Agreed.

Thank you. Public utilities board, total O and M $547,000.

Agreed.

Thank you. Details of grants and contributions. Grants, $15,000.

Agreed.

Grants and contributions $15,000.

Agreed.

Thank you. We have completed the Workers' Compensation Board already, and detail of work performed on behalf of third parties. Renewals, recoveries, and transfer of payments. Description of budget. Go back to program summary, page 08-7, total O and M $6.354 million.

Agreed.

Thank you. Total department.

Agreed.

Thank you. I would like to thank the Minister, and the witnesses at this time.

What does the committee wish to do now? E.M.R., is this committee agreed? Okay.

Page 16-7, I wonder if the Minister would like to make opening remarks? Mr. Minister.

Introductory Remarks, Department Of Energy, Mines And Petroleum Resources

Thank you, Mr. Chairman. By way of introduction, Mr. Chairman, it is important to outline the significant changes to this year's department from last year, then we can turn to some of the department's priorities over the next fiscal year.

Mr. Chairman, you will note an increase in the proposed budget of just over $600,000, or approximately 17 percent.

The major reason for the increase is the new Minerals Initiative Program, which began in 1991 as a replacement program for the Mineral Development Agreement. This is a five year program which, like the old M.D.A., is funded under the Canada-N.W.T. Economic Development Agreement.

The Minerals Initiative Program includes four components: geoscience mapping; minerals technology; public information, and, prospectors' assistance and training.

The Prospectors' Assistance and Training program was recommended by M.L.A.s in the review of our 1990-91 budget. Its purpose is to increase the participation of northerners in the mining industry, by developing an educated, and experienced group of N.W.T. prospectors, who will give local communities a stake in the mining industry.

Assistance is provided for salary and benefits for 12 weeks through the Department of Education and Canada employment and immigration programs.

Grubstake funding agreements have been entered into with eight experienced prospectors for the current fiscal year. These agreements will provide from $4,000 to $8,000 for eligible activities this summer and fall. One half of the funds have been advanced, with the balance to be paid in November. Prospectors are being supported in Fort Rae, Arviat, Rankin Inlet, and Yellowknife.

Minimal field work was carried out in 1991-92, because it was the initial year of the new agreement, and many projects were in the start up phase. 1992-93 will be the first year of a full program, accounting for a substantial increase in funding requirements.

The department's budget increase of $1.2 million and 2 person years, resulting from minerals initiatives, is offset by the termination of one-time funding for the Colville Lake Electrification Project, and restraint measures, in response to the government's fiscal situation.

Mr. Chairman, a survey by the Chamber of Mines indicates that mineral exploration has increased by more than 30 percent between 1991 and 1992. This is significant, because exploration levels are down across Canada as a whole. The survey was done prior to the diamond discovery at Lac De Gras, 200 kilometres north of Yellowknife.

Two companies, BHP Mineral Canada, and Dia Met, have announced the discovery of a diamond-bearing kimberlite. It will take the companies several years to determine the economic feasibility of the discovery. Statistically, better than one in ten kimberlites of this grade are proven economical to develop.

Several companies have responded to the initial news by staking an area approximately 270 kilometres by 200 kilometres in the vicinity. Expenditures are estimated at $25 million to date, with one half of this remaining in the N.W.T.

The department is currently reviewing the diamond marketing and cutting industry, in order to see if the northern benefits can be maximized.

The diamond discovery has overshadowed work being done on a base metal deposit, 200 kilometres south of Coppermine at Izok Lake. Two companies, Minnova and Metall, have done some preliminary exploration work with very encouraging results.

A joint industry/government study is looking at the feasibility of shipping in the Coronation Gulf. If this proves feasible, the G.N.W.T. could realize significant savings in the resupply of Coppermine and Cambridge Bay.

A student, under the guidance of E.M.P.R. and Executive, has upgraded employment data in the Coppermine area. A benefit agreement is being negotiated between Minnova and the Kitikmeot Inuit Association. This is a critical step, as the N.W.T. must receive a net benefit before the government will support the opening of any new mines.

Mr. Chairman, because the G.N.W.T. does not benefit from royalties relating to non-renewable resource development, we continue to pursue the Northern Accord which would see the devolution of responsibility, for oil and gas and minerals management, from the Government of Canada to the G.N.W.T..

Most issues related to the negotiation of the Northern Accord have been resolved, however, one of the outstanding problem areas is the fiscal arrangement.

First, the funding available for the program transfer is not enough.

Second, under the federal proposal the share of royalties that would be retained by the G.N.W.T. is too low, ranging from 40 to 20 percent.

Third, the proposed treatment under the formula financing agreement of tax revenues from oil and gas exploration and development make the federal position even less attractive. Increases in tax revenues from sources such as corporate income tax, fuel tax, and property tax, resulting from oil and gas activity, reduce the amount of the formula financing grant.

Furthermore, the application of the tax effort adjustment factor, the perversity provision, meant that the G.N.W.T. loses approximately $1.30 in the grant for each $1.00 of new revenue generated. Rather than providing the G.N.W.T. with a net fiscal benefit, increased exploration and development would result in the G.N.W.T. being financially worse off.

It continues to be the G.N.W.T.'s position that a development fund is required to finance new infrastructure for oil and gas transportation and local use of N.W.T. oil and gas resources. We are prepared to have the federal government jointly manage the fund.

Considering the general feeling that we have been short-changed on previous transfers from the federal government, it continues to be the department's position that the G.N.W.T. must be prepared to forego oil and gas management responsibilities, until adequate funding is available.

Since April of this year, the N.W.T. Power Corporation has been under the jurisdiction of the Public Utilities Board. The department has represented, and will continue to represent, the government in all P.U.B. hearings.

The department was involved in the review of the N.W.T. Power Corporation's O and M expenditures, which was completed in June, and is presently involved in a review of capital expenditures, which will be completed this fall.

The department is also involved in the development of new utility rate structures.

The Dogrib Nation and the N.W.T. Power Corporation, are working together to identify, and develop new hydroelectric supply in the North Slave Area.

The Department of Energy, Mines and Petroleum Resources is taking the lead in coordinating the participation, and involvement, of G.N.W.T. departments in any hydro development project, which may be proposed.

Mr. Chairman, consistent with previous Standing Committee on Finance recommendations, responsibilities for public programs related to energy conservation were transferred from the Department responsible for Government Services and Public Works in August.

This transfer included two PYs, and a small O and M budget. The department will now be responsible for the promotion of energy awareness, and for providing energy management advice to all energy users in the Northwest Territories, other than those whose energy costs are paid for by the Department of Government Services, and the Department of Public Works.

As a result of this transfer, the department will integrate energy policy and programs under a single division. These organizational changes will help ensure that the G.N.W.T. will be able to respond more effectively to increased demands for energy conservation information, advice, and services.

I will now answer any questions that honourable Members wish to pose. Thank you, Mr. Chairman.

Thank you. Ms. Mike, for the Standing Committee on Finance.

Thank you, Mr. Chairman. We have a couple of resolutions.

Northern Accord. The committee is pleased to learn that the government anticipates a final agreement on the Northern Accord, by March 1993, as there is a great sense of urgency. It is incumbent on the committee, in consultation with the Chairperson of the Financial Management Board, to examine and recommend the terms and conditions of any agreement relating to financial arrangements, with the Government of Canada.

The committee is concerned that, in the past, benefits float south, and little is accrued to the Northwest Territories. This shows the economic agreement simply has not worked. More political preservation is required to ensure that benefits stay in the north, including resource revenues, jobs, infrastructure, and taxes, etc.

Therefore, I move that the committee recommends that the Chairperson of Financial Management Board consult with the committee at an appropriate time prior to finalization of the Northern Accord, so that the committee may have meaningful input.

Thank you. Motion is in order. Order to the motion. Question has been called. All those in favour? Opposed? Motion is carried.

---Carried

Ms. Mike.

Mr. Chairman, the other motion is measuring output and effect. The committee wishes to know what the department is going to accomplish with the money put into energy, mines and petroleum resource programs.

Therefore, I move that the committee recommends that the Department of Energy, Mines and Petroleum Resources report, as a minimum, the following performance measurements in the 1993-94 main estimates: economic and employment indicators; resource revenue sharing; industry investment; and trends in power and field cost by community.

Thank you. Motion is in order. To the motion. Question has been called. All those in favour. All those opposed. Motion is carried.

---Carried

Ms. Mike.

Mr. Chairman, that concludes the resolutions.

Thank you. General comments. Is it the wish of the committee that we deal with general comments?