Thank you, Mr. Speaker. Mr. Speaker, I have a written question for the Honourable Roger Allen, Minister responsible for the Housing Corporation.

Please provide the following information regarding the Fuel Rebate Program introduced in March of 2001:

1. What was the duration of the program?
2. Did the program go beyond March 31st?
3. If so, until what date and why?
4. What was the total amount given out under the program?
5. What percentage of the total allocated budget did this amount constitute?
6. How many individuals benefited from the program? Please specify by eligible amount categories. For example, $320, $160, et cetera.
7. What is the community breakdown of these recipients? Please provide the number of recipients in each community.
8. What was the total number of applicants?
9. How many were rejected? What community were these from?

Thank you, Mr. Speaker.

Thank you, Ms. Lee. Item 7, written questions. Item 8, petitions. Item 9, reports of standing and special committees. The honourable Member for Frame Lake, Mr. Dent.

Thank you, Mr. Speaker. Mr. Speaker, today I have the Report on the Review of the Report of the Auditor General to the NWT Legislative Assembly for the Year 1999.

The Standing Committee on Accountability and Oversight met to review the Report of the Auditor General to the NWT Legislative Assembly for the year 1999 on April 2 through April 3, 2001.

The first day involved briefings by the committee analyst and staff from the Office of the Auditor General on issues raised in its report. Staff from the Auditor General's Office included Mr. Ronald C. Thompson, assistant auditor general; Mr. Roger Simpson, principal; and Mr. Shawn Vincent, legislative auditor.

A public meeting was held on April 3, 2001. Committee members took the opportunity to raise issues with witnesses that came before the committee. The list of witnesses included Mr. Lew Voytilla, comptroller general; Mr. Kelsey Scott, analyst, Financial Management Board Secretariat; Ms. Debbie DeLancey, associate deputy minister, Health and Social Services; Mr. Warren St. Germaine, director of corporate services, Health and Social Services; and Mr. Fred Koe, president, Northwest Territories Development Corporation.

Mr. Speaker, public accounts are the audited consolidated financial statements of a government. The consolidated financial statements represent the financial position of the Government of the Northwest Territories.

The committee and the Auditor General noted that the Government's public accounts and most of our territorial corporations' annual reports are rarely tabled in a timely manner. The public and Members of the Legislative Assembly have a need for timely, accurate and relevant information on the financial condition of the government so they can effectively hold the government accountable for the way in which it manages and spends public money.

The Standing Committee on Accountability and Oversight conducted an interjurisdictional survey to determine if public accounts for the fiscal year 1998-1999 have been submitted in a timely manner and whether other Canadian jurisdictions included unaudited statements which may accelerate the tabling process. Of the jurisdictions surveyed in Exhibit 1.0, only Alberta and the Northwest Territories required audited statements without exception. As of June 4, 2001, the results are as follows:

• • in the jurisdiction of the Northwest Territories, our documents were tabled on the 30th of June, 2000;
• • in the Yukon, the documents were tabled on the 1st of November, 1999;
• • in British Columbia, they were tabled on the 9th of May, 2000;
• • in Alberta, the individual departments tabled at different times;
• • in Saskatchewan, volumes 1 and 2 were tabled on the 7th of December, 1999, and Financial Statements Compendium Parts A and B were tabled on the 26th of May, 2000;
• • in Manitoba, volumes 1 through 3 were tabled on the 30th of November, 1999, and volume 4 on the 3rd of August, 2000;
• • in Ontario, the documents were tabled on the 15th of October, 1999;
• • New Brunswick does not formally table their documents;
• • Nova Scotia tabled theirs on the 15th of December, 1999;
• • Prince Edward Island tabled volume 1 on the 7th of December, 1999 and volume 2 on the 14th of February, 2000; and finally
• • Newfoundland tabled their document on the 14th of December, 1999.

The committee noted that the Northwest Territories tabled its 1998-1999 Public Accounts 15 months after their March 31, 1999 year end. Only Manitoba tabled their 1998-1999 Public Accounts later than the Northwest Territories.

An interjurisdictional survey of the 1999-2000 Public Accounts was also conducted, and is included in Appendix C of this report. As of June 4, 2001, jurisdictions that tabled later than the Northwest Territories -- which tabled on February 27, 2001 -- were Prince Edward Island, which tabled on March 23, 2001; Nova Scotia, which tabled its final Public Accounts component on April 4, 2001; and Nunavut and British Columbia, which have not yet tabled their reports.

In recognition of the additional efforts required to improve the timely submission of the public accounts, the Auditor General's Office suggested that a progressive approach be taken. For example, the 2000-2001 Public Accounts may be submitted by October 31, 2001 and in the succeeding year by September, 2002 and so on. Committee members note that the tabling of the public accounts prior to review of the government's business plans would be beneficial.

The Standing Committee on Accountability and Oversight and the Auditor General's Office encourage the government to increase the readability of its public accounts and to regularly produce a straightforward and user-friendly document based upon performance indicators that will give the public and Members of the Legislative Assembly a clearer picture of where this government stands financially. The government's comptroller general office, which is responsible for the compilation of our public accounts, agreed.

In light of these significant reporting and tabling issues, the Standing Committee on Accountability and Oversight, upon the advice of the Auditor General's Office, made the following recommendations:

The Standing Committee on Accountability and Oversight expects the Government to immediately adopt a progressive approach to the timely tabling of its public accounts by having:

(a) the 2000-2001 Public Accounts ready for tabling by October 31, 2001;

(b) the 2001-2002 Public Accounts ready for tabling by September 30, 2002;

(c) the 2002-2003 Public Accounts ready for tabling by August 31, 2003;

(d) and in subsequent years, to have the public accounts ready for tabling by no later than August 31 of the same year.

The Government of the Northwest Territories regularly produces a brief, timely, accurate and straightforward document that incorporates performance indicators based upon data included in the public accounts to report the financial health of the government.

Furthermore, the document must:

1. Be published once a year initially;
2. Be user-friendly; and
3. Use the same set of indicators each year.

Mr. Speaker, the Standing Committee on Accountability and Oversight stated in order to improve the effectiveness of the government's overall third-party accountability framework, there must be compatible and user-friendly information databases and easy-to-use communication linkages within and between the government and its third-party program and service providers.

Committee members are also of the position that an effective third-party accountability framework combined with a cost-effective procurement policy would contribute to increased levels of compliance with the Financial Administration Act.

The Auditor General noted that in the past few years, there has always been at least one department that has overspent.

The Auditor General noted three instances of non-compliance with authority. These instances are described on the next two pages.

Mr. Speaker, I would now request, with your concurrence, that the deputy chair of the standing committee, the honourable Member for Inuvik Boot Lake, be permitted to continue with the report.

Thank you, Mr. Dent. The honourable Member for Inuvik Boot Lake, Mr. Roland.

Thank you, Mr. Speaker.

The Financial Administration Act states a department cannot spend more than its approved budget, including supplementary appropriations. Any overexpenditures are in violation of the Financial Administration Act.

The Standing Committee on Accountability and Oversight expressed concern that the Department of Health and Social Services has repeatedly overexpended its budget for the same reasons every year. These reasons are increases in non-insured health benefits, out of NWT hospitals, physician services, children in care programs, and independent living.

The Auditor General's Office noted that these expenditures could be avoided or minimized if the department incorporated models or made educated assumptions that take into account potential or anticipated expenditures. The Auditor General added that the department should extend their outlook and plan in advance of expected expenditures. However, the department has repeatedly replied that it does not know the full extent of all its expenditures until "all the bills are in."

The Government of the Northwest Territories accrued $25,000,000 in 1997-1998 and another $8,000,000 in 1998-1999 as an estimated provision to settle the pay equity dispute. However, in accruing the provision, the government did not comply with the authorization process as set out in the FAA, which requires the government to request a supplementary appropriation within 15 days of tabling its public accounts, which it did not in either year.

The Auditor General's Office recognized the actions of the government were based on practicality, but believes the government should have adhered to the FAA and obtained the necessary authority. Although this was primarily a technical issue, the Auditor General's Office and the Standing Committee on Accountability and Oversight encourage the government to either follow the FAA in the future or prepare amendments to the act to better reflect the actual operating environment.

During the recent review of the government's main estimates for 2001-2002, the government reported an 83 percent settlement rate of $27,390,000. The government commented that close to a 100 percent acceptance rate could be achieved if they could locate all remaining employees.

The DevCorp may subsidize its subsidiaries' operating costs based on jobs created directly or indirectly, up to an amount prescribed by regulations under the NWT Development Corporation Act. Until recently, no such regulations existed. Since 1989, the Financial Management Board (FMB) had set an upper limit of $10,000 per annum per job created.

The act also allowed the DevCorp to make an initial investment in a subsidiary based on jobs created directly or indirectly. The FMB had set the initial investment limit at $100,000 per job created.

The committee was informed that regulations are now in place, but they allow $25,000 in annual contribution per job created, a significant increase from the previous $10,000 as the upper limit per annum per job; and initial investment limits per job created remain at $100,000 per job created.

The corporation for the fiscal year 1998-1999 was not in compliance with the FAA, as it did not collect information on jobs to demonstrate that subsidies did not exceed the maximum set by the FMB. The Auditor's Report on the financial statements for the years ended March 31, 1997 and 1998 was qualified for the same reasons.

The Standing Committee on Accountability and Oversight and the Office of the Auditor General noted that the DevCorp has undergone a complete turnover of senior management in April 1999, and the current management is making progress on correcting past reporting and management difficulties. The committee members encourage the DevCorp management to continue its efforts to diligently meet its mandate.

Originally, the government planned to complete seven P3 projects in the west. The private sector would build the required facility and the government would lease it back with a buyout option at the end of the lease term.

However, only the student family housing facility in Fort Smith has been completed and the remaining projects have been determined by the government to be unsuitable for the P3 approach. From the Fort Smith project, the government has learned that a P3 approach does not necessarily represent cost savings or value for money. The Auditor General's report concluded that the P3 project will cost the taxpayers more money than if the government had built and operated the facility itself.

The government has halted its use of the P3 approach and will take the conclusions of the Auditor General into consideration if it ever considers using the P3 approach again. The Standing Committee on Accountability and Oversight supports the government's decision to put a moratorium on new P3 projects.

Finally, the committee also asked the government if any proponents were paid back on cancelled P3 projects. Committee members were informed that fees to P3 consultants totalled $900,000 and the proponent involved in the Inuvik Hospital P3 project was compensated in the amount of $40,000.

There has been a shift in roles between the Department of Health and Social Services and health and social services boards. Boards are responsible for delivering programs, while the department is responsible for policy, monitoring and evaluation. Part of this change involves increased financial contributions to boards, which requires an effective third-party accountability framework for boards and non-governmental organizations involved in delivering health and social services.

Committee members stated that although much of the responsibility for the delivery of health and social services has been devolved to the board and agency levels, the government, the Department of Health and Social Services, Members of the Legislative Assembly and most importantly the public need to know if they are receiving value for money.

Members of the Standing Committee on Accountability and Oversight suggested that the government establish linkages between their third-party accountability framework and their Knowledge Management Strategy (KMS). The KMS is a Government of the Northwest Territories strategy consisting of a review of information technology organization and operations within the government and boards and agencies. The standing committee is of the position that accurate, coordinated and well-managed information databases and communication linkages will contribute to increased effectiveness for the Department of Health and Social Services as well as improving third-party accountability.

A number of territorial boards of health and social services are in a deficit situation. At the time of the public review of the 1999 Auditor General's Report on Other Matters on April 3, 2001, the cumulative net deficit of all health and social services boards was $3,100,000. Members of the Standing Committee on Accountability and Oversight are especially concerned whether there will be an effect on the levels of programs and services available at facilities managed by boards that have incurred deficits. Further, committee members expressed concern that funding to boards are linked to their traditional spending patterns rather than tied to actual program and service requirements.

Committee members stated that funding concerns must be linked to any third-party accountability framework. Budgeting and evaluation can be enhanced with better coordination of the different information databases used by various boards and the department. Without a uniform system, committee members note it is difficult to obtain accurate and timely information. The Standing Committee on Accountability and Oversight notes some health and social services boards have gone entire years without an approved budget in place.

The Auditor General also noted that the boards' inability to produce a timely budget may be compounded by the lack of a uniform accounting system. The Standing Committee on Accountability and Oversight concurred with the Auditor General and, in addition, believe that a budget must be established and reviewed prior to the annual allocation of funding for each board.

The Department of Health and Social Services budget represents almost 25 percent of the Government of the Northwest Territories overall spending. Committee members stated that given our limited revenue growth, program and service demands in other areas such as education and housing, and an increasing accumulated debt, responsible budgeting and evaluation and an effective third-party accountability framework become increasingly important.

The Standing Committee on Accountability and Oversight is of the position that the budgeting, funding, and evaluation, as well as the delivery of programs and services, are a shared responsibility between the department and its boards of health and social services. The committee noted that the boards and the department do not operate in isolation.

The Standing Committee on Accountability and Oversight further notes that ultimately, the Government of the Northwest Territories is accountable for the financial health of the department and its boards of health and social services and at the end of the day, the territorial government is responsible for the delivery of health and social services to the people of the Northwest Territories.

The Standing Committee on Accountability and Oversight expressed concern over the number of consultants procured by the Department of Health and Social Services. Committee members stated that various consultants through previous governments and department administrations have studied the same problems repeatedly. The standing committee would like to see less examination of the problems and more implementation of recommendations from previous studies. The problems and solutions have not changed, just their relative magnitude. While the department waits for the results of its most current consultation effort, life goes on. In many cases, these consultation projects have been sole-sourced to southern contractors, even though in some cases, northern consultants are available. In short, the Standing Committee on Accountability and Oversight would like to see more concrete results rather than more consultants' reports.

At this time, Mr. Speaker, I would like to pass the report back to the chairman of the committee. Thank you.

Thank you, Mr. Roland. The honourable Member for Frame Lake, Mr. Dent.

Thank you, Mr. Speaker.

The Standing Committee noted that the NWT Development Corporation (DevCorp) underwent a complete turnover of senior management in April 1999. The investment decisions referred to in this and the Auditor General's report were all made by the previous management.

The committee members recognize efforts by the current management to rectify problems at the DevCorp and acknowledge that most of the difficulties were due to the previous management. As a result, the Standing Committee on Accountability and Oversight encourages the Northwest Territories Development Corporation to continue vigilant efforts to resolve existing difficulties and deliver its mandate.

The Auditor General's Office noted that the current management had also inherited some subsidiaries from the old Department of Economic Development and Tourism and the original Development Corporation. The Auditor General added that the current management is trying to maintain those original businesses while at the same time trying to develop new ones.

The committee members noted the DevCorp originally had a number of social objectives, such as investment in high-risk ventures, and job creation in small, remote communities and regions.

Committee members suggested that subsidiaries with social objectives should be measured differently than those subsidiaries with strictly business objectives. This would improve the accountability process.

The committee added that if management and technical assistance programs and services were readily available to DevCorp businesses, it would likely result in a greater number of financially successful subsidiaries. Under the current DevCorp structure, once financial subsidies are transferred to their respective subsidiaries, the government's responsibilities are considered concluded.

Committee members and Mr. Fred Koe, president of the Northwest Territories Development Corporation, discussed the role of the DevCorp at length. In the end, the standing committee agreed that until the government's initiative to examine the potential for combining the Northwest Territories Business Credit Corporation (BCC), the Business Development Fund (BDF) and the Northwest Territories Development Corporation is concluded, it would not be appropriate to recommend structural change. The committee expects to be briefed by the government as soon as the study is concluded.

The Standing Committee on Accountability and Oversight requests that the Executive Council table a comprehensive response to this report within 120 days in accordance with Rule 93(5) of the Rules of the Legislative Assembly. Mr. Speaker, that concludes the Report of the Standing Committee on Accountability and Oversight on the Review of the Report of the Auditor General to the Legislative Assembly for the Year 1999.

I MOVE, seconded by the honourable Member for Inuvik Boot Lake, that Committee Report 1-14(4), be received by the Assembly and moved into committee of the whole. Thank you, Mr. Speaker.