Thank you. I just want to make the point that we are dealing with the 97-98 report, but the '99 report has been tabled and there are still problems with the Development Corporation. So I agree, maybe we are turning things around in certain areas, but clearly there has been at least a ten-year trend here. I think the governments have come and gone, but we seem to not have been able to get this under control. I think that is disturbing.

So I am glad the Minister takes the recommendation seriously, but I think if we back up and start right at the mandate, he said he has a committee to address the roles of the various lending agencies of this government. I think that is important. I think at the root of the problem with the Development Corporation is we cannot decide if we want to have a social or economic mandate.

What business is the Development Corporation in? Is this social assistance? Is this something that Education, Culture and Employment should be in charge of? Or is this economic creation and economic development? One of the criteria when we get involved in investments and subsidiaries with the Development Corporation is that we do not invest in anything that we do not believe within three years can be self-sustaining. The idea is that these will be sold. Well, I mean if we ask the Minister how many of the businesses it has created have been self-sustaining after three years, I am willing to bet it is none or very close to none. So I think we have to set realistic goals.

I think we have to re-look at the mandate and decide if it is a social agency or if it is the business of economic development because clearly it is not, in my opinion, achieving. It is achieving job creation, but in some instances, it could be argued that these are make-work projects, that they are not economically viable. So again in 1999, we do see considerable problems with the Development Corporation still, so I hope we are working to get a handle on this. Thank you.

Thank you, Mr. Chairman. There were a few areas that I wanted to make some comment on and then ask the Minister some questions for clarification. One of the areas that the Auditor General pointed out that he was concerned about was in multiple dipping. The Minister just now talked about a committee that is reviewing the activities of the Development Corporation, the Business Credit Corporation and the other agencies within the Department of Resources, Wildlife and Economic Development that hand out money.

I am hoping that what we will see is some rationalization of the program so that we do not see situations where one body is providing equity funding which is then used to get loan funding for another part of the proposed operation.

I think that we need to be clear about how much of an investment this government is going to make in each proposed new program or new company or new operation. It gets to be very unclear when there can be different pots of money that can be accessed for the same company or the same start-up. I am hoping that one of the ideals behind this proposed rationalization is the issue of multiple dipping.

The other area I wanted to talk about is one that Mr. Bell just got into and maybe ask the Minister in the transcripts from the committee to have a look at page 7 from the Wednesday, September 28th session. If he has a copy of our report, you will find that the transcripts are in there.

In the response, the chair of the board which administers the operations of the Development Corporation says that she believes that their mandate really means that they are taking social service directed money and using it to distribute in a business plan. I think that is cause for concern, for me at least, because I wonder if this is income support money. If this really is income support money, should the administration not involve Education, Culture and Employment so that we are sure we are getting the training aspect that is required to come to bear on this expenditure as well?

In terms of openness and transparency, public reporting, the Minister has said that he has some concerns about monies that are basically coming from a government run bank being disclosed. Part of the problem we have is that among the public right now, there is a lack of confidence. I have had a number of people come up to me and say I understand this company got money from this pot and this pot and this pot and there is no way now to confirm or deny that because there is no public reporting.

These are public funds. I think people have a right to expect that if this government does provide a grant to a company, then that grant will be reported on publicly. If this government provides a loan to people, it will be reported on publicly. I think one thing to remember is that the Aurora funds, both Aurora funds, the recipient of loan monies from those funds have been made public. Again, this was a program of loans, not grants, which were administered by this government. So the amounts and the names of the loans and the names of the companies receiving the loans have been made public by this government over the past couple of years.

I would say that we should not segregate our programs. If we have one program where we are comfortable insisting that people who take advantage of the funding know that their name and the amount that they borrow, that they have to pay back will be made public, then I think we should expect that will be required in all situations.

The bottom line is these are public monies and yes, there is a different standard for getting public money into the economy. One of those standards is there has to be public accountability and transparency. People have to be able to be comfortable that government will stand behind the grant or the loan and say this was given for the right reasons, the assessments were done properly and we are prepared to say that this was the right way to go. If you do not come out and tell people where the monies have gone though, there will always be some people who say that there was some preference that was given in the awards. So I think it is absolutely essential that we move, as most jurisdictions in Canada have, to public reporting of funds that are given out in business development.

The Minister also just recently talked about a revised Business Incentive Policy. So one other area that I would ask him to address is, he has talked a number of times now about wanting to revise the Business Incentive Policy, but I have not heard what the philosophical reason for that is. The Business Incentive Policy was developed solely to provide an incentive for business to develop. It was felt by the government of the day that if northern ownership was enhanced that monies would be kept in the North, and that was a sufficient reason to come up with this policy. It had nothing to do, it has never had anything to do with labour. It has to do with the fostering of the ownership of businesses by northern people. Is the philosophy then going to change from that?

If we are going to now change it from what the Minister said, I understand it is now headed towards a plan that would foster employment rather than perhaps northern ownership. Mr. Chairman, just some general comments and some questions in those four areas that I would hope that the Minister would address. Those were:

• • Multiple dipping;
• • Whether or not the Development Corp is in fact a social agency and should be moved within the social envelope;
• • The issue of openness and transparency, in particular since in one area of lending, we do now and have for a number of years publicly reported on loan recipients; and
• • What is the revised philosophy underpinning the proposed Business Incentive Policy that the Minister plans to bring forward?

Thank you, Mr. Chairman.

Mr. Chairman, I will reply briefly to these. I am comfortable doing that. If we are going to get into more detailed questioning, or a lot of detailed questioning, then I would want to ask the witness to come in. In the meantime, I will answer these four questions.

Mr. Chairman, if I can just answer the four issues that Mr. Dent raised and if there are further questions, I would be more comfortable if I had a witness with me. In terms of the role of the Development Corporation, the Northwest Territories Development Corporation basically has two roles.

One of its roles is to operate what we call subsidiaries in communities where a private venture would not make money, but yet it is possible to operate a venture, a business, with a limited loss each year. The reason for doing that is to create employment in communities where employment would not exist. We do have a number of those that the Development Corporation has been operating for years.

With those subsidiaries, there is no short-term plan to have those necessarily turn into viable businesses. In many cases it is worthwhile and we still do use the figure of $10,000 per job. It is worthwhile subsidizing those subsidiaries in order to generate the employment that is more cost effective for the government than it would be if we were simply to provide social assistance or other forms of support. That is one role of the Development Corporation.

A second role is to provide assistance to ventures, which are running into short-term difficulties. It is normally done through the purchase of preferred shares. In those cases, the Development Corporation enters into those businesses with the intention of having their preferred shares bought out within a reasonable period of time. That is to help northern businesses that are in temporary difficulty but who can be viable as operating entities. Very generally, those are the two roles of the Northwest Territories Development Corporation.

In response to the issue raised with regard to the review that is being undertaken of the Business Credit Corporation, Northwest Territories Development Corporation, and Community Futures, as well as our business development funds, Mr. Dent is correct. The intention there is not just to review the delivery of the programs by each of those entities but rather to rationalize the whole mix of services that we provide through these various programs. The underlying question on that is, is there a more effective way of providing loans, grants and contributions to the various clients who access those services?

The third question related to accountability and the need to be more open. As I said, that one I take under advisement. The way the Business Credit Corporation Act is written, if we were going to change this and be more open in terms of divulging names and amounts and so on, then we would have to have a change to the Act to enable us to do it. Otherwise, we would be relying on a clause that is not meant for that broad purpose. I want to take that under advisement.

I would want to talk to the Chamber of Commerce and to others who represent the business community to determine whether or not they would be in agreement with us moving more in that direction. In the past, we have received mixed reviews from them. A lot of people are afraid that this is just the thin edge of the wedge here. Pretty soon they are going to have all of their affairs spread out. So there are various opinions. I am not saying that is my opinion, but there are various views on it and I want to check that out before making any commitment.

In terms of the review of the Business Incentive Policy, that policy is very important to us in developing northern businesses and it can be very effective if designed properly and administered effectively. A problem with the Business Incentive Policy is the definition of a "northern business" to begin with and then it goes from there.

We have many companies who have been grandfathered, who are no longer really northern entities. We have companies that are no more than a shell. We have companies that have joint ventures that again really are not a joint venture but just using someone's name and paying them off a little bit but claiming it as a joint venture. So there are a whole bunch of questions.

I want to make the Business Incentive Policy work well and I want to do that through measuring the benefits to the Northwest Territories. That includes both employment benefits and benefits to the Territories through investment in the North. If a company invests heavily in the North, then they are truly a northern business, in my view. If they are just using the name, then I do not agree with giving them the level of benefits that some of them enjoy right now. So I want to look at what are the benefits to us as the Northwest Territories in doing that review. Thank you, Mr. Chairman.

Thank you. I would like to say I agree with Minister Handley's assessment of the Business Incentive Policy and exactly what and who we should be providing incentives to. So I look forward to the re-tooling of this policy to address this as I see it going forward. I do disagree with Mr. Handley about the mandate of investments made by the Development Corporation. He suggested that these investments happen and limited losses are acceptable for as many years as necessary. In reading the Act, unless I have old information, section 21(4) of the Act states:

"The corporation (Development Corporation) shall not invest in a business enterprise from the venture investment fund unless the rate of return expected within three years from the date of investment is positive."

This would suggest that limited losses are not acceptable for years and years on end unless this Act has been updated and I am unaware. Possibly the Minister will have to bring his witnesses in to address this question, but I am hoping that he can speak to this question. I could be entirely off base here, Mr. Chairman, but I would like the Minister to answer the question. Thank you.

Mr. Chairman, I do not have a copy of the Act in front of me but the section Mr. Bell is referring to deals with business ventures and it is true. They should not and cannot invest in business ventures that are not going to show a positive return within a matter of a few years. However, there is another section of the Act that you have to look at dealing with subsidiaries. Ventures and subsidiaries are two different creations and it is possible and it is a purpose of the Northwest Territories Development Corporation to own and manage these subsidiaries for the purpose of creating employment in situations where the private sector would not go and where losses are going to be limited. So there are two different functions, subsidiaries and business ventures. You have to look at both sections of the Act. Thank you, Mr. Chairman.

Thank you, Mr. Chairman. I think in the area of subsidiaries, though, we still have criteria laid out as to how much of the investment or the money we contribute is direct subsidization. For instance, we cannot be subsidizing 100 percent. There has to be some sort of money that is coming in. In 1996 when subsidiaries were looked at, an analysis indicated that on average for every dollar of payroll paid by a Development Corporation subsidiary, 91 cents was subsidized. This seems extraordinarily high to me. I am wondering if the Minister would agree that the goal of subsidiaries here is not to be entirely or almost entirely subsidized but we do expect them to be, if not marginally profitable, at least not losing boatloads of public money? Thank you.

Mr. Chairman, the purpose of subsidiaries is to subsidize these businesses in situations where the private business would not go. Within that, there is a guideline of $10,000 per job. That was what the government considered when that was set up in 1984 to be a reasonable expectation. As part of the review, we are looking at the whole operation of the Northwest Territories Development Corporation. Certainly the definition of a job has to be looked at and so does the $10,000 figure.

The Member is correct. We do not want to have these things 100 percent subsidized. Hopefully, some of them, and we have had a couple of experiences in the past where some of them do become viable businesses and can be turned over to the private sector. There is a guideline. I will say that in the past, you will find that the Northwest Territories Development Corporation has not been diligent in living within those guidelines. I intend to correct that as well. Thank you.

Thank you. I am glad that the Minister intends to correct that. I think he mentioned that the Development Corporation has to come up with an agreement with themselves and FMB on the definition of a job, and also look at the $10,000 subsidy mark. I would entirely agree. I agree that the Development Corporation has not been diligent. Not only have they not kept to this $10,000 figure...well, actually we have no idea if they have kept to this because they do not even count jobs. Instead of counting jobs, they have suggested we do not know how to define jobs, so we cannot count it. No attempt has been made to. Instead of analyzing the number of jobs, they have been able to rely on the fact that it was not laid out clearly and explicitly what a job was.

Before we take a look and decide whether $10,000 is adequate, we have to start counting these jobs and measuring, analyzing exactly if we are not hitting this $10,000 figure for subsidy maximums, where are we? Are we at $100,000? Clearly a review of this is not going to be adequate if we do not know where we are now. I think that we need to take an honest hard look at ourselves and see where we are before we even start to address whether $10,000 is enough.

It seems to me that in ten years, we could have been able to define "job". It is just amazing. I am glad the Minister has committed to look at this and I do not want to continue to beat him over the head with this stuff. I just think that it has been an ongoing problem for many years. Clearly we have been operating under a record of decision from FMB and we have heard that we are moving to regulation. The department agrees that this is the way we have to go. We have to be publicly accountable, and I am sure they have agreed with that for years and years. I would like to know a timeline. When can we see these regulations? When will we move away from it operating under this secret record of decision? How long are we talking about here?

Thank you, Mr. Bell. Mr. Handley.

Mr. Chairman, as I mentioned earlier, I will take that under advisement. I would like to talk to my staff about it. I would like to talk to the business community. I would like to talk to the committee that is doing a review of the three entities; the Business Credit Corporation, Northwest Territories Development Corporation and Community Futures, as well as our Business Loan Fund. I would like to consult with them before I give a specific timeline, but I can assure you that we will not delay in getting a response back. Thank you.

Mr. Bell.

Thank you, Mr. Chairman. I may have misspoken. I did not mean to refer to the BCC and our other lending agencies with regard to the publishing of information that I would consider should be appropriate. I am talking about the record of decision in 1989 in the Financial Management Board Secretariat that the Development Corporation operates under.

In this record of decision is this $10,000 stipulation, but the public has no idea of what is in this record of decision because it is not by public regulation. It seems crazy that it is not but it has been ten years and here we are still with no regulations. The department insists that it is addressing this matter, but I am talking about a time frame for having the Development Corporation operating under regulation, not a record of decision, not referring to BCC and other lending agencies and the publishing of loans. Thank you.

That was more of a comment. Mr. Bell.

Thank you, Mr. Chairman. Specifically, the ROD that the Development Corporation operates under, the department indicates they agree they want to move to having it operate under regulations which would be public and there would be some accountability there. I think they are working on this. Can the Minister clarify whether or not they are moving away from an ROD for the Development Corporation to regulation? Again, I am not talking about the publishing of loan information. I am just strictly talking about where the Development Corporation gets it authority from to operate.