Proceed with your opening remarks, Mr. Minister.

Thank you, Mr. Speaker. I am pleased to speak to you today about the 2001-2002 Main Estimates for Municipal and Community Affairs.

Community governments are important partners with the GNWT in providing effective governance. MACA supports the development and operation of strong and capable community governments. The work we will do in this area will help us to meet the goal of better governance through partnerships identified in Towards a Better Tomorrow.

MACA is requesting $60.8 million in operating expenses for the 2001-2002 fiscal year. We are also requesting $4.2 million for capital acquisitions.

Almost 70 percent of the operating expenses that MACA is requesting will go to communities. Just over $40 million will go directly to community governments in the form of operating grants and other contributions, including:

• • Community government funding under the new formula funding proposal;
• • Grants-in-lieu of taxes;
• • Senior citizens and disabled property tax relief;
• • Water and sewer services subsidy;
• • Mobile equipment operations; and
• • Infrastructure contributions.

An additional $800,000 will go to community governments and other local organizations to fund community development and capacity building through:

• • Fire training funding;
• • Recreation funding;
• • The community development fund; and
• • Regional leadership contributions.

The 2001-2002 Main Estimates reflect the new community government funding proposal. The proposal was developed as a way to distribute available community government funding as fairly and equitably as possible. I have consulted extensively with the NWT Association of Municipalities and community governments on this proposal.

Several community governments will see increases in their funding this year as a result of the funding proposal. No community government will face a reduction in funding this year because of the proposal.

MACA shares the concerns that Members have about community government capacity. During 2001-2002, MACA will continue to take steps to ensure that community governments have the support they need to manage effectively. For instance, we will make arrangements to provide improved engineering advice to community governments.

We are also taking steps to help communities better manage their finances. MACA has introduced a new quarterly financial report that will help community councils better understand their financial position. We have also made arrangements with private northern accounting firms to improve our ability to provide financial management support to community governments.

The School of Community Government continues to help community governments and related organizations access training programs in many areas.

MACA will also work to draft community government legislation during 2001-2002. Existing legislation is outdated and restricts the kinds of decisions that community governments can make. Updated legislation will provide greater flexibility and broader powers and responsibilities to those community governments that want them.

MACA will also need to develop new community government legislation as a result of self-government negotiations. Under the agreement-in-principle with the Dogrib, MACA is required to introduce Dogrib community government legislation. This legislation will include many of the amendments that we are proposing for our other community government legislation.

Thank you for this opportunity to present MACA's proposed main estimates. I will be pleased to answer any questions and respond to your comments now. Thank you, Mr. Chairman.

Thank you, Mr. Minister. I call on the standing committee responsible for MACA for comments. Mr. Braden.

Thank you, Mr. Chair. The Department of Municipal and Community Affairs is responsible for the development and maintenance of community governments that is responsive to the needs of residents, with sufficient legal authority and resources to carry out community responsibilities, to provide their public programs and services essential to good community life and to deal effectively with other governments and organizations. The department is also responsible for protecting the interests of consumers.

The Standing Committee on Governance and Economic Development met with the Minister of Municipal and Community Affairs and his staff on Monday, January 22, 2001, to review the department's 2001-2002 main estimates.

The committee noted a $58,000 projected decrease in operations expense from the department's 2001-2004 business plans. Changes from the business plan include:

• • a $562,000 increase in compensation and benefits arising from the recent UNW collective agreement;
• • a reduction of $14,000 in amortization estimates;
• • a decrease of $1,665,000 in Financial Management Board (FMB) approvals representing a transfer to the department's capital expenditure program to pay for solid waste and water system upgrades in various communities;
• • a $437,000 increase to help community governments to offset increased operating expenses caused by the increase in world fuel prices; and
• • an increase of $622,000 transferred from other departments to help pay for increases in compensation and benefits, and other operations.

As mentioned earlier, Mr. Chair, committee members noted a $1,665,000 increase in the department's capital acquisition plan from the department's 2001-2004 business plan compared to the department's 2001-2002 main estimates to pay for water and sewer upgrades in various communities.

There were no adjustments in the department's revenue projections from their business plan. However, the department's 2001-2004 business plan had already incorporated increases in fees proposed in the government's program and functional review. There was an increase to the land document fees, and a plan review fee was adopted and will be applied to projects in communities where this service is not provided at the community level.

The committee expressed its concerns on sports and recreation to the department, who replied that they are developing a sports and recreation policy framework. Committee members remarked that sports and recreation organizations are already knowledgeable about related programs, services and funding. The committee is of the opinion that these organizations need more support and especially funding, not more regulatory hurdles. If the funds are not there to operate a facility or run a program, then that facility or program is wasted. The department replied that unfortunately given this government's short to near term fiscal outlook, there is not enough money available to upgrade sports and recreation facilities.

There is concern on the part of some committee members that recreation funding is not allocated equitably between various organizations and communities. Committee members remarked that communities have difficulty procuring funding and support for their sports and recreation programs, while hundreds of thousands of dollars are spent on the Arctic Winter Games. The committee noted that sports and recreation is a concern that has overall territorial implications and referred this issue to the Standing Committee on Accountability and Oversight to ensure it is brought to the attention of all Members. The Minister will provide a briefing on sports and recreation organizations, including Sport North and the Aboriginal Sports Circle, to the Standing Committee on Accountability and Oversight.

The committee submitted further concerns on the Arctic Winter Games (AWG) to the Minister and his department. Committee members pointed out that the Arctic Winter Games do not have a rationale for the removal of sport events at the games. The committee suggested that the cost of attending the AWG and the intent of the Games be revisited. The committee understands that this will be addressed in the department's briefing to the Standing Committee on Accountability and Oversight.

Finally, Mr. Chair, the committee emphasized the importance of sports and recreation and its positive role in the development of youth. The committee urged the department to work with the Department of Education, Culture and Employment to improve the working relationship between physical education departments in the schools and the community recreation coordinators and to ensure improved sports and recreation benefits for our youth. Shortfalls in school sport and recreation programs are taken up by the community recreational coordinator. The extra stress placed upon these coordinators leads to burnout and the eventual loss of some community programs and services.

The committee suggested that volunteerism must be appropriately recognized as funding for many programs and services are minimal. Committee members added that more training programs must be initiated, supported and made available to volunteers. This will allow volunteers to bring needed skills and experience back to their communities.

Committee members stated that if funding for training is not available for volunteers, then many programs, services and facilities are wasted. The committee emphasized that "volunteerism is more than sports and recreation, it is an area that unites communities."

Committee members noted that a number of communities are running operating deficits. One explanation may be that these communities do not have sufficient means to raise their own revenues. The committee further added that the current funding formula is too broad-based. Communities must be addressed on an individual basis, acknowledging their unique circumstances and operating requirements. For example, fuel costs have greatly contributed to increased operating costs in the communities. The committee encourages the department to proactively work with communities which may have encountered financial difficulties.

This was also a committee concern in its review of the department's 2001-2004 business plan that if programs, services and facilities are transferred to communities, adequate levels of funding, technical information and support should accompany those additional responsibilities. In some cases, communities did not have access to essential operating information and/or were excluded from decision-making processes that affected them. The committee reiterated that a community should be fully involved in any process that may affect their community and funding levels should realistically reflect higher operating costs such as fuel in smaller and remote communities. The standing committee is aware the department is reviewing and proceeding with proposed legislative changes in this matter and the committee encourages the department to complete these changes in a timely and responsive manner.

During the committee's examination of the department's 2001-2002 main estimates with the Minister and his staff, committee members uncovered an extraordinary fund that had been built into the department's directorate activity. The department rationalized that the funds are there for emergencies and that if there were no emergencies, the funds would be reallocated elsewhere in the department for other programs and services. However, the committee informed the Minister and his department that emergency funds are usually procured through the supplementary appropriation process. Further, such as in the case of Fort McPherson last summer when there was a water treatment crisis, the department replied that it did not have any funding to resolve the situation.

Within some general taxation area communities, there are band lands. Band residents living on band lands do not have to pay municipal taxes as the federal government pays a grant-in-lieu of municipal taxes to the GNWT. Committee members point out that a concern occurs when another band member lives off band land in the same community and has to pay their municipal taxes themselves.

The committee encourages the department and the Department of Finance to work with the federal government to find a fair solution to this taxation disparity. Committee members added that this is an ongoing concern and previous committees have also sought resolution on this.

That concludes the report of the Standing Committee on Governance and Economic Development, Mr. Chairman.

Thank you, Mr. Braden. Does the Minister responsible for MACA wish to bring in any witnesses?

Yes, Mr. Chairman.

Does the committee agree?

Sergeant-at-Arms, please escort the witnesses in. Mr. Minister, can you introduce your witnesses for the record, please?

Thank you, Mr. Chairman. To my immediate left is Mr. Dave Murray, deputy minister of the department. To my immediate right is Ms. Gay Kennedy, director of corporate affairs. Thank you.

Thank you, Mr. Minister. General comments. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, this department is undergoing some significant work in the area of legislation and community governance. Changes are happening quite rapidly. Formulas and how communities are funded is changing. We have raised a number of concerns in our committee's report on a number of issues, whether it is capital planning or dealing with communities and how they are able to deal with their financial situations.

The big area for me as a Member is to ensure that, with all of this work that is going on and the changes that are going on, the community governments are kept up-to-date and are able to continue with their planning and the processes they will use, so they do not get caught out in the cold, as they say.

When I look at my community of Inuvik, there are a bunch of changes going on there as well, just as a community. The potential growth that can happen in the short term leaves the community a little concerned as to how they can actually deal with it and deal with extraordinary growth in the sense of coming up with the facilities, water and sewer and so on to deal with the potential growth. They are working fairly hard to try to stay on top of it, but it is an area of concern if there is a large influx over the next few years in that community.

There are processes available to them if they find themselves needing and finding that the demand on the resources has outgrown their capacity. Not only capacity infrastructure-wise, but resources-wise. Right now, there is block funding put in place for the community, but it is based on more historical spending than what it might cost if there is unforeseen growth in that aspect.

With that, I will save the rest of my comments and questions for when we get into detail. Thank you, Mr. Chairman.

Thank you, Mr. Roland. Is it the wish of the committee that we get the Minister to answer each Member or after general comments? At the end?

Mr. Miltenberger.

Thank you, Mr. Chairman. Mr. Chairman, I just wanted to make some general comments that will highlight the areas I intend to question as we go through the detail.

The first area I would like to quickly touch on is the whole area of sports and recreation. I know the Minister has spoken to that in the House when questioned by myself yesterday about the need to look at a revamped strategy for sports and recreation, and clearly look at the role of such major events as the Arctic Winter Games, and try to make sure that we focus as much of our attention and resources as possible at the community level.

I will have some questions with regard to the block funding arrangement and questions as to the water and sewer subsidy being left out. Of course, as it pertains specifically to the community I represent, Fort Smith, I will be asking some questions with regard to the water and sewer subsidy just to confirm that the arrangement I heard about has been taken care of.

Finally, I will ask the Minister to speak, either in his response to general comments or when it is appropriate in detail, to the issue that I raised in the House last week. It is very topical and the Minister is in the paper about it. That is the whole area of the municipal insurance issue, the huge rate increases municipalities face and how the department has been working within the NWTAM in the communities to come to grips with this. I do not know if there is any way to do battle with the insurance sector, but very clearly they saw this as a target of opportunity. With Walkerton, they had the perfect leverage to squeeze the municipalities, at least in the Northwest Territories, for a lot more money. So I will just ask the Minister to speak to that issue as well. That concludes my general comments, Mr. Chairman. Thank you.

Thank you, Mr. Miltenberger. General comments. Does the committee wish to go into detail? Mr. Minister, would you care to respond to the opening general comments?

Thank you, Mr. Chairman. Yes, I do and I think it is very important to accept the points the two Members made. I agree that significant work has been occurring as we move along in the evolution of the way of this government. The political environment is changing rapidly. We are trying to keep up to the ever-growing needs of the communities. Our consultation process with them varies as we travel to each community, some to a larger degree than others.

I would just like to make a comment with respect to that. I was in a meeting last week, last Friday at the NWTAM board of directors, I believe they were. I listened to the Premier who stated some objectives under the NWT business and economic prospectus and some of the future potential revenue generation in the Northwest Territories. We look forward to sharing that with the communities, knowing that we do not have all of the fiscal capacity to meet all of the needs, but we do have future revenues that we can at least expand our level of service into those communities.

I would like to acknowledge that we did appear before the AOC yesterday with regard to sport and recreation. We felt we had made a clear and objective presentation to the committee that outlined a number of objectives we are taking in terms of changing the way sport is delivered in the North. We are finding that the requirements and the demands coming for the communities, we are responding accordingly.

In regard to the NWTAM and its problems with insurance and the liability, we are responding very quickly to the letter they had submitted to ourselves, dated February 28th, outlining the situational problems. The need to react to that has been undertaken, so we are meeting that specific agenda item.

As well, Mr. Chairman, there are a number of other good things that are happening at the municipal level. I understand that when it comes to water and sewer programs, I will ask both the deputy minister and the director of corporate services to answer that in detail. Thank you. That summarizes my response to the comments.