Thank you, Madam Chair. I would now like to provide the committee's report on the Financial Management Board Secretariat.
The committee met with the chairman of the Financial Management Board on February 18, 2004, to review the draft 2004-2005 main estimates for the Financial Management Board Secretariat, FMBS.
FMBS is proposing a $518,000 increase in operations expenses from the 2003-2004 main estimates. This is primarily due to forced growth in salaries and benefits and the power subsidy program, which is partially offset by expenditure reductions and the transfer of the staff housing program to the NWT Housing Corporation.
Technology Service Centre
The Technology Service Centre, TSC, was established in 2003 and provides centralized service desk, desktop, network, server and network authentication support services to departments. Before the TSC, each department had its own information technology, IT, staff providing these services.
The year 2004-2005 will be the first year the TSC is fully operational. Early indications are the centre has been successful in achieving more efficient and better-coordinated IT services across government.
Because it is early in the TSC's rollout, the committee reserves comment on the overall efficiency of the initiative. The committee notes that between FMBS and Public Works and Services, for 2004-2005, a total of $11.7 million, and 47 person years are devoted to computer services for GNWT departments. This does not include outside boards or agencies, which control their own technology budgets.
The committee will look forward to more detailed assessments of the TSC's performance during the next business plan cycle.
The committee wishes to commend the government not only for its initiative in establishing the TSC, but also for accomplishing its implementation with minimal fanfare and disruption to services. Members believe the TSC could serve as an example for other service centres the government may consider establishing in the future.
Human Resources Service Centre
The committee believes there are opportunities for the government to build on its positive results with the TSC by looking at other potential service centres. In particular, Members believe there may be much to be gained in efficiencies, better coordination and more consistent application of policies by establishing a human resource service centre.
All departments currently have their own human resource staff, which is similar to the situation that existed with IT staff prior to the TSC. There are concerns about consistency between departments, particularly when it comes to the hiring process. As well, government-wide human resources responsibilities are split between the corporate human resources division in the Executive offices and the labour relations and compensation division in FMBS. Members believe it is time for the government to restructure the way human resource services are provided on a government-wide basis.
The Standing Committee on Accountability and Oversight recommends the government investigate the feasibility of establishing a human resource service centre.
If a decision is made to establish a human resource service centre, Members would hope to see the government take a well-planned, low-key approach to implementation similar to what was used for the TSC.
Power Subsidy
The power subsidy program assists residential and commercial customers in high cost communities by paying the difference between the Yellowknife power rate and the local rate, up to a maximum number of kilowatt hours.
For 2004-2005, the subsidy is expected to cost $8.307 million, an increase of 16 percent or $1.127 million from the 2003-2004 main estimates. The total increase since the 2001-2002 fiscal year, when the subsidy program cost $5.419 million, is nearly $3 million. This means the program is growing by an average of about $1 million each year.
The committee finds this growth trend alarming and is concerned about the sustainability of the program. Approximately $4 million of the subsidy is offset by the NWT Power Corporation's dividend to the GNWT. The balance of the subsidy is paid for from general revenues. Other programs and services will suffer if the subsidy is allowed to balloon.
The Standing Committee on Accountability and Oversight recommends the government bring back to the committee, before the next draft business plan reviews, options for measures to stabilize power subsidy costs at current levels.
Loan Guarantees
The draft main estimates for FMBS include a grant of $120,000 which reflects interest the GNWT has agreed to forego pursuant to a debt settlement. The debt arose from a loan guarantee the government provided on behalf of a diamond manufacturing company that was unsuccessful in its operations. Under the terms of a negotiated settlement, the parent company has agreed to repay the principal of the loan in exchange for the GNWT agreeing to forego the interest costs. The committee learned that the total interest costs the GNWT has agreed to forego amount to $800,000 over 10 years.
The committee is very concerned that the GNWT appears to be inconsistent in its approach to collecting debts. In this case, Members wonder whether the GNWT could have taken a stronger position and insisted on repayment of the full debt, including the interest. The outcome of this case may be perceived as unfair by other debtors who have not enjoyed such leniency. It may also send a signal to the beneficiaries of the other approximately $17 million in diamond loan guarantees that should they get into similar financial difficulties they will be able to negotiate equally favourable settlements.
Audit Bureau
The audit bureau is proposing an increase of $35,000, or approximately 30 percent, in other expenses for 2004-2005 from the 2003-2004 main estimates. The Minister and his staff advised the committee the reason for the increase is that the audit bureau anticipates using some additional contract resources, in part because they are having difficulties recruiting to fill three vacancies.
This information led Members to question whether the entire function of the audit bureau could not be contracted out to an outside firm which may be able to provide the services more efficiently, and also at arm's length from the GNWT. The committee suggests the government give this serious consideration, and report its findings during the 2005-2008 draft business plan review.
Thank you, Madam Chair. That concludes the report.