Thank you, Mr. Chairman. I will ask the deputy minister to give the answer.

Thank you, Mr. Chairman. That financial services section entails the salaries for approximately $330,000 and other O and M expenditures of $220,000. The other operations and maintenance expenditure is related to travel for staff to go to the field and work with the communities. It also deals with some of the contracts that we do in terms of developing guidelines, the financial monitoring and reporting procedures, that type of thing. We are also contracting models for the communities so they have standard form contracts when they are going out for projects and things like that. Most of the other operations and maintenance is for outside contracting assistance, as well as travel to develop tools for the communities to use. Thank you.

Thank you, Mr. Chairman. This is a headquarters activity. The staff that work in this area travel to the communities and work with the various community and regional staff, in terms of dealing with financial problems at the community level. They are on the road a fair amount of the time to get out there and get involved in training at the community level, as well as trying to solve those financial problems that we were talking about before, to ensure that the communities stay viable financially. Those are headquarters functions in that $550,000. Thank you.

. Thank you. One community having some difficulty right now is Aklavik. The Department of Municipal and Community Affairs has reviewed the current budget and is working with the hamlet staff to monitor their performance. We have Paulatuk, where the department's regional staff is currently working with the hamlet staff to eliminate the factors or the problems that are causing a denied audit opinion. In Fort Resolution, the department has prepared an operational evaluation that is currently being reviewed by the regional superintendent in Fort Smith. Contracts that are currently due have been postponed for about three months to determine the cost benefit analysis of the same. In Fort Good Hope, the hamlet has recently hired a SAO. The department's staff is working with the hamlet's staff to develop a revised budget and a recovery plan for a debt that they have. In Rae-Edzo, in April of this year, the department was advised that the hamlet would not be able to meet its payroll if funds were not advanced. The Department of Municipal and Community Affairs' staff travelled to Rae-Edzo to meet with the hamlet office several times and developed a debt recovery plan that would reduce the expenditures. Eventually, this will eliminate the accumulated deficit. At a later date, there was an advance of money that was made to the hamlet to help their short term crisis. This advance has been agreed upon by the hamlet in the debt recovery plan. We are continuing to work with the hamlet and with the auditors to finalize the community's March 2000 financial position.

Those are some of the communities that we find are having some difficulties. The department is travelling with the financial analysts to the communities to continue to provide support. This is where the $550,000 is used, to do this type of work. Thank you.

Thank you, Mr. Chairman. Mr. Chairman, the financial difficulty with the municipalities has been ongoing for as long as municipal governments have been there. Some municipalities are doing good and have always done good. Some have had troubles in the past for one reason or another and were able to recover their debt through a debt recovery plan. From time to time, for different reasons, different communities come forward. Therefore, we step in and we help them out.

With regard to your question about whether some of these communities are in financial difficulty on an ongoing basis, I would have to say I do not think so. I think the intention of the municipalities is that if they do get into a deficit situation and ask for help, we step in through the department's assistance and help them try to meet the debt recovery plan. In many cases, municipalities are successful and do get out of debt. They run a tight ship. It moves around. Sometimes it is one community and sometimes it is another. If we understand and identify what the problems are, hopefully we will not have anymore municipalities in debt. Again, in the financial review, we like to look at it. We are going to work with the municipalities to see what the problems are and perhaps maybe address them at that time. Thank you.

Thank you, Mr. Chairman. Yes, there is a process that we are looking at. We are looking at the financial review of this department to see how we fund these communities. I think that is what the honourable Member is talking about. That is what this department, hopefully in this financial management review that we are undertaking, hopes to address.

Yes, we also need to work closer with the communities to do better planning with them. You mentioned that Aklavik and other communities which are not tax-based do not collect taxes or they do not have any way to generate their own source of revenue. Perhaps this is something we should look at as well. It is a bigger plan than we have in mind. We have already been told that we are too ambitious in what we want to do as a department. Certainly, I think there is some merit in that. I think we have to take a look at that as well. Thank you.

Thank you, Mr. Chairman. I just have one question. They sort of touched on my question when Mr. Krutko asked about the funding. I asked a question on this in March, when I knew the hamlet was going into a deficit. The question was about the funding formula. I think they sort of gave me an answer that when they look at all the problems in the communities, they are going to see where they can fix it. According to the funding formula, it is standardized all across the territories. Some of the communities take on more responsibility. Some take over water and sewer from the Department of Public Works and Services. Because the facility they are taking over is outdated, a lot of their own operations and maintenance funds are going towards repairs, which they did not expect. Because the community consists of two towns within one municipality, separated by 16 kilometres, they did not make any allowance for travel time back and forth. But we know that they were given special funding just to cover some of their costs for a number of years now. If they were looking at it really closely, since they are in a financial bind right now, that maybe they can look at the funding formula in just one community. So there is water take over, extra responsibilities. I think those are a big cost. That might have been the ruin of Rae-Edzo. Thank you.

Again, I do not want to sound like we are putting too much stock in trying to cure everyone's problem by saying we are looking at the financial review. I did indicate to an honourable Member earlier on that we hope to have something and try to look at all the different financial arrangements for our business plan coming in August or September. Hopefully, we will work into it. Like I said, every community is different from each other. Each community you visit is different. They are located differently. Their infrastructures are different. The types of buildings are different. In the case of Rae-Edzo, you have two communities that are set apart and there is one administration for both, which is an added factor. The existing formula we have, as the honourable Member stated, is outdated. That has to be factored into it once we look at these new arrangements. Again, on the water and sewer side, there is a cost factor to individuals in the communities. Each community is different. In some places, people pay their water and sewer bills. Others may not. That may be a factor in there as well. We have to look at all these different factors and see if we can come up with something that is going to be fair, equitable, and accepted by most of the people and see if it will work. Thank you.