Thank you, Mr. Speaker. Yes, the department will certainly consider that. As a matter of fact, I think they are doing that in some communities already, with the establishment of facilities for handicapped individuals.

Thank you, Mr. Speaker. I have a couple of questions for the Minister responsible for the Liquor Licensing Board.

1) What amount of revenue is currently raised annually by the five per cent liquor tax?

2) Please provide details of the annual cost to operate the Liquor Licensing Board.

Mr. Speaker, I am pleased to present the first report of the standing committee on public accounts to the 12th Legislative Assembly. We had four days of public meetings, on April 29 and 30 and June 1 and 2. Part one of this report describes the details of the hearings. Part two contains the general observations about the hearings as a whole, and part three contains our recommendations.

During the hearings, the committee was very aware that the government now finds Itself with a significant budget deficit Hard financial times increase the need for much greater vigilance amongst government managers. We have tried to reflect our current financial situation in our recommendations by stressing the need for much greater responsibility and accountability throughout government.

Mr. Speaker, we wish to thank the Auditor General's staff which included Mr. Raymond Dubois, Deputy Auditor General; Mr. Roger Simpson, principal at the Edmonton regional office; Mr. Dale Shier, manager of the NWT audit team, for their assistance. We also wish to thank the comptroller general, Mr. Jim Nelson, for his help in co-ordinating the appearance of the witnesses.

Mr. Speaker, on February 26, 1991, the Auditor General of Canada, Mr. L. Denis Desautels, forwarded his report on the Legislative Assembly to the Speaker, the Hon. Michael Ballantyne.

This document, along with the public accounts 1990-91, became the focal point for four days of public hearings. The Auditor General's report is divided into six chapters. First, financial issues; second, compliance issues; third, legal aid; fourth, government travel; fifth, asset management; and sixth, Kerns reported in previous years.

Most of the report deals with three major issues: Legal aid, government travel and asset management. The first two issues were the major agenda items on April 29 and 30. The chapter on asset management was reviewed during the hearings on June 1 and 2 of this year. In addition to the public hearings, Mr. Speaker, the committee met in camera on several occasions to prepare for public meetings and review recommendations. On April 27th, the committee heard from senior financial managers within government. These managers explained their roles and responsibilities and described the government's financial planning systems and monitoring processes. On April 28th, and again on June 1st, the committee met with the Auditor General's staff to go over the Report of the Auditor General to the Legislative Assembly in detail.

Before making specific recommendations, the committee wishes to make a general observation about the hearing as a whole. This year, the hearing took place in a very different atmosphere. For the first time, the government is in a serious deficit situation. This reality should influence every aspect of government. it should send out a signal across government that things must change; that there must be far more fiscal responsibility and accountability than we have been accustomed to seeing in the past. But this message does not seem to be getting across,

Public Accounts Committee Will Hold Managers Accountable

During the hearing, committee Members got the distinct feeling that witnesses did not take the public accounts committee seriously. By way of this report, Mr. Speaker, the public accounts committee wishes to signal loudly and clearly that this situation will change. The committee intends to be taken seriously. It has adopted a new philosophy; one that is much more proactive in holding managers accountable for their past actions, and it intends to bring about the kinds of changes that are needed.

In keeping with this new more aggressive philosophy, the public accounts committee has introduced some procedural changes. It will meet more frequently. In the past the public accounts intends to limit their meetings to one meeting per year. This committee will meet several times over the course of the year. This will give it the opportunity to follow-up on issues raised by the Auditor General and to investigate its own areas of interest. It will follow-up on commitments made by witnesses.

In the past the committee has been told by various witnesses that corrective action is under way, but the committee has become frustrated waiting to see the results. A delay of several years can occur between the time the problems are pointed out and the time they are fixed. This is unacceptable. From now on, the committee will require witnesses to get specific dates for making required changes and will monitor the dates very closely. It will insist upon co-operation and coordination among government departments and agencies.

Many problems that come before the committee require a coordinated approach, but departments seem either not to notice this fact or they choose to ignore it. They often strike out on their own, developing systems and procedures that respond to their individual needs but do not correspond to the needs of government as a whole. This "doing what's good for us' mentality inevitably leads to higher costs and the decline in level and quality of services. It cannot be allowed to continue.

Finally, the public accounts committee will work more closely with other committees of the Legislative Assembly. When matters that come before the committee fall within the mandate of other committees, the public accounts committee will refer such matters to the appropriate committee with all due haste. A closer working relationship among all legislative committees will help ensure greater responsibility and accountability throughout government.

During the public hearings, the committee discussed the various issues raised by the Auditor General with senior departmental officials. The committee then developed specific recommendations. We present a brief summary of the issues followed by specific recommendations.

This year, for the first time, the Auditor General's report contains a reservation of opinion on a financial statement. A reservation is a statement by an auditor that he is unable to reach a conclusion on all or part of financial statements.

Health Care Billings Dispute

At issue is the dispute between the GNWT and the federal government, the Department of Indian and Northern Affairs, over health care billings. The GNWT claims that the federal government owes $32 million for health care claims, and the federal government disagrees. After reviewing the issue the Auditor General stated that the reason for the reservation is: "As an independent auditor, the Auditor General of Canada cannot take sides but has to weigh carefully all the evidence to reach an opinion. We do not disagree with the calculation of the government's claimed amount, but there is not enough audit evidence for us to conclude whether all this money will be recovered. The government has not provided for any possible loss, as it also does not know the future outcome of its claims. This is the reason for our reservation in our audited report!

Mr. Speaker, the committee called in the deputy minister of Health, Mr. Robert Cowcill, and the deputy minister of Finance, Mr. Eric Nielsen, and asked them to explain the reason for the dispute. The issue is indeed complex. After hearing the witnesses, the committee had two concerns: the large amount of money involved and the impact the potential loss of these funds will have on the government's overall financial situation.

The committee considers the Auditor General's reservation to be an extremely serious matter. It reflects negatively on the accountability that government owes to the Legislative Assembly and to the NWT residents, and the particular issues the disputed $32 million in health care billing can have serious consequences for the government's whole financial position.

Legislative Assembly To Be Kept Apprised By GNWT

This year, Mr. Speaker, two departments went over their budgets. The Department of Personnel overexpended its budget by $4,234,999. The Legislative Assembly overexpanded its budget by $436,900. In both cases, the departments were unable to accurately forecast their actual requirements. This has been an ongoing problem for a number of years. A number of departments seem unable to accurately forecast how much money they are going to need to meet their obligations. At the end of the fiscal year, they end up having to cover unpaid liabilities, money the government owes, and unrecovered revenues, money the government is owed. Government must improve its ability to forecast what its actual costs are going to be.

Therefore, our second recommendation is that government must develop and put in place procedures that will allow it to accurately predict the amount of money it is going to need in a given year. These procedures must allow it to forecast unpaid liabilities and unrecovered revenues, and these procedures must allow It to predict its financial requirements, not only at year end but on an ongoing basis throughout the year.

In addition to the systems problem, there are also people problems. The committee is concerned that managers are not managing their resources properly, and that they do not clearly understand their responsibilities. The Financial Administration Act states quite clearly that managers should not spend money if they do not have the necessary money in their budgets, but every year managers in departments continue to overexpand. The committee accepts the fact that, from time to time, managers may require more resources than they have been given in their annual budgets. What It cannot accept is the willingness of managers to spend money they do not have in their budgets. In such cases, there is no excuse for not coming before the Assembly with a request for supplementary appropriations.

To overcome this problem, the committee is recommending that government must make sure that all managers are aware of their responsibilities for their budgets, and must ensure that all managers stay within their budgets and spend money property according to approved procedures and the requirements of the Financial Administration Act. If managers lack the necessary skills in the area of financial management, they must receive the appropriate training, and government must hold managers accountable for their performance in financial matters. It must link financial management directly to merit increases for good performance, and to disciplinary action for poor performance.

Financial Problems With Legal Aid Program

The Auditor General reviewed the legal aid program and identified a number of problems. Many of these same problems have been identified by recent studies, particularly by the Strength at Two Levels review and the recent report of the Legal Services Board. Though program costs are rising rapidly, the department does not have an adequate information system to allow It to forecast requirements or monitor expenditures.

The committee recommends that the Department of Justice and the Legal Services Board develop adequate information systems at the earliest possible date. The system must provide managers with the information they need to monitor both the cost and the quality of services. Clear deadlines must be set to develop these systems and put them in place.

There is a significant problem with client eligibility and with cost recovery. The program does not seem to have a clear set of eligibility criteria that is understood by program staff and by the clients. Committee Members recognize the need for some kind of means test similar to the one used to determine eligibility for social assistance. They also suggest exploring a closer working relationship with the Department of Social Services to share information and reduce duplication of effort.

A related problem is cost recoveries. The program seems to have no clear guidelines for assessing the client contribution, and there are significant delays in making collections. The committee recommends that government develop eligibility criteria to determine who can receive legal aid and under what conditions. These criteria must be made available to the public. The next recommendation is that a means test be developed to help determine how much individual clients can afford to pay for legal aid services. The means test must be applied consistently.

The committee felt that many residents do not know their rights and obligations. The present system is an imported system based upon the English model of justice. It does not adapt well to the needs of aboriginal residents in small remote communities. Many NWT residents have their own cultural beliefs and traditions, including dispute settling mechanisms, which are different from the imported legal models. They feel that the present criminal justice system is biased against them. Members heard and recounted examples of inequity of treatment by the system, including the treatment of aboriginal persons by law officers. The committee felt that while improvements are needed to the legal aid system, this cannot be done without considering the major problems with the NWT justice system as a whole. Therefore, our committee recommends that government should carry out an independent review of both the legal aid program and the whole criminal justice system itself. This review should focus upon whether people are treated equally and fairly, whether services are consistently high quality, whether programs and services are cost effective; and that a simply worded code of rights should be drawn up and translated into all official languages.

Comprehensive Travel Policy Required

The Government of the Northwest Territories spends about $70 million annually on travel. The Auditor General identified significant problems with the management and control of government travel. There is no comprehensive travel policy. Over the years, travel policies have become fragmented and appeared in several documents. The committee was particularly concerned at the way some travel policies have become institutionalized in union agreements. These tie the hands of government, and making changes is difficult.

Our committee recommends that government should produce a single document that contains all travel-related policies and procedures. This should be distributed to all government departments, corporations and agencies, and it must be updated regularly.

The Auditor General also pointed to poor management control over travel budgets and expenditures. In many cases, documentation was poor to non-existent. Managers are wasting money, and the committee had serious concerns about the integrity of many managers when authorizing travel.

The committee heard testimony from the comptroller general who indicated that he was aware of the many problems reported. The Auditor General's observations suggest that he had not been successful in imposing changes. The comptroller general indicated that he struck a committee to provide a complete review of government travel policy, and the committee has completed its work. It is the understanding of the public accounts committee that the new comprehensive travel policy and procedures is now before cabinet.

The committee agreed with the Auditor General's recommendation regarding travel and recommends that government incorporate into a new travel policy all the recommendations made by the Auditor General in his 1990-91 report, and that government puts its new travel policy into place throughout government, along with appropriate training and orientation sessions, by September 1, 1992.

During the discussions with departmental officials, committee Members were particularly concerned with the high cost of travel. While some of these costs might be attributed to travel in the North, many others seem to be the result of poor planning and poor management practices.

The committee came up with two specific recommendations that might directly reduce the cost of travel: that government should cut down on the number of air charters and use commercial seats whenever possible; and 2 that government should investigate the use of new technology, video interviewing, to reduce travel costs. The Department of Personnel should explore the potential of this technology to interview job applicants in the South, and government should experiment with the technology to see if it can reduce the need for and costs of travel.

Finally, in its discussions with Mr. Ken Lovely, deputy minister of Personnel, committee Members noted that his department

was moving ahead vigorously to correct a number of the inadequacies pointed out by the Auditor General. Changes recently introduced should significantly reduce travel costs. The committee wishes to commend Mr. Lovely and his department for their decisive action.

Mr. Speaker, in preparing for the public hearing, the committee requested a presentation on the role and responsibilities of government's senior financial managers. While committee Members appreciate the presentation, they noted some differences in interpretation among some of the participants about how the roles should be defined. In addition, there seems to be lack of clarity about the relationship and responsibilities of departmental managers and managers within central agencies.

Role Of Comptroller General

The committee is particular concerned about the role of the comptroller general. The control function of his office is weak. It should be significantly strengthened. The committee noted that the Financial Administration Act empowers the comptroller general with direct action capability, but in practice, the role has been reduced to more of an advisory role, analogous to a slap on the wrist when things go wrong. In the committee's view, this is not adequate, and the independence and role of the comptroller general need to ensure that systems and processes protect public property. The committee feels that roles and responsibilities should be clarified, especially to deal more effectively with financial restraint.

Therefore, our committee recommends that government should strengthen the roles and responsibilities of the deputy minister of Finance and the comptroller general. The role of the comptroller general should be made more independent of Finance, and accountability of the incumbent should be spelled out more clearly. Both the deputy minister and the comptroller general should become more pro-active in dealing with spending problems, and they should ensure that all departments obtain value for money.

Asset Management

Mr. Speaker, the Auditor General reported on his first audit of asset management in government. This government has some three billion dollars invested in non-cash assets such as inventories, buildings, equipment, arts and other cultural Items, et cetera. The committee heard testimony from the comptroller general, who has a leadership role under section 12 of the Financial Administration Act, and the deputy ministers of several other departments with specific custodial responsibilities.

The committee was disturbed to hear a recurring theme that departments had control systems but none were complete, and there is no overall control and accountability for asset control. In reality, no one knows exactly what the government owns or what it is worth. This is disturbing because the assets owned represent major investments in infrastructure and other items for the people of the Territories. The committee had no satisfaction that the various departments were doing a good job of effectively managing and controlling this large investment. The committee also expressed concern about how little departments co-operate and work together to control and manage assets. We heard, too, many examples of why things could not be done, rather than how departments could work together to make improvements.

The committee was surprised at the extent of cultural assets that were owned and, in many cases, not controlled properly. Many cultural items are portable and valuable. These include carvings, prints and paintings owned by Culture and Communications, as well as other significant items owned by

other departments. For example, the Department of Economic Development and Tourism had a program to purchase artwork and to lend them to other departments. The committee heard that this is not done and the inventory of these attractive and valuable items is not well controlled. Other cultural assets have unique characteristics that make them extremely valuable, but they are not properly managed. Meanwhile, the government's warehouse contains examples of ordinary items that are not highly valuable yet take up expensive storage space.

The committee heard that many purchases of capital items are budgeted and paid for under operations and management, not under capital. In many cases items are not ordered on a component by component basis to get individual items in the system under the $5000 capital asset definition. This is a blatant attempt to avoid showing Kerns correctly as capital assets which are under more detailed scrutiny by the Legislative Assembly, especially in these times of restraint.

Mr. Speaker, the committee, therefore, recommends that the comptroller general develop a strategy to encourage interdepartmental co-ordination in the design of asset control systems; that he create and carry out a plan to provide maximum co-ordination in the design and development of inventory control systems, particularly for the Department of Public Works, Municipal and Community Affairs and the Department of Transportation; and that he report on this plan to the public accounts committee, either in person or in writing at least twice a year.

Our next recommendation is that the departments with assets custodial responsibilities work together to identify where systems, methods and processes can be combined to save money. All asset inventory systems should be completed promptly and should contain all pertinent information about the assets, including all legal descriptions and maintenance data.

Our next recommendation is that the Department of Culture and Communications develop a comprehensive policy to properly manage historical and cultural assets; that the policy provide procedures for acquiring, assessing, classifying, maintaining, protecting, insuring and controlling these assets; and that the department develop a system and establish procedures for conducting an inventory of historical and cultural assets, including those which are the responsibility of other government departments, agencies and institutions.

Our final recommendation, Mr. Speaker, is that the government take immediate steps to stop departments from splitting capital purchases into smaller components and classifying them as O and M expenditures.

Mr. Speaker, that concludes the report of the standing committee on public accounts on its review of the Auditor General's Report for the Fiscal Year Ending March 31, 1991.

Motion To Move Committee Report 13-12(2) To Committee Of The Whole, Carried

Mr. Speaker, I move, seconded by my colleague for Kivallivik, that the report of the Standing Committee on Public Accounts be received by the Assembly and moved into committee of the whole for consideration.

Thank you, Mr. Speaker. I have an interim report from the Special Committee on Health and Social Services. Mr. Speaker, this report outlines our initial plans, both as to focus and to the process we will use in gathering information. As we begin our work, we are mindful of those aspects of the broader environment which have significant impact on our task.

Mr. Speaker, constituents continually remind us that our major social and health problems are still very much with us, and current efforts do not always seem to be having a significant impact on them. As Members of this Assembly know, we must find ways to do more with less at a time when health costs are growing, and the state of the economy places greater pressure than ever on our social programs. At the same time, government structures and processes are being reviewed in an attempt to streamline services and bring their control closer to the people that they serve.

As we go, we will be listening to all ideas and concerns brought to us, whether or not they fall neatly into the above areas. For example, we take note of the concerns on various social issues raised on June 23 in the Assembly by the Member for Nahendeh on behalf of the interagency group. Looking at program delivery, we will look at our health care system. We have questions about rising costs and the longterm implications of this trend. We want to compare models of service delivery and their effectiveness in meeting people's needs. In all services which seek to help people meet their needs, the people who work directly with the recipients are crucial to the success of the venture. We want to listen to their experiences and hear their ideas about making things better.

We are also concerned about how we take care of these dedicated workers. What do they need in terms of training, skills and personal support if they are to effectively carry on this important work.

In many cases, the best ideas for positive change to services in health and social services are thwarted by external forces such as lack of funds, political support or appropriate legislation and policy. We want to look at the key pieces of legislation to see where changes most need to be made.

Mr. Speaker, we want to base our recommendations to the Legislative Assembly on accurate information gathered from the people who are most involved in the area of social and health needs. We want to hear from those who are in need and from those who strive to help people meet their needs. We want to learn from people who are trying different approaches in helping people. In order to do this, we will start by informing ourselves about what work has already been done in our areas of interest. In some areas where available data is lacking, we may launch special projects or studies. At the same time, we will be refining our plans for a series of community workshops; one to be held in each region. These regional workshops will begin either very late in 1992 or in the spring of 1993 due to the full legislative timetable over the next six months.

We want to approach the process of public participation differently. We want to use a more interactive style than perhaps has been used in the past. We want to hear ideas and concerns from people, especially those who have not always been heard. We want to encourage discussion about the ideas we hear among those in attendance. T hat way, what will emerge will be a consensus view of both the problems and possible solutions for that region. We will take these collective thoughts along to community visits when individual committee Members will, in consultation with the local MLA, visit one community in each constituency. Here we will visit people and services, meet with groups and hear their ideas and responses to the ideas and concerns from the regional workshops.

Mr. Speaker, when this committee was established, there was significant interest by Members who made a commitment to assist the vital work of this committee. We, therefore, hope to hear feedback from Members as to our work plan and focus of attention, and I would ask Members to please pass on comments to either of the committee co-chairman.

Mr. Speaker, that concludes Interim Report, No. 1, of the Special Committee on Health and Social Services.

Motion To Accept Committee Report 14-12(2), Carried

Therefore, I move, seconded by the honourable Member for High Arctic, that Interim Report, No. 1, be received by the Assembly.