This is page numbers 105 - 126 of the Hansard for the 12th Assembly, 5th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was housing.

Topics

Members Present

Mr. Titus Allooloo, Mr. Antoine, Hon. Silas Arngna'naaq, Mr. Ballantyne, Hon. Nellie Cournoyea, Mr. Dent, Mr. Gargan, Hon. Stephen Kakfwi, Mr. Koe, Mr. Lewis, Hon. Jeannie Marie-Jewell, Mr. Ng, Hon. Rebecca Mike, Hon. Don Morin, Mr. Ningark, Mr. Patterson, Hon. John Pollard, Mr. Pudlat, Mr. Pudluk, Hon. John Todd, Mr. Whitford, Mr. Zoe

---Prayer

Item 1: Prayer
Item 1: Prayer

Page 105

Madam Speaker

Good afternoon. Item 2, budget address. The Minister of Finance.

Item 2: Budget Address
Item 2: Budget Address

Page 105

John Pollard Hay River

Thank you, Madam Speaker. Another barn-burner from this side of the House.

---Laughter

Madam Speaker, it was said to me by my staff, that I should try to liven it up. I said, I might try to sing it, but it is written in B flat and I don't sing in B flat. Madam Speaker, in the past, a budget address was a forum to announce major new initiatives that would be funded from growing revenues. In today's economic climate, the emphasis for government, as well as the private sector, has shifted toward streamlining, downsizing and increasing efficiency. Across the country, a government budget address is more likely than not to contain both expenditure reductions and revenue raising initiatives.

Despite these new realities, this budget contains a positive message. The Government of the Northwest Territories has responded to a difficult fiscal environment by adjusting program delivery and government structure to meet the needs of Northwest Territories residents, within current resource levels.

This government has a long-term strategy for achieving fiscal reform. This strategy was outlined in the Premier's February 1992 statement on Reshaping Northern Government. Government must become more efficient, more productive and more responsive to the needs of Northwest Territories residents. By providing better, more effective services at less cost, we can avoid drastic reductions in services.

Fiscal Position And Outlook

Madam Speaker, when the previous budget was tabled a year ago, the government projected a $26 million deficit for 1992-93 and a balanced budget for 1993-94. We are now showing a small surplus for 1992-93 and a projected $23 million deficit for 1993-94. Madam Speaker, there has been some criticism of our forecasting in these areas. I would point out, on a billion dollar budget, to be within $25 million, we believe is as accurate as we can be, taking into consideration the factors that affect us.

Madam Speaker, the 1993-94 deficit was higher than forecast because of unforeseen events. A severe forest fire season last summer cost us an additional $10 million for fire suppression. The outbreak of anthrax in the wood buffalo population cost us more than $1 million to control. As well, Madam Speaker, almost $10 million in additional social housing costs were incurred due to the federal spending cutbacks and the requirement to ensure that minimum client needs were met. This still falls far short of meeting the real need for housing in the north and our ability to address the housing deficiency will be further eroded in 1994-95 and future years with the withdrawal of federal funding support for new social housing.

The 1994-95 budget forecasts capital and O and M expenditures of $1.2 billion and revenues of an equal amount. This government has committed itself to presenting a balanced budget, and we have achieved this goal through a number of expenditure and revenue measures.

Expenditures

Capital and O and M expenditures are budgeted to grow by only two-tenths of one per cent in 1994-95 over 1993-94 revised estimates. A tight rein must be kept on government spending to achieve this low growth rate. Wherever possible, however, we have tried to achieve savings by becoming more efficient, so that funds can be reallocated to meet increased demand for programs and services.

This session, Members will be asked to approve O and M spending of a little over $1 billion. This represents an increase of only two per cent from the 1993-94 main estimates amount.

Social Services

Madam Speaker, included in this budget is an additional $3.5 million to allow for essential payments to social assistance clients. The underlying causes of increased social assistance spending are being analyzed and further funding adjustments may be necessary. In addition, the way in which social assistance is provided is being reviewed. Details of this review will be given later in this address.

Funding has also been increased by $1.4 million to meet the operating and maintenance costs of several new social services facilities, including a new child welfare group home in Baker Lake, two new group homes for disabled adults in Rankin Inlet and Inuvik and the new Baffin regional alcohol and drug treatment centre located in Iqaluit .

Education, Culture And Employment

Funding for the Department of Education, Culture and Employment to plan, develop and operate the elementary and secondary school system will increase by $6 million. This will bring it to a total of more than $144 million in 1994-95. Included in this increase are the funds required to extend grades in 15 community schools, together with the costs of additional teachers, classroom assistants, transportation and support services associated with ever increasing enrolments. Further information on grade extensions will be provided by Mr. Nerysoo during the committee of the whole review of the department's budget.

The increase in grade extensions has allowed more students to attend high school in their home communities. As a result, the operation of Akaitcho Hall is no longer economic or necessary and the closure of this facility is planned for June 30, 1994.

Increased contributions to school boards of approximately $1.5 million will be used to fund the community teacher education program, which is designed to increase the number of aboriginal teachers in Northwest Territories schools. The program will primarily be directed at individuals already working in education settings. The first group of successful trainees is scheduled to assume teaching positions in the fall of 1995.

Due to projected growth in post-secondary student enrolments, $1 million has been added to the student financial assistance program, together with a $1 million increase in the provision for student loan remissions.

Municipal And Community Affairs

The Department of Municipal and Community Affairs will increase transfer payments to hamlets by $684,000 and support to settlements will increase by $257,000. As well, the department's budget includes an additional $400,000 to provide communities with funding support to operate recreation facilities and hire recreation leaders. New recreation leaders are being supported in Hall Beach, Wrigley and Lac La Martre and a new facility maintainer position in Whale Cove will be funded. This increase reflects the government's and the Honourable Silas Arngna'naaq's continued support for community recreation programs which help to strengthen community well-being and provide a positive focus for youth. Madam Speaker, I would say at this point that we have received some criticism from the federal government for these kinds of facilities we provide to smaller communities. My answer has been, to Mr. Martin, that you do not find a Davis Inlet in the Northwest Territories. I cannot express the importance that we place upon keeping our youth busy in these small communities.

Transportation

In the area of transportation, the budget includes $1.2 million in additional O and M costs for the extension of the Mackenzie Highway, as well as $400,000 to operate the new ferry at Ndulee. Increased general highway maintenance costs of $850,000 are also included. The highway extension, the ferry

and increased highway maintenance will all provide additional opportunities for local employment.

Madam Speaker, as previously promised, the Baker Lake training centre will be in operation in 1994-95. The centre will train northerners in the specialized techniques and procedures necessary for the safe and efficient operation of our community airports.

Renewable Resources

The budget of the Department of Renewable Resources includes $3 million for the second of five equal payments to the Nunavut harvester income support fund in accordance with an agreement with Nunavut Tunngavik Incorporated.

Economic Development And Tourism

Also reflected in this budget are organizational changes in the Department of Economic Development and Tourism. The department has been reorganized and streamlined to simplify application procedures and assist in the stimulation of economic development. Decision-making has been decentralized to improve the department's ability to respond to changing economic circumstances and to better address the needs of the small business community. Regional offices have been given increased authority and responsibilities and associated funding has been transferred to facilitate this change.

Housing Corporation

The Government of the Northwest Territories' contribution to the operations and maintenance budget of the Northwest Territories Housing Corporation has been increased by eight per cent over the 1993-94 main estimates amount to more than $56 million. The total operations and maintenance budget of the corporation is over $105 million, of which $77.5 million is in grants and contributions to local housing organizations, up $8.2 million from 1993-94.

This increase, Madam Speaker, will fund the operating costs of new housing units and increased operating costs on existing housing. Approximately 80 per cent of the Housing Corporation's expenditures supports the local housing associations and authorities who administer and maintain over 5,500 rental housing units across the north.

Health

The $178 million budget for the Department of Health represents almost 18 per cent of the total operations and maintenance budget, and is 2.3 per cent less than the 1993-94 main estimates amount. This reduction reflects the government's continuing efforts to control health costs in the area of medicare, medical travel and hospital services, while improving the quality of and access to services.

Madam Speaker, savings are being achieved primarily through the repatriation of services from the south. This permits care closer to home, with resultant savings in out-of-territory hospital expenses and the related decrease in medical travel costs. The budget anticipates reductions of more than $6 million through such initiatives, without any reduction in service levels.

Public Works And Services

Madam Speaker, the Department of Public Works and Services budget is 2.1 per cent less than the 1993-94 main estimates. This budget includes a reduction of $1.5 million resulting from the sale of staff housing units, which will now be maintained by their new owners. Additional savings are anticipated as more housing units are sold.

The department has been reorganized and the construction management function decentralized to improve effectiveness and provide greater regional presence. The budget also reflects the privatization of the publications and productions function.

Madam Speaker, in addition to these expenditure initiatives which are reflected in the budget, there are a number of other initiatives which are being considered.

Income Security Reform

The first of these is a review of the government's spending on income support and employment training. This budget has allocated $80 million in O and M funding for the Department of Social Services, of which approximately $32 million will be spent to provide direct income support to persons. The budget also allocates $212 million in O and M funding to the Department of Education, Culture and Employment, of which approximately $56 million is directly targeted to training and employment support. These amounts demonstrate the Government of the Northwest Territories' strong commitment to provide income support to those in financial need and to those who need education and training to find a job.

Madam Speaker, government spending alone cannot provide meaningful employment and restore an individual's dignity by reducing his or her dependence on government. We need more opportunities for participation in the economy and for increasing individual self-reliance. We also need to restructure government expenditure on income support and on employment development and training programs so that we spend more efficiently. This is how we can transform passive social service payments into an investment in people.

Therefore, Madam Speaker, we have begun an in-depth review of our income support systems. The intent is to integrate all the government's programs of income support to avoid duplication and overlap and to provide maximum benefits to residents. The challenge will be to eliminate the barriers that exist in programs such as social assistance and the social housing rental scale and to establish work incentives and training initiatives which will encourage residents to enter or return to the job market.

One element in our approach will be to involve, as much as possible, communities and claimant groups along with local businesses in the delivery of integrated programs to upgrade the skills of social services recipients and provide them with on-the-job training. We believe this will increase the number of skilled individuals available for employment and will enhance the community's overall self-sufficiency. We intend to overhaul the system so that different programs are not working at cross-purposes and do not create disincentives to work and training.

The Minister of Social Services, Ms. Rebecca Mike, is working closely with the Minister of Education, Culture and Employment, Mr. Richard Nerysoo, to find ways to integrate to the greatest extent possible income support, training and employment development programs. The two departments are developing pilot projects specifically intended to test this integrated approach. They will be seeking final Financial Management Board approval of these initiatives later this year.

Madam Speaker, we were particularly pleased by the recent announcement by the federal Minister of Human Resources, that the federal government will undertake a complete review of income support programs. The objectives of the federal government are very similar to ours. Since successful reform cannot be achieved without changes to federal programs, the federal initiative comes at a most opportune time and, Madam Speaker, we intend to participate very actively in intergovernmental discussions on income support. We will ensure that our reforms dovetail with the federal reforms. A first meeting of federal, provincial and territorial Ministers is being held today. Minister Nerysoo will be making a statement on this matter when he returns from Ottawa.

Public Service Management

Madam Speaker, over $400 million of the Government of the Northwest Territories' budget goes to public service salaries and benefits. All three of our existing collective agreements with public service unions and associations expire in 1994. We expect collective bargaining to start soon.

In the last few years, other jurisdictions in Canada have taken measures to reduce the cost of their public service wage bills including wage freezes and roll-backs, lay-offs and forced time off without pay.

Northwest Territories public servants, in comparison, have not been subjected to the drastic measures taken elsewhere. We have had no massive lay-offs of government employees. Employees affected by government initiatives have either found other jobs within government or received benefits from the workforce adjustment program which the government negotiated with the Union of Northern Workers.

Furthermore, Madam Speaker, if we compare public service salaries and benefits within the Northwest Territories, the government pay and benefits package appears to be significantly higher than that offered by community employers. We are undertaking a survey to determine whether the differences among the pay and benefits packages of the various community and public sector employers are significant and if so, how large the disparity is. The results of this survey are expected by late spring and will assist us in determining future direction in a number of areas. The results of the survey will be reported to this House, Madam Speaker.

Madam Speaker, we cannot ignore the impact of the cost of the public service on our financial situation. Public service costs represent one-third of our budget. Our serious financial situation has forced us to take a hard look at all of our priorities. This significant portion of our budget must also come under thorough review. Cost containment must extend to collective bargaining.

The government will want to address a number of significant matters during collective bargaining. This will include rethinking components of the public service benefits package. Some Members of this House have stated that the benefits package needs to be more reflective of our northern environment. Business people have raised concerns with the value and structure of government employee benefits. The government realizes that it needs to rethink its benefits package. There must be serious flaws in a system where some employees qualify for as much as $30,000 in vacation travel assistance.

The issue of pay for performance needs to be addressed in collective bargaining. Productivity in all sectors of our economy needs to be increased for the country to become more competitive and a stronger linkage between pay and performance is fundamental to this. There is also a need to discuss greater flexibility and innovation to allow us to become more effective and efficient in the delivery of public services. This applies particularly to hours of work and shift scheduling provisions of the collective agreement.

We will also need to examine the reasons why employees who resign after only a few years get severance pay and why we pay their costs to leave the Northwest Territories.

Madam Speaker, we have a history in the north of being able to resolve difficult problems together. Our employees are valued and appreciated. However, we must be realistic and negotiate within the context of today's financial realities and labour environment. We look forward to exploring innovative ways to deal with our problems, reduce costs, and respond to emerging workplace issues.

Madam Speaker, it is in recognition of our financial realities and the need for responsible actions that I will be introducing in this session, on behalf of the Legislative Assembly's Management and Services Board, an amendment to the Legislative Assembly and Executive Council Act that will result in a zero increase to Members' salaries for 1994-95.

--Applause

Madam Speaker, as I mentioned previously, there has been a strong desire to link public sector compensation more closely to performance and to the achievement of results. Bringing about this change must start at the highest level of the bureaucracy. On behalf of the Premier and my Cabinet colleagues, I am pleased to announce that a new approach to deputy minister compensation will be implemented during the upcoming fiscal year. This new approach will involve the conversion of a significant portion of deputy ministers' base salaries to performance pay. Although deputies will see their regular take home pay substantially reduced, they will have the opportunity to earn greater merit pay based on their performance and the results they achieve.

Madam Speaker, creative initiatives are also needed in other human resource management areas. As we move closer to division, the need for strategies to plan for, develop, recruit and retain staff are taking on greater importance. We have, therefore, begun to develop a corporate human resource planning strategy. We will be reviewing existing policies and programs to ensure that we have knowledgeable staff to fill future public service jobs. We must attract capable northerners, assess their abilities, provide them with training and monitor their progress in order that we can assist them in pursuing a career path within government. Although Mr. Nerysoo's officials in the Department of Education, Culture and Employment and officials in the Financial Management Board Secretariat are taking the lead role in developing this strategy, Madam Speaker, it must involve all departments and agencies.

A major component of the strategy will be an extensive review of the effectiveness of the affirmative action policy in increasing, developing and retaining affirmative action employees. Part of the review will include talking with those who use the policy, including eligible staff, interested groups and representatives of the broader community. The results of this review will be reported to both Cabinet and this Assembly with a specific action plan before the end of 1994.

Revenues

Madam Speaker, I would now like to address the revenue side of the budget.

Last year, we implemented a new Northwest Territories payroll tax. This tax came into effect on July 1, 1993. The government remains convinced that all individuals who are employed in the Northwest Territories must share in the tax burden. This tax is the most effective way we have to ensure that such sharing takes place. Implementation of the tax has proceeded smoothly, largely as a result of the cooperation of Northwest Territories employers. Indications are that our forecast -- that it would raise about $8 million in the current year -- is on track.

Last year, the government also introduced a cost of living tax credit for Northwest Territories' residents. This credit is based on net income and is available to all Northwest Territories residents who file a Northwest Territories income tax return. The credit for 1993 will be up to $322.50, depending on income, half the rate of future years. Madam Speaker, that is because we didn't implement it until half-way through the year. The credit can be claimed by filling out and filing the form included with all 1993 Northwest Territories income tax returns. The government will be initiating a public awareness campaign through ads in northern newspapers to encourage residents to file their tax returns so that they may get this credit as well as the federal child tax benefit.

Despite forecast healthy economic growth this year and next, the government is projecting lower tax revenues in the current fiscal year, and only a slight improvement next year. This is due primarily to a decline in corporate income tax revenues in 1992. In that year, corporations in Canada and the Northwest Territories had lower profits and, therefore, lower taxes. Because 1992 taxes were not completely assessed until well into 1993, the lower 1992 taxes are reflected in our 1993 and 1994 payments from Revenue Canada.

The government has balanced this year's budget mainly by controlling spending. I am announcing that in this budget there is:

-no increase to personal income taxes; -no increase to the one per cent payroll tax;

-no increase to fuel tax rates;

-no change to liquor mark-ups;

-no changes to property tax mill rates;

-no change to the income tax rate for small businesses; and,

-no sales tax introduced in the Northwest Territories.

---Applause

However...

---Laughter

Madam Speaker, I have one tax change to announce. Effective January 1, 1994, the Northwest Territories corporate income tax rate will increase from 12 per cent to 14 per cent. This rate change will not apply to the first $200,000 of active business income of Canadian-controlled private corporations. This change will result in additional revenues of $5 million in the coming year. Legislation to implement this rate will be introduced during this session.

---Applause

Madam Speaker, this is the first increase in the corporate income tax rate in four years. The new rate will still be the lowest of any province or territory other than Quebec. Because our rate will still be lower than in Yukon and in nine of the ten provinces, we do not expect that this increase will significantly affect investment intentions of large companies in our economy.

Although the government considered a range of taxation alternatives, no changes have been made to taxes on individuals in this budget. Last year, we asked employees to pay more through the new payroll tax and an increase in the personal income tax rate. This year, we are expecting large corporations to increase their contribution.

Last week, the federal government announced a reduction of $5.00 a carton in the federal cigarette tax, along with other measures to combat tobacco smuggling in Canada. Given that Northwest Territories tobacco taxes are levied as a percentage of the retail sale price, including the federal tax, this measure will result in a revenue reduction of up to $3.40 per carton in our tax, or about $2 million a year if we do not act to avoid this erosion of our revenues. The lower price would also increase consumption. I don't have to tell this House of the effects of an increase in smoking on the health of our residents. We are examining the revenue and health implications of the federal action and I will report back to the House with a plan for dealing with the problem.

Tax increases in this budget have been kept to a minimum, because we believe that a balanced budget must come primarily from restructuring spending, not by increasing the tax burden, with its resulting negative impact on individuals, business and the economy.

The Economy

Madam Speaker, in 1993, the economy of the Northwest Territories offered excellent employment and investment opportunities.

The job situation in the Northwest Territories proved to be much healthier than at the national level. About 900 new jobs were created in the Northwest Territories last year. This represents a 4.4 per cent increase, the second largest annual increase in employment since consistent record-keeping began in 1983. Government initiatives such as the Northwest Territories worker training fund delivered by the Department of Education, Culture and Employment, contributed to this employment growth. Madam Speaker, we also believe that negotiating those contracts and trying to spend more of our money in the Northwest Territories, has resulted in more northerners being employed.

Most of the goods produced in the Northwest Territories are sold elsewhere. Unfortunately, over the past few years, Canadian and international demand for our goods was weaker because of the recession and the subsequent fragile recovery. Consequently, in 1992, real final domestic demand, a measure of consumer, government and business spending, grew by one per cent, slightly above the Canadian average of 0.4 per cent. It is estimated that real final domestic demand in 1993 grew by between one and two per cent. In 1994 and 1995, we expect annual growth of two to three per cent. Employment is expected to grow by about 2.5 per cent a year.

Mining

Mineral mining is the largest goods-producing industry in the Northwest Territories and has historically accounted for ten per cent of the direct jobs available here. In 1992, largely because of a 17 per cent fall in gold output, real GDP grew by only 0.4 per cent. This decline was attributed partly to falling productivity, but it was primarily due to the closure of the Colomac gold mine in June of 1991.

Although final statistics are not yet available for 1993, it is estimated that the mining industry's performance was measurably better and significant improvement is expected this year and the next.

Key factors are causing the outlook to improve. World demand is improving. Metal prices have stabilized or increased in US dollar terms. The declining value of the Canadian dollar has further increased revenues for Canadian producers. Our mines have cut operating costs while maintaining total metal production. This is crucial for the export performance of the Northwest Territories because 95 per cent of our total exports of goods are non-renewable resources.

With the expected return to full production at territorial gold mines and with the planned reopening of the Colomac gold mine in April of 1994 and the approximately 240 jobs that this is expected to provide, the outlook for the industry is bright.

Diamond exploration activity is front and centre in the economic news. The total area of claims recorded in the Northwest Territories during 1993 reached 30 million acres, an area almost twice the size of New Brunswick. This represents a 75 per cent increase over the previous year and 18 times the area claimed in 1991. It is becoming increasingly more probable that the Northwest Territories will host the first diamond-producing mine in North America.

---Applause

This would vastly increase the role of mining as a direct and indirect generator of employment and income. I think Mr. Todd will be talking a little more about this, possibly today, Madam Speaker.

The full potential of our wealth will truly be realized only if the employment and investment opportunities yielded by this economic activity accrue to northerners. Latest statistics indicate that of 1,683 full-time workers in the metal mining industry in the Northwest Territories, only 51 per cent were northerners and less than 10 per cent were aboriginal persons.

These ratios must improve. The Government of the Northwest Territories, through its education and training system, is dedicated to expanding employment of local people. The Department of Energy, Mines and Petroleum Resources has a number of initiatives specifically aimed at increasing northern and aboriginal employment in the mining industry. However, the cooperation of employers is also needed to successfully reach this goal. In addition, employment clauses in land claims agreements and the potential for new mine development over the next five to ten years will support the trend towards higher levels of aboriginal employment.

This government continues to support the development of a transportation corridor in the resource-rich Slave geological province. The construction of an all-weather road between Yellowknife and Coppermine and of a deep sea port on the Coronation Gulf would have major benefits, not only for the Northwest Territories, but for all of Canada. The cooperative efforts of government, both territorial and federal, and the private sector, are required to make this happen. The Honourable John Todd, Minister of Transportation, is actively pursuing this important initiative.

Renewable Resources

The Minister of Renewable Resources, the Honourable Stephen Kakfwi, will table a new Renewable Resources development strategy during this session. This strategy will identify economic opportunities in the renewable resource sector, which produces goods that have a current annual value of more than $55 million. The Department of Economic Development and Tourism will disseminate this information and provide support when needed to transform these opportunities into viable business ventures.

Progress over the last two years has been encouraging, particularly in the area of wildlife, fisheries and forestry. New opportunities for residents have included the establishment of an outfitting venture in Fort Providence for hunting wood bison, a very successful harvest of muskox by hunters of Cambridge Bay, commercial harvesting of the rapidly expanding caribou population on Southampton Island, expansion of offshore and inshore fisheries quotas and licenses and six new forest harvesting licenses that will allow the harvesting of more than $9 million worth of wood. This progress has occurred without compromising the long-term and vital interests of northerners for sustainable access to country food and fuel wood.

Economic Development

We recognize that in most communities, the economic environment is not buoyant and there are limited employment opportunities. To help meet the need for jobs, the Department of Economic Development and Tourism is encouraging innovative initiatives that build on traditional skills and occupations.

In the Kitikmeot region, a group of women in Taloyoak have formed the Natilikmiot Anakavik Producers Cooperative to revive the production of dolls. This has come about through the efforts of the producers, the departments of Education, Culture and Employment, Economic Development and Tourism, the hamlet and the Northwest Territories Development Corporation.

Progress is being made in the development of the inshore and offshore fisheries in the Baffin region. Last summer, 500 metric tonnes of offshore turbot were harvested in the Davis Strait from a new quota awarded to Cumberland Sound Fisheries Limited. In September 1993, an exploratory fishing program, funded in part by the federal-territorial economic development agreement, was successful in identifying a stock of turbot of commercial potential near Broughton Island. Both of these developments bode well for increasing the employment and income generated by Baffin fisheries. Exploration for fish resources will continue in 1994.

Exploratory fishing will also continue in the Keewatin region in 1994 to build upon the encouraging results from last summer. It is believed that this program will result in new economic opportunities and growth within two to five years.

Arctic food production will also be undertaken in the North Slave region in 1994. The Dogrib people have recently decided to undertake a federally inspected test harvest of approximately 500 caribou for commercial purposes. The harvest will take place in late winter and, if successful, could be repeated in 1995. This project is as a result of ongoing consultations over a two year period with the residents of North Slave.

In the Inuvik region, an economic development committee has been establish in Fort Norman. The committee has met with the Department of Economic Development and Tourism to initiate a community economic planning process. A number of initiatives have been identified, most of which focus on the development of the tourism industry. Tourism will also be a focus in the Deh Cho region. Initiatives will be undertaken to attract tourists travelling the Alaska Highway.

In summary, Madam Speaker, the longer term economic outlook of the Northwest Territories remains very positive. Diamond mining would provide a tremendous boost to the economy. As prices for minerals increase, output and employment should improve. The development of a transportation infrastructure will open the Northwest Territories to tourism and further mineral exploration and development. With the devolution of responsibility for oil and gas and minerals to this government, decision-making can take place in the Northwest Territories and at local levels where northerners can then stake a claim in their own future.

Madam Speaker, the economic development of the Northwest Territories will also bring significant benefits for Canada. There will be economic benefits since most of the goods used by Northwest Territories producers and bought by Northwest Territories consumers come from southern Canada. There will also be fiscal benefits since economic development will decrease the government's reliance on transfers from the Government of Canada.

Federal-Territorial Fiscal Arrangements

Madam Speaker, there are a number of outstanding federal-territorial fiscal issues which require resolution. These include the formula financing agreement, the devolution of oil and gas and minerals, the health billings dispute and funding for social housing.

Formula Financing

The coming fiscal year is a crucial one for federal-territorial fiscal relations since 1994-95 is the final year of the current five year formula financing agreement. Renewal discussions are expected to begin within the next month.

Considerable effort has been made by both sides to improve our fiscal relationship with the federal government. Our meetings with federal Ministers indicate they have a willingness to listen and to resolve outstanding issues. We are looking forward to productive discussions on our financing arrangements. However, given the current federal fiscal situation, we must be realistic about what we can achieve.

There are two major outstanding issues related to the formula financing agreement which we would like to see resolved and changes implemented before the expiry of the current agreement in 1995.

One element of the formula which we would like to see addressed is the GDP ceiling. This ceiling, which has cost us hundreds of millions of dollars in lost revenues, links the growth of our base funding to economic growth in southern Canada. While we disagree, in principle, with the application of a ceiling unrelated to our expenditure requirements, we understand the federal government needs to limit its fiscal exposure. However, the ceiling on formula financing is more restrictive than the one applied to federal-provincial equalization payments. We have asked the federal government to apply the formula financing ceiling in a more equitable way.

Secondly, the formula currently contains an element which penalizes the Government of the Northwest Territories when our tax revenues increase as a result of economic growth, since for every $1 earned in additional taxes, the formula financing grant falls by $1.30. This aspect of the formula creates the wrong incentives for economic growth and development. We have made a proposal to the federal government that would eliminate this element, and the disincentives it creates, without increasing federal spending.

The successful resolution of some of these issues would be a significant boost to economic growth as well as a benefit to both governments. We understand that the federal government is facing a serious deficit situation and must keep expenditures in check. This precludes large increases in transfer payments to the Northwest Territories. However, federal expenditure reductions and tax increases alone will not resolve the federal deficit problem. As the federal Minister of Finance and the Prime Minister have recognized, the active pursuit of economic growth-enhancing policies is the third and essential component of a deficit reduction policy. The Northwest Territories could make more meaningful contributions to national economic growth if some of the issues in federal-territorial relations were resolved.

For this to happen, Madam Speaker, the right set of incentives has to be in place. First and foremost among these is a formula financing agreement which does not create fiscal disincentives to economic growth and development for the Government of the Northwest Territories. As I have already explained, the formula creates the wrong incentives for the Government of the Northwest Territories and can, in its current form, only lead to reduced revenues for both governments in the longer term.

Oil And Gas And Minerals Devolution

Devolution of remaining province-like programs from the federal to the territorial government would also create more incentives for our government to promote economic growth and development, especially in the areas of minerals and oil and gas. By repatriating decision-making to the Northwest Territories, our government could work in closer cooperation with local residents, claimant groups and industry to promote orderly development of our mining and oil and gas industries.

Efforts at concluding a northern accord on oil and gas and at devolving responsibilities for mining have not, however, been successful up until now. Resolution of the formula financing issue, along with the provision that the Government of the Northwest Territories can retain meaningful benefits from oil and gas and mining royalties, would remove the major stumbling block in concluding devolution agreements. We believe that this would result in increased support by business, claimant groups and all Northwest Territories residents for the development of these two major industries. This development would more than compensate the federal government for any foregone revenue and also provide a net fiscal benefit to the Government of the Northwest Territories.

Health Billings

Madam Speaker, we want to work with the federal government to resolve a number of other outstanding issues. With regard to this government's dispute with Canada over payment for aboriginal health care, I have approached the federal Ministers of Finance and Indian and Northern Affairs on this issue. We have agreed to explore the possibility of reaching a settlement. Resolution of this dispute would be a major milestone in improving federal-territorial fiscal relations.

Social Housing

Members are aware that the federal government has cut funding for new social housing steadily since 1991. Now, all of that funding is gone.

More than 3,500 housing units are required across the Northwest Territories right now, and the shortfall between needs and available housing is growing. Overcrowding is already a major problem in many communities. As our young population grows, local housing shortages will get worse. Ultimately, this will lead to more health problems, more family violence and other social problems, and increased learning and behaviour problems of school age children. Most of those who need housing assistance in the Northwest Territories are aboriginal people and the federal government has a special responsibility to them.

Madam Speaker, the Government of the Northwest Territories simply does not have the resources to address the housing crisis on its own, especially in light of the severe cuts imposed on formula financing growth by the GDP ceiling. The Minister responsible for the Northwest Territories Housing Corporation, the Honourable Don Morin, has met twice with the current federal Housing Minister to inform him of our urgent housing shortage and the impact of federal restraint. Mr. Morin is also working with a special committee made up of Housing Ministers from several provinces. This committee will advise the federal Minister on the significance of the special housing needs of the territories and of some of the provinces, and the need to address the funding shortfall. This issue has been raised on several occasions with federal Ministers.

We will continue to pursue the issue of social housing vigorously with the federal government, in consultation with aboriginal organizations and the Advisory Committee on Social Housing. The federal government has to recognize its responsibilities for providing housing to aboriginal persons in the north. It must reinstate funding for social housing in the Northwest Territories.

National Infrastructure Program

Madam Speaker, an example of the kind of productive federal-territorial discussions which are possible are those relating to the $2 billion national infrastructure program, announced by Canada in December. When supplemented with contributions from provincial, territorial and municipal governments, this program will provide up to $6 billion in capital spending across Canada to promote employment and accelerate economic recovery.

The Northwest Territories supports the goals of the initiative. As Members will recall, when we were first made aware of the infrastructure program by the federal government, the funding allocated to the Northwest Territories was less than $4 million. The program would have consisted of two components: a national infrastructure program to be administered by the Government of the Northwest Territories; and, a First Nations infrastructure initiative to be administered by the Department of Indian and Northern Affairs. Delivery of these two programs independently would have resulted in different treatment for different communities in the Northwest Territories.

As a result of representations by the government and the direct intervention of the Premier with Prime Minister Jean Chretien, the federal government has increased the amount of funding allocated to the Northwest Territories and eliminated the double standard in program delivery. First, an additional $400,000 has been allocated on the basis of revised unemployment estimates. Second, the funding allocated to Indian and Northern affairs for the First Nations infrastructure initiative will be combined with the allocation to the Government of the Northwest Territories under one program to be administered by our government.

These changes mean that total federal funding allocated to the Northwest Territories under the infrastructure initiative will be $5.3 million over two years.

If all communities participate in this program, approximately $13 million could be spent on capital improvements in the Northwest Territories over the next two years. However, no funding has been allocated for this initiative in the government's 1994-95 capital budget. As soon as agreement has been reached with Canada on the administration of this program, funding will need to be identified. Once this has been done, details will be communicated to all Northwest Territories communities in March 1994.

Conclusion

Madam Speaker, I am almost at the end and I am sure there are many people who are relieved about that. But I would like to say that every day it becomes clearer that the Northwest Territories can depend less and less on the federal government for its needs and to defend its interest. We must become more self-sufficient and less dependent on Ottawa. This can only happen if Northwest Territories residents are working together towards clear goals. All of us must work hard to reconcile the interest of aboriginal organizations and claimants, business and industry, government and other groups if we are to bring about and manage the political and economic development of the Northwest Territories. There are large economic resources available in the Northwest Territories whose development would make us much less dependent on the federal government. We need to put aside our differences, stop dealing with the federal government independently of one another and work together to place our future where it should be, in the hands of northerners.

Madam Speaker, my Cabinet colleagues and I would like to offer thanks to the Members of the Standing Committee on Finance and to other MLAs for their assistance and advice in preparing this budget. Madam Speaker, I would also like to thank my Cabinet colleagues and their deputies and departments for putting up with my badgering as well.

I will conclude this address by summarizing the message we want to convey. Governments can no longer finance new spending initiatives out of revenue growth. Existing programs may no longer be affordable. The only way to ensure that governments can continue to provide services is to rethink the way we deliver those services.

Reform will not be achieved overnight. Nor should it be. The changes that are necessary will require careful consideration and consultation with those affected.

The budget we are presenting today takes important steps toward achieving this reform. Thank you, Madam Speaker.

---Applause

Item 2: Budget Address
Item 2: Budget Address

Page 113

Madam Speaker

Thank you. Item 3, Minister' statements. The honourable Member for Keewatin Central, Mr. Todd.

Minister's Statement 9-12(5): Bhp Minerals - NWT Diamonds Project
Item 3: Ministers' Statements

Page 113

John Todd Keewatin Central

Thank you, Madam Speaker. Last week, BHP Minerals submitted a project description of their proposed diamond mine, near Lac De Gras, to the federal government's regional environmental review committee. The document is intended to describe the major aspects of the project, as a preliminary step in the environmental review process. The project must be developed in a manner which assures environmental safety and a minimum of social disruption.

The company is continuing to test the property and has not yet confirmed that they have an economic deposit. However, there is reason to expect that the results of these tests will be positive. It is important that Members of this Assembly are informed of some of the major elements of the project description.

BHP is pursuing an aggressive development schedule, with construction starting in 1995 and production commencing in 1997. Three separate diamond bearing kimberlite pipes in close proximity to each other would be developed, using a central processing facility. They would be developed initially as open pits, with a mine life of 20 years.

This would be a very large project. By way of comparison, it would process more ore than all other operating mines in the NWT combined. There would be a construction workforce of 1,000 and a production workforce of 650 people, who would fly in and out from Yellowknife and other local communities. A further 780 to 880 indirect jobs are estimated to be generated from the project.

The company has stated its intent to ensure that the benefits of the project to the people of the north are maximized and shared equitably. It plans to negotiate a benefit agreement with the Dogrib people, and to use Yellowknife as the point of hire.

The NWT diamonds project employment policy will be to hire qualified employees first from the proximate Dene and Metis communities, then from within the NWT, before looking elsewhere. Preference will be given to suppliers of goods and services in the NWT, followed by those from the rest of Canada.

---Applause

Minister's Statement 9-12(5): Bhp Minerals - NWT Diamonds Project
Item 3: Ministers' Statements

Page 113

Madam Speaker

Thank you. Item 3, Ministers' statements. Item 4, Members' statements. The honourable Member for Iqaluit, Mr. Patterson.

Tribute To Simon Awa
Item 3: Members' Statements

Page 113

Dennis Patterson Iqaluit

Thank you, Madam Speaker. It's not every day that politicians rise to pay tribute to people who work in the media, but today I am very pleased to express on behalf of my constituents, our gratitude for the excellent work done by an over 11 year employee of CBC in the eastern Arctic whose last working day was last Friday.

Simon Awa came to CBC radio with the excellent background of having been president of the Baffin Region Inuit Association. Over his 11 years, Simon was well-known within the CBC as someone keenly dedicated to improving the quality of Inuktitut programming and staffing. He did a great deal to improve and strengthen the role Inuit played in CBC North as operations manager for some five years, recently as chair of the Inuit Services Committee of CBC North which advises the CBC on Inuktitut issues, and in his recent return to on-air broadcasting with special responsibilities on the presentation of news in Inuktitut.

Although well respected as a very well organized manager, Simon's first love was being on air. Being very well informed of current issues of the day in the north, in Canada and internationally, Simon possessed that rare gift of being able to extemporaneously read a news story, seemingly effortlessly in Inuktitut, even though that often requires that the story be retold in a manner quite different from the way English speakers communicate. I've seen John Ningark do that too, Madam Speaker.

For example, I am told that when a tank showed up in a news story about Bosnia, Simon described it clearly and concisely as a vehicle with tracks, metal plating and a big gun on top. I know that unilingual Inuit were very grateful for his strong, clear presentations of the news, and all this done only with an English text to work from.

Simon is also well-known as a hunter, active participant in search and rescue in Iqaluit -- in fact, I've had the pleasure of being Simon's hunting companion from time to time over the years, myself.

Today is Simon's first day as executive director of the Nunavut Implementation Commission. He now, obviously, wants to shift his focus to be involved in the development of Nunavut. He's been thinking of this change for a long time. His background as a superb communicator, manager and long-time student of current events will be a definite asset in this new challenge.

Myself and my constituents thank him for his years in the CBC and wish him well in his new job. Qujannamiik.

---Applause

Tribute To Simon Awa
Item 3: Members' Statements

Page 113

Madam Speaker

Thank you. Well-timed Member's statement. Item 4, Members' statements. The honourable Member for Yellowknife Centre, Mr. Lewis.

St. Valentine's Day
Item 3: Members' Statements

Page 114

Brian Lewis Yellowknife Centre

Thank you, Madam Speaker. It's ironic that on Friday we had a debate and agreed on a declaration of non-violence, especially non-violence of men towards women, Madam Speaker, and today is St. Valentine's Day.

St. Valentine's Day is when we are supposed to show love to our spouses, mates and partners, and to recognize them as life-long friends. But it made me think on the way to work today, Madam Speaker, that so often we find love and tragedy go hand in hand because St. Valentine was one of these guys that got bumped off. That's how you become a martre, you die with what you believe in. By helping a whole bunch of Christians against the nasty Romans, he became a saint. We remember him on days like this because he died for what he believed in, but died violently.

Madam Speaker, today I was also thinking on the way to work that in 1929 one of the very famous dates in American history was the St. Valentine's Day massacre, when Al Capone, who was very heavy into the bootlegging business -- not cigarettes, but the other stuff --

---Laughter

...dressed all his hoodlums up in the uniforms of the Chicago police, found unarmed members of the rival gang of Bugsy Malone and lined them up inside a garage and shot them all. What a way to remember St. Valentine's Day, this irony of violence and love among people.

Today, perhaps, it will give us a chance to reflect, Madam Speaker, that not only are we talking about domestic peace and harmony with the partner we've chosen to live with, but in a wider sense the society which we would like to have as a lawful society where we respect the laws we've all agreed to live under. That, to me, would be a wonderful end, if you like, of this debate we had on Friday. Thank you, Madam Speaker.

---Applause.

St. Valentine's Day
Item 3: Members' Statements

Page 114

Madam Speaker

Thank you. Item 4, Members' statements. The honourable Member for Amittuq, Mr. Allooloo.

Nunavut Leaders' Summit In Rankin
Item 3: Members' Statements

Page 114

Titus Allooloo Amittuq

Thank you, Madam Speaker. On January 17, in Rankin Inlet, the Nunavut leaders who were assembled there, including Members of the Nunavut Caucus of this Legislative Assembly, concluded three days of discussion by approving a declaration and three accompanying statements which were developed during the course of the meeting. I intend to table these documents today at the appropriate time, Madam Speaker, so that the worthwhile work that the delegates did at the meeting might be available for the public.

Madam Speaker, this was the second Nunavut leaders' meeting that has been held. You may recall that the first occurred two years ago in Iqaluit. The first meeting was prior to many crucial events, as we go down the road to Nunavut. Since we first got together in Iqaluit, the boundary plebiscite

was held, the land claim has been ratified, and both the Land Claim Act and the Nunavut Act were made the law of the land.

Prior to our latest leadership meeting in Rankin Inlet, the members of the Nunavut Implementation Commission were appointed and we were pleased they were able to join us at the table as we discuss how best we might proceed during the coming years.

Madam Speaker, on behalf of the Nunavut Caucus, I offer my congratulations to the new members of the Nunavut Implementation Commission, and trust that they will work in the spirit of cooperation with all residents of Nunavut in order that the tasks that we have set for them will be done in an orderly and competent manner.

The members of the commission are John Amagoalik, chief commissioner from Iqaluit, Billy Lyall and Joe Ohokannoak from Cambridge Bay, David Alagalak and Guy Alikut from Arviat, Meeka Kilabuk and Kenn Harper from Iqaluit, George Qulaut and Peter Ernerk from Rankin Inlet, and Mary Simon from Ottawa. I am sure they will prove through their actions the trust that we have in them as they bring forward their recommendations between now and 1999. Thank you.

Nunavut Leaders' Summit In Rankin
Item 3: Members' Statements

Page 114

Madam Speaker

Thank you. Item 4, Members' statements. The honourable Member for Baffin South, Mr. Pudlat.

Community Transfers To Cape Dorset
Item 3: Members' Statements

Page 114

Kenoayoak Pudlat Baffin South

(Translation) Thank you, Madam Speaker. I am going to speak about the community transfer initiative, especially to acknowledge the hard work and accomplishments by the hamlet of Cape Dorset. I would like to thank Mr. Stephen Kakfwi for his kind words in his statement.

Madam Speaker, the hamlet of Cape Dorset has worked for many years to try to gain local control of different government programs. During a series of meetings in Yellowknife last week, a delegation from the hamlet of Cape Dorset made considerable progress as it moves forward in gaining control of Economic Development, Social Services, Public Works and housing programs.

The hamlet of Cape Dorset has been a strong leader in the community transfer initiative. Other communities can now look to Cape Dorset as an example of what is possible for themselves. When I met with the delegation last Monday, the mayor, Akalayuk Qavavau, asked me to pass on deep-felt appreciation to the Government Leader. I also would like to thank, on behalf of the hamlet of Cape Dorset, Mr. Stephen Kakfwi for his support. I was informed by Mayor Qavavau that the delegation was especially impressed by Mr. Kakfwi's cooperative approach and his knowledge in dealing with the issues. They also wanted to express their gratitude to the Ministers of Social Services, Economic Development and Tourism, Safety and Public Works and Housing, for their help and encouragement during their meetings. I also would like to acknowledge the hard work put into this initiative by the former mayor of Cape Dorset, Mr. Charlie Manning, and the continuation of that work by the present mayor, Akalayuk Qavavau. I also want to recognize Chuck Gilhuly, their senior administration officer, for his invaluable contribution.

Madam Speaker, I seek unanimous consent to finish my statement.

Community Transfers To Cape Dorset
Item 3: Members' Statements

Page 115

Madam Speaker

The honourable Member is seeking unanimous consent. Are there any nays? There are no nays. Please proceed, Mr. Pudlat.