up.

MR. RAMSAY: My own went up something like 35 per cent in one year, although that was based on a five-year term, right?

MR. HOGAN: That's five years. I would suggest to you that under the new computerized program it might not attain it, it might go higher, I don't know. We anticipate that it would be more uniform and less painful for your pocketbook in the years to come.

MR. RAMSAY: Okay.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: What's happening in a lot of those municipalities, especially in the smaller municipalities, that even if the assessment does go up, if they don't have a high enough poll tax rate there are only a few people who get hit. You put your mil rate where you like, from 3 to 6, 3 to 9, 3 to 10. You've got a certain portion of the municipality because of their, say, a higher property value, and if you haven't got your poll tax in place to meet a good minimum, that's where they face a lot of problems. Especially under this new system.

Under Municipal Assessment, 2.2.01.05. Your budget and your revised are pretty well the same, dead on, but this year it's down. Why would that be down?

MR. HOGAN: The computer system is now fully installed.

MR. WOODFORD: So that would be the...?

MR. HOGAN: That would be the drop in expenditures from last year to this.

MR. WOODFORD: The computer system is complete.

MR. DOYLE: You had layoffs in the assessment division?

MR. HOGAN: No.

MR. WOODFORD: No. Salaries are the same.

MR. DOYLE: Oh, are they? Yes, okay.

MR. HOGAN: Half a million dollars in savings from installation and design to purely operating.

MR. WOODFORD: Under 2.2.03.05, Professional Services, for Urban and Rural Planning?

MR. HOGAN: What number?

MR. WOODFORD: 2.2.03.05. Would that have anything to do with requests for municipal plans?

MR. HOGAN: That is the shoe on the another foot. That's the increased expenditures to installation of... regional?

AN HON. MEMBER: GIS, that's Geographic Information System.

MR. HOGAN: Which one is the GIS?

AN HON. MEMBER: The mapping system.

MR. HOGAN: The mapping system, Geographic Installation System, is it?

AN HON. MEMBER: Geographic, yes, Information System.

MR. HOGAN: Yes. Geographic Information System. I defer to Mr. Peckham to explain what GIS means. Forgive him if he swears.

MR. DONALD PECKHAM: The extra funding there is really for data processing to implement a new process that would create base maps in the urban and rural planning division. These maps will be used by several divisions in the Department: engineering, assessment, urban and rural planning, and probably other Departments - Crown lands - as well. It's a fairly sophisticated map making, electronic data processing.

MR. HOGAN: We'll sell it as well.

MR. PECKHAM: We may be able to sell it soon as well to the public.

MR. WOODFORD: Under Engineering Services, 2.3.01.11, Debt Expenses, $355,700. It's not very often you see debt expenses like that.

SOME HON. MEMBERS: (Inaudible).

MR. HOGAN: Mr. Peckham will answer that one, Mr. Chairman.

MR. PECKHAM: That's the repayment of debt for waste management facilities, a debt that's been incurred in previous years.

MR. WOODFORD: On their incinerators?

MR. PECKHAM: On their incinerators, that is right.

MR. WOODFORD: That would be the cost-shared.

MR. PECKHAM: Yes, that is cost-shared.

MR. DOYLE: I wanted to get a couple of fast questions in if you don't mind, Mr. Chairman.

On the early tendering we heard a contractor last week, I believe, publicly state that there was only two contracts so far called or let in the department. Could you tell us a little bit about the early tendering? How is it coming along? Are there contracts coming out on a daily basis now, because there are only two let as of last week, I believe? We are getting along now into June, and by the time we get the contracts out and allow for the five or six weeks, whatever it is, and then get them back in, by the time it is awarded we could be well up in the fall again before work gets going. So is there anything you can tell us about that? Are we going to be in a decent position? You know the unemployment problem is something else.

MR. HOGAN: I think the hon.member in the coming weeks will see the pages filled with tender documents being called, with the April 30 deadline and the consulting engineers getting in their documents and getting everything approved. I think you will find in the coming weeks an inordinate number of tenders being called. I have to concur with the hon. member and all hon. members here that we are still not early enough on our call.

MR. DOYLE: No.

MR. HOGAN: Hopefully our next move now is to go out, get municipalities to get their five year plans in for the next couple of years and see if we can't get it through this fall and get decisions made much earlier in time than they have been this past year.

MR. DOYLE: Yes, because you are going to be moving up to August -

MR. HOGAN: Either late this fall or early in the new year I would like to go out with capital works this year.

MR. DOYLE: You are going to be getting into the middle of August now before work starts this year, so it is -

MR. HOGAN: It is not a new criticism.

MR. DOYLE: No, that is right. I had the same criticism when I was there as minister.

MR. HOGAN: I am sure both of us have lived with that. There are always circumstances which delay it. I guess the road to hell is paved with good intentions and it was our intention this year to have it out a little earlier than it was. It got circumvented for any one of a number of reasons. We always seem to be depending on the availability of credit and funding of others and all that kind of stuff, and hopefully we can overcome that this year and get a fairly early announcement of capital works.

MR. DOYLE: I guess there is really no reason why you couldn't have the capital works program announced maybe in January sometime or February.

MR. HOGAN: The only one that I know of, and one I am not very familiar with - I don't know if anyone here is totally familiar with it, the officials are, certainly - is the credit market and the availability of money and the circumstances of the province at the time and the frame of mind of politicians at the time, and a whole mix of things which delay the more practical people such as ourselves in getting things done.

MR. DOYLE: Just a comment on the Libraries Board. I believe there is supposed to be an investigation done with respect to the Libraries Board. Is there an investigation ongoing in the Libraries Board? Does the minister see it as necessary? I believe there have been accusations flying back and forth with respect to mismanagement and what have you. Is there any evidence that the minister can give us to date with respect to mismanagement at the Libraries Board? Are there any general comments that the minister can make and shed some light on what is happening there?

MR. HOGAN: I am drawing some hints of innuendo from the question here of mismanagement. I don't know where that came from. There has been a lot said back and forth about the Libraries Board question over the last couple of weeks, a lot by people who don't know what they're talking about, mostly.

The Department was advised in writing by the Public Libraries Board - I forget the exact date, but probably about three weeks or a month ago - that having studied their allocation for this year that in the best interests of all concerned it would be best to shut down the Libraries Boards for one period of two weeks. It was the cleanest, easiest way to deal with it. The very lowest time of business, and so on.

In advising the minister of that situation they asked for a meeting. A tentative date was set, or we tried to reach a tentative date when the parties that were to be at the meeting could be at the meeting, and a date was set. I think it was yesterday, or today. Then it was changed because of all the rhetoric that was flying about. We moved it up to last week and we met on May 11, I think it was. Was it, Mr. Frost?

MR. FROST: May 12.

MR. HOGAN: May 12, was it? It was a week earlier than what we had planned. Despite the rhetoric it was a good meeting. It was attended by myself, Mr. Frost, and three principals of the Public Libraries Board. Again, the simplest, most clean-cut way of dealing with the shortfall, considering the money available, was to shut down for two weeks. I discovered, much to my surprise, that the shutdown of the Library Boards is not a brand new thing because they've been doing it for ages - on an individual basis, instead of a collective basis.

There are a lot of these boards operating on ten, twelve, fifteen hours a week. I might be wrong in the number of hours now, but generally speaking that's the practice. When that person who works there ten, twelve, fifteen or twenty hours a week, or part-time week, or partially open week, whatever they call it, goes on a vacation or something, or goes to Florida, or goes wherever he or she might want to go, they shut down. The customers all know it and they're all prepared for it and everything. Only this year it had it be a conscious decision across the board, is the way I read it. I might be wrong, but I think my analogy is a pretty fair description of it.

Having discussed it with the Libraries Board last week and because of all the concern that was out there, rightly or wrongly, what was decided was that a representative of the Department, a representative of the Libraries Board and a representative of Treasury Board, would sit down and review the budget. Now they did some things in their budget - I don't know if it's mismanagement or not but it certainly wasn't the proper thing to do - some things that they did within the budget were in contravention of the government policy under the restraint program and contrary to Bill 16 of last year and Bill 17 of this year. That was pointed out to them.

Now if that's mismanagement, let it be, but I didn't think so. I took it to be a misinterpretation of the regulations by the Public Libraries Board. There was no big thing with anybody. The Libraries Board went off and as far as I know they're still going to be shut down for two weeks and they're hopefully in discussion with somebody from the Department. Who's the person from the Department?

AN HON. MEMBER: Rick is (Inaudible).

MR. HOGAN: Oh, Rick. There you go, the man is there himself. Rick Hayward is the director of financial operations. He's sitting down with his counterpart from Treasury Board and a financial person from the Public Libraries Board and they're going to see if we, the practical people, it's grand to be in with the financial people in what they're doing, if they come out and say that that's the way she slips, then that's the way she slips.

MR. DOYLE: So there's no investigation as such going on with respect to the Libraries Board, is what the minister is saying. Okay.

MR. HOGAN: Call it what you will. I don't call it an investigation. That's not the word for it, I don't think. A review of the facts, or the obstacles, or whatever is tending to - is the decision to shut down for two weeks the right one? Although it's been made now for aeons. It's just that somebody chose now to make it a media event.

MR. DOYLE: I just wanted to touch for a moment on the Goulds. Is the department considering any transitional funding for the Goulds so that they can phase in the higher tax rates over a longer period of time?

MR. HOGAN: No.

MR. DOYLE: There is no -

MR. HOGAN: No.

MR. DOYLE: Okay.

MR. HOGAN: I say no because I have not seen anything asking us to do that. Have we received any requests? As you know, we touched on this subject because you are familiar with the amalgamation process - there have been no commitments made to any of the groupings that were entering into the amalgamation process that drew any incentive or any promise or any commitments for anything.

As I understand it, with encouragement from Mr. Peckham here, is that the City of St. John's asked for some transitional funding to cover off such things. In the pre-amalgamation debate it was said 'no' to, the same as it was said 'no' to throughout the Province.

Since that has taken place and a transition - I do not know if there has even been any transitional meetings in the committee structure; I will have to ask about that - but I would anticipate it, in any normal procedures. I would sit down and, as a mayor or mayors, I saw that this was affecting one of the municipalities, the first thing I would do is put together a proposal and, seeing that they were party to this amalgamation, to write the Province and outline a proposal that would alleviate the situation, whether it is the Goulds or whether it is Torbay, or whatever part of the amalgamated entity has drawn an unnecessary burden, that they would put a plan in progress to alleviate it. No such plan has been forthcoming, and that is what I have been saying. No, we have not heard from the City of St. John's.

I have read in the paper, and I heard all kinds of utterings about it, but no, the Province has not seen it; but I did see this week, in the media again, where the fire fighting services - regional fire fighting services - were going to make a proposal to government. We have not received that either, yet.

MR. WOODFORD: I have one short question, Mr. Chairman, and then I can go on to Newfoundland and Labrador Housing.

Minister, under 3.3.04, environmental improvements - I think it is a joint effort between the federal and provincial government - what project would that be? Would that be a water system in Grand Falls, or ...?

MR. HOGAN: Oh, that is the -

MR. WOODFORD: Environmental improvements.

MR. HOGAN: The famous projects that have been ongoing now for the last couple of years, that includes Placentia flooding, the major project water system in the Grand Falls area, and the Corner Brook East Development Scheme.

MR. WOODFORD: What portion of that would be allocated - that did not start, did it? Did that particular project start, the Corner Brook East Development Scheme?

MR. HOGAN: Not to my knowledge, no.

MR. WOODFORD: But you have your monies allocated for a certain portion of that?

MR. HOGAN: To my knowledge nothing has started on it. I know the closest one that has started is probably the Placentia scheme, is it?

They have already gone to tender, have they?

AN HON. MEMBER: The Placentia one has.

MR. HOGAN: Placentia is partially gone to tender and some of it might have started in Corner Brook.

MR. WOODFORD: Okay, Mr. Chairman.

MR. SHORT: Subheads 1.1.01 through to 7.1.01 inclusive, by the Department of Municipal Affairs.

MR. CHAIRMAN: You have heard the motion that subheads 1.1.01 to 7.1.01 be adopted. Any question?

On motion, subheads 1.1.01 through 7.1.01, carried.

MR. CHAIRMAN: Thank you, Mr. Minister, and your officials.

MR. HOGAN: Mr. Chairman, with your permission and the permission of the committee, could the officials from the Department of Municipal and Provincial Affairs be excused? I will call the officials from the Newfoundland and Labrador Housing Corporation forward.

MR. CHAIRMAN: Gentlemen.

MR. HOGAN: Mr. Chairman, with your permission I'll distribute my opening remarks so that those present can better understand them.

MR. CHAIRMAN: Yes, okay, thank you. I'd ask Mr. Hogan if he'd introduce the officials from Newfoundland and Labrador Housing before he begins his opening remarks.

MR. HOGAN: Mr. Chairman, on my immediate left, the Chairman and Chief Executive Officer of Newfoundland and Labrador Housing Corporation, Mr. Bob Noseworthy; on my immediate right is Mr. Peter Honeygold, Vice-President of Programs and Operations; and on my far left, Mr. Ed Heath, Vice-President of Finance and Administration of Newfoundland and Labrador Housing.

I would like to take this opportunity to review the estimates for the Newfoundland and Labrador Housing Corporation and provide an overview of the activity proposed for 1992-1993. However, before looking at these areas I would like to provide a brief overview of the mandate and activities of the Corporation.

NLHC is the housing arm of the provincial government which strives to ensure suitable and affordable housing is available to all residents with the priority to provide such housing to those in need. In these activities NLHC works in cooperation with the federal government, municipalities and community organizations to assist in the Province's economic development. NLHC plans and develops the residential and industrial land facilities in areas of actual and potential growth.

The Corporation's prime responsibility is delivery of social housing programs for low income families, senior citizens and special needs groups. These social housing programs, which are cost-shared on a 75-25 federal-provincial basis with Canada Mortgage and Housing Corporation, are delivered and administered by NLHC. As well as social housing, NLHC administers market rental housing, develops residential land assemblies and develops and administers provincially-owned industrial parks.

I would note that as a result of a comprehensive review of the Corporation's mandate the strategic plan of the Corporation has been adopted by government. This plan confirms the role of NLHC in each of these activities and that is: continued active involvement in the provision of social housing, the continuation of the current policy of selling our market rental housing portfolio, a continued ranking and development of residential land, and a continued planning, development and marketing of industrial properties.

With regard to the scope of NLHC's activities, the Corporation presently manages a portfolio of some 7,500 social housing units and 800 market rental units. As well, the corporation administers the portfolio of some 10,000 mortgages and home repair loans totalling in excess of $130 million. In the area of land development the Corporation has developed close to 6,350 residential building lots, of which 5,600 have been sold to date. Over 1,000 acres of industrial land have been also developed, of which close to 600 acres have been sold.

Gross expenditure for the Corporation for the upcoming fiscal year is estimated at $175 million, representing current account expenditures of $119 million and capital account expenditures of $56 million. It is important to note that the provincial grant of $16.8 million referred to in the estimates represents only the provincial share, or less than 10 per cent of total expenditures. Fifty-two per cent, $91.4 million, will be generated by the Corporation from its various housing loans and land programs. Thirty-four per cent, $59.3 million, will be provided by the federal government. Four per cent, $7.7 million, will be financed independently by the Corporation through bank loans.

Net current account request of $16.8 million contained in the budget represents an increase of nearly $5 million over the 1991-1992 revised budget. Current programs with the corporation require no capital funding from government.

Highlights of the 1991-1992 budget include: the provision of ongoing assistance to some 17,000 families throughout the Province by means of subsidized rentals, mortgages and repair loans. These programs will cost the federal and provincial governments a total of $85 million in 1992-1993.

The provision of some 205 new social housing units throughout the Province to serve families, seniors, natives, and nonelderly singles and disabled. Some 166 of these units will be newly constructed at a cost of $15.1 million, while the remaining 39 units represent new rent supplements which will assist needy clients living in private rental accommodations. All programs will provide financial assistance based on the tenant's annual income and their ability to pay.

The provision of some $18 million in federal/provincial home repair funding to over 1,500 eligible recipients. This funding provides grants and loans to low income home owners, including natives and the disabled, to upgrade their existing homes. Rehabilitation represents the greatest housing need in the Province and will continue to be a major focus of the corporation.

The provision of some $14 million to fund residential land development that will see an additional 300 residential building lots develop.

The provision of some $2 million to initiate a three year modernization plan for the 210 unit Buckmasters Circle project in St. John's; the total cost over a three year period is expected to exceed $5 million.

The provision of some $3.2 million for industrial land construction in such areas as Clarenville, Arnold's Cove and Stephenville, that will upgrade existing facilities adding some fifty-eight acres to the inventory of lands available for sale.

The continued sale to the general public of the corporation's market rental units. This year's budget provides for the ongoing sale of projects throughout the Province as well as two large projects in the City of St. John's. Should proposal calls generate a fair return for the corporation, then both the Elizabeth Towers and Churchill Square apartments will be sold.

In closing, I feel that the 1992-1993 budget of the corporation represents an excellent balance, recognizing the continuing need for social housing in the Province while considering the fiscal realities facing government.

In total, social housing needs of some 1,730 additional households in the Province will be addressed through this budget in the coming year, as well as expenditures of the corporation in the order of $175 million will provide employment for some 1,400 persons throughout the Province.

I must, however, express concern over the federal government cutbacks in new social housing expenditures which will see new unit and repair loan reproduction reduced by over 50 per cent during the next two years. Attempts are being made by all the provinces to have this policy reversed.

In looking at the area (inaudible) residential construction industry, it means a promising part of our economy. Housing starts in the Province are expected to reach some 2,650 units and a continuing strong performance is expected in the renovation sector.

Lower interest rates, together with initiative to reduce the down payment requirements will improve the affordability of new homes for both the first time home buyers and a trade up market as well.

As the minister responsible for Newfoundland and Labrador Housing Corporation, I am looking forward to another successful year for the home building industry in the Province.

Thank you.

MR. CHAIRMAN: Thank you, Mr. Minister.

Okay, Rick, do you want to start questioning?

MR. WOODFORD: Minister, will there be any new housing starts with regard to Newfoundland and Labrador Housing this year in the Humber Valley area? Last year we had a few.

MR. HOGAN: I will refer this specific question to the Chairman of the Board.

MR. NOSEWORTHY: We are not in a position right now to announce, I guess, projects for this year. We should be in a position in about ten days to two weeks.

As you may be aware there have been some considerable reductions in the federal social housing budget this year, announced a couple of months ago, to the extent that we are likely to encounter about a 37 per cent reduction in this Province. We had to reconsider our allocations for social housing, quite frankly, as a result of that this year. Our budget from the federal government was only approved as of last Thursday, actually, for expenditures. So we will need to make some adjustments, and we also are required under our federal-provincial agreements to make joint announcements with the federal government. So our revised allocations have gone forward to Ottawa now and we're expecting approval for those within ten days or so. We should be in a position then to make the allocations known.

MR. WOODFORD: Mr. Minister, I wonder if either yourself or your officials could explain to me the new rating procedure with regards to entrance in Newfoundland and Labrador Housing units? With regards to priority.

MR. HOGAN: Mr. Noseworthy.

MR. NOSEWORTHY: You mean individual units?

MR. WOODFORD: Individual units.

MR. NOSEWORTHY: (Inaudible) units?

MR. WOODFORD: You use three components, I understand. Based on need, finances, and even cleanliness.

MR. NOSEWORTHY: That's right. The reason I ask is because it is not a new procedure as such. Our point scoring system which is used for eligibility for social housing really hasn't changed substantially over the past number of years. There are essentially I guess a variety of components.

First of all, the affordability of a person is considered, or their financial situation. That would look at currently where they're living right now and what rent they're paying as a percentage of their income. It would also look at total income. It would look at present housing conditions - where they're living at right now and whether an overcrowding situation exists there. A number of persons per bedroom is a criterion that we use. The condition of the house in general terms, in terms of heating facilities, in terms of other facilities - kitchen facilities, accessibility, provision of water and sewer, things of that nature. Also, medical situations we would look at as well. We would assign points on that basis. Distance from employment, in terms of transportation facilities, access to transportation, et cetera.

There is a whole list of criteria in our policy manual and we use that. I can certainly supply that. I don't have the details in front of me now but that is well laid down as the criteria that we follow rigidly. In terms of the decision, we do have in-house committees which review applications for social housing and they certainly assess those criteria and weigh those points and decide and determine then who would be eligible for social housing.

MR. WOODFORD: I understand you have proposals called for both Churchill Square and Elizabeth Towers. Is that true? Or about to?

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: For the sale?

MR. NOSEWORTHY: They're pending. They haven't been called yet.

MR. HOGAN: No, they haven't been called.

MR. WOODFORD: Haven't been called.

MR. HOGAN: No.

MR. WOODFORD: But do you expect to do it in the fairly near future?

MR. HOGAN: It's under consideration, very active consideration, to do it in the near future.

MR. CHAIRMAN: Mr. Oldford.

MR. OLDFORD: I just wanted to ask one question, and that's regarding some apartment buildings or apartments that are owned by Newfoundland and Labrador Housing. I've often wondered: the apartments in the Churchill Park area - Allandale Road, Pine Bud Avenue - some in Pleasantville and Elizabeth Towers, are they subsidized? Is the rental in those subsidized or are the occupants paying market value for rent?

MR. HOGAN: Mr. Noseworthy will answer that.

MR. NOSEWORTHY: We establish rents on an annual basis there in line with the market.

MR. OLDFORD: So they're not really subsidized as such.

MR. NOSEWORTHY: In Elizabeth, Churchill Square, Pine Bud, Allandale, in all those that Mr. Oldford mentioned, no sir.

MR. OLDFORD: Okay. Thank you.

MR. CHAIRMAN: Larry.

MR. SHORT: Just one question - well I have one, in a minute, on the housing thing in the estimates, but before I get into that - this year there has been a change from social services. Any housing emergency repairs and that kind of thing that they used to administer - I mean, obviously social services should never probably have been looking after that aspect of social needs because they are not trained in that area. It seems logical that it would go to Newfoundland and Labrador Housing; but were there any resources that moved from social services to Newfoundland and Labrador Housing with that shift, either in money or manpower or anything? How is Newfoundland and Labrador Housing going to deal with an additional work load, if you like, because I have a feeling there is going to be an additional work load. I do not know if you would like to address the issue, Mr. Minister. You know what I am talking about, I guess?

MR. HOGAN: Yes. Mr. Honeygold can probably best address it, but it was viewed by the corporation that they had the technical expertise to carry on this, rather than the Department of Social Services, because it is the nature of the beast more than anything. It was figured that they would be involved in anything up to in the order of $1,200 per unit.

We began the operation of this particular program in January for the avalon regional office, and we are expanding gradually to the other offices. I do not know if we have reached the west coast yet or not.

MR. OLDFORD: Yes, it was supposed to be taken over around the end of April, I believe, or the first of April.

MR. HOGAN: It is in all of them now, is it?

AN HON. MEMBER: Yes.

MR. HOGAN: But we will get some specifics from Mr. Honeygold.

MR. HONEYGOLD: You mentioned first of all about resources. We incur the expenditure - in other words pay the contractor for the work that is done once it is determined what needs to be done. Then on a monthly basis the department is billed for that expense, plus a small administrative fee.

The actual delivery of the program is done through either our maintenance or our technical staff that would normally deliver the RRAP program, and we are not yet far enough into the program, despite the fact that we worked in the avalon for three months, to find out what the overall impact on our staffing requirements might be.

One of the things that is probably balancing that situation is the fact that our RRAP funding, as we just said, through the federal government is decreasing, so the work load is obviously diminishing in that area of our technical staff and can be taken up more readily by some of this activity.

MR. SHORT: Just a couple of other quick questions.

It bothers me that there is a 50 per cent reduction during the next two years. You mention the federal budget was only finalized last week. With regard to that last line there - attempts are being made by all the provinces to have the policy reversed - when you signed the budget document last week or whatever, with regard to the federal government, had we made any dent in the 37 per cent reduction that you mentioned, or the minister mentioned in his opening statement, or is it still where the federal government said it was going to be a couple of months ago? Are they still maintaining that they are going to reduce, or have we been able to get them to move at all in that area?

MR. HOGAN: Mr. Chairman, Mr. Noseworthy can comment on this also, but I think you will see the reduction stay where it is this year, at least the intended reduction, unless there are new programs which come on stream. We are meeting with Mr. McKay, as I said in the House of Assembly the other day, toward the end of June - all the ministers - and we hope to have some practical impact on what takes place there. Hopefully we can come out of there with - probably not turn it around, but with improvement other than what they have reduced it to at this time, and it is not cut as drastically; but it is an area in which apparently the federal government, in my assessment in the short time I have been there, is trying to get out of social housing altogether.

Mr. Noseworthy might want to comment on that.

MR. NOSEWORTHY: The minister is exactly right. There has been one meeting with the federal minister, or one meeting I should say among the provincial ministers, and there is unanimous agreement, I think, among all housing minister across the country and in the territories as well, wanting to see this budget reinstated. It gets worse actually looking at next years approval. We would be looking at a 70 per cent reduction in this Province in social housing. The federal government have actually capped the amount which they are providing, and as inflation eats away from that over the next few years, if the position remains that they are currently adhering to or advocating, we would see the existing housing stock eating into that cap and the federal government getting out of social housing entirely by default or otherwise. So it is a very serious situation, and I think all provinces are addressing it in that way. As the minister points out, there is a meeting which should be telling toward the end of June with all provinces and territories and the federal minister, and we will see, I guess, what their position is at that stage.

MR. SHORT: One final question. I guess one of the most frustrating things for a member is the waiting list for RRAP programs and so on. Is that kind of uniform throughout the Province? Like I know on the west coast, for example, around my area, the Stephenville office, it is about two to two and a half years. Is that normal for the Province? I know there is a serious housing problem in that sense, but are some areas better off than we are on the west coast, for example? On average is it around two years.

MR. HOGAN: Mr. Honeygold can comment on that.

MR. HONEYGOLD: Most of the areas are relatively similar in their waiting list. I think the area with the greatest demand though is the Conception Bay South area. That outweighs all the remainder, but your area certainly is fairly strong. You are talking about at least a year, and it is obviously going to get worse as the budget numbers go down.

MR. NOSEWORTHY: (Inaudible) all statistics in the Province, the need for the measures that we have in this Province for social housing as it relates to repair. The minister commented earlier, I think, that repair is one of the greatest needs in the Province, the need for home repair for those who really cannot afford to upgrade and maintain their own house. The need that has been identified is roughly in the order of ten thousand as the minister pointed out. We will be providing about fifteen hundred loans this year. We would have been at around two thousand except for the federal cutbacks. That simple division would show about seven years to serve the total need that is measured in the Province in light of the existing allocation that is available.

MR. CHAIRMAN: Bill Ramsay.

MR. RAMSAY: With regards to those loans, when those monies are returned back to the treasury does it go on a pro rata basis federal/provincial or does it all come back to NLHC on behalf of the province? I just wondered what happens in that respect. Also what is the default rate on these loans and how would that end up being written off? Really as far as we have to look at with respect to these financial operations, we just have the one budget subhead so we don't have any provision to understand just how adequate other than looking at your own financial statements that we receive in the House of Assembly.

MR. HOGAN: That doesn't go back to the treasury, that comes back to our own coffers, as it were, and it is revolved and utilized by the program within the housing authority.

MR. RAMSAY: Okay, so it -

MR. HOGAN: It's re-used.

MR. RAMSAY: It's re-used. Any of the federal provisions are not returned to the federal treasury either?

MR. HOGAN: (Inaudible).

MR. RAMSAY: No, I wouldn't want you to. So any monies that are federal are used for loans in the program and then returned to us.

MR. NOSEWORTHY: Any money that is cost-shared 75/25, which the repair program would be, any loan funding that comes back, 75 per cent of that automatically goes. What the minister is referring to is our 25 per cent. It's generally recycled through the program. Because it's an annual program year after year.

MR. HOGAN: That 75 per cent picked up again, whichever. We're not as stunned as we look.

MR. CHAIRMAN: Rick.

MR. WOODFORD: Minister, the Venture Centre in the incubator mall in Pasadena. What's the responsibility of Newfoundland and Labrador Housing there now with regards to maintenance, or what do you do there now? What are you responsible for?

MR. HOGAN: (Inaudible) we're the landlords. It's money in and money out with us, or money out and money in, whatever way you want to look at it. It's that we're landlords and we recover the losses from wherever. Mr. Noseworthy.

MR. NOSEWORTHY: The Venture Centre was built several years ago using 100 per cent federal money. Once it was completed the ownership of that was transferred to the Newfoundland and Labrador Housing Corporation to act as landlord in terms of leasing the property, and indeed in providing any maintenance to the property, et cetera.

As you are aware, the concept of the incubator mall is really to try and attract small businesses or entrepreneurs if you will, and provide them with subsidized leased arrangements - at least subsidized in the first few years. I think it started off at 75 per cent, and the idea being a 5 per cent increase in terms of the lease rate per year up to five years, at which time it became 100 per cent, even beyond that to 110 per cent, 120 per cent, to encourage an entrepreneur to move then out of the Venture Centre to provide it for somebody else and move out into the private market.

Our role really was to recover, or collect if you will, those leases, and any shortfalls between our costs and the leasing rate were to be provided through the Department of Development. Essentially for us, we are to maintain that property, we own it, we are the landlord, and we collect the rents and the difference is paid through the Department of Development. Essentially that's our role.

On motion, Newfoundland and Labrador Housing Corporation, total heads, carried.

MR. CHAIRMAN: Thank you, gentlemen, it's been a pleasure working with you.

The Committee adjourned.