Minister of Justice, Mr. Kakfwi.

Thank you. Supplementary, Mr. Gargan.

Thank you, Madam Speaker. Madam Speaker, I don't know how or why the selection was done on those two communities, but I would like to ask the Minister whether or not, since the RCMP was so involved with the selection, other communities were also consulted before the final decision was made or was this because Fort Good Hope showed a continued interest. How can every community show interest if there is no interest by this government to even consider them?

Thank you. Minister of Justice, Mr. Kakfwi.

Thank you. Supplementary, Mr. Gargan.

Thank you, Madam Speaker. Again, to the Minister of Justice, since they are the communities, this government and the federal government have chosen to take the initiative, which government is paying for that program?

Minister of Justice, Mr. Kakfwi.

Thank you. Final supplementary, Mr. Gargan.

I would think that paying 48 per cent of any cost would also require some influence on your part to determine which communities would get that. Did you use that percentage base in order to also influence who or did you just leave this open for the federal government only? Thank you.

Thank you. Minister of Justice, Mr. Kakfwi.

Thank you. The time for oral questions has lapsed. Item 6, written questions. Item 7, returns to written questions. Item 8, replies to opening address. Item 9, replies to budget address. Item 10, petitions. Before we go on to reports of standing and special committees, the House will recess for 15 minutes. Thank you.

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I will call the House back to order. Item 11, reports of standing and special committees. The honourable Member for Nahendeh, Mr. Antoine.

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.

Thank you. The honourable Member for Kitikmeot, Mr. Ng.

Committee Review Process

Outstanding Issues

Thank you, Madam Speaker. During a review of the 1994-95 main estimates, the committee considered outstanding issues such as deficit management and the housing crisis, and

the role that the committee should play in the resolution of these issues. Those major outstanding issues are addressed in the two recommendations made in the committee's last report to the Legislative Assembly, "Response to the Options Paper on Deficit Management," which was tabled on December 14, 1993.

These two recommendations are presented below.

The first recommendation from the response to the options paper on deficit management. The committee recommends that the Department of Finance and the Financial Management Board develop a short-term strategy, aimed at avoiding deficit financing, to guide fiscal management for the 1994-95 fiscal year. This short-term strategy should be presented to the Standing Committee on Finance at the commencement of the committee's meetings on January 10, 1994, and should include the following:

- A discussion of the underlying principles, priorities and objectives;

- A discussion and assessment of deficit reduction options;

- A detailed deficit reduction plan for 1994-95; and

- Details of any federal/provincial/territorial plans for deficit reduction.

In his opening remarks to the Standing Committee on Finance, the Chairman of the Financial Management Board informed committee Members that the government has a long term strategy for achieving financial restraint. He went on to say that this strategy has been publicly stated on several occasions and was perhaps best articulated in the Premier's February 1992 statement on Reshaping Northern Government.

Second Recommendation From The Response To The Options Papers On Deficit Management

That the Financial Management Board develop an integrated plan and political strategy that brings together the major financial issues facing the GNWT. There should be one package presented to the federal government that incorporates such issues as health billings, forest fire suppression costs, formula financing agreement, and incremental added costs for division, land claims implementation and others. It should include revenue producing responsibilities such as the northern accord and a mining accord. The Financial Management Board should develop possible compromises and trade-offs among these issues and develop the political strategy to achieve the following results:

- certainty of adequate funding to create and sustain two new territories with no diminished level of service;

- each territory to be given the economic tools necessary to lessen their dependence on the federal government - for example, northern accord, mining accord.

- a ten year financial agreement with the federal government to provide a basis of fiscal stability in order to facilitate the orderly constitutional evolution of two new territories.

The plan and the political strategy should be available to the Standing Committee on Finance for review in February, 1994.

The committee was informed that the chairman of the Financial Management Board is in the process of developing an integrated plan and political strategy and was encouraged by this preliminary response to the second recommendation.

In view of these important and timely recommendations, the committee decided to take a proactive approach to reviewing the 1994-95 O and M budget. This proactive approach is outlined as follows:

- the committee continued to encourage the government to take a lead role in establishing and implementing a responsible and responsive overall fiscal policy;

- the committee must be kept informed of, and have the opportunity to review, all major fiscal policy decisions and political strategies; and,

- throughout the review, the committee made a number of practical and concrete suggestions regarding fiscal strategy, revenue generation and potential programs and initiatives.

Review Process

The Standing Committee on Finance met in Yellowknife from January 10 to January 27, 1994, to conduct the review of the 1994-95 main estimates of the Government of the Northwest Territories. The review process is outlined below.

The committee met the first day, in camera, to discuss the following items:

- outstanding issues;

- committee schedule and approach;

- committee themes, strategies and the review process; and,

- budget overview.

An initial briefing session was held with the chairman of the Financial Management Board. The following topics were discussed:

- deficit management strategy;

- budget overview;

- fiscal framework;

- briefings/updates on the following topics:

- reorganization of Executive management functions;

- decentralization initiatives;

- privatization initiatives;

- collective bargaining; and, - formula financing.

Departmental reviews were conducted department by department. The review process for each department involved the following steps:

1. in camera review of the departments' estimates;

2. Ministers' appearance before the committee to answer questions and provide additional information that the committee required to complete its inquiry; and,

3. in camera wrap-up session to assess all available information for the department and decide on the discussion and recommendations to be included in this report to the Legislative Assembly.

A final review session was held with the chairman of the Financial Management Board to address any remaining outstanding issues.

Delivery Of Documents

The committee was not satisfied with the fact that the Financial Management Board was unable to provide the documents for this review by the promised delivery date. The result was that the committee was unable to do as much preparation as it would have liked prior to the scheduled meetings.

Scheduling

The Finance Committee made many concessions to accommodate the travel and meeting schedules of Ministers when departmental appearances were scheduled. Committee Members felt that this courtesy was not returned. Committee meetings are scheduled well in advance and Members feel that these schedules and work plans must be respected.

Madam Speaker, I would like to refer back to the chairman of the committee.

Thank you. The honourable Member for Nahendeh, Mr. Antoine.

Mahsi, Madam Speaker.

Fiscal Framework

In his opening remarks to the committee, the chairman of the Financial Management Board said that our fiscal situation has improved slightly since December 1993. The improvement is due to new information being taken into account in the calculation of the formula financing grant. The chairman reported that, for the 1994-95 fiscal year, the shortfall is estimated at $14 million rather than $20 million as previously estimated.

Budget Strategy

The government informed the committee that it is following a long-term strategy of creating a "more efficient, more productive, and more responsive government." While fully recognizing the importance of this strategy, the committee is concerned that other...

I am sorry, Mr. Antoine. There has been a point of order raised by the Premier. Madam Premier, your point of order.

Point Of Order

The document that is being read is very critical. We would like to follow it. We do not have a copy of the document. Thank you.