I am unable to answer that question at this time. Thank you.

Thank you. Okay. Are you okay, Mr. Picco? Mr. Picco.

Thank you, Mr. Chairman. Mr. Chairman, I understand that this is a very sensitive point and I think it affects the government of the Northwest Territories very drastically. So, I guess my third question on this area would be to the Minister when do we expect the response by this government on the recent court ruling on the pay equity case?

Perhaps, the Member should ask the consent of the Members to go to page 03-8 Directorate. Mr. Minister.

I am unable to answer that question at this time.

Thank you. Program summary, Finance. Mr. Picco.

Thank you, Mr. Chairman. Mr. Chairman, I wonder if the Minister could let me and the House know when he would be able to answer those questions.

Thank you. I am having some difficulty here. We are in the program summary, finance, and we do not ask detailed questions on this page, program summary. Members will have to ask Members to consent to go back to a particular activity if they want to ask detailed questions. Mr. Minister.

I have already said to my honourable colleague, and I met with him privately and I am disappointed with his line of question right now, I am unable to answer that question at this time.

Do we agree that this matter program summary, total operations and maintenance is $9,351,000?

Agreed.

Agreed. A total expenditure, $9,351,000. Agreed?

Agreed.

Thank you. Do we agree the Department of Finance is concluded?

Agreed.

Thank you. I would like to thank the Minister and the witness for appearing before the committee. Thank you. Does the committee agree that we deal with the Department of Public Works?

Agreed.

Agreed. I would like the Minister, Mr. Arlooktoo, to make an opening remark on behalf of the Department of Public Works. Mr. Arlooktoo.

Thank you, Mr. Chairman. Today, I am pleased to present the 97/98 main estimates for the Department of Public Works and Services. This budget covers the first year of our three year business plan. The department's proposed budget for 97/98 showed the need for $83,672,000 in O and M, for 335 positions. Also for $3,835,000 in capital funding. This represents a decrease of 12 percent from the 96/97 main estimates. These amounts do not reflect the transfers of O and M resources that will go to departments as a result of the user pay/user say initiatives. The department estimates that $56 million will be transferred to other departments so that they can manage services such as the operation and maintenance of buildings and vehicles, purchasing and mail services, and project management.

After the transfer of funding to client departments about 150 Public Works and Services employees will continue to provide various services such as building and maintenance. The department will charge back the costs of those services to the user department. This charge back fund is expected to include $20 million and $25 million. The remainder of the $56 million transferred will be used by departments to provide their own service. The user pay strategy is a good way for departments to become familiar with the costs and the responsibilities of these services.

The department also continues to manage resources for the petroleum products division through a revolving fund which operates on a cost recovery basis. The research for privatization of petroleum products is being finalized in preparation for review by Cabinet before the end of March, 1997. I will update Members as soon as possible, as soon as more information is available.

A major change from the last fiscal year is the addition of the safety inspection group, formerly located in the Department of Safety and Public Services. This will increase the O and M budget by about $1.5 million. The Department of Public Works and Services provides support for many of the services that are being devolved to communities as part of the community empowerment initiative. The department is working with MACA to ensure that this process works smoothly. My department will turn over ownership and operation of buildings and equipment which support many community programs. While the plans are being developed, the department is preparing transfer agreements for the communities of Pangnirtung, Pond Inlet, Rankin Inlet, Arviat, Repulse Bay, Cambridge Bay, Tsiigehtchic, and Kahtlodeeche.

Thirteen other communities have expressed interest in transfer agreements. Community transfer agreements are the best way for the communities to gain experience in managing government resources. It is a natural transition to take more responsibility and helps the community to develop management skills. Mr. Chairman, a transition team was created in the department to steer the department's privatization, user pay and community empowerment initiatives. This transition team is temporary and will phase itself out as its objectives are accomplished over the coming year.

Finally, Mr. Chairman, I would like to add that the Department of Public Works and Services takes career development seriously. We demonstrate this by working closely with Education, Culture and Employment; Transportation and the private sector to sponsor the first ever northern pre-engineering program at Aurora College. Students in this program are working to gain the math and science skills to allow them to go on to studies for engineering technologist careers. I would like to take this opportunity to commend both management and staff of Public Works and Services for their contributions in accomplishing government initiatives during these difficult times. I am proud of how the staff of Public Works have dealt with the many significant changes. That completes my opening remarks, Mr. Chairman. I will be pleased to answer Members' questions.

Thank you. I believe the Committee on Infrastructure is the committee that reviewed this particular department. I am wondering, Mr. Erasmus, are you going to be making a comment on behalf of Infrastructure Committee?

Mr. Chairman, I was wondering if we could get copies of the Minister's opening address?

Thank you. Do we have copies of the opening remarks? I believe they will be circulated. Mr. Picco, I believe you are the designate of the Infrastructure Committee to make opening remarks. Mr. Picco.

Thank you, Mr. Chairman. Mr. Chairman, the Department of Public Works and Services is continuing to forsake its past of being a provider of services and evolving towards being an administrator of services. Through various user say/user pay initiatives, the department expects to transfer almost two thirds of its current $88 million budget to other departments. Some of the services presently provided by PWS will be privatized. Most, however, will continue to be provided within the government but on a chargeback basis.

On user say/user pay, the whole user say/user pay concept has generally met with approval from the Committee, requiring those who use a service to pay for the service and often, to dictate how that service will be provided, will undoubtedly provide greater efficiencies and cost-savings to the government operations. However, Committee members still have some concerns in this area. While devolving authority and responsibility to the clients of services has many advantages, some members have expressed concern that inefficiencies may result from loss of economies of scale, from decentralization and from other details of the implementation of these initiatives.

As the Committee has said before, these initiatives should not be used merely as an excuse to download programs onto others. The goal should always be more efficient provision of services with the limited resources available. Off-loading must never be a substitute for more efficient, internal initiatives if they exist. The government must do more to ensure that these initiatives will not be more expensive than retaining the provision of services and working to provide those services more efficiently. As well, the government must be careful not to over-estimate the savings from these initiatives. Committee members understand that money transferred from PWS's budget to departments' budgets to pay for these services, will be reduced due to anticipated savings. However, the reductions must not be too high. If only 60 percent, for example, of the funds for a service are transferred to a department, and the department is not able to realize a 40 percent savings in that area, the remaining funds would have to come from other departmental programs. This would not be acceptable, Mr. Chairman. Public Works and Services should work closely with other departments to ensure that this does not happen.

On the petroleum products privatization, the committee expressed concern about the proposed privatization of petroleum products storage and sales. Members are concerned that fuel prices could rise upon privatization and would like more detail on how the GNWT plans to regulate this area. In addition, Members are concerned that once privatized, northern communities could receive fuel of inferior quality and this could lead to a host of new problems. Based on these concerns and the lack of information received from the government, the committee made the following recommendations. Recommendation 1: the Standing Committee on Infrastructure recommends that the privatization of petroleum products storage and sales not proceed until Committee Members have had an opportunity to review at a minimum the cost benefit analysis of the proposed privatization, detailed description of the anticipated end result of this move and responses to committee concerns regarding fuel quality and price. It was further recommended that GNWT take no further steps towards privatization, including a decision on the request for proposal, until such time as the above information is made available to Members and Committee so that the concerns are addressed.

Mr. Chairman, the Committee noted the government maintains ownership of the Northwest Territories Power Corporation because affordable, reliable power is a necessity here in the north. Members feel that affordable, reliable supplies of fuel are as much a necessity. As a result, some Members discussed the possible advantages of NWTPC taking over the delivery and sales of fuel. This move could result in the best of both worlds, privatizing to take advantage of a more efficient private sector, and retaining ultimate public control over the provision this essential service. Since NWTPC is at present the largest consumer of fuel in the north and since NWTPC often has its own storage tanks located within PBTs tank farms there would be many efficiencies to this possibility.

The Standing Committee did note that NWTPC was one of 33 firms expressing interest in taking over some or all of petroleum products storage sales responsibilities. The government's response was that once requests for proposals were issued, any proposal from NWTPC would be evaluated using the same criteria as all other proposals.

Some additional information: In addition to the above, Members would like the Minister responsible for Public Works and Services to provide written briefing material on the following, an explanation of grants in kind given by the department generally and specifically related to the office complex in Fort Resolution, and a summary explaining the use of the project officers by the Department of Transportation, along with a brief explanation of the relationship as it relates to the Rankin Inlet air terminal project. Some of this information, Mr. Chairman, has been forthcoming from the Minister. With that, Mr. Chairman, is the Infrastructure Committee Report on the Department of Public Works and Services. Thank you, Mr. Chairman.

Thank you, Mr. Picco. Before we ask the Minister to entertain general comments, some honourable Members have indicated they wanted to take a short break. Agreed?