Question re: LNG facility cost over-runs - April 20, 2015

Mr. Silver: Last December, Yukoners learned that yet another capital project was mismanaged by this Yukon Party government and went over budget. Yukoners were informed, not by the minister, but by the president of the Yukon Energy Corporation, about the new LNG facility being $6.4 million — or 18 percent — overbudget.

We could add this to a long list of projects that have cost more than they were supposed to under this government’s not-so-watchful eye.

The new estimate cost, according to the president of the Energy Corporation, is $42.9 million. Can the minister tell Yukoners whether this is, in fact, the final cost, or whether he, as minister, accepts responsibility for this major cost overrun?

Hon. Mr. Cathers: First of all, I have to point out to the Leader of the Liberal Party that he conveniently ignores that most capital projects are on time and on budget, or underbudget, and in the cases — for example, I draw the member’s attention to the recent report of the Auditor General, which included the reference to the Whitehorse Correctional Centre, in which the Auditor General effectively gave government a gold star for management of the project.

Mr. Silver: I will give the minister a gold star for that as well, but we’re not talking about the Corrections facility today; we’re talking about LNG and facilities therein. So if he could keep his answers to the question, that would be much appreciated.

We know the Yukon Party government, like their predecessor — they’re very good at spending taxpayers’ money. There are numerous examples all around us. I can give you some examples of cost overruns: the new ambulance station, the F.H. Collins school and the two rural hospitals being built in Dawson City and Watson Lake, both being very critical from the Auditor General of Canada. Despite repeat promises to do better, the government keeps on going overbudget on these builds.

Will the minister at least take responsibility for the fact that this project — this project — is almost 20 percent over its original budget — yes or no?

Hon. Mr. Cathers: First of all, what I would remind the member of when he casts the assertion the government has not made improvement in this area, not only is it unfair to officials, it quite frankly does not reflect the facts. The most recent report by the Auditor General referencing government’s capital construction — in that report, the Auditor General effectively gave staff a gold star for the good work that was done.

With regard specifically to the LNG project — that is managed by Yukon Energy Corporation, which is accountable ultimately to this Legislative Assembly, through the Yukon Development Corporation. In fact, that is one of the reasons why we have taken steps in the last three years to significantly strengthen the oversight and accountability of Yukon Energy Corporation.

The cost of construction of the LNG project is over the original budget. That is certainly not news that we’re happy about, but I would remind the member that, in fact, strengthening the governance structure is an important part of what we are doing to prevent this type of thing occurring in the future and remind the member that, in fact, although he may not actually be aware of it, the Yukon Utilities Board ultimately exercises the oversight as the regulator for projects such as this one.

Mr. Silver: Mr. Speaker, $6 million — just because Ottawa continues to send us over 85 percent of our budget is no excuse to be wasteful of it. This is just another example of a major capital budget that has gone way overbudget — simple. It is at least 18 percent, or $6 million, overbudget and it is not finished yet. The Yukon Party claims that it manages Yukoners’ money carefully and yet we have taken another hit from another cost overrun that has just come to light. The minister stands here today and takes no responsibility for millions of extra dollars needed to be found to see this project through to fruition.

How does the corporation intend to cover this $6-million cost overrun?

Hon. Mr. Cathers: It is a little bit interesting that the member has just now become aware of this and failed to ask the witnesses a question about this when representatives of the corporation appeared here in the Legislative Assembly last fall. They appeared to answer questions and yet the member was asleep at the switch, apparently.

Again, there have been cost overruns on this project. That certainly is not good news but, as I reminded the member in my previous question, strengthening the accountability and oversight of Yukon Energy Corporation is why this government in the past three years has taken a number of steps, including strengthening the protocol between government and Yukon Development Corporation, revising and updating the letter of expectation between Yukon Development Corporation and Yukon Energy Corporation, and we are taking the steps necessary to strengthen that oversight and accountability.

Again, I would have to point out to the member, the Leader of the Liberal Party, that it is passing strange that it took him until now to answer this question, rather than him actually asking the chair and CEO of the corporation when they appeared in the Assembly last fall.