Thank you, Mr. Speaker. Later today I will be tabling a report titled "A Proposal to Privatize the Northwest Territories Power Corporation."
The report was prepared by consultant Fred Abbott, a retired partner with Coopers and Lybrand, and does not represent a position of the government at this time. Ultimately, any decision on the privatization of the Power Corporation will be made by this Legislature.
The government purchased the Power Corporation in 1988, in order to make the utility more responsive to the concerns of the NWT customers and to allow it to operate as an independent regulated business.
The report concludes that these objectives have largely been achieved and that the corporation could now be successfully privatized, as a single entity, without sacrificing any of the gains made over the five years of Government of the Northwest Territories' ownership.
This opportunity raises some interesting questions about government ownership, opportunities for government investment and subsidy funding.
Government ownership of the corporation involves some indirect costs:
1. The government guarantees the corporation's debt and, although the corporation makes all the payments on that debt, the existence of the guarantees restricts the government's borrowing ability.
2. The government has $80 million tied up in its investment in the corporation. These are dollars that could, perhaps, be put to other uses. At a time when we are facing severe funding shortages, we have to ask whether this money could be used in ways that are more directly responsive to the needs of NWT residents.
There are, of course, advantages of owning the corporation. The chief benefit is probably the annual dividend paid by the corporation to the government to fund the electricity subsidy programs. However, while it is recognized that subsidies must be continued, it is not clear that they must, or even should, be funded with dividends from the corporation.
The proposal to privatize the Power Corporation provides us with an opportunity to discuss these issues and to consider our fiscal priorities. The coming months will allow time for discussion about whether continued ownership of the corporation is the best way of investing $80 million of government money.
Mr. Speaker, if a decision is made to privatize the corporation, the report proposes that the sale be made in a way that encourages northern ownership and prevents control by one or two shareholders. The report contains a number of recommendations to ensure that northerners retain some control over the utility. For example, it is proposed that Northwest Territories' residents be given the first opportunity to purchase shares and that no one can hold more than ten per cent of the shares.
The report considers the creation of Nunavut and concludes that the unique concerns of the two territories could be addressed by separate Public Utilities Boards. The report notes, however, that division of the corporation into two utilities to serve Nunavut and the west, respectively, would increase costs to a point which would make private sector ownership unattractive.
Critical issues to be examined prior to privatization include the continued employment of existing staff and the integrity of the pension plan. As the report stresses, good business practice requires that employees continue to receive an equitable level of benefits.
It is expected that Cabinet will examine the report shortly, and will make formal recommendations to this House regarding the privatization proposal when the Assembly reconvenes next fall.
Mr. Speaker, this is an exciting opportunity for northerners. The government looks forward to hearing your views on the proposal over the coming months. Thank you very much.