Mahsi, Madam Speaker. In accordance with its terms of reference, the Standing Committee on Finance is pleased to submit its report on the review from the 1995-96 capital estimates of the Government of the Northwest Territories.

Therefore, the committee decided it was both necessary and timely to examine both the budget processes as a whole and the outstanding issues related to the operating budget, in addition to the proposed capital expenditures.

The primary purpose of the September meetings of the Standing Committee on Finance was to review the five-year capital plan for the time period from 1995-96 until 1999-2000. The committee decided to approach this review by focusing on policy and major financial issues. Further, the committee decided to save the detailed line-by-line scrutiny of the capital budget for the participation of all Members of the committee of the whole. This decision was made in the interest of holding a full public debate.

The committee reviewed the five-year capital plan for the period 1995-96 to 1999-2000 in the context of the larger issues of overall government fiscal policy and effective resource management. Committee Members carefully reviewed fiscal strategies and plans, as well as spending priorities. Throughout the review, committee Members focused on finding solutions to problems identified. New and innovative approaches to conducting the business of government were explored and are reported in this document.

The 1995-96 capital estimates represent the last capital budget to be presented by the current government. The government is proposing to spend close to $195 million for capital projects in the fiscal year 1995-96. This figure is approximately 12 per cent lower than the current year revised forecast of $221.5 million.

In his opening remarks to the committee, the chairman of the Financial Management Board said two key decisions were made with the 1995-96 capital budget. The first was that the government could not afford the capital programs that are in place. The chairman cited, as evidence, the 20-year capital needs assessment which calls for annual capital spending levels that are twice the current annual budget.

In response to this major issue, the Financial Management Board launched a comprehensive government-wide review of capital standards and criteria. The major objective of this review is to bring capital requirements into line with capital resources. The chairman also expects the review will provide the framework for developing alternatives to current programs. The FMB chairman commanded that until this is done, the development of a realistic and responsive long-term capital strategy is not possible. The Standing Committee on Finance looks forward to seeing the results of the capital standards and criteria review.

The second major decision, described by the FMB chairman, affecting the 1995-96 capital budget was that the government could not significantly reduce the 1995-96 capital program without compromising the fundamental well-being of NWT residents. He pointed out that commitments have been made, programs have been implemented and contracts have been let. He went on to say eliminations of capital projects on a large scale would undermine all that the government has been trying to accomplish over the last three years.

During the review of the 1994-95 capital estimates, the Standing Committee on Finance recommended that changes be made to the five-year capital forecast documents to clarify and ensure consistency in the reporting of prior year, current year and total expenditures.

The Financial Management Board responded promptly to this recommendation with proposals for changes. The proposed changes are incorporated in the five-year capital forecast documents from 1995-96. The committee also recommended, during the review, that the Financial Management Board provide substantiation for any changes over $100,000 in planned expenditures.

A report that compared the 1994-95 capital forecast to the 1995-96 capital forecast for any changes over $250,000 in planned expenditures was sent to the committee for its review of the 1995-96 capital estimates. The Financial Management Board suggests that using a $250,000 cut-off would provide a more meaningful and manageable report for a couple of reasons.

First, the volume of changes at $100,000, based solely on revised cost estimates, would be very large. Second, $250,000 is the level for reporting transfers and overexpenditures to the Legislative Assembly. Committee Members were satisfied with the results and found the report very useful in conducting its review.

At this time, Madam Speaker, I will be turning the rest of the Standing Committee on Finance report over to a colleague, the honourable Kelvin Ng.