Mr. Chairman, I would like to apologize on behalf of the Minister responsible, for matters beyond his control, he is not able to deliver his budget address. So, I will be trying my best to carry out this function.
Mr. Chairman, the 1992-93 main estimates for the Department of Economic Development and Tourism total $45.738 million, which includes $34.228 million of operations and maintenance funding, $8 million for the Northwest Territories Development Corporation, and $3.5 million for Tourism and Parks capital projects. In addition, this budget provides funding for 147.5 person years.
Mr. Chairman, the government has heard from communities that priority must continue to be placed on supporting the creation of new jobs through the growth of the private sector, particularly in the smaller communities.
To this end, the Department of Economic Development and Tourism has re-allocated resources, and adjusted operations, in order to continue to stimulate growth in smaller communities.
The programs and services offered by the Department of Economic Development and Tourism are geared towards business development and increasing incomes. The variety of programs, issues and responsibilities, covers sectors such as fisheries, small business, arctic foods, agriculture, arts and crafts, tourism marketing, parks and visitor services, as well as interprovincial and international trade.
Mr. Chairman, there are different organizations within, or at arms length from the department, aimed at delivering programs to promote economic development in these areas. I will provide Members with some highlights of initiatives that the Department of Economic Development and Tourism, and related organizations, are undertaking to develop the economy of the Northwest Territories.
Mr. Chairman, I would like to stress that the success rate of initiatives undertaken by the department, and related agencies, is largely dependent on the level of community support. When local groups initiate, or help, to drive the course of a project, there is a sense of ownership and pride in the outcome. The Department of Economic Development and Tourism endeavours to involve local residents when initiatives are being considered, and we encourage communities to help identify potential economic opportunities.
The Business Credit Corporation is a product of the Northwest Territories' economic strategy, and is structured to make funding more accessible to level II and III communities.
The N.W.T. Business Credit Corporation Act was proclaimed in October, 1991, the effective date of start up being April 1, 1992. The purpose for establishing the corporation was to create an arms length lending agency capable of providing term loans, contract security, and loan guarantees, to new or established northern businesses. It replaces the department's business loan fund, which had provided similar services since 1977.
Although the corporation provides the same lending services as the previous business loan fund, there are a number of distinct differences in its method of operation.
While the current cap for the loan fund is $20 million, it has the ability to grow to a maximum of $50 million, at the discretion of the Financial Management Board.
The loan fund is intended to be self-sustaining. That is to say, that interest income, net of the cost of borrowing, must be greater than the fund allowance for write off. The corporation will continue to receive approximately $333,000 annually to cover operating costs.
The Board of Directors has been granted lending authority up to $500,000, and has been empowered to delegate its authority to officers of the corporation. The delegated authority is currently set at $200,000. Loans in excess of $500,000, up to a maximum of $1 million, can be approved by the Minister, on the recommendation of the board.
Mr. Chairman, the corporation is fully functional, but has a number of operational and administrative initiatives, which will be undertaken prior to year end to increase its effectiveness. This includes the delegation of lending authority up to $25,000 to regional staff. The delegation of authority will be implemented upon the completion of credit training courses, being sponsored by the department over the next two months. All departmental economic development officers, board members, and B.C.C. staff, will take the course currently scheduled for Inuvik, Iqaluit, Yellowknife, and Hay River.
Over the past 12 months, the board of directors of the corporation have approved 43 loans valued at $6.350 million. There is approximately $18.290 million in principal currently outstanding to 223 clients, and the total portfolio, including interest due, is approximately $19.200 million.
The Business Development Fund was established in 1991, in response to concerns raised in the Scone Report, and also in conjunction with, the direction established in the government's economic strategy.
The program was designed to achieve the following objectives: to consolidate a variety of business incentive policies into one comprehensive policy; to target funding to businesses in disadvantaged communities; to improve client access to funding programs; to reduce the time required to apply and receive funding; and to provide funding for the complete business cycle.
In all instances the guiding principles which dictate applicant eligibility are: One, projects must demonstrate a level of job creation. Funding is based on $25,000 per job created with a job being measured as $12,000 in wages, or 40 weeks of employment; Two, the applicant must demonstrate need. The program continues to be last resort funding. Therefore, all other sources of funding must be accessed before approaching the fund; Three, the project must demonstrate potential for viability within reasonable time frames, generally two to three years; Four, the applicant must share the risk. Although the minimum equity required for each program, ranging from 5 percent to 20 percent, in the policy is mandatory, it can be increased if the applicant has the resources.
A full report of the fund's performance over the past 12 months will be tabled in November. In it, you will note that there has been a significant shift in the distribution of funding to less advantaged communities, and that the programs are meeting our objectives.
For example, since the new policy was introduced in 1991, approvals in level III communities have increased 76 percent, those in level II have increased 13 percent, with an estimated 68 percent of the funding being provided to aboriginal-owned businesses.
In 1991-92 the department issued 229 contributions for a total of $3.35 million. This generated 172 new jobs, and levered an additional $9.85 million in project funding from other sources.
The proposed reduction of $607,000, in total, to the department's contribution programs should not affect this performance since it reflects historical lapses.
Mr. Chairman, we will continue to refine the policy, system and programs, to further enhance access to the fund, and to improve the level of service to the business community.
The usage of the fund crosses all sectors, and shows that contributions need not be large to make a difference.
Eight fishermen received contributions through the Business Development Fund, of about $1,500 each, to purchase automated haulers for the winter turbot fishery, to increase their efficiency and productivity.
Similarly, assistance totalling about $40,000 was provided to seven char fishermen in the Keewatin, to purchase boats, motors and fishing gear.
With a contribution of $8.277 million, the Toonoonik Sahoonik Co-op in Pond Inlet hosted three japanese tour wholesalers. As a result, two departures to the floe edge will be offered in May, 1993, and summer narwhal viewing tours are scheduled for August. Total income from these bookings is estimated to be $60,000.
The True North Trading Company received funds to develop a mail order catalogue for N.W.T. arts and crafts. Over 100,000 copies will be distributed throughout Canada by the end of October.
The department provided assistance of $31,000 to an Aklavik resident for a pilot project to produce fur parkas. Twelve parkas were produced prior to the Inuit Circumpolar Conference, and the initial response indicates that there may be a limited market for these parkas within the Northwest Territories.
For the third year, the small tools and Capital Equipment Assistance Program has provided funds to regions, to assist artists and crafts people to by tools and equipment. Better tools will allow for better quality arts and crafts production, and greater incomes for producers. A total of $200,000 has been provided to regions this year.
Each year, the freshwater fish marketing corporation administers a commercial fisheries assistance subsidy on behalf of the department. To date, $544,000 has been committed this fiscal year, to offset costs for the Great Slave Lake fishery.
The Department is the implementing party for the majority of funds under the D.I.A.N.D. Cooperation Agreement of the 1991-1996 Canada-G.N.W.T. Economic Development Agreement. This agreement totals over $10 million this fiscal year, with the Northwest Territories portion being 30 percent of that, or about $3 million.
Projects are under way in a number of sectors, including arts and crafts, fisheries, community sponsored development, agriculture and wildlife harvesting. These sectors account for 68 percent of the total program funding.
We also participate in the Industry Science and Technology Canada Cooperation Agreement, which includes funding this year for tourism and entrepreneurship. The total value of this agreement for 1991-92 is over a million dollars.
A third cooperation agreement, valued at $2.7 million over five years, has been signed by the Government of the Northwest Territories and Forestry Canada. Over half a million dollars has been allocated for the 1992-93 fiscal year, to undertake forest management and development initiatives. The Department of Economic Development and Tourism participates in the decision making under this agreement, although the Department of Renewable Resources is the lead G.N.W.T. department for this agreement.
Mr. Chairman, the regions have direct involvement in the design of the programs, and the criteria for E.D.A. applications. There is an extensive consultation process, leading up to the development of work plans. Regional sub-committees, with public representation, have the authority to review, and approve applications.
The Department is working to ensure that this E.D.A. will provide money in the sectors where it is need most, with direct involvement at the community level.
Mr. Chairman, some examples of projects undertaken through the E.D.A. Program are as follows:
1. In response to industry concerns about soapstone supply, quarry projects were funded in Pangnirtung, Lake Harbour and Broughton Island. An assessment of the Cape Dorset marble deposit was completed by Energy, Mines and Petroleum Resources officials and the local Economic Development Officer;
2. E.D.A. funds were invested in the Cape Dorset and Pangnirtung Graphics Program, both collections of which will be launched this fall. The Pangnirtung collection has been produced under the auspices of the Pangnirtung Print Shop, and is the first collection produced in five years.
3. Keewatin Region saw a commitment of $455,000 directed to exploration for fish stock, and enhancement of technologies for fishing activities in both Hudson's Bay and Inland Lakes.
4. The Baffin Region has undertaken an aggressive five year program involving the exploration for, and testing of, fish stock in areas in and around Baffin Island. Over half a million dollars has been committed to this program for this year alone.
5. The Kitikmeot Region saw a commitment of $90,000 towards enhancing fisheries production technologies, as well as seeking new stocks in communities outside of Cambridge Bay such as Gjoa Haven.
6. Community sponsored development funding was approved for the Baffin Regional Chamber of Commerce to promote small business week in October, and conduct the second annual Nunavut Trade Show next spring.
7. The eastern Arctic's second business service centre is under construction in Cape Dorset through funds provided by E.D.A. and the N.W.T. Development Corporation. Built in conjunction with a new retail store for the west Baffin Co-op, it has been a cooperative effort between the department as facilitator, and the Kingnait Development Corporation as proponents. The Business Service Centre will be occupied by the G.N.W.T. as a primary tenant which will help subsidize new business tenants. It will open in early 1993.
8. There are approximately 250 performing artists in the N.W.T. who will have the opportunity to benefit from E.D.A. funding directed towards professional development and enhancement opportunities.
9. In the tourism sector, the department negotiated $1.4 million over the life of the current E.D.A. specifically directed towards increasing the tourism skills of northerners. An excess of 200 northern students graduated from these programs last year.
10. A significant initiative within the commercial renewable resource sector in the west involved musk-ox harvesting for export markets. In the first year of the E.D.A., Umayot Corporation, an Inuvialuit controlled company, received $375,000 towards the purchase of capital equipment to facilitate the commercial harvesting of musk-ox on Banks Island. Approximately 2,000 animals were harvested under the direct supervision of Agriculture Canada.
The Commercial quota of 5,000 animals on Banks Island leaves considerable room for expansion. This year, and additional $300,000 has been approved for investment in upgrading technology, and a harvest is planned for this October.
11. An additional $250,000 has been allocated for this fiscal year to test the feasibility of conducting an export harvest of musk-ox near Holman. This will be the first harvest of this kind carried out in a location other than Banks Island. Again, Umayot Corporation will be working closely with the local Hunters' and Trappers' Committee, and the department. Meat harvested from Banks Island, and Holman, will hopefully find its way into markets throughout Canada, and the rest of the world.
12. The department has also facilitated the approval of funding for carrying out harvests for a projected 200 caribou in Coppermine, and 200 to 300 musk-ox in Cambridge Bay. These harvest are to be structured to allow for government inspection for the first time in N.W.T. All meat harvested from these two projects will be committed to commercial markets here in the N.W.T. The local hunters' and trappers' associations are the primary proponents, with the N.W.T. Development Corporation providing professional support and access to markets.
13. The North Slave Region will receive funding to consult with communities to determine their interest in pursuing commercial caribou harvesting.
The total commitment for this fiscal year for commercial wildlife harvesting is $735,000 with proponents, chiefly Umayot Corporation, providing an addition $500,000 in equity.
The N.W.T. Development Corporation was established in 1990. It is mandated to invest primarily in, or for, the benefit of lesser developed communities. This year, it will invest some $8 million towards development of business opportunities. These businesses are community based, with local boards playing a major role in their continued operation.
Mr. Chairman, all commercial enterprises currently operated by the department, will be transferred to the N.W.T. Development Corporation. This will allow these enterprises to operate in a more business-like setting, and remove the artificial limit to their growth that was imposed through their inclusion in the government's budgetary processes.
One project the corporation has undertaken is the airport kiosk in Toronto International Airport. "Arctic Canada" was opened in July of this year, and provides an opportunity to market northern products, and gain a better insight into product demand patterns. Suppliers benefit from direct market feedback on their products, and "Arctic Canada" provides a vehicle to promote the Northwest Territories to a national, and international clientele.
Sales are carefully monitored so that breakdowns by product line and by region are easily available. We also obtain information on where customers are from, and what they are buying. This information will assist any N.W.T. suppliers in targeting their products to specific markets.
On the production side, the corporation is involved in several projects. One of these is the Tuktoyaktuk carving project. In seven months, ending August 1992, the project purchased 1,095 carvings from 46 different artists in the community. These purchases amount to $84,700. for the period. The carvings are being marketed in the national market, as well as directly through Arctic Canada.
In Rankin Inlet, the Corporation is undertaking a pilot project for fabric arts and crafts products. This project has been operating since July, and is fostering some creative new product lines.
The Corporation is also involved with older and more established businesses, such as the Fort McPherson Tent and Canvas Shop. The product line there is being developed to bring new concepts to a well established product.
Mr. Chairman, some of these products are on display at the N.W.T. Development Corporation Offices. I invite Members to drop my to get a first hand view of the type of products that are being produced through development corporation projects. Their offices are located on the seventh floor of the NorthwesTel Tower.
Mr. Chairman, another development corporation project, or key interest, will be the provision of continued support to the expanding fishery in Pangnirtung, which includes a new plant and secondary facilities. This investment alone is approximately $3.3 million, not including the operational costs, bringing the total investment and support offered to this region in excess of $4.2 million for this fiscal year.
With a downturn in the Canadian economy, and slow arts and crafts sales, the department's arts and crafts marketing has been focusing on development of European and Asian markets. This involves raising awareness of the product, and N.W.T. generally, and an aggressive program to establish links with dealers.
The Government of the Northwest Territories has provided ongoing support to the Amway Environmental Foundations, "Masters of the Arctic Exhibition", currently on a world tour, including Japan, Mexico, Brazil, and the United States.
We have provided a wide range of technical and artistic assistance as well as funding. We will be taking advantage of this high profile exhibition by undertaking a number of commercial exhibitions in the United States portion of the tour. Concurrent with this, negotiations are under way to include N.W.T. arts and crafts as part of Amway's Corporate Awards Program, and inclusion of these products in Amway's consumer catalogue.
There are seven galleries in Europe currently carrying N.W.T. arts and crafts. Our objective is to triple this figure by direct contact, and taking advantage of our increased exposure through Expo in Seville, and 14 exhibitions through Spain this last year.
A new Spanish company which is wholesaling our products has purchased $120,000 worth of arts and crafts to date from wholesalers such as Arctic Co-operatives Limited.
Mr. Chairman, I would like to note that approximately 45 percent, $374,000, of purchases for the Expo retail outlet were Dene arts and crafts. Our exports to broad markets, as I have just described, include both Inuit and Dene arts and crafts.
To assist further with the development of Dene crafts, a new person year was allocated to Fort Rae. Furthermore, an E.D.A. contribution of $88,000 was provided for the development of promotional materials to enhance sales of N.W.T. arts and crafts which five of eight brochures dedicated to Dene crafts.
Our Asian marketing campaign has produced sales of over $900,000 with costs incurred by the department amounting to just over $340,000. Japan and Korea are the target markets. Major exhibitions in leading Japanese and Korean galleries were undertaken after the successful showing of the "Masters of the Arctic" exhibit in the newly opened Canadian Embassy in Japan.
The department is working with Arctic Co-ops Limited and a Japanese businessman to build on the excellent reception these products have had to date. A similar arrangement has been made in Korea.
An extensive survey of the United States market was conducted with the assistance of Canadian Consulate offices. It found that only 32 outlets now carry Northwest Territories products but an additional 50 expressed immediate interest in doing so. We do anticipate increased sales opportunities through follow up to this study.
The initiatives I have just outlined form part of a comprehensive arts and crafts marketing strategy developed pursuant to our overall economic strategy. Current retail sales in this sector are just over $28 million. This strategy is aiming at increasing sales by $10 million by 1995.
In addition to departmental promotion efforts, the Northwest Passage Trading Company of Gjoa Haven is an example of a community group taking the initiative to directly market its products. This company is the focus of a revitalization of the carving industry in Gjoa Haven, and we are pleased to be working cooperatively in furthering their initiative.
Mr. Chairman, the N.W.T. is rich in terms of a large land mass, highly marketable unique resource base, and a strong cultural identity. Renewable resources in the north are characterized by slow growing stocks, however, and development in this sector faces high cost of production, a limited pool of qualified managers and workers, inadequate infrastructure, and small markets. The department's resource strategy is targeted at assisting in overcoming these barriers and harnessing the wealth in this sector.
In this year alone the department, in conjunction with E.D.A. and the N.W.T. Development Corporation, committed over $9.5 million to assisting growth in the commercial renewable resource sector. The vast majority of that assistance and investment has gone towards expanding fisheries, which involve primarily level II and III communities.
The department combined its efforts with the Department of Renewable Resources to secure new offshore allocations involving three operators and 8,800 tonnes of fish and shrimp, in addition to the 1,000 tonne open quota for turbot in Cumberland Sound. Only two years ago, the offshore allocation to the N.W.T. was limited to one operator and approximately 2,000 tonnes.
The agriculture sector is somewhat limited by geography, but opportunities and developments in recent years have been exciting.
The department is focusing on development of market gardens and greenhouses in the North and South Slave areas.
Technical advice and infrastructure has been provided in a variety of communities such as Trout Lake and Kakisa.
Much of the work being done now is modeled on work completed several years ago by the department with a company called "Produce North" in Norman Wells. This company operates a very technically advanced greenhouse producing a full range of vegetables and fruits. The company's entire production this year was sold to the Northern Store in Norman Wells displacing significant amounts of produce normally supplied from the south.
Our focus in this sector is to replace imports, and develop value added processing of Arctic foods. Our successes in developing product lines for Expo will assist sales of northern food products, both locally and outside the Northwest Territories.
Mr. Chairman, a major function of the department is to support the development of the tourism industry. Areas of activity include, product development, marketing, licensing and regulations, research, intergovernmental coordination, and park establishment.
The travel industry has been one of the faster growing components of the service sector in the N.W.T. Since 1979, all purpose travel has almost doubled, and related expenditures have more than tripled. Visitor expenditures in 1989 were reported to be $89 million of which 456 million or 63 percent were pleasure-based, while 33 percent gross receipts was derived from business travellers. Statistics show that the number of non-resident motor vehicles, entering the Northwest Territories increased 10 percent in the five year period from 1986 to 1991.
Although the western part of the Northwest Territories still receives a major share of the visitors, largely as a result of the road network, there has been substantial activity in other regions, especially the Baffin.
A significant proportion of the new travel businesses are located in the smaller communities. Overall, the number of hotels/motels and bed and breakfast facilities in the Northwest Territories has increased from 23 in 1971, to 98 in 1992.
The most recent information shows that little to slight growth in visitor numbers has occurred between 1990 and 1992 for the Northwest Territories as a whole. Total business and pleasure person trips are expected to remain level this year at 89,000. Although 1992 visitor statistics are not yet available, we anticipate increased visitation in the Inuvik region, partially resulting from Alaska Highway celebrations, and the opening of the N.W.T. Visitor Centre near Dawson City. The Dawson Visitor Centre had 8,414 visitor registrants in 1991, the highest of all Northwest Territories operated facilities.
Estimates for the eastern Northwest Territories indicates a slight decline in numbers during the same period. For package tours operating in the 1992 season, bookings are said to be down. Although the short term outlook for the tourism industry presents a challenge, it should be remembered that the industry has performed equally or better than other provinces. Many provinces experienced a significant decline in tourism sector activity in 1992.
It is likely that any downturn in industry performance is due largely to the recession in the south curtailing the vacation plans of visitors to the north.
Mr. Chairman, the department's research indicates the need for a more focused marketing program, and the requirement for tourism products offered in the Northwest Territories to keep pace with consumer trends.
Improvements required to generate additional employment and economic benefits from tourism include, the immediate need to streamline and target market our existing and proven products. An immediate focus on more product specific marketing, the long term development of more non-consumptive specialty type products, and a gradual improvement in the quality of facilities in both the private and public sector.
The Department of Economic Development and Tourism has and will continue to monitor, evaluate and support the tourism industry.
Continuing department initiatives in the tourism sector include:
1. Support for community based tourism through the provision of financial assistance to tourism zone associations.
2. Assistance to community initiated tourism feasibility planning activities. For example, the Fort McPherson tourism business plan or the Ndilo tourism and cultural attraction feasibility study.
3. Support for public infrastructure and associated creation of marketable tourism destinations deemed valuable by the industry and Northwest Territories residents.
4. Assistance to operators for product development.
5. Monitoring and evaluation of tourism trends, and dissemination of appropriate information to business operators and decision makers.
6. Support for private sector tourism operators through the business development fund.
7. Liaison with other departments and governments, to ensure that the concerns of the Northwest Territories Tourism Industry are coordinated/represented.
One example of a potential growth area is the visit of the Russian Icebreaker to the Kitikmeot and Baffin regions with about 50 tourists, 32 of whom joined the vessel in Cambridge Bay, and six of who were tour operators looking to add to the destinations they market.
These people were impressed with the quality of the facilities available, and are booking a return trip with 112 tourists next season.
Mr. Chairman, a major new initiative of the department is the development a product oriented cooperative marketing program.