Thank you, Mr. Yakeleya. Mr. Roland.

Thank you, Madam Chair. There are a number of avenues that we will take and use to get the information to people and continue to provide them with the information to ensure that they feel that they're getting all that is required to understand our situation. I think that started in a large way yesterday by doing the budget address and highlighting that message to our people in the Territories of the impacts of what this budget means to them. As we go through this process in the next two-and-half weeks, as Members ask questions of departments and ask for the detail, that information then can flow through this process, with the media, through phone calls to people back home.

I agree; it's the bread-and-butter issues that people are worried about. It's not the fancy documents or the Bill 1 Appropriation Act that really means something to them. What it means to them is, at the end of the day when they sit down at the supper table, they can still afford to feed their children, still afford to pay their bills. That's something that we've taken and considered as our first step in this process, is to try to mitigate the impacts on residents in the Northwest Territories. For example, as I've mentioned in the payroll tax, we're increasing the payroll tax but we're also adjusting the two lowest brackets to reduce the impact on residents in the Northwest Territories, especially those with incomes lower than $66,000. As well, we are increasing the cost-of-living tax credit through that process, again to minimize the impact on those with low incomes in the Northwest Territories. We looked at a number of other initiatives and, based on comments from Members, we decided that they were not wise to move forward with because of the impacts they would have on residents.

So through this process we are starting to get the information out, get the message out, this is what the budget means, this is the impact in their communities. At the end of the day, what my message will be to people in the Territories is although we are making difficult choices, we are making them so that we can in fact protect what we have built up in the Northwest Territories over the years. For example, we have invested a lot of money in educating our children in the Northwest Territories, and we invest a lot of money for adult education, and we want those people to benefit from the jobs that are available here in the Northwest Territories. So if we go through this exercise and start to look at cutting so drastically that we undermine all of the work of the years before in trying to build up residents so that they can take those jobs, I think that is one of the things we need to keep in mind.

This whole exercise is not going to be a pleasant one. There will be some times I think we will find a silver lining in the clouds, so to speak, that we get some good things done. We are still spending $1 billion. The budget has grown by just over $20 million from the prior year. So we are continuing to invest in important initiatives. It has not just been a carte blanche, cut exercise. We are trying not to do that. We need to be more systematic, more surgical in what we do. As one of the Members, I think Mr. Allen, talked about a zero-based exercise; well, that may be a tool that we'll need to use to try to find and be more surgical in what we can find for revenues out there and still deliver programs and services for the people. That is why we continue to put our arguments forward to the federal government, is to ensure that we continue to build up the population of the North so that they can better take on the responsibilities they have as parents, as teachers and educators, as health care providers, and that is the message we need to continue to get out. Whatever we can do to help get that message back home to individuals will happen. Thank you.

Thank you, Mr. Roland. Mr. Yakeleya.

Thank you, Mr. Yakeleya. Mr. Roland, do you want to make any response to those mostly comments, not too many questions there?

Thank you, Madam Chair. I will keep it short. I agree with what the Member is saying. We need to continue to find ways and work together in the Northwest Territories. I think that is the northern leaders' aspect of how we can work together and put our arguments forward to Ottawa and can benefit all of the residents of the Northwest Territories. It is not about us and them, it is about we, how we can together work and go forward and put that business case in Ottawa about the revenue situation.

Again, as I stated, as a government we will have to look at our own power we have now to do things. We don't have the power for royalty revenues. What we do have is an ability to tax and we have to look at all that is available to us to ensure that in one form or another that we, the residents of the Northwest Territories, are benefiting from large development and ensuring that our people in the Territories are getting jobs and training so that they can take advantage of some of those higher paying jobs. So we will have to work on that and I will count on the support of Members. If there are ideas out there or support for some ideas, we need to work on those together to see what is the best way to bring some of these things forward. Thank you.

Thank you, Mr. Roland. Next on my list I have Mr. Delorey.

Thank you, Madam Chair. Just a few comments. Everybody is tying the opening comments and the budget together. I just wanted to mention a few things. The Minister is right when he says that yesterday was the first step, especially in these initiatives for revenue generating by putting it out there in the budget. It seemed to be accepted fairly well yesterday, I didn't hear too much in the Great Hall afterwards.

However, I did get about three calls today that are very concerned about the government starting to introduce taxes. As soon as you mention taxes, we can do all of the explaining we want, but what the people out there see is added costs to the cost of living. I can see that taxes are not good, they are no good at any time and I know that we don't want to do it. It becomes an act of does it benefit us enough to make it worthwhile doing. A lot of these we are hoping they are going to bring in some revenues to the government and we've put some projections out there. But I am really concerned when we look at the personal income tax. I think we are looking at hopefully generating close to $1 million with that. If it includes any administration whatsoever, we are doing it for absolutely nothing. We are just putting taxes out there just to, I think, upset a lot of the people. I certainly have some concerns in going back to my constituency and talking to them about increased taxes. I know we've tried to do as much as we can to mitigate the effects on lower income families, but if we have to give it all back to make it feasible, then there is not much sense in doing it. So I don't know how much administration cost there will be, added administration costs if any, but I will tell you from the way I look at it, it wouldn't take very much to totally mitigate anything that we are going to gain from those taxes. I don't think we have started to hear back yet from our constituents as to what they think on these taxes. I think we have already heard from one large corporation that says they will be filing their taxes outside the Territories because they have an office somewhere else. That could be possible and we would lose there with corporate taxes.

My question is on the cost of insurance premiums. This is an industry that seems to be running out of control, this insurance. I don't think that our government has a lot of say into the insurance industry but, again, I see that you identify $1.624 million of savings in insurance premiums, and then you go on in the next page to say that because of taking on the responsibility for self-insuring, the government is taking on a lot more for risk, and a portion of that savings will be re-enlisted into strengthening this program of risk control. Again, if we are going to be setting up a whole bureaucracy again now for risk management, how much is that going to cost us if we are saving $16 million and we spend $2 million? Do we have any idea what we are looking at when we say a portion of this premium will be put back to risk management because of the added risk that the government is taking on? Again, are we really doing this to save money or are we just going to spend it somewhere else? Thank you, Madam Chair.

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Madam Chair. Before I get into that specific issue, there were a number of comments the Member made about our revenue-generating initiatives. Yes, they are difficult and nobody likes the idea of increased taxes or new taxes, but if we don't get it from the corporate citizens of the NWT or Canada, then we end up focussing on the private individual which would be much more difficult.

The fact is the federal government measures our tax effort and because we are not measuring up to what they think we can generate for revenue in the Northwest Territories, we are penalized on that. So we have to take some steps in that area to ensure that we are going to protect the revenue base that we do have. It's not a good thing. As I stated earlier, it's not something I came into the job looking at as a target, but it is part of the puzzle we have to put together in trying to move forward and protect the programs we have for residents in the territory.

On the administration side of it, because these are existing programs, there are no increases in the administration. The federal government collects the taxes for us and remits them back to us. It would be a different case if we did that all on our own, but because the federal government does that for us it lessens the impact of administration.

On the specific question of insurance premiums, it is an area where we have been hit hard. As I have stated, we reduced our loss record over the last number of years, but our premiums were still jumping significantly. So there was an exercise done to see what we can do to mitigate those costs. We've identified a savings of $1.6 million, but from that $1.6 million, we are taking $330,000 and reinvesting it in the area of risk management. To achieve that level of savings, we've had to increase our own

deductible. We've increased it a significant amount and by doing that, we have to now make sure we are managing and ensuring that our risk loss control measures are adequate so we don't end up losing a lot of our facilities. So we've had to step it up on that side, but we've seen that as an ongoing savings. We just need to make sure we have the right monitoring in place so we don't lose out and end up paying our own deductible if we don't take care of our facilities.

Thank you, Mr. Roland. Mr. Delorey.

Thank you, Madam Chair. Is all of the government under the self-insurance program now? Are all government assets under self-insurance programs now? Thank you, Madam Chair.

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Madam Chair. All government assets are covered under our insurance program. We are self-insured for the first $10 million, but we do buy insurance for over and above that. So on an annual basis, if we had losses of some small equipment in a community or region of a few hundred thousand dollars, we would end up paying for the full shot of replacement. That would happen until we hit the $10 million figure. Then we would kick into our insurance program that we paid for. So it's a cumulative amount. It's not going to be on every case, but it adds up to that first $10 million we would end up having to pay for. So if we had some losses of buildings or infrastructure of $1 million or $2 million, we would end up paying for that up front until we hit the $10 million figure. Once we hit that figure, then our insurance program kicks in. That's where we have our savings. That's why we feel it's important to increase our risk side of our equation to make sure that we don't end up paying a lot more. Thank you.

Thank you, Mr. Roland. Mr. Delorey.

Thank you, Madam Chair. In the area of our fiscal arrangement with Canada on the formula financing agreement, I know that we are in the process of renegotiating that. I don't know what the timelines are or where we are in finalizing that, but I would like the Minister to tie in...The first bullet is finalizing the discussion with Finance Canada and changes to the formula financing agreement, then the fourth and fifth paragraph deals with providing taxation for formula financing input and resource revenue sharing discussions with Canada and aboriginal governments. There are two bullets that contain fiscal taxation input to self-government negotiations. How do those bullets tie together with negotiating the formula financing agreement with Canada?

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Madam Chair. The first one, finalizing discussions with Finance Canada on our formula financing agreement, that's strictly with ourselves right now, the GNWT with the federal government. There have been some discussions with aboriginal governments saying they would like to be involved in the process. Finance Canada is not willing to have that approach taken, so we have continued as a territorial government to take that on as our own initiative as it results in the transfers to this government to operate existing programs and services.

Providing taxation and formula financing input to revenue resource sharing discussions with Canada and aboriginal governments and the next bullet, continued fiscal taxation input to self-government negotiations, those are tied together. Self-government tables are discussing taxation initiatives, sharing tax room. The federal government has agreed, for example, with the Tlicho to look at giving up some tax room to them and that then puts the pressure on us to look at what we are doing in the Northwest Territories and how that would impact on us in the Northwest Territories. So there is that ongoing side of the taxation with self-government discussions. There is talk right now at a number of the tables of taking the tax room available and using it for net benefit for their own programs and services. What we say is we would look at tax sharing, but along with that tax sharing comes the burden that's with it now, running existing programs and services. The territorial government right now, as we all know -- that's why we are having to reduce programs and reallocate dollars -- can't afford what we are doing today. So we have little to no tax room to give up.

We say if they want to take some of the tax room, then they have to take the corresponding amount of burden with that and moving forward in those directions. It's still very early in the discussions, but that's something we have to be prepared to look at as the territorial government. Again, what agreements the aboriginal governments make with the federal government can have an impact on us, and we are going to the federal government and discussing with them those potential impacts and asking them to be ready to mitigate those impacts on the GNWT when they give up the tax room and give up some net fiscal benefit to aboriginal governments. We have to be the backstop because we don't have the dollars to continue programs and services if the federal government foregoes some of those taxes. Thank you.

Thank you, Mr. Roland. Mr. Hawkins.

Thank you, Madam Chair. First I want to make an observation. When a Member has a very good question, I seem to hear the click and it appears the Minister is reading from notes. So I have to compliment his staff on his excellent replies back.

Madam Chair, I just happened to notice under expenditures and categories, it does cause me some concern when I read under grants and contributions, 42 percent of the budget goes to grants and contributions. When we are scrambling to make adjustments with our payroll tax and just tax in general on people, it causes me some stress that we could have evaluated our grants and contributions just that little bit closer if we start looking at playing with our taxes.

Madam Chair, if I may, one thing I noticed earlier in the budget is we talked about reallocation of $15 million from low priorities to high priorities. If the Minister would do me the honour of telling me what were the low priorities in general and some specifics and telling me some of the high priorities. My concern is are we losing some very valued programs which were referred to as the low priorities? Thank you, Madam Chair.

Thank you, Mr. Hawkins. Mr. Roland.

Thank you, Madam Chair. I would like to thank the Member for complimenting the people here with me, as they have worked hard to prepare the documents now and the main estimate the Member uses. As well, I would like to inform the Member I have been referring to the opening remarks I have made and I actually thanked my people here with me because they have worked hard to make sure I had the information to go over and make myself very familiar with this. So it is a team effort. Like what I have been saying about the process we are going to go in, it's a team effort.

The grants and contributions area that the Member has raised -- and I believe he's referring to the summary of the main estimates document -- that funding goes to health boards, education boards, through block funding to municipal governments. That funding, a very large amount of that, goes directly to providing frontline services to individuals in the territory. So Stanton Health Board, Inuvik Regional Health Board, the Sahtu one that is being created, that is going to frontline workers in hospitals and health care workers, social workers, education authorities are getting those dollars, municipal governments are getting transferred those amounts through block funding arrangements. So a lot of that is in there.

In the area of losing some critical programs, unfortunately, because of our situation, as departments review their funding allotments, they are going to have to look at the programs they deliver and some of those are going to be offered up as potential areas of savings. Any reduction of programs is going to affect residents in a way that is not liked and won't be supported by those individuals or groups that see those reductions. But, unfortunately, that is where we are today; having to face those kinds of decisions and going forward. In fact, we are going to be facing more of those. Thank you.

Thank you, Mr. Roland. Mr. Hawkins.

Thank you, Madam Chair. I notice three-and-a-half minutes of my time was lost there by hearing that that money is being allocated to health, education and municipal areas. We didn't get any comments on what some of the low priorities were. While I am at the mike, I would also like to get some of those examples and references rather than just programs. The honourable Minister references that a five percent cut hasn't been restored. We are arguing that we want $18 million of the five percent. I think he knows what I am referring to. Is there any indication that our government is being led on or is there any indication that our government has a chance of getting this five percent cut restored? I would hate to see our Minister spend valuable time on this topic if we have no hope of getting this money back. Thank you.