Thank you. Supplementary, Mrs. Marie-Jewell.

Thank you, Mr. Speaker. There used to be a program called "rural and remote" and quite a few of my constituents took advantage of the program at the time. The program provided for a 25-year mortgage, and 25 per cent of your income went towards the mortgage. I believe this program has been discontinued and that was my purpose of asking. I would like to know, since there have apparently been a few of them, whether or not there has been any indication from CMHC to the Minister of Housing about addressing the

outstanding rural and remote units for individuals who have taken advantage of this program in the past. Thank you.

Mr. Morin.

Thank you, Mr. Speaker. When I was in Fort Smith some time ago, some of the Member's constituents raised the issue of the rural and remote program to me, as well as some constituents of Mr. Nerysoo's in Fort McPherson, and people in Inuvik and Iqaluit. We have tried to work with CMHC to see if they would write off the program and flip it into a program similar to what is now offered by the Housing Corporation. To date, CMHC has refused to approve a write-off, and it would cost us approximately $3 million if we were to pay out CMHC on behalf of those clients.

So, I've asked the Housing Corporation to look into it further, especially for people who are getting on in age. One person in Fort McPherson -- and I forget her name -- lives in a house and continues to pay 25 per cent with no cost-of-living adjustment. She has to pay her power and electricity as well. Others must be in the same boat. They are paying a higher cost than their neighbours and we're trying to get something drafted to write off the amounts for rural and remote that people have been paying faithfully over the years. Thank you.

Thank you. Supplementary, Mrs. Marie-Jewell.

Thank you, Mr. Speaker. I appreciate that reply. Could the Minister advise the House when he anticipates a paper being presented which considers the write-off of the rural and remote program? People are paying exorbitant amounts and some have been unable to pay because of the continual increase of costs. Thank you.

Mr. Morin.

Thank you, Mr. Speaker. The Housing Corporation has a fairly heavy workload right now, but this has been one of my priorities. Since the honourable Member for Thebacha has brought it up, I will resurrect it and try to get it done as soon as possible. Clients out there are suffering from high mortgage rates, especially clients who are paying them. Some have not paid at all, and they will be addressed differently. There are even some who have leased out their units and we will have to address that as well. But we will try to help those who are attempting to own their own home as best we can. Thank you.

Thank you. Item 6, oral questions. Mr. Koe.

Mahsi, Mr. Speaker. I have a question for the Minister of Finance. In the Minister's budget speech, he mentioned, briefly: "becoming more self-sufficient." This was a very short section, about six lines long. The Minister stated that: "We have to become less dependent on the federal government and we have to raise more of our own revenues. At the moment, we have a limited capacity to do so and we have been living with a financing formula which discourages initiative and self-reliance."

Mr. Speaker, in the matters of raising taxes and arrangements with the federal government, I believe this is called a perversity factor. I would like to ask the Minister if he can explain what the perversity factor is.

Minister of Finance, Mr. Pollard.

In 25 words or less.

Mr. Speaker, I hope Ron Irwin doesn't read these debates. I promised him I wouldn't say the "p" word because it gets the federal government excited. Mr. Speaker, when the formula was put together, it was deemed by Canada that we should maintain 85 per cent of the average tax rates across southern Canada, which includes personal income taxes, corporate taxes, tobacco taxes, property taxes, et cetera.

What happens if we fall behind? The federal government says you should have been able to achieve that and they lop that off of our grant. They automatically take it from us. I should explain again, Mr. Speaker, -- Mr. Patterson asked for 25 words or less, but it's difficult to do that -- what happens is if there is a volume increase in taxation in the Northwest Territories -- which means more people are working and paying their incomes taxes -- then for every extra dollar we receive in that particular revenue, the formula takes $1.30 from the formula financing agreement for those revenues inside the formula.

So, putting more people to work in the Northwest Territories actually works against us in that respect. That's it, sort of, Mr. Speaker. It's highly technical and I could send the documentation to Mr. Koe, who I know is an accountant and who could probably wade through the pages. But, that's it, in a nutshell, Mr. Speaker. Thank you.

Thank you. Supplementary, Mr. Koe.

Yes, I would appreciate the information, if I can get it from the Minister. It is really curious that if the population increases and we hire more people -- and we say that our industry is going to grow, especially in mining -- for every dollar of tax we collect, we will lose $1.30. That doesn't make sense. I would like to ask, what is the Minister doing to try to change this situation?

Mr. Pollard.

Mr. Speaker, we have been discussing this particular matter with the federal government. I want to be fair to the federal government and I want to tell people that any tax increases that we have put in place, since 1989, the increased portion comes to us outside of the formula. It becomes very technical because as the volume increases, if you put more people to work at those tax rates at the time the 85 per cent was established, then we lose $1.30 out of the formula. But when we increase taxes, we gain that outside of the formula. So my preference would be to make a new arrangement with the federal government that would see some incentive given to us for putting people to work. I think that is in the best interest of Canada and people in the Northwest Territories.

I will give you another example. In Mr. Koe's area, there was a lot of oil and gas activity some years ago. Under the existing terms of the northern accord -- I am talking about the one that was sent to us several years ago -- we would have to wait 10 years for development before we got revenues coming in. Yet, the taxes of general application would start to come in and they would act in a perverse fashion against the formula. So there is another issue with perversity that needs to be worked out with the federal government with regard to the northern accord.

Thank you. Supplementary, Mr. Koe.

Thank you, Mr. Speaker. Over the past several years, Members of this Assembly have been making suggestions about developing a northern package, a package to be negotiated as part of the financing formula arrangement. There were many aspects to it. The Minister mentioned some. What is the status of the negotiations on the current financing formula agreement?

Mr. Pollard.

Mr. Speaker, yes, I think the term "package" was put upon this arrangement by the Standing Committee on Finance. The package arrangement concerned a number of things: it concerned the health billings dispute, the grants in lieu of taxes and a number of outstanding issues that we had with the federal government that we wanted to clear up. We have been nibbling away at those negotiations and coming to some agreements with Canada. The outstanding issues in the package are what happens at the time of division with the formula. Will there be incremental funding available at the time of division and can the formula

deliver that incremental kind of funding? Can we sort out the issue of the northern accord and any other transfers that may come to us and have them not affect us in an adverse fashion. All those things have yet to be worked out. We have managed to settle some of those small things along the way. Health billings is not small, but it is one of the things we had to get by.

In the next round of negotiations, which will occur some time after I meet with Mr. Martin, we will be trying to say to them that this package should be changed in these particular ways to reflect these particular concerns. Thank you, Mr. Speaker.

Thank you. Item 6, oral questions. Mr. Antoine.

Minister of Finance, Mr. Pollard.