Thank you, Mr. Chairman. The Standing Committee on Accountability and Oversight reviewed Bill 20, Forgiveness of Debts Act, 2003-2004, on August 28, 2003. The committee would like to thank the Minister of Finance and his officials for presenting the bill.
This bill authorizes the forgiveness of debts in accordance with section 25 of the Financial Administration Act. This section requires an act be passed through the House for the forgiveness of debt or obligation owed to the government that exceeds $1,000. This act will forgive $952,881.09.
As the Minister explained, a debt forgiven when the government has decided that the collection of the debt is not possible and no further action will be taken to recover the debt, many accounts are forgiven as a result of bankruptcies and negotiated settlements.
Committee was told that forgiven debts do not require new appropriations. Allowances for doubtful accounts were previously charged to an appropriation when it was determined that collection was unlikely.
The original Bill 20 proposed the forgiveness of $1,071,413.47 in debts owed to the government. However, the government made last minute amendments to the bill that resulted in an adjustment of $952,881.09. Had this bill been considered as scheduled in the June session instead of the fall session of the Legislative Assembly, a number of debts would have been forgiven that would have required further adjustments after their collection. This also caused the committee to question just how exhaustive the collection process is.
The government explained that payments were received from clients that were not anticipated when the accounts were advanced for forgiveness recommendations, as all reasonable efforts had been expended. The new net amount reflects changes in circumstances to three accounts. One account was paid in full. Another account received an additional payment from a negotiated settlement. The third recommendation for forgiveness of debt was withdrawn as one of the principals did not receive an absolute discharge from bankruptcy as originally reported. Once all dividends, if any, are received and the remaining principal's bankruptcy is absolute, a new recommendation for forgiveness may be considered at a later date.
Committee members suggested that in the future the government should verify the findings of the bankruptcy trustee. Apparently the trustee informed the government in error that the client in question had been absolutely discharged from bankruptcy. The committee notes that if the original bill had passed in the June session, that client would have been prematurely absolved of his debt to this government.
Mr. Chairman, following the committee's review, a motion was carried to report Bill 20, Forgiveness of Debts Act, 2003-2004, to the Assembly as ready for Committee of the Whole. Additional comments or questions to Members may be posed as we proceed. Thank you, Mr. Chairman.