That's correct, Mr. Chairman. I have opening remarks I would like to make, but the officials who I'm expecting to come in are not here yet.

Thank you, Mr. Chairman. I would like to thank the Members of the House for this opportunity to appear before the committee of the whole, and to have a full discussion of the water and sewage service policy amendments and subsidy reductions that I announced in my statement to the House on March 30, 1994.

Historically, the water and sewage service subsidies provided by the government have not been consistent across all the communities. As a result, the changes to the subsidy provisions in the water and sewage services subsidy policy appear rather complex.

Mr. Chairman, I will not repeat the text of my previous statement to the House, however I would like to elaborate on some of the background and context surrounding the changes that were announced.

The water and sewage subsidy program is targeted at three groups of users; residential, non-profit and commercial users. There is no subsidy for government or industrial users.

The policy has been designed around four principles. Firstly, that NWT residents should be entitled to basic water and sewage services to safeguard their health. Secondly, that these services should be provided to residents on an equitable and affordable basis. Thirdly, that municipal governments should exercise authority and responsibility for delivery of water and sewage services. Lastly, that these services should be provided as efficiently as possible.

Mr. Chairman, I must stress, however, that the ability of the government to fulfil these principles is limited by the financial resources that are available.

The most difficult element of this policy to deal with is the determination of what is affordable to consumers and what is not. In the absence of a better standard to rely on, this policy refers to the rate charged to residential customers in the city of Yellowknife for piped water and sewage service to be the guide in the determination of what is an affordable rate to all NWT residential consumers. This approach is consistent with other similar utility subsidy programs of this government.

When the water and sewage services subsidy policy was first introduced in April of 1987, the base rate -- the rate based on cost of service in Yellowknife -- was approximately .20 of a cent per litre. This rate was subsequently revised upward to .22 of a cent per litre in April of 1990. Today, Mr. Chairman, the rate has reached approximately .33 of a cent per litre. Accordingly, the recent announcement of the adjustment in the subsidized rate was necessary to keep up with the increase in the rate.

In addition to the change in the base rate there has been a need to modify the policy to make it more consistent throughout all communities.

When the water and sewage services subsidy policy was first introduced, it only applied to the hamlets, charter communities and settlements. The remaining tax-based municipalities continue to receive only the benefit of a trucked water delivery subsidy.

Local circumstances in each of the tax-based municipalities were such that over time the trucked water delivery subsidy provisions had to be applied differently from one community to the next. Ad hoc arrangements prevailed. What was consistent was that trucked sewage pump out and piped water and sewage service received no subsidy at all in the tax-based municipalities.

In some instances, the lack of subsidy for these services meant that some residents were unable to have their sewage pump out tanks regularly emptied. This contributed to local sanitation problems. In other instances, high user rates were imposed upon government and industrial users in order for the municipality to indirectly subsidize the provision of services to local residents and businesses.

Over the period of 1989 to 1991, the water and sewage services subsidy policy was extended to include the towns of Norman Wells and Iqaluit as part of the turnover of the local water/sewer infrastructure to the municipalities. There was one exception in that only 50 per cent of the commercial consumption would be subsidized, whereas in hamlets, charter communities and settlements, commercial users were subsidized at a rate of .44 of a cent per litre for 100 per cent of consumption.

Mr. Chairman, the amendments to the policy which I announced on March 30, 1994, will now finally extend the subsidy provisions to those remaining municipalities with the exception of the city of Yellowknife which is funded through a separate block funding agreement.

As my colleague, the Honourable John Pollard, indicated in the House one year ago, the subsidized rate to commercial users in hamlets, charter communities and settlements was to be reduced to 50 per cent of consumption from the present level of 100 per cent. This would make the subsidy arrangements for commercial users in hamlets, charter communities and settlements consistent with the subsidy rules applied in the towns of Norman Wells and Iqaluit. It would also make a contribution to the government's effort to address the overall operating deficit that has been projected.

There has been recognition however, that the pursuit of consistency in the design of this subsidy policy may be at odds with the principle of affordability. As a result, the reduction of the commercial subsidy in hamlets, charter communities and settlements is being implemented very carefully. The subsidy is being reduced only to 90 per cent of consumption at this time, not to the 50 per cent level originally indicated.

Mr. Chairman, this will allow the government time to monitor and assess the impact of this 10 per cent subsidy reduction to commercial users before any further reduction is considered. The 10 per cent subsidy reduction also strengthens the local accountability of councils and their administrations for the efficient provision of water and sewage services.

Should the local economic rate for water and sewage service increase, it will now have a direct impact on the non-subsidized 10 per cent of service to commercial users. If commercial users believe that the service is not provided as efficiently as possible, they are likely to raise their concerns with the local municipal government.

Mr. Chairman, this kind of feedback is essential for local councils to be truly responsible and accountable to their residents for the efficient delivery of municipal services.

At this time, Mr. Chairman, I would like to thank Members for their patience in allowing me the time to elaborate more fully on this matter. I and my officials are prepared to respond to any detailed questions Members may have. Thank you, Mr. Chairman.

Thank you, Mr. Chairman. Before we get into the short break, can I ask that the Minister provide copies of his opening comments to us?

Yes, Mr. Chairman. I would like to bring in some departmental staff.

Agreed.

---Agreed

Thank you, Mr. Chairman. To my right is Mr. Al Menard, deputy minister of Municipal and Community Affairs and to my left is Mr. Vern Christensen, assistant deputy minister of the department.

Thank you, Mr. Chairman. First of all, I would like to apologize once again to the Members for the manner in which the Members found out about the amendments to this policy. However, I believe it is an amendment to a policy which was not equitable to the communities across the territories. The amendments that are being made to this policy make it equitable for all communities.

I think a decision like this, to pick the pockets of the residents of the Northwest Territories, is a very difficult decision that was made. Whenever a government such as ours has to make amendments of this type and decisions like this, it is very difficult. The timing of such an amendment is difficult in that there is really no right time. There was to be an announcement made by myself in the form of a Minister's statement. However, the statement didn't come through early enough to be made here in the House. I apologize for that. That statement was not made earlier in the House, but it still is an amendment that had to be made to make all communities equal in the subsidization for this program.

As for the consultation, it is something that has been mentioned in the annual general meetings of the Association of Municipalities. I think that the department is trying every way to make it smoother for communities to be able to accept this amendment to the policy. The departmental officials in the regions are working with each individual community to try to ease this policy. For the consultation part of it, with the policy having been introduced in 1987, it started out to be a policy which was using Yellowknife as a base rate. However, they didn't go far enough with the policy to make it equitable amongst all communities in the territories. I understand that communities are aware of this policy and the manner in which it is run.

I have also indicated that the water and sewage rates in the city of Yellowknife, which are used as a base, have increased since the policy was introduced in 1987. I also understand that the policy was amended in 1990, which affected some municipalities. So it has been four years, Mr. Chairman, since this policy has been amended. The amendments being made at this time are making it equal for all municipalities in the Northwest Territories. I think it is a roundabout way of saying there has been consultation, but for any more details on the consultation, I would have to ask Mr. Menard to elaborate. Thank you, Mr. Chairman.

Thank you, Mr. Chairman. With regard to ongoing consultation, this is something that has been discussed well before my time, so I would have to refer that to Mr. Menard or Mr. Christensen. The policy, which has been in existence since 1987, gives a 90 day time period to inform municipalities, which I understand is sufficient time for municipalities to change their by-laws to come in line with any amendments that may be made to the policy.

With regard to the municipality of Inuvik, I understand that is an anomaly and it is being dealt with, I believe, in a manner in which the residents of Inuvik should be able to handle. Over the period of time that this policy has existed, the community has enjoyed the rates they have been paying for water and sewage services. To the suggestion the Member is making, I would have to bring that to Cabinet for their consideration.

I would like to ask Mr. Menard to respond to concerns about ongoing consultation.

Thank you, Mr. Chairman. Even though the executive of the Association of Municipalities indicated to the Member that there was no ongoing consultation, we have been dealing with some municipalities on a daily basis for two years now. We have been making them aware of the changes that are coming about. Some of them have been happy to receive the news and some of them have not been so happy. It depends who they are. I think I spent more time talking to the mayor and the administrator in Fort Simpson than I have ever talked to anyone in my life. I have talked to them every day, and they are anxious to get in line with the policy.

The only thing we could not consult with them about was the rate change, itself, because we didn't know what Cabinet was going to approve. So, that was not done. As far as the association, the executive director works right in our building and I talk to her on a daily basis. She has been well-aware, not officially in writing, but on a verbal basis, of exactly where we have been with the policy.

Regarding hamlets, I've personally dealt with the mayor of Rae-Edzo, the mayor in Rankin Inlet, a lot of mayors. They've been waiting for the policy changes and are aware of them. They just don't know what the rate is. We only got official approval towards the end of March. In fact, I broke protocol by advising some municipalities of it because they were anxious to hear about it, even before the Minister had a chance to announce it. That wasn't the right thing for me to do, of course, but I did it to try to help them out so we could review the impact of the policy amendments on their municipalities.

We know we need at least 90 days before we can implement the policy, to give the users a chance to adjust to the rates, to rationalize them and to ensure they watch any hardship cases that might arise. We don't know all the impacts this will have because every tax-based municipality is different. Some hamlets are different too. We are hoping during the next few months that we will be consulting with them on a detailed basis, knowing what the rates are.

We have been consulting on an ongoing basis for the last two years, not in writing or anything like that, but unofficially. As we see each other -- and we see each other often -- the superintendents have been preparing the communities for changes, the same way as they advise us when they have to change their rates. We consult, sometimes, a year in advance. Some of the reasons some of them are in deficit situations is because they have to change their rates. There have been ongoing discussions about that. It sometimes seems to be easier for them to change their rates when they have to increase them than when they have to decrease them because they are collecting too much revenue and they have too large a surplus.

As far as timing, we'll have to go back to Cabinet to get permission because we are running out of time for the 90 days, as required. We probably are going to have to ask permission to push the date back because we need the time for consultation about the effects in each community.

As far as the deficits in each community, we have dealt with some of the ten communities that are in a deficit position. They know what they have to do about it and the by-laws have already been changed. The consultation did take place. I might also add that we did consult with some MLAs as well. In fact, Mr. Antoine was in touch with us a few times and we kept him advised of how things were coming along, but, again, we didn't know about the exact rates. If we delayed it too much across the board, then it might cause some hardship for some municipalities like Fort Simpson, because they want to get on it as soon as possible, and the same thing with Hay River.