The Bees Knees: Prizes for Week Five

Each week the Legislature is in session we give out four prizes for the best and worst moments, as recorded in Hansard.

But this week Graham Steele’s farewell address first set the opposition straight on how budget estimates work, and then had the legislature teary-eyed with his comments about his kids. Instead of doling out the awards, we encourage you to read his remarks in full.

Graham Steele: Since I resigned as Finance Minister almost one full year ago, I have not taken a large part in the proceedings of the House. I no longer speak for the government because only a minister can do that and I no longer speak for the Department of Finance.

My focus is back on serving constituents in the constituency, which is where I started back in 2001. I was a little surprised when the gist of the Speaker’s ruling yesterday was that I had never stood up in the House to state plainly that there was no intention on my part to mislead the House in the presentation of last year’s budget. It’s still not clear to me what opportunity there is for a government backbencher to make such a statement in response to a point of privilege.

Nevertheless and in any event, I’m taking the opportunity to do that now. Let me say plainly and directly, there was in the presentation of last year’s budget absolutely, positively no intention on my part to mislead the House. Building a $9 billion budget is an exceedingly complex process. It was my privilege to play a lead role in that process four times while I served as Minister of Finance. The process takes place over about eight months. There are literally thousands of line items. The economic model used by the Department of Finance has over 600 variables – everything is connected to everything else.

There is new information coming in on these line items and these model variables all the time, every single day. As a result, in the preparation of a budget there has to be a cut-off date. There has always been a cut-off date and there will always be a cut-off date. There is no Finance Minister, ever, who has stood up in this House with a budget that is up-to-date as of the day of the budget. That may be possible with a $9,000 budget or a $90,000 budget but it is not possible with a $9 billion budget, with thousands of line items and hundreds of variables, all of which are inter-connected and on which new information is coming in every day.

In the case of last year’s budget, everyone agrees that the new information came in after the cut-off date. This was explained at length when the Department of Finance appeared before the Public Accounts Committee. Anyone who still has questions about that point should review the transcript of that meeting. The only question left then is whether the new information was material in an accounting sense of the term, and again, everybody agrees that it wasn’t.

I know that $27 million sounds like a lot of money and it is, except in the context of a $9 billion budget. The Auditor General himself attests to the fact that it was not material. Remember that the Auditor General reviews the revenue estimates every year. Last year he signed off on the revenue estimates, as he has every year. He would not have signed off on the revenue estimates if there had been a material change. So, Madam Speaker, we had new information that came in after the cut-off date and it wasn’t material in the context of a $9 billion budget.

The commitment of this province, and indeed, of any participant in the financial markets, is that non-material changes will be incorporated into the next scheduled financial statements, and they duly were in the September forecast update. In short, routine matters were dealt with in a routine way. That’s the end of the story, or it should have been the end of the story.

Madam Speaker, I was flabbergasted to read in the February report of the Auditor General his view that the new information should have been stated at budget time. I did not understand his position then, and I do not understand it now. If the information came after the cut-off and was not material, which everyone agrees on, then what accounting rule says that it needs to be reported anyway? There isn’t one.

The Auditor General says that errors should be corrected, which is another accounting rule everyone agrees with, but this wasn’t an error. It was new information that wasn’t material that came in after the cut-off. That’s not an error or a mistake in any normal sense of the word. If the Auditor General’s interpretation is accepted, then the concept of the cut-off date become meaningless, because any change has to be reported, or maybe it’s not just any change.

The Department of Finance followed the rule of materiality, just like the Auditor General, and just like the department always has. The Auditor General now seems to be suggesting that a different rule should be followed, but he hasn’t said why or what the new rule should be. If the rule of materiality should change so that changes of a certain size should be reported, even if they’re not material, the Auditor General has not said what the new threshold is, nor has he said how close to Budget Day is too close.

Madam Speaker, I could go on about this, but the point is essentially this: the Auditor General in his February report is applying a new rule that he hasn’t spelled out, that is different than what has been applied before or that he applies himself, and that nobody in the Department of Finance, including me, could have anticipated at the time the budget was delivered.

There is another aspect of this matter that I think is relevant, and I think can only be understood by somebody who has sat in the chair of the Minister of Finance. The Province of Nova Scotia is a participant in the bond markets. As a public issuer, there are certain rules and conventions that apply. There is a process for the release of financial information of a public issuer. The Auditor General is suggesting a change in well-established rules about the release of information. The markets would consider this to be very peculiar behaviour. When you have a budget with thousands of interrelated line items and hundreds of interrelated economic variables, you cannot be dribbling out information just because one of those items has changed on a given day.

Madam Speaker, in closing, let me say that I am proud of the work I did as Minister of Finance. (Applause) I am proud of the Back To Balance process, and I’m proud that my successor as Minister of Finance was able to deliver a balanced budget to the people of the province this year. I have never deliberately misled the House, and I did not in delivering the budget last year. I respect this House and all that it represents, although I do believe that the level of posturing and partisanship on all sides should be a concern to all citizens of the province and all members of the House.

I am proud of what I have been able to accomplish as a member of this House for the past 12 years. The older I get, the more painfully aware I am that I could always have done more, and I could always have done better. I say all this knowing that these may well be the last words I say in the course of debate in this House, because this sitting will end soon, an election is imminent, and I am not reoffering as a candidate. One day, perhaps when my children grow up, they will look at Hansard for the period 2001 to 2013 and see what their father did and said while he was here. They are still young and it may be many years from now when they do that and if I am not around when they read these words, I want them to know that I love them, I am proud of them, and I hope that what they read here in Hansard makes them proud of me. Thank you very much.

1,565 QP Qs by the NSLP and NSPC

Two distinct strategies suggest themselves in a review of the one thousand five-hundred and sixty-five questions asked by the Liberals and Conservatives in 2012.

The Liberals used a spray-paint or roller technique to try to colour the government on broad topics, while the Conservatives used a smaller brush to give detailed work to delicate issues.

Credit must be given to the Conservatives for getting stories like Talbot House (50 questions) and the Home for Coloured Children (21 questions) into the press. Spending a lot of time on a few stories can make a difference. But there is risk in this approach as well. Asking no questions on universities, agriculture, doctors, crime rates, or rural roads, but 22 questions on First Contract Arbitration legislation, suggest this focused attack can result in forgetting other core values.

A word of caution: as the Official Opposition, the Liberals ask approximately 60% of the questions. It would be unfair to suggest that because they asked two questions on Immigration in 2012, and the Conservatives did not ask any, that they care about that issue more than the PCs. With 313 more questions, the Liberals could hit more targets.

For the NDP, it is worth noting that the topics their supporters seem most interested in – universal health care, climate change, income assistance, root causes of crime, and the minimum wage – received no questions from either the Liberals or the Tories.

Digging down into the numbers on health also yields a point of interest. Instead of wait times (9 questions total) and ER closures (15 questions total) dominating the discussion as they did under previous Liberal and PC governments, the number one health issue raised in Question Period in 2012 was the NSGEU and Collective Bargaining (57 questions).

Write to us with your observations at pictoubee@gmail.com

The Question Period Priorities of the Nova Scotia Progressive Conservative Party and Liberal Party.

The Question Period Priorities of the Nova Scotia Progressive Conservative Party and Liberal Party.

Jobs Here

As Liberal MLAs speak out against the NDP’s moves to bring ship building contracts, engineering jobs and IBM’s data analytics centre all home to Nova Scotia, another prominent business voice is speaking out against the politics of negativity.

No one can accuse Halifax Chamber of Commerce Valerie Payn of being a partisan New Democrat. She has worked for the Halifax Chamber of Commerce for 17 years and has been named as one of Atlantic Canada’s top CEOs by Atlantic Business.

As Stephen McNeil attacks on job growth continue, Payn offered this letter last week:

The rash of negativity around recent announcements by Projex and IBM, and their plans to set up business in Halifax, leaves me bitterly disappointed. Let’s face it. These companies could go anywhere in our increasingly shrinking world. Yet, they have chosen to locate in Halifax.

Do we really want new jobs, to keep our young professionals here, to grow our economy? … Or do we not?

These are jobs of the future; well paying, and suited to our provincial assets. These jobs, and these companies, are a good fit for us. So, I would ask all those who have been so vocal in their negative comments, “What — exactly — do you suggest? Is there something I am missing?

One thing we all agree upon is that we cannot continue to export our young people, year over year over year — and yet expect to be a strong and fiscally stable province. Surely, we cannot expect to do the same thing …. take the same approaches over and over… and expect a different result. Seriously, can we expect change… but not actually change? Am I missing something?

Let’s not spend precious time over the next year focused on an upcoming election, when that might be, and what it might mean. We have much more important issues facing us.

And let’s not for sure, absolutely for sure, not lash out at those businesses who choose to locate here. Unless, of course, we would prefer that they, and others like them, not come. And let them take their business elsewhere.

Believe it or not, Nova Scotia, they have other options.

Cutting Steele

We know not everyone has time to tune into Legislative Television, particularly the Late Debates.  But we did not want anyone to miss these gems from Allan MacMaster, the Tory from Inverness, as he waxed philosophic about capitalism and “freedom” on Wednesday:

Allan MacMaster: I believe in capitalism. I have a business degree. I’m very much a believer in the free market, but this kind of activity where companies are just asking for handouts really bothers me, especially when we compare them to people who, say, fought for our country, who really gave us the freedom so that those companies could operate here with the freedoms they have here and be in an economy that is solid, where they can make money. That’s a blessing that they should be appreciative of. Instead, they don’t seem to be, because they just come to the government looking for a handout. 

Sadly, in addition to the strange juxtaposition of economic growth and supporting our troops, MacMaster joined the Liberals in attacking a specific company, in this case the Halifax Shipyard:

Allan MacMaster: What was particularly galling to me was Irving, because they won a taxpayer-funded contract. The taxpayers are already paying for this work to build those ships, and they need another $260 million. That equates to an extra 1 per cent profit margin on that contract for them. 

We expect better from the Tory backbench.  We do not see how joining the Liberals in this nasty business of slagging companies and their employees makes any political sense, no matter how much they might believe in the fanciful world of pure capitalism that MacMaster imagines.

More importantly, MacMaster shows that he, like Stephen McNeil, forgot how Nova Scotia won the ships contract. On Thursday MacMaster turned his attack to the government role in the bid:

Allan MacMaster: There was no need to pay Irving $260 million in terms of a forgivable loan. They won the tender to build the ships. They’re going to be making an enormous amount of money off that project. It’s a tremendously lucrative project for them- $30 billion over 25 years…taxpayers in Nova Scotia didn’t have to spend that money but this government chose to spend it for them.

Graham Steele: You don’t have the slightest idea what you’re talking about.

Not very polite of the former Finance Minister, we suppose. But Irving would not have won the contract if the NDP government did not invest in their yard. Does MacMaster actually know about how the bidding worked? Sadly, if you look to Hansard for an answer, you will be disappointed:

Allan MacMaster: From what I have heard, if you look at the examination of the bids, there was a factor – I believe it was worth seven points on the submission they made – that had to do with the company could have asked the federal government for money to help spruce up their infrastructure to complete the contract, and it was worth seven points. Well, Irving won this bid by more than seven points, so they didn’t need the handout that they got from the government.

Aside from the faulty logic at work (it was a competitive bidding process), is MacMaster right? Was it really only worth just seven points?

You don’t spot the other team 20 points on a $25 billion contract.

Not quite.  The “Cost to Canada” component counted for 20 out of 100 points in the bidding process set out by the National Shipbuilding Procurement Strategy.  By MacMaster’s logic, Nova Scotia would have given up 20, not 7, points. And lost the bid.  It is like spotting another team a 20 point lead and expecting to come out on top.

We do not doubt Allan MacMaster believes the ship contract was a great win.  We just do not think he understands how the ships were won.