Thank you, Mr. Chairman. I understand the concern of the honourable Member for Hay River North, regarding the Hay River situation.

During the committee review, we went through it and the block-funding issue was not raised at the community level. We were not able to raise it at that time. However, there is a $10 million cut across the board on capital issues. This affected every community which is not block-funded. Somehow, the block-funded communities have to take a share in the reduction in the total capital. The way it works is that they have an operations and maintenance in the capital, and we have to take a look at it too.

We have to be fair and equal between all of the communities, including the tax-based municipalities. As a result of that, we are going to be cutting them. No, we have not contacted the communities yet. I am sure through this forum here they are fully aware of that.

We did indicate to them through letter form that there were questions raised that the three-year block-funding arrangement is expiring this March. However, because of the municipal financial review, we said we are going to roll over the same amount we were getting previously, but it was subject to cuts through the budgeting process. From my understanding, they are aware of the possibility of cuts, but we did not communicate to them regarding this arrangement. We thought we would wait until the interim appropriation is completed with this department, then contact them. Thank you.