Under the area of transportation strategy, Mr. Chairman, the Minister and his department informed the committee that the government is proposing a user fee for commercial traffic on our highway system. This proposed fee would generate funding that will be directed specifically for the maintenance, development and expansion of our highway infrastructure. A proposed fee of five cents per tonne per kilometre (payload charge) will apply to commercial transportation on territorial highways. A user fee as opposed to a tax will not affect our formula funding agreement with Ottawa. Under the current funding agreement, an increase in our tax revenues would incur an almost proportionate reduction in federal funding transfers. A user fee would avoid this costly readjustment in our federal grant funding. This investment plan would increase highway spending by $100 million over a four-year period. Expenditures will be funded by a highway user-toll on commercial trucking that will raise $15 million annually. Additional investment needs will be leveraged with the projected revenue stream into short and long-term borrowing. Revenues will go to a dedicated highway investment trust fund.
The committee expressed concern, Mr. Chairman, that this proposed user fee would negatively impact upon our cost of living, which is already expensive. Compounded by increasing fuel prices and our remoteness, our cost of living will be substantially higher than our southern neighbours. Committee members commented that a user fee would merely be passed on to the consumer, northern residents, businesses and government. The department replied that the government will give a cost-of-living tax credit for NWT residents to offset increased transportation costs that would be passed on to northern residents and businesses by transportation companies.
The committee stated that a safe and reliable transportation system is an important key to sustained economic growth. Furthermore, a transportation system that would provide supplies to communities safely, cost effectively, economically and efficiently, while providing access to minerals, oil and gas would be on target.
The committee commented that if the government is able to mitigate the costs of highway construction with minimal impact upon northern residents, then its Members are in support of this initiative. In recognition of the overall impact of this initiative, the committee referred this issue to the Standing Committee on Accountability and Oversight to allow further study by all regular Members.