Another familiar face. Welcome, Mr. Voytilla. General comments, statements or questions. Are Members ready to go into detail?

Agreed.

---Agreed

Have all Members got the appropriate document? You will find it with Bill 18 in your legislative binder. Members, we all have the same document in front of us now.

Line By Line

Would you turn to page 6 of that document. Executive, operations and maintenance. Not previously authorized, human resource management, $15,441,249 million. Mr. Koe.

Mahsi, Mr. Chairman. I would like to get some explanation here. This is a major increase in what, to me, is bookkeeping. Over years, we know that employees accumulate leave, severance and retirement pay. It is all in the agreements. And for management, they are on Hay Plan. I'm wondering why now, all of a sudden, in 1994, we have to make a $15 million book adjustment, and that's cash out of our accounts. Something is not making sense here. Can the Minister advise us why there is a major increase to this account?

Thank you, Mr. Koe. Mr. Pollard.

Mr. Chairman, we decided to look at what our liabilities were and when we came to look at leave, furlough, lieu time, retirement benefits, ultimate removal and resignation benefits, we found that perhaps we had been underestimating those numbers in previous years, so we did a study and came to the conclusion that we were, in fact, underestimating the liabilities. Consequently, you see the resulting supp before you. Thank you, Mr. Chairman.

Thank you, Mr. Pollard. Mr. Koe.

That's nice, but again, this is a major, major hunk of money, $15 million and $13.8 million for ultimate removal. What has changed? Has the price for planes gone up or is it because of poor bookkeeping up to date?

Thank you, Mr. Koe. Mr. Pollard.

Mr. Chairman, there might have been some methods used that might not have been as accurate as we would have liked in the past. There have also been changes that occurred as a result of collective agreement changes, staff turnover, and the change in status of some of those staff. There are a number of contributing factors to cause us to want to change this and reflect what we think is a more accurate liability in these particular areas. Thank you, Mr. Chairman.

Thank you, Mr. Pollard. Mr. Koe.

The collective agreement is not new. It is two or three years old. I'm not satisfied with the answers about why the accounting for these liabilities all of a sudden changes. The other question is, is this a one-time adjustment or are there going to be further adjustments annually?

Thank you, Mr. Koe. Mr. Pollard.

Mr. Chairman, by far the largest portion of this $15 million is to reflect a different method of calculating ultimate removal and we think that different method more accurately reflects, at this point in time, the liability that the government has. It was a new method that was developed and we believe it is as close as we can get to being sure, to the penny, of what our liability might be. I know it is a large amount of money and I must say that when I agreed to look at this, I had no idea that we were going to come up with a liability of this magnitude.

But, once it was presented to me and once the new method of calculating was presented to me, I agreed that is the way it should be. I took it to FMB and also advised Public Accounts of this particular recalculation. I realize it is a large dollar amount, but it reflects the new method of calculating ultimate removal. Thank you, Mr. Chairman.

Thank you. Mr. Koe, you still have the floor.

Mahsi. Something must have triggered the review of these accounts. Was there mass resignation or people threatening to resign and all going to leave the north at the same time, so that all of a sudden we have to fix the books to reflect this? There is something I can't get my finger on. I

know it all stems to how you keep books. But if we didn't put $15 million into this account, that is $15 million for other expenditures, including housing and schools. I am just wondering why, all of a sudden, we need a major adjustment. Why couldn't we spread the $15 million over five years and make a $3 million adjustment each year? Something is not jibing here, and I guess that is why I'm questioning this.

Mr. Pollard.

Mr. Chairman, it might be that with the transfer of this responsibility from the Department of Personnel to the Financial Management Board that it came to our attention, how are we going to handle it, what is it sitting at at the present time, what are the methods used to calculate and so on. We couldn't, at least Mr. Voytilla couldn't, get the right answers for me when we were looking at what we were taking over.

Once we went back and looked at the issue, it was plain to us that we perhaps weren't doing it in the correct manner. We were accruing the liability based on how many people left in a particular year, instead of looking at what our liability was out there with regard to people who were staying longer and they were not being entered into the books as being an ultimate liability. We were just basing it on what the turnover would be in any particular year.

So, as I say, when this was brought to my attention I had no idea that the number was going to be this large. But I did agree that the method being used was not accurate and that we should find a better way to do it. And, as I say, after some very, very detailed reviews of these particular areas, it was found that we were some $15 million short in that account and it had to be corrected. Thank you, Mr. Chairman.

Thank you, Mr. Pollard. Mr. Koe.

The Department of Personnel has been around for a long time, and this liability and the benefits to our employees...We've been in existence since 1967. That's 27 years that nobody has picked up on this, and it strikes me as odd that all of a sudden, in 1994, just because you reshuffled some departments that somebody struck a match and, eureka, you found out we're not accounting properly.

I really question why we're doing it in one shot. I feel that if we're going to make the adjustments, we could have accrued it over maybe a couple of years. I know Public Accounts says we have to accrue all liabilities, and that's proper accounting, but it just seems like a big chunk of money in one shot.

General comments. Thank you, Mr. Koe. Do you want to respond, Mr. Pollard?

Mr. Chairman, as I said before -- and I agree with Mr. Koe -- it is a large sum of money. I don't want you to think that we were merely going to this particular area and saying are we doing it right, do we have our sums correct and is the formula correct. We were looking at the whole aspect of labour working for the Government of the Northwest Territories, whether it's in management, middle management or anybody who is working.

We were looking at the status of what our collective agreement said we should pay; what demands might be made of us in future years; what the make-up of our civil service was; how long they had been working for us; why was there certain turnover in certain areas, et cetera. It wasn't just pinpointing this particular area, we were looking at the whole labour area and this is one of the things that came to light.

So, Mr. Chairman, as I say, I recognize it's a large number. Why didn't we do it over two or three years? The fact of the matter is, is that once it came to the Comptroller General's attention that we were short by this much in that account, he had to report it and, consequently, we decided to do it in one year, Mr. Chairman. Thank you.

Thank you very much, Mr. Pollard. Mr. Koe.

Mahsi. This is an increase of $15.4 million. What is the total liability to this government for ultimate removal benefits?