Minister of Finance, Mr. Todd.

Mr. Speaker, what I had indicated is that we have used the Hay Plan Evaluation System for our management in this government for a number of years, I believe it is 15 to 20 years. What I was trying to indicate was how broad, if you want, the Hay Plan Evaluation System is across Canada. Whether it was used for the nursing profession or not, I am not aware of that. I would have to look into it. It certainly is now, under the job evaluations that we have done and there is, particularly for community nurses, a significant increase in their salaries, I think somewhere in the region of $13,000 to $14,000 for a community nurse, I believe, and, of course, slightly less for hospital nurses. There is some concern being raised by the nursing fraternity between the disparity between institution nurses and nurses who are at the community level. Thank you.

Oral questions. Supplementary, Mr. Erasmus.

Thank you, Mr. Speaker. The nurses had also indicated that through this new system, they do not seem to be treated as professionals any longer. Is there any merit to this and if there is, could the Minister explain what has happened here?

Thank you. Mr. Todd, two questions.

I would certainly hope that we would view the nursing fraternity, as we view all other professionals, as an important service and professional institution in our communities. I am not aware of that. I think there is some concern in respect to comparative jobs. I already offered up yesterday, or the day before, during the conversation I had with some of the local nurses, an opportunity for them to talk directly to me. I would say again today, that I am perfectly willing to do that and sit down and try to get a better understanding of what their position is and see if we can act accordingly. The position of the government is and has been, as long as I can remember, nurses are a very, very, very important component to our health care system and certainly stand in the professional area like teachers, lawyers and everybody else. Thank you.

Oral questions. Final supplementary, Mr. Erasmus.

Thank you, Mr. Speaker. Another concern that the nurses had was that people are getting burnt out, and leaving is a good way of putting it. I am not exactly sure where the problem arises, but it seems as though everybody is working extreme hours of overtime on weekends and evenings. The way they put it is, we are wasting thousands and perhaps hundreds of thousands of dollars on overtime when it should not be happening. Is the Minister aware of this?

Mr. Todd.

I am aware of it. Certainly the Minister of Health has tried to address it. There is a serious concern about retention of the nursing fraternity. Of course, there is a recognition that community nurses and large institution nurses are putting in an inordinate amount of time. Certainly, the Minister of Health and the Cabinet is working toward trying to find some solution to that. What I would say though, in somewhat defence to our position, is that this is not just a position just commonplace to the territories. If you read in the newspapers and if you do the research, there is a shortage of professionals like the nursing fraternity right across the country. Of course, we are getting hit with that as well, but there is a genuine attempt to work out an appropriate solution to retain nurses and to determine what will retain them. We know that money is one part of it, but there are a variety of other things, as Mr. Erasmus said, job environment, work hours, et cetera. Mr. Ng is not here today, but I believe he is working hard with the medical community in trying to find an appropriate solution to this difficult problem we have. Thank you.

Thank you. Question period is over. Item 7, written questions. Item 8, returns to written questions. Item 9, replies to opening address. Item 10, petitions. We will take a 15-minute break. I would also like to invite the Pages to join us in our lounge for lunch.

--Break

The House will come back to order. We are on item 11, reports of standing and special committees. Mr. Erasmus.

Thank you, Mr. Speaker. Mr. Speaker, the Standing Committee on Government Operations is pleased to present its report on the review of Bill 1, Power Corporation Act and Bill 2, An Act to Amend the Public Utilities Act.

Chapter 1 of the report establishes the terms of reference for the review and outlines what the bills are intended to accomplish. The 2nd chapter of the report describes the standing committee's course of action in reviewing the two bills. Chapter 3 deals with the environmental scan. It outlines the political forces and legal structures impacting upon the proposed legislation. This chapter identifies a number of organizations with a significant role in the proceedings and briefly describes their mandates. In chapter 4 of the report, the principles of the review and the factors that guided the standing committee in their deliberations are introduced. Chapter 5 of the report is designed to help the reader understand the differences between the present legislation and how Bills 1 and 2 would impact on the operations of the Power Corporation and the Public Utilities Board. Chapter 6 of the report outlines the core issues that the standing committee heard during its public hearings on the two bills and the solutions offered by the presenters to their concerns with the bills and the companion documents. In chapter 7 the committee makes recommendations and explains the current status of the two bills.

On October 23, 1997, the Minister responsible for the Northwest Territories Power Corporation, the Honourable Charles Dent, introduced Bill 1, Power Corporation Act. Bill 1 received first and second readings in the Legislative Assembly and was referred to the Standing Committee on Government Operations for review and public hearings. On October 23, 1997, the Minister responsible for the Northwest Territories Public Utilities Board, the Honourable John Todd, introduced Bill 2, An Act to Amend the Public Utilities Act. Bill 2 received first and second readings in the Legislative Assembly and was referred to the Standing Committee on Government Operations for review and public hearings.

The Power Corporation Act would repeal the current Northwest Territories Power Corporation Act and provide for the continuation of the Northwest Territories Power Corporation under the Canada Business Corporations Act. The bill authorizes the Minister to hold shares in the Corporation and to transfer shares to the Interim Commissioner of Nunavut, upon the agreement of the Interim Commissioner. The Government of the Northwest Territories would be authorized to make guarantees on behalf of the corporation, to make loans and contributions to the corporation and to invest in the corporation. Consequential amendments would be made to five other acts to reflect the change of status of the corporation. The NWT Power Corporation is currently incorporated under territorial legislation and operates only in the Northwest Territories. The new territory of Nunavut will be created under the Nunavut Act on April 1, 1999. The effect of the Nunavut Act is that the laws enforced in the Northwest Territories on April 1, 1999 will be duplicated for Nunavut. If no legislation is passed before the creation of Nunavut, the current NWT legislation, the NWT Power Corporation Act,will be duplicated in Nunavut. This would mean the creation of a separate power corporation for Nunavut.

In Footprints 2, the Nunavut Implementation Commission's Report to the Governments of Canada and the Northwest Territories and Nunavut Tunngavik Incorporated on the establishment of Nunavut, the NIC recommended that a single power corporation exist to serve customers in Nunavut and the new Western Territory. The Government of the Northwest Territories agreed with this proposal and introduced Bills 1 and 2 as enabling legislation. The proposed Power Corporation Act calls for the NWT Power Corporation to be continued under federal legislation (the Canada Business Corporations Act) with its shares held by the Governments of Nunavut and the Western Territory. Under the CBCA the continued corporation could operate in more than one province or territory.

Bill 2 would amend the current Public Utilities Act to allow the Public Utilities Board to establish joint divisions with a Public Utilities Board of another province or territory, where a public utility conducts business in both jurisdictions. The bill provides that a joint division has the jurisdiction, powers and duties of the board and that a decision or act of a joint division is a decision or act of the board. This amendment would allow the future governments of Nunavut and the Western Territory to set up a joint division of their respective Public Utilities Boards made up of members of both boards to regulate a utility that operates in both jurisdictions. The proposed act to amend the Public Utilities Act is largely in response to the proposed Power Corporation structure set out in the Power Corporation Act, the Standing Committee on Government Operations decided to review and report on the two bills together.

Mr. Speaker, I will now pass this onto Mr. Miltenberger. Thank you.

The Member for Thebacha, Mr. Miltenberger.

Thank you. The Member for Yellowknife South, Mr. Henry.

Thank you, Mr. Speaker. Committee Members were very concerned that as these two bills were the first division related legislation to come before a committee, the review process must be open, fair and balanced from an east/west perspective. Committee Members also realized that the comments and submissions that the committee would be receiving would reflect the interests and priorities of the stakeholders within the framework of division depending on which new territory they represented. The committee's responsibility is to look at the issues from a territorial perspective and to act in the best interests of all residents of the NWT.

In conducting its review of the proposed Power Corporation Act, the committee provided a very clear definition to stakeholders and prospective presenters of the committee's role in the public review of the two bills. Committee Members felt that negotiations between the Interim Commissioner's Office and the Government of the Northwest Territories on the Unanimous Shareholder Agreement should be conducted at a properly constituted negotiation table and not in a public forum convened by a legislative committee.

Until April 1, 1999, this committee has the responsibility to consider the needs of all residents of the present Northwest Territories. This was a paramount principle in guiding the committee's deliberations. Committee Members realized that although their primary responsibility is to review the bills referred to the committee, the companion documents could not be ignored. The proposed Power Corporation Act is inextricably linked with the USA, articles and by-laws and must be viewed in that context. The presentations to the committee reflected this and much attention was focused on how contentious issues might be resolved through changes to the companion documents. It was not possible to separate the bills from the broader context.

The proposed Power Corporation Act would repeal the existing Northwest Territories Power Corporation Act and provide for an application to be made to have the Power Corporation continued under the Canada Business Corporations Act. The Minister would be authorized to transfer shares in the Power Corporation to the Interim Commissioner of Nunavut, upon reaching an agreement with the Interim Commissioner. As a Canada Business Corporations Act corporation, the continued Power Corporation would have powers and restrictions that are different from those under the current NWT legislation. There would be additional flexibility to place corporate governance provisions in the USA, the articles and the by-laws of the Corporation.

The committee examined the impact Bill 1 and its companion documents would have on the structure and governance of the Power Corporation. Under the existing Northwest Territories Power Corporation Act (NWTPC Act), the Power Corporation is an agent of the Government of the Northwest Territories. A typical CBCA corporation is not generally an agent of its shareholders and the new Power Corporation Act would not expressly make the Power Corporation an agent of its shareholders.

The present NWTPC Act provides for the directors, chairperson and president to be appointed by the Minister Responsible for the NWT Power Corporation. Under the CBCA, the directors are elected by majority vote of the shareholders; the directors appoint the chair and the president. The by-laws or USA can alter this. The proposed USA calls for the appointment of six directors by the NWT and four directors by the future Government of Nunavut. The chairperson is to be appointed by agreement of the shareholders and the president is to be appointed by the Board of directors.

Mr. Speaker, I would ask that my colleague Mr. Krutko continue with the presentation. Thank you.

Thank you. The Member for Mackenzie Delta, Mr. Krutko.

Thank you. The Member for Iqaluit, Mr. Picco.

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.

Thank you. The Member for Baffin Central, Mr. Enuaraq.

Thank you, Mr. Speaker. I might not be as professional as my colleague, Mr. Picco in reading, but I will give it a good try. Mr. Speaker, the Unanimous Shareholder Agreement as mentioned earlier in this report of the Standing Committee on Government Operations recognizes that it is not technically within the committee's purview to provide recommendations on the proposed Unanimous Shareholder Agreement. The standing committee has always held the view, however, that the successful passage of the Power Corporation Act is contingent upon the negotiation of a mutually acceptable Unanimous Shareholder Agreement between the governments of the NWT and Nunavut.

The NWT Power Corporation's reasoning for the 50/50 split on the $43 million in equity between Nunavut and the Northwest Territories is that under NCPC ownership, the costs of assets in each community were not specifically recovered through the rates set in that community. This means that although NCPC records indicate in which community the assets were acquired, the cost was being recovered on a territorial-wide basis from all customers. In the opinion of the NWT Power Corporation, this makes it impossible to verify that the customers in a particular community, in fact, paid for the assets in that community, and the fairest way to allocate the common stock of $43 million is to divide it equally between the customers in the East and the West.

The NWT Power Corporation forecasts that 31 percent of the rate base will be located in the east and 69 percent in the west. This same rate of allocation would be applied to the retained earning forecast of $56 million as of March 31, 1998.

Combining the above equity factors, the NWT Power Corporation proposes that 40 percent ($39.1 million) of the total equity be allocated to the east and that 60 percent ($60 million) be allocated to the west. The Western Coalition does not agree with the share split as proposed and believes the split to be unfair to the residents of the new Western Territory. The coalition suggests two alternate approaches to the $43 million in equity. First, because the $43 million was a gift from the federal government to the residents of the NWT, one can argue that this gift should be distributed on a per capita basis. Based on the 1991 census, approximately 63 percent of NWT residents lived in the west and 37 percent in Nunavut. Secondly, the Western Coalition argues that the $43 million in equity has been earning a return on equity since 1988. Since the return on the equity has been paid by customers through their rates and since contributions to this return on equity have been generally made according to the rate base, the Coalition believes that the formula for the share split should be based on the 1997/1998 rate base of 69 percent for the west and 39 percent for Nunavut.

The Western Coalition calculates that if the original $43 million in equity is distributed on a per capita basis and the remaining equity is split according to the rate base of each territory, the Western Territory would hold 66 percent and Nunavut would hold 34 percent of the shares in the new Power Corporation. The Western Coalition asserts that the formula for the share split must be determined using past performance and cannot be based on future possible mitigating factors, such as the closing of Giant Mine or projected population growth in Nunavut. The MLA for Yellowknife Centre, Mr. Jake Ootes, also supports a share split that allocates a greater proportion to the Western Territory. The town of Hay River believes that this is an issue that can be worked out within the USA negotiations by the two parties.

The Office of the Interim Commissioner does not agree that the proposed share split is fair to the residents of Nunavut. The share split is similar to the proposed membership structure of the Board of directors and that does not guarantee the people of Nunavut an equal say in the affairs of the proposed continued Power Corporation. The Interim Commissioner's Office feels that there is insufficient data to recommend the adoption or approval of the proposed share split model or any other model for that matter.

Nunavut Tunngavik Incorporated also has concerns with the proposed 60/40 share split because the model does not take into account that three-quarters of the accumulated debt is for projects in the western NWT. NTI also notes that the model does not take into account the fact that future growth of the NWT Power Corporation will be steady in Nunavut and will follow measurable population increases. In the Western Territory, NTI suggests future growth is tied more directly to industrial growth. Due to the uncertainty of industrial growth projections, NTI maintains that the assumption that the Western Territory will increase at the same rate as in Nunavut cannot be relied on. NTI also argues that the future expiration of franchise power distribution agreements in the Western Territory could lead to reduced revenues should any of the franchises decide to generate their own power. NTI can see the case for an unequal profit split but can see no case for anything less than a 50/50 voting share split.

The joint presentation by the Baffin/Iqaluit Chambers of Commerce call for the share split to be based on revenue and not assets. This would work out to 46 percent of the shares for Nunavut and 54 percent for the Western Territory. However, the Chamber is convinced that a 60/40 share split is doomed to failure because minority shareholder rights cannot be adequately protected. The Chambers believe that there must be an element of trust in the sharing of the Power Corporation by the two territories and that a 50/50 share split would show this trust. The Chamber stated that the Power Corporation must be equally owned and operated. Anything less than equal ownership and control means that there should be two Power Corporations. The MLA for the High Arctic, Mr. Levi Barnabas stated that the proposed 60/40 share split would be unfair to the residents of Nunavut and that the distribution should be 50/50.

Mr. Speaker, I will now ask Mr. O'Brien, MLA for Kivallivik, to continue. Thank you.