Thank you, Mr. Chairman. Supplementary Appropriation Act, No. 3, 2003-2004 requests authority for additional appropriations of $8.568 million for operation expenditures and $1.628 million for capital investment expenditures.

Major items included in this request for operations and expenditures are as follows:

1. $3 million for the Department of Health and Social Services for the following items:

• • $1.6 million for retroactive increases to compensation for nurses and allied health care professional positions as a result of job re-evaluations.
• • $806,000 for additional costs associated with a collective agreement for the Hay River Community Health Board.
• • $600,000 for costs associated with the meningitis C immunization campaign.

2. 1.3 million for the Department of Justice for retroactive increases to compensation for correctional services officer positions as a result of job evaluations.
3. $514,000 for the Financial Management Board Secretariat for increased costs in the territorial power subsidy program.

The operational funding requests also include: $1.7 million for grants-in-kind and additional amortization expenses which do not require an outlay of cash; $46,000 for items that will be funded by the federal government; and, $300,000 in transfers from capital investment expenditures.

The net funding requirement for operations expenditures is $6.1 million, which exceeds the 2003-04 supplementary reserve of $5 million included in the current fiscal framework. As a result, our 2003-04 operating result will be impacted by the million-dollar difference.

Mr. Chairman, I am prepared to review the details of the supplementary appropriation document. Thank you.

Would the Minister like to bring in any witnesses?

Yes, Mr. Chairman.

Does the committee agree?

Can I ask the Sergeant-at-Arms to seat them, and ask the Minister to introduce the witnesses. Thank you.

Thank you, Mr. Minister. Can you introduce your staff?

Thank you, Mr. Chairman. Mr. Chairman, I have with me the secretary to the FMB, Mr. Lew Voytilla.

Thank you, Mr. Minister. General comments. Mr. Braden.

Thank you, Mr. Chairman. One question I think that's fairly brief. The Minister advises that we're going to be exceeding with this supp, the 2003-04 supplementary reserve, and as a result the operating result will be impacted by the million dollar difference. For the record, could the Minister advise what is the normal amount that we would start out with as a reserve? What has caused us to use it all up and, in fact, exceed it? Will the $50 million adjustment that we've just found out about actually change anything in the operating results? Thank you. I would appreciate some explanation on those points, Mr. Chairman.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, the supplementary reserve set for 2003-04 was $15 million net, and the announcement of the action of not rebasing by Ottawa doesn't change it, because that deal is for 2004-05. This supp reserve is dealing with the last actions, or until the end of March. So it's dealing with the 2003-04 fiscal year up until March 31st. Thank you.

Thank you, Mr. Minister. Mr. Braden.

Okay. So we started with $15 million, we have now run over that. What were the principle drivers, Mr. Chairman? What caused us to use this $15 million reserve up in this past year? Thank you.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, we would have to look at supp No. 1 and No. 2 which are taking up the lion's share of that and what was approved by the previous government as they dealt with those bills. This one, the additional costs as we've laid out are driven by a number of factors, the large majority of that around operations and maintenance, health and justice, as well. We have the details and we can go through it to see what those drivers are. Supp No. 1 and No. 2 came to almost $8 million out of supp No. 1 and another $5 million out of supp No. 2. Again we're coming with this one at just over $6 million. So we have exceed that amount of $15 million, and that is highlighted in the fact that we're still registering a deficit budget of $79 million as indicated in the main estimates. Thank you.

Thank you, Mr. Minister. Mr. Braden.

Thank you, Mr. Chairman. One more point. Is this going to be the last of the adjustments to fiscal 2003-04, or is it possible that we should anticipate yet another adjustment, another supp to the fiscal year that's closing out? Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, there's a potential that there could be a further supp as a result of accruals. So it wouldn't be actual past expenditures, but because of accruals if there are some changes there, that would be the reason we potentially could have a further one going forward. Thank you.

Thank you, Mr. Minister. Mr. Braden. Thank you. Mr. Menicoche.

Thank you, Mr. Chairman. Just with regard to this appropriation, I know there was some significant debate in the 13th and 14th assemblies, but I'm just wondering how the regular budget impacts a supp. Does the department have to plead their case that there's absolutely no money in their budget? We're just going through this whole exercise where we do think that there is some money in the departments' budget. So for the Minister, Mr. Chair, what qualifies departments to claim a supp?

Thank you, Mr. Menicoche. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, first of all, the supp reserve is put in place; for example, in 2004-05 we have established a supp reserve of $20 million. Departments would have to come forward to Cabinet or to FMB and, as the Member stated, plead their case that in fact they don't have money in the identified area of expenditure. As we approve this budget, departments have allotments for each area of operation, and they are, by our rules, not allowed to spend more than what has been identified. So if a department is aware that they do not have enough, there are a number of things they can do. One is to do transfers from within the department, which still have to be accounted for, still have to go forward and get the approval, but most departments as they build their budgets would look at those and see their requirements for the rest of the year, and based on those decide if in fact they need to come forward for a supp and plead their case. If it is agreed to, then we would approve it in Cabinet and then come forward as we have through the process that the Members are aware of, bringing to committee and then to the House for approval. So a couple of stages. One, each department comes forward if they don't have the money, identifies it, brings it forward to FMB for discussion and approval, and at times we send them back for more detail or turn down the request and tell them to find it from within. Once FMB approves it, then we gather that information after a number of supplementary appropriations have been

made, and bring them forward to the House based on the timelines that are permitted for session. Thank you.

Thank you, Mr. Minister. Mr. Menicoche.