Thank you. Directorate. Yes, Mr. Steen.

Thank you. Mr. Todd.

I am sorry, Mr. Chairman. I do not approach the division of the territories this way. I have tried to explain that on a consistent basis to the House. What I have done, is asked and rolled up what I believe are the rolled up costs associated by each department, have them document what they think the time they spent on it. The money they have spent on materials, the money they have spent on consultant fees, et cetera. Whether east or west. I really do not have and have not asked for it to be addressed on an east/west basis, so it would be difficult for me to be judgmental on that, Mr. Chairman. Again, I am not trying to avoid it, that is just not the way I see it. I see it as the two new territories that require equal attention, particularly on the fiscal side. It may be that one territory is further ahead because it has a mandate and a structure unfolding, and is a little further ahead than the other. It may be that there is more money spent on the overall 1.2 million there than in the west, but I could not tell you whether it was 60/40, 50/50, 80/20, I just could not. I never approached it that way. Sorry.

Thank you. Yes, the division is pending and we treat it as pending, but imminent. Mr. Steen.

Thank you, Mr. Steen. Mr. Minister.

Thank you, Mr. Chairman. I think it is important to point out that when Mr. Steen makes reference to the educational monies, that is transitional monies that were provided by the federal government. And that is transitional because there is a structure in place and a legislative commitment at the federal level to move on Nunavut. So that is important. I think it is also important to try again, because I know this was a major issue with Mr. Steen before, there is transitional costs, which we are trying to track. There are incremental costs that come after we determine what the core function of government will be that will have to be negotiated.

I am not trying to avoid the issue, far from it. I am a man who believes in detail and likes to see the light at the end of the tunnel, but I am advised by my staff that we have not tracked it on a territorial basis. I am prepared to go back and think about what Mr. Steen said, and see if there is some way to do that, but I can not commit to this today. I think it is also important that this Finance Minister believes that there are transitional and incremental costs associated with two governments, not just one. And when the constitutional framework for the west unfolds and who know how it will be, that is up to the participants in that exercise, I believe there will be a requirement for incremental costs there as well, as there is a requirement for incremental costs in the east. Hence, my position as it relates to transitional costs. They are both east and west and, although I understand where my colleague is coming from, I will have to go back and think about what he said and see if, first of all, I can ideologically get my head around it, secondly, see whether I agree with it, and if I do agree with it, can I do it? Thank you.

Thank you. We have Mr. Erasmus and Mr. Picco. I will give you one more chance to speak for the time being, and I will recognize the Members who have not spoken yet as we review the Department of Financial Management Board. Mr. Steen.

Thank you. Mr. Minister.

Thank you, Mr. Chairman. I fully understand and I certainly respect the time and energy that Mr. Steen has put into this issue, both here and in the past. I do take a different position. I see the negotiation of two new formula arrangements as exactly that. It is an arrangement for two new formulas. It is not a question of saying, this is the pie, let us split it up. Philosophically, that is the position I have come from in my discussion with Mr. Morin. It is not a question of saying we have a billion dollars, let us put 60 percent over here and 40 percent over there. It is a question of going back to the basic needs, the essential services, and developing two new formulas. That is where I am coming from, philosophically. I want you to understand that because this constant arguing about who is going to get what is going to bog us down into a very serious quagmire. My philosophy and my approach to the formula financing arrangement, is that I am starting from scratch and developing two new formulas. That is the way I see it.

That is important to say that. I do not know if everyone sees it that way. I may be somewhat autocratic. I am taking the lead on it, and that is the position I have taken and I have made that clear to Mr. Martin and to the Department of Finance.

I fully understand Mr. Steen's line of questioning, and I think he is right that we need to address it, because it could become acrimonious and it could become divisive. I want to avoid that. What I have tried to do, a year ago when I was assigned this responsibility, was at least get the bureaucracy up and running as to identifying the costs. I will take into consideration what he has told me today. I will not commit to anything at this time but I will commit to reviewing whether or not it is possible to define it, east/west. But again, for clarity's purpose, I have to tell you, I do not see the negotiations of the new formulas based upon that concept. I see it based upon the concept of two new formulas, simultaneously, based upon the basic requirements of both territories. Thank you.

Thank you, Mr. Todd. Directorate. Operations and maintenance. Mr. Erasmus.

Thank you, Mr. Chairman. My question is regarding incremental costs. I do not think it has anything to do with the new formula financing arrangements, why we should track them. I believe that we should be tracking costs separately. I also believe that we are creating two new territories, which I do not think has any bearing on keeping track of costs separately either. I think we all should be wary of the fact that the federal government will only pay certain costs. They are not going to accept the figure that we give them. If that is the case, we are going to have to substantiate what we want paid for. I am sure as prudent a businessman as Mr. Todd is, he will want to be prepared when the federal government asks him, why do you guys want to get paid this $20 million of incremental costs or whatever it is? He is not going to want go to his bureaucrats and say, do you remember what you guys did, two years ago on December the 6th? Did you work on this or did you work on that? To be on the safe side to ensure that we can get our money from the federal government, would it not be prudent to start keeping track now of all the work that is being done on the east, and differentiate what is being done in the west and exactly what they are doing? Thank you.

Thank you. Mr. Todd.

Incremental costs are a separate issue than transitional costs. Incremental costs are the costs associated with running two governments, rather than one. You need to get the basic framework of those two new governments in place at the time to find out what those incremental costs are. To avoid prolonging this debate about east/west, etc. I will make a commitment to review what we are doing in relationship to east/west expenditures on the transitional side and get it back to the House as quickly as I can. If it is at all achievable to differentiate between east and west, I will take a hard look at how much it takes to do that, if the effort is prudent and advise the House accordingly. I will certainly move to analyze that. That is on the transitional side.

On the incremental side, as I said, we need to get a clearer definition of what the two new governments are going to look like, so we can start costing it, and then make the analysis of the incremental costs and seek the federal government's approval to secure that I believe I said earlier this or last week, we are optimistic that the officials at the negotiating level in which we have a broadly based representation, that their first meeting will be sometime in March. There they will work out the parameters of fiscal negotiations. I will keep the House appraised, and the Government Ops Committee and others, of those developments as they unfold. Thank you.

Thank you. On the Directorate, Mr. Erasmus.

Thank you, Mr. Chairman. Would the Finance Minister kindly differentiate the difference between the transitional costs and incremental costs?

Thank you. Mr. Todd.

Yes. Absolutely, Mr. Chairman. Yes.

Thank you Directorate. Operations and maintenance, Mr. Erasmus.

Thank you, Mr. Chairman. Could we get an explanation of the difference between transitional costs and incremental costs?

Thank you. Mr. Todd, would you please define the difference for the things we are looking at. Mr. Todd.

Transitional costs are the costs associated with the pre-implementing plan east and west. In preparing for negotiations, doing some of the preliminary work that we are doing. The work that Mr. Issacs, for example, is doing. The work others are doing for the west. That is what transitional costs are. The costs we are bearing now, are associated with preparing the plan, et cetera. The pre-implementation for Nunavut and the western territory, the training site, et cetera, are all part and parcel of transitional costs.

Incremental costs are costs associated with, if you want, the additional costs over and above the cost that we are currently expending for one government versus two governments. We are not at the incremental cost stage now. We have not yet determined, for example, if I can use Nunavut because it is further forward. We have not determined with the parties at the table, NTI and the federal government, what is going to be the basic framework for the new government. Once the consensus of each has done that in the coming weeks, which I think is going to be addressed in Cambridge Bay, we will then be able to with our partners, et cetera. NIC put a costing attached to that, and then be able to define what the incremental costs are that put that new structural government in place. It will be exactly the same in the west, once the constitutional discussions unfold.

Let us just say, hypothetically, you come forward with some regionalized type of government. There will be incremental costs attached to that, so then that will be identified then. Incremental costs come at a later date, if you want. Transitional costs are now. Thank you.