Thank you, Madam Speaker, and Members, colleagues.

Madam Speaker, as Members know, changes were made to the water and sewage services subsidy policy earlier this month. This afternoon, I want to outline the background and basic features of the changes.

The subsidy program was introduced in 1987 because consumers were not getting equitable treatment in the municipal water and sewage rates charged to them. Often the rates they paid were far greater than the economic costs of providing water and sewage services in the community.

Municipal governments often chose to use their water/sewage rates as a key source of municipal revenue, because of the lack of comprehensive GNWT municipal O and M funding policies at that time.

The water and sewer services subsidy policy was created because of this to help make sure that basic services were provided equitably throughout the Northwest Territories by municipal governments at a price that residents could afford.

Until amendments to the policy were made earlier this month, it applied mainly in hamlets, charter communities and some settlements. The lack of coverage for residents of most tax-based municipalities was raised as an issue by the NWT Association of Municipalities, the town of Hay River, the village of Fort Simpson and by the Member for Nahendeh.

As a result, changes to the policy now extend its provisions to all municipalities except Yellowknife. Yellowknife doesn't receive the subsidy because it gets municipal service funding under a three year block funding agreement.

In making the changes to this policy and extending the benefits of the subsidy program to the large population of residential and commercial users in the tax-based municipalities, it was necessary to balance equity and affordability of service costs with the realities of limited financial resources.

Even after the policy changes, the government will still be subsidizing, on average, 91 per cent of the cost of water and sewage services in hamlets, charter communities and designated communities.

The revised water and sewage services policy includes the following new rates for residential and commercial users:

- the subsidized residential and non-profit rate will be .33 of a cent per litre in all tax-based municipalities effective June 1, 1994;

- in Iqaluit and Norman Wells, that means an increase from an average of $25 a month to $37 a month for residential users of trucked services; and, an increase from an average of $50 a month to an average of $75 a month for residential users with piped services.

In addition:

- the subsidized residential and non-profit rate will be raised from .22 of a cent per litre to .27 of a cent per litre in hamlets and designated communities effective June 1, 1994;

- based on specific household accounts, some typical increases in rates per residential user in hamlets would be:

- from $18 to $22 per month in Chesterfield Inlet;

- from $30 to $37 in Aklavik;

- from $37 to $45 in Fort Providence;

- from $25 to $30 in Pond Inlet; and,

- from $26 to $32 in Pelly Bay.

- any additional annual increases will be subject to Financial Management Board review.

Madam Speaker, other changes affect the subsidized residential and non-profit rate in special service areas, mainly small areas outside the built-up areas of certain municipalities:

- the subsidized residential and non-profit rate for those locations will be increased from .33 of a cent per litre to .37 of a cent per litre effective June 1, 1994, with a further increase subject to Financial Management Board approval;

- the subsidized commercial rate in hamlets, charter communities and designated communities will also change. Effective June 1, 1994, 90 per cent rather than 100 per cent of water/sewage consumption by commercial users will be subsidized.

The subsidized amount will be reduced each year until 50 per cent of the consumption is subsidized at .44 of a cent per litre and the rest at the economic rate. Each yearly reduction will be subject to Financial Management Board review. This review process will allow the Financial Management Board to review specific cases, to avoid undue hardship.

Some examples of the immediate impact on commercial users would be:

- an average monthly increase of $31 to $39 for the Northern Store in Aklavik;

- an average monthly increase of $19 to $52 for the Northern Store in Chesterfield Inlet; - an average monthly increase of $46 to $66 for the Northern Store in Fort Providence; and,

- an average monthly increase of $31 to $58 for the Northern Store in Pond Inlet.

Madam Speaker, there have been questions about consultation with this House and with the municipalities on the changes to the water and sewage services subsidy policy.

On February 19, 1993, the Minister of Finance announced in his budget address that the government planned to adjust the degree of subsidization of commercial users in hamlets. And on November 24, 1993, my predecessor, the Honourable John Todd, made a return advising the Member for Nahendeh that policy amendments had been approved to extend coverage to all towns and villages, but that the financial implications of the policy amendments were to receive final review by the Financial Management Board.

In addition, during the seven years since this subsidy program was instituted, the Department of Municipal and Community Affairs has engaged in ongoing consultation with municipal councils and their administrations on items such as the objectives of the policy and program, the economic rates for water and sewage services in each community, and on establishing municipal water and sewage services rates by-laws.

Madam Speaker, municipalities are familiar with the workings and administration of the water and sewage services subsidy policy and program, including the fact that rate adjustments periodically occur. The systems are in place in municipalities for the rate adjustments to be made effectively. The subsidized rate increases are targeted to take effect June 1, 1994, to afford councils at least 60 days to amend their water and sewage rates by-laws and advise consumers.

In conclusion, Madam Speaker, in attempting to address Members' questions about the policy changes on March 24, I stated that the subsidized residential and non-profit rate was not affected and that policy changes would take effect May 1, 1994. This information was not correct and the information I have provided today should set the record straight. Thank you, Madam Speaker.