The standing committee is aware that, while the majority of communities in the NWT provide their own water and sewer services, there are currently four communities that rely on the Department of PWS to deliver that service. These communities have signed agreements with the department which bind them to accept the department's maintenance services on the necessary infrastructure.

During the review of the government's 2002-2003 main estimates the Standing Committee on Governance and Economic Development took issue with the fact that the four communities are currently being charged an additional nine percent administration fee. This fee is over and above the amount being paid to the Department for other work done on a community's behalf.

The committee was aware that the majority of the money spent by the community on services is ultimately recovered from the Department of Municipal and Community Affairs. Therefore the committee did not feel that it was appropriate for the Department of PWS to unilaterally impose a charge which will ultimately come from another GNWT Department. Members suggested that this issue be considered by the Standing Committee on Accountability and Oversight so that all Regular Members could have input.

The AOC committee considered the matter and made the following recommendation in its report on the 2002-2003 Main Estimates: "The Standing Committee on Accountability and Oversight recommends that the Financial Management Board Secretariat reconsider the surcharge of nine percent on services performed on behalf of community governments."

The Standing Committee on Governance and Economic Development reviewed the department's 2003-2006 business plans in September of 2002. At that time the Minister announced that there would be an increase in the administration fee from nine percent to 16 percent effective immediately. Justifying the increase, the Minister stated that he had been directed by the Financial Management Board to obtain full cost recovery for all services provided to the communities.

The Standing Committee on Governance and Economic Development once again pointed out that it did not support even a nine percent administration fee levied on work done by the department for communities and would certainly not support an increase of this fee to 16 percent. Furthermore, the committee expressed concern that a large increase in the middle of the fiscal year would be an undue hardship on small communities that had not factored such an increase into their budgets. The Minister agreed to delay the implementation of the increase to April 1, 2003. The GED committee recommended that this issue be reviewed by the AOC.

Regular Members were subsequently informed that other GNWT departments are currently charging considerably less in administrative cost recoveries. For example, Nunavut is charged a 6.5 percent administration fee for work done on their behalf by the GNWT. Members failed to understand why we would charge a higher fee to NWT residents than is charged for services delivered to non-residents. The Standing Committee on Accountability and Oversight suggests the government use a consistent method for determining administrative costs. Then, if fees are to be recovered, they can, and should, be levied fairly.

The Standing Committee on Accountability and Oversight sees water and sewer as an essential service and would like to see all municipalities obtain full control over the delivery of these services. The committee urges the Government of the Northwest Territories and the mayors of the concerned communities to fully co-operate in preparing for the take-over by agreeing on a timeline for the gradual transfer of water and sewer services. We suggest that a period of three to five years should be adequate. However, any transfer of these vital services must include adequate resources and training to the affected communities. To encourage the departments to move quickly to devolve responsibility, the committee suggested the removal of all administration charges.

In response, the government stated it had reviewed the proposed charge and has instructed the department to withdraw the planned increase to the fee. However, the government also said that the fee will remain at the current nine percent charge until a thorough review has taken place.

In order to encourage the department to work proactively to achieve this transfer of responsibility, the committee makes the following recommendation: The committee strongly recommends that no water and sewer services administration fees be charged by Public Works and Services until the complete transfer of such services to all communities is concluded.