Thank you, Mr. Premier. Supplementary, Mr. Krutko.

Thank you, Mr. Speaker. Can the Premier acknowledge in the House how soon can he get back? Can he get a reply back before the adjournment of this House?

Thank you, Mr. Krutko. The honourable Premier, Mr. Kakfwi.

Thank you, Mr. Speaker. Mr. Speaker, I will do what I can to make a commitment in the House to the matter. Thank you.

Thank you, Mr. Premier. Item 6, oral questions. Item 7, written questions. The honourable Member for Mackenzie Delta, Mr. Krutko.

Mr. Speaker, I would like to know:

1. Where is there a policy that limits the access or use of gravel pits in the Northwest Territories?
2. If there is no policy, then why is the department both suggesting the use of the airport site and then denying the airport site?
3. Who would provide permission for access to gravel sites located on the Department of Transportation land with regard to other employment? Also, what role does headquarters play in that decision?

Thank you, Mr. Krutko. Item 7, written questions. Item 8, returns to written questions. Item 9, replies to opening address. Item 10, petitions. Item 11, reports of standing and special committees. The honourable Member for Inuvik Boot Lake, Mr. Roland.

The Standing Committee on Governance and Economic Development is pleased to report on its review of Bills 9 and 10, the Commercial Vehicle Trip Permit Act and the Public Highway Improvement Fund Act, respectively. Collectively, they are also referred to as the proposed Highway Investment Strategy. This report was prepared by members of the Standing Committee on Governance and Economic Development. The committee is comprised of myself as chair, Sandy Lee as deputy chair, Bill Braden, Paul Delorey, David Krutko and Steven Nitah.

On June 13, 2001, Bill 9 was introduced by the Honourable Vince Steen, the Minister of Transportation; and Bill 10 was introduced by the Finance Minister, the Honourable Joe Handley. Both bills received second reading on June 14, 2001 and were referred to the Standing Committee on Governance and Economic Development on the same day.

Under the rules of the Legislative Assembly, the standing committee has 120 days to review and report on bills. The committee met frequently to discuss and review research material and legal issues surrounding the bills. The committee, which is not part of Cabinet, conducted public hearings on Bill 9, the proposed Commercial Vehicle Trip Permit Act, and Bill 10, the proposed Public Highway Improvement Fund Act, in the following communities:

(a) in Inuvik on August 27 and 28, 2001;

(b) Fort Simpson on September 13 and 14, 2001;

(c) Fort Smith on October 10 and 11, 2001;

(d) Hay River on October 11 and 12, 2001;

(e) Norman Wells on October 15 and 16, 2001;

(f) and in Yellowknife on October 17 and 18, 2001.

Prior to the public hearings, the committee placed advertisements in newspapers in the Northwest Territories to inform the public of the committee's review, to invite oral presentations and written submissions, and to advise that applications for travel assistance would be considered by the committee. Public service announcements were also aired on northern radio stations and notices placed on community television channels. Media advisories were sent informing the press where the hearings would be held. In addition, the committee provided information packages and offered assistance to over 200 identified interested parties to appear before the committee.

The Standing Committee on Governance and Economic Development would like to thank all the individuals and organizations that presented their views and concerns at the public hearings or by written submissions. The comments and suggestions were of great assistance and were carefully reviewed by the committee during its deliberations.

Appendix 1 and appendix 2 of this report list the numerous concerns and options presented by witnesses who appeared or sent written submissions to the committee, organized by community.

Bill 9, the Commercial Vehicle Trip Permit Act will allow the government to collect trip permit fees from commercial vehicle traffic weighing over 12,000 kilograms using the territorial all-weather public highway system. It would not collect permit fees from non-all-weather public highway systems such as ice roads. The trip permit fee is based on a truck's axle configuration and its route through designated highway zones. The larger the truck and the farther it travels, the greater the trip permit fee. There will be no need to weigh each truck. The fee is determined by the truck's carrying capacity and the trip it takes. From the Department of Transportation's perspective (and not necessarily from industry or consumer's perspective), the proposed system would be simple to administer and would allow carriers to obtain trip permits over the telephone.

Under the proposed system, for example, a truck does not need a trip permit if it is empty, if its load begins and ends in the same highway zone, if the trip is only over a seasonal winter road, or is engaged in highway construction.

All fees collected from the Commercial Vehicle Trip Permit Act will be paid into the Public Highway Improvement Fund that is proposed under Bill 10, the Public Highway Improvement Fund Act.

This fund will enable the government to finance reconstruction and upgrading of all existing territorial highways and pay for costs of administrating the trip permit system. It will not finance new highway construction. The department stated that the commercial vehicle trip permit fee on commercial trucking would generate $15 million annually.

Bills 9 and 10 are the foundation of the Department of Transportation's proposed Highway Investment Strategy. The objective of the strategy is to improve the existing territorial all-weather highway system.

The strategy will allow the government to invest $100 million over and above the $48 million planned expenditure over the next four years, in the reconstruction and upgrading of existing all-weather highways throughout the Northwest Territories.

In his opening remarks at the outset of the hearing, the chair, being myself, advised the public that the proposed bills are government initiatives and that it was the committee's responsibility to hear the views and concerns of residents of the Northwest Territories. I added that the committee is not part of Cabinet. Finally, I stated that after careful consideration, the committee would report the public's concerns back to their colleagues in the House by way of this report.

The committee heard many concerns from stakeholders and other members of the public arising from the review of Bills 9 and 10. A comprehensive list of these concerns are listed by community in appendix 1 of this report. The committee also heard and received many alternatives to the proposed Highway Investment Strategy from the public. These alternatives or options are addressed later in the report and are listed by community in appendix 2.

The overwhelming majority of public opinion centred upon the following issues:

Without exception, individuals and non-profit organizations were of the opinion that the ordinary residents of the Northwest Territories, not the resource or trucking sectors, would ultimately shoulder the trip permit fees and that these fees would have significant impact upon seniors, the disabled and fixed- and low-income earners. The committee heard from the majority of presenters that Bills 9 and 10 should be scrapped and other options considered. All presenters agreed that the roads need improvement, but this strategy is the wrong way to do it.

Presenters noted resource companies would be able to deduct the trip permit fees from their gross taxable income. Trucking companies would not absorb the fees as they are in the business of making money and will have to recover their costs. These fees, further increased by costs relating to their complex administration, will be passed on to their customers who in turn recover their costs from the final consumer, the residents of the Northwest Territories. As the goods are transferred from one party to another, costs are increased by the inclusion of GST and other overhead such as supplementary paperwork, which significantly increases the ultimate costs of goods.

In its written and oral submissions to the committee on October 12, 2001, the Hay River Seniors' Society concluded that:

The road tax, or trip permit fee, will be applied universally and its impacts on our economy can be potentially devastating, whether it is a package of chewing gum or fuel to heat your home. This tax, or fee, reaps rewards; but this revenue will be converted into higher costs that are passed onto consumers.

With an increased cost to people receiving social benefits and those living on fixed income, including seniors, this plan offers great peril... for us on fixed income, it is a double whammy. We must first absorb the increased cost of living through belt tightening.

This is further supported by a presentation made by the Northwest Territories Trucking Association on October 17, 2001, in Yellowknife, which stated:

Transportation is an essential service. It is a significant component of the high cost of living in the North, a cost that includes food, shelter, heat, clothing and other essentials. The proposed toll fee will increase these costs further.

Our Finance Minister says it will add $300 per year for a family of four. The actual cost increase will be about four to five times higher for a family in Fort Good Hope than it will be for a family of four in Hay River. The recently approved increase to our cost of living tax credit will give additional relief of $177 per year for our wealthiest citizens and less than $100 for a family with a net taxable income of less than $35,000. (Speaking notes for a presentation by the Northwest Territories Trucking Association to the Standing Committee of the NWT Legislative Assembly, October 17, 2001, page 2)

Furthermore, only a small portion of goods and services purchased by the average Northwest Territories household was taken into consideration by the government in its impact analysis of the fee upon Northwest Territories residents. In a study commissioned by the Chamber of Mines for the Northwest Territories and Nunavut, it was reported that:

The government provides data only for the impact on groceries, heating fuel and motor fuel which, according to Statistics Canada, accounts for only 20 percent of the 1998 Northwest Territories household expenditures. It does not take into account the fact that all goods and services, such as cars, building materials, air tickets, et cetera, in the Northwest Territories households would be impacted by the tax or fee.

The exclusion by the government of 80 percent of the goods and services purchased by the Northwest Territories households in their cost analysis significantly understates the impact of the road tax on Northwest Territories residents. (A Review of the Proposed Road Tax on the NWT Economy, Preliminary Report -- A Report Prepared by Ellis Consulting for the NWT and Nunavut Chamber of Mines, October, 2001, page 2)

The committee heard unanimous opinion that the living cost will substantially be increased for residents living and operating businesses in communities that are not on the all-weather highway system.

The proposed Highway Investment Strategy provides funding for the reconstruction and maintenance for the existing all-weather highway system, but not for new highways.

Communities that are not on the all-weather highway system will not receive any direct benefit, but will still be required to pay for part of the strategy through the increased costs of goods and services. Goods including fuel, food and other essential supplies, are in most part shipped via truck to the nearest regional centre before being flown in to these isolated communities and costs will be recovered by every party in the transaction except for the final end-user, that being the residents in the isolated communities.

With the exception of the Food Mail Program, operated by Canada Post and partially funded by the Department of Indian Affairs and Northern Development, there are no other subsidized freight programs for isolated fly-in communities.

Mr. Kevin Diebold, the mayor of Norman Wells, which is a community that is not on the all-weather highway system, informed the committee that:

The council of Norman Wells opposes the imposition of a permit fee. The rational -- freight costs are already the greatest single impediment to the North.

It creates an additional burden for already high freight costs on our area residents for whom there is no direct benefit. That is not only Norman Wells, but I assume that if you were to hold your meetings in other communities in the Sahtu region, none of which are on the highway system, you would hear the same thing.

Additional costs for administration of the program would also be passed on to the consumer, both for trucking and retail. The cost for a kilogram of freight is greatest in the Sahtu, except for Wrigley. (Norman Wells Committee Transcript, October 15, 2001, page 3)

Most presenters and stakeholders recommend not passing the bills and exploring other options to expand and maintain the territorial highway system. However, if Bills 9 and 10 are implemented, significant numbers of presenters were of the position that exemptions or subsidies for essential goods be established for communities not on all-weather highway systems. The cost of living is expensive enough for fly-in only communities without them having to contribute to a program from which they do not receive a direct benefit.

There was agreement among all businesses that appeared before or made submissions to the committee that if the Highway Investment Strategy is implemented, it will result in hardship and some closures for northern businesses.

All businesses will either have to absorb the cost or pass it on to the customer. Many businesses in the Northwest Territories, especially those in the manufacturing and export sectors, will no longer be viable. The following submission reflects the general sentiment that came before the committee:

The high cost of transportation in the North is perhaps the greatest single impediment to developing the northern economy and increasing business activity and employment opportunities. And that inputs for the production of northern goods and services are expensive to import and finished products are expensive to send to markets. We find it disappointing that the government is seeking to raise the cost of transportation even further.

However, we will not be the only industry to pay for this tax and substantial costs will be passed on to the public as well as to government. (Diavik Diamond Mines, Inc. letter and presentation to the committee, October 17, 2001, page 2)

Regarding the mining exploration activity or industry, Diavik reported that:

At the 2001 Mines Ministers Conference, the Prospectors and Developers Association of Canada has clearly indicated the sad state of the exploration industry in Canada. It has been steadily shrinking for the last four years. Additional costs will further raise the barrier to exploration and discourage junior exploration companies from investing in the Northwest Territories.

These are difficult times. There is a global economic slowdown and the northern economy is not immune from that effect. How long and difficult it will be is still not clear. We do not believe that creating a new tax is wise, nor is it necessary at this time. (Ibid., page 6)

In addition, the manufacturing and export sector will be particularly impacted as these industries have to compete in the national and global marketplace. An example is Fibreglass North. Not only do they have to pay a trip permit fee on raw materials imported to their manufacturing facility, but will be double charged when they export their finished product to market. Fibreglass North can pass these costs on to the customer, but it will most likely lose business to more economical manufacturers in lower cost jurisdictions like Alberta. A $200 tank would cost $1,000 by the time it gets to the Alberta border because of the backhaul charge, which would be $800.

The committee noted that unless businesses can find measures to avoid this tax, such as the use of other modes of transportation that are limited or prohibitively expensive, they will either have to close or relocate south. The proposed Highway Investment Strategy will also discourage people from starting or expanding their own businesses as well as businesses from moving to the Northwest Territories.

A proposed commercial trip permit fee is also difficult and expensive to administer due to the complexity. Unless a toll is based on weight or volume for liquids and bulky items, it will be unfair. RTL, Robinson Enterprises Limited, expressed some of its concerns in a letter to the committee that:

The majority of shipping customers in the Northwest Territories access LTL (less than load) service. The freight shipments of many customers are combined to make up a full load. Therefore, the permit fee associated with this LTL load must be fairly dispersed between the shipping customers.

In a perfect world perhaps, all customers ship to one destination and even more perfectly, the configuration of trailers used for the trip will always weigh in at the maximum legal axle rate. In the real world, however, there are space consuming, but light weight goods to be shipped (baked goods, potato chips, insulation, et cetera) and very likely there will be line drops (destinations along the way where some cargo is to be delivered or perhaps one or two trailers be dropped off).

Freight transportation is akin to assembling a jigsaw puzzle very quickly. Perishable and time sensitive commodities will not wait for a perfect load configuration and often space is maximized before weight is. The transportation industry is not able to absorb shortfalls in toll collections for less than maximum weight loads. The result will be hidden tolls built into rates.

Shippers or consumers must be able to expect consistent and fair applications of their share of the permit fees. Fifty pounds of potatoes hauled to Hay River should trigger the same toll, whether moved in super B vans or a body truck, regardless of which carrier has been hired to move the goods. In analyzing the proposed fee structure, we note that the per pound rate for maximum weight loads varies with the configuration. (RTL, Robinson Enterprises Limited, July 13, 2001, letter to the Standing Committee on Accountability and Oversight and referred to the GED, pages 2 to 3)

Bills 9 and 10, if implemented, would severely impact upon the Government of the Northwest Territories' ability to maintain delivery of existing programs and services. The government, directly or indirectly, imports most of the goods it needs from the south. These goods may include heating fuel, construction supplies, medical equipment, textbooks and other essential goods. These goods are most likely shipped by carrier, which must pay the vehicle trip permit fee. These fees are passed on to the customer, in this case, the government.

A report prepared for the NWT and Nunavut Chamber of Mines concluded that:

The GNWT will pay a significant portion of the tax and it will lead to higher costs for the departments and agencies, as well as those of local governments, school boards and publicly funded agencies. In addition, the federal government would be impacted by the tax. It is estimated that the government sector will pay about $4 million or 20 per cent of the tax revenues in 2002. (A Review of the Proposed Road Tax on the NWT Economy, Preliminary Report -- A Report Prepared by Ellis Consulting for the NWT and Nunavut Chamber of Mines, October 2001, page 2)

Further, the NWT Trucking Association stated that:

Will the government be looking for more money to make up the added costs? Will municipalities be looking for more money from the GNWT or will they also raise taxes to pay for their increased costs? How much revenue will the government lose as a result of bankruptcy and losses in businesses and employment income? (Presentation by the NWT Trucking Association to the Standing Committee of the Legislative Assembly, October 17, 2001, page 2)

The general consensus amongst presenters is if the territorial government does not have the resources to maintain and expand its highway system, the government should lobby for and obtain the necessary funding from the federal government.

The committee heard many alternatives to the government's proposed Highway Investment Strategy from stakeholders and other members of the public. A complete list of these options is listed by community in appendix 2 of this briefing note. In summary, the majority of public opinion suggested the following options:

The option most mentioned at all the public hearings held by the committee is, cancel the proposal and work with stakeholders, aboriginal groups, communities and other members of the public to explore other options. The passage of Bills 9 and 10 represent considerable hardship for the residents and all sectors of the economy of the Northwest Territories.

Ms. Judy Harder of Inuvik made the following statement to the committee:

I oppose this toll tax because it is going to increase the freight rate on everything that we buy, whether it be clothing, food, fuel for our vehicles, whatever is brought up the highway is going to have an increased freight rate. There is nothing in the North that arrives here where if it does not come by truck, it comes by air. We already know that when the road closure happens, the air-freight cost is over a dollar a pound. If it is not coming by air, it is coming by truck.

My petition states that we the residents of Inuvik region oppose the proposed toll fee on the Dempster Highway. To even consider increasing the cost of freight to this region will increase the cost of living for every man, woman and child and that is unacceptable. We do not agree to an increase to our food costs, clothing costs, transportation costs, fuel costs, everything that we buy. We request that the Government of the Northwest Territories rescind this proposal. (Committee transcript, Inuvik, August 27, 2001, page 11)

The second most frequent option was to lobby the federal government for more funding and aggressively pursue a greater share of our resource royalty revenues from the federal government.

In the past and within our current formula financing agreement with Ottawa, it is the federal government who receives most of the benefit from resource development in the North. Under the existing formula financing agreement, for every additional dollar in tax revenues that is received by the territorial government, Ottawa receives 80 cents. If the federal government is receiving most of the benefit, then they can pay their fair share for the investment in highways.

There are no guarantees from the federal government that the proposed fee would not be clawed back in future formula financing agreements with Ottawa. This was an ongoing concern of the committee. Unfortunately, in the committee's correspondence with the territorial Finance Minister on this issue, the Minister was unable to provide a solid assurance that the proposed fee would not be clawed back:

I am writing in response to your letter of May 25, 2001, in which you request a special revenue exclusion under the territorial formula financing for the new highway toll you are introducing. It is my understanding that although this is not a concern under the current TFF agreement, however, you are seeking a special exclusion for the next agreement which would commence in 2004-2005.

...I am not in a position to make such a commitment at this time.

...I would not want to prejudice the outcome of that process.

(June 18, 2001 letter to the Honourable Joe Handley, Minister of Finance, Government of the Northwest Territories, from the Honourable Paul Martin, Minister of Finance, Government of Canada)

Mr. Frank Pope, a town councillor from the community of Norman Wells, summed it up by suggesting:

When you go back and write your report on this, I think you should direct the Cabinet, the Premier, et cetera, to go after the federal government. That is where the dollars are. There are people who are being well paid from our resources from the Northwest Territories. Once De Beers and Diavik come on-line and that starts to pay for itself again, unless these things change, the royalties, the dollars are going to flow into federal coffers and they will give you a little back. (Committee's minutes, Norman Wells, October 16, 2001, page 10)

Many presenters were not hopeful, that despite the bill's shortcomings, the government would shelve the proposal. As a result, in light of the already high cost of living in the North, especially for isolated fly-in only communities, numerous presenters suggested exemptions be considered. These exemptions are twofold:

(a) If the proposal is considered, include exemptions for groceries, clothing and other essential goods to minimize the impact upon residents; and

(b) If the proposal is considered, include exemptions and/or subsidies for communities that are not on the all-weather highway system, as they will be the most severely impacted.

At every public hearing, members of the public, non-profit organizations and businesses encouraged the government to include a sunset clause in the proposed legislation.

Presenters were of the opinion that once a government, federal or territorial, introduces a tax or a fee, they will never withdraw it, even when the tax or fee's objective has been achieved.

Examples include our personal income tax system, which was implemented to pay for Canada's participation in World War I, the payroll tax and the GST.

The legislation as it stands does not have a sunset clause. The presenters would like a clause added to the legislation, even if it extends into the future Legislative Assemblies.

The Standing Committee on Governance and Economic Development conducted public hearings in six communities and received written submissions from numerous stakeholders in the Northwest Territories on Bill 9, the proposed Commercial Vehicle Trip Permit Act and Bill 10, the proposed Public Highway Improvement Fund Act. Members of the committee heard general consensus that Bills 9 and 10, collectively referred to as the Highway Investment Strategy, be shelved.

The overwhelming majority of the presenters and the members of the committee appreciated the need for improvements to our existing highway system. However, they concluded in the strongest terms that this strategy is the wrong way to do it.

The proposed strategy would severely impact upon the already high cost of living for the residents of the Northwest Territories, especially upon communities who are not on the all-weather highway system. These isolated communities would be required to pay for a program from which they will not receive a direct benefit. In short, it will not be the resource or trucking sector that will bear the brunt of this strategy, but ultimately, the costs will be borne by the residents of the Northwest Territories.

Almost all stakeholders and residents that came before or made presentations or submissions to the committee recommended the government work with the private sector, aboriginal groups, communities, residents and other stakeholders to develop and consider more realistic options that would minimize the overall impact upon our already high cost of living.

Accordingly, after a lengthy and detailed consultation process, the majority of the committee members on October 18, 2001, rejected Bill 9, the proposed Commercial Vehicle Trip Permit Act and Bill 10, the proposed Public Highway Improvement Fund Act.

In a press release made on October 23, 2001, myself, the Chair of the Standing Committee on Governance and Economic Development and Ms. Lee, the deputy chair, stated:

The opposition to this proposal was nearly unanimous. It was overwhelming. Everyone agrees we need to improve our highways. Most Northerners agree that the trip permit fee is not the route to take. (Ms. Lee)

The majority of our committee membership cannot in good conscience support the enactment of this legislation. We are hopeful that Cabinet and other Members have been listening to their constituents. (Mr. Roland)

Mr. Speaker, that concludes the report of the Standing Committee on Governance and Economic Development on the review of Bill 9, the Commercial Vehicle Trip Permit Act and Bill 10, the Public Highway Improvement Fund Act. Therefore,

I MOVE, seconded by the honourable Member for Range Lake, that Committee Report 8-14(4) be moved into committee of the whole for consideration. Thank you, Mr. Speaker.

Thank you, Mr. Roland. We have a motion on the floor. The motion is in order. To the motion. Question has been called. Is the House ready for the question? All those in favour? Thank you. All those opposed? Thank you. The motion is carried. The honourable Member for Inuvik Boot Lake, Mr. Roland.

Thank you, Mr. Speaker. I seek unanimous consent to waive Rule 93(4) and have Committee Report 8-14(4) ordered into committee of the whole for today. Thank you.

Thank you. The honourable Member is seeking unanimous consent to waive Rule 93(4). Are there any nays? There are no nays. Therefore, Committee Report 8-14(4) is ordered into committee of the whole for today. Thank you, Mr. Roland. Item 11, reports of standing and special committees. Item 12, reports of committees on the review of bills. Item 13, tabling of documents. The honourable Member for Weledeh, Mr. Handley.