Thank you, Mr. Chairman. Good afternoon, Members It is my pleasure this afternoon to present for your consideration the Department of Transportation's main estimates for 2005-06. The department's proposed budget for 2005-06 contains an operations and maintenance budget, excluding amortization, of $54 million. This is an increase of .8 percent over last year's main estimates. The department's proposed 2005-06 capital program is $51.4 million. This is an increase of 7.6 percent over last year's main estimates. I would note that almost half of the

capital program, $21.3 million, consists of contributions from the Government of Canada.

To help the government manage its fiscal position, the Department of Transportation has identified $1.1 million in expenditure reductions. By internal reorganization and the re-assignment of duties and responsibilities, the department has managed to reduce its staff requirements by six full-time positions. It has also scaled back its financial contributions to the community marine and local access road programs. At the Fort Providence and Dempster Highway ferry crossings, the department has revised its seasonal freeze-up procedures to save money on fuel and the physical wear and tear on the ferries.

We have taken these restraint measures to cut back on the costs of operation with, I believe, the least inconvenience or disruption to the public.

While the Department of Transportation has had to find ways of reducing its costs, it has been successful in searching out additional sources of funding, mainly from the federal government, that will go towards badly needed capital improvements in our transportation infrastructure. As the committee members know, the Mackenzie gas project will put huge new demands on the territorial transportation system. At the same time, work will also begin during the 2005-06 fiscal year on the construction of the third Snap Lake diamond mine. The new capital funding comes just at the right time to help meet the demands of these resource development projects.

All of the equipment, material and supplies needed for the Mackenzie gas project will have to move over our transportation system. I am pleased to advise the committee that the proponents of the Mackenzie gas project and the Department of Transportation are already working to plan the transportation logistics and have the transportation system ready for the heavy traffic the project is expected to generate.

With Transport Canada and the territorial Bureau of Statistics, the Department of Transportation is studying the long-term implications for the transportation system of a growing hydrocarbon energy industry. The Department of Transportation needs to plan for the demands on the transportation system that will come once the pipeline is built.

The main estimates for 2005-06 allocate a capital construction budget of $40 million to the highways program. With the help of 50/50 cost-sharing contributions from the Canada strategic infrastructure fund, the department has scheduled $32 million in reconstruction projects on highways No. 1, No. 3, No. 4, No. 7 and No. 8 as well as the Mackenzie Valley winter road.

I look forward in the 2005-06 fiscal year to the completion of the reconstruction and paving of Highway No. 3 between Rae-Edzo and Yellowknife. This will come as a great relief to everyone who has ever travelled it and especially to the growing number of people who drive daily between Rae-Edzo and Yellowknife.

Aside from reconstruction, the department's capital program also includes $8 million in projects aimed at preserving the highway infrastructure. The highway system is aging and the lifecycle repair or replacement for many of its capital structures, culverts, large and small bridges, are passed or coming due. These expenditures are necessary to keep our highways in good operating condition and maintaining the value of the public's long-term investment in the highway system.

The last revision of the department's Highway Strategy was completed in November of 2000. In 2005-06, the department will update the Highway Strategy to take into account the developments over the past five years and to give special attention to the seasonal and all-weather highway connections to the smaller communities.

As I have previously announced, as of the end of this fiscal year, the Department of Transportation will no longer deliver the Community Airport Radio Station, CARS, program on behalf of NAV Canada. The department and NAV Canada have been working to make an orderly transfer of the CARS program to a private sector contractor. The transition is proceeding well and the CARS service will convert to private sector delivery on April 1, 2005, without disruption to the air carriers to the communities they serve.

Since the terrorist attacks of 2001, transportation security has become a high priority concern as never before. Almost immediately at airports, passengers and their hand carried luggage were subject to more rigorous and intrusive inspections. The Department of Transportation had to make renovations at the Yellowknife Airport to accommodate the new security inspection procedures.

The regulations of the new Canadian Air Transport Security Authority, CATSA, now require that all checked baggage accompanying passenger flights must be inspected for explosives. The new explosives detection equipment must be installed and operational at the Yellowknife Airport by January 1, 2006. In addition to the security requirements, the Department of Transportation decided that it made sense to renovate for the projected growth in passenger traffic moving through the terminal building. Therefore, an extensive, three-year renovation project has begun at the Yellowknife Airport that will meet the terminal's security requirements as well as its future traffic requirements.

The new concern with transportation security is not limited to the air mode. The Department of Transportation has been working with its provincial, state and territorial counterparts to establish new security standards and procedures for the issuance, storage, retrieval and exchange of motor vehicle records and documents. The Council of Ministers responsible for Transportation and Highway Safety have formally agreed on new international standards and protocols for the administration and control of motor vehicle records across North America. The Department of Transportation will introduce a new territorial driver's licence during the 2005-06 fiscal year. The main estimates provide a one-time cost of $700,000 for the purchase of new equipment and $300,000 for implementing the more secure administrative procedures.

Very briefly, these are the highlights of the Department of Transportation's main estimates for 2005-06. The committee can see that the main estimates include a good many projects and initiatives that the department expects to accomplish over the next fiscal year.

In closing, we expect 2005-06 to be anther year of growth in the traffic at our airports and on our highways. Over the past decade, the traffic carried by our transportation system has grown significantly. Keeping the system in

good repair while meeting the demands of heavier traffic is the department's greatest challenge. Based on the department's past performance, I have every confidence that the Department of Transportation is equal to that challenge. Thank you, Mr. Chairman.