Thank you, Mr. Chairman. The Standing Committee on Governance and Economic Development met with the Department of Resources, Wildlife and Economic Development, or RWED, on January 20, 2003, to review the department's draft 2003-2004 main estimates.
The department is proposing a net decrease of $6,000 from its prior 2003-2006 business plans. This decrease is due to an adjustment in amortization expense for the department.
Division Of Department
As members reviewed the extensive and varied responsibilities of the department, the committee reiterated their opinion from prior years. The committee has expressed their concern that the combination of wildlife and environmental protection with economic development creates unnecessary complications and competing interests within one department. The committee also is concerned that as the focus of the NWT has turned to its increasing economic growth, the need for a focused program to monitor the effects of development on the environment, wildlife and communities is even more vital than before.
The committee has suggested in previous reports that there may be a need to divide the department into the two respective departments. One department would maintain responsibility for environmental and wildlife protection, as well as forest management and land use. The other department would manage all aspects of economic development programs and divisions. The committee feels that the division of RWED into two departments would eliminate the possibility of one activity overshadowing another vital activity.
The committee would like to suggest that the Premier's Task Team on Corporate Review and Transition Planning take the committee's suggestion to divide the Department of RWED into consideration for its final report.
Forest Fire Pre-Suppression Contracts
In September of 2002 the committee reviewed the business plans for the Department of RWED and was told that the pre-suppression water bomber contracts were due to be renewed shortly. The Minister stated that he had received Cabinet approval to proceed with another negotiated contract with Buffalo Air to renew for a further five years.
Several members of the committee noted that negotiated contracts were used in awarding the original contract to Buffalo Air and in the previous renewal for a total of seven years. At the time of their last renewal, Members of the 13th Assembly were assured that any future contracts would be put out for tender. Members are aware of the significant amount of these two contracts totalling almost $21 million dollars. In order to open up the process and allow for equal competition in the NWT as well as to guarantee the GNWT's provision of services at a competitive price, the committee had recommended that the water bomber contracts up for renewal be open to requests for proposals.
In its response to the committee, the department stated that it recognizes that contract services obtained by the GNWT must be provided at a reasonable cost. However, the department also stated that if contracts were awarded to a company other than Buffalo Air, the new company would require time to build the needed skills and incur costs associated with capital for infrastructure and the development of training programs. These costs would be reflected in the cost of the contracts to the GNWT.
On December 20, 2002, members and the public were informed that the two five-year contracts for air and land-based tanker services for forest fire management contracts were awarded to Buffalo Air.
Members are not convinced that there was an urgent need to renew the existing air contract with Buffalo Air for five years, rather than offering the contracts up for RFP. However, members were pleased to hear that the Minister had written letters to all the airline companies based in the NWT explaining his decision to award the contract.
The Minister also stated that a new RFP would be offered to NWT airline companies by year three of the current five-year contract with Buffalo. The government feels that this will allow local companies enough time to build up the necessary infrastructure and training programs in order to adequately compete with a well-established firm that has been operating the contract for a dozen years. The standing committee hopes that this process will allow for competitive bids from local businesses so that they, too, may continue to flourish.
NWT Business Development Corporation
Members noted the planned incorporation of a new NWT Business Development Corporation within the department. The committee has expressed concern repeatedly in prior reports about the need to streamline business development funding to reduce duplication and to clarify the process for business operators in the NWT.
Members had also expressed concern during the business plan review that any proposed changes to the department would require extensive legislative change. The committee received the legislative proposal for the new corporation in January and reviewed the proposal on January 22, 2003. The committee raised several issues that were of particular concern to them and made numerous recommendations in letters to the department.
In particular, members would like to be assured that the process of distributing funds throughout the NWT is fair to all communities and not focused on areas that are already experiencing significant economic growth. Members also raised concern about the methods of business development funding delivery within small communities, especially those without economic development officers or those ineligible for community futures funding.
During the review of the draft main estimates for the department, however, members limited themselves to the issue of potential savings that had been proposed by the department by the amalgamation of the numerous business funding programs operated by the GNWT.
In the initial discussions with the department, the committee was informed that the proposed amalgamation would see an annual savings of $500,000. However the committee was unable to identify this savings within the draft main estimates. Upon questioning, the department stated that the Financial Management Board Secretariat has taken the $500,000 off the top and had restated funds in the draft main estimates to take that into consideration.
However, the committee then noted an increase in the draft main estimates for the new NWT Business Development Corporation of $174,000. Members must conclude then that the proposed savings of $500,000 are now being reduced to a mere annual savings of $326,000. As the new corporation will ultimately be responsible for distributing over $8 million dollars in business development funding, m embers are concerned that the proposed amalgamation is not resulting in the desired outcome of administration expenditure savings.
Members look forward to reviewing the bill in committee and ensuring that their concerns are addressed prior to the planned incorporation for the summer of 2003.
Arctic Canada Trading Corporation
The Arctic Canada Trading Corporation, ACTC, has been a long-standing project of the NWT Development Corporation to provide a marketing outlet for local artisans. The ACTC purchased goods from local artists and proceeded to market these goods to retail organizations both in the NWT and throughout Canada. Members are aware that during its heyday the corporation provided a large supply of native art and crafts to the southern markets.
It would appear from the comments made by the president of the NWT Development Corporation during the review of RWED's main estimates that the ACTC is no longer operating in its former capacity. In fact, the president of the NWT Development Corporation stated that the ACTC is now down to a staff member of one.
Members also became aware that the Arctic Canada Trading Corporation had recently attempted to promote discount sales of items over the Christmas season through a promotional flyer. Retail outlets were upset to see a government-funded operation directly competing with local businesses. The committee asked if the new Business Development Corporation would attempt to directly compete with thriving independent businesses in the NWT. The committee was advised that there will be a retail representative on the new board for the Corporation and that the board will reconsider its current retail policy.
Finally, the committee feels that considerably more attention must be paid to assisting local artisans in marketing their wares. Many small communities in the NWT lack the resources to sustain a viable retail business community. Therefore, local artisans require assistance in both marketing their goods and/or shipping their pieces to NWT or southern markets. Members would like to see the development of a program to provide workshops and assistance directly to artisans within their own communities. Successful artists could provide these workshops and develop a valuable network of artisans throughout the NWT.
Petroleum Specialists
The issue of providing oil and gas specialists for those communities which will be significantly impacted by upcoming oil and gas exploration in their area was discussed.
During last year's review of the department's business plans and main estimates, the department committed to providing four new oil and gas specialist positions within impacted areas of oil and gas development. In specific relation to the oil and gas position in the Deh Cho region the Minister stated during the review of the main estimates on January 21, 2002, that he would fill that position. (Hansard, GED review of the 2002-2003 Main Estimates, RWED, p. 60)
The Minister followed up that commitment by stating in the House on February 27, 2002, in reference to the position in the Deh Cho region, "The position is not filled and we have to fill it." (Hansard, Feb.27, 2002, p. 222)
The Member for the Deh Cho region is particularly concerned that the communities impacted by new development in the region are currently unable to adequately negotiate with large multi-national oil and gas companies due to a lack of expertise in this area. Negotiations regarding impact benefit agreements, wildlife management, environmental concerns and the social impacts caused by increased activity in this sector are all vital areas that need to be addressed by community leaders. The Standing Committee on Governance and Economic Development recommends the Department of RWED hire an experienced person to assist the Deh Cho communities with negotiations related to increased oil and gas activity within their area as soon as possible.
Energy Strategy
The new Energy Secretariat was announced during the main estimates for 2002-2003. Members were told at that time that the secretariat would produce an energy strategy to help the NWT address serious concerns regarding the consumption of fuel, possible alternative methods of energy production and savings as well as future considerations for the pricing of fuel and distribution.
Some Members at the time expressed support for the secretariat but felt that the issue of energy would be better handled by RWED as opposed to the Department of the Executive. Members were pleased to see the Premier agreed with their recommendation and transferred responsibility for this new secretariat to RWED.
As the committee reviewed the business plans for the departments in September 2002, Members were disappointed to hear that the draft energy strategy was still unavailable for distribution. As many crucial decisions related to energy development, such as the proposed one-rate zone for the Power Corporation, were to be based on this report, members were concerned that they lacked this information heading into the final year of their term.
During the main estimates review, members were informed that the original draft energy strategy had to be substantially rewritten into a discussion paper before Cabinet would consider its release for public consultation. After the considerable amount of resources committed to this Energy Secretariat, Members had expected to receive a more detailed report than a discussion paper and in a much more timely fashion.
Forestry Management
The committee remains concerned about forestry management issues, especially given the complicated ownership and authority of forest lands in the NWT. As the committee pointed out in the last main estimates report, the lack of a timber inventory for the NWT is severely hampering efforts to establish commercial forestry operations.
While the committee recognizes that a detailed forest inventory will never be complete, it would like to be assured that the department has at least an estimate of the current forest inventory in the NWT or could at the very least provide a new timeline of when that estimate would be available. Until communities are provided with a basic knowledge of the resources within their areas, they cannot attempt to develop economic opportunities based on those resources. Baseline data is crucial for those communities to diversify their economic development. That concludes the Standing Committee on Governance and Economic Development's report on Resources, Wildlife and Economic Development. Thank you.