Yes, I would like to call witnesses. Thank you.

Does the committee agree that the Minister may call his witnesses?

Would the Sergeant-At-Arms please escort the witnesses in?

Mr. Minister, please introduce your witness for the record.

Mr. Chairman, on my right is Mr. Lew Voytilla, Secretary to the Financial Management Board.

At this time, I would like to ask if there are any general comments or questions from the Members regarding the opening comments. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the residents of the Northwest Territories have been eagerly awaiting any decisions that we will make regarding budgets and what they will have to look forward to in the upcoming year.

Many people understand the reason why we are doing an interim appropriation and not the main estimates. Due to the timing of the election and getting groups together and getting the process going for the 14th Assembly, we find ourselves having to go through an interim appropriation for four months.

Mr. Chairman, many people would consider this as being just as the term implies, interim, but in fact, I believe we are setting many of the goals through this interim appropriation. Some may say it is up until July, and we will have a budget in place by the end of June, maybe the first week of July.

I believe if there is any serious change in the government's funding situation, it would be very difficult for us as a government to change the direction of the ship once it has been launched and we are halfway through a budget year.

Mr. Chairman, we have seen through the work done on the interim appropriation with the departments. Many departments have gone in the direction that the percentage of the interim budget should be in the range of 33 percent. We have seen a number of departments come in significantly higher than that. That is understandable because the summer season is when contracts are let. For example, the housing area, transportation, municipal and community affairs, a lot of the construction work is done in the summer.

There was concern raised by Members that in fact, by putting so much of the emphasis and so much of the budget through in the interim appropriation, that when we go to put the actual business plans in place, projects will have already been started. We will not see anything new in the business plans, or the main estimates, for 2000-2001. If the project did not make it in an interim appropriation cycle, you may be looking at a delay.

There was a lot of concern mentioned in committees that because of the time crunch we were under, we could not review in full the capital plans for a number of the departments. We requested some follow up material from those departments. We are going to have to go through the departments project by project. The timeliness of this has put a lot of strain on the departments and committees to try and make sure that we have done the best job we can in reviewing the process, the interim appropriation and the expenditures required.

There are a number of new initiatives, as we have heard lately. That is of concern to Members. It is good to have a positive message to let the people of the North know we are continuing to do business. As well, we must be prudent in our work and what we put forward.

If in fact we are finding ourselves getting closer to the debt wall, we must ensure we do not hit that debt wall. No one yet has been able to clearly say what would happen once we hit our borrowing limit. What would the impact be?

We have heard the Minister say in this forum on a number of occasions that they are doing the work that is necessary to ensure they do not hit the so-called debt wall. When you see the growth in a number of areas, whether it is under urgently required new initiatives or the heading of forced growth, which seems to have changed a bit from the understanding we had of forced growth in the 13th Assembly, I think we need to question the areas of new initiatives to make sure we are doing the best for the people of the Northwest Territories.

The majority of this interim budget is based on status quo, the 1999-2000 budget. And there is no significant change. My fear is that if we do not take appropriate actions now and plan for the potential of hitting the debt wall, we will be left with little or no time to plan properly in areas of strategic change, priorities and goals of the Northwest Territories.

Indeed, many people would ask today, as a government who has been in power for four months, where are our goals and priorities? I believe we are setting them, in a sense. The message being sent by this process we will go through in the next ten days is in large part determining our priorities, at least for the first year of the 14th Assembly.

Mr. Chairman, I will take part in this interim appropriation with great interest as we go through department by department, and try to ensure we are doing the best we can for all residents of the Northwest Territories. Also, we will ensure that any new expenditures we put forward as a government are the wisest decisions we can make for those new expenditures.

Somehow in the chaotic atmosphere we find ourselves in by not trying to hit a debt wall and the potential development that is on our doorstep...how do we manage? How do we grow? How do we come up with new dollars?

Many people out there right now say they do not get enough of their existing budgets. I am sure they will be paying a lot of attention to see what we pass. Does it mean more for them, or less? Or is it the same? As I stated earlier, by basing it on the 1999-2000 business plans, with little forced growth attached aside from what we saw in the area of pensions and a few new initiatives, we are not going to do much that is new.

I think that is a concern, but I think that is where we as a government have to reevaluate our priorities to say what is essential to the residents of the Northwest Territories?

From what I see, we have not been able to do that in this process to date. Instead, we have looked at a past cycle, made a few minor adjustments and will try to do the best from within in that sense to ensure we are meeting the needs of the residents of the Northwest Territories.

I just hope the future will not come back to us in the sense that we have been too optimistic and built in very serious time constraints on making any serious change to government as we see it today. With that, Mr. Chairman, I look forward to going through each of the departments to ensure that we, as a government for the people of the Northwest Territories, are spending the dollars that are provided for us in the best way possible. Thank you.

Thank you, Mr. Roland. Mr. Minister, would you like to respond to those comments?

Thank you, Mr. Chairman. The timeframe we have had to work with is very short. We have had since mid-January to go through this process. We have not been in government for four months. It has been closer to two months.

One of the early commitments that we made, going back to our planning sessions, was that we would involve Caucus and work very much in partnership. We were not going to jump ahead and go off with our own agenda, that we would work with everyone. We have been doing that. It was only a couple of days ago that we agreed on our agenda, our vision, our priorities, our strategies, our actions, so we have really only had a couple of days to really have that to work with.

We had agreed in Providence that we would proceed this way, with the interim appropriations for the first four months, or until the 2000-2001 budgets were approved.

During this time, we have put limits on the departments. The interim appropriations generally represent spending that is restrained, that does not include a lot of new initiatives, and hopefully is responsible. When we take into consideration the contracts we need to enter into, the need to move ahead with some capital projects, and so on, then the amount in the interim appropriations in total represents 45 percent of our projected budget for this coming year.

I agree that is limiting our ability to be able to take new directions and initiatives in the balance of the year. There is no question about that. As well, being as close as we are to our borrowing limit does limit the wiggle room we have. It is continually narrowing and we are very aware of that. We have to manage that very carefully.

As we prepared the interim appropriations, there were a number of new initiatives. The new initiatives that are included in here are in large initiatives that come at the recommendations of the whole Caucus.

Working Together, for example, in education. That is a program that a lot of people spoke on. It had to do with student summer employment. It was necessary to put some money back into the old program, which was sunsetted.

The intergovernmental forum process is another one where we felt there was a consensus to move ahead with this as a new initiative and move it ahead more aggressively than we had planned. There are some new initiatives here, but we tried to read what Members were saying and have anything new in here reflect the priorities we were hearing.

We are aware we are getting increasingly close to our borrowing limit, and we need to look for new dollars. We need to look internally. We intend to continue doing that. We will review our capital budgets. We will review our operations and maintenance very carefully as we move along and as we prepare our budgets. That is essential, as was mentioned earlier on a number of occasions.

We initiated discussion with the federal government to review what might be available in terms of reconsideration or resource development support. We have also had to continue with some initiatives in the resource and development area in particular to try and maximize the benefit we get out of that.

I hear the Member very clearly. We do not want to be overly optimistic either. As I said, our wiggle room is a lot smaller. Being overly optimistic could create some risk at the end. We are very aware of that. Thank you.

Thank you, Mr. Minister. General comments. Mr. Dent.

Thank you, Mr. Chairman. I have a couple of questions I would like to ask the Minister. There seems to be a bit of confusion as to what constitutes forced growth. I would like to ask the Minister if he could provide for the committee what the Financial Management Board Secretariat's definition might be of forced growth. Could he also advise the committee which departments included that in their submissions we will be considering in this interim appropriation?

Thank you, Mr. Dent. Mr. Handley.

Thank you, Mr. Chairman. The definition of forced growth that we use is that the growth has to be either a statutory requirement, a legal obligation, a contractual commitment or driven by external factors that are beyond our control. We do have to leave a bit of room for those items that would simply cause too much hardship if they were not addressed. I think we always have to have that bit of wiggle room so it cannot be simply left to statutory, legal or contractual commitments. It is essentially everything that is non-discretionary, with the exception of those that we judge to cause too much hardship.

In terms of which departments have included forced growth, I would have to compile a list and get it back to the Member. Thank you.

Thank you, Mr. Handley. Mr. Dent.

Thank you, Mr. Chairman. I think that list would be interesting to this committee, so I will take the Minister up on his offer and hope we would see that list within the next couple of days, and certainly before we conclude consideration of the bill.

I would like to move now to the debt wall topic. Mr. Chairman, we now know, given a stand pat budget, we could project a deficit in the next fiscal year of perhaps $42 million. The Minister has, in this House, said he will ensure he brings forward a budget that keeps us from hitting the debt wall. Yet we know that we have as of March 31st this year, probably only $39 million before that happens. We know there is already a danger of us being over by $3 million.

We also know that we do not see any reallocations in here for the extra cost for education as a result of Bill 1, for instance. We have consistently heard that in order to deal with the requirements of Bill 1, it will require a reallocation from one department to another.

The Minister himself admitted that there is getting to be less and less wiggle room as we get into the year and get closer to the debt wall. I would like to seek confirmation from the Minister that he is comfortable that he will be able to bring forward a main estimate in June that will keep us from hitting that debt wall, and that there is still a commitment to reallocate funds to deal with the increased costs we are committing to in Education, or will likely commit to in Education, and that it will not be a further increase in the deficit. Thank you, Mr. Chairman.

Thank you, Mr. Dent. Mr. Handley.

Thank you, Mr. Chairman. Mr. Chairman, I think as a basic premise, keep in mind that this is an interim appropriation. This is not the budget. What we are showing here does show that we only have $39 million worth of flexibility before we reach our spending limit. We have, in this interim appropriation, already begun to take some steps to ensure we do not hit that wall.

When we do the budget, and we are working on the budget, there will be further efforts made in both the expenditure and the revenue sides to ensure that does not happen. We should not take this as being the budget. It is not. It is just an interim appropriation.

In terms of where are the dollars we need for education, those will be identified in the budget as we do the budget. We are working on it now. They will definitely be in the budget. They do not show up here in the interim appropriation. Thank you.

Thank you, Mr. Handley. General comments? The Member for Yellowknife South, Mr. Bell.

Thank you, Mr. Bell. Mr. Handley.

Thank you, Mr. Chairman. All of the departments were directed to identify any forced growth they required during this interim period. I believe they have all done that. If there is further forced growth, then the departments will have to factor it in as they prepare their budgets or, as a last resort, we have built in a supp reserve, which would be drawn upon to cover any of those expenses we were not able to identify earlier. It has been factored in. We realize that. Thank you.

Thank you, Mr. Handley. Mr. Bell.

Thank you, Mr. Chairman. Thank you for that reassurance. I think when we went through the interim appropriation for health, the break out showed while they factored in the superannuation additional costs to the Government of the Northwest Territories taking over the pensions, they had not identified other forms of forced growth. Our committee specifically asked the question, is there other forced growth involved this year you have anticipated? Do you know what that amount is and have you identified that in the interim? The response was that yes, there is additional forced growth, some $5 million. We submitted that, but it was not identified in the interim. I am wondering if the Minister could clarify.

Thank you, Mr. Bell. Mr. Handley.