Yes, I will, Mr. Chairman.

Does the committee agree?

Sergeant-at-Arms, escort the witnesses in, please.

Mr. Handley, for the record, would you introduce your witness, please?

With me is Lew Voytilla, secretary to Financial Management Board.

Thank you, Mr. Handley. We are reviewing Bill 11, tab 11 in your binder, page 9. Municipal and Community Affairs, operations expense, $1.603 million, not previously authorized, regional operations.

Total department, $1.603 million not previously authorized.

On page 10, Public Works and Services, operations expense, expenditures, directorate, not previous authorized, $3,000.

Asset management, not previously authorized, $216,000.

Systems and communications, not previously authorized, negative $82,000.

Petroleum products, not previously authorized, $4.127 million.

Mr. Braden.

Thank you, Mr. Chairman. Mr. Chairman, I am not going to dispute or decline or vote against this appropriation, but I would like to spend, for the record, a little bit of time exploring the nature of this fund, the petroleum product stabilization fund and the supporting mandate or policy that surrounds it. I believe, Mr. Chairman, we have a rather flimsy, very open-ended piece of financial administration here and it deserves to be tightened up. My understanding of this fund, Mr. Chairman, is that this fund absorbs any loss or profits that the petroleum product revolving fund sustains as we provide petroleum products to 15 communities, mainly the small communities, off the road network, Mr. Chairman.

This fund has a limit of $5 million. The more I understand it, Mr. Chairman, is if there should ever be profits accumulated up to a maximum of $5 million, then those profits will then be redistributed back to the customers through pricing.

Conversely, when losses accumulate to $5 million, and we are just about there, something has to be done to either go back to the customer and start collecting enough money to reduce that accumulation or, as the government is proposing here, to go to the taxpayer and collect $4.17 million and, in effect, give this as a subsidy to the fuel customers in small communities. To a very large extent, Mr. Chairman, I think it's worth noting that the GNWT, through its own infrastructure and public housing policies, is its own best customer. But, Mr. Chairman, my concern here -- and this is where I will try to craft a question for the Minister -- is what are the criteria that FMB uses to decide how to balance out this fund? Why is it that the more obvious option, which is going to the customer to recover the money, is not being used and why are we just going right back to the taxpayers pocket for what I believe is an ill-defined subsidy to some people in the NWT. Thank you, Mr. Chairman.

Thank you. Mr. Handley.

Mr. Chairman, the purpose of the petroleum products revolving fund is to have a fund which would be able to absorb losses and, theoretically, if there were revenues in a particular year to balance that out in a way so that the consumers would not have these price increases and decreases. So that fund was set up a good number of years ago. It was set up as a stabilization fund. Over the years, going back... And my note goes back to 1996-97 with a $3 million deficit... It's faced losses all the time. So the fund deficit has continued to grow. In December, we corrected that to a large extent by charging all the government users the amount they should be paying, so they are at least paying their full amount. So that will help move it closer, as you can see on the page, to breaking even. We have that $4.7 million that's accumulated. Unless we intend to recoup it from consumers, then it's carried on and on as a deficit. If we are going to collect it from the consumers, it is going to be a big hit on people living in the small communities. If we are not going to collect it, then the proper way of accounting for it is to take it off here and put it into our books as being a deficit that we've accumulated and recognize it as part of our deficit. We don't leave it hidden in this revolving fund, otherwise we are going to be accused of not accounting for it properly. Our view right now is that we are not going to be able to collect the $4.7 million from the customers in PPD communities, so write it off and we start over again. We should be able to maintain a balance by the correction we've made in charging governments the correct amount that they should be paying.

Thank you. Mr. Braden.

Mr. Chairman, that's the kind of discussion that I think we should have on this issue and we should continue to have. To highlight an area of concern as referenced by the Minister, when he said that in our view -- and I am assuming this is FMB's view -- that the best way to manage this is, et cetera, et cetera, with the measures that have been put in place, and I think those are good measures to charge the government the true and the full cost, so that we may see more stability in the stabilization fund.

Mr. Chairman, this still doesn't satisfy me to the principle that I am trying to pursue here, which is that this really is an open ended subsidy to some people in the NWT. I am not at all against the need of the people in the small communities to have some help with the cost of something as essential as fuel, the way in which we provide this subsidy really needs to be better defined and better managed so that everybody comes out with a knowledge of how and to what extent we are going to provide a subsidy.

I would leave my discussion and maybe the Minister could comment on this. I'm looking at report that comes from the Auditor General of Canada to the Legislative Assembly in Nunavut, Mr. Chairman for the year 2001. In one of the discussions here, and in reference specifically to their petroleum products revolving fund, I understand it was duplicated essentially from what we have.

May I make a suggestion here that what we do suggest is that PPRF or the petroleum products revolving funds accounting be changed to include all costs including harmonization associated with the government sale of fuel. This will show the Legislative Assembly and, I would mention the customers, Mr. Chairman, the total cost of the fuel program. Let's include in that the tankage, the liability, the insurance, the management, all the things that we already subsidize but don't pass the cost on. Let's do the accounting properly and fully and openly, Mr. Chairman, and then we can make a good decision on how to manage any subsidy or system that is going to be given to those small communities. Thanks Mr. Chairman.