Thank you, Mr. Speaker, Members. Mr. Speaker, I want to give Members of the Legislature an update on our financial situation and then speak about how

we must work together to get more benefit from the limited resources we have.

During our last session I explained the effect of a recession on our annual grant from the federal government and that a weak national economy has driven us into a poor financial position. Mr. Speaker, the situation has not improved.

Largely as a result of the drop in our formula funding revenue, our 1991-92 operating deficit is now expected to be $50 million by the end of this year, March 31. In addition, the government is continuing to face growing expenditure pressures from many areas, particularly from user-driven programs like health and education.

By the end of March, Mr. Speaker, we will have had to borrow $55 million to cover our cash shortfall. And unless we take action to increase revenues and reduce expenditures, our future operating deficits will increase. We could have an accumulated deficit of close to $100 million by the end of 1992-93. This would result in additional borrowing of $100 million. The 1992-93 interest costs on this debt would be in the order of $10 million, Mr. Speaker.

We need to be realistic. We cannot afford to get into this much debt. The size of our financial problem demands that we continue to be vigilant over our spending; continue to restrict non-essential hiring and travel; bring salary and wage costs in line with what we can afford; and gain greater efficiencies in areas such as utility and energy use, and communication costs.

Mr. Speaker, spending restraint will not be enough. We must also consolidate and down-size government operations and programs; review how we use government institutions and facilities; review the levels of service we provide, and the capital standards and entitlements we base our capital program on; and review our need for specific assets and dispose of those that are no longer necessary for program delivery or no longer reflect government policy.

In some cases we can draw on the recommendations of the report, Strength at Two Levels. But that report is just one source of ideas. We must look well beyond the pages of that document to identify more areas for reduced spending and revenue generation.

Increasing our revenues through taxation and user-pay initiatives is not a preferred option because of our high costs and limited tax base. But they will have to be examined. So will the fact that Canada begins receiving a one-third share of Norman Wells oil field profits this year. The estimated $50 million per year the federal government has started to receive should not leave the Northwest Territories.