Mahsi, Mr. Speaker. In accordance with its terms of reference, the Standing Committee on Finance is pleased to submit its Report on the Review of the 1995-96 Main Estimates of the Government of the Northwest Territories.
Introduction
The Standing Committee on Finance met in Yellowknife between January 9th and 31, 1995, to review the proposed operations and maintenance main estimates of the Government of the Northwest Territories for the 1995-96 fiscal year.
As the committee chair, I would like to offer thanks to the Members of the committee for their effort and their contributions to the review. The committee would also like to thank the Cabinet Ministers and their staff for their cooperation, for the information they provided to the committee, and for their participation in the committee's review. All government departments were reviewed, except for the Ministry of Intergovernmental and Aboriginal Affairs, as the Minister responsible could not meet his commitment to appear before the committee. This ministry will be reviewed during the current session of the Legislative Assembly. Finally, the chair thanks the committee staff for their assistance in the review and in the preparation of this report.
Setting The Stage For Next Year And Beyond
The 1995-96 main estimates are the last estimates that the 12th Legislative Assembly will consider. The 13th Assembly will face very difficult challenges; notably, the preparations for division of the Northwest Territories, and the "new fiscal reality," where funds from the federal government will no longer be abundant or even secure. The Standing Committee on Finance recognizes that these challenges add greater importance than usual to the Assembly's consideration of this budget.
The standing committee has undergone a number of changes over the life of the 12th Assembly. Yet there are two themes which have recurred since 1992, and which were uppermost in committee Members' deliberations this year:
- Fiscal uncertainty, with its implications for transition planning, division and constitutional development; and,
- Commitment to social issues, and the implied interdepartmental cooperation necessary to exercise that commitment.
Fiscal Uncertainty
The Northwest Territories is far from being financially independent. Over 80 per cent of GNWT revenues come from the federal government, with less than 20 per cent being generated internally. The NWT simply does not have the revenue base necessary to support all of the programs offered by the government.
While the government has announced the creation of a task force, which is to develop and report suggested taxation improvements, the fact remains that the possible revenue sources available to the government are limited compared to the revenue presently received from Canada.
Through the 20th century, the people of the north have been drawn into a state of dependence on government. The influence of non-native government has largely forced aboriginal people away from most aspects of the day-to-day life of their ancestors, towards a more "western" lifestyle, replacing nomadic camps and living off the land with wooden houses and store-bought food. Since the devolution of authority from Ottawa starting in 1967, northerners have come to rely specifically on the Government of the NWT for a whole range of services, including educational, health, and social services, as well as highways, municipal projects, and other services.
Meanwhile, Ottawa is finally coming to grips with the massive debt plaguing the federal government. They are looking everywhere for ways to cut spending, and grants to the NWT have not been and will not be exempt. There are tremendous economic and political pressures facing the federal government. The opportunity to increase revenues through higher taxes is sorely limited by economic conditions. So the federal government is forced to consider massive spending cuts as the primary way to balance the federal budget -- a budget where close to 30 per cent of expenditures go towards servicing the debt. As a result, the next Legislative Assembly and the government they choose will have to face the possibility of further cuts in federal grants to the NWT -- cuts that will force that government to make some very tough choices.
To date, the Government of the NWT has done well in managing their resources. Since the beginning of the 1981-82 fiscal year, the government has maintained a surplus financial position. In fact, the 1993-94 accumulated surplus of $19.833 million was the lowest figure since 1981. This accumulated surplus is now gone. The NWT has, unfortunately, joined the remainder of Canadian jurisdictions in indebtedness. Granted, the deficit now is quite small compared to that of other jurisdictions and the current deficit position can be blamed more on unforeseen circumstances -- such as the extreme forest fire season of 1994, or the additional funding assigned to compensate for the 1992 federal cuts in social housing funding -- than on the management skills of the government.
Balanced Budget Legislation
During the review of the 1995-96 capital estimates, the committee brought forward the idea of introducing legislation which would force the government to have balanced budgets. The committee recommended that the Financial Management Board "seriously consider...introducing...legislation that requires the government...to ensure that, on March 31, 1998, no deficit has accumulated." The intent of this legislation would be to ensure that the new territories to be created upon division would not be burdened by debt incurred by the outgoing territorial government.