Mr. Speaker, it could be assets. We are really speculating here -- and I don't like doing this -- that this company is going to not honour its payments to us. I believe they will. It could be a combination. It could be assets the company owns. It could be a building that's in some business here or it could be a claim against revenues by that company. Thank you.

Final supplementary, Mr. Bell.

The Minister indicated that it would be future revenues. That's not the same as assets like a building or something like this and it's very speculative. Can he confirm that that is part of the security, future potential revenues?

Minister responsible for the FMBS, Mr. Handley.

Mr. Speaker, yes, that is part of the security.

Item 6, oral questions. Item 7, written questions. Item 8, returns to written questions. Item 9, replies to Opening Address. Item 10, petitions. Item 11, reports of standing and special committees. Mr. Dent.

Thank you, Mr. Speaker. Mr. Speaker, I would like to present the report on the review of the Report of the Auditor General to the NWT Legislative Assembly for 2000 and 2001. This is a report from the Standing Committee on Accountability and Oversight.

The Standing Committee on Accountability and Oversight met on December 2nd and 3rd, 2002 to review the Report of the Auditor General to the NWT Legislative Assembly for 2000 and 2001.

On December 2nd, briefings on issues raised in the report were provided by the committee analyst and staff from the Office of the Auditor General represented by Mr. Roger Simpson, principal and Mr. Daniel Stadlwieser, director.

A public meeting was held on December 3, 2002, during which committee members took the opportunity to hear from several witnesses. The list of witnesses included: Mr. Lew Voytilla, comptroller general, Financial Management Board Secretariat, FMBS; Mr. John Carter, assistant comptroller general, FMBS; Ms. Catherine Praamsma, assistant deputy minister, operational support branch, Department of Health and Social Services, HSS; Mr. Warren St. Germaine, director, financial services, HSS; Ms. Debbie DeLancey, deputy minister, Department of Municipal and Community Affairs, MACA; Ms. Margaret Melhorn, deputy minister, Department of Finance, Finance; Mr. Doug Doak, director and superintendent of insurance, Finance; Mr. Tom Beaulieu, president, Northwest Territories Housing Corporation, NWTHC; Mr. Jeff Anderson, chief financial officer, NWTHC; Mr. Bob McLeod, deputy minister, Department of Resources, Wildlife and Economic

Development, RWED; and Mr. Doug Doan, assistant deputy minister, Resources and Economic Development, RWED.

The formula financing agreement determines the amount of the grant from Canada. The agreement is negotiated regularly between the Government of the Northwest Territories and the Government of Canada. The current agreement came into effect, April 1, 1999 and is due to expire March 31, 2004 unless it is extended. The grant accounts for 70 percent of the territorial government's income.

Two major factors in the grant calculation are the NWT's population and spending by other Canadian jurisdictions. Final figures for both components are frequently unavailable for up to seven years and may require subsequent adjustments to grant transfers.

There is a risk that revenue figures for any given year are too high or too low. If they are too high, the risk is worse. It will then mean that the government would have to pay some monies back to Canada. Conversely, if they are too low, then Canada owes additional monies to the government. Either situation makes it more difficult for the government to properly plan and budget for its activities. The Auditor General suggested that the government, by carefully managing its revenue risks, could increase the amount of lead time it has to adjust for the inevitable shifts in grant revenues.

The committee and the government agreed with this recommendation. Conservative, yet realistic forecasts would significantly contribute to decreased revenue risks and improved financial planning and management. The committee encouraged the government to ensure a more reliable revenue stream is incorporated in the upcoming agreement negotiations.

The government also receives a significant amount of income from Canada's payment for hospital and medical care costs for Indians and Inuit. At the end of March 2001 and March 2000, Canada owed the government $19.3 million and $26.5 million respectively. The Auditor General pointed out that this is tantamount to lending the federal government money interest free. As a rough estimate for the two years, at a nominal 5 percent, the cost or loss in interest income to this government would be more than $1 million.

The Department of Health and Social Services explained that it did not receive funding from Canada on a timely basis as its agreement with the federal government was not signed until late into 1999-2000 and thus it could not bill monthly. Further, the required audit for the 1999-2000 claim year had not been completed and as such, Canada held back payments for the 2000-2001 fiscal year.

The Office of the Auditor General recommended the government reach an interim billing agreement with Canada to better manage its cash flows, and the department should review its processes to ensure claims are finalized and audited on a more timely basis. The Auditor General did not encounter any federal regulation that would prohibit DIAND from entering into such an agreement.

The committee and the Auditor General encourage the department to enter into an interim agreement with DIAND for the timely reimbursement of hospital and medical care costs for Indians and Inuit. Committee members stated there is no reason the GNWT should fund the program. Timely reimbursement is especially important given the government's forecast cash deficit. The government advised that they are requesting an interim funding agreement with DIAND be put in place. At the time of the review, the government had not received a response. Mr. Speaker, I seek your consent to have my colleague from Range Lake continue with the committee report.

Ms. Lee.

Thank you, Mr. Speaker. The next section of the report deals with business development funding and grants to small businesses. The department of Resources, Wildlife and Economic Development administers both the business development fund, BDF, and the grants to small businesses, GSB, programs. Both programs provide funding to small businesses.

According to the department's website, the BDF is made up of nine program schedules that are roughly tied to the business development process. The BDF provides assistance up to a maximum of $30,000 per year with certain exceptions. The Minister of RWED may direct the department to provide up to $250,000 in BDF funding to any one client in any fiscal year. Contributions made within the program may be repayable. The government distributed $3,000,000 and $4,096,000 in BDF funding in 2000-2001 and 1999-2000, respectively.

The GSB program was developed to provide relatively small amounts of money to individuals who operate small businesses. These small businesses may include artists, craftspeople, renewable resource harvesters, trappers and home-based businesses. The program provides funding up to a maximum of $5,000 per individual over their lifetime. The government dispensed $229,000 and $316,000 in GSB funding in 2000-2001 and 1999-2000, respectively.

The Auditor General reviewed both business assistance programs and identified a number of deficiencies in eligibility criteria, program administration and performance measurement and evaluation. These concerns are addressed in greater detail in chapter three of the report.

The Auditor General tested a sample of 20 files from the 1999-2000 GSB program and 46 files from the 1999-2000 BDF program. Fifteen files or 33 percent of the BDF sample had no accounting in their files and a further five files or 10 percent had incomplete accounting, in that they did not provide enough receipts to demonstrate that they had spent all of the contribution on the project as agreed. The Auditor General also found in its sample of GSB files, that there were a number of approved projects where it was not clear if the eligibility criteria of the program was met. The department has taken steps to rectify the deficiencies identified in the Report.

Committee members pointed out that many projects were approved for GSB funding to pay for extraordinary costs. Although the GSB does allow funding for extraordinary costs, no parameters or guidelines were evident and the category is subject to wide interpretation. The committee suggested that "extraordinary costs" be clearly defined in order to ensure the fair and effective distribution of GSB funding.

The committee was especially concerned about the lack of eligibility and accounting for a significant number of BDF files reported by the Auditor General. The department advised that keeping track of all BDF and GSB files to a high level of accountability may incur a bureaucratic nightmare, as many of the distributed funds are small. Department officials reported that in some cases, the amounts are in the hundreds of dollars. The Office of the Auditor General agreed that the cost/benefit of any controls put in place must be considered against the need for consistent application of policies and procedures.

The Auditor General and the committee also pointed out that Schedule G of the BDF program is subject to wide interpretation and lax accounting. Schedule G or the community initiatives program provides funding to projects that support community-based strategies for the development of a stable economic base. Of the 15 files in the BDF sample, 6 or 40 percent did not have adequate accounting in them. In 1999-2000, contributions made under Schedule G were worth $2.2 million, while $1.9 million were awarded under all the other BDF schedules. The department reports that all accounting has now been provided.

The committee replied there needs to be some form of accountability to ensure Government programs and services are achieving their objectives. Both the Auditor General and the Committee stated that if policy makers lack meaningful information on program performance, they would not be able to decide if programs are working, or if they need to be changed. As a more practical solution, committee members suggested a sliding scale for accountability. In other words, for a greater amount of funding, there should be a higher level of accountability. Mr. Speaker, I seek consent to have the Member for North Slave continue with the report. Thank you, Mr. Speaker.

Member for North Slave, Mr. Lafferty.

Mr. Dent.

Thank you, Mr. Speaker. Mr. Speaker, that concludes the report on the Standing Committee of Accountability and Oversight on the review of the report of the Auditor General.

I move, seconded by the Honourable Member for North Slave, that Committee Report 8-14(6) be received by the Assembly and moved into committee of the whole. Thank you, Mr. Speaker.

The motion is in order. To the motion.

Question has been called. All those in favour? All those opposed? The motion is carried.

---Carried

Item 11, reports of standing and special committees. Item 12, reports of committees on the review of bills. Item 13, tabling of documents. Mr. Kakfwi.

Mr. Speaker, I wish to table the following document titled GNWT response to "Strengthening GNWT Support to Smaller Communities" Interim Report of the Special Joint Committee on Non-Tax-Based Community Affairs. Thank you, Mr. Speaker.

Thank you. Item 13, tabling of documents. Mr. Miltenberger.