Thank you, Mr. Speaker. Mr. Speaker, I would like to provide the House with the Standing Committee on Governance and Economic Development report on the review of the 2005-2006 Draft Main Estimates.

Introduction

Mr. Speaker, the Standing Committee on Governance and Economic Development -- GED -- met from January 13 to January 18, 2005, to review the 2005 - 2006 Draft Main Estimates. The GED envelope includes the departments of Industry, Tourism and Investment, Environment and Natural Resources, Public Works and Services, Municipal and Community Affairs and Transportation.

General Comments

Streamlining Programs And Cost Savings

As a result of the restructuring of the Department of Resources, Wildlife and Economic Development, 17 additional positions will be created in the departments of Investment, Tourism and Industry and Environment and Natural Resources. This will mean an ongoing cost to the public of over $2 million. The committee strongly urges the government to find further cost savings to balance this increase.

The committee believes the government has made a reasonable attempt so far to reduce its expenditures; however, Members have identified several more areas throughout this report where services could be combined to achieve further savings. These further changes would have the added benefit of improving service to the public by streamlining programs and locating them within one department.

Changes To Accounting And Capital Planning Process

The committee strongly believes it is time for the GNWT to review some of its business practices for practicality, transparency and accountability.

Currently, the Financial Administration Act requires funds to be spent in the year in which they are appropriated. If the departments do not spend them, the funds lapse. This inability to accrue funding leads some departments to questionable spending at year end. These funds could better be diverted into a reserve for initiatives like the Arctic Winter Games or serve as an emergency fund for extraordinary circumstances such as high forest fire seasons. Moreover, departments need to have more control over their own revenue sources. For instance, the Department of Transportation could turn revenues from driver licence fees into initiatives like paved roads, instead of profits disappearing into the consolidated revenue fund. If each department had greater control over their own expenditures and revenues, perhaps this would allow greater responsibility in spending and reduce or eliminate the supplementary funding process.

However, the committee still expects departments to account for expenditures and revenue in a transparent and accountable manner. Further to this point, the committee has some issues with respect to the way departments currently account for their expenditures. Each department can describe expenditures in their main estimates differently. For example, FMBS has a zero-based budgeting practice; other Departments do not. MACA's capital plan is split between two places in the budget; other Departments are not. The committee is concerned that this complicated process may make it difficult for members of the general public to review the main estimates and determine how the government is spending their money. The committee would like to see a plain language approach to government accounting and would appreciate the opportunity to have more discussions with the Minister with regard to this matter.

Finally, the committee again would like to see changes to the corporate capital planning process. The committee would also like to reiterate its concerns with the CCP, which it provided in its report on the draft 2004-2005 Main Estimates:

1. The prioritization process, which includes the protection of people and protection of assets, unfairly penalizes less developed and less populated communities.

2. Cost overruns on large projects, a lack of adherence to maximum construction costs in some cases and major increases to the scope of existing projects have the potential to impact funding and timelines for other projects. Members are concerned there may be an incentive for contractors to purposely bid low if they are led to believe by past practices that overruns will be approved later.

3. The membership of the Capital Review Committee is made up entirely of deputy ministers. Regional representation on the Capital Review Committee is non-existent.