Notices of motions for first reading of bills.

Item 15, motions.

Item 16, first reading of bills.

Item 17, second reading of bills. Item 18, consideration in committee of the whole of bills and other matters: Tabled Document 9-12(2), Strength at Two Levels; Tabled Document 10-12(2), Reshaping Northern Government; Tabled Document 12-12(2), Plebiscite Direction; Bill 14, Appropriation Act, No. 1, 1992-93; Committee Report 3-12(2), Standing Committee on Finance Review of the 1992-93 Capital Estimates, with Mr. Arvaluk in the chair.

The committee will come to order. What is the committee's wish? Mr. Pollard.

May I suggest to the committee that we proceed with Bill 14, Mr. Chairman? Thank you.

Thank you, Mr. Pollard. Bill 14, Appropriation Act, No. 1, 1992-93. This will also include Committee Report 3-12(2). The committee will take a 15 minute break.

---SHORT RECESS

Bill 14, Appropriation Act, No. 1, 1992-93 And Committee Report 3-12(2)

I would like to call the committee back to order. We are dealing with Bill 14 and Committee Report 3-12(2). Mr. Pollard, would you like to make a statement?

Thank you, Mr. Chairman. Mr. Chairman, I would request that I would be able to move to the witness table and bring in a witness.

Is the committee agreed on that?

Agreed.

---Agreed

Mr. Minister, would you please introduce your witness?

Mr. Chairman, I have with me Mr. Lew Voytilla, who is the secretary to the Financial Management Board. Thank you, Mr. Chairman.

Thank you. Mr. Pollard, proceed with your statement.

Minister's Opening Remarks

Thank you, Mr. Chairman. Mr. Chairman, I am placing before you the 1992-93 capital estimates. These estimates propose spending over $167 million on capital projects in the 1992-93 fiscal year.

Included in this amount, Mr. Chairman, is approximately $15 million for projects that were originally budgeted in the 1991-92 fiscal year. These projects have not been completed as quickly as planned, so they are being carried over to 1992-93. The funding that was included in the 1991-92 estimates for these projects will not be spent.

The $15 million included in the 1992-93 capital estimates for project carry-overs does not include all projects that will need to be carried over. By the end of the fiscal year on March 31, 1992, we expect that at least another $10 million dollars in project carry-overs will be identified. For these additional carry-overs, the 1992-93 appropriation authority required to complete them will be contained in supplementary appropriations next year.

Mr. Chairman, I would like to take this opportunity to explain how the detailed capital project budgets are presented in the capital estimates document. In the "detail of capital" section of the book, the total planned expenditure to complete each capital project is shown under the headings: 1992-93 main estimates, prior years' costs, future years' anticipated costs, and total capital projections. Although these headings are relatively clear, there are a few points I would draw to Members' attention.

First, the amounts shown are what will be spent to complete the projects contained in the 1992-93 capital plan only. It does not include amounts for projects that were completed in prior years nor amounts planned for projects that may start in future years. If the 1992-93 expenditure does not commit the government to future year spending on that project, then no future year costs are shown.

For example, a project to upgrade a section of highway may be part of a long-term plan to upgrade the entire highway system, but upgrading that particular section of highway does not contractually commit the government to upgrade the entire highway. As a result, only the budget for that specific highway section upgrade is shown, not what was spent last year on other highway projects, nor what may be spent next year on other sections.

The full long-term plan for specific types of capital infrastructure is contained in documents other than the capital estimates. For example, the total cost and plan for the NWT highway system is outlined in the NWT transportation strategy. It is important to realize that the government's ability to carry out these long-range plans is dependent on the level of funding that is available. Very often plans must be delayed or changed simply because the government does not have enough money to do everything it wants or needs to do.

Mr. Chairman, the second point that needs to be explained is that the capital estimates represent a plan, and plans may sometimes change. When the Legislative Assembly reviews the project detail in the capital estimates document, they are seeing the best estimate from the government of what a project will cost and when it will be completed.

Factors Affecting Accuracy Of Capital Budget Estimates

The accuracy of these estimates can be affected by the stage of project planning. Planning for each significant project goes through several stages. The first stage often involved no more than a review of the specific needs the project is supposed to address. Later, the project proceeds through to the preliminary and then the detailed design stage. After that, the tender and contract stage, and finally the construction stage.

At each of these stages, changes to project plans and costs can be made necessary as additional information becomes available about such things as the needs the project is to address, the site of the project, the detailed design requirements, the method of construction, the market conditions at contract tender time, the weather, and many other factors.

The accuracy of project estimates can also be affected by the availability of funding in future years. When the government commences the planning for a project and includes it in the capital estimates, it is recognizing the need for that project. But if there is less money to go around next year because revenues shrink, as they did this year, or something happens that was not anticipated and the government must spend more money somewhere else, then plans must change. This may mean that budgeted projects are down-sized, cancelled or deferred. When this occurs, the delayed project remains a priority -- and I repeat, a priority, Mr. Chairman -- and becomes a first draw on funding that becomes available in future years.

For the reasons I have just explained, the capital project budget may change from one year to the next. The government is authorized within certain limitations to make changes, and others are made through supplementary appropriations that are submitted for the approval of the Legislative Assembly. Ordinary Members will see these changes if they are comparing last year's estimates to this year's. If questions arise, individual Ministers will provide explanations.

Mr. Chairman, most of the detailed planning for the 1992-93 capital estimates was performed during the term of the previous government, and over half of the funding being requested in this capital budget is to complete projects that have already been started. Decisions on 1992-93 projects must be made now to meet the summer transportation and construction season. These factors have limited the opportunity for the current government and the Legislative Assembly to make major changes to either the process or plan for 1992-93.

New Approach Proposed For Capital Planning And Budgeting

For 1993-94, a whole new approach to capital planning and budgeting is proposed. This new approach will provide for greater involvement by ordinary MLAs and by communities. The major elements of this new process are: the provision of a capital needs assessment for all programs to MLAs and communities as a consultation document for capital planning; a permanent change to the planning and approval cycle so that the capital budget is dealt with in the fall; and the introduction of and adherence to a standardized schedule and procedure for MLA and community involvement in the capital planning process.

With these changes, the capital planning process will become much more open and responsive to community priorities. Although the government's ability to respond to community-identified priorities will always be limited by the funding that is available, a more open approach should allow us to direct that limited funding to the areas of greatest need.

Mr. Chairman, in closing I would point out that the government's capital program has a number of objectives. One is to provide the physical infrastructure necessary to do such things as house, care for, and educate NWT residents. But another objective is to promote the development of NWT business and create employment for NWT workers. To accomplish this second objective, the government must allocate and deliver capital projects in a manner that maximizes the local employment and business opportunities that can be obtained from capital spending. This requires us to be innovative and accommodating. It will mean that capital projects have to be distributed fairly among communities, and that projects will have to be spread more evenly between years so that a more continuous level of capital activity occurs in each community. We must temper our desire to have capital facilities in place as soon as possible with our need to keep the economic benefits of capital spending in the North.

Mr. Chairman, as we go through the process and as each department comes before this Legislative Assembly, motions will be made to amend Bill 14 by the Minister responsible for that particular department or by myself, sir, in response to the recommendations of standing committee on finance.

Mr. Chairman, this concludes my opening comments and I am prepared to answer any general comments Members may have before we commence the department-by-department review of the 1992-93 capital estimates. Thank you, Mr. Chairman.

Thank you, Mr. Minister. Are there any general comments? Mr. Todd.

I think in our address yesterday we pretty well indicated to the government what the position of the standing committee on finance was with respect to the budget. Unless there are any others that wish to make some general comments, we have pretty well said our piece yesterday.

Thank you, Mr. Todd. Mr. Pollard.

May I suggest, Mr. Chairman, that we ask Education to come up first? Would that be acceptable?

Mr. Todd.

Perhaps, if I can, Mr. Chairman, prior to Education coming to the witness stand, we can ask everybody's indulgence for us to bring forward some general resolutions which we would like to address this morning with respect to the budget.

Thank you, Mr. Todd. Does the committee agree on Mr. Todd's suggestion?

Agreed.

---Agreed

Mr. Todd

Motion That Cabinet And MLAs Hold Joint Strategic Planning Workshop, Carried

Thank you, Mr. Chairman. I would move that the committee recommends that the cabinet and ordinary Members hold a joint one-week strategic planning workshop to develop a shared vision of what good government looks like; and further, that the joint workshop be co-chaired by the Government Leader and an ordinary Member; and furthermore that the joint workshop be undertaken and completed prior to the review of the 1992-93 main estimates by the standing committee on finance.

The motion is in order, and the motion will be distributed. Everybody has a copy now. The motion is in order. To the motion. Mr. Todd.

This motion is in keeping with the position we have all taken with respect to open government. There is clearly a need to get some direction as to where we are heading. All of us have to be involved in the process; hence the reason for the motion. We want the shared vision to be clear prior to the 1992-93 main estimates. Thank you, Mr. Chairman.