Thank you, Madam Speaker. Members of the Standing Committee on Public Accounts are pleased to present the report, Toward an Economic Development Strategy. Your committee has reviewed Tabled Document 52-12(4), 1993 Audit of the Department of Economic Development and Tourism; the NWT Development Corporation and the NWT Business Credit Corporation. Our report presents the results of our review.
Acknowledgements
Members of the Standing Committee on Public Accounts appreciate the cooperation of the Minister responsible for the department and corporations under review. Thanks are also due to officials form the Financial Management Board Secretariat, the office of the Comptroller General, the Department of Economic Development and Tourism and the two corporations that participated in the review by appearing before the committee and answering questions.
The Standing Committee on Public Accounts also acknowledges the organizations and individuals who provided information to the public review. Committee Members appreciate the thoughtful comments and documentation provided by witnesses and by those who prepared written submissions. Members of the standing committee considered all information contributed.
Some of the department's economic development officers also participated in the review process by responding to the committee's request for information. The committee would like to thank them for providing their perspective on the issues being considered. As well, committee Members would like to acknowledge the participation of the assistant auditor of Canada and his officials from the Edmonton regional office in the review. The assistant and his staff provided advice and assistance during preview briefings and in camera meetings of the committee. They also served as witnesses during the public hearing.
Executive Summary
The Assembly's Finance committee recently recommended that the Government of the Northwest Territories focus on social issues. The government was asked to assess its priorities and refocus its efforts on social issues. This does not mean that the government should abandon economic development. What it does mean is that we need to build a strong foundation of healthy, well-educated people.
We must invest in our future by investing in our people. These are long-term investments and the expected returns are also long term. Benefits should be forthcoming well into the future. The government should continue with economic development initiatives while, at the same time, ensuring that our people are able to respond to the opportunities created.
The pace of change in the north has been phenomenal. It has not been that long since most residents lived traditional lifestyles. With these dramatic changes have come enhanced expectations, many that result in a demand for public funding. Governments face many challenges in meeting the needs of their citizens. More than ever, governments have to channel limited resources into areas of greatest payback. This requires designing programs that cater to the needs of the community and provide the most useful benefits while, at the same time, preserving the overall interests of the taxpayers.
Madam Speaker, many people agree that government support of one kind or another is needed to stimulate and sustain economic development in the north. With limited resources, the government must focus and coordinate its economic development efforts. This requires a clear, central strategy and all participants must understand their role in achieving the best results. More detailed planning is required for the Department of Economic Development and Tourism. There is a real need for a broad, long-term economic development plan that clearly articulates potential opportunities; strategies for developing opportunities; and the costs and benefits associated with major public and private investments in different sectors.
Committee Members recommend three strategic directions for developing the economy of the Northwest Territories. First, the Government of the Northwest Territories should study the costs and benefits of focusing on small scale investments. The idea is to invest smaller amounts of money in a larger number of communities. Second, committee Members recommend that the Department of Economic Development and Tourism develop a comprehensive marketing strategy. Marketing information should be collected and distributed to people in the communities. People in the communities need to be aware of the outside market. They need to know whether there will be buyers for the products that the community produces.
Third, committee Members recommend that Economic Development and Tourism develop a comprehensive strategy to guide the development of parks and the tourist industry in the Northwest Territories. Worldwide competition for tourist dollars is fierce. With shrinking resources, governments have to assess where they are to invest their money and human resources to obtain the best results. The central issue is the appropriate role of tourism in an evolving economy. There has been a great deal of discussion about whether, in times of fiscal restraint, we should be spending money in the area of tourism and parks.
Committee Members discovered overlapping jurisdictions and inconsistent policies and guidelines governing the granting of financial assistance, across programs, in the department and the corporations. The government should develop a rational plan for the delivery of economic development financial assistance programs across the Northwest Territories. Committee Members noted a number of situations where clients who are potentially able to repay money granted are receiving assistance in the form of non-repayable grants and contributions.
The Government of the Northwest Territories could benefit from exploring the idea of repayable contributions. Repayment could be required in all cases where it is determined to be possible. The funding could then be "recycled," used to help others who require funding assistance. Cases where some businesses received financial assistance from several different programs were identified. Committee Members do not view this practice of "multi-dipping" to be a problem by itself. But they feel that information about the total amount of support provided to individuals and companies should be available to decision-makers.
The Department of Economic Development and Tourism commissioned an independent consulting firm to undertake an organizational review of the department. The consultants completed the review and submitted it to the department in the fall of 1993. In response, department managers made organizational changes. Some of these changes were taking place while the committee was reviewing the 1993 audit. Therefore, committee Members plan to monitor these changes and assess the results.
The primary organizational issue with the NWT Development Corporation is its relationship to the Department of Economic Development and Tourism. The Development Corporation has operated autonomously from the Department of Economic Development and Tourism and the rest of government. While recognizing the need for the Development Corporation to function autonomously, committee Members noted opportunities to integrate Development Corporation's and ED&T's contribution to the overall economic strategy.
The Business Credit Corporation (BCC) was originally set up to be an arm's-length corporation. However, it is not operating that way. The corporation's general manager now reports to the deputy minister of the Department of Economic Development and Tourism. Further, fiscal restraint prohibits BCC from setting up its own regional and headquarters structures with sufficient staff to run its operations independently. Committee Members feel strongly that a decision needs to be made about he desirability and feasibility of having the BCC independent of government operations.
The government has created a number of programs that specifically address economic development. Many other programs have been initiated and are funded through the federal government. However, all the money comes from government sources and it makes sense to look at the total funding for economic development as it if were one pool of money and people. Improved efficiency is one way of ensuring that the government will get the best value for money in economic development. Thus, the government should examine whether there are better, more efficient ways of achieving its objectives.
Many of the people who provided information to the committee pointed out the need to create a cohesive approach to economic development programs, a need to create one-window shopping. The client should be able to go to one place to get all the information they need about acquiring funding assistance. Whether it comes from different pots of money or not should not affect the client.
Along with one-window shopping, committee Members and presenters identified the need to develop more aftercare or follow-up services. Once funding assistance has been granted, there seems to be, in many cases, no follow-up service from the economic development officer, the department or the corporations. Aftercare service is required because many clients, although very proficient in their work -- for example, producing arts and crafts products -- are not experienced in the administration and management of the business. Often, there is no follow-up until the business is in trouble and, by then, it is too late to rectify the problem.
Committee Members believe that the government must develop a clear, government-wise economic development strategy. The Department of Economic Development and Tourism must then examine its mandate, policies, organization and programs and make adjustments to conform to the strategic direction established by the government. This assessment should include the Development Corporation and BCC. A key element of the economic development strategy is the development of accountability systems, systems that describe and monitor desired results. As well, there is a need to ensure that the information and expertise required to make effective decisions is available when and where it is required.
Members of the Standing Committee on Public Accounts made a number of recommendations to assist in creating an effective economic development strategy for the Government of the Northwest Territories. Madam Speaker, prior to proposing the motion for receiving the report of the Standing Committee on Public Accounts, my report is quite lengthy; therefore, I would seek unanimous consent to consider the report read as presented and printed in Hansard.