Thank you, Mr. Chairman. I am very pleased to appear before this committee today to review with you the proposed 1992-93 operations and maintenance budget for the Department of Public Works.

The mandate of the department is to design, build, lease, operate and maintain facilities required by the government to carry out its programs and services. In providing this infrastructure, the department ensures that to the maximum extent possible benefits of its expenditures go to northern and local residents and businesses.

In July, Cabinet approved the revised Business Incentive Policy, enabling us to increase local and northern content in the government's contracting and purchasing of goods and services. The department is responsible for administration of the policy. Assisting in this effort, is an advisory committee which includes representatives from the N.W.T. Construction Association and the N.W.T. Chamber of Commerce.

Through a series of workshops and attendance at trade shows, government staff and business people throughout the territories are being informed about the policy. Appropriate publications are also being prepared.

I believe these revisions will help to further reduce the leakage of G.N.W.T. contracting and purchasing dollars to southern Canada. In response to a question from the honourable Member for Natilikmiot, I recently advised this House that over 84 percent of the department's contracted construction dollars in the first quarter of this fiscal year, have gone to northern contractors.

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While significant information has not yet been assembled to show the actual increase in northern content since the revisions to the Business Incentive Policy, I believe that there has been an effective increase in the number of awards to northern companies, as a result of increasing the preference premiums to 15 and 20 percent. I will report more fully on the statistics when they have been developed.

Mr. Chairman, even though we do have a high level of contract awards to northern contractors, I do not believe that this is an accurate reflection of the level of participation by northern residents in the jobs that these contracts create. We must do more to train our people to take advantage of these employment opportunities.

As I stated in my opening remarks to the Housing Corporation's main estimates, in building the government's facilities we must ensure that more jobs go to local people. To this end, I am working with the Minister of Education to develop a long-term, comprehensive strategy for training northerners in the construction skills needed for employment on capital projects. Through better coordination of all G.N.W.T., federal, municipal and private sector initiatives that can impact on training and employment in construction, we can speed up the development of this important northern resource.

As Members have been previously advised, a number of pilot projects were also established to test a new construction worker training program. The program was developed by D.P.W. and the N.W.T. Construction Association with funds from D.P.W., M.A.C.A., Education and the Housing Corporation. The N.W.T. Construction Association is administering the program which is being run on six projects with 16 northern residents receiving training. We are still early in the program but are encouraged and believe that it will probably be a key plank in the training strategy.

This year we have reorganized the two divisions at headquarters that come under the project management activity. In place of the architectural and engineering divisions, a technical services division and a construction management division have been established.

We believe that our project management delivery process should better reflect the importance of the design and the construction activities themselves, to the development of the northern construction industry, rather than to the end product, that is, the building. Project management staff will continue to coordinate and manage the design and construction process. However, the construction management division will provide a better focus to the priority objective of northern and local involvement in the construction phase. The technical services division will focus more on establishing design and operating standards that better address the unique needs of the northern construction industry and the construction and operating environment.

With the exception of the project management activity, the delivery of all of the departments services are fully decentralized to the regions. The project management activity is, however, already highly decentralized, with over 60 percent of the staff resources committed to project management, now located within the regions. Nine of the positions deleted this year are in the project management activity in Yellowknife. Continued transfer of responsibility for the delivery of the construction program to the regional operations remains a priority. While we are concerned about the potential impact of reductions in staff in all activities, we feel continued decentralization will bring about economies through better coordination with communities and reduced travel time and costs.

Toward increasing the efficiency and effectiveness of service delivery to other government departments, considerable effort is being directed at the current consolidation of the Departments of Government Services and Public Works. This will result in a better coordination of internal government service functions. Eight divisions within Public Works, four divisions from Government Services and one division from the Department of Culture and Communications are affected. The regional offices of Public Works and Government Services are also being consolidated into one office. Most of the direct savings that will eventually result from the consolidation are achieved by reducing the numbers of senior managers. Larger savings will occur over time through better coordination of services to departments. These savings will however, begin to be reflected in the 1993-94 Main Estimates.

In response to the Auditor General's recent report to the Public Accounts Committee, the department is acting to respond to concerns about G.N.W.T. asset management. The department is working with Municipal and Community Affairs and other departments to see if a common inventory system can be used. A complete assessment of the department's computer-based inventory systems has started and the data on those systems is being updated.

The Department is also actively participating in a number of other key interdepartmental initiatives including:

- developing a long term staff housing strategy,

- land claims negotiations and implementation,

- community transfer initiatives,

- capital needs assessment and capital plan reviews,

- a number of expenditure reduction committees, and

- international and circumpolar relations.

The department's request for its 1992-93 operations and maintenance budget is $119 million, compared with last year's budget of $121 million. To meet the government's guidelines for expenditure reductions, the following cuts were identified:

- 26 person years were cut to save $1.5 million. This represents a 6.2 percent of the department's total PYs;

- $2.13 million dollars cut from buildings and works programs;

- $1.25 million cut from operations;

- $340,000 cut from the directorate;

- $225,000 cut from vehicles and equipment;

- $80,000 cut from project management.

These decreases, combined with a $2 million surplus from the utilities budget, total about $7.5 million. The 26 person years reduction was achieved by deleting positions not currently staffed, sixteen of those were in Yellowknife and 10 were in regional centres.

Offsetting these reductions, the department has about $5 million in forced growth, mostly in leases and increased maintenance and utility costs.

Some service reductions should be expected. The level of some maintenance will be slightly reduced. For example, painting cycles will be lengthened a little, and floor coverings will not be replaced as often. Reductions in service levels will be done recognizing priorities, for example, to health and education facilities. The inventory of vehicles is being examined to identify ways to reduce the numbers and usage of vehicles. Generally, reductions will be managed to minimize service disruptions.

In closing, you can see that this will be a year of change for the department. It will result in a stronger orientation to community needs, closer links to northern businesses, a higher percentage of the government's dollars being spent in the north, and a more efficient administration.

That completes my opening remarks. I now look forward to Members' questions and discussion on the department's proposed budget. Thank you, Mr. Chairman.