This is page numbers 273 - 302 of the Hansard for the 13th Assembly, 7th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was chairman.

Item 20: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 20: Consideration In Committee Of The Whole Of Bills And Other Matters

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The Chair

The Chair Jane Groenewegen

Agreed, thank you. Sergeant-at-Arms, I would ask you to please bring in the witnesses. Thank you, Mr. Dent, for the record, would you please introduce your witnesses.

Item 20: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 20: Consideration In Committee Of The Whole Of Bills And Other Matters

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Charles Dent

Charles Dent Yellowknife Frame Lake

Thank you, Madam Chairperson. On my right is the deputy minister of the department, Margaret Melhorn, on my right, the director of Finance and Administration, Mr. Bill Setchell.

Item 20: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 20: Consideration In Committee Of The Whole Of Bills And Other Matters

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Dent. Mr. Ootes.

Committee Motion 1-13(7): Identification And Evaluations Of Alternative Sources Of Revenue
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Jake Ootes

Jake Ootes Yellowknife Centre

Thank you, Madam Chairperson. During the report on the Department of Finance, I made reference to committee recommendations and at this time, for the record, I would like to move a motion. I move that this committee recommends that timely efforts be made to identify and evaluate alternative sources of revenue.

Committee Motion 1-13(7): Identification And Evaluations Of Alternative Sources Of Revenue
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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Ootes. The motion is in order. To the motion. Question has been called. All those in favour? All those opposed? The motion is carried. General comments on the Main Estimates of the Department of Finance? Mr. Krutko.

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David Krutko

David Krutko Mackenzie Delta

Thank you, Madam Chairperson. I believe that we do have to make an effort to look at other jurisdictions in Canada and also see what other alternatives we have for generating revenues. I believe the only option we have in the north in regard to the funding sources we do get is limited to the taxes we do collect, but also that the revenues we receive from Ottawa are not sufficient at this time. I feel it is essential that we consider looking at other alternatives. I believe the previous Minister of Finance was looking at the possibility of revenues from the diamond industry and also looking at the whole area of generating revenues from the secondary industries that come from that industry. I think it is critical that we seriously make the attempt to find new sources of revenues. I think for ourselves we have to be open-minded and look where other jurisdictions across Canada and the other provinces have had to try and find unique ways of generating revenues. I would like to ask the Minister exactly what has Mr. Martin done to consider those other alternatives in other jurisdictions in Canada and, has he met with other provinces or Ministers of Finance from different jurisdictions to see exactly what other options are out there and what they are?

Committee Motion 1-13(7): Identification And Evaluations Of Alternative Sources Of Revenue
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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Krutko. Mr. Dent.

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Charles Dent

Charles Dent Yellowknife Frame Lake

Thank you, Madam Chairperson. I have not as yet had the occasion to meet with Ministers of Finance in other jurisdictions since my appointment to this position. However, I know that our officials have maintained good contacts and have met with officials from other jurisdictions over the years. There is an ongoing review by the department and they have brought initial items for consideration to me in terms of different ways that we might raise revenues. As I pointed out in the budget speech, the one that holds the most potential for the most dollars in the shortest time is tied to our natural resources. Thank you, Madam Chairperson.

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Dent. Mr. Krutko.

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David Krutko

David Krutko Mackenzie Delta

Thank you, Madam Chairperson. One of the concerns I have is in regard to this government interfering or benefiting certain aspects of the economy, either it is the diamond industry or developing infrastructure on behalf of developers and also using public funds to give one group over another an upper hand when it comes to developing their industry. I am talking about the different diamond sectors that have come forth. There are a lot of public funds being spent in the different areas, especially for developing those different industries up here.

We also have to realize we are here to deliver programs and services. Yes, it is great to put money into stimulating the economy, but we also have to realize that it does not benefit all residents of the Northwest Territories and in some aspects it gives the upper hand to one business entrepreneur over another. I think we have to ensure that we do not find ourselves in a conflict situation where we are supporting one portion of the sector, but not supporting all the sectors involved in those different industries. I would like to ask the Minister, what is the department doing to ensure that there are guidelines in place that we do not find ourselves in a conflict situation by catering to one sector of the economy over another?

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Krutko. Mr. Dent.

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Charles Dent

Charles Dent Yellowknife Frame Lake

Thank you, Madam Chairperson. This government always finds itself in a situation where it has to try to ensure that there is a balance in how it provides services to its citizens. There is a respect for the regional needs and I believe those regional needs are reflected in its overall budget.

This government has seen an opportunity in this field to try to develop a market that would not otherwise exist in the north. Obviously, whether it is in logging, mining, or any kind of primary activity in the territories, the more value- added jobs we can bring to the territories, the more our whole economy benefits from the primary activity.

This government is supportive of seeing sawmills in areas where there are trees. We do not want to see the trees shipped south to sawmills. We saw an opportunity with diamonds to pursue the secondary diamond industry and we have done that. I believe there is a balance whereby programs and services on the economic side are not diminished in other regions. Madam Chairperson, the Member is right, we have to make sure we are aware of those regional concerns and balance our responses to economic opportunities.

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Dent. Mr. Krutko.

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David Krutko

David Krutko Mackenzie Delta

Thank you, Madam Chairperson. I believe that this government is taking a risk. Any business is a risky business to be involved in. I think any business that this government gets involved in, at the end of the day, we do not want to find ourselves in regard to investing a whole bunch of money in any company and finding that we are losing money because of a bad investment. I would like to expand on that point that we also have to realize that we do not have the so called economic programs and services we had in the past. We do not have a federal economic program that we can depend on for entrepreneurs in the smaller communities and also the economic development grants we had in the past under federal programs. Because of that, I do not think we can concentrate all our efforts or all the resources in one sector. You have to look at the Western Territory as a group of communities and also, an area that covers large jurisdictions. We cannot just concentrate the resources and the opportunities in one particular riding or geographical area. We have to look at the Western Territory as a whole.

The concern I have is because we do not have those federal programs we depended on in the past in regard to economic development programs, EDA and other programs we had from the federal government and without those programs, I think we are going to find ourselves in a really bad economic situation. We will have to consider that we have to treat everybody fairly regardless of what jurisdiction they reside in and economic sector we are talking about: oil, gas, minerals, forestry, or tourism.

From what I have seen so far, especially looking at the budget, it seems like we are still putting too much emphasis in the diamond industry, it is a multi-billion dollar industry in the world, yet we are just basically a minute spectrum in regard to that industry. I think they have survived for hundreds of years and I do not think they need the assistance of this government to get them involved in it. I believe that they want bad enough to get involved in that industry, there are hundreds of thousands of companies and corporations that specialize in diamonds, are willing to set themselves up without any money from this government. We have to keep that in mind. Thank you.

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Krutko. Mr. Dent.

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Charles Dent

Charles Dent Yellowknife Frame Lake

Thank you, Madam Chairperson. I have no doubt that the companies mining diamonds will do so if it is economically viable. None of them have ever come to this government and asked for assistance; however, there will not be a secondary diamond industry in the Northwest Territories unless this government is prepared to support it. No company is prepared to come here and set up without some kind of assistance. Every single company so far has looked for some assistance, particularly on the training side.

It is also important to point out that in terms of economic dollars or if you will, dollars that are spent on economic development in the Northwest Territories, a very small part of our overall budget goes to the secondary diamond industry. We are talking a few hundred thousand dollars a year in comparison to the millions of dollars that are spent territories-wide in economic development. It is not something that has cost this government a great deal of money. The biggest expenditure to date has been commitments on the training side which are typically for training on-the-job subsidies. What that means is that the employers are paying for a good part of the training, the Department of Education, Culture, and Employment subsidizes a portion of the training. Thank you, Madam Chairperson.

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Dent. Mr. Erasmus.

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Roy Erasmus Yellowknife North

Thank you, Madam Chairperson. For the last little while, we have been hearing that we are going to be needing a different source of funds because the revenues we are going to receive from the federal government will not be sufficient. One of the ways for doing that has been identified as getting more dollars through the extraction of our resources in the Northwest Territories, primarily non-renewable resources. Madam Chairperson, this has been projected as being a partnership with the aboriginal governments. I do not know if this has been meant as a way to put pressure on the aboriginal governments so they will have to or people will put pressure on them to come to some type of an agreement or if this was done inadvertently. However, it seems to me that there is some pressure being put on the aboriginal governments to come to an agreement on some type of a Northern Accord, as it was called before when negotiations were underway to bring control of northern resources to the north.

Madam Chairperson, I noticed that in the Minister's opening comments, he had indicated that they matched, that the department of financing agreement provides a secure funding source for the Northwest Territories. I know there were some problems in the Formula Financing Agreement in the past where we lost money when certain things happen. Could the Minister indicate what those problems were and have they been eliminated in this new Formula Financing Agreement?

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Erasmus. Mr. Dent.

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Charles Dent

Charles Dent Yellowknife Frame Lake

Thank you, Madam Chairperson. Madam Chairperson, in the previous Formula Financing Agreement, one of the biggest problems was what was known as the perversity factor. In this Formula Financing Agreement

it has, to a large extent, been eliminated. We now slightly benefit from finding our own new sources of revenue, where in the past we were penalized for it. If the Member is referring to the significant budget reductions that we have received in the past, the federal Minister of Finance announced in parliament that he was going to freeze our contributions for one year followed by a 5 percent reduction. His timing was such that at the time, there was a new Formula Financing Agreement being negotiated and the federal government imposed that on the new agreement. The freeze was the first year of the new Formula Financing Agreement and the reduction was in the second year of the Formula Financing Agreement. Those two reductions were accomplished because the five year agreement in place previously was concluded. For the next five years the funding is secure.

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Dent. Mr. Erasmus.

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Roy Erasmus Yellowknife North

Madam Chairperson, the funding is secure, yes we will be getting money every year. I guess you could say that it is secure. If I understand correctly, our funding is going down. Is that correct? If it is, why?

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Erasmus. Mr. Dent.

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Charles Dent

Charles Dent Yellowknife Frame Lake

Thank you, Madam Chairperson. Madam Chairperson, we expect that the funding will likely remain almost exactly the same for the next few years as a result of our population growing at a lesser rate than that of Canada.

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The Chair

The Chair Jane Groenewegen

Thank you, Mr. Dent. Mr. Erasmus.