Thank you, Mr. Chairman. Yes.

Mr. Chairman, on my left is the deputy minister of Transportation, Mr. Peter Vician, and on my right is Mr. Masood Hassam, the director of transportation planning.

Thank you, Mr. Chairman. I would like to make my general comments on the Minister's opening statement. This is my first opportunity to express my support for the investment on the Highway Strategy.

Mr. Chairman, I do not know if you are aware, but I have had an ad on the local cable network asking people to respond to the budget. I have stated in my Members' statement as well that I have been talking to people to get feedback on what they thought of this. I have not been hearing too much negative input. Those who I talked to, where I had explained what this proposal was about as much as I knew, I think there is a general sense out there that people are willing to do their part to see that this highway -- at least the highway from Rae Edzo to Yellowknife -- will be paved much sooner than is planned.

Mr. Chairman, for that reason, I want to state very clearly here that I support the Minister and the Cabinet for being very bold and courageous in coming up with this idea to build Highway No. 3 and all other roads quicker than planned.

Mr. Chairman, subject to the details on the financing and more information that we may get from the economic impact on individual residents which we did not receive full information on, I think the greatest thing about this is that we will no longer talk about why Highway No. 3 or other highways cannot be built. We will have to now talk about why things cannot be done and why everything has to be in the negative because we do not have money from the federal government on resource revenue, or because we do not have devolution, because we do not have money from non-renewable resources, because we just do not have the money after we pay for the hospitals and schools, and everything else -- that there is no money for highways.

Mr. Chairman, I think everyone here knows that the government's capital budget has been steadily decreasing for the last ten years. It is now less than ten percent of our budget. I think it is even as low as eight percent of our capital budget. I do not think that our road system could handle that sort of deterioration without any infusion of new capital into our infrastructure. Highway No. 3, right from the border to Yellowknife, is becoming almost dangerous because of the additional loads that are being carried by necessity because of the resource development that is happening. I believe that is also the case for many other parts of the highway system. For that reason, I have to support this, Mr. Chairman.

I like this proposal for a number of other reasons also. I like the fact that it is dealing with all of the highway system and not just Highway No. 3. It purports to improve all highways considerably within a very short period of time than was ever thought possible. I like this because I no longer have to badger the Minister in the House about when would he get the money for Highway No. 3. I was running out of different ways of asking that question, and I am sure that the Minister was tired of answering the same question.

Mr. Chairman, I like the fact that Highway No. 3 will be built within three years instead of the 11 years that is currently planned. I could not really ask for any more money for Highway No. 3 because I knew that a lot of money was already going for Highway No. 3 out of the whole budget for transportation.

Mr. Chairman, I also like this because the money will go where it is collected most, not perfect, but I am glad that Highway No. 3 and the users of Highway No. 3 will pay all of the costs and beyond, and pay for some of the costs of building other parts of the road. I think that should eliminate anybody speaking about how Yellowknife gets everything at the expense of other regions. I think this will show that Yellowknife will carry its share plus more for the others.

Mr. Chairman, I like the fact that there is no question of clawback on this funding because it is a trust fund and the money will be a fee and a toll and not a tax. There is no question about whether or not the federal government would penalize us and jeopardize our financial status when it goes into a re-negotiation three years from now. This money will stay and the money will go towards the highway.

Mr. Chairman, I like this because once the roads are paved and chip sealed in some parts, we could build money to build the bridge over the Mackenzie River. There will be an ongoing mechanism in place to build our war chest to make sure that there is enough money to build on our capital situation.

Mr. Chairman, I know that almost all Members out of Yellowknife during the election had as their campaign slogan the acceleration of the reconstruction of Highway No. 3. I believe that this is the best chance we have to contemplate building this road in a sooner time period than the 11 years currently contemplated, which is absolutely unacceptable.

I also like this proposal because once this road is paved we will then finally be connected to the rest of the world and the rest of the country, and will no longer be the last capital city in the country not connected by a paved highway and by the trail that it is now. I believe that it will really encourage rubber-tire traffic and it will encourage all sorts of other development. Once a certain period of paying has passed, I think it will contribute to decreasing the cost of living in the North because we would be very much part of the mainstream.

Mr. Chairman, I hope that the Minister does not mind that I took most of the 10 minutes to talk about how much I like this proposal. Of course, I am constantly listening to my constituents to get feedback on what they think of it, but I really want to applaud the government and the Minister for being bold and coming out with a strategy about what we can do instead of what we cannot do. Thank you, Mr. Chairman.

Thank you, Mr. Chairman. I hate to follow up Ms. Lee's comments with some more sobering comments of my own, but I do have some concerns about the very same proposal.

Although I also support an infusion of money into our transportation infrastructure, I think that it is important that we carefully analyze and assess exactly how we are going to go about doing this. I used the analogy in a Member's statement earlier that I think everybody would support putting more money into our transportation infrastructure, but I do not think too many people would support the department coming around household by household, knocking on doors and asking everybody to ante up $10,000 or $15,000 a family.

While those numbers may be extreme, I think it is critical that we get a good handle on exactly what kind of money we are talking about. I think the committee indicated their endorsement for this proposal, but they wanted to make sure that the impacts on northern residents were going to be mitigated. I believe they used the word "minimal". I think that is critical. I think when we look at the consumer price index here and realize the cost of living in the North is so high, anything that we do to further increase that I think would be a mistake.

We are asking municipalities, we are asking industry to try to get their employees to live in the North and not to be in a fly-over situation where they live south and work up here, but one of the hard sells we are having is convincing people of that. There are other things that have to be factored in. Quality of life is very important, but costs continually come up. When people look at these comparisons to the cost of living in Edmonton or Calgary or Grande Prairie compared to Hay River, Yellowknife, Inuvik, it is tough for them to swallow. As long as it is easy to fly into these locations, I think it will continue to happen, especially if we further raise the cost of living.

I know the department has done some calculations and looked at what they felt the impact per household of the Northwest Territories would be from this increased toll. I am not sure what the average size of a family is in the Northwest Territories, but I believe the department used a family of three. They also took a look at an average consumption of groceries and fuel per family, but there are a lot of other expenditures made by families that they were not able to calculate and they admit this, but I think they are significant.

I think that you will see that when you go here locally to the building supply store to buy two-by-fours and you buy the materials to build a new house, we could be talking about a significant amount of money on the price of building a new home in the North. I think these are big-ticket items that people will look at and compare these figures from now and then. I think if the increases are significant, we will hear about them, they will be in the media. This will certainly deter people from moving here.

It is important to also factor in not only groceries and fuel, but as much of our expenditure. We have to get a handle on our entire expenditure picture. If the tax credit can entirely offset this, that is one thing. If it can partially assist Northerners in paying these additional bills or mitigate partially, that is quite another thing. I am reserving any show of support for this until I have a clear picture in my mind exactly what it is going to mean for my constituents and for all Northerners.

Another thing is that it involves, by any estimates, is quite a significant amount of new borrowing. There are a couple of factors that have to be considered here. Certainly we are going to have to raise our borrowing limit. That has been discussed. While I think many of us can see that theoretically this can be self-liquidating if our projects on the amount of tolls we can collect are accurate, if we are way off, if the boom cycle that we are now in really peters out after the next few mines, then I do not know where that leaves us if we do not have the capacity to collect the kinds of tolls we think we will. We have to be careful here.

I think also if we are all convinced that we are on the verge of getting a resource revenue sharing deal with the federal government, that will also put us at ease and maybe make us feel that borrowing this $40 million is the right thing to do. However, if we have concerns, if we are not convinced, if we do not believe that the federal government is committed to devolution and resource revenue sharing, then I think some of us will further worry about that.

We have heard some good things from Minister Nault about devolution, but we all know there is a bureaucracy in Ottawa that does not seem motivated and cannot seem to understand that this would be a win-win situation. When the Minister indicated that he was not prepared to move DIAND positions to the Northwest Territories from Ottawa, it was a real slap in the face for this level of government. His concern for the families in Ottawa and not wanting to uproot these folks and move them all the way up here, I think that was a message loud and clear to us that maybe we are not as close as we might like to think.

The other thing that I am concerned about with the new borrowing is there are no indications that this toll will not be clawed back in our next revenue sharing arrangement. I think that we are going to do our best, as the Minister of Finance has said, to get an arrangement that works for Northerners and is agreeable and is positive, but there are no guarantees in this kind of thing.

One more concern, Mr. Chairman, I have is with this concept that trucking companies will simply pass the toll on to northern businesses who are not going to be expected to eat this because they will pass it on to consumers. For households, we have a tax credit. For the people we are really after and we are attempting to get royalties from industry, we are assuming that industry will pay the tab and that northern businesses will not be stuck with the bill, but I think there are situations where there are long-term supply arrangements with mines in place.

Northern companies have an agreement for the next five years to provide, for example, widgets at a certain price. The mines may simply say to them, we have a deal for the next five years and when that deal is up, we can renegotiate. So the commercial toll will simply come out of the contribution margin of these northern businesses. I do not think that was ever the intent. I hope this was thought through and I guess we will see exactly how many of these long-term arrangements are in place.

As I have indicated, Mr. Chairman, I am thrilled to see the department is taking a proactive approach and, as Ms. Lee has indicated, they are trying to stop talking about what we cannot do and they are trying to find new ways to think outside the box a little bit here and get our infrastructure upgraded and we desperately need it. I just need to be convinced that Northerners are not going to be bear the brunt of this because I think that is going to be critical for all of us.

The other thing I wanted to talk about was the program and functional review. Just briefly, I think when you talk about tolls that will increase our cost of living and you talk about airport landing fees, airport-lease rental, there are other things outside this department like the hotel tax proposal. I think the accumulated impact of these new additional levies, taxes and tolls is certainly going to have an effect on life in the North.

I hope we have a clear picture and a clear understanding of just what the total impact of all of these things will be. It is easy to look at each of these things in isolation and say, for instance, a total of this amount of a hotel tax of five percent or an airport landing fee for this amount seems small, but when you add them all up, I think we have a fragile...especially in tourism. I think the market is very fragile. I think these are people who come in here quite often who are very price-sensitive. We are going to have to be careful to make sure that we do not tip the balance.

I think there is sort of a break-even scenario that we have to run to make sure that we are not...we want to raise money, but we have to make sure in trying to do so, we are not keeping tourists from coming here because that certainly would not be very productive.

I would be interested to hear the Minister's thoughts on the cumulative impacts of some of these initiatives in his department specifically under the program and functional review. Thank you.

Thank you, Mr. Bell. Mr. Minister, any comments?

Thank you, Mr. Chairman. Mr. Chairman, perhaps I could respond to Ms. Lee and Mr. Bell simultaneously.

With regard to comments by the Member, Ms. Lee, the department does appreciate the support she indicated for the proposal. We wish to state though that this support or this initiative is really not just the brainchild of the department. This is the result of many consultations with stakeholders, including the comments by the past committee members as to the declining capital investments of this government into highways. It is simply because we did not have the revenue to do it. So this proposal here is really the result of many people being involved in what exactly we can do to raise revenue on a short-term basis and reinvest the revenue back into where it comes from. This initiative was put through to other Cabinet Members and, as you know, did receive the support of Cabinet before it appears here in our budget. However, I would like to point out that it is not just the department's initiative. Credit goes to everyone for this idea.

There is no doubt that there are going to be some negative aspects to it. People have to pay some price for benefits of an improved highway system. I suppose that you could really look at it as that you either pay the pain of driving on rough highways, or you pay the pain of paying a few cents more per kilometre for improving your highway. So whether it is done through a toll or it is done some other way, you still have to have some way of getting the money into the department so that we can do the job.

We took into consideration the possibilities of clawbacks from the federal government if we increased taxes in any way. So we had to come up with something like this, where it was not subject to clawback. I do not disagree with the Member, Mr. Bell, that in the future, this may be subject to clawback, but for the time being, it is not. It is something that the Minister of Finance is well aware of.

The cost of the toll to local residents of Yellowknife, we were thinking of that as well. We took the concern to the Minister and to Cabinet and it is really the aspect of the discussions on the toll charge and, in particular, a tax credit issue or the clawback issue is really a subject for the Minister of Finance. It should be addressed to the Minister of Finance rather than myself.

I can speak towards the actual plan for what we expect, and maybe the end product, as far as what the toll charge would be. Whether it is five cents per tonne per kilometre or whatever, that is something that we have prepared for and we will be in a position to present to the standing committee in May for future discussions.

We have tried to take a proactive approach to this idea of improving our highway systems. As the Members well know, with our limited budgets in the past and our declining capital funding that the department has been receiving, there is just no way we could even keep up with existing impacts on our highway system. So it is really a kind of boost even to the morale of the department. We feel that if this proposal goes forward, we have the ability to respond to people's concerns. In particular, concerns expressed by the standing committee members in this House. I think that I have pretty well covered the comments that I have heard from the two Members up to now, Mr. Chairman. Thank you.

Thank you. I am just wondering if the Minister can touch quickly on the projections that we have used in trying to determine the payback period for the new borrowing, specifically to the $15 million per year that we think we can collect from tolls, and what the payback period will be for the new borrowing?

I guess that I am interested in finding out, when we run the scenarios, is there a possibility that if development really drops off in five or six years after Diavik and Snap Lake, we could be left with debt that we are going to have a hard time servicing?

Thank you, Mr. Chairman. Mr. Chairman, the Member has a legitimate concern in whether or not we will be able to address our future ability to pay back. What we have done is our estimates are based on 1999 traffic volume and we should take into consideration that, I believe the information that I have been given was that at that time, BHP was the only mine that was really operating in the Slave Geological Province in 1999. Diavik was coming on stream. Snap Lake is not on stream yet. So therefore, those did not really reflect in those volumes in 1999.

In fact, they are quite low and conservative estimates of the traffic volume for the future. As we all know, the traffic volumes have tripled since 1999 to accommodate Diavik coming into production and, more than likely, they will keep on for another year, but then they will start slacking off and then possibly another mine will kick in by that time.

The point here is that the department, who put this together, just presented it to Cabinet as a proposal. The proposal to put forward borrowing capabilities is something that should really be addressed to the Minister of Finance, because that is his department that is going to be handling the borrowing and the payback initiative here.

The only part that we could probably respond to is how it would fit into our legislation. However, again, that is something for the future. We have not even started drafting this legislation yet. So if I may suggest, Mr. Chairman, maybe the Member would be better to redirect his question to the Finance Minister when the Finance Minister is dealing with his aspect of the budget.

Thank you. I certainly will ask him the same questions and I would agree that Finance will have a large role to play in how we are going to pay this back. However, I think the reason I directed the question to Mr. Steen was to get his feelings on traffic. It was his department that did the calculations, using 1999 as a base-year and, as he indicated, he feels this was sort of a conservative year to take.

However, I think if you took, although it may not have been as booming as things will be in the next two or three years, if you took 1989, for example, what would these numbers look like? I am not asking him to give this kind of information, but I am just not sure 1999 was a really conservative year. If you have been around for the last ten, things were going pretty good in the Slave Geological Province in 1989. That was my reasoning for asking the Minister those specific questions. Thank you.

Thank you, Mr. Chairman. Mr. Chairman, I have two areas of concern that I would like to touch on in my comments. The first one, of course, being the proposed plan for increased infrastructure development. As it is clearly recorded in the Hansard of the Legislative Assembly, the issue of chip-sealing Highway No. 5 has been on the table for a considerable amount of time.

Mr. Chairman, I can indicate that no matter what other capital work we have done in the constituency, be it a $2 million airport improvement or upgrading the schools, people would say, "That is very nice, but what about chip-sealing Highway No. 5?" So it is a persistent issue for us. Of course, the feedback that I have received so far indicated support for this and on the face of it, I do support the concept, the idea of being able to access money that may become royalties.

I recognize that there is work to be done in terms of the detail. Very clearly for the people in my constituency, the thought of chip-sealing Highway No. 5 is a major one. On that note, for the Minister to clarify for me, when I look at his comments on page 3 on the bottom, the last paragraph, I am confused by the definitions and when I conclude my question, possibly he could clarify them for me. I notice Highway No. 1 from Fort Liard at Fort Simpson to the junction of Highway No. 7 will have a chip-sealed surface. The entire length of Highway No. 5 from its junction with Highway No. 2 at Hay River all the way to Fort Smith will have an asphalt surface. Similarly, Highway No. 6 will have a continuous asphalt surface and Highway No. 7 will have pavement.

I know in the budget address, the Minister of Finance referred to the covering as paving, so I would appreciate some clarification from the Minister on that particular list of definitions or different terms to refer to different types of asphalt covering on the roads.

The other area I would like to touch on, Mr. Chairman, is the whole issue of the move back to fire protection at the airports. I can remember very well when there used to be those services in my constituency and then the federal government changed the rules, got rid of the equipment and the specialized fire truck that used to be in Fort Smith is at BHP. It made its way through a circuitous route from the community, down south and was picked up by BHP. When we were up there a few weeks ago, they had somehow managed to pick it up through the private market in Alberta.

Now we are talking about trying to put those requirements back in, put the onus back on the communities, though it would appear from what we have heard from the committee report that community fire departments may not be able to meet the requirements. So I will save my detailed questions for that particular issue to the time when we come across it in doing the main estimates, but I would like to note that it is a concern to me, the reinstitution of that requirement by the federal government.

I would hope the federal government is not going to institute rigourous new requirements and no funds and leave us as a community and as a Territory trying to pick up the pieces because of their decision-making having brought us full circle in less than five years in that particular area.

Mr. Chairman, that basically concludes my general comments. I would just appreciate if the Minister would clarify his comments on page 3 of the differing definitions of asphalt surfaces. Thank you.

Thank you, Mr. Chairman. Mr. Chairman, I am told that asphalt, chip-sealing or other forms of hard top are really all hard top. If there is associated cost with this, perhaps I could direct the question to Mr. Vician, who is probably more informed on that than I am.

Also with regard to the firefighting at airports and the effects of the new Transport Canada legislation on us, I will have Mr. Vician respond to that as well. We could have just as well responded later when we are dealing with the airport section, but we will do it now if the Member wants. Mr. Vician.

Thank you. Mr. Vician.

Thank you, Mr. Chairman. Is it anticipated that the federal dollars will cover the full cost to get all this new capital equipment in these five communities or is Transportation going to have to come up with money of their own as well? Thank you.