Thank you, Mr. Speaker. Mr. Speaker, I would like to speak in favour of this motion. I'm hoping that Members will also support it. I'd like to go through my reasons for supporting the motion in the order presented in the motion.
Mr. Speaker, Members, including myself, have told the Minister a number of times of concerns about the existing policy that have not been addressed by the new policy. For instance, the issue of store fronting and the lack of adequate policing. We don't see those as being addressed in the new policy.
Store fronting; the new policy would limit the business incentive policy qualifications to companies that pay Northwest Territories taxes and operate from a bona fide place of business. There's no definition of what constitutes a bona fide place of business, so it makes it easier under the new policy for southern business to rent a little place and get around the spirit and intent of the business incentive policy. So this actually makes the new policy worse at stopping store fronting businesses than the existing policy.
Mr. Speaker, the revised policy also has been touted as something that improves access in the smaller communities. It's been suggested the changes will better serve small business. Mr. Speaker, from an examination of the policy this is flat out wrong. I can't figure out where this is coming from. I've gone through the proposed policy very carefully and discussed it with many people and there's no way that the new policy improves how the business incentive policy will support small business in the smaller communities.
Right now, Mr. Speaker, the new policy proposes a $1 million limit on contracts. This is something that's new. The Minister said that the business community asked for these limits. He still said that, Mr. Speaker, in August, in the backgrounder that came with the press release on August 15 that I tabled in the House yesterday. That's not backed up by what we heard from business associations and individual businesses in our communities. I challenge the Minister to table in this House transcripts that prove that position was widely taken at the consultation process that his department undertook on the business incentive policy, because I haven't been able to find one business that supports that change.
This limit actually causes a lot of problems for smaller business, especially in construction contracts, because what will happen on a $3 or $4 million contract is that the general contractor will use up the entire incentive on their own forces on that first $1 million. That leaves the general contractor with no reason to look at hiring any northern businesses if a southern one can do it cheaper. This, in fact, will hurt our small northern businesses that operate things like plumbing and heating or electrical companies. With this new system, all of the sub-contractors in a contract for $3 million or better could wind up being southern.
With this new policy, there has been a removal of the definition of northern supplier. This creates a loophole allowing the contractor to purchase materials anywhere and claim a bid adjustment for it. This certainly won't help the small businesses and the smaller communities get business when contracts are let in their region.
Mr. Speaker, as we've noted in the motion, the Agreement on Internal Trade grandfathers the existing policy. We're not certain that this isn't going to cause a problem. I know that Minister Antoine and I were both elected to this House at the time that the current policy was put in place; 1992. At the time, we were told that the purpose of the business incentive policy was to stimulate northern ownership of businesses. Why? Because somebody who owns a business in the North, when they make profits, those profits circulate again and again through the North, multiplying their impact. They don't filter down to a person who lives in the South. That purpose has been removed from the new policy. All that we say is that the business has to pay taxes in the North and that it has to hire Northerners. So we've removed one of the significant reasons for this policy being in place and once you change that, I think it calls into question whether or not the grandfathering under the agreement on internal trade would actually continue.
Mr. Speaker, the standing committee has asked for information numerous times on what the current business incentive policy costs. I think it's something we've heard often, even from a Member now on the Cabinet side, that you shouldn't make decisions unless you have blue-chip information. Yet, whenever we asked the Minister, what does the current policy cost? He says that they can't tell us. The government has no idea what the current policy costs. So our committee suggested that what we should do is perhaps collect that information. Let's find out what the business incentive policy is costing us per year. Let's see just exactly what it costs us and then maybe we can take a stab at assessing whether or not we get any value for the money that we're spending.
The Minister has also said that one of the reasons we're proceeding with this is that the business incentive policy might cost us too much. At the press conference, his deputy minister suggested that there might be a $10 million premium for it. Although the Minister has repeatedly told us that they have no idea what the actual premium is that's being paid, they were still floating numbers at the press conference. If he can't tell us how much it's costing us, how can they float those numbers publicly?
If we can't find out what this is costing us, how do we know that the changes from the current policy are actually going to fix what the Minister thinks is wrong with the policy right now? Until we know for sure what it's costing us or what we might be getting from it, there's no way of knowing whether we're going to fix that with these changes.
As I said, we had expected that we were going to see a year's worth of data presented to us and that we would then be able to hear from the Minister just exactly how we were going to be fixing the problem that would suddenly become apparent from the data that he collected. So, Mr. Speaker, in January, the committee sent the Minister a letter in which we very clearly stated that it was the position of the committee that no changes should be made to the business incentive policy at this time. In the absence of information on the costs and benefits of the policy to government, businesses, communities and residents, Members do not believe it is possible to know what the proposed changes would accomplish or even whether the policy should be continued at all.
Mr. Speaker, in February, when we were in Session, the Minister responded to a question from Mrs. Groenewegen asking what the government's intention was with the policy. We took his response to mean that the government was not going to proceed; that the government was listening to our advice; that we had achieved a consensus and that in the true sense of consensus that was going to be reflected in the government policy. I think, Mr. Speaker, that we should be able to take that sort of communication back and forth from the committees to the Ministers to set out what was going to happen. We should know that we can take a Minister at his word and it's going to be reflected in a policy that the Cabinet is going to back up.
Particularly in our system, Mr. Speaker, where we talk about having a consensus. When the Minister presented the reasons for changing the policy at the press conference and if you look at some of the back-up materials that were tabled yesterday you'll see that there's a certain assumption that the business incentive policy costs us extra money. Cabinet clearly thinks that it costs us money, because they waived the business incentive policy for the second phase of the North Slave Correctional Centre. What happened with those bids? All but one went to northern firms anyways. But the one that didn't was for electrical contracting and it didn't go because the northern bidder was high by $85,000, or five percent. Had we not waived the business incentive policy, the northern electrical supplier would have gotten the tender, would have done the job, would have paid ten residents of Yellowknife salaries amounting to about $600,000 which would have gotten this government back $6,000 in payroll taxes, it would have gotten this government approximately $50,000 in income taxes and it would have gotten this government six times whatever their family numbers were times $15,000 back in payments from the federal government in transfer payments.