Thank you, Mr. Speaker. Mr. Speaker, the Department of Indian and Northern Affairs has released a discussion paper that suggests changes to the mineral royalties regime in the NWT. In my opinion, this set of proposals, if implemented, would hurt northern development. I think the CBC summarized the situation best in the news item earlier this week. Their reporter said Ottawa wants mining to become more expensive, and it is making no secret about it.
In the 1995 Federal Budget, parliament directed the Northern Affairs Department to review its mining royalties. The project had several objectives, mostly however, it attempted to propose a system that featured competitive levels of taxation and profits. In attempting to achieve this goal, the department has drafted a proposal that calls for higher royalties all around, for example, it raises the maximum royalty rate from 12 to 14 percent. It also ends the three year royalty-free period for new mines.
Mr. Speaker, I do not see how this will benefit the north, in my view it will discourage development.
First, a new royalty system will do little for us until we complete Northern Accord negotiations. As it stands, any new money that is raised through taxation, goes to Ottawa. We can be fairly sure the Federal government will not send it back to us.
Second, raising royalties will not create long term returns. It will only squeeze a few more bucks out of existing mines and deter others from starting up. If we want to generate a strong cash flow from mineral royalties, we have to create a decent environment for mineral development. This means, that our efforts should focus on building an efficient approval system, which must include environmental reviews and mechanisms for negotiating community benefit agreements.
This is the key to obtaining long term sustainable development. Long term sustainable development will do more to increase revenue for mining and create much needed jobs than will hikes in the royalty rates. Thank you, Mr. Speaker.