Thank you, Mr. Speaker. When this Legislative Assembly took office, it faced a potential deficit of $150 million for 1996-97. It has been a very difficult task to find ways to manage our way out of this problem. Together, the standing committees of the Legislative Assembly and the Cabinet have come close to achieving the objective of sound fiscal management in a fair and reasonable manner.

As we have reached agreement on the components of our emerging plan over the last few months, we have been announcing the initiatives that we will be implementing. On several occasions, we have stated that one part of the overall solution to our financial situation will require us to address the $460 million that we spend on the public service. This has resulted in considerable speculation and concern among our employees about what this will mean to them. Mr. Speaker, I believe that it is best, wherever possible, to put an end to that speculation and alleviate employee uncertainty.

In February, we met with our non-unionized employees and sought their input on the preferred means by which wages and benefit reductions should be implemented. Taking that input into account, the following changes will be made to the compensation package for non-unionized employees, including deputy ministers, managers and excluded employees, effective April 1. 1996.

- The $5,400 annual accommodation allowance will be eliminated by rolling it into the current base rates of pay. A 6.25 per cent reduction will then be made to the new base.

- The existing settlement allowance and vacation travel assistance benefit will be combined into a northern allowance that each employee will be entitled to. The northern allowance will have a fixed base of $1,750 in Yellowknife and will be adjusted by an index to reflect differences in the cost of living among communities. The new northern allowance is structured to ensure that employees can continue to receive the income tax deductions for travel expenses. However, travel days and winter bonus days will be eliminated.

The ultimate removal entitlement will be frozen as of March 31, 1996, and the maximum benefit will be capped. Ultimate removal will not be available for future employees. In addition, removal on initial appointment will be eliminated as a term and condition of employment and will be revised to support specific recruitment needs.

Medical travel assistance will be retained as a benefit of employment but will be brought into line with the benefits available to the general public through the NWT health care system. And,

Unique rates of pay will be established for excluded casual employees and summer students to reflect the work that they perform.

Mr. Speaker, these changes will be implemented April 1, 1996, for non-unionized employees. It is also our intention to eliminate the $5,400 accommodation allowance, effective August 31, 1996, for teachers and March 31, 1996, for all other employees, by offering to roll it into base wages as done for non-unionized employees. This will be subject to a negotiation process with the unions and will only occur when other changes to the wages and benefits for unionized employees are made.

Implementation of this decision on April 1, 1996, will avoid potential overpayment in wages and vacation travel assistance for non-unionized employees. The recovery of these payments could cause an unnecessary financial hardship for these employees.

The same concern exists for unionized employees. I have asked my officials to work out an arrangement with the unions that will avoid payment of vacation travel assistance in 1996 pending the results of negotiation of a new collective agreement.

Mr. Speaker, these changes to the wage and benefit entitlements for non-unionized employees reflect the new fiscal realities facing this government. Thank you, Mr. Speaker.

--- Applause