Thank you, Madam Speaker. One of the critical elements in ensuring future fiscal stability for the NWT lies in the development of a stronger local revenue base. The more revenue we, as northerners, can generate and control, the more we will be in control of our future. It is for this reason that the successful negotiation of the northern accord is so crucial. Successful completion of this agreement with the federal government will allow us to make our own decisions about priorities in areas such as finance, economic development and environmental protection.
In view of the fact that all of these fiscal policy matters are interrelated, Members would like to emphasize a message contained in the committee's response to the government's options paper report on deficit management. That is, the committee encourages the government to continue developing and implementing a budget strategy using the concept of a "package" approach. The package approach is comprehensive and incorporates issues such as health billings, funding for social housing, incremental added costs for division, land claims implementation, the formula financing agreement and others. Also included are revenue-producing initiatives such as the northern accord, including a mineral accord.
Managing Government Business Effectively
Business Incentive Policy
The committee supports the objectives of the business incentive policy. Members want to keep money in the north. We want to ensure that northerners receive the maximum benefit for the money the government is spending.
However, the committee sees the present policy creating an increasingly convoluted system of criteria for evaluating and awarding contracts. People in the communities see the system as excessively bureaucratic and, in many cases, detrimental to the well-being of the business community.
The Department of Public Works and Services has agreed to undertake extensive consultations with a view to revising and improving the business incentive policy. Departmental officials have developed a new policy proposal to serve as the basis for community consultation. From the information that committee Members have seen regarding the proposed new policy, it appears that the difficulties with the present policy will not be adequately addressed.
Therefore, committee Members feel that an innovative way of accomplishing the objectives of the business incentive policy must be found. Committee Members encourage the department to look for new and innovative ways through the consultative process.
During its review of the 1994-95 main estimates, the committee noted a number of concerns relating to the government's way of negotiating contracts. These concerns are summarized in the following excerpt from the committee report:
"In many communities, negotiated contracts have helped establish successful aboriginal enterprises. However, there is a perception that negotiated contracts may be, somehow, less "fair" than tendered contracts. As well, there have been serious problems with some negotiated contracts. Committee Members feel that all contracts, whether negotiated or tendered, must be better monitored. The committee also believes that full public disclosure of negotiated contracts would help to ensure that value for money could be assessed."
The committee, therefore, recommended that the government develop policies and procedures for providing full public disclosure of the details of negotiated contracts, and for monitoring all contracts in order to avoid cost overruns and poor management. The committee asked that this policy and these procedures be in place before August 1, 1994, and that copies of the policy and procedures be provided to the Standing Committee on Finance.
The committee did not receive a response to its recommendation by the deadline date. However, on September 13, 1994 the committee was informed that the Department of Public Works and Services had undertaken to draft policies and procedures in conjunction with the Financial Management Board Secretariat, the Department of Transportation, the NWT Housing Corporation and the Department of Economic Development and Tourism. The response suggests that the departments are working toward a completion date of December 1994. No indication was given as to why an extension of the deadline is necessary. The Standing Committee on Finance will follow up on this issue when it meets in January 1995 to review the main estimates.
Concerns arose throughout the committee's September 1994 review about the way in which capital projects are planned, designed and managed by the Department of Public Works and Service. Committee Members wonder if the means of coordinating and managing capital projects adopted by the Department of Public Works and Services, on behalf of the government as a whole, are as efficient and effective as they should be.
There is a concern that the standards set by the department may be higher than necessary. As a result, construction projects managed by the department end up costing more than similar projects managed in a different way. Members noted that, in particular cases, projects funded through block funding arrangements have proven to be more cost-effective than projects managed by the Department of Public Works and Services on behalf of a client department. Members feel that the project management approach, adopted by the department, can and should be streamlined. The department should assess the current procedures and look for alternatives that are more cost-effective.
While recognizing the significance of the project management function, it is important to remember that it is an overhead expense. In times of tight financial resources, it is particularly important to ensure that capital spending brings about maximum benefit to communities and that overhead expenses are minimized. It is also important to ensure that the procedures used for estimating capital expenditures be as accurate as possible because it is on the basis of these estimates that the Legislative Assembly approves the allocation of capital dollars.
Therefore, at the appropriate time, Madam Speaker, the committee will make the following motion.
The Standing Committee on Finance recommends that the Financial Management Board, in consultation with the Department of Public Works and Services, assess the efficiency and effectiveness of the current practices of managing capital projects, and provide a report on the results of that study to the Standing Committee on Finance on December 23, 1994, along with the 1995-96 operations and maintenance documents.
During the recent review, a number of problems with the current means of tendering government projects were identified. The most critical problem relates to the timing of contract tendering. The chairman of the Financial Management Board committed to investigate the reasons for contracts being tendered later than desired and offered to try to resolve the problem. The committee looks forward to discussing, with the chairman of the FMB, the reasons why the process has not worked as planned and the proposed resolution. Committee Members expect this discussion to take place during the committee's January 1995 budget review.
Madam Speaker, that concludes my part of the presentation. With your permission, I would like to ask Mr. Charles Dent to continue. Thank you.