Agreed.

---Agreed

---SHORT RECESS

Thank you, Mr. Chairman. I am pleased to present the Department of Public Works and Services 1994-95 main estimates. The proposed operations and maintenance budget is $127.154 million and 511 person years. This represents a 2.2 per cent funding reduction and a 1.2 per cent PY reduction from 1993-94. In addition to this appropriation, the department manages $71 million through the petroleum products, community granular and public stores revolving funds and the systems and communications charge-back account.

The department's major initiative this year has been to implement the initial phase of the building and learning strategy. As this Assembly knows, the Minister of Education, Culture and Employment and I have spearheaded the development of the building and learning strategy. This strategy uses GNWT capital projects to train northerners in the building trades. This year, 58 residents in six communities took part in classroom training under the strategy. Of those, 32 went on to take on-the-job training. In addition, 59 residents in seven other communities participated in the construction worker training program which is a joint effort with the NWT Construction Association.

The department will be seeking funding to add five more communities to the building and learning program in 1994-95. They are Baker Lake, Coppermine, Igloolik, Lac La Martre and Fort Providence. In this way, the communities now in the strategy will be equally distributed between the four regions and the three areas south of the lake.

In addition to the building and learning strategy, the government has supported using negotiated contracts to increase the involvement of local businesses and residents on construction projects. Many local development corporations have benefitted from the GNWT using negotiated contracts. They have developed new business skills and gained more local control over community projects. I am confident that this approach has increased the benefits from our construction program to many northerners, who otherwise might not have had such an opportunity.

Construction management responsibility for capital projects has also been decentralized to the regional and area offices. Ten positions have been transferred from Yellowknife. Project managers will become more familiar with the capabilities of community residents and businesses. This will help the department to use more local people on construction projects.

The petroleum products division is now decentralized to Fort Simpson and Rankin Inlet and located in new offices built by local companies. At the Fort Simpson office, all eight employees are from the Fort Simpson area. At the Rankin Inlet office, three employees relocated from Yellowknife, four were hired from the south for three year term positions and 11 are from Rankin Inlet.

The government's decentralization initiative has required new offices in Rankin Inlet, Fort Simpson, Fort Smith, Hay River, Inuvik and Iqaluit and new housing in Iqaluit, Rankin Inlet and Fort Simpson. I am happy to report that all new contracts for offices and housing in these communities were with northern companies.

Mr. Chairman, the department is responsible for selling staff housing under the staff housing strategy. As of February 21, 1994, we had sold 123 houses, with revenues of $10.5 million. GNWT staff purchased 92 houses and the public bought 31 units. Also, 70 sales were pending. Because of this successful first round of sales, Cabinet has directed the department to conduct another round of sales to tenant employees in Level II and III communities, directed that multi-plexes be offered for sale, and set a process for MLA consultation about what to do with any surplus units in their communities.

As part of the staff housing strategy, user-pay for electricity was implemented on August 1, 1993. Employees in GNWT housing now pay directly for these services. User pay for water and sewer services will start on August 1, 1994.

Public Works and Services now has 252 aboriginal employees, representing 40 per cent of all employees. The department's affirmative action training strategy for 1993-94 included cross-cultural training courses, post-secondary education, short-term educational leave, achievement awards and on-the-job training for decentralized positions. In 1994-95, we will continue with the headquarters' aboriginal employees' support group and provide improved career counselling for regional aboriginal employees.

Changes to the tendering methods for 1993-94 fuel resupply to the Baffin, Keewatin and Kitikmeot regions saved approximately $1.5 million. Following the 1993-94 expenditure reduction exercise, Cabinet directed the department to review the pricing structure for petroleum products, particularly capital costs of infrastructure, inventory carrying costs and cross-subsidization between communities. That review will be completed by March 31. Petroleum products will also be replacing its three year community fuel delivery contracts with ten year contracts, each with a five year renewal option. Contractors will then be required to provide garages and fuel delivery vehicles. The longer term commitments provide better economic viability for the contractors.

As committee Members are aware, the business incentive policy is currently undergoing a review and we anticipate some significant improvements to it. The review is being done by the senior management preference committee, which is chaired by Public Works and Services but includes the three major contracting departments as well as Economic Development and Tourism. The SMPC was established in the last rewrite of the policy, approved in June 1992, and has resulted in the senior management of those departments gaining a much better understanding of the problems with administering the policy. A report will be provided to Cabinet by April 1994. Subject to Cabinet agreement, there will be a period of consultation, procedure development and training for both the private and public sector before full implementation in early 1994.

There are significant increases and decreases proposed in our 1994-95 estimates, resulting in a net reduction. One increase relates to new office and residential leases to support decentralization and for the new Legislative Assembly building. Another increase is for maintenance and utility costs for the new Assembly building and for new assets identified in the capital plan. The decreases relate to leases expiring that do not need renewing, to utilities funding from user-pay for electricity, to utilities and maintenance funding because of staff housing sales and to privatizing the publications and production activities.

In 1994-95, the department will complete community transfer agreements for maintenance activities with the hamlets of Holman and Cape Dorset. The Sanikiluaq power plant, the last plant still operated by the department, will be transferred in April to the NWT Power Corporation. Privatization of departmental warehouses will be implemented in 1994-95, subject to Cabinet approval of a plan now being prepared.

In response to a recommendation from SCOF, the department will prepare a plan to transfer the community dust control program to MACA in 1994-95. Mr. Chairman, Public Works and Services has undergone major changes this year. Next year will give us a chance to adjust to those changes. The department will continue to deliver its programs and services in support of overall GNWT priorities and objectives, while maximizing local and northern employment and business opportunities.

Mr. Chairman, that completes my opening remarks. Thank you.

Thank you, Mr. Chairman. The committee is in favour of initiatives that will maximize opportunities for local employment on government contract work. However, the Department of Public Works and Services must work with other departments to improve the policy and procedures surrounding negotiated contracts, and consider possible alternatives to negotiated contracts. We also look forward to seeing the results of the review of the business incentive policy (BIP), and encourage the government to strengthen BIP -- and, in fact, the entire public tender process -- in order to maximize local

employment. This issue of government contracts is discussed in this report in the section on the Financial Management Board Secretariat.

Privatization Initiatives

Committee Members were glad to see the department's recent privatization initiatives, including the publications and printing division. The committee encourages the department to continue examining possible areas for privatization, such as warehousing and records management.

Specifically, some concern was raised about records management and its apparent disarray. Committee Members expressed frustration and discouragement at the difficulties and delays seen in the reform of this important area. We urge the Minister to address this problem immediately and not to be put off by the apparent magnitude of the task. Even if the government's records must be organized slowly, one year's worth at a time, any initiative in this area will be an improvement. And, if the private sector is more willing to tackle this job immediately, then they should be given that opportunity.

Office Accommodation

The committee expressed concern at the drastic reduction to plans for office accommodation for headquarters employees. Office accommodation standards directly affect the productivity of government employees and we are concerned that these reductions will have an adverse affect on that productivity. This concern was also noted in the Standing Committee on Finance's report on the 1994-95 Capital Estimates.

In addition, committee Members noted during the capital review that by going to public tender rather than over-holding leases, the government could most likely accommodate headquarters personnel much more cost-effectively. The committee recommended, following the capital review, that the department review the Yellowknife office plan and resubmit estimates for office renovations and tenant improvements for 1994-95.

The Department of Public Works and Services provided the committee with another briefing on office accommodation for headquarters personnel during the committee's review of the departmental operations and maintenance budget. The briefing included a description of two different versions of the accommodation plan and the associated costs, but did not include a reassessment of renovations costs based on the current commercial real estate market.

Recommendation 29

The committee recommends that the Department of Public Works and Services develop the office accommodation plan that most effectively and efficiently houses headquarters personnel. The cost-benefit analyses which accompany the plan should be based on a consideration of savings that could be achieved in the current commercial real estate market. This plan, along with the cost-benefit assessment, should be made available to the Standing Committee on Finance prior to review of the department's budget in committee of the whole.

The committee further recommends that the department go to public tender for all aspects of rationalizing office accommodation in Yellowknife, including moving and improvement in addition to the space itself, starting with the 1994-95 fiscal year.

Upcoming Studies

The committee notes the studies forthcoming which relate to this department's mandates, including warehouse privatization, Keewatin resupply and informatics. Committee Members would like the Minister to arrange briefings to the committee when these studies are complete. This will allow the committee to make informed recommendations to the government, based on the results of those studies.