Thank you, Mr. Chairman.

The Department of Finance is responsible for obtaining the financial resources to carry on the functions of government, for intergovernmental fiscal negotiation and arrangements, for regulating the insurance industry, and for controlling the sale of liquor in the Northwest Territories.

The Standing Committee on Governance and Economic Development met with the Minister of Finance and his staff on Wednesday, January 16, 2002 to review the Department of Finance's 2002-2003 draft main estimates.

The committee noted a net decrease in the department's operations expenditures in the amount of $1,236,000. This net decrease is attributed to a $500,000 increase in forced growth reflecting the forecasted increase in insurance premiums for government assets; and a $1,736,000 reduction in other subsequent FMB approvals as the result of decreases in the government's short-term interest expenses. The Department of Finance did not have any capital expenditures.

Financial Reporting and Forecasting

Timely and accurate financial reporting and forecasting continue to be significant concerns for the standing committee. The financial health of the government is of primary importance for members of the public and the Legislative Assembly. Without effective reporting and forecasting, an accurate picture of the government's financial health is difficult.

For example, last year, the government received what they referred to as a "one-time" net corporate tax windfall of $16 million. This year, the government reported that it would receive another "one-time" net corporate tax windfall in the amount of $87 million from the same filer. This comes from the GNWT response to the Standing Committee Report on 2002-2005 Business Plans, Financial Management Board, January 11, 2002.

The committee is aware that corporate tax filers, like individual filers, are required by the Canada Customs and Revenue Agency, or CCRA, to make at least monthly instalments on their projected tax payable. This tax payable is based on a corporation's or an individual's forecasted income for the upcoming tax year, or on their income from the past year, whichever is less. Non-payment or underpayment of taxes payable would incur expensive interest penalties. In light of this tax requirement, it is possible that the government would have been aware of any large corporate tax windfalls well in advance.

During the review of the department, the Minister remarked that if he had been informed that there was additional money on its way, he would alert the committee right away but that he did not expect anything for the next couple of months.

Committee members found it coincidental then that the government reported corporate tax windfalls on the first day in each of the Standing Committee's reviews of the Government's 2001-2004 and 2002-2005 business plans. The government, in both instances, had explained that they were notified either that morning or the day before by the CCRA. A few members noted that if the Minister had been informed at the last minute of any corporate or other tax revenue windfalls by the CCRA, why would he state that he did not expect anything for the next couple of months? Some members added that if the department was not notified in a timely manner, this may draw into question the condition of this government's working relationship with the federal government.

In short, good information is the foundation for good decisions. Accounting systems are an important source of this information. These issues are especially important, given this government's increasingly difficult financial circumstances. These concerns were conveyed to the government in the committee's report on the review of the 2001-2002 main estimates and the committee's response to the government on the review of the 2002-2005 business plans.

Resource Revenue Sharing

The committee suggested the establishment of a heritage fund similar to Alberta's. The Minister replied that it may be impractical at this time as most of the revenues from oil, gas, and diamonds go to the federal government. The Minister stated that hopefully after devolution, the NWT will see better revenues and for now, it may be more productive to invest in people and infrastructure.

The Minister apprised the committee that the NWT will never reach a resource revenue sharing agreement similar to Alberta's. Alberta keeps 100 percent of the revenues arising from resource extraction. The department further stated that the NWT would be lucky to keep 50 to 60 percent. Some provinces, like Nova Scotia, only get to keep 30 percent of their oil and gas revenues.

Committee members suggested that in order to improve on negotiations with the federal government, the NWT must develop a position, quantify potential revenues, study what has resulted in other jurisdictions, and develop options and alternatives.

Expansion of Banking Services to More Communities

Banking services are limited in most NWT communities. The committee would like to see more effort from the government to encourage banks to set up services such as automatic teller machines, or ATMs, in the communities. The establishment and the improvement of banking services would allow for bill payments and the disbursement of payroll and income support payments in the communities.

In response to the committee's concerns, the Minister replied that in the next call for proposals for banking services, the department will ensure banks develop a northern specific banking regime and improve their services in communities to include ATMs and other services.

Statistics

Committee members would like the GNWT to improve its statistics work to ensure federal statistics such as population surveys are accurate, as a significant component of our formula financing agreement is dependent upon the result. The department should undertake steps to increase the use of our own Bureau of Statistics and northern firms to ensure that statistics remain current and accurate.

The Minister replied the NWT Bureau of Statistics has only seven staff, but he agreed with the committee regarding the increased use of northern firms. The committee and the Minister were of the position that northern firms are more than capable of doing many of the surveys and this would also ensure a higher level of consistency in the compilation of statistics.

Liquor Act

Some committee members would like to see more of the income generated from liquor sales be directed towards alcohol and drug programs. The Minister replied that this income is transferred to the GNWT's Consolidated Revenue Fund, which in turn puts some of its money into social programs, including alcohol and drug programs.

The committee will undertake to examine the most current government review of the Liquor Act, review the current act and then provide its concerns and recommendations to the Minister. The Minister agreed that he would consider any input made by the committee.

Mr. Chairman, that concludes the Standing Committee on Governance and Economic Development's report on the draft main estimates of the Department of Finance. Thank you.