Mahsi, Madam Speaker. In accordance with its terms of reference, the Standing Committee on Finance is pleased to submit its report on the review of the 1994-95 main estimates of the Government of the Northwest Territories.

Introduction

The Standing Committee on Finance for the Legislative Assembly of the Northwest Territories has reviewed the proposed operations and maintenance estimates for the 1994-95 fiscal year. The committee reviewed all government departments with the exception of the Ministry of Intergovernmental and Aboriginal Affairs, which is contained in the Department of the Executive. The ministry will be reviewed during the current session of the Legislative Assembly.

The Members of the Standing Committee on Finance devoted a lot of time and effort to this process. The committee chair wishes to thank Members for their participation and their contribution to this report. In addition, the chair would like to thank the Ministers and their staff for their contribution to and participation in this process. Finally, the chair would like to thank our committee staff for their support and contributions.

The committee realizes and appreciates the political climate that we are facing today. The Government of the Northwest Territories is proposing to spend slightly over $1 billion in 1994-95 to run the Government of the Northwest Territories. The majority of revenue for this budget, an estimated $878 million, will come from the Government of Canada through the formula financing agreement.

The formula financing agreement of the Government of Canada expires March 31, 1995. Therefore, negotiations for a new funding arrangement have recently commenced. The Standing Committee on Finance has some strong suggestions regarding how government should approach these new negotiations.

Political And Economic Climate

The Government of the Northwest Territories is entering into year three of its four year mandate. The mid-term Cabinet review has been completed. Preparation for division is under way and land claims settlements across the territories are at various stages of negotiation and implementation. Members of the Legislative Assembly are about to review the main estimates for the fiscal year 1994-95.

This review takes place in the context of a number of outstanding funding issues in dispute with the federal government. Included among the outstanding issues are the following:

- funding for social housing;

- health billings dispute; and,

- RCMP billing for the Giant Mine labour dispute.

Funding negotiations with the federal government will continue in the following areas:

- formula financing agreement - the current agreement expires March 31, 1995;

- transportation agreements - Arctic "A" airports, highways;

- the northern accord;

- the mineral accord;

- the Government of Canada's new infrastructure program; and,

- incremental costs of division of the Northwest Territories.

Other significant issues which remain outstanding, and create uncertainty for fiscal planning include the following:

- the impact of the North American free trade agreement on the Northwest Territories business incentive policy and buy north initiative;

- provincial and territorial responses to the federal reduction in the tobacco tax;

- any changes affecting the interprovincial trade barriers;

- the impact of animal rights groups on the fur industry; and, - any new initiative or changes in the federal Human Resource Development ministry, including western economic diversification.

The new Liberal government of Canada took office in November, 1993. At that time, it was speculated that the deficit for the current fiscal year would be as high as $48 billion, much higher than estimated in last spring's budget. The Liberal government's approach to the country's economy is described in the following excerpt from its campaign Red Book, "Creating Opportunity - the Liberal Plan for Canada."

"We are profoundly optimistic about the future of Canada. We do not believe that the only solution to our economic problems is another five years of cutbacks, job losses and diminished expectations. We believe we have to take immediate measures to make our economy grow and create jobs. We believe that Canada has both the human and natural resources to solve its problems. We see enormous opportunities for Canada, both at home and internationally, to create a strong economy and a vibrant, creative society."

The new Minister of Indian Affairs and Northern Development has committed to negotiate a definition of self-government over the next six months with aboriginal groups, provinces and territories. The Prime Minister has acknowledged that the renewed efforts are proceeding without a constitutional amendment. He said that the constitution already recognizes self-government and can be amended later, if need be.

Committee Mandate

The primary task of the Standing Committee on Finance, as outlined in the committee's terms of reference, is to undertake a detailed examination of the government's annual budget and its related fiscal operations. Specifically, the primary purpose of this review is outlined in the following statement:

- to review and recommend on the preparation of estimates, expenditures and appropriations required to defray the charges and expenses of the public service of the territories in each fiscal year.

Also during this review, the committee focused on three other aspects of its terms of reference. These include the following items:

- in consultation with the chairman of the Financial Management Board, examine and recommend the terms and conditions of any agreement relating to financial arrangements with the Government of Canada;

- review, evaluate and recommend on any revenue sources that may be available to the territories; and,

- review financial implications of existing and proposed territorial programs and the financing thereof, as well as any other programs which may, in future, become a charge against the territorial budget.

The committee intends to fulfil its mandate, on behalf of the Assembly and the people of the Northwest Territories and to ensure that the government is financially responsible.

Approach To 1994-95 O and M Review

Committee Members approached the review of the 1994-95 main estimates with the following guidelines in mind:

- Members were very aware of the need to continue to avoid an accumulated deficit. The Government of the Northwest Territories is the only jurisdiction in the country that has so far managed to avoid accumulating a deficit. It is important to maintain this trend, particularly in view of the territories' financial independence on the federal government;

- on the other hand, the committee was alert to any opportunities to increase territorial revenues and decrease this dependence;

- as well, Members looked, through their review of government operations, for ways and means to streamline and economize; and,

- finally, economic and business opportunities were carefully examined for opportunities to allow all northerners to becoming increasingly self-sufficient.

Review Theme

The committee's review of the 1994-95 main estimates was conducted in the context of the larger issues of overall government fiscal policy and effective resource management. Committee Members carefully reviewed new government initiatives and initiatives currently under way, to see if they complied with government policies and noting the resource requirements.

Through 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.

Overview Of Report

Following this introduction is a discussion of the process that the committee used to review the 1994-95 main estimates. A discussion of the fiscal framework within which these estimates were developed follows. An overview of the budget and a discussion of some government-wide issues is described in the next section of this report. Finally, the bulk of the report is comprised of detailed reviews of each government department.

At this point in time, Madam Speaker, I would like to ask the deputy chair of the Standing Committee on Finance to help me read this document. Mahsi.