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Chairman (Mr. Kattuk)(interpretation): Can you hear me? (interpretation ends) Thank you, Members.
I am very proud to be in this chair.
I’ll try to direct you where I want to direct you to, so bear with me and don’t get mad at me.
In the Committee of the Whole, we have the following items to deal with: Bills 26, 27, 30, 33, and 34.
We wish to deal with Bill 34, Bill 30, Bill 26, Bill 27, and then Bill 33, in that order.
Chairman: Are we in agreement we will first deal with Bill 34?
Bill 34 – Nunavut Outfitters Liability Protection Fund Act – Consideration in Committee
Chairman: I would now like to ask the Minister of Finance to make his opening remarks.
I am pleased to appear before members today to speak to Bill 34 – Nunavut Outfitters Liability Protection Fund Act.
This bill will create the Nunavut Outfitters Liability Protection Fund. It defines how eligible outfitters, guides and tourism establishments can access limited indemnity coverage for comprehensive liability claims.
Any outfitter who is unable to buy liability insurance from a private insurance company can apply to the Government of Nunavut for liability protection under this Act.
Once approved, they would sign a contract with the Government of Nunavut. The contract will clearly outline the type and limits of the coverage the applicant is receiving.
This program is fee based, with the initial fee set at $3,500 per year.
This bill is designed to assist Nunavut outfitters, guides and tourism establishments who cannot obtain liability insurance in the private market. The Nunavut Outfitters Liability Protection Fund offers them up to $1 million in limited liability coverage.
This coverage is limited to maximums of $1 million per occurrence and $1 million per outfitter, per year.
The entire fund is capped at $2 million per year in payments. If there are more than $2 million in claims in any given year, any additional claims would not be covered by this fund.
Any actual claims will be handled by a professional outside firm and then paid out of the fund, as necessary.
The Nunavut Outfitters Liability Protection Fund is designed to eventually be self-sufficient.
The Financial Management Board has approved an initial capital contribution of $5 million to the fund.
Of that $5 million, $2 million would come from the Government of Nunavut over a two-year period, and $3 million would come from the Federal Community Development Trust.
All fees and premiums, as well as interest earned, would be credited to the fund to allow it to grow to a maximum of $10 million.
Any claims payments would come out of the fund itself and not come from a departmental budget.
In keeping with Government of Nunavut’s commitment to strengthening financial management, an annual report will be tabled outlining the assistance provided, the claims received, and the financial status of the Nunavut Outfitters Liability Protection Fund.
I would be pleased to answer any questions from the members, Mr. Chairman.
Hon. Louis Tapardjuk (interpretation): Yes, please.
Chairman: Sergeant-at-Arms, please escort the witnesses in.
Thank you. (interpretation) Minister Tapardjuk, for the record, please introduce your witnesses.
On my left is Peter Ma, my Deputy Minister with the Department of Finance, and on my right is Andrew Campbell from the Department of Justice and he is a legislative drafter, Mr. Chairman.
Does the Chair of the Standing Committee on Government Operations have any comments?
This is my first time calling you Mr. Chairman.
Mr. Chairman, the Standing Committee on Government Operations and Accountability has scrutinized Bill 34, the proposed Nunavut Outfitters Liability Protection Fund Act.
The standing committee recognizes that this bill has been introduced in order to fulfill the commitment made in this year’s Budget Address to provide assistance to outfitters in obtaining liability coverage.
The Budget Address indicated that “it has been difficult for Nunavut outfitters to obtain suitable liability insurance. Policies available on the market require high premiums for little coverage, and typically exclude the kinds of activities that outfitters offer their clients.”
Mr. Chairman, during the minister’s appearance before the standing committee, members took the opportunity to raise a number of issues concerning the implementation and administration of the proposed legislation.
The standing committee supports the government’s desire to assist outfitters in obtaining adequate liability insurance coverage.
Tourism is a critical sector of our economy, and measures to enhance opportunities for entrepreneurs to achieve success are to be welcomed.
However, members raised a number of cautionary notes with respect to this initiative and areas where further work will need to be undertaken in the context of the development of regulations and policies under the Act.
As the minister noted in his opening comments to the committee and today, outfitters will be able to obtain up to $1 million in limited liability coverage. The entire fund will be capped at $2 million per year in payments, as he had indicated in his opening comments.
While the standing committee recognizes the need for the government to carefully assess its own exposure to risk, it is essential that outfitters who apply for coverage clearly understand the program’s limits and clearly understand that if there are more than $2 million in claims in any given year, any additional claims would not be covered by this fund, which potentially could result in situations where outfitters would not have any coverage at all.
The standing committee urged the government to give careful consideration to a number of other issues, including the question of whether HTOs that act as outfitters will be able to take advantage of the program.
The committee stressed the importance of working with appropriate partners, such as the Workers’ Safety and Compensation Commission and Nunavut Tourism, in order to help ensure that safety training is available to outfitters and to assist them in obtaining insurance coverage for their equipment.
The committee also expressed its view that outfitting companies which may operate in Nunavut but are headquartered in another jurisdiction should not be eligible to take advantage of the program, and was pleased to receive assurances that the policies under the Act will clearly provide that the program is for Nunavut residents.
The standing committee also suggested that the NAMIX experience may be of benefit to the government in its implementation of the legislation.
As all members are aware, the government has proposed that $4 million be allocated towards the establishment of this new fund. This amount is included in the proposed supplementary appropriation legislation currently before the House.
The standing committee would like to note for the public record that section 59 of the Financial Administration Act provides that, and I’ll quote it, “no revolving fund shall be established except by Act.”
Bill 34 contains appropriate language in this regard and which I might say is exactly why we’re doing it in the proper order now - the legislation before the funding.
Mr. Chairman, the standing committee congratulates the minister and his officials for bringing forward a bill that includes a requirement for an annual report to be tabled in the Legislative Assembly, which is usually one of the generic recommendations of the committee anyway, so kudos for that.
Annual reporting to the Legislative Assembly is a critical element of transparency and accountability.
Members recommended that the annual reports tabled under this Act include detailed information concerning how many outfitters receive coverage under this new fund and all the other information that the minister stated in his opening comments, as well as how many outfitters are refused coverage under the fund.
This type of information is necessary to enabling the government and members to evaluate the success of this initiative.
The standing committee was also pleased to hear testimony from government witnesses that indicated that periodic reviews of the program will be undertaken. The standing committee also looks forward to the opportunity to scrutinize and comment on draft regulations and policies under this Act.
Mr. Chairman, that concludes my opening comments. The standing committee recommends the passage of Bill 34 to all members.
I also welcome Bill 34. I remember during the NWT days, we kept bringing this issue up but the tourism outfitters with boats had to pay a $2,500 premium.
The majority of the outfitters who faced this fee were unilingual and older then. I was the CEDO in Coral Harbour at that time.
I wanted to assist the outfitters and looked through all the programs, but they still had to pay that $2,500 premium out of their own pockets.
I welcome this bill because it recognizes our uniqueness and the fact that we, as a government, are starting to prioritize the interests of our people in the communities and not just the priorities of the government.
As I have maintained, the interests and wishes of our constituents have to be protected, especially children because they have no voting rights, and especially when we are considering recreational facilities, such as community halls and arenas.
Other infrastructure such as docks and useful items for the hamlets such as community freezers are more reasons why I welcome this bill and its content.
It will be a welcome relief to tourism operators and those who own boats and snowmobiles, as well as the polar bear sports hunt operators, if, in fact, that industry will survive with the extenuating circumstances we face today.
We all know that the tourism industry is not going away anytime soon, given the beautiful scenery of Nunavut lands. We are one of the few remaining pristine areas in the world and there is a lot of potential.
I would like to urge the government then, as Mr. Tootoo said, that we will have to set the regulations properly and we will have to make sure that the information goes out at the community level.
We would like Bill 34 not just to be an impediment to those who are going to be seeking this type of coverage.
We would like the government and the future Members of the Legislative Assembly to know that. I’m sure that the regulations will outline how you would be eligible for this coverage and how you could be rejected.
Thank you, Mr. Chairman. I will be in support of Bill 34.
We will now to proceed to the clause-by-clause review of the bill starting with page 1.
I’m one of the members of the standing committee and I would like to get some on-the-record statements from the minister and his officials with respect to how this program works.
The opening comments of the minister and our chair indicated that the liability insurance covers per incident is up to $1 million and that’s the liability portion.
Who would be responsible for liability claims larger than $1 million per incident?
The way the fund is proposed at this point in time is that if there is an amount over $1 million, it would not be covered by the fund. So the outfitter would have to basically come up with it out of his own funds if there is such a claim above $1 million.
What I would say to the Committee of the Whole is that it’s our understanding, in our research that we have done, that the Canadian Tourism Commission, for liability claims then, was the average down south is about $50,000 per claim.
Obviously, that doesn’t preclude something being greater than that, and obviously, our costs are a lot higher than in other jurisdictions.
Mr. Peterson: Thank you, Mr. Chairman. I thank the minister and Mr. Ma for that information.
So would the Government of Nunavut, through the Department of Finance I take it, ensure that the outfitters are aware that their liability coverage is up to $1 million?
They may believe that they’re insured for an infinite amount, so that would have to be clear to them and their customers as well.
We will try to keep outfitters informed about these regulations.
If we work with Economic Development and Transportation, we will definitely keep the outfitters informed about the liability insurance limits. Once this is passed, we will definitely inform those Nunavummiut who will be affected the most by the passage of this bill.
Minister, in your opening comments, you said that the entire fund is capped at $2 million per year in payments and if there are more than $2 million in payments in any given year, any additional claims would not be covered by this fund. We certainly hope that there are no claims but in your legislative proposal, you indicated that there are 90 outfitters who require this assistance.
So if we have 90 outfitters paying up to $3,500 per year in premiums, in theory, the first two claims, which are potentially up to $1 million each, would max out the program. What would the other outfitters do if that occurred? They wouldn’t have any insurance if you maxed out at $2 million for the year.
How would they deal with that?
Hon. Louis Tapardjuk (interpretation): We will keep the outfitters informed as to what they can expect within the year. If we can’t pay anymore because of the cap, we would let the outfitters know that we have reached our maximum.
We’re only in the initial stage and I’m sure that as time goes by, we will continue to fine-tune the regulations, Mr. Chairman.
Would the Department of Finance, who would be the administrator of this program, refund the insurance premiums that the outfitters paid if the $2 million per year claims were exceeded?
Hon. Louis Tapardjuk (interpretation): Thank you. Perhaps my deputy can explain that, Mr. Chairman.
The short answer is no, we would not refund the premiums to the outfitters that we provided the coverage to. Once the maximum is reached on an annual basis of $2 million, then that would be it.
It may have been in the minister’s opening comments or a reference might have been made by the chair of the standing committee, but it’s similar to a NAMIX type program, everybody shares in the risk and everybody shares in the rewards of it.
I thank the minister and Mr. Ma for that information.
Again, it goes back to my earlier question: will the Department of Finance ensure that outfitters are fully aware that this is not your normal insurance program, it comes with qualifications - you are insured but you are not really insured - depending on how many claims are against the program in a given year?
Hon. Louis Tapardjuk (interpretation): I will have my deputy answer that question.
With a program like this, the member is quite correct, the Department of Finance provides the necessary communications to potential outfitters or clients, I guess, so to speak. Obviously, that communication plan would include things such as what the maximum amount would be, which is $1 million per claim and the annual maximum of $2 million per year, but once those maximums are reached, basically there will be no coverage for other participants in that particular plan.
So the member is quite correct, I think it’s imperative on us to provide the necessary information to people that may be enrolled in the plan. Certainly, we are working currently on an appropriate communications plan and information that we can provide to potential clients.
Earlier this year, minister, you had indicated in your Budget Address that a single organization will represent the outfitters in the territory and that the Government of Nunavut would enter into an agreement with that organization and offer this insurance.
In your opening statement there, you said that the outfitters would basically deal with the Government of Nunavut directly.
Is that the way that you envisioned this program continuing?
In the minister’s Budget Address, at that time, the Department of Finance had thoughts about using a single organization to deliver this particular program. Subsequent to that, as we continued with the design and the drafting of the bill, we realized that perhaps that was maybe not the best course of action to take.
What we recognized after that was that perhaps it would be best left for the Department of Finance to deliver this particular program and I’ll state the reasons for that.
First of all, my department has responsibility for risk management within the government overall, so we do have some expertise and some resources within that can provide that particular expertise, so to speak.
Second of all, the organization that we had contemplated at that point in time probably doesn’t have those resources and we would probably stretch them to some extent.
There was some discussion within our briefing to the standing committee, but perhaps we could even use the participants of the NAMIX program.
But we feel this is sort of a somewhat specialized area, we don’t want to take away from the good that the NAMIX people are doing, so I think it would be best at this point to leave it in Finance.
I think thirdly, and I think it was mentioned by the chairperson of the standing committee that we have committed to bringing back into this House an annual report. In order for that to happen, it’s probably best within a particular government department because then we are sort of legislated to give that report back into the House.
So those are some of the thought that we had after the fact and I hope that answers the member’s question.
I appreciate the information from the minister and Mr. Ma. Having said that, minister or Mr. Ma, by the government entering into agreements with outfitters to provide them with this insurance funding, are you exposing the government to potential liability issues if there are any claims against the outfitters and their insurer?
Hon. Louis Tapardjuk (interpretation): I’ll have Mr. Ma explain that.
The member raises a good question that was given careful consideration. Obviously, there’s always the possibility of a lawsuit being brought against government.
However, I think that the work that we have done to get the bill to this stage will mitigate that. Obviously, we were limited to $1 million and a $2 million cap would be there. Also within the legislation that you are going to be going clause-by-clause through, there is some language also to protect the government further in that respect.
Certainly, I could ask our legal counsel to comment further if the member would like, but we have certainly looked at that possibility.
I think, Mr. Chairman, it would be appropriate if the legal counsel could offer an opinion.
Hon. Louis Tapardjuk (interpretation): I’ll have Mr. Campbell elaborate on that.
I think the member raises a good point and I think there’s always a possibility of a lawsuit flowing to the government.
I think in the Act, the department has sought to manage this risk in a number of ways.
This will be managed by the cap that Mr. Ma has discussed and also by the eligibility criteria and the underwriting criteria that will be part of the application process. This will also be managed in the contracts that are issued between the government and the outfitters under this Act.
And then finally, there is a limitation of liability provision in the Act which seeks to prevent claims in what would be called collateral contracts or tort, which are claims based on people or outfitters thinking that they’re getting coverage that they’re not getting.
Mr. Peterson: Thank you, Mr. Chairman. I thank the minister and Mr. Campbell for that information.
Minister, in your Budget Address earlier this year, you indicated that it has been difficult for Nunavut outfitters to obtain suitable liability insurance.
I guess that’s why we’re attempting to develop this program, but can you tell us, for the record, why it has been difficult for outfitters to get liability insurance?
There are a number of factors that impact why people can’t get appropriate liability insurance coverage.
First of all, even if outfitters can get coverage, the cost is somewhat prohibitive, and I think the member from Pond Inlet indicated that in his comments earlier, so that’s a bit of a deterrent to the outfitters. So even when they can get insurance, it’s so prohibitive that it’s probably not worth running your season, for example, boating season.
One of the other reasons is also the fact that insurers in the field are not willing to make a market. What that basically means in laymen’s terms is they’re not willing to take the risk or to make the effort to provide insurance in our particular territory. Likely, the reason for that is because there’s a limited number of tourism operators and so that’s probably a bit of the rationale behind it.
We have certainly had conversations with a number of major international insurers to see if they could provide coverage. So this is an issue that has been ongoing, certainly in my lifetime up here, which is now 14 years.
I appreciate that answer from the minister and Mr. Ma. In the development of Bill 34, did the department hold any consultations with Nunavut Tourism, and if so, what was their opinion of the proposed legislation?
I actually honestly don’t recall if my director spoke to Nunavut Tourism or not, I think he may have.
He is currently down on a federal/provincial meeting. However, whether he did or not, I think that this is something that Nunavut Tourism and certainly its membership has obviously wanted.
I think we have heard that through a number of venues, not just to the department but I think they have also spoken to various MLAs. I think Mr. Arvaluk is an example of that.
Certainly, from personal experience, I know that this is a product, if you will, that tourism outfitters would like from somebody. And I guess I’m particularly proud that perhaps our department can help deliver that product to our outfitters.
I appreciate that answer from the minister and Mr. Ma. Minister, in your opening comments, you said, “Any outfitter who is unable to buy liability insurance from a private insurance company can apply to the Government of Nunavut for liability protection under this Act.” I guess there are estimates of 90 outfitters in Nunavut, so would all 90 be eligible for this insurance program?
Hon. Louis Tapardjuk (interpretation): Thank you, Mr. Chairman. The outfitters in Nunavut are the ones who deserve to benefit from this legislation, including dog team owners who take tourists out on the land or anyone else who is in the business of catering to tourists.
In the legislation, it states that the people who are trying to get insurance will get coverage and will be approved right away from the minister. We will ensure it is open to all Nunavummiut who have outfitting and tourism businesses.
Those are the people who will be benefit from this legislation, Mr. Chairman.
Given that there are roughly 90 outfitters in Nunavut and obviously, they all have risky businesses because they can’t get the liability insurance, who works with the outfitters to ensure that they have equipment that are up to standards, are safe, and that their employees are well trained in all the safety requirements to offer a product to the travelling public or tourists visiting Nunavut?
Who would oversee that and ensure that, “Yes, we certify this outfitter to be a safe operation and they are eligible for insurance”?
If my memory serves me correctly, I think the regulation of tourism outfitters is through the Department of Environment. Previous to that, I think it was part of the Department of Sustainable Development. The split had happened some time ago and I think that responsibility was left with the Department of Environment, although I could stand corrected.
With respect to the quality of products that are offered by Nunavut outfitters, I believe that responsibility falls with the Department of Economic Development and Transportation. Having said that, Nunavut Tourism I think also provides assistance in that regard to its membership.
I think I’m generally right in what I’m saying in that regard.
Mr. Peterson: Thank you, Mr. Chairman. I thank the minister and Mr. Ma for that answer.
There could be 90 outfitters who are eligible for insurance but that’s not to say that all 90 would necessarily be approved. Could the minister or Mr. Ma tell us on what grounds an outfitter would be denied insurance under this program?
Hon. Louis Tapardjuk (interpretation): I’ll have Mr. Ma respond to that question.