Thank you, Mr. Speaker. Mr. Speaker, I made a statement in the House before Christmas on the federal government's proposal to raise mining royalties in the NWT. I would like to follow up on those comments today. Let me begin with a quick recap. The Northern Affairs Department has released a discussion paper which says the current royalty regime is unclear and produces revenues that fall below international standards. The department wants to clarify the rules and increase the government's income from mining.

To do this, it has proposed a royalty increase. The higher rates are offset somewhat by a flexible system of allowances that help companies lower their royalty burden in given years. Mr. Speaker, the discussion paper presents a rational proposal if it is taken in isolation. However, it is unclear to me whether it gives due consideration to the overall cost of mining in the north. I am mostly concerned with how the proposals will effect future projects.

Let me give you an example. The discussion paper recommends ending the three year royalty holiday for new mines. This will raise costs during critical start-up years. At the same time, new federal environmental review rules shift more of the costs of the approval process to the companies that propose projects. Is it possible that the end of the royalty holiday, coupled with new environmental review expenses, could act as a disincentive to development? Companies could use their various allowances to keep start-up costs low, but what is left for the future when markets slump, or other costs go up? During this Session, I will be writing to Northern Affairs with details of my concerns and questions. I look forward to reporting the department's reply to this House. Thank you, Mr. Speaker.