Agreed.

---Agreed

Thank you. Now I think we have to return to the summary which is on 02-6. Executive departmental summary, total O and M, $56.251 million.

Agreed.

---Agreed

Thank you very much. Do Members agree that we have concluded the consideration of the Department of the Executive?

Agreed.

---Agreed

Agreed.

---Agreed

Mr. Chairman, there is a net reduction of over $300,000 in the 1995-96 expenditure budget of the Department of Finance. This reduction is primarily due to lower interest costs on Northwest Territories Power Corporation promissory notes as a result of the annual redemption of 10 per cent of these notes.

As well, the contract negotiated with the government's banker will reduce financial costs in the 1995-96 main estimates by over $200,000.

On the revenue side, Mr. Chairman, the payroll tax which was implemented on July 1, 1993, is estimated to generate new revenue to this government of $12.4 million in 1995-96, an increase of almost $700,000 from the 1994-95 estimates.

Mr. Chairman, the department has devoted a significant portion of its time in developing studies and conducting discussions on formula financing with the federal government. These studies and discussions have addressed such issues as "perversity,"

the gross domestic product ceiling, the measurement of tax effort and the treatment of investment income.

Mr. Chairman, for fiscal year 1995-96, the grant from Canada will be frozen at the level of grant entitlement for 1994-95. The grant for 1995-96 is therefore estimated to be $876 million. Because the formula financing agreement will be suspended for 1995-96, total revenues will become more uncertain since the failsafe provisions of the agreement will not apply.

Mr. Chairman, the taxation revenues for the Department of Finance, shown on page 04-15 of the main estimates document, include the revenues from the two percentage point increase in the corporate income tax rate introduced in 1994. Corporate income tax revenue for 1995-96 is projected to be $30.3 million, an increase of $7 million from the 1994-95 revised forecast.

Tobacco tax revenues for 1995-96 will increase by more than 30 per cent or $4 million, over the 1994-95 main estimates, as a result of the government's decision to maintain tobacco prices when the federal government reduced its excise tax on cigarettes by $5 per carton.

Total taxation revenues are expected to be $140.2 million in 1995-96, up $6.8 million from the 1994-95 main estimates.

The increase from $11.7 million to $12.4 million in payroll tax collections between 1994-95 and 1995-96 is based on projected increases in economic activity and wage rates in the Northwest Territories.

The interest earned on the government's temporary cash balances is forecast to decrease from $1.5 million to less than $150,000. This decrease results from four years of deficits since 1991-92 and the resulting elimination of the government's accumulated surplus.

Associated with the decrease in cash balances is the cost of borrowing to meet the government's obligations. Interest costs were not included in the 1994-95 expenditure estimates and are not provided for in the main estimates for 1995-96. Members were asked in this session to approve a supplementary appropriation of $1.2 million for 1994-95 interest costs. A supplementary estimate for 1995-96 interest costs will be presented in 1995-96 when interest costs can be more accurately determined.

In total, revenues budgeted in the Department of Finance, excluding the grant from Canada, are expected to increase by $3.5 million over the 1994-95 main estimates.

As noted earlier, Mr. Chairman, the expenditure budget of the department is reduced by $558,000 of interest on redeemed NWTPC notes and by over $200,000 of bank service charges. These reductions are partially offset by an expenditure increase of $150,000 for a tax options study and $340,000 for increased insurance premiums.

In total, Mr. Chairman, the expenditure budget of the Department of Finance will decrease by $313,000 from the 1994-95 main estimates. Thank you, Mr. Chairman.

Thank you, Mr. Speaker. An important factor in some financial arrangements with the federal government are territorial population statistics. There are currently two different versions of these statistics. The federal government relies on the figures from the 1991 Statistics Canada census. However, these figures are substantially lower than those prepared by the bureau of statistics. The bureau of statistics uses a combination of information from deaths and births to health care card applications and returns to assess the population.

Hear! Hear!

Recommendation 14

The committee recommends that the Department of Finance actively encourage all northerners, through an awareness campaign, to participate in the 1996 census.

Banking Services

For many years, Members of the Legislative Assembly have been raising concerns regarding the lack of banking services in most communities. The committee noted during the review that some banks are starting to move into communities in the north. For example, it is expected that there will soon be banking facilities in Cambridge Bay.

The committee is aware of and supports the contractual arrangement for banking services which the government has negotiated. Without undermining this arrangement, the committee suggests that the government encourage the development and enhancement of banking services in smaller communities.

Property Taxation

The issue of property taxation was discussed with this department and with the Department of Municipal and Community Affairs in the review of the 1994-95 main estimates. At that time, the committee recommended that the taxation policy in general taxation areas be reviewed and a plan developed to resolve all outstanding issues in this area, with particular reference to treaty concerns. The committee was informed during this review that a study is under way and the final report is expected in September 1995. This issue should be highlighted as a priority for the next government in the transition plan.

Mr. Chairman, I move that the committee recommends the Department of Finance actively encourage all northerners, through an awareness campaign, to participate in the 1996 census.

Question.

That is the end of the comments from the Standing Committee on Finance.

If I might, Mr. Chairman.

Agreed.

---Agreed

Thank you, Mr. Chairman. On my right is Mr. Eric Nielsen, the deputy minister of Finance; and, on my left is Bill Setchell, the director of finance for the Department of Finance. Thank you, Mr. Chairman.