The Committee met at 9:30 a.m. in the House of Assembly Chamber.

CHAIR (Bennett): Order, please!

Are we ready to call this meeting to order?

Good morning, everybody. This is a meeting of the Public Accounts Committee of the Province of Newfoundland and Labrador. I am going to initially call on people to introduce themselves before I make a statement.

My name is Jim Bennett. I am the Chair of the Public Accounts Committee. I will go first to Ms Murphy.

MS MURPHY: Elizabeth Murphy; I am the Clerk of the Committee.

MS BARNES: Sandra Barnes, Clerk of the House of Assembly.

CHAIR: Mr. Brazil.

MR. BRAZIL: David Brazil, Vice-Chair of the Committee.

MR. S. COLLINS: Sandy Collins.

MR. CROSS: Eli Cross.

MR. K. PARSONS: Kevin Parsons.

MR. JOYCE: Eddie Joyce.

MR. MITCHELMORE: Christopher Mitchelmore.

CHAIR: I will also ask the witnesses to identify themselves.

Mr. Pike?

MR. PIKE: Bob Pike, representing Marble Mountain Development Corporation.

MS RUSSELL: Sandra Russell, Acting Deputy Auditor General.

MR. JANES: Claude Janes, Audit Principal.

CHAIR: The evidence is taken under oath, and Ms Murphy will administer the oath to the people who will be witnesses today.

Mr. Robert Pike

Ms Sandra Russell

Mr. Claude Janes

CHAIR: The Public Accounts Committee is a Committee that is appointed from all parties and the purpose of the Committee is to report to the House of Assembly on financial matters involving public spending in the Province.

The Committee is chaired by an Opposition member and it is made up of all three parties. There are four government members. Mr. Brazil is the Vice-Chair and he will say a few words. Mr. Joyce is the other member from the Opposition who sits on the Committee, and Mr. Mitchelmore is the other member from the Third Party who sits on the Committee.

Questioning of the witnesses – and the witnesses who are here today are not under subpoena; they are here voluntarily. The matter before the Committee today is to explore the findings of the Auditor General in relation to the Marble Mountain Corporation.

Questioning will start with Mr. Joyce from the Opposition. Questioning will be done in approximately ten-minute intervals and we will alternate back and forth.

Before we begin questioning, Mr. Brazil would like to say a few words.

MR. BRAZIL: Thank you, Mr. Chair.

I just want to thank the witnesses for appearing and to reiterate what the Chair had said. This is about looking at the accountability in the Auditor General's report, to see how we move forward to improving the financial accountability of all entities that the Auditor General does the reports on, but particularly in this case, Marble Mountain.

I want to thank Mr. Pike, yourself and your staff, for very promptly putting together a response to the questions asked by the Committee. We look forward to some open dialogue and some good responses to see how we can address any of the shortcomings or any of the issues put forward, and help move Marble Mountain forward as a viable entity.

Mr. Chair, those are the only comments that I have as a lead-in, particularly as this is our first hearing in a number of years.

CHAIR: Unless anybody has any questions of the Chair, I will begin questioning with Mr. Joyce.

Mr. Joyce.

MR. JOYCE: Okay, thank you very much.

As a person from out on the West Coast, I am fairly familiar with Marble Mountain and I will get right to the financial position. In 2008 there was a deficit of $126,587 and in 2011 there was a deficit of $563,059. Can you explain the difference in range in such a short period of time?

MR. PIKE: Where are those numbers again Mr. Joyce?

MR. JOYCE: That is in the Financial Position, page 325. It is under the Executive Summary.

MR. PIKE: I guess I have the shorter version because I only have the Marble Mountain section, but just give me the numbers one more time.

MR. JOYCE: It is $126,587 in 2008 and in 2011, in three years, $563,059.

MR. PIKE: Just bear with me for one second.

I think a lot of that has to do with two main factors. From 2008 to 2011, one big thing would have been the difference in the weather. You would have had a shorter season for the winter product, being skiing, which is the main product for Marble Mountain. You would have had a shorter season; you would have had an increase in cost because of snowmaking costs, which has a significant impact on the bottom line; 2011 would have been the second year of bad weather. Of course, the way it is in the ski business or even in the snowmobile business, I guess and all winter product, is that when you have a bad year, you do not really see the full impact on that until the following year.

The other thing that would play a big part in those numbers is that back in 2008 you still had a lot of benefits from the European market, and it had a significant benefit to Marble Mountain. You were seeing more dollars being spent on day passes, for example. You were seeing more dollars being spent on rentals. You were seeing more dollars being spent on food and beverage, and more dollars being spent on lessons. Once the European market died off, because of the issue with direct flights and so on, it really had a significant impact on the bottom line of Marble Mountain.

MR. JOYCE: Yes. As most people know, the major operating cost for Marble Mountain is the maintenance of the hill; as you know and I know, one of the major costs.

In the AG report it mentioned September, for a five-year period, based on a request for expressions of interest. The contract expired in 2005. It was replaced with a three-year contract and then subsequently renewed for a two-year period which expires in 2014. In that, it went up - $658,000 has been paid in management contract fees without any further request for proposals or public tender.

Do you think Marble Mountain should put it out, just to see if they can get it cheaper to try and help bring down the cost? Because it is the major cost for Marble, as you know, is the maintenance of the hill itself.

MR. PIKE: Yes. Marble Mountain certainly intends, at the expiration of that contract, to go to market.

When I look back in the past, in 2000 there had been expressions of interest and they looked at all options at that time. The individual who manages the outside operations was hired at that point in time for a five-year period. Subsequent to that five-year period, there was another contract let for three years. There have been, subsequent to that, two-year extensions.

I think the board at the time felt very comfortable that they were getting the best bang for the buck. Operating the outside operations at Marble is a very unique skill set. The individual they have doing that right now, it is safe to say, certainly knows the operations like the back of his hand. I would also say they have been getting some good results.

With the poor weather conditions, of course, you have to make snow. Once you make snow, the whole grooming process is different. The product that has been delivered in the last number of years has been second to none in the country. I think that is mainly due to the leadership of the individual and the expertise of that individual.

Also, at Marble there is a lot of infrastructure. A lot of that infrastructure is old and requires a lot of maintenance. In some cases, it is not easy maintenance. In some cases, they are out there and they have actually manufactured parts.

The individual in question has a good understanding of the facility; what is on the ground, what is underground when it comes to the piping, where it is, and repairs, and what is above ground, being the lifts and the electrical on those lifts. You have motors; you have a lot of different infrastructure. The board has been satisfied that in times of need that individual has really come to the table and has proven that he is very valuable to that operation.

MR. JOYCE: Someone from the West Coast, and I have it in the AG's report here. In 2005 – and I know, Mr. Pike, you were not chair at the time, "the Board Chairperson stipulated that normal winter operations required operation management services for 32 weeks."

Isn't that a bit long for a winter season for Marble Mountain? I know you were not the chair at the time and this is no reflection on you, but management services for thirty-two weeks for Marble Mountain for winter operations?

MR. PIKE: Is that the correct number? I seem to think it was more. It seemed to me to be a different number than that – for thirty-two weeks, yes.

If I think of the operation, Mr. Joyce, it is more than – you have to look at, how long is the season open for? In a good season, they are usually open from mid or just – they try to be open by Boxing Day and open until Easter. You have January, February, March, and into April. So you are pretty close to four months.

In addition to that, there is a lot of outside work that has to be done at the hill. First of all, in snowmaking situations, if you start in mid-December, snowmaking usually starts to get that product in place back in November. Once the season is over at the end of the year, there are a number of weeks of I will call it, preventative maintenance and securing things for the off season. Things have to be oiled up; they have to be sort of decommissioned.

Likewise, on the other end, long before you get into even the snowmaking, the actual lifts and structures have to go through inspections. I think it is a third of the chairs each year has to be taken down and go through non-destructive testing. All the lifts and the motors and so on have to be inspected and annual maintenance and everything done. All of this has to be documented from the insurance perspective. There is a lot more work to the outside operations than one would think of, if you just look at the snow conditions. That is the reason for the extended period.

MR. JOYCE: Does this company do all that work also?

MR. PIKE: Yes.

MR. JOYCE: They ensure the chair lift, the maintenance of the chairs?

MR. PIKE: That is right. The contract with this individual is to manage outside operations, all inclusive. That takes into account all of those things.

MR. JOYCE: I know this individual and I know he definitely knows the hill well.

MR. PIKE: Yes.

CHAIR: If we could go to a government member now, that was a little over ten minutes.

MR. BRAZIL: Thank you, Mr. Chair.

Mr. Pike, you noted in your response that there are some cost-saving measures and increased revenue streams that you are about to implement. Can you just elaborate a little bit more on those, at what stages you are and what you plan to put in place?

MR. PIKE: I guess the most immediate example I could give you is that I am here by myself.

MR. BRAZIL: Okay, fair enough.

MR. PIKE: I thought of bringing in the General Manager and our Manager of Finance but, of course, like me, they are relatively new. We had this report, we prepared our response to the report, and we are happy to be here to be able to answer any questions or inquiries that you have. The information is what the information is. I made a decision, in the interest of cost, that I would come by myself.

In addition to that, I have instructed the managers of the operation to do a line by line look at every piece of the operation, look at ways to find costs. Marble Mountain, without the current government grant, would not be able to continue. I suggest to them that they need to prepare in the event that if that grant were not there, what would we do? We have to start operating like private industry. We have to think like private industry. As such, we have to look for ways to increase revenues, and on the other side of the equation we have to look for ways to reduce costs.

On the reducing costs, we have been looking at some things. For example, in the middle of the week when things are slower, when it is not a week like Winter Carnival and those type of things, do we need all three lifts operating? Can we get by with two lifts operating? Can we get by with one lift operating? As long as, in that time of the week, we are able to get access to the majority of the hill and there are no lineups, then the thinking that we are trying to instill is that there is no justification to have everything running. So that would be an example.

We have reconfigured the cookhouse, based on some customer input and also based on a review of just the way that the lineups work and see if we can have things more efficient. In the past, as good as it was from a product perspective, anybody who came into that cookhouse and ordered something for lunch had it made fresh. Of course, that has an impact on your lineup. We are asking them to look at ways so the things that sell the most, can those things be prepared in advance and in advance of that rush-hour type thing.

Last year, we had planned to have a new chip fryer in place prior to the season, but there were delays in delivery. We did not get it up and running. Our plan with the upcoming season is that, in your cafeteria where you have all of your food and so on, we will have a separate line for fries only because that is a popular event. Rather than have somebody who only wants fries standing there while other people are getting their lunch, we will be able to process things quicker.

It is the same thing in the bar. We are looking at the bar with putting in more draft beer machines. Rather than having them back on to the customers, we will relocate it and have it in the front. While you are serving one, you will be able to be talking to the other individual. It is just ways of trying to improve the productivity and increase efficiency.

We are asking that for the whole operation. We are looking at the lift tickets. Do you need two people on that front counter when historically you look back and you see that you do not have busy times from, say, a Tuesday to a Wednesday? So everything is under review.

MR. BRAZIL: Perfect.

I do like the concept where you are moving forward of treating it like a full-fledged business, particularly around not being reliant on government support as part of it. Obviously, government gives supports for reason, because we see the benefits of Marble Mountain and what it does for that part of the Province from an economic point of view. I do like the point that you did note that your plans are not to increase the current debt, but there is a looming debt that you have inherited.

Will there be any plans down the road to try to address how you get to that point because of the interest that is being paid on that current debt?

MR. PIKE: First of all, on the debt, I think it is worthy to note for the current board and staff, and even previous boards and staff, is that debt was built up in a three-year period. I think it was from January 1999 to June 2003. That was around and following the Canada Winter Games. Back then, you had a different board, you had different staff, and it was different times. I would even go so far as to say it was a different government. The bulk of that debt was incurred during that period. Since then, that debt has remained relatively stable.

In recent years, the goal has been not to increase that debt. The current board, and even the board before it that I am familiar with, it was their goal not to go into that debt at all, and they have been very successful in doing that. Unfortunately, that debt brings with it in the range of $100,000 a year interest, which hits us on our operating line.

Also, unfortunately, the corporation is not in the position to reduce that debt; however, going forward if and when we have any excess revenue, of course that is where it will go. I do not hold up a lot of faith for that in the near future because there are a number of things that we have to do on the safety side, the liability side, customer service side, and looking in the long-term viability of the product that we are trying to put in place.

We have had some preliminary discussions with government during Budget time, the last couple of years, you would raise that; but, of course, the various departments are trying to balance their budgets as well. I do not think that the department was in a position to have $1.9 million that they did not have anything else to do with it, that they could put down on that debt, which certainly I would like to see but you have to be realistic about it as well. It is having an impact on our operating line.

MR. BRAZIL: Thank you, Mr. Pike.

Mr. Chair, it is good for me for now.

CHAIR: Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Pike, for coming here today. I have to say that I am disappointed by the responses that you provided in the letter to Mr. Bennett, our Chair of the Public Accounts Committee, to the six questions. It certainly lacked any additional detail, really, than what was already in the Auditor General's report.

For a Public Accounts Committee which is an oversight committee of making sure we are getting the best value for government dollars, our tax money, we needed additional details. I am going back to the original question in the letter. What is the process of identifying examining alternatives to the current debt structure in order to reduce interest cost, and does the corporation have a long-term plan to address the debt and debt servicing issue?

That is a big concern. Right now, you have an operating line of credit at $1.9 million. Has that figure changed and what is the interest rate that you are paying for a provincial guaranteed line of credit?

MR. PIKE: Well, to your question, I do not know that there is much more that I can add than what I just previously stated when I was talking about that debt, in that the debt is there. It is a debt that has been in place for a number of years. It is a debt that is guaranteed by government. I do not know the exact interest rate, but I do know that it is very low.

MR. MITCHELMORE: Does the Auditor General or Deputy Auditor General know, or does somebody in the government department know, what the interest rate is?

WITNESS: We are not sure. We would have to refer to our work papers to get that information.

MR. MITCHELMORE: It is something I would like to have provided to the Committee.

Do you know, Mr. Pike, if the operating line of credit has increased from the $1.9 million since the report? Is it near max right now, based on your financial statements?

MR. PIKE: No, it has not. In actual fact, it has gone down. I did look at the number; bear with me for one second. It has gone down by about – not much, but it has gone down and not up, I do know that. Just bear with me now and I should be able to –

MR. MITCHELMORE: Have you made a request to the Department of Finance or to anybody to look at a lower interest rate for this type of loan? Given our new fiscal position in the Province, bond ratings and things like that, we should be at the absolute lowest possible rate for almost $2 million in debt you are carrying.

MR. PIKE: While I cannot quote you the interest rate, I do know that it is low, because I remember when I did see it a year or so ago I would have liked to have had it for myself.

MR. MITCHELMORE: Has a request been made to government for any type of debt relief, or are you looking at – you get a $400,000 subsidy. Are you looking at seeing if that can go away anytime soon or are you going to be continuously reliant on the $400,000 of subsidy from the government, and are you looking for an increase?

MR. PIKE: Just to answer your first question earlier. The debt at the end of 2011 was $1,889,000. At the end of the last fiscal year it was $1,884,000. It had gone down by $5,000. I think the positive thing there is that we have committed to ourselves to hold the line on that debt and we are successful in doing that.

As for any formal requests, no; my understanding is that interest rate is extremely low and I do not know that there is much room for improvement on it.

WITNESS: If I can add; yes, we have looked through what we have here and we believe it is around prime, the interest rate.

MR. MITCHELMORE: Okay.

I have some concerns then about the two snowmobiles that were purchased costing $22,469, financed over a three-year period at a rate 6.59 per cent interest, costing your corporation over $10,000 in interest. Wouldn't it have made sense to just carry the additional debt load? Would it have been cheaper to look at other financing means, because that is a higher interest rate?

MR. PIKE: I think the snowmobiles in question were not purchased, I believe they were leased. Leasing equipment for an operation like Marble, for some things, still makes sense when you look at it, especially the equipment that is used in outside operations. If I look at their snowmobiles, if I look at their groomers, especially the groomers are very expensive machines. When they are used on a mountain and they are used for work and not for pleasure, this equipment gets used to the full extent of the word and after it is a few years old maintenance costs gets extremely high.

MR. MITCHELMORE: Okay.

MR. PIKE: I guess it is a combination of, when you do the analysis it makes sense to lease some of this equipment so that you can change it out. You can get rid of it around the same time that the maintenance costs start to get high and hit you on your operating line.

Also, to some degree, some of that pressure comes from the fact that the debt is there. We have made a commitment to ourselves that we do not want to get into that debt; we do not want to increase that debt. We are actually operating every means we can as if it does not exist. That is sort of the thinking we have instilled in the staff.

MR. MITCHELMORE: Okay.

The Auditor General's report asked questions about your fuel-tracking system. Do you know what actually happened to your diesel fuel and all the fuels? Because it had pointed out that two snowmobiles and an ATV had used $4,350 worth of fuel. Is there any type of tracking for fuel? To your knowledge, do you know if any of this fuel has been used for personal consumption where you do not have adequate tracking records?

MR. PIKE: I cannot guarantee you, no, looking back. I think in our response we have indicated that we will be putting a tracking mechanism in place, and we will have that in place before the ski season starts.

I think it is worthy to note, that while I was not able to report on that in a positive way when I replied to the Chair's questions, none of that equipment gets used during the off season. There should be no fuel being used in the off season.

MR. MITCHELMORE: I would like you to explain your quote in parenthesis to the Chair, which, in your response, you said, "As part of MMDC action plan, we will develop a process to monitor fuel consumption that includes general ledger accounts." Then, in parenthesis, you had sent to the Chair, "(has this been developed yet? If not, is this something that could be created rather quickly and we report positively that we have it done?)"

Was that left in there by error?

MR. PIKE: Yes. I accept responsibility for that. I signed that letter and I sent it. I think that is an example of good help is hard to get and you get what you pay for. In that, I did not have anybody do that letter and send it off for me. I did it myself, I did it in haste. It was during my peak construction season in my normal job. I do not have a lot of spare time in the summertime and I was doing that to get it out the door to meet the timelines that the Chair had requested, and yes, it was an error.

When I had done the draft and sent it off for input, I did ask those questions. I felt well, is this something that we can do now? Of course, it had not been done. I was reminded that it is one of the things that we are working on and we are looking at. This equipment is not being used, so we are not going to be in any worse position if we do not have this done until the fall.

MR. MITCHELMORE: I think it is a very serious statement for this to be placed in the letter in your capacity as Chair. I wonder: has the board met to actually discuss these types of things? Have they met?

MR. PIKE: Yes. Actually, if you would not mind, maybe I could make some comments on the actual Auditor General's report and what we are doing as a board.

First of all, with respect to the Auditor General's report, I think it is understandable that as a board we were somewhat disappointed with the results. That being said, we accept the report, and we have accepted the report to the board. We thanked the Auditor General for the work they have done and their efforts, but at the same time, we, as a board, and certainly I, as a Chair, view this as a very positive exercise.

MR. MITCHELMORE: Mr. Pike, I would just like to cut in because I have a very minimal amount of time and some very specific questions. You will get an opportunity to maybe explain those types of things, but -

CHAIR: Mr. Mitchelmore –

MR. MITCHELMORE: My time has expired?

CHAIR: Yes, but there will be ample opportunity for questions.

MR. MITCHELMORE: Okay, thank you.

CHAIR: A government member.

MR. S. COLLINS: Mr. Pike, I was wondering if you would like to continue, because I was interested in where you were going with that, so if you would like to continue with that train of thought, if you can do it within a limited amount of time.

MR. PIKE: Yes, what I was about to say is that we view it as a positive exercise and one that brings with it lots of opportunity. It is important to note that Marble Mountain's management team has experienced unprecedented turnover in the last year or eighteen months. Unfortunately, we were going through this audit with new staff. In lots of cases, we as a board feel that the decisions made back when were made with full insight and full approval. In a lot of cases, there was a lack of documentation or there was a lack of being able to find the documentation. That was one of the things.

Since the report, or around the same time, we have a new General Manager. Certainly since the report we have a new Manager of Finance and we have set a new course for ourselves. We have a new team in place and we are focused on safety, we are focused on reliability, and we are focused on the whole customer experience.

In the last year alone, we have done a lot of things to improve Marble Mountain. We have made improvements to our snow-making capabilities. We have a newer, safer, customer-friendly Magic Carpet to replace the old T-bar because it had reliability issues, it had safety issues, and it had issues for the customer. It was a thing that often turned people away from the sport. We are getting some rave reviews on that.

We have started on a ten-year infrastructure plan to rehabilitate, refurbish, and try to extend the useful life of all of the equipment out there that is aging. Just last year alone, we have improved lift reliability on one of the lifts.

We have a new marketing campaign in the last year. We have engaged in a new company. Marble Mountain now has broken away from the full Department of Tourism, Culture and Recreation advertising campaign where you have the big market and the big contract. We have carved off our own little niche and we have engaged our own marketing group, which is more focused on the product itself.

MR. S. COLLINS: If I may interject there, because that was actually one of the points I wanted to raise, or a question I wanted to ask, with regard to the marketing, what do you spend annually on marketing and what positive returns have you seen from it? Because I know we have all heard it on the radio; it is great advertising. I am just wondering: Can you put a number to the returns, the positive returns from that marketing?

MR. PIKE: Well, sometimes it takes a few years before you really start to see the impact of marketing, and it is hard to see as well when you are coming off of a couple of bad years, weather wise. We think that we are focused in the right directions.

Our new marketing team – I think we spend $200,000 a year. In the past year, our main focus has been on the St. John's market. In our plans we plan to focus on the local market, which I will say is within two hours of Marble Mountain, the St. John's market, then you have the rest of the Island, then you have Atlantic Canada and then you have beyond that. Those are the ways that we look at it.

Last year we focused a lot on the St. John's market. We focused on radio, on newspaper, but we are putting a lot more emphasis now on the social media. We have enhanced, within the past year, Marble's Website: www.skimarble.com. We are now in Facebook, in Twitter. We have an iPhone app. We have a blog. Of course, with the blog you have almost instant communication with your customers. So you are able to explain things when things are not going right or if somebody has an issue and they put it on the blog, you are able to respond to it. So you are given the opportunity to recover. Those are some of the things that we are doing.

In the report, there are a lot of policy and procedure issues. I was not able to respond positively as to what we have accomplished in my response to the Chair, but what we have done – we recognize there are a lot of policy issues. There are policies that had not been adhered to, there are policies that need to be tweaked, and there are new policies that need to be written. We have formed a subcommittee of our board to look at all those policies. Where we are at to date, is that that subcommittee has come back with a first cut of these policies.

At our last board meeting, as the full board reviewed those policies, we gave a lot of feedback, we gave a lot of input and we gave direction. So, now that subcommittee has gone away and hopefully by September-October time frame they will be back with a close to final draft that we will have another look at and then we will have them ready to go before year-end.

What we did, we went through the Auditor General's report, we did our response, which of course was printed in the report, then we took our response and we did our own internal action plan with assignments, and our goal is to have each and every recommendation and each and every issue that is raised in that report addressed by the end of this year.

MR. S. COLLINS: Sorry, I do not mean to be abrupt, but of course I am on a limited time schedule, but thank you.

MR. PIKE: Yes.

MR. S. COLLINS: You make reference in your responses – I am referring to the response back to the Chair – question 2, that as part of the MMDC action plan you will review and update current purchasing policies. You go on to say that the process will include seeking the help of the Department of Tourism, Culture and Recreation comptroller. I am just wondering if you can expand on that a little bit, and with regard to it do you plan to adhere and adopt the recommendations that will come forward?

MR. PIKE: Yes, we certainly do plan to adopt the recommendations –

MR. S. COLLINS: Wholeheartedly, everything across the board, or is it something you bring back to consider and take those that are appropriate, or is it just a –

MR. PIKE: No, I think we recognize that there were some things that just did not have the documentation to show they were being done, there were other things that could have been done, and there were some errors in some calculations and things that were not done on T4s, for example. All of those errors have been addressed already. We have new staff in place. We have met with those staff. We got them to ensure that they are doing things as we are supposed to be doing.

With the consultation with the department, a lot of that has to do with the purchasing and just understanding the government procedures. For example, when you only have one supplier, then what do you do? Within government, there is proper paperwork and so on that has to be done. Well, the new staff, of course, not coming from government would not be familiar with that. So, in our response what we said is that we will consult with the comptroller within the department to help our staff understand the correct procedures and to give them guidance and to help us make sure that we are doing the right things and getting things put in place right, upfront.

MR. S. COLLINS: Okay, fair enough.

Mr. Chair, do I have time to ask another question?

CHAIR: Sure.

MR. S. COLLINS: Not to beat a dead horse, I understand, obviously, safety takes precedence as a liability and it is something you always have to look at as a corporation, I am sure. That precedence over debt servicing, I am just wondering – we see you are taking positive steps toward a more fiscally prudent operation. I note that somebody had asked a question before. Do you see anywhere in the near future where you would start servicing that debt as opposed to letting it just continue?

I know it may be hard to say today, but would it be reasonable to say that would be part of an action plan? Maybe, no, it is not something we could address in a short term but perhaps we would turn the corner in five years time, whatever the case, where we would start addressing that service. Let's start addressing the debt.

MR. PIKE: Yes. Well, there is no short-term solution to it.

MR. S. COLLINS: No.

MR. PIKE: Also, we have some other issues that we also have to deal with. Last April, when I was appointed Chair, that was one of the reasons – going back to somebody's question on the amount of time that the outside operational manager is around. When I became Chair I had him stay around for an additional three weeks, it might have even been four weeks, because I wanted a full assessment done. I had asked some questions that I was not quite satisfied with some of the responses.

What I did, I took some time myself and I went out. Myself and the new general manager, and the outside operations manager, walked every inch of that hill. We climbed structures, we looked at the intake, we looked at the pump house, we looked at the condition of the villas, we looked at the lifts, we went up and looked at every electrical motor, every belt. We identified what we had, and where the strengths and weaknesses were.

There is approximately $35 million worth of infrastructure associated with Marble Mountain. Some of it is fairly old. Like anything, if you do not maintain your capital investment it will deteriorate and it will have to be replaced. I do not think that Marble, and I do not think we have the support where we would be able to go out and just start replacing those lifts. So we have to make sure that they are adequately maintained.

You have to spend money on capital investment to have a good, useful life. If you spend the right money in the right places, you will be able to extend that useful life. So, we have created a ten-year plan. We have been working with the department; we have presented our ten-year plan.

In addition to the operating grant that we get, we also get a capital grant. It is not a guaranteed thing. We have to present, but I think the department was pleased that we had taken this long-term approach and I think it makes good business sense.

Also, if you look at the operating lines, over the last five years, I did a calculation that the lift-repair line went up in the last five years somewhere over 100 per cent. Those things were eating away at our operating dollars as well. So, not only are we going to improve safety, are we going to improve the reliability, are we going to improve the customer satisfaction, but we are also going to have a positive impact on our operating line. Otherwise, those operating costs – then you are fixing things when they break in peak season and it is at all cost to get it done. Again, we are trying to step back and take a business approach to this Crown corporation.

MR. S. COLLINS: Okay, thank you.

CHAIR: Mr. Joyce.

MR. JOYCE: Thank you.

Mr. Pike, I go back to the extension for the contact which was, at first, for a minimum of sixteen weeks in 2005. Again, I acknowledge you were not there as chairperson. Can you tell me if that was approved by the board? Because here in the Auditor General's report it says the board chairperson stipulated. Can we get the minutes? Can you tell me how many meetings were held per year with the board itself?

MR. PIKE: Back in 2005 –

MR. JOYCE: From 2005 up until you took over as Chair, are you familiar with how many meetings? Because even in the Auditor General's report earlier there were things that were not signed off by the board. The minutes were not signed by the board and the board was actually expired. Is there any way that you can send us a copy of the board minutes?

MR. PIKE: Yes.

MR. JOYCE: Because in such an expenditure like this here, I am assuming it was approved by the board with everybody present and everybody agreeing. Once again, I am from out in that area. I think people would be a bit surprised when they hear that the winter operation took over forty weeks out at Marble Mountain.

MR. PIKE: It is my understanding that those contracts were approved by the board. As for the number of board meetings, again, it is my understanding that the board was meeting fairly regularly, as often as once a month. Again, I do not think they met every month, especially during the summer period, but for the majority of the year they had a meeting.

MR. JOYCE: Can we get a copy of those minutes?

MR. PIKE: Pardon me?

MR. JOYCE: Can we get a copy of the minutes of the meetings for these expenditures?

MR. PIKE: I can certainly take that under direction and see if I can get them for you. I do not know where to put my finger on them at this point in time, but I will request those.

MR. JOYCE: It is a major expenditure, and you assume that it was approved by the board, the full board, to have such expenditure.

MR. PIKE: Is this, Mr. Joyce, the 2005?

MR. JOYCE: It is 2005; May 2005, yes, when it was done. In the AG report 2010-2011 it was extended for forty weeks, and in 2009-2010 it was thirty-nine weeks for winter maintenance.

MR. PIKE: I will do my best to get that for you, Sir.

MR. JOYCE: Thank you.

Once again, I know you were not Chair. In May 2010 to October 2011 there were a lot of additional expenses. They were paid out to a contractor, like repairs to the vehicles, cellphone charges $2,000, insurance, and vehicle rentals $7,000. Then, in the AG report, "These expenses were not covered by the contract and there was no assessment to determine whether the Corporation was getting the best value…"

My question to you is, for a lot of the expenditures now, is there a system put in place by Marble Mountain to ensure that things are either put out on tender or by quote to ensure that from here on in things will be done according to government policy, and also to ensure that Marble Mountain gets the best bang for its buck?

MR. PIKE: Yes, there is.

MR. JOYCE: Okay. Can you explain what procedures are put in place? Is there a new comptroller put in place or new procedures? Is it following government procedures?

MR. PIKE: The staff now has been reviewing the Public Tender Act and the requirements. They have been instructed and they have been following the proper procedure since this report has been written.

MR. JOYCE: Okay, perfect.

MR. PIKE: And instructed to do so on a go-forward basis.

MR. JOYCE: Okay.

In a lot of instances in here, the Auditor General mentioned even smaller things, like some services. Are there services included? Because there is a certain limit that you have to go to tender, and a certain limit that you just have three quotes. Is that also included in your new structure to ensure the services are included?

MR. PIKE: Yes, it is.

MR. JOYCE: Okay.

Also, when you notice, in the Auditor General's report, "The Board minutes were not signed as approved and the terms of appointment for eight Board members had expired. These members continued to serve on the Board without the required approval of the Lieutenant-Governor in Council to extend their terms."

Has that been taken care of to ensure that all board members are properly in place and properly approved by the Lieutenant-Governor in Council? Because, again, that goes back to my first question: How many board meetings did they have? Were all these expenditures and the extension of the contracts approved by the board? Who was on the board to ensure that these expenditures fell within government guidelines? Because it is very obvious, with the extension from a contract from sixteen weeks going up to forty weeks, I am assuming it had to be approved by the board.

MR. PIKE: There are two parts to the points you make, Mr. Joyce. First of all, the minutes not being signed by the general manager and the Chair; that is correct, they were not. They have been since, but what I will say is that while they were not signed –and that was probably an oversight by new people involved – each meeting, the minutes are prepared and sent to the board, at the following meeting one of the agenda items is always adoption of the previous minutes. While they were not signed, there is documentation that there was a motion put forward and they had been approved by the full board.

The second question you have on the terms of some of the board members, you are correct in that some of the board members' terms are currently expired. It is my understanding that the department or government has looked at that and it is now in the hands of the minister and the new appointments are working through the process. You are probably more familiar with the process than I, but it is in the works from what I understand.

MR. JOYCE: A lot of times in Public Accounts hearings it is to try to highlight some things and improve things. I know I will have another time later – I have a few more questions later. Can you give the Public Accounts and the public assurances that with the AG report and with the new procedures put in place by Marble Mountain and yourself in particular, can you give the public and the Public Accounts more assurances that things will be followed according to the Public Tender Act, through the proper procedures, that Marble Mountain now will be looked at in a better light through the board?

MR. PIKE: I can give you that assurance right upfront, but what I will say – and in my experience in private business and in this current exercise, while I am sure there are a lot of people who do not look forward to an audit, I am the opposite. Because I think it is a point in time when you have people who are not involved in any day-to-day operations. They come in and they dig and the probe and they question, as I am sure that the folks representing the Auditor General can attest to, and they write a report.

As I said earlier, we accept this report for what it is, and we welcome what is in it. Audit reports are not always pretty, but audit reports are always an opportunity for improvement. That is the way that we look at this, that is the way the board looks at it, and we have set to task to ensure that each and every recommendation that is within the audit report is addressed prior to the end of this year.

By addressing these recommendations, the point that you asked: Can we be assured that things will operate better? Yes, they will. Partially because we have taken the point in time, we have looked at and we will be revising our policies. We now have new staff – and not to point any fingers at anyone who was there before, but we have a new general manger, we have a new manager of finance. These people have been involved in this audit report. They will be there now involved with the new policies. They are the ones who are recreating procedures to plug all the holes to make sure that if there are any monies that are laid out that T4s are – that everything is done by the book.

Now, will something slip in the next year or two? I hope not. I would not go so far as to guarantee it, but the intent here is that as much as reasonably possible things will be operating correctly going forward.

MR. JOYCE: I just have one more question, Mr. Chair; I have another minute left.

There are two department mainly involved with Marble Mountain: Tourism, of course, and the Department of Finance. Has Marble Mountain Corporation, under your leadership, asked those departments to come in to help with ensuring that procedures are put in place? Because I am sure they have the expertise and they have the ability to come in to help and almost do another review, financially or through the tourism aspect; they have the personnel to come in. Was that ever requested or is that something you might think about to ask to try to ensure all the safeguards are put in place?

MR. PIKE: The new general manager, with the assistance of his new finance manager, had a lot of discussions and consultation with the appropriate people within the department. We deal mainly with the Department of Tourism, Culture and Recreation because that is where we fall. We feel that we would go to them. If they cannot help us, if they find they do not have the answers, we would rely on them to consult with others, whether it is the Department of Finance or whomever.

There has been a lot of consultation ensuring we understand – and I say we, speaking on behalf of the staff – the way things work in a government process, as I mentioned before, and for a Crown corporation because their backgrounds are not in government and are not in a Crown corporation.

For me, personally, when I first got involved with this board, the biggest adjustment for me was understanding the process of a Crown corporation and government, coming from private industry. I am of the practice of: I see something; I think it should change, you make a decision, and you get on with it. You do not stop to think: What policy does this fall under or who do you have to consult with?

It takes time, but we are figuring it out. I truly think we are starting to make some great progress.

CHAIR: Thank you, Mr. Joyce.

A government member.

MR. CROSS: Just to follow on with some things I had identified and have indicated, there seems to be a theme coming around that there is a lot of change and changeover in staff in the operations. Looking through, I see there is a small management component of approximately six people but it lists up to 140 other full-time or part-time staff. I guess that is seasonal.

How many of these do you know are repeats? Do they come back from year to year? Is the staff from most years new people?

MR. PIKE: No –and I am speaking now more of my experience as a customer, because I have been a customer longer than I have been a Chair. The seasonal staff, the 100-plus seasonal staff at Marble, are very fortunate in that there is very little turnover. A lot of them have been around twenty-five-plus years.

I am proud to say that this year Marble Mountain celebrated its fiftieth year of actual lift skiing in the Province. Some of those people have been around close to thirty years. It is the same thing when I look in the bar, when I look in the cafeteria, when I look at the lifts, when I look at the groomer operators, the people who are in place there now, as long as I can recall in the last eight, ten years, the majority of them have been there every winter. I think that is a very positive thing.

MR. CROSS: Okay. In looking forward, as well, because I think probably one of the themes we have seen today is not to look back. We look at the reports that are there and there are some things that we would wish were not there, but looking forward seems to be a theme.

In today's world, it is not necessarily how smart you are but how can you be smart, or how are you smart? - which means PD for staff and management. I do not see, in looking through this, much expenditure for training and PD and things for staff. How does that build into the positive image towards the future? Are there plans or something in the modest budget that that can be arrived at?

MR. PIKE: Well, I think on the training side there are a couple of areas. One is, from the outside operations, where you have a lot of repeat staff – and they do have the product down very well, but for them it is always looking at the new technology. Part of our capital long-term plan is trying to invest in that technology.

For example, when you look at snowmaking, there are new technologies and new snowmaking heads that can make snow in a higher humidity, higher temperature than some others. We will be investing over time in that so that we can improve our snowmaking ability. Right now, we have to wait for the temperature to be down to probably -7, as an example. It has to be down for probably, forecast for three or so days out, because by the time you get the water in the systems and get it flowing, it takes a number of hours to get it up and running. Then you have to drain it all down afterwards. So you have to make sure that it is worth your while. That is one of the things that we are looking at.

On training, an area of recent that there has been a lot of training done on – although it does not take a lot of cost, because usually you do it in-house – and that is on your ski patrol; again, looking at safety, looking at first aid, looking at rescue and how to get people down from lifts. I know the more recent managers of the ski patrol in the last few years have been doing a lot of training and a lot of exercise.

Another area that we are looking at going forward on training is our customer service staff; how to interact, how to get more efficient with the cafeteria operations, how to get more efficient with the bar, and always trying to get the most product out for the less effort and improve productivity. There are some of those things.

Another area we are planning to invest on, and we have, it is part of a three-year plan that we have, and that is a new financial system. Right now, the financial system at Marble Mountain is basically archaic. I do not know if there is really a proper system that exists. That will take care of a number of the small procedural things and the tracking things that are missing today that surfaced in this report.

The first phase of that is basic financial. We are investing in IT, and with that will come training with that IT. We will have a new basic financial package in place by this fall, followed by the following year where we will expand that into our lift tickets and being able to automate some of that stuff. Then in the third year the whole point of sale, so that people can call up, they can book.

If you go down to get your skis, you do not have to come up, line up and buy your lift ticket first and then go down and get something else. You can go down to the point of sale and do it all in one place, anywhere where there is a contact person. Even better again, you can do it all in advance. Have it booked and have it paid for and it will be all put aside for you before you even show up. That will improve the output. It will improve productivity but it will also improve customer service.

MR. CROSS: Okay. Just a couple of quick questions and then I guess I am finished for this session.

Some of the points have already been referred. When you are talking about contractors and the length of the season, there is a comment that says: No weekly invoices were submitted as required by the contract. Under a new financial management system as you suggest, then there should be an adequate way that this would all be in there and accounted for?

MR. PIKE: That is correct, yes.

MR. CROSS: In the meantime, is there some way of monitoring this? In the sense of recording these and having this done now, has that started?

MR. PIKE: Yes, yes it is.

MR. CROSS: Okay.

MR. PIKE: I think what happened in the past is that there is a familiarization over time with the people. You have a contractor, you know this is the weekly rate that he gets paid. He gets paid that weekly rate. Technically, he would be supposed to submit this invoice, but over time it sort of fell by the wayside.

I personally do not have any concern that there were payments made when they should not have been made. It is just that when you come from an audit process, you are looking at: Okay, where is the paper trail and where is the documentation? When you go through this you will see there are a lot of areas where that fell down, but I am not concerned that proper procedure was not in place. It is just that the proper paperwork had not been done.

MR. CROSS: Another item that was brought up and started by Mr. Mitchelmore, and I guess he is probably going to pursue it but it is just a comment from me.

In the case of the purchase of diesel fuel for the three snow groomers, it was purchased in bulk and there is no record of the different machines that consumed the different amounts. In the efficiencies, if you want to look at the operations such that you want to know which lifts are costing more and all this, then obviously these finite records are an area that is there. Has that started or is that part of the new system as well?

MR. PIKE: That will be in place before that equipment goes in service this coming fall.

MR. CROSS: Yes. That is another example, like your comment, of how you can make yourself smarter. If you can identify certain things and you know it, you get the information quicker.

MR. PIKE: You are absolutely right. There are two things there. One is you are ensuring the fuel is actually going where you say it is going and not going somewhere else. Also, you are able to track so that if you have three machines and you are about to get a new one, well which one are you going to let go and which one are you going to keep? You look back at your maintenance costs. If the maintenance costs are not high, can you extend that one for another year? Is that cheaper than bringing in a new one?

To come back to the whole lease thing that we mentioned earlier, that is the benefit of leasing. Is that you have that flexibility, whereas if you own them, then you do not. Once you are hit with the operating costs and the maintenance costs, you are hit with it, and then if you are trying to get rid of them and buy a new one – whereas with a lease you know what you have. You know you are going to be able to turn it around and you know what you are going to get for it at the end of the day.

MR. CROSS: Okay.

I will turn it now to Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Pike.

I would like to ask you: When was your last board meeting held?

MR. PIKE: This is August. It would have been in July.

MR. MITCHELMORE: Okay.

How many times has the board met since January?

MR. PIKE: Since January?

MR. MITCHELMORE: Yes, since the release of this report.

MR. PIKE: The board met in January. Of course, in the winter months it is when we are under our main operations, so it meets more often. We would have met in January, February, and March. I do not recall if we met in April. We did meet in May and then we did meet in July.

MR. MITCHELMORE: Okay.

How many members are on your board?

MR. PIKE: Ten.

MR. MITCHELMORE: Ten.

How many of them are operating to capacity, which are not expired? Are there just two active members based on the fact that the Auditor General's report said there were eight operating with expired terms, or have there been new appointments since that time?

MR. PIKE: I did not quite hear your question.

MR. MITCHELMORE: Based on the Auditor General's report it had noted a number of board members who had expired terms. You had noted that there have been recommendations put forward to the department and the minister's office. So, during these meetings, are these people who are attending operating on the pretence that they have expired terms?

MR. PIKE: Some of them would have, yes.

MR. MITCHELMORE: Okay.

Can we have a list of the board members and when their expired terms are, and if you are contravening your own bylaws in the Corporations Act? Because all of the decision-making processes would – could you actually make a decision and reach a quorum in this situation?

MR. PIKE: I do not recall, exactly, off the top of my head, who is expired and who is not, but I can get that for you.

MR. MITCHELMORE: I sat on a number of – well, I sat on at least one government board, one of the RED Boards, and they produced their staff, their board members and their expiry terms on their Web site. Is that something in the name of openness and transparency that Marble Mountain Development Corporation will be looking at to be more accountable to the public?

MR. PIKE: It certainly could be done. Personally, I do not know if there is any benefit but it can be done, yes.

MR. MITCHELMORE: I want to go back then to the fuel question. You had mentioned that there was personal abuse of the fuel. I just want to know: Has your board taken any action for disciplinary action on this or pursued a criminal investigation?

MR. PIKE: I do not recall saying that.

MR. MITCHELMORE: Okay.

I had asked you if you could confirm that some of the fuel was not used for personal consumption and you said no, you could not confirm that.

MR. PIKE: I guess I did not understand your question.

MR. MITCHELMORE: Okay.

MR. PIKE: I think what I thought you were saying, could I confirm basically which piece of equipment fuel was being used for, and no, I could not confirm that. That was my understanding of your question.

MR. MITCHELMORE: Can you explain then the $50 fuel for the truck receipt that was listed in the Auditor General's report which was listed as not being owned by the corporation?

MR. PIKE: I cannot go to any specifics, but I can give you an example of where something like that may happen. Because I do recall with our outside contractor one time, the winter before last – which would have been within this time frame – when we had a motor problem late in the afternoon, the contractor worked until midnight or so to get that motor taken out, took it in his own vehicle, drove to St. John's, had it down to the electrical company for when they opened up at 8:00 o'clock. He waited around until they had it fixed by late that day, put it in his truck, drove back to Corner Brook, spent all night again putting it in place and had it up and running for the following morning. My experience with the individual involved if he put in a gas receipt, it certainly did not cover his expenses.

MR. MITCHELMORE: I guess that does not make any sense to me as to why someone would not claim the full expense of fuel if they are incurring costs and doing work for your corporation.

MR. PIKE: They may have left with a full tank of gas. They may have come back and they had one receipt, and that is what they put in and they did not try to maximize how much they could get back.

MR. MITCHELMORE: I guess the Auditor General's report also listed that you are using a per kilometre rating that is higher than the stipulated government rate. Why is that?

MR. PIKE: Well, our policies are currently under review. A number of things that are looked at for Marble are not necessarily looked at by looking at government. Government is one of the things that we look at. We are looking at wages or we are looking at other things. We compare ourselves to the industry. We will look to other positions within the industry. If we are looking at salaries, we just do not look at government rates because that is where our competition is and that is what we are competing for people and policy and so on.

On the actual mileage, obviously, at some point in time that was a rate that was set by a previous board, for whatever reason. They may have been looking at private industry for all I know.

MR. MITCHELMORE: How could you incur $20,000 worth of interest in penalties of taxpayers' money for failing to pay the payroll tax, the health and post-secondary tax to the tune of $47,000 that was revealed in the audit? Once you knew that you had failed to pay this fee, it is owed to the Canada Revenue Agency. Why did you not pay it and incur all of these penalties and additional fees above and beyond to the tune of $20,000?

MR. PIKE: I do not think they knew they had not paid it. Once it was picked up, a period of time had gone by. Just like you or I, if we are dealing with a government agency and they determined we have not paid proper tax and it is three years old, then usually there is an interest charge associated with it by the time you are made aware of it.

MR. MITCHELMORE: Have you met or requested a representative from the Canada Revenue Agency to meet with your finance department or your chief accountant and the staff who would be dealing with these T4s since the Auditor General's report?

MR. PIKE: No, we have not that I am aware of, but the new finance manager comes with a fair bit of experience to the point that I would feel comfortable he is aware of the way these procedures should work and are working now.

MR. MITCHELMORE: There are significant problems when it came to the financial aspect previously. Do you account that to the turnover of staff at that time and a lack of following generally accepted accounting principles? There is too much happening to say that is just human error or whatnot. Something has gone astray with your accounting department at Marble Mountain.

MR. PIKE: Certainly that would be a big part of it. We went through a number of people in that financial position in about a twenty-four-month period.

MR. MITCHELMORE: Even so, Mr. Pike, in your own questioning, you have had a total of five meetings since the Auditor General's report, with your board. The questions were asked, responses were made, and then we get back answers wherein two of the answers you have stated: Has this been developed yet? If not, is this something that could be created rather quickly? We report positively that it has been done.

Would you provide us with the minutes of your board meetings since the Auditor General's report? That is something the Public Accounts Committee, or myself as a member, would be quite interested in having.

It seems alarming that you have not reviewed the capital assets since you have said you have gone with the contractor and also with your general manager touring and putting in this big infrastructure plan to government for a ten-year plan.

MR. PIKE: I think, Mr. Mitchelmore, you have to understand that when this report came out we were in the midst of our winter operations, when it takes full commitment from the staff at hand to keep that hill running, to keep the snow made, to keep the grooming done, keep everything operating. That is their first and foremost priority during that period.

Once that period is over, we are down to a very minimal staff of four or five people, with vacation periods and everything else, because certainly there is no vacation taken during that peak winter season. We have a plan that we are working on. We have timelines that we are working on. We did not have a lot to report with the timing of your questions. Our goal is that we have everything done by year-end.

Your comment you make on the letter, I think I have explained that it is no other error other than my own, and I take full responsibility for that.

MR. MITCHELMORE: Yes.

What about the copy of your board meeting minutes? Can we have copies of those since the Auditor General's report?

MR. PIKE: I can undertake to get those.

MR. MITCHELMORE: Thank you.

CHAIR: Thank you, Mr. Mitchelmore.

MR. K. PARSONS: Thank you very much.

Mr. Pike, thank you very much for coming here today. I have to say that it is very informative what we are hearing here this morning. To me, it seems like your corporation is in a positive mode and there are a lot of good things happening. I agree with you, the Auditor General's report is a good thing for any corporation because it really does give an outside view of what is happening at Marble Mountain.

I just have a couple of little questions to ask now. I know you stated this morning when you came here that you are here by yourself. Is there anything in place now – because the Auditor General's concerns, there was a lot of concerns there with travel and cellphone usage. I know if I had a report, one of the first things I would be looking at is saying: Okay, this is something that we have to stop right now. This is what we have to do in order to make these usages and make sure that things are tracked properly and whatnot. I am wondering if you have any procedures in place when it comes to travel and cellphone usage.

MR. PIKE: Yes, we do.

Some of those procedures were in place beforehand; they just were not adequately followed. In a lot of cases, it is not a case where we have to start from the beginning; it is just that we have to do what we say we are going to do.

Each and every travel claim, each and every cellphone bill, is reviewed now monthly by the general manager. That is in place and has been in place since this report came out. Cellphones – because we have a number of cellphones in use because of the operation – at the end of the season, any of the seasonal staff that have cellphones, those cellphones are turned back in. I know at one point in the report where our outside operations guy had been gone during the operational time for personal use and had the cellphone with him.

If that were next year, this same thing would happen, because from the board's perspective or from the management's perspective, and some of the examples that we used, he is the guy who knows the operations best. If he were going somewhere for four or five days, any time from the beginning of December to the end of April, I would want to ensure that our staff were able to get a hold of him, and that is one way to do it. So, I make no apologies for that piece. If it were next year, the same thing would happen again. That is just good business.

MR. K. PARSONS: Okay.

When it comes to travel, like you said this morning, is there a specific policy now that you have in place for travel for recording? There was a lot of stuff that was done that was not recorded. There was travel that no one could figure out who was there and why and whatnot. So, is there a policy? Because that is something that I think you could adapt right away and say: Okay, this is our travel policy and this is what it is going to be. Is there one in place?

MR. PIKE: Yes. As I said, our policies are all under review, travel policy being one of them, but we did have a travel policy all along. It was clear by some of the detail that was brought out in the Auditor General's report that even our existing policies were not followed to the T. So, some of the easy fixes upfront was initially that staff were instructed and the general manager was instructed to ensure that these things happen, that as a minimum, until we got new policies, that we are doing what we say we should be doing. So, having receipts to substantiate payments of travel claims is in place today.

MR. K. PARSONS: Okay.

Also, when it came to the use of your corporate credit card statements, there were a lot of questions there from the Auditor General. Is there anything done as it comes to credit cards and the statements themselves? Do you have either policy in place with that?

MR. PIKE: Yes, again, I think that in the expenditures that were in question, that were approved, obviously the people who were approving the expenditures knew what the expenditures were for, but the proper paper documentation was not in place. Staff has been instructed since then, that in order for payment of travel claims you have to have the proper forms filled out; you have to have the proper receipts to substantiate it.

MR. K. PARSONS: Okay, that is good. I know with us now, with the Green report and everything else that come out with government, I mean it is such a procedural thing now we are pretty well used to it and you know what you can claim. Once staff – I am sure – realizes that it does not go to the room cost, it has to go to the cost of – this is the policy and I understand.

The other thing I wanted to just question about was the tracking of your inventory. The Auditor General was really concerned that there was no tracking of the stuff that was disposed of and your capital assets. Have you put anything in place now to do a complete inventory of that?

MR. PIKE: We do not have the full process in place at this point in time. It is a work in progress. It is part of our action plan and it is one of the things that we have planned to have in place before the end of this year.

MR. K. PARSONS: Okay.

You said also that you had a new financial manager in place. Can you give a little bit of background to what his background is and stuff like that? Because sometimes it is fairly important that the people who we put in place in corporations like Marble Mountain, that they do have familiarization with that type of thing, how to run a corporation and whatnot. Because a lot of the stuff that I am reading in the Auditor General's report is financial, like when you talked about the T4s and not recording the employment and stuff like that. So, it is very important that the financial person is probably one of the main people, especially when you do an audit of a corporation that they have to be really qualified.

MR. PIKE: Unfortunately, I cannot because I was not involved in the interview process for this individual. The only statement I can say is that I am assured that he is qualified, that he met all of the requirements that we had, but I cannot give you much more than that about him. I am not that familiar with –

MR. K. PARSONS: Okay.

I just thought that he may be familiar with that type of operation.

MR. PIKE: I am familiar with his work since he came with us, which I am impressed with. His support to me, for example, just going through this exercise and helping to prepare the response to this Auditor General's report. Obviously, we have a lot of discussion about a lot of detail and about how things should work, and the lack of documentation and so on.

I think by just going through the exercise, because he was fairly new in that role when he got thrust into this audit, so I would say that he is quite familiar with what needs to be done coming out of it.

MR. K. PARSONS: Okay.

I know Marble Mountain creates a lot of spinoffs, and I know Mr. Joyce probably is more familiar with it than I am, being from that area. Can you just talk about some of the stuff? We look at the picture here today as Marble Mountain with deficits and everything else, but I am sure that you must have some kind of records of hotels, travel, and whatnot, and the benefit it does bring to the West Coast of the Province.

MR. PIKE: I do not have the numbers, but it does bring in a lot of business and spinoff to the airport, to all the hotels, and to the restaurants. Even in the immediate area, Marble Mountain is the key winter attraction for winter tourism in the Province, and more particularly on the West Coast. It is the diamond in the crown, so to speak, on the West Coast for winter tourism.

In addition to what it generates itself, if you look in the immediate area, at Marble Mountain now we have a private company, Marble Zip, which has been in place now since 2008 operating on the premise. Since it has been there is has expanded three times. It operates year-round. Most recently, it has added to its zip line operations summer ATV tours, winter snowmobile rentals. They have partnered with Marble on a Zip & Stay using the condominiums or the villas next door.

Also, when Humber Valley Resort started a number of years ago, Marble Mountain was one of the things it used in its marketing and packaging to try and promote that. Now that it is under new management and a new operating model, those villas or those chalets are still open for rental and so on. Again, they are marketed with the hill in mind.

Have a look at the property across the street that started as a number of cabins a few years ago. Now it has developed into an inn, a restaurant, and a fitness centre. The cabins are gone. There is a fifty-unit, condominium-style business that is created there now. Another company in Corner Brook has built a number of condominiums across the street, and has plans for more. You have a business there, George's Ski World. Again, it is all a spinoff from the hill itself. There is a lot of activity.

Part of going forward, one of the things we are looking at as a board is how we can develop the base of Marble Mountain to attract private investment. That is where we need to get to in order for Marble to become really viable. You have to surround it by these generators of revenue that is going to create more buzz, that is going to bring more people in, and there would be some spinoff back to Marble for that which will help it become more financially viable.

MR. K. PARSONS: I look at Marble Mountain as a real asset to the Province, obviously. It is one of the highlights of our Province for the winter tourism industry. I am just wondering what other revenues – like you just mentioned that time. Is there anything you can see that should be done with respect to tourism that we can do as a government or whatever to make it even better than what it is? Because I think East of Montreal it is the largest hill that is around, and we need to attract – like you say, it is a business. It is a place where we can generate a lot of revenues and stuff like that. So, I am just wondering, is there anything else that you think needs to be done there?

MR. PIKE: I know government, or with tourism, I know last year they were out there and actually did some footage to create some new winter tourism ads. So, they are working on that, but Marble itself is looking at its own marketing plan and strategy in trying to generate more interest.

Another thing that Marble is doing a lot is working with the school program and supporting youth in recreation, which is also introducing our youth to the outdoors, to sport, to skiing, and to snowboarding. The new magic carpet that I talked about earlier has been getting rave reviews. It has only been in existence now for a year, but for school kids – because before you had this old T-bar where there were more injuries getting on and off, and there were more people turned off from the sport because they never really got to learn it. Now you go out and it is just like standing on a conveyer belt going through Toronto airport. It is actually no more difficult than that, and it is amazing the reviews that we are getting.

So, I think over time we are going to see the numbers of people who are interested in the sport and taking up the sport increase. I think it is a little bit cyclical right now, but this magic carpet is going to go a long ways in turning that around.

CHAIR: Thank you, Mr. Parsons.

Before we go back to Mr. Joyce, I would like to give our witness a ten-minute break because we have been going for an hour-and-a-half. So, if we could come back in ten minutes.

We are going to see if we can get the noise to stop.

CHAIR: Order, please!

Are we ready?

We are ready to resume right now. I will go back to Mr. Joyce.

MR. JOYCE: I will go on with one comment Mr. Pike made and I will ask just a few questions.

I will just ask you, just in case it ever happens again, would you think it would be beneficial if the comptroller was here to answer some of the questions that we are asking or, you thought, where he was new at the job also – because a lot of these questions are financial in nature.

MR. PIKE: I think my perspective coming into this today, a lot of this has to do with the past and what are we doing today. I think had our financial guy been here, the response would be somewhat similar. Today, we are doing things right. We know what we have to do. We know where the errors or the non-conformances that have been identified are.

We do not disagree with them and we know we have to do it right. If it does not take policy changes – the things that we have to do, we are doing. Some of the paperwork that we have to get in place, like the tracking systems and so on, it is going to take us between now and the end of the year. Some of the policies to have written up, explored and fine tuned are going to take to the end of the year, but we have all of the confidence in the world that we will be there by the end of the year.

So, no, I do not know that it would make much difference.

MR. JOYCE: Okay.

I would just like it for the record, for you more so than anybody, and have it on the record that of all of those things, this is prior to you becoming Chair. When we are asking you all of these questions, this is all prior information that you probably would not be privy to. I just want it on record that when you came here today, a lot of this information was prior to you being Chair of Marble Mountain. The question that we are asking you is the review that you had with the comptroller and other staff, and by no means is it a reflection on your term as Chair of Marble Mountain.

MR. PIKE: I appreciate you raising that. Likewise, for the general manager we have now and the finance manager we have now, it is all prior to their time as well.

MR. JOYCE: Two more things on it. You mentioned earlier we are not looking at money missing, and I do not think anybody in this Public Accounts is saying there is. As we go through some of the things, part of our duties is to bring things forward and to ensure – for example, the Auditor General's report: Our review identified six purchases totalling $119,295 were not tendered as required. Snowmobiles – our review identified fourteen purchases totalling $65,906.

I agree with you, there is no money missing, but our role when we make a report back to the House of Assembly is to ensure the procedures are in place that we can save money for the Marble Mountain Corporation. I do not think anybody is accusing anybody of inappropriate funds. We are looking for better ways to save Marble Mountain money and in the long run save the government and the taxpayers of Newfoundland and Labrador – that is our role here as a Committee and as the AG.

My last few questions for now – as you mentioned, Mr. Pike, you fall under the Department of Tourism. I am not sure if you would know this or if it is something you would consider: As a lot of entities of the government, are your financial statements reviewed by the Department of Tourism at the end of the year, your procedures? Are they or were they in the past? Is that something you would consider for the future, just to ensure that Marble Mountain is following government procedures and the proper procedure is in place?

MR. PIKE: Yes, the financial statements are done each year. They are presented to the department. I certainly know that is happening now, but it is my understanding it was also happening in the past. I can recall the first meeting I had with the deputy minister when I became Chair. He was very familiar with the financial statements over the years, more so than I was.

MR. JOYCE: Just to follow up on that and some of the things, the extension of the contract, say, from thirty-two weeks in May 2005: Will that be put into the minutes and properly approved – I am not sure if it was before – to ensure it reflects the accurate time that you would need a contract? Because if it is not – and I can give an example, when the AG went in, the contract was for sixteen weeks, and in 2005 it was extended up to thirty-two weeks. If the proper minutes were not approved, then when it comes back again and the AG does another review we will be back here again saying: Well, why wasn't the proper minutes done and why wasn't the proper procedures put in place? Is your board looking at ensuring that all decisions made are put in the minutes to reflect the actual funds that have been spent?

MR. PIKE: I can certainly speak for, since I have been involved with the board as Chair, that decisions like that get brought to the board, there is a motion put forward, and it is documented in the minutes.

MR. JOYCE: In the report there were a lot of smaller expenditures that were made. Were there procedures put in place prior to your taking over – are you aware of – where people should get three quotes for services? Did you ever come across that since you became Chair prior to, that it was actually in place, or was it never in place or just not followed? I know I am putting you in a position, because I know that you may not have been back there in 2005 and 2006.

MR. PIKE: Yes.

I think, Mr. Joyce, I would have to answer by saying that it was in place and not followed, because the requirement within government is not new, it was always there. As such, as a Crown corporation, the staff at the time would have been required to follow that procedure.

I think where they got sidetracked is that oftentimes they felt, through their own experience, when they were looking for certain services, they felt that they knew they just were not going to get three quotes. They knew who would come to the table and after a while that is the way they went. I am not making excuses for them, because if you look at the proper procedure, if you cannot get three quotes then you have to show what you have done and there is a process to follow. Not one that I am totally familiar with within government policy, but I do understand that it is there.

MR. JOYCE: Just on another note, how are the Marble Mountain condominiums doing? I notice now they generally report the occupancy rate is up 25 per cent, 27 per cent. Can you just comment on that?

MR. PIKE: Yes, I had some notes on the actual occupancy rate somewhere. I do know the occupancy rate over the years has not been really high. It has been 10 per cent, 12 per cent. One year it was 17 per cent and 19 per cent. Two years ago, I believe, it got up to 25 per cent. It dropped off again.

This past year, which is not covered by this, was probably the best year yet. I am going to say that it was somewhere in the range of 35 per cent. That was driven by some developments within Corner Brook. Being from Corner Brook, you will recall how they had a fire at Greenwood. That took all of those room nights off the system. The people who would have normally been using Greenwood of course expanded out into other areas. The Marble condominiums picked up some of that business.

Interestingly enough, some of the people who stayed there just did not realize they could actually stay there. I think they thought that they were indeed condominiums, privately owned condominiums. So that may result in some repeat business.

Just my local knowledge for this coming season, we are probably not going to sustain that level of occupancy rate because the Greenwood is back on the market again, all refurbished. I am sure as you would be aware the hotel in Deer Lake that has been under construction for a number of years now is now open. There are a lot of rooms that are available that were not available this time last year. All of that has an impact on it.

While the villa is perfectly located for the winter tourism and the skiing, it is not perfectly located, the way it is right now, for someone who is in town doing business. Everything they do, they have to drive. You cannot walk downtown Corner Brook, you cannot walk to a restaurant, and you cannot go out and have a beer and walk back. I am sure all of that has an impact.

I think going forward it is one of the things with our new marketing thinking that it is something we should be promoting more than it has been promoted in the past. I think there is some potential there to increase it. That being said, the villa is a nice plus line on our financial statements. It is a positive thing, but at the same time it has been around now since 1998 or 1999.

MR. JOYCE: 1999.

MR. PIKE: 1999, and it is probably now to the point where it needs some refurbishment. Some of the monies that we take in now, we will be reinvesting in it for the long-term and try and get it back up to speed. Otherwise, you are going to be competing with new, fresh hotel rooms with older furniture and a little bit dilapidated rooms.

CHAIR: Thank you, Mr. Joyce.

Does the government member wish to ask a question?

MR. BRAZIL: Thank you, Mr. Chair.

At this point, I really do not have a lot more to ask. I am very pleased at the fact, as my colleague noted, that you have acknowledged the Auditor General's report being a benefit to your organization, being optic from an outside visionary to be able to look at how you address some of your concerns and some of your issues.

I have been very much informed here, particularly around your operational policies and how you want to move forward, some of the fiscal accountabilities and some of the plans for future economic viability. While, again, the Auditor General did outline some major concerns, the whole Committee agreed and that is why you were asked to come forward as a witness. Your explanations, your outline, and the process you have put in place reassures me that if things do fall in place the way that you plan, Marble Mountain will become more viable and will address some of the concerns. I would hope the next Auditor General's report will attest to that and the compliancy will be up.

As my colleague from the Bay of Islands mentioned, I did look at and I do see the condominiums as a major asset for the organization out there. Has there been any thought given – I know you just answered about the occupancy rates and I understand there are struggles around that, particularly when the market is where it is.

Are there any potential sales? Has that been looked at since the original – the original process was to build and sell so many of them and move from there. I know that things have changed from there. The plan was around the European market and all that has sort of bottomed out. Have you discussed that? Will that be discussed down the road? I look at that from being able to accumulate some additional revenues to address some of your shortfalls, or the debt load, or improve the day-to-day operations.

MR. PIKE: The short answer is yes, it will be discussed. We have had some discussion on it at this point. Before those units were on the market for private sale and I do not think there was any uptake on them at all. There is a lot more available out there right now. The timing today to put them on the market might not be in the best interest of gaining the best result.

Before I go further, the other thing we look at, as I just mentioned, right now it is one of the more positive lines on our financial statements. It brings us in more today than the interest on the line of credit, even though that hits us on the operating line. Had it been the other way around, then maybe we would say: Well, let's just shake those and get rid of this. At the end of the day, our operating would be better off.

We have a number of subcommittees set up and we have a development committee set up. I do not want to get ahead of ourselves here, but I will say just to give you a little bit of an idea of where we see our vision going. We are exploring looking at base development and looking at trying to create a base development plan and strategy. We are looking very closely at the success of some other ski hills, whether it is things like Tremblant or any of those where you go out and you actually have that sort of village around the hill.

We will not get to the point of that, but is there room out there for some private investment, or some private homes – or not necessarily homes, but private condominiums for a rental pool? Once you bring that in, can you get some restaurants there? Can you bring some other revenue generators that bring people to the area to bring in its own little resort or its own little community?

We will be exploring a lot of that. Once we start looking at that, then one of the things that I think should be explored at that time is whether the timing is then right to look at putting the villas up for sale.

MR. BRAZIL: Perfect.

Mr. Chair, I am quite content with the answers I have gotten. My colleagues have asked some very poignant questions and we have gotten some honest, straightforward, and visionary answers. I am, at this point, quite content to be complete in my asking of questions.

CHAIR: Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Pike.

Since we are on the topic of the condos that are there, strictly looking from an accounting perspective of the revenues and expenses, to me you are saying it is one of your more profitable lines and it is reporting a net profit in 2011 at $135,437 on page 339.

Is that just direct revenue and direct expenses? This does not take into account the grant to build, the repayment of the long-term debt, and things like that. It is just direct revenue and direct expenses. If you look at it in the long-term, your condos are most likely losing money.

MR. PIKE: Well, if you had to go build them yourself with your own money or finance them yourself, it would make a big difference to that bottom line.

MR. MITCHELMORE: Right.

MR. PIKE: For Marble today, it is a revenue generator.

MR. MITCHELMORE: It is only because of the grant, the subsidy from the government to build them, that you do not have to pay for them –

MR. PIKE: Most certainly.

MR. MITCHELMORE: Right.

What I would like to see, or maybe an option, is that you might look at selling it to a private investor to extend on the development, if possible, to get to fifty units because the Province has a Resort Property Tax Credit of 45 per cent. That would be an incentive to be able to sell these condos. If you have thirty-one of them and you are able to sell them at $150,000 or $180,000, given the market, you could generate millions of dollars in revenue and pay off some of this operating debt.

I ask: Is something being done to pursue this option? You had mentioned earlier to my colleague, Mr. Parsons, when he had talked about the developments and the economics of the area. You talked about all the other condos and the other hotels in the area. I would have to say the other condos and hotels would have to be above 25 per cent occupancy or they would all be out of business. This is not a net revenue generator for the taxpayer, and I would seriously look at trying to sell the condos.

Is that being done?

MR. PIKE: I think the original intent when they were put there is that they would be sold, but there was no uptake at that time. I can assure you there is nobody knocking on the door trying to buy that building for any price, even to steal it, to my knowledge.

MR. MITCHELMORE: Since that time, though, we have also seen the Humber Valley Resort basically close up shop in terms of what it was doing in terms of timeshares and things like that. There may be an opportunity now to look at that.

What I am saying is that thirty-one units are not big enough. It needs to be at fifty units to take advantage of the direct tax benefit of purchasing the property at a 45 per cent discount. That is something that might need to be explored in a public-private partnership to look at selling them so you can get in a better financial position. That is my suggestion.

MR. PIKE: Now, I am not really familiar with that fifty units, you may be more so, but my thinking is that is for new units coming on the market. The whole incentive is to create additional rooms or units for tourism. I do not think the existing thirty or thirty-two would count in that formula.

MR. MITCHELMORE: I do think you need to sell those units because it is costing the taxpayer too much money to maintain them.

I would like to ask you about the number of evident loose tracking records and the number of times you have contravened the Public Tender Act. I am wondering about this exclusive sole-sourced contract you have with the maintenance supplier. The Auditor General's report said this person received $3,164 while on vacation and unable to perform the duties of the contract.

This needs an explanation for me, Mr. Chair.

MR. PIKE: The payment that the Auditor General referred to comes from the fact that there were no weekly invoices put in to substantiate the payments. The payments were made based on the time frames and the work that needed to be done. The staff at the time just carried on with their normal payment schedule knowing that the contractor was on vacation, but knowing the contractor would indeed make that up at the end.

I do not think it was a case where the contractor was paid an additional $3,000 or whatever the number was more than he should have received. It is just that technically, had things been done by the book, during that week there would be no payment and the payment would have been made for the week at the end of the period.

MR. MITCHELMORE: So this exclusive contract that is provided that did not go through the Public Tender Act, this person is receiving $3,164 weekly for the work being done for a total of thirty-two weeks? Is that the contract?

MR. PIKE: The way that it is, the contract is per season, but then the way that it gets paid, it gets paid out by the week. He does not get a cheque for the full amount.

MR. MITCHELMORE: So what is the total amount of the contract annually?

MR. PIKE: I do not know the exact – if you did the calculation, but I am thinking that it is somewhere in the range of either $109,000 or $112,000.

MR. MITCHELMORE: Okay.

That is the same no matter if there are sixteen weeks, thirty-two weeks, thirty-seven or thirty-nine, or in those additional weeks – because Mr. Joyce had pointed out that the original was sixteen weeks, it was extended to thirty-two weeks, and in the Auditor General's report they had noted that there were two instances where they were paid seven additional weeks and nine additional weeks beyond that amount.

MR. PIKE: That amount is for what they deem to be a normal season now, which I am thinking are thirty-two weeks. Then, outside of that, it could be because of mechanical issues that have to be dealt with after the fact that they are trying to get done at the end of a season or at the beginning of a season. Then, it is in addition to the normal time frame, and that gets paid.

Or, as I mentioned last year, when I became Chair, it was around the same time that the contract would have been expired and I had requested that the operations manager stay on for a few more weeks because we needed to really get a handle on each and every piece of the infrastructure and create a ten-year strategy that I could work with government on, as to this is what I felt needed to be done.

MR. MITCHELMORE: So this contract is now expired?

MR. PIKE: Pardon me?

MR. MITCHELMORE: The contact – the service agreement has expired?

MR. PIKE: No, I think it expires in 2014, if I am not mistaken.

MR. MITCHELMORE: So do you plan at that time to go to public tender?

MR. PIKE: That is correct.

MR. MITCHELMORE: Okay.

Coming from someone who had dealt with controls in terms of business, I am wondering why you would pay a supplier who fails to provide invoices for work. If the contract is set at $109,000 annually, it is not broken down in a weekly rate that they get paid this much per week, it is based on the work, is from what I am gathering from you. It is based on what they supply. So, how are you paying them for the work done? Is it a weekly set rate? No matter if they do no work or lots of work or –

MR. PIKE: No, the contract is in place to manage the outside operations for a particular point in time. That is how the dollar amount gets set. Now, what is required and is brought forward in the Auditor General's report is that the contractor is supposed to be submitting weekly invoices for payment.

MR. MITCHELMORE: Okay.

MR. PIKE: Of course, that was not happening. Again, that is just one of those paper trail things that had either – and I do not know if it had ever been in place or it had been in place and it just became complacent, but the weekly amount is basically taking the contract, dividing it by the number of weeks within that contract, and that is how you get paid. So, they did not give them any monies – they did not give them 50 per cent upfront, or he did not have to work twelve weeks and then he would get 30 per cent of it, that kind of thing; he was paid on the week, the same as a payroll type thing.

MR. MITCHELMORE: So, when the contract was extended for the seven additional weeks in the Auditor General's report, this person was paid an additional $3,164 per week?

MR. PIKE: That would be my understanding of it, yes.

MR. MITCHELMORE: Okay.

There is a –

CHAIR: Mr. Mitchelmore, thank you.

I will go to a government member now.

MR. MITCHELMORE: Sure.

MR. S. COLLINS: Just to go back to marketing – we had discussed it in the last round of questioning there – currently you mentioned you are spending $200,000 annually, and you went on to say you are looking at social media now. We all recognize that social media is potentially far cheaper, or far less expensive I will say than traditional media.

I am wondering: Would you keep your budget of $200,000 constant or is that something that you could realize some savings there if you were to use Twitter, Facebook, those types of things? I am looking, even if you cut that back by half, you would be realizing a savings of $100,000, which given your debt servicing and whatnot, that money could be well used, I am assuming.

MR. PIKE: Over time that may indeed be the case, but I think right now there is so much to be done, and the whole social media piece is part of the overall strategy. It is something that we are seeing a lot of uptake on because if you look at year over year, you are increasing with your blog and certainly with Facebook you are seeing more likes or more hits, whatever you want to refer to it, but that is only a certain component. We still have a lot to do on our marketing strategy, trying to get out to those outside markets – or even the local market.

I will give you an example. One of the issues that I think we have to address is that I talked earlier about how you have a bad snow year the year before last so then it will affect last year, or the last year's snow will affect people's mindset on the upcoming season. In recent years, our outside staff have done a fantastic job of creating something out of nothing – and I also talked about how we are planning to invest in new snow-making technology, so we will even be able to do more.

The difficulty we have is, when we have a good product at Marble Mountain, our focus is trying to get potential customers on the East Coast to understand we have good snow conditions. I am from the East Coast and when I leave my driveway – and I love it when there is no snow on the East Coast because I do not have to shovel it and I do not have to be worried about it when I am gone; I spend a lot of time on the West Coast in the winter.

Likewise if people are not shovelling snow in their driveways in Corner Brook, they do not go up skiing. It is a mentality that we have to get around. The ski conditions are absolutely fantastic, and then you get somebody to come up. I am out there skiing and I am out from St. John's. I am looking around saying: I do not see a lot of people here from Corner Brook who I know normally ski. Someone will come up and say: I did not realize it was so good up here.

We have to re-engage the immediate local market. Then we have to focus on that two-hour drive market. We have to focus on the Avalon Peninsula where the bulk of the population is. We are taking it piece by piece because you cannot do everything and we have to balance the dollars we have with what we need to do. Then we have the Halifax market. Then we have other markets we can look at.

There may be a point in time that if we find we get successful, then you are not going to spend marketing dollars for the sake of spending marketing dollars. It is always an evolving strategy. Will we always spend $200,000? Mr. Chair, $200,000 is not very much money when it comes to a marketing strategy. In my own business I spend a lot more than that, probably on The Telegram alone or on NTV alone. We are really working with a very limited budget, but we are trying to maximize that.

Social media is one of the things that we are trying to grow and trying to grow because we know we can hit a certain demographic with social media. You are certainly not going to reach my age with social media. I am not on Facebook. I have no plans on getting there in the near future.

MR. S. COLLINS: I hear you. Fair enough.

I was happy with what was brought up by a couple of my colleagues previously with regard to the condominiums. Even myself, I am from Glovertown and I go to Corner Brook – I would not say quite often – a few times throughout the year. I am not really in the mindset – when I go to Corner Brook, if I go to look at accommodations, I do not look to Humber Valley.

I think it is something lacking in the marketing that lets people know that these are available. I am kind of on a different page, I guess, than my colleague, Mr. Mitchelmore, because when I look at the figures here even when you are operating at 17 per cent occupancy rate, you are still at $135,000 in the black. I am of the mindset to keep these. It is an asset. It is something we can build on, certainly, but to sell them off in a fire sale, I do not think would prove beneficial. I think it is a great asset.

Something definitely needs to be done on the marketing side of it because you just have so much potential there, I think, that has been untapped. I think in the last year you mentioned because of a hotel in town shutting down that has pushed people that way. Maybe that is going to build on next year's sales. Anyhow, that is where I am with that.

I have just one other question with regard to cellphone usage. How many cellphones currently are issued throughout your corporation? Are you able to put a number to that?

MR. PIKE: I do not know. If I was to guess, and this would only be a guess, I would say probably in the twenty to twenty-five range.

MR. S. COLLINS: Okay.

My only thing with that is how you justify that use. Because I am just trying to, in my own mind, think of the operations on a ski hill. I picture people using handheld radios to communicate back and forth. I am just wondering: Are the cellphones used for offsite? I am not intimately familiar with the operations of a ski hill, but I am just wondering is it justifiable to have twenty-plus cellphones in an operation such as this, and is it something that is needed, or is it something that you could go to like a handheld radio. Again, I know that may be quite archaic.

MR. PIKE: The twenty-five is only a guess, as I said.

MR. S. COLLINS: Certainly.

MR. PIKE: Just one second now, I might be able to tell you.

MR. S. COLLINS: Okay.

MR. PIKE: We have fourteen.

MR. S. COLLINS: Fourteen is better than twenty-plus. That is fantastic, yes.

MR. PIKE: We do have a radio system, but it is mainly for the ski patrollers.

MR. S. COLLINS: Okay.

MR. PIKE: It is not something that is used for the normal communication because it is for emergency response, the condition of the hill, knowing where people are and communicating when they are doing their morning sweeps, their evenings sweeps, is the hill in good shape, if it is not, if we have a problem, where we have to send somebody to get it fixed before the runs actually open. Then, at the end of the day, making sure that there is nobody on the hill, and then between opening and closing if there is anybody hurt, injured or lost, you have immediate response.

MR. S. COLLINS: Fair enough.

Those bills at the end of each month, would that be something where you would give it back to the employee who owned the cellphone and ask them to go through it to see what personal calls would be on it. Is that is something that is monitored to make sure that it is not abused?

MR. PIKE: Right now the initial response is for the general manager or the finance manager to go through each of them. Because, some of them, you would not even go through that exercise. It could be just the basic charge and no additional charges, just your local calls. Anything outside of that, it is reviewed and it is questioned. Those approving it have to be satisfied that it is legitimate Marble use.

MR. S. COLLINS: Okay.

I guess the same train of thought would be applied to the credit cards that are issued amongst employees.

MR. PIKE: Most definitely.

MR. S. COLLINS: The same checks and balances would be in place, I assume.

MR. PIKE: Yes, certainly on a go-forward basis.

MR. S. COLLINS: Okay, perfect.

Thank you. That is everything.

CHAIR: Thank you.

Mr. Joyce, do you have questions?

MR. JOYCE: I just had two more things for Mr. Pike.

In one of the highlights that the Auditor General put in, "The payroll data system used at the Corporation is inadequate to record overtime separately from regular hours." That was a bit of confusion about overtime. Is there a new data system put in place?

MR. PIKE: There will be a new financial system I mentioned that we are trying to get in this fall. In the meantime, while we do not have a process of tracking the overtime for approval after the fact, the way that the overtime gets approved at Marble, it is approved in advance, and that has been the procedure. Overtime gets scheduled in advance of it occurring. It is not something that overtime is incurred, okay was it right or wrong. The overtime is approved before it happens, and that has been the practice. It is just that there is no paper trail to support it.

MR. JOYCE: Okay.

MR. PIKE: The financial process right now does not support it. As Chair, I have a lot of questions that I would be asking. They are not easily answered because the information is hard to get. I was not surprised when I saw those comments. That is why part of our ten-year capital investment strategy in the upfront piece, in three years we have an IT component of that because we recognize we really need to get a better financial system. We are getting the basic finances this year then we are building on it in the next two years.

MR. JOYCE: I have two more questions and a comment and I will be finished.

I go back to the management of the hill. Will the board now put in place the time limit that they would need in the management of the hill? As in the AG report and I brought up earlier, it started out as fifteen weeks, sixteen, then it went up to thirty-two and then it was gone to forty. Will there be a time frame put in place for that? Because when you look at it, it is almost like: What do we want to do with it this year? How do we want to do it this year? Is there any way to put that in place?

In no way am I trying to not recognize the commitment of the company and the value to the hill, but it just looks like the deal was for sixteen weeks, then it went up to thirty-two weeks, then it was gone to forty last year and thirty-nine the year before. Is there any way to narrow that down so when the public looks at it or anybody sees it, here is what we are using –

MR. PIKE: I think the standard in the last number of years has been thirty-two, but one of the things you have to recognize as well is if you go back to the year 2000 to now, in the last twelve years, there has been, not just in the ski industry but in many industries, a tremendous amount of changes in regulations and inspections and required maintenance and things of that nature. So the whole safety and reliability is held to a much higher standard today than it was twelve years ago, especially in the ski industry because you are dealing with lifts of people. The standards have gotten very high and our expectations, and I am sure the expectations of government, is that we take it very seriously.

That is why now, as I mentioned earlier, you have a certain block of the ski season and then prior to the ski season, because of weather conditions, we are spending a lot of time making of snow and getting the hill in its place. Then you are back up from that and you are back into early fall when you are doing all of, I will call it, your non-destructive testing, so that every so many years every chair has to come off those lifts, the cables have to be checked, especially the detachable quad.

For those of you not familiar, the high-speed lift, as you are getting on those lifts or off those lifts, the chair is actually detached from the cable so that you get off when it is slow and the cable is still going around fast. Then when it clamps on away it shoots out again, and the same thing down at the lower end.

Well, if you ever had the opportunity to go up inside that housing and looking at all the checks and balances and the safety features built into that, it would blow your mind. Those have to be checked every year – not every year, I mean they are checked every week, but it has to go through a certain protocol every year. So there is a lot of maintenance and they call non-destructive testing where you have to take it all apart, you have to pressure it to the point that you do not break it but you have to make sure that it is working.

MR. JOYCE: My point to that is – and I understand what you are saying. I skied Marble many times, been up there; I understand. Just for openness and transparency, I would just suggest to the board to change the contract to meet those regulations, those thirty-two weeks instead of the original sixteen. Then it would be more open and more transparent of here is the length of the contract and the reasons why. Then you would not have this in the AG report. This is just a comment to the board and yourself to reflect on it.

MR. PIKE: I think you are absolutely right because I think what has happened is that the original contract in 2000, as we see, was five years, then it got extended and extended. Everything else changed and the length of time that we are being paid for within that block all changed. Again, as we saw with a number of things in this Auditor General's report the paper flow and the paper work, the paper trail, is not there to substantiate it. That was one of our weaknesses, and it is one lesson learned through this exercise.

MR. JOYCE: Mr. Chair, I am finished with questions right now unless something else comes up in the discussions.

Mr. Pike, thank you very much. I know it is always difficult to sit down with a group from Public Accounts, but it is even more difficult when you are speaking about happenings before you took over as Chair. Obviously, you came in well prepared. You spent a lot of time reviewing this to give us what information you can so we can make recommendations. Personally, thank you very much for your time that you put into it to help us.

MR. PIKE: You are welcome, sir, and we look forward to seeing you on the hill this winter.

MR. JOYCE: You will.

CHAIR: The next government member.

MR. CROSS: Just a very, probably, general short couple of comments and then a sort of a wrap up.

My interest here, I guess, in looking through the documents in review are more or less looking at the broad strokes, not taking the exact dollar and cent line items as such, just to know that what was, in essence, in looking at the Auditor General's report was a comedy of errors almost that could have led to a good tragedy.

Looking at the ineffectiveness and the inefficiency of all of that and seeing that most of the response from you today, as well as what is listed here, is that the MMDC will endeavour to review policies, create policies, develop and document procedures, these are the positive statements on a go-forward basis that we need to hear.

My question is not to you right now but to either Ms Russell or Mr. Janes. What we are hearing and on this go-forward basis, I guess, in the future we are going to look to a future Auditor General's report that would show that what we have seen or what we look at now is maybe a recipe for success; the proof is going to be in the pudding, in that when another report comes out.

What should we be looking for in the meantime that would make sure this would be open, transparent, user friendly, and not get us another report in the future like this? We hear the language and we respect the point of view of Mr. Pike. Again, he is answering for his predecessors and not for his actions. How would we look to the future to see that this does not repeat itself?

MS RUSSELL: Two years from the time that report was issued, we will follow up on the recommendations with the corporation to see where they are. We would hope that they would act on them. At that time, we should see improvements in their position.

I think their biggest challenge is going to be their debt. Most of the other recommendations are things they can address. You can develop policy and you can put procedures in place to monitor compliance with policy, but addressing the debt will be a little bit more difficult.

MR. CROSS: Well, thank you, Mr. Pike. I respect your answers. I am satisfied and content right now.

I will pass it back to some of my colleagues.

MR. MITCHELMORE: Thank you.

Mr. Pike, I have several other questions for you. Mr. Joyce had brought up safety and you had talked about it. One of the issues highlighted in the Auditor General's report was the lack of Certificates of Conduct on file of employees. Even in the response, you had noted that all new employees will have them on file, but it still did not give the assurance that all employees currently on staff have these Certificates of Conduct on file. Has this been done to date?

MR. PIKE: Yes, and I think the response indicated the more recent employees had them when the audit was done, but they were not paper. They found them afterwards on an electronic format. They also confirmed that, for the employee who looks after the child care centre, they did have that one. We indicated in the response, we would be getting them for the other staff that was required. Any staff that is on staff during this time of the year and are required are in place, to my understanding.

MR. MITCHELMORE: What type of timeline are you looking at to have them all accurately and on file, since they are not all there yet?

MR. PIKE: Our goal, as I mentioned several times this morning, on this Auditor report, is to have everything done and in place by the end of this year.

MR. MITCHELMORE: Okay.

MR. PIKE: The only exception, I would say, because it may take a lot of consultation and it is probably not as easy a task, and some of you are probably more familiar than I, and that is the review of the corporation's bylaws and so on. That is probably not one that we are going to have done by year-end because it is probably not one that is totally within our control and we have to do a lot of consultation.

MR. MITCHELMORE: Okay.

Mr. Pike, did someone drop the ball when they approved $21,900 in relocation for an employee without signing the return to service agreement, and will this happen again?

MR. PIKE: No, it will not happen again.

MR. MITCHELMORE: How long was this employee with the corporation, who received the $21,900 in relocation expense?

MR. PIKE: That employee has been around now, I think, two years. We are going into the third year.

MR. MITCHELMORE: What types of costs were absorbed in this $21,900 in relocation? It seems quite high to me for anyone to relocate. Where did they relocate from?

MR. PIKE: They located from the far side of British Columbia.

MR. MITCHELMORE: Okay.

MR. PIKE: We were fortunate enough in attracting somebody with some industry background, who was actually working in the Whistler area and we relocated them to Corner Brook.

MR. MITCHELMORE: So then are you willing to continue to repay relocation expense to this tune but you would ensure that you would have the return to service agreement?

MR. PIKE: That is correct, we would. It would be normal practice. In this case, I would have thought that there would have been one, but obviously there was not. Usually when you have a return to service agreement, it usually runs out within three years. In any that I have done in my own business, it has been three years. So we have two years behind us, one year to go, and I certainly have my fingers crossed that this guy does not leave in the next year.

MR. MITCHELMORE: How many corporate credit cards do you have?

MR. PIKE: I do not know, but my guess on that one would be in the range of about four or so.

MR. MITCHELMORE: Okay.

MR. PIKE: Because it would be your key managers.

MR. MITCHELMORE: Why do you have them, period? Is there an absolute need for corporate credit cards?

MR. PIKE: Well, in some cases they are out buying materials – certainly on the catering side. They are picking up things on short notice based on what they need. They have a wedding; they have a conference. You cannot always –

MR. MITCHELMORE: Could this not be invoiced or cheques paid or a direct deposit to the suppliers?

MR. PIKE: It all depends where you are getting things. You could have a supplier set up and what you need on that particular day or that particular week they do not have, you have to go somewhere else. So, I would suggest that it is just a matter of convenience.

MR. MITCHELMORE: Are you credit card balances paid off at the end of every month, or are you incurring interest on these cards?

MR. PIKE: I am not familiar with that level of detail.

MR. MITCHELMORE: Okay.

I just have some big concerns with the credit cards in general, because the Auditor General's report revealed double billing where employees had claimed hotels, they had claimed meals, they also put in a travel claim then it was not cross listed. So, in the essence of openness and transparency, I think it would be a wise decision to get rid of the corporate credit cards.

MR. PIKE: Well, Mr. Mitchelmore, I think you have to be careful that you do not throw out the baby with the bath water. We would read the Auditor's report as it is, it was over a three-year period, you look at the issues that are there. For the most part, in some cases, there was no documentation. There were several errors over that time period. My approach to that would be is that we put processes in place to make sure that things are working correctly, and not that we take things away that are going to make it more inefficient for us to operate our operations.

MR. MITCHELMORE: There were instances where funds were paid to people without providing official receipts. If they are putting this on their credit card, they can contact the credit card company to get a copy of the receipt so that it is on the file and that it can be proven that those claims were supplied.

MR. PIKE: Yes, but obviously the individual approving felt satisfied that it was a legit. In my day-to-day business, if I have somebody working with me – and I have many – if somebody came and I was about to an expense report, they did not have a receipt for an expenditure but we talked about it and I was satisfied that it was a legitimate expense, am I going to not approve that and hold up the process and have them take an hour or a couple of hours tracking down – I have to look at the productivity and the value, but I also have to look at, am I satisfied with the response that I am getting when I raise the question.

MR. MITCHELMORE: I am questioning your process right now, and I am not making that as clear as I could. Because if an employee of the corporation submits a claim before their corporate credit card expense comes in to show these things that are going to be paid for, is the protocol in place so that you are not ensuring that double billing is occurring again and again and again.

MR. PIKE: What I do, as Chair, is, I look back to learn but I look forward to take action.

MR. MITCHELMORE: Right.

MR. PIKE: I look at this report, it was a point in time, it has raised some issues and as I said earlier there is nothing in this report that we as a board disagree with. We accept the report. We are putting processes in place and policies in place to ensure that everything gets done to a standard that it needs to be. To be quite honest with you, I look forward to two years' time, probably closer to a year now, when the Auditor General's office comes back because I will be looking for a clean bill of health.

MR. MITCHELMORE: Right.

Have any of the funds that were double billed been recouped from the employees that were paid twice?

MR. PIKE: I do not know the answer to that.

MR. MITCHELMORE: The financial statements or the comptroller would be able to confirm was there any action, was there requests made to recoup funds that were overpaid. The Auditor General's report states, in many instances, of cases where there were hundreds of dollars of statutory holidays overpaid, cases where there was double billing, and there are other instances in the report.

I am wondering, as Chair, if your board has discussed pursuing and trying to get money back from some of these past employees for overpayments, who are not in compliance?

MR. PIKE: I think if you look at the dollars involved – you say hundreds of dollars and probably collectively yes, it may be hundreds of dollars. If you are talking past employees and you are going and trying to recoup a hundred or a couple of hundred dollars there or an overpayment of $50 there, you really have to step back and say at what point do you cut your losses and say okay, it is what it is, we move forward. In some cases, it would cost you more to try to go back to get it than what you are going to get.

MR. MITCHELMORE: Okay.

I would like to ask yourself, as the Chair of the board, who is responsible for all of the untendered goods and services that your corporation is pursuing? Is it the general manager or is it the board itself, as to how you comply with the current Public Tender Act?

MR. PIKE: When you say the non-tendered services, so in the past –could you give me an example?

MR. MITCHELMORE: Well, in the past, there was $40,000 plus HST that went to an affiliate company under the same contractor that has the supply agreement in 2006-2007 that did not seem to follow the act. Who makes those decisions, and what controls have been put into place to ensure that this does not happen again?

MR. PIKE: Well, those decisions would have been made by the general manager. They certainly would have been in consultation with the Chair, if not the full board. So, there are two parts to the question, but in the past, for those services, I think everyone involved was very satisfied that the price that they were getting for the services that were required, they felt, was lower than anything they were going to get had they gone to market, just with their local knowledge.

MR. MITCHELMORE: Now, the tube park is no longer operating, is it?

MR. PIKE: Pardon me?

MR. MITCHELMORE: Is the tube park still operating under the Marble Mountain Development Corporation?

CHAIR: Mr. Mitchelmore, if you are going to go to another subject, then I would move on to a government member.

MR. MITCHELMORE: Sure.

MR. K. PARSONS: Thank you very much.

I just want to conclude with one thing. I just want to ask the Deputy Auditor General, when you look at the Auditor General's report and the compliance with their responses, how do you feel the responses were from Marble Mountain Corporation to your report?

MS RUSSELL: We would view the response that we received to the initial report to be a positive response. They indicated in all instances that they were going to take action on the recommendations that we made. Again, when we follow up in a year or so now, we will get documentation from them to demonstrate whether or not that has occurred – but from all indications in the response they provided, that is their intent.

MR. K. PARSONS: Okay, good.

Thank you very much.

To you, Mr. Pike, I would like to acknowledge again, like Mr. Joyce did, it is a hard role to play that you did here today, and your knowledge and information you gave us was excellent. Again, not being the Chairperson, a lot of times things were happening at the corporation. So, again this morning it seems like it is a very positive thing that we are hearing her today, and I am very pleased and confident actually that on a go-forward basis we should see good results with Marble Mountain Corporation.

I thank you for coming here this morning, as well as I thank the members of the Auditor General's office who are here this morning also.

That is it for me.

CHAIR: Mr. Joyce, if you do not have any more questions right now, I will go back to Mr. Mitchelmore.

MR. JOYCE: No, not right now. I may come back later.

MR. MITCHELMORE: On Figure 2 on page 332 under Marble Mountain Development Corporation, their Financial Position, I would like to ask: For the year ended April 30, 2011, could you explain the $23,130,703 for the contributed surplus?

That is under the total assets and liabilities.

CHAIR: Mr. Pike, I do not know if you have a background in accounting. If you feel it is beyond your scope, the Auditor General's staff might be able to comment on it. If you do have the answer, then please go ahead and answer.

MR. PIKE: I will attempt, and I will look to my right to my Auditor General friends to see if I am anywhere close.

The contributed surplus piece does not add up to me in my normal business day. I am wondering whether or not it is the depreciation of some of the assets.

MS RUSSELL: No, I would have to see the statements to know for certain, but I think it is probably the accumulation of contributions, probably of capital from government, like your condominiums and all of that stuff.

MR. PIKE: If you look in the top line you have your capital assets of $15,700,000. If you look at the value of the assets that are on site, which are $35 million-plus, and if you add the two of them together it will probably put you up there as to where it would be. That is what makes me think that it may be just your depreciation line, only under different terminology.

MR. MITCHELMORE: Could you explain the deferred government assistance of almost $6 million, in the same table under the liabilities?

MS RUSSELL: I would assume that is deferred revenue where monies have been received from, more than likely, government for a particular purpose and that purpose has not occurred yet. So maybe something is to be purchased or something is to be constructed, along those lines.

MR. MITCHELMORE: Right.

CHAIR: If those answers turn out not to be correct, can we have a written verification to the Committee to answer the question? Because I do not know how many of us are accountants here. I know some of us are, but it may require a more precise answer so we will not inadvertently miss that.

MR. MITCHELMORE: That is what I am getting at. I would like more detail or notes as to how these numbers are changing from year to year and what is contributing to the nearly $100,000 increase for deferred government assistance to that detail. Based on the figures that I am seeing, this is a heavily, heavily subsidized operation on the taxpayer. That is why I suggested with the looking at the condos as well that there could be options to actually put us in a better financial position.

I want to go back for a couple of minutes to the $28,971 that was purchased untendered under the supplier contract. It included things like the flood lights, but one of the alarming things for me was the $3,164 for an ATV rental. Can you provide me with the length of time that this ATV was rented – it seems like a high cost to rent – and what the associated purpose was?

MR. PIKE: I cannot tell you the exact timeline, but the way that these numbers are brought together it is the total amount from the first of May in 2010 to October 2012 –

MS RUSSELL: 2011.

MR. PIKE: 2011 rather, sorry.

MR. MITCHELMORE: Okay.

I guess it just puts into question: Is that a reasonable amount to pay? It depends on if it was maybe a few months that it was rented or if it was a week or if it was a day, it could be a reasonable figure to pay going untendered for that thing depending on the length of time and the purpose and if it had a driver or whatnot associated with it. As of right now, we do not know if that $3,000 was just for an hour use and given to someone based on that. We do not know if we are getting the best value for taxpayers' dollars.

In another instance they talked about the two contracts, $36,829 untendered or without quotes to two companies affiliated with the contractor of the exclusive service. Do you see a conflict there? Are you aggressively working towards adopting a policy to show that you are really going to follow the Public Tender Act?

MR. PIKE: No, I do not see a conflict because it is two totally different works at two different times of the year. Yes, I feel very confident that on a go-forward basis we will be following the tendering process.

MR. MITCHELMORE: Okay. Because that is over the amount stipulated. It did not get quotes. It did not get a tender. Despite the person who was maybe the best price and the most capable person of doing the work, the perception of it certainly raises questions because the same contractor also was being rented the $40,000 plus HST for the tube park back in 2006 and 2007.

I want to question why your corporation did not claim back HST in instances, because most non-profit corporations need the money. They do apply for their rebates of the portion of the HST that they are eligible for. Why wasn't your corporation doing that?

MR. PIKE: Are you referring to a specific situation here?

MR. MITCHELMORE: Yes, there was one highlighted in the report. I could find that if you give me a moment.

I think it was under one of the allowances. It may have been the tool allowance where things were not reported under the T4 and also the HST portion was not claimed. I do not have the page number.

MS RUSSELL: It is page 352 (inaudible).

CHAIR: Page 352; two-thirds, way down at the bottom.

MR. MITCHELMORE: Yes, the corporation was not receiving HST paid on incidentals, meals, taxis, parking fees, conference fees, and as a result was not obtaining rebate on these costs – page 352.

Any organization that I worked for on a travel claim that they had set up, the HST portion was automatically being calculated just using a basic Excel spreadsheet. It did not have to incur a high cost to purchase the software, and the savings are quite significant to most non-profit organizations. It seems absurd that Marble Mountain Development Corporation was not claiming HST, just letting this go.

MR. PIKE: I would suggest that would have been an oversight by the employee responsible for it at the time.

MR. MITCHELMORE: So, do you have a new template then? Since this report came out, has there been a new template? Can you provide it to us to show that this change has been implemented, or has there been no action on it? Because there would have been travel associated, including yours today.

MR. PIKE: Well, they are not going to get much back on my travel today, because I live here.

I can only look at going forward, because if you are going back – and this is sort of water under the bridge, the way I look at it, we look back and we learn and we plan for the future. So right now we have a new financial manager in place. One who at least I feel is competent, qualified. One who has also gone through this audit process, has gone through this report, and has gone through this audit response. One who is very familiar with the issues, and very familiar with what needs to be done. First of all, the proper thing to do going forward, from a financial basis, but also knowing where we are coming from, the scrutiny and the detail that has to be done going forward – one, to do the right thing, and the other one, to be able to show we are doing the right thing, knowing that we have another audit not too far in our future that is going to be coming in expecting us to be able to prove that we are doing the right thing.

Taking all that into account, yes, I feel very comfortable that this individual now knows what to do and is doing it. As far as documentation, it is just basic accounting, basic finance, and if you have the right people in the job, it is going to happen.

MR. MITCHELMORE: I am happy to hear that you feel so confident in the staff that you do have.

Mr. Chair, do you want to interject?

CHAIR: No, not to interject, but in eleven or twelve minutes it is time for lunch. We would resume with the government member in an hour.

MR. MITCHELMORE: Sure.

CHAIR: Let's say at 1:40 p.m. we will come back. We are on summer hours, so we will not be late today. I think we are making pretty good progress anyway.

CHAIR: Order, please!

We are ready to resume, if the Committee is ready.

I just spoke with the Auditor General's staff and over lunch they conferred and looked at the financial statements on that question to do with contributed surplus. I ask them if they would like to take a minute now and clear it up, rather than have to write letters back and forth.

MR. JANES: I looked this up over lunch; I wanted to make sure before I spoke this morning, in that basically they get the capital funding in the deferred government assistance. Any capital grants they get would go into there. As the related assets that they purchased from that is amortized, they amortize that deferred government assistance at the same time. Once it is amortized, it goes into the contributed surplus, so basically your contributed surplus is your amortized capital assets. That is all. It is basically like an investment in capital assets, that type of thing.

CHAIR: I take it that is the answer.

Do you require any more clarification? If not, I will go on to a government member next.

MR. BRAZIL: Thank you, Mr. Chair.

Again, I just want to reiterate my last statement. I am pleased with the responses that we have received and I do thank Mr. Pike for very professionally putting together his answers but also in preparing us in advance so that we would have a fair idea of exactly where the corporation was heading and that it was heading in a positive manner. I am confident from that we can write, as a committee, a comprehensive report to present to the House of Assembly.

In a general context of what the Public Accounts Committee is set up to do, in a bigger picture, is make all corporations and all departments and any monies that are spent by government agencies or departments accountable to the taxpayers. I am confident from what you have presented that we are in a good light in reference to that.

We do look forward to – or I do particularly – future responses and see how they are being implemented. We may have some follow-up discussions. I look forward to the Auditor General, in a year, their report as to where you are.

I will say that it may be a little bit – I cannot say confusing, but changing your train of thought because, at times, I think my learned colleague in the Third Party sometimes might feel that this is an Estimates review where he is going line for line when it comes to dollar figures and that. The intent, as I see it, is to look at the bigger picture, to make sure some of the challenges that you guys faced, you found a way to address them and you put a plan in place that will move the organization forward and, if there are challenges, that the supports are out there, be it a line department or another agency that could support you guys. You have mentioned that. That you are not beyond going outside and finding supports that can in some way entice or enhance or guide to where you want to move forward.

On that note for myself and the government members here, we are pleased with the responses and we have no other further questions at this point.

CHAIR: Mr. Joyce.

MR. JOYCE: This has nothing to do with the person in front of us, but, Mr. Brazil, just to let you know –and I am sure Chris can pick up for himself – anything in this Auditor General's report, anybody is allowed to ask questions. I can assure you in the future if it is not Marble Mountain, if it line by line, if I have to go line by line to ensure that I get the proper information, I will be doing it. Your comments of do not know where people are going, I can assure you that as a Member of the Public Accounts if there is something in line by line that I want to ask, I will ask. If there is something in the Auditor General's report no matter how much, how little you may think it is, I will ask. I think it is unfair for you, as Vice-Chair, to criticize a member of the Public Accounts for asking questions which is in the Auditor General's report.

For the record, I think you should let members ask the questions as they see fit. This is supposed to be an open and very transparent Public Accounts and I do not think any member, no matter what side of the Legislature you sit on, if you are the government side, if you are in the Opposition or if you are in the NDP, I do not think anybody should be chastised for asking questions line by line, if they feel that is what needs to be done.

I would defend anybody who is on the Public Accounts, who wants to ask any question, to stay as long as they can, ask whatever they want, because this is open and accountable. As Vice-Chair, I think your comments are very inappropriate. I personally do not like them and I do not adhere to them. I will just be on the record that in the future I will not be listening to those comments. I will be asking any questions I want to ask.

CHAIR: We are here for questioning, but I understand members want to respond and they should be able to respond.

MR. BRAZIL: (Inaudible). I will reiterate in the tone of the Public Accounts that we stay around exactly what the intent was so we can get to the information necessary to be able to put together a professional report. That was my intent there. If you want to go line by line, that is fair enough, but it should be noted that at the end of the day the process will outline exactly what was in the best interest of being able to get the information.

The nickel and dime stuff, if that is the intent of how you want to proceed, it is fine. The government members will proceed on the bigger picture: How do we make sure accountability is acknowledged and how do we move the organization forward?

Mr. Chair, I will ask comments on that.

CHAIR: Mr. Mitchelmore, if you want to respond you may before we go into actual questioning, before we continue questioning. You certainly do not need to.

MR. MITCHELMORE: No, I will not be making any commentary to those comments. I am completely in compliance with my line of questioning. I will continue to ask questions as I see fit to Mr. Pike. Looking at the Auditor General's report, there are quite a number of instances that raised alarm bells. I still do not feel comfortable that all has been done to address these instances.

For example, you have not confirmed that you have made any movement on a severance policy. There have been several cases where people who had a significant amount of years of experience were paid less than others. There were people on a probationary period who received severance, who did not have to.

Has your board discussed severance since this Auditor General's finding and report?

MR. PIKE: Yes, we have.

MR. MITCHELMORE: Have you developed a policy?

MR. PIKE: As I indicated earlier when I made a statement on policies in general, severance being one of them – severance I believe is one of those that we needed to create a new policy on and that we did not have one. There were a number of policies in question. In some cases, there were policies we were not following. In some cases, there were policies that were outdated. In other cases, there were some policies we just do not have.

I indicated earlier we had struck a subcommittee of our board. That subcommittee had gone off with a list of all the policies we needed to revise, create, or look at otherwise, and have come back to the board with a draft – severance being one of them.

We have looked at it from a board – none of them are finalized, certainly not the severance one. We have given our feedback, we have posed some questions, and we have given some direction on those policies that the subcommittee has taken under advisement, gone back to do further work, and we are hoping by the time we have our next board meeting that we will have, what I will call, a draft that is very close to final. I would hope that they would all be final, but of course we will not know until we see them. Our goal is, as I indicated earlier today, to have all of these policies in place, finalized, before the end of this year.

MR. MITCHELMORE: Do you, as the Chair, and the committee then make those decisions? Do you have complete authority, or do you provide advice documents to the Department of Tourism and gauge their input as to what your policies are?

MR. PIKE: We would make those policies ourselves, as a board.

MR. MITCHELMORE: So there is no discussion with the department on this matter?

MR. PIKE: We may seek input from the board, we may seek input from other ski hills, and we may seek input from private business as to what appropriate policies may be. We go out in all different directions. We do not confine our input and our research in one particular area. Then, from that, with the expertise that we have on the board from different areas, some is government related, some is private industry, some is with the City of Corner Brook, the Town of Steady Brook, some with the tourism side of the business and myself, being from private business with a bit of an HR background, collectively we have our input and then we would sign off.

MR. MITCHELMORE: You had mentioned earlier that you were looking at – I have lost my train of thought on that question. On the leave – not on leave, sorry; it has come back. On the overtime issue, you had stated earlier in the morning session that overtime was requested in advance. Can you explain that, how somebody can know that they have to perform overtime duties and if that is a standard accepted principle with your corporation? Is that just management staff?

MR. PIKE: No, overtime is scheduled in advance. The manager responsible for the area would schedule the overtime. An example of scheduled overtime would be if you have an event in the evening, it could be a concert, we know that we are going to need bartenders for a certain period of time. Most of those would have worked in the daytime; they would be required to work overtime. We know that the cleaning staff, we would want them on the premise while the event was underway so that they stay ahead of cleaning up bottles and cans and everything else that they have to do.

Then when the event is over, if it is over at 1:00 a.m. or 1:30 a.m., we know that the staff will be there until 3:00 o'clock so that when they leave the facility is in reasonably good shape – especially if it is in the winter – so that when our skiers come in, in the morning, that the lodge is put back together and everything is ready to go. That would a case where overtime is approved in advance. So, we schedule them to work until 3:00 o'clock and that overtime is scheduled.

Another example would be in the outside operations, during snow-making. When we get the snow-making up and running, we run it twenty-four hours a day, because you have your pipes, obviously it is freezing time, you have water being pumped through metal pipes out to these snow-making heads and we schedule people in advance to work. It is not that they are just working overtime and then coming in and saying: Here is what I worked, now pay me. That is not the case. We do not have the financial system to track it right now, but it is not as disorganized as it might seem when you just read the report on its own.

MR. MITCHELMORE: How can we be assured then if you do not have a tracking system to know that the hours worked and the overtime hours match up? Is it just at the employee discretion?

MR. PIKE: No, it is up to the manager to be accountable for that and to know what his or her staff are doing, whether they are working, whether they have the work done that was assigned. In many cases, those managers are there for the majority of the time.

MR. MITCHELMORE: Right.

So is this the general manager that is involved in doing this?

MR. PIKE: No. If you have an event, you have your catering manager; the outside operations, snow-making and so on, then your outside operations manager is responsible for it and so on down the line.

MR. MITCHELMORE: Have you done an analysis, I guess, for cost-benefit savings looking at the overtime and looking at implementing the system that is needed? Because, obviously, if this is just done by paper or just by individual managers on a regular basis this could be taking up a significant amount of human resource time.

MR. PIKE: No, it does not take up too much time to track it because their time is scheduled. Time paid has to be approved. So, no matter what type of a system you have, you still have to have that process.

I think I mentioned earlier today that one of the things we are lacking is a good financial system. We recognize that. We have included that in our ten-year capital plan that we have presented to the department. This year, this current year that we are in now, some of our capital monies – we just do not get our capital grant. During the Budget process, we have to present to the department what we plan to use the monies for. Then it has to get approved by Cabinet. One of the things that were approved this year was the first phase of our IT upgrade. That will be the basic financial package.

MR. MITCHELMORE: The thirty-five boxes of documents that were destroyed, that did not comply with the data management act; to your knowledge, did any of that include financial data that was less than the seven-year period per recording data?

MR. PIKE: I cannot guarantee that is the case. My understanding of what that was is in the lodge, downstairs, there is a section out back where there was a lot of stuff that was stored there. It was old chairs, parts of beds, old parts of washers and dryers, and boxes of stuff from years gone by. I think the documents or the records that are being referred to, some of that stuff, when they tried to clear it up and clean it up, this was sort of old documents that have never been used, have never been touched, but I cannot guarantee that, no.

MR. MITCHELMORE: You do not know if they were shredded or properly disposed of?

MR. PIKE: No, I do not know, right now.

MR. MITCHELMORE: Okay.

CHAIR: If no other members have a question, you may keep going.

MR. MITCHELMORE: Sure, absolutely.

CHAIR: Do you want to keep going?

MR. MITCHELMORE: I have additional questions if there is no other –

CHAIR: Yes, please keep going.

MR. MITCHELMORE: Unless you have questions –

CHAIR: No, I will wait until all members have asked and then I will ask more supplementary questions and go back to members.

MR. MITCHELMORE: Thank you.

You had noted in your marketing budget that you hired someone dealing with social media. Is there a specific staff person dealing with social media?

MR. PIKE: No, I indicated that part of our marketing strategy had a social media component to it.

MR. MITCHELMORE: Right.

MR. PIKE: A lot of the new things that were set up would have been done through that contract and through that agency.

MR. MITCHELMORE: Okay.

MR. PIKE: Once it is set up, then somebody internally is able to maintain it fairly easily and effectively without too much effort.

MR. MITCHELMORE: So you have contracted for the Web site, the blog, the branding for your Twitter account, Facebook, and things like that under a certain company?

MR. PIKE: That is correct.

MR. MITCHELMORE: Right now, you have someone internally who is maintaining and updating it. Is it just one individual?

MR. PIKE: The contractor is still engaged. It is a three-year contract, I think it was, that we had let. They are still engaged and they are still working with us. On the day-to-day piece, the marketing administration person has overall responsibility for that. They can do it themselves or there are a number of staff members that they would have who would be trained to be able to update those sites and so on when necessary.

MR. MITCHELMORE: Was this a tendered contract, this three-year contract to do the design work and the support?

MR. PIKE: Yes, it certainly was. There was a competition of six marketing firms that were interviewed from St. John's, Central, Western, and as far away as Halifax.

MR. MITCHELMORE: Okay. That is great to hear, absolutely.

A lot of my other questions would be around the purchase orders not being issued and basic financial compliance. To date, you have stated that has not been addressed but it is being worked on. I am wondering if, at the end of the year, we could maybe get an update as a committee noting that these bookkeeping matters are up-to-date and in order, and you are in compliance to our committee.

Is that something you could provide?

MR. PIKE: Well, I can do better that. What I will tell you is that all of our policies are not finalized, but as far as the purchasing and following proper protocol as per government, that is in place. That is clarified. If the Auditor General were to go back and audit anything from the time this report was written until today, then he or she would find that things are in order.

MR. MITCHELMORE: Okay.

Have you written off any of the assets, the ones that were not even owned by your corporation such as the tube park? Can you confirm that your accountant – or that that has actually taken place because this would change the figures in terms of where you stand financially. That is an accounting error, to be recording assets that you do not own.

MR. PIKE: No, there are no assets that have come to the board and been written off since this report has been written.

MR. MITCHELMORE: So you would still have listed this tube park then, that is not under your ownership, in your financial records?

MR. PIKE: Well, it should not be for this year. It is my understanding that the tube park was a separate business and in a separate location that was owned by our external contactor and other people who went out of business and that equipment was sort of sitting to one side. A few years ago, in the wisdom of those who were there at the time, they thought it would be something that may work well and something that they could expand at Marble Mountain.

As far as I know, it was rented, and then it was set up. It was in place for a year, if not two years. Then at the end of the day it was felt that it just was not making them any money, when you take the amount of effort that it took and the staff that it took and the grooming that it took and everything else. So, yes, there was a cost analysis done, whether it was formal or informal and somebody made the decision that we are not going to continue to proceed down this way.

MR. MITCHELMORE: It is no doubt that Marble Mountain Development Corporation brings a huge economic driver to the Western region, but over the last three years you have lost $1.36 million on the ski operations and lost about 20 per cent of your actual ski lift. People who are actually using the site, it has declined about 20 per cent in the last three year. That is significant, given that the ski operation should be the core revenue generator.

Is something being done to bring greater revenue generation to your ski lift? Are you looking at other options? Because we have seen a number of private entities go up around it and thrive, yet the condos are not making money. Then you have a number of other things, like the zip line there, which I would ask as a supplementary to my questioning is: They have expanded three times, have you increased your rate to them as to what kind of revenue you are getting in terms of rent from this private company?

MR. PIKE: The contract they had was just renewed. I cannot confirm if it is signed today but it was under negotiation over the last couple of months. Yes, we have looked at the rate that they were paying and we have increased the rates accordingly, recognizing that they have more of a product to offer. All of that has been taken into account.

MR. MITCHELMORE: Okay.

Is there anything being done to look at creating revenue from your losing ski operation which is the core of your business? What is being considered to build on these revenues?

MR. PIKE: I mentioned earlier how the board is – we do have a sub-committee on development. We are doing a lot of exploratory work now. We are doing a lot of research and we are looking to, in the foreseeable future – well, I do not know about the foreseeable future, but in the future our vision is that we would create a development plan for the base of the mountain based on the design of other successful hills that are year-round events.

The challenge for us then, once we get to that point, because we will have to do a report, we will have to create a plan. That plan will be a mix of private – it will be mostly, if not all private investment, but we will have identified what it will take, whether it be restaurant, whether it will convenience, whether it will be sort of private condos that are there also for lease, whether it be another bar with a whole different atmosphere, based on the models that have worked in some of the more successful hills. That is our vision and that is the path we are trying to go down.

MR. MITCHELMORE: I certainly agree that you need to have that vision to expand the services and things like that. At the same time, the revenue streams that are coming from all of these private investments need to make sure that this, even though it is a non-profit, you should be able to make money off this ski hill and not be continuously dependent on a government subsidy of $400,000 and losing revenue and having deficits.

If all the profitable lines of business are going to private businesses all around you, then you might need to look at what you are doing and how you are going to create the revenue around your core operation as the ski lift and find the efficiencies there, and do that private-public partnership with the entities that already exist rather than continue operations off your core line of business that is losing you money.

MR. PIKE: Yes, there is no doubt, we are looking at a lot of different things, but we recognize the model that we have to grow our revenue. We will have to look at every possible way to reduce operating costs. At the same time, we have to take a long-term view and we have to ensure that we have a safe, reliable, and a very viable product.

There is a lot of infrastructure associated with Marble Mountain. We have to make sure it is maintained. I mentioned earlier today, we are creating a plan where we are trying to extend the useful life so that we do not have to replace some of those very expensive lifts. At the same time, we keep them maintained so that they are in really good shape, they are running right, they are reliable, and most importantly, that they are safe.

MR. MITCHELMORE: Okay. I certainly would like to see how we are going to see further efficiencies.

What do you see you need to cut to get the efficiencies at Marble Mountain?

MR. PIKE: Well, my challenge has been put out to each and every one of the managers to look at their individual operations and look at everything, every line, and every expense. Is there a way to improve productivity? Is there a way to reduce costs? Is there any wastage? Likewise, is there a way to spend money this year that is going to save money down the road? Build a case, bring it to us, and we will look at it as a board.

Sometimes you have to spend money to make money and sometimes you have to spend money to save money. Everything right now is up for review. We are trying to look at everything from every angle so we can try and run the most efficient business we can.

MR. MITCHELMORE: From the Auditor General's report, there was one year where the Province paid the subsidy quicker, which was then used to pay down the debt. That in turn would result in interest savings.

Is that something that is being considered or being pursued by the board?

MR. PIKE: When we receive any grants and so on, it is mostly associated with the whole Budget process of government.

Actually, in that particular year when the monies did come, I am not sure if it came that much earlier or whether the expenditures that they were being used for had not been occurred by the time of year-end. Any monies that come in like that, it temporarily goes in to reduce that debt. It does not go over in a different pot, and then if there is anything left over we put it in because that debt is there.

That is what happened in that case. That $800,000 came in, it went in there. So when the books were done, that is where it was sitting and that is the way it was reflected.

MR. MITCHELMORE: Excellent. That is positive to hear that that was done.

I could ask a number of other questions pertaining to around cost savings. I will not press this matter further right now. I will let any other member or the Chair ask questions.

I do feel you may want to, as other colleagues have put forward, look at: Is fourteen cellphones necessary based on the number of core staff that you operate on a full-time basis as a potential cost savings?

MR. PIKE: That would fall right under what I just explained, is that each and every manager is asked to look at every piece of their operation and look to identify things that are unnecessary that can reduce costs. That is the type of thing that I would expect to come forward.

MR. MITCHELMORE: Great.

Thank you, Mr. Pike.

MR. PIKE: You're welcome.

CHAIR: Mr. Pike, I have just a few questions. Actually, my colleagues on the committee I think have asked just about everything that could have been asked. It has been very extensive.

I am looking at the Auditor General's report on page 330. This goes back to a question Mr. Mitchelmore had when he referred to the tube park lift. Under Control over Capital Assets: Is there now a capital asset ledger?

MR. PIKE: You will have to bear with me, I am working from page 1 onwards; whereas the rest of you are working on I think, page 326 or 226 onwards. So I am trying to juggle.

Sorry, your question was again?

CHAIR: Control over Capital Assets, early in the AG report there was no capital asset ledger found. Is there now a capital asset ledger?

MR. PIKE: It is one of the ones that are not complete yet. It is on the list and it is – I should say it is not finalized and it is not populated but there will be one before the end of this fall.

CHAIR: Does that mean you do not yet know how many or what capital assets you have, or you know where they are and what they are they just have not been listed?

MR. PIKE: I think it is one of these things, like a lot of the stuff in this report, people know where things are, they know what we have, but we do not have the paper trail to show the documentation. There were several things in this report like that, that we did not have the proper paper trail. So that is one of those where we actually have to have the ledger. We have to have it populated and we also have to have a physical check and documentation and be able to show that we have what we say we have and that we have checked it every so often and have the documentation for it.

CHAIR: I understand that the capital asset ledger would also be used for depreciation of capital assets. You would identify that in your accounting process?

MR. PIKE: That would be correct.

CHAIR: Does this mean you will have either a change in your position – this is a follow-up to Mr. Mitchelmore's question that I did not really get the answer to.

Will this result in more of a loss or less of a loss when this is finalized? There seem to be assets that you have had for a long time that have never been written off or you may have assets there which may not have been recorded and you acquired them somehow.

MR. PIKE: It should not, but that being said, because of the lack of paper trail I cannot assure you that everything has been done correctly. So come this fall, it may very well be the case. There may be some reconciliation, but I would not anticipate, if there is, that there should be much to it.

CHAIR: It could go either way, plus or minus.

MR. PIKE: That is correct, exactly.

CHAIR: You may have some in there that is really obsolete and it should be written off, or you may have some in there that you did not record and now somebody bought it and it looks like it was not properly accounted for.

MR. PIKE: You are absolutely right.

CHAIR: In the lodge that has the thirty-one units and cost $3 million or thereabouts: Do you have any idea of what that would appraise at today?

MR. PIKE: No, I do not know what it would appraise at. The only thing I can do in my head is try and think: Well, if there are thirty-one units and you were building something today, what would it cost you? I suspect some of that would be in excess of $100,000 a unit. So you be up $3 million, probably $3.5 million or higher.

CHAIR: Okay.

So the $130,000-odd per year, which I took to be net rental revenue, even though with a low occupancy rate you still had a net rental revenue but that was because you were not servicing a mortgage.

MR. PIKE: That is correct.

CHAIR: Are you able to determine: What is the return on investment? If you attribute it to the capital, how well are we doing for that? Is it 2 per cent, 5 per cent or 10 per cent?

MR. PIKE: I do not have those numbers. If you just step back and look at the infrastructure and you look at what you are making, the return would be fairly low, it is safe to say.

CHAIR: Now, I understand your reason – they were not sold when they were intended to be sold because the market was soft, and it seems like we have gone up and gone back down again. The market has improved and maybe deteriorated for that type of product: the Deer Lake place and the Humber Valley Resort. So, has the corporation given any consideration to working with a time-share company and maybe see if some of these could be sold as time-share units, as some ski resorts do?

MR. PIKE: There has not been any discussion around it at the table since I have been on the board, no.

CHAIR: There might be a benefit if the Marble Mountain Corporation could recover a substantial amount of capital to apply to that debt that might be better than the net rental income that you are realizing. You may net out better than $130,000 or $140,000.

MR. PIKE: That is true. I mentioned earlier that initially when they tried to sell them, they did not – although they have not actively been trying to sell them of recent. The types of things that are going up in the local market these days are a little bit different than that particular product. Some of those units are fairly small compared to today's expectations, I suppose, when people are buying into those types of a condo.

In the meantime – and I believe I might have mentioned this before – although the corporation has not been actively marketing it, I am not aware that anybody has come knocking on the door even looking for a fire sale. My experience, living in this Province, in the business world, is if you have something that someone thinks that they are going to make a buck on, they will not be too shy in knocking on your door to see if they can get it. The first thing they will be doing is insulting you with a price, and then you will be working up. We have not been dealing with any insults at this stage.

CHAIR: From your business experience and your business background, do you see this corporation operating on a break-even basis with the $400,000 grant, and do you see operating on a break-even basis without the $400,000 grant?

MR. PIKE: I can definitely see it breaking even with the $400,000 grant. It would be my desire to have it breaking even without; I am not prepared to commit to that at this stage. Right now, I am trying to ensure that get it to a position under my watch that we are breaking even with the grant, and that we are not going further in debt.

So that is our primary goal. Once we get there and we do a lot of the things that we are doing –and hopefully through some marketing we can start to, as I say, try to build the revenues, cut the costs, and then see where things go from there, but at the same time continue investment in that infrastructure.

CHAIR: I suppose the ultimate question with any Crown corporation that provides a service of this nature is that if the government should decide at some point that it did not really want to be in the ski hill business, do you have an idea of how much this whole resort would sell for? If the Province decided to sell it and recover the capital, not have to worry about the grant, do you have any thought in mind what that would compare to or how much it might be?

MR. PIKE: Are you asking me how much I think you would get for it if you sold it, or how much do I think it is worth?

CHAIR: If you have an opinion, both numbers.

MR. PIKE: I certainly do not have an opinion on one. You have to look at the infrastructure that is there. If you look at that hill –and it is not the biggest in the country, it is not the best in the country, but I think it is the best in the country for its size. It has a lot to offer and there are a lot of people who come here from throughout the world, and certainly throughout Canada – not as many as we would like, but those who do come are very impressed with the product that we have, with the views and everything else.

The infrastructure that is there, when you take the land, when you take the monies that have gone into it over the years, the buildings, the lifts, and everything else, if you add up all the investments from whatever source, right back when from the volunteer sweat and everything that was put into it, I would think that if you had that hill today, you be up in $38 million to $40 million range to put it there.

If you look at the book value on it, well, of course we are carrying assets, I think, in the range of between $15,000 and $16,000.

CHAIR: Million.

MR. PIKE: Or million, sorry. Thank you.

CHAIR: Depreciated book value.

MR. PIKE: Yes.

If you were to sell it, what would you get for it? I would not hazard to guess to answer that question.

CHAIR: You have been through the units, so you know what kind of condition they are in – the thirty-one units.

MR. PIKE: The thirty-one units – I have been through some of them, yes.

CHAIR: What sort of deferred maintenance is there, in your view? Are they pretty good – they are a dozen years' old. They have been used.

MR. PIKE: If someone were to buy them, right now they would need to basically refurbish them from top to bottom.

CHAIR: Paint, carpet, and furniture.

MR. PIKE: The same way with the building itself, I think you would have to do the roof.

CHAIR: I have no more questions. Do any of the members have questions?

MR. JOYCE: (Inaudible) and very briefly. You mentioned there are seven or eight members on the board.

MR. PIKE: On the board?

MR. JOYCE: On the board – ten.

MR. PIKE: There are ten, right now.

MR. JOYCE: Are there any representatives from the departments even back to 2005-2006 when this report covers – were there departmental representatives on that board at that time?

MR. PIKE: Yes.

MR. JOYCE: Were they aware of some of the things that were going on? Are you aware if they were at meetings or at the board meetings when some of these things were actually taking place, not following government procedures in reporting back to the various departments? Are you aware of that?

MR. PIKE: No, I have not been on the board myself that long. I think I went on late in 2009. I think some of the issues that have come up in this report would be more on the operations side, from within the management team as opposed from the board itself.

MR. JOYCE: How many people from government are on the board? How many different departments? I assume Tourism.

MR. PIKE: I think there are three different departments.

MR. JOYCE: Three. Is there any way that we can get a copy of the minutes, say, since this report until now?

MR. PIKE: Yes, and I think that might have been mentioned earlier today.

MR. JOYCE: Okay.

CHAIR: I think the earlier request might have been specific to 2005.

MR. MITCHELMORE: I made the request for the minutes since the Auditor General's report for the meetings that had taken place throughout this year. I had made that request, Mr. Chair.

MR. PIKE: That is correct, yes.

MR. JOYCE: My concern is that if there are three government departments represented on this board and we have an Auditor General's report, I am assuming that whoever is on the board representing that department would bring back to the different departments the concerns that they are having or some of the concerns, or at the end of the year looking at the financial statements and seeing that a contract was extended. I am assuming that had to be somehow pushed by the board or approved by the board in the minutes.

I know I am putting you on the spot a bit here, but –

MR. PIKE: No, I think we recognize that the contract in question –

MR. JOYCE: There is more than one. That is just one. Then there is one with that $46,000 that was given out untendered, and there were other things that were sole sourced. My point is if government is overseeing the Marble Mountain Corporation by having three people on the board to make sure that they are in touch with what is going on, my question is: Is the department themselves ensuring that the representatives on the board are doing their due diligence to ensure that this corporation is being run in compliance with the laws of the provincial government?

MR. PIKE: I think with some of those circumstances, where there were things that had to get done, most of this is linked to breaks in water pipes and those types of things that had to get done. The contractor that came in, the price that he did it for, I think the people around the table would have felt that this is the best bang for the buck that we are going to get, and let us get on with it.

MR. JOYCE: So, you will try to undertake to get us the board minutes so I can see who was at the board making these decisions if –

MR. PIKE: Yes.

MR. JOYCE: Because if not, one of the recommendations that we would have to make, I assume, that I would be pushing for it from the Public Accounts, is that if there are board members representing each different department on this corporation that they do their due diligence to ensure that its procedures are being followed.

MR. PIKE: Yes, and I have a list here that I have been keeping. I can check afterwards and make sure that we have a full list of undertakings that we are expected to deliver –

MR. JOYCE: Okay, thank you.

MR. PIKE: – and will deliver them.

CHAIR: Do any other members have any questions?

MR. MITCHELMORE: I would just like to make a comment, Mr. Chair.

This is one of the reasons why I had asked earlier about having the board members, their terms, and their expiry dates listed on a Web site. It really does show more openness and transparency, because I had asked you as well, Mr. Pike, about questions – like, who makes these decisions, is it the board, or is there some advice paper taken from government, and I did not realize that there were three members on your board representation from government. What Mr. Joyce is bringing up is a very good point. I do think you need to have that openness and accountability, so that would be very important for us to have.

Thank you.

CHAIR: Before we close, I think I should ask if the Auditor General's office has any questions or if there are any areas that you feel we should cover while Mr. Pike is here?

MS RUSSELL: No. Like I said earlier, in about a year or so we are going to follow up on these recommendations and that will be in a report that we make to the House of Assembly. So, at that time, we will make comment on whether or not they have been implemented or not. That is our normal process when it comes to our reports.

CHAIR: Okay.

Thank you very much.

We will conclude. I am going to ask the members to stay behind for a few minutes so we can arrange some timing, some scheduling. I have spoken to Mr. Brazil, Mr. Joyce, and Mr. Mitchelmore earlier.

Mr. Pike, thank you very much for coming. You have been most helpful.

MR. PIKE: Certainly, I would like to thank you for the opportunity (inaudible) as Chair and if my lack of attention to detail may have thrown you off, but I can assure you that is not the normal process.

Thank you very much.

CHAIR: We need a motion to adjourn.

MR. BRAZIL So moved.

CHAIR: Seconded?

MR. K. PARSONS: Seconded.

CHAIR: Moved by Mr. Brazil, seconded by Mr. Parsons.

On motion, the Committee adjourned.