Thank you, Madam Chair. In the area of formula financing, that is something that is critical to our government in trying to come up with new revenues that we have put forward. Specifically on the five percent reduction area, I believe we have a very good business case. I have had a discussion with the federal Finance Minister on this area. He's told me two things that he is not going to stray from; one is he will not bring in a deficit and, two, he will treat everybody equitably.

For me, there are a few messages that aren't so positive; one, we are running a deficit and, two, equity is a concern to us because we are not the same as southern jurisdictions. We are not the same as Alberta, B.C. or Ontario. It's a principle we have to live by and on that one, I think we can show that it is equitable that we get that five percent put back into our base because they have brought the numbers back up to 1996 numbers. That hasn't occurred in our case because CHST again doesn't impact us the same way as it does in provinces.

With the jurisdictions having their numbers brought up in that case, it's only right in having equitable treatment to have that restored to our base. I don't think it's a lost cause and I guess I will bring in my hockey experience. You don't quit playing the game until the final buzzer goes and that's my intention. If we have a chance of getting some new revenues through our solid arguments, then we will continue to put them forward. There will come a time in some of these other initiatives we have that we are going to have to say it's not achievable in this time and we must look at other initiatives. There are times when we are going to have to look at what we are doing as a government and decide at that point if we should further travel down that trail or change our direction. Thank you.

Thank you, Mr. Roland. Mr. Hawkins.

Thank you, Madam Chair. Thank you, Mr. Minister. The Minister indicated that next year we would have to be a little more aggressive, to the tune of $20 million. I am looking for a forecast of what we may expect. Is it the Minister's intent that we could be looking at hiring freezes, wage freezes, discussions with the unions on drastic changes? He set out a very passionate and aggressive target for himself, which I admire. In his position, you have to be good. So I am waiting with glee to see some of these ambitious projects. Are hiring freezes, wage freezes or discussions with unions some of the examples we will be looking forward to seeing?

There was a 20 percent government cut in travel and, as I see it, this was the low fruit bearing from the tree. It was dangling there. What I saw here is we have just over a $3 million reduction travel, but student travel and medical travel was not cut. Even though those two areas were not cut, does it still reflect an across-the-board total of travel with the Government of the Northwest Territories and its related programs? Does that still reflect a trueness of 25 percent, or is it the intent that every department that gave up money was 25 percent? Thank you, Mr. Chairman.

Thank you, Mr. Hawkins. Mr. Minister.

Thank you, Mr. Chairman. The $20 million forecast is yet to be discussed in the future budget. I will be going to Members and as the Member for Hay River South had asked earlier about potential options or suggestions, we are looking for suggestions to go forward. We have to look at all avenues that we spend our money on, all programs and services delivered by our

government that we have flexibility in. We are going to have to look at those. Core programs and services are going to have to be maintained because some of those are required. They are statutory obligations that we have to meet minimum standards. Those things we are going to do.

There are a lot of programs we do run that are of our own development or are enhanced from the territorial level that we are going to have to look at. We will be coming back to Members with some of those suggestions. Mr. Hawkins has mentioned a number of potential options out there and all those things can be looked at. If this House is willing, that direction is where we go. Those are options on the table. We are going to have to look at every envelope we have to find the savings.

The direction given to departments for travel they were to reduce travel by 25 percent. So departments went back, looked internally and found 25 percent of their travel. Some departments did not take it purely out of travel, but they found some of that money because their budgets are tight in a possible area of funding, either a vacant position or something to try to find that money. They went back and found what would be equivalent to 25 percent of their travel budget. That's travel that's discretionary; that's the key component of that. Thank you.

Thank you, Mr. Minister, and thanks for your questions, Mr. Hawkins. We will now move to Ms. Lee.

Thank you, Mr. Chairman. I have some questions on the opening statement with regard to the insurance issues. I need to know more about this. On the first page, we are seeing a reduction in the amount of $1.6 million plus, because of a reduction in premium costs. Later on, we also see a decrease in our short-term interest costs because of changing estimates of the government's cash requirements. I don't understand this, because from all indications that we have seen we are still borrowing a lot. So I would like to know more details about what this is about. Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. That is a difficult area. Insurance, to start with, there is a savings there of $1.26 million because of the premium amount we've managed to reduce. But by doing that, we've increased our potential loss just because we're going to pay the first $10 million deductible in that area. We feel that by developing this risk loss area of $330,000 that we can ensure that we don't have a substantial amount of loss. It's not just a pure exercise saving money that we have to do a first loss assessment to ensure we protect our assets.

The area of short-term interest cost estimates, $1.7 million, it was estimated that we would be needing more money for our shortfall and then having to go to borrow. Because of the funding flow that we get from Ottawa and the timing, for example, the timing of our tax payments from Ottawa, the timing of a number of the other payments that are delivered to us, we are right now in a cash positive way temporarily, but we feel that will carry through the year. That again doesn't impact on our actual deficit position; that's the cash flow. The money you have in your bank, but the money is committed. So right now we're in a positive cash position, but the money is committed and we know we're going to overspend our revenues and at the end of the day end up incurring a deficit that we've estimated of $40 million. The way in which we get into the cash position versus a deficit position is fairly complicated, but hopefully that provides some information for the Member.

Thank you, Mr. Minister. Ms. Lee.

Thank you very much. I think we're getting there. I have a follow-up question, Mr. Chairman. On the first, the premium cost has been reduced by $1.6 million. What is the entire amount of the premium?

My second question is if the short-term interest cost savings that we are getting in the amount of $1.7 million, could we rely on that as something that's going to stay a savings for the rest of this fiscal year? How temporary is that? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. The insurance cost, the total premium we're estimating to spend this fiscal year in 2004-05, is $2.030 million. So we've made a significant savings of what would have been required if we didn't make those changes. Again, that's $2.030 million as the premiums we've estimated this year.

Again our cash position, short-term borrowing, there are a number of factors that flow in there and can impact on that. If we find ourselves not meeting some of our targets or not implementing some of our revenue options, not implementing some of the potential savings through reallocation of dollars or over expenditure in a number of areas, we could end up finding ourselves going back and borrowing money. So right now our estimates are based on how the cash flows, how much money we have coming in, the timing of payments from Ottawa on the taxes. We feel that we're safe at this point, that we can identify that as a savings. We're hoping that we don't have to go into that area of borrowing.

Mr. Chairman, as well, just further to that, the insurance premiums are finalized later in the year and we'll have the final numbers in June. So what we're putting in is an estimate and we're hoping that that number is accurate. Again, because of the timing of that, we had to put in our best numbers and this is what we feel it will come out as, but if there are any changes we will come forward and notify the House. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you, Mr. Chairman. I've been commending the Minister for two days now for working with realistic numbers, and now I'm being told here we're working with best numbers. So I hope his best assumptions work out here, because the reduction of the insurance premium from $2 million to $1.6 million is quite drastic.

Having said that, I have further questions about insurance in general, understanding that this department not only takes care of the insurance coverage for the government and taking care of the risk management of government

assets, but also it regulates the insurance industry and such. I have a question about whether or not your risk management includes the NGOs or any arm's-length agencies or maybe even school boards and health boards. Sorry; I shouldn't combine those. Does your risk management work apply to any of the NGOs, because we understand that some of the NGOs that operate under finances or mostly getting money from the government, they are going through difficult times as well. I would like to know if the government has any say in that.

Perhaps I could just pose my second question in case I run out of time. In the Minister's budget, there was $1.9 million allocated for northern communities' insurance exchange. May I get some more information on that item, as well? Thank you.

Thank you, Ms. Lee. Two questions to you, Mr. Minister.

Thank you, Mr. Chairman. The insurance amounts do cover health boards, education boards. Communities have their own system, and that's the $1.9 million that the Member referred to. That is within Municipal and Community Affairs, and that's to cover their changing insurance program and working with the Association of Communities. So that is included in that, and you will be able to get more detail on that through the Municipal and Community Affairs department when we go through their draft mains.

Again, for non-government organizations on the insurance side of our program, normally they would self-insure because they are outside of the government and are receiving funding through contracts. But as an example, shelters have difficulty paying increased insurance, and they do get funding through the Department of Health and Social Services to cover a lot of that. That's one area they're grappling with right now, is how to deal with those increased insurance costs. I know they're working with the Department of Health and Social Services on that one, in that particular instance anyway. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you, Mr. Chairman. Taking advantage of the remaining seconds, could I ask the Minister for more information about the involvement of the government in terms of helping out the NGOs with their insurance coverage? The Minister made reference to shelters. More specifically, I'm wondering if this section of the government, the Finance department and the insurance management division, is engaged in analyzing the situation and looking at options for the government and the NGOs as to how to address the high insurance costs and how to mitigate that cost perhaps. Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. The avenue that we work with insurance is strictly with our own assets right now, in setting up that environment and covering our assets with the insurance program that we've put up. We would be prepared to work with the Department of Health and Social Services if they were to come forward and ask for some assistance in looking at what options might be out there. Right now they are working internally, and I know that just because of the situation that I'm aware of from my constituency. So it's not from knowledge through the department itself, but I am aware of that. We would be prepared to work with other departments and deal with NGOs if they were to come forward requesting some assistance. Thank you.

Thank you, Mr. Minister. I don't have anybody else on my list, so I will make one last call for general comments.

Okay, detail. The wish of the committee is detail. We'll now turn to page 3-7 in your main estimates binder. Page 3-7 is the department summary, operations expense, total operations expense. We will defer consideration of that and go into the activity summary on page 3-9. Operations expense under directorate. Total operations expense, $1.336 million. Ms. Lee.