Thank you, Mr. Speaker. Mr. Speaker, I noted the Minister presented the budget speech with a fair degree of optimism. I would agree with that optimism and I welcome that approach.
Mr. Speaker, in the North, we have tremendous potential. We have tremendous potential in our people, in our land and resources. With proper and careful development of all of those, we have a really bright future.
Yes, Mr. Speaker, we face significant challenges, but we must strive to beat those challenges. I would like to say that I welcome the progress of the Premier and the Minister of Finance, who have appeared to have made, in building the partnerships necessary, to find the revenues we need to balance our budget and to make the important strategic investments that are needed to get our economy going.
As the Minister of Finance has admitted, there was not a lot of room for flexibility. This was pretty much a stand-pat budget, without much in the way of new initiatives. However, Mr. Speaker, while we have a tight fiscal situation, we should not let money become our only focus, or even our major focus. After all, without a strong government-wide commitment to a literate, healthy population, new money still only provides a band-aid solution. Even small investments can make a big difference in this area.
We need to see a strong government commitment. A real commitment to social well-being.
In the budget speech, the Minister spoke of four key areas identified for investment, and our territorial agenda for children and youth and to support for parents and families. Programs for expectant new mothers, early childhood care, and Mr. Speaker, literacy programs.
Mr. Speaker, the commitment to social well-being cannot just be a wish list, for it is not really a commitment.
In his speech, the Minister talked about, and I quote: "An early childhood development action plan." Then, Mr. Speaker, he went on to say, " I hope that this government will be in a position to implement new initiatives in next year's budget."
Mr. Speaker, in all four of those key areas, we need more than just hope. If it is important enough to talk about in the budget speech, if it is important enough to develop an action plan, then there needs to be a commitment by the government to take action. That may mean that there needs to be a process to reexamine and reset priorities if necessary and that process should be set up, Mr. Speaker, so that the public understands how it will be done and how they will be involved.
Mr. Speaker, the Finance Minister spoke about our fiscal situation still being tight. I am concerned that we still have the debt wall looming. I am concerned that revenues have grown from $716 million last year, to $751 million this year. Thirty five million dollars in growth and we are getting a onetime $35 million payment from Nunavut, yet we are showing a cash deficit in this year's budget of $28.5 million the same as we had in last year's budget.
Mr. Speaker, while we have every reason to be optimistic about reaching a deal to see more revenues, who knows how much we are going to be looking at and when those monies will start to flow.
I guess my question has to be, have we put all of our eggs in one basket?
The Minister told the House that we could hit the debt wall in 18 to 24 months. Knowing that, Mr. Speaker, we need to be sure that our spending is well targeted and that efforts are being made to bring spending growth in line.
I have to say, Mr. Speaker, that I was disappointed to hear the hotel tax initiative being floated in this budget speech. The Minister noted that he had outlined this initiative to committee. When it was first brought up in committee, I explained why I thought it was a bad idea.
Mr. Speaker, the Northwest Territories is a high cost travel area. We need to look for ways to bring down the cost of travel, not for ways that are going to drag the cost up. The five percent will bring in only $1 million net. It is hardly worth the aggravation. What about the drop in business? What about the potential impact on Northern employment?
We can pay lip service to regional capacity building, but what about the significant impact such a tax will have on travel for training? This tax will likely take more out of Northern pockets than it will out of the pockets of tourists, further driving up the cost of living in the North and, Mr. Speaker, the cost of doing business in the North.
I would be surprised if more than half of all hotel nights were not, in some way, paid for by the Government of the Northwest Territories, its boards, and its agencies. Mr. Speaker, that means that departments, boards and agencies might be paying more than half of the gross amount collected in this tax.
In fact, Mr. Speaker, this is a hidden reallocation of funds from different departments to tourism.
I believe we do need to invest in tourism. We need to make a significant investment in marketing tourism. We need to do a better job, but the government could more efficiently reallocate funds by just setting new targets for departments.
Let us take the same amount from the departments that they will be spending on this new tax, and transfer it directly to the Department of Resources, Wildlife and Economic Development so that they can use it for new marketing programs.
The net amount will likely be very close to the net amount that will be received from the tax right now, and it would avoid the cost of setting up the bureaucracy and to administer the new tax, and it will not scare tourists away with the new higher costs for accommodation.
Mr. Speaker, I heard some rumblings that there might be consideration for a change to the payroll tax, and I have to say that I do think that this is one area where the Minister had some opportunity. I think he should have brought forward some ideas here.
I think that if government wants to look at a tax, it will have some important effect. Increasing the payroll tax is an option that needs further exploration. I think, Mr. Speaker, that we should look at, rather than a one percent tax, at increasing it.
With all of the economic activity that is talked about as just on the horizon, this has the potential to raise significant new revenues.
Then, Mr. Speaker, I say we use this new money. Let us use it to reduce the cost of living for Northerners. Our cost of living is notoriously high. Let us use these new revenues to bring down our cost of living by dramatically increasing the northern residents deduction on our income taxes. This in effect lowers our taxes, something that governments across Canada want to do for their residents. This will encourage more people to move to the Northwest Territories, rather than flying in and flying out for work, which would mean that this government not only collects increased tax revenues from people who live here, but a bigger grant from Canada, since we get so much of it based on the size of our population. Mr. Speaker, put together, these two initiatives would likely receive more support than the ill-conceived hotel tax, and have a much bigger fiscal impact in the long run.
Mr. Speaker, in his budget speech, the Minister highlighted the achievement of maintaining service levels, yet as we are all aware, funding cuts to municipalities took place. These will likely mean service reductions. It is hardly right to pat yourself on the back for maintaining service levels when cuts to funded agencies have meant that they will have to reduce service levels.
In his budget speech, the Minister complains also unilaterally about the $55 million cut to our Formula Financing Grant imposed a few years ago by the federal government. Now, he and his Cabinet colleagues have done exactly the same to tax-based municipalities, unilaterally imposing cuts. Mr. Speaker, these cuts were imposed several months after these municipalities have set and approved their budgets.
Mr. Speaker, this is the wrong way to do things. We want to see responsible decisions made, and that requires long-term funding stability. Other jurisdictions have been able to guarantee municipalities from one to three years notice of funding changes. It is time that this government made the same sort of commitment to our municipalities.
Mr. Speaker, I am also concerned about cuts in the area of capital. In the 1996-97 fiscal year, capital made up 15 percent of our total expenditures. In this budget, Mr. Speaker, we have cut capital to seven percent. That is less than half as a proportion of the spending in the 1996-97 budget. With cuts like this, Mr. Speaker, we are putting off a day of reckoning to solve a cash problem. I am afraid that this will lead to much higher repair and replacement costs down the road.
I think it is also important to remember, Mr. Speaker, that there is a social cost this year for these cuts. This will reduce the number of jobs in communities in the North. In many places, our capital program is the largest job generator. This means we are going to drive up the costs of income support and dependents in our communities.
It is also causing a problem for northern business. We have used the Business Incentive Policy to encourage growth of business. New cuts in spending, or now these cuts in capital spending will put some of these businesses at risk. We need to address this problem quickly.
Mr. Speaker, in conclusion, I would like to congratulate the Minister on not having responded to the fiscal pressure with drastic cuts. That would not have been the right way to deal with them, and it would not have been acceptable. I do recognize that we have limited flexibility in our fiscal situation, and I appreciate the government response in some areas that Ordinary Members have highlighted to date, such as the response that we start funding in the student and youth employment programs, and the most recent announcement of partial restoration of funding for the Skills to Work Program.
So, Mr. Speaker, we have seen some positive responses from this government, and I congratulate them for that. There are areas that can still be improved. I hope that this government will continue to be responsive as we go through their budget in committee of the whole. Thank you, Mr. Speaker.