We will move to capital, page 21, at the back of your report. Capital acquisition plan, resource management and economic development, total resource management and economic development, $1,585,000.

Forest management, total forest management, $340,000.

Total department, $1,925,000.

Does the committee agree that consideration of the Department of Resources, Wildlife and Economic Development budget summary has been concluded?

I would like to thank the Minister and the witnesses. Sergeant-at-Arms, would you please escort the witnesses out? Prior to the break, we agreed that once we concluded the Department of Resources, Wildlife and Economic Development, we were going to deal with the Department of Transportation. At this time, I would like to ask the Minister if he has any opening comments. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, it is my pleasure to present to you the Department of Transportation's proposed main estimate appropriation for the 2002-2003 fiscal year.

For most of the department's operational programs, the main estimates budget projects continuity and stability in the delivery of the department's transportation programs and services. The operations and maintenance component of the budget actually amounts to only a small reduction in expenditures of about a half million dollars, from $50.7 million in 2001-2002 to $50.2 million in 2002-2003.

There are almost a million dollars in forced growth expenditures, due largely to the added demands on the transportation system from our booming resource industries and, of course, the introduction of new national security measures at our airports.

The increase in air traffic associated with the growing oil and gas industry calls for a new regional airport manager in the Beaufort-Delta area. Similarly, the increase in industrial highway traffic in the Mackenzie Delta requires a stepped-up, seasonal presence of the department's highway patrols.

During the ferry season at the Tsiigehtchic crossing, the department will increase the number and frequency of daily crossings to keep up with the traffic. At freeze-up, it will accelerate the construction of the ice bridge at the Tsiigehtchic crossing with the application of ice-spraying technology.

A security and protective services officer will coordinate the implementation of Canada's new airport security measure across the territorial airport system.

The department's budget for 2002-2003 includes a $38.3 million capital construction program. The government's financial position has permitted a one-time injection of $15 million to the department's reconstruction program that will bring up expenditures this year on highway improvements to $33 million.

The budget also provides $4.6 million for runway and air terminal improvements in the airport system. In its marine program, the department plans to install a workshop for the Peel River ferry operation near Fort McPherson.

One of the Department of Transportation's most successful programs for stimulating the economic potential of our smaller communities is the community access road program. In 2002-2003, the department has budgeted $587,000 for local access road projects in Aklavik, Fort McPherson, Lutselk'e, Rae Lakes, Tsiigehtchic, Wekweti and Wha Ti. Contributions from the community access program mobilize local capacities in the construction of new roads on a scale suitably adapted to the needs of a small economy.

All together, Mr. Chairman, the budget we are reviewing today represents proposed expenditures by the Department of Transportation of $88.5 million on the programs and services in the Transportation portfolio.

In the delivery of its transportation programs, the department is always looking for ways to improve the quality of its services. Its commitment to better public service and supplies across the transportation mandate to our airports, highways, ferry operations, road licensing and road safety services. The detailed review of the Department of Transportation's proposed budget is always a good opportunity to showcase the essential importance of the transportation function in our economy and daily lives of the Northwest Territories. I look forward to the Members' comments and questions. Thank you, Mr. Chairman.

Thank you, Mr. Minister. At this time, I would like to ask the standing committee responsible for reviewing the department under consideration to present their report. Mr. McLeod.

Thank you, Mr. Chairman. The Department of Transportation provides for the safe, accessible and reliable movement of people and goods throughout the Northwest Territories. The Standing Committee on Governance and Economic Development met with the Minister of Transportation and his staff on January 15, 2002 to review the department's main estimates for 2002-2003.

The standing committee noted a net $518,000 decrease in operations expenses for the department from their 2002-2005 business plan. This decrease resulted from:

• • An $887,000 increase in amortization expense;
• • A $1,750,000 decrease for approved strategies and priorities resulting from a funding reduction for the Highway Investment Strategy from $1,850,000 to $100,000; and
• • A $345,000 increase in other subsequent Financial Management Board approvals to fund required enhancements to small airports and airfield security.

The standing committee also noted a net decrease of $16 million in the department's overall capital expenditures from its 2002-2005 business plan. This adjustment was attributed to a $1,100,000 reduction in funding for the Mackenzie winter road bridges, and a $14,900,000 decrease in funding for highways that resulted from a revision of the original Highway Investment Strategy.

Some committee members made their concerns known to the Minister that more Northerners would be hired if there were more training programs available and training is incorporated as part of a department contract.

The department replied that training dollars are a component of some contracts, but not all. However, they are making "best efforts" to ensure the selection or inclusion of northern businesses and labour in their contracts.

At the request of the standing committee, the department agreed to provide a list of training money and the number of individuals that have received training through the department or its contractors for the past five years.

A number of committee members pointed out that, as there are initiatives to improve the highway system, there should also be initiatives to improve community access roads, especially to gravel sources.

Some committee members pointed out that community access roads that lead to gravel sites are particularly underfunded. For example, to build a gravel access road, the community requires gravel, but without ready access to a gravel source, a road is costly, if not difficult to build. Gravel access roads are distinct and have unique requirements compared to community access roads that lead to historical, harvesting or recreational sites.

The Standing Committee on Governance and Economic Development recommends that a separate gravel access road program be incorporated within the Department of Transportation.0

The standing committee was especially concerned about the low level of funding available to communities for the proper development of their community access roads. Committee members are of the position that with the current annual maximum of $50,000 for a maximum period of five years, for a total of $250,000 for community access road projects, by the time a road is completed to some sites, it might take 10 to 15 years. Considering our adverse climate, short construction season and high operating costs, the current level of funding is inadequate.

Further, a number of committee members reported that once a segment of road is completed, part of next year's funding has to go to repairing the existing portion due to permafrost and wear and tear. Compare this level of funding to public highway access roads, which receive the full amount of funding necessary to connect a nearby highway to a community.

The standing committee debated the merits of the current community access roads program and came to an agreement that the yearly amount be increased to $75,000, but the overall cap should remain unchanged.

The new corporate capital planning process was developed and implemented by the government prior to the 2002-2005 business plan review. The establishment of the new capital planning process was done without consultation of the Regular Members.

The standing committee is of the opinion that this process affects all Members and would like the government to give a status report on the corporate capital planning process to the Standing Committee on Accountability and Oversight.

This would give all Members an opportunity to express their concerns to the government on the current process. The government would then convey those concerns to Cabinet for possible amendments, if required.

In the Standing Committee on Governance and Economic Development's review of the 2002-2005 business plans, committee members noted that:

The new process removes capital planning from the departments and places the decision-making firmly in the deputy ministers' control and may leave communities and Regular Members without effective input.

As a result of this new capital planning process, all GNWT capital projects are now subject to a prioritization process, determined by the Capital Review Committee, which is made up of departmental representatives. The prioritization process is made up of a review of all capital projects screened through a new primary rating criteria.

The new primary rating criteria places the protection of people first, followed by the protection of assets, protection of the environment, financial investment considerations, and then program needs or requirements. The standing committee is concerned that these criteria, especially the protection of people, may lead to more projects being placed in larger rather than smaller communities.

(Response to the Government on the Review of 2002-2005 business plans, November 13, 2001, page 3)

The inflexibility of the government's new capital planning process is particularly evident in the Department of Transportation's ferry operations. For example, when ferries encounter major mechanical breakdowns, in some cases, it may be more cost effective to replace an engine rather than to adhere to a strict maintenance schedule and engineer costly makeshift repairs. As a result, committee members would like to see the current capital planning process be more flexible and responsive.

The standing committee was concerned about expenditures to date resulting from the cancelled Highway Investment Strategy. The Minister explained that $178,000 was spent on salaries and $542,000 on other operations expenditures. No capital expenditures, including motor vehicles, were made.

The Minister assured the standing committee that he would not bring back the original Highway Investment Strategy. He added that he has gone to the private sector for advice. The private sector has formed a lobby group, which includes the NWT Trucking Association. This group, which is led by the NWT Chamber of Commerce, plans to lobby Ottawa for more highway and other infrastructure funding.

As a result of the cancellation of the government's original Highway Investment Strategy, the Minister offered to arrange an information session for the standing committee with the highway and infrastructure lobby group. The standing committee looks forward to meeting with the lobby group.

Thank you, Mr. Chairman.

Thank you, Mr. McLeod. At this time, I would like to ask the Minister if he will be bringing in any witnesses. Mr. Minister.

I am prepared to bring in witnesses, Mr. Chairman.

Does the committee agree that the Minister bring in witnesses?