Thank you, Mr. Speaker. Mr. Speaker, in my budget address in February of this year, I outlined the fiscal strategy of this government. This strategy called for the government to make the critical investments that would ensure that NWT residents benefited from resource development.

At the time this decision was made, we recognized that without access to royalties and other resource revenues, the government did not have enough money to make all of the investments needed. But with the belief that we could negotiate a resource revenue sharing deal with the aboriginal and federal governments, we decided we would make as many investments as we could to implement the strategies and direction of Towards a Better Tomorrow. We were prepared to make these investments even if we had to go into debt.

However, the amount of debt we were prepared to incur was limited. It was limited by the fact that we have a federally imposed borrowing limit that has often been referred to as our debt wall. It was also limited by the fact that we would need new sources of revenue to pay back this debt. If we had to pay it back from existing revenues then that would mean cutting programs and services and we were not prepared to do that.

To ensure we could pay back the debt we needed to keep our new investments modest, we needed to push hard for a resource revenue sharing deal and we needed to determine if some of the debt could be paid for by other means, such as the proposed highway toll. All of these measures were critical to our fiscal strategy and the related investment and spending plans. These plans anticipated new revenues but also involved borrowing over $200 million additional by the end of our term.

Mr. Speaker, at the time we launched this fiscal strategy in February, I presented a balanced operational budget, calling for a small $2 million surplus. Our borrowing for 2001-02 was primarily to finance our capital investments. Since then, we have had both good and bad economic news.

The good news has taken the form of the resolution of an outstanding formula financing issue with the federal government and the potential, once again, of being the beneficiary of a large, one-time corporate tax payment in the Northwest Territories. These two events have resulted in a one-time increase in our revenues of over $100 million spread between last fiscal year and the current year. Later today, I will be tabling the unaudited interim accounts for last year.

The bad news has been the recent world and national economic slowdown, which has been worsened by the events of September 11th. Added to this has been slower than anticipated Northwest Territories population growth, temporarily lower natural gas prices, softer international demand for finished diamonds and reductions in tourism. Although the government is still confident that the Northwest Territories' economy will develop and expand dramatically over the next few years, we may have to be more patient than we thought. This means we will have to be fiscally cautious while we closely monitor world events and economic markets over the next year.

The one-time revenues that we recently received will afford us some breathing space while we reassess our fiscal strategy in light of these world events. Instead of having to go into immediate debt to finance our capital programs, we can draw on this one-time revenue and avoid the $75 million cash deficit we had forecast for the 2001-02 fiscal year. This revenue will also reduce the more than $200 million of borrowing we had planned over the next few years as we moved forward with our spending and investment plans.

Continuing with these plans is critical to our ability to benefit from and cope with resource development, as well as achieve other priorities, such as helping Northwest Territories residents deal with the northern cost of living. Initiatives like the recent increases to the Northwest Territories cost of living tax credit and income support rates, and the tax reform recommendations we anticipate from the committee reviewing our personal tax system, are examples of the types of changes we must still pursue.

In the longer term, our fiscal health is still very dependent on oil and gas development proceeding and on completing a fair deal on resource revenue sharing. Without these economic gains, we still continue to be reliant on a financing agreement with Canada for the majority of our money and it looks like future formula financing agreement revenues will be lower than anticipated due to the national economic slowdown and slow population growth. In the past few months alone, the forecast revenue yield from our formula agreement over the current and next three years has declined by over $100 million.

As the Premier just advised in his sessional statement, our efforts to secure federal investment in the Northwest Territories must now compete with new national security and defence priorities.

Mr. Speaker, this does not mean the government will abandon its current fiscal strategy or shy away from continuing to make critical investments. It does mean we will have to keep the level of these investments affordable and constantly review how we are going to ultimately pay for them. It also means we have to continue to look at our own ability to pay for the investments we want made. This may mean investing less aggressively than we originally planned but investing nevertheless.

It is my hope world events and markets stabilize over the next few months so that I can bring you more clarity in the February budget session. Along with my provincial and territorial colleagues, I will be meeting with the federal finance Minister this coming weekend. After that meeting, I hope to have a better understanding of the national economic picture and of how governments across Canada anticipate responding to the new situation. In the meantime, we should stay the course, avoid unnecessary debt and monitor events around us vigilantly. Thank you, Mr. Speaker.

-- Applause