Thank you, Mr. Chairman. The purpose of this Act is to amend the financial limits and guarantees made pursuant to the Financial Administration Act and allow the Commissioner or the board of a public agency to make a guarantee, with the approval of the Financial Management Board, in an amount which must remain within the aggregate limit of 15 percent of annual government revenues, as set out in the estimates.
Currently, the Financial Administration Act sets a limit of $500,000 on the Financial Management Board's authority to approve a guarantee. For any guarantee in excess of the $500,000, an Act of this Assembly is required. This limit was set during the early years of government, when guarantees in excess of $500,000 were unusual. As we all know, the economic situation has changed considerably in recent years. More and more governments, including ours, are seeking greater opportunity for expansion of public infrastructure and their economies in a manner which limits the cost to the taxpayer.
One very effective method is to enter into partnerships with the private sector on major projects. Another method is to replace direct contributions and grants with loan guarantees. The amendment to this Act will allow the government more flexibility in entering into public/private partnerships related to the development of infrastructure and other projects to expand our economy and provide employment where it is in the public interest. The Financial Management Board's authority to approve guarantees would be subject to an overall limit set out in the amended legislation.
I can also assure the committee that a process will be put in place for reviewing requests for guarantees that will ensure that each application reviewed by the Financial Management Board will be subjected to rigorous due diligence review and analysis and will be approved or rejected based solely on the economic merits of the project and its potential benefits to the taxpayers in the Northwest Territories.
There will also be clear procedures for ensuring adequate security is provided for and that the government's interest is duly registered. In addition, all Members of the Legislative Assembly will receive formal notice, 14 days in advance, of the final approval of all guarantees over $500,000 that the Financial Management Board is intending to issue.