Thank you very much, Madam Chair. In regard to the opening remarks and the budget address, the Minister speaks about reallocating $15 million from low priority spending to invest in higher priority areas. If I can ask the Minister, what specifically is referenced with that?

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Madam Chair. The area the Member is speaking about, reallocations are from within all the departments. They would find money from within areas that they felt they could give up. In our effort to reduce our expenditures as well as knowing that there is demand for increased expenditures, instead of just taking that right out of the budget a lot of that was refocused to what is considered to be higher priority items. So within our Department of Finance, there is little of that because ours is focused on revenues and managing that end of it, but within each department there has been different amounts given up by the departments to reinvest in other areas they felt were critical, but there were also sunsets to programs. Within this department, as I stated in my opening remarks, we have reduced our expenditures from previous years by 30 percent.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Mr. Minister. I am wondering overall, budget wise, I am new to this process and I am wondering if you could shed a little bit of light on why the budget was at $960 million when we came to the 15th Assembly, and why there wasn't a lead up to kind of striving to balance our budget, instead of the predicament that we find ourselves in, which is fine, because I believe it is manageable because I like to look on the bright side too. If the Minister can give me a little bit of history of why the budget was at $960 million without the forced growth issues. It seems that we had planned on a budget that was a deficit even before I got here I guess.

Thank you, Mr. Menicoche. Could I just remind Members that they are to address the questions through the Chair and not directly to the Minister in the form of a direct question. We are all new; don't worry, I just wanted to mention that. It is a bit of a strange process, but it is what we do. Mr. Roland.

Thank you, Madam Chair. I guess my focus is from the start when we took office and moving forward, previous expenditure patterns by government were made on their assumptions of what they might expect and where they could possibly end up and hoping for new sources of revenue. The amount -- I believe you will find it in the budget address -- that the gap between when we first took office, the potential deficit we might have gotten if we didn't change anything and closing that gap from almost $80 million on our revenue side versus the expenditure side to bring it down to where we would come in with a $46 million deficit. As you will become accustomed to as we go through this process, the cycles of budget planning start well in advance of the timeline we are now setting down. We are sitting with the final product before us, but the cycle of budget preparation starts early in the spring, in June. We will be getting back to work here in trying to find the next $20 million, as I have stated in the budget address, and try to find more revenues as well. Hopefully the majority of that with the agreement from Ottawa, but as I have seen here we are taking what we have and starting to work from the aspect of what we have on the books today and, as Ms. Lee stated earlier, if we do happen to come up against some windfalls or new and unexpected revenues then we would truly be in a position to benefit from them.

One of the big impacts that we have had, that was a result and now passed on to us is, for example, the corporate tax situation that is paid to us from the federal government. It is collected by the federal government and then paid to us, and they use prior year's numbers to pay us on the upcoming year. There was a couple of large windfalls made in previous governments, and the federal government used the previous year's numbers and said you know you made this much money in corporate tax in that year and we are going to pay you according to that thinking that that's what would happen. Well, unfortunately that didn't happen. They came in later on in the year and informed us that in fact our corporate tax earnings were substantially lower and we had been overpaid. That is part of the problem now; having to deal with that overpayment and try to adjust our budgets accordingly. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. I think my next question would be let's say the windfalls or the extra bonus revenue that we receive, are government the ones who spends it or does it come before the House so we can have some input? I am just wondering how that process works.

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Madam Chair. The normal process is the one we are going through now. The departments would highlight their requirements for expenditures, whether it be the O and M side or the capital side. If there are requirements for further funding that is over and above what has been identified in the budget process, then the government would have to come forward through a supplementary and request either more revenues for this particular area within the department, or if it is in fact a reduction come in with a negative supplementary. Again, identifying exactly what area from within the budget of the department it would be removed from. Although, for example, we are putting before you the planned expenditures of each department, throughout the year there could be a number of things happen that would either cause them to need more money than has been identified and if that is the case, a supplementary would come in and add to that going forward. So there is an exercise; it would require at the end of the day the approval of the House in doing that. Approval is needed for the main estimates and approval is needed in the House as well for the supplementary appropriations that come before this House.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. I am just trying to get a concept of whether we should get our bonus revenue because it is tax time and that we get an extra $20 million. What guarantee do we have that it is put into the cash surplus and not spent before it gets to the House?

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Madam Chair. Again, through the exercise, if we receive new revenues we would have to change our estimates within Finance to show that there are increased revenues that came forward, and then it is the direction of government if in fact we want to set that money aside for future activities or for a potential part of repaying of whether it be a deficit or expenditure. Again, that would require approval of the House. Any money that comes and flows in has to be accounted for whether it is just in revenue in establishing a reserve that would pay out a certain amount. We've got a number of them; for example, our supplementary reserve. We've set aside some money knowing that there will be some cost overruns or unplanned events that may occur, we try to budget that in to a certain degree. Not that I am encouraging use of that; in fact, I will be encouraging departments to not use that avenue, but there are areas and times when unexpected events happen and we will have to find the dollars for that. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. My next question is with regard to when Ottawa announces a new initiative that is cost shared 50/50. I think that's what kind of gets us into trouble, because we don't have the other 50 cents to chip in to begin with, yet we take the opportunity to do it. Does that also come before the House, where we can have input into an initiative that's good but we just can't afford?

Thank you, Mr. Menicoche. I just noticed that I didn't reset the clock at the beginning of Mr. Menicoche's general comments, so you're getting a bonus today. Mr. Roland.

Thank you, Madam Chair. With the cost-sharing initiatives by the federal government, to match those dollars that would be over and above what we have in the budget, then we would have to come forward with a plan and ask for approval of those expenditures. Right now all the money identified in the budget, for example on our capital acquisition plan, is identified for specific projects, and if there is a new program that comes up between now and the end of this fiscal year that would require new money even though it was cost shared, we would have to identify that money and come forward to committee and then to this House for approval of any new dollars. Thank you.

Thank you, Mr. Roland. Next I have Mr. Allen and then Ms. Lee. Mr. Allen.

Thank you, Madam Chair. I want to again raise the profile of some of my correspondence I had with the Minister in terms of new tax initiatives; not tax changes to increase personal tax and other methodologies that were suggested. I think it's important to concentrate basically on pages 6 and 7 of the Finance Minister's address yesterday, and try to conceptualize where he wants to fit it into the opening remarks today.

I believe we all recognize the difficulty he has with Finance Canada in trying to come to a conclusion on the formula financing agreement; we're all aware of that, territory-wide. I'd just like to raise the point to the Minister that we're certainly concerned from a constituency perspective. I think we've heard a lot about our inherent costs in trying to meet the obligations of this government to deliver appropriate and sustainable program service delivery. That's why I raised the point -- and I will reiterate that in my correspondence to the Minister -- that we should really look at Bill C-48 as a mechanism to deal with aboriginal self-government, to see if they would cost share many of those program service deliveries as they have the capability, as well as through land claim agreements and other funding agreements with the federal governments.

Somehow it bypasses our government coffers and sometimes in treaty entitlements, for example, and other different modes, we see the people in the Western Arctic make huge announcements on human resources training and employment that goes directly to aboriginal groups. So certainly I want to speak a bit on some of those processes, and later on I will ask the Minister some questions on the validity of those transfers and how they will affect our fiscal situation.

I strongly believe that we have very little capability in negotiating directly with Finance Canada, Madam Chair. I think we need to find a way as we continually hear different departments respond to questions of what causes us to have increased costs to this government. Certainly recognizing his points in the budget address, respectfully I feel somewhat compelled that we need to look at different methodologies to address Finance Canada and see if we can somehow put them on the block here where we can somehow force the issue.

I think myself, as well as other Members of this Assembly, are concerned that as long as we are in a deficit budgeting process, we will continue to be under pressure from the constituents to try to introduce new initiatives that would help the Minister overcome some of those deficits. I look at some of the areas in terms of how we will deal with other local governments and also aboriginal governments, and we talk about how we should work together in trying to get some departments looking at putting people back onto the land so they become resourceful again, for example. It's a very minute investment that will return greater net results, simply because there will be less pressure on social expenditures.

It has also been raised to me many times -- and I raised it again yesterday in my reply to the opening address -- we really need to look at a comprehensive review of our programs and services and look at some of the efficiencies and some of the cost analyses of trying to reform them. At some point, I'll ask the Minister if he will take a lead role in looking at this in the context of the costs and will he look at his discussions with the federal government in trying to deal with our fiscal situation.

I realize it's long term, but I still think we need to plant the seed today so he can incorporate it into his 2005-2008 business plans and modify his tax system to truly address some of the key problems we have. I don't beg to differ on the Minister's budget speech, but certainly, in a helpful way, hopefully we could work as an Assembly and try to look at issues such as zero-based budgeting, for example, and tax rate initiatives is another example, giving older workers the ability to retrain so they can become productive in their small communities. It worked well in the past; I think there's still the possibility it will work well again in the future.

Also I think in terms of the fiscal strategy, Madam Chair, we really need to ask you to deal with that at the Circle of Northern Leaders meetings so that they understand precisely where we're at to know their capabilities to support their own initiatives as they come to us quite often.

If I may speak briefly before I conclude, Madam Chair, when we talk about devolution, I'm still concerned about the proposed transfer of dollars in terms of the cash quantum. In my many meetings with my colleagues from the Yukon, they always emphasize that we should not go into the devolution process or the resource revenue sharing process without some definite and very definitive legal obligations. I think quite often we use the word "a covenant." That would establish precisely what our entitlements are. So I just want to say that I think being helpful in the long-term discussions, we need to look at that as one of the very important aspects of the future negotiations and the fiscal framework agreement with the federal government in terms of how you articulate the need for resource revenue sharing and also trying to find solutions to the many problems we are confronted with.

So, Madam Chair, to the Minister again, hopefully you find my suggestions helpful and we will be able to work with you in the context of your trying to resolve our fiscal and our financial problems, not only today but as we go towards your objective of having a balanced budget by 2006-2007. With that, I conclude my statement, Madam Chair. Thank you.

Thank you, Mr. Allen. Mr. Roland.

Thank you, Madam Chair. The Member raises a number of ideas and points of discussion, and I would agree with him on a number of them. Our formula financing agreement is a very difficult process in terms of trying to have the federal government agree with our arguments and situations. We have continued to work and put our best-case scenarios and business cases forward.

What seems to be becoming more of a norm now is to have any movement require political decision, and we need to continue to do that. I think that's how we can work with our northern leaders; if we can get everybody understanding and working with the numbers that we have available to us, they can help us when it comes down to making our arguments in Ottawa and going forward on that basis. So, yes, to establish the understanding with the northern leaders as to our fiscal situation is critical in building our argument. It not only impacts on the delivery of existing programs and services, but it also impacts on what they would like to see growth in, or to see expand or support their initiatives.

Right now we're having a very difficult time just keeping what we have going. In fact, we're having to now make those decisions of what areas we can look at foregoing in the sense of continuing on, and then put that money into higher-placed priorities. That exercise will continue.

As I stated earlier, we will begin the next budget process in the very near future. I will be counting on Members as well as northern leaders to try to help find ways of using the dollars we do have in a more effective and efficient manner. That would require looking at all our existing programs and services and having to make some tough choices. But if we're going to meet our goals and become more sustainable in the future and have something for our children, we're going to have to make those choices. Building a team to do that, going forward with all the leaders and people in the Territories, is going to be critical to that.

On the tax initiatives, I'm looking for areas that we can improve our tax system. When I took this job, I didn't take it with the idea that all I would do is go after existing resources and the people in the Territories and tax them. That wasn't the goal that I had stepped into the job with, but unfortunately it is the reality with the short time frame that we have available to us.

Again, looking at what we have available to us under taxation and the authority we have, we will continue to investigate those. We will be looking at alternatives in the future if our estimates or our assumptions don't pan out with formula financing, then we will have to start expanding and broadening our vision in where we might be able to get new revenues from. But that is something we're going to have to go into and go into cautiously and make sure we have the right tools and the right agreements in place.

As the Member stated, using the Yukon as an example, we have to ensure that if we continue down that path of devolution and get an agreement on resource revenue sharing, we must get the best deal possible for NWT residents. We don't want to get into a deal where we can stand up and wave a deal we have in the air, but it really means nothing to the resources that flow to the North. We have to continue to work with that in mind: what benefits the future of northern residents. That would require having a solid effort coming from all fronts in the Territories. I think gone are the days that we can go it alone and take that stance. Self-governments are becoming more and more a reality, they are emerging, we have to find ways of working together. After all, we are all working together for the benefit of 43,000 people in the Northwest Territories. Thank you.

Thank you, Mr. Roland. I had Ms. Lee, Mr. Yakeleya and Mr. Delorey. Ms. Lee has indicated that she would defer to the Members who haven't spoken yet, so I'll go next to the Member for Sahtu, Mr. Yakeleya.