Thank you, Mr. Chairman. I would like to have witnesses.

Does the committee agree?

Thank you. I would ask the Sergeant-at-Arms to please escort the witnesses in.

Thank you. Mr. Minister, for the record, please would you introduce your witnesses.

Thank you, Mr. Chairman. To my far right is Mr. Gerry Gagnon, manager of tax policy; to my immediate right is Ms. Margaret Melhorn, deputy minister; and to my immediate left is Rebecca Veinott from Justice. Thank you.

Welcome. We will now move to general comments. Mr. Hawkins.

Thank you, Mr. Chairman. Mr. Chairman, in this particular case I'm going to state that I will be supporting this adjustment. Although very unusual probably for me to be enthusiastic about a tax increase, $7.54, under the $68,000 taxable income bracket, basically could represent a box of Tim Horton's doughnuts. So I don't think that's going to have a significant impact on that tax bracket.

The other side of the taxable income of $110,000 plus, the increase being $227 per year, we are really only talking about $15 a month so I don't think that will have a significant impact on that bracket either. Therefore, I will be supporting this. Although I stress it's highly unusual for me to be enthusiastic about a tax increase, I feel that this will have a very minimal impact on those in the sense that they will never even notice. Thank you, Mr. Chairman.

Thank you, Mr. Hawkins. Other general comments. Ms. Lee.

Thank you, Mr. Chairman. It appears that I'm going to have to play the lonely role of a contrarian here. I am not going to support this tax bill either, on the basis of many things that I've said. I do believe that we have had a break from the federal government for $50 million. I do believe it is unreasonable to go from a deficit position of $47 million and the federal government gives us $50 million that we were not expecting, and we go into a surplus of $3 million but still pursue an increase in taxation.

Mr. Chairman, I should state -- I think everybody here understands but I just want to make it clear -- that we have, as Members, to state our position and argue on an issue-by-issue basis and present our justification for the way we take our positions. I don't think it means any disrespect to the work of the Finance Minister. I know that the Minister of Finance, since becoming the Minister of Finance, has not I don't think given thought to anything but his budget. I'm sure he speaks this formula financing and rebasing and tax effort adjustment and all those jargons in his sleep. So I know that he is constantly crunching the numbers. But I am just very resistant to this taking the box again that I was fed in the last Assembly, where not only did we increase the spending, as the Minister's of Finance budget address suggested, our spending grew by $220 million in the years between 1999 and 2000 since division, where our revenue only went by $140 million. We spent way more than we got. At the same time, we reduced the personal tax credit, we reduced corporate tax, all in the name of justification that the Finance Minister of the day told us.

So I think Members could understand that I have a healthy dose of cynicism and skepticism when I'm presented with a completely 360 degree backwards on another set of assumptions. I'll be watching the Minister's work over the next while and once I've had a chance to go through the business planning process, not as a new Member but as a returning Member to this Assembly, maybe I'll feel that I could actually have an input into the way that we make our priorities by the way we set our budgets. After all, when we pass a budget that is setting our priorities. So far I feel like I've had zero input into how we spend our money, what assumptions we expect, how we accept and how we interpret those assumptions. I guess I live my life where I don't mind making mistakes, but I don't like making mistakes twice and I'm not going to sit here and accept everything that is told to me.

Another reason, Mr. Chairman, is that I think anyone who walks down to Tim Horton's, not only to buy a box of Tim Horton's doughnuts with, well, I guess extra money we will have to spend once this is passed, anyone who walks down there will hear from the people that the biggest problem we have in the North is the cost of living. Everything about living here is high. Even the government acknowledges that it's too high to buy here that they're going to go south to buy where it's cheapest. Not only that, Members that come here have gotten themselves a housing allowance increase because they can see with eyes open how expensive it is to live in Yellowknife, and it applies to all the communities in the North.

This taxation would affect the top two tax brackets, but it would affect about 3,500 taxpayers. We have only been here for four months, we have not had a chance to look at what we can do better. I'm telling you we had lots and lots of spending stuff last time that I haven't seen, and I'm not speaking for cuts in programs, I'm talking about what we

can do to better use our dollars before we go out and reach into the pockets of the people out there. It's not their problem that we have spent out of control and spent like drunken sailors, which is a quote that I gave to this Assembly.

Perhaps in a year's time I may be willing to support something like this, but I think this is way too new in this Assembly and I am going to exercise my right to flex my healthy dose of skepticism and cynicism and I'm going to not give support to the Minister's of Finance initiative just because. I know he's good and willing and he operates under good faith and he's certainly working hard to put some fiscal discipline into our work, but I do believe the picture is incomplete and I do believe that if somebody came to me and said they're going to pay off my mortgage and I owed the amount of $47 million and somebody gave me a $50 million cheque, I think somebody could get a break here and not respond to that by a tax increase. In the House I fought and fought and fought hard to save some of our programs and none of that happened. So I'm thinking why should I be doing everything that the government wants if the government is not prepared to listen to any of the suggestions we make on this side of the House. So on that principle and all the reasons that I have given already, for that reason I am not prepared to support this bill. Thank you.

Thank you, Ms. Lee. I have Mr. Menicoche.

Thank you, Mr. Chairman. One of the things that I have been telling the people back home and I'm going to be consistent about, is that it would be unrealistic to come to government and try to get more. We cannot get more programs, more services, but we can hang on to what we have. Unfortunately this tax is one of the ways we do it, and I would like to look in the long term as well. I do want to achieve a balanced budget and this is one of the ways we're going to have to do it.

This afternoon I had the pleasure of being at a presentation where one of our organizations that we support was in a severe deficit position, but they rolled up their sleeves and they did lots of hard work just to climb out of it, and that's where we are today. That's what I would like to concentrate on, is here we are today and what can we do to better ourselves for our people and the future? This is one of the ways of doing it right now. So I'm supportive of this increase in Bill 3. This is one of the best ways I think today we can achieve those results of a balanced budget, which I am striving for as well. Thank you.

Thank you, Mr. Menicoche. Mr. Roland, did you care to make some comments?

Thank you, Mr. Chairman. Mr. Chairman, the philosophy of the 15th Assembly is different from previous assemblies, and that's something I think we need to recognize. As a new government we sat down as new Members, some returning, some more experienced, some with new ideas, and decided that we would set a fiscal course early on. Now we've taken that direction, myself as Finance Minister and my Cabinet colleagues, and looked at the alternatives we have before us in trying to meet that target. It's not an easy process. We know that taxes are something that is not an option that's looked upon lightly. In fact we're going to have to ensure that as we go forward that we're spending the money wisely, the money that the taxpayers of the Northwest Territories pay as well as the rest of the Canadian citizens as they play a big part, as over 70 percent of our revenue comes from Canada. So we're going to have to ensure we're doing the best we can.

Early in the life of this Assembly our Cabinet has committed to ensuring we're going to begin to look at that and how we spend money as a government. Look internally, see how we're delivering programs to those in small communities as well as those in the large communities. That balance is going to be a tough balance to come across.

I respect Members who, on principle, do not support the tax initiative. As Ms. Lee mentioned, on principle it's her right to speak and I respect that. We all have that opportunity here, and I've done that on many occasions in the past myself. But one of the things we have to remember is we ended up in a situation, for a number of reasons, that we were now looking at a potential deficit of $46 million for 2004-05. Now myself as a homeowner, if somebody came to me and using the scenario that was used by the Member, if somebody came to me and paid off my mortgage, I wouldn't be tempted to get myself back into a huge debt. I would be very thankful that somebody paid my mortgage, but then I would use my resources to ensure that I didn't end up in a position like that again unless I knew I could pay my own way out of it.

So there are difficult choices that we'll have to make going forward from here. I think again with the options before us, the timeline that we have, we can't afford to put off initiatives and see what the future may hold. By doing that, we only create a bigger hole and deeper hole to try to dig ourselves out of. So we're being proactive here in trying to come up with the approach that we agreed to as new Members of the 15th Assembly. We've taken the initiative, we've gone forward, we are looking long term down the road in trying to secure a stable fiscal environment for the 15th Assembly, but, more importantly, beyond. I think we have to take the actions today to ensure that our children aren't paying for equipment and infrastructure that we make use of today and that they'll run out of in the future. But I agree; we're going to have to look internally and look at how we're spending those dollars and ensure that we're doing the best job for the residents. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. I have concluded my comments. Thank you very much.

Thank you, Mr. Menicoche. Mr. Allen.

Thank you, Mr. Allen. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, I thank the Member for his comments. The discussion about alternatives is something that as a government we will have to look at to see how we can stimulate growth in a way that still protects our base. So there are initiatives looked at, the suggestion is made, we've already started to do some work to see where we can go as a government in those areas. Again, it's critical that because we're a small jurisdiction with a very small tax base, we will have to look carefully at the impacts not only through the effect of the formula, but just on the base itself and delivering programs. So we're looking at the options that are out there and trying to become more proactive than reactive. That will take some work.

The idea of being in the box; well, that's something we're working on, is to try to be a little more creative in that sense. At the same time, we have to protect the level of the base we have now. Thank you.

Thank you, Mr. Roland. Mr. Allen. At this time can we take a short break? I was told that supper might be ready.

---SHORT RECESS

At this time, I will go to Dave Ramsay.

Thank you, Mr. Chairman. I will start my comments. I have had a chance to be in the chair for awhile and my blood pressure came down a little bit and I had something to eat.

---Laughter

---Applause

I feel a lot better, Mr. Chairman. Once again, I would just like to reiterate a couple of things. The first one is the obligation that Members of this Assembly have to do what we can to deliver a balanced budget to the residents of the Northwest Territories. I also wanted to talk again a bit about the formula financing arrangement that we have with Ottawa and how I see that as a key inhibitor to any success we are going to have as a territory.

Last week, the Premier will remember my Member's statement when I talked about the fact that we've been talking about trying to fix our arrangement with Ottawa for a number of years as well as the devolution process and all that comes with that. I am going to say this again, I think the common denominator -- I am a Conservative and I don't hide that -- to a lot of our difficulties here in dealing with the federal government is the Liberal government that's in Ottawa. I can't state it any more clearly than that, Mr. Chairman.

I see lately that they've agreed to give $1 million to Mr. Peterson who is in charge of negotiations on the NWT file on devolution; $1 million a year to carry on with that. The Premier has talked that we are going to have a new arrangement and everyone is saying all the right things, but really we haven't gotten anywhere. I think that is the crux of the problem. We have not gotten anywhere with the federal government.

In terms of this specific tax revenue or revenue option here, I can't support this the way it is. I have heard other Members say it's only going to be a box of doughnuts, it's only to be this or it's only going to be that. What it is to me, Mr. Chairman, is an increase to the cost of living in the Northwest Territories, something I feel is high enough already. I don't care if it's 25 cents. If it's more, it's too much. I do believe that we have to try to attract people to live in the Northwest Territories. We have to have the skilled labour here. It's very competitive out there right now across the country, across North American, for that matter, in terms of attracting skilled labour. Anything we do to increase the cost of living here is the wrong thing to do. I think we should be trying to look at ways of lowering taxes here and trying to attract people here. I have talked about the permanent trust fund I would like to see the money that Ottawa is taking from us every year and put into this trust fund for the benefit of Northwest Territories down the road and into the future. I think those are things the government should be supporting, not raising taxes. I think it sends the wrong message.

The argument can be made it's for the higher tax brackets, they make enough money already. I can't buy that. I think any tax increase is the wrong thing to do. Again, a lot of the same arguments are the same ones I had for the corporate income tax. I don't think the government has done enough to have a look in the mirror, Mr. Chairman, and try to find ways or means within our own organization where we can effectively cut spending. Like Ms. Lee, I haven't got a lot of say in how things are done and how we might be able to realize some savings. I think once taxes go up, they never come down, unless it's the corporate income tax, but that's another story.

---Laughter

It's like chasing a rainbow, Mr. Chairman, our relationship with Ottawa and how numbers change week in and week

out, Mr. Chairman. To me, it's not a very good way to run a government. If we are going to have any success here, we have to get a better financial situation, better financial reality with Ottawa. I have got my own ideas on how that might happen, but I will leave it there, Mr. Chairman. Thank you.

Thank you, Mr. Ramsay. Mr. Roland, would you like to comment?

Thank you, Mr. Chairman. Mr. Chairman, I respect the Members and their opinions as we come to this table and discuss the initiatives of government and what we need to do or should do. Again, it was not our intention as we took office to look at trying to make it a more difficult place to live, but again as elected Members and as a direction we set for the 15th Assembly with our fiscal targets, Cabinet has gotten down to work and come up with what we feel are some of the better options than were out there for the time frame. Again, I would encourage Members to encourage us to look in the mirror and take a hard look at how we run business. Your support is going to be needed as well as we go through the next cycle and start looking at what areas we have to reallocate money on or reduce budgets. It's not going to be an easy exercise. I am a Member who came into the 13th Assembly and it seemed like I cut my political teeth in a period of harsh restraint. We are trying to come up with a balanced approach so we don't have to be back there again looking at massive cuts across the board. We are trying to be more surgical and look at how we do spend money and if there are pockets out there where it's ineffectively spent, we have to look at reallocating. Thank you.