Agreed.

---Agreed

Department Of Public Works And Services

Thank you. Is the appropriate Minister, the Honourable Don Morin, prepared to make his opening remarks?

Minister's Introductory Remarks

Thank you, Mr. Chairman. We have given copies of the opening remarks -- 42 copies -- to the Clerk. We have done that already.

I am pleased to be here today to present the proposed 1995-96 capital budget for the Department of Public Works and Services. The capital requests total $12.685 million.

This year the Department of Public Works and Services, along with the NWT Housing Corporation and the Department of Education, Culture and Employment, have implemented the building and learning strategy in 12 pilot communities; two in each region. The number of participants has increased to approximately 100 in the training programs this year.

Local people are involved in training that will advance them towards jobs as trades persons, project managers or foremen. In addition to the six community training committees established last year, committees have now been established this year in Baker Lake, Coppermine, Igloolik, Fort Providence, Lac La Martre and Snare Lake. These committees work with representatives of the three departments and identify priorities and trainees for the training opportunities associated with local construction projects.

In 1995-96, the department will manage approximately 600 capital construction projects worth $79 million. The department's objective is to maximize the northern employment and business opportunities associated with the GNWT construction program. In addition to the building and learning strategy, the department used a wide variety of delivery approaches to achieve this objective. As a result, there are increasing numbers of northern companies, based in the smaller communities, that can be counted on to carry out construction projects. Fossil Lake Enterprises Limited in Fort Good Hope is one example. This company has managed renovation and construction projects for the GNWT over the last two years, totalling more than $2.5 million.

Many other companies, such as Kawtak Construction Limited in Sanikiluaq, Qillaut Development Corporation in Pond Inlet, Qikiqtaq in Pangnirtung, Cap Mountain Ventures in Wrigley, Issatik in Whale Cove, Tetlit-zeh in Fort McPherson and Nakehk'o Koe Construction in Fort Simpson, to name only a few, have all benefitted from these approaches.

In January, I wrote to all MLAs outlining the delivery approaches for projects in their ridings. I will briefly outline some of these project delivery methods.

The many small road-site-land development projects are normally tendered by invitation to local companies only. If there is only one local company, the department will sole-source that contract. If there is no local company, the department will sole-source with the local council.

Contracted construction management services are sometimes used in communities where there is no local construction company able to manage a project. The construction manager must ensure the use of local labour, equipment and small businesses. This approach was used for projects such as the community centres in Nahanni Butte and Kakisa and the Snare Lake community office and school.

The department contracts with local development corporations and local councils to provide labour to general contractors. For example, Nakehk'o Koe Construction is providing labourers for Hovat on the Fort Simpson Bompas school project.

At my instruction, the contract for the Arviat tank farm construction was tendered by invitation only to NWT contractors. Before this project, construction contracts for tank farms and fuel storage facilities had traditionally gone to southern companies. A local firm, Eskimo Point Lumber, won the contract and is now completing its first year of work on this multi-million dollar multi-year project. The department has worked closely with the company to assist the owner to manage the largest contract this company has ever had.

In 1994-95, to date, four contracts for capital construction projects have been approved for negotiation, for a total value of approximately $1.3 million. The awards for these negotiated contracts have been within the budgeted estimates. I am confident, therefore, that the department is getting good value when these contracts are negotiated.

This year, the department contributed $1.4 million to the retrofitting of the Terry Fox ice breaker, as part of a joint initiative with the federal government. A new crane will be installed and tanks will be retrofitted. This retrofit will permit an annual sealift resupply of petroleum products and dry goods to Pelly Bay and will benefit the community significantly by reducing the costs of these goods.

For the 1995-96 capital budget, the department provides office space to government departments and is requesting $1.131 million so that space requirements can be met in eight NWT communities. I am pleased to report that one major undertaking, the Yellowknife office plan, is on target to reduce the total inventory of leased office space by 40,000 square feet in Yellowknife by the end of 1996-97 and to achieve an operations and maintenance savings of $1 million annually by 1997-98.

Under the building and works activity, the department is requesting capital funding to continue to upgrade the program for the Laing Building in Yellowknife and the Brown Building in Iqaluit. Ventilation systems in five schools will be upgraded to national building code standards as part of a multi-year project in which 20 schools will be upgraded over five years. This will provide a healthier environment for the students. The department will continue with the energy conservation capital program and proposes to commit $450,000 to those projects.

In the vehicles and equipment activity, $647,000 is required to replace 25 vehicles: 13 are for the Department of Public Works and Services, while 12 are for other departments.

Cabinet approved the transfer of the community dust control program, effective April 1, 1995 and the proposed capital main estimates for MACA and Public Works and Services have been adjusted accordingly.

The petroleum products division buys, ships and stores petroleum products for over 45 communities not served by private industry. Facilities and vehicles are required to keep pace with the growing community demand. As a result, major tank construction projects will occur in five communities. Projects in another five communities will proceed to design and warranty phases. The total capital request for the petroleum products activity is $7.83 million.

This year, under the systems and communications activity, the department is requesting $190,000 to fund the continued upgrading of mainframe hardware systems. This also includes starting a three-year project to upgrade computer room facilities in the regional centres.

Members will note that the funding requested for the delivery of the building and learning strategy has not been included in the department's 1995-96 plan. The 1994-95 program will be reviewed later in the year. Plans for 1995-96 will be developed and funding will be requested through a special warrant.

Finally, as Members know, the department will move quickly to undertake community consultation on the business incentive policy. We intend to take the revisions to the policy to Cabinet before the end of the fiscal year. Thank you, Mr. Chairman. That concludes my opening remarks. I will be pleased to answer any questions from the Members. Mahsi cho.

Thank you, Mr. Minister. The chairman of the Standing Committee on Finance, Mr. Antoine.

Standing Committee On Finance Comments

Mahsi, Mr. Chairman. Since this department is responsible for negotiating, tendering and implementing

many of the contracts of other departments as well as its own, a number of issues relating to contracting in general were discussed when this department appeared before the committee.

Business Incentive Policy

One concern expressed was regarding the business incentive policy (BIP). Committee Members report that many business operators in the north are increasingly frustrated with the current policy. They see it as unnecessarily complicated. They also see it as unfair at times, when southern companies start getting northern preference without, in their view, adequate justification.

The committee acknowledges that the department is re-examining the BIP in hopes of improving it. But committee Members urge the department to go back to the original objective of the policy: to ensure that as much of the government's expenditures as possible stay in the north to the benefit of northerners. Suggestions that a revamped BIP would put more emphasis on the northern labour content of contracts are worthwhile, but the department must be careful not to further complicate the program.

Recommendation 11

The Standing Committee on Finance recommends that the Department of Public Works and Services replace the current business incentive policy with a new program that is simpler, less bureaucratic, enforceable, and more effective.

At the end of this presentation, I will be making a motion on this recommendation.

Contract Estimating And Budgeting

Committee Members also noted a possible problem with the estimation of contracts, and with coordination and communication with other departments. In the past, the standing committee pointed out how many projects had gone over budget and urged the department to improve its estimating procedures. Now, many projects are over budget, but many projects come in under budget, too. While this means that overall spending estimates are more likely to be accurate, the wide variance in project estimation still concerns committee Members.

Granted, estimating projects in the north is much more difficult than elsewhere in Canada, due to the many unique factors affecting construction and planning in the north. But the committee still urges the department to improve its estimating procedures, in order to reduce the variance in project spending and to allow better and more consistent planning. The committee will expect departments to explain and justify wide variances in project estimates.

In his opening remarks, the Minister suggested that the original goal of splitting the budget into two separate bills -- allowing capital project tenders to go out earlier -- would be reached by April 1996 for 1996-97 contracts. Committee Members are concerned, however, that tenders are still often late enough that projects are delayed to future years. Committee Members noted many disadvantages to the two-budget process, and noted that if the advantage of extra lead time was not being realized, then the two-budget concept should be reviewed.

Inuvik HTHW System

Committee Members note that the department is proceeding with the phasing-out of the Inuvik high temperature hot water (HTHW) heating system. As was recommended last year, the committee continues to encourage the department to consult with other departments, as well as agencies such as the NWT Power Corporation, as they plan the dismantling of that system.

The motion is in order. To the motion.

Question.

Question has been called. But I see there is no quorum here. We will ring the bell to bring people in, one by one. Do we have a quorum now? Order, please.

Mr. Whitford, order. There is a motion on the floor and question has been called. All those in favour? All those opposed? Motion is carried.

---Carried

Mr. Antoine.

That concludes the Standing Committee on Finance report, Mr. Chairman. Mahsi.

Thank you. Before we get into general comments, I would like to ask the honourable Minister if he would like to bring in his witnesses. Mr. Minister.

Thank you, Mr. Chairman. Yes.

Thank you. Do we have the concurrence of the committee that the honourable Minister bring in his witnesses?

Agreed.

---Agreed

Sergeant-at-Arms, escort the witnesses, please.

Mr. Minister, for the record, would you introduce the witnesses to the committee.

Thank you, Mr. Chairman. To my right is Bob Doherty, the deputy minister, and to my left is Dave Waddell, finance director.

General Comments

Thank you. We are dealing with the 1995-96 capital estimates of the Department of Public Works and Services. We are now on general comments, if there are any. General comments on the budget. Mr. Whitford.

I thank you kindly, Mr. Whitford. Mr. Minister.

Thank you, Mr. Chairman. Yes, we have been putting money into retrofitting, so there will be a crane on the ship and it will be used for places other than Pelly Bay.

Thank you. General comments from the floor. Mr. Gargan.

Mr. Chairman, with regard to the community training committees. There is one in Providence. I support whatever the community does in the area of training, but the selection is perceived to be blatant patronage of family members. I see that happening in Providence and, of course, other families don't approve of it. When it is so obvious that communities bring it up, I think there is something wrong.

I hope when you create these committees, you take every possible measure so that when selection is made for training programs, you don't have fathers selecting sons for trainees and ignoring the rest of the community.

Thank you. The honourable Minister of Department of Public Works and Services.

Thank you, Mr. Chairman. In the communities what we try to do is get a broad base of representation on the committee. I will assure the Member that we do get a broad base and draw from, for example, the band council, the hamlet council, the Metis association, the community education society and the local employment officer. All of these people should be involved actively in this committee so we can receive proper recommendations on who to train in the community and what projects to work on. Thank you.