Mr. Nitah.

Ms. Lee.

Thank you, Mr. Chairman. I would like to add another voice onto the issue of the hotel tax and try to highlight some issues that are not, hopefully, a repetition of what the Members for Frame Lake and Yellowknife South have mentioned already.

With respect to the study, the consultants report the Minister mentioned, I would like to get a copy of that and know who did it.

Also, the information item we have here, a lot of it is based on Stats Canada statistics, which I understand because we cannot always have all the studies. However, I know for a fact, I live here in Yellowknife and I talk to the hotel operators and I have given a lot of thought about what this tax means.

I understand that there are hotel taxes when we travel all over the world or even every other city in Canada. But we are not Vancouver. We are not Toronto. We are not Edmonton. We are Yellowknife and the Northwest Territories. We do not have a conference industry. We have a fledgling tourism industry that needs a lot of support. I am not sure that this should be something that we should be adding on at the moment. What I am worried about is this tax base is so tiny. We have such a tiny population already and we have so few tourism operators from whom we are going to collect this tax. I am worried about the burden we place on these operators.

For example, the owner of the Igloo Inn told me that a five percent tax would constitute all of the money he spends on his utility bills. It comes right out of their pockets. What is so strange about this tax, what is irrational about it, is a government that has an $800 million budget has to go and institute a new tax to collect, in my view at best, about $800,000.

The Department of Resources, Wildlife and Economic Development budget is almost, I believe, $75 million. If the department and the Minister are really committed to the tourism industry, and I know he is, I have heard his election platform, then I think that he should understand that all the Yellowknife MLAs are committed to a tourism strategy. We are talking about how we can help them.

The concern I have is that we are imposing this paper burden and operational burden on a small operator, especially the little bed and breakfasts, without a plan, without a commitment shown by the government. For the government in the fiscal position that it is in, it is in a deficit position, it has not come forward with any cost cutting measures first.

The department has not volunteered to take one percent out of the Department of Resources, Wildlife and Economic Development's budget to come up with a plan as to where the money for this tax would be spent. Talking to the tourism operators I understand that they are desperate for money. They are willing to bite this pill, if they could be guaranteed that they will get the kind of attention that they desire.

It seems like it is a carrot that is hung in front of them. To say, "Well if you go with this tax you are going to get the money." the Minister has made no commitment whatsoever in this House that he is interested in direct taxation so that there is an absolute 100 percent guarantee that the money will go to tourism operators.

I know that he replies to that by saying that he is committed, "I said that I am going to do it." I think that we need to see more than that.

The fad words by all Ministers lately are Regional Capacity Building. The Minister of Aboriginal Affairs has mentioned that a few times. He mentioned that in Fort Simpson. He mentioned that in his capacity as Minister of Municipal and Community Affairs. The word is mentioned in the Intergovernmental Affairs Forum and this Minister has mentioned regional capacity. That is one of the two prongs that he is going to practice in terms of a tourism strategy. But what does it mean? We have not had, as a Member, as an Assembly, any discussion about what that means. What does it mean in the tourism context? I have no idea.

I would think that if the Minister is really committed to the tourism industry, as I know he is, and if he is really committed that the only way that he could address the tourism industry is by taxing them, the least he could do is find the money within to come up with a plan that shows what the need is and where the tax would fit in. This is cart before the horse. This was a total surprise attack.

Another thing with the consultation that I have a problem with is what he means by consultation. He says he is going to implement this tax and he is not prepared to do direct taxation. He already says that he knows what he needs in the tourism industry. So what I see from this consultation is that I am just going to sell this ideal. I am going to convince everybody within the next six months that this is what is good for them. I have a real problem with the notion of consultation in that way. Thank you.

Minister of Finance.

Thank you, Mr. Chairman. First of all I will get the name of the consultant, it is a consultant out of Alberta, who has done a lot of work with Alberta on their hotel tax. But I will get it for the Member.

When we talk about Regional Capacity Building, I think as Mr. Nitah has said, we have a lot of communities in this Territory that are very poor. They do not benefit from the non-renewable resource sector that is so important to our economy. We have such an opportunity to do more with tourism. It is a way of getting money out to those communities so that they can build the ability for the people in the communities to be able to welcome tourists, to have facilities for them, to have trained people who can deal with them and operators who can help.

I hope as we do consultation that, as many of the Members who have not travelled widely in the North as possible, get a chance to come out with me or come out on their own and talk to the people in the communities. We need to support that sector of our economy. We need to diversify our economy. We need to get something to the little communities, otherwise the people there will just continue to be a drain on our whole economy where they could be self-sufficient, contributing financially to our whole economy.

We have done some great things in some areas. I can tell you that Bill Tait's initiatives in bringing Japanese tourists is a real good example. I tell you the work that the outfitters have done in the North is great. They bring $30 million a year into our economy. Unfortunately, it does not get out into the little communities in any big way.

The comment that it comes out of the hotel operators' pockets and their utility expenses is incorrect. It comes out of the pockets of the occupants of the hotels who to a large extent are tourists.

I am very committed to tourism and I want to find money to help diversify our economy and build this important piece. I think that we have a tremendously great Territory to live in and this has potential and we need to work together to make it happen. That is how we are going to get communities moving towards greater self-sufficiency.

To find it from somewhere else in the budget, it is easy to say find it from somewhere else, find it from within. But, we are stretched to the limit in the government in terms of what we are asking departments to deliver on and expecting good quality programs. We are asking this year for departments to identify $5 million more in cuts in the 2000-2001 year. They have to find another $5 million.

We cannot keep going back and asking them to find more and more, because like an elastic band, after awhile the thing just bursts. If you stretch them too much, you have no quality left at all. In future years, unless we get revenue from somewhere, whether it is federal government or from economic activity, we are going to go broke. That is just the bottom line of it. So we have to take some chances do some things that are going to generate some economy here.

This is not a surprise attack on anybody. I did bring it up in standing committee. I mentioned it in this Budget Address, even though it does not come into effect for a year, because I want to consult. When I talk about consultation then I am open to do that anyway at all, but I certainly want to talk.

Personally, I want to consult, through Finance, through Resources, Wildlife and Economic Development and so on, with as many people as possible to design the best tax possible before we implement anything. I am not out there to sell it. As I said in my opening comments, the Legislative Assembly has a chance when we bring legislation forward, to give me their approval for it or not. Depending on what they decide in November, it is not something that I am going to go out there and sell to people but I think it is a way of building out tourism economy. Thank you.

Thank you, Mr. Minister, Mr. Braden.

Thank you, Mr. Chairman. A couple of general comments. First of all on the issue of the hotel tax. Taxation, in general, is something that I think the government should always have at its disposal. It is one of the tools to help keep a stable financial regime going. One of the things that I campaigned on was, however, that I would be very leery to see a tax which comes in that increases the cost of living for Northerners and this is where I am sort of conceptually in favour of a hotel tax, things like a payroll tax, because it does generate money from outside sources in, I think, a potentially viable way. I am not at this time, though, prepared to come out in favour categorically of the hotel tax. I have stated before that I would like to see first, and overall, a tourism strategy because the Minister has stated it would be the objective to direct funds directly into the tourism industry from this tax. I would like to see the details of that strategy and how this tax could fit in as one of the potential revenue generators for it.

In that light, I am looking forward, Mr. Chairman, to the consultation that the Minister is going to have and that is already underway with the tourism industry on the overall strategy. To see how this tax could fit in.

A comment there, Mr. Chairman, but I did want to ask a question in terms of methodology. The models that the department is proposing here in this paper, and I appreciate very much getting this based on percentage, I was wondering whether the department looked at a flat rate per room as another method of collecting this kind of tax? I will stop there and see if the department can respond, Thank you, Mr. Chairman.

Mr. Handley.

Thank you, Mr. Chairman. I appreciate the Member's comments and his open mindedness to the potential of this. I appreciate that he cannot commit to it right now. In terms of the other options like a flat rate tax that has been raised by myself, as well by one of the hotel operators, that just felt that this would be easier for people to calculate, even though it is just five dollars a night or seven dollars a night per room. It would be easier than working on percentages and that is certainly something that I think we can take into consideration as we do the consultation. Thank you.

Mr. Braden.

Thank you, Mr. Chairman. I am glad to see that methodology would be something that will be looked at. There are greater mathematical minds in our midst than mine, but I did a quick bit of math here and at five dollars, given the numbers and the occupancy rates, it would suggest that $1.27 million could be raised at a five dollar flat rate. That does not include the lodges. I would like to suggest, probably, some fairly tough negotiations with the lodges because they price their services in a package and not by individual service. So I leave the hotel tax at that one.

On a sort of broader area, Mr. Chairman, the government has adopted a strategy that I am in support of, this continued spending and investing, at least this year, on a status quo basis. I also believe that if we were to engage in a bunch of dramatic cuts to spending services and investment that, given the level of activity and the demands that will be on our systems, we will be hurting ourselves if we cut back now. I think we will just have to redouble our efforts to build capacity as growth overtakes us. So I am satisfied with that strategy for now.

I am also encouraged with the contacts the Premier and the various Ministers have made in Ottawa on things, such as new investment money for highways, for economic development, for the non-renewable resource strategy, and the health program. These are encouraging. We sure hope there is going to be results, but we have had a couple of signals in the last few days or weeks that the federal government may not be all that willing to follow through with this. They pulled back on the Protected Areas Strategy commitment, on things like the Giant miners. It gives me cause to think we had better have a plan B that we should be looking at.

So my question, Mr. Chairman, is at what point is the department going to have to say, "Gee, if Ottawa does not come through with some new spending in these areas, we are going to have to start looking at those cuts." We just have to. My question though is, at what points in a time basis, on a calendar basis, will the Minister have to say, "Gee, Ottawa is not coming through. We are going to have to change our strategy." Could the Minister explore that area? Thank you, Mr. Chairman.

Mr. Handley.

Thank you, Mr. Chairman. I can assure the Member that at the same time as we are proceeding optimistically in our negotiations with the federal government, hoping that they will come through on the non-renewable resource investments we are asking them to make, we are also at the same time working internally in the departments on a worst case scenario, if we just got nothing from them and they continued to renege on some of their commitments and obligations in other areas. It is a difficult one because out of a total budget this year, I am looking at revenues of $751 million. Our ability to generate revenues and make a big difference in the North is pretty small because 80 percent of that roughly comes from the federal government. So we would have to have a horrendous demand on our people to ever be able to balance the budget.

So the worst case scenario has to be going back to the federal government to renegotiate the grant, looking at things like increasing the borrowing limit and so on. We are looking at a whole host of scenarios here at the same time, so that we are not putting all our eggs just in that one basket and not putting any thought toward the other scenario if we do not get any support at all. Thank you.

Thank you, Mr. Minister. Mr. Braden.

Thank you, I guess I would like to return to my question. In a time sense, when given the calendars there is a federal election coming up. I think the departments have already started the planning cycle for the 2001-2002 budget year, but you know at some point along that process, will it be November of this year, will it be February of next year? The writing is going to be on the wall, some of the money will be there, some of it will not.

The question is, when is the Minister going to be taking that measure of Ottawa's largess, or lack of it, and come back to us with the good news or the bad? Thank you.

Mr. Minister.

Thank you, Mr. Handley. Mr. Miltenberger, you do have 10 minutes.

Thank you, Mr. Chairman. It should actually be 19, because I only got to use 30 seconds of my first 10 minutes. However, I would like to thank the Chair for his recognition.

Mr. Chairman, I just have a question on this hotel tax. If the intent of the Minister was to run us up the flagpole, so to speak, and see who saluted, at least at this Assembly, he has definitely gotten some reaction.

I have not heard anything in my community really strongly about this either way. I do have a question though, just to my very rudimentary math on the financial implications. I recognize the Minister said this was a draft. In my questions to the Minister yesterday, I asked about when you want to look at the true cost of government, in terms of the amount of money that they spend on accommodations. It has to be more than just employees. There are health boards, school boards, other agencies, NGOs, communities that get their funding entirely from the government, not to mention all the contractors and consultants that will just add that cost into their bill to the government.

So my question to the Minister is, as they fine tune this, if these are in fact just the first cut rudimentary figures, which it appears they are, will they be sharpening their pencils in terms of their calculations?

In terms of the $1,250,000, because with that big piece of the equation missing, it will affect the bottom line in terms of potential revenues. Thank you.

Mr. Handley.

Mr. Chairman, I did commit yesterday to try to pull a more accurate estimate of how much we as a government are paying directly and indirectly.

Directly, I mentioned it was six to eight percent, it worked out from our employees traveling. But we do give contributions, grants, and so on to government boards, agencies, other groups, including aboriginal organizations and so on.

To figure out how much they really spend on accommodation, we practically have to go to everyone of them and get them to give us an estimate because we have no way of knowing exactly how they spent their money. In a contribution, they do not have to account back to us for that kind of detail. I will do that and we hope to do that as we do the consultation, but I certainly will not have that for tomorrow. Thank you.

Mr. Miltenberger.

Thank you, Mr. Chairman. I do not expect that by tomorrow. Once again, I am concerned, with my four and a half years experience with financial projections, if in fact you project $1,250,000 based on just government employees.

The reality is, for example, in Health and Social Services, there is over 60 or 70 percent of their budget right off the top. The two largest departments in government are about $175 million. The majority of their budget, right off the top, goes to the health boards and school boards. So it is a significant chunk of the government's budget.

There is going to be an upward pressure on all of their costs, so I am concerned that if the figures are not accurate, if we accept his projection through rose colored glasses and then the money is not raised, the commitment and the expectation of the tourism sector is that they are going to get a certain amount of money, $1 million a year, injected into their sector. If that does not come true, because we have not done our numbers tightly enough, then it reflects badly on us all.

I am not necessarily opposed to this. I just want to make sure that given the test of even a short period of time, that these things will stand scrutiny and that question is being asked.

So I just would assume the government is bringing forward a tax increase and would have quite tight numbers. This document is very broad and general and rudimentary from what I can see. Thank you.