Thank you, Madam Speaker. The Standing Committee on Finance asked, during last year's review of the
capital estimates, for a plan on how the government proposes to deal with housing shortfalls and the withdrawal of federal funding. Such a plan was never produced. The committee has seen little indication that either the government or the corporation has a strategic plan to deal with these shortfalls in housing stock and funding.
When questioned during the committee's September review, the Minister responsible for the NWT Housing Corporation said that, given all of the funding cuts, it is not possible to plan the housing program and, instead, decisions need to be made from year to year. Further, he said the corporation needs direction from the Legislative Assembly and target funding allocations from the Cabinet before it is possible to begin planning. The Minister did say, however, that the corporation could develop different options for the delivery of the social housing program.
Committee Members noted that even though federal funding has been cut substantially, and we are now using funds previously targeted elsewhere to provide fewer housing units than in the previous year, the size of the corporation's staff remains the same. In fact, committee Members noted that it appears to have grown by one of two PYs last year.
The Standing Committee on Finance strongly urges the government and the NWT Housing Corporation to develop a realistic strategic plan for the delivery of social housing well into the future. The plan should address the difference between identified housing needs and the ability of the GNWT to meet those needs. In light of reduced funding from the federal government, the plan should address various options for fundamentally restructuring the organization responsible for delivering the housing program.
The latest information available to the committee indicates that Fire suppression activities, this year, are going to cost the Government of the Northwest Territories over $20 million. Committee Members are very concerned with the magnitude of expenditures for fire suppression, particularly when expenditures are viewed in the context of cost-benefit. The committee recognizes the difficulty facing the government in attempting to deal with this issue. It is, for example, very difficult to satisfy everyone's concerns no matter what action is taken, and it is also difficult to develop an objective measure of success in managing forest fires. However, it is evident that we have to find a more efficient and effective way of dealing with fire suppression in the Northwest Territories.
The chairman of the Financial Management Board has directed the Department of Renewable Resources to develop a plan of how the government can reduce its financial exposure during bad fire years. The department will have to address the following issues in developing its plan:
- the method used to fight fires;
- the effectiveness of the decision-making process;
- the type of resources consumed;
- the level of community involvement in planning and decision-making; and
- the proportion of government expenditures for fire suppression that stay in the north.
Committee Members look forward to reviewing the results of this planning initiative.
Cabinet Unity And Leadership
Committee Members noted, during the recent review, that the Cabinet is not as unified as it should be. Members are aware of the obstacles and challenges presently facing the Cabinet and the Legislative Assembly. They also recognize the need to develop innovative approaches to managing scarce resources.
Committee Members have noted, on a number of occasions, the importance of the Cabinet presenting a united front. This did not happen during the review. The committee is looking for leadership, as well. Members feel that departmental leadership comes from Cabinet Members, but the Premier and the chairman of the Financial Management Board have an overall responsibility to ensure that issues are brought together and dealt with in a strategic manner.
The Government of the Northwest Territories has undertaken a tremendous number of organizational restructuring initiatives during the term of the present government. Some of this restructuring, such as the amalgamation of the Departments of Health and Social Services, was imperative in order to streamline and enhance the provision of services to people in the communities.
On the other hand, committee Members have heard about significant changes taking place in the Department of Municipal and Community Affairs. The committee was unaware of the need for such dramatic changes. The need was not documented and was not presented to the Legislative Assembly for consideration and discussion.
Members are left wondering why these changes were felt to be necessary and why they were made in such a hurry, apparently without the benefit of the a well thought-out plan. The committee, therefore, makes the following recommendation:
The Standing Committee on Finance recommends that the Department of Municipal and Community Affairs report on the organizational restructuring, the rationale for the changes and the anticipated benefits. Further, the committee recommends that this report be provided to the committee by December 23, 1994.
Committee Members were also very concerned with the massive restructuring within the Department of the Executive. These concerns are well-documented in the Report on the Review of the 1994-95 Main Estimates.
As is the case with the large number of initiatives currently being undertaken by this government, committee Members feel that the government may be over doing the structural changes and may not, in the end, be able to produce the desired results. The committee is concerned that the bureaucracy is being consumed by adapting to structural changes and is therefore not able to focus on the very real and critical needs of the citizens of the Northwest Territories.
Coordinating Inter-Departmental Initiatives
It was noted earlier in this report that the time has come for governments to abandon the compartmental approach to providing public services. Political, social and economic issues of the day do not lend themselves to being dealt with in this fashion. Individual departments can no longer afford to categorize and build fences around their particular areas of responsibility. Turf battles are no longer affordable.
Committee Members are aware that the government has made progress in some areas such as the amalgamation of the Departments of Health and Social Services. However, reorganization in itself is not enough. What is required is a fundamental change of attitude among the Ministers and the senior bureaucrats. Further, the Premier and the chairman of the Financial Management Board should assume responsibility for coordinating inter-departmental initiatives.
More and more, it is becoming evident that the overall health and well-being of our people requires that the government develop a holistic, integrated approach to service delivery. Current approaches need rethinking. This requirement is well-illustrated by the number of interdepartmental committees currently in existence and by the number of initiatives that require a new and separate organizational structure for planning, design and implementation. Examples of such initiatives include zero tolerance for violence, income support reform and planning for division.
The Budget As A Management Tool
The budget is increasingly becoming recognized as an important -- perhaps the most important -- management tool. The budget spans the entire government organization. It addresses policy issues and resource requirements across government. It responds to the needs of the people. It is the means by which the government announces its priorities.
It became apparent during the last committee review that the separation of the budget into two parts is artificial and may even be counterproductive. It is impossible to examine capital expenditure requirements without considering the fiscal framework. The fiscal framework contains both capital and operating elements that require joint consideration.
Soon after the two budget sessions were implemented, the Standing Committee on Finance recognized that it was unrealistic to review proposed capital expenditures without considering the associated direct and indirect incremental operating costs. It did not make sense, for example, to recommend approval of funding for a school when it is not known if funds would be available to operate the school. The committee, therefore, recommended that the government submit the associated incremental costs for consideration in concert with the capital expenditure plans. The incremental operating costs are now provided. Now the committee reviews incremental operating costs of capital projects outside of the context of departmental operating budgets. However, the picture is still not complete.
Government spending priorities do not sort themselves nicely into capital and operating categories. This is plainly demonstrated by the different approaches to developing definitive objectives taken by various departments. In some departments, the definitive objectives are the same in the capital and main estimates. In other departments, the definitive objectives cited for the Main Estimates are very different from those presented for the department in the capital estimates. Committee Members wonder how this can be. How can departmental objectives change according to the type of expenditure being considered? Perhaps this contradiction helps to explain the government's ability to develop and articulate a clear set of spending priorities.
The committee understands the rationale and supports the underlying principle for separating the budgets and reviewing them in two separate sessions in the Legislative Assembly. There is a real need in this environment to plan ahead so that capital projects can proceed when conditions allow. There is a real advantage to tendering projects earlier in the process. However, while the rationale is sold, the reality is that tenders are not being let early. There appear to be real obstacles in the way of changing the tendering system to meet the established objectives.
Another very real consideration is the amount of resources consumed by the budget process. Public service bureaucracies are overwhelmed at budget time. When the budget is considered in two separate sessions of the Legislature, the resource consumption is doubled. In our system, the Standing Committee on Finance reviews the budget before it is reviewed in the House. Splitting the budget dramatically increases the workload of this committee as well as that of the departments.
In view of the above-noted considerations, the Committee makes the following recommendation:
The Standing Committee on Finance recommends that the Financial Management Board undertake a full review of the costs and benefits associated with separating the capital and operating budgets. The review should include an assessment of alternative methods of achieving the objective of early tendering of capital projects. Further, the committee recommends that the chair of the Financial Management Board provide a comprehensive report on its findings to the Standing Committee on Finance along with the 1995-96 operations and maintenance documents currently scheduled to be provided by December 23, 1994.
Madam Speaker, that concludes my part of the report. I would like to turn over the balance to my colleague, Mr. Arvaluk.