April 3, 1995                                           GOVERNMENT SERVICES ESTIMATES COMMITTEE


The Committee met at 9:00 a.m. in the House of Assembly.

MR. CHAIRMAN (Gilbert): Order, please!

We will now call this meeting to order.

The purpose of the meeting today is to discuss the Estimates of the Department of Finance and the Public Service Commission. We have a couple of housekeeping things to do before we start, so I would ask someone to move that the minutes of our March 30th meeting be approved.

On motion, Minutes adopted as circulated.

MR. CHAIRMAN: I will ask the Committee to introduce themselves and then I will ask the minister to introduce the officials he has with him and then we will open. Normally what happens then, the minister has an opening statement of fifteen minutes, the Finance Critic and the Opposition will then have an equal amount of time and then we will go into a ten-minute question and answer period when each member will indicate to me that he wants to speak. So I will now introduce the Committee.

My name is David Gilbert, I am the MHA for Burgeo - Bay d'Espoir. Roger Fitzgerald, MHA for Bonavista South. Jack Byrne, MHA for St. John's East Extern. John Crane, MHA for Harbour Grace. Bill Ramsay, MHA for La Poile. Jim Walsh, MHA for Mount Scio - Bell Island. Neil Windsor, Opposition Finance Critic and MHA for Mount Pearl. Thank you.

Now Mr. Minister, if you would, you may introduce your officials and if the officials are asked a question, I would like them to identify themselves before they speak, because the people who are transcribing this do not recognize your voices as they would most of the ones on that side so, if you indicate that one of your officials is going to answer, I would ask the official to identify himself before he speaks.

Mr. Minister.

MR. BAKER: Thank you very much, Mr. Chairman.

First of all, I would like to apologize to the Committee for being a few minutes late; I got hung up on a phone call, those things happen so I would like to apologize for holding you up this morning.

This session deals with, I guess Department of Finance and the Public Service Commission so I have officials from both departments.

First of all, from the Public Service Commission, Jim Byrne and Sheila Devine and they are sitting behind me. From the department itself the deputy is not available this morning as he is away on a meeting. I have the three ADMs; first of all, Bob Vardy on my right who handles fiscal policy and Bob Clarke who handles the tax collections and tax policy and on my left, John Bennett who is debt management and pensions.

MR. CHAIRMAN: Very good, sir. Do you want to have an opening remark, Mr. Minister.

MR. BAKER: Not very much. The Department of Finance obviously is a department that does two essential things. It handles the collection of money and has an important role in terms of policy of government, and is instrumental in preparing the Budget each year. The three general areas: in the area of fiscal policy we have an awful lot going on at the current time in terms of discussions with the federal government and that department obviously is very active in the intergovernmental area. We have a lot of cases to make to the federal government in terms of transfer payments, in terms of equalization payments, in terms of what this Province should be receiving, what changes we see and Mr. Vardy is in charge of that area.

The collection of taxes, of course, is obviously very important and involves all taxes collected by government called Taxes of General Application. I guess the biggest area of course is retail sales tax but involves a lot of other areas as well. In terms of the debt management pension side, obviously it is very important. We have tremendous pension problems that have to be solved in the near future and this division is keen on that resolution. In terms of debt management, our debt is huge. The borrowing program has to be managed properly, the investment has to be managed properly in terms of the sinking funds and in terms of the pension funds and so on. So John Bennett also has a pretty big job to do there.

I don't think I will get into any more detail and ask hon. members for any questions they might have, or anything they might want commented on. Obviously anything of detail I will pass on to the appropriate officials as they would be able to give a better detailed answer than I would.

MR. CHAIRMAN: Thank you, Mr. Minister. Mr. Windsor.

MR. WINDSOR: Thank you, Mr. Chairman. First of all I would like to thank the Committee for their courtesy in allowing me to speak here this morning by leave of the Committee. I recognize that I am not here officially as a member of the Committee. I certainly do appreciate the opportunity to speak and appreciate the courtesy in being allowed to speak first as finance critic.

Mr. Minister, you mentioned first of all fiscal policy which is an interesting area because I noticed in the Budget the amounts increased from $333,000 this year to $459,000 while your Budget last year was $473,000. So you were well under budget last year but you are projecting to go back up again this year. Can you tell us, first of all, why that amount? In your opening statement you gave some indication that you are very much involved with negotiating transfer payments and the whole fiscal policy area with the Government of Canada. Can you tell us as well, does that include continued negotiations on tax reform, harmonization of GST and RST and also would you like to tie in with that the government's present position on payroll tax? Are you proposing, as part of this overall tax reform, to eliminate the payroll tax and if so, how do you propose to replace that?

MR. BAKER: Yes, first of all we have no definite plans in place to replace the payroll tax or eliminate the payroll tax. It is a very important source of revenue and has to be looked at in light of all other taxation levels in the Province. In terms of businesses, we have taken great strides in lowering the tax levels on businesses in the last few years. As you know, we are still determined to make this Province business friendly by announcing this year a research and development tax credit that is again a positive on the tax side in terms of businesses but there are no plans in place at the present time to eliminate the payroll tax. The tax effort on businesses in this Province is very low in comparison to other provinces and unfortunately, whereas we would like to, we cannot eliminate all taxes.

In terms of the discussions with the federal government, certainly we are still pursuing harmonization. That has run into a lot of snags in other provinces. Most other provinces are not prepared at this point in time to accept a nationwide harmonization of any kind and we are still continuing these discussions. There is a finance minister's meeting, I believe, sometime in June where the issue will probably be discussed again. We perhaps may have the opportunity at some point in time to do a partial harmonization - and talk about partial in terms of Canada - if we can come to some kind of agreement to harmonize Atlantic Canada with the GST, but that is still off in the future. Our position is that we want harmonization, which would mean broadening our base considerably to as closely as possible match the GST base, and then hopefully being able to lower our rate. This is where we would like to be but I cannot give you an estimate as to when that would happen.

In terms of the numbers in tax policy they were low last year primarily because we had two vacancies during the year that were not filled, but we intend to fill these vacancies.

MR. WINDSOR: Thank you, very much, Mr. Minister.

In the area of fiscal policy you budgeted $352,000 and actually spent $586,500. Would you like to tell me why fiscal policy should go up by 50 per cent? There are primarily salaries in that particular subhead, your salaries doubled from $280,000 budgeted to $542,000, and projecting the cutback this year to $287,000 again. Would you like to explain that to us?

MR. BAKER: I am told, Mr. Chairman, that that number, $542,300 is a mistake in the estimates and that should have been in fact $271,000 instead of $542,300. I will see how that translates through the whole estimates. I am assuming there is no affect on the bottom-line. Perhaps before we finish today I can get a further explanation of that, but that should have been $271,000, and I am assuming there is another comparable mistake somewhere there. I will see if I can find out from Treasury Board budgeting people.

MR. WINDSOR: Getting back to the payroll tax issue and tax harmonization. How would you propose to truly harmonize Atlantic Canada as long as we have a payroll tax in place and other provinces in Atlantic Canada do not? How do you justify harmonizing part of Canada? If you are looking at harmonization there is give and take here, and part of the give is that we give up a tremendous amount of flexibility in using the taxation system to deal with social policy. Government has always retained that and I suspect that is why most provinces of Canada are not totally in favour of harmonization. How do you justify partial harmonization if other provinces of Canada are not going to be part of this and we have gained the benefits, and there are some, of harmonization but we have given up all of the costs?

MR. BAKER: You are right there are some benefits to harmonization and some, I guess, extra revenue to the Province making it easier for the federal government to carry out their duties at the border and so on. There are advantages to harmonization. The payroll tax is not a consumption tax and harmonization refers to simply the harmonizing of the consumption taxes on the individuals.

Harmonization, I guess, also involves a shift in tax burden, as the hon. member probably realizes, because there is a rebate of business inputs which have to be made up somehow. It does limit our flexibility but we believe that the advantage in terms of business growth of having a harmonized system would be substantial.

I don't know if ever we will get it, this is the point. These are the reasons why we've been aiming towards it. The major stumbling blocks to harmonization of course have been, first of all Alberta has no retail sales tax, and they are already, as they proudly proclaim, fully harmonized, because they have no RST. Some other provinces have elections coming very soon and they have made a commitment to no new taxes. They would envision that if they were to harmonize, then the base broadening that would result could be construed as being a new tax and therefore would be very inopportune just before an election. So I think our system is conspiring against it.

MR. WINDSOR: I remind the minister that his budget claims no new taxes either but they are very cleverly hidden in there. It is just I would submit to him the way of premiums through Hydro and a few other things of that nature, that eventually will come back to the consumer, and we will get into that in a little while.

Before we leave harmonization, Mr. Chairman, I would like to ask the minister: How can you truly have harmonization? I hear what you say, that you are just talking consumption taxes. The real benefit of harmonization ties in with the whole concept of interprovincial trade barriers being removed. Clearly if we have a payroll tax - all provinces of Canada, particularly Maritime provinces, do not, so we are not truly harmonized, are we? Neither is there equal opportunity to do business in this Province. It is a different playing field, it is not a level playing field.

MR. BAKER: Yes. We can also I guess point out that some of the provinces have a provincial property tax. We don't have that. I believe Nova Scotia still has a school tax. We don't have that. It is not a one-sided affair. Our tax effort is slightly above the national average but it is not very much above the national average, and there are differences in every tax I suppose that you care to look at. We are not talking about complete harmonization of all taxes. If we were I guess there would have to be some more give-and-take on the part of all provinces and not just this Province.

MR. CHAIRMAN: Mr. Windsor's time has now expired, but no one else has indicated he wants to speak. By leave of the Committee I will let you and Mr. Windsor continue until somebody wants to speak. Is that alright with the Committee?

Carry on, Mr. Windsor.

MR. WINDSOR: Thank you, Mr. Chairman, and I again thank the Committee. I don't wish to take up the whole morning, and I don't want the other members to get off too easily either.

WITNESS: As long as we stay friendly.

MR. WINDSOR: As long as we stay friendly. I won't promise that, Mr. Chairman, because I will probably be cut off in due course.

Getting into the area, again in Financial Policy, under research, I notice we've increase the budget amount this year from $97,000 expended last year to $140,000, primarily in the area of Salaries. Is that simply one additional person being added to that division? It just seems a little strange that research in fiscal policy would be going up that much this year.

WITNESS: 2.1.02.

MR. WINDSOR: Page 36, 2.1.02. At the same time, Investments underneath it has gone down by a similar amount.

MR. BAKER: Yes. That is an increase because of a change with the credit unions. There are more individuals working in this area now rather than working with the credit unions. That accounts for that increase.

MR. WINDSOR: 2.2.01, Crown Agencies - Recoveries, $26 million. I assume that is the premium from Hydro. At least part of that is a premium from Hydro which I understood was $20 million this year. So there is another $6 million there. Would you also tell us what was the $1.7 million from last year that was not budgeted but that was received. What was that for?

MR. BAKER: Yes, that was the privatization of NLCS, that $1.7 million.

MR. WINDSOR: Is that the full amount received for NLCS? Maybe you could tell us, what was the final sale price of NLCS?

MR. BAKER: These are the dividends for last year. The final sale price was about $9 million.

MR. WINDSOR: (Inaudible) twenty-five?

MR. BAKER: Yes. I think the final sale price is about $8.5 million but I can check the number.

MR. WINDSOR: Eight-and-a-half million dollars. The $26 million is Hydro plus what? NLCS again?

MR. BAKER: Yes, I'm sorry for the hold-up, I was just getting a rather detailed explanation from Mr. Bennett. I think what I should do is get this in writing and get it to you, sort of the detailed explanation. It is a number of things that we will put down in writing and get to you.

MR. WINDSOR: Thank you, Mr. Minister.

MR. BAKER: You are right - that is not all Hydro, there are a lot of other things in there.

MR. WINDSOR: Recoveries on Loans, Advances and Investments, 2.2.02: I notice here last year we budgeted recoveries of $1.6 million, actually got almost $11 million, and we are projecting $20 million this year. Perhaps the Recoveries on Loans, Advances and Investments is Hydro.

MR. BAKER: That is where the amount for NLCS is in there as well.

MR. WINDSOR: In that $10.9 million?

MR. BAKER: In that $10.9 million, yes. That is why it was that much higher than the $1.6 million that was budgeted.

MR. WINDSOR: You tell us the final price of NLCS was $8.5 million, so that would account for all of that, or at least up to $10 million.

MR. BAKER: Pretty close to it, yes.

MR. WINDSOR: There is another $1 million besides, and you told us there is $1.7 million up in Crown Agencies - Recoveries. There has to be something else besides just NLCS.

MR. BAKER: The $1.7 million was dividends, not the sale price. That was simply normal dividends cluing up the year-end. The full amount, which I will get for you - I recalled it was around $9 million, my ADM says it is around $8.5 million - is part of that $10.9 million number.

MR. WINDSOR: Nineteen point eight million dollars this year. Is that your projection on Holiday Inn and Hardwoods? Is that what you are proposing?

MR. BAKER: Yes, those plus some minor recoveries, but 95 per cent of it is that, yes.

MR. WINDSOR: So it is Holiday Inn.

MR. BAKER: Yes, and Hardwoods, and I guess anything else of a minor nature that we recover.

MR. WINDSOR: I assume you are going to sell both of those. Do we have reason to believe - Holiday Inn, I know you are in negotiations and you probably have a handle on it. Do you also have a handle on Hardwoods as well?

MR. BAKER: Yes. Hardwoods, we went public and called for proposals or tenders, whatever they were - and I'm sure we will get into that later, too - and everything is in and is being analyzed. We do have a handle on approximately what that will bring according to the information we have. We don't on Holiday Inn. We have not gone public yet because we have a consultant to put together the tender package. That should be ready, I suppose, within a week or so. So we don't have a handle on Holiday Inn yet.

MR. WINDSOR: Newfoundland Hardwoods, I mentioned in debate in the House the other day, that with Hardwoods, one of the key concerns I would have would be the sale of the asphalt operation, the monopoly. Are you proposing to sell that as part of Newfoundland Hardwoods operation? Will that be privatized? If so, what controls can we put on the price that is being charged for asphalt, because it would impact on government more than anyone else. You are the biggest purchaser of liquid petroleum asphalt.

MR. BAKER: Yes, we are very aware of that. As we just said, I have not seen the proposals that are in; I have not seen the bids that were made on that asset, so I am sorry, but I can't really answer your question as to what is there. Obviously, fairly soon, once a recommendation is made to me, then we will know all about what safeguards are in there to protect government in the future, but you make a good point, and right now, that's the only sourcing we have for the liquid asphalt. I don't know what protections are built in, to be honest with you.

MR. WINDSOR: It is also the only source of any of the paving companies anybody else in the Province has; it is a monopoly situation which, you know, you might almost want to consider as a public utility, in that regard, regulated by PUB or something.

MR. BAKER: Well, I think this is something that is very re-active to pressures and if, in fact, whoever buys Newfoundland Hardwoods has a price that is too high, I am sure somebody else will bring in liquid asphalt if there is any money to be made on it. You are not saying this is the only company in the Province that is allowed to bring in liquid asphalt. So, if the prices get upwards, it is possible for somebody else to make a buck, and obviously, they will start bringing it in, too.

MR. WINDSOR: It is very unlikely unless government went to tender for the bulk amount.

MR. BAKER: Yes.

MR. WINDSOR: It would not be feasible to start another asphalt operation here unless you had government contract because that probably represents 80 per cent of the market; unless, as I understand, you haven't changed the policy. The Department of Works, Services and Transportation always provided the liquid petroleum to paving contractors, so in calling tenders for highway work, you would assume that. Now, if you are going to change that so individual contractors are going to be purchasing as well - but your cost of pavement will go up as a result of that so you are much better off doing as we have been doing forever which is providing the liquid petroleum.

MR. BAKER: Yes. This is something that I am sure you will watch as events unfold in the next few weeks and so will I.

MR. WINDSOR: Maybe I should.

Pensions Policy: I notice we had a budget last year of $55,000 and actually only spent $23,000 - there was a recovery in there somewhere.

MR. BAKER: Yes. That recovery was budgeted in the $50,000 you are talking about, wasn't it?

MR. WINDSOR: Transportation and Professional Services are down. Those are the two items that have changed there. Is there a reason for that?

MR. BAKER: Yes. The saving is there, obviously, in Transportation and Communications, which means that I guess the need for the travel was not there in relation to pensions, the pensions division. I think that is probably it.

In terms of Professional Services, again, last year we budgeted $15,000 and only spent $200, but we have to put some money in there in case there is some consulting work we need to get done in terms of pension policy so we put the standard sum of $15,000.

MR. WINDSOR: Mr. Chairman, I won't hold up the Committee too much longer. There is just one more series of questions, if I may, with the Committee's consent. In the area of Tax Administration, Compliance and Audit, Minister, we budgeted $6 million last year and spent only $5 million, projecting $5.4 million this year. In Support Services we actually spent $3.6 even though we only budgeted $2.2, projecting $2,086,000 this year. Would you like to explain those variances to us?

MR. BAKER: Again, I have to go back because in terms of the revised for 1994-'95 I am told that amount should be $933,000 and not $1.7 million.

MR. WINDSOR: I am sorry, Mr. Minister, I lost you. Which figure are we talking?

MR. BAKER: I am talking about Salaries and Support Services under Tax Administration 3.1.02. We budgeted $937,400 and it is in here as $1.7 million. That should be $933,000, and again, I will get an explanation from the budgeting people in Treasury Board.

MR. WINDSOR: Errors in the Budget due to the fact we sold NLCS this year? Have our computers gone ill on us?

MR. BAKER: I am sure there is an explanation, however, this is something that perhaps you could bring up when we do, in the House, the estimates of Executive Council, because at that point in time I will have this information from the Treasury Board budgeting people. I have made note of those two.

MR. WINDSOR: I am sure the minister will agree that it is highly unusual to have these mathematical errors in the Budget document.

MR. BAKER: Absolutely.

MR. WINDSOR: I don't recall ever seeing it in my time. There may well have been, but I don't recall it.

MR. BAKER: I don't recall it in the last three years either, to be honest with you.

MR. WINDSOR: In the area of Compliance and Audit, I assume your budgeted amount is still accurate for Compliance. That has not changed any, but Support Services has changed.

MR. BAKER: Yes.

MR. WINDSOR: Are we still putting the same effort into Compliance and Audit or have we increased it? Where are we on that, and how are the recoveries? Are we satisfied that we are getting reasonable recoveries?

MR. BAKER: Well, I have asked this question a number of times. We have Compliance in our division so I will ask Bob to give you a more detailed answer in a second. In terms of RST, which is the one that I keep an eye on mostly, our collection rate is extremely good, probably approaching very close to 100 per cent in terms of the taxes that are owed. We probably don't collect that percentage of interest and penalties but certainly, in the taxes that are owed, we are well up on the game. The percentage is extremely high, probably approaching 100 per cent.

I ask Bob to make a comment on that.

MR. CLARKE: As the minister has said, the receivables have been, I guess, fairly steady. They have increased by about $4 million over the last few years, but I guess the dollars are a little bit harder to get because of the economy and the GST collections. We have increased our auditors by four people over the last few years and that has brought in some extra audit revenue.

MR. BAKER: It is kind of a balancing act, as the hon. member knows. You have the information that if you hire an extra auditor you can bring in an extra $200,000 or $300,000, therefore, you end up gaining by hiring more auditors. There might be some validity to that except obviously, there is a point where your return doesn't match your expenditure. The question is to find the right balance. I would be willing to accept the fact that if we hired a few more auditors we could probably raise revenue, but whether we are at that point where we are at the maximum efficiency I don't know, have no idea.

MR. WINDSOR: Mr. Chairman, I want to ask the minister a question on - being more specific, actually, on collections. On the policy of write-offs, particularly in the case of companies that run into financial difficulties, do we write off taxes that are owing? Have we written off taxes for companies that have been in financial problems?

MR. BAKER: Our approach generally is, I guess as follows: There is authority, for instance, to write off interest under certain conditions; there is a policy to write off taxes under certain conditions. The conditions under which interest can be written off generally are that if it is long-standing, more than thirty-six months owing, and collection procedures have been exhausted, and if there is, we believe, no possibility to collect and it is an old debt, then we have the authority to write it off. Sometimes we do that, depending on the circumstance.

We can write-off and make settlements in cases of bankruptcy where again our procedures are exhausted, there is a bankruptcy, there is only a certain amount to be obtained through the procedures, and we can either have or get through Cabinet the authority to write-off under those conditions. But with the volume of letters that I write ending "I regret my reply could not have been more satisfactory," we don't do very much of it. I will ask Bob if he wants to comment on that, because it takes up 90 per cent of his time, I believe.

MR. CLARKE: Speaking of write-offs, in approximately the last four years, we have written off about $4 million. That is a very small percentage, of course, of the total revenue. Most of that would be bankruptcies.

MR. WINDSOR: Over what period of time is that?

MR. CLARKE: Over about four years. Most of it was written off this year, actually, in just this past month - about $3 million.

MR. WINDSOR: (Inaudible) company?

MR. CLARKE: No, that is quite a long list. It was an accumulation of probably about three years, I guess, of bad debts.

MR. WINDSOR: Why would that just be written off this year?

MR. CLARKE: Why would it be -

MR. WINDSOR: Is it that you just got around to looking at all of these and saying: We will write all of these off?

MR. CLARKE: Yes, it is an accumulation. There is an accumulation of bankruptcies. Instead of going to Treasury Board every couple of months or every six months we accumulated them, I guess, not because of not wanting to do them, it is just trying to get around to doing it. We are spending most of our time trying to collect it.

MR. WINDSOR: (Inaudible) I discussed with you, Mr. Clarke, privately, dealing with a company that was involved in building trusses in this Province. I requested some information on the terms and the circumstances surrounding a write-off to a particular company which technically went bankrupt, but I understand was sold from father to son. For the first time in twenty years, you didn't give me the answers I requested, so I said I would ask them of the minister. Perhaps now the minister would like to give me that information.

MR. BAKER: What were the details?

MR. WINDSOR: I don't know if there is any news media here. I hesitate to publicly use company names, in fairness to the companies, until and unless I know that there is some impropriety here, then I will deal with it.

MR. BAKER: Yes, okay.

MR. WINDSOR: I think Mr. Clarke is familiar with the situation and a request comes because another company really is complaining that this is unfair competition. I am told that an amount of $125,000 was written off in taxes for this company, and the company was transferred, really, from father to son, and to avoid total bankruptcy, the Province agreed to write-off a portion of that. I think that was half the taxes owing if I am not mistaken, I maybe wrong on that, Bob. If the minister doesn't want to give me an explanation, that's fine.

MR. BAKER: I have just been given the name of the company - Bob remembers it. This was about three years ago. It seems it is an old case about three years ago. I remember vaguely a lot of requests crossing my desk and being passed along. I would have to look it up again.

MR. WINDSOR: I am just as happy not bringing these kinds of details up publicly either as long as I have an undertaking from the minister that he will give me that information.

MR. BAKER: I will dig out the files and you can come down and we will have a chat about it, certainly. I know that file crossed my desk at least half-a-dozen times, but that was three years ago, I guess.

MR. WINDSOR: The other company that was involved had a lien placed on it for a small amount, $17,000 for taxes owing, apparently. They actually only owed about $5,000 at the time and had been reducing their payment, I am told. I won't get into the details here but perhaps we can discuss that at the same time, and try to clarify that whole situation.

MR. BAKER: Generally, as long as there is a satisfactory repayment schedule put in place, and so on, as far as I know, we are fairly lenient and it is only when a business or an individual has indicated through their history that they don't live up to commitments and so on that we start doing those things, so I would have to look into it.

MR. WINDSOR: In this case, I am told, they were not even advised that a lien had been placed on them. They read it in Dun and Bradstreet, which I find unusual. Surely, you would notify people.

MR. BAKER: You have to recognize, too, that with the thousands of cases that are dealt with, every now and then you are going to find one, where perhaps something has been done that maybe shouldn't have been done. You are bound to find that, out of all the cases that are dealt with. Normally, when it is brought to our attention, we correct it, but you are going to find areas of inequity when you try to apply laws of general application, regardless.

MR. WINDSOR: Well, I will leave that there, unless Mr. Clarke wants to say something. I am prepared to drop it until we can meet privately.

MR. CLARKE: I was trying to explain that when we register stats or liens right now, and that is what you are saying is in Dun's bulletin. If somebody is in our receivables, they are registered almost automatically, and if there is a return filed today without payment and it is $16,000, that may have been paid or partly paid two days later but it will still be published as the original amount, and then there will be a correction in a subsequent publication.

MR. WINDSOR: But it will only be published if a formal lien is in place, I assume. There are all kinds of people who owe taxes or owe something else - if you published that list you would own Dun and Bradstreet. So you are only going to publish the ones where a lien has been actually placed. In this case, this company, I understand, were not even aware that you had applied a lien against them and only found out through Dun and Bradstreet on the same day they applied for some other financing and were told there was a third party demand on their bank account because of this lien. They were restricted from doing business for a period of time because of that. It's not our normal practice, I am aware, but this one does concern me.

MR. CLARKE: That is a new policy of registering stats or liens, because of the new Bankruptcy Act. Previously, they weren't registered but they were there. They weren't visible. So that is something that has been done in the last year.

MR. WINDSOR: Mr. Chairman, thank you very much, and again, I thank the Committee for their tolerance.

MR. CHAIRMAN: Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman.

With respect to the Estimates for 1995 for the Department of Finance, the finance critic has asked all the questions that I had highlighted myself, on the Estimates.

MR. WINDSOR: Is that correct?

MR. J. BYRNE: Every one.

MR. WINDSOR: Surprised, are you?

MR. J. BYRNE: Not really. So I am going to ask a couple of questions on the Auditor General's Report, if I may?

MR. BAKER: Absolutely.

MR. J. BYRNE: On page 86, under Management Practices, it says: "the human resource management process needs to be expanded to include employee performance objectives, regular performance evaluations and an assessment of employee training requirements" and it goes on. Are there any plans along this line by the government to -

MR. BAKER: Which page is that, Mr. Byrne?

MR. J. BYRNE: Page 86, under Management Practices. It is basically talking about the regular performance evaluations of employees. Are there any plans along that line?

MR. BAKER: Yes. I think the Auditor General, this time, concentrated to a large extent on written policies, policies that were written versus not written and so on. The only comment is that we agree a strategic planning process should be put in place and we will start to do that. It is one of the recommendations that we are saying we are proceeding with, yes.

MR. J. BYRNE: On page 81, under Conclusions, and it is the second one, it says: "Government has not developed a plan to address its unfunded pension liability". Then, on the next page it says: "Government should appoint a Superintendent of Pensions who is independent of government". Is anything planned along those lines? I know you are trying to do something with the pensions.

MR. BAKER: Yes. We simply don't agree with her conclusion. We believe the independence is already there and we believe that person can be and should be an employee of government and part of the Department of Finance, so it is an area of slight disagreement. But, she is absolutely right - well, she is not absolutely right; we are dealing with or trying to deal with the unfunded pension liability, but it is not as simple as an accountant looking at it and saying: Oh, something should be done about this. This involves people, it involves unions, it involves a lot of other things and government's fiscal capacity as well. We are trying to put a plan in place and we are carrying on negotiations and discussions with our unions with a view to doing that, but if we were to suddenly come up with something, then that wouldn't be proper either.

MR. J. BYRNE: Page 94, section 3: Legislation, and then it goes on about Clearance Certificates?

MR. BAKER: Yes.

MR. J. BYRNE: The first one there, says: "13 August 1991 the seller went into receivership with an amount owing to government of $96,761"; and right through the whole list, another says: " 10 August 1992, the Branch made a credit to the account of $96,868 so that the system would allow the refund of $107".

The next one is of similar-type stuff going on. Can you make any comments about what is going on here? I mean, it seems to me that (inaudible) $96,000 so you could pay back $107; unless I am reading it wrong, it seems to be a poor system and needs to be changed or some corrections made or something.

MR. BAKER: Yes. Well, again, I guess it goes back to a general comment I made a moment ago. If you have a law of general application where there are thousands and thousands of things being done, I don't know if there is any way to avoid one or two errors in those instances, and whereas it would be nice to have a totally efficient, totally error-free system, I think it is next to impossible. I believe we have maybe 15,000 of these going through, and in one or two cases there may, in fact, have been errors made, either through people not being available at the time to do something or whatever. I believe this is a very minor problem but I'm glad she pointed it out. I don't think we could ever have an error-free system.

MR. J. BYRNE: So basically what has happened though, you had to put in $96,000 or $97,000 to pay someone $107. Is that correct? Am I reading that wrong or what? In number three there, one, two, three.

MR. BAKER: Yes, I'm just going through that now. I'm not familiar with the individual case Mr. Byrne, so you may be right. Does anybody know? Bob?

MR. CLARKE: That was the only error in the whole system like this. I don't know how it got picked up, but that is the only one. The system is such that you can't process or refund unless there is a credit in the account, and that is a control feature. There was an amount that went in there that was paid by a receiver that shouldn't have gone in there, and in order to get that refund out this fictitious adjustment had to be made. Through some timing and some staff being off it didn't get put back in, essentially. That's why that error occurred.

MR. BAKER: Yes, this was an error in the system.

MR. J. BYRNE: An error in the system. That error in the system, will it be corrected in the future, won't happen again, or can it happen again?

MR. BAKER: When you are dealing with 15,000 instances and there is one error, you can't sort of change the whole system for that. I don't know if Bob has done an evaluation of the system. (Inaudible).

MR. J. BYRNE: But you are saying there is only one error. We really don't know that, do we?

MR. CLARKE: What I am saying is, there is only one of this nature.

MR. J. BYRNE: Yes.

MR. BAKER: Yes.

MR. CLARKE: There is no other like this.

MR. J. BYRNE: Okay.

MR. CLARKE: It is a question of whether you should change the system because of this one, or leave it and avoid others, essentially.

MR. J. BYRNE: As I said earlier, the questions I had lined up to ask were asked by the finance critic, so I have no more.

MR. BAKER: Okay, thanks.

MR. CHAIRMAN: Thank you, Mr. Byrne.

Before I recognize Mr. Fitzgerald, normally at 10:15 a.m. we would break for coffee, but if it is the intention that we carry on and we can finish up the Public Service Commission very quickly - say by 10:30 a.m. or so -, I won't call a break and we will pass the heads at that time. Is that alright with everybody?

WITNESS: Okay.

WITNESS: Okay with me.

WITNESS: Okay.

MR. CHAIRMAN: Alright. Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman.

Mr. Minister, with regard to the school tax, can you tell me how much money has been actually written off in - monies that are uncollectible in that particular department?

MR. BAKER: I will let Bob answer it. My understanding is that we first of all inherited a series of records that were - less than perfect is an understatement. A lot of confusions, a lot of problems with the records we inherited from the school tax authorities, and we have been the last three years trying to sort them out - people going by hand through hundreds of thousands of documents and so on. It has not been a simple job.

Whether there was a lot written off depends upon what you mean by written off. There were a lot of instances, we discovered, where people who were on the rolls as having owed school tax - and as we carried through the investigation we discovered they didn't really owe it in the first place. So that is really not written off. It is instances where people would automatically go on school tax lists simply because they existed and were there previous years, even though they for that year weren't working or were in university or had retired or whatever, you know, and their income had dropped below the level, but they were still being charged.

There were a lot of those that I don't look at as written off - there is, I think, a recognition that they didn't really owe the money. Bob can perhaps deal with it better than I can. Bob, what about the write-offs and so on?

MR. CLARKE: You are right, Minister, the write-offs mostly were adjustments because the debts weren't valid. The true write-offs are probably about $2 million and that would be for people in hardship situations.

MR. FITZGERALD: So all monies that are outstanding and are owed to government are still being collected?

MR. BAKER: We are still going through normal collection procedures, however, again I should stress that I believe some of what is still on our books is not legitimately owed, so we have perhaps not been pushing as hard as otherwise we would have because there is that recognition. The records were thoroughly confused and perhaps there are still a lot of people out there who, on the books, owe money, but really don't, but then, of course, there are the people who legitimately owe money and we should go after them with all the vigour we have, and with everything we have.

MR. FITZGERALD: I get many calls from several people in my district who supposedly owe money, according to the Department of Finance, but I think they should be considered as not owing money due to the circumstances when those bills were brought forward, but government in their wisdom still continue to add on interest and still deal the heavy hand saying, `You owe, you owe.'

MR. BAKER: However, in all those instances where it is reported to us, we look at the case, we send out the forms to be completed, because obviously, we can't simply make a decision on our own without having something back. Generally we need something back from them, either a notarized statement, an exemption form filled out, or something. Normally we need a form back and when the form comes back then we deal with it. But a lot of people have a tendency to simply ignore stuff and it just gets ignored, and ignored, and obviously, if they don't send the information in, then we keep sending them the bills.

Now, having said that, because of the volume as well, and you have to remember we had what - close to 200,000 of those to start, Bob?

MR. CLARKE: We had 157,000.

MR. BAKER: Out of that 157,000, and stuff being sent out and so on, again there are bound to be a few errors made, and I believe in one computer run there were a couple of hundred that went out that should not have gone out. They were supposed to be flagged in the computer as `stop' because we were looking at it, and the computer inadvertently spewed them out. There have been some mistakes like that made but they are very easily corrected.

MR. FITZGERALD: Is your department willing to look at some kind of an incentive to encourage those people who do rightfully owe the money, such as reducing the interest rate or wiping out the interest altogether and having them pay the principal amount they owe?

MR. BAKER: Where people legitimately owe money, we have an obligation to get it back and I, as I said, have no authority to write off interest. However, we look at hardship cases and if they don't legitimately owe the money, then we write the whole thing off if there is some reason why they didn't. But if they legitimately owe the money, we have an obligation to the other taxpayers who did pay their taxes to pursue it with whatever vigour we can within the law.

MR. FITZGERALD: I think it was last year, Mr. Minister, that your government brought in a new way of collecting taxes from fishermen. When they make a purchase, they pay the retail sales tax and then they submit a form and collect it at the end. I think there was some concern raised, at the time, about the length of time involved from when the fisherperson actually makes a purchase until the refund is made. At one particular time I remembering questioning a member of your department, who indicated it was entirely up to the fisherperson, that he could submit his purchase quarterly or at the end of the year or when the purchase was actually made, if it was a large amount. I wonder how is that system working.

MR. BAKER: I don't know so I will pass it over to Bob Clarke again. He probably knows. I don't know the detailed workings of that system.

MR. CLARKE: The system, as far as I know, is working quite well. I'm not aware of any problems right now. It was a bit slow getting started because it was something new, but if we get a legitimate claim, original invoices and so on, I don't think there has been any delay in getting the refunds out.

MR. FITZGERALD: Here again, I've had several calls from fisherpeople in my district. One person had bought an outboard motor and up until - I'm going back a few months ago now, in the last conversation I had with him - and some four-and-a-half months had elapsed - and up until that time he had not received his refund on the taxes he had paid. In fact, it was indicated to me that several fisherpeople now are going to Nova Scotia and New Brunswick and making purchases where they don't have to pay any tax whatsoever. They don't have to part with their money, and within a day or two they have whatever they need right here, and some kind of a courier service. I'm wondering if the whole thing has been a detriment to some of the local businesses in the area.

MR. CLARKE: In the case of an outboard motor, we have to establish that it is being purchased by a fishermen, and that is an item we have to be careful with. In that particular case, there may be some dispute, I don't know. As for somebody going outside the Province and buying something, well, they are supposed to pay tax when they bring it in, and that goes for anybody. I haven't heard any cases like that.

MR. FITZGERALD: Whether it is happening or not I don't know, but I know it was something that was brought forward to me, that they found it much more convenient. Rather than parting with their money here, their 12 per cent, they can make purchases somewhere else and keep their money in their pocket, and still really get the same level of service.

MR. BAKER: They are breaking the law if they do that, you know.

MR. FITZGERALD: I'm wondering, Mr. Minister, it has been talked about free economic zones being created here in the Province. I think Argentia is probably one place that has been put forward as a possible place for something like that to happen. Is your department considering allowing a free zone to exist here in the Province and taking into consideration the benefits that it might be able to -

MR. BAKER: What you are talking about is a request that we have with the Federal Government to allow the set-up of what we call duty-free zones, or free ports. It is entirely a federal decision. We are in favour of using such mechanisms to try to stimulate business growth and businesses moving into the Province to create jobs. However, it is totally a federal decision as to whether this is allowed or not. In the United States it is allowed and these duty-free areas are engines of growth. In Canada, the decision was made by the Federal Government that we would not allow the existence of these duty-free zones. That is the current federal position. As part of the fisheries response and economic renewal program for the Province, one of the things we are suggesting is that they do allow duty-free zones in this Province. All I can tell you is that we are in favour of using the mechanism but we can't because it is under federal control.

MR. FITZGERALD: In your last Budget, I believe, if I'm correct, there was $1.2 million brought forward for extra surveillance on the Burin Peninsula and I think around the Labrador-Fermont border, as it related to the bringing in of tobacco products and liquor. Have you seen any difference in the amount of sales on the Burin Peninsula, or have you seen any difference in the number of people who are being charged or caught with this contraband?

MR. BAKER: Yes. I believe - although one of the gentlemen here with me might be able to give you some detail, I don't know - I believe we have been adequately rewarded for that extra surveillance. Our tobacco tax revenues did not collapse, and in fact increased a bit. There have been more seizures and convictions, and therefore, more revenue gained through that process. For periods of time, I believe, we have had an effect on the whole smuggling business. Whether that is a permanent effect or how long it lasted, I don't know. Does anybody know anything about the cases and so on?

It is really an RCMP matter, but there has been a fairly big increase. Again, I can do you a summary of that. I have to go to Justice. I can do you a summary of the arrests that have been made, the seizures that have been made. I know there are a lot of cases pending now before the courts so it has paid off in terms of apprehension. It has also, we believe, helped keep our tobacco revenues where they are, so I'm pretty happy with that.

MR. CHAIRMAN: Mr. Fitzgerald, your time has expired, but if you have one question, just to clue up, I would ask leave of the Committee.

MR. FITZGERALD: Just a couple of very quick questions. Mr. Minister, is your government looking at reducing the cost of tobacco products and liquor products in line with, say, Quebec or Ontario?

MR. BAKER: The quick answer is no.

MR. FITZGERALD: Okay. Monies collected from Atlantic Lotto. Are those monies that (inaudible) or do they just go into general revenue?

MR. BAKER: They simply go into general revenue like all other monies that we collect. Our policy is that we don't earmark revenues. We didn't want to start that practice of earmarking revenues.

MR. FITZGERALD: Have you had many complaints coming through your department regarding - well, I will use teachers' pensions - where people have been off on sick leave, have applied for an early retirement pension due to ill health, and having to wait in excess of a year in order for their government pension to be authorized and for them to receive funding?

MR. BAKER: Are you talking about people now applying for medical pensions?

MR. FITZGERALD: Yes.

MR. BAKER: Okay. In a lot of cases I think they are fortunate it is handled as quickly. It is an area that we have to be very careful of. There is a procedure that has to be gone through in order to get a medical pension. Whereas if somebody has some sort of definable, well-defined illness, somebody has been in an accident and so on, some of these cases are very easy to take care of. Other cases are not. Particularly in the case of the teaching profession when the teacher says: Look, I can't take it any more in the classroom. Now, is that grounds for a medical discharge or not? They have to go through quite a rigorous process and get recommendations from medical people and so on, and sometimes we send them back for re-evaluation.

We have to be very careful because of the state of the pension plan, and we have to make sure that the people who go off on medical pensions are in fact people who should be off on medical pensions, you know. There is some delay with some of them. Others are handled more quickly because they are more obvious. I would suggest that if the delay is over a year it means that there is some question, some thing we needed checked, and some new information we requested or whatever. Mr. Bennett could answer that. He has been handling those things for some time.

MR. BENNETT: Just slightly to elaborate, because the minister has really put it the way it is. We find it very difficult sometimes with, say, psychologically-related illnesses to do a final determination of whether the person is permanently disabled. That is the one thing that the act requires, the permanency. That means at no other time, and no time in the future, under the best assessment, can the person return to the particular position. In these particular areas with teachers - bad back syndromes with the public service will give you another type of example - that is a very difficult determination.

Often what has to happen - and you will find that with any of these; Workers' Compensation is the same way - is there are periodic reviews for a period of time, at which time then a determination is made, and sometimes in as high as two years.

MR. FITZGERALD: Yes. I was just referring to one particular incident where one individual who is a school teacher had a psychiatric problem, and his psychiatrist had moved I think outside the Province and couldn't be located. As a result of that, after teaching in the classroom for twenty-six years, found himself with no telephone, going to social services to pay his light bill and this sort of thing, and it seems to be very degrading when somebody would put that amount of time in and be assessed by other doctors here and it will be shown that he was incapable of doing a duty that he normally performed, so it kind of struck me that it was very uncaring on somebody's part.

MR. BENNETT: Just a slight response to that if I may, Mr. Chairman.

As a result of sort of getting involved personally by say, people of the pension division in the Department of Finance with a medical problem, with the doctors of the patient, we recently appointed Atlantic Offshore Services to act as independent medical advisers and this has removed any personality problem that may develop between, say the staff who are looking at these particular medical opinions and documentation and the doctors themselves, so we do have an independent review, we don't see the medical evidence any more. We have no say as to what the recommendation is that is going to be made. Dr. O'Shea heads that up, and that has worked extremely well and this is a chance for doctors to talk to doctors and to do assessments on this basis. It is completely independent of us and also very importantly, completely independent of the person's physician or specialist, because obviously that person also has a vested interest in protecting the welfare of his patient, so we feel that the current system which we introduced less than a year ago, is now working quite well.

MR. FITZGERALD: With all the talk of attracting new business here into the Province, Mr. Minister, at one time I know we could invest in local businesses like Newfoundland Light and Power and Newfoundland Power used the investments similar to an RRSP, where you could write it off on your taxes at the end of the year. Is your government considering allowing that to happen with other businesses here in this Province, in order to encourage Newfoundlanders to invest locally and create employment?

MR. BAKER: That concept was tried. I would suggest to you that companies like NewTel, Fortis and those companies have no difficulty getting people to invest in them, and it would probably be a gross waste of taxpayers' money to give rebates for people investing in NewTel and Fortis and some of those other companies. We tried that scheme for a while and it was not overly successful because most of the investment that we ended up giving credit for, was the 10 per cent variety that was in Fortis, and they have no need of risk capital, there is no risk involved in investing with them.

The whole concept of making a risk capital available, is one that we are at this current time considering again. We believe that there is perhaps a shortage of risk capital and we are having discussions with some of the other provinces as well, in terms of pools of risk capital, how to best make them available, so the concept is a good one, and I hope that within the next six months or so I would be able to report back on an initiative in that area.

MR. FITZGERALD: Yes. I am not thinking along the lines of Fortis and Newfoundland Power -

MR. BAKER: I understand that.

MR. FITZGERALD: You should be able to broaden the scope there and allow other entrants to be available and allow people to participate in other ventures other than the sure thing, sort of thing.

MR. BAKER: Sure. I say that it is a good concept and whereas there is no money in the Budget at this point in time for that type of initiative, we are having discussions about other mechanisms to make venture capital available and hopefully, in the next few months, I will be able to say something about it. It is obviously needed. There are discussions going on now between the Maritime premiers that may lead to something there that will involve credits for venture capital and provide access to a lot of venture capital. I think it is very important.

MR. CHAIRMAN: If this meeting is going to continue on much past 10:30 a.m. I think we should have a break now and come back, but if it can be concluded within the next few minutes we will carry on and finish. What is the consensus of the Committee?

WITNESS: Chairman, we are ready to move the heads.

MR. CHAIRMAN: Mr. Byrne has asked to be recognized, so I wanted to bring this up. Should we have the break and recognize Mr. Byrne, or have Mr. Byrne and then come back?

MR. WALSH: Mr. Chairman, we are ready to move the Estimates, but I have no problem in Mr. Byrne asking a few more questions. If not, we can probably see ourselves here till 1:00 p.m. because at that point in time government members feel that maybe they should jump into it as well - we've been here for about an hour and a half now, so if we take an hour and half that will be 11:30 a.m., 12:00 p.m. We will let Mr. Byrne have his few questions and as I say, we are ready to move the Estimates.

WITNESS: What about the Public Service Commission?

MR. CHAIRMAN: We are going to do the Public Service Commission. What we will possibly do is ask Mr. Byrne to have his few questions, we will adjourn for a break, and come back and do the Public Service Commission here after. Is that alright?

Mr. Byrne.

MR. J. BYRNE: Thank you, Mr. Chairman. First off, we have only been asking questions for an hour and four minutes, not an hour and a half.

MR. BAKER: I was late, right?

MR. J. BYRNE: I have no questions on the Public Service Commission anyway. I want to get back to the school tax. Has government gone beyond the point of diminishing returns? Is it costing more now to track and collect the revenues out there? When will it be completed?

MR. BAKER: Right now it is still taking in about twice as much as it is costing us to administer. We haven't yet reached the point of no return; however, I suspect it will come very soon, and we have to go to other mechanisms to collect what is left. There was one mechanism suggested in the House of Assembly in the last session and may in fact come back in the fall in the form of a bill, but that will be dealt with at the time. But you are right. You do reach the point of diminishing returns. We are watching that very closely. When we reach it, I believe we plan to stop....

WITNESS: (Inaudible).

MR. BAKER: We are going through this year because we are still recovering twice as much.

MR. J. BYRNE: So you figure it will be completed this year.

MR. BAKER: But I suspect at the end of that time that will be it.

MR. J. BYRNE: When you closed out the school tax authority you increased the income tax to offset the revenues, or to collect revenues for the schools. How much more is government receiving through income tax than it was receiving through the school tax?

MR. BAKER: Yes, we did two things. We increased the payroll tax to get the business side and then we made a change to the income tax side to get the personal side. The calculation was done that this would be revenue replacement, okay?

MR. J. BYRNE: That is all?

MR. BAKER: That is all. Since then obviously there have been changes in demographics, the average wages have gone up or down - in some cases down. I couldn't really answer your question accurately. Our attempt was revenue replacement with the changes we made at that time. I don't know if we can give a number as to whether it was revenue replacement or a loss or a gain.

WITNESS: (Inaudible).

MR. J. BYRNE: More than likely it is up.

MR. BAKER: Bob Vardy says about even. He has been following this.

MR. J. BYRNE: Is that right? I was figuring it would be on the plus side. Anyway, in the Departmental Salary Details, page 21, Department of Finance.

MR. BAKER: Yes.

MR. J. BYRNE: It says: Government Personnel Costs, Overtime & Other Earnings, $1.8 million. Can you explain that? Is there more personnel? Is this strictly for overtime for employees in the department? Wouldn't it make more sense to have more employees? Or am I reading that wrong?

MR. BAKER: It depends. Is the $1.8 million within the department overtime, Bob, or...?

MR. VARDY: The overtime amount for the Department of Finance would be much lower than that. In some cases, particularly in fiscal and tax policy divisions, there is a lot of overtime at one period during the year, right, at budget time. People work in some cases twenty hours a day in getting things done on time. You wouldn't be able to spread that out over other resources. It wouldn't be feasible.

MR. BAKER: It wouldn't make sense at the time to hire new people to do it because you have to use the people who are there. There are these bump times.

MR. VARDY: Other personnel costs, that wouldn't be overtime. The overtime amount is quite a small proportion of that.

MR. J. BYRNE: What are the other personnel things?

MR. VARDY: Say, Canada Pension Plan contribution, UI contributions, et cetera.

MR. BAKER: That is from the normal salaries. Those contributions to the normal salaries within the department.

WITNESS: That figure is exactly the same as the figure for pay equity. Would it be a possibility that that is the same figure? Because it is $1.8 million on personnel costs on page 34 in the Estimates. I didn't know if it might be just one is the same as the other.

MR. BAKER: Yes, you might be right. That is probably the $1.8 million, that is probably the pay equity.

MR. CHAIRMAN: Thank you, Mr. Byrne. I think before we carry on to the Public Service Commission I will ask the Clerk to call the subheads and maybe go inclusive from 1.1.01 to 3.1.02. Would you do that, sir?

On motion, subheads 1.1.01 through 3.1.02, carried.

MR. CHAIRMAN: Without amendment.

SOME WITNESSES: (Inaudible).

WITNESS: It hasn't been amended.

MR. CHAIRMAN: No.

WITNESS: (Inaudible).

MR. CHAIRMAN: No, no amendment, they have admitted it and are going to change it.

WITNESS: (Inaudible).

MR. BAKER: I would like to point out that the errors were not in the 1995-1996, the Budget, it was in the revised for last year, which is going to be totally redone once we get the public accounts anyway. Once the Auditor General gets at it.

MR. CHAIRMAN: I thank the member for being so diligent.

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

MR. CHAIRMAN: We will move on to the Public Service Commission. I recognize Mr. Fitzgerald. He tells me that he has a few questions.

MR. FITZGERALD: Thank you, Mr. Chairman. I just have a couple of quick questions. Page 52, Mr. Minister, Services to Government and Agencies. 2.2.04, French Language: "Appropriations provide for French language training and translation services for Departments, Crown Corporations and Agencies...."

Two hundred and forty-seven thousand dollars brought forward in the Budget of 1994-1995, $47,900 was the revision. Another $247,000 for the Estimates for 1995-1996. Could you explain those figures, please?

MR. BAKER: First of all I am not as familiar with the Public Service Commission Estimates as I am the others so I will ask Sheila Devine if she would attempt to give answers to those questions.

MS. DEVINE: The French language program is governed by a French language agreement, a federal cost-shared agreement which was entered into approximately two years ago, and that agreement provides for 75/25 funding for the French training program, and 50/50 per cent cost-sharing for the translation services. Now, the program has been slow to get off the ground and certainly what you see there reflected in last year's Budget figures is the cost of one instructor.

The past year was spent developing the training program, looking at some needs assessment, and what you will see over the next year is certainly a regional component of the program whereby we will go out to centres such as Labrador City to provide training for public servants there. Basically, it is program expansion.

MR. FITZGERALD: So would it be fair to say that due to not spending that money we lost approximately $110,000 in federal revenue last year?

MS. DEVINE: We are certainly going back formally to the federal government to see if we can renegotiate to have a year's extension to that particular agreement.

MR. FITZGERALD: So that money will be forthcoming, hopefully, this year?

MS. DEVINE: We would hope so, but we have not concluded any discussions, no.

MR. FITZGERALD: That is the only question I have.

MR. CHAIRMAN: Mr. Fitzgerald, I will now ask the clerk to call the heads of the Public Service Commission, please.

On motion, subheads 1.1.01 through and including 2.2.05, carried.

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

MR. CHAIRMAN: Motion to adjourn now, please.

On motion, the Committee adjourned.