Thank you, Mr. Chairman. I would suggest that the committee continue consideration of Bill 1 and Committee Reports 1, 2 and 3 concurrently.

Agreed?

With that, we will take a short break.

-- Break

I will call the committee to order. Mr. Roland would you like to read your motion for the record.

Thank you, Mr. Chairman, as we ended yesterday I did present a committee motion.

I MOVE that this committee recommends that the government develop more detailed categories for other expenses to justify the request for funds;

AND FURTHER that where possible, these categories be consistent across government;

AND FURTHERMORE that, one of the categories should cover items on the controllable asset inventory list that are now, under the new tangible capital asset accounting system, considered as an operation expense.

Thank you, Mr. Chairman.

Thank you, Mr. Roland. Your motion is in order. We did debate the motion yesterday. General comments. Question has been called. All those in favour? All those opposed? Abstentions. The motion is carried. Motions, Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman I have a committee motion.

Thank you, Mr. Roland. The motion is in order. To the motion. Question has been called. All those in favour? All those opposed? The motion is carried. Motions. Mr. Bell.

Thank you, Mr. Chairman.

I MOVE that this committee recommends that the final report and recommendations of the government's Program and Functional Review Senior Management Task Team be presented to the Standing Committee on Accountability and Oversight before the next business plan review process scheduled for the fall of 2000.

Thank you, Mr. Bell. The motion is in order. To the motion. Question has been called. All those in favour? All those opposed? The motion is carried. Motions. Mr. Miltenberger.

Thank you, Mr. Chairman.

I MOVE that this committee recommends that the government produce on an annual basis, more consistent and detailed affirmative action information in standardized government-wide categories;

AND FURTHER that the standardized categories include affirmative action priority, and job categories broken down to the regional and community levels to ensure appropriate levels of detail, scrutiny and accountability;

AND FURTHERMORE that affirmative action statistics for senior management be presented with senior management defined as all positions at a director or superintendent level and above.

Thank you, Mr. Chairman.

Thank you, Mr. Miltenberger. The motion is being distributed. The motion is in order. To the motion. Question has been called. All those in favour? All those against? The motion is carried. Motions. General comments. Bill as a whole? Mr. Miltenberger.

Thank you, Mr. Chairman. I have some brief opening comments. General comments about the budget. Mr. Chairman, one of the key issues that I touched on yesterday, which was addressed through a motion as well, was the issue of a need for clear measurable targets and goals so that government and departments can be held accountable and that we require of ourselves as government, the same stringent requirements that we have in terms of information and targets that we ask of all those agencies and boards that are funded by the government.

Very clearly, as today's discussion and debate in the House has indicated the human resource issue is a very big one. The issue of a Public Service Commission is one key issue, but the other one as well over the last four or five years has been the fragmentation of the human resource service in government. This is a corporation that services thousands of employees, but it has been balkanized. There is a need for an overall human strategy, which I hope that this government will address.

As an MLA from a small community in the South Slave, I am very concerned about growth in headquarters as I was during the interim appropriation and when we were looking at supplementary appropriations for the Executive. I think that it is critical that the Executive continues to lead by example. We have to recognize all the facts that have been mentioned before with Nunavut and the loss of half the jurisdiction or 40 percent of the jurisdiction. The shrinkage in the political area, especially when we are asking the municipalities' tax bases to take a cut. I recognize the fact there has been some growth, like education, as the Minister has pointed out which are good and supported by this house. However, we have to be very vigilant and cognizant at all times of the insidious growth that always occurs quietly and under the cover of administrative requirements at headquarters.

Another issue that I think I have to draw attention to is the informatics issue that has been raised in this government and in this budget. Mr. Chairman, this particular strategy has been out there. They have been planning for years.

When I was superintendent, that goes back five or six years ago now, this was on the table and the government appears no closer to any kind of comprehensive coordinated strategy. The departments are unconnected. Information is fire-walled off. There is no ability to coordinate, consolidate, and share on areas where it is necessary. Even in the social envelope it is clear within departments that there is still work to be done, like the child welfare information system.

We have a government in the 21st century that still has to hand count the paper to get statistics. We have the PeopleSoft system, where the health boards and education boards are not included, which we have paid millions for. I think we should be looking at a thorough review of how that was implemented. We have tied our star to that particular system and, at the very least, part of this comprehensive review of the human resource strategy should look at those kinds of issues. It is tied directly to the informatics system.

I am also very concerned about the digital communication network, which we bought into, which we are committed to for the next few years. We could have the best systems in the world sitting in our offices but if the pipelines to get information around are inadequate, antiquated, outdated, cannot carry the load, do not have the band width, then we are stuck. You can have a $10,000 computer system and you cannot tie into the rest of the world. It defeats the purpose.

For myself as well, an ongoing issue has been the pressing, insistent and growing need for meaningful cooperation between departments, in planning and business plans and strategic developments and programs that are being moved ahead. The communities made it very clear to me, where I have travelled, that it is not enough for the government to come in and tell communities and boards and agencies and groups to work together. Then everybody goes back to Yellowknife and it appears that the departments rarely talk to each other. And the business plans reflect, once again, at least in the social program area that whatever cooperation is there is cursory at best.

I know that it takes months sometimes to get the social program Ministers in the same room to talk about an agenda given the constraints of time and other pressing agenda items. This Cabinet has chosen as well to put two other Ministers into the mix with portfolios where they do not have any resources and for me the mandate is not clear, Mr. Allen for Youth and Mr. Steen for Seniors.

It is a cause of concern. While it is nice to have a Minister specifically acknowledged and targeted and tasked with that function, I think that there has to be work done in terms of the mandate and how do you actually bring the resources to bear so that when the Minister responsible for Youth speaks, he speaks with the full backing and resources that the government has at its command for that area. The resources are significant. They are scattered across a couple of departments but when you target all the money that is there for children and youth, it is a significant amount of cash.

When you look at the money that is there for seniors, scattered across government there are significant amounts of money and that often is not recognized. While it was a positive step, I think the government has to make some serious concerted efforts to demonstrate to us and to the people that they are working together, that they talk to each other and for me, Mr. Chairman, I would look for the day where in key areas, a joint business plan is put out in the social envelope that links services to seniors or links healthy children, that demonstrates that in fact the departments are working together and not coming to the table often using different terminology for the same strategy.

This could be considered something of a stand-pat budget, Mr. Chairman, as the Minister responsible for Finance has indicated. Unfortunately one of the reasons is, is that a lot of the work that was to be done has not been done. The functional review was supposed to have been done months and months ago. This was supposed to form the basis for planning. We are still waiting for that.

The economic strategy is far past the gestation period of an elephant and we are still waiting for something, a birth, a presence, of something coming forward. I know that they have been working for months. But at the 13th Assembly it was a tortuous experience in terms of getting organized on that particular issue. And here we are planning for the financial future of the Territory without that critical component at our fingertips so that we can incorporate some of the findings and strategies and recommendations that they are making.

I will have many questions as we go through department by department. I just wanted to make those general ones and I am also going to be watching and very interested in how successful we are with the issue of momentum. Especially in southern jurisdictions, we have put a lot of our financial eggs and hopes and aspirations in the basket of new revenues from the federal government in the very near future. We recognize, with the debt wall, that the time we have shrinks daily in terms of the new revenues that are required to maintain even the level of services we now have. We know that if we are not successful, then the decisions that we make the next time around will be, in fact, much more difficult. It would be very similar, I would suggest, to the dark days of the early years of the 13th Assembly, where we had to make very tough decisions because the revenues clearly did not meet our expenditures.

The money, for me, is an issue, but a lot of these other process issues and structural issues are equally critical as we try to become an effective and efficient government. It is not just a revenue problem, but an expenditure problem, and we spend money, as a government, in many ways that are sometimes not effective, efficient, or economical. Thank you.

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

Thank you, Mr. Chairman. I would just like to make some comments on the general issues on the budget, and I will not try to cover all areas. I think it is worth repeating some of the concern that the committee has expressed about benchmarks. I certainly, personally, feel very strongly that it is absolutely essential for departments to very clearly set out what their goals are, when they present a budget or a business plan.

I think they have to be equally as clear about how we will rank their performance as they work to achieve those goals. The public has to get a clear picture of how we are progressing towards the goals that we set, and they have to know that they are getting value for money. The only way they can do that is if there is an easy way to assess whether or not the departments are achieving their benchmarks. I would like to see significant improvements in those areas when we review the business plans in the fall.

I have to say too, Mr. Chairman, about what I see happening to capital expenditures in this budget. In 1996-97, capital represented 15 percent of the total expenditures for the Government of the NWT. This year, the percentage is down to about half of that, down to about seven percent. Mr. Chairman, I understand that we have a difficult cash situation, and I know that the Minister responsible for Finance did not have a lot of flexibility, but my concern is that the longer we put off necessary maintenance, necessary building of infrastructure, the greater the costs grow. Where we may need only a million or two in retrofit or renovations to a school this year, if we delay those renovations or the retrofit for another two or three, or four years, the costs will grow above that one or two million to perhaps as much as five million dollars. Or perhaps the structure will get to the point where it is no longer worth doing the retrofit, and we will have to advance the construction of a whole new building. Delaying capital expenditures can turn out to be a short-term cash gain, but in the long run, it could turn out to be a significant problem for a government. I am concerned that over the past four years we have cut and cut and cut capital. We have had to in this budget, again, cut capital even further. These cost savings to the government, will cost our society in the long run.

Capital projects, in fact, are one of the significant ways that this government provides employment opportunities for Northerners and communities across the North. This drop in capital spending will translate into fewer jobs for Northerners this year. That is going to be a significant problem. It is going to be a significant problem because we have been relatively successful over the past seven or eight years through the use of the Business Incentive Policy, in seeing more companies getting started up and established. Now that we have companies getting established, they are used to being able to bid successfully on government programs or government contracts. They are not going to be there this year. What is going to happen to those companies? I am very concerned about the cut to capital. I think that it is a short-term solution, and perhaps a shortsighted solution. I think we should look for ways to solve that very quickly.

I would also like to take the opportunity to go on record as being opposed to the proposed hotel tax, which I know is not in this budget, but was floated in the budget speech as an idea for next year. Mr. Chairman, we are in a very high cost travel area. I think we need to look for ways to reduce costs for tourists, not to drive them up. I do not believe that the net gain we will see through this tax makes it worthwhile. I think, as has been noted, it is particularly galling to me, because I believe that at least 50 percent of the tax will be, in fact, a reallocation from government departments. Those hotels will be paying the tax. I bet they see 50 percent of their business from government travel. It would be far more efficient, if we were going to take money from the Department of Health, the Department of Education, the Department of Resources, Wildlife and Economic Development, the Department of Transportation. If we are going to take that indirectly through a tax on hotel rooms, as their employees travel, it would be far more efficient to take it directly from them. I would ask the Minister responsible for Finance to consider a reallocation instead of taxing.

I am also concerned that, although we have been assured that we will not hit the debt wall this year, our expenses continue to outstrip our revenues. I do not see the line getting particularly closer between the two. I will be interested in hearing from the Minister when he now thinks we will, in fact, hit that $300 million borrowing limit, based on our current expenditure and the trends there, and the current revenue line and the trends there. I would, at this time, like to ask the Minister responsible for Finance when does he expect that if we see no new revenues, based on current trends, when would we hit the $300 million borrowing limit? Thank you, Mr. Chairman.

Thank you, Mr. Dent. Mr. Dent directed his question to the Minister responsible for Finance. Mr. Minister.

Mr. Chairman, if we saw no revenue increase at all, which I do not think is likely, I think we are already seeing a bit of a turnaround, and a little bit of population growth, and so on. But if we saw no increase at all, then we would hit our maximum within two years. Within two years we would be there, and quite possibly within 18 months. That is an estimate because things all change.

Thank you, Mr. Handley. General comments. Bill 1. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, we have heard, as the Finance Minister spoke on this issue of the budget and as it is coming forward, someone made reference to a stand-pat budget, that, in fact, we are holding the tidewater back, I guess. We have heard a couple of comments that initially I think most people can applaud the fact that there are not a lot of reductions during this budget cycle, but I raise the concern, since I have become a member of the 14th Assembly, of the impending debt wall. If things are not improved on the revenue side.

I applaud the work of the Minister and Cabinet in terms of pursuing Ottawa to transfer the royalty revenues to the North. I think that realistically, that is not in the very near future. Settlement of that -- I do not believe that we will see it this year. Although I pray for miracles, it still is a difficulty that I see out there. We know that in government, and my experience with government since being a Member of the 13th Assembly, that every year we see departments come back with forced growth, as they call it. We have got to get that money from somewhere. Even with all the reductions during the 13th Assembly, few of the reductions actually addressed the workload and the red tape, as we call it, of government.

The structure basically exists the same as it did previously. We have done one big amalgamation and that was Resources, Wildlife and Economic Development. That still draws a lot of attention and questions. I think that if we are going to make a real difference, the opportunity is early in the government's life. To address some of the potential savings out there for streamlining and for creating a more effective, efficient government, especially when we are dealing with land claims and the settlement of those land claims, because they will be impacting the government, and that is an ongoing battle on its own with Ottawa. As I said earlier, I think we can look at trying to hold the tidewaters back. The reality is the tide will continue to move and we will be left sitting in high tide, stuck in the mud and nowhere to go. I think we need to start addressing some of the issues of the functions of government and procedures. We tell departments that they have to provide for and move forward with, and we impose that onto non-government organizations as well, when we ourselves do not have the ability to monitor and track a lot of what goes on. That is not a good way of doing business. We need to be a little more proactive in dealing with the issues that come to us. I have always said, as government we seem to be going from one fire to the next, and putting those out. That continues to be, as I see it, the way things are going to be done for the first part of this government. I think we need to put more ingenuity into what we can do.

I know I was looking at the procurement and functional review of the government, and was disappointed to know that it has not gone as far as I thought it would have during this timeline that was set out. Things will become more difficult to change afterwards. It is good to be optimistic, but as a government we have to face the reality when it comes to what we can truly provide to the residents of the Northwest Territories. Priority setting is a big exercise for government and nobody likes to hold the bad news, but I feel that if things do not come around; if new money does not become available, we will end up having to do that later, anyway. The pressures will be on us. On the capital side it is a concern. My community has been impacted already. I am concerned that if things do not turn around that could be used against our community one more time. It is not something I look forward to. I will do my best to represent my community in the government today, and as I have done in the past.

The one bright thing, truly bright thing, we have in the future, is the non-renewable resource sector. A recent trip to Calgary for the World Petroleum Congress showed me the great interest in the Northwest Territories now, and the resources we have that are yet to be developed. It is very promising to see the aboriginal groups that are now steering the ship, so to speak. They took the proactive steps to band together to get a motion to proceed with some form of development. I think that is very positive, and something we need to be proactive in, and assist in any way possible as a government with what resources we have. I have seen the government's plans as they presented the non-renewable resource strategy and the intention to reinvest dollars, but if we do not get the federal government on side here, it is a plan. The plan will not be able to be implemented within our existing resources. We have the Department of Health and Social Services that is crying out for dollars. Education needs more. We have the UNW in negotiations now, and has that been built into this. There is so much growing pressure here.

In my community of Inuvik, because of reductions to the government, tax payers have had to pay more. That is my fear, again, as we have been informed. The reduction to tax-based municipalities, does that mean, myself, at the end of day, will be paying more in my community? We can blame tax-based municipalities but the bulk of their funding comes from this government. As my colleague mentioned, it may only happen in Boot Lake, but I think that our community council is very fair and will do things across the board.

The cost of living in the Northwest Territories continues to skyrocket. That is something that is out of our control, but it impacts how we can do things. We have heard of the hotel tax. That will be added on to people coming in from out of the jurisdiction, but it will also impact on the Government of the Northwest Territories. It will impact on education boards, health boards as they travel to their meetings, and the training that we put our employees through. More of a concern is, how do we lower costs, or as a government try to impact decisions made by big corporations? That is next to impossible. Esso in Inuvik is a monopoly, supplying gas. It is a bulk agent there that supplies to a couple of the gas stations. We are paying 98 cents now for a litre of unleaded gas, and there is no choice of gold, silver or bronze. It is unleaded gas, one quality fits all tanks. No choice there, you go to the pumps and you pay for it.

That will impact food prices. Heating oil went up over 50 cents a litre this past winter and with this reduction to municipalities the possibility is that we will see other things. I know that the community I live in is looking at taking over the utilador system. People are wondering if that will be impacted as we hear Municipal and Community Affairs is doing the changes. That impacts water, sewer subsides, so will that impact us even further?

It would be nice if we could all live in locations that are as low cost as some of our southern communities. But the cold, hard facts are if we are going to live in the communities we are as a government going to have to find some way of dealing with the diversities and the costs of living in the Northwest Territories through the harsh climate we do.

I do not envy the task of the Finance Minister trying to put this together. I know that it has been a short time as we have heard so many times. It has been recently since Cabinet got together and tried to put this together. But the fact is if we are going to make significant changes in government and how it looks and how it functions those changes have to come early. Otherwise we only build up the debt and build up the growing concern with how we are going to provide services in the Northwest Territories at existing levels.

The Finance Minister stated that we are holding our own. We can point out examples and as we go through the budgets, I will definitely point out my concerns for my community level. Thank you, Mr. Chairman.

Thank you, Mr. Roland. General comments, Mr. Krutko.

Thank you, Mr. Chairman. I too have some real concerns especially in the way that the business reviews have taken place. I see areas that I feel that we have not really done justice, especially to the communities and the municipalities where they received a cut, yet what we see happening is the bureaucracy continuing to grow in some cases up to 28 percent in different departments. I, for one, feel that in order to be able to relieve the pressures from all sectors we have to be fair across the board.

Another area I have a real problem with is the number of vacancies and dollars that have been lapsed in different areas and in different departments. I feel that it is critical that as a service provider that we have the human resources in place to provide the services that they are for. By having these vacant positions within the different departments we are not adequately servicing the people we represent by not having the resource people in those different jobs that they were prescribed for.

In different areas in my riding I noted that in regard to the development in the area of transportation, in the Inuvik region alone there are something like nine vacant positions. Yet those are major senior positions, especially when it comes to engineering. We should make sure that we have the people there so that we can identify the work that has to be done and how it is going to be done. Without having these professionals in place and within the government bureaucracy, we are not doing justice to those different portfolios.

The same thing applies to the infrastructure and cap in our communities. I feel that sooner or later we are going to have to bite the bullet realizing that there is a major cost associated with not maintaining the facilities that we do have in our communities, and also upgrading those facilities so that they can take on the capacity in a lot of our communities. A lot of these facilities and infrastructures that are in our communities were built almost 20 years ago. The populations of these communities from the time that they were put in place have almost tripled in size since the original infrastructure was put there. Because of these impacts on those facilities, we are starting to see the effects on the population and also being able to realize that there is a cost associated with having to maintain these facilities without improving them over a period of time.

The other area I have a lot of concerns about that we mentioned here today is the question of human resource funding being lapsed. We have to ensure that we have the ability to train the people that are within the public sector and give them the tools they need. Realizing that there is a change in regard to how government thinks today from where we were five or ten years ago.

I am talking about the technology that we have in place now. We have to realize that there are certain aspects in regard to telecommunication, computers and also management regimes of how do we manage our public service. How do we administer programs and services to derive the best return on the dollars that we can spend to ensure that we meet the goals and objectives that we set as a government.

The other area that I am very concerned about is the cost of negotiations with the UNW. We have just finished negotiations with the teachers. That set the precedent for the negotiations with the UNW. We have given them, in some cases, almost eight percent increases and that will be on the bargaining table with the UNW. So what will that cost be to this government? In regard to our deficit situation where we have a very slim window to allow for any more unforeseen expenditures and that is one that I feel that we have to ensure that we have the resources in place to confront whatever the cost or outcome of those negotiations are going to be.

The other area I have a real problem with, is ensuring that as government we are improving the social and economic conditions of the people we represent. We have a lot of people in our smaller communities that are dependent on income support because there is no economic base in a lot of our communities. We have the potential to take advantage of what we see is happening in the oil and gas industry, the mining sector, and tourism. But in order to do that we have to ensure we have the trained human resources and the businesses in place to take that on.

I would like to touch on the area of the businesses which have policies and initiatives in place that this government has put there. The purpose was that instead of importing all our goods and services, we start producing our goods and services so that we can export these goods and services to other places in Canada and Alaska and other places. Yet what we see happening is that we continue to spend money importing goods and services and not really concentrating on the development of our infrastructure and the industry that will be able to take advantage and generate jobs and opportunities for the residents of the Northwest Territories.

We, as government, cannot do that, but the private sector and the business community can do that for us. I, for one, feel because of what is happening in the oil and gas industry in regard to the mining industry and tourism we have to support industry and the business community to assist them to generate their businesses, locate them in the North and expand those businesses to develop tools that we are going to need to improve the quality of life for the people in the Northwest Territories. We cannot do that on our own.

The other area that I have very grave concern about is improving our infrastructure in the Northwest Territories. Without the infrastructure in place to be able to sustain this development in regard to the oil and gas and mining industries and also tourism, we will not be able to achieve the goals that we want to set. One of the areas I do have concerns about is the announcement from the federal government in regard to national highways funding that we may have access to. The concern I have is that we can access those dollars but the precedent has been set in the past that you can match those federal dollars, dollar for dollar, only on new projects. A large portion of the monies that we spend to-date on improving our infrastructure is spent on Highway 3 somewhere in the range of $8 million.

Yet the portion of dollars that is left is very minimal compared to the majority of the money that is being spent on the one highway. But in order for us to match the dollars from the federal government, dollar for dollar, we cannot put new dollars into Highway No. 3 because we have already capped at $8 million.

So I, for one, feel that this government has to seriously look at the implications of us not being able to arrive or be able to find ourselves penalised from accessing federal dollars because we have put too much money into one system. We have to spread the dollars around for our infrastructure fairly across the board to all highways. We have some 2,200 kilometres of highway in the Northwest Territories. Yet a large portion of the money for maintenance is on a small stretch of 100 kilometres of road. I feel that we may lose out on the highway dollars that we could access from the federal government.

So those are some of the areas that I have concerns about. I would like to ask the Minister, could he comment on the question I raised earlier about what is the cost for the negotiations with UNW and what implications that will have on the government's ability with the deficit situation that we find ourselves in. Thank you.

Thank you, Mr. Krutko. Minister Handley would you care to respond to that.