Mr. Chairman, if we could get rid of the perversity factor in the formula, then that would solve a lot of our problems right there. Right now ,we are doing everything we can to convince the federal government to get rid of this perversity factor and allow us to get on with life, and so, yes, that is what we are doing to try and address that issue, Mr. Chairman.

Thank you. The honourable Member for Yellowknife North, Mr. Ballantyne.

The point I tried to make yesterday in my response to the budget is that the federal government is looking at us the way they look at other jurisdictions, from a fairly narrow perspective, and all they see is that we are very dependent on the federal government and we receive, comparatively, a good chunk in transfer payments but we still maintain relatively low taxes. They don't see the tax burden, which was the argument that we made a thousand times. Mr. Nielsen can do the tax burden argument backwards and forwards in seven languages. They also don't see that in the long term, unless you do something that will improve our economy, we will progressively get more dependent on the federal government. I wonder if the Minister could share with us any new approaches that he is going to bring to bear on the federal government on this issue. We used the best experts in the country but federal Finance was adamant that we had to bring our level of taxation up to a provincial standard. I wonder if the Minister could share with us any new approaches in this area, if you are not giving away any negotiation secrets.

Thank you. Mr. Minister, do you have any brilliant ideas on this?

I think the only thing that is going to change them is the armed approach, Mr. Chairman.

---Laughter Mr. Chairman, the last effort that we made was a little different. It was done on the basis of disposable income, I think, and we diligently used all the methods that were acceptable to the federal bureau of statistics and worked the thing out versus, I think Halifax, Nova Scotia, was the point that we used to compare to. We did these numerous calculations and papers and sent them into the department. By the way, it was St. John's, Newfoundland. I am reminded. We have yet to receive a response from the department, Mr. Chairman.

The enemy is not the politicians, because, very recently, in the last eight months, a federal Minister was heard to comment that they were glad that somebody understood the formula financing agreement because they certainly didn't. That is the difficulty that Mr. Ballantyne had. It is the difficulty that I have right now. I understand the formula financing agreement to the point where I am dangerous. That means that I don't understand all of it, Mr. Chairman. I am not saying I do, but I am pretty dangerous with it. When I sit down with other politicians to discuss this, I find myself having to talk to the bureaucrats who are eventually going to advise their Minister.

If we could get a simpler agreement, one that politicians could understand, then I would probably have more luck at making the pitch. I can make it to the politicians and they tell me at the meeting, I understand and it sounds silly to have a perversity factor. Gee, that is no good at all. Yet, the next letter comes back and they have been advised by their officials that perversity is something that is in the agreement for a very good reason.

If you want my honest opinion on what is going to change this thing, a politician in the federal government who says, to heck with convention. I understand your problems. I'm willing to work with you. We'll change it with the stroke of his or her pen. That is the message that we are now taking. I have given up on the bureaucracy. I think Cabinet agrees that this has got to be dealt with at the political table. We'll keep hammering away until there is a politician with that kind of nerve who says, to heck with convention. I understand your problem, and here is the deal. Get on with life. Thank you, Mr. Chairman.

Thank you. In a way, you are saying that federal politicians should open the tab a little bit wider. Mr. Ballantyne.

I agree. It has to be a politician. We have gone through a long string of politicians. I think the Minister remembers, when he was the chairman of the standing committee, some of the politicians who we talked to, most of whom agreed that it was unfair. He may also remember certain specific deputy ministers who were very adamant about this as an underpinning of Canadian unity. When does the Minister think he'll get a sense of whether the federal government is going to be flexible on this? That is my first question.

Thank you. Mr. Minister.

Mr. Chairman, I talked to Mr. Martin before the budget and I mentioned to him again about the things that we have been talking about, the four or five items that we had on the table. He will be back to me quite quickly on where those issues are at, at the present time. Tomorrow, I have a 45 minute telephone call with Mr. Irwin. This issue is going to come up along with health billings again tomorrow. Mr. Todd and I will be in Ottawa during the break and the issue will come up again. I am hoping that, one way or another, we can have this thing resolved in the next six months. I should say that if, by August, we haven't made any progress, then it is going to take something a lot more than just talking to those people to make them understand. I'm thoroughly sure that we are going to be listened to. Whether they will make any changes, Mr. Chairman, I can't say.

Thank you. Mr. Ballantyne.

This is my last comment, Mr. Chairman. I think the frustration that the Minister is sharing with us strengthens the point of the standing committee that it is difficult to deal with these issues one at a time, because, if you deal with the Department of Health issue, then the Department of Health bureaucracy, who are in the health culture, have very strict health perspective.

The Department of Finance, as we know, is probably the most interesting culture of them all. It is very difficult for them ever to let go with their theories of how life goes around. There is no certainty in any of this, as you know, in this serious fiscal situation the country finds itself in. The only way to unlock some of these individual problems is with a package. Again, we have emphasized that. Sometimes it is easier to say than to put into effect.

Basically, at the Finance Minister's level and the Prime Minister's level, they have to be convinced of a political as well as a financial package. The goals that we are trying to achieve, through the resolution of these problem areas, have to be goals that fit into their long-term objectives. The goal of economic self-sufficiency has that long-term payback to Canada, because as the Minister of Energy, Mines and Petroleum Resources has said a number of times, any big project here, 70 per cent of the benefit goes to Ontario, Quebec, Alberta or British Columbia.

They have given a great deal of lip service to the whole concept of a new relationship with aboriginal people. Here, in the Northwest Territories, it seems to me that we are so far ahead of other jurisdictions that, by helping in these areas, helping provide that kind of economic fiscal and political stability, where Nunavut can happen, where we can work out some of the treaty issues and self-government issues, in a way, that will look good on the federal government. The problem with each Minister looking at it through the prism of their ministry, they miss the big picture. I think what we have to offer as the Northwest Territories is a big picture win for Canada. To me, to frame it up that way is when I am talking about a package deal. There will be all the trade-offs within the package deal, but it won't fly unless the political underpinnings of the package deal fit with the objectives of the federal government. I am pretty convinced that you may win things like the $5 million for infrastructure because they are easy ones. They will say, "All right. We will give you $5 million. We have already given the Northwest Territories their bit." I am convinced that one single problem approach will seldom lead

to success. We get nickel and dimed every time we turn around.

Somewhere down the line, either we have some economic fiscal political stability going into 1999 or things could start falling apart here, as the Finance Minister knows, politically and otherwise. If it falls apart politically, then it falls apart economically. If it falls apart economically, then it falls apart physically. Ultimately, the federal government has to pick up all the pieces. The relatively small amount of money to them that they are harassing our government about in the long term will be absolutely nothing compared to the problem we are going to inherit if this land experiment called the Northwest Territories doesn't work. That is the message that has to get across at the Prime Minister and the Finance Minister's level. At the departmental level now, they've got too many other people chasing after their piece of the departmental pie. Thank you, Mr. Chairman.

Thank you, Mr. Ballantyne. On the piecemeal approach, Mr. Minister.

Mr. Chairman, obviously Mr. Ballantyne's right but I would be less than candid with this House if I said that at the present time Ottawa's buying that. They're not buying it because they are living from year to year. I notice that the Standing Committee on Finance suggested a ten year deal on formula financing. My initial scouting down there revealed that they're not really interested. You'll notice in the Finance Minister's budget yesterday, he didn't go very far in making projections down the road. I know that's what we have to sell and I know we have to sell that dream, as well as future development in the NWT, both politically, economically, and constitutionally, and we have to sell that eventually we're going to be weaned from the federal government.

But, the fact of the matter is, it's not selling quite well right now. You have no idea how consumed they are with issues in Quebec. Quebec got attention right now when they wanted to lower the prices on tobacco. I mean, right now. It just consumed those people. They spent hours and hours discussing it. We are doing and selling the cases as well as we can, but when we talk about increasing dollars and so forth, they are only talking about decreasing right now. Long-term deals are just not in the cards.

I do agree, though, and I first tried the package deal in 1992. I think it is the way to go. As I've told the Standing Committee on Finance, I do have a package together that lists out the subjects of the package. They don't necessarily list out what we might trade back and forth. That's the package that Mr. Martin has before him and once they've agreed to sit down and discuss this with us, then we'll start going back and forth across the table.

I think we want it to be at the political level. There's no point in spinning our wheels, sending our employees down there back and forth when there have to be decisions made either at Cabinet level or in a Minister's office. We want it to be at the political level so that sitting at the table are two, three or five people who can make a decision and that decision will carry. Thank you, Mr. Chairman.

Thank you. I have Mr. Lewis on my list. Mr. Lewis.

Thank you, Mr. Chairman. Mr. Ballantyne has covered pretty well most of the area relating to the financial arrangements we have and so on. What I have to offer is only a couple of points. One of them maybe not so serious and the other one very serious. I used to work in Ottawa for a short time and bureaucrats have made their reputations by inventing a word. It's not a new word, but they come up with a word and this word becomes part of the jargon of the public service and gets currency right across the country. Words become famous because they come up with words like perversity.

Everybody uses it then, "the perversity factor." For years I used to laugh when people talked about reprofiling, "reprofile the money." I asked, what do you mean, "reprofile the money?" It's the same looking money. A profile to me means an outline. It looks the same to me. They use reprofile to mean they take it from one place and put it somewhere else. That's all they mean. All perversity means is we're digging in our heels, that's all. So, they call us perverse. Because we're digging in our heels and we don't go along and do the same things the provinces are doing in terms of taxation, we are in fact guilty of violating the perversity factor.

My suggestion to the Minister is maybe he should get his bureaucrats to work on a few of our own words we would like to use. Use a bit of time on a Friday to give you some words to use to battle these people in Ottawa. Perversity is something you have to battle with, so they should give you a better word so you can go and use your own jargon. Maybe that word will eventually catch on and everybody will be using it across the country. That's half serious, but it's true. This is what happens. People feel so proud of a word and have ownership of it and they won't get away from it. It's the only thing that matters and it's all they throw back at you. Get them onto something else.

The other point I want to make, and it's been hinted at but not made as clear as it could be, maybe. Mr. Allooloo was looking for support for this at OMC this morning. It's not a Yellowknife issue. It's an issue he raised in relation to a contract in the eastern Arctic. It seems to be a little bit remote from what we're discussing, but I'll try to make the point as briefly as I can.

There was an agreement with the Inuit under their claim that with any major business that was going to be conducted in the eastern Arctic involving the federal government's contracting for work, there would be a process to make sure that the Inuit could become involved and take advantage of economic opportunities. I have said for at least 15 years that the eastern Arctic is within the orbit of Quebec. Anything that goes on in the eastern Arctic, the people in Quebec see as part of their wider empire.

That goes back all the way to the 1970s when they used to have a map showing Quebec going all the way up, including Baffin Island and everything up to the North Pole. That was going to be Quebec. This is the early years of the constitutional talks. Anything that goes on over there is seen as being within the economic orbit of the province of Quebec, and that's going to be the biggest challenge for Nunavut. One of the biggest challenges will be to make sure that with whatever goes in in the eastern Arctic, there will be some economic advantage to the people who live there.

As Mr. Pollard briefly mentioned, the federal government will do everything it can to placate the people of Quebec for historical reasons. The people in the east will always lose out. My question to the Minister is this, what are the tax implications when you know that all these major projects that are going to come up in the eastern Arctic involving federal contracts are going to go to Quebec companies and you're going to have people coming in from the south to do the work? What kind of power do we have -- and I know we don't have any legal power -- to make sure that activity that takes places in the eastern Arctic will accrue taxes to the benefit of the people of the Northwest Territories through our government?

That's the major issue we'll be facing in the west and in the east, in my opinion anyway, where it is a far bigger problem. The east will go its own way but will be seen to be very much within the federal government and the orbit of the province of Quebec. We've got several years yet, another five or six years, when we are going to have to face up to this program.

I mentioned the Avati attempt to get a contract to do the clean-up on the bases in the eastern Arctic because these old DEW Line sites have been a subject of discussion in this House for years now. We are the ones who brought them to the attention of the federal government with regard to doing something about it. It's been an issue for us. Now, it is an economic opportunity and nothing happens. We don't get anything out of it.

Is there any way at all in which we could look at making sure that the people that work there can benefit? We must be able to come up with some system of registering workers or something so we can make sure that we do something more than just a payroll tax to get some money out of them. The payroll tax doesn't do that much. Thank you.

Thank you, Mr. Lewis. On the influence of this government, Mr. Minister.

Mr. Chairman, on the word "perversity" I think we invented it, but I am not totally sure about that. I will check and report back to Mr. Lewis on that. We invented perversity, the feds don't like it. Our people do the same thing, inventing words.

With regard to what we can do, Mr. Chairman, I know it is a bad thing to say in this House, but that is the reason for the payroll tax. I have some statistics here with regard to the payroll tax. There are already 13 companies from Quebec who report annually, three who report semi-annually, one who reports quarterly, three who report monthly and 13 who report seasonally. So there are already 33 Quebec companies registered with us in the Northwest Territories.

On a total payroll basis, there are already $14.356 million. So, you are right. I could give you some other comparisons. Yukon is $11 million. The USA is $7.5 million. Alberta is $92 million. British Columbia is $49 million and Manitoba is $16 million. Already there are 33 companies from Quebec that are working in the Northwest Territories. We know, those of us who live in the western Arctic, Mr. Chairman, that they are not working here. So you have to say that they are working in Nunavut. Mr. Todd and I had an experience with a Quebec business person whom we had somehow offended by not giving his company a contract and, believe me, Mr. Todd and I found out that they do business very differently in Quebec. We were in the Cabinet room discussing this and we were both surprised at the way that person acted. So not only do we have the numbers, the economic mass and expertise, we also have tens of years of experience in bidding jobs, lobbying and being in Ottawa getting after the federal government.

For mining, I suppose we could tax on commodity. But when you are talking about the clean-up of a particular site, which is mostly labour, that is very difficult to do other than by a payroll tax or by some tax on companies. That would affect Northwest Territories companies as well.

With regard to the clean up, I think it was at a DEW Line site that we are discussing, I used to be the Minister responsible for the closure of the DEW Line. Mr. Todd now has that responsibility. I do recall being at numerous meetings and the Premier was there as well, where we were told by the federal government they would do as much business in the Northwest Territories as possible. So I am also surprised that this particular contract has gone that way. Thank you, Mr. Chairman.

Agreed.

---Agreed

Agreed.

---Agreed

Agreed.

---Agreed