Thank you, Mr. Speaker. Mr. Speaker, I would like to take this opportunity at this time to thank the Government Operations Committee for coming to Iqaluit on the Power Corporation issues. Under Core Issues, the committee heard many common issues and concerns related to the bills and their companion documents were expressed by persons appearing before the Standing Committee on Government Operations, in a context appropriate to the respective interests of the two future territories.
Under Bill 1 The Power Corporation Act there was a section on the Corporate Governance.
The proposed Power Corporation Act calls for the incorporation of the NWT Power Corporation under federal legislation, specifically the Canada Business Corporations Act. This would effectively remove the NWT Power Corporation from direct political control by the Minister responsible for the NWT Power Corporation. While presenters could see some merit to the proposal to incorporate the NWT Power Corporation as a CBCA corporation, there was concern that the checks and balances contained in the USA were not sufficient to protect the interests of the peoples of the NWT and Nunavut.
The Western Coalition was concerned about the lack of legislative control over the operations of the Power Corporation under the proposed Power Corporation Act and companion documents. The coalition felt it was important to insert into the USA corporate governance provisions to protect the public interest. These provisions would include, but are not limited to, the creation and operating of an Audit Committee, a Human Resources Committee and a Corporate Governance Committee made up of Members of the Bbard of directors. The Western Coalition also proposes that certain provisions of the Financial Administration Act and the Financial Administration Manual and other legislation be imported to the USA to provide for greater protection of the public interest.
The town of Fort Smith and Stand Alone Energy Systems are both concerned that the two governments would lose flexibility and control in favour of a financial advantage to the Power Corporation. These presenters argue that the rationalization for the proposed model for the Power Corporation requires more in-depth analysis. Nunavut Tunngavik Incorporated notes that the incorporation of the Power Corporation may appear attractive because it suggests an efficient and business-like relationship between the Power Corporation and the governments which will be its shareholders. However, the structure would mean that the governments would lose some of the existing controls over the workings of the Power Corporation, without gaining much in return. Without independent financial analysis, NTI believes that this is the wrong time to pursue this option. NTI has proposed an 18-month interim agreement. This interim agreement would approximate the current status quo of the Power Corporation as closely as possible. It would identify one trustee to hold the undivided shares in the Corporation in escrow, with terms that prevent any major business changes in the short term.
NTI also suggests that an independent consultant analyze the technical and financial implications of the proposal. NTI's major concern is that the new structure would impact on the subsidy programs and would result in a price increase for the residents of Nunavut. The independent consultant would examine the direct subsidy presently provided for by Power Corporation dividends and the effects of the proposal on other programs that will be directly or indirectly subsidized by the future Government of Nunavut. NTI believes that the negotiation of any deal on the Power Corporation must be on a government-to-government basis and that a moratorium on the deal would allow the future Government of Nunavut time to get on its feet. NTI envisions that minor changes to existing legislation would accomplish their proposal.
The Interim Commissioner's Office believes that continuance of the Power Corporation under the Canada Business Corporations Act is a fundamental change in the way the Power Corporation conducts its business. The ICO believes that the GNWT proposal is inconsistent with the recommendations contained in the Nunavut Implementation Commission's reports, Footprints 1 and Footprints 2. The Interim Commissioner's Office is of the opinion that NIC's recantation for joint political control implied equal control of the Power Corporation by the two parties. The ICO had understood that the Power Corporation would remain under direct political control of the two governments. The ICO agreed with the position of NTI, that an 18-month interim agreement maintaining the status quo of the Power Corporation should be entered into until such time as the two governments are able to negotiate an agreement on equal footing. The ICO envisions negotiating the inter-jurisdictional agreement in conjunction with a termination agreement. Should the two parties be unable to come to an agreement on the future of the Power Corporation, the termination agreement would come into force and two Power Corporations would come into existence.
Providing that agreement can be reached on the underlying model and the continuation of the Power Corporation under the CBCA, the Standing Committee on Government Operations believes that the corporate governance issues can be dealt with to the satisfaction of all parties by inserting appropriate clauses in the Unanimous Shareholder Agreement and the by-laws and the Articles of Continuance.
Under the Review Period, several presenters suggested that a requirement for a review period should be attached to any agreement between the parties. The majority of presenters preferred incorporating provisions for a review period in the Unanimous Shareholder Agreement. However, the committee Members felt that for greater certainty, the review period clause should be included in the bill rather than the companion documents.
In his presentation on behalf of his constituents, Mr. Miltenberger suggested that a clause establishing an initial three-year review period be incorporated in Bill 1, the Power Corporation Act. A review period would require the future governments to consider whether the structure of the Power Corporation continues to meet the needs of the residents of each territory. The governments would also have the opportunity to opt out of the agreement. In Mr. Miltenberger's view, this would provide stability to the Power Corporation for the short term, while ensuring that each government has the flexibility to ensure that the arrangement continues to be the most effective structure for the delivery of power in each jurisdiction.
Presently, the earnings of the corporation are not subject to corporate taxation, because the Government of the Northwest Territories is the sole shareholder of the NWT Power Corporation. Several presenters were concerned that with continuance of the Power Corporation as a CBCA corporation that this tax-exempt status would cease. Although the Minister responsible for the NWT Power Corporation and Power Corporation officials responded that they had been verbally informed by Revenue Canada that the tax-exempt status would continue, this was an area of concern.
After the completion of the public hearings, the Minister, Mr. Dent, supplied to the committee a copy of an interim tax ruling by Revenue Canada. The ruling confirms that the Power Corporation would likely continue its tax-exempt status for so long as the governments of the NWT and Nunavut remain the sole shareholders.
Several presenters to the Standing Committee were concerned that the model for the future Power Corporation, as presented in Bill 1, the Power Corporation Act and its companion documents, might not be the best option. The committee shares that concern and had expressed this to the Minister during the early stages of the committee's review of the bill, while generally satisfied with the Minister's explanation that continuation of the Power Corporation as a CBCA corporation was the most viable option; in the committee's view, other options should have been presented to the stakeholders early in the process and the government's reasoning on the options fully explained.
At this time Mr. Speaker, I would like to give an opportunity for my colleague, Mr. Enuaraq, who is the Member for Baffin Central, to continue with the report on page 11 under the subsection, Unanimous Shareholder Agreement. Thank you, Mr. Speaker.