Question re: Yukon Hospital Corporation funding - April 15, 2013

Mr. Silver: I have a question for the Minister of Finance. The centerpiece of the budget we’re debating this spring is a $27-million bailout of the Yukon Hospital Corporation. It was only a couple of years ago that the Yukon Party government
brushed off concerns about the amount of debt the Hospital Corporation was running up, insisting it was not biting off more than it could chew. It was only a couple of years ago that the Government of Yukon was insisting, despite the fact that it generates almost no revenue, the Hospital Corporation was capable of paying off almost $70 million in loans by renting space back to the government.

It was a financial agreement based on fantasy. Well, that fantasy came to an end this spring in the form of a $27-million bailout.

Why was the corporation allowed to borrow this money in the first place, when there was really no plan to pay it back?

Hon. Mr. Pasloski: As I said before, this government is proud of its record in the 10 years that the Yukon Party has been in government. We’ve gone from a time, with the previous NDP and Liberal governments, when there was a mass exodus from this territory. Thousands of people left, primarily our prime young workforce of 25- to 40-year-olds. Why did they leave, Mr. Speaker? They left because there were no jobs — because the economy of the two previous administrations had created an environment where there weren’t any opportunities out there.

Look at where the economy is today. We’re very proud of the job that we have done. We are in a position where homeowners have an opportunity once a year to make a lump-sum payment on their mortgage to reduce the time that they will have a mortgage or reduce their payments. Like a good financial individual, the government is doing the same thing —
we’re going to ensure that we can pay down some money because we have some money right now. We have money in the
bank — one of the few jurisdictions in this country that does.

We’ll use this opportunity to reduce some of the debt load for the long term.

Mr. Silver: The bottom line is that it’s not good fiscal management when the centrepiece of an annual budget is a $27-million bailout of a corporation that can’t pay its bills because it is swamped in debt-servicing payments. These loans should never have been allowed in the first place, and the government should just admit that.

When the Auditor General released his scathing report on the government’s handling of this project, he questioned why the corporation went to the banks in the first place — and I quote: “The Corporation could not provide us with any explanation
regarding why the loans were secured through banks rather than from the Government of Yukon.”

The decision to go through the banks means higher interest rates than if the government had given the corporation the funds directly. The corporation could not provide any explanation. Can the Minister of Finance explain to the public why this more costly option was chosen in the first place?

Hon. Mr. Pasloski: The centrepiece of the budget would be continued growth and prosperity — a $250-million capital budget, reinvesting in Yukon, creating jobs, creating training opportunities, creating business opportunities for Yukoners — moving forward with such projects as the new seniors complex at 207 Alexander, moving forward with the rebuilding of the Sarah Steele Building and dealing with addictions problems and countless other projects we have going forward.

By paying $27 million of debt down, we are saving $12 million in interest over the long term. This government thinks that’s a good decision.

Mr. Silver: The minister wants credit for bailing out the Yukon Hospital Corporation, when it is the government that got the corporation in over its head in the first place. The Hospital Corporation was so overextended that it needed a $27- million bailout to get back to solid financial footing. This government let the Hospital Corporation borrow money with no plans to pay it back. Taxpayers are also paying higher interest rates on these loans because the corporation went to the banks for financing instead of to the government. Taxpayers are on the hook for many years to come because of the way this project
was financed. This year alone, there is $3.6 million in the budget for loan-servicing costs for the Dawson and Watson
Lake facilities. Again, to the Finance minister: Why was the corporation forced to borrow from banks and pay higher interest costs?

Hon. Mr. Pasloski: Of course, I can’t speak to the decisions that were made prior to this administration being here, but I can tell you that the citizens of the member opposite’s riding of Klondike and, in fact, the citizens of the riding of Watson Lake do appreciate and think it is important that we do have enhanced medical care and hospitals or health centres in their communities.

I think that member opposite could go back and ask the residents of his community if in fact they think it is a good decision or not.

We are saving $12 million in interest payments as a result of moving this debt down. Of course, we have all kinds of room and flexibility, as you are aware, Mr. Speaker. We are nowhere near our debt ceiling as a government. The federal government did raise the debt ceiling for all three territories. The other two territories certainly were in a position where this was very important for them; however, that wasn’t the case for us. Certainly we have more money and assets than we have liabilities and in fact have money in the bank.

This is a different situation because when the interim leader of the Third Party — when they were last in power, I believe that they were borrowing money just to pay government salaries, Mr. Speaker. I think it’s a stark contrast to the financial management that occurs today and what happened under the previous Liberal government.