Agreed.

--- Agreed

Thank you, Mr. Minister, and your witness. The next item is the Department of Public Works. Agreed?

Agreed.

--- Agreed

Department Of Public Works

Mr. Minister.

Minister's Opening

Remarks

Thank you, Mr. Chairman. The department's capital budget request for 1992-93 is approximately $4.5 million. Five hundred and seventy-five thousand dollars is budgeted for the dust control program. This program controls dust on roads in non-tax-based communities.

Under accommodation services, renovations to existing offices and tenant improvements to new offices are a large part of Public Works' capital. These projects are in response to growth or organizational changes of our client departments. Potential department consolidation have put much of government's office plan on hold until implications are reviewed. This has allowed for the accommodation services capital program for 1992-93 to be reduced,

In addition to the earlier reductions made during the capital target reduction exercise, and in response to the recommendations from the standing committee on finance, I will be introducing a motion to further reduce this program by $200,000.

Almost half of the 1992-93 capital program is for major improvements to buildings and works and for replacement of vehicles. This ensures working conditions for employees, provides buildings and vehicles that operate efficiently and results in long-term operating cost savings to the government. As an example, under the buildings and works activity, we will do $450,000 worth of energy conservation projects. These projects reduce utility costs in public buildings. The cost of each project will be recovered in five years or less through lower operating costs.

A major renovation and upgrade to the Laing building will be completed in 1992-93. This has been a three year overhaul of the building's mechanical and electrical systems and the replacement of the roof. The GNWT bought the building for one dollar in 1989 after a 20 year lease-to-purchase agreement.

The vehicles and equipment capital program provides for the replacement of vehicles that become inefficient to operate. This target was reduced by $138,000 in January. The department is also reviewing the use of pool vehicles in Yellowknife and regional centres to see where additional savings might be achieved.

Mr. Chairman, the department's capital target is relatively small, but it is important to achieving effectiveness and cost efficiency in the operation of the GNWT, which you must remember is now a billion dollar a year "business." More importantly, however, is the fact that the department is also responsible for managing the design and construction of buildings and works, so that departments, boards and agencies, and municipalities can deliver programs and services to the NWT residents.

In 1992-93 the department will manage $70 million worth of capital projects. These expenditures represent a very significant economic opportunity for Northerners. As the Minister responsible for overseeing these expenditures, I wish to assure the committee that the department sees its responsibilities to developing the economy every bit as important as it is to build cost effective and technically sound infrastructure. To illustrate, I would like to outline some new and ongoing initiatives.

For this construction season Public Works will work closely with the Housing Corporation and Department of Transportation to co-ordinate construction activities and will implement pilot projects to strengthen the community-based approach to construction. By community-based project planning, I mean that all projects in the community should be planned and co-ordinated over three to five years rather than as individual projects. The departments will work more closely with municipal councils to establish project schedules which better enable the community resources to undertake this construction work.

This community-based approach has been tested in Snowdrift last year. The local development corporation needed construction expertise. Public Works and the Departments of Transportation and Municipal and Community Affairs agreed to a construction management approach for a road project. Public Works provided a construction superintendent to help the corporation with the project. The council indicated its desire to have the departments plan the projects over a longer period of time to maximize local benefits. The results were positive in that the corporation is now better prepared on future projects in the community.

Community-based projects are also organized in Chesterfield Inlet, where the community asked that several projects originally planned for a two year period be spread over a three year period. This allowed for the creation of three new training programs and much greater employment of residents. During 1992-93, Public Works will implement this approach in at least one community in each region.

Public Works and Housing Corporation are co-ordinating efforts to find appropriate ways to support new and existing northern manufacturing operations, such as a proposed window plant in Hay River. How to make more and better use of northern lumber in our construction projects is also being examined.

The department is managing the new Legislative Assembly project on behalf of the NWT Legislative Assembly Building Society. Major contracts for this project have been tendered and won by northern contractors. This project will require contractors to bring labour and skilled trades into Yellowknife. To assist the contractors, however, in hiring northern labour and trades, a committee of several departments is being established to identify, contact and support people from across the North in coming to Yellowknife to work on this project. In co-operation with Arctic College, training programs will also be established.

Mr. Chairman, many of our projects and contracts are negotiated directly with community development and contracting corporations. For example, the new drug and alcohol treatment centre at the Hay River Reserve is a three million dollar project. Representatives from the communities surrounding Hay River were very much involved in the planning and design of this unique facility. The project has been broken down into several construction contracts which are being negotiated directly with the reserve's own construction company. Department officials are working with a local development company in Igloolik to jointly develop a design for the proposed new air terminal building in that community. When completed, the developer will build a building and lease it back to the government. The department will continue to require staff housing, offices, warehousing and arenas, where possible, through design/build agreements with northern developers and contractors.

Mr. Chairman, the traditional procedures used in other jurisdictions for designing, tendering and awarding contracts for construction projects are no longer employed by this department. All of our design, tendering and construction procedures have been significantly modified to meet the unique needs of our developing northern construction industry and economy. Whether it be to tender under the rules of the business incentive policy, to tender on the basis of northern and local content only, to negotiate general contracts, construction management contracts, design/build contracts, or any one of the several other unique approaches, these procedures have been developed in response to expressed wishes of our client departments, communities and the construction industry itself.

This year the department is co-operating with the NWT Construction Association in a pilot project in which two projects will be tendered through a bid depository approach, Subcontractors will submit their bids to the general contractor through a depository operated by the construction association. This should enhance the openness and fairness of the bid process and facilitate the evaluation of northern subcontractor tenders over the southern. The department is co-ordinating a review of contracting bonding requirements. The objective is to find ways that northern general contractors can be assisted by reducing the requirements for contract security while protecting northern subcontractors.

Several new training initiatives will also be facilitated this coming year. The department has provided funding to the NWT Construction Association to develop a construction worker training program. This program will work in conjunction with approved capital construction projects to train residents in basic construction skills and prepare them to pursue further training and employment in construction. The association has identified a number of projects that this program will be suited to run with concurrently. The NWT Construction Association is now approaching communities and regional Pathways committees for commitment and funding. Project managers will provide assistance and support as required.

These initiatives, however, require a great deal of effort and commitment by all departments involved, as well as by community councils, residents and northern businesses. The Public Works' role in this is simply to provide a focus or residence of northern expertise for the management and control of the planning, design and construction of these projects. But it is a critical role, as the project manager will organize and co-ordinate the resources of the community, industry and the government to achieve maximum northern participation while controlling costs to approved appropriations.

One thing that all of this effort does, in addition to increasing the northern benefits from our construction activities, is to increase the cost of individual projects in terms of planning and management efforts and in purchased labour and materials.

Mr. Chairman, the message from the standing committee on finance is clear to me. We must achieve more northern spending, training and employment and business development, all with less total spending. I believe the Members understand, however, that there is an extra cost on a project-by-project basis, but this is accompanied with greater benefits for Northerners.

Mr. Chairman, the high cost of delivering our capital facilities continue to be questioned, however. These questions are nevertheless welcome as challenges. I admit that these facilities are expensive, for the reasons that I have just mentioned such as in training lesser skilled labour and in using northern consultants and construction businesses with higher operating costs. They are also expensive because they are designed and constructed to high technical standards. These facilities must operate for a long time in a very harsh environment, and with high utility and maintenance costs. The cost of operations and maintenance of a school, for example, over 25 years can be as much as five times the cost of the initial construction. To save a few dollars in the initial construction with cheaper pumps and motors or lesser insulation or roofing systems is a false economy.

The department is aware, however, that it must continually review and refine its construction standards to reduce the costs where possible. Standards and construction details are also improved, as required, to facilitate the use of local materials and skills on particular projects. As examples, the electrical and mechanical designs for recreation centres are being reviewed with two northern contractors to develop and ensure our standards meet particular local conditions and are the lowest yet most cost effective. In another case, Leonard and Associates, the major contractor and employer in Arviat, has been invited to participate in the design of the library proposed for that community. In 1992-93 the department will initiate technical standard reviews on a regional basis, through the regional offices. In addition to involving the client departments, contractors and consultants resident in those regions or experienced in construction in those regions will have an opportunity to participate.

Mr. Chairman, I should just say a few comments about the business incentive policy. As you know, this policy allows a 15 per cent preference to northern contractors and five per cent more when the contractors are local. Public Works has co-ordinated a major effort, over the past two years, to review and revise this policy. A presentation was given to the standing committee on finance in February to outline the proposed changes. Those changes came after a long and intensive review of the policy, a review which included MLA and public input. The discussions with the standing committee were productive and resulted in further improvements.

I would like to emphasize something I have said before in this House. The business incentive policy is designed to compensate northern businesses for their higher northern operating costs. It is not a policy which in itself can create the kinds of training and employment opportunities that Northerners should expect from government purchasing and construction programs. The review identified that the policy was not effective in creating training or employment and that northern contractors, as well as those from the South, had to import most of their labour and materials from the South. We have a skills shortage in the North that must be addressed by other means.

Cabinet appreciates the frustration of MLAs and Northerners with this situation and is committed to addressing them through the government's capital construction program by better focusing resources and initiatives. The business incentive policy should be enhanced and streamlined to focus on business development. But to establish an absolute preference policy when we know the required skills and materials are not available in the North will only necessitate expenditures of valuable effort and limited dollars to manage all of the exceptions to the policy. I believe that we can better achieve our objectives with an improved BIP in combination with initiatives such as I have outlined.

Mr. Chairman, I apologize for taking so much time in opening remarks when our actual capital request is quite small. But I have listened carefully to the discussions and concerns raised during the debate of the capital bill. They are concerns that I share as an MLA and am now committed to addressing as the Minister responsible for much of this government's capital construction program.

The capital projects managed by the Department of Public Works have significant social and cultural impact on northern communities, but as has been illustrated by this debate in the past, there is much to do in improving the planning that goes into developing the capital program. We will contribute our expertise to the communities and departments in that task. Further, as made clear during the standing committee on finance review, Public Works is a significant economic instrument. The department understands its accountability to this Legislature, to cabinet, and to Northerners in this respect. We will continue to undertake this role in ways which make most effective use of that instrument. The deputy minister has already met with the NWT Construction Association and a committee of northern consultants to reinforce that message and to tell them that government and industry must work together to further resolve these issues.

With the support of the northern construction industry, and in co-operation with communities, I am confident that we can improve the benefits of construction activities to northern residents and business. We will be able to do more with less.

In conclusion, Mr. Chairman, I will be pleased to answer

questions from the Members.

Thank you. Mr. Minister, would you like to call your witnesses?

Mr. Chairman, I would like to bring in my witnesses, Bob Doherty, deputy minister of DPW, and Dave Waddell, finance director.

Does the committee agree?

Agreed.

--- Agreed

You may proceed, Mr. Minister.

Please introduce your witnesses.

Thank you, Mr. Chairman. To my left is Dave Waddell and to my right is Bob Doherty.

Thank you. General comments. Mr. Todd.

Comments From The Standing Committee On Finance

Thank you, Mr. Chairman. First of all, let me commend the Minister for the excellent introduction of his budget. It is good stuff. I think it is sincere and the kind of stuff that we have all talked about. Certainly, the current Member talked about it many times when he was in the Legislative Assembly. Clearly, we have to look at the capital budget and the budget of the Northwest Territories as an economic instrument to ensure that maximum benefits go to all Northerners both in employment and in the private sector. The initiatives the standing committee on finance and the current Minister of Public Works is bringing forward are commendable and in keeping with strong feeling held by most of the Members of this Legislature.

With respect to the capital budget per se, the Public Works capital budget, there was some concern that in these difficult times perhaps office renovations for civil servants at this particular time may not necessarily be a reflection of our needs and perhaps there should be a re-examining of that.

There was also some concern that perhaps the standards -these palatial palaces that some people reside in -- are a little high when you consider the majority of people are having a difficult time finding employment and finding houses, et cetera. As I say on many occasions, and as I will say until we get running water in houses, there are people without running water in their homes.

On the business incentive policy, the committee noted and I know the Minister as a former MLA spoke strongly to it that there has been significant improvement in the "buy North' policy over the years. Everybody has to be commended for that. We do give credit when credit is due. In this case, it is due.

However, like everything else, there is always room for improvement. The business incentive policy is an important economic instrument for bringing about change in this country, in the North. The NWT is in a different situation than the rest of Canada when it comes to unemployment. Our skill level is low, and our job opportunities are few. Northerners have to see changes happening now in order to have hope and to be optimistic for a job for an opportunity in the future. This is not something we should talk about. This is something that we should do. We do not need 20 reasons why we cannot do something. We only need one reason why we should do it.

The committee is prepared to support the government if they will do things differently, as has been suggested in the speech by the Minister. The standing committee on finance believes that northern employers will be more conscientious in the recruitment, hiring and training of Northerners than southern ones. But, also, the standing committee on finance agrees that we have to put in some necessary checks and balances to ensure that Northerners, particularly in the employment field, do behave and perform in a manner which is acceptable to the Legislature. As well, to put in place positive reinforcement to working toward maximum job creation in the expenditure of territorial funds.

The standing committee on finance will recommend that the government implement the policy directive given by the Legislative Assembly which will permit only companies resident in the Northwest Territories and who meet the government's business incentive policy to tender in all GNWT contracts. This is consistent with the previous standing committee on finance, and consistent with many speeches the current Minister has made with respect to this policy.

The committee believes that the "buy North" policy should be implemented immediately. Government should keep it simple and practical, and stop referring to it as an absolute preference. Government should work with employers to provide on-the-job training and provide positive reinforcement for employers to "buy North" and "hire North." This likely means taking a totally different creative way to get the job done, as we have talked about and as you have addressed in your speech, which we appreciate. All government contracts for goods and services, not just construction, should be part of that business incentive policy.

In closing, Mr. Chairman, I am certainly encouraged by the Minister's comments today. But you know, there is an old saying that action speaks louder than words. We certainly hope that six or eight months from now what has been suggested and what has been recommended will be put into effect, and that the net effect to Northerners will be a plus, not a negative. Thank you.

Thank you. I should note that this was the chairman's remarks. General comments. Mrs. Marie-Jewell.

Members Concerns Regarding Department Of Public Works Budget

Thank you, Mr. Chairman. Some of the comments I want to make with respect to concerns on the Department of Public Works have been echoed by the chairman of the standing committee on finance. But, at the same time, I want to indicate some concerns with regard to the budget that is being proposed.

My main concern, Mr. Chairman, is the fact that, quite precisely, the government has been telling this Legislative Assembly that there is no funding and that we are in a time of fiscal restraint. We have all come to acknowledge and accept that and have tried to deal with the financial position that we are in. But, at the same time, it appears that if you look at this department's budget, when you take into consideration the amount of funding they are using for renovations and the amount of funding they are using for purchasing of vehicles, it is basically serving the organization, which is the government; you look at probably 51 per cent of this particular budget being utilized in either building upgrades or renovation upgrades, which in itself takes 40 per cent. Mobile and other equipment is 13 per cent. Fifty-three per cent of this budget is to either purchase vehicles or to do office renovations. I am concerned with the way they are prioritizing their plans on how to address the needs of the North.

We have many different programs in the government that are going to be facing cuts. We are looking at being scrutinized to a degree because of the cost. Yet, the department is allowed to look at renovating office space and purchasing vehicles for civil servants. What I am concerned about is the fact that this department is being, to quite a degree, self-serving of the government for civil servants. Here we are telling the people of the North that there is no money to purchase this or to do that, but it is okay for us to buy new vehicles for our civil servants to drive around. It is okay for us to be self-righteous and renovate office buildings to suit our needs. I think this is the wrong type of message to send out to the people of the North. I think it is wrong for the government to do that.

I have indicated to the standing committee on finance that when you look at the Department of Public Works, I find that a good portion of their budget, even though they stimulate the economy and assist the contractors accordingly -- and I believe everybody recognizes that -- is being self-serving. This is the concern I have. I recognize the Minister has some changes to office renovations. He indicated that he will consider cutting back by $200,000, and he should be commended for that, but at the same time I do not know whether $200,000 is really enough when you look at the total amount of your office renovations as we go into the details of the budget. You do office renovations only in Yellowknife, which is $750,000. So $200,000 is just a small portion. When you look at your total office renovations, I think they come to $1.8 million. What portion is $200,000?

I am concerned that if we are going to do things such as send a signal out to the people of the North that there is no money to be able to address issues that we face in the North and that we are going to spend money at the same time to address concerns of the civil servants who have jobs when many people in the North do not have jobs, I believe we are failing into a wrong type of mode in how we want to serve the people of the North.

I do want to indicate to the Minister that I am still concerned by the fact that 53 per cent of his budget is to be self-serving. I recognize that he cut $200,000, but I still think the 52 per cent of his budget addresses the civil servants and I do not believe it is serving the people's needs. It is addressing the people's needs of the Government of the NWT, but not the people of the North. I do want him to be fully aware that I am still concerned with the budget that he is presenting to the Assembly.

General comments on Public Works. Mr. Minister.

Thank you, Mr. Chairman. I guess the main reason for our capital budget is to supply a service to the client departments. At the appropriate time I will introduce a motion to reduce by $200,000 the Yellowknife accommodation services. What is left in Yellowknife is about $550,000, and $150,000 of that goes to Fort Rae, $100,000 to reinforce the floor in the courthouse and $300,000 for office renovations to accommodate the Department of Safety and Public Services. This is no expansion, just renovation of very poor office space. As of February we have 79 leases with northern and native owned companies and that is approximately nine million dollars a year in business to northern businesses for office space.

Mrs. Marie-Jewell.

Mr. Chairman, I was not going to dwell on the point and I do not want the Minister to come in defence in regard to the comments I made, but the point I would like to make to the Minister is that he has to bring forth to the cabinet, in respect to this whole budget, the fact that this budget, particularly out of his total budget of $4.5 million, $1.8 million is being used for office renovations, regardless of who it is going to. And $1.8 million is serving civil servants which is depriving the ability of funding to be released so that programs can be addressed and concerns can be addressed in the Territories.

I think that is the point I want. I know the Minister is responsible for delivering services on behalf of all other departments; I recognize that and I recognize that it is not his budget alone, that it is on behalf of the total government departments that he wants to address these concerns. But I think the concern has to be expressed to cabinet, the fact that if we are going to go out and tell people of the North there is no money, I think at the same time we have to practise as a government and government offices have to make every effort to practise that there is no money and they just have to leave with the walls they currently have. I think it is critical that that concern be addressed, and just to renovate because you have a budget amount allocated should not be entertained as readily as it used to be. That is the specific point I want to make.

Mr. Minister.

Thank you, Mr. Chairman. I agree. People should have to justify renovations to their buildings. Departments will have to justify renovations a lot more in this time of very little cash. Even in the communities the renovations that they need, they are going to have to justify them. If a social worker needs an office, everything will have to be justified more. It is not a bottomless pit, guaranteed. So everything will be watched closely.

Mr. Todd.

If there are limited dollars what are we going to do about it? That is all we are trying to say here. When I look at four boardrooms in one office building for the Department of Health, when I go into some of these offices and see what people have, the rain is not coming through the roof, the heat is on and the carpet gets cleaned and the garbage gets picked up. So I think we have to get down to basics here. It is almost like a revolving door. Every time you turn around somebody is moving from one office to another to another. Renovations going all over the place.

I think Mrs. Marie-Jewell has a point here. We have to give ourselves a shake here. People are doing not bad from what I see. They also have a reasonable salary, not a bad lifestyle, running water, flush toilets. So are these kinds of expenditures really necessary when we have more critical things to address? I think we have to get that message through to people that maybe you have to put up with a little less. We are saying it to everybody else out there. You are saying it to the regions, you are saying it to councils. Why not say it to the civil service.

In the overall pitch of things, it is not a significant dollar issue, but in terms of perception it is important. Public perception should be that we all must take our share of pain, if that is what we all want to do, until good times come, and I understand they are going to be rolling in soon, according to Mr. Pollard anyway. But I think that is what we are trying to say, Mr. Chairman.