Yes, Mr. Chairman, certainly. Any way the Chair wishes to conduct it, I am open.

Thank you, Mr. Handley. Mr. Dent.

Thank you, Mr. Chairman. If I might then, first of all, the Minister, in his statement, noted that in February when he presented the original fiscal strategy for the year, he presented a balanced operational budget calling for a small $2 million surplus. He noted that the borrowing would be primarily to finance capital investments. I was wondering if we could find out from the Minister what precisely was the amount of borrowing that would have to be undertaken to finance the capital this year and was the net change then forecast in the cash position?

In other words, although on the operational side we are not showing a deficit, in terms of the total cash expenditures for the government, I am assuming from this statement that there was in fact a deficit because we are spending more than what we have in revenues when you put both operations and capital expenses together.

Thank you, Mr. Dent. Minister of Finance, Mr. Handley.

Mr. Chairman, I am assuming that the Member is referring to the February 2001 fiscal update, the fiscal framework, is that what you are looking at?

Clarification, Mr. Dent.

Thank you, Mr. Chairman. I am looking at the fiscal update which is Minister's Statement 31-14(4), which was made in this House on October 23, 2001. On page 2 of our copy, the copy that was distributed in the House when the statement was made, the first full paragraph at the top of the page talks about launching the fiscal strategy in February. I am not referring to a specific document in February. I am referring to his statement in which he mentions the launch of the fiscal strategy in February and my question is based on that.

Thank you. Mr. Handley, have you found it?

Mr. Chairman, in the fiscal framework that was presented to AOC on September 25th, that is our most recent one and that is the one on which our business plans are built, our capital investments amount of $98 million this year. That is the one the Member is referring to. For this fiscal year, we are showing a total cash surplus for the 2001-2002 year of $120 million. That reduces, based on current expected revenues and expenditures, to $29 million in 2002-2003 and $104 million in 2003-2004, by the end of 2003-2004. Thank you.

Mr. Dent.

Thank you, Mr. Chairman. From that I am assuming, and I noticed that he mentioned later on in his statement, that there was a projected $75 million cash deficit which had been forecast but which we are now avoiding. The number I am specifically looking for is the difference between that $75 million deficit and the cash surplus and asking if we could have projected through to the end of the year, which I think he did. He said there was going to be a surplus number. He has answered the question I was looking for in a bit of a roundabout way.

I was wondering if he could also answer a question on the next paragraph from the one I was first talking about. He talks about a one-time increase in revenues of over $100 million, spread between the last fiscal year and the current year. Could he please indicate, just so the public understands, what is the difference? Not year-to-year, but how much more revenue has been received by this government over what was forecast in the budget that was presented to and passed by this House in March of this year?

Minister of Finance, Mr. Handley.

Mr. Chairman, if I could round these numbers off a bit, they are not exact. Since we did the budget and presented the framework in February 2001, we have received roughly $60 million that was the one-time adjustment that Minister Martin agreed to make on the PL factor in our formula in the last fiscal year. However, we received it this year. Actually, it is the one-time $20 million of corporate taxes and then we are anticipating receiving here another roughly $80 million in one-time corporate taxes. That works out to roughly $160 million. Then of course there have been adjustments that have been made because of population numbers and other factors that came into play.

Mr. Dent.

Thank you, Mr. Chairman. On the next page of the Minister's statement, he talked about how in the past few months alone the forecast revenue yield from our formula agreement has declined by over $100 million. I have had some experience with the formula, so I have an idea what may be causing this, but I think it would be useful for the public to have an understanding of what would cause the formula to fluctuate by $100 million in that period of time. I would ask the Minister if he could give us, in layman's terms, an explanation so that the public might have some understanding of what has led to this change and what sort of impacts we can expect as a result of the world economy on our formula financing.

The Minister of Finance, Mr. Handley.

Mr. Chairman, that decline of over $100 million is forecast for the current and the next three fiscal years. If I look ahead after this current year, the next three years, then we are right now forecasting about $100 million decline in the formula.

We are anticipating most of that will come from anticipated reduced spending on the part of Canada and the provinces. That is based on the Conference Board of Canada forecast of our economic future. These are very much forecasts on what is happening in Canada and how it may impact. That is the biggest adjustment.

Second is we also have some ongoing concerns with regard to population numbers and differences on Stats Canada's estimates. We have included that factor in as well. We will get Stats Canada population numbers, which make a big difference in our formula. We will hopefully get those next summer. At this point, I cannot really predict it.

Essentially, to answer in layman's terms, what is happening is spending is projected to decrease across Canada by all governments, all consumers. That will have an accumulated effect of about $100 million over the next three years.

Mr. Dent.

Thank you, Mr. Chairman. I had been hoping that the Minister might engage in a bit of an explanation about the provincial local escalator clause, the spending clause that relates to provincial and local spending in the formula financing arrangement. I am not sure that the public understands how economic change in other parts of Canada impact on our revenues.

The Minister of Finance, Mr. Handley.

Mr. Chairman, our formula is a fairly complicated one. Two of the main factors that have an impact on us are our population numbers and provincial local spending across Canada. The government works out the spending increases or decreases that might be across Canada and, based on a ratio, then adds that or uses that in calculating our money. If provincial local spending across Canada goes down, then there will be a downward adjustment of our revenues as well. If provincial local spending goes up, we will get an increase.

I believe that is based on the assumption that we will experience the same kinds of trends and should benefit from the same kinds of trends that are happening across Canada. If we were in a period of economic growth, it would not just be the federal government that would get the benefits of economic growth in the Territories. We would also get some of that built back into our formula. I do not know if that helps with the explanation or confuses it.

On the population factor, which is another major factor, then our formula is adjusted according to our population growth or decline. Again, there is a formula for working it out but it works out to roughly $13,000 to $15,000 per person, which is the basis for calculating our formula. Thank you.

Thank you, Mr. Handley. We are dealing with Minister's Statement 30-14(4), Sessional Statement and Minister's Statement 31-14(4), Financial Update. General comments. Mr. Dent.

Thank you, Mr. Chairman. Just to carry on with my questions for the Minister, in the opening paragraph of the statement, the Minister talked about the fiscal strategy of the government calling for critical investments to ensure that Northwest Territories residents benefit from resource development. I think all Members of this House have supported that initiative. Obviously, it is going to cause us some concern if there is going to be a drop in revenues that it may cause some squeezing in our ability to borrow, because the Minister has also noted in this statement that we have limited capacity to handle borrowing, particularly in advance of seeing resource royalty revenues.

Just so that the public has a better understanding, and I think all of us here, what lies ahead? Knowing we have had some one-time revenue increases but understanding that we are still looking at expenditures each year that exceed projected revenues, could the Minister project for us, based on current levels of spending and on what are now anticipated levels of revenues, when would we project that? If we do not make some changes, either on the revenue side, being successful at resource revenue sharing or on the expenditure side, maybe making some trimming necessary, when would we hit that so-called debt wall? Would it be 2006-2007, 2007-2008? Does he have a sense right now of how many years we have to either be successful on the revenue side or that we are going to have to start looking at expenditures?

The Minister of Finance, Mr. Handley.