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 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 spent a considerable amount of time exploring this issue. Members discussed the limiting nature of the current contracts and had encouraged the Minister to draft new agreements in consultation with the communities. The Minister agreed and stated that new agreements would be signed with the affected communities over the summer of 2002.

At the same time the standing committee took issue with the fact that the four communities are currently being charged an additional nine percent administration fee over and above the amount being paid to the department for work done on the community's behalf. The committee is aware that the majority of the money spent by the community on services is ultimately recovered from MACA. Therefore, the committee does not feel that it is appropriate for PWS to unilaterally impose a charge which will ultimately come from another GNWT department.

The standing committee felt that any administration fee would in effect be charged back to another GNWT department and therefore defeats the purpose of decreasing costs to the GNWT. Members suggested that this issue be referred to the Standing Committee on Accountability and Oversight so that all 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.

During the business plan review for 2003-2006, the committee asked if any communities had signed new draft agreements with the department over the summer. The Minister stated that no community had signed a new agreement. However, a planned increase of the administration fee to 16 percent was going ahead for implementation 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 committee 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 cause 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 committee is at a loss to explain how the department can arbitrarily decide to increase administration fees in the absence of newly signed agreements from the communities.

Finally, committee members are aware that other GNWT departments are currently charging considerably less in administrative cost recoveries and in some activities, are charging no administrative fee at all. For example, Nunavut is charged only a 6.5 percent administration fee for work done on their behalf by the GNWT. The Department of RWED has a mutual agreement with fire suppression forces in other provinces and territories to charge no administration fee for any services provided to another jurisdiction. Clearly there is a large discrepancy throughout the GNWT as to the charge of administration fees by departments.

Furthermore, the members of the committee would like to suggest to the government that water is an essential service and should be a cost to the government without an expected 100 percent recovery of costs from the communities. Members also suggested that there be a cap on the costs of water/sewer maintenance fees or charges.

The Standing Committee on Governance and Economic Development has once again referred this item for comment by all Regular Members at the Standing Committee on Accountability and Oversight.