Mr. St. Germaine.

Thank you for that clarification. Does that suffice, Mr. McLeod? Okay. Capital acquisition plan, primary and acute care, $16,899,000. Agreed?

Page 10, community health programs, total community health programs, $1,763,000. Agreed?

Total department, $90,912,000. Agreed?

Page 6-7, departmental summary, operations and expenses, total operations and expenses, $182,811,000. Agreed?

With that, I would like to thank the Minister and her witnesses. That concludes the Department of Health and Social Services. Thank you.

The next department on the list is the Department of Transportation. I would like to ask the Minister responsible for Transportation if he has any opening comments. Mr. Steen.

Thank you, Mr. Chairman. Yes, I have opening remarks for the committee, Mr. Chairman.

Mr. Chairman, members of the committee, it is my pleasure to be here this afternoon to consider the Department of Transportation's Main Estimates for 2001-2002.

Mr. Chairman, the report of the Economic Strategy Panel, Common Ground, the Non-Renewable Resource Development Strategy, and the Department of Transportation's Investing in Highways for People and the Economy all emphasize the necessity of seeking federal and private sector investments and contributions in order that we can build the new transportation infrastructure that is needed to develop a strong territorial economy. While we pursue this funding, we will continue to invest in these strategies to the greatest extent possible.

Mr. Chairman, as we examine the Department of Transportation's Main Estimates for 2001-2002, I think it is worthwhile to point out the extent of federal and third party contributions contained in the department's budget and that help to make our territorial appropriation go that much further in operating and building the territorial transportation system.

The Department of Transportation operates 17 community aerodrome radio stations, CARS, on behalf of Nav Canada. Funding received from Nav Canada goes principally to wages, salaries and training for observer-communicators at our community airports. Nav Canada pays the department $3.5 million annually for delivering the CARS program.

The main estimates identify $11 million in capital improvements planned for our airports in 2001-2002. These include runway improvements at Sachs Harbour, Inuvik and Tulita and territorial terminal improvements at Aklavik, Fort Simpson, Tulita and Wha Ti. Some of that budget comes from Transport Canada's airport capital assistance program.

Public Works Canada delivers the Canadian Coast Guard's capital projects on federal docks, wharves, breakwaters and landings across most of Canada. In the Northwest Territories, however, the Coast Guard's marine infrastructure program is effectively delivered by the Department of Transportation with a contribution of $500,000 annually.

This year, the Executive Council approved $195,000 for the construction of a winter road to Colville Lake so that the community could participate beneficially in the oil and gas exploration programs taking place nearby. Two exploration companies agreed to contribute to the project, enabling the department to double the amount of work on the road it could have done with territorial money alone.

In fiscal year 2001-2002, the department will install seven bridges on the Mackenzie Valley winter road as part of the bridges acceleration program agreed to this past December with the federal Department of Indian Affairs and Northern Development. The federal contribution of $3.8 million represents two-thirds of the cost of the project.

In a recent meeting with Transport Canada Minister David Collenette, I was told we would soon be advised of the Northwest Territories share of the $600 million National Transportation Investment Strategy announced by the federal Ministers of Finance and Transport last year. The Department of Transportation will invest whatever funding is received towards Highway No. 3 and Highway No. 1.

Mr. Chairman, the members of the committee should know that the Department of Transportation is constantly looking for new sources of transportation funding to enhance its programs and make its budget go further. In this, we have been remarkably successful. Individually, the individual items may seem small. Considered together, they are an important piece of the department's budget.

Mr. Chairman, as the Minister of Transportation, I am very pleased with the Highway Investment Strategy that the Minister of Finance announced in his budget address. The investment strategy will make possible badly needed capital improvements across the territorial highway system. The investment strategy proposes to add $100 million of new money to the Department of Transportation's highway construction program over the next four years. As the Finance Minister pointed out, the territorial economy is on the verge of expansion on an unprecedented scale, yet our highway infrastructure was never built to a standard to support that level of economic activity. Over the next four years, the investment strategy will go a long way towards improving the standards of our roads.

In the first year of the program, the department's construction budget will increase by a relatively modest $10.6 million to $22.3 million. This will double the present pace of reconstruction on Highways No. 3 and No. 8. In years two, three and four, the construction program is projected to exceed $40 million a year. By the end of the fourth year, the department will have completed three times the amount of highway construction it would have at present budget levels.

When the program is finished, Highway No. 1 from the Liard River at Fort Simpson to the junction with Highway No. 7 will have a chip-sealed surface. The reconstruction and paving of Highways No. 1 and No. 3 that began in 1989 at the Alberta border will be complete to Yellowknife.

-- Applause

Highway No. 4 will be reconstructed and paved from the junction with Highway No. 3 to the Detah access road. 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 to Fort Resolution. Highway No. 7 will have pavement from the British Columbia border to Fort Liard, as well as selected improvements to meet the needs of resource traffic. On Highway No. 8, selected locations along its length will be improved to meet the heavier traffic demands of the resource industry activity in the Beaufort-Mackenzie Delta region.

Mr. Chairman, in four years' time, the investment strategy will have dramatically improved the quality of the territorial public highway system. Not only will our roads be in better physical condition to carry the increased traffic of the resource industry, the highway system will be in a safety condition.

In announcing the investment strategy, the Finance Minister also talked about how we intend to pay for a $100 million expansion in highway construction. Later this year, this government will introduce a commercial traffic highway toll that will raise approximately $15 million a year in toll revenue. The toll revenues will be paid into a dedicated highway investment fund rather than the government's general revenue account. In this way, the toll revenues collected from commercial traffic using the highway system will go directly to paying for the investment strategy's highway improvements.

Mr. Chairman, at this stage, the details of the commercial highway traffic tolls are being worked out. The toll will require legislative authority. I expect the Standing Committee on Governance and Economic Development will have a legislative proposal to examine in May and I will be in a position to answer detailed questions at that time.

Mr. Chairman, the department is requesting a total operating budget of $70,140,000. Under capital acquisitions, this plan is to invest $39.139 million in highways, airports, ferry, marine and motor vehicle infrastructure.

Mr. Chairman, transportation plays an essential role in the long-term development of the territorial economy and I welcome the committee's comments and questions on the department's budget. Thank you, Mr. Chairman.

Thank you, Mr. Minister. Does the committee responsible for reviewing the department under consideration have any comment on the department's estimates?

Thank you, Mr. Chairman.

The mandate of the Minister and the Department of Transportation is to plan, design, construct or reconstruct, acquire, operate and maintain public transportation infrastructure in the Northwest Territories. Public infrastructure includes community airports, docks and the highway system, pursuant to the devolved authorities and/or memoranda of understanding between the Government of the Northwest Territories and the federal government. The department is also responsible for the regulation and licensing of vehicles and individuals operating vehicles in the Northwest Territories. To fulfil their responsibilities, the department is organized into the following ongoing activities; corporate services, ferries, highways, airports, motor vehicles, community access roads, and community marine.

The Standing Committee on Governance and Economic Development met with the Minister of the Department of Transportation and his staff on Wednesday, January 24, 2001, to review the department's 2001-2002 main estimates.

The committee noted a $2,135,000 increase in operations expense from the department's 2001-2004 business plan. This variance can be attributed to an upward adjustment in the department's amortization estimates of $996,000 and an increase in compensation and benefits of $1,139,000 arising from the recent UNW collective agreement. Upon further examination, Mr. Chairman, the committee reports an $11,496,000 increase in the department's capital acquisition plan from their business plan. Revenue projections have increased by $129,000. The increase is for work done on behalf of Transport Canada for monitoring and enforcement of standards under the National Safety Code with respect to commercial motor vehicles. The department's revenues already include most fees proposed by the department under the program and functional review. Fee increases have been made for motor vehicle licenses, registration and other fees, airport landing fees, and airport leases/rental. There were no proposed changes to the Department of Transportation's human resources from the 2001-2004 business plan.

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.

Under the program and functional review fees, Mr. Chairman, the committee remains concerned about the impact of proposed increases to airport landing fees, general terminal fees and airport leases. These increased fees will ultimately be passed on the consumer. The consumer is already impacted by proposed department fee increases for motor vehicle licensing, registration, reinstatement and other motor vehicle administrative fee increases.

Committee members remarked, Mr. Chairman, that the proposed fee increases may end up proportionately worse for the transportation sector and the consumer due to increasing fuel prices. Although the committee members can appreciate the department's efforts to attempt full cost recovery on our facilities, such as airports, the committee questioned if this initiative is realistic especially in light of our small economies of scale. Committee members noted that these transportation fee increases did not draw as much attention as the proposed hotel room tax.

The committee concluded that the territorial government's proposed program and functional review increases will have a significant impact across the North, affecting most northern residents and businesses. As a result, Mr. Chairman, committee members have decided to engage all regular Members in this discussion and referred the matter to the Standing Committee on Accountability and Oversight.

The committee stated that there should be a balance between the use of tendered and negotiated contracts, Mr. Chairman. Nevertheless, committee members acknowledge that negotiated contracts will continue to play an important role in allowing aboriginal companies to develop the necessary skills, training and work experience to allow them to be more competitive. This matter was also mentioned in the committee's review of the department's 2001-2004 business plan. Further, if a movement away from negotiated contracts is considered, the standing committee would like assurances that proper criteria be adopted to ensure proper skills and training are in place.

Under highway safety, Mr. Chairman, the committee expressed concern to the Minister on the issue of highway safety, specifically emergency response protocols and effective highway patrol. The Minister replied that the department and the departments of Justice, and Municipal and Community Affairs, and the RCMP have worked on developing emergency response protocols. He added that a toll-free number has been established for highway emergencies and this number has been identified in brochures in stops and businesses along the highways.

The department informed the committee that for occupational safety reasons, the Department of Transportation will no longer patrol non-commercial traffic on our highway system. Department officers do not have the training or the equipment to effectively handle dangerous confrontations. The committee has been informed by the department that it has worked with the RCMP to increase their presence on our highway system.

Mr. Chairman, for the balance of this report, I would like to hand this over to my colleague, and the deputy chair of the committee, Ms. Lee.

Thank you. Ms. Lee.

Thank you, Mr. Chairman. I would like to continue on with the report.

The committee encouraged the department to make efforts to maintain and recruit expertise. This issue has been an ongoing committee concern. Qualified staff are required to maintain and deliver many essential programs and services. However, given better competitive packages from the private sector, a strong southern economy and fiscal restraint, the recruitment and retention of qualified staff will continue to be a significant concern of this department and government.

Committee members and the department were concerned that many senior staff at the Department of Transportation will soon retire. Middle management is capable of replacing the senior staff, however the problem arises with the replacement of some middle management and entry level positions with new graduates, especially in light of our current recruitment and retention problems.

The committee added that some positions might be filled by summer students, who may be fully qualified later to replace some department positions. Committee members were assured that the department plans to hire between 20 and 25 summer students this calendar year.

The Minister suggested that the Government of the Northwest Territories take over the Lupin ice road from Echo Bay Mines after their license expires. The department supported their argument by stating that a Nunavut company currently constructs the ice road and any benefits accrued will stay in Nunavut. Control of the ice road, according to the Minister, will ensure benefits go to the NWT. The department added that control would also result in equal access for all residents.

The committee replied that although they can appreciate the economic benefits and equal access, they questioned whether the regulatory hurdles and potential liabilities arising from its ownership are worth it.

Committee members also pointed out that global warming would have an increasingly detrimental effect upon the ice road resulting in a shorter season and sporadic closures throughout the winter. Furthermore, if the power grid is extended to the mine site, the need for an ice road would be diminished as most of the cargo is fuel. The committee suggested that the government revisit its intent to take over the ice road.