Thank you, Mr. Chairman. We appreciated getting the material from the Coles Group and the guidelines the Minister tabled in the House. We had an opportunity as Ordinary Members to review this and then spend a bit of time doing some research and to work our way through possible areas that may be of concern. We appreciate the Minister's concern that he needs a bit of time to digest what may be recommended here and then be able to report back to us. We do have a number of areas that are of concern and suggestions that perhaps could be put forward. I was able to put together some notes, Mr. Chairman, that I would like to work my way through with your and the Members' indulgence that outlines some of the areas that were discussed at the Ordinary Members' Caucus. They are my notes, rather than a collective representation. Other Members will no doubt speak along the same lines and may have other suggestions. If you can bear with me, Mr. Chairman, I will work my way through the notes.

Many Ordinary Members have supported, in general terms, the decision of the government to use the Public/Private Partnerships to develop capital infrastructures in the Northwest Territories. We all know that there is a serious need for infrastructure development. Capital needs' assessment identified a shortfall for capital infrastructure projects in the order of $200 million immediately and more than $800 million over the next 20 years. These shortfalls are dominated by needs in the areas of housing, transportation, municipal services, education, health and corrections. We also know these capital projects cannot all be funded in the current fiscal climate.

The Public/Private Partnerships initiative may be able to address some of these deficiencies and allow some of the projects to go ahead. Mr. Chairman, the announcement of the Public/Private Partnerships initiative has focused attention on a new way of doing business with the Government of the Northwest Territories. This is not a new concept. The Minister has also stated that there are other examples for this. Partnerships have occurred before, also in the Northwest Territories, and are taking place all over the world in many forms.

While I generally support the Public/Private Partnerships concept, there are serious concerns that must be addressed before the government proceeds any further. This government can learn from the experience of other jurisdictions. The government must also be able to learn from its past mistakes and that means taking immediate and concrete steps to improve its contracting policies before these policies get muddied further in the context of a new infrastructure program.

Most important, Mr. Chairman, the government must review and revise the current request for proposal policies. Specifications and evaluation criteria must be clear and objective. All P3 bidders, but particularly, the unsuccessful firms should be debriefed on the results of each competition. This must be provided in a consistent and objective way. Bidders should be provided a report card after each competition that rates their submission and gives clear feedback on each element of their bid. Mr. Chairman, I would like to outline briefly some of the fundamental questions that this government must address in relation to the P3 initiative so the public can have confidence that P3 will be administered fairly and openly. This government well knows that transparency is the overriding concern of many Members and members of the public in relation to this issue. The government is well aware of its problems in relation to the public perception of government contracting processes. In fact if the government does not address these concerns the P3 initiative may not see the light of day because the construction industry has also said that the process must be transparent if its members are to buy in. This concern has been recognized in other jurisdictions and there is a host of measures this government can consider to ensure there is absolutely no opportunity for a perception of bias to arise. For example, many jurisdictions have established an advisory board, committee or panel that draws experience from the public and private sectors to design the scheme for the implementation of P3 initiatives. The board is generally composed of members from business, labour, government and in some cases, the academic world. These boards provide advice to the government to monitor and assess progress in implementing P3, act as facilitators or brokers between the public and private sectors and fulfil a due diligence function by evaluating P3 decisions and processes.

Mr. Chairman, as the Standing Committee on Government Operations noted in its report on the review of the main estimates, any proposed project will have to service the basic needs of a community. Before any projects are reviewed, they must be brought to the Ordinary Members for review and consultation. There must be some structured mechanism to ensure that there is regular input by business and labour throughout the P3 initiative. This is crucial to achieving transparency. The suggestion in the government guidelines that the P3 process be run by government project teams and a senior management committee is simply not good enough. It would certainly make me wonder, and I suggest it would make members of the public, business and industry wonder, if the government objected to the direct involvement of affected groups. As well other jurisdictions have put in place mechanisms for the independent review of the contracting process where complaints arise. In Australia for example, it is usual to have an independent accounting firm conduct a provatae audit when questions arise as to the fairness of the process. In Ontario, during the selection of Highway 407 Proposal an independent process consultant was retained to confirm that the process was fair. The Metropolitan Council of Toronto has taken on this issue by adopting the principles that there be complete disclosure of all information that relates to private sector participants and their interest in the venture.

The guidelines proposed by this government state that methods will be devised to discourage the lobbying of elected officials and government staff. New Brunswick has dealt with this question quite simply. Any attempts to lobby result in disqualification. Mr. Chairman, I realize that the projects in the Northwest Territories may not be as large as of some of the projects that have been undertaken in other jurisdictions. The need for clear review mechanisms is no different. We do not want to set up extra layers of bureaucracy, but we do need a simple straightforward and effective structure that ensures transparency and accountability.

Mr. Chairman, there are, of course, other concerns in relation to P3 and I would like to comment on a few of them briefly. There must be care taken in designing the scope of P3 projects as the initiative develops. We have focused on the use of P3 for infrastructure development, but P3 is also used to deliver services traditionally provided by government. As the scope broadens it may become more difficult to include an appropriate accountability mechanism in the P3 contract. While public officials are answerable to the public, P3 private sector partners are not. We must ensure that the public sector maintains appropriate responsibility and control. Mr. Chairman, there have also been issues in other provinces and other countries about the ultimate financial risk to government in relation to P3 projects. For example, research conducted on P3 projects in Japan found that although projects were intended to be profit making enterprises, profit projections were not objective. Many projects were money losing ventures and private sector managers often expected that the government would eventually bail them out. In many cases, banks only provided financing because the government was involved and was expected to bare ultimate responsibility.

The government will be aware that the Nova Scotia government recently experienced difficulty with their P3 school constructions contracts. There were problems with the lease negotiations and the financing and eventually the province loaned the private partners $7 million in interest free loans. The GNWT guidelines proposed that a cost benefit analysis and risk assessment will be conducted for each proposed initiative. Mr. Chairman, this is a crucial step in the process and careful attention must be made to the determination and allocation of risk. The methods used must be clear, open and consistently applied. Mr. Chairman, it is also imperative that we address, up front, the fact that P3 has long been ....

Thank you, Mr. Chairman. Mr. Chairman, I am just about through. If I may seek the indulgence of the Members for unanimous consent to conclude.

Thank you, Mr. Chairman. The GNWT guidelines proposed that a cost benefit analysis and risk assessment will be conducted for each proposed initiative. This is a crucial step in the process and careful attention must be made to the determination and allocation of risk. The methods used must be clear, open and consistently applied. It is also imperative that we address, up front, the fact that P3 have long-term operating budget implications. Operating and capital budget implications must be considered over the full life of a project. The government must ensure that any economic benefits of a P3 are reflected in its value for money over the life time of the project not in the immediate impact on expenditures.

There are still some more issues that we can expect that will arise that have not yet been adequately addressed. The GNWT guidelines do not deal with the issue of environmental concerns and the need to ensure that these are not minimized by private sector partners or the issue of long-term environmental liabilities. As well the transaction cost of bidding, negotiating and contract may be high for more complex proposals and the government may need to develop a policy on reimbursement. For example the contractor selected to construct a North Cumberland Strait bridge, a very complex project, spent more than $30 million in developing its proposal and negotiating the contract. The federal government reimbursed $5 million. The other two finalists also each spent an estimated $10 to $13 million on their unsuccessful bids.

We must ensure that any P3 project results in user charges and that the charges are not excessive. The Metropolitan Council of Toronto has adopted principles relating to this issue: that the return on investment to the private sector participant is in direct relation to the degree of the participation and risk that the public sector expects the private sector to take; that the return is fair and publicly defendable and that the benefits that would accrue either directly or indirectly to the participating private sector members be evaluated on an individual and collective basis.

Finally, Mr. Chairman, we know from the experience of other jurisdictions that it is crucial to the success of the P3 initiative that the government proceeds only with projects that are high quality. Projects should go to completion only if they have clear objectives carefully specified by requirements and are backed by a solid business plan. If lower quality projects, projects with vague and uncertain criteria or projects with inadequate risk analyses are pursued, the private sector will quickly lose faith in the initiative. The government will then be forced to pay a premium for any projects that do go ahead. Mr. Chairman, there are risks with the P3 initiative and the government has a lot of work yet ahead of it. I am confident though that if the initiative is implemented with careful planning and in the context of comprehensive detailed strategy, it can be very successful and bring great benefits to all people in the Northwest Territories. I look forward to meaningful discussions and resolution of these issues here, today, in committee of the whole. Thank you.

--Applause

Thank you, Mr. Chairman. Mr. Chairman, I am assuming once I finish my comments by the demonstrated interest of the others here that we should be able to move on and take care of other business. Mr. Chairman, my comments are going to be somewhat different from those made by my colleagues, who I agree made some very good points. I think one situation or some variables that we have to keep in mind that make our situation unique is the very limited time constraint that we have and are facing. We have as an Assembly 13 months left in our term, and in less than a year our eastern colleagues will be out on the hustings for election. We have to respond fairly quickly, but in a careful and measured way to this particular initiative which I support and have supported, from its conception many months ago down the halls of the Assembly. The first year of this particular initiative, Mr. Chairman, to me is focused initially on two main projects and that is Inuvik and Baffin hospitals, which is an outstanding commitment. We may want to lay the ground work for a year or two and maybe some supplementary projects in year one. Very clearly as well, in year two will be the responsibility of the two new Legislatures. It is critical that we do have appropriate checks and balances in place and we should learn from what other jurisdictions have done and gone through in order to make this a sustainable and affordable initiative. We have to keep stressing to people that this is not free money. This is not

$200 million that just dropped from the trees.

The critical issue to me, Mr. Chairman, and I will conclude my opening remarks, is that we are approaching division with a very limited timeframe and opportunity as an Assembly. This is our last budget together and we have to make the necessary steps to move this particular initiative along. If we delay any length of time, I do not think that we would be able to meet under the existing funding arrangements we have within the budgetary process, our commitments initially to Inuvik and Baffin. We have to try to pull together very quickly with the measured necessary checks and balances. We do not have much time. This is our last opportunity, in my opinion, to have any kind of projects or proposals of this significance that we are going to be able to act on. Thank you, Mr. Chairman.

Good afternoon, Mr. Chairman. I support the initiative of the P3. However, there are a number of things to ensure. As we have heard earlier, the transparency of the process, where we cannot be considered by other parties that we are influencing the process by political will instead of the need established. As well, my concern will be in the area of ensuring that future governments are not put into a situation where we are paying long-term and we freeze everything after a couple years of building new infrastructure and then we are stuck back to our lower levels and having to pay long-term for existing leases. We do not want to be put back into a situation of having to make reductions to balance the books. I think that, as was referred to earlier, the process established needs to be a clear one. There needs to be a framework put in place where one can measure the results and the way things get done, a framework that does not limit what projects go into it but a basis for where one can measure the results of the projects and the success or failure of those projects. Just to be brief, I would say I support the P3 and the sooner we get on with it the more we can get done for the residents of the territories. Thank you.